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2017 Half-Year Results

4 August 2017

Half-Year results for the period ended 30 June 2017

Kennedy Wilson Europe Real Estate Plc (LSE: KWE), an LSE listed property company that invests in real estate across the UK, Ireland, Spain and Italy, today announces its unaudited half-year results for the period ended 30 June 2017 (the "Period").

  

  30 June
2017
30 June
2016
Change
(%)
Net operating income (NOI) (£m) 79.7 78.7 1.3
Net profit after taxation (£m) 54.9 78.7 -30.2
Adjusted earnings (£m) 38.9 36.2 7.5
Adjusted earnings per share (p) 30.8 26.8 14.9
DPS paid (p) 24.0 24.0 -
Quarterly DPS announced (p) 12.0 12.0 -
  30 June
20171
31 December
2016
Change
(%)
Adjusted NAV (£m)2 1,565.8 1,533.7 2.1
IFRS NAV (£m) 1,567.9 1,535.9 2.1
Adjusted NAV per share (p) 1,241.4 1,215.9 2.1
IFRS NAV per share (p) 1,243.0 1,217.6 2.1
Valuation movement (£m) 16.6 -55.93 Na
Net debt (£m) 1,234.0 1,234.8 -
Loan to value (LTV) (%) 42.4 42.8 -0.4pp

Operational highlights in the Period:

  • Portfolio value at £2,910.41 million, generating annualised topped-up NOI4 of £160.0 million across 207 properties
  • Strong asset management momentum continues, completing 76 commercial lease transactions (1.1 million sq ft), delivering an uplift over previous passing rent of 13.1% and outperforming valuers’ ERVs by 5.2%
  • Secure income underpinned by long WAULTs of 7.4 years (9.3 years to expiry) and solid portfolio occupancy of 93.6%
  • Non-core disposal programme has gained further traction, delivering £57.6 million of sales across 15 properties at a spread of 219bps over entry yield on cost; achieving a premium to book value of 6.1% and generating a return on cost of 29.5%
  • Practical completion at Pioneer Point, Ilford, saw the launch of KWE’s professionally managed PRS operation in London with 135 brand new units to let in the South tower and a best-in-class amenity offering
  • 73,000 sq ft agreement for lease with global online fashion retailer, ASOS, for a new 10-year lease; the largest letting of the year in the South East office market

Financial highlights in the Period:

  • 2.1% increase in Adjusted NAV per share to 1,241.4 pence (Dec-16: 1,215.9 pence)
  • Dividends paid of 24.0 pence per share or £30.2 million
  • Low weighted average cost of debt of 3.0%, with 93% of debt fixed or hedged
  • Debt term to maturity at 5.6 years; LTV of 42.4%, within target range of 40-45%
  • On 24 April 2017 and 13 June 2017 KWE and Kennedy-Wilson Holdings, Inc. announced the terms of a recommended merger – details can be found on KWE’s website www.kennedywilson.eu/investors/kwhi-and-kwe-proposed-merger/ The Scheme Document will be published in due course and will contain further details about the merger transaction

Post Period end achievements:

  • A further £75.0 million of non-core disposals delivered across three properties generating a premium to preceding valuation of 11.6% and a return on cost of 44.3%; bringing total disposals in H1-17 to £132.6 million across 18 properties
  • In Milan, preliminary zoning was approved for the regeneration of the Farini railway yard, which includes our Via Valtellina site as a key gateway to a significant mixed-use commercial and residential development

Charlotte Valeur, Chair of Kennedy Wilson Europe Real Estate Plc, commented:  “KWE has delivered another strong set of results over the past six months, having carefully navigated the market with solid leasing progress and capitalised on opportunistic disposals. The performance is once again underpinned by smart asset management to generate stable cash flows. As such, the Board is pleased to announce a further quarterly interim dividend of 12.0 pence per share to be paid in Q3-17.”

Mary Ricks, President and CEO of Kennedy Wilson Europe, added: “The portfolio has benefitted from big leasing wins in the first half of the year, with the team delivering £4.1 million of incremental annualised income, already beating all of 2016. We continue to deploy accretive capital expenditure through a combination of value-enhancing refurbishments and more material redevelopment opportunities to provide a pipeline of value-add initiatives to grow NOI.

“Liquidity levels remain high across the investment market for the right product. This has further enhanced our non-core disposal programme. Including post Period-end sales exchanged, we are firmly on track to meet our £150 million disposal target announced in February. I am particularly pleased with the team’s discipline in assessing disposal opportunities to ensure we meet our target returns – with a notable £636.7 million of sales since 2015, generating an average premium to book value of 7.0% and a return on cost of c. 30%.”

Footnotes:
1. Third party valuations (RICS Red Book) have been undertaken by CBRE on direct property assets (other than the Italian office portfolio which has been valued by Colliers); loan portfolios have been fair valued by Duff & Phelps, in each case at 30 June 2017
2. KWE’s Adjusted NAV per share referred to above is based on third party valuations as at 30 June 2017. The Scheme Document will contain either updated valuations reported on in accordance with Rule 29 of the Code or confirmations that the valuations referred to above continue to apply
3. Valuation movement for H2-16
4. Topped-up NOI includes expiration of rent-free periods and contracted rent steps over the next two years

Dividend

The directors of the Company have resolved to pay an interim quarterly dividend of 12.0 pence per share.

Dividend event

Declared

Ex-dividend

Record

Payment

Date

4-Aug-17

17-Aug-17

18-Aug-17

31-Aug-17 

Leavesden Park, Watford, UK (1)

Investor enquiries
Juliana Weiss Dalton, CFA
Investor Relations Director,
Kennedy Wilson Europe
+44 (0) 20 7123 5577
ir@kennedywilson.eu

Press & media enquiries 
Dido Laurimore / Tom Gough
FTI Consulting
+44 (0) 20 3727 1000
kennedywilson@fticonsulting.com