Good day, and welcome to the Kennedy-Wilson Second Quarter 2025 Earnings Call and Webcast. Please note, this event is being recorded. I would now like to turn the conference over to Daven Bhavsar, Head of Investor Relations. Please go ahead.

Thank you, and good morning. Thank you for joining us today. Today's call will be webcast live and will be archived for replay. The replay will be available by phone for 1 week and by webcast for 3 months. Please see the Investor Relations website for more information. With me today are Bill McMorrow, CEO; Matt Windisch, President; Justin Enbody, CFO; and Mike Pegler, President of Europe. On this call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. You can find a description of these items, along with the reconciliation of the most directly comparable GAAP financial measure and our second quarter 2025 earnings release, which will be posted on the Investor Relations section of our website. Statements made during this call may include forward-looking statements. Actual results may materially differ from forward-looking information discussed on this call due to a number of risks, uncertainties and other factors indicated in reports and filings with the Securities and Exchange Commission. I would now like to turn the call over to our Chairman and CEO, Bill McMorrow.

Thank you, Daven, and thank you, everyone, for joining the call today. We're pleased to report solid results for the second quarter of 2025, which exceeded our business plan and reflect the continuing strengthening in our operations and in the overall real estate investment market. We deployed or committed $1.7 billion of new capital in Q2, driving total capital deployment to $2.6 billion for the first half of 2025. We remain on track this year to exceed the $4.3 billion we deployed in 2024. Improving transaction levels within the commercial real estate space allowed us to successfully execute on over $600 million in noncore asset sales generating $250 million in cash proceeds to KW, exceeding the $200 million target we set on our last call. We utilized $170 million to reduce our unsecured line of credit and allocated the remaining capital to new investments. We continue to see strong activity across our markets with clear evidence of sustained long-term demand for both rental housing and real estate credit solutions. On today's call, I'll review our portfolio and the progress we've made across our 2025 strategic initiatives and in particular, our asset sales and unsecured debt reductions. Assets under management grew to a record $30 billion and has increased by 70% since the beginning of 2021. At the 100% ownership level, our stabilized investments generate $1.6 billion of revenue and $1.3 billion of stabilized NOI. KW holds a 37% weighted average ownership interest in these assets, with the remaining 63% managed on behalf of partners generating fee income for our platform. Rental housing, our core focus, represents 65% of our assets under management comprised of approximately 70,000 units that we either have an ownership interest in or are financing in our credit platform. We expect this sector to grow to over 80% of our AUM over the next 2 years. In the second quarter, capital deployment was focused on rental housing equity and credit. We originated another $1.3 billion in new rental housing construction loans, which is our second largest quarter in originations to date. Since arriving at KW, our credit team is closing in on surpassing $6 billion in new loans, all focused on the development of high-quality market-rate multifamily or student housing communities across the U.S. We also expanded our U.S. multifamily platform, acquiring 4 communities at significant discounts to replacement costs, totaling 1,200 units for $387 million. These new investments were completed through our investment management platform, which included adding 2 new Japanese-based institutions to our growing group of high-quality institutional partners. In Europe, we continue to build up our single-family rental platform with CPPIB, one of Canada's largest pension funds. In Q2, we added $100 million in new sites, which brings our total portfolio to 13 sites totaling 1,200 planned homes. We are under offer on new sites totaling over $200 million with an additional 500 homes, which, if closed, would take our venture to 1,700 homes within 12 months of formation. Capital deployment for the first half of the year was 96% directed toward the rental housing sector with 74% into construction loan originations and 22% into equity ownership of the Western United States and U.K. single-family rental investments. The higher levels of capital deployment have driven our investment management platform to record levels. Fee-bearing capital reached a record $9.2 billion. Our investment management fees grew by 39% in Q2 to a quarterly record of $36 million. Our fees for the first half of 2025 have increased by 30% year-over-year and have already reached the levels we generated in all of 2023, where our fees were $62 million. Over the past 15 years, we have expanded our network of strategic partners across North America, Asia, the Middle East and Europe. These long-standing, well-capitalized partners remain highly engaged in deploying capital alongside KW, both in equity and in credit, which gives us strong momentum for continued growth in our fee-related earnings. We also made solid progress on our noncore asset sale program in the quarter. Our dispositions included the sale of 3 European office assets, the sale of an older Northern California multifamily asset built in 1988, and the reduction in our ownership interest in our only hotel asset. We generated $275 million of cash from asset sales for the year, which keeps us on track to hit our goal of $400 million by year-end. The proceeds in the second half of the year will be used to further reduce our unsecured debt, including the final tranche of our KWE bonds that will be repaid in full in October as we announced yesterday. With the total $350 million KWE repayment, we will have fully retired the original $650 million principal amount of the 2025 bonds. We also plan to continue recycling capital into higher return investment opportunities in our investment management platform. Turning to the market, real estate fundamentals continue to strengthen in Q2, and we believe there remain compelling risk-adjusted opportunities in the rental housing sector. A persistent housing shortage across all our markets, coupled with affordability challenges in the single-family sector, continues to fuel sustained rental demand. In the U.S. apartment sector, the bulk of new supply that began delivering in 2023 has largely been delivered and is being absorbed. With new starts falling sharply, the supply pipeline is thinning, setting the stage for strong rental growth going forward. With a portfolio of 40,000 apartment units, we are well-positioned to capitalize on these favorable supply-demand dynamics over the next few years. We're confident that as we grow our NAV and scale in our diversified investment management business, the value creation will increasingly be recognized in our share price. We are entering the second half of the year with an existing portfolio that is well positioned with a strong pipeline of activity centered around our strategic initiatives, increasing free cash flow by growing our NOI and recurring fees, harvesting realized gains from our asset sales and increasing our fee income. With our own capital and the support of the major global strategic partners, I remain very optimistic that in the remainder of 2025, we will see a record level of new capital deployment and benefit from KW's team's experience to make sound investment decisions together with our partners. With that, I'd like to turn the call over to Justin Enbody.

Thanks, Bill. I'll begin with a review of our Q2 financial results and then discuss the balance sheet. GAAP EPS for the quarter totaled a loss of $0.05 per share compared to a loss of $0.43 per share in Q2 of last year. Baseline EBITDA for Q2 came in at $117 million, a 12% increase year-over-year. This brings our trailing 12-month baseline EBITDA to $425 million. Adjusted EBITDA totaled $147 million and was up significantly from $79 million in Q2 of last year. As Bill mentioned, our asset sale activity picked up significantly in the quarter. Our consolidated asset dispositions in Q2 resulted in $55 million of gains on sale. Our co-investment portfolio, which now totals $13 billion in assets held at fair value, is 75% comprised of rental housing and industrial investments that we own with partners. KW's ownership in this portfolio is approximately 32%. During the quarter, this portfolio saw minor net changes in value, with modest increases in real estate values offset by costs related to financing activities. Turning to our balance sheet, in Q2, we made solid progress on reducing our unsecured debt through the payoff of $170 million on our line of credit, which stood at $100 million as of the end of the quarter. Our largest upcoming maturity is our KWE unsecured bonds totaling EUR 300 million, which we announced we will be paying off by October 3. Our total debt is 98% fixed or hedged with a weighted average maturity of 4.6 years and a weighted average effective interest rate of 4.7%. We also have $113 million of consolidated unrestricted cash and $450 million of undrawn availability on our $550 million credit facility. Finally, we began utilizing our share repurchase plan in Q2, repurchasing approximately 400,000 shares at an average price of $6.21. We have $100 million remaining on our $500 million share repurchase plan. And with that, I'd now like to hand the call over to Matt Windisch for a portfolio update.

Thanks, Justin. Our stabilized real estate portfolio generates estimated annual NOI of $468 million to KW with 70% related to rental housing or industrial. This is up from just 58% just 3 years ago. We anticipate that these 2 sectors will continue to grow as we look to expand within these 2 asset classes while also disposing of noncore assets. Turning to our largest sector, multifamily, which represents 64% of our NOI. In Q2, we saw sustained apartment demand and strong retention from our diversified apartment portfolio, which was 94% occupied as of quarter end. In total, U.S. same-store NOI grew by 3.3% for our market-rate portfolio, which was driven by blended leasing spreads accelerating from 1.4% in Q1 to 2.1% in Q2. Renewal spreads totaled approximately 3.5% and spreads on new leases improved to 75 basis points, the highest level in 2 years. At the end of the quarter, we sold a 90% stake in our largest asset in the region, which will come out of the same-store pool in Q3. That sale generated $40 million of cash to KW. Our vintage housing affordable portfolio, which utilizes low-income housing tax credits, saw solid same-property NOI growth of 5%. These results were driven as a result of rising area median incomes. We have another 1,900 units under development and lease-up, which will require minimum capital from KW and are expected to add $10 million of NOI. We are on track to reach 13,000 stabilized units while actively evaluating opportunities to further expand our affordable portfolio. In Ireland, same-property NOI in our apartment portfolio was up 2.4%, driven by occupancy growth. We stabilized our final remaining Irish lease-up apartment asset, the Cornerstone in Q2, which increased total stabilized units to over 3,500. The other key headline was the Irish government's proposed measures related to existing rent control that is expiring at the end of the year. Starting in Q1 of next year, we expect that units that are leased to new tenants will likely be able to be brought to market rents. The implementation of this change is still subject to government approval, which is expected later this year. Moving over to our office portfolio. We sold 2 Irish office assets in the quarter at attractive cap rates to core buyers who have started to return to the office market. We sold these 2 fully leased properties, Kildare Street and Hanover Quay, in separate transactions for a combined total of $155 million, reflecting a 5.3% weighted average buyer cap rate. These are both best-in-class assets that we built, are comprehensively redeveloped and subsequently fully leased to prime tenants. Seeing these assets successfully trade to core buyers marks the completion of our business plan and serves as strong validation of the high-quality assets that we've developed. We also completed the sale of our largest remaining asset in Italy. Combined, these sales generated $70 million of cash to KW. Roughly 75% of our stabilized office portfolio sits in Europe, where same-property NOI declined by 3% in the quarter and was impacted by a decline in occupancy at 2 U.K. assets. In both cases, we have now agreed to lease the space at significantly higher rents, which will positively impact our future results. Our overall European results pro forma for these leases would have resulted in a 2.7% NOI increase. Turning to our investment management business, Q2 saw $36 million in fee revenue, while fee-bearing capital grew to a record $9.2 billion. Additionally, there's another $5.2 billion in future debt fundings that will impact our fee-bearing capital base over the next couple of years. Our credit portfolio continues to generate strong returns on invested capital, benefiting from favorable spreads and a deep pipeline of high-quality opportunities. Since acquiring the $4.1 billion construction loan portfolio 2 years ago, of which KW bought a 5% stake, as of June 30, $1.8 billion of the loans have successfully been repaid, which has generated a deal level IRR of 27% to KW, including fees. We are also making strong progress in our U.K. single-family rental platform, which we launched in Q4 and now totals 1,200 planned homes. The initial homes delivered from developers have begun lease-up with encouraging progress on achieving our planned rents. We continue to look for opportunities to expand this portfolio and have been having active conversations with both new and repeat counterparties, which will seek to take the platform beyond 2,000 units. In closing, we made significant progress on advancing our key initiatives in Q2, including monetizing noncore assets, reducing our unsecured debt, and streamlining our portfolio. Additionally, we've taken meaningful steps to position our capital-light investment management platform for long-term growth. So with that, we'll open it up to Q&A.

Our first question will come from Anthony Paolone with JPMorgan.

My first question, actually, we'll start with the SFR business in the U.K. I think we have some familiarity with it in the U.S. and where it is in the evolution here. But maybe can you talk a bit more about just where it is in the U.K. and whether it's purely a build-to-rent strategy or if there's existing rental homes that could also be purchased and also maybe a little bit about the returns that you see and why it's so attractive?

Mike, do you want to go ahead with that?

The single-family rental housing business is still in its early stages in the U.K. This market has seen significant growth over the past couple of years, but the penetration levels are much lower than expected—about one-tenth of what is seen in the U.S. It's still early in the process, and there are only a few players establishing this institutional ownership model, which we believe will become a key component of the U.K. rental housing market in the coming years. Our strategy, in partnership with CPPIB, focuses on a build-to-rent approach where we aim to acquire properties from housebuilders at a discount. We’re looking to purchase around 100 units for each lot to create single-family rental communities within existing master plans provided by housebuilders. We see a significant pipeline in this area, and we believe it's highly scalable, with the potential for strong returns for both our partners and ourselves. In terms of returns, we aim for mid-teens at the asset level, which will increase with additional fees. We anticipate pushing those returns into the 20s, along with significant promote returns on top of that, further enhancing our overall results. The European team is highly focused on this initiative, and as mentioned, we aim to reach around 2,000 homes by the end of this year, with plans to expand to 4,000 homes with initial capital from CPPIB. We believe we will become a significant player in the U.K. market and see potential for continued growth beyond that. We are enthusiastic about the returns this segment can generate both in the short term and long term.

Okay. That's a great overview. Just my second one just relates more broadly, Bill, you've been pretty clear about just the skew towards residential and moving the company in that direction. And that's been the case both on your equity and debt investments. But on the debt side, as that business probably gets a bit more competitive, do you think that moves to other property types and beyond development? Or how are you thinking about the debt platform maybe for Matt?

Thank you, Tony, for the good question. We've maintained our focus on residential construction lending, and our successful track record shows that we excel in this area. This will remain our primary focus moving forward. I've mentioned in previous calls that we have the potential to broaden our lending capabilities in the residential sector, including bridge lending and possibly some permanent lending options in the near to medium term. We see opportunities for expansion in this area. A few quarters ago, we announced a partnership with Tokyo, concentrating on residential investments in preferred equity and mezzanine solutions. Additionally, our expertise extends to other product types; the team we brought from Pacific Western Bank has a history of lending to various sectors, such as hospitality and industrial. Over time, depending on our position within the capital structure, we have the ability and knowledge to allocate capital outside of housing in the credit space. However, I believe that housing will continue to make up the majority of our operations going forward.

Okay. And just last one for me. Just you've been pretty active in selling noncore assets and producing cash back to KW. Just any order of magnitude of what might be planned for the balance of the year?

Well, Tony, what I said in my remarks is that we had laid out $400 million at the beginning of the year as our goal, and we've done $275 million so far. We're well on track now to do the last $125 million, and we may exceed that by some amount. But for sure, we'll finish the year at over $400 million.

Our next question will come from Jana Galan with Bank of America.

Bill, can you elaborate on your strategy to increase multifamily investments, specifically your preferences for affordable versus market rate in the U.S. compared to Europe? Also, where are the most attractive cap rates at this moment?

Sure, Jana. This is Matt. So I'll answer that. Look, I think we're interested in expanding our exposure to that sector through both our credit business as well as the equity business. We've certainly been more active geographically in the U.S., although depending on some changes in policy in Ireland, there could be an additional attraction to Irish assets going forward. But I would say, look, our credit business for the past year or so has been the majority of the capital deployment within the residential space. That did start to shift a bit in Q2. You saw that we bought 4 apartment communities in the quarter, and there's several more that we're looking at here in the second half of the year for investment management platforms. So it all depends on the opportunity set, who the seller is, what the circumstances are, but we're actively pursuing residential opportunities across geographies and across the capital stack.

Yes, Matt, if I could add on a little bit to that. I mean one of the metrics that I mentioned that we really focus on is the total number of units that we either have an ownership interest in or that we're financing. And we're now up to 70,000 units that we either have an ownership interest in, 40,000 or that we're financing 30,000. And so as I mentioned, the shift in our total portfolio where we're at 65% now to going to 80% will mean that some of the other asset classes, particularly office, will decrease. But over the next, I'd say, 3 to 4 years, we hope to move that 70,000 up to somewhere between 90,000 to 100,000 units, depending on what the opportunities are.

And then maybe just for Justin. Curious about the EUR 300 million loan repayment on October 3. Is that just when there's no longer a prepayment penalty? Or I'm just curious about the timing.

The timing for us is correct, there's no prepayment penalty, and we're building our cash position to pay it down effectively. We're in a great spot and looking forward to putting that behind us.

Our next question will come from Omotayo Okusanya with Deutsche Bank.

In terms of the credit business, again, everywhere you turn, there seems to be a new kind of private credit platform. Just curious how competition is shaping up there and how that may potentially be impacting pricing in any way, shape, or form, if at all?

Yes, good question, Tayo. You're right. There is a significant amount of private credit capital available. What's distinctive about our platform and what we've been focused on over the past couple of years, especially in the last few quarters, is our emphasis on residential construction lending within the multifamily and student housing sectors. We do not currently utilize any back leverage in our portfolio, which sets us apart from many private credit vehicles that have been raised, as they tend to use a lot of back leverage and typically focus on non-construction lending. Consequently, we are not experiencing a substantial impact in our niche area from the influx of private credit solutions competing with us. However, banks have become more active in the market, which has increased competition slightly. Over the past year, spreads in construction lending have narrowed by about 30 to 50 basis points, but we still view this sector as attractive, and we continue to deploy capital there at appealing risk-adjusted returns for us and our capital partners.

The only other thing I would add to what Matt just said is that we are not engaging in any unsecured financing. We are focusing entirely on secured financing, generally at 55% to 65% loans to cost with some of the top names in the country. Even though the private credit market has expanded significantly in other asset classes, all our activities are centered on real estate secured financing. The combination of our equity ownership business and debt business gives us an outstanding base of information and relationships across the entire country. In our credit business, many of the loans we are processing involve multiple borrowers with whom we have had previous loans. As Matt pointed out, nearly 50% of the loans we acquired in the Pacific Western portfolio a couple of years ago have already been paid off.

Got you. That's helpful. Second question, again, great success on the asset sale side. I know your #1 goal is to use proceeds to kind of to pay down debt and delever. But just curious, again, as you kind of take a look at the stock still trading at this very large discount to NAV, how you think about stock buybacks as part of your overall capital allocation decisions?

Yes. Well, we started in a small way in the second quarter. And I think you're making the right point. These are all just capital allocation decisions. We have $100 million left in the existing buyback program. And once we get past the bond payoff, which is slightly over $300 million, then we'll be making decisions about where we want to deploy capital. But clearly, one of the opportunities that we have is we see a big opportunity in our own stock.

Got you. That's helpful. And then one for Justin. Again, as we start to think beyond 2025, just kind of talk to us a little bit about kind of 2026 debt maturities and swap maturities and how you start thinking through addressing those?

Yes. I mean I think similar to what we've done this year is we will continue to dispose of noncore assets to free up capital to allow us to handle some of our debt maturities. In some instances, whether secured maturities, we're going to obviously go to the market and refinance them. But we'll continue to execute on our plan of noncore asset sales to delever.

I would like to emphasize that some of the larger maturities are related to assets that we plan to dispose of either this year or next year. Therefore, we are optimistic about the potential for refinancing our loans. The average rate on these maturing loans is nearly 6%, which is higher than our overall borrowing cost. Consequently, we do not anticipate a significant increase in the cost of refinancing; in fact, we expect it to align closely with the current rates we are paying.

So you're not expecting a lot of earnings dilution as a result of that?

Correct.

With no further questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Bill McMorrow for any closing remarks.

Thank you, everybody, for joining the call. And as always, we're always available to answer any other questions that might come up. So thank you. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.