Kennedy-Wilson Holdings, Inc. [KW] Filings

10-Q 1 kw-20240630.htm 10-Q kw-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 001-33824

Kennedy-Wilson Holdings, Inc.

(Exact name of Registrant as specified in its charter)


Delaware						26-0508760
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

151 S El Camino Drive

Beverly Hills, CA 90212

(Address of principal executive offices)

Registrant’s telephone number, including area code:

(310) 887-6400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $.0001 par value	KW	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.

See definition of “large accelerated filer," "accelerated filer," "smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of common stock outstanding as of August 5, 2024 was 137,411,923.

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Index


PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Loss	3
	Consolidated Statements of Equity	4
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	84
Item 4.	Controls and Procedures	86

PART II OTHER INFORMATION		87

Item 1.	Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosure	87
Item 5.	Other Information	87
Item 6.	Exhibits	87

SIGNATURE		89

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FORWARD-LOOKING STATEMENTS

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as “believe,” "may," “anticipate,” “estimate,” “intend,” “could,” “plan,” “expect,” “project” or the negative of these, as well as similar expressions, are intended to identify forward-looking statements.

Forward-looking statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results to differ materially from any future results, performance or achievements, expressed or implied by such forward-looking statements. These risks and uncertainties may include the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the “SEC”), including the Item 1A. “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed in our filings with the SEC. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.

Non-GAAP Measures and Certain Definitions

In addition to the results reported in accordance with U.S. generally accepted accounting principles ("GAAP") included within this report, Kennedy Wilson has provided certain information, which includes non-GAAP financial measures (including Adjusted Earnings Before Interest Taxes Depreciation and Amortization ("EBITDA"), Adjusted Net Income (Loss) and Net Operating Income, as defined below). Such information is reconciled to its closest GAAP measure in accordance with the rules of the SEC, and such reconciliations are included within this report. These measures may contain cash and non-cash gains and expenses and gains and losses from the sale of real-estate related investments. Consolidated non-GAAP measures discussed throughout this report contain income or losses attributable to non-controlling interests. Management believes that these non-GAAP financial measures are useful to both management and Kennedy Wilson's shareholders in their analysis of the business and operating performance of the Company. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measures. Additionally, non-GAAP financial measures as presented by Kennedy Wilson may not be comparable to similarly titled measures reported by other companies.

“Adjusted EBITDA” represents net income before interest expense, loss (gain) on early extinguishment of debt, the Company's share of interest expense included in unconsolidated investments, depreciation and amortization, the Company's share of depreciation and amortization included in unconsolidated investments, provision for (benefit from) income taxes, the Company's share of taxes included in unconsolidated investments, share-based compensation expense for the Company and EBITDA attributable to noncontrolling interests. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP measures” for a reconciliation of Adjusted EBITDA to net income as reported under GAAP. The Company's management uses Adjusted EBITDA to analyze its business because it adjusts net income for items the Company believes do not accurately reflect the nature of its business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, the Company believes Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of the Company's results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing its operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not remove all non-cash items or consider certain cash requirements such as tax and debt service payments. The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in the Company's debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and the Company's ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

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“Adjusted Net Income (Loss)” represents net income (loss) before depreciation and amortization, the Company's share of depreciation and amortization included in unconsolidated investments, share-based compensation, and excluding net income attributable to noncontrolling interests, before depreciation and amortization and preferred dividends. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Certain Non-GAAP Measures and Reconciliations” for a reconciliation of Adjusted Net Income to net income as reported under GAAP. The Company's management uses Adjusted Net Income to analyze its business because it adjusts net income for items the Company believes do not accurately reflect the nature of its business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, the Company believes Adjusted Net Income is useful to investors to assist them in getting a more accurate picture of the Company's results from operations. However, Adjusted Net Income is not a recognized measurement under GAAP and when analyzing its operating performance, readers should use Adjusted Net Income in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of Adjusted Net Income may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted Net Income is not intended to be a measure of free cash flow for management’s discretionary use, as it does not remove all non-cash items or consider certain cash requirements such as tax and debt service payments.

“Cap rate” represents the net operating income of an investment for the year preceding its acquisition or disposition, as applicable, divided by the purchase or sale price, as applicable. Capitalization ("Cap") rates discussed in this report only include data from income-producing properties. The Company calculates cap rates based on information that is supplied to it during the acquisition diligence process. This information is not audited or reviewed by independent accountants and may be presented in a manner that is different from similar information included in the Company's financial statements prepared in accordance with GAAP. In addition, cap rates represent historical performance and are not a guarantee of future net operating income ("NOI"). Properties for which a cap rate is discussed may not continue to perform at that cap rate.

“Carried interests” refers to amounts that are allocated to the Company under its Funds and certain co-investment vehicles based on the cumulative performance of such venture See “Note 2 – Summary of Significant Accounting Policies and Adoption of New Accounting Pronouncements – Unconsolidated Investments” of the Company’s Notes to Consolidated Financial Statements for a discussion of the Company’s accounting of carried interests that it is entitled to under its Funds and certain co-investment vehicles.

“Carried interests compensation” refers to any carried interests earned by the Company to be allocated to certain employees of the Company, as approved by the compensation committee of the Company’s board of directors.

“Co-Investment Portfolio NOI” refers to the Company's share of NOI that is generated from the properties in which the Company has an ownership interest and that are held in the Company's Co-Investment Portfolio business segment. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of Co-Investment Portfolio NOI to net income as reported under GAAP.

“Consolidated Portfolio NOI” refers to the NOI that is generated from the properties that the Company has an ownership interest in and are held in the Company's Consolidated Portfolio business segment. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of Consolidated Portfolio NOI to net income as reported under GAAP.

"Equity partners" refers to non-wholly-owned subsidiaries that are consolidated in the Company's financial statements under U.S. GAAP and third-party equity providers.

"Fee Bearing Capital" represents total third-party committed or invested capital that the Company manages in its joint-ventures, commingled funds and debt platform that entitle the Company to earn fees, including without limitation, asset management fees, construction management fees, acquisition and disposition fees and/or carried interest, if applicable.

“Funds” refers to certain commingled funds managed and sponsored by the Company that are investment companies under the ASC Topic 946, Financial Services.

"Gross Asset Value” refers to the gross carrying value of assets, before debt, depreciation and amortization, and net of noncontrolling interests.

“KWH,” "KW," “Kennedy Wilson,” the "Company," "we," "our," or "us" refers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries. The consolidated financial statements of the Company include the results of the Company's consolidated subsidiaries.

“KWE” refers to Kennedy Wilson Europe Real Estate Limited.

"Net operating income" or " NOI” is a non-GAAP measure representing the income produced by a property calculated by deducting certain property expenses from property revenues. The Company's management uses net operating income to

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assess and compare the performance of its properties and to estimate their fair value. Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of the Company's properties resulting from its value-add initiatives or changing market conditions. Management believes that net operating income reflects the core revenues and costs of operating its properties and is better suited to evaluate trends in occupancy and lease rates. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Certain Non-GAAP Measures and Reconciliations” for a reconciliation of Net Operating Income to net income as reported under GAAP.

"Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.

“Principal co-investments” consists of the Company’s share of income or loss earned on investments in which the Company can exercise significant influence but does not have control. Income from unconsolidated investments includes income from ordinary course operations of the underlying investment, gains on sale, fair value gains and losses.

"Pro-Rata" represents Kennedy Wilson's share calculated by using our proportionate economic ownership of each asset in our portfolio. Please also refer to the pro-rata financial data in our supplemental financial information.

"Real Estate Assets under Management" ("AUM") generally refers to the properties and other assets with respect to which the Company provides (or participates in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. AUM is principally intended to reflect the extent of the Company's presence in the real estate market, not the basis for determining management fees. AUM consists of the total estimated fair value of the real estate properties, total loan commitments made through the Company’s debt investment platform, inclusive of both currently outstanding loan amounts and contractual future funding commitments, and other real estate related assets either owned by third parties, wholly-owned by the Company or held by joint ventures and other entities in which its sponsored funds or investment vehicles and client accounts have invested. The estimated value of development properties is included at estimated completion cost. The accuracy of estimating fair value for investments cannot be determined with precision and cannot be substantiated by comparison to quoted prices in active markets and may not be realized in a current sale or immediate settlement of the asset or liability (particularly given the ongoing macroeconomic conditions such as, but not limited to, recent adverse developments affecting regional banks and other financial institutions, ongoing military conflicts around the world and uncertainty with respect to, fluctuating interest rates continue to fuel recessionary fears and create volatility in Kennedy Wilson's business results and operations). Recently, there has also been a lack of liquidity in the capital markets as well as limited transactions which has had an impact on the inputs associated with fair values. Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including capitalization rates, discount rates, liquidity risks, and estimates of future cash flows could significantly affect the fair value measurement amounts. All valuations of real estate involve subjective judgments.

“Same property” refers to stabilized consolidated and unconsolidated properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared. This analysis excludes properties that during the comparable periods (i) were acquired, (ii) were sold, (iii) are either under development or undergoing lease up or major repositioning as part of the Company’s asset management strategy, (iv) were investments in which the Company holds a minority ownership position, and (v) certain non-recurring income and expenses. The analysis only includes Office, Multifamily and Hotel properties, where applicable. To derive an appropriate measure of operating performance across the comparable periods, the Company removes the effects of foreign currency exchange rate movements by using the reported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods. Amounts are calculated using Kennedy Wilson’s ownership share in the Company’s consolidated and unconsolidated properties. Management evaluates the performance of the operating properties the Company owns and manages using a “same property” analysis because the population of properties in this analysis is consistent from period to period, which allows management and investors to analyze (i) the Company’s ongoing business operations and (ii) the revenues and expenses directly associated with owning and operating the Company’s properties and the impact to operations from trends in occupancy rates, rental rates and operating costs. Same property metrics are widely recognized measures in the real estate industry, however, other publicly-traded real estate companies may not calculate and report same property results in the same manner as the Company. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of “same property” results to the most comparable measure reported under GAAP.

iii

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PART I

FINANCIAL INFORMATION

Item 1.Financial Statements (Unaudited)

Kennedy-Wilson Holdings, Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in millions, except share and per share amounts)


	June 30, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	366.5	$	313.7
Accounts receivable, net (including $11.3 and $13.8 of related party)	41.4		57.3
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of $938.5 and $957.8)	4,605.0		4,837.3
Unconsolidated investments (including $1,914.0 and $1,927.0 at fair value)	2,056.0		2,069.1
Loan purchases and originations, net of allowance for credit losses	248.3		247.2
Other assets, net	178.1		187.5
Total assets(1)	$	7,495.3	$	7,712.1

Liabilities
Accounts payable	$	12.1	$	17.9
Accrued expenses and other liabilities	551.3		597.8
Mortgage debt	2,756.3		2,840.9
KW unsecured debt	1,957.4		1,934.3
KWE unsecured bonds	507.8		522.8
Total liabilities(1)	5,784.9		5,913.7

Equity
Preferred stock 1,000,000 shares authorized, Series A cumulative preferred Stock, $0.0001 par value, $1,000 per share liquidation preference, 300,000 shares outstanding as of June 30, 2024 and December 31, 2023, Series B cumulative preferred Stock, $0.0001 par value, $1,000 per share liquidation preference, 300,000 shares outstanding as of June 30, 2024 and December 31, 2023 and Series C cumulative preferred Stock, $0.0001 par value, $1,000 per share liquidation preference, 200,000 shares outstanding as of June 30, 2024 and December 31, 2023	789.9		789.9
Common stock, $0.0001 par value per share, 200,000,000 authorized, 137,425,743 and 138,727,521 shares issued and outstanding as of June 30, 2024 and December 31, 2023	—		—
Additional paid-in capital	1,700.6		1,718.6
Accumulated deficit	(416.6)		(349.0)
Accumulated other comprehensive loss	(404.4)		(404.4)
Total Kennedy-Wilson Holdings, Inc. shareholders' equity	1,669.5		1,755.1
Noncontrolling interests	40.9		43.3
Total equity	1,710.4		1,798.4
Total liabilities and equity	$	7,495.3	$	7,712.1

(1) The assets and liabilities as of June 30, 2024 include $168.4 million (including cash held by consolidated investments of $5.7 million and real estate and acquired in place lease values, net of accumulated depreciation and amortization of $132.9 million) and $74.3 million (including investment debt of $53.5 million), respectively, from consolidated variable interest entities ("VIEs"). The assets and liabilities as of December 31, 2023 include $154.9 million (including cash held by consolidated investments of $3.6 million and real estate and acquired in place lease values, net of accumulated depreciation and amortization of $121.8 million) and $101.4 million (including investment debt of $54.9 million), respectively, from VIEs. These assets can only be used to settle obligations of the consolidated VIEs, and the liabilities do not have recourse to the Company.

See accompanying notes to consolidated financial statements.

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Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

(Dollars in millions, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
Rental	$	97.8	$	106.6	$	195.2	$	213.2
Hotel	—		15.5		9.3		26.1
Investment management fees (includes $16.6, $12.4, $31.0, $23.7 of related party fees)	26.1		19.1		47.4		30.1
Loan	8.0		4.7		16.1		8.4
Other	0.1		0.6		0.4		0.9
Total revenue	132.0		146.5		268.4		278.7

(Loss) income from unconsolidated investments
Principal co-investments	(5.8)		6.3		3.9		22.7
Carried interests	(12.3)		(7.7)		(28.7)		(18.4)
Total (loss) income from unconsolidated investments	(18.1)		(1.4)		(24.8)		4.3

Gain on sale of real estate, net	0.2		89.0		106.6		108.2

Expenses
Rental	37.0		38.7		74.2		75.3
Hotel	—		9.7		7.6		17.6
Compensation and related (including $6.0, $7.3, $11.2, $14.4 of share-based compensation)	31.8		37.0		59.4		67.6
Carried interests compensation	(4.5)		(1.1)		(10.0)		0.5
General and administrative	9.5		8.7		17.8		17.1
Depreciation and amortization	36.4		40.1		75.3		79.5
Total expenses	110.2		133.1		224.3		257.6
Interest expense	(63.8)		(66.0)		(128.5)		(128.3)
Loss on early extinguishment of debt	(0.5)		(1.7)		(0.2)		(1.6)
Other income	0.3		24.3		7.1		21.3
(Loss) income before benefit from (provision for) income taxes	(60.1)		57.6		4.3		25.0
Benefit from (provision for) income taxes	11.8		(10.3)		(14.9)		(6.4)
Net (loss) income	(48.3)		47.3		(10.6)		18.6
Net loss (income) attributable to the noncontrolling interests	0.1		0.1		0.2		(4.1)
Preferred dividends	(10.9)		(8.4)		(21.8)		(16.3)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	(59.1)	$	39.0	$	(32.2)	$	(1.8)
Basic (loss) earnings per share
(Loss) earnings per share	$	(0.43)	$	0.28	$	(0.23)	$	(0.01)
Weighted average shares outstanding	137,588,910		139,389,170		138,142,769		138,674,109
Diluted (loss) earnings per share
(Loss) earnings per share	$	(0.43)	$	0.28	$	(0.23)	$	(0.01)
Weighted average shares outstanding	137,588,910		139,545,944		138,142,769		138,674,109
Dividends declared per common share	$	0.12	$	0.24	$	0.36	$	0.48

See accompanying notes to consolidated financial statements.

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Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(Dollars in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Net (loss) income	$	(48.3)	$	47.3	$	(10.6)	$	18.6
Other comprehensive income (loss), net of tax:
Unrealized foreign currency translation (loss) gain	(2.8)		11.7		(20.3)		25.8
Amounts reclassified from AOCI	—		—		5.1		—
Unrealized foreign currency derivative contracts gain	5.2		6.4		15.1		5.2
Total other comprehensive income (loss) for the period	2.4		18.1		(0.1)		31.0

Comprehensive (loss) income	(45.9)		65.4		(10.7)		49.6
Comprehensive loss (income) attributable to noncontrolling interests	0.2		—		0.3		(5.0)
Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc.	$	(45.7)	$	65.4	$	(10.4)	$	44.6

See accompanying notes to consolidated financial statements.

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Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Equity

(Unaudited)

(Dollars in millions, except share amounts)

Three Months Ended June 30, 2024


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Shares	Amount		Shares	Amount										Total
Balance at March 31, 2024	800,000	$	789.9	138,095,244	$	—	$	1,706.5	$	(347.1)	$	(406.7)	$	42.3	$	1,784.9
Shares retired due to common stock repurchase program	—	—		(669,501)	—		(11.9)		6.1		—		—		(5.8)
Share-based compensation	—	—		—	—		6.0		—		—		—		6.0
Other comprehensive (loss) income:
Unrealized foreign currency translation loss, net of tax	—	—		—	—		—		—		(2.9)		—		(2.9)
Unrealized foreign currency derivative contract gain, net of tax	—	—		—	—		—		—		5.2		—		5.2
Common stock dividends	—	—		—	—		—		(16.5)		—		—		(16.5)
Preferred stock dividends	—	—		—	—		—		(10.9)		—		—		(10.9)
Net loss	—	—		—	—		—		(48.2)		—		(0.1)		(48.3)
Contributions from noncontrolling interests	—	—		—	—		—		—		—		0.1		0.1
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(1.4)		(1.4)
Balance at June 30, 2024	800,000	$	789.9	137,425,743	$	—	$	1,700.6	$	(416.6)	$	(404.4)	$	40.9	$	1,710.4

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Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Equity

(Unaudited)

(Dollars in millions, except share amounts)

Three Months Ended June 30, 2023


	Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Shares	Amount		Shares	Amount										Total
Balance at March 31, 2023	600,000	$	592.5	139,344,238	$	—	$	1,702.5	$	47.9	$	(418.0)	$	46.5	$	1,971.4
Preferred stock issuance	200,000	198.0		—	—		—		—		—		—		198.0
Issuance of common stock	—	—		46,599	—		0.7		—		—		—		0.7
Share-based compensation	—	—		—	—		7.3		—		—		—		7.3
Other comprehensive income:
Unrealized foreign currency translation gain, net of tax	—	—		—	—		—		—		11.6		0.1		11.7
Unrealized foreign currency derivative contract gain, net of tax	—	—		—	—		—		—		6.4		—		6.4
Common stock dividends	—	—		—	—		—		(33.5)		—		—		(33.5)
Preferred stock dividends	—	—		—	—		—		(8.4)		—		—		(8.4)
Net income	—	—		—	—		—		47.4		—		(0.1)		47.3
Contributions from noncontrolling interests	—	—		—	—		—		—		—		0.8		0.8
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(1.1)		(1.1)
Balance at June 30, 2023	800,000	$	790.5	139,390,837	$	—	$	1,710.5	$	53.4	$	(400.0)	$	46.2	$	2,200.6

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Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Equity

(Unaudited)

(Dollars in millions, except share amounts)

Six Months Ended June 30, 2024


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests
	Shares	Amount		Shares	Amount										Total
Balance at December 31, 2023	800,000	$	789.9	138,727,521	$	—	$	1,718.6	$	(349.0)	$	(404.4)	$	43.3	$	1,798.4
At-the-market equity offering program costs	—	—		—	—		(0.1)		—		—		—		(0.1)
Restricted stock grants (RSG)	—	—		379,188	—		—		—		—		—		—
Shares retired due to RSG vesting	—	—		(129,011)	—		(1.6)		—		—		—		(1.6)
Shares retired due to common stock repurchase program	—	—		(1,551,955)	—		(27.5)		14.2		—		—		(13.3)
Share-based compensation	—	—		—	—		11.2		—		—		—		11.2
Other comprehensive (loss) income:
Unrealized foreign currency translation loss, net of tax	—	—		—	—		—		—		(14.9)		(0.1)		(15.0)
Unrealized foreign currency derivative contract gain, net of tax	—	—		—	—		—		—		14.9		—		14.9
Common stock dividends	—	—		—	—		—		(49.6)		—		—		(49.6)
Preferred stock dividends	—	—		—	—		—		(21.8)		—		—		(21.8)
Net loss	—	—		—	—		—		(10.4)		—		(0.2)		(10.6)
Contributions from noncontrolling interests	—	—		—	—		—		—		—		0.1		0.1
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(2.2)		(2.2)
Balance at June 30, 2024	800,000	$	789.9	137,425,743	$	—	$	1,700.6	$	(416.6)	$	(404.4)	$	40.9	$	1,710.4

Table of Contents

Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Equity

(Unaudited)

(Dollars in millions, except share amounts)

Six Months Ended June 30, 2023


	Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests
(Dollars in millions, except share amounts)	Shares	Amount		Shares	Amount										Total
Balance at December 31, 2022	600,000	$	592.5	137,790,768	$	—	$	1,679.5	$	122.1	$	(430.1)	$	46.4	$	2,010.4
Preferred stock issuance, net of issuance costs	200,000	198.0		—	—		—		—		—		—		198.0
Issuance of common stock	—	—		1,690,743	—		30.0		—		—		—		30.0
Restricted stock grants (RSG)	—	—		955,756	—		—		—		—		—		—
Shares retired due to RSG vesting	—	—		(1,046,430)	—		(13.4)		—		—		—		(13.4)
Share-based compensation	—	—		—	—		14.4		—		—		—		14.4
Other comprehensive income:
Unrealized foreign currency translation gain, net of tax	—	—		—	—		—		—		24.9		0.9		25.8
Unrealized foreign currency derivative contract gain, net of tax	—	—		—	—		—		—		5.2		—		5.2
Common stock dividends	—	—		—	—		—		(66.9)		—		—		(66.9)
Preferred stock dividends	—	—		—	—		—		(16.3)		—		—		(16.3)
Net income	—	—		—	—		—		14.5		—		4.1		18.6
Contributions from noncontrolling interests	—	—		—	—		—		—		—		0.9		0.9
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(6.1)		(6.1)
Balance at June 30, 2023	800,000	$	790.5	139,390,837	$	—	$	1,710.5	$	53.4	$	(400.0)	$	46.2	$	2,200.6

See accompanying notes to consolidated financial statements.

Table of Contents

Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in millions)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(10.6)	$	18.6
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Gain on sale of real estate, net	(106.6)		(108.2)
Depreciation and amortization	75.3		79.5
Above/below market and straight-line rent amortization	(0.8)		(3.3)
Uncollectible lease income	1.5		3.0
Accretion of discount on loans receivable	(2.1)		(0.2)
Provision for credit losses	8.5		—
Benefit from deferred income taxes	(2.3)		(0.3)
Amortization of deferred loan costs	4.3		4.4
Amortization of discount and accretion of premium on issuance of senior notes and mortgage debt	(3.2)		3.5
Unrealized net gain on derivatives	0.5		(21.5)
Loss (income) from unconsolidated investments	24.8		(4.3)
Operating distributions from unconsolidated investments	29.4		35.2
Deferred compensation	(5.7)		7.3
Share-based compensation	11.2		14.4
Change in assets and liabilities:
Accounts receivable	13.1		(2.5)
Other assets	(6.7)		(1.8)
Accounts payable, accrued expenses and other liabilities	0.5		(26.1)
Net cash provided by (used in) operating activities	31.1		(2.3)
Cash flows from investing activities:
Proceeds from collection of loans receivable	15.3		11.9
Issuance and acquisition of loans receivable, net of discounts	(21.0)		(106.3)
Net proceeds from sale of consolidated real estate	330.6		174.1
Purchases of real estate	(7.4)		—
Capital expenditures to real estate	(88.7)		(93.5)
(Premiums) proceeds from on settlement of derivative contracts	(0.6)		4.7
Purchases of derivative contracts	—		(3.4)
Distributions from unconsolidated investments	4.8		46.5
Contributions to unconsolidated investments	(59.4)		(93.8)
Net cash provided by (used in) investing activities	173.6		(59.8)
Cash flows from financing activities:
Issuance of preferred stock	—		198.0
Borrowings under line of credit	100.0		50.0
Repayment of line of credit	(75.0)		(185.0)
Borrowings under mortgage debt	97.6		336.0
Repayment of mortgage debt	(167.9)		(319.9)
Payment of deferred loan costs	(0.6)		(0.6)
Repurchase and retirement of common stock	(14.8)		(13.4)
Proceeds from issuance of common stock, net of issuance costs	(0.1)		30.0
Common dividends paid	(67.2)		(69.1)
Preferred dividends paid	(21.8)		(15.7)
Contributions from noncontrolling interests	0.1		0.9
Distributions to noncontrolling interests	(2.2)		(6.1)
Net cash (used in) provided by financing activities	(151.9)		5.1
Effect of currency exchange rate changes on cash and cash equivalents	—		4.7
Net change in cash and cash equivalents(1)	52.8		(52.3)
Cash and cash equivalents, beginning of period	313.7		439.3
Cash and cash equivalents, end of period	$	366.5	$	387.0

(1) See discussion of non-cash effects in the supplemental cash flow information.

See accompanying notes to consolidated financial statements.

Table of Contents

Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Supplemental cash flow information:


	Six Months Ended June 30,
(Dollars in millions)	2024		2023
Cash paid for:
Interest(1)(2)	$	119.7	$	112.0
Income taxes	2.1		11.4

Cash received from consolidated and unconsolidated asset sales and loan repayments, net	261.3		182.2

(1) $0.5 million and $1.7 million attributable to noncontrolling interests for the six months ended June 30, 2024 and 2023, respectively.

(2) Excludes $4.5 million and $2.4 million of capitalized interest for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023 the Company had $103.6 million and $69.6 million, respectively, of restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on properties and reserves held on loans in the newly acquired Construction Loan Portfolio (as defined herein) on behalf of the borrowers under such loans. These reserves typically relate to interest, tax, insurance and future capital expenditures at the properties and on our loan investments.

Supplemental disclosure of non-cash investing and financing activities:


	Six Months Ended June 30,
(Dollars in millions)	2024		2023

Accrued capital expenditures	$	1.9	$	6.3
Common dividends declared but not paid on common stock	16.5		33.5
Preferred dividends declared but not paid on preferred stock	9.2		7.2

During the six months ended June 30, 2023, the Company sold a 49% interest in two previously wholly-owned market rate multifamily properties into an existing joint venture platform managed by the Company (see gain on sale of real estate in Note 3 for further description of the transaction) and retained a noncontrolling 51% interest in such properties which was treated as a non-cash activity with the remaining share of real estate, mortgage loan and other balance sheet items being removed from the consolidated balance sheet with an increase of $33.4 million to unconsolidated investments.

During the same period, the Company also sold a previously wholly-owned multifamily property into its Vintage Housing Holdings ("VHH") platform, with the Company retaining an interest in the property through its investment in VHH. The transaction was treated as a non-cash activity with the remaining share of real estate, mortgage loan and other balance sheet items being removed from the consolidated balance sheet with an increase of $16.8 million to unconsolidated investments.

See accompanying notes to consolidated financial statements.

Table of Contents

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

Kennedy-Wilson Holdings, Inc. (“KWH,” NYSE:KW) and its wholly owned and consolidated subsidiaries (collectively the “Company” or “Kennedy Wilson”) is a real estate investment company that invests in high growth markets across the United States, the United Kingdom and Ireland. With an objective of generating strong long-term risk-adjusted returns for its shareholders and partners and drawing on over three decades of experience in identifying opportunities and building value through various market cycles, in its markets, the Company focuses on (i) investing in the rental housing sector (both market rate and affordable units) and industrial properties; and (ii) originating, managing and servicing real estate loans (primarily senior construction loans secured by high quality multifamily and student housing properties that are being developed by institutional sponsors throughout the United States). The Company is focused on growing its investment management and co-investment platform whereby it invests a minority position (with the potential for carried interest) and earn asset management fees in its role as asset manager. During the six months ended June 30, 2024, the Company’s investment management platform generated a total of $47.4 million of asset management fees representing a growth of 57% over the same period in 2023.

Kennedy Wilson's unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") may have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes that the disclosures are adequate to make their presentation not misleading. In the Company's opinion, all adjustments, consisting of only normal and recurring items, necessary for a fair presentation of the results of operations for the three and six months ended June 30, 2024 and 2023 have been included. The results of operations for these periods are not necessarily indicative of results that might be expected for the full year ending December 31, 2024. For further information, your attention is directed to the footnote disclosures found in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Throughout these unaudited interim consolidated financial statements “Kennedy Wilson” is referenced, which is defined as the Company and its subsidiaries that are consolidated in its financial statements under U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation.

In addition, throughout these unaudited interim consolidated financial statements, “equity partners” is referred to, which is defined as both the non-wholly owned subsidiaries that are consolidated in the Company's financial statements under U.S. GAAP and third-party equity partners.

Kennedy Wilson evaluates its relationships with other entities to identify whether they are variable interest entities ("VIEs") as defined in the Accounting Standards Codification ("ASC") Subtopic 810-10, Consolidation, as amended by Accounting Standards Update ("ASU") 2015-02, Consolidation (Topic 810) - Amendments to the Consolidation Analysis, and to assess whether it is the primary beneficiary of such entities. If the determination is made that Kennedy Wilson is the primary beneficiary, then that entity is included in the consolidated financial statements in accordance with the ASC Subtopic 810-10.

The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosure about contingent assets and liabilities, and reported amounts of revenues and expenses. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

REVENUE RECOGNITION — Revenue consists of rental and hotel income, management fees, leasing and commission fees, loan interest income and sales of real estate. ASC Topic 606, Revenue from Contracts with Customers, is a five step model to recognize revenue from customer contracts. The model identifies the contract, any separate performance obligations in the contract, determines the transaction price, allocates the transaction price and recognizes revenue when the performance obligations are satisfied. Management has concluded that, with the exception of carried interests and loan interest income, the nature of the Company's revenue streams is such that the requirements are generally satisfied at the time that the fee becomes receivable.

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Rental income from operating leases is generally recognized on a straight-line basis over the terms of the leases in accordance with ASC Topic 842, Leases. Hotel income is earned when rooms are occupied or goods and services have been delivered or rendered. Sales of real estate are recognized when title to the real property passes to the buyer and there is no continuing involvement in the real property.

Investment management fees are earned from limited partners of funds, co-investments, or separate accounts and are generally based on a fixed percentage of committed capital or net asset value. The Company provides investment management on investments it also has an ownership interest in. Fees earned on consolidated properties are eliminated in consolidation and fees on unconsolidated investments are eliminated for the portion that relate to the Company's ownership interest.

Investment management fees include acquisition, arrangement and disposition fees. Acquisition, arrangement and disposition fees are earned for identifying and closing investments on behalf of investors and are based on a fixed percentage of the acquisition or disposition price, as applicable. Acquisition and disposition fees are recognized upon the successful completion of an acquisition or disposition after all required services have been performed.

Loan income from investments in performing loans which Kennedy Wilson originates or acquires are recognized at the stated interest rate plus any amortization of premiums/discounts or fees earned on the loans. Interest income from investments in loans acquired at a discount are recognized using the effective interest method. When a loan or loans are acquired with deteriorated credit quality primarily for the rewards of collateral ownership, such loans are accounted for as loans until Kennedy Wilson is in possession of the collateral. However, accrual of income is not recorded during the conversion period under ASC Subtopic 310-30-25, Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality. Income is recognized to the extent that cash is received from the loan. The Company has evaluated its loan portfolio under ASC Subtopic 326, Financial Instruments – Credit Losses for current expected credit losses ("CECL") reserves. CECL reserves reflect the Company's current estimate of potential credit losses related to loans included in the Company's consolidated balance sheets. Changes to the CECL reserve are recognized through other income on the Company's consolidated statements of operations. While ASC Subtopic 326 does not require any particular method for determining the CECL reserve, it does specify the reserve should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions.

Sales of real estate are recognized when title to the real property passes to the buyer and there is no continuing involvement in the real property. Under ASC Subtopic 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, the Company recognizes the entire gain attributed to contributions of real estate properties to unconsolidated entities.

Property services fees are earned from the Company's auction sales and marketing business. In the case of auction and real estate sales commissions, the revenue is generally recognized when escrow closes. In accordance with the guidelines established for Reporting Revenue Gross as a Principal versus Net as an Agent in ASC Topic 606, Kennedy Wilson records commission revenues and expenses on a gross basis. Of the criteria listed in ASC Topic 606, Kennedy Wilson is the primary obligor in the transaction, does not have inventory risk, performs all or part of the service and has wide latitude in establishing the price of services rendered and discretion in selection of agents and determination of service specifications.

REAL ESTATE ACQUISITIONS—The purchase price of acquired properties is recorded to land, buildings and building improvements and intangible lease value (value of above-market and below-market leases, acquired in-place lease values, and tenant relationships, if any). The ownership of the other interest holders in consolidated subsidiaries is reflected as noncontrolling interests. Real estate is recorded based on cumulative costs incurred and allocated based on relative fair value. Acquisition fees and expenses associated with the acquisition of properties determined to be business combinations are expensed as incurred. Acquisition fees and expenses associated with transactions determined to be asset acquisitions are capitalized as part of the real estate acquired.

The valuations of real estate are based on management estimates of the real estate assets using income and market approaches. The indebtedness securing the real estate is valued, in part, based on third party valuations and management estimates also using an income approach.

UNCONSOLIDATED INVESTMENTS—The Company has a number of joint venture interests that were formed to acquire, manage, and/or sell real estate. Investments in unconsolidated investments are accounted for under the equity method of accounting as the Company can exercise significant influence, but does not have the ability to control the unconsolidated investment. An investment in an unconsolidated investment is recorded at its initial investment and is increased or decreased by

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

the Company’s share of income or loss, plus additional contributions and less distributions. A decline in the value of an unconsolidated investment that is other than temporary is recognized when evidence indicates that such a decline has occurred in accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures.

The Company records its investments in certain commingled funds it manages and sponsors (the “Funds”) that are investment companies under the ASC Topic 946, Financial Services - Investment Companies, based upon the net assets that would be allocated to its interests in the Funds assuming the Funds were to liquidate their investments at fair value as of the reporting date. Thus, the Funds reflect the Company's investments at fair value, with unrealized gains and losses resulting from changes in fair value reflected in their earnings.

In addition, the Company elected the fair value option for 72 investments in unconsolidated co-investment entities. These 72 co-investments are structured as limited liability companies and limited partnerships with one partner and function under a collaborative decision-making structure and the Company owns a weighted average ownership of approximately 40% of the equity investment in such co-investment investments. The Company elected to record these 72 co-investments at fair value in order to report the change in value in the underlying investments in the results of its current operations in a fashion consistent with its investments in certain commingled funds, as described above.

The Company has adopted an ownership model for carried interests representing allocations to the Company from equity method investments, based on cumulative performance to-date. Consequently, in accordance with the guidance set forth in ASC Topic 606 and ASC Topic 323, these allocations are included as a component of the total income from unconsolidated investments in the accompanying consolidated statements of income as “carried interests”. Carried interests are allocated to the Company under the Funds and such co-investment investments based on the cumulative performance of the venture and are subject to preferred return thresholds of the partners. In the case of the Funds, these carried interests represent an allocation relating to the performance of investment management services, whereas they represent returns for the performance of the underlying investments in the co-investment investments structures subject to collaborative decision-making.

At the end of each reporting period, the Company calculates the carried interest that would be due as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interests to reflect either (a) positive performance resulting in an increase in the carried interest to the general partner or asset manager or (b) negative performance that would cause the amount due to the Company to be less than the amount previously recognized as income from unconsolidated investments, resulting in a negative adjustment to carried interests to the general partner or asset manager. As of June 30, 2024 and December 31, 2023, the Company has $48.6 million and $77.3 million of accrued carried interests recorded to unconsolidated investments that are subject to future adjustments based on the underlying performance of investments. The amount of the Company’s carried interest from its Funds and the 72 co-investments for the three and six months ended June 30, 2024 and 2023 are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Funds	$	(10.7)	$	(4.4)	$	(25.6)	$	(10.4)
Co-investments	(1.6)		(3.3)		(3.1)		(8.0)
Total	$	(12.3)	$	(7.7)	$	(28.7)	$	(18.4)

Carried interests compensation is recorded in the same period that the related carried interests are recorded and can be reversed during periods when there is a reversal of carried interests that were previously recorded. As of June 30, 2024 and December 31, 2023, the Company has $13.3 million and $22.8 million, respectively of accrued carried interests compensation recorded to accrued expenses and other liabilities that are subject to future adjustments based on the underlying performance of investments.

FAIR VALUE MEASUREMENTS — Kennedy Wilson accounts for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recorded or disclosed at fair value in the financial statements on a recurring basis under the provisions of ASC Topic 820, Fair Value Measurement. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When estimating fair value in the absence of an orderly transaction between market participants, valuations of real estate are based on management estimates of the real estate assets using income

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

and market approaches. The indebtedness securing the real estate and the investments in debt securities are valued, in part, based on third party valuations and management estimates also using an income approach. The use of different market assumptions or estimation methodologies may have a material impact on the estimated fair value amounts.

FAIR VALUE OF FINANCIAL INSTRUMENTS — The estimated fair value of financial instruments is determined using available market information and appropriate valuation methodologies. Considerable judgment, is necessary, however, to interpret market data and develop the related estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material impact on the estimated fair value amounts.

FOREIGN CURRENCIES — The financial statements of Kennedy Wilson's subsidiaries located outside the United States are measured using the local currency as this is their functional currency. The assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date, and income and expenses are translated at the average monthly rate. The foreign currencies include the euro and the British pound sterling. Cumulative translation adjustments, to the extent not included in cumulative net income, are included in the consolidated statement of equity as a component of accumulated other comprehensive income.

Investment level debt is generally incurred in local currencies. Fluctuations in foreign exchanges rates may have a significant impact on the results of the Company's operations. In order to manage currency fluctuations, Kennedy Wilson entered into currency derivative contracts to manage its exposure to currency fluctuations between its functional currency (U.S. dollar) and the functional currency (euro and the British pound) of certain of its wholly-owned and consolidated subsidiaries. KWE has also entered into currency derivative contracts to manage its exposure to euro to British pound currency fluctuations. See Note 5 for a more detailed discussion of Kennedy Wilson's currency derivative contracts.

LONG-LIVED ASSETS — Kennedy Wilson reviews its long-lived assets (excluding goodwill) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Subtopic 360-10, Property, Plant and Equipment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. If certain criteria are met, assets to be disposed of are presented separately in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The assets and liabilities of the assets to be disposed of are classified as held for sale and would be presented separately in the appropriate asset and liability sections of the balance sheet.

RECENT ACCOUNTING PRONOUNCEMENTS

For information regarding accounting standards that the Company adopted during the periods presented, see note 2 of the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company did not adopt any new accounting standards during the six months ended June 30, 2024.

The FASB did not issue any other ASUs during the first six months of 2024 that the Company expects to be applicable and have a material impact on the Company's financial position or results of operations.

NOTE 3—REAL ESTATE AND IN-PLACE LEASE VALUE

The following table summarizes Kennedy Wilson's investment in consolidated real estate properties at June 30, 2024 and December 31, 2023:

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)


	June 30,		December 31,
(Dollars in millions)	2024		2023
Land	$	1,295.7	$	1,328.3
Buildings	3,508.8		3,679.1
Building improvements	486.2		511.3
In-place lease values	252.8		276.4
	5,543.5		5,795.1
Less accumulated depreciation and amortization	(938.5)		(957.8)
Real estate and acquired in place lease values, net of accumulated depreciation and amortization	$	4,605.0	$	4,837.3

Real property, including land, buildings, and building improvements are included in real estate and are generally stated at cost. Buildings and building improvements are depreciated on a straight-line method over their estimated lives not to exceed 40 years. As of June 30, 2024, the Company has 62 operating properties and 8 properties under development or lease up that consist of 10,192 units and 5.7 million square feet.

Acquired in-place lease values are recorded at their estimated fair value and amortized over their respective weighted-average lease term which was 7.1 years at June 30, 2024.

Consolidated Acquisitions

The purchase of property is recorded to land, buildings, building improvements, and intangible lease value (including the value of above-market and below-market leases, acquired in-place lease values, and tenant relationships, if any) based on their respective estimated relative fair values. The purchase price generally approximates the fair value of the properties as acquisitions are transacted with willing third-party sellers.

During the six months ended June 30, 2024, Kennedy Wilson spent $7.4 million for consolidated acquisition of certain rental properties in the United Kingdom.

Gain on Sale of Real Estate, Net

During the six months ended June 30, 2024, Kennedy Wilson recognized gains on sale of real estate, net of $106.6 million. These gains were primarily due to (i) the Company's sale of the Shelbourne hotel which resulted in a gain of $99.1 million; (ii) the sale of a building in an office campus which resulted in a gain of $21.6 million; and (iii) the remainder of gain on sale of real estate relates to the sale of non-core retail in the United Kingdom. The gain on sale of real estate, net includes an impairment loss of $14.2 million relating to non-core office and retail buildings in the United Kingdom and Spain that were marketed for sale during such period.

During the six months ended June 30, 2023, Kennedy Wilson recognized gains on sale of real estate, net of $108.2 million. These gains were primarily due to (i) the Company's sale of a 49% of its equity interest in two previously wholly-owned market-rate multifamily properties into an existing joint venture platform managed by the Company and retained a noncontrolling 51% interest in such properties, which resulted in a gain on sale of real estate of $79.5 million; (ii) the sale of a Western United States property to VHH, pursuant to which the Company retains an interest in the asset through its ownership interest in VHH, which resulted in a gain of $15.1 million; and (iii) the remainder of gain on sale of real estate relates to the sale of non-core retail and residential properties in the Western United States and the United Kingdom. The gains on sale of real estate, net include an impairment loss of $10.6 million relating to non-core office and retail buildings in the United Kingdom and Ireland that are being marketed for sale.

Leases

The Company leases its operating properties to customers under agreements that are classified as operating leases. The total minimum lease payments provided for under the leases are recognized on a straight-line basis over the lease term unless circumstances indicate revenue should be recognized on a cash basis. The majority of the Company's rental expenses, including common area maintenance and real estate taxes and insurance on commercial properties, are recovered from the Company's tenants. The Company records amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. The reimbursements are recognized in rental income in the consolidated

Kennedy-Wilson Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

statements of operations as the Company is the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk.

The following table summarizes the minimum lease payments due from the Company's customers on leases with lease periods greater than one year at June 30, 2024:


(Dollars in millions)	Minimum
	Rental Revenues(1)
2024 (remainder)	$	112.0
2025	123.6
2026	104.1
2027	87.1
2028	69.6
Thereafter	187.3
Total	$	683.7

(1) These amounts do not reflect future rental revenues from the renewal or replacement of existing leases, rental increases that are not fixed and exclude reimbursements of rental expenses.

NOTE 4—UNCONSOLIDATED INVESTMENTS

Kennedy Wilson has a number of joint venture interests including commingled funds and separate accounts, generally ranging from 5% to 50%, that were formed to acquire, manage, develop, service and/or sell real estate. Kennedy Wilson has significant influence over these entities, but not control. Accordingly, these investments are accounted for under the equity method. In many of these investments, Kennedy Wilson earns customary fees in its role as asset manager which are recorded to investment management fees on the statement of operations.

Investment Management Fees

The following table presents investment management fees recorded by Kennedy Wilson during the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2024		2023		2024		2023
Base management fees	$	9.6	$	8.8	$	17.7	$	17.5
Acquisition related fees	0.6		—		0.6		—
Total(1)	$	10.2	$	8.8	$	18.3	$	17.5

(1)Fees above are recorded as a component to investment management fees on the statement of operations.

Joint Venture and Fund Holdings

The following table details Kennedy Wilson's investments in joint ventures by investment type and geographic location as of June 30, 2024:


(Dollars in millions)	Multifamily		Commercial		Hotel		Funds		Residential and Other		Total
Western U.S.	$	817.1	$	74.7	$	253.0	$	72.8	$	182.5	$	1,400.1