Good morning, and welcome to the Kennedy-Wilson Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being record. I would now like to turn the conference over to Daven Bhavsar, Vice President of Investor Relations. Please go ahead.

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 a reconciliation of the most directly comparable GAAP financial measure and our third 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.

Daven thanks very much. Good morning, everybody. And thank you for joining us today. We hope everybody that's on this call either you or your families is healthy and you continue to do well in this period of time we're in. I'd like to start by touching on the key highlights for the quarter. Q3, we continued to successfully grow our investment management business by deploying capital and our debt platform. And we made great progress in our development and lease-up portfolio positively growing our NOI. We also saw continued high occupancy and strong rent collection across our largely suburban multifamily and office assets, which together comprise 81% of our stabilized portfolio. Across our investment markets, real estate volumes remain low in the third quarter similar to what we saw in Q. Q3 sales transactions in our markets fell between 40% to 60%. As a result of these changing market dynamics, we temporarily paused our asset sale program in Q2 and Q3. However, as seen by the disposition of Baggot Plaza, generated cash of $165 million, and a gain of $85 million to Kennedy-Wilson, and the $198 million acquisition of an 888 unit Mountain State portfolio, both of which were announced last Friday. We will have higher levels of transactions in the fourth quarter, where we expect to complete the majority of our 2020 asset sales. I'll discuss both of these transactions in greater detail in just a moment. So looking at our financial results in Q3, we produce adjusted EBITDA of $76 million and adjusted net income of $27 million. For the year, we produce adjusted EBITDA $261 million and adjusted net income of $84 million. The slower transaction market of course impacted our results with lower gains on the sale on the quarter, which we expect to make…

Thanks, Bill. Before I delve into our strong rent collections, I'd like to update you on the Shelbourne hotel. I reported last quarter that our iconic Shelbourne hotel reopened at the end of Q2, this spacious Five Star 265 room hotel with over 240,000 square feet better facilitate social distancing than competing hotels. And we've seen that benefit come through since reopening. I'm pleased to report that the Shelbourne's market share is outperforming its direct competitor set and has been profitable for Q3. A big achievement since closing its doors on the 20th of March. Post quarter end, Ireland has gone back into a level five lock down until early December, adding further restriction to the hotel's operations. Nevertheless, we have a good pipeline of business for the permitted services and subject to further restrictions December looks promising. The hotel has successfully reoriented itself to more domestic business and the remains a solid book of business for 2021. Under the rent collections, I'm happy to report that we continue to see strong level of collections across our portfolio. This speaks to the quality of our portfolio and the intensive Asset Management we engage across the board. Our two largest asset classes globally multifamily and office account for 86% of our Q3 billed rents. We collected 97% of our rents across these two asset classes in Q3. Maintaining the strong collection levels we saw in Q2. Suburban assets account for 89% of our multifamily NOI, average monthly rents in our global portfolio were $1,678 and occupancy remained solid during the quarter at 94.4% compared to 94.5%, as of Q2. In the US, we have strategically shifted our apartment portfolio over the past few years out of areas such as Northern California, where we own now, only three market rate assets, two…

Mary thanks very much. I'd like to update all of you on our development projects and our leasing initiatives which are currently expected to be completed by 2023 and include 4,500 multifamily units, 2.8 million commercial square feet and one hotel. Many of our projects are 50:50 joint ventures with strategic partners. And in total, we have a 59% ownership interest in our development and lease-up portfolio. We have continued to make great progress in our construction projects and lease-up initiatives throughout the entire year. Q3, we completed the development at Stockley Park, a 54,000 square foot suburban office asset in the United Kingdom. We also completed the first phase of the development called 38 degrees north. That first phase is 120 units located in Santa Rosa, leasing up very quickly, with almost 60% of the units leased in three months. We are under contract to acquire 11 acres adjacent to this property where we going to add an additional 172 units, bringing the 38 degree North community to a total of 292 units when completed. We also finished construction and lease-up at Rosewood, a 66 unit multifamily property in Boise, Idaho, which is now 100% occupied after three months of leasing well ahead of our schedule, rents above our pro forma. These 66 units were added to an existing stabilized community and in total Rosewood now total 234 units. Finally, our Irish multifamily JV with AXA continues to perform strongly. Lease-up at Clancy Quay phase three is performing ahead of expectations. We began leasing this final phase in the third quarter. And very quickly we leased 20% of the units by the end of the quarter. That number is now at 35% and it rents ahead of our business plan. We're seeing strong interest in our institutional quality assets,…

[Operator Instructions] The first question will come from Anthony Paolone of JPMorgan.

Yes, thanks. Hi, everybody, like to -- my first question relates to just capital allocation, because it seems like you made some investments, but that stuff is going well. But you've also up the buyback. So just wondering if you can walk us through a little bit of how you're prioritizing where you want your capital to go?

Well, Tony, I'm oversimplifying slightly, but there are basically four buckets that we can deploy capital into, of course, new investments, the CapEx that we have going on both rehabbing existing properties, and our apartment portfolio, and new investments, as you saw from the 880 unit transaction. And, of course, as you also saw, we are paying down debt; we paid down almost $170 million of unsecured debt. And lastly, and not in any order of priority, it's the stock repurchases. I would say that, and to maintain, I would say, lastly, we want to continue to maintain the levels of liquidity roughly around the levels that we're at right now. And so that's the set of constraints that we're operating within. Our first priority really is to continue to grow the business. And to the extent that we have opportunities to grow the business, of course, that's where we're going to deploy our capital into. We're fortunate because we have a lot of very; very high quality assets that are both generating cash or to the extent that we feel that we have an opportunity to receive an attractive price we can sell. So I wouldn't really put any priority in terms of how we're going to spend the money other than to say that, of course, we're committed to the CapEx. And any new investments that come along, over the next 15 months. We have a belief that the investment market in 2021 will be somewhat more attractive than it has been during this year, for obvious reasons. So and as we think about the stock repurchase, it's going to be handled over, an extended period of time. So that's a long one that says that, where we want to keep the liquidity levels of the level we're at right now. We're paying down on secured debt. We have great investment opportunities, particularly right now in our debt platform. And we have to complete the construction, the very large amount of construction that we've obligated ourselves to over the next couple of years.

Okay. In the disposition that you made in Ireland post quarter at a four cap, I know there was a long term lease there. So maybe it was unique, but I do think cap rates are generally lower there. And you seem to be able to get a positive spread, with redeploying the money into Western apartments, right. Is that something you think there's more to do there? Or do you think that that sort of swap? Just a bit more unique to circumstances?

Well, I would say just depends on the circumstances and the opportunity. I mean, I think that we're very focused on growing the NOI and the net income of the business. And we made a decision, see these construction projects that you're doing can take a very long period of time, they can take up to five years by the time you conceive of the idea and to finish and to stabilization. And so I think the thing that we clearly have learned, we own -- we have ownership interests in slightly over 300 assets, some small some very large, the higher the quality that you have, particularly in the multifamily space today, the more attractive it is for people to live there. And I think the other interesting thing, when you think about both Hanover Quay and Kildare Street, basically, the asset that we sold Baggot Plaza was roughly the same size as the two assets we're finishing this year. Both of those obviously will be brand new. So I do have a belief, and I've been saying this on these calls for two or three years now that we are going to be in an extended period of time of low interest rates. And particularly in Europe, where interest rates are some cases negative there, they're clearly near zero. And here in the United States, of course, I think as everybody knows, when you look at the 10 year bond rate, even though it's fluctuating up and down these days, it's near historical lows. And so that -- for us to the extent that we want to have realizations puts us in a very attractive position, particularly on these higher quality assets.

Okay, and then just last question for me, it seems like you deployed a lot into this debt platform pretty quickly. Is there a potential to increase the size of that?

Well, yes, I mean, I think over time, we will depending on market circumstances, and I would say on the debt platform, what we are doing is staying basically in the same markets that we already have ownership interests in. And so as I said earlier, the Western United States, Ireland and the United Kingdom, then what that allows us to do is utilize the great skill sets, the existing people that we have in those various platforms. And so even though Matt Windisch has direct responsibility for the debt platform, and we have our own dedicated team and that debt platform, to the extent, for example, that we're doing apartment loan in the Western United States, we utilize the multifamily team to help us underwrite and do due diligence. So, yes, we want to grow that business. But again, it just depends on whether there's an opportunity that we find to be attractive, and whether that opportunity, not only interest rate wise, but in terms of the quality of the sponsorship, and the quality of the collateral fits within what we think are the right framework. And the last thing I would add, Tony, is that during the credit crisis, either through purchases or originations, we were involved in almost $7 billion of debt transactions. And so we've had a very long history of doing these types of transactions. So we'll just see if the opportunities continue to materialize that fit our requirements.

Bill, I think it's worth noting that our European business was really started on the back of a very large debt deal that we bought. And the other thing to add is Baggot Plaza came out of a debt portfolio where we ended up; it was a broken CMBS deal. And that was roughly EUR 300 million transactions with multiple assets in it. And so I think as those pointing out, KW has an excellent ability to, when there's non performing loans coming which we think 2021 you will see more of that we can seize that opportunity.

Those are good points, Mary. Really good points. And I thin, Tony, the other thing I would say is that we, because we have equity ownership interests and all of these markets, we're also lending in; we have a very clear picture. And we're building all of these markets. And so we have a very clear picture of costs. And in interesting way, we kind of have a built in appraisal system within our own company. And I would say the last thing is that we know, some cases personally, almost all of the player all the, various investors in those markets. So that was really what I was trying to reference that we have a very tight underwriting standard in terms of sponsorship, the quality of assets and the locations, but they've got to be in our basic markets.

The next question comes from Sheila McGrath of Evercore.

Hi, yes, good morning, I was just wondering if you could comment on the loan platform again, what kind of coupons are you putting that money out at? And if you include the fees what are the returns? What do they look like to KW?

Matt, I'd like you to answer that question.

Sure. Hi, Sheila. So yes, so if you look at the third quarter, we invested in six different loans in the quarter three in the multifamily space three in the office space, all as Bill mentioned, in the western US end markets that we currently own assets and have expertise. So the overall coupon was right around 5%. On the whole loans, but in some cases, we structure these with an AB structure where we're Kennedy-Wilson will take a first loss position and get a higher coupon. So if you combine that with the servicing fees we're receiving, we're achieving on those six loans, right, around 10.5% is the annual return to KW when you combine the coupon plus the servicing fee. And that's unlevered. We're doing this all with; we're not using repo lines, or any financing. This is all just cash investments.

Okay, great. And then KW has historically created value from loan to own where your purchase loans at a discount, just wondering if that is something that you plan on doing in the platform? I know, Mary mentioned the office building in Dublin was a loan to own situation.

Sure, yes. I mean, I'd say to date in the platform, although we've bought a couple loans at small discounts. Nothing we've done so far has been a loan to own strategy. That doesn't say that doesn't mean we wouldn't do it in the future. Just today, we haven't. So we certainly have the capability and the expertise, and we're looking for those opportunities, but they've got to really fit our criteria. They've got to be in markets that we know and like. And I think we're going to be pretty specific on the product types, to the extent we are going outside of office and multifamily, we're going to have to get significant discounts for those investments to make sense. But certainly, Sheila, it is something we were looking at and considering.

Sheila, I would add to that, Sheila, and just say over multiple cycles, Kennedy-Wilson is we've really built our businesses on transacting with financial institutions. And so if you just in the last downturn or dislocation, if you just look at what we did in Europe to create that whole business, the first two years of that business, all we did was really transact with financial institutions. Buying really distressed, non performing or sub performing loans, that we have a dedicated debt team, obviously, that Matt is running and that we also have in Europe. But we also alongside our real estate executives and expertise that we have in real estate, we're able to price everything as if we were going to own every piece of real estate. So I think given just if you look at the history of KW, the relationships that we have with financial institutions, and what we most recently did in the last dislocation in this one, you can anticipate that there will be more plentiful opportunities for KW in the space.

Sheila, I think the last thing I would say is that and that we may have mentioned this on other calls, but we have we have several work streams going on, the one of them, we call our relationship management system. And that over the three decades that, Mary and I've been together at KW, of course, we've been able because of our teams, we've been able to create very deep relationships with financial institutions, in the marketplaces that we like. And some are medium sized. But many of these are very large financial institutions. And so for the last, I would say, Mary, seven or eight months, we've been very, very focused outreaching to financial institutions in our marketplace. And to the extent that there are opportunities to buy loans at on a discounted basis, it's very much part of our history, as Mary's pointed out, but we're on it. And if there are opportunities that surface, I would say the other great news and why I said earlier that we're maintaining our levels of liquidity, where we're at is that we also have partnerships, long term partnerships, with very large institutions that are partners with us. And they've done well with us. And so we've got the great ability to move with speed to the extent that these transactions present themselves.

Okay, and last question, and sorry, if you already mentioned this, but I just wondered if you could comment on the remote working trend, and just your portfolio in mainland US versus Dublin, just wondering how things are going with all those tech companies in Dublin and remote working there versus here.

Mary, you want to answer that?

Sure. I mean, Sheila, we're not overly concerned about tenants, the work from home as a long term trend, I like to use the really good example of Microsoft, they announced on October 9, okay, all workers, you can opt to work remotely on a more permanent basis. Okay, so that same article said, they'd likely go to some hybrid model where employees would go to the office part of the week and everyone would be subject to, that would all be subject to manager approval. Furthermore, on the same day, Microsoft's VP of global real estate, his name's Michael Ford, he spoke at the Puget Sound Business Journal event. And he started by saying that the company will need more space due to social distancing, and that we're not going to have the dense workplaces that we've had in the past. And furthermore, Microsoft will likely be millions of additional square feet in the Puget Sound due to their significant growth in their cloud computing investment. So, really, I think, while some tech companies are out there, messaging that they're going to -- their employees can work from home permanently. That's not really what we're seeing on the ground. I think Microsoft is a huge example. And it's a great example. I mean they're experiencing tremendous growth driven by a transition in their senior leadership, their cloud computing investments. And we've just come across, quite a few reports showing that Microsoft and their tenants of ours, and we haven't seen it in our existing portfolio. So to sustain the increase in their revenues and their operational scale, that must be supported by correlated increase in employee headcount, and thereby office space. So we don't, we really are not concerned about it. And we also think to add to that, Sheila, that our portfolio, which really is mostly suburban office, low rise, or tenants have their own front door, we've got a very, very defensive office portfolio company wide. So we feel really strongly about what we own.

The next question is from Derrick Johnson of Deutsche Bank.

Hi, everybody. Good morning. I jumped on late so I apologize if I dupe anything. But when you look at the multifamily markets and specifically the new markets you've entered, are you specifically looking to diversify away from court dense urban properties when it comes to multifamily and then also within the three multifamily acquisitions specific, are there any value add opportunities within this portfolio? And what can we expect it to contribute over the next four to six quarters?

Yes. I mean, I think just to get a little more granular on that three asset portfolio, the property that I mentioned earlier in Colorado, Colorado Springs, we bought on our own balance sheet. And the other two were done in partnership ventures, one with a new partner that has great capacity. I would say almost always, in our apartment acquisitions, there's some component of value add, whether that's upgrade that one in Tempe Arizona will be one where we're upgrading amenities, and doing unit turns. And so we never -- generally never buy these with kind of a status quo in mind. And the whole idea over time as we're implementing our rehabs of the amenities -- so on is to obviously grow the NOI. And I think a very good example of that is, and I would say the last thing, too, is that the company has always had a history of mind to get into these markets where we think there are growth opportunities on the multifamily space, and then developing enough of a major beachhead that we can have scale. And so when you think about Boise, Idaho, for example, or Salt Lake City, little bog down the dates, but we probably started in Boise, five or six years ago, we started in Seattle 16 or 17 years ago, and today, we're one of the largest multifamily owners both in the market rate and the affordable and senior platform. And in Salt Lake City, we probably started it up there close to 10 years ago, and we've got a great portfolio that allows you to have better management teams, better management focus. And the other thing we've also learned is that getting into these markets early before other people are there, it allows you to think about the first Boise asset that we bought; it was, very, very, very fired property that we implemented a very big overhaul of. And today, based on our cost structure, and our acquisition price, and what we spent on the rehab, our cap rate on that asset is well over 10% might even be higher, closer to 15%. And so the key is to get an upscale in these markets, and to more directly answer your question about these very urban markets, we made a decision, many years ago to say, for example, avoid places like Center City, San Francisco, downtown Los Angeles. Those were markets that we just we saw an awful lot of product being built. And we felt that long term the rent structures that people were going to have to achieve, based on the cost to build were just not sustainable. So it's proven to be the case. And so it wasn't that we had a strategy to diversify away from those markets. We just didn't like the overall economics of what we thought was going on in these centers, city markets. And I would say Mary is kind of the opposite Ireland. Would you say?

Yes, I mean, I think in Ireland, you've got a lot of people are living in the city but you also have the look at our Clancy Quay asset, which is the largest multifamily asset in all of Ireland. That's adjacent to Phoenix, Phoenix Park, which is the largest park in Ireland. Then the other thing I'd say about just in general, our Irish multifamily portfolio, we've got really balconies and in really almost everything that we own there so and amenity space, outdoor space, we're now creating dog parks. We're creating gyms, we're creating business centers. So all of those things are critical to the success I think of our Irish multifamily portfolio.

Okay, great. And then staying, I guess, the International theme, clearly KW is viewed as a leader and capital allocation and understanding, where the next great opportunities are. Have you seen anything interesting, and this is, both off balance sheet and on in the Ireland or UK markets as far as a different property types, possibly industrial? Or were any other avenues of opportunity, given Brexit and the dislocation that may have forced in that market? Thanks.

Yes, I mean, that's great question, we've had a lot of success in the industrial space. With our European team, especially in the UK, we've done quite a few deals where we've round tripped them and our IRRs have been, very, very high 20% type range, we are seeing a lot of opportunities in the value add space. In this smaller, I'm going to say smaller lot sizes in the UK, where we're compiling those assets. And we're doing that with several partners and growing that into a platform. So what where there's not -- there's we're seeing a lot of competition in big portfolios, where the Blackstone's and the big names are trying to buy very large portfolios, and that's getting priced to levels that we don't like, but making the effort to buy the single lot sizes, and then combining those into a portfolio and or a platform, which is what we're looking to do right now. That would cover the UK, Ireland, and a small allocation to Spain; we're really excited about so that is the space that we look for us to grow in for sure.

The next question comes from Jamie Feldman of Bank of America, Merrill Lynch.

Thank you. I was hoping to just get your thoughts on just tenant behavior across the different regions in your residential portfolio. Just when you think about, when the pandemic started, and people wanted to get out of the cities, I'm sure you saw an uptick in the Mountain States. Now people are thinking vaccine. So I guess when you think about the volume of incoming interest for your properties, where would you say we are in that, if you want to call it a cycle, but this -- the pattern of behavior, in terms of people thinking maybe one day you do actually go back?

Well, I would say that you're seeing a very big accelerating trend that Mary talked about earlier, where you're seeing, I would say, people between the ages of 25 and early 30s that are in some of these urban, maybe even grew up in some of these urban markets. Where the affordability is just it's a real challenge. And where your quality of life is not real and it's a very mobile group of people. So you've got your quality of life, you've got lower state income taxes. And so you're seeing a very clear migration of kind of that age group into these Mountain States. And what's also key to all of this was following this is the job growth, the tremendous job growth in the Mountain States, Denver, Salt Lake City, Boise, Idaho, and then in the Pacific Northwest, and that's all buttress against, very strong educational systems. And so when you look at rents, like for example, this Rosewood property that we just finished, I mean it was 100% leased in 90 days. And but the rents that we're getting, although they work very well for us in terms of our returns are as much as half of what they would be in California. And so I'm not picking on California but there are just real afford issues here. And so I see this trend not diminishing at all. And so one of the great things we've been able to do over the last, really 24 months is kind of get our flag hosted not only in the Mountain States, but we bought a property in Albuquerque. We, one that to Mary and her team just bought in Tempe are the first asset that we've owned, actually in Arizona. And so we continue to think that all of these non California markets are going to be growers over time, both in terms of jobs and in terms of population.

Okay, that's helpful. And then as you think about, over the next 12 or 18 months, and the kind of distress you might see, and your experience over cycles, how do you differentiate between stuff that looks attractive, because it's off market -- market rents or values have really declined and/ or and property types that really have a secular issue, and may not recover? How willing -- how do you manage that risk of kind of digging a little too deep, when there may actually be longer term changes in trends?

Well, I mean, Mary, you might have a different answer to that. But I think the great strength of our company is our people that these teams, our teams have been together for, like I said, Mary and I've been together for three decades. Matt and others, Matt's over 15 years. And so we have a very, very clear, we're value investors. But we're value investors that have on long term outlook. And I think the other part of too it is extent of work we're dealing with a financial institution, reputationally, we've been viewed over the years is a very, very good counterparty, I mean, we do what we say we're going to do. So it just -- it always it just -- but I would say the last thing, too, is we never, ever, ever start any period of time, whether it's a year or quarter, and we say, look, we've got to deploy this much capital, that is a recipe for having a bad outcome. We're always looking for opportunities that meet our criteria, but we don't have any, like annual goals of how much capital we would like to deploy. It's just got to make sense. And I don't know, Mary, if you have anything to add to that.

I mean, what I would add is it's just as always, we would be very conservative in our underwriting assumptions, and anything that we would buy, we would just, I think in this market, you want to have multiple exit strategies. So I think, you just, it depends on what you're talking about. But if you're talking about, for example, buying retail, then perhaps there's a reuse option there that we'd be looking at. So I think as Bill said, I mean, over the years, we've been very, very careful; we will continue to be that we'll be disciplined and will be very conservative in our underwriting.

Are there assets or markets you were interested in before the COVID that you wouldn't touch now?

That we wouldn't touch?

Yes.

I don't know that. I don't know that I would say that. Mary, again, it always depends on what the value proposition is. And what the steeper the higher the risk, the steeper the discount has to be for us. And so, as I said earlier, one of the great things about Kennedy-Wilson is because we both, we are -- under Matt's direction, we're originating debt, we're buying debt. And we also are equity investors. And we operate in every part of the capital stack in real estate. And so we have these very rates built in appraisal systems in the markets that we operate in. I would say the only constraint geographically is that we don't really have any plans to go outside of the footprint that we're already. We really feel without exception that there's going to be plenty of opportunities in the markets that we're already in.

Okay, and then the last question for me is where do you see your leverage trending over the next year or so?

So, Matt, you want to answer that question?

Sure. As Bill mentioned, we successfully tendered for part of our 2022 bonds in Europe. So we brought the unsecured debt levels down, I think you'll continue to see that over time. And as these developments come online and start to produce cash flow that will also create value in the business and bring the leverage down. So I think the answer is it. We see it trending down over the next couple years with the completion of those developments and the repayment of some of this unsecured debt.

The next question comes from Alan Parsow of Elkhorn Partners.

Hi, good morning. With regard to a little bit of a follow up to the JP Morgan question on cap rates, can you elaborate? I mean, obviously, the Baggot sale was a great sale at a 4% cap rate. Obviously, interest rates in Europe are much lower than they are in the United States albeit they are very low here also, can you talk about the differences between the cap rates you're seeing both on buying and selling properties in the United States versus the UK?

Mary, you want to tackle that one?

I mean, Alan, what I would say about what's going on in the real estate space. And as it relates to cap rates, I mean, there's so much dry powder right now for real estate investments. We've on some research that we've looked at there's $214 billion for North America, and $87 billion for Europe. So as you see negative rates across Europe and the UK kind of barely holding on to not going negative, although they could go negative. We think that's going to have a positive impact on cap rates. So look, we think real estate values over time are going to increase just because of the amount of capital and where rates are. And that's across all the markets we're operating in.

I guess what I'm asking, I'm not saying --

To amplify a little bit on Mary, we made a very clear strategic decision almost five or six years ago, that we just felt this was coming and one way to really be a value creator is through the new building that we've built, that we've done as demonstrated by Baggot at the time we finished Baggot, Mary, I believe the stabilized cap rate on that was over 8% wasn't it?

Yes, 8.6%

8.6% and so even though we are very conservative and telling you where we think these cap rates are going to be, once we've stabilized new construction, we've always generally achieved higher cap rates than we --sorry, higher cash returns on our investment than we originally underwrote. And so even though I think everybody financial world wants to only give you credit for your development pipeline, once it's built and finished, the amount of work that goes into actually even getting it started and on the way to finishing is really creating value. So and we virtually all of the construction we're doing, it's like an assembly line, we rolled off some this year, we're going to roll up more next year and more the following year, and then almost all of it by the end of 2023. But it's going to be all of it's going to stabilize it, very attractive cap rate.

I just want to, what I'm actually asking is, is it true or untrue that cap rates in Europe will remain lower than cap rates in the United States because of the interest rate differentials between the US and the UK and Europe?

It's hard to say, I mean, it's just it's hard to say. I mean, I think that's a logical conclusion. And as Mary pointed out, and as you saw from the Baggot sale there -- cap there are investors that need some form of yield today. And I think it's particularly too when the insurance industry, obviously, what's driving so much of this, Alan, as you well know is that with the 10 year bond or whatever it is 80 basis points. It's very difficult for certain financial institutions to achieve the kind of returns that they need for their basic business at 80 basis points and putting in money out for 10 years. And so that's created as we started this debt platform opportunity. And even for somebody that obviously is earning 5%, or 6%, or 7%, that's a whole hell of a lot better than earning 80 basis points. Whether the cap rate compression in Europe is going to stay this way or not, we'll just have to see over time, it feels like it. But we'll see.

Yes, and I think it's really about the asset class too like core assets, Alan, like in Europe, you're seeing core yields in France and Paris be in the 3% range. So in Ireland, if you look at the buyers in Ireland, the core buyers, 75% of the deals that have been done this year in the core space are German funds. So 4% is an attractive yield for them, as we've been talking about given negative interest rates.

This concludes our question and answer session. And I'd like to turn the conference back over to Bill McMorrow, for any closing remarks.

Well, on behalf of everybody at Kennedy-Wilson, as I said earlier, we appreciate everybody's interest in the company and your support of the company. And I hope everybody has a great day. Thanks very much.

Thank you, sir. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day.