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Kennedy-Wilson Holdings (NYSE:KW)
Q1 2020 Earnings Call
May 07, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome to the Kennedy Wilson first-quarter 2020 earnings conference call and webcast. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Daven Bhavsar VP of investor relations. Please go ahead.

Daven Bhavsar -- Vice President of Investor Relations

Thank you, and good morning. This is Daven Bhavsar and joining us today are Bill McMorrow, chairman and CEO of Kennedy Wilson; Mary Ricks, president of Kennedy Wilson; Matt Windisch, executive vice president of Kennedy Wilson; and Justin Enbody, chief financial officer of Kennedy Wilson. Today's call will be webcast live and will be archived for replay. The replay will be available by phone for one week and by webcast for three months.

Please see the investor relations website for more information. On this call, we will refer to certain non-GAAP financial measures including adjusted EBITDA and adjusted net income. You can find a description of these items along with the reconciliation of the most directly comparable GAAP financial measure, and our first-quarter 2020 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 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.

Bill McMorrow -- Chairman and Chief Executive Officer

Devon, thanks very much and good morning everybody, and thank you for joining us today. I hope everybody on this call and your families was doing, as well as, possible during this challenging period of time. And before I discuss the highlights from the first quarter on our outstanding rent collections in April, which Mary will discuss in greater detail. I'd really like to extend my heartfelt thanks to those sacrificing their own safety and well-being to help others through this crisis, including healthcare workers, first responders, firefighters, police officers, and many others that are bravely providing essential services around the globe.

I know you all feel this way, but they deserve our deepest gratitude and admiration. While the COVID-19 pandemic has created unprecedented challenges for all of us, I'm thankful to report that the global KW team is healthy and our communication across all parts of the company has never been better. I'd like first to comment on what we are doing to ensure our business continues to run smoothly. As we grow our company over the past three decades from one office, 11 people, and $57,000 in capital to grow a global real estate investment business, a hallmark of Kennedy Wilson has been our ability to communicate across business lines.

In March, we rolled out our remote global communications plan that allowed all of our staff to work remotely for the past two months without missing a beat. We have daily calls with our senior management team, our asset management team, our finance and cash management team, and we've increased the frequency of our board meetings to ensure that we are all on the same page and up to date on the latest global developments. In addition, we continue to be in constant dialogue with our human resources, legal, insurance, accounting, I.T., and communication teams which form the backbone of our company. I'd like to express my greatest gratitude and thanks to our employees, our board members, and their families for their tremendous and tireless contributions during the past two months. I am very certain that what we have all gone through together will make us better people and a better company should long term.

With that, to touch on our highlights for the quarter, we produced EBITDA $112 million and adjusted net income of $45 million. The quarter was highlighted by strong same property NOI growth of 5% on our multi-family portfolio, continued growth in our investment management platform, further progress on our asset sales, and good progress in our construction development pipeline. As it always has been at KW, today, it's all about capital allocation while preserving liquidity. In the quarter, we allocated $95 million of capital with 42% acquisitions, 31% capex, and 27% to share buybacks.

On the investment side in the quarter, we were a net seller as we have said over the last few years. We completed $199 billion of acquisitions in the quarter, in which our ownership interest was 13%. We sold $331 million of real estate investments, in which our ownership was 100%. The largest distribution in the quarter was Pioneer Pointe, our only multi-family asset in the United Kingdom.

We acquired this asset as a non-performing loan in 2015, and after we completed our value add Asset Management Plan, including adding 10,000 square feet of residential amenity space, we sold 294-unit asset in February at a 3.8% cap rate, which was unlevered and returned $127 million to KW. I'm pleased to report that the strong growth we saw in our investment management platform in 2019 continued into Q1 of 2020. During the quarter, we raised an additional $300 million in seed-bearing capital bringing our total to $3.3 billion. This is 80% -- this is up 83% since Q4 of 2017.

Looking ahead, given the low interest rate environment we are in globally, we currently expect our key financial partners and other investors to continue investing in high quality real estate. As a result, this will allow us continued growth in our investment management platform. By September, we'll relaunched our debt platform, where we are investing alongside our partners and unlevered debt investments secured by high quality real estate. Since going public in 2009, and primarily, as a result of the great recession, we have originated or acquired over $6 billion in real estate related debt.

We typically take 5% to 10% interest in these investments, and also earn recurring management fees. In the last nine months, we've completed $400 million in bond purchases, including $125 million loan investment that we completed in April where we are a 5% investor. When you include our management fees, we are earning double-digit unlevered returns on our capital. At quarter end, we quickly turn our attention to April.

Before Mary discusses April rent collections and leasing, it's right to give you a little context on how we began two years ago preparing for this type of loan level debts. In our past earnings calls, I've described our plans to keep higher levels of cash on hand in order to mitigate any unforeseen risks. I'm grateful to say that we started the year from a position of strength, armed with the most liquidity we've ever had in our history. We have constantly been adding to our liquidity by being a net seller these past two years.

Since January 2018, we have sold $3.1 billion of assets of which Kennedy Wilson share was $2 billion and was harvested gains of approximately $750 million to KW. These sales also included the disposal of many non-core real estate and hotel assets. More recently, our balance sheet was further strengthened by the $300 million preferred equity investments from Eldridge Industries in October of last year. This investment coincided with the expansion of our separate account platform with Eldridge as affiliate security benefit, increasing it to $1.5 billion in total asset purchase power.

In that platform, we've acquired approximately $400 million of assets to date. As of the quarter end, we have $735 million worth of cash and an additional $500 million of availability on our line of credit for a total $1.2 billion of dry powder. We also mentioned that in the middle of this volatile period, our line of credit was extended during the quarter for four more years with the option for a fifth year for improving our pricing. When you include the $600 million of cash available within our two discretionary funds, we have currently have a total of $1.8 billion in discretionary dry powder.

Additionally, we have several strategic partners who are well-positioned with billions of dollars of liquidity and a strong interest in partnering with Kennedy Wilson. Our debt maturity profile remains very favorable with $29 million maturing for the remainder of this year and $157 million maturing next year. All of our debt maturities through the next year are non-recourse secured property level financings. So we are in great financial position of having both ample liquidity and limited debt maturities.

As you may know, we have always maintained a diversified real estate portfolio both by geography and by product type, which is dominated by multi-family and office. To provide you an update on where we stand on rent collections in April and on our commercial leasing activity. I'd like to turn the call over to our President, Mary Ricks.

Mary Ricks -- President

Thanks, Bill. I'd like to start by echoing your sentiments and thank you to all of our employees, and hope everyone on the call and your families are doing well. As Bill mentioned, our two largest asset classes globally are multi-family and office, which together account for 80% of our estimated annual NOI and 87% of our April rent. Our multi-family portfolio totals 30,000 units globally and consists of high-quality communities, where we have enhanced our resident experience through offering a variety of tenant amenities.

As of quarter-end, average rents totalled $1,660 and our portfolio was 95% occupied. Close to all time highs and putting us on solid ground going into April, our on-site management teams have performed very well during this difficult time, and as a result, I'm happy to report that multi-family rent collections in April totaled 97%. And our market rate portfolio, the U.S. saw rent collections of 97% and in Ireland, we saw rent collections of 99%, and in our Vintage Housing senior and affordable apartment portfolio, we saw rent collections of 98%.

That's across the board. We saw extremely high rent collection levels in April and have a good -- very good start in May. Our office portfolio globally was 93% occupied as of quarter-end with a weighted average lease term of 6.2 years. Our top 20 office tenants include strong credit quality companies like Costco, Microsoft, Google, KPMG, State Street, The Bank of Ireland, Indeed, and the UK and Italian governments to name a few.

I am pleased to report that we collected 98% of April rent from our top 20 tenants and in total global office rent collections in April were 97%. Looking regionally, in the U.S., office rent collections were at 97%. Our top 20 office tenants account for 76% of the portfolio and we collected 98% of their April rent. In Europe, we collected 97% of our office rents.

Our top 20 tenants in Europe account for 76% of our portfolio and rent collection for the top 20 was at 98%. We're very proud of our office tenant base and fortunate to have large credit worthy tenants on long-term leases. The April rent due from our retail portfolio totaled $4.7 million. We have collected 49% with $2.4 million outstanding.

We expect smaller retail tenants to eventually utilize the various government relief programs that are available to them, and therefore, expect moderate increases in the retail collection figures. Finally, we have a small industrial portfolio in the UK with $860,000 of rent due in April, of which, we have $240,000 outstanding. So across our retail and industrial portfolio, we have only $2.6 million of ramp -- rent outstanding in April. In total, we collected 91% of our share of rents due in April across our global portfolio.

And as we look ahead, I'd like to note that the majority of our European office tenants pay their rents quarterly in advance in April. Thus, much of our rent collections in April gave us a head start in collecting May and June rent. I'd also like to touch on our robust leasing activity. We continue to see encouraging leasing data, as we pursue and complete lease extensions and renewals across our commercial portfolio.

Our office portfolio continues to be well-positioned to retain our existing tenants and attract new companies looking for high-quality space and well-located assets, priced attractively given that corporates continue to be mindful of occupancy costs. This is proved out even today with the leasing activity throughout our portfolio. Globally, we've completed lease extensions, reviews, and renewals on 60 commercial lease transactions across 493,000 square feet so far this year, which includes 83,000 square feet in April. These lease transactions had a weighted average lease term of 6.6 years, and resulted in incremental income of $6.8 million.

We have another 450,000 square feet in legals, currently across 51 lease transactions. And thus, many of our tenants are looking to secure their long-term space requirements. And again, a very encouraging sign for the strength of our tenants and for the long-term confidence in our assets. In our U.S.

multi-family portfolio, we have been rolling out new technology for prospective tenants, allowing them to take virtual tours of our assets and apply and sign leases online. By the end of next week, 100% of our U.S. market rate portfolio will have this capability, as well as, our largest Irish multi-family communities with plans to roll out to 100% of our Irish properties by the end of June. We completed 808 new leases in our U.S.

multi-family portfolio in April, a 6% increase from April 2019. 94% of these leases were completed virtually, and so, we have seen promising early traction in this exciting new virtual technology. With that, I'd like to turn the call back over to Bill.

Bill McMorrow -- Chairman and Chief Executive Officer

Thanks, Mary. Now, I'd like to update you on our major construction initiatives with a focus on our near-term projects. Most of the equity for these construction projects has been fully funded already by Kennedy Wilson. Our development and leasing initiatives are currently expected to be completed by 2024 and include 5,000 multi-family units, 2.9 million square -- commercial square feet, and one hotel.

Virtually, all of our major construction projects are 50/50 joint ventures with our strategic capital partners. And in total, we enjoy a 60% ownership in our development and leasing portfolio. We expect to spend only $20 million of cash for our capex commitments in Q2 and approximately $50 million to $75 million for the remainder of 2020. As it relates to our development in Dublin, we currently expect construction to reopen later this month.

Soon thereafter, we will finish Class C Phase 3, which totals 266 units, which is on track to be completed by the end of June. We originally acquired plants in 2014, which at the time had 423 developed Phase 1 units and 8.5 acres of undeveloped land. Phases 1 and 2 which are not complete, are currently 97% occupied and we are excited to finish the final phase, which will make it the largest apartment community in all [Inaudible] with a total of 865 units. The two Dublin office construction projects, Hanover Quay and Kildare total 133,000 square feet and we're currently on track to finish that construction next year.

The three remaining Irish projects: The Grange, Cooper's crossing, and Leisureplex are all longer-term developments we expect to complete in 2024. In the U.S., we continue to make progress on all of our developments at Santa Rosa and Northern California and Rosewood, River Point, and Clancy, Boise, Idaho which together totals 558 units. Construction has continued with minimal disruption. The completion date for Santa Rosa and Rosewood is at third quarter of 2020 and the completion date for [Inaudible] is Q1 of 2021.

We're also making great progress on our Vintage Housing developments where we acquired three new land sites in the quarter and currently have 1,800 units under construction or on lease up and another 800 units in the pipeline. In total, we were adding 2,600 units to the existing 7,400 units, as we are on track to grow the platform to 10,000 stabilized units by the end of 2022, representing an increase of 82% since we acquired the portfolio in 2015. Looking ahead, I'd like to put this crisis in context of what we've experienced these last 32 years at Kennedy Wilson. With the current crisis marks the sixth major economic traction that I have gone through in my career, starting with 1988 to '83 period, which had a 21% prime interest rate and high inflation, the 1990 to 1993 savings and loan crisis, the 2000 collapse of the dotcom bubble, the economic fallout from the horrific events of September 11th, 2001, and of course, the most recent, the Great Recession.

In each of these moments, Kennedy also mobilized. In 1994, we opened the first Kennedy Wilson office in Japan that ultimately led to the IPO of Kennedy Wilson Japan on the Tokyo Stock Exchange in 2002. In 2000, we lost our funds management business, and during the Great Recession, we went public on the NYSE. A year later, we entered Europe for the first time, which led to our $1.7 billion IPO in 2014, the second-largest real estate IPO in the history of the London Stock Exchange.

And after the dislocation caused by Brexit in the summer of 2016, we acquired the remaining 76% of Kennedy Wilson, that we did not already own that closed in October of 2017. But we all know that each crisis has a beginning and eventually an end. While the timing is currently difficult to predict, this one will be no different. In challenging times, it's extremely important that you have four key components: long recurring cash flow, excess liquidity, strong joint venture partners, and the same team of people that have serve -- that have been successfully working together over a long period of time.

Today, I'm grateful to say we have all four. We have a very high-quality real estate portfolio with best in class developments that we will finish over the next four years. We have the most liquidity we've had since going public and we have very well capitalized partners alongside us, who themselves have significant liquidity. We have a senior management team that has decades of experience working together through many cycles, and the team has a proven track record in investing during periods of opportunity.

We also continue to benefit from having the leadership of our board of directors. The most recent addition to our board was Todd Boehly who joined in March. Todd is co-founder and chairman of Eldridge Industries, a diversified investment company with assets under management of $40 billion. I'm honored to have fought on our board, for we were able to tap his extensive experience and knowledge.

While 2020 will undoubtedly present unknown challenges, I believe we are well-positioned financially, while all at the same time, we also plan to leverage our extensive experience and deal sourcing relationship network into uncovering new opportunities. The Kennedy Wilson team is ready for any challenge and I'm confident that together, we will emerge out of this a stronger company. So with that Daven, I'd like to open it up to any questions.

Questions & Answers:


Operator

Thank you. [Operator instructions] First question today comes from Anthony Palone with JP Morgan. Please go ahead.

Anthony Palone -- J.P. Morgan -- Analyst

Yeah, thanks. Good morning, everybody. My first question.

Bill McMorrow -- Chairman and Chief Executive Officer

Hi.

Anthony Palone -- J.P. Morgan -- Analyst

Hi. Just bigger picture given your track record and everything you have seen over the years. What's your thought process on on where cap rates go or what change in property values look like coming out of this?

Bill McMorrow -- Chairman and Chief Executive Officer

Yeah. Well, I think before I answer that question directly, you know, you got a kind of frame at least where we see the company, and then, I'll get to your question. I would start by saying that we're early in this whole process. I mean, I think anybody that is an investor is early in this process.

Because as everybody knows, this whole pandemic in this location only started two months ago. And so, there's always a lag time between when opportunities show up and when you're actually ready to invest. And when you think about what happened during the Great Recession, when we went to -- starting in Ireland, we made our first trip there in 2010 and it was all it was 10 months later that we made our first investment there. But what I would say is, that when you think about Kennedy Wilson, we're in a very, very different spot today than we were at during the Great Recession and in the following sense.

We have more of our own liquidity, as I already went through, than we had back then. And we had many more capital partners but -- so a lot of those capital partners during that period of time actually had their own financial issues. And so, we had to spend a lot of time cultivating new third-party financial partners and you know create deal flow. And at the core of our operation, has always been the extensive relationships that we have with financial institutions all over the world, that we've worked on for 30-plus years, whether it's here in the United States or in Europe over the last 10 years or in Japan, as I mentioned.

And I think, that what you would believe -- what you would hear from most of the financial institutions that we do business with is, that we're an extremely reliable counterparty. In other words, we do exactly what we say we're going to do. And the last thing I will say before I answer your question is, that the people that we have in the company now, they've all gone through -- the exact management team that we have today, all went through the experience of going through the Great Recession, whether it was in the United States or in Europe. And so, you can't discount what experience means in this period of time.

I think as far as -- and I've said this on calls now. I think, at least for the last couple of years, Tony, that having a perspective of global investment platform and having been in Japan now for over close to 30 years. I believed that we were going to stay and actually opt for a low interest rate environment for a long period of time before these events that happened in the last two months. And so, when you look at the various asset classes that people were investing over a long period of time, not looking at one stretch of 90 days or six months, you're going to have, in my opinion, you're going to have low interest rates that ultimately are going to be followed by lower cap rates.

And so -- but there's going to be a period of time here where, as everybody well knows, the banks have taken major reserves. And so, there is going to be a period of time where there was a dislocation in the process which is, although I'm sensitive, extremely sensitive to this one. That's what will create the opportunities out of the financial institutions. But I believe long term, rates are going to stay low and cap rates are going to stay low, and they're -- at this time, they're -- even though they're still -- even with all of the, I would say, terrible economic news that we see coming from every direction, there is still a lot of liquidity and a strong desire for people to invest in real estate.

I think, one of the things that we really should have said in addition to our internal communication, we've been very outward reaching in the last two months, whether that's done to our shareholder base or to our partners. And we've been in constant communication with our major partners, assessing with them, you know, where we see things going directionally. I would tell you that all of our partners that we did business with and when you really look through all of our platforms, it's not just the insurance companies that we have a separate account partners. We've got major household names in both of our funds that have separate account capability.

So -- but you've got to -- you've got to be patient during these period of times. You can't just, you know, start jumping into the market. So, I hope I answered that question. It was long winded but I wanted to give you a little background.

But specifically, I think, you're going to see over the longer term that low interest rates, we're going to see cap rate compression.

Operator

The next question comes from Sheila McGrath with Evercore. Please go ahead.

Sheila McGrath -- Evercore ISI -- Analyst

Yes, good morning. I wanted to get a little bit more information on the Pioneer Pointe disposition because you did mention that you do see some loan investment opportunities. If you can just remind us. I think that was a loan investment opportunity, loan to own, and how that ended up in terms of the IRR to Kennedy Wilson.

Bill McMorrow -- Chairman and Chief Executive Officer

Well, Mary, do you want to take Sheila through the history on that transaction?

Mary Ricks -- President

Sure. Hi, Sheila.

Hi, Mary.

So that deal came from -- we bought that from a German Bank and you were right to remember. That was -- that was a loan deal. That was really in the period in Europe that we -- we were buying a lot of debt and that was a deal that we did off market and German Bank had to get rid of the asset. That asset its two towers: one was completely closed at the time and one was just partially rented.

And so what we did is, we took title to the asset which was somewhat complex. But I think as you know, much of our team has a lot of background and have been lenders in the past. So, you know, in terms of an opportunity set in terms of buying debt, and then, taking titled real estate, that's something that we know how to do. And so, we took titles of the real estate, and then, we went ahead and open the other tower and did whatever improvements we needed to do, and put a whole amenity block on the ground floor which is kind of a KW signature.

Make sure we're offering a sort of best in class multi-family and a little bit unique to to the U.K. and really European multi-family asset class. So, we put all of our amenities in place, and then, we went ahead and did a lease up and we let it up very, very well. And the team did a great job and it was stabilized and we sold it on, and I think, the next buyer will do well as well.

It's a really good asset.

Sheila McGrath -- Evercore ISI -- Analyst

And what --

Mary Ricks -- President

The IRR --

Sheila McGrath -- Evercore ISI -- Analyst

Yeah. Go ahead.

Mary Ricks -- President

I mean, you saw the low cap rate. I mean, I think the IRR would have to have been in the -- probably mid-20s. I'd have to get back to you on the specific number, but it was an excellent return for KW.

Sheila McGrath -- Evercore ISI -- Analyst

OK. Great. And I just wondered, Bill, maybe you could comment on your bigger picture thoughts on the office sector with everybody home right now. And any update on -- WeWork as far as paying rent and the plans at your London property.

Bill McMorrow -- Chairman and Chief Executive Officer

Yeah. Yeah. I'm going to let Mary talk about WeWork, which is very, very small part of our office portfolio in a second. But as far as the office is concerned, you know, and there's obviously a lot of discussion going on that now that everybody's worked remotely, that you're going to see a diminished need for office space.

And you know, having -- I listened to all of that, Sheila, in 2000. When the tech bubble happened, what was going on in the tech world at that time, including the big accounting firms. I remember like yesterday. They were all talking about how they were going to all work remotely.

And I think, the two social things that relate to office space that can't be underestimated is the need for human contact. And the fact that it's logistically -- it's not easy to work at home when you've got other distractions. And I know in our own company, one of the things that we've had to be sensitive to in this period of time is that we've got a lot of younger families in the company that all have younger kids at home now aren't going to school. And so, that presents its own set of distractions, and then, finding a place that you can actually work in your house.

And so, my belief is that they'll be a little bit of a -- I would say they'll be extended discussions of this topic. But I think over the long term, it's really not going to amount to anything. And I do think that there has also not been a tremendous amount of office overbuilding in the markets that we're in. And so, I don't see any -- over the long term, I don't see any reduction in the amount of office space that people are going to have.

People, for the last, I'd say, five years, maybe longer, have been reconfiguring their space into more open, open spaces with less emphasis on the private office functions and I don't see that changing at all. You know, while respecting all the things that we're all going to have to respect when we go back to work. I think for a period of time, most companies are going to leave it to the individual employees to decide in their own mind, what they want to do as far as the office or working remotely. And we're obviously going to have to respect the whole new social distancing issues.

But long term, I think, that the office market's going to be just fine in the good markets. And I would say sure too, before I turn to Mary. That's the other big difference in our company is that we weren't established in a lot of the markets that we're in today. When you think back even to the Great Recession.

You know, we have -- now have extensive platform all throughout the Western United States which didn't exist and we didn't have either of the platforms in the United Kingdom or Ireland when the Great Recession started. But as it relates to we were -- you know, when you think about our apartment business of 30,000 units and just use 1,000 square feet including the common areas plus an office space, we have 50 million square feet of space that's occupied by somebody and in the WeWork -- Mary, I think when you look at it in totality, there are less than -- our shares are less than 200,000 square feet, isn't it?

Mary Ricks -- President

Yeah. It's a couple hundred thousand square feet. It represents just about 2% of our income. So it's very small.

And then, the other thing I would add is, you know, honestly, they have some of our best space. I mean, 400 Cal in San Francisco, we only on 10% of that asset. That's one of the best located and one of the best built-out assets that is fully occupied by an enterprise tenant for WeWork. And then, Sheila, you reference the office building that WeWork is taking in London which is in the South Bank submarket which is one of the best performing tightest markets in all of London.

In the city, it's less than 5% vacancy rate. Rents have increased significantly over the past three years. If you recall, we got that asset -- that was actually another loan-to-own type transaction that we did in London. Our basis is very low in that asset, and actually, London, and in particular, in South Bank that is one of WeWork's best performing submarkets.

So they're right now, working on the construction on that asset and they plan to be in by later this year.

Sheila McGrath -- Evercore ISI -- Analyst

OK. Great. Thank you.

Bill McMorrow -- Chairman and Chief Executive Officer

I'm still at -- Mary, they also paid 100% of the rent in April, too. Is that correct?

Mary Ricks -- President

Fully paid, correct.

Sheila McGrath -- Evercore ISI -- Analyst

Oh, on all their locations?

Mary Ricks -- President

Correct.

Sheila McGrath -- Evercore ISI -- Analyst

OK. Great. Thank you.

Bill McMorrow -- Chairman and Chief Executive Officer

Turner.

Operator

[Operator instructions] The next question comes from Tom Hennessy with Deutsche Bank. Please go ahead.

Tom Hennessy -- Deutsche Bank -- Analyst

Good morning. My question's in reference, I guess, to raising new bearing capital and you've been on pace for even doing about $1 billion plus a year. I mean, in a recessionary environment sometimes it's tough to do that. Do you anticipate any challenges with that? Or is it the opposite the reputation you guys have had for special situations investing especially -- essentially can make it -- make you get new new partners or adding additional capital from other partners?

Bill McMorrow -- Chairman and Chief Executive Officer

Yeah. Yeah. I think you have to find that one, you know, currently. So obviously, in this world today everything is in flux.

I can tell you that we have had many inbounds from capital partners that we have never done business with and from our existing people that we already do business with. Their existing companies that we do business with. And so, on the assumption that there are opportunities out there, I see us quite significantly growing the fee-bearing capital during the next few years. On the assumption that there is going to be opportunities here that makes sense to invest in.

But like we've always said at Kennedy Wilson, we never feel like we're under any pressure to invest money unless it's the right opportunity. So, that would be the key thing. The money is certainly available to us, but it has to be the right opportunity.

Tom Hennessy -- Deutsche Bank -- Analyst

Thanks, Bill. That makes a ton of sense. I guess, just a follow-up on that though, too. I mean, you'd mentioned with Ireland and waiting 10 months before your -- you made a jump in there.

But I mean, with what we have here it seems ripe for obvious dislocations and in a close near-term, do you anticipate being more of a net buyer in 2020?

Bill McMorrow -- Chairman and Chief Executive Officer

Depends on what the opportunity set is. You know, I'm not trying to sidestep that, but you know in every cycle, generally, the initial opportunities tend to be get purchases. Even like the one that Mary just described at Pioneer Pointe. When you think about some of the assets that we continue to own today in Europe, we reacquired those through debt acquisitions.

And there's really two types of debt acquisitions that we've done historically, but really I guess, three. A modest amount of our own origination, and then, we would buy debt basically to collect the principal amount. And then, there was this issue that they mentioned the debt that you buy this a loan-to-own and especially in Europe where there's a receivership system that people don't pay their interest. Basically, it goes into receivership and the receivers are fantastic with selling the assets.

That tends to happen pretty quickly. In the United States, there -- as we all know, there's many different protections that borrowers can seek. But the first opportunities, we believe will surface in this cycle, we're going to be on the debt side, as it takes longer for the equity ownership to go through the system. So, the fee-bearing capital will definitely grow assuming, under the assumption I underline that 10 times, that there are investment opportunities that make sense.

We have it available to us. We just need to be smart enough to find places to put it safely and with good risk adjusted returns.

Tom Hennessy -- Deutsche Bank -- Analyst

Thanks Bill. That was very helpful.

Operator

The next question comes from Jamie Feldman with Bank of America Merrill Lynch. Please go ahead.

Jamie Feldman -- Deutsche Bank -- Analyst

Thank you. I was just wanted to get your thoughts on leverage levels and if you think about your liquidity, you did draw on your line and then you have some of that -- a lot of that liquidity still on the credit line. Just how do you think about how you'd be willing to take leverage, if you found opportunities and what are the governors you think about from that perspective?

Bill McMorrow -- Chairman and Chief Executive Officer

Yeah. OK. So, Matt, I'm going to bump that question to Matt Windisch.

Matt Windisch -- Executive Vice President

Sure. Yeah. So, if you look at our our leverage levels, we're definitely comfortable with where they are today. I'd note that over the past two years, we've reduced leverage on our consolidated debt.

We're down 20% over the last two years. Our net debts come down by 10% over that same period of time. And then, if you look at what we did toward the latter half of last year, we raised 300 million of preferred equity, used the proceeds to pay down debt and we have less than 4% of our debt maturing in the next two years. All of that being non-recourse.

And as Bill mentioned in his remarks, we have the highest levels of liquidity we've ever had as a company. So, we feel very comfortable with the debt position. We think that some of the opportunities that present themselves particularly in the debt space that may come over the next several quarters, we're likely to do that on an unlevered basis as we typically have. And we certainly have enough liquidity within the business and with our capital partners to acquire assets to the extent there are good opportunities, and doing that in a way where we're not increasing leverage at the business.

So I guess to sum it up, we're very comfortable with our leverage and liquidity levels and we certainly don't see the leverage levels going up as we -- as we invest capital over the next couple of years.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. Do you have a high end of where you'd be comfortable operating?

Matt Windisch -- Executive Vice President

I think where we're at now is the highest we're going to go.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. So you wouldn't want to take leverage any higher than where you are today?

Bill McMorrow -- Chairman and Chief Executive Officer

Correct.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. And then, as you think about the unstabilized portfolio and the development portfolio, do you think you need to push out any of the stabilization dates or kind of fully leased development, you know, fully leased dates based on potential leasing delays or even construction delays? Do you feel pretty confident on your original underwriting?

Bill McMorrow -- Chairman and Chief Executive Officer

Well, we do in the multi-family side particularly, I mean, we have -- as I said, in the in the U.S., basically, there wasn't much disruption in Northern California, Santa Rosa, and Boise and then the vintage assets there. We were allowed to continue work on site during the last couple of months. And now, as you all know, many of the states in the Western United States, Utah and other places, they're starting to actually reopen everything. So, we don't see any big timing differences in the U.S.

In Europe and in the United Kingdom and Ireland of course, they shut the sites. Now Ireland has announced that they're going to allow reopening of the construction sites on the 18th of May with all of the new guidelines in terms of work distancing and safety and all of that. So Clancy, as I mentioned to you, which is one of the largest projects we've ever undertaken. That's going to be completely finished at the end of June.

It's really basically finished now. We just have to move in. In Ireland, you rent your apartments fully furnished. We just have to move the furniture in and finish the exterior landscaping.

And so, we'll see how the leasing goes. We don't have any crystal ball on that, but I think that the thing that has been extremely encouraging is the staff that Mary pointed out earlier in the call about the virtual leasing and the success of the virtual leasing. That has been a real eye opener to us. To do 800 leases in the month of April and 94% of those is being done virtually and having that be up 6% over what it was in April of 2019 is quite a compelling statistic.

The only property that we wanted to take extra time to make sure that we had correct was the hotel property that we have in the United States with a 50/50 venture with a very, very strong capital partner and that related really to two things. It didn't relate to the pandemic at all, it related to the fact that we wanted to make sure that we had every single cost buttoned down and we wanted to get our construction loan in place before we undertook the lion's share of the development, and that construction loan that we did -- closed in March. And so, we're off and running right now but we intentionally moved that out by almost a year. But everything else is progressing on time and on budget.

I mentioned the three big projects that we're doing in Ireland that aren't yet completely under construction there. They're in the process of -- what we're doing there is all the architectural and design work and enabling work. But two of those are multi-family projects. Actually, three of them, the Grange and Cooper's crossing are two of the biggest ones.

And those are both joint venture partners with -- joint venture deals with the major, major insurance company that's based in Europe. And then, the last piece is the office that we're doing. It's also a 50/50 venture with the well-capitalized partner, but those three will be more in 2024 range. But a big, big, big part of the construction pipeline are these multi-family assets, both the market rate and the vintage assets that are all running right on time with the one little delay that we had in Ireland on Clancy.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. And then, you've got a pretty unique market footprint with kind of the West Coast focus in mountain state focus. And if you see disruption in other parts of the U.S., either on the apartment or residence or commercial side, I mean, would you be willing to go to like a new york or some of these other East Coast markets? Or do you -- are you still going to concentrate around your current footprint?

Bill McMorrow -- Chairman and Chief Executive Officer

Look, I never like to say never but I think it's unlikely. The markets that we're in, we had deep embedded relationships both on the -- I would call the acquisition capability front and also on the asset management side with all of our own teams on the ground. And the key, the very big key in these types of endeavors is just to make sure that you've got the same team of people that are doing the same work every day. And you just can't underestimate how important that is in a time like we're in, in a time where you're going to invest, hopefully, the kind of money that we're planning on.

So I think the markets that we have our footprint in which is basically the Western United States, the West of the Rockies, and the United Kingdom and Ireland is where we're about to spend our time. I would say that that we've been a -- for lack of a better way to put it, we've been a pioneer on the West Coast and going to markets well before they became, I would say, came on the radar screen for institutional investors. And so, we have a big platform now in the Rocky Mountain states that Seattle, Boise, Salt Lake City and so on and in Denver. And we've gone into some other smaller markets on the West Coast here in the last 12 months.

So there's plenty of opportunities in the markets that we already have a footprint in. So to answer your question, I think it's unlikely we go out of that. But we have to see what the opportunity side is.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. And then finally, we use some decent tech exposure in the portfolio. Just from the office side, any anecdotes of conversations that you're having with your larger office tenants in terms of how they may be changing their space planning or needs?

Bill McMorrow -- Chairman and Chief Executive Officer

Yeah. I think that's what I said earlier. I think it was answering series of questions that -- sure, there'll be a lot of discussion around it through a period of time, and then, it's things over the next 12 to 24 months or longer get back to a normal -- whatever the new normal is. So, I think you're not going to see any significant changes.

We're very, very fortunate that we have high-quality credit tenants in our properties. And so -- and some of the tenants, obviously, the tech tenants that we have which are the dominant tenants, and clearly, the Seattle market, the San Francisco market, and in Dublin are actually no news to anybody on this call. I mean, they're all doing well, the Googles, the Microsofts and so on. So over the longer term, I don't, Mary, any significant change and there may be changes in how people can reconfigure their space.

Mary Ricks -- President

Right.

Bill McMorrow -- Chairman and Chief Executive Officer

But -- and I think the other part of this too which always happens is that there won't be any availability of construction lending for new office space with the near term for the next 24 to 36 months. And so, lot and houses way of self-correcting, meaning, supply issues. And Mary --

Mary Ricks -- President

Yeah. Bill, what I was going to say is what we're hearing from a lot of our tenants. I think our portfolio plays really well in terms of the new normal if you will. And obviously, the return to work takes significant planning especially in how sort of work environments are configured, as those setting up to facilitate social distancing, enhanced cleaning, one-way ingress and egress, handsfree technology, those kinds of things.

And I think, with the way our properties, we don't have 50-storey high rises where people have to queue to take elevators. You know, we have more of a low rise type office product which I think plays itself very well to tenants' need today. And we're hearing from a lot of our tenants right now that want to take more space because they just -- they want to spread their people out. So, I think it's going to be interesting.

I think our portfolio will do very, very well with these new normal.

Jamie Feldman -- Deutsche Bank -- Analyst

OK. All right. Thank you.

Operator

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

Bill McMorrow -- Chairman and Chief Executive Officer

Well, as I always say on these calls, we appreciate your support. We thank you for your interest in the company, and I would say on this call as I close it out, I wish everybody and your families the good health and safety and we'll talk soon. So, thank you very much.

Operator

[Operator sign-off]

Duration: 59 minutes

Call participants:

Daven Bhavsar -- Vice President of Investor Relations

Bill McMorrow -- Chairman and Chief Executive Officer

Mary Ricks -- President

Anthony Palone -- J.P. Morgan -- Analyst

Sheila McGrath -- Evercore ISI -- Analyst

Tom Hennessy -- Deutsche Bank -- Analyst

Jamie Feldman -- Deutsche Bank -- Analyst

Matt Windisch -- Executive Vice President

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