Good day, and welcome to the Kennedy-Wilson Second Quarter 2025 Earnings Call and Webcast. [Operator Instructions] 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 our financing in our credit platform. We expect this sector to grow to over…

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 quarter end, our loss to lease totaled 4.2%. I'd like to highlight a few regional stats. Starting with our Pacific Northwest portfolio. Once again, we saw the strongest NOI growth across the portfolio, totaling 5.6%. The Seattle area continues to benefit from return-to-office mandates from companies like Amazon and Starbucks. We also saw favorable real estate tax savings in the quarter. The Mountain West has begun to turn the corner on supply that is being absorbed. Our largest state in the region is Idaho, which saw an impressive 7.2% NOI growth, benefiting from higher rents, lower real estate taxes and lower insurance costs. We believe the rest of this region is set up well over the next few years as supply decreases and the region continues to benefit from offering a high-quality outdoor lifestyle that is much more affordable than higher cost states. In Southern California, our low-density, mostly suburban portfolio generated 5% NOI…

[Operator Instructions] 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?

Sure. Thanks, Bill. I'll take that one. The single-family rental housing business is really in its early days in the U.K. This market has been growing significantly in the past couple of years, but the levels of penetration are way, way, way below what you would expect in the U.K. -- in the U.S., something like 1/10 of the market penetration that you see in the U.S. market. So it's really early days. And there are a handful of parties creating this institutional model of ownership, which we think will become an established part of the U.K. rental housing market over the next few years. It really is a build-to-rent gate at the moment or at least that's what we're doing in our strategy with CPPIB and to get to where we're targeting. We're looking at buying from housebuilders at a discount. We're trying to buy maybe 100 units in each lot and trying to create these single-family rental communities on existing master plans that housebuilders are bringing forward. We think there's a huge pipeline. We think this is really scalable, and we think we can generate great returns for our partner and for ourselves. In terms of the returns we're targeting, we're probably looking at, let's say, mid-teens at the asset level. And then with the fees that we're going to generate on top of that, that's going to push it. In terms of the asset management fee, we'll probably push it into the 20s. And then hopefully, we're going to be returning significant promotes on top of that, which will send our returns up even higher over the course of our business plan. So this is something that's got a lot of focus for the European team. As Bill and Matt said, we're pushing towards hopefully being at about 2,000 homes by the end of this year, potentially further. And this initial [indiscernible] of capital by CPPIB is going to take us up to 4,000 homes. So we think then we will really be one of the most meaningful players in the U.K. market, and we think there could be further growth to go beyond that. So we're excited about the prospects of the returns that this segment of the business can be generating over the short, medium 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?

Yes. Thanks, Tony. Good question. So look, we've continued to focus on residential construction lending. And I think our track record in terms of deployment and success on the realizations would demonstrate that we're best-in-class in that space. So we are going to continue to have that be the primary focus for what we do. I think I may have alluded to this on previous calls, but we -- I think we have an opportunity to expand our lending capabilities within the residential sector to cover bridge lending and potentially some permanent lending solutions over the short to medium term. And so we do see the opportunity to expand in that space. We did announce a partnership with Tokyo a couple of quarters ago, where we're going to focus as well, primarily on residential investing within preferred equity and [ mezz ] solutions. That being said, I think there are -- we have the expertise and knowledge of other product types and the team that we brought over from Pacific Western Bank a couple of years ago, historically has been a lender to other sectors, including hospitality and industrial. So I think over time, depending on where we are in the capital structure, we certainly have the capabilities and the knowledge to deploy capital outside of housing within the credit space. I do think that housing will continue to remain the vast majority of what we do going forward though.

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 was our goal, and we've done $275 million so far. And 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, on your plan to further increase the multifamily exposure, can you get into a little detail of your preferences between affordable versus market rate in U.S. versus Europe? And kind of what -- maybe where the cap rates most attractive right now?

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 on the EUR 300 million loan repayment in October 3. Is that just when there's no longer a prepayment penalty? Or I'm just curious around the timing.

So the timing for us is -- correct, there's no prepayment penalty as well as just building the cash position to pay it down effectively. So we're in a great spot, and we're looking forward to put that behind us.

[Operator Instructions] 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. I'd say you're correct. There's obviously a lot of private credit capital out there. I think what's unique about our platform and what we've been doing in the past couple of years and in particular, the last couple of quarters is we have been -- as we've mentioned, we're focused really on residential construction lending within multifamily and student housing sectors. We don't use any back leverage currently in our portfolio. So a lot of the private credit vehicles that have been raised are utilizing a lot of back leverage and they're generally looking to do nonconstruction lending. So we're not seeing a ton of impact within our specific area right now where we're seeing a lot of private credit solutions coming in competing. That being said, the banks have definitely become more active in the market. So we are seeing a bit more competition there. And I'd say if you look over the past year or so, spreads have probably come in between 30 and 50 basis points on construction lending, but we still think it's a pretty attractive space, and we're continuing to deploy capital there at really attractive risk-adjusted returns for ourselves and for our capital partners.

The only other thing, Tayo, that I would add to what Matt just said is that we're making -- we're not doing any unsecured financing. We're doing all secured financing at generally 55% to 65% loans to cost with some of the best names in the country. And so even though the private credit market has grown substantially in these other asset classes, everything that we're doing is real estate secured financing. And the combination of our equity ownership business and the debt business gives us an incredible base of information across the entire country and relationships. When you look at our credit business, many of the loans that we're doing are multiple borrowers that we've had multiple loans to. And as I think Matt pointed out in his remarks, over -- close to 50% of the loans that we bought in the Pac Western portfolio here 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 to the -- 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, 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 just add to that, that a handful of the larger maturities are on assets that we have in our disposition plans either for this year or next year. And so we feel very, very good about the prospects for refinancing the loans we have. And the average rate on what we're maturing is it's close to 6%. So it's actually well above our average borrowing cost. And so the incremental cost to refinance is -- we don't expect to be significantly higher. In fact, we think it will be close to in line with the current rates we're paying.

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

Correct.

Thank you very much. Great momentum here.

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.