Year-end results For the year ended 31 December 2015 26 February 2016
Agenda Overview Mary Ricks, CEO Financial review Fraser Kennedy, Head of Finance Portfolio review Peter Collins, COO Summary Mary Ricks, CEO Q&A 1 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Mary Ricks 2 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Completed redevelopment of Lochside Avenue Lochside Avenue, Edinburgh (Artemis portfolio) Before After 3 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix KWE investment proposition Unlocking value of under-resourced real estate Growing income through asset management +15.3% £19.4m +12.9% NOI growth on re-letting Ahead of valuers ERV on Target incremental NOI from and lease renewals 1 re-letting and renewals 1 selected asset management Robust dividends underpinned by secure cashflows +37% 96.0% 7.3 / 9.2 Prospective 2016 2015 Occupancy 2015 WAULT (years) dividend increase (first break) / (to expiry) (48p vs 35p) Creating value through asset management and selective investing +11.5% +23.1% +5.8% 2015 valuation uplift Disposals ROC Premium to BV on (like-for-like) (to date) completed disposals Notes 1 Since IPO in February 2014 to 31 December 2015 4 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Highlights Financial Net investments 14.6% 1,175p £157.1m +11.5% £262m 17 mths Adjusted NAVPS growth Valuation uplift (like-for-like) Disposals Hold period (2015) (2015) (to date) 4.1% 35p +480% 5.8% 240bps NOI growth (like-for-like) DPS paid Exit yield Spread between (2015) (2015) (to date) YOC & exit yield 2.9% 47.9p +85% £1,136m 7.1% Cost of debt Adjusted earnings per share Acquisitions YOC (2015) (2015) (2015) 5 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Operational achievements Portfolio AM transactions £2,793m 7.3% £7.6m +69% Portfolio value Under-rented portfolio Incremental NOI from AM 2014: £1,490m (Based on 31 Dec 15 ERVs) 2014: £4.5m £211.8m +8.2% £161m 1.3m sq ft Annualised NOI (£m) Total valuation uplift AM transactions area 2014: £91m 2014: £57.9m 2014: 0.5m sq ft 233 +82% 302 96.0% +5.1pp Number of AM transactions Number of assets 1 Occupancy 2014: 128 2014: 111 2014: 90.9% Notes 1 2015: including 20 loan collateral assets; 2014: including 29 loan collateral assets 6 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Finance review Fraser Kennedy 7 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Strong NAV and earnings growth Total accounting Adjusted NAV Dividend return return per share growth +18.0% +14.6% +3.4% 2014-15 2014-15 2014-15 8 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Financial highlights Income statement 2015 2014 Net operating income (£m) 130.1 50.7 Adjusted earnings 1 (£m) 65.0 23.1 Adjusted earnings 1 (p per share) +84.9% 47.9 25.9 Dividends (p per share) 35.0 6.0 Balance sheet 2015 2014 Portfolio value (£m) 2,792.7 1,490.4 Cash (£m) 326.5 441.9 Secured debt (£m) 841.3 553.5 Unsecured debt (£m) - 594.8 LTV (%) 7.5% 39.7% Adjusted NAV 2 (p per share) 1,025.2 +14.6% 1,174.5 Notes 1 Adjusted earnings are defined as EPRA earnings adding back performance fee expense (capital in nature) 2 Adjusted NAV is defined as EPRA NAV deducting performance fee (accounted for in share-based payments reserve) 9 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Strong investment activity growing earnings 2015 part period acquisition NOI 2014 acquisition NOI 140 +130.1 120 2015 adjusted earnings (£m) +43.3 -10.9 100 -15.2 80 Dividend Cover: 1.4x +4.8 +86.8 60 -36.2 -7.6 65.0 40 47.5 35p/share 20 0 NOI Admin Investment Net Tax EPRA Adjusted Dividends NOI Admin costs Investment Net finance Tax Adjusted Adjusted Dividends costs 1 management finance adjustments earnings paid management cost Earnings Earnings Paid fee fee costs Notes 1 Admin costs include items such as administrator and adviser costs, expensed acquisition costs and legal fees 10 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix 20% quarter-on-quarter dividend increase for Q1 2016 Cumulative dividend cover 2016 Quarterly dividend paid 2015 14 1.8 12.0p Dividend cover on adjusted earnings (x) 12 1.7x 1.7 10.0p 10.0p Dividend (p per share) 10 1.6 8.0p 7.0p 8 1.5 1.5x 6 1.4x 1.4x 1.4 4 1.3 2 0 1.2 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 11 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Strong adjusted NAV per share growth driven by valuation uplift Adjusted NAV per share growth +14.6% 2014-15 12 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix 14.6% adjusted NAV per share growth Adjusted earnings £65.0m Realised gains £14.6m 1,800 +79.6 1,700 Movement in adjusted NAV (£m) +211.8 1,600 -47.5 -29.7 -4.6 1,500 1,596.5 1,400 or 1,174.5p 1,300 1,386.9 1,200 or 1,025.2p 1,100 1,000 ≈ 900 Adjusted NAV Valuation Retained Dividends Performance FX/other Adjusted NAV 31 Dec 14 surplus earnings paid fee 31 Dec 15 13 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Valuation surplus components LFL 2015 acquisitions Total £157m £55m £212m 1 +11.5% +4.5% over 7 months +8.2% Notes 1 On constant currency basis 14 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Total valuation surplus +8.2% or £212m 3,000 Valuation +55 +1,210 2,800 surplus Portfolio value contributors (£m) £212m 2,793 2,600 2,400 2,200 2,000 1,800 +157 1,600 1,400 1,528 1,490 -119 1,200 1,371 ≈ 1,000 Portfolio Net LFL LFL LFL Net Acquisition Portfolio value disposals portfolio valuation portfolio acquisitions valuation value 31 Dec 14 value surplus value surplus 31 Dec 15 31 Dec 14 31 Dec 15 15 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Long term fixed rate debt raised Term to maturity Fixed debt Total cost of debt 7.5 years 88% 3.2% Debt raised in 2015 16 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Unsecured BBB bonds 41% of total debt £351.2m £300m 32% Secured debt UK unsecured bond TTM 1 : 5.8 years TTM 1 : 7.0 years £946.0m No. of facilities: 4 Maturity: 30 June 2022 debt raised 3.35% 2 Wtd average cost: 2.96% Total cost: 31% 37% €400m (£294.8m) Euro unsecured bond UK unsecured bond TTM 1 : 10.0 years Euro unsecured bond Maturity: 12 Nov 2025 Secured debt Total cost: 3.25% Notes 1 TTM = term to maturity 2 Post cross currency swap 17 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Ensuring an efficient capital structure Term to maturity Total cost of debt LTV 5.9 years 2.9% 39.7% Dec 2015 Dec 2015 Dec 2015 18 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Well staggered debt maturities Total Term cost (years) Facilities £m Margin Fixed 58% 829.5 Na 319bps 7.7 Floating 42% 606.6 209bps 245bps 3.6 Total 100% 1,436.1 209bps 288bps 5.9 600 507.5 500 400 Debt expiry (£m) 2 year extension 296.3 options 294.8 296.3 300.0 300 200 161.7 99.0 211.2 100 70.7 2.2 0 ≈ 2016 2017 2018 2019 2020 2021 2022 2023 2025 2037 2037 Unsecured bond – Fixed Secured - Floating Secured – Floating with option extension Secured - Fixed Note: £225m RCF undrawn 19 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Efficient hedging programme Fixed interest debt Euro balance sheet FX hedging 85% 83% Dec 2015 Dec 2015 20 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Hedging reduces volatility 85% fixed interest debt 83% Euro balance sheet FX hedging Investments (properties + loans) Debt Working capital FX derivatives 1,600 58% 15% 172 1,400 Euro balance sheet at Dec 15 (€m) 85% 1,200 1,325 310 21% FX derivatives debt fixed or 1,000 hedged 925 800 27% 600 62% natural hedges 400 Fixed 200 Hedged via Interest rate cap Floating 0 Total Euro Total Euro debt & derivatives assets € 1,235m € 1,497m 21 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Overview Financial review Portfolio review Summary Appendix Pro forma financing capacity £672.2m 31 Dec PPE (£m) 2015 disposals Pro forma Cash 326.5 120.7 447.2 Undrawn facilities 225.0 225.0 Financing capacity 551.5 120.7 672.2 Total drawn debt 1,436.1 (16.8) 1,419.3 Net debt 1,109.6 (137.5) 972.1 Portfolio value 2,792.7 (137.5) 2,655.2 LTV (%) 39.7 36.6 22 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
Portfolio review Peter Collins 23 Kennedy Wilson Europe Real Estate Plc Year-end results 2015
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