Kennedy-Wilson Holdings Inc (KW) 2016 Q3 法說會逐字稿

Good morning, and welcome to the Kennedy-Wilson third-quarter 2016 earnings conference call.

(Operator instructions)

Please note: this event is being recorded.

I would now like to turn the conference over to Daven Bhavsar, Director of Investor Relations. Please go ahead.

Good morning, and welcome to Kennedy-Wilson's third-quarter 2016 earnings conference call. This is Daven Bhavsar. Joining us today are Bill McMorrow, Chairman and CEO of Kennedy-Wilson; Mary Ricks, President and CEO of Kennedy-Wilson Europe; Matt Windisch, Executive Vice President of Kennedy-Wilson; and Justin Enbody, Chief Financial Officer of Kennedy-Wilson.

Today's call is being 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 section of Kennedy-Wilson's 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 the reconciliation of the most directly comparable GAAP financial measures in our third-quarter 2016 earnings release just posted on the Investor Relations section of our website.

Statements made during this conference call may also 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.

Thanks, Daven, and good morning, everyone. Thank you for joining us today.

We are pleased to have reported a strong third quarter driven by growth in recurring income across our platforms and highlighted by the performance of our multifamily business. We would like to discuss the following topics today. We will start by discussing our key financial highlights for the quarter, followed by a review of the operating performance across our real estate portfolio. Next, we will discuss our balance sheet before turning to a summary of our investment activity for the quarter. We will then give you an update on our major value-add projects that we have in progress. Finally, we will discuss our current market outlook before opening it up to your questions.

Starting off with the financial highlights for the third quarter: Adjusted EBITDA was $88 million, an increase of 6% compared to $83 million during Q3 2015. The increase in our adjusted EBITDA for the quarter was largely due to a substantial increase in our recurring cash flow year over year.

To provide a bit more detail around these results, during the third quarter of 2016 our pro-rata share of recurring NOI, property level NOI, was up by $9 million, or 17%, to $61 million.

Now I would like to review the key parts of our investment portfolio. At the end of the quarter, we had an ownership interest in 444 real estate properties. Geographically, 62% of our portfolio is in the Western US and 35% is located in Europe, which is primarily in the UK and Ireland.

In the Western US, multifamily represents our largest sector. The NOI of our multifamily portfolio continues to produce significant recurring income for the company, which is driven by our increased ownership in the portfolio coupled with the exceptional performance of our properties. For the quarter, our share of total multifamily revenues increased by 10%, and our share of NOI was up nearly 13% on a same-property basis.

Looking at some of the larger public multifamily REITs: NOI growth has averaged 5% on a same-property basis versus 13% for our portfolio. For KW our Western US portfolio, which represents 85% of our unit count, led the way. In particular, in the state of Washington, which is our largest apartment market, our portfolio saw strong same-property growth with our share of revenues up almost 11% and NOI up 15%.

Driven by job creation from some of the world's largest companies based in Washington, including Amazon, Microsoft and Starbucks to name a few, the state's population has also grown by more than 50% since 1990 to over 7 million people today. This compares to growth in the country's overall population of less than 30% over the same period. We remain bullish in our portfolio of over 10,000 units in Washington, the majority of which are in and around the city of Seattle.

Turning back to our global multifamily portfolio, which is currently 95% leased. The majority of our assets sit in or adjacent to high-growth cities such as Seattle or San Francisco with attractive underlying fundamentals. Through value-add programs, our typical communities offer upgraded units and newly amenitized common areas, but come at a substantial discount to class A CBD rents.

Our average rent per month is approximately $1.75 per square foot or $1,500 per unit across the portfolio. In total, our multifamily portfolio has almost 26,000 units and produces $276 million of annual NOI, which is up over $100 million since the beginning of 2014. Our share of that NOI is $150 million or roughly 54%. Also, we now have 8,400 units that we own 100% and that generate $96 million of NOI for Kennedy-Wilson on an annual basis.

Looking at our commercial portfolio for the quarter, occupancy grew by 1% while our share of revenues and NOI increased by 3% on a same-property basis. In particular, we saw strength in our Western US office and retail portfolio with NOI up 7% on a same-property basis.

We expect further upside in our recurring income in the commercial business as we continue to make progress across our unstabilized commercial portfolio. That portfolio is comprised of 14 properties, six in the US and eight in Europe, totaling 1.3 million square feet. While these properties are only 56% occupied, they are currently 75% leased. Over the next few quarters we will see some of these properties move into the stabilized bucket, including office properties in Marina del Rey and Beverly Hills, which will represent some of the highest rents in our entire US commercial portfolio.

Also I would like to touch on the performance of our hotel portfolio, which is now comprised of 972 keys, or rooms, across five properties, two of which are owned through KWE. This product type currently represents about 7% of our total investment portfolio. The largest component of our hotel portfolio is the Shelbourne in Dublin, Ireland, which is 100% owned by Kennedy-Wilson US.

At the Shelbourne we have seen stabilized NOI increase by 36% to $16 million over the past year. We continue to invest in this historic property, having completed a renovation of the exterior facade earlier this year, and we are currently in the process of upgrading the interiors, which will be finished by the end of next year. We expect this capital expenditures to continue to drive an increase in our ADR and NOI.

The Shelbourne is one of 15 remaining assets that we acquired in Europe prior to the formation of KWE in 2014. The remainder of our European portfolio is held through KWE, in which we own as of today 22.6% of the share capital and act as its investment manager.

Earlier this morning KWE released its third-quarter 2016 business update. The annualized NOI in KWE's portfolio as of September 30 stands at $203 million. KWE's portfolio of 265 properties is 95% occupied. During the quarter, KWE completed sales of $80 million at a 3.4% premium-to-book value, valued as of June 30, as well as completing 31 commercial leases post Brexit, which added over $2 million of incremental annualized NOI.

In September, KWE sold an additional GBP2 million of unsecured bonds maturing in 2022. The yield on those bonds 3.6%. At the end of Q3 2016 KWE's cash position stood at $625 million. Additionally in September KWE announced a share buyback of GBP100 million. As of today KWE has repurchased and retired 4.9 million shares for a total purchase price of GBP50 million.

Turning to the KW balance sheet. During the quarter, Kennedy-Wilson raised $250 million of unsecured debt maturing in 2024 with a fixed rate of 5.875%. We used the proceeds to pay off our line of credit and for general corporate purposes. We closed the quarter with nearly $300 million of cash and $475 million of availability on our undrawn revolver for a total of over $750 million of liquidity at the KW corporate level, with no corporate debt maturities for another eight years.

We also have minimal property-level debt maturities in the next couple of years. For the two largest maturities in 2017, which represent over half of our property-level debt maturities for next year, we have already received commitments and have locked rates in advance of the closing of these refinances in December and January. In total, 71% of our corporate- and property-level debt is at fixed rate and an additional 15% is hedged against long-term rate increases.

Although we have focused on building a liquidity position in the Company, we continue to find great opportunities to invest our capital both within our existing platforms and in new acquisition opportunities. During the first nine months of 2016, Kennedy-Wilson invested approximately $250 million of cash from our balance sheet. Of that, roughly half of our investment dollars went towards a combination of: KW share repurchases; KWE stock purchases, and value-add capital ex spent on our existing portfolio, where we expect to add new sources of recurring income. The other half of our investment dollars went into new acquisitions.

As part of our capital recycling program, we continue to selectively harvest gains from investments where we have completed our value-added business plan. The sales proceeds have helped us fund a combination of our CapEx programs, share purchases, as well as our property acquisitions where we have been upgrading the quality and location of our portfolio.

In total, the Company and its equity partners completed approximately $900 million in investment transactions in Q3, bringing our year-to-date total to $2.2 billion, with $1 billion of acquisitions and $1.2 billion of dispositions. For the quarter, we and our equity partners acquired $460 million of real estate, all of which is located in the Western US.

On the disposition side, together with our partners we sold $444 million of real estate. Excluding KWE's sales, KW's equity multiple on these realized investments was 2.2 times, including our share of promoted interests. For the year, we have sold $190 million of non-income producing assets, which our share is $60 million. We remain focused on reducing our non-income producing assets in the Company by either selling or creating income through asset management and construction initiatives.

Also, after the end of the quarter, we and our partners entered into separate contracts to sell five investments in the Western US, including three multifamily properties, one office property, and a residential land investment. The aggregate sales price for these transactions, if they all close, is $309 million. Additionally, the Company is currently under contract to purchase a multifamily investment in Portland for $93 million.

I would like to go into a little bit more detail on the acquisition and disposition activity of our multifamily portfolio. So far in 2016 we have now completed over $1 billion in multifamily investment transactions. On the buy side, including one deal that closed in October, we have acquired a total of $684 million across 2,800 units in which we have an average 51% ownership interest. We have also sold $325 million of multifamily assets totaling 1,240 units in which we held only a 23% average ownership.

From these transactions we are adding almost $15 million net of annualized NOI to Kennedy-Wilson which we think will grow substantially as our various value-add asset management initiatives are completed on the newly acquired properties.

Finally, I would like to discuss our major development initiatives where we continue to make great progress. Many of these projects are being built on excess land, which we originally acquired with little or no basis within or adjacent to income producing assets that we also own. This is allowing us to build below replacement costs and create new income streams at above market cap rates.

In total, we expect to invest between $150 million to $200 million of KW's cash over the next 12 to 18 months into these projects, and we are targeting a 10% to 15% annual return on that equity once these assets are stabilized. Additionally, within KWE there is CapEx of over $100 million planned over the next 12 to 18 months.

I would like to give you an update on some of our larger projects that are in progress. At the Capital Dock campus, which is being developed in the Docklands section of Dublin, Ireland and sits adjacent to our State Street office building, which is fully occupied by State Street on a lease with over 11 years remaining. We are on track to deliver the first new office building in 2017 with the project expected to be fully completed by 2019.

The south Docklands submarket currently has less than 2% vacancy for class A office space. Kennedy-Wilson has a 42.5% ownership stake in Capital Dock, which is one of the largest development projects in all of Ireland. When completed, this spectacular waterfront project will deliver a total of 690,000 square feet, including 425,000 square feet of office, 25,000 square feet of retail, and 190 multifamily units housed in a 23-story highrise. The site, which is in excess of five acres, will create a unique live-work campus environment in the heart of Dublin.

At Clancy Quay, which is situated on the southern bank of the River Liffey in Dublin, Ireland, we are building an additional apartment units on eight acres situated adjacent to an existing 423-unit apartment community that we purchased in 2013. Those 423 units are currently 97% occupied.

As part of Phase 2, we are delivering 163 units in total, including 46 units completed during the third-quarter with another 32 units expected to be completed in Q4 of 2016, and the remaining 85 units expected to be completed by Q3 of 2017. Phase 3, which is still in design, will deliver another 213 units by 2020. When completed, Clancy Quay will total almost 800 units making it one of the largest residential communities in Dublin. As an aside, we have new videos up on our website on both Capital Dock and Clancy Quay, which would be a good way for you to see the size and scale of these two projects.

In the US, we continue to build multifamily units through our Vintage Housing joint venture. Vintage, which is 62% owned by Kennedy-Wilson is engaged in the development and management of affordable housing on the West Coast with a focus on independent senior living. As of September 30, the portfolio has grown to 5,600 units across 35 properties. Additionally, Vintage has 1,300 units either in planning or under construction in Seattle and in Santa Rosa that we expect to complete over the next 12 to 30 months.

Looking ahead into 2017 and beyond, we believe that we will continue to experience global volatility, but it is important to remember a few key points. Number one, we have invested through many decades with a strong track record of creating long-term value. We remain disciplined in how we allocate our capital, investing for the long term to create value for our shareholders. Number two, with $1.6 billion of liquidity between KW and KWE, we remain well-positioned to take advantage of any market dislocations but also remain very focused on executing our business plan, which involves creating value and recurring income to asset management strategies on properties that we already own.

Finally, we have built a proprietary global network of relationships that have been cultivated over many decades, which provide us both market intelligence as well as new investment opportunities. With that, I would like to open it up to any questions.

We will now begin the question-and-answer session.

(Operator instructions)

Mitch Germain, JMP Securities.

Just curious, some of your peers on the multifamily side have been seeing indications of some headwinds. In terms of talking to the people that are working at the various properties that you own, are you seeing any patterns in terms of reduced level of showings or indications that you might be seeing some softness upcoming?

We are really not, but I think the point really to remember is just the location of our properties and the types of properties that we have invested in and own currently. Remember that generally none of our properties are located in the CBD, like downtown San Francisco where you have extremely high rents and where there clearly is flattening or slowing in rent increases.

When you think about northern California, virtually all of our apartments over 5,000 units are located in the East Bay, which is really an easy commute into downtown San Francisco, and so you are seeing people move to what are considered less expensive apartment communities. The same thing is really true in the Seattle market. Which are, on the West Coast, our two main markets.

I think, too, when you look at the US, the point we were trying to make with what is going on in the state of Washington -- up and down the West Coast, whether it is California with a population of almost 40 million people, Oregon with a population of almost 4 million people, and then Washington with a population of 7 million people -- all three of those sectors in those states are growing. Jobs are getting created, particularly in the Seattle market, where as I mentioned you've got these really great companies like Amazon that is currently building out a campus there that ultimately will encompass almost 6 million square feet of space.

It is all really driven, in our markets, by the location of our properties, where there is still a value proposition and what is happening with job growth in those locations.

Great. Over in Europe, I know you guys have a number of developments. I know you are doing a bunch of investment in your portfolio.

With regards just to the market itself, is it the holding pattern to see what happens from the political standpoint, coupled with the fact that there really has not been as much of a decline in asset values? When do you start getting comfortable putting capital to work again in M&A or acquisitions?

Again, as I was trying to outline -- you have to remember, too, Mitch, with the number of properties that we own and with some of the large capital projects that we have going on right now. Our primary focus in Europe right now is finishing those major capital programs, finishing the asset management initiatives that we have.

When you think about Europe, out of that almost 300 properties, we have 25 properties that are either undergoing major capital expenditure initiatives or where we are actually building ground up, in the case of Clancy and Capital Dock, and so that is a big part of our focus. We intentionally went into Brexit with a position that we were going to conserve our capital, see what the outcome of the vote was going to be and then make decisions as we move forward. I think the good news out of Brexit that, maybe Mary you can amplify on a little bit, is that post Brexit we have done over 30 new leases.

Commercial transactions are happening there, in terms of -- at the business level. There clearly is a difference between the bid and the ask, on acquisitions, and our strategy right now is to wait and see. Wait until we have little more clarity, which is going to take time, on what comes out of Brexit.

As I said also, we are in effect reinvesting in our own business by initiating a program to buy back almost 10 million shares of stock. We have done half of that since we announced that.

Also, in Europe in addition to all the capital expenditures, some of the portfolios we bought came with smaller properties. When I say smaller, I am talking a number of them under GBP5 million in value, and so we continue to work through those properties because they are not generally long-term holds for us. I think the good news on those properties, just as it is here in the United States, there is a very, very liquid market.

With people unable to achieve the kind of yields that they want, obviously, by keeping their money in the bank or any other place, there is a very strong desire on the parts of owners and entrepreneurs to own real estate where they can achieve returns of 3%, 4%, or 5%. For right now, in summary, we are focused on everything that we currently own.

We're focused on the capital expenditure side in Europe. We are focused on the disposition of these smaller assets and the completion of the stock repurchases while we, over time, get some clarity, hopefully, on what's going to happen here with Brexit.

Great. That's very helpful. Last one for me, I think it's, what, $309 million sale, is that the unwind of venture that you have right now?

No, these are separate properties.

Okay.

That were, in the case of the apartment units -- sorry, let me back up a second. One of the properties that we sold that is not in that five is an office building here in Southern California at 5200 Lankershim. We had a very nice profit on that deal, but the building was basically stabilized.

As we have said several times, we are not -- in KW, we're de-emphasizing the ownership of office buildings, so we sold that at a nice profit. That cash from that transaction is the money that we are using to close the $92 million apartment acquisition in Portland.

The other five sales that we are doing, three of which are multifamily assets, all of that cash is going to be recirculated into really higher-quality properties. We already, for example, I think, Matt, it is in our supplemental. We announced previously that we sold the reserve property in Federal Way, Washington.

That was a property, an older property, that we bought several years ago. We took the profit and the cash from that transaction and invested it in a building called the Equinox, which is more of a class A steel-frame construction building situated near Lake Washington with views of the lake that was built to condo specs in 2008 and 2009. We're taking profits, not only out of our office portfolio but some of these older apartment assets, and recirculating those into higher-quality assets in better locations.

Great. Thank you.

Vincent Chao, Deutsche Bank.

I just wanted to maybe touch base on the acquisitions this quarter. I think the cap rates are a little lower than we've seen. I know a lot of it is because it was all multifamily in the Western US and also skewed by LIV Bel-Red.

I'm just curious what the cap rate excluding the Bel-Red would have been? Also, can you just talk a little bit about that project and what the play is there?

I think that was a mid 5%s kind of a deal as well, but just -- or maybe low 5%s. Just curious what the opportunity is?

I'm going to let Matt answer part of that. Then the size of that acquisition was $175 million, so it is a big property, in a great location, in the Seattle market, where we believe through asset management there is real upside both in occupancy and rents. Matt, do you want to --?

Yes. If you exclude that transaction, we would've been closer to 6% cap rate for the quarter. As we've talked about before, in a lot of these apartment assets, we are buying things that have lost a lease and have upside through value-add initiatives, so our plan on all of these assets is to grow the NOI over the next several years and get them to a much higher yield.

On that one in particular, though, it's a fairly recent build, so is it just a weak initial lease-up or --?

We are in the business of owning and operating these assets -- and we know these markets very well; we have over 10,000 units in that market, so we think we will be able to really add some good leasing and asset management to that asset. A lot of times on these lease-ups there are concessions that take place that actually, in essence, lower the yield, but once those burn off and the loss of lease goes away, they stabilize at much higher yields.

Got it. Okay. On the split-out of the affordable bucket, which I guess enters the same-store pool today, it doesn't make sense to include it with the market rate since there is some caps on your rental rate growth. Can you just remind us on those deals, I think the Vintage portfolio, what the return expectations are there? Because I think that was more of a basis play than a rate growth kind of idea.

We're not anticipating substantial rent growth in that portfolio. Like you mentioned, there is caps on the rents and it is based on area median income, how those move up, so in our underwriting we do not have an expectation of high-rent growth in that portfolio.

Okay.

As far as the returns are concerned, they tend to be very high returns because they take minimal capital on our part.

Got it. Okay. Then a last question on the overall opportunity set, where do you see the best opportunities to deploy and where are you looking to reduce, if there is any geographic or property type or any other kind of risk exposure that you're looking to either add or subtract from?

We believe very strongly in this Western US market. But, we're trying to be very -- as I have said for several quarters now -- we are being very selective in the things that we buy because anything that we buy has to have, in addition to what we are buying, has to have some upside through management initiatives, whether it is building units or just better management at the property level.

We want to continue to grow our multifamily business. In the large part we are doing that by recycling capital, as I mentioned, out of these older assets. When you really think about what is happening this year, you've got very strong sources of income coming on stream -- it's starting in the latter part of 2017 and into 2018 and 2019 -- through the build out of these major capital expenditure programs that we have going on.

That's where -- when you think about building for the future, a lot of the income growth is going to come out of the build out of these larger assets.

Okay. How does Canada fit into the equation at this point?

Well, it doesn't fit in, in terms of -- at all. We do not own anything in Canada. I can tell you that for several years now we have been carefully studying the market.

I think I said going back four or five years ago, we never like to just jump into a market until we really have studied it and understand it thoroughly. Canada itself is a very attractive place to be because, similar to the United States and the UK and Ireland and other places in the world, there is a sense of a rule of law and so on and so forth.

We are studying it, but to date we haven't seen the kind of opportunities that we think we should put our capital into. It's something we have our eye on, though.

Got it. All right. Thank you.

David Ridley-Lane, BofA Merrill Lynch.

Can you update us on the progress of deploying capital at the Fund V and maybe any potential for additional US value-add funds?

Yes. We have deployed about 75% of the capital now in Fund V, which the total commitments in Fund V were roughly $500 million -- not roughly, they are $500 million. With that capital being provided with some of the biggest household names both in the endowment and pension fund world mostly here in the United States, although we have a couple of foreign investors in that fund.

We are going to be launching shortly, what I will call, Fund VI. The expectation is that we're going to raise capital in that fund that will exceed Fund V, and we have obviously had preliminary discussions with a number of the investors that are in both Fund IV and Fund V and we expect many of them to re-up into that vehicle and in some cases with upsized commitments.

Sounds good. Can you talk about the dividend policy? Since you have initiated it, it's been growing quite quickly. Do you have a guidepost in terms of the payout ratio or percentage of your current cash flow that you would target over time?

Are you talking about KW US?

Yes, KW US.

We sit down with our Board in the February timeframe, once we have had a full assessment of the year and what the future looks like. We do not layout a specific policy as far as our dividend is concerned, but it is obviously something that we will take hard look at it in February with our Board and make a decision then.

Okay. If Kennedy-Wilson were to become a bit more aggressive on disposals next year, what would be the top uses of cash flow? I ask because Kennedy-Wilson Europe has good liquidity; the acquisitions dispositions in the US are running at a pretty similar pace -- [uses of cash flow].

I would say it is almost important to predict the future in terms of where the opportunities come from. I think the point I was trying to make at the end of my formal presentation is that throughout the world -- now over 28 years that I have been here at Kennedy-Wilson and Mary over 25 years and all of the team members that we have across the globe -- we have built up a very, very strong set of relationships with financial institutions, both banks and insurance companies, and with companies that run certain fund businesses that at the end of their lives have to dispose of assets.

You never really know where the opportunities are going to come from, but I can tell you that our -- reputationally, we have just very strong reputations with, particularly, the financial institutions that we do business with. You just have to -- but I will tell you that the markets that we are in, at least in my opinion, are the most attractive markets in the world.

Given that background and given the relationships that we have built and giving the recurring cash flow we are and the cash flow that will come on from our capital expenditure programs, our whole strategy has been to keep our liquidity levels at reasonably high levels. At the same time we are executing pretty big capital expenditure programs. Not sure exactly where the next opportunity will be, but we are ready for it where ever it is.

Thank you very much.

Craig Bibb, CJS Securities.

You guys sold some land in the quarter. Is there an optimal percentage of the portfolio that should be allocated to land?

It's a small part of our investment portfolio. Generally speaking, although there are exceptions to this, the land that we are involved in has to have clear exit. By that I mean, there has to be -- even though we have an entitlement capability, both in Europe and here in the United States -- it is not something that we are trying to land bank.

We're trying to figure out ways to create value and profits and get out of. But there is no set percentage. It is a very small percentage of our total investment portfolio.

Right, and I think if you look at a lot of the land that we bought, it was part of other transactions. Like the Capital Dock project we talked about, we bought an office building and it came with a piece of land and we bought that three or four years ago. As Bill mentioned in his remarks, we are looking to certainly shrink that over the next couple of years either by selling or building on and creating long-term income.

Yes, Matt, you make a good point, just to reiterate. The eight acres that we own it Clancy Quay, when we bought that we really didn't allocate a lot of value to it because it wasn't clear at that time what would happen in that market. That eight acres, the five acres next to the State Street Bank building and so on are good examples of the land that we have ended up with.

Generally -- not generally, I would say we are much more focused on creating value out of assets that have existing cash flow.

Okay. It looks like loans are running off. Is that what we should expect until the next downturn?

Yes, when you think back to 2008 and 2009 -- and it always kind of cycles that way. The first opportunities, generally speaking, are to buy loan portfolios from the financial institutions. Those loan portfolios are bought either with the intent to just get the loans paid off at, hopefully, par or to own the asset.

As you go through a recovery cycle, as we have now really starting in 2010 and 2011, your loan portfolios, by definition, will really run down to almost zero. Obviously, when you look at what we have done over the last five or six years, it gets taken over by the equity investments that you're making in properties that are going to create long-term income for you.

Okay. At Capital Docks -- I'll look at the video after the call -- are you close to topping out there and what is the level of [tire kicking] for your office space?

Mary, do you want to answer that question?

Yes. Our core is almost completely done. We are making unbelievably good progress.

We've got -- since the costs are locked down, so feeling very good about that and we're on time with everything we're doing. I think Bill talked about in his remarks that we would have -- it would be ready for occupation mid-2018, and obviously it's a very, very good project. I think Bill said, it is the biggest project in Ireland.

We have had a lot of tours have been going on, looking at the model, talking about the market, meeting with the senior management team in Ireland. We think with Brexit, we think that presents an opportunity for us and for Capital Dock, so I would say feeling very comfortable with the level of interest right now.

To answer -- Mary, the cores are done and we are actually coming out of the ground now. I saw a picture yesterday, and we are almost at ground level and from there on up, you are going to see pretty rapid progress, now, over the next six to nine months.

I know it's early, but can you give us a ballpark on projected NOI once it's done and fully stabilized?

We have the number. I'm just not sure, Bill, how you want to handle that?

Excluding land, the total cost of build out is roughly EUR300 million. You can really pick whatever cap rates you want off of that. That's really up to you.

We have an idea where we think it is going to end up, obviously. But it is going to be a very meaningful number, once you allocate the land value and that cost number that I just said to you.

Okay.

I think that is about it. I think you've got to do your own math from there.

Okay. Matt, could you walk us through the broad strokes of the reporting change and the ownership percentages?

Sure. This is all really supplemental information, nothing at all on the financial statements. What we have now provided is our pro-rata share of NOI, in particular, across the apartment portfolio and the commercial portfolio to give a more detailed look at the cash flow we are generating to the KW shareholders.

Similarly, we're giving our pro-rata share of the debt across those two product types, so you can see -- again, from KW shareholder perspective -- what our share of the debt is. It will just give you a more detailed look at the portfolio.

Same thing with ownership, we are looking at the ownership from an NOI perspective, as opposed to balance sheet perspective, again to give better indication of what is actually being returned to the KW shareholders.

Okay. Last one, what was the IRR and the equity multiple on that November's dispositions?

Which disposition?

Subsequent to the quarter, the $309 million.

We haven't sold those. Those are not sold; they are under contract, pending closing, so we're not going to talk about the multiples or IRRs until those are done.

Too early. Okay. All right. Thanks a lot, guys.

Thanks.

This concludes our question-and-answer session. I would now like to turn the conference back over to Bill McMorrow for any closing remarks.

All right. Again, I'd like to thank everybody for joining the call. As always, we very much appreciate all of the support we receive from everybody, so thanks very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a great weekend.