Welcome to the Kennedy-Wilson Second Quarter 2013 Earnings Conference Call. My name is John and I will be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that the conference is being recorded. And I’ll now turn the call over to Christina Cha. You may begin Christina.

Thank you. Good morning everyone. Joining us on today’s call 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 one year. Please see the Investor Relations section of Kennedy-Wilson’s website for more information. Statements made during this conference call may be 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 will now turn the call over to Bill McMorrow.

Good morning everyone. I’m happy to report to you we had an excellent second quarter and to put numbers around both the second quarter and the first half of the year. Our EBITDA for the second quarter was $37.1 million which is a 97% increase over the $18.8 million in the same period of 2012 and for the six month period our adjusted EBITDA was $69 million which represents an 82% increase from $38 million in the same period in 2012. Now I’m going to go through some of the highlights of the quarter and then open it up to questions, but as I said in my statements we crossed over the – on our gross basis billion dollars in our investment account during the second quarter. And as I think most of you saw what the press release relating to the so-called Opera transaction in Ireland. We crossed over in July, the $1 billion investment mark on a depreciated basis. I mentioned at the beginning of the year that the focus of our acquisition activity we felt in January was primarily going to be split roughly 80:20, Europe versus the United States and so to-date our investment activity plus or minus has been 70% Europe and 30% the United States. We’re obviously with those kinds of numbers had – two things have happened our distributions out of our existing investments has reached record levels this year. So through the first six months of the year we received $109 million of distributions from our investment account and as you think about the balance of the year without any forecasting we expect those distributions to take us above $200 million for the entire year. As you can see in the press release we have sizable portfolio now, we are at 19.3…

Thank you. And I’ll begin the question-and-answer session. (Operator Instructions). And our first question is from David Gold from Sidoti & Company. Please go ahead. David Gold – Sidoti & Company: Hi, good morning.

Hi, David. David Gold – Sidoti & Company: Can you speak a little bit about the thinking from here and out a way of deployment of capital? One opportunistically which geographies you are looking at most closely. How does Spain fit in there and then just changes and you’re thinking given interest rate moves at least domestically sorry and also one question?

Well it’s interesting David I mean I think it really is playing out exactly doesn’t always happened this way but it is playing out exactly as we felt that it would really starting this time last year. There are still all those opportunities here in the United States but it is obviously more competitive in terms of capital and the so as I said earlier we really felt that with the platform that Mary and her team have built in Europe that the focus of our investing activity in terms of the bulk of our dollars was going to be in Europe this year with the primary focus and really almost the only focus being in the United Kingdom and Ireland and that’s proven to be the case. We felt at the beginning of the year that we would have a good shot at finding somewhere between $2 billion to $3 billion of acquisition opportunities in our primary markets the Western United States and two those countries in Europe. And so including the Opera transaction we are kind of in the middle part of that range through the really the first half of the year. I suspect that through the rest of this year and really more than likely carrying into next year that our that the majority of our investment dollars will be going into those two markets the United Kingdom and Ireland. We have it’s been as we said at the beginning of this cycle going back to 2010 it’s very much been for us an instant replay of what happened in Japan. And Mary has been able to assemble and add to a very, very high quality team there and we found out in these periods of whatever you want to call it correctionaire however you want…

Well it could be I mean we have a we continue to see from time to time some reasonably good multifamily opportunities that obviously is a core part of our investment strategy in the United States and we have one meaningful office portfolio transaction that we’re engaged in looking at right now here in the United States and so even in what I would call more stable market here in the United States. And so even in what I would call a more stable market here in the United States we always find opportunities it’s always been the case over the last 25 years it doesn’t matter whether it’s a non-stable or stable market because of kind of the depth of our platform and our reputation and so on there is always inefficiencies in the market so you’re going to see us investing money in the Western United States but I think the as I’ve said now couple of times the majority of our investment capital will be headed to those two countries in Europe. David Gold – Sidoti & Company: Perfect. Thanks so much.

Your next question is from David Ridley-Lane from Bank of America Merrill Lynch. David Ridley-Lane – Bank of America Merrill Lynch: Sure could we get some a little bit of additional detail on the $727 million in loan purchases in the second quarter?

Sure that’s David that relates to a pool of loans in the United Kingdom primarily and we bought those at a significant discount to par and there is really two pieces to it. One is more of a liquidation play where we expect to resolve those loans quickly the other piece of it is a longer term asset management play where in some cases we would look to take either ownership or have significant influence over the operations of the property and add value and then potentially exit. David Ridley-Lane – Bank of America Merrill Lynch: Got it. And then how is the pipeline for loan purchases in the UK and Ireland booking for the second half I guess?

So Mary you want to give a little color on how you see that?

Sure yeah that the all the selling banks that we have been transacting with over the last 18 months still have plenty of assets on their balance sheet to divest. So actually our pipeline is quite full and I think we’re going to have a busy second half. David Ridley-Lane – Bank of America Merrill Lynch: Great and then is the national organization NAMA still seeking to sell as well in addition to this banks?

They are yeah NAMA still has several 10s of billions on their books that they’re going to need to divest over the next sort of seven to 10 years. We have a good relationship with NAMA and have meetings with them all the time and I mean dialogue with them about several different opportunities.

Yeah I think the, without also as I will say self-congratulating ourselves I think the fact that we were really able to get to Europe early back in December 2010 when it didn’t seem so readily apparent that there was an opportunity and by creating an operating business and a platform there were today Mary has plus or minus 50 people in her operation and we – as I’ve said before we learned from our experience in Japan in the 90s that you have to have your own operating platform in order to succeed in these international markets. So the flag so to speak that we were able to plant in Ireland and the United Kingdom and then actually effectively transact has really created a great reputational value for us where I am not saying it’s every transaction but I would say that the vast majority of things that come to market or coming to market Mary is going to see in her operation and the banks in both of those markets and NAMA which is still holding significant amounts of real estate are going to continue to be sellers this year and next year and the following year. There are still plenty to do there but I would also say and I know that you read in the press I think it’s very clear that particularly in Ireland that market has bottomed out and that you’re seeing a real recovery it’s in the whatever inning you want to pick its early in the process but the housing market seems to have stabilized there and for sure the rental market of multifamily apartment units is gotten better and it’s strong we’re running very high occupancies in the three first class properties that we own in fact one of them when I was there most recently they had a waiting list. So the occupancies are very strong, rental rates are moving and the office market there in Dublin because it’s a smaller confined market with technology companies like Google and others expanding that those rental rates are starting to grow again. So you’ve got some good fundamentals that have started to happen in those markets with still plenty of things to do on the purchase side. David Ridley-Lane – Bank of America Merrill Lynch: Got it that’s very helpful. And then if I could just squeeze in one last one on the U.S. How are you judging the trade-off between very strong rent growth in your West Coast multifamily assets versus rising cap rates there?

Well its always an interesting phenomenon I mean there was obviously over the last couple of years there has been real cap rate compression in the multifamily sector. And even with these interest rates we did a financing on the so called Harrington acquisition not about this time last year and we did a 10 year loan fixed at 331 was the interest rate. Now obviously interest rate since the bottom have moved plus or minus a 100 basis points up on the 10 year since that period of time but you haven’t really seen it’s not an instant thing that happens where people will adjust the cap rates on the acquisition side. So cap rates on the multifamily assets continue to be very – very low and a big part of it continues to be predicated on the fact that you’re seeing this great rent growth as you saw in our kind of same-store statistics rents particularly in San Francisco in the Bay Area and in the Seattle market but particularly the Bay Area just continue to be very, very strong. So the underlying fundamentals in the West Coast in the major cities Los Angeles, San Francisco, Seattle have been very strong. And then the other thing of node I think is two as you all know we made two meaningful purchases in Salt Lake City during the past nine months and the first one that we did which was the so called Sandpiper acquisition we’ve been running occupancy wise in that property close to 97% but we’re increasing rents there almost like we have been in Seattle, San Francisco and Los Angeles. So the West Coast fundamentals are very good. And so its but we selectively still see some opportunities certainly not as many as there were a couple of years ago but we developed a very, very good portfolio of assets that are producing out of Japan and the West Coast of the United States significant cash distributions for us now on a monthly basis.

And we’ll go to our next question from Whitney Stevenson from JMP Securities. Whitney Stevenson – JMP Securities: Hi, there everyone. Can you hear me?

Yes. Hi, Whitney. Whitney Stevenson – JMP Securities: Hi and thanks for taking my question. So, obviously it sounds like the pipeline is there but I was wondering if you could talk just a little bit about competition for deals in Ireland, and may be where you’re seeing first capital coming from?

Well I’ll take the part of it and then I – I’d like to again Mary to jump in on this. But, there is – there is obviously more capital coming to Europe. But and I think as I said before Whitney, that one of the lucky things that we were able to do was to really get ourselves on the ground there on establishing on operating business in Dublin where it wasn’t really a what I would call like a fly over or you’re flying in and out and trying to find opportunities and so on. So, we’ve developed very, very deep relationships there. And so, I’m not saying that it’s – a total advantage but we do have I would say somewhat of a leg up from the standpoint of all the relationships that we’ve created there. But Mary you might comment on how you’re seeing things in Ireland in terms of competition.

Yeah I mean, I think those point is right in terms of the relationships and also I think just our reputation for transacting quickly doing what we say we’re going to do all those things carry a lot of weight with vendors that are selling assets. In terms of competition we’re seeing lot of American firms there some German funds recently there is a Canadian firm that was multi-family REIT looking at an asset there. So here you’re seeing and in there are some Irish investors as well. But I think one of the differences is that we do have a very big team of knowledgeable real estate people right in Dublin. So we have a lot of variety of capital partners coming to us saying, can you guys be our local GP. So I think this thing with us gives us the advantages that we’ve got the feet on the ground and we’ve got the knowledge and we’ve got the relationships on the transaction record for doing things quickly, efficiently and always keeping our word.

Yeah you just Whitney, you cannot underestimate the value of having your own team and particularly as it relates to the, your ability to do due diligence on these assets which allows you to with certainty in terms of your underwriting and your physical due diligence to move with speed. And over the years Mary and I’ve been together at the company and now going on 23, 24 plus years here. Once you establish or reputation is being very efficient, being able to move with speed and the biggest thing that any entity whether it’s a bank or company or whatever, they want to know when they’re selling something in particularly something that involves a significant markdown they want to know that there is a certainty of closing. And what we’ve tried to do over the past 25 years is whatever market we’re in, is to give our sellers not only the fact that we can move with speed but we can give them the certainty that we’re going to close that we’re not going to tie something up say we’re going to do something and then not perform. And so, it takes time in a new market like that to establish that kind of reputation and that’s really what Mary and her team have been able to do not only in Dublin but in the United Kingdom also. Whitney Stevenson – JMP Securities: Okay. So then if I could ask one more, I’m just wondering a fundamentals continue to improve in Ireland, could we see or may be going after some deals and smaller secondary markets outside of Dublin?

Mary.

Yeah I mean, I would say right now we own one asset there came with the Opera portfolio that’s in Cork of the 19 assets, 18 are in Dublin and the 1 asset that’s in Cork is Marks & Spencer lease for 75 years terms certain. So I would say no, to the extent that there is a special situation whether it’s in NPL or SPL pool that’s kind of spread around throughout Ireland that’s something that we’d look at in our special sits group but in terms of hard assets now our focus is going to be Dublin. Whitney Stevenson – JMP Securities: Okay, great. Thank you.

Thank you.

And I take to Mary before we leave that at the other thing that is important is the quality of the assets that we have in Ireland and it’s extremely high quality. In fact, some of the best in terms of just basic quality the assets that we own in Dublin are some of the best that we have in the company when you think about in that Opera portfolio was the KPMG’s headquarters, the Bank of Ireland’s headquarters, the three multifamily assets that we’ve acquired is not the best there is certainly right up there in the top 5 to 10 in terms of quality. And so that has been the other great thing that’s happened to us in Ireland has just been the quality of the assets that we’ve been able to acquire.

Your next question is from Jason Ursaner from CJS Securities. Jason Ursaner – CJS Securities: Good morning.

Hi.

Hi Jason. Jason Ursaner – CJS Securities: Just looking at the investment account sure that you covered this, but in multifamily have you been seeing any significant change in cap rates given the move in 10-year treasuries and where is that sort have been and has the spread been moving independently?

I was willing to, there is always a lag effect, when rates go up we’re actually as kind of as quickly they have say on the order of 100 basis points in the last six months. There hasn’t been really any noticeable change in cap rates and – I think a big part of the reason for that of course is that – rental rates continue to grow in the western United States and on the east coast. and so, people still continue I’m not saying it’s us but people in general continue to be willing to own that asset class it’s a very, very good asset class to finance off of with a two agencies and so even though there has been a good increase in rates by any historical standard to financing costs are still low and you’re doing that with the background your acquisitions or you’re doing that with the background that rental rates are increasing. So, we haven’t yet seen the same say correlation between a 100 basis point rate increase and a 100 basis point cap rate increase it just hasn’t happened and I don’t – I actually don’t see that happening. Jason Ursaner – CJS Securities: Okay. And on Ireland specifically you mentioned before the platform and reputational value that you guys felt there and then also that the market itself is clearly bottomed in and started a recovery, how do both of those factors fit with what you’re seeing in terms of investor demand changing to get into that market there was an Irish REIT that IPO’d and it somewhat of a similar field to what we’d hear you talk about in Japan are financial insurance were creating relatively significantly differently from their net asset value. That is ultimately been a relatively short window, so how, how do you see that right now and is there any way to may be take advantage of that side of the market?

Jason this is Matt. So that we’re well aware of the success of Green REIT which launched several weeks ago and we certainly have announced a portfolio on Ireland that we’re very proud of it Bill mentioned we’ve got some very high quality assets there. As with all of our investments globally we’re always exploring any in all strategic options that potentially maximize shareholder value. And so I think we leave it at that. Jason Ursaner – CJS Securities: Okay. And then it also looks like you started accruing for incentive compensation during the quarter as oppose to the last couple of years where it ultimately been a big drop at the end of the year. How much of the sequential increase in compensation is related to that versus platform expansion and fixed increases and what drove the decision to do that this year are you just farther along relative to your annual plan or is there something else going on there?

Bill I’ll take that one as well. So Jason about three quarter of the increase from the six months last year to the six months this year is driven by the accrual as you mentioned and we in terms of where we’re at from a profitability perspective we’re well ahead of where we were at this stage last year. And so that accrual is just in line with the progress we made so far year-to-date. Jason Ursaner – CJS Securities: Okay. Great I appreciated all that thanks.

The next question is from Ian Corydon from B. Riley & Company. Ian Corydon – B. Riley & Company: Thank you. Most of my questions around the UK and Ireland and I think you did answer all of those. So may be just one of the services business with EBITDA by quarter jumping around quite a bit. Is there a way for us to think about what kind of a more normalized run rate of EBITDA that businesses running out?

Yeah I think we mentioned this may be on the last call. In terms of the normalized number it does vary as we have several different fees streams coming into that line but we’re – I’d say kind of a base line is in the low to mid 20s on an annual basis. Ian Corydon – B. Riley & Company: Got it. Thank you.

(Operator Instructions). We have a question from William Field from LeFrak Organization. Please go ahead. William Field – LeFrak Organization: Yeah my question was specific to the Irish assets I just Bill you had elaborated on the quality and scale of that portfolio. I was just curious if you can elaborate on the long-term plans but Matt you really, I think you said as much as you wanted to say on that topic is that fair but just really long-term plans if you had any thoughts because we were interested in the REIT market there as well?

Yeah I mean as we mentioned we got a very strong portfolio there and we’re as always as we always all of our investments we’re always looking to maximize shareholder value may be. William Field – LeFrak Organization: Okay. Okay thank you.

Yeah I think that the important point about the United Kingdom really in Ireland is that the capital markets have just changed improved tremendously there over the last 12 months and I think I mentioned in the first quarter call really even up until I would say Mary the beginning of 2012 there was virtually no debt market to finance off of. And so we were like the first BOI REIM loan portfolio acquisition we did which was $1.8 billion we did all equity. And we did that for a couple of reasons but obviously one of the bigger reasons was there was no debt market. And so today you’ve got a very robust debt market than United Kingdom and in Ireland you’ve got all the major U.S. banks that are now lending. And I think the easiest way really to for and how we do think about Europe is that they kind of went into their issues a couple of years later than we did here in the United States and so it’s almost what’s playing out in Europe in those two markets is really somewhat of an instant replay of what is happened here in the United States but a couple of years later. And so the capital markets at every level whether that’s the debt market of the equity market have had significant improvement over the last 12 months. And I expect that both of those markets are going to continue to get better I think in the debt market although you haven’t seen a lot of it right now the spreads on your financing at the property level are starting to get more competitive they’re still way wider than they are in the United States. But it’s all really playing out in those two markets a bit like what happened in the United States really starting in 2010 and 2011 where our markets really turned around fairly quickly.

And that was our final question. And I’ll turn it back over to you William McMorrow for any concluding remarks.

Okay. Well listen we appreciate everybody being on the call and as always we appreciate all the support that we received from everybody and especially our shareholders. So thanks very much and we’ll talk again on our September third quarter call. Thank you.

Thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.