Kennedy-Wilson Holdings, Inc. (KW)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered stronger non-GAAP results (Adjusted EBITDA up to $125.2M; Adjusted Net Income $18.0M) while GAAP remained a loss ($0.15 loss per share) amid ongoing portfolio repositioning and non-core asset sales .
• Investment management scales to records: AUM reached $31B and Fee-Bearing Capital rose to $9.7B; Q3 investment management fees increased 8% to $23.4M, supported by $603M of loan originations .
• Balance sheet actions and strategic catalysts: the company repaid €300M KWE notes in October and announced a pending acquisition of Toll Brothers Apartment Living, expected to add ~$5B AUM and materially grow the rental housing platform .
• Dispositions exceeded the 2025 target, generating $470M YTD cash; management highlighted baseline EBITDA stability ($101.1M) despite lower property NOI from asset sales .
• The take‑private proposal (CEO + Fairfax) created a near-term stock reaction catalyst; a special committee is evaluating and the company will not comment further until definitive outcomes .

What Went Well and What Went Wrong

What Went Well

• Fee-based platform momentum: Fee-Bearing Capital reached $9.7B (record), AUM reached $31B; investment management fees rose 8% YoY in Q3 to $23.4M .
• Non-GAAP profitability improved: Adjusted EBITDA nearly doubled vs Q3 2024 to $125.2M and Adjusted Net Income improved to $18.0M .
• Strategic growth initiatives: pending acquisition of Toll Brothers’ Apartment Living platform expected to add ~$5B AUM and expand rental housing portfolio to 60,000+ units (company share 5–10% across acquired properties) .

What Went Wrong

• GAAP remains negative: Q3 GAAP net loss attributable to common shareholders of ($21.2M) and diluted loss per share ($0.15) as depreciation/fair value changes and interest expense continue to weigh on results .
• Rental revenue declined YoY: Q3 total revenue fell to $116.4M vs $127.5M in Q3 2024, with rental revenue down to $87.2M from $97.8M, partly reflecting lower property NOI following non-core asset sales since Q3 2024 .
• European office softness: same-property office NOI in Europe decreased (occupancy -5% YoY in Q3), though leasing agreements to backfill vacated space are signed but not yet commenced .

Financial Results

Consolidated P&L and Non-GAAP Metrics (USD Millions)

Margins (S&P Global)

Values retrieved from S&P Global.*

Revenue Mix by Type (USD Millions)

Segment/Portfolio KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We continued to execute on our strategic initiatives… growth in our Fee-Bearing Capital to $9.7 billion… strong progress on our 2025 disposition plan… payoff of our €300 million KWE bonds and the pending acquisition of Toll Brothers' Apartment Living platform, which is expected to add $5 billion in AUM…” .
• CFO: “We paid off the last tranche of our KWE unsecured bonds, totaling €300 million… simplifies our debt capital structure… total debt is 96% fixed or hedged; WAM 4.5 years; effective rate 4.7%” .
• President (Portfolio): “Stabilized real estate generates estimated annual NOI of $434 million… US market-rate multifamily same-store NOI grew 2.4%; leasing spreads 1.4% (renewals +3.4%, new leasing −1%)” .
• IR on take‑private: “Special committee formed to evaluate the proposal… no ongoing updates until definitive transaction or termination” .

Q&A Highlights

• Cap rates and development economics: multifamily cap rates “high 4s to high 5s”; development expected spreads of 125–175 bps over market cap rates; Toll Brothers pipeline focused West Coast and select East Coast .
• Affordable portfolio/government: no current impact from government shutdown; Q3 affordability NOI was expense-driven .
• Fundraising dynamics: less emphasis on discretionary funds; growth via separate accounts; traction across Asia, U.S., Canada, parts of Europe .
• Loan originations: Q3 seasonal slowdown; competition tightening spreads; pipeline remains strong .
• UK SFR: ~1,300 homes committed, ~200 built and leased; more acquisitions expected in Q4; platform support from CPPIB .
• UK/Ireland office: occupancy decline due to timing of lease breaks; agreements for lease signed; expect occupancy to tick back up over coming quarters .

Estimates Context

Q3 2025 Actual vs S&P Global Consensus

Values retrieved from S&P Global. Note: “Primary EPS” is S&P’s normalized metric and may differ from GAAP diluted EPS, which was a ($0.15) loss in Q3 .

Drivers of the surprise:

• Revenue/EBITDA misses reflect lower rental revenue and property NOI following non-core asset sales and recapitalizations, despite stronger investment management fees and gains on sale boosting non-GAAP performance .
• EPS beat on a normalized basis contrasts with GAAP loss due to non-cash items (depreciation/fair value) and capital structure effects; management cited non-cash charges of $36M in Q3 .

Forward Consensus (S&P Global)

Values retrieved from S&P Global.

Key Takeaways for Investors

• Fee-based growth is the anchor: AUM/Fee-Bearing Capital reached records, with investment management fees rising; expect Toll Brothers platform to accelerate fee earnings and rental housing scale upon close .
• Portfolio recycling working: $470M YTD cash generated from sales/recaps, exceeding the $400M plan—supports deleveraging and growth capital deployment .
• Balance sheet de-risking: repayment of €300M notes simplifies the capital structure; debt 96% fixed/hedged, 4.7% effective rate, and 4.5-year WAM .
• Mixed operating cadence: US multifamily same-store trends positive; European office temporarily softer but with signed backfills, offering a recovery path .
• Near-term catalysts: potential close of Toll Brothers Apartment Living in Q4 and any update on the take‑private process; dividend maintained at $0.12 for Q4 .
• Watch estimate resets: given revenue/EBITDA shortfalls vs consensus, models may need to reconcile asset sale impacts and fee growth vs GAAP headwinds .
• Strategy consistent: continue to prioritize rental housing and credit platforms with favorable supply-demand dynamics; UK SFR scaling provides a differentiated growth vector .