Q1 2024 Kennedy-Wilson Holdings Inc Earnings Call

Good day.

Operator: And welcome to the Kennedy-Wilson first quarter of 2024 earnings call. Please note that today's event is being recorded, and all participants will be in a listen-only mode for the duration of the call. Should you need any assistance at any time, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions, and instructions to join the queue will be provided at that time. And with that, I would now turn the call over to Daven Bhavsar. Please go ahead.

And welcome to the Kennedy Wilson first quarter of 2024 earnings call.

Operator: Please note that today's event is being recorded and all participants will be in a listen only mode for the duration of the call.

Operator: Should you need any assistance at any time, please signal conference specialist by pressing the Starkey followed by zero.

Daven Bhavsar: After today's prepared remarks, there will be an opportunity to ask questions and instructions to join the queue will be provided at that time and with that I would like to now turn the call over to Devin Bhavsar. Please go ahead.

Daven Bhavsar: 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.

Daven Bhavsar: Thank you and good morning, Thank you for joining us today.

Daven Bhavsar: 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 with me today are Bill Mcmorrow, CEO, Matt Windisch, President, Justin and Bonnie CFO and Mike Pegler President in Europe on this call, we will refer to certain non-GAAP for Nash.

Daven Bhavsar: 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 first quarter 2024 earnings release, which is posted on the Investor Relations section of our website.

Daven Bhavsar: 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 first quarter 2024 earnings release, which is posted on the Investor Relations section of our website statements made during this call may include forward looking statements actual results may materially differ.

Daven Bhavsar: 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 the 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 McMorris.

William J. McMorrow: For forward looking information discussed on this call due to the 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, Kevin. Thank you. Good morning, everybody. Thank you for joining our call.

William J. McMorrow: Devin, thank you. Good morning, everybody.

William J. McMorrow: Thank you for joining us on our call. Yesterday, we reported our results for the first quarter of 2024, which was highlighted by significant growth across our key financial metrics and positive momentum across all our business lines. Fee-bearing capital grew to a record $8.6 billion, and investment management fees increased by 94% in Q1. We also successfully completed $360 million in non-core asset distribution. These sales enhanced our liquidity by generating $236 million of cash and led to gains of $106 million in the quarter.

William J. McMorrow: Yesterday, we reported our results for the first quarter of 2024, which was highlighted by significant growth across our key financial metrics and positive momentum across all our business lines.

William J. McMorrow: Bearing capital grew to a record $8 6 billion in investment management fees increased by 94% in Q1.

William J. McMorrow: We also successfully completed $360 million of noncore asset distributions.

William J. McMorrow: These sales enhanced our liquidity by generating $236 million of cash and led to gains of $106 million in the quarter.

William J. McMorrow: Since the end of Q3 2023, we have generated $320 million of cash for KW, and we are more than halfway complete against the target announced in December 2020-2023 of $550 to $750 million, cash generation from non-core asset sales by the end of the first quarter of 2025. We've made great progress towards completing our development pipeline of $2.5 billion, including finishing two remaining projects in Dublin. We delivered over 800 new apartment units in the U.S. and Ireland in the quarter, and in total, we have 4,100 units either undergoing lease up or completing construction, which upon stabilization will add meaningfully to our estimated annual NOI. Our assets under management, at quarter end, total $25 billion.

William J. McMorrow: Since the end of Q3 2023, we've generated $320 million of cash to kw and we're more than halfway complete against Targa.

William J. McMorrow: Target announced in December of 2023 of $550 to $750 million of cash generation from noncore asset sales by the end of the first quarter of 2025.

William J. McMorrow: We've made great progress towards completing our development pipeline of $2 5 billion, including finishing two remaining projects in Dublin.

William J. McMorrow: We delivered over 800, new apartment units in the U S and Ireland in the quarter and in total we have 4100 units either undergoing lease up or completing construction.

William J. McMorrow: Which upon stabilization will add meaningfully to our estimated annual NOI.

William J. McMorrow: Our assets under management at quarter end totaled 25 billion.

William J. McMorrow: Transaction activity has picked up significantly this year, and in the first four months of the year, we completed $1.1 billion of loan originations, with another $800 million in the process of closing. $160 million of new real estate acquisitions and $450 million of dispositions, resulting in $2.5 billion in gross investment activity. Proceeds from asset sales are being recycled into our investment management business and to pay down debt and repurchase securities.

William J. McMorrow: Transaction activity has picked up significantly this year and in the first four months of the year.

William J. McMorrow: We completed $1 $1 billion of loan originations with another $800 million in the process of closing.

William J. McMorrow: 160 million of new real estate acquisitions and $450 million of dispositions.

William J. McMorrow: <unk> two $5 billion in gross investment activity.

William J. McMorrow: Proceeds from asset sales are being recycled into our investment management business and to pay down debt and repurchase securities.

William J. McMorrow: Turning to the future, we have built KW on the ability to adapt quickly in order to take advantage of changing market conditions and to invest in asset classes that create long-term value for the company. While we continue to see uncertainty across the globe because of high interest levels, high interest rate levels, and geopolitical risks, we're making great progress on the following key initiatives and goals.

William J. McMorrow: Turning to the future we have built kw on the ability to adapt quickly in order to take advantage of changing market conditions and to invest in asset classes that create long term value for the company.

William J. McMorrow: While we continue to see uncertainty across the globe because of high interest levels interest rate levels and geopolitical risks, we're making great progress on the following key initiatives and goals.

William J. McMorrow: First, we have shifted our business in a significant way to emphasize growth within our investment management platform, allowing us to grow our fee-bearing capital and resulting fee income. Over the last five years, we have grown our fee-bearing capital and fees at the rate of 30% per annum, making it the fastest-growing part of our company. We expect to continue growing our fee income at a rate of 15 to 20% over the next several years.

William J. McMorrow: First we have shifted our business in a significant way to emphasize growth within our investment management platforms, allowing us to grow our fee bearing capital and resulting fee income.

William J. McMorrow: Over the last five years, we have grown our fee bearing capital and fees at the rate of 30% per annum, making it the fastest growing part of our company.

William J. McMorrow: We expect to continue growing our fee income at a rate of 15% to 20% over the next several years.

William J. McMorrow: Our capital-wide investment management platforms are allowing us to generate above-market returns on our invested capital. Our investment focus is on three key sectors. The first is rental housing, where our portfolio now totals 60,000 units, including 22,000 units financed through our debt platform and 38,000 owned in various partnerships. There remains a structural shortage of rental housing globally, and specifically in the U.S., the United Kingdom, and Ireland, where we have built a long-term track record of acquiring, institutionally managing, and developing high-quality communities. Rental demand is being driven by the large differential between the affordability of renting versus buying, due in part to the interest rate environment.

William J. McMorrow: Our capital light investment management platforms are allowing us to generate above market returns on our invested capital.

William J. McMorrow: Our investment focus is around three key sectors first as rental housing where our portfolio now totals 60000 units, including 22000 units for enhanced through our debt platform and 38000 owned and various partnership.

William J. McMorrow: <unk>.

William J. McMorrow: There remains a structural shortage of rental housing globally, and specifically in the U S. The United Kingdom, and Ireland, where we have built a long term track record of acquiring institutionally, managing and developing high quality communities.

William J. McMorrow: Rental demand is being driven by the large differential between affordability of renting versus buying.

William J. McMorrow: Due in part to the interest rate environment.

William J. McMorrow: There has also been a significant decline in new construction starts in 2024, which over time will alleviate excess supply in virtually every growth market and enhance our ability to grow our net operating income.

William J. McMorrow: There is also a significant decline in new construction starts in 2024, which will, over time, alleviate excess supply in virtually every growth market and enhance our ability to grow our net operating income. We also believe that starting in the second half of the year, we expect increasing levels of investment opportunities that will come from debt maturities or owners who have high levels of leverage on their portfolios, many of which were acquired during the 2021 to 2022 period and financed with floating rate debt. Second, we look for continued expansion of our credit platform. Banks and non-bank lenders have largely exited the construction loan market for new developments.

William J. McMorrow: We also believe that starting in the second half of the year, we expect increasing levels of investment opportunities that will come from debt maturities.

William J. McMorrow: <unk> owners, who have high levels of leverage on their portfolios many of which were acquired during the 2021 2022 period and financed with floating rate debt.

William J. McMorrow: Second we look for continued expansion of our credit platform.

William J. McMorrow: Banks and nonbank lenders have largely exited the construction loan market for new development.

William J. McMorrow: Our focus here is on high-quality sponsors who are developing multifamily and student housing communities. We have a strong pipeline today of new potential origination opportunities that should give us ample opportunity to grow our portfolio further in 2024. As I mentioned earlier, we have either closed or are in the process of closing on loans totaling $1.9 billion, which would bring our total platform to over $8 billion. And third, we look to continue building on our existing 11 million square foot logistics platform.

William J. McMorrow: Our focus here is on high quality sponsors who are developing multifamily and student housing communities.

William J. McMorrow: We have a strong pipeline today of new potential origination opportunities that should give us ample opportunity to grow our portfolio further in 2024.

William J. McMorrow: As I mentioned earlier, we have either closed or in closing on loans totaling $1 9 billion, which would bring our total platform to over $8 billion.

William J. McMorrow: And third we look to continue building on our existing 11 million square feet foot logistics platform.

William J. McMorrow: We're evaluating a number of new opportunities in our industrial pipeline in both the U.S. and in Europe as to capital raised for our platform. We have developed very strong relationships with large global institutions located in the U.S., Canada, Europe, and across Asia.

William J. McMorrow: We are evaluating a number of new opportunities in our industrial pipeline in both the U S and in Europe.

William J. McMorrow: As to capital raised for our platforms.

William J. McMorrow: We have developed very strong relationships with large global institutions located in the U S, Canada, Europe and across Asia.

William J. McMorrow: As part of our capital raising plan and we recently reopened our office in Japan, which is a market where we have been doing business dating back to $19 94.

Justin Enbody: As part of our capital raising plan, we recently reopened our office in Japan, which is a market where we have been doing business dating back to 1994. We're continuing to see tremendous interest from our institutional partners to invest in existing high-quality multifamily properties, new construction of multifamily properties, industrial, and credit, where our investment teams could continue to find off-market opportunities to deploy significant capital into new transactions, which in turn will grow our investment management business.

Justin Enbody: We are continuing to see tremendous interest from our institutional partners to invest in existing high quality multifamily properties, new construction of multifamily properties industrial and credit.

Justin Enbody: Where our investment teams could continue to find off market opportunities to deploy significant capital into new transactions, which in turn will grow our investment management business.

Justin Enbody: The second initiative for us relates to our noncore asset sale plan as.

Justin Enbody: The second initiative for us relates to our non-core asset sale plan. As I mentioned earlier, our asset sale plan expects to generate between $550 and $750 million in cash. We have also resized our dividend rate to $0.12 a quarter, which will allow us to save $66 million annually on dividend payments. These two sources of cash will allow us to deploy capital into stock buybacks, debt reduction, and capital to grow our investment management business. With that, I'd like to turn the call over to our CFO, Justin Enbody, to discuss our financial results.

Justin Enbody: As I mentioned earlier, our asset sale plan expects to generate between $550 $750 million in cash proceeds.

Justin Enbody: We are also re sized our dividend rate to 12 a quarter.

Justin Enbody: Which will allow us to save $66 million annually on dividend payments.

Justin Enbody: These two sources of cash will allow us to deploy capital into stock buybacks debt reduction and capital to grow our investment management business.

Justin Enbody: With that I'd like to turn the call over to our CFO, Justin <unk> to discuss our financial results.

Justin Enbody: Thanks, Bill. I'll start by reviewing our financial results and then discuss our balance sheet. Consolidated revenues grew by 3% to $136 million for the quarter. Investment management revenue grew by 94% to $21 million in Q1, driven by origination fees from our debt business and higher levels of fee-bearing capital. Baseline EBITDA grew by 8% to $103 million. Additionally, in the quarter, across our co-investment portfolio, values were largely stable in Q1. As Bill mentioned, we saw an increase in asset realization activity and sold a number of non-core, wholly-owned assets in Q1, which generated $236 million of cash and $106 million of net gain on sale. In total, we had a gap net income of $0.19 per share.

Justin Enbody: Thanks, Bill I'll start by reviewing our financial results and then discuss our balance sheet Consol.

Justin Enbody: Consolidated revenues grew by 3% to $136 million for the quarter <unk>.

Justin Enbody: Investment management revenue grew by 94% to $21 million in Q1, driven by origination fees from our debt business and higher levels of fee bearing capital.

Justin Enbody: Baseline EBITDA grew by 8% to $103 million.

Justin Enbody: Additionally, in the quarter across our co investment portfolio the values were largely stable in Q1.

Justin Enbody: As Bill mentioned, we saw an increase in asset realization activity and sold a number of noncore wholly owned assets in Q1, which generated $236 million of cash and $106 million of net gain on sale.

Justin Enbody: In total we had GAAP net income of <unk> 19 per share adjusted.

Matt Windisch: Adjusted EBITDA totaled $203 million, and adjusted net income totaled $71 million, all increasing significantly from a year ago. Now, turning to our balance sheet and debt profile. At quarter end, we had $542 million of consolidated cash. We paid down our line of credit by $60 million in April, and today we have $188 million drawn on our $500 million line of credit. Our share of total debt is 98% fixed or hedged with a weighted average maturity of 5.2 years.

Justin Enbody: Adjusted EBITDA totaled $203 million and adjusted net income totaled $71 million, all increasing significantly from a year ago.

Matt Windisch: Turning to our balance sheet and debt profile.

Matt Windisch: At quarter end, we had $542 million of consolidated cash we paid down our line of credit by $60 million in April and today, we have $188 million drawn on our $500 million line of credit.

Matt Windisch: Our share of total debt is 98% fixed or hedged with a weighted average maturity of five two years.

Matt Windisch: We continue to collect cash as a result of our interest rate hedging activities, which, as a reminder, is not reflected in our financial statements as an offset to our interest. In Q1, we collected $12 million of cash, and over the last year, we've collected $45 million in cash from our interest rate hedging instrument. Our effective interest rate of 4.5% reflects a 60 basis point savings over our contractual rate due to our hedging strategy.

Matt Windisch: We continue to collect cash as a result of our interest rate hedging activities, which as a reminder is not reflected in our financial statements as an offset to our interest expense in Q1, we collected $12 million of cash and over the last year, we've collected $45 million in cash from our interest rate hedging instruments are effective.

Matt Windisch: Just rate of four 5% reflects a 60 basis point savings over our contractual rate due to our hedging strategy.

Matt Windisch: After completing a number of successful refinances in Q1, our remaining 2024 debt maturities totaling $210 million, which are all non recourse at the property level for example in Dublin, we refinanced a construction loan at one of our recently completed multifamily projects with permanent financing.

Matt Windisch: After completing a number of successful refinances in Q1, our remaining 2024 debt maturities total $210 million, which is all non-recourse at the property level. For example, in Dublin, we refinanced a construction loan at one of our recently completed multifamily projects with permanent financing, where the rate improved from 8% to 4.5% on a five-year term. We also began repurchasing stock in the quarter, totaling 1.1 million shares at an average price of $8.76. As a reminder, since 2018, we have now bought back $385 million in stock, totaling 21 million shares. We have $115 million remaining on our $500 million share repurchase authorization. With that said, I'd now like to turn the call over to our president, Matt Windisch, to discuss our investment portfolio.

Matt Windisch: The rate improved from 8% to four 5% on a five year term.

Matt Windisch: We also began repurchasing stock in the quarter totaling $1 1 million shares at an average price of $8 76.

Matt Windisch: As a reminder, since 2018, we now have bought back $385 million in stock totaling 21 million shares.

Matt Windisch: We have $115 million remaining on our $500 million share repurchase authorization.

Matt Windisch: With that I'd now like to turn the call over to our President Matt Windisch to discuss our investment portfolio.

Matt Windisch: Thanks, Justin. Over the past several years, we've made a conscious effort to prudently shift our portfolio into higher quality assets in markets and product types that we believe will outperform over the long term. Today, our stabilized portfolio totals $464 million in estimated annual NOI, with the majority of that NOI coming from multifamily properties, predominantly in the western U.S. As an example of this shift, over the past five years, retail has declined from 17% to a minor 4% today, while U.S. multifamily has grown from 39%.

Matt Windisch: Thanks, Justin over the past several years, we've made a conscious effort to prudently shift our portfolio into higher quality assets in markets and product types that we believe will outperform over the long term.

Matt Windisch: Today, our stabilized portfolio totaled $464 million in estimated annual NOI with the majority of that NOI coming from multifamily properties predominantly in the Western U S.

Matt Windisch: As an example of this shift over the past five years retail has declined from 17% to a minor 4% today, while U S multifamily has grown from 39% to.

Matt Windisch: 52% rough.

Matt Windisch: Roughly three-quarters of our NOI today is comprised of multifamily, credit, or industrial assets, which continue to be our three main areas of focus. In total, our multifamily portfolio totals 38,000 units and has grown to approximately 60% of our stabilized portfolio, producing $273 million in estimated annual NOI to KW.

Matt Windisch: Roughly three quarters of our NOI today is comprised of multifamily credit or industrial assets, which continue to be our three main areas of focus.

Matt Windisch: In total our multifamily portfolio totaled 38000 units and has grown to approximately 60% of our stabilized portfolio.

Matt Windisch: Producing $273 million in estimated annual NOI to kw.

Matt Windisch: Occupancy is strong at 94%. We have 4,100 units in our lease-up and development pipeline, which we expect to add 46 million to our estimated annual NOI at stabilization. From an operating perspective, in the U.S., same property revenue grew by 3%, operating expenses were up 5%, and NOI was up 2.5% in our market rate apartment portfolio, as we continue to see underlying fundamentals improve from year end. Looking at our results sequentially, we are seeing stable to improving operating expenses, which we are hopeful will continue for the remainder of the year. Our U.S. market rate portfolio, which is 90% suburban, saw leasing spreads of 2% and ended the quarter with a loss to lease totaling 3.5%.

Matt Windisch: Occupancy is strong at 94%.

Matt Windisch: We have 4100 units and our lease up and development pipeline, which we expect to add $46 million to estimated annual NOI at stabilization.

Matt Windisch: From an operating perspective in the U S same property revenue grew by 3%.

Matt Windisch: Operating expenses were up 5% and NOI was up two 5% and our market rate apartment portfolio as we continue to see underlying fundamentals improved from year end.

Matt Windisch: Looking at our results sequentially, we are seeing stable to improving operating expenses, which we're hopeful will continue for the remainder of the year.

Matt Windisch: Our U S market rate portfolio, which is 90% suburban saw leasing spreads of 2% and ended the quarter with a loss to lease totaling three 5%.

Matt Windisch: We have seen momentum pick up and asking rents, which have increased by approximately 4% from year end.

Matt Windisch: We've seen momentum pick up in asking rents, which have increased by approximately 4% from year end. We have also seen some very large trades in the market, highlighting the demand for the multifamily sector, which bodes well for overall transaction volumes going forward. Turning to our regional highlights, in our largest department region, the Mountain West, we saw occupancies improve by 1%, leading to revenue and NOI growth of 2%. The strongest growth came out of our Nevada and New Mexico portfolios, which saw 10% and 7% NOI growth respectively.

Matt Windisch: We are also seeing some very large trades in the market highlighting the desire for the multifamily sector, which bodes well for overall transaction volumes going forward.

Matt Windisch: Turning to our regional highlights in our largest department region in the mountain West we saw Occupancies improved by 1% leading to revenue and NOI growth of 2%.

Matt Windisch: The strongest growth came out of our Nevada, and new Mexico portfolio, which saw a 10% and 7% NOI growth respectively.

Matt Windisch: Overall, we continue to believe in these Mountain West markets, which will continue to improve as the supply picture stabilizes. Our Mountain West Portfolio's average rents are $1,600, and we believe these markets will continue to draw young workers seeking a lower-cost, affordable lifestyle with recreational opportunities. In our California portfolio, we made great progress working through delinquencies and re-leasing units, while also seeing lower levels of bad debt. This led to strong NOI growth of 4%.

Matt Windisch: Overall, we continue to believe in these mountain west markets, which will continue to improve as the supply picture stabilizes.

Matt Windisch: Our mountain West Portfolio's average rents are $600 and we believe these markets will continue to draw young workers seeking a lower cost affordable lifestyle with recreational opportunities.

Matt Windisch: And our California portfolio, we made great progress working through delinquencies and re leasing units, while also seeing lower levels of bad debt.

Matt Windisch: This led to strong NOI growth of 4%.

Matt Windisch: With our California assets currently having a loss to lease of 5%, the region is set up for further NOI growth as we work through the remaining delinquencies. Moving over to Dublin, our stabilized portfolio there sits at 98% occupied. In Q1, we completed all of our remaining developments in Ireland, and we are now in the process of leasing up approximately 1,000 units in Dublin at strong leasing velocity and at rents ahead of the business plan.

Matt Windisch: With our California assets currently having a loss to lease of 5%. The region is set up for further NOI growth as we work through the remaining delinquencies.

Matt Windisch: Moving over to Dublin, our stabilized portfolio of their sits at 98% occupied.

Matt Windisch: In Q1, we completed all of our remaining developments in Ireland and we are now in process of leasing up approximately 1000 units in Dublin.

Matt Windisch: With strong leasing velocity and at rents ahead of business plan.

Matt Windisch: We are over 50% leased as of today on these units and leases. We anticipate our newly built communities will continue to draw significant renter interest due to the overall lack of high-quality rental housing, coupled with Ireland being one of the fastest growing populations in the EU. With regard to our U.S. office portfolio, which at quarter end represents only 6% of our NOI, we successfully sold an office building in Issaquah, Washington, to an owner-occupier.

Matt Windisch: We are over 50% leased as of today on these units in lease up.

Matt Windisch: We anticipate our newly built communities will continue to draw significant renter interest due.

Matt Windisch: Due to the overall lack of high quality rental housing coupled with Ireland being one of the fastest growing populations in the EU.

Matt Windisch: With regards to our U S office portfolio, which at quarter end represents only 6% of our NOI. We successfully sold an office building in Issaquah, Washington to an owner occupier.

Matt Windisch: In addition, we have seen a pickup in leasing activity so far this year. The majority of our office portfolio is located in Dublin in the UK, where the overall leasing environment has also improved in 2020. In Q1, same property NOI increased by 1% in our European office portfolio, driven by the completion of successful rent reviews and declining operating expenses in our Irish portfolio. Stabilized occupancy remains healthy at 94%, with a weighted average lease term of 7 years to expiration and 5 years to break.

Matt Windisch: In addition, we have seen a pickup in leasing activity so far this year.

Matt Windisch: The majority of our office portfolio is located in Dublin, and the U K, where the overall leasing environment has also improved in 2024 and Q1 same property NOI increased by 1% and our European office portfolio.

Matt Windisch: Driven by the completion of successful rent reviews, and declining operating expenses in our Irish portfolio.

Matt Windisch: Stabilized occupancy remains healthy at 94% with weighted average lease term of seven years to exploration in five years to break.

Matt Windisch: Tenant interest in Dublin, and the U K is highly focused on high quality amenity rich properties with strong ESG credentials.

Matt Windisch: Tenant interest in Dublin and the UK is highly focused on high-quality, amenity-rich properties with strong ESG credentials. For example, in Dublin, our nine-property stabilized portfolio includes six assets that are fully leased, and at quarter-end, we are working on a number of inquiries for our available space in the remaining three assets, as we are seeing a significant uptick in tours. Fundamentals in our industrial portfolio remain strong, with our portfolio 98% occupied in Europe. Leasing completed in the quarter delivered a 51% increase in rent.

Matt Windisch: For example in Dublin are nine property stabilized portfolio include fixed assets that are fully leased at quarter end. We are working on a number of inquiries for our available space in the remaining three assets as we are seeing a significant uptick in tours.

Matt Windisch: Fundamentals in our industrial portfolio remained strong with our portfolio, 98% occupied and.

Matt Windisch: In Europe <unk>.

Matt Windisch: Leasing completed in the quarter delivered a 51% increase in rents.

Matt Windisch: In-place rents remain 31% below market, which allows for us to continue growing property NOI as leases mature. Looking ahead, we are very focused on our capital-light investment management platform, which is currently centered around the investment themes of rental, housing, credit, and logistics. Importantly, these platforms are structured to utilize our existing team and generate attractive returns on invested capital. For example, on our credit platform, in which we're a 2.5% investor going forward, we are able to generate attractive unlevered returns on invested capital of over 20%, including a combination of fees and interest income.

Matt Windisch: In place rents remain 31% below market, which allows for us to continue growing property NOI as leases mature.

Matt Windisch: Looking ahead, we are very focused on our capital light investment management platforms, which we are currently which are currently centered around the investment themes of rental housing credit and logistics.

Matt Windisch: Importantly, these platforms are structured to utilize our existing team and generate attractive returns on invested capital.

Matt Windisch: For example, in our credit platform, and which were a 225% investor going forward.

Matt Windisch: We are able to generate attractive unlevered returns on invested capital of over 20%, including a combination of fees and interest income.

Matt Windisch: Our debt team, which is vertically integrated from originations to servicing has capacity for significantly more AUM as we continue to see exceptional lending opportunities and look to deploy additional capital from our strategic partners.

Matt Windisch: Our debt team, which is vertically integrated from originations to servicing, has capacity for significantly more AUM as we continue to see exceptional lending opportunities and look to deploy additional capital from our strategic partners. A significant source of our third-party capital has been from large institutional insurance companies, sovereign wealth funds, and foreign investors. We're beginning to see an improving window for deployment. We saw an example of this in Q1, as we acquired two multifamily properties in the Pacific Northwest with Haseko, a new partner based in Japan.

Matt Windisch: A significant source of our third party capital has been from large institutional insurance companies sovereign wealth funds and foreign investors.

Matt Windisch: We're beginning to see an improving window for deployment.

Matt Windisch: We saw an example of this in Q1 as we acquired two multifamily properties and the Pacific Northwest with <unk>, a new partner based in Japan.

Matt Windisch: Between recent large portfolio deals, M&A activity, and reduced spreads, we are optimistic that this strengthening in liquidity will improve our ability to deploy capital at scale and enable us to continue growing the AUM and our investment management portfolio. So to summarize, we believe the combination of higher levels of recurring cash flow, lower leverage, and a lease-up-for-development, along with recycling of cash from non-core assets into high-growth platforms, sets KW up well in the near term. So with that, Operator, we can open it up for Q&A.

Matt Windisch: Between the recent large portfolio deals M&A activity and reduced spreads we are optimistic that this strengthening and liquidity will improve our ability to deploy capital at scale and enable us to continue growing the AUM in our investment management business.

Matt Windisch: So to summarize we believe the combination of higher levels of recurring cash flow lower leverage and the lease up of our development.

Matt Windisch: Along with the recycling of cash from non core assets.

Matt Windisch: Into high growth platforms, Hesitative kw up well in the near term.

Matt Windisch: With that operator, we can open it up for Q&A.

Matt Windisch: Okay.

Speaker Change: We will now begin the question and answer session.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, you may press star, then 2. At this time, we will take our first question, which will come from Anthony Paolone on behalf of J.P. Morgan. Please go ahead.

Anthony Paolone: To ask a question you May press Star then one on your telephone keypad.

Operator: If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw a question you May Press Star then two.

Anthony Paolone: At this time, we will take our first question will come from Anthony <unk> with Jpmorgan. Please go ahead.

Anthony Paolone: Yeah, thank you. So the first question is, can you talk a bit about maybe expectations for additional asset sales over the next 12 months and just any sense as to how much you might have in the market for sale now?

Anthony Paolone: Yes. Thank you.

Anthony Paolone: So the first question is can you talk a bit about maybe expectations for additional asset sales over the next 12 months and.

Anthony Paolone: Just any sense as to how much you might have in the market for sale now.

Anthony Paolone: Sure Anthony Tony This is Matt.

Matt Windisch: Sure, Anthony. Tony, this is Matt.

Matt Windisch: Yeah, so as Bill mentioned, we had a target of 550 to 750 that we announced in December that would take us through Q1 of 2025. And we're already halfway to that, and we're confident that we're going to hit that target. And so we've got several assets on the market now that we expect to sell, and several more that are in the pipeline to sell. We're definitely seeing an improvement in liquidity, as we mentioned. The transaction volumes, certainly for us and for others in the market, are stepping up from where they were last year, and so we're confident we're going to hit that target.

Matt Windisch: Yes, so as Bill mentioned, we had a target of $5 50 to 750 that we had announced in December that would take us through Q1 of 25.

Matt Windisch: And we're already halfway through that and we're confident.

Matt Windisch: So we're going to hit that target and so we've got several assets on the market now.

Matt Windisch: We expect to sell and several more that are in the pipeline to cell.

Matt Windisch: We're definitely seeing an improvement in liquidity as we mentioned the transaction volumes certainly for us and for others in the market are stepping up here.

Matt Windisch: From where they were last year and so we're confident we're going to hit that target.

Matt Windisch: I mean is there.

Matt Windisch: I mean, is there any thought towards doing more? I think probably since you put the program in place last year, if the stock has been under some pressure, you still have room for the buyback. And so I'm just trying to understand just the propensity to maybe lean more into the buyback if that liquidity is there to sell some things that you don't necessarily want to keep longer term.

Matt Windisch: Any thought towards doing more I think probably since you put the program in place last year.

Matt Windisch: The stock has been under some pressure you still have room on the buyback and so I'm just trying to understand just the propensity to maybe lean more into the buyback.

Matt Windisch: If that liquidity is there to sell some things that you don't necessarily want to keep longer term.

Speaker Change: Yes, Tony I think that's certainly a possibility like I said, we're comfortable with the target and if there is further opportunities to.

Matt Windisch: Yeah, Tony, I think that's certainly a possibility. Like I said, we're comfortable with the target. And if there's further opportunities to sell non-core assets and redeploy that into the areas we talked about, which would be our investment management business, paying down debt, and buying securities, we're definitely focused on that.

Matt Windisch: Sell non core assets and redeploy that into the areas, we talked about which would be our investment management business.

Matt Windisch: Paying down debt and buying securities, we're definitely focused on that.

Matt Windisch: Okay, and then Matt on the on the debt platform.

Matt Windisch: And then Matt, on the debt platform, the originations have been pretty strong, and you guys have done far in excess of the repayments. If we look out the next couple of years, is there a stretch of time, though, where the repayment schedule gets pretty heavy, and we have to kind of watch, you know, how to net that against, you know, what the origination picture looks like?

Matt Windisch: Originations have been pretty strong that you guys have done foreign excess of the repayments. If we look out. The next couple of years is there a stretch of time, though where the repayment schedule gets pretty heavy and we have to kind of watch.

Matt Windisch: How to net that against what the origination picture looks like.

Matt Windisch: Yes, it's a good question and obviously in that business. It's not these things are not permanent investments in so you are successful when you get repaid and so we're.

Matt Windisch: Yeah, it's a good question. And obviously, in the debt business, it's not, you know, these things are not permanent investments. And so, you're successful when you get repaid. And so we're aware of that.

Matt Windisch: Aware of that I think given the level of originations that were seeing and what we've done recently.

Matt Windisch: We don't expect to hit that that point anytime soon.

Matt Windisch: But obviously, we need to continue to originate and find opportunities to grow the platform.

Matt Windisch: With these construction loans in particular.

Matt Windisch: I think given the level of originations that we're seeing and what we've done recently, we don't expect to hit that point anytime soon. But obviously, we need to continue to originate and find opportunities to grow the platform. What you know, with these construction loans, in particular, We're not, as we originate, we don't necessarily deploy that capital right away because the equity tends to fund first. And so a lot of these newer originations, we haven't even deployed that capital into these loans yet.

Matt Windisch: We're not as we originate we don't necessarily deploy that capital right away because the equity tends to fund first.

Matt Windisch: And so a lot of these newer originations, we havent even deployed that capital into these loans yet.

Matt Windisch: And so at the volumes we're doing now, you know, certainly for the next 18 to 24 months, we feel like we can grow this business, and then we'll have to see where the opportunities are, but we're confident we'll find them.

Matt Windisch: So the volumes were doing now certainly for the next 18 to 24 months, we feel like we can.

Matt Windisch: Grow this business and then we'll have to see where the opportunities are but we're confident we'll find them.

Speaker Change: Okay and then just last question on the debt and just maturities, perhaps over the next year or two.

Matt Windisch: Okay, and then just last question on the debt and just maturities, you know, perhaps over the next year or two. I guess there are two parts. One, just any thoughts in terms of sources of funds for the maturities over the next couple years, just how you're thinking about that. And then two, any equity gaps that you anticipate on the secured side where you need to, you know, fund something there. Yeah, Tony, on the debt repayments...

Matt Windisch: <unk>.

Matt Windisch: I guess two parts one just any thoughts in terms of source of funds.

Matt Windisch: For the maturities over the next couple of years, just how youre thinking about that and then two any equity gaps.

Matt Windisch: That you anticipate on the secured side, where where you need to.

Matt Windisch: Something there.

Matt Windisch: Yes, Tony on the on the debt repayments and particularly the unsecured debt I mean, our primary source of that is going to be these asset sales like we've talked about and so we're.

Matt Windisch: Yeah, Tony, on the debt repayments, in particular, the unsecured debt, I mean, our primary source of that's going to be these asset sales, like we've talked about. And so that's one of the main reasons we're focused on this asset sale program. In terms of the secured refinances, you know, there are some that will be cash in, and there are some that will be cash out, and so we don't see it, certainly in the short term, being a significant use of capital having to pay down loans.

Matt Windisch: That's one of the main reasons, we're focused on this asset sale program.

Matt Windisch: In terms of the secured refinances.

Matt Windisch: That will be cash in and there are some that will be cash out and so we don't see it certainly in the short term being a significant <unk>.

Matt Windisch: Use of capital having to pay down loans.

Matt Windisch: On the secured side.

Tony: Okay. Thank you.

Joshua Dennerlein: And our next question will come from Joshua Dennerlein with Bank of America. Please go ahead.

Matt Windisch: And our next question will come from Joshua <unk> with Bank of America. Please go ahead.

Joshua Dennerlein: Hey guys, thanks for the time. I'm just kind of curious about the rationale for capital allocation in 1Q, which was cut the dividend, but you leaned into share repurchases. Just kind of how should we think about that on a go forward basis?

Joshua Dennerlein: Hey, guys. Thanks for the time.

Joshua Dennerlein: Just kind of curious on the rationale for capital allocation <unk>.

Joshua Dennerlein: Cut the dividend, but you leaned into share repurchases just kind of how should we think about that on a go forward basis.

Joshua Dennerlein: Yes, Josh I mean, I think it's in line with what we said I mean, I think a combination of these asset sales as well as the the resizing of the dividend will those proceeds will be used for a combination of things. So it will be growing the investment management business, where we can make 20% plus returns between the fees and.

Matt Windisch: Yeah, Josh, I mean, I think it's in line with what we said. I think a combination of these asset sales, as well as the resizing of the dividend, will use those proceeds for a combination of things. So it'll be growing the investment management business, where we can make 20% plus returns between the fees and, you know, the cash flow we're getting from the various investments. We did, you know, pay down the revolver in April.

Matt Windisch: The cash flow, we're getting off the various investments.

Matt Windisch: We did we did pay down the revolver in April.

Matt Windisch: A lot of the asset sale proceeds we generated were very back-ended in the quarter. It was really the end of March, so we really didn't have a chance to redeploy a lot of that yet. And so, and then, you know, we obviously were somewhat active on the stock buyback program in the quarter as well. So, that'll be the focus for us in Q2 as well.

Matt Windisch: The asset sale proceeds we generated were very.

Matt Windisch: Back ended in the quarter. It was really end of March. So we really didn't have a chance to redeploy a lot of that yet.

Matt Windisch: And so and then we obviously were somewhat active on the on the stock buyback program in the quarter as well so that'll be the focus for us in Q2 as well.

Matt Windisch: And then maybe just to follow up, just on the dividend resizing, how did you come to that 12 cents per share for the latest dividend? How do you guys determine what's best for setting it? Yeah, I mean, we did a deep, deep analysis.

Speaker Change: Alright, and then maybe just a follow up just on the dividend re sizing just like how did you come to that 12 cents per share.

Matt Windisch: For the latest dividend how do you guys determined what's what's best for setting it on a go forward basis.

Matt Windisch: Yeah, I mean, we did a deep analysis of this, and we looked at, obviously, the sales we had in the quarter and Q1, and then our portfolio, I'd say, is in, you know, a somewhat period of transition where we're selling assets and redeploying that into our various platforms. And so if you look at how we've grown the business over the past couple years, especially the fees, where we're now up to almost $100 million annualized, and we're growing that at over 25% over the past couple years.

Speaker Change: Yes, I mean, we did a deep deep analysis into this and we looked at obviously the sales we had in the quarter.

Matt Windisch: In Q1, and then our portfolio I'd say its somewhat a period of transition, where we're selling assets and redeploying that.

Matt Windisch: Our various platforms and so if you look at how we've grown the business over the past couple of years, especially the fees are we're now up to almost $100 million annualized and we're growing that.

Matt Windisch: Over 25% over the past couple of years.

Matt Windisch: And then you look at the development and lease-up assets, which are on track and, in many cases, performing ahead of the business plan and will be stabilized here shortly. We looked at all of that, and we anticipate having ample recurring revenue to cover the current level of our dividend while taking into account our plans to reduce leverage in the overall business. So we did a deep dive and came to this conclusion. I would say that we're very comfortable with the sustainability of this dividend going forward.

Matt Windisch: And then if you look at the development and lease up assets, which are on track and in many cases performing ahead of business plan and will be stabilized here shortly.

Matt Windisch: We looked at all of that and we anticipate having ample recurring revenue to cover.

Matt Windisch: The current level of our dividend.

Matt Windisch: Taking into account our plans to reduce leverage in the overall business.

Matt Windisch: So we did a deep dive and came to this conclusion.

Matt Windisch: I would say that.

Matt Windisch: We're very comfortable with the sustainability of this dividend going forward.

Matt Windisch: At the time.

Speaker Change: Okay. Thank you have a question you May press Star then one to join the queue.

Conor Peaks: Again, if you have a question, you may press star and then 1 to join the queue. Our next question will come from Conor Peaks with Deutsche Bank. Please go ahead.

Conor Peaks: Our next question will come from corner peaks with Deutsche Bank. Please go ahead.

Conor Peaks: Thank you.

Conor Peaks: Thank you. I guess staying on the development front, here it is quite an active quarter with over 800 units delivered. Could you speak to the leasing activity and tenant demand here and, maybe, going forward, if you could kind of talk about how you plan to use these developments and how they fit into KW's vision as investment management becomes a larger part of the business?

Conor Peaks: Staying on the development front here is quite active quarter without radar units delivered.

Conor Peaks: Could you speak to the leasing activity and tenant demand here and maybe going forward.

Conor Peaks: Talk about how you plan to use these development there and how they fit indicator of his vision his investment management becomes a larger and larger part of the business.

Conor Peaks: Yes.

William J. McMorrow: Well, I think, as Matt said, you know, we're seeing great leasing velocity at all of the assets here in the United States and in Dublin, and on the vintage platform. And I think a good example, we just finished a It's a mixed-use project that we're calling Anacapa Canyon in Camarillo, and we just finished a 310-unit market rate. We just opened it for leasing here just a couple weeks ago, and we opened a 170-unit vintage asset in that same development.

Speaker Change: Well I think as Matt said.

William J. McMorrow: We're seeing great leasing velocity is all of the assets here in the United States and in Dublin.

William J. McMorrow: And in the vintage platform.

William J. McMorrow: And I think a good example, we just finished.

William J. McMorrow: Vintage it's a mixed use project that we're calling out a kappa canyon and camera real.

William J. McMorrow: We just finished a 310 unit market rate.

William J. McMorrow: It's interesting because if you look at both of the buildings, you can't distinguish between what's senior and affordable and really what's market rate, but the vintage asset is essentially 100% leased right now in the first three months. So the thing you see in the senior and affordable business is that within two or three months of opening, they generally get to almost 100% occupancy with a waiting list. The only limiting factor is how fast you can move people in.

William J. McMorrow: We just opened up for leasing here.

William J. McMorrow: Just a couple of weeks ago, and we opened 107, new unit vintage asset in that same development.

William J. McMorrow: It's interesting because if you look at both of the buildings you really you can't distinguish between what's senior and affordable and really what's market rate, but the the vintage asset is essentially 100% leased right now in the first three months and so the thing you see in the senior and affordable business.

William J. McMorrow: Is that within two or three months of opening.

William J. McMorrow: They generally get to almost 100% occupancy with a waiting list.

William J. McMorrow: The only limiting factor is how perhaps you could move people out.

William J. McMorrow: The market rate deal there of almost 310 units in the first, month and a half or two, we've already leased about a third of the units there. And, you know, we don't count these properties in stabilization until they get to 80%, but we've got a number of buildings now that are in lease-up that are in the high 60s and low 70s, and so you're going to see them, you know, come into the stabilized platform here in the third and fourth quarter.

William J. McMorrow: The market rate deal there are almost 310 units in the first.

William J. McMorrow: Month, and a half or two we've already leased about a third of the units there.

William J. McMorrow: And.

William J. McMorrow: We're seeing we don't count.

William J. McMorrow: These properties in stabilization until they get to 80%, but we've got a number of <unk>.

William J. McMorrow: Buildings now that are in lease up that are in the high <unk> and low seven days and so youre going to see them.

William J. McMorrow: Come into the stabilized platform.

William J. McMorrow: Here in the third and fourth quarter I would also tell you that.

William J. McMorrow: I would also tell you that, pretty much overall, the leasing rates that we're achieving and these construction projects, which are brand new, are ahead of our original business plan. We have... a lot of embedded gains in these new developments. That doesn't mean that I'm telling you that we're planning on selling any, but we've really been able to do a very good job of building on-time and on-budget, very, very high-quality new properties. And then the backside of it, too, is that these brand new properties don't require capital on an annual basis like some of the older properties.

William J. McMorrow: Pretty much overall, the leasing rates that we're achieving.

William J. McMorrow: And these construction projects brand new.

William J. McMorrow: Head of our original business plan.

William J. McMorrow: We have.

William J. McMorrow: Yes.

William J. McMorrow: A lot of embedded gains in these new developments.

William J. McMorrow: That doesn't mean that I'm, telling you that were planning on selling any but.

William J. McMorrow: We've really been able to do a very good job of building on time and on budget.

William J. McMorrow: Very very high quality.

William J. McMorrow: New properties and then the backside of the two was the brand new properties don't require capital on an annual basis like some of the older properties.

William J. McMorrow: And the one other thing that I would tell you that we've done, I think, an exceptionally good job of this year has been our capital budgeting across all of our assets. And when you think about uses of cash with the construction activity basically finished at this point, and with the capital budgeting that we've done. So we're not allowing capital to be spent on any multifamily asset unless it's producing at least a 15% return on cost.

William J. McMorrow: And the one other thing that I would tell you that we've done I think an exceptionally good job of this year has been our capital budgeting across all of our assets and when you think about uses of cash with the construction activity basically.

William J. McMorrow: Finished at this point.

William J. McMorrow: And with the capital budgeting that we've done so we're not allowing capital to be spend at any multifamily asset unless it's producing at least a 15% return on cost, but when you kind of add up all of these factors that Matt went through between the dividend.

William J. McMorrow: But when you kind of add up all of these factors that Matt went through between the dividend, uh... saving us sixty six million dollars a year on our capex budget and our development commitment to development is the lowest it's been in probably five years. So, you're talking very, very meaningful amounts of money in the CapEx budget and development costs. So you have this great shift, and I think, as Matt pointed out, the last thing I would say is we're very, very focused on being capital white on all of these platforms with a real focus on growing our fee income, you know, 15 to 20, 25% a year.

William J. McMorrow: Saving of $66 million, a year, our capex budget and our development our commitment to development is the lowest it's been in probably five years.

William J. McMorrow: So youre talking very very meaningful amounts of money in the Capex budget.

William J. McMorrow: The development costs so.

William J. McMorrow: You have this great shift and then I think as Matt pointed out the last thing I would say is we're very very focused on.

William J. McMorrow: Being capital light.

William J. McMorrow: All of these platforms with a real focus on growing our fee income.

William J. McMorrow: <unk>, 2025% a year.

William J. McMorrow: And Bill, I would just add to that, you know, we have best-in-class construction teams both here in the U.S. as well as in Europe, and with a great track record. And so we're confident we can attract third-party capital, continue to build these really best in class properties, but do it, as Bill said, in a more capital-light manner. So we're really excited about continuing to grow this business, just capitalizing on it in a bit of a different way than we have. Yeah, in the past, we've either been.

Matt Windisch: And Bill I would just add to that we have best in class construction teams both.

William J. McMorrow: Here in the U S as well as in Europe.

William J. McMorrow: And with a great track record and so we're confident we can attract third party capital continue to build these really best in class properties.

William J. McMorrow: But do it as Bill said in a more capital light manner. So we're really excited about continuing to grow this business just capitalizing it.

William J. McMorrow: And a bit of a different way than we have historically.

William J. McMorrow: In the past, we've either been 100% owners of these assets, like Anacapa Canyon, or we've generally been 50% owners. But we think there's a real opportunity with the skill set that's been developed over the last 10 years in both of these. Markets in the United States and in Ireland to, you know, transition that business into acting more as a construction manager, where we have an investment in the asset, a meaningful investment, but not nearly at the levels that we've had before, where we're earning different fee streams than we have in the past.

William J. McMorrow: In the past, we've either been 100% owners of these assets like Anna Katherine Canyon.

William J. McMorrow: We've generally been 50% owners, but we think theres a real opportunity with the skill set that's been developed over the last 10 years in both of these.

William J. McMorrow: Markets, the United States, and Ireland too.

William J. McMorrow: Transition that business into <unk>.

William J. McMorrow: <unk> more as a construction manager where we have the.

William J. McMorrow: Investment in the absence of meaningful investment, but not nearly at the levels that we've had before.

William J. McMorrow: Where were earning different fee streams.

William J. McMorrow: We have in the past.

Speaker Change: Okay, Yes, and looking at the investment management business, maybe from a higher level.

Conor Peaks: Thanks. Yeah, and looking at the investment management business, maybe from a higher level, you've got the built-out team with the BackWest deal, the right-sized dividend to reinvest, and Dry Powder to put to use, and I think you've kind of partially answered this question, but how fast can this business grow, and if there are any goals or milestones you're targeting here?

Conor Peaks: Got to built out team with the <unk> deal at the right size dividend reinvest.

Conor Peaks: And dry powder to put to use thank.

Conor Peaks: Thank you kind of partially answered this question, but.

Conor Peaks: How fast can this business grow and if theres any goals or milestones you're targeting here.

Speaker Change: Well look I'll, let Matt answer that I mean, we were in what I would call it on the.

William J. McMorrow: Well, I mean, look, I'll let Matt answer that. I mean, we were in what I would call the perfect storm.

William J. McMorrow: Perfect Storm the average size loan, we're doing is approaching $80 million and Theyre generally 55% loan to cost so that requires a sponsor to have a lot of equity.

William J. McMorrow: The average size loan we're doing is approaching $80 million, and they're generally 55% loans to cost. So that requires a sponsor to have a lot of equity. And so the number of

Matt Windisch: And so the number of.

William J. McMorrow: Sponsors that can come up with that equity or are the highest tier in the in the country in the United States are really some of the best developers well cap very well capitalized and the back side of it is what we alluded to earlier, but you've got less competition in that market today.

William J. McMorrow: Sponsors that can come up with that equity are the highest tier in the country in the United States. They're really some of the best developers, well kept, very well capitalized. And the backside of it is what we alluded to earlier, that you've got less competition in that market today. I would say, and Matt might answer it slightly differently, we don't set goals in terms of deploying capital into a lending business.

William J. McMorrow: I would say and Matt might answer it slightly differently. We don't we don't set goals in terms of deploying capital into our lending business. We we look for the right opportunities.

William J. McMorrow: We look for the right opportunities with the right sponsor in an asset class. We are doing exclusively this year multifamily and student housing, pretty much. And so. It just depends on whether you've got the right opportunities to deploy capital. But, I've learned from my banking days when you start setting, you know..., you know, targets for loan Y and that's not, you don't get the best outcome.

William J. McMorrow: With the right sponsor and an asset cloud where we.

William J. McMorrow: We're doing almost exclusively we are doing exclusively this year multifamily and student housing pretty much.

William J. McMorrow: So.

William J. McMorrow: It just depends on whether the you've got the right opportunities to deploy capital.

William J. McMorrow: Learn from my banking days, when you start setting.

William J. McMorrow: Targets for loan volume, that's not you don't get the best outcome.

Matt Windisch: You know, we just add to that that it's obviously going to be opportunity driven, and we see significant opportunities in the second half of the year, continuing. We've grown the overall fees at a clip of 25% compounded over the past five years. You know, we're confident we can keep that level or do better. Assuming the opportunities exist, and we do think they exist.

Speaker Change: I would just add to that that it's obviously going to be opportunity driven and we see.

Matt Windisch: Significant opportunities in the second half of the year continuing.

Matt Windisch: We've grown the overall fees at a clip of 25% compounded over the past five years.

Matt Windisch: We're confident we can keep that level or do better.

Matt Windisch: Assuming the opportunities exist and we do think they exist.

William J. McMorrow: Matt, I don't mean to keep going on here, but I would also add that, obviously, I have a bias, but on all of our platforms, reputationally, it takes a very, very long time to build credibility for the company and for your team. And I think that because of our reputations across these types of asset classes over three decades, we just have a very big opportunity right now to grow the investment management business in a very meaningful way.

Speaker Change: And I would Matt I don't mean to keep going on here, but I would also add.

William J. McMorrow: Obviously I have a bias, but we have a best in class team.

William J. McMorrow: And bolt in all of our platforms reputation really it takes a very very long time to build credibility for.

William J. McMorrow: The company and for your teams.

William J. McMorrow: I think that the.

William J. McMorrow: <unk>.

William J. McMorrow: Because of our reputation.

William J. McMorrow: Sure.

William J. McMorrow: Across these types of asset classes over over three decades, we just we have a very big opportunity right now to grow the investment management business in a very meaningful way.

Matt Windisch: Thanks, and then maybe if I could sneak one more in here.

Conor Peaks: Thanks. And maybe I could sneak one more in here on the reduced dividends, which allows for a generally higher and better use of capital. But were there any cash flow challenges that factored into this decision? No, it was just, it's an...

Conor Peaks: The reduced dividends.

Conor Peaks: It's Alaska.

Conor Peaks: Higher and better use of capital, but are there any cash flow challenges that factored into the decision.

Conor Peaks: No. It was just it's a natural evolution of the business that we have as we've gotten bigger we have the ability to scale the business.

William J. McMorrow: No, it was just a natural evolution of the business that we have. As we've gotten bigger, we have the ability to scale the business, and I think any company in the real estate business should go up. I don't need to go through names, but they're obviously big public investment managers. You know, they tend to be capital light in terms of their investment, and we plan to scale, you know, our assets under management and our fee income at a pace where you... are going to want to have third-party capital providers.

William J. McMorrow: And I think any company in the real estate business of scale.

William J. McMorrow: I don't need to go through names, but there are obviously, a big public investment managers.

William J. McMorrow: They tend to be capital light in terms of their investment and we plan to scale.

William J. McMorrow: Our assets under management in our fee income.

William J. McMorrow: Pace where are you.

William J. McMorrow: We're going to.

William J. McMorrow: Want to have third party capital providers.

Speaker Change: Thank you.

William J. McMorrow: And that will conclude our question and answer session I would like to turn the conference back over to Bill Mcmorrow for any closing remarks.

William J. McMorrow: And that will conclude our question-and-answer session. I'd like to turn the conference back over to Bill McMorrow for any closing remarks. Well, thank you.

William J. McMorrow: Well, thank you everybody for joining us today, and as I always say, we're always available for any follow-up questions you might have. So, thank you very much.

William J. McMorrow: Well. Thank you everybody for joining us today and as I will say, we are always available for any follow up questions. You might have so thank you very much.

William J. McMorrow: Okay.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.

Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.