Good morning, and welcome to the Kennedy Wilson third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Daven Bhavsar. Please go ahead.
Thank you and good morning. This is Daven Bhavsar, and joining us today from Kennedy Wilson are Bill McMorrow, Chairman and CEO, Mary Ricks, President, Matt Windisch, Executive Vice President, and Justin Enbody, Chief Financial Officer. 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, the most directly comparable GAAP financial measure, and our third quarter 2021 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 the number of risks, uncertainties and other factors indicated in reports and filings with the Securities and Exchange Commission. I would now like to turn the call over to our Chairman and CEO, Bill McMorrow.
Thanks, Daven, and good morning, everybody, and thank you very much for joining the call today. I'm very pleased with our strong third quarter results, which saw EBITDA, adjusted EBITDA increase over 165% compared to Q3 of 2020. The record results we have posted for the first nine months of the year, adjusted EBITDA totaled $741 million thus far in 2021, compared to $261 million for the first nine months of 2020. We've made tremendous progress this year on our two key initiatives, growing our in-place annual NOI and growing our fee-bearing capital. We had a very active quarter, completing $1.8 billion of investment transactions, bringing our year-to-date total to $4.4 billion.
Our assets under management has grown by 17% in 2021 to a record $20.5 billion, from $17.6 billion at the end of 2020. We have a strong pipeline of new transactions that we expect to close by the end of the year, which would further increase our AUM and result in a record year of capital deployment for KW. I'd like to start by providing some perspective on what we were seeing in our markets as real estate fundamentals continued to improve in the quarter. Global transaction volumes remain healthy, with Q3 volumes in the U.S. increasing 150% from last year's levels, according to Real Capital Analytics. Institutional demand for real estate remains high, with trillions of dollars of capital globally that continue to search for sound risk-adjusted returns. 2021 operating metrics continue to improve for us.
In our U.S. market, we saw continued impressive apartment rent growth, with rents increasing at one of the fastest rates in recent memory across all our regions. Investor demand for high-quality rental housing remained very strong and has resulted in cap rate compression and further increases to the value of our real estate portfolio. Our Mountain West apartment portfolio, which is our largest region with almost 11,000 units, outperformed once again, driven by very attractive migration trends and relative affordability. We also saw significant improvements in our Pacific Northwest and California portfolio as pandemic-related moratoriums began to burn off. We expect meaningful rent growth in all of these areas over the next 15 months. In Europe, we saw outstanding performance in our U.K. and Dublin properties. On July 19, the U.K. removed all COVID restrictions.
In Dublin, essentially all travel reopened on July 26, and we saw a gradual return to office that we expect will accelerate over the next six months and have a positive impact on our portfolio. Strong leasing demand in our Dublin multifamily portfolio resulted in occupancy growing by over 400 basis points in Q3 to 96.6% occupancy. The key acquisitions in the quarter were three wholly owned multifamily assets totaling 879 units that we acquired for a total of $399 million. Two of these assets are located in suburban Seattle, and the third asset is located in suburban Denver. We look forward to implementing our value add programs at these communities, which has consistently shown our ability to drive outsized returns.
Our multifamily portfolio globally grew to a record 33,400 units at quarter end, including almost 5,000 units under development, which we expect to complete at yields well above current market cap rates. We're on track to increase our global unit count to 35,000 by year-end. Mary will speak later on the impressive growth of our European logistics portfolio. Our Q3 transactions grew estimated annual NOI to $413 million, an increase of $19 million in the year, and we increased our fee-bearing capital to $4.8 billion, representing a 23% growth year- to -date. I'm also pleased to announce that yesterday, our board of directors authorized a 9% increase to our quarterly dividend, which now annualizes to $0.96 per share. Looking ahead, I believe the key drivers of our business will be...
We are well-positioned with our multifamily portfolio, the reopening of our European markets, the growth of our investment management platform, and the completion of our development projects. Before we discuss these initiatives in more detail, I'd like to pass the call over to our CFO, Justin Enbody, to highlight our Q3 financial results.
Thanks, Bill. In Q3, we had GAAP EPS of $0.47 per diluted share compared to a loss of $0.18 in Q3 of last year. Adjusted net income in the quarter grew to $112 million compared to $27 million last year. Adjusted EBITDA grew to $203 million in the quarter, compared to $76 million in 2020. For the year, we've had GAAP EPS of $1.96 per share, adjusted net income of $424 million, and as Bill mentioned, adjusted EBITDA of $741 million, representing record results for the first nine months of the year. In our co-investment portfolio, which includes our unconsolidated funds and joint ventures, we continue to see appreciating asset values driven by strong NOI growth and further cap rate compression.
This strong performance led to $79 million in gains and $46 million of accrued performance fees in the quarter. For the quarter, including promotes, total adjusted fees were $56 million, up from $8 million in Q3 of last year. Turning to our balance sheet, in August, we issued $600 million of unsecured bonds maturing in 2030. The proceeds were used to fully pay off our line of credit, as well as the remaining $296 million of our KWE bonds due in 2022, which was completed in October. We significantly improved our maturity schedule with no unsecured debt maturities until 2025 and nothing outstanding on our $500 million revolving credit facility.
Our debt has a pro forma average interest rate of 3.6% and a weighted average maturity of six and a half years, which has improved by two and a half years since the beginning of the year. During the quarter, we bought back $25 million of stock at an average price of $21.55. Since the beginning of 2018, we've now returned $750 million or approximately $5.40 per share to shareholders in the form of dividends or share repurchases, which includes repurchasing 15.7 million shares or approximately 10% of our outstanding share count. We still have $213 million on our $500 million buyback authorization remaining, a portion which was utilized in October.
With that, I'd now like to turn the call over to Matt Windisch to discuss our multifamily portfolio.
Thanks, Justin. Our global multi-family portfolio continues to outperform due to our market selection and our hands-on asset management style. Our assets are experiencing improving market conditions, lower delinquencies, and increasing rents. Positive migration trends and affordability continue to create outsized demand, in particular for our Mountain West portfolio, which saw same property revenues grow by 11% and NOI grow by 15%. We think there remains strong upside in our Mountain West portfolio, where average rents are $1,366 per month, and as people continue to seek a higher quality of life and migrate out of higher rent, higher tax states. We are also starting to see improving trends from our Pacific Northwest and our California assets. Offices began to reopen, which has been a positive for renter demand.
Rent concessions in the U.S. were down 63% in Q3 compared to Q3 2020, and we saw leasing spreads average a record 27% on new leases across our U.S. portfolio. We also continue to work with our tenants and take advantage of the rent relief measures that are available. The combination of these factors resulted in robust same-store revenue growth across our U.S. market rate multifamily portfolio of 8% and NOI growth of 12% versus Q3 2020. This represents our best quarter of NOI growth in the last five years. Sequentially, from Q2 of this year, revenues grew by an impressive 6% and NOI by 8%. In-place rents in our U.S. portfolio are now 6% above pre-pandemic levels.
With an average loss to lease of 15%, we believe our portfolio is set up for strong growth in 2022 and beyond. Similarly, at our Dublin apartment portfolio, we continue to see strong demand as people begin returning to the city. This led to Clancy Quay being stabilized in Q2, and currently, Capital Dock is 77% leased and on track to be stabilized in Q4. Overall occupancy is now returning to pre-pandemic levels in Dublin. In addition to the mega cap tech companies that have been large employers in Dublin for many years, other high-growth tech companies are looking to expand their presence in Dublin, such as Stripe, TikTok, ServiceNow, and First Data. We continue to believe in the long-term prospects of the Irish apartment market, driven by a young and growing population.
Additionally, there are a large number of multinational companies with their European headquarters in Dublin with a workforce that is more likely to rent than buy. Now I'd like to turn the call over to our President, Mary Ricks, to discuss our office portfolio and our investment management business.
Great. Thanks, Matt. Turning to our office portfolio. As tenants begin to return to the workplace, we are seeing improvements in the operational environment, including a growing number of firm requirements, requests for tours, and deals being executed. Quality in both design and construction and staff wellness continues to be an important factor as tenants are drawn toward amenity-rich buildings with ESG credentials. Thematically, we continue to focus on office tenants in high growth and essential business sectors, including life sciences, media, and technology. When you include our suburban apartment and growing logistics assets, we believe this thematic approach positions our overall portfolio well for future cycles.
A great recent example is at one of our largest office assets, 111 Buckingham Palace Road in London, where by October, we transacted on approximately 100,000 sq ft of lease transactions, including 20,000 sq ft under offer, which in total represents 45% of the building. These transactions will improve the occupancy significantly from 80% - 100% in Q4, deliver 26% growth above in-place rents, and 40% of the income at pre-COVID top rents in excess of GBP 70 per sq ft, compared to 15% in Q3 of 2020. Major tech firms represented 80% of the new leases, illustrating that top tenants are active in the market and willing to make decisions for the right space.
71% of our office NOI is from our European portfolio, which saw Q3 same property revenue grow by 4% and NOI grow by 5%. These results were driven by strong rent collections, lower bad debt, and the burn-off of free rent in the quarter. With an even larger focus on employee retention, large corporate tenants are taking advantage of the benefits of modern low-rise suburban offices such as affordability, shorter commute times, and outdoor amenities. We continue to see this play out in our own portfolio with approximately 90% of the NOI from low- and mid-rise properties. We completed 585,000 sq ft of leasing in the quarter, bringing our year-to-date total to 1.5 million sq ft with a WALT of 7.6 years.
Our leasing pipeline remains strong with 152,000 sq ft of leasing completed thus far in Q4, and another 600,000 sq ft in legals that we're actively working on closing out, giving us good momentum heading into next year. Turning to our investment management platform, we've continued to see strong growth in the quarter with our fee-bearing capital growing to $4.8 billion. This has now increased over 160% since the beginning of 2018. Our fast-growing global credit platform continued to lead the charge in Q3. In July, we announced a new GBP 500 million commitment focused on European loans, bringing total global commitments to $3 billion. In Q3, we completed $440 million of loan investments, including our first loans in Europe on a few large industrial portfolios.
Our debt platform grew by 24% to $1.4 billion in loans outstanding with $140 million in future unfunded commitments. We've been able to attract institutional quality borrowers with high-quality assets to our debt platform with an average loan size of $70 million and weighted average maturity of four years. We continue to see a strong macroeconomic environment in the European logistics sector. Occupational demand has driven vacancy to an all-time low in the U.K. of 3.4%, and yields continue to compress across Europe due to accelerating rent growth. Our thesis from the start when we launched this platform was that last mile logistic properties in close proximity to transit centers would have strong demand as they allow for companies to get their products to the end customer in an efficient manner.
COVID has accelerated this thesis as online sales penetration continues to grow, with online sales making up 28% of total retail sales in the U.K. Our industrial portfolio has grown rapidly. Including assets under offer, our portfolio has a gross value of approximately $1.1 billion today across 59 assets, with KW share at approximately 20%. We look forward to further growing both our debt platform and our logistics platform in the fourth quarter and continued expansion of our investment management business, which has in total $2.1 billion in future commitments from our various strategic partners. Another important area of growth for KW will be the completion of our development and lease-up projects, where we continue to make progress throughout the pandemic.
Our developments totaling $2.7 billion at cost are being delivered with strong sustainability credentials with environmental improvements and tenant wellness at the center of our focus. Once these assets are completed and stabilized, we expect an incremental $105 million of estimated annual NOI to KW, which represents an initial yield on cost of approximately 6%. We are nearing completion of two office properties in the heart of Dublin, Hanover Quay and Kildare Street, which total 134,000 sq ft that are expected to complete in Q4 and Q1 respectively. We remain on track to complete the majority of our construction projects in 2023 and 2024 on time and on budget. Last month, we announced a new project that we are extremely excited about in a public-private partnership with Cal State Channel Islands.
We are going to develop 589 residential units as part of a master planned community in Camarillo, California. The project will have 310 wholly owned market rate units, 170 affordable units built through our Vintage Housing joint venture, and 109 for sale townhomes sold by Comstock Homes. This development sits adjacent to a 386 unit wholly owned community which we acquired in 2016. A project of this nature was a natural fit for KW, given our broad multifamily expertise in developing both market rate and affordable units. We are aiming to complete construction in 2024 and look forward to breaking ground in Camarillo later this month. With that, I'd like to pass it back to Bill.
Thanks, Mary. As you can see, we have a combination of ways to further drive earnings and cash flow growth at Kennedy Wilson. As I mentioned on the last call, we have a clear path to grow our stabilized NOI at the rate of 10%-15% a year over the next three years, driven by strong organic NOI growth, new acquisitions, and the completion of our construction. We also plan to grow our fee-bearing capital and resulting fees by 15%-20% per year over the next three years. The combination of these factors should lead to significant growth in both our net asset value per share and our assets under management. As we look ahead to 2022, I'm very optimistic in our ability to continue expanding our business for a number of reasons.
First, business conditions have rebounded as economies reopen, and we have a very healthy transaction and financing market, perhaps the strongest we've seen in the last decade. Second, over the last 18 months, we either grew or established new investment platforms with well-capitalized, extremely liquid, global strategic partners who have a keen desire to expand their relationship with Kennedy Wilson. We can now creatively allocate capital across the entire capital structure and in a wide range of asset classes. Finally, our global investment team remains intact, and our global communication has never been better. I'm very pleased with the progress our team has made, not only in Q3, but over the course of 2021. I'm also reminded of the importance of long-term relationships, both internally and externally to KW.
Although I'm biased, we have an exceptional global team that has been working together for decades, and our internal communication, as I mentioned, is the best it's ever been. This fact, combined with very high quality properties in the right product category, located in diversified and growing markets, has set up KW for excellent long-term growth. I'd like to thank our tremendous KW team, our shareholders, our board, and our partners for their continued support of Kennedy Wilson. With that, Daven, I'd like to open it up to any questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will be from Anthony Paolone of JP Morgan. Please go ahead.
Great. Thank you. My first question's for Bill. I mean, given you've got a deep level of experience doing this for a long time, how are you thinking about inflation or what does that kind of, you know, suggest you do from a real estate point of view, strategy, geography, property type, et cetera?
Yeah. Well, I think there's many facets to that, Tony. I mean, as you heard from Matt and Mary, the growth in our top line rents is really increasing at a very rapid pace, way far ahead of any inflation rates. You know, I think about it in terms of our own exposure. Really, when you think about it really primarily relates to what we'd be doing in the construction and development area. You know, when we started really building seven or eight years ago, we made a decision that the vast majority of our projects were gonna be handled through what we call GMP contracts, which is a fixed price contract that you do with the general contractors.
I would say into the 90% range, everything that we're doing has got a guaranteed maximum price on it. Also, we've demonstrated over now a very long period of time that between our two construction teams in the U.S. and in Ireland, which, you know, now total probably close to 35 people, we have the capacity to bring things in on time and on budget. I'm not really concerned about inflation as it relates to KW. And then the only other question that really comes up in this whole discussion is what's happening in the supply chain issue in terms of, you know, really getting materials, not only to the construction projects, but to the CapEx that we're doing on properties that we're just doing value add to.
We really haven't seen any impact in terms of our ability to get, you know, the raw materials, the lumber, the steel, furniture, whatever it is that we need at the properties. We've had very little impact. You know, not that it's any bellwether here, but, you know, we see the supply chain issue as it relates to, you know, cargo moving and all of that, as really a temporary kind of situation. We happen to sit here, at least in Los Angeles, at one of the largest ports in the United States. Really, the issue is not whether things are getting shipped, it's just getting them off the ships and trucked. You know, I think we'll see that, you know, the trucking companies figure it all out. They'll hire more people.
They'll deploy their trucks. You know, I think by, you know, certainly the middle of next year, this whole discussion will, I think, be less relevant. That's kind of how we're looking at everything.
Okay. Got it. Thank you. Just my other question is, you know, in the past, you've got experience in lodging and other property types outside of multifamily and office. Are you spending more time in any other areas, just given liquidity out there and need to go find returns in other places?
Well, I think that, you know, really when you think about it, clearly, the multifamily is the biggest part of our business today, and that's one that we really wanna continue to grow. We think that's really the best real estate asset class. We also very much, as Mary pointed out, like the industrial space. Both here and in Europe, particularly in the United Kingdom and Ireland and Spain to a secondary degree, we wanna see that business grow.
The office business here in the United States has nothing to do with occupancy, but because of the lease terms here, which, you know, generally are in the three to five-year range, don't present as attractive an option for us in terms of our capital, because we like to get cash flow out of our properties every month. Where we do find it attractive, though, is actually in the markets that we're in Europe, particularly the United Kingdom, because the lease terms there can be 10, 15, in some cases, 20 years. You've got income certainty for, you know, long periods of time, which also means you're not putting additional capital into those buildings every three or four years. We're very, very focused on really kind of those three asset classes.
Great. Thank you.
The next question comes from Derek Johnston with Deutsche Bank. Please go ahead.
Hi, everybody. Good morning. Just wanted to focus on multifamily and value add. How substantial today does remain the value add opportunity in the multifamily book? I do believe some projects were slowed or maybe halted during the pandemic. Wondering if they've been reignited and where you're focusing your value add spend, you know, as clearly the IRR is a pretty solid use of capital given today's compressed cap rates. Just if any elaboration there would be helpful. Thanks.
Yeah, Derek. Thank you. That's good points. Just to be clear, we've made a very conscious decision in March of 2020 that we were not going to stop any construction or capital spending on our development projects unless we were mandated by that local jurisdiction, you know, the government entities that were in that particular geographic area. We were able to hold true to that. We pushed through all of our construction. Really the only place where we saw I would say modest time delays was in Ireland, where, you know, they shut down construction sites for a couple months. Everywhere else that we operated, we didn't have any slowdowns at all.
You know, I've learned over time the result of that is that then you're finishing brand-new properties at a time where in some cases other people might have stopped their capital spending given the uncertainty that existed in 2020. We're fortunate now, as, you know, I think Mary pointed out or Matt pointed out, that we're continuing now to roll off new finished properties. We just finished a big property up in Boise now that's running at full occupancy. We're finishing two really first-class office buildings in Ireland that we've got great leasing interest in. The key in our business, as long as you can, is really just to not stop unless there's some external reason to stop. I'm gonna ask Matt to amplify on the other part of your question.
Yeah. Thanks, Bill. Yeah. I'd say across the U.S. market rate multifamily portfolio, there's roughly 40% of the units that we have not renovated yet, so there's significant upside to doing the renovations. If you look at the return on cost on those, they can range from, you know, 15%-25% when we're putting capital into these units. I'd say additionally, you know, we certainly in the Mountain West continued doing renovations throughout the pandemic. We were slower in California and the Pacific Northwest, just given that rents were kind of flat, and so we are now re-implementing some of those value add initiatives. We've got a combination of a 15% loss to lease and then 40% of the portfolio that we can, you know, invest capital into the units.
We think there's some good runway here to grow rents over the next couple of years in that portfolio.
Okay, great. No, you know, both comments very helpful. The loan book was also pretty active in 3Q at over $400 million. Could you go into some detail on the type of loans you're seeing and what you're interested in funding?
Yeah. I'm gonna start and then turn it over to Matt, Derek . I think the key there is that it's been really interesting, and I really think over time, this will become probably the largest part of our fee-bearing capital, the loan business. We're transacting in many cases with, you know, people that we've known for years, decades, in some cases. Then the other part of it is that since we're active on the equity investing side and we're also active on the construction side, we know costs. We know values, and we know costs. Matt and his team are also able to leverage the other parts of our company that, for example, our multifamily group, where he's done a number of loans to multifamily developers.
Not construction loans, but transition type of loans. We're able to leverage all parts of our platform. I would say the other great thing about the debt business is it gives us you know, a great information flow in terms of what's going on in various markets. I've always felt that even though, yes, we're in the real estate business more than anything, we're in the information business of knowing values and what's going on in a variety of markets. It's been a you know, really from a standing start in May of 2020, quite remarkable to see the growth. Matt, you wanna give some more?
Yeah. I think just as a starter, I'd say that we're really focused on institutional quality sponsors, very high-quality assets that fit within the geographies we already own and operate properties in. Something that gives us a competitive advantage. You know, our average loan size is $70 million, so we're doing, you know, relatively large loans. In that sense, for the quarter, to give you a sense, we did, you know, one loan that was secured by a hotel, one loan secured by a multifamily property, one loan secured by an office building, and then we did a few loans secured by industrial. So it's, you know, across the gamut of product types, but if you look through the entire portfolio, it's still a majority multifamily and office, just like our equity portfolio.
We do have the flexibility to, you know, invest lower down in the capital stack for, you know, hospitality and retail, where, you know, to date, over the past few years, we have not been investing in the equity. We are still investing in the debt in those product types.
Good stuff. Thanks, guys.
The next question will come from Sheila McGrath of Evercore ISI.
Yes, good morning. Bill, your advantage in investing in the Mountain States a while ago was that there wasn't much institutional investor competition. I'm just wondering if that's still the case, and maybe you could describe the competitive landscape in Mountain States versus Pacific Northwest and other markets?
Yeah. Well, thanks, Sheila. Yeah, it takes a long time to get yourself established in any new market, you know. We started probably 16 or 17 years ago. We made a conscious decision, and it had nothing to do with, you know, what was going on in any way in California, but we wanted to diversify our income streams into other Western geographies. Between Seattle and Salt Lake City and Boise, Idaho, and now Albuquerque and Denver and Colorado Springs and so on, we've got a really great footprint in these other markets, in some cases, smaller markets. It's not easy. It takes time. We're probably the largest multifamily owner now in Boise, Idaho.
I don't have any statistics on the Greater Seattle market, but we'd be in the top five, I'm sure, if not the top two or three. It takes time. I think too, generally speaking, although this is a big generalization, the institutional deployers of capital, you know, the big companies don't go to these smaller markets. It's competitive. It's never not been competitive. You know, over my three decades here, it's always competitive. I think we have a very big advantage in these smaller markets because we've got, you know, as they say, boots on the ground, and we've got assets in these markets. You know, the other thing that I can't stress enough times, Sheila, is that the-
If you look at the people that run our multifamily business, they've been doing it here at KW for 17 years. That really has been over the last couple of years as we all dealt with, you know, all kinds of different issues related to this pandemic, the real great strength that we've had has been the fact that our teams have been together for all of these periods of time. I mean, yes, there's always competition, but I really feel like the relationships that was kind of what I was alluding to when I talked about the relationship, both internally and externally. I think we're viewed as a very, very good counterparty in every market that we're in, because we always do what we say we're gonna do.
You know, I'd like to think that for all of those reasons, we have a competitive advantage.
Okay, that's helpful. On stock buyback, just curious your thoughts with acquisition cap rates compressing meaningfully, particularly in multifamily, does that make stock buyback more of a priority? Just your thoughts there.
Yeah. Well, I think, you know, the stock buybacks, like any company, it's always been a capital allocation decision. We've got, you know, like any growing business that like we are, you've got to make capital allocation decisions, whether it's to new acquisitions, whether it's to your development pipeline. The way we look at it is just part of the whole menu. We still believe that the stock price is a very attractive price, and I think particularly with the dividend increase that we did, you know, we feel that the overall total yield opportunity in our stock is really good. As we said on the call, even though it was past the quarter in October, we continued to deploy capital into the stock buyback.
You know, as it's well known, I've personally been a buyer of our stock over the last nine to 12 months. I think that kind of tells you how I feel about where the values are.
Okay, great. On affordable housing, there are some programs in D.C. that are under discussion allocating more capital to affordable housing. Just wanted your thoughts on, do you think that's another avenue of growth for KW? Maybe you could comment on that new acquisition in Southern California, 'cause that seemed to have affordable and market rate opportunities.
Yeah, Sheila. So, yeah, we're well aware of the legislation in Washington that will impact kind of the amount of bond cap available for affordable housing. I'd say in you know a number of our markets, we continue to have you know availability, but there are certain markets where the bond cap is getting smaller and smaller. It is making it more challenging to invest you know in certain markets right now. Certainly that will be a huge help to the affordable housing business, which you know clearly there's a huge need for affordable housing you know across the U.S. and particularly in our markets. You know, we certainly have other ways to deploy capital into affordable housing without the bond allocation, but it certainly does help.
It is something we're closely monitoring, and we're hopeful that we get a good result there. Then with regards to the project in Southern California, yeah, I mean, it's a project we've, you know, we own the adjacent property for five years now, and we've been working on this land acquisition for several years. It's unique to be able to have the ability to build both market rate housing and have the affordable housing capability with our partner to be able to deliver really all of these units in-house.
Okay, thank you.
The next question is from Jamie Feldman with Bank of America Merrill Lynch.
Great. Thank you. I guess, you know, as you take a step back and think about all the growth you've had over the last couple of years in terms of both partners and product type, you know, what do you think is still missing from the platform at this point?
I would say the main focus that you know we I think we're in all the right businesses now. Now it's just the ability to continue to grow those businesses. So that all relates to your team and the people you have. We've had really great success on the people front in terms of new hires over the last 12-20 months. I would say Kennedy Wilson in our real estate world is a very desirable place to work. We're attracting you know really high-quality younger people into our business. Then of course we have the one you know I would say senior addition to our team in Gary Palmer here this year. We're in all the right markets and all the right businesses.
Now you just have to make sure that you know you've got the right team in place to support that growth.
Okay, that's helpful. Then you announced a nice dividend increase. Can you just talk about how you think about whether it's AUM, you know, third-party AUM or just kinda NOI from the platform? I mean, how can we tie kinda growth in the business to growth in the dividend going forward?
You mean, like as a policy? I'm not sure I follow your question.
Well, just to understand how you think about, you know, the I guess the number one is what drove the dividend increase. You know, you don't have a required payout under your structure.
Right.
Is there a good way to think about, you know, how you have a view and your board, you know, think about when to grow the dividend and-
Yeah.
You know, what the key driver is?
Well, I would say we don't have any formal policy in terms of some percentage or yield that we're trying to hit. I think as Justin pointed out, for a company our size, we've been very conscious of returning capital to our shareholders. The dividend increases all really relate to how we view future cash flows. We've had great success this year reducing our unsecured debt costs. You know, we look at kind of net cash flows. You know, the natural result out of all of this is that our assets under management are gonna grow significantly over the next three to five years.
When you talk about the NOI and you talk about the fee-bearing capital, the assets under management are gonna come right along with that. I think in nine months, to have 17% growth off a reasonably big number, that's really good. We're, you know, gonna continue to evaluate the dividend over time. As I said, it really relates to, you know, our very optimistic outlook about future cash flows. That's why we did the dividend increase.
Okay, thanks for your thoughts.
This concludes our question and answer session. I would now like to turn the conference back over to Bill McMorrow for any closing remarks.
Well, as I said in my closing remarks, I really appreciate everybody's interest in the company. As I always say, any of the four of us that were on the call today are always available to answer any questions that come up post this call. Thank you again, and have a great day.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day.