Good day, and welcome to Kennedy-Wilson's First Quarter 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded.

And now I would 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 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 section of our 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 to the most directly comparable GAAP financial measure and our first quarter 2022 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..

Good morning, everyone, and thanks, Daven, and thank you, everybody, for joining us today. I'm pleased with the Q1 results that we reported yesterday. After a year of record results in 2021, our business is off to a very strong start in 2022.

Operating results continue to improve, driven by robust tenant demand, the completion of construction, new acquisitions and increasing rental rates and asset values, all resulting in an improvement in our key financial metrics, including adjusted EBITDA, which increased by 25% from Q1 of last year and totals $160 million.

I'd like to start by providing some background on what we are seeing in our investment markets. In the U.S., we once again saw strong results out of our market rate apartment portfolio including double-digit same-property NOI growth across every U.S. region.

As Matt will go into in just a moment, these results were driven by strong demand for our high-quality, largely suburban multifamily communities. Including the acquisitions we announced last week, our global multifamily portfolio totals 37,600 units, which has grown by 25% in the last two years.

The unit count includes over 4,500 units under development with roughly 50% expected to be completed in 2023 and the remainder in 2024. In The UK and Ireland, we similarly saw a significant improving operating environment, which in turn, drove an increase in leasing velocity for both our office and multifamily properties.

In Dublin, where coincidentally, Mary and I are today, we've recently seen a few of the world's largest asset managers announced multibillion-dollar office or corporate investments recently which reinforces the long-term attractiveness of the market and speaks towards the value of our existing office and development portfolio.

Investment transaction levels and deal flow remained solid in Q1. We completed almost $1 billion of transactions in the quarter, which grew our assets under management to $23 billion versus $22 billion at 12/31/21 and $18 billion at 12/31/20.

These transactions along with a strong organic NOI growth and stabilizations across our existing portfolio grew our estimated annual NOI by 6% to $461 million at quarter end. This represents a 19% increase from Q1 of last year. Similarly, our fee-bearing capital grew by an impressive 6% from year-end to $5.3 billion and 29% growth over Q1 2021.

Finally, we completed a $300 million perpetual preferred equity investment from Fairfax Financial in Q1, which further strengthened our financial position and our ability to take advantage of future opportunities.

Along with this investment, Fairfax also increased their commitment to our debt platform by $3 billion, which the debt platform now totals $5 billion of lending capacity. I'd like now to pass the call over to our CFO, Justin Enbody, to highlight our Q1 financial results..

Thanks, Bill. In Q1, we had GAAP EPS of $0.24 per diluted share compared to $0.04 in Q1 of last year. Adjusted net income was $85 million compared to $47 million last year. And as Bill mentioned earlier, adjusted EBITDA was $160 million compared to $128 million last year.

During the quarter, we delivered solid growth in our consolidated revenues which increased by 25% to $125 million from Q1 of 2021. This was driven by strong revenue growth from our multifamily portfolio, new acquisitions, improving hotel revenues as well as continued growth in our investment management fees.

Our co-investment portfolio continues to generate attractive returns for our shareholders. In Q1, we saw another strong quarter of investment performance and increasing asset values, resulting in $105 million in income from unconsolidated investments in Q1 compared to only $18 million in Q1 of 2021.

Total investment management fees which include our base management fee and accrued promote income totaled $39 million in Q1, up from $7 million in Q1 of last year. Turning to our balance sheet and debt profile. We continue to monitor the movements in interest rates and have been actively managing our debt.

As a reminder, we refinanced all of our unsecured debt last year, extended the maturities from 2024 to between 2019 and 2031 while lowering our borrowing costs. Less than 10% of our share of debt matures by the end of next year, which is all secured at the property level.

Additionally, 94% of our debt is either fixed or hedged using interest rate derivatives. And with that, I'd now like to turn the call over to Matt Windisch to discuss our multifamily portfolio..

Thanks, Justin. KW's global multifamily portfolio now comprises over half of our estimated annual NOI. This compares to only 39% four years ago.

In Q1, we acquired four additional communities, which totaled 1,150 units through our co-investment portfolio for a gross purchase price of $370 million, including another 450 units in the Pacific Northwest, roughly 700 units in the Mountain West.

We saw a continuation in the quarter of the recent strong operating trends as our portfolio delivered robust same-property NOI growth of 13%. So starting with the U.S., leasing spreads remained elevated with new leases increasing by 16% and renewals by 12%. Occupancy remained solid at over 95% with no current concessions to speak of.

Same property revenue grew by 11% in the quarter, including 14% in our largest region, which is the Mountain West. Average rents in the Mountain West are approximately $1,400 which we think remains extremely attractive, given that this region still sees robust in migration as people relocate from higher-cost states.

We continue to allocate capital to these high-growth markets in Q2 and as Bill mentioned earlier, we recently acquired off-market another 1,100 units across three assets in Scottsdale, Albuquerque and Las Vegas for $418 million which brings our unique Mountain West portfolio up to almost 14,000 units.

Our Pacific Northwest and California assets also continued to grow with same-property NOI up double digits in each region. Looking at our sequential results, we've seen a strong increase in NOI by 5% from Q4 with increases seen across every U.S. region. Our U.S. market rate portfolio has an average loss to lease of 12%.

And as a reminder, over half of these units have yet to be renovated, positioning us well for the typically strong summer leasing months. Same property revenue and NOI was up 5% in our vintage affordable housing portfolio. Rents for this portfolio are tied to the change in area median income, which is on track to continue growing as wages increase.

The debt advantage has an attractive weighted average maturity of 14 years. We have another 2,000 units we will be adding to the existing 9,000 units, resulting in doubling the original 5,500 units we acquired back in 2015. Turning to Dublin. We saw a boost in leasing as the economy has reopened and employees are returning back to the office.

Same property occupancy improved by 6.5% to over 97%, which resulted in same property NOI growth of 9%.

Our best-in-class offering at Capital Dock is now 94% leased, with a growing population and a structural undersupply of housing, we continue to be believers in the long-term Dublin multifamily market and remain on track to complete an additional 1,000 units by 2024.

So with that, I'd like to turn the call over to our President, Mary Ricks, to discuss our office portfolio and our investment management business..

Thanks, Matt. Turning to our office portfolio. Over 70% of our office NOI comes from European assets where we continue to find strong investment opportunities. In Q1, we acquired Waverleygate, a prime well-located 204,000 square foot office property in the UK for $105 million.

It is adjacent to the main railway station and with excellent transport connectivity, including walking and cycling. Waverleygate, both leading environmental and wellness features. It is 96% occupied and includes high-quality tenants, such as Amazon, Microsoft and the Scottish government.

We expect to increase the initial NOI of $5.4 million over our investment period as current in-place rents are approximately 35% under rented in an extremely tight market that currently has a 2% vacancy rate.

Waverleygate has significant similarities to our largest UK office, 111 Buckingham Palace Road in London, where we have successfully refurbished and added tenant amenities and wellness features and delivered a number of environmental initiatives, including enhancing the building management system, reducing energy consumption and transitioning to almost all electric building from renewable sources at 111.

We have taken the occupancy from 79% at the end of Q4 2021 to 100% leased, including a recent signing of a new 14,000 square foot lease in Q1 and a further lease expected to close in Q2, driving growth in total estimated annual NOI to $18 million. We've seen – we've recently seen a market increase in foot traffic.

Physical usage of buildings, prospective tenant inquiries and inspections across our entire commercial portfolio. Leasing activity remains strong, completing 660,000 square feet of lease transactions in Q1 with an attractive weighted average unexpired lease term of 8.9 years. Turning to our office developments.

We continue to see meaningful occupier interest in newer office assets with leading environmental, wellness and intelligent building technologies. Across our own portfolio, Dublin leasing demand and rental rates achieved on new developments are exceeding pre-COVID business plans.

In Q1, we stabilized our 68,000 square foot Hanover Quay development in Dublin, which was completed with LEED, WELL and WiredScore Gold certification. We leased the entire building to a Fortune 500 fintech tenant on an attractive 15-year lease term with rents ahead of our business plan resulting in a yield on cost in excess of 6%.

We are also making great progress at leasing our Kildare street office development, which is scheduled to complete in Q2. We already have 75% of the building under offer at rents above business plan.

Looking further ahead, our Coopers Cross development in Dublin, which totals 395,000 commercial square feet and 471 multifamily units is slated to complete next year and is targeting top ESG credentials, which will make it one of the most efficient and desirable mixed-use city center campuses in the market.

In total, our global development and lease-up portfolio, which is 40% multifamily and 39% office is expected to add $101 million of estimated annual NOI to KW. Approximately 90% of this incremental NOI relates to assets that will either complete lease-up or finish construction by the end of next year.

Our developments are being completed on average to a 6% development yield, which is a substantial spread to current market cap rates. Turning to our investment management platform. Growth in fee-bearing capital in the quarter continues its upward trajectory, growing by 6% from year-end to $5.3 billion and up 29% from Q1 2021.

The two largest drivers in the quarter were our debt platform and European logistics portfolio. Our debt platform completed another $246 million of loans with high-quality sponsors growing outstanding loans to $2.2 billion with another $200 million in successful realization since launch.

We secured an additional $3 billion of commitments in the quarter, which drove total commitments to $6 billion with our loan origination capacity at quarter end at $3.5 billion. KW is earning attractive double-digit returns from this platform, which stands to benefit as interest rates rise, given that 80% of the loans are floating rate.

We also delivered significant growth across our European logistics portfolio, which is focused on last-mile logistics assets that benefit from the continued rise in e-commerce. Demand from occupiers remains very strong as they increasingly shift from just-in-time to just-in-case inventory management.

Importantly, our acquisition teams with deep contacts across our markets, continue to find attractive opportunities in the UK as well as Ireland and Spain.

Including investments made through our fund and deals under offer, we are on track to grow our European logistics platform to approximately $2 billion across 74 assets that make up approximately 10 million square feet and generate $66 million of NOI currently.

The existing industrial portfolio has delivered 16% rental uplift on completed lease transactions over the last 12 months. Fundamentals remain attractive with UK industrial market rents expected to continue to grow with little available supply, which hit a record low of 3.7% at the end of Q1 2022.

Our own portfolio benefits from low vacancies and remains under rented with current in-place rents 18% below estimated rental values. We believe the macro environment coupled with strong property fundamentals will continue to benefit both our credit and our logistics platforms.

We have over $4.5 billion of nondiscretionary capital which we look to deploy across all our announced platforms. This will add significantly to our existing $5.3 billion of fee-bearing capital. And with that, I'd like to pass it back to Bill..

Thank you, Mary. We are off to a very great start to the year, and we continue to simplify our global business, which is focused on growing our two core initiatives, growing our recurring net operating income and growing our investment management business where we receive our share of the NOI plus management fees.

As I previously mentioned, our financial position was strengthened in February with the $300 million investment from Fairfax Financial. We ended the quarter with $962 million of cash and available lines of credit, and we have minimal debt maturities through 2023.

As Justin mentioned, 94% of our corporate and property level debt carries a fixed rate or is hedged against rate increases. We continue to partner with and attract capital from well-capitalized global strategic partners who have significant capital to deploy into our investment management business.

We have an extremely talented team at KW that has invested together over several decades. Our teams have consistently demonstrated the ability to source sound risk-adjusted investment opportunities and then enhance our returns through hands-on asset management initiatives.

I'd like to thank the global KW team and our shareholders, partners and our Board for all of your support of Kennedy-Wilson. And with that, Daven, I'd like to send it back to you to open it up for any questions..

We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Derek Johnston with Deutsche Bank. Please go ahead..

Hi, everybody. Good morning out there. The fee-bearing capital is becoming a very meaningful part of the business. And Bill, you mentioned the growth sequentially 6% and 29% year-over-year on that basis.

I mean, do you see a few more years of growth or runway to continue adding and building this asset base? Or at some point, is there a limit on or perhaps a ceiling on how large the fund business may grow?.

Well, I would let Mary amplify on it, Derek. But I mean there's no ceiling on where we can go with this. And I think without bragging, I think our name among institutional capital partners has only improved over the years and decades that we've been investing.

We have partners that have been investing with us in some cases like Fairfax, we've been investing together now going on almost 12 years. So I think the partners have a lot of confidence in our – it's not just the ability to deploy capital.

It's our ability to asset manage the properties that we buy and/or the lending business that Matt has responsibility for. And when you look at the asset classes that we really like to invest in the three main asset classes that are growing our investment management business are, the debt business, as Mary mentioned, in the industrial business.

And then I would say, thirdly, while we're continue to grow the multifamily business on our balance sheet. We also have co-investment platforms for our multifamily business. And so those three asset classes really are the ones along with office.

But office – the office assets are a smaller part of the fund management business or the asset management business today. But I mean, to answer your question directly, as I said, I don't see any ceiling on this.

But Mary, do you want to add to that?.

Yes. I mean I think the one thing that I would add is that the partners who we have very deep relationships with are all looking for income. And so when you really think about the asset classes that we're growing, for example, I can talk a lot about the logistics platform, which is extremely reversionary in nature.

So I think especially when you think about just the macro trends in the e-commerce business and in fact, the inflationary environment that we're in, we're looking for the reversion in rental income and the supply-demand dynamics that I think are driving many of our businesses that are well heeled capital partners want to invest alongside of us.

So really multifamily, where you're marketing those rents and industrial and in the debt space..

Yes. And I think too, Mary, and Derek, what is masked in the assets under management number, which is now $23 billion. And as I said, it grew from $18 billion just two years ago, is that you're also disposing of assets along the way. And we're typically disposing of somewhere between $1 billion to $1.5 billion worth of assets each year.

And so when you kind of factor that into the thought process, you can really see how much the assets under management has really grown over the last couple of years..

No, that makes a lot of sense. Thank you. And I was going to ask about the near-term development pipeline in Hanover Quay, but in the opening remarks, I think Mary did a really good job of not only talking about that project, but the ones that are behind it.

So I would just pivot to something – I don't think we've talked about in a while, but clearly, Dublin occupancy rebound in multifamily, really an impressive snap back, right, in occupancy year-over-year, 6.4%, which kind of begs the question, the Sherbrooke hotel, how do you see that performing in a post-pandemic type of era? And what would be the expected NOI contribution in 2022?.

Yes. I mean, we're super excited about the Dublin occupancy. And we've just seen – I mean, as Bill said in his remarks, we're here in Dublin. We've been here for the week. And the city is buzzing. There's a lot of energy.

And we're really excited about the occupancy and how well our multifamily assets are performing, and we expect to see that just continue. In terms of the Shelbourne, it's the same comment. I mean it's great to see the Shelbourne super busy. We have – we've been doing about $1 million a month in NOI at the end of March.

And I think April will look – is looking similar to that. We're just doing the numbers now. And then when you think about – what we're really excited about is the book of business that we've already built at the Shelbourne. So we're about 50% rooms sold out for the balance of the year.

And so in the hotel world, that's a great base then to start driving your rate. And the other thing we were just talking to the team about this, as the euro sort of weakens that obviously drives the American tourists and we're seeing about 68% of our room bookings right now are from America. And that really hasn't been like that since March of 2020.

So we're really excited about where the Shelbourne is going. We expect for it to be at least a €10 million NOI this year, and we could exceed that..

I think, Mary, I could add to that. And I'm just remembering the March numbers to give you the contrast. I believe the revenue in the hotel in March was slightly over $3.22 million last year. That same month, it was $300,000.

And so – and I think the other interesting thing that I could be slightly off on this, Mary, but the roughly 60% of the revenue in March came from U.S. travelers and so what you'll see, I think, as you go into really the very busy season here in Dublin kind of starts in May through October. And so you're going to see very strong summer results.

It's very easy to get in and out of Dublin now. There's not, I don't know how to describe this, but there's not some of the still standing restrictions that we have in the United States. And so I can tell you that the restaurants are full, the hotels are doing well.

As you've heard from Mary, the office occupancy and the office leasing is very, very strong. And as you pointed out, Derek, the apartment occupancies have increased in a very big way..

Thank you, good stuff..

The next question comes from Anthony Paolone with JPMorgan. Please go ahead..

Okay. I guess we'll stay with Dublin for a minute here. So you did get that occupancy back on the residential side there, and we saw what happened in the U.S. when that came back and how quickly rents move.

So do you think that's the playbook or what could happen there from this point now that the occupancies back?.

I mean, we're seeing rental growth. And I think as you think about our development pipeline coming through, we're building really best-in-class apartments with a lot of amenities in everything that we're building.

So we're seeing those market rents continue to move up and so I think we can really drive our NOI into our new development projects for sure. And just working on containing expenses and continuing to run a tight ship and keep our occupancy..

Yes. I think, Mary, I mean, to add a little bit, Tony, you'd have to see. I mean it's – these developments that we're doing here are remarkable both in scale and the quality of planning and design. You think about Coopers Cross.

I mean that's a 1 million square foot development, 400,000 square feet of office and then they're obviously the remainders, the 500 new apartment units that Mary and I were on site there yesterday with our construction people and I mean it's – these are big undertakings to do. But when they're finished, like Clancy Quay is a good example.

That is the largest single project in Dublin on the multifamily side, it's almost 900 units. And I could be a little up, Mary, but I think the occupancy there is….

97%..

97% over almost 900 units. But when you're on that property and you see the quality of both the amenities, the supermarket that's there, the fitness centers, the – and so on, you just – you see why our clients, I'll call it, are attracted to these new developments. And we've got three sizable projects underway here right now.

And I would say the last thing, too, on this whole development discussion is that we – our team made a – we made a decision at the beginning of COVID that we were going to continue on through the construction pipeline, and it turned out to be a really very, very sound decision because now we're finishing things in a period of time where there's well-known supply chain issues.

And the other thing that our development people did here and we did it in the United States as they started buying out things as they started projects a year, 1.5 years ago, in some cases, two years ago. And we stored these materials in whatever locale we're building in. And so we haven't had any supply chain issues or cost overrun issues to speak of.

And that's against a very large development pipeline that we have going on. So I would say that our development teams, both in Europe and in the United States, have really done an exceptional job of managing through the building of all these assets..

Okay.

And at the Coopers Cross office component, can you remind me, is that something you expect to go like to a single tenant or a small number of tenants? Or do you think that is a more multi-tenant asset?.

So that's two buildings, Tony. It's a 100,000 square foot building and a 295,000 square foot building. So the 100,000 square foot building, we could definitely see going to one occupier.

The larger one could also because it could just be a very large city center campus with all the amenities on site with the largest city park with all the commercial concessions and restaurants and dog parks and all the things that Bill talked about.

And that is really one of the things that is so exceptional about our team which is really our development team and our asset management team working just lockstep as we go to develop and plan and then develop this out. So – it's hard to say.

We'll have the flexibility to multi-tenant it, which is what we did at the Kildare Street development, which is just across the street from the Shelbourne, which is just right on St. Stephen's Green. And so we've multi-tenanted that but I would say, impressively our asset management team has managed to keep 12-year term certain on all the leases.

And so that's often the benefit of doing a lease to one single tenant as you can really drive that term. And in the multi, a lot of times with the smaller tenants, you have shorter lease terms. Well, in this case, we're doing 12-year term certain deals. So back to Coopers, it's really hard to say.

What I will say is that I think it will be the best development in Dublin. You noticed probably in my remarks, I talked a lot about ESG and environmental credentials and smart buildings and wired buildings, and Coopers Cross really is going to be cutting edge in that space.

And that is really what we've seen, the occupier demand and that's really what is driving – our developments are really driving that demand because of all these really impressive credentials..

Mary, I mean, I think to that point, you might comment about how tenants are looking at that and how important that has become..

I mean, I would say, even as little as a year ago that the conversation on ESG, it was – sure people were interested. But now literally every single tour it's top of mind and it's in every single conversation. So the corporations around the world are demanding.

And I think their employees, it goes down to the person that are working or living in assets that are requiring some sort of ESG credentials. So we're excited because we believe in it. We've got a really strong program, and Kennedy-Wilson is very focused in the space..

Okay.

And then last one, if I could, probably for Matt, does the rate environment and the volatility that's unfolded, does that have any impact, make it easier, harder, indifferent as you originate in the debt platform?.

Yes. That's a great question, Tony. So 80%, as we mentioned, about 80% of what we've been doing historically has been floating rate. And so obviously, on the loans we did floating rate with low floors, which most of them have, we're moving up as the Fed increases rates.

But if you think about it from a borrower's perspective and as we're really underwriting these loans over three to five years, we have to be thoughtful around making sure we have proper interest reserves, these things are capitalized for a rising rate environment.

I could say the volume we've seen in the business has continued to be very strong over the past several months and several weeks. And so I think it will be an opportunity for us to deploy capital in that space.

Doing this thoughtfully with strong sponsorship, understanding that the returns we're making out of the gate are actually going to move up as rates move up. I'd say the fixed rate market, interestingly, last year, there was very little in the way of mezz that was being broken off of securitizations.

That has changed pretty dramatically over the past couple of months. So I think in our mezz platform, we could see substantially more volume there.

The LTVs that we're getting securitized a year ago were 20% or 30% higher than they are today and so there'll be more opportunity in the fixed rate mezz space but we're definitely being very thoughtful around locking in rates for long-term in our lending platform..

Okay, thanks for the help..

[Operator Instructions] And the next question comes from Sheila McGrath with Evercore. Please go ahead..

Yes, good morning. I was wondering if you could help us understand the potential upside in the NOI in the Mountain State portfolio, just what the loss-to-lease is there? How much you think you can push rents? And also on the renovation opportunity, if you could give us some more detail on that opportunity..

Matt, do you want to take a shot at that?.

Yes, no problem. Sheila. So the loss-to-lease there is it's pretty much in line with the overall portfolio, roughly, call it, 12%, 15% loss-to-lease on those assets. Similar to the rest of the portfolio, you've got about 50%, maybe a little bit more of the units that are unrenovated at this point.

So doing some kind of simple math, if the loss-to-lease is 15%, and let's just say, over the next three years we can raise rents overall at 10%, over those three years, you're looking at 25% differential between kind of where rents would be in three years versus where we're locked in today.

So there's a pretty good path to continue increasing rents there over the next several years. And that being said, you're starting from a pretty low base relative to other markets, about $1,400 per unit per month. And so you still have relative affordability when you compare the rents in our apartments to the average incomes in the area.

And so – and as you know, we're resetting rents generally on an annual basis, but we have leases coming due every day. And so in particular, when tenants move out and new tenants are coming in, a lot of them coming from higher cost dates. We have the ability on a pretty regular basis to move rents up where it makes sense..

And then just on the renovation capital, is there any rough idea of how much you think you could spend annually and what the returns are on that capital?.

Yes. I mean, generally, we're trying to get to about 20% returns on capital when we invest. I don't have an exact figure for how much we'd spend. It will depend on turnover and things like that. But generally, as we're deploying money into units, we're trying to underwrite 20% returns on that capital..

Okay, great. And then just on the simplification process, you've sold some more non-core, I think, retail assets.

Where are you in the process of selling non-core assets? And how much more do you have to sell?.

Matt, do you want to answer that?.

Yes, sure. Yes. So we've been a net seller of retail for several years now. And you've seen us redeploy that capital really into our investment management business as well as into our wholly-owned multifamily portfolio. And so we do see that trend continuing. We have a number of non-core assets on the market that we expect to sell this year.

And so I'd say, if you look at the – really the core of the business being 80% plus multifamily and office, that other 20%, we've been more opportunistic in how we've invested it. And so you could see us over the next couple of years, continuing to lock in our returns on those assets and redeploy it into the higher growth parts of our business..

Okay. Great. And last question, just on the performance fees, that was well ahead of what we were expecting, and I realize it's lumpy.

Is there any – if you could give any detail on that result in the quarter? And is there any rule of thumb that could help us project that going forward? Or is it just episodic?.

This is Justin. I'm happy to take that. Generally, our performance fees are a function of valuations. And so our valuations are increasing. And as we see values continue to increase. You should see correlated performance – correlated result with our performance fees..

Okay, thank you..

This concludes our question-and-answer session. I'll turn the conference back over to management for any closing remarks..

Tom, thank you, and thank you, everybody, again. And as I always say, any of us are available if there are further questions that you want to follow up on it at a later time. So thanks again for taking the time to be on the call. Talk to you later..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..