DEF: Kennedy-Wilson Holdings Seeks Stockholder Approval for Equity Plan Amendment at 2025 Annual Meeting

Kennedy-Wilson Holdings is asking stockholders to approve an amendment to its equity participation plan to increase the number of shares available for issuance at the annual meeting on June 5, 2025.

Summary

• Kennedy-Wilson Holdings, Inc. is holding its annual meeting of stockholders on June 5, 2025, at the Beverly Wilshire Hotel in Beverly Hills, California.
• Stockholders of record as of April 15, 2025, are entitled to vote.
• The meeting will address the election of three directors, approval of an amendment to the equity participation plan, an advisory vote on executive compensation, and ratification of the appointment of KPMG LLP as the independent registered accounting firm for the 2025 fiscal year.
• The key proposal is to approve an amendment to the Companys Second Amended and Restated 2009 Equity Participation Plan to increase the number of shares of the Companys common stock that may be issued thereunder by an additional 3,400,000 shares.
• In 2024, Kennedy Wilson's real estate AUM reached a record high of $28.0 billion, and fee-bearing capital also hit a record of $8.8 billion.
• Investment management fees grew by 60% year-over-year to a record $99 million.
• The company generated $571 million from asset sales, recapitalizations, and loan repayments.
• The company completed $1.3 billion of property-level refinancings with total KW interest only increasing by $0.5 million.
• The company is asking for approval to increase the number of shares available under the equity plan by 3,400,000 shares, to a total of 24,645,000 shares.
• The Board of Directors recommends voting for the election of directors, the equity plan amendment, the advisory vote on executive compensation, and the ratification of KPMG LLP.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with record-high AUM and fee-bearing capital, significant investment management fee growth, and strategic capital recycling. However, it also acknowledges a challenging interest rate and inflationary environment, suggesting a balanced perspective.

Positives

• Record high Real Estate AUM of $28.0B.
• Record high Fee-Bearing Capital of $8.8B.
• 60% Year over year annual investment management fee growth to a record $99 million.
• $571MM cash generated from asset sales, recapitalizations and loan repayments.
• $29MM of NOI stabilized from completed developments in 2024.
• Renewed corporate line of credit with 10% upsize to $550 million.
• Completed 175 million early pay-down of Kennedy Wilson Europe bonds due November 2025.
• Completed $1.3 billion of property-level refinancings with total KW interest only increasing by $0.5 million.

Risks

• The document mentions risks related to competitive, economic, operational, financial, accounting, liquidity, tax, regulatory, foreign country, health and safety, employment, cybersecurity, and political factors.
• The document mentions that the accuracy of estimating fair value for investments cannot be determined with precision and may not be realized in a current sale or immediate settlement of the asset or liability.

Future Outlook

The company expects an additional $65 million of NOI to be generated from its development and lease-up portfolio in the near future with minimal equity commitments from the Company remaining for such projects.

Management Comments

• William J. McMorrow, Chairman and Chief Executive Officer, invites stockholders to attend the annual meeting and emphasizes the importance of their vote.

Industry Context

The document positions Kennedy Wilson as a leading real estate investment company with a unique global business model, encompassing both a growing investment management platform and a balance sheet portfolio of high-quality assets.

Comparison to Industry Standards

• The document states that traditional REITs do not provide a true comparison to Kennedy Wilson due to its global operations, diverse investment philosophy, and significant strategic capital platforms.
• Kennedy Wilson directly competes with a combination of private equity real estate companies, investment banks and sophisticated family offices, among others, in terms of deal sourcing, accessing third-party capital and the recruitment of talent.
• The company's peer group includes select asset managers who engage in meaningful real estate activity and more sophisticated REITs that either operate globally, use significant strategic capital, and/or actively develop properties.
• The 2024 peer group included Alexandria Real Estate Equities, Inc. (ARE), Blue Owl Capital Inc. (OWL), Bridge Investment Group Holdings Inc. (BRDG), DigitalBridge Group, Inc. (DBRG), Essex Property Trust, Inc. (ESS), Ladder Capital Corp (LADR), Prologis, Inc. (PLD), Rexford Industrial Realty, Inc. (REXR), SL Green Realty Corp. (SLG), UDR, Inc. (UDR), and Vornado Realty Trust (VNO).

Related Party Transactions

• The Company is party to a stock purchase agreement with certain of the Eldridge Industries Entities whereby the Company has issued shares of perpetual convertible preferred stock of the Company (the Series A Preferred Stock) in exchange for approximately $300 million in proceeds.
• Mr. Boehly also directly or indirectly has an excess of 10% equity interest in Eldridge Industries, Security Benefit Corporation and Cain International and their subsidiaries (together, the Eldridge Industries Entities), all of which are involved in transactions (KW/Eldridge Industries JVs) with the Company or its subsidiaries (KW Entities).
• In the fiscal year ended December 31, 2024, the KW Entities paid certain of the Eldridge Industries Entities a total of approximately $17.3 million in dividends related to the Series A Preferred Stock and certain of the Eldridge Industries Entities paid the KW Entities a total of approximately $3.1 million in management fees and one-time acquisition fees related to the KW/Eldridge JVs.
• Also in 2024, an Eldridge Industries Entity (an entity affiliated with Cain International (the Cain Entity)) repaid in full a partner loan (approximately 950,000) that was made to the Cain Entity in 2023 by a KW Entity.
• In addition, in 2024, the KW Entity made additional similar short-term partners loans to the Cain Entity (maturity date in March 2025 and interest rate of 20%), the balance of which was approximately 1.2 million as of December 31, 2024.
• The Company also paid certain Eldridge Industries Entities approximately $1.8 million in interest related to their respective holdings of our Bonds as discussed above.
• Mr. Burton is the President and Chief Investment Officer of HWIC, a wholly-owned subsidiary of Fairfax.
• On March 8, 2022, the Company issued to certain affiliates of Fairfax (i) 300,000 shares of Series B Preferred Stock and (ii) 13,043,478 warrants to purchase 13,043,478 shares of common stock of the Company for gross proceeds of $300 million.
• On June 16, 2023, the Company issued to certain affiliates of Fairfax (i) 200,000 shares of Series C Preferred Stock and (ii) 12,338,062 warrants to purchase 12,338,062 shares of common stock of the Company for gross proceeds of $200 million.
• In the fiscal year ended December 31, 2024, the KW Entities paid certain of the Fairfax Entities a total of approximately $26.3 million in dividends related to the Series B Preferred Stock and Series C Preferred Stock and certain of the Fairfax Entities paid KW Entities a total of approximately $27.1 million in management fees for such transactions and certain of the KW Entities paid the Fairfax Entities a total of approximately $26.7 million in interest on certain loans whereby the Company are borrowers under secured mortgages.
• During 2024, the Company held a minority, 11% beneficial ownership interest in Zonda, a technology based real estate business that offers residential construction data, of which Jeffrey Meyers owns a less than 1% beneficial ownership interest and is the chief executive officer.
• Tyler McMorrow, who is the son of William J. McMorrow, was hired as a non-executive employee of the Company's debt investment group in September of 2024. His aggregate compensation earned in 2024 was $98,940 and was comparable with other Company employees in similar positions.

Stakeholder Impact

• Approval of the equity plan amendment will allow the company to continue granting equity-based incentives to employees, which is intended to align their interests with those of stockholders and drive long-term value creation.
• The advisory vote on executive compensation provides stockholders with an opportunity to express their views on the company's executive compensation program.
• Ratification of the appointment of KPMG LLP as the independent registered public accounting firm provides stockholders with assurance regarding the integrity of the company's financial reporting.

Next Steps

• Stockholders are requested to vote on the proposals outlined in the proxy statement.
• The company will hold its annual meeting on June 5, 2025, to discuss and vote on the proposals.

Key Dates

Keywords

equity participation plan, annual meeting, executive compensation, KPMG, directors, AUM, Kennedy Wilson, shares, stockholders, vote, fees, capital