Kennedy Wilson To Delist Stock

Company chairman and CEO William J. McMorrow cites the "excessive burden" that SEC reporting requirements have become in terms of their costs in both money and management time. The company expects the deregistration to become effective within 90 days of the filing with the SEC, after which its shares will be traded over the counter on the Pink Sheets, a centralized quotation service that collects and publishes market maker quotes, primarily through its website.Such a voluntary delisting of a company's stock is so rare that "I can't remember the last time I saw one," says Craig Silvers, a longtime REIT industry analyst and principal of L.A.-based Bricks & Mortar Capital, a fund that invests in REIT stocks. Silvers says publicly held companies have been complaining about the increased time and expense of SEC reporting requirements since the passage of the Sarbanes-Oxley Act of 2002, which was an attempt to rectify the sloppy and misleading reporting practices that contributed to the dot.com stock collapse. "Every firm I follow has raised its G&A [general and administrative] spending estimates because of Sarbanes-Oxley," Silvers says. "The time and expense can be burdensome, and for a smaller company like Kennedy Wilson, it's proportionately more burdensome."Silvers adds, however, that being registered with an exchange provides certain benefits, including enhanced liquidity for stocks, so a company that deregisters its shares risks losing those benefits. "It sounds like what they're saying is that the listing costs are too high versus the benefits, and that this will save money for shareholders," Silvers says. Generally, he says, stocks traded via the Pink Sheets have less liquidity and higher spreads between the bid and ask rates.McMorrow says Kennedy Wilson has chosen to delist its stock because of the "increasing financial cost and commitment of management's time to ever increasing regulatory requirements." He says the company believes that its shareholders will be much better served by the firm's "applying these financial and management resources to creating value for our stockholders." Freeing money and management time "will allow us to better execute both tactical and strategic plans," the Kennedy Wilson CEO says.Kennedy Wilson was founded in 1977 and maintains regional offices and operations in 18 states. It is an investor and manager of value-added commercial and industrial properties, apartments, and discounted note portfolios, which it holds both in partnership with institutional investors and in wholly owned projects. The company provides real estate services that include property management, leasing, asset management, brokerage and development. The company says it will continue to report to its stockholders in accordance with Delaware law and intends to report its quarterly and annual financial results on its website as well as in press releases.