Q3 2023 Kennedy-Wilson Holdings Inc Earnings Call
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Please note. This event is being recorded I would now like to turn the conference over to Devin 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 one week and by webcast for three months. Please see the Investor Relations website for more information 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 a reconciliation of the most directly comparable GAAP financial measure in our third quarter 2023 earnings release, which is posted on the Investor Relations section of our web.
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.
Yeah, Brian Thanks, very much and thank everybody for joining us this morning.
I'm very pleased and honored actually to be here with Matt Windisch.
Most of you know as the new President of Kennedy Wilson.
Bass has been together with me here at Kennedy Wilson for 17 years, we've worked together on virtually every aspect of the company during that period of time I'm also joined by Justin and body, who was recently promoted to senior executive Vice President of the company.
And as you also know has been the CFO of the company for the past 12 years.
And then here with me today also as Mike Pegler, who is the newly appointed President of Kennedy Wilson Europe.
And Mike has been with the company now going on eight years and I.
As you've heard on many of our managed much calls as the COO.
Constant in our company has been over long long periods of time, we keep the same group of people together as a company and so I'm very very honored.
To have these three people alongside me today.
So I'd like to start by outlining how Kennedy Wilson's positioned for todays market environment and highlight our strategic focus before passing it to adjusted to discuss our financial results.
Yesterday, we reported our third quarter results, which were highlighted by continued growth in our best management platform positive growth from our global multifamily same property portfolio.
And solid progress on completing and stabilizing our newly developed assets.
Be very capital grew to a record $8 2 billion in estimated annual NOI totaled 485 million as of the quarter out.
Our results were also impacted by modest noncash fair value adjustments, which Justin will discuss in a moment.
Against the backdrop of high inflation high interest rates and geopolitical issues I believe kw remains very well positioned to take advantage of the opportunities that come from these type of market dislocations.
We have a proven history of doing this over our 35 years of investing experience.
For example in June we sourced an acquired off market of $4 1 billion dollar construction loan portfolio from a regional bank at a discount representing the largest single transaction in our company's history.
This transaction was possible given our reputation in the banking industry and our ability to move with speed and certainty to get a transaction of this size closed inside of 30 days.
We were also able to do this because we could deploy a very deep bench of kw people for due diligence and underwriting of each of these walls.
These are all harm hallmarks of what difference it differentiates kw.
And positions us well to continue sourcing opportunities in todays environment.
Yeah.
This is a very similar transaction to what we did in 2011, when we purchased at a discount of $2 $2 billion of high quality loans secured by 23 assets in London, where in the end we ended up collecting 100% of the principal balances.
And as I look forward to where we think opportunities may arise, we are being very disciplined and patient on capital deployment.
I believe we are entering a period of time, though present ample opportunities across real estate capital structure and our focus remains on growing our cash flow is centered around three key sectors.
First.
We're focused on growing our global credit business. During Q3, we welcomed 40, new employees from the regional Bank I mentioned.
Who have integrated perfectly into our existing operations and considerably strengthen our lending capabilities.
We're currently one of the few active construction lenders in the U S market.
And our team has a strong pipeline of New Orleans, which is significant amount will close here in the fourth quarter.
While our credit platform today is concentrated in the U S. We're also looking to grow our credit business, primarily in the United Kingdom, and Ireland, where we think there'll be some more opportunities to generate attractive double digit unlevered returns.
Secondly, we look to selectively grow our stabilized multifamily portfolio.
In Q3, we completed our false first multifamily acquisition in nearly 18 months, where we acquired a minority position with a partner and a brand new 315 unit apartment community in suburban Seattle.
We also stabilized two projects within our 12000 unit vintage portfolio and delivered 1000 newly constructed units and the Dublin and the mountain West markets.
With another 1300 units, we expect to deliver by the middle of next year.
Our portfolio in the U S is comprised of garden style communities, 90% of which are suburban that offer a high quality lifestyle at an affordable price point.
Coupled with our best in class amenity rich portfolio located in Dublin, where occupancy sits at 98%.
We have over 33000 stabilized units.
That are 94% occupied.
With another 4000 units in development on the lease up that we expect will add $40 million to $45 million in NOI to kw once completed and stabilized.
Thirdly, we're focused on growing our industrial.
Assets under management, which today totals almost 11 million square feet.
Our leasing trends continue to remain very favorable.
We added 183000 square feet to our logistics portfolio in the quarter.
They have a number of opportunities in the us and Europe and our investment pipeline.
Including the acquisition.
About $115 million industrial property located in the Western United States, which was completed yesterday.
Importantly, we also anticipate a major reduction in development spending in 'twenty to 'twenty four.
We're in the final stages of completing a 3 billion dollar construction pipeline.
This year.
A lull and we have spent $300 million of capital on new construction and value add projects, which we anticipate going down to less than $100 million in 'twenty to 'twenty four.
We continue to remain very focused on reducing costs at both the corporate level and the property level.
With that I'd like to turn the call over our CFO, Justin antibody to discuss our financial results.
Thanks, Bill I'd like to start by covering some of the key drivers of our Q3 financial results consolidated revenues improved to $141 million with increases in hotel income investment management fees and loan income compared to Q3 of last year.
<unk>, our partnerships our share of recurring property NOI and fees totaled $131 million in the quarter, improving slightly from Q3 of 'twenty two.
Our co investment portfolio includes assets that we owned with partners, which are unconsolidated on our balance sheet and largely held at fair value.
In Q3, we saw valuations of our two plus billion dollar co investment portfolio declined by 3% or $74 million on a net basis with estimated fair values being impacted by the implied expansion in cap rates, primarily as a result of the higher interest rate environment.
Our fair value portfolio includes assets, we intend to hold long term and consistent joint ventures with well capitalized institutional partners.
We also saw lower realized gains on sale in the quarter due to lower volumes of dispositions.
Our Q3.
Asset sales included the disposition of a consolidated 200 unit multifamily community in Montana, which generated a gain of $20 million. We also completed further dispositions in our noncore retail portfolio, which now totals only 5% of our overall investment portfolio.
In total we had a Q3 GAAP net loss of 66 per share, which includes the noncash items, such as depreciation and fair value adjustments I mentioned adjusted EBITDA totaled $33 million in Q3, and $319 million for the year, which includes $74 million and $108 million of negative.
Fair value adjustments in those periods.
Looking at our balance sheet and debt profile at quarter end, we had $331 million of consolidated cash and $146 million drawn on our $500 million line of credit.
Our consolidated debt has declined by $330 million in 2023.
Our share of total debt is 100% fixed or hedged with a weighted average maturity of five four years.
As of September 30th our interest rate hedges cover $2 2 billion of notional at the 100% level with the weighted average maturity of one seven years and a weighted average strike of two 5%.
Well below today's rates.
In Q3, we collected $12 million of cash from our interest rate hedges.
Our effective interest rate of four 3% has essentially been flat for the year and reflects a 68 68 basis points of savings over the contractual rate due to our hedging strategy as I mentioned.
Our near term maturities are limited with 6% of our debt maturing by the end of next year looking at that maturity looking at that maturity detail in the U S. We have two multifamily properties that have debt maturities in Q3, and Q4 totaled $75 million.
And $38 million of maturities in our vintage housing portfolio.
We also had $50 million remaining related to a UK retail portfolio, which we've been selling down and ultimately anticipate paying off next year the.
The remainder of our maturities primarily relates to our properties that we own in Ireland, where rates are lower as seen in the 10 year Irish government bond, which currently trades at three 1%.
With that I'd now like to turn the call over to our President Matt Windisch to discuss our investment portfolio.
Justin I'm, starting with our multifamily portfolio.
This sector is our largest and represents 54% of our stabilized portfolio.
Produces $468 million of NOI of which our share is $260 million.
Globally same property multifamily revenue grew by 4% and NOI grew by approximately 3% in Q3 in the U S. We saw healthy renewal growth rates of 5% and total blended leasing spreads of 2%.
Our U S market rate portfolio ended the quarter with a loss to lease of 5%.
The strongest performance was in our largest department region, the mountain West, which generated same property NOI growth of 5%.
Our mountain West assets are diversified across states such as Colorado.
New Mexico, Utah, Arizona and Idaho.
Leading the charge in the mountain West was our new Mexico, and Colorado portfolio, which saw robust same property NOI growth of 14% and 9% respectively.
Our mountain West Portfolio's average rents total an attractive $600 and we believe these cities will continue to draw residents seeking a more affordable high quality of life.
In the Pacific Northwest, our second largest region same property NOI grew by approximately 4%. This portfolio is largely comprised of our assets in and around the Seattle region.
And benefited from increasing occupancy and a four 4% growth in revenue.
This region continues to recover as return to office mandates are driving incremental demand for rental housing.
And our California portfolio. Our results are still seeing the impacts for elevated delinquencies higher operating expenses and lower occupancy as a result of non paying tenants. We also saw the end of governmental rental assistance, which told us totaled $2 8 million and assistance for the first nine months of the year compared.
200000, thus far this year.
We are making progress recapturing units from non paying tenants, which is a positive trends we anticipate this continuing in the coming quarters.
And a headwind becoming a tailwind as we re lease these units at market rents and improve overall occupancy.
Excluding California U S market rate same property NOI grew by four 4% versus two 5%, including California.
We've completed 1100 units thus far in the year and have another 5500 units that are remaining to be renovated in the U S with 80% of those units located in the mountain West Pacific Northwest.
At our vintage housing affordable portfolio, we saw very strong revenue growth of 7% driven by increasing levels of area median income, resulting in NOI growth of 4%.
Increases in operating expenses were primarily due to higher labor and maintenance costs in the quarter, along with elevated insurance costs.
And the lease up and development portfolio for vintage we stabilized two properties totaling 424 units in the quarter.
Bringing our stabilized vintage portfolio to over 10000 units.
Looking ahead, the completion and stabilization of another 800 units and our development pipeline will grow our total portfolio to almost 12000 completed units.
As we continue to explore new prospects, we are dedicated to seeking additional growth opportunities within this venture.
In Dublin, Ireland demand for rental housing remains quite strong our portfolio is 98% occupied.
We saw same property NOI growth of four 5% driven by increasing levels of occupancy.
Dublin is one of the fastest growing populations in the EU and continues to see a structural under supply of housing.
Which bodes well for our developments in Q3, we delivered nearly 800 units at our Green and Coopers Cross developments as.
As well as adding units at our existing Sanford Lodge community.
We are extremely proud of these best in class projects, which are in prime locations.
To date leasing velocity has outperformed our expectations for example at the Grange, we're already almost half leased within 10 weeks of completion with average rents that are roughly 10% ahead of business plan.
We have another 230 units were in the midst of finishing and delivering early next year.
Which will grow our Dublin apartment portfolio.
Over 3500 stabilized units with an expected incremental $13 million in NOI <unk>.
W from the stabilization of these developments.
Now, we will shift our focus to the credit business as Bill mentioned growing our debt portfolio remains a key priority for us in Q3, we closed the final tranche of loans acquired from Pacific Western Bank for $212 million.
We also completed $252 million of additional fundings and realized 376 million and repayments, which included capturing $12 million of discounts.
Our debt portfolio totaled $6 5 billion in loan commitments, including future fundings, which has now doubled in size during 2023.
<unk> investment in the debt business currently sits at $255 million in loans outstanding.
Returns from our floating rate loan portfolio has benefited from rising base rates.
We've seen a pullback from traditional lenders and believe we are well positioned today to continue growing this business.
Since joining kw.
The new team of 40 people has been actively pursuing opportunities and we have a healthy pipeline of deals.
We closed our first loan in October with.
With a total loan size at $77 million and we have another half a dozen loans that we're expecting to close in the next few months.
Our platform has additional capacity.
To grow by approximately $2 billion based on the commitments we already have in place.
Turning to our industrial portfolio.
Fundamentals for our European industrial portfolio remains strong.
Market rents have continued to grow with average industrial rents having increased by approximately 8% in the past year.
During the quarter, we added two more assets to our EU industrial platform, which now totals $1 6 billion in AUM and as 97% leased.
Leasing transactions completed in the quarter resulted in a 66% increase in <unk>.
In place rents, which were 13% above our underwriting.
Year to date, we have completed 40 leasing transactions delivering at 55% increase in rents.
And those are coming in well above our business plan.
The strength of this strength is a result of the significant under market rents embedded in our portfolio.
Which totals 26% at quarter end we.
We look to continue capturing this mark to market over the years ahead.
We continue to have high conviction in our European logistics.
<unk> seen continued strong performance in the occupational market.
We are now able to acquire high quality assets at higher projected stabilized yields than we've seen in recent years.
Our joint venture has over $1 billion, and overcapacity and belief and we believe we will see good opportunities to deploy capital in this sector in the coming quarters.
In total our investment management platform has an incremental $3 billion of non discretionary commitments and future fundings, which we will look to deploy primarily across our debt and logistics platforms.
This should add significantly to our existing $8 2 billion in fee bearing capital, which grew by 4% in the quarter and has more than doubled in the past three years.
Turning finally to our office portfolio. Our office portfolio is primarily comprised of high quality assets located in Dublin, and the U K.
Same property revenue and NOI in our European office portfolio was largely flat in the quarter. We saw positive NOI growth in Ireland, driven by successful rent reviews offset by declines in our non core Italian portfolio.
Our stabilized portfolio in Europe, as well east to a solid roster of tenants with a weighted average lease term of eight years to exploration and occupancy of 95%.
In the U S. Our office portfolio is primarily owned through our funds and partnerships in which we have a minority position.
We have only six assets in which our ownership is greater than 50% and this represents less than 7% of our stabilized portfolio.
Globally, we completed 128000 square feet of office leasing in the quarter, bringing our year to date total to approximately 800000 square feet overall.
Overall stabilized office occupancy totaled 93% as of September 30, with that I'd like to pass it back to bill.
Matt Thank you.
In closing I'd like to highlight several important takeaways from today's call.
Number one we have an incredibly dedicated and talented global team of kw that has worked together for decades.
The best team we've ever had here.
We have limited debt maturities in 2024, all at the property level.
Justin pointed out we are a predominantly fixed rate balance sheet with long duration at a low effective borrowing rate for.
3%.
We have minimal capital requirements next year due to the near term completion of the majority of our developments, which we started many years ago.
And lastly, we have a growing credit business combined with long term institutional partners that are prepared to deploy capital in new property level of investments at the appropriate time.
With that I'd like to open it up for questions.
Okay.
Thank you.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
Our first question comes from Anthony <unk> with Jpmorgan. Please go ahead.
Alright, great. Thank you.
My first question relates to just growing the credit business and the priority. There I was wondering if you can maybe help us with some brackets to think about what the new team.
Has to originate on say like a quarterly basis to kind of keep the AUM.
Flat or to grow it because <unk> got commitments to finish up funding construction loans you are starting to get paid back and you've got the new team to originate so I'm just trying to piece it all together to get sort of order of magnitude.
Yes, Tony This is Matt happy to answer that I think one thing I'd note is within the existing portfolio that we acquired from some Pac West earlier. This year, there are future fundings and so right now we're funding almost $300 million a quarter.
On those development projects and as that.
Comes into.
It's a platform that $300 million, we don't earn fees on that so that's not part of the fee bearing capital today. So that's that's an AD. We did have a few loans that paid off as expected pretty quickly after the acquisition.
We expect that to slow down here for the next six to nine months, we don't think there'll be as many repayments just given where things are in the in the process of development.
But I can tell you the team.
Has been unbelievable in terms of their origination capability certainly beyond our expectation of what they could produce in a very short period of time.
And a lot of it has come out of existing relationships with both borrowers sub debt providers and of course, the brokerage community and so for US we don't like to set any targets in terms of what we want to originate we are only going to originate things that makes sense in terms of the risk profile and the return that worked for us in our capital partners.
That being said I mean, there theyre off to the races and were no.
On track to close you know I'd say over half a billion this year.
If everything goes according to plan and the pipeline remains extremely strong.
For us, we're really playing in the 50% to 55% loan to cost range and doing primarily residential projects. So we feel very comfortable with that risk and its a return that certainly works for our capital partners and works well for Kennedy Wilson So with.
We feel we're on a great track, but there's no specific target, but based on what the team's doing there. They are certainly growing the business at this point in time.
Okay, and then just with regards to the Pac West team. He brought over is this.
Primarily going to be originating new construction loans or do they have a broader mandate.
To do other stuff.
Yeah look I think right now, we're seeing construction lending being a very attractive area to deploy capital and that's been the primary focus but that being said the team has experience doing construction lending bridge lending subordinate debt lending. So they've got the gamut of experience about half. The team is really focused on originations about 20 of the team.
Is there a role that there's 20 people we brought on who are solely focused on asset management, which is a key component to making sure. Once we originate these loans that were monitoring them and working with our borrowers and construction things don't always go exactly. According to plans do you have to be able to do that.
Work with your borrowers and shifting around and so we've got a team that's very experienced in that area.
Half the teams focused on originations and half is on asset management.
Okay and then.
The question relates to <unk>.
The dividend and can you maybe just give us a sense of your view on on thinking about the dividend where it is capital out the door versus perhaps.
Finding other places to invest especially in a capital constrained environment Youre not a REIT you don't have to pay it so just any thoughts there.
Well I think I think told me that this is obviously something we review every quarter.
We I think the point I was trying to make with the capital expenditure spending that we've had to do really over the last 10 years.
Generally speaking these construction projects that we've been involved in which we are stabilizing at very attractive cap rates.
We're 50 50 partners with big institutional players and so when youre doing a pipeline of that level.
You've got to come up with a lot of capital every year.
I really wanted to make is that that number is declining.
Very very meaningful way starting next year, because we're completing this pipeline.
The other.
A point that I want to make is that as we continue to grow that business. We're typically a two and a half to two 5% investor in that platform.
As opposed to some of these bigger development. So we've been doing where we're a 50% owner.
So youre going to see us free up.
Cash flow and capital from.
Really the lower level of investing we're doing as a percentage of the entire capital structure.
From the capital expenditures that we've been doing.
I would say the third thing that were.
Focus on as I think any company has both at the corporate level and at the property level as the management of expenses.
And so we're we have and we continue to implement meaningful.
<unk> reductions at the corporate level.
At the property level.
So all of those things combined.
With.
The growing of the cash flows some of the isolated asset sales we're doing this.
The smaller level of capital utilization.
Give us comfort to continue paying the dividend.
Okay. Thank you.
Yeah.
Our next question comes from Josh <unk> with Bank of America. Please go ahead.
Yeah, Hey, guys, maybe just a tangential follow up on that on just with the development pipeline slowing it sounds like you'll be less active on on that front is that a function of opportunity set or a change in strategy or just like how should we think through through that.
It's not necessarily a well it isn't a change of strategy.
We just feel that there are better opportunities too when you look at these development deals.
The timeframe that you have to think about from the time you start to when you actually stabilize these assets can be as long as four years.
So we see many developing opportunities certainly in our credit business like Matt alluded to.
We've got the ability to deploy.
Tremendous amount of capital into that business, where you're getting a current return in the double digits.
No.
We're also starting to see some we've made now two equity investments those are the two only equity investments that we've really made of any magnitude in the last 18 months, we're starting to see opportunities show up there.
So the development piece, it's always the case that it runs a cycle you have higher quality, we have very very very high quality assets now that we've completed.
Generally and platforms with big Big Institutional partners, where we plan to keep these assets long term.
The the development business and the kind of cycle that we're in right now.
Really starts to show up.
As people get.
Long land positions, where discounts come into play which is something that happened for us.
Ireland.
Yeah.
During the great recession, but.
Most of the development that we've done has been on properties that were adjacent to properties that we already all boy there was existing cash flow.
So.
See you know in Ireland is really really good example of that we bought.
Property that had 420 finished units, but there was roughly another eight acres that we own that came along with that property.
Today.
We have this largest multifamily property in Ireland, we built out another 500 units approximately.
So it's a 900 unit project, but it's on the same piece of land that we bought back in 2013.
Okay that color and one more from me.
On the co investment fair value accounting could you walk us through that and then just maybe how to think about it.
As we go forward for <unk>.
On a go forward basis.
Yeah.
Soon to really answer that question, but I I would start the answer if I could just end by just saying that.
The adjustments you saw in the quarter or basically inside.
Three partnerships, where you've got.
Three institutional quality owners that have over two trillion dollars of assets under management.
So these were never out sets that were intended to be.
So there are there long term.
There are assets that we're holding for the long term, but then I would turn this over to Justin to amplify on that.
Hey, Josh.
There is about $2 billion in that investment bucket that exists that's sort of what we call fair value partnerships in every quarter. We go through the process of evaluating those investments and as you know they go up and down over time, and we've had times, where they've gone up and we've had times, where they've gone down ultimately obviously in our disclosures our goal.
As to also communicate to you the cash flows of those properties than what our long term investment plans are and so.
But I think to your point there is as I mentioned, there's about $2 billion of properties that are going to have.
Quarterly valuations attached to them and ultimately we would communicate differently if they are ever realized.
I would say to Justin.
I don't I'm not.
Uh huh.
You basically should ignore these ups and downs.
Best you can.
As I said these are assets that we plan to hold long term, but as Justin said earlier in his part.
When you've got interest rates rising.
Implied cap rates widen and so you've got to make these adjustments that are noncash in nature.
Okay. Thanks for the time guys.
Okay, and if you'd like to ask a question. Please press Star then one.
Our next question comes from <unk>, Okay.
<unk> with Deutsche Bank. Please go ahead.
Hi, yes, good afternoon, everyone.
I just wanted to stick with multifamily for a second.
The first question just around again, the California portfolio and just some of the more challenged some of the challenges going on in California.
Just kind of curious your thoughts on how you see that ultimately seeing al how soon some of these kind of.
The VIX and issues and things like that ultimately.
End up playing out and how quickly that.
Becomes less of a headwind to the portfolio.
Thanks Tayo. This is Matt Yeah, I think we're getting towards the end of it.
Still a little bit of time to go to get this all cleaned up so I think as we said in the prepared remarks, you know right now its a headwind, but I think.
The interesting part is the loss to lease on those assets in California is actually quite high and so as we are able to.
Re tenant some of those buildings.
Going to see a nice.
Leasing spread come in on those assets. So it's hard to put an exact time around it but I think it's probably another quarter or two where youll see a bit of a headwind, but I think pretty quickly you will see that become a tailwind where youll see occupancy go up and you'll see some good lease street trade outs, it's really a point in time issue I think once we get through this those properties are going to perform.
Very very well.
Over the next couple of years.
Okay. That's helpful and then on the on the development side.
But the multi portfolio again, just given a lot of the assets about to about to deliver.
Curious again, what <unk> seen in the market about the take out of your construction loans on those assets I'm just curious what.
How lenders are looking at this.
Getting more conservative button, NOI outlooks or debt service coverage ratios are getting tighter.
What could that ultimately means we're kind of like the permanent financing.
You need to get to take out the construction.
And they potentially you may even have to put in some equity or some you know some some.
Cash outlays to kind of balance all of that out.
Yeah, if you look at our overall development and lease up pipeline the overall leverage.
Roughly 33% against our gross asset value.
So we feel very comfortable like on the multifamily assets. We're finishing we started these three years ago. The rents are significantly higher than we thought obviously interest rates are up so theres a pretty good counterbalance on that.
So we think if anything it's probably going to be a net neutral maybe some ability to take cash out on some of the deals, but we don't see.
I need to really put a lot of capital and given where the market conditions are today and I think a lot.
That has to do again with with what's happened with N O wise on our projections three years ago versus where we are today. So we're very comfortable with it.
All of that whether it's rich.
For example, with the agencies.
Okay.
And if I may ask another one just around your EV.
Disclosures and.
And the NOI there just curious again just from a cap rate perspective again, a lot of your assets are pretty unique.
The markets you're doing some interesting things in affordable housing and things like that how does one kind of start thinking around thinking around kind of cap rates, we should be applying.
Some of these kind of NOI streams to kind of come up with a decent kind of any V that you own you guys like what's what's happening with cap rates. What are you seeing in some some of the key buckets.
Yeah, well I'd say look transaction volumes are obviously significantly down and I can only tell you whats happening with what we've sold so the apartment asset we sold in the quarter, we sold at just under a 5% cap rate.
And then in other cases, we're buying stuff for higher cap rates.
So it's hard to put an exact figure on it for sure.
I'd say for us.
Over the long run we have a lot of faith in the assets, we own we believe in the business plans.
Theres obviously.
Comps out there that we look at when we do our fair values and things like that so you know happy to go through that in more detail offline, but I think overall clearly theres been a increase in cap rates over the past year I think that's.
That's a fact, it's just how much are they up 25 basis points 35 basis points. That's that's harder to put your finger on it.
Say as well.
If you look at our <unk>.
Irish portfolio for example, Theres been no trades in Dublin to speak of in that in that state.
And a lot of these things we've owned for six seven years and in many cases, we've stabilized. These at cap rates that are nine or 10%. So we feel very good about the portfolio.
Got it Sir.
Then last one for me if you could indulge me.
30% of that.
That is floating rate debt penthouse caps on it again.
Several of those swaps on about one point in time, when Youre doing duration, but just kind of given this idea of kind of rates being higher for longer.
Curious, how you kind of start thinking about that.
Coming off in 2024 and 2025.
Do you, let this stuff flow do you have to put the new caps, that's going to increase.
Cost of debt around some of that debt as it as it starts to mature.
Yes, I mean for US we're as we mentioned, we're 100% hedged right now we've.
We've historically been somewhere in the range of 90% to 100%.
<unk> hedged on our portfolio. So we would definitely like to keep it within that range I think one thing.
Is that we've done a lot of sweat.
Swaps historically.
And as we're thinking about some of those swaps coming off are more likely to do caps at this point as opposed to swaps so that were.
Locking in the rate, but we're you know we're kind of fixing the cost of that hedged versus having an uncertainty around the value of the swap. So we may change the way, we hedge but I think we're still going to remain somewhere in that 90% to 100% hedged range over the next year.
Gotcha. Thank.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Bill Mcmorrow for any closing remarks.
Well, thank you everybody on the call.
As always we remain available to talk to anybody that's got any follow up questions. So have a great day. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.