Kennedy-Wilson Holdings, Inc. (KW)·Q2 2025 Earnings Summary

Executive Summary

• Adjusted EBITDA rose 86% year over year to $147.1M, while Baseline EBITDA increased 12% to $117.0M; GAAP diluted EPS improved to a loss of $0.05 from a loss of $0.43 YoY .
• Investment management fees hit a quarterly record $36.4M (+39% YoY) as Fee-Bearing Capital reached $9.2B; AUM climbed to a record $30B .
• Asset sale program execution delivered $250M cash and $55M gains in Q2; subsequent event: full redemption of €300M KWE notes announced for Oct 3, 2025 .
• Versus S&P Global consensus: EPS beat materially while revenue missed; the EPS beat was driven by gains on asset sales and stronger fee income; the revenue miss reflects lower rental and loan income and portfolio reshaping (see Estimates Context) .
• Near-term stock catalysts: accelerated deleveraging (KWE bond redemption), record fee momentum, and a growing rental housing platform (40k owned units, 28k financed) .

What Went Well and What Went Wrong

What Went Well

• Record fee momentum and AUM: “Our assets under management (AUM) grew to a record $30 billion, resulting in investment management fees growing by 39% to a quarterly record of $36 million” .
• Asset sales and cash generation ahead of plan: $250M cash in Q2 with $55M gains; CEO highlighted exceeding prior target: “We generated $275,000,000 of cash from asset sales for the year… we are well on track to hit our goal of $400,000,000 by year end” .
• Multifamily fundamentals improved: same-property market-rate NOI up 3.1% YoY; Vintage affordable portfolio NOI up 4.9% YoY; total multifamily same-property NOI up 3.5% YoY .
• Strategic credit platform execution: $1.2B originations in Q2, $2.0B YTD; future funding commitments of $5.2B support forward fee growth .

What Went Wrong

• Revenue softness in core operations: rental revenue declined YoY ($93.3M vs $97.8M), and loan revenue decreased ($5.7M vs $8.0M) as non-core dispositions and repayments reshaped the portfolio .
• Office same-property NOI down in Europe (-2.7% YoY in Q2); UK occupancy dips impacted results, though leases at higher rents were agreed post-quarter .
• Continued GAAP loss for common shareholders ($6.4M), reflecting high interest expense ($62.5M), depreciation/amortization ($34.5M), and preferred dividends ($10.9M) despite strong non-GAAP performance .

Financial Results

P&L Summary vs Prior Periods and Estimates

Note: EPS estimate uses S&P Global “Primary EPS” methodology, which may differ from GAAP diluted EPS presentation. Values retrieved from S&P Global.*

Segment Revenue Breakdown (Q2 2025 vs Q2 2024)

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We’re pleased to report solid results… AUM grew to a record $30,000,000,000… We originated another $1,300,000,000 in new rental housing construction loans… We also expanded our U.S. Multifamily platform acquiring four communities… for $387,000,000” .
• CFO: “GAAP EPS for the quarter totaled a loss of $0.05… Baseline EBITDA… $117,000,000, a 12% increase year over year… Adjusted EBITDA totaled $147,000,000… We repaid $170,000,000 on our line of credit… will be paying off [€300,000,000 KWE bonds] by October 3” .
• President (Europe): On UK SFR returns: “We’re targeting mid-teens at the asset level… asset management fee will probably push it into the 20s… potentially further growth to go beyond [4,000 homes]” .
• President (Corporate): Multifamily demand: U.S. same-store NOI +3.3%; renewal spreads ~3.5%; new leases ~0.75%; Pacific NW NOI +5.6%; Idaho NOI +7.2% .

Q&A Highlights

• UK SFR strategy and returns: Early-stage market with build-to-rent focus; targeting mid-teens asset returns plus fees/promotes; potential to scale to ~2,000 homes by year-end and capacity up to ~4,000 .
• Credit platform focus and competition: Primary focus remains residential construction lending; possible expansion to bridge/permanent lending; banks more active but KW’s secured, low LTV approach and relationships are differentiators .
• Asset sales trajectory: Reaffirmed $400M FY target; likely to exceed modestly .
• Capital allocation: Buybacks considered post bond payoff; $100M remaining authorization acknowledged as an opportunity .
• Debt maturities: Strategy to combine asset sales with refinancing; maturities near ~6% rates should limit earnings dilution .

Estimates Context

• S&P Global consensus indicated a significant EPS beat and a revenue miss. Company-reported total revenue was $135.7M (differences vs SPGI actual may reflect classification/normalization) .
• Estimate revisions: Expect upward adjustments to fee-related earnings and potential normalization of EPS forecasts given realized gains and fee momentum; revenue forecasts may be tempered to reflect portfolio reshaping and lower loan income.
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Execution on asset sale program and announced redemption of €300M KWE notes materially de-risks the balance sheet and supports a deleveraging narrative .
• Investment management platform is scaling rapidly (Fee-Bearing Capital $9.2B; record $36.4M fees), providing a growing, more recurring earnings base .
• Multifamily fundamentals are improving across key regions (PNW and Mountain West), with embedded loss-to-lease and leasing spreads supportive of forward NOI growth .
• Near-term earnings cadence may remain non-GAAP led (Adjusted EBITDA/Adjusted NI) given interest expense and preferred dividends, but equity value creation is supported by asset sales and fee growth .
• Watch for Q3/Q4 originations and UK SFR scaling as catalysts; management suggests mid-teens asset-level UK SFR returns plus fees/promotes .
• Office exposure is being actively managed; European office pro forma leasing suggests stabilization potential, but mix shift toward rental housing continues .
• Capital allocation optionality (repurchases post-bond payoff) could be a positive incremental catalyst given stated discount to NAV .