Kennedy-Wilson: Value in Rental Properties
Focus: REAL ESTATE
Kennedy-Wilson Holdings (KW) is run by CEO and Chairman of the Board Bill McMorrow. Under his leadership, he built KW into a global real estate investment company, asserts Charles Mizrahi, value investing expert and editor of Park Avenue Investment Club.
When he bought the company in 1998, it only had 11 employees. And today, it has over 500 employees in 27 offices throughout the world.
KW has investments concentrated in the western U.S, United Kingdom, and Ireland. As of December 31, 2016, the company had an ownership interest in approximately 39 million square feet of property globally, including close to 26,000 multifamily rental units.
Its investments are primarily in commercial and multifamily properties. Many of its income generating assets are located in high demand areas, providing it with an enticing market to expand into.
KW’s relationship network that was built up through its legacy real estate business gives it opportunities from financial institutions for lucrative real estate deals.
McMorrow has a 12% ownership stake in KW, ensuring that his interests are aligned with shareholders. For the past 30 years, he has pivoted the business from a real estate services business to an investment company.
KW has returned capital to shareholders via dividends. And dividends have been consistently rising every year since it went public.
We started following this stock when we read the share letter from Fairfax Financial’s Prem Watsa — a great long-term investor and has been investing with McMorrow for the past seven years.
Fairfax owns 10.7% of KW (12.3 million shares). Our only regret is that we should’ve been buying when the shares were trading in the $11 range.
Our research shows that KW is trading at a price that doesn’t reflect its private market value. We continue to like KW and, if you are underinvested, we recommend adding KW to your portfolio below $21 per share.