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KW Kennedy-Wilson

Filed: 6 Aug 21, 4:16pm
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, 2021
Or
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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $.0001 par valueKWNYSE
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). (Check one):
Large accelerated filer  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No
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.     
The number of shares of common stock outstanding as of August 2, 2021 was 140,763,243.


Index
 



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, 2020. 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 EBITDA, Adjusted Net Income 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.
    “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.  
    “Adjusted EBITDA” represents net income before interest expense, loss on early extinguishment of debt, our share of interest expense included in unconsolidated investments, depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, provision for (benefit from) income taxes, our share of taxes include in unconsolidated investments, share-based compensation and EBITDA attributable to noncontrolling interests.  Please also 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. Our management uses Adjusted EBITDA to analyze our business because it adjusts net income for items we believe do not accurately reflect the nature of our 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, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing our 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, our 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 our management’s discretionary use, as it does not remove all non-cash items (such as non-cash acquisition-related gains or expenses) 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 our debt instruments, which are further adjusted to reflect certain
i

other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. 
    “Adjusted Net Income” represents net income (loss) before depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, share-based compensation, preferred dividends and accretion of preferred stock issuance costs and net income attributable to noncontrolling interests, before depreciation and amortization. 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.
    “Consolidated Portfolio NOI” refers to the NOI that is generated from the properties that we have an ownership interest in and are held in our 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 we consolidate in our financial statements under U.S. GAAP and third-party equity providers.
"Fee Bearing Capital" represents total third-party committed or invested capital that we manage in our joint-ventures and commingled funds that entitle us to earn fees, including without limitation, asset management fees, construction management fees, acquisition and disposition fees and/or promoted interest, if applicable.
"Gross Asset Value” refers to the gross carrying value of assets, before debt, depreciation and amortization, and net of noncontrolling interests.
    "Real Estate Assets under Management" ("AUM") generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. Our AUM is principally intended to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our AUM consists of the total estimated fair value of the real estate properties and other real estate related assets either owned by third parties, wholly-owned by us or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested. Committed (but unfunded) capital from investors in our sponsored funds is not included in our AUM. The estimated value of development properties is included at estimated completion cost.
    “Co-Investment Portfolio NOI” refers to the NOI that is generated from the properties that we have an ownership interest in and are held in our Co-investments 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.
    "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. Our management uses net operating income to assess and compare the performance of our 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 our properties resulting from our value-add initiatives or changing market conditions. Our management believes that net operating income reflects the core revenues and costs of operating our properties and is better suited to evaluate trends in occupancy and lease rates.
    "Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.
    “Same property” refers to properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared.  The same property information presented throughout this report is shown on a cash basis and excludes non-recurring expenses. This analysis excludes properties that are either under development or undergoing lease up as part of our asset management strategy.      
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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,
2021
December 31,
2020
Assets
Cash and cash equivalents$686.5 $965.1 
Accounts receivable (including $12.2 and $12.6 of related party)43.7 47.9 
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of $786.2 and $815.0)4,556.7 4,720.5 
Unconsolidated investments (including $1,429.5 and $1,136.5 at fair value)1,577.5 1,289.3 
Other assets188.7 199.1 
Loan purchases and originations134.8 107.1 
Total assets(1)
$7,187.9 $7,329.0 
Liabilities
Accounts payable$18.3 $30.1 
Accrued expenses and other liabilities585.8 531.7 
Mortgage debt2,332.4 2,589.8 
KW unsecured debt1,472.1 1,332.2 
KWE unsecured bonds951.5 1,172.5 
Total liabilities(1)
5,360.1 5,656.3 
Equity
Series A cumulative preferred Stock, $0.0001 par value, 1,000 per share liquidation preference, 1,000,000 shares authorized, 300,000 shares outstanding as of June 30, 2021 and December 31, 2020295.2 295.2 
Common stock, $0.0001 par value per share, 200,000,000 authorized, 140,763,243 and 141,365,323 shares issued and outstanding as of June 30, 2021 and December 31, 2020
Additional paid-in capital1,719.5 1,725.2 
Retained earnings165.4 17.7 
 Accumulated other comprehensive loss(382.9)(393.6)
Total Kennedy-Wilson Holdings, Inc. shareholders' equity1,797.2 1,644.5 
Noncontrolling interests30.6 28.2 
Total equity1,827.8 1,672.7 
Total liabilities and equity$7,187.9 $7,329.0 


(1) The assets and liabilities as of June 30, 2021 include $169.0 million (including cash held by consolidated investments of $9.9 million and real estate and acquired in place lease values, net of accumulated depreciation and amortization of $151.8 million) and $110.5 million (including mortgage debt of $101.5 million), respectively, from consolidated variable interest entities ("VIEs"). The assets and liabilities as of December 31, 2020 include $166.0 million (including cash held by consolidated investments of $9.1 million and real estate and acquired in place lease values, net of accumulated depreciation and amortization of $150.0 million) and $107.7 million (including mortgage debt of $97.5 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.

1

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,
2021202020212020
Revenue
Rental$94.7 $98.9 $183.6 $206.6 
Hotel2.2 0.1 3.0 7.3 
Investment management and property services fees (includes $9.1, $4.6, $16.6 and $9.7 of related party fees)9.3 7.9 17.4 16.3 
Loan and other2.2 0.2 3.8 0.2 
Total revenue108.4 107.1 207.8 230.4 
Expenses
Rental32.4 32.0 65.4 68.7 
Hotel2.5 2.2 4.1 8.2 
Commission and marketing0.3 0.9 0.6 1.6 
Compensation and related (includes $7.3, $8.3, $15.0 and $16.9 of share-based compensation)48.6 27.4 83.3 58.8 
General and administrative9.0 8.0 15.8 17.5 
Depreciation and amortization41.7 45.3��86.1 90.8 
Total expenses134.5 115.8 255.3 245.6 
Income from unconsolidated investments52.4 19.2 70.8 30.1 
Gain (loss) on sale of real estate, net328.5 (0.5)402.0 43.7 
Transaction-related expenses(0.4)(0.3)(0.4)(0.5)
Interest expense(44.5)(50.4)(96.1)(99.2)
Loss on early extinguishment of debt(23.8)(1.3)(38.6)(1.3)
Other loss(0.3)(3.0)(0.1)
Income (loss) before (provision for) benefit from income taxes286.1 (42.3)287.2 (42.5)
(Provision for) benefit from income taxes(64.9)3.2 (67.6)(2.5)
Net income (loss)221.2 (39.1)219.6 (45.0)
Net (income) loss attributable to the noncontrolling interests(1.5)1.3 (1.2)1.6 
Preferred dividends and accretion of preferred stock issuance costs(4.3)(4.3)(8.6)(8.6)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$215.4 $(42.1)$209.8 $(52.0)
Basic earnings (loss) per share
Earnings (loss) per share$1.55 $(0.30)$1.51 $(0.37)
Weighted average shares outstanding139,260,408 140,219,177 139,290,576 140,214,960 
Diluted earnings (loss) per share
Earnings (loss) per share$1.53 $(0.30)$1.50 $(0.37)
Weighted average shares outstanding140,778,616 140,219,177 140,136,010 140,214,960 
Dividends declared per common share$0.22 $0.22 $0.44 $0.44 

See accompanying notes to consolidated financial statements.
2

Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
(Dollars in millions)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net income (loss)$221.2 $(39.1)$219.6 $(45.0)
Other comprehensive income (loss), net of tax:
Unrealized foreign currency translation gain (loss)0.9 21.4 (22.9)4.6 
Amounts reclassified out of AOCI during the period2.2 2.2 0.2 
Unrealized currency derivative contracts (loss) gain(9.0)(19.3)29.4 (6.3)
Unrealized income (loss) on interest rate swaps(0.7)1.7 (6.3)
Total other comprehensive (loss) income for the period(5.9)1.4 10.4 (7.8)
Comprehensive income (loss)215.3 (37.7)230.0 (52.8)
Comprehensive (income) loss attributable to noncontrolling interests(1.4)1.2 (0.9)3.0 
Comprehensive income (loss) attributable to Kennedy-Wilson Holdings, Inc.$213.9 $(36.5)$229.1 $(49.8)

See accompanying notes to consolidated financial statements.

3

Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Equity
(Unaudited)
(Dollars in millions, except share amounts)
Three Months Ended June 30, 2021
 Preferred StockCommon StockAdditional
Paid-in Capital
(Accumulated Deficit) Retained EarningsAccumulated
Other
Comprehensive Loss
Noncontrolling Interests 
SharesAmountSharesAmountTotal
Balance at March 31, 2021300,000 $295.2 141,074,106 $$1,718.6 $(18.9)$(377.1)$28.5 $1,646.3 
Restricted stock grants (RSG)— — 5,000 — — — — — — 
Shares retired due to RSG vesting— — (309,243)— (6.4)— — — (6.4)
Shares retired due to common stock repurchase program— — (6,620)— (0.1)— — — (0.1)
Stock based compensation— — — — 7.4 — — — 7.4 
Other comprehensive income (loss):
Unrealized foreign currency translation gain, net of tax— — — — — — 2.7 (0.1)2.6 
Unrealized foreign currency derivative contract loss, net of tax— — — — — — (9.1)— (9.1)
Unrealized income on interest rate swaps, net of tax— — — — — — 0.6 — 0.6 
Common stock dividends— — — — — (31.1)— — (31.1)
Preferred stock dividends— — — — — (4.3)— — (4.3)
Net income— — — — — 219.7 — 1.5 221.2 
Contributions from noncontrolling interests— — — — — — — 3.1 3.1 
Distributions to noncontrolling interests— — — — — — — (2.4)(2.4)
Balance at June 30, 2021300,000 $295.2 140,763,243 $$1,719.5 $165.4 $(382.9)$30.6 $1,827.8 



















Kennedy-Wilson Holdings, Inc.
4

Consolidated Statements of Equity
(Unaudited)
(Dollars in millions, except share amounts)
Three Months Ended June 30, 2020
 Preferred StockCommon StockAdditional
Paid-in Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss
Noncontrolling Interests 
(Dollars in millions, except share amounts)SharesAmountSharesAmountTotal
Balance at March 31, 2020300,000 $295.2 143,548,864 $$1,738.7 $3.4 $(424.8)$42.5 $1,655.0 
Shares retired due to RSG vesting— — (59,964)— (0.7)— — — (0.7)
Stock based compensation— — — — 8.3 — — — 8.3 
Other comprehensive (loss) income:
Unrealized foreign currency translation gain, net of tax— — — — — — 21.3 0.1 21.4 
Unrealized foreign currency derivative contract loss, net of tax— — — — — — (19.3)— (19.3)
Unrealized loss on interest rate swaps, net of tax— — — — — — (0.7)— (0.7)
Common stock dividends— — — — — (31.5)— — (31.5)
Preferred stock dividends— — — — — (4.3)— — (4.3)
Net loss— — — — — (37.8)— (1.3)(39.1)
Contributions from noncontrolling interests— — — — — — — 1.6 1.6 
Distributions to noncontrolling interests— — — — — — — (1.6)(1.6)
Balance at June 30, 2020300,000 $295.2 143,488,900 $$1,746.3 $(70.2)$(423.5)$41.3 $1,589.1 

See accompanying notes to consolidated financial statements.





















Kennedy-Wilson Holdings, Inc.
5

Consolidated Statements of Equity
(Unaudited)
(Dollars in millions, except share amounts)
Six Months Ended June 30, 2021
 Preferred StockCommon StockAdditional
Paid-in Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Noncontrolling Interests 
SharesAmountSharesAmountTotal
Balance at December 31, 2020300,000 $295.2 141,365,323 $$1,725.2 $17.7 $(393.6)$28.2 $1,672.7 
Shares forfeited— — (237,588)— —  — — — 
Restricted stock grants (RSG)— — 619,945 — — — — — — 
Shares retired due to RSG vesting— — (967,536)— (20.5)— — — (20.5)
Shares retired due to common stock repurchase program— — (16,901)— (0.3)— — (0.3)
Stock based compensation— — — — 15.1 — — — 15.1 
Other comprehensive income (loss):
Unrealized foreign currency translation loss, net of tax— — — — — — (20.9)(0.3)(21.2)
Unrealized foreign currency derivative contract gain, net of tax— — — — — — 29.3 — 29.3 
Unrealized income on interest rate swaps, net of tax— — — — — — 2.3 — 2.3 
Common stock dividends— — — — — (62.1)— — (62.1)
Preferred stock dividends— — — — — (8.6)— — (8.6)
Net income— — — — — 218.4 — 1.2 219.6 
Contributions from noncontrolling interests— — — — — — — 4.0 4.0 
Distributions to noncontrolling interests— — — — — — — (2.5)(2.5)
Balance at June 30, 2021300,000 $295.2 140,763,243 $$1,719.5 $165.4 $(382.9)$30.6 $1,827.8 




















6



Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Equity
(Unaudited)
(Dollars in millions, except share amounts)
Six Months Ended June 30, 2020
 Preferred StockCommon StockAdditional
Paid-in Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss
Noncontrolling Interests 
(Dollars in millions, except share amounts)SharesAmountSharesAmountTotal
Balance at December 31, 2019300,000 $295.2 142,283,109 $$1,754.5 $46.2 $(417.2)$40.5 $1,719.2 
Restricted stock grants (RSG)— — 2,533,967 — — — — — 
Shares retired due to RSG vesting— — (469,680)— (9.8)— — — (9.8)
Shares retired due to common stock repurchase program— — (858,496)— (15.3)(1.3)— — (16.6)
Stock based compensation— — — — 16.9 — — — 16.9 
Other comprehensive income (loss):
Unrealized foreign currency translation gain (loss), net of tax— — — — — — 6.3 (1.4)4.9 
Unrealized foreign currency derivative contract loss, net of tax— — — — — — (6.3)— (6.3)
Unrealized loss on interest rate swaps, net of tax— — — — — — (6.3)— (6.3)
Common stock dividends— — — — — (63.1)— — (63.1)
Preferred stock dividends— — — — — (8.6)— — (8.6)
Net loss— — — — — (43.4)— (1.6)(45.0)
Contributions from noncontrolling interests— — — — — — — 1.9 1.9 
Distributions to noncontrolling interests— — — — — — — (1.8)(1.8)
KW Europe Fund II deconsolidation— — — — — — — 3.7 3.7 
Balance at June 30, 2020300,000 $295.2 143,488,900 $$1,746.3 $(70.2)$(423.5)$41.3 $1,589.1 

See accompanying notes to consolidated financial statements.
7

Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)
Six Months Ended June 30,
20212020
Cash flows from operating activities:
Net income (loss)$219.6 $(45.0)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net gain from sale of real estate(402.0)(43.7)
Depreciation and amortization86.1 90.8 
Above/below market and straight-line rent amortization8.0 (7.4)
Accounts receivable - collection no longer probable5.6 
Provision for (benefit from) deferred income taxes61.8 (5.0)
Amortization of deferred loan costs12.3 4.1 
Amortization of discount and accretion of premium on issuance of the senior notes and mortgage debt2.8 
Unrealized net gain on derivatives(2.3)(3.1)
Income from unconsolidated investments(70.8)(30.1)
Accretion of interest income on loans(0.3)— 
Operating distributions from unconsolidated investments30.7 29.5 
Deferred compensation5.2 3.5 
Share-based compensation15.0 16.9 
Change in assets and liabilities:
Accounts receivable(0.4)(6.9)
Other assets(14.9)(8.1)
Accounts payable, accrued expenses and other liabilities(22.7)(61.3)
Net cash used in operating activities(66.3)(65.8)
Cash flows from investing activities:
Proceeds from collection of loans22.1 33.9 
Issuance of loans(51.6)(6.8)
Net proceeds from sale of consolidated real estate394.1 180.9 
Purchases of real estate(476.3)
Capital expenditures to real estate(68.6)(78.7)
Purchase of marketable securities(9.8)
(Premiums paid) proceeds from settlement of foreign derivative contracts(3.8)36.3 
Proceeds from development project asset2.3 
Distributions from unconsolidated investments26.7 88.6 
Contributions to unconsolidated investments(103.6)(64.5)
Net cash (used in) provided by investing activities(261.0)182.2 
Cash flows from financing activities:
Borrowings under senior notes payable1,204.3 
Repayment of senior notes payable(1,150.0)
Borrowings under lines of credit239.3 200.0 
Repayment of lines of credit(150.0)
Borrowings under mortgage debt376.4 87.3 
Repayment of mortgage debt(160.4)(125.6)
Repayment of KWE unsecured bonds(207.0)
Payment of debt issue costs(18.7)(4.6)
Repurchase and retirement of common stock(20.8)(26.3)
Common dividends paid(64.1)(62.2)
Preferred dividends paid(8.6)(7.6)
Issuance of shareholder loans to noncontrolling interests0.6 
Contributions from noncontrolling interests3.9 1.9 
Distributions to noncontrolling interests(2.5)(1.8)
Net cash provided by financing activities41.8 61.7 
Effect of currency exchange rate changes on cash and cash equivalents6.9 (17.4)
Net change in cash and cash equivalents(1)
(278.6)160.7 
Cash and cash equivalents, beginning of period965.1 574.0 
Cash and cash equivalents, end of period$686.5 $734.7 
(1) See discussion of non-cash effects in the supplemental cash flow information.
See accompanying notes to consolidated financial statements.
8

Kennedy-Wilson Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

Supplemental cash flow information:
Six Months Ended June 30,
(Dollars in millions)20212020
Cash paid for:
Interest(1)(2)
$87.6 $103.3 
Income taxes4.3 2.1 

(1) $2.1 million and $2.1 million attributable to noncontrolling interests for the six months ended June 30, 2021 and 2020, respectively.
(2) Excludes $1.6 million and $1.8 million of capitalized interest for the six months ended June 30, 2021 and 2020, respectively.

    As of June 30, 2021 and December 31, 2020 we have $32.7 million and $25.8 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.  These reserves typically relate to interest, tax, insurance and future capital expenditures at the properties. In addition to the restricted cash above, as of June 30, 2021 the Company has $186.4 million of cash in escrow accounts available for 1031 exchanges or opportunity zone investments which is also included in cash and cash equivalents. The Company is under no obligations to use this money for these investments but if it does it could defer paying taxes associated with taxable gains on the sales of real estate which generated these cash proceeds.

Supplemental disclosure of non-cash investing and financing activities:
Six Months Ended June 30,
(Dollars in millions)20212020
Accrued capital expenditures$3.4 $1.6 
Common dividends declared but not paid on common stock31.0 31.5 
Preferred dividends declared but not paid on preferred stock4.3 4.3 

    The noncontrolling 51% interest that the Company retained in the MF seed portfolio (see gain on sale of real estate in footnote 3 for further description of 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 $178.8 million to unconsolidated investments.

During the six months ended June 30, 2020, the Company deconsolidated its interest in KW Real Estate II ("KW Europe Fund II") that were previously consolidated in the Company's financial statements. The portion of the Company's share of real estate, mortgage loan and other balance sheet items were removed from the consolidated balance sheet. These items along with an increase of $7.8 million to unconsolidated investments were all recorded as non-cash activities.

    During the six months ended June 30, 2020, the Company sold its interest in a development project in the Western United States to its equity partner. The Company received cash, a loan receivable and 3 parcels of land valued at $16.5 million that the Company now wholly owns. The parcels of land were treated as a non-cash increase to the real estate balance.
See accompanying notes to consolidated financial statements.



9


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

NOTE 1—BASIS OF PRESENTATION
    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 accounting principles generally accepted 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, 2021 and 2020 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, 2021. 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, 2020. 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 significant intercompany balances and transactions have been eliminated in consolidation. "KW," “KWH,” “Kennedy Wilson,” the “Company,” “we,” “our,” or “us” are also referred to which are defined as Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries.
     In addition, throughout these unaudited interim consolidated financial statements, “equity partners” is referred to, which is defined as 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. generally accepted accounting principles 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 performance fees, the nature of the Company's revenue streams is such that the requirements are generally satisfied at the time that the fee becomes receivable.
    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. Refer to section COVID-19 Lease Modification Accounting Relief below for the impact of rent deferrals and other lease concessions to lessees on the Company's rental income amounts. 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.
    Management fees are primarily comprised of investment management and property services fees. 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. Property services fees are earned for managing the operations of real estate assets and are generally based on a fixed percentage of the revenues generated from the respective real estate assets. The Company sold its property services group ("Property Services") at the beginning of the fourth quarter 2020 with the sale of KWP and will have minimal property services fees going forward from its auction sales and marketing business. The Company provides investment management and property services on investments it also has an ownership interest in. Fees earned on
10


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
consolidated properties are eliminated in consolidation and fees on unconsolidated investments are eliminated for the portion that relate to the Company's ownership interest.
    Commissions primarily consist of acquisition and disposition fees, auction and consulting fees and, prior to the sale of Property Services, also consisted of real estate sales commissions, and leasing commissions. Acquisition 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. 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 the 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, has credit risk, and has wide latitude in establishing the price of services rendered and discretion in selection of agents and determination of service specifications. Leasing fees that are payable upon tenant occupancy, payment of rent or other events beyond Kennedy Wilson's control are recognized upon the occurrence of such events.
Interest 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.
    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.
    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.
    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 — Kennedy Wilson has a number of joint venture interests that were formed to acquire, manage, and/or sell real estate or real estate related investments. Investments in unconsolidated investments are accounted for under the equity method of accounting as Kennedy Wilson 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’s share of income or loss, contributions, distributions and foreign currency movements. 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.
Kennedy Wilson elected the fair value option for 44 investments in unconsolidated investment entities ("FV Option" investments). Due to the nature of these investments, Kennedy Wilson elected to record these investments at fair value in order to report the change in value in the underlying investments in the results of our current operations.
    Additionally, Kennedy Wilson records its investments in commingled funds it manages and sponsors (the "Funds") that are investment companies under 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 their investments at fair value, with unrealized gains and losses resulting from changes in fair value reflected in their earnings.
11


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Performance fees or carried interest are allocated to the general partner, special limited partner or asset manager of Kennedy Wilson's real estate funds based on the cumulative performance of the fund and are subject to preferred return thresholds of the limited partners. At the end of each reporting period, Kennedy Wilson calculates the performance fee 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 performance fees to reflect either (a) positive performance resulting in an increase in the performance fee allocated to the general partner or asset manager or (b) negative performance that would cause the amount due to Kennedy Wilson to be less than the amount previously recognized as income from unconsolidated investments, resulting in a negative adjustment to performance fees allocated to the general partner or asset manager. As of June 30, 2021 the Company has $77.1 million of accrued performance fees recorded to unconsolidated investments that are subject to future adjustments based on underlying performance of investments.
The compensation committee of the Company's board of directors approved and reserved up to (35%) of any performance fees earned by certain commingled funds and separate account investments to be allocated to certain employees of the Company (excluding named executive officers). The full performance fee earned by the Company will be recorded to income from unconsolidated investments and the amount allocated to employees is recorded as a component of compensation expense.
    The Company has concluded that performance fees to the Company, based on cumulative fund performance to-date, represent carried interests. For equity method investments, these fees are included as a component of the income reported from the underlying equity method investee and for equity method investments where the fair value option has been elected, these fees are included in the determination of fair value under ASC Topic 820, Fair Value Measurement.        

    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 recognized or disclosed at fair value in the financial statements on a recurring basis under the provisions of ASC Topic 820. 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 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. See Note 5 for further discussion of the estimation uncertainty related to COVID-19.
    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
12


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Subtopic 360-10, Impairment of Long-Lived Assets. 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

    COVID-19 LEASE MODIFICATION ACCOUNTING RELIEF—Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, many lessors may be required to provide rent deferrals and other lease concessions to lessees. While the lease modification guidance in ASC 842 Topic addresses routine changes to lease terms resulting from negotiations between the lessee and the lessor, this guidance did not contemplate concessions being so rapidly executed to address the sudden liquidity constraints of some lessees arising from the COVID-19 pandemic and restrictions intended to prevent its spread.
    
    In April 2020, the FASB staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, on a lease by lease basis the Company would have to determine, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows the Company, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company had no significant deterioration to its rental collections during the six months ended June 30, 2021.The Company has received some requests for lease modifications and has granted some deferrals but the amount probable of collection over the lease term generally has not changed so there has been minimal impact to rental revenues from lease modifications. The Company will continue to evaluate the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering into such concessions.
    In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU was effective upon issuance on a prospective basis beginning January 1, 2020 and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the impact of adopting ASU 2020-04 on its consolidated financial statements as the Company has not had any reference rate reform activities occur through June 30, 2021.

RECLASSIFICATIONS—Certain balances included in prior year's financial statements have been reclassified to conform to the current year's presentation
    The FASB did not issue any other ASUs during the first six months of 2021 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, 2021 and December 31, 2020:
13


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
 June 30,December 31,
(Dollars in millions)20212020
Land$1,218.0 $1,225.1 
Buildings3,283.3 3,436.0 
Building improvements508.1 546.6 
In-place lease values333.5 327.8 
5,342.9 5,535.5 
Less accumulated depreciation and amortization(786.2)(815.0)
Real estate and acquired in place lease values, net of accumulated depreciation and amortization$4,556.7 $4,720.5 
    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. Acquired in-place lease values are recorded at their estimated fair value and depreciated over their respective weighted-average lease term which was 7.7 years at June 30, 2021.
    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 third-party willing sellers.
During the six months ended June 30, 2021, Kennedy Wilson acquired the following consolidated properties:
(Dollars in millions)
Purchase Price Allocation at Acquisition(1)
LocationDescriptionLandBuilding
Acquired in-place lease values(2)
Investment debtNet Purchase Price
Western U.S.Five multifamily properties$51.3 $164.0 $0.8 $132.9 $83.2 
United KingdomOffice building71.2 177.9 14.7 263.8 
$122.5 $341.9 $15.5 $132.9 $347.0 
(1) Excludes net other assets.
(2) Above- and below-market leases are included in other assets, net and accrued expenses and other liabilities, respectively, on the accompanying consolidated balance sheets.
    Gains on Sale of Real Estate, Net
    During the six months ended June 30, 2021, Kennedy Wilson recognized gains on sale of real estate, net of $402.0 million. These gains are primarily due to (i) the sale of a 49% equity interest in nine multifamily properties that were previously wholly-owned and controlled by the Company (the "MF seed portfolio") to a global institutional investor and partner in connection with the Company's launch of a new U.S. multifamily separate account. The Company retained a non-controlling 51% interest in the MF seed portfolio; and (ii) the sale of Friars Bridge Court, an office property in the United Kingdom.
Under ASC Subtopic 610-20, due to the sale and deconsolidation of the assets that make up the MF seed portfolio, the Company recognized a $332.0 million gain on sale of real estate asset and generated $166.4 million of cash proceeds for the Company. The gain is due to the sale of the 49% interest to the Company's partner and the recording of the Company's retained 51% interest in unconsolidated investments at the fair value established by the transaction. The MF seed portfolio and subsequent investments within the separate account will be accounted for at fair value as the Company has elected to account for this investment under the fair value method.
Prior to the sale of Friars Bridge Court and during the six months ended June 30, 2021, the Company terminated the lease of the building's existing sole tenant and re-leased the building to a new tenant. As a result of lease termination, the Company wrote off $7.7 million of lease related assets to rental income and $2.7 million of leasing commissions to amortization expense relating to that tenant.
14


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
During the six months ended June 30, 2020, Kennedy Wilson recognized gains on sale of real estate, net of $43.7 million. The net gains include the sale of properties in the United Kingdom: 1 multifamily property, 11 retail properties, 1 industrial property, and 1 office property and a loan receivable secured by a multifamily property in Dublin, Ireland.
    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 recorded 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 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 tenants on leases with lease periods greater than one year at June 30, 2021:
(Dollars in millions)Minimum
Rental Revenues(1)
2021 (remainder)$153.3 
2022154.2 
2023130.2 
2024108.8 
202594.7 
Thereafter341.3 
Total$982.5 
(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.
Joint Venture and Fund Holdings
15


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
    The following table details Kennedy Wilson's investments in joint ventures by investment type and geographic location as of June 30, 2021:
(Dollars in millions)MultifamilyCommercialHotelFundsResidential and OtherTotal
Western U.S.$403.8 $88.0 $114.8 $121.8 $190.9 $919.3 
Ireland390.4 133.9 4.2 528.5 
United Kingdom112.3 17.4 129.7 
Total$794.2 $334.2 $114.8 $143.4 $190.9 $1,577.5 
    The following table details Kennedy Wilson's investments in joint ventures by investment type and geographic location as of December 31, 2020:
(Dollars in millions)MultifamilyCommercialHotelFundsResidential and OtherTotal
Western U.S.$226.2 $83.0 $86.3 $118.1 $180.8 $694.4 
Ireland389.7 129.7 3.7 523.1 
United Kingdom56.4 15.4 71.8 
Total$615.9 $269.1 $86.3 $137.2 $180.8 $1,289.3 
    During the six months ended June 30, 2021, the change in unconsolidated investments primarily relates to $178.8 million associated with the deconsolidation of the MF seed portfolio as discussed in Note 3, $103.3 million of contributions to new and existing unconsolidated investments, $57.4 million of distributions from unconsolidated investments, $70.8 million of income from unconsolidated investments, and a $7.5 million decrease related to other items which primarily related to foreign exchange movements. Please see below for additional details.
    As of June 30, 2021 and December 31, 2020, $1,429.5 million and $1,136.5 million, respectively, of unconsolidated investments were accounted for under fair value. See Note 5 for more detail.
    Contributions to Joint Ventures    
    During the six months ended June 30, 2021, Kennedy Wilson contributed $103.3 million to joint ventures, primarily to fund new acquisitions in the Company's UK industrial separate account and capital calls for development on Kona Village hotel.
    Distributions from Joint Ventures
    During the six months ended June 30, 2021, Kennedy Wilson received $57.4 million in operating and investing distributions from its joint ventures.
    The following table details cash distributions by investment type and geographic location for the six months ended June 30, 2021:
MultifamilyCommercialFundsResidential and OtherTotal
(Dollars in millions)OperatingInvestingOperatingInvestingOperatingInvestingOperatingInvestingOperatingInvesting
Western U.S.$11.7 $14.6 $4.0 $$7.0 $5.3 $$5.6 $22.7 $25.5 
Ireland3.0 5.0 1.2 8.0 1.2 
Total$14.7 $14.6 $9.0 $1.2 $7.0 $5.3 $0 $5.6 $30.7 $26.7 
    Investing distributions resulted primarily from the sales of 2 office properties in Fund VI, refinancing and buyouts from limited partners in the VHH portfolio, and a partial redemption of a non-core hedge fund investment. Operating distributions resulted from operating cash flow generated by the joint venture investments.
Income from Unconsolidated Investments
    The following table presents income from unconsolidated investments recognized by Kennedy Wilson during the three and six months ended June 30, 2021 and 2020:
16


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)2021202020212020
Income from unconsolidated investments - operating performance$12.5 $8.7 $26.0 $23.0 
Income from unconsolidated investments - realized losses(3.1)(3.1)(0.6)
Income from unconsolidated investments - fair value26.8 10.7 32.1 8.8 
Income from unconsolidated investments - performance fees16.2 (0.2)15.8 (1.1)
$52.4 $19.2 $70.8 $30.1 

 ��  Operating performance is related to underlying performance from unconsolidated investments. Realized losses are related to asset sales. Fair value gains primarily related to growth in the business of the Company's retained unconsolidated investment interest in the Zonda business from Meyers Research after the sale of a significant interest in that business in 2018. The Company's European logistics portfolio had fair value gains associated with tightening of yields on industrial assets in the United Kingdom and resyndications at the Company's VHH partnership and net foreign exchange movements on fair value European unconsolidated investments. Income from performance fees primarily relates to increase in the Company's unrealized performance fee related to one of the Company's commingled funds which was primarily driven by value increase in its multifamily assets.
Vintage Housing Holdings ("VHH")
    As of June 30, 2021 and December 31, 2020, the carrying value of the Company's investment in VHH was $136.2 million and $142.9 million, respectively. The decrease in the six months ended June 30, 2021 related to cash distributions associated with development projects in VHH. Distributions in the current period primarily relate to the refund of advances on two development projects in which VHH provides cash for the construction costs in advance, and other partners subsequently pay their share of the costs back to VHH. Fair value gains in the current period primarily relate to resyndications in which VHH dissolves an existing partnership and recapitalizes into a new partnership with tax exempt bonds and tax credits that are sold to a new tax credit partner and, in many cases, yields cash back to VHH. Upon resyndication, VHH retains a GP interest in the partnership and receives various future streams of cash flows including: development fees, asset management fees, other GP management fees and distributions from operations. Prior period fair value gains primarily relate to cap rate compression.
Capital Commitments
    As of June 30, 2021, Kennedy Wilson had unfulfilled capital commitments totaling $102.5 million to 5 of its unconsolidated joint ventures, including $77.9 million relating to 3 closed-end funds managed by Kennedy Wilson, under the respective operating agreements. The Company may be called upon to contribute additional capital to joint ventures in satisfaction of such capital commitment obligations.
NOTE 5—FAIR VALUE MEASUREMENTS AND THE FAIR VALUE OPTION
    The following table presents fair value measurements (including items that are required to be measured at fair value and items for which the fair value option has been elected) as of June 30, 2021:
(Dollars in millions)Level 1Level 2Level 3Total
Unconsolidated investments$$$1,429.5 $1,429.5 
Net currency derivative contracts(52.0)(52.0)
Total$0 $(52.0)$1,429.5 $1,377.5 
    The following table presents fair value measurements (including items that are required to be measured at fair value and items for which the fair value option has been elected) as of December 31, 2020:
(Dollars in millions)Level 1Level 2Level 3Total
Unconsolidated investments$$$1,136.5 $1,136.5 
Net currency derivative contracts(64.0)(64.0)
Total$0 $(64.0)$1,136.5 $1,072.5 
17


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Unconsolidated Investments    
    Kennedy Wilson elected to use the fair value option for 44 unconsolidated investments to more accurately reflect the timing of the value created in the underlying investments and report those results in current operations. Kennedy Wilson's investment balance in the FV Option investments was $1,286.2 million and $999.2 million at June 30, 2021 and December 31, 2020, respectively, which is included in unconsolidated investments in the accompanying balance sheets.
    Additionally, Kennedy Wilson records its investments in the Funds 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. Kennedy Wilson’s investment balance in the Funds was $143.3 million and $137.3 million at June 30, 2021 and December 31, 2020, respectively, which is included in unconsolidated investments in the accompanying consolidated balance sheets. As of June 30, 2021, Kennedy Wilson had unfunded capital commitments to the Funds in the amount of $77.9 million. See Note 4 for more information on the fluctuations for these investments.
    In estimating fair value of real estate held by the Funds and the 44 FV Option investments, the Company considers significant unobservable inputs to be the capitalization and discount rates.
The following table presents changes in Level 3 investments in Funds and FV Options for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)2021202020212020
Beginning balance$1,157.8 $1,066.0 $1,136.5 $1,099.3 
Unrealized and realized gains59.3 25.0 77.5 45.7 
Unrealized and realized losses(3.8)(4.0)(6.0)(12.4)
Contributions50.6 12.8 102.8 49.8 
Distributions(13.8)(18.3)(49.2)(80.3)
Foreign Exchange1.6 5.5 (11.4)(13.3)
Other177.8 (1.3)179.3 (3.1)
Ending Balance$1,429.5 $1,085.7 $1,429.5 $1,085.7 
The Other balance above includes $178.8 million relates to the deconsolidation of 9 multifamily assets in the MF seed portfolio during the period. See note 3 for further discussion regarding the sale.
Unobservable Inputs for Real Estate
In determining estimated fair market values, the Company utilizes discounted cash flow models that estimate future cash flows (including terminal values) and discount those cash flows back to the current period. 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. 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. The table below describes the range of unobservable inputs for real estate assets as of June 30, 2021:
Estimated Rates Used for
Capitalization RatesDiscount Rates
Multifamily3.80% —5.75%5.75% — 8.15%
Office4.00% — 7.00%5.00% — 9.00%
Retail5.00% — 8.75%7.50% — 11.25%
Hotel6.00% —6.00%7.50% — 8.25%
ResidentialN/AN/A — N/A
18


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
    In valuing indebtedness, the Company considers significant inputs such as the term of the debt, value of collateral, market loan-to-value ratios, market interest rates and spreads, and credit quality of investment entities. The credit spreads used by Kennedy Wilson for these types of investments range from 0.37% to 4.90%.
    There is no active secondary market for the Company's development projects and no readily available market value given the uncertainty of the amount and timing of future cash flows. Accordingly, its determination of fair value of its development projects requires judgment and extensive use of estimates. Therefore, the Company typically uses investment cost as the estimated fair value until future cash flows become more predictable. Additionally, the fair value of its development projects may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. If the Company were required to liquidate an investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company have recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the currently assigned valuations.
    The Company assessed the impact of the COVID-19 pandemic and its impact on the fair value of investments. Valuations of its assets that are reported at fair value and the markets in which they operate, to date, have not been significantly impacted by the COVID-19 pandemic as there has been little disruption to projected cash flows or market driven inputs on the underlying properties as a result of COVID-19. As a result of the rapid development, fluidity and uncertainty surrounding this situation, the Company expects that information with respect to fair value measurement may change, potentially significantly, going forward and may not be indicative of the actual impact of the COVID-19 pandemic on its business, operations, cash flows and financial condition for the six months ended June 30, 2021 and future periods.
Currency Derivative Contracts
    Kennedy Wilson uses foreign currency derivative contracts such as forward contracts and options to manage its foreign currency risk exposure against the effects of a portion of its certain non-U.S. dollar denominated currency net investments. Foreign currency options are valued using a variant of the Black-Scholes model tailored for currency derivatives and the foreign currency forward contracts are valued based on the difference between the contract rate and the forward rate at maturity of the underlying currency applied to the notional value in the underlying currency discounted at a market rate for similar risks. Although the Company has determined that the majority of the inputs used to value its currency derivative contracts fall within Level 2 of the fair value hierarchy, the counterparty risk adjustments associated with the currency derivative contracts utilize Level 3 inputs. However, as of June 30, 2021, Kennedy Wilson assessed the significance of the impact of the counterparty valuation adjustments on the overall valuation of its derivative positions and determined that the counterparty valuation adjustments are not significant to the overall valuation of its derivative. As a result, the Company has determined that its derivative valuation in its entirety be classified in Level 2 of the fair value hierarchy.
     Changes in fair value are recorded in other comprehensive income in the accompanying consolidated statements of comprehensive income as the portion of the currency forward and option contracts used to hedge currency exposure of its certain consolidated subsidiaries qualifies as a net investment hedge under ASC Topic 815, Derivatives and Hedging.
    The fair value of the currency derivative contracts held as of June 30, 2021 and December 31, 2020 are reported in other assets for hedge assets and included in accrued expenses and other liabilities for hedge liabilities on the accompanying balance sheet.
19


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
    The table below details the currency derivative contracts Kennedy Wilson held as of June 30, 2021 and the activity during the six months ended June 30, 2021.
(Dollars, Euros and British Pound Sterling in millions)June 30, 2021Six Months Ended June 30, 2021
Currency HedgedUnderlying CurrencyNotionalHedge AssetHedge LiabilityChange in Unrealized Gains (Losses)Realized GainsInterest ExpenseCash Paid
Outstanding
EURUSD232.5 $4.3 $12.0 $0.2 $6.1 $2.0 $
EUR(1)
GBP235.2 30.5 7.5 
EUR(1)(2)
GBP26.6 
GBPUSD£435.0 10.6 24.4 (6.2)2.2 
Total Outstanding14.9 66.9 28.1 6.1 4.2 
Settled
GBPUSD(0.2)(3.8)
Total Settled(0.2)(3.8)
Total$14.9 $66.9 $27.9 (3)$6.1 $4.2 $(3.8)
(1) Hedge is held by KWE on its wholly-owned subsidiaries.
(2) Relates to KWE's Euro Medium Term Note. See discussion in Note 9.
(3) Excludes deferred tax benefit of $1.5 million.

    The gains recognized through other comprehensive income will remain in accumulated other comprehensive income until the underlying investments that they were hedging are substantially liquidated by Kennedy Wilson.

The currency derivative contracts discussed above are offset by foreign currency translation of the Company's foreign net assets. For the six months ended June 30, 2021, Kennedy Wilson had a gross foreign currency translation loss on its net assets of $23.1 million. As of June 30, 2021, the Company has hedged 95% of the gross asset carrying value of its euro denominated investments and 88% of the gross asset carrying value of its GBP denominated investments. See Note 10 for a complete discussion on other comprehensive income including currency derivative contracts and foreign currency translations.

Interest Rate Swaps

    The Company has interest rate swaps with a notional value of $138.4 million on certain variable rate property-level mortgage loans. Interest expense relating to differences in variable rate and fixed interest rates was $0.6 million and is recorded through interest expense. Changes in fair value on contracts was a gain of $2.3 million and are recorded to other comprehensive income (loss).
Fair Value of Financial Instruments
    The carrying amounts of cash and cash equivalents, accounts receivable including related party receivables, accounts payable, accrued expenses and other liabilities, accrued salaries and benefits, and deferred and accrued income taxes approximate fair value due to their short-term maturities. The carrying value of loans (excluding related party loans as they are presumed not to be an arm’s length transaction) approximates fair value as the terms are similar to loans with similar characteristics available in the market.
    Debt liabilities are accounted for at face value plus net unamortized debt premiums and any fair value adjustments as part of business combinations. The fair value as of June 30, 2021 and December 31, 2020 for the mortgage debt, Kennedy Wilson unsecured debt, and KWE unsecured bonds were estimated to be approximately $4.6 billion and $4.9 billion, respectively, based on a comparison of the yield that would be required in a current transaction, taking into consideration the risk of the underlying collateral and the Company's credit risk to the current yield of a similar security, compared to their carrying value of $4.8 billion and $5.1 billion at June 30, 2021 and December 31, 2020, respectively. The inputs used to value
20


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
the Company's mortgage debt, Kennedy Wilson unsecured debt, and KWE unsecured bonds are based on observable inputs for similar assets and quoted prices in markets that are not active and are therefore determined to be Level 2 inputs.
NOTE 6—OTHER ASSETS
    Other assets consist of the following: 
(Dollars in millions)June 30, 2021December 31, 2020
Straight line rent receivable$44.9 $51.6 
Deferred taxes25.9 22.1 
Goodwill23.9 23.9 
Other, net of accumulated amortization of $0.0 and $2.1 at June 30, 2021 and December 31, 2020, respectively20.2 19.0 
Furniture and equipment net of accumulated depreciation of $28.7 and $27.2 at June 30, 2021 and December 31, 2020, respectively20.0 22.3 
Hedge assets14.9 12.0 
Above-market leases, net of accumulated amortization of $59.8 and $58.3 at June 30, 2021 and December 31, 2020, respectively11.6 15.0 
Right of use asset, net10.7 11.2 
Prepaid expenses9.7 11.8 
Leasing commissions, net of accumulated amortization of $8.6 and $7.4 at June 30, 2021 and December 31, 2020, respectively6.9 10.2 
Other Assets$188.7 $199.1 

Right of use asset, net

    The Company, as a lessee, has 3 office leases and 3 ground leases, which qualify as operating leases, with remaining lease terms of 2 to 238 years. The payments associated with office space leases have been discounted using the Company's incremental borrowing rate which is based on collateralized interest rates in the market and risk profile of the associated lease. For ground leases the rate implicit in the lease was used to determine the right of use asset.

    The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted to calculate the right of use asset and related lease liability for its operating leases in which we are the lessee:
(Dollars in millions)Minimum
Rental Payments
2021 (remainder)$0.8 
20221.5 
20230.8 
20240.5 
20250.4 
Thereafter32.8 
Total undiscounted rental payments36.8 
Less imputed interest(26.1)
Total lease liabilities$10.7 

NOTE 7—MORTGAGE DEBT
    The following table details mortgage debt secured by Kennedy Wilson's consolidated properties as of June 30, 2021 and December 31, 2020:
21


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(Dollars in millions)
Carrying amount of
mortgage debt as of (1)
Mortgage Debt by Product TypeRegionJune 30, 2021December 31, 2020
Multifamily(1)
Western U.S.$1,119.2 $1,345.5 
Commercial(1)
United Kingdom365.6 429.6 
Commercial(1)
Ireland355.8 320.5 
CommercialWestern U.S.375.4 375.2 
CommercialSpain42.2 43.6 
HotelIreland85.3 88.0 
Mortgage debt (excluding loan fees)(1)
2,343.5 2,602.4 
Unamortized loan fees(11.1)(12.6)
Total Mortgage Debt$2,332.4 $2,589.8 
(1) The mortgage debt balances include unamortized debt premiums. Debt premiums represent the difference between the fair value of debt and the principal value of debt assumed in various acquisitions and are amortized as a reduction of interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The unamortized loan premium as of June 30, 2021 and December 31, 2020 was $3.0 million and $4.5 million, respectively.
    The Company's mortgage debt had a weighted average interest rate of 3.22% per annum as of June 30, 2021 and 3.31% as of December 31, 2020. As of June 30, 2021, 82% of Kennedy Wilson's property level debt was fixed rate, 8% was floating rate with interest caps and 10% was floating rate without interest caps, compared to 73% of Kennedy Wilson's consolidated property level debt was fixed rate, 13% was floating rate with interest caps and 14% was floating rate without interest caps, as of December 31, 2020. The weighted average strike price on caps of Kennedy Wilson's variable rate mortgage debt is 1.52% as of June 30, 2021.
Mortgage Loan Transactions and Maturities
    During the six months ended June 30, 2021, there were four property acquisitions and three existing loans were refinanced. There was one existing investment that was consummated initially without any debt that was subsequently partially financed with a mortgage loan.
    The aggregate maturities of mortgage loans as of June 30, 2021 are as follows:
(Dollars in millions)Aggregate Maturities
2021 (remainder)$12.0 
2022347.6 
2023299.4 
2024162.1 
2025487.7 
Thereafter1,031.7 
2,340.5 
Unamortized debt premium3.0 
Unamortized loan fees(11.1)
Total Mortgage Debt

$2,332.4 
    As of June 30, 2021, the Company received waivers on certain debt covenants in loan agreements governing a total of $259.3 million or 11% of our consolidated mortgage balance. These mortgages are secured by certain retail and hospitality assets in the United Kingdom and Ireland. All of these loans are non-recourse to the Company and the waivers are through the end of the second quarter 2021 and beyond and typically cover interest coverage and loan-to-value covenants. The Company expects to be in compliance with these covenants subsequent to the second quarter of 2021, or will seek additional waivers and/or extensions as, and if needed. In the event the Company is required to seek such additional waivers and/or extensions, the Company is currently confident that it will be able to secure the same. The Company is current on all payments (principal and interest) for its consolidated mortgages including the loans discussed above.
22


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
    As of June 30, 2021, the Company was in compliance with or had received waivers on all financial mortgage debt covenants.
NOTE 8—KW UNSECURED DEBT
    The following table details KW unsecured debt as of June 30, 2021 and December 31, 2020:
(Dollars in millions)June 30, 2021December 31, 2020
Credit facility$289.3 $200.0 
Senior notes(1):
2024 Notes1,146.9 
2029 Notes602.0 
2031 Notes602.1 
KW unsecured debt1,493.4 1,346.9 
Unamortized loan fees(21.3)(14.7)
Total KW Unsecured Debt$1,472.1 $1,332.2 
(1) The senior notes balances include unamortized debt premiums (discounts). Debt premiums (discounts) represent the difference between the fair value of debt and the principal value of debt assumed in various acquisitions and are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The unamortized debt premium (discount) as of June 30, 2021 and December 31, 2020 was $4.1 million and $(3.1) million, respectively.


Borrowings Under Credit Facilities
    On March 25, 2020, the Company extended the A&R Facility's $500 million revolving line of credit (the "Second A&R Facility"). Loans under the Second A&R Facility bear interest at a rate equal to LIBOR plus between 1.75% and 2.50%, depending on the consolidated leverage ratio as of the applicable measurement date. The Second A&R Facility has a maturity date of March 25, 2024. Subject to certain conditions precedent and at Kennedy-Wilson, Inc.’s (the "Borrower") option, the maturity date of the Second A&R Facility may be extended by one year.
    The Second A&R Facility has certain covenants as defined in that certain Second Amended and Restated Credit Agreement, dated as of March 25, 2020 (the "Credit Agreement") that, among other things, limit the Company and certain of its subsidiaries’ ability to incur additional indebtedness, repurchase capital stock or debt, sell assets or subsidiary stock, create or permit liens, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers. The Credit Agreement requires the Company to maintain (i) a maximum consolidated leverage ratio (as defined in the Credit Agreement) of not greater than 65%, measured as of the last day of each fiscal quarter, (ii) a minimum fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.70 to 1.00, measured as of the last day of each fiscal quarter for the period of four full fiscal quarters then ended, (iii) a minimum consolidated tangible net worth equal to or greater than the sum of $1,700,000,000 plus an amount equal to fifty percent (50%) of net equity proceeds received by the Company after the date of the most recent financial statements that are available as of March 25, 2020, measured as of the last day of each fiscal quarter, (iv) a maximum recourse leverage ratio (as defined in the Credit Agreement) of not greater than an amount equal to consolidated tangible net worth as of the measurement date multiplied by 1.5, measured as of the last day of each fiscal quarter, (v) a maximum secured recourse leverage ratio (as defined in the Credit Agreement) of not greater than an amount equal to 3.5% of consolidated total asset value (as defined in the Credit Agreement) and $299,000,000, (vi) a maximum adjusted secured leverage ratio (as defined in the Credit Agreement) of not greater than 55%, measured as of the last day of each fiscal quarter, and (vii) liquidity (as defined in the Credit Agreement) of at least $75.0 million. As of June 30, 2021, the Company was in compliance with these covenants.
    As of June 30, 2021, the Company had an outstanding balance of $289.3 million on the Second A&R Facility with $210.7 million available to be drawn.
    The average outstanding borrowings under the Second A&R Facility, as applicable, was $227.8 million during the six months ended June 30, 2021.
23


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Senior Notes
On February 11, 2021, Kennedy-Wilson, Inc., as issuer, issued $500.0 million aggregate principal amount of 4.750% senior notes due 2029 (the “2029 notes”) and $500.0 million aggregate principal amount of 5.000% senior notes due 2031 (the “2031 notes” and, together with the 2029 notes, the “initial notes”). On March 15, 2021, Kennedy-Wilson, Inc. issued an additional $100 million aggregate principal of the 2029 notes and an additional $100 million of the 2031 notes. These additional notes were issued as "additional notes" under the indentures pursuant to which Kennedy Wilson previously issued 2029 notes and the 2031 notes. The notes are senior, unsecured obligations of Kennedy Wilson and are guaranteed by Kennedy-Wilson Holdings, Inc. and certain subsidiaries of Kennedy Wilson.

The notes accrue interest at a rate of 4.750% (in the case of the 2029 notes) and 5.000% (in the case of the 2031 notes) per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021. The notes will mature on March 1, 2029 (in the case of the 2029 notes) and March 1, 2031 (in the case of the 2031 notes), in each case unless earlier repurchased or redeemed. At any time prior to March 1, 2024 (in the case of the 2029 notes) or March 1, 2026 (in the case of the 2031 notes), Kennedy Wilson may redeem the notes of the applicable series, in whole or in part, at a redemption price equal to 100% of their principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to the redemption date. At any time and from time to time on or after March 1, 2024 (in the case of the 2029 notes) or March 1, 2026 (in the case of the 2031 notes), Kennedy Wilson may redeem the notes of the applicable series, in whole or in part, at specified redemption prices set forth in the indenture governing the notes of the applicable series, plus accrued and unpaid interest, if any, to the redemption date. In addition, prior to March 1, 2024, Kennedy Wilson may redeem up to 40% of the notes of either series from the proceeds of certain equity offerings. No sinking fund will be provided for the notes. Upon the occurrence of certain change of control or termination of trading events, holders of the notes may require Kennedy Wilson to repurchase their notes for cash equal to 101% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
    As of December 31, 2020, Kennedy Wilson, Inc. also had $1.2 billion of 5.875% Senior Notes due 2024 (the "2024 notes"). On January 27, 2021 the Company announced a tender offer for up to $1.0 billion aggregate principal amount of outstanding 2024 notes. On February 9, 2021, $576.9 million aggregate principal amount of the 2024 notes were tendered. As a result of the tender offer the Company recognized $14.8 million of loss on early extinguishment of debt due to the tender premium and the proportionate write off of capitalized loan fees and debt discount associated with the bonds retired as part of the tender offer. On April 1, 2021 the Company redeemed the remaining $573.1 million of the 2024 notes using cash on hand from the proceeds of the 2029 notes and 2031 notes. As a result of the redemption the Company recognized an additional $11.7 million of loss on early extinguishment of debt during the three months ended June 30, 2021.
The indenture governing the 2031 notes, 2029 notes and 2024 notes contained various restrictive covenants, including, among others, limitations on the Company's ability and the ability of certain of the Company's subsidiaries to incur or guarantee additional indebtedness, make restricted payments, pay dividends or make any other distributions from restricted subsidiaries, redeem or repurchase capital stock, sell assets or subsidiary stocks, engage in transactions with affiliates, create or permit liens, enter into sale/leaseback transactions, and enter into consolidations or mergers. The indenture governing the 2031 notes, 2029 notes and 2024 notes limited the ability of Kennedy Wilson and its restricted subsidiaries to incur additional indebtedness if, on the date of such incurrence and after giving effect to the new indebtedness, the maximum balance sheet leverage ratio (as defined in the indenture) is greater than 1.50 to 1.00, subject to certain exceptions. As of June 30, 2021, the maximum balance sheet leverage ratio was 0.85 to 1.00. See Note 14 for the guarantor and non-guarantor financial statements.
    As of June 30, 2021, the Company was in compliance with all financial covenants.
NOTE 9—KWE UNSECURED BONDS
    The following table details KWE unsecured bonds as of June 30, 2021 and December 31, 2020:
24


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(Dollars in millions)June 30, 2021December 31, 2020
KWE Bonds$303.3 $504.7 
KWE Euro Medium Term Note Programme649.2 669.7 
KWE Unsecured Bonds (excluding loan fees)(1)
952.5 1,174.4 
Unamortized loan fees(1.0)(1.9)
Total KWE Unsecured Bonds$951.5 $1,172.5 
(1) The KWE unsecured bonds balances include unamortized debt premiums (discounts). Debt premiums (discounts) represent the difference between the fair value of debt and the principal value of debt assumed in various acquisitions and are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The unamortized premium (discount) as of June 30, 2021 and December 31, 2020 was $(2.4) million and $(2.8) million, respectively.
    As of June 30, 2021, KWE, as issuer, had 3.95% fixed-rate senior unsecured bonds due 2022 ("KWE Bonds") that have a carrying value of $303.3 million and $504.7 million as of June 30, 2021 and December 31, 2020, respectively. KWE effectively reduced the interest rate to 3.35% as a result of it entering into swap arrangements to convert 50% of the proceeds into Euros. On April 26, 2021, KWE completed the redemption of £150.0 million in aggregate nominal amount of the KWE Bonds outstanding which resulted in a $9.3 million loss on early extinguishment of debt due to a make whole premium paid as part of redemption and proportionate write off of loan fees.
    In addition, KWE issued senior unsecured notes for an aggregate principal amount of approximately $651.7 million (based on June 30, 2021 rates) (€550 million) (the "KWE Notes"). The KWE Notes were issued at a discount and have a carrying value of $649.2 million, with an annual fixed coupon of 3.25% and mature in 2025.  As KWE invested proceeds from the KWE Notes to fund equity investments in euro denominated assets, KWE designated the KWE Notes as net investment hedges under ASC Topic 815. Subsequent fluctuations in foreign currency rates that impact the carrying value of the KWE Notes are recorded to accumulated other comprehensive income. During the six months ended June 30, 2021, Kennedy Wilson recognized a gain of $26.6 million in other comprehensive income due to the strengthening of the euro against the GBP during the period. The KWE Notes rank pari passu with the KWE Bonds and are subject to the same restrictive covenants.
    The trust deed that governs the bonds contains various restrictive covenants for KWE, including, among others, limitations on KWE’s and its material subsidiaries’ ability to provide certain negative pledges. The trust deed limits the ability of KWE and its subsidiaries to incur additional indebtedness if, on the date of such incurrence and after giving effect to the incurrence of the new indebtedness, (1) KWE’s consolidated net indebtedness (as defined in the trust deed) would exceed 60% of KWE’s total assets (as calculated pursuant to the terms of the trust deed); and (2) KWE’s consolidated secured indebtedness (as defined in the trust deed) would exceed 50% of KWE’s total assets (as calculated pursuant to the terms of the trust deed). The trust deed also requires KWE, as of each reporting date, to maintain an interest coverage ratio (as defined in the trust deed) of at least 1.50 to 1.00 and have unencumbered assets of no less than 125% of its unsecured indebtedness (as defined in the trust deed).
As of June 30, 2021, KWE was in compliance with these covenants.
NOTE 10—EQUITY
    Dividend Distributions    
    Kennedy Wilson declared and paid the following cash distributions on its preferred and common stock:
Six Months Ended June 30, 2021Six Months Ended June 30, 2020
(Dollars in millions)DeclaredPaidDeclaredPaid
Preferred Stock$8.6 $8.6 $8.6 $7.6 
Common Stock(1)
62.1 64.1 63.1 62.2 
(1) The difference between declared and paid is the amount accrued on the consolidated balance sheets.
    Share-based Compensation    
    During the six months ended June 30, 2021 and 2020, Kennedy Wilson recognized $15.0 million and $16.9 million, respectively, of compensation expense related to the amortization of grant date fair values of restricted stock grants.
25


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Common Stock Repurchase Program
    On November 4, 2020, the Company's board of directors authorized an expansion of its existing $250.0 million share repurchase plan to $500 million. Repurchases under the program may be made in the open market, in privately negotiated transactions, through the net settlement of the Company’s restricted stock grants or otherwise, with the amount and timing of repurchases dependent on market conditions and subject to the company’s discretion. 
    During the six months ended June 30, 2021, Kennedy Wilson repurchased and retired 16,901 shares on the open market for $0.3 million under the stock repurchase program. During the six months ended June 30, 2020, Kennedy Wilson repurchased and retired 858,496 shares on the open market for $16.6 million under the previous stock repurchase program.
    Generally, upon vesting, the restricted stock granted to employees is net share-settled such that the Company will withhold shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remit the cash to the appropriate taxing authorities. The restricted shares that vested during six months ended June 30, 2021 and 2020 were net-share settled. The total shares withheld during the six months ended June 30, 2021 and 2020 were 967,536 shares and 469,680 shares, respectively. During the six months ended June 30, 2021 and 2020, total payments for the employees’ tax obligations to the taxing authorities for the shares which were net-share settled were $20.5 million and $9.8 million, respectively. These activities are reflected as a financing activity within Kennedy Wilson's consolidated statements of cash flows.
    Accumulated Other Comprehensive (Loss) Income
    The following table summarizes the changes in each component of accumulated other comprehensive loss, net of taxes:
(Dollars in millions)Foreign Currency TranslationCurrency Derivative ContractsInterest Rate Swaps
Total Accumulated Other Comprehensive Loss(1)
Balance at December 31, 2020$(32.2)$2.6 $(5.4)$(35.0)
Unrealized (losses) gains, arising during the period(23.1)27.9 2.3 7.1 
Noncontrolling interests0.3 0.3 
Deferred taxes on unrealized losses (gains), arising during the period0.2 1.5 (0.6)1.1 
Amounts reclassified out of AOCI during the period, gross3.3 (0.2)0.8 3.9 
Amounts reclassified out of AOCI during the period, tax(1.6)0.1 (0.2)(1.7)
Balance at June 30, 2021$(53.1)$31.9 $(3.1)$(24.3)
(1) Excludes $358.4 million of inception to date accumulated other comprehensive losses associated with noncontrolling interest holders of KWE that the Company was required to record as part of the KWE Transaction in October 2017.
NOTE 11—EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed after adjusting the numerator and denominator of the basic earnings per share computation for the effects of all potentially dilutive common shares. The dilutive effect of non-vested stock issued under share‑based compensation plans is computed using the treasury stock method. The dilutive effect of the cumulative preferred stock is computed using the if‑converted method.
     The following is a summary of the elements used in calculating basic and diluted income (loss) per share for the three and six months ended June 30, 2021 and 2020:
26


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions, except share and per share amounts)2021202020212020
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$215.4 $(42.1)$209.8 $(52.0)
Weighted average shares outstanding for basic139,260,408 140,219,177 139,290,576 140,214,960 
Basic earnings (loss) per basic share$1.55 $(0.30)$1.51 $(0.37)
Weighted average shares outstanding for diluted(1)
140,778,616 140,219,177 140,136,010 140,214,960 
Diluted earnings (loss) per diluted share$1.53 $(0.30)$1.5 $(0.37)
(1) For the three months ended June 30, 2021 and 2020, a total of 13,507,422 and 13,252,286 potentially dilutive securities, respectively, have not been included in the diluted weighted average shares as they are anti-dilutive. For the six months ended June 30, 2021 and 2020, a total of 13,612,675 and 13,673,790 potentially dilutive securities, respectively, have not been included in the diluted weighted average shares as they are anti-dilutive.
NOTE 12—SEGMENT INFORMATION
Segment Presentation
    The Company evaluates its reportable segments in accordance with the guidance of ASC Topic 280, Segment Reporting which aligns with how the business is being run and evaluated by the chief operating decision makers.
Segments
    The Company's operations are defined by two business segments: its Consolidated investment portfolio (the "Consolidated Portfolio") and its Co-Investment Portfolio:
Consolidated Portfolio consists of the investments that the Company has made in real estate and real estate-related assets and consolidates on its balance sheet.  The Company typically wholly-owns the assets in its Consolidated Portfolio.
Co-Investment Portfolio consists of (i) the co-investments that the Company has made in real estate and real estate-related assets through the commingled funds and joint ventures that it manages; and (ii) the fees (including, without limitation, asset management fees, construction management fees and performance fees) that it earns on its fee bearing capital.  The Company typically owns a 5-50% ownership interest in the assets in its Co-investment Portfolio.
    In addition to the Company's 2 primary business segments the Company's Corporate segment includes, among other things, corporate overhead and included the Property Services for all periods prior to its sale in the fourth quarter 2020.     
Consolidated Portfolio
    Consolidated Portfolio is a permanent capital vehicle focused on maximizing property cash flow. These assets are primarily wholly-owned and tend to have longer hold periods and the Company targets investments with accretive asset management opportunities. The Company typically focuses on office and multifamily assets in the Western United States and commercial assets in the United Kingdom and Ireland within this segment.
Co-Investment Portfolio
    Co-investment Portfolio segment consists of investments the Company makes with partners in which it receives (i) fees for managing its partners equity and (ii) rental income from its co-investments in these assets. The Company utilizes different platforms in the Co-investment Portfolio segment depending on the asset and risk return profiles.
27


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
The following tables summarize income activity by segment and corporate for the three and six months ended June 30, 2021 and 2020 and balance sheet data as of June 30, 2021 and December 31, 2020:
Three Months Ended June 30, 2021
(Dollars in millions)ConsolidatedCo-InvestmentsCorporateTotal
Revenue
Rental$94.7 $$$94.7 
Hotel2.2 2.2 
Investment management and property services fees8.7 0.6 9.3 
Loans and other2.2 2.2 
Total revenue96.9 10.9 0.6 108.4 
Expenses
Rental32.4 32.4 
Hotel2.5 2.5 
Commission and marketing0.3 0.3 
Compensation and related23.8 6.4 18.4 48.6 
General and administrative5.9 1.4 1.7 9.0 
Depreciation and amortization41.7 41.7 
Total expenses106.3 7.8 20.4 134.5 
Income from unconsolidated investments, net of depreciation and amortization  52.4 52.4 
Gain on sale of real estate, net328.5 328.5 
Interest expense(30.1)(14.4)(44.5)
Loss on early extinguishment of debt(12.1)(11.7)(23.8)
Transaction related expenses(0.4)(0.4)
Other (loss) income(0.1)0.1 
Benefit from (provision for) income taxes1.7 (66.6)(64.9)
Net income (loss)278.1 55.5 (112.4)221.2 
Net income attributable to noncontrolling interests(1.5)(1.5)
Preferred dividends and accretion of preferred stock issuance costs(4.3)(4.3)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$276.6 $55.5 $(116.7)$215.4 
Three Months Ended June 30, 2020
(Dollars in millions)ConsolidatedCo-InvestmentsCorporateTotal
Revenue
Rental$98.9 $$$98.9 
Hotel0.1 0.1 
Investment management and property services fees5.2 2.7 7.9 
Loans and other0.2 0.2 
Total revenue99.0 5.4 2.7 107.1 
Expenses
Rental32.0 32.0 
Hotel2.2 2.2 
Commission and marketing0.9 0.9 
Compensation and related9.0 4.9 13.5 27.4 
General and administrative4.2 1.6 2.2 8.0 
Depreciation and amortization45.3 45.3 
Total expenses92.7 6.5 16.6 115.8 
Income from unconsolidated investments, net of depreciation and amortization  19.2 19.2 
Loss on sale of real estate, net(0.5)(0.5)
Interest expense(32.3)(18.1)(50.4)
Loss on early extinguishment of debt(1.3)(1.3)
Transaction-related expenses(0.3)(0.3)
Other loss(0.6)0.3 (0.3)
(Provision for) benefit from income taxes(2.5)5.7 3.2 
Net (loss) income(31.2)18.1 (26.0)(39.1)
Net loss attributable to noncontrolling interests1.3 1.3 
Preferred dividends and accretion of preferred stock issuance costs(4.3)(4.3)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders$(29.9)$18.1 $(30.3)$(42.1)
28


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Six Months Ended June 30, 2021
(Dollars in millions)ConsolidatedCo-InvestmentsCorporateTotal
Revenue
Rental$183.6 $$$183.6 
Hotel3.0 3.0 
Investment management and property services fees16.1 1.3 17.4 
Loans and other3.8 3.8 
Total revenue186.6 19.9 1.3 207.8 
Expenses
Rental65.4 65.4 
Hotel4.1 4.1 
Commission and marketing0.6 0.6 
Compensation and related38.9 12.3 32.1 83.3 
General and administrative10.2 2.7 2.9 15.8 
Depreciation and amortization86.1 86.1 
Total expenses204.7 15.0 35.6 255.3 
Income from unconsolidated investments, net of depreciation and amortization  70.8 70.8 
Gain on sale of real estate, net402.0 402.0 
Interest expense(62.2)(33.9)(96.1)
Loss on early extinguishment of debt(12.1)(26.5)(38.6)
Other loss(2.5)(0.5)(3.0)
Transaction related expenses(0.4)(0.4)
Provision for income taxes(2.2)(65.4)(67.6)
Net income (loss)304.5 75.7 (160.6)219.6 
Net income attributable to noncontrolling interests(1.2)(1.2)
Preferred dividends and accretion of preferred stock issuance costs(8.6)(8.6)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$303.3 $75.7 $(169.2)$209.8 
29


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Six Months Ended June 30, 2020
(Dollars in millions)ConsolidatedCo-InvestmentsCorporateTotal
Revenue
Rental$206.6 $$$206.6 
Hotel7.3 7.3 
Investment management and property services fees9.7 6.6 16.3 
Loans and other0.2 0.2 
Total revenue213.9 9.9 6.6 230.4 
Expenses
Rental68.7 68.7 
Hotel8.2 8.2 
Commission and marketing1.6 1.6 
Compensation and related20.9 9.5 28.4 58.8 
General and administrative9.8 3.3 4.4 17.5 
Depreciation and amortization90.8 90.8 
Total expenses198.4 12.8 34.4 245.6 
Income from unconsolidated investments, net of depreciation and amortization  30.1 30.1 
Gain on sale of real estate, net43.7 43.7 
Transaction-related expenses(0.5)(0.5)
Loss on early extinguishment of debt(1.3)(1.3)
Interest expense(65.7)(33.5)(99.2)
Other (loss) income(1.3)1.2 (0.1)
(Provision for) benefit from income taxes(7.6)5.1 (2.5)
Net (loss) income(17.2)27.2 (55.0)(45.0)
Net income attributable to noncontrolling interests1.6 1.6 
Preferred dividends and accretion of preferred stock issuance costs(8.6)(8.6)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders$(15.6)$27.2 $(63.6)$(52.0)
(Dollars in millions)June 30, 2021December 31, 2020
Total assets
Consolidated$5,167.1 $5,562.4 
Co-investment1,712.3 1,396.4 
Corporate308.5 370.2 
Total assets$7,187.9 $7,329.0 
30


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 13—INCOME TAXES
    The Company derives a significant portion of its income from the rental and sale of real property. As a result, a substantial portion of its foreign earnings is subject to U.S. taxation under certain provisions of the Internal Revenue Code of 1986, as amended, applicable to controlled foreign corporations ("Subpart F"). In determining the quarterly provisions for income taxes, the Company calculates income tax expense based on actual year-to-date income and statutory tax rates. The year-to-date income tax expense reflects the impact of foreign operations and income allocated to noncontrolling interests which is generally not subject to corporate tax.
    During the six months ended June 30, 2021, Kennedy Wilson generated pretax book income of $287.2 million related to its global operations and recorded a tax expense of $67.6 million. The tax expense for the period is above the US statutory tax rate, primarily as a result of non-deductible executive compensation in the United States and non-deductible interest expense in the United Kingdom.
    Kennedy Wilson elected to treat KWE as a partnership for U.S. tax purposes effective as of December 29, 2017. Due to unrealized foreign exchange losses not yet deductible for tax purposes and the consideration paid to acquire the non-controlling interests in KWE exceeding the book carrying value of the non-controlling interests in KWE, the Company’s tax basis in KWE exceeded its book carrying value at December 29, 2017, December 31, 2018, December 31, 2019, December 31, 2020 and June 30, 2021.  Due to the conversion of KWE to a partnership for U.S. tax purposes, the Company was required to record a deferred tax asset related to its excess tax basis over book carrying value for its investment in KWE.  As a significant portion of the excess tax basis would only reverse upon a strengthening of foreign currencies or upon a disposition of KWE, the Company determined that a valuation allowance was required for substantially all of the tax basis that was in excess of the Company’s carrying value for its investment in KWE. The valuation allowance will be released when tax benefit from future real estate dispositions can be reasonably anticipated. As of June 30, 2021, Kennedy Wilson's excess tax basis in KWE and the related valuation allowance is $64.9 million and $64.9 million, respectively, while as of December 31, 2020, Kennedy Wilson's excess tax basis in KWE and the related valuation allowance was $66.5 million and $66.5 million, respectively.
    


31


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 14—GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS
    The following consolidating financial information and condensed consolidating financial information include:
    (1) Condensed consolidating balance sheets as of June 30, 2021 and December 31, 2020; consolidating statements of operations for the three and six months ended June 30, 2021 and 2020; consolidating statements of comprehensive income for the three and six months ended June 30, 2021 and 2020; and condensed consolidating statements of cash flows for the six months ended June 30, 2021 and 2020, of (a) Kennedy-Wilson Holdings, Inc., as the parent, (b) Kennedy-Wilson, Inc., as the subsidiary issuer, (c) the guarantor subsidiaries, (d) the non-guarantor subsidiaries and (e) Kennedy-Wilson Holdings, Inc. on a consolidated basis; and
    (2) Elimination entries necessary to consolidate Kennedy-Wilson Holdings, Inc., as the parent, with Kennedy-Wilson, Inc. and its guarantor and non-guarantor subsidiaries.
    Kennedy Wilson owns 100% of all of the guarantor subsidiaries, and, as a result, in accordance with Rule 3-10(d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries as of and for the three and six months ended June 30, 2021 or 2020.
32


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2021
(Dollars in millions)
ParentKennedy-Wilson, Inc.
Guarantor Subsidiaries
Non-guarantor SubsidiariesEliminationConsolidated Total
Assets
Cash and cash equivalents$$95.5 $179.0 $412.0 $$686.5 
Accounts receivable17.7 26.0 43.7 
Real estate and acquired in place lease values, net of accumulated depreciation and amortization1,731.2 2,825.5 4,556.7 
Unconsolidated investments14.7 511.1 1,051.7 1,577.5 
Investments in and advances to consolidated subsidiaries1,837.1 3,381.4 2,056.4 (7,274.9)
Other assets57.1 60.9 70.7 188.7 
Loan purchases and originations7.9 45.4 81.5 134.8 
Total assets$1,837.1 $3,556.6 $4,601.7 $4,467.4 $(7,274.9)$7,187.9 
Liabilities and equity
Liabilities
Accounts payable$$0.8 $2.7 $14.8 $$18.3 
Accrued expenses and other liabilities39.9 246.6 135.0 164.3 585.8 
Mortgage debt1,082.6 1,249.8 2,332.4 
KW unsecured debt1,472.1 1,472.1 
KWE unsecured bonds951.5 951.5 
Total liabilities39.9 1,719.5 1,220.3 2,380.4 5,360.1 
Equity
Kennedy-Wilson Holdings, Inc. shareholders' equity1,797.2 1,837.1 3,381.4 2,056.4 (7,274.9)1,797.2 
Noncontrolling interests30.6 30.6 
Total equity1,797.2 1,837.1 3,381.4 2,087.0 (7,274.9)1,827.8 
Total liabilities and equity$1,837.1 $3,556.6 $4,601.7 $4,467.4 $(7,274.9)$7,187.9 
33


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2020
(Dollars in millions)
ParentKennedy-Wilson, Inc.
Guarantor Subsidiaries
Non-guarantor SubsidiariesEliminationConsolidated Total
Assets
Cash and cash equivalents$$105.5 $174.5 $685.1 $$965.1 
Accounts receivable0.2 15.5 32.2 47.9 
Real estate and acquired in place lease values, net of accumulated depreciation and amortization2,009.7 2,710.8 4,720.5 
Unconsolidated investments15.1 459.4 814.8 1,289.3 
Investments in and advances to consolidated subsidiaries1,686.5 3,173.4 1,768.4 (6,628.3)
Other assets0.9 69.3 128.9 199.1 
Loan purchases and originations9.4 97.7 107.1 
Total assets$1,686.5 $3,304.5 $4,496.8 $4,469.5 $(6,628.3)$7,329.0 
Liabilities
Accounts payable$$0.2 $1.9 $28.0 $30.1 
Accrued expense and other liabilities42.0 285.6 49.6 154.5 531.7 
Mortgage debt1,271.9 1,317.9 2,589.8 
KW unsecured debt1,332.2 1,332.2 
KWE unsecured bonds1,172.5 01,172.5 
Total liabilities42.0 1,618.0 1,323.4 2,672.9 5,656.3 
Equity
Kennedy-Wilson Holdings, Inc. shareholders' equity1,644.5 1,686.5 3,173.4 1,768.4 (6,628.3)1,644.5 
Noncontrolling interests28.2 28.2 
Total equity1,644.5 1,686.5 3,173.4 1,796.6 (6,628.3)1,672.7 
Total liabilities and equity$1,686.5 $3,304.5 $4,496.8 $4,469.5 $(6,628.3)$7,329.0 



Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)


CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2021
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Revenue
Rental$$$47.2 $47.5 $$94.7 
Hotel2.2 2.2 
Investment management and property services fees6.7 2.6 9.3 
Loans and other0.1 0.9 1.2 2.2 
Total revenue0.1 54.8 53.5 108.4 
Expenses
Rental18.0 14.4 32.4 
Hotel2.5 2.5 
Commission and marketing0.3 0.3 
Compensation and related8.1 30.3 8.8 1.4 48.6 
General and administrative4.5 2.6 1.9 9.0 
Depreciation and amortization0.4 18.9 22.4 41.7 
Total expenses8.1 35.2 48.6 42.6 134.5 
(Loss) Income from unconsolidated subsidiaries0.2 28.8 23.4 52.4 
(Loss) Income from consolidated subsidiaries229.3 358.4 204.4 (792.1)
Gain on sale of real estate, net(1.7)128.5 201.7 328.5 
Transaction-related expenses(0.1)(0.3)(0.4)
Interest expense(14.5)(11.7)(18.3)(44.5)
Loss on early extinguishment of debt(11.7)(0.7)(11.4)(23.8)
Other income (loss)0.3 0.1 (0.4)
(Loss) income before benefit from (provision for) income taxes  221.2 295.9 355.5 205.6 (792.1)286.1 
Benefit from (provision for) income taxes(66.6)2.9 (1.2)(64.9)
Net (loss) income221.2 229.3 358.4 204.4 (792.1)221.2 
Net loss attributable to the noncontrolling interests(1.5)(1.5)
Preferred dividends(4.3)(4.3)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders     $216.9 $229.3 $358.4 $202.9 $(792.1)$215.4 
35


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)


CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Revenue
Rental$$$93.7 $89.9 $$183.6 
Hotel3.0 3.0 
Investment management and property services fees12.1 5.3 17.4 
Loans and other0.2 0.9 2.7 3.8 
Total revenue0.2 106.7 100.9 207.8 
Expenses
Rental35.1 30.3 65.4 
Hotel4.1 4.1 
Commission and marketing0.6 0.6 
Compensation and related16.6 46.1 17.7 2.9 83.3 
General and administrative7.9 4.4 3.5 15.8 
Depreciation and amortization0.7 37.9 47.5 86.1 
Total expenses16.6 54.7 95.7 88.3 255.3 
(Loss) Income from unconsolidated subsidiaries3.1 33.0 34.7 70.8 
(Loss) Income from consolidated subsidiaries236.2 415.6 264.5 (916.3)
Gain on sale of real estate, net(1.7)128.5 275.2 402.0 
Transaction-related expenses(0.1)(0.3)(0.4)
Interest expense(34.0)(23.2)(38.9)(96.1)
Loss on early extinguishment of debt(26.5)(0.7)(11.4)(38.6)
Other income (loss)(0.4)0.1 (2.7)(3.0)
(Loss) income before benefit from (provision for) income taxes  219.6 301.6 413.1 269.2 (916.3)287.2 
Benefit from (provision for) income taxes(65.4)2.5 (4.7)(67.6)
Net (loss) income219.6 236.2 415.6 264.5 (916.3)219.6 
Net loss attributable to the noncontrolling interests(1.2)(1.2)
Preferred dividends(8.6)(8.6)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders     $211.0 $236.2 $415.6 $263.3 $(916.3)$209.8 







36


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)


CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2020
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Revenue
Rental$$$47.8 $51.1 $$98.9 
Hotel0.1 0.1 
Investment management and property services fees7.0 0.9 7.9 
Loans and other0.2 0.2 
Total revenue54.8 52.3 107.1 
Expenses
Rental18.2 13.8 32.0 
Hotel2.2 2.2 
Commission and marketing0.9 0.9 
Compensation and related8.6 8.4 9.1 1.3 27.4 
General and administrative3.8 2.9 1.3 8.0 
Depreciation and amortization0.3 20.0 25.0 45.3 
Total expenses8.6 12.5 51.1 43.6 115.8 
Income (loss) from unconsolidated investments0.6 (2.2)20.8 19.2 
(Loss) income from consolidated subsidiaries(30.4)(6.5)4.9 32.0 
Loss on sale of real estate, net(0.5)(0.5)
Transaction-related expenses(0.2)(0.1)(0.3)
Interest expense(18.1)(11.8)(20.5)(50.4)
Loss on early extinguishment of debt(1.3)(1.3)
Other income (loss)0.6 (0.4)(0.5)(0.3)
(Loss) income before benefit from (provision for) income taxes  (39.0)(35.9)(6.0)6.6 32.0 (42.3)
Benefit from (provision for) income taxes5.6 (0.5)(1.9)3.2 
Net (loss) income(39.0)(30.3)(6.5)4.7 32.0 (39.1)
Net loss attributable to the noncontrolling interests1.3 1.3 
Preferred dividends(4.3)(4.3)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders   $(43.3)$(30.3)$(6.5)$6.0 $32.0 $(42.1)
37


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2020
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Revenue
Rental$$$96.1 $110.5 $$206.6 
Hotel7.3 7.3 
Investment management and property services fees14.6 1.7 16.3 
Loans and other0.2 0.2 
Total revenue110.7 119.7 230.4 
Expenses
Rental35.8 32.9 68.7 
Hotel8.2 8.2 
Commission and marketing1.6 1.6 
Compensation and related17.5 18.2 20.3 2.8 58.8 
General and administrative8.6 6.2 2.7 17.5 
Depreciation and amortization0.7 39.4 50.7 90.8 
Total expenses17.5 27.5 103.3 97.3 245.6 
(Loss) income from unconsolidated investments(0.4)(5.0)35.5 30.1 
(Loss) income from consolidated subsidiaries(27.5)27.4 50.4 (50.3)
Gain on sale of real estate, net43.7 43.7 
Transaction-related expenses(0.2)(0.3)(0.5)
Interest expense(33.5)(24.5)(41.2)(99.2)
Loss on early extinguishment of debt(1.3)(1.3)
Other income (loss)1.5 (0.4)(1.2)(0.1)
(Loss) income before provision for income taxes  (45.0)(32.5)27.7 57.6 (50.3)(42.5)
Benefit from (provision for) income taxes5.0 (0.3)(7.2)(2.5)
Net (loss) income(45.0)(27.5)27.4 50.4 (50.3)(45.0)
Net loss attributable to the noncontrolling interests1.6 1.6 
Preferred dividends(8.6)(8.6)
Net (loss )income attributable to Kennedy-Wilson Holdings, Inc. common shareholders   $(53.6)$(27.5)$27.4 $52.0 $(50.3)$(52.0)


38


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2021
(Dollars in millions)

ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Net (loss) income$221.2 $229.3 $358.4 $204.4 $(792.1)$221.2 
Other comprehensive income (loss), net of tax:
Unrealized foreign currency translation loss0.9 0.9 1.8 2.2 (4.9)0.9 
Amounts reclassified out of AOCI during the period2.2 2.2 3.2 (5.4)2.2 
Unrealized currency derivative contracts gain(9.0)(9.0)(1.4)(7.6)18.0 (9.0)
Unrealized loss on interest rate swaps
Total other comprehensive loss for the period$(5.9)$(5.9)$0.4 $(2.2)$7.7 $(5.9)
Comprehensive loss$215.3 $223.4 $358.8 $202.2 $(784.4)$215.3 
Comprehensive loss attributable to noncontrolling interests(1.4)(1.4)
Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc.$215.3 $223.4 $358.8 $200.8 $(784.4)$213.9 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Net (loss) income$219.6 $236.2 $415.6 $264.5 $(916.3)$219.6 
Other comprehensive (loss) income, net of tax:
Unrealized foreign currency translation gain (loss)(22.9)(22.9)4.6 (21.1)39.4 (22.9)
Amounts reclassified out of AOCI during the period2.2 2.2 3.2 (5.4)2.2 
Unrealized currency derivative contracts (loss) gain29.4 29.4 (4.7)34.1 (58.8)29.4 
Unrealized loss on interest rate swaps1.7 1.7 (1.7)1.7 
Total other comprehensive (loss) income for the period$10.4 $10.4 $(0.1)$16.2 $(26.5)$10.4 
Comprehensive (loss) income$230.0 $246.6 $415.5 $280.7 $(942.8)$230.0 
Comprehensive loss attributable to noncontrolling interests(0.9)(0.9)
Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc.$230.0 $246.6 $415.5 $279.8 $(942.8)$229.1 
39


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2020
(Dollars in millions)

ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Net (loss) income$(39.0)$(30.3)$(6.5)$4.7 $32.0 $(39.1)
Other comprehensive income (loss), net of tax:
Unrealized foreign currency translation gain (loss)21.4 21.4 (1.0)21.2 (41.6)21.4 
Amounts reclassified out of AOCI during the period
Unrealized currency derivative contracts loss(19.3)(19.3)1.2 (20.4)38.5 (19.3)
Unrealized loss on interest rate swaps(0.7)(0.7)0.7 (0.7)
Total other comprehensive income for the period$1.4 $1.4 $0.2 $0.8 $(2.4)$1.4 
Comprehensive (loss) income$(37.6)$(28.9)$(6.3)$5.5 $29.6 $(37.7)
Comprehensive loss attributable to noncontrolling interests1.2 1.2 
Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc.$(37.6)$(28.9)$(6.3)$6.7 $29.6 $(36.5)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2020
(Dollars in millions)

ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesEliminationConsolidated Total
Net (loss) income$(45.0)$(27.5)$27.4 $50.4 $(50.3)$(45.0)
Other comprehensive income (loss), net of tax:
Unrealized foreign currency translation gain (loss)4.6 4.6 (50.3)5.4 40.3 4.6 
Amounts reclassified out of AOCI during the period0.2 0.2 0.2 (0.4)0.2 
Unrealized currency derivative contracts (loss) gain(6.3)(6.3)49.5 (55.7)12.5 (6.3)
Unrealized loss on interest rate swaps(6.3)(6.3)6.3 (6.3)
Total other comprehensive loss for the period$(7.8)$(7.8)$(0.8)$(50.1)$58.7 $(7.8)
Comprehensive (loss) income$(52.8)$(35.3)$26.6 $0.3 $8.4 $(52.8)
Comprehensive loss attributable to noncontrolling interests3.0 3.0 
Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc.$(52.8)$(35.3)$26.6 $3.3 $8.4 $(49.8)

40


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Dollars in millions)
ParentKennedy-Wilson, Inc.Guarantor SubsidiariesNon-guarantor SubsidiariesConsolidated Total
Net cash (used in) provided by operating activities$(1.5)$(262.1)$135.1 $62.2 $(66.3)
Cash flows from investing activities:
Issuance of loans(0.4)(44.5)(6.7)(51.6)
Proceeds from collection of loans0.5 0.4 21.2 22.1 
Net proceeds from sale of consolidated real estate83.2 310.9 394.1 
Purchases of real estate(137.5)(338.8)(476.3)
Capital expenditures to real estate(20.0)(48.6)(68.6)
Premiums paid from settlement of foreign derivative contracts(3.8)(3.8)
Distributions from unconsolidated investments3.3 7.6 15.8 26.7 
Contributions to unconsolidated investments(3.0)(28.2)(72.4)(103.6)
Distributions from (investments in) consolidated subsidiaries, net95.0 125.1 (105.4)(114.7)
Net cash provided by investing activities95.0 125.5 (248.2)(233.3)(261.0)
Cash flows from financing activities:
Borrowings under senior notes payable1,204.3 1,204.3 
Repayment of senior notes payable(1,150.0)(1,150.0)
Borrowing under lines of credit239.3 239.3 
Repayment of lines of credit(150.0)(150.0)
Borrowings under mortgage debt144.5 231.9 376.4 
Repayment of mortgage debt(26.6)(133.8)(160.4)
Repayment of KWE unsecured bonds(207.0)(207.0)
Debt issue costs(17.0)(0.3)(1.4)(18.7)
Repurchase and retirement of common stock(20.8)(20.8)
Common dividends paid(64.1)(64.1)
Preferred dividends paid(8.6)(8.6)
Repayment of shareholder loans to noncontrolling interests
Contributions from noncontrolling interests3.9 3.9 
Distributions to noncontrolling interests(2.5)(2.5)
Net cash (used in) provided by financing activities(93.5)126.6 117.6 (108.9)41.8 
Effect of currency exchange rate changes on cash and cash equivalents6.9 6.9 
Net change in cash and cash equivalents(10.0)4.5 (273.1)(278.6)
Cash and cash equivalents, beginning of period105.5 174.5 685.1 965.1 
Cash and cash equivalents, end of period$$95.5 $179.0 $412.0 $686.5 
41


Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020
(Dollars in millions)
ParentKennedy-Wilson, Inc.
Guarantor Subsidiaries
Non-guarantor SubsidiariesConsolidated Total
Net cash provided by (used in) operating activities$3.8 $(130.1)$(14.7)$75.2 $(65.8)
Cash flows from investing activities:
Issuance of loans(6.8)(6.8)
Collections of loans33.9 33.9 
Net proceeds from sale of real estate180.9 180.9 
Capital expenditures to real estate(30.8)(47.9)(78.7)
Distributions from unconsolidated investments4.0 34.1 50.5 88.6 
Contributions to unconsolidated investments(0.2)(21.5)(42.8)(64.5)
Proceeds from development project assets2.3 2.3 
Purchase of marketable securities(9.8)(9.8)
Proceeds from settlement of foreign derivative contracts36.3 36.3 
Distributions from (investments in) consolidated subsidiaries, net61.5 66.5 4.6 (132.6)
Net cash provided by investing activities61.5 53.7 22.7 44.3 182.2 
Cash flows from financing activities:
Borrowing under line of credit200.0 200.0 
Borrowings under investment debt27.5 59.8 87.3 
Repayment of investment debt(50.8)(74.8)(125.6)
Debt issue costs(4.0)(0.1)(0.5)(4.6)
Repurchase and retirement of common stock(26.3)(26.3)
Common dividends paid(62.2)(62.2)
Preferred dividends paid(7.6)(7.6)
Issuance of shareholder loans to noncontrolling interests0.6 0.6 
Contributions from noncontrolling interests1.9 1.9 
Distributions to noncontrolling interests(1.8)(1.8)
Net cash (used in) provided by financing activities(96.1)196.0 (23.4)(14.8)61.7 
Effect of currency exchange rate changes on cash and cash equivalents(17.4)(17.4)
Net change in cash and cash equivalents(30.8)119.6 (15.4)87.3 160.7 
Cash and cash equivalents, beginning of period30.8 6.4 102.7 434.1 574.0 
Cash and cash equivalents, end of period$$126.0 $87.3 $521.4 $734.7 
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Kennedy-Wilson Holdings, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations contains forward-looking statements within the meaning of the federal securities laws. See the discussion under the heading “Forward-looking Statements” elsewhere in this report. Unless specifically noted otherwise, as used throughout this Management’s Discussion and Analysis section, “we,” “our,” "us," "the Company" or “Kennedy Wilson” refers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries. “Equity partners” refers to third-party equity providers and non-wholly-owned subsidiaries that we consolidate in our financial statements under U.S. GAAP. Please refer to “Non-GAAP Measures and Certain Definitions” for definitions of certain terms used throughout this Management’s Discussion and Analysis Section. 

COVID-19 Impact and Business Update
    The following discussion is intended to provide shareholders with certain information regarding the Company's operations and the impact of the COVID-19 pandemic on our business and management’s efforts to respond to the same. Unless otherwise specified, the statistical and other information regarding our portfolio and tenants are estimates based on information available to us as of August 2, 2021. As a result of the rapid development, fluidity and uncertainty surrounding this situation, we expect that such statistical and other information may change, potentially significantly, going forward and may not be indicative of the actual impact of the COVID-19 pandemic on our business, operations, cash flows and financial condition for 2021 and future periods.
Health and Safety of our Employees and Tenants
    Our primary objective during the COVID-19 pandemic has been to protect the health and safety of our employees as well as the tenants and service providers across our portfolio. We have started to open our offices in jurisdictions where applicable laws permit us to do so, including our corporate headquarters located in Beverly Hills, California. Prior to reopening any office, we have strictly followed applicable laws in preparing and maintaining the space to be as safe as possible and providing an environment that encourages the following of social distancing guidelines, including, without limitation, adopting hybrid office and remote working schedules and staggering employees' schedules to ensure ample space is available between work spaces and occupied offices. In jurisdictions where applicable laws have not permitted us to reopen our offices, our employees continue to work remotely. We will continue to monitor and follow local laws and guidance to assess our ability to reopen or keep open our offices across the globe. Our IT infrastructure and communications are robust and we are focused on maintaining business continuity, while doing our share to support each community where we do business. The daily operations of our business are not materially directly dependent on a supply chain or production chain that may be disrupted due to the pandemic.
Impact to the Global Economy and Jurisdictions we Invest in
As a result of the unprecedented measures taken across the globe, the disruption and impact of the COVID-19 pandemic to the global economy and financial markets has been significant. We continue to closely monitor changes in applicable laws and COVID-19 guidance provided by local, state and federal regulators, or their equivalents, in the jurisdictions in which we operate. Nearly all the markets in which we operate continue to enforce some form of restriction on the operations of businesses and international travel due to the COVID-19 pandemic. Although the United States, United Kingdom, Ireland and Spain have eased certain restrictions and have generally started to allow certain industries to open and operate, there are still measures and restrictions in place that may increase or decrease in response to the impact of the COVID-19 pandemic. Additionally, the continued and long-lasting economic impact of the COVID-19 pandemic may lead to some of our multifamily tenants having difficulty in making rental payments on time.
Liquidity
    Kennedy Wilson has a strong financial and capital position to help withstand any potential near-term cash flow impact caused by the COVID-19 pandemic. As of June 30, 2021, we had $686.5 million ($292.7 million of which is in foreign currencies of GBP or EUR) of cash and cash equivalents on our consolidated balance sheet. We also have $210.7 million available to draw on our unsecured revolving credit facility as of June 30, 2021.
    As of June 30, 2021, we have 5.8 weighted average years to maturity on our debt obligations. We have limited debt maturities over 2021, which total $44.2 million and are secured by non-recourse property-level financings and represent only 1% of our total outstanding debt obligations. During the six months ended June 30, 2021, we closed the offering of $600 million aggregate principal amount of 4.750% senior notes due 2029 (the “2029 Notes”) and $600 million aggregate principal amount of 5.000% senior notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”). We used the proceeds from the offering of the Notes to fully redeem the 2024 Notes. On April 26, 2021 we also completed a £150.0 million redemption of our KWE Bonds due in 2022. As discussed in further detail in "Liquidity and Capital Resources", our need to
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raise funds from time to time to meet our capital requirements will depend on many factors, including the success and pace of the implementation of our strategy for strategic and accretive growth where appropriate. Additionally, we may opportunistically seek to raise capital (equity or debt) when we believe market conditions are favorable and when consistent with our growth and financing strategies.

Year to Date Highlights
For the six months ended June 30, 2021, we had net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders of $209.8 million as compared to net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders of $52.0 million for the same period in 2020. For the six months ended June 30, 2021 we had Adjusted EBITDA of $537.8 million as compared to $184.8 million for the prior-year period. The increase in net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders and Adjusted EBITDA is due to higher gains on sale in the current period due to the sale of the interests in the MF seed multifamily portfolio (as discussed in this report) and Friars Bridge Court in the United Kingdom which was offset by the loss from the early extinguishment of debt on 2024 Notes, KWE bonds and property level loans
On June 25, 2021, the Company and a global institutional investor partner launched a new joint venture with respect to core-plus multifamily properties located in the Western United States (the “JV”). The JV commenced with the partner purchasing a 49% ownership stake in nine multifamily assets (2,809 units) previously wholly-owned by us and valued at approximately $800 million (the “MF seed portfolio”). The sale of the 49% ownership interest in the seed portfolio to its partner generated cash to the Company of $167 million. We do not control the JV, which led to the deconsolidation of our retained 51% interest resulting in a gain on sale of real estate in accordance with U.S. GAAP of $332.0 million. The gain is due to the sale of the 49% interest to our partner and the recording of our retained 51% in unconsolidated investments at the fair value established by the transaction. We will earn customary asset management fees from our equity partner and will treat our retained interest as a fair value unconsolidated investment going forward.
In addition, immediately prior to the sale of the seed portfolio above, we refinanced four separate mortgages encumbered by three assets within the seed portfolio, which generated an additional $92 million to us. The Company currently expects the majority of the proceeds from the sale and refinancing transactions to be reinvested in new wholly-owned acquisitions.
We acquired $1.1 billion (KW share of $591.4 million) of real estate and originated $401.5 million (KW share of $50.7 million) of loans secured by real estate.
Issued $1.2 billion in new senior notes and retired previous outstanding senior notes which extends weighted average maturity to 5.8 years and lowers weighted average interest expense to 3.5% from 4.1 years and 3.7% at December 31, 2020. We recognized a loss of $35.7 million due to the extinguishment of the 2024 Notes and KWE Bonds during the six months ended June 30, 2021.
Increased fee-bearing capital to $4.5 billion as of June 30, 2021, a 10% increase from December 31, 2020.
Investment portfolio and Rent Collections
    Our investment portfolio is diverse both geographically and by product type. In the United States, our portfolio is focused in the western part of the country. In Europe, our portfolio is primarily located in Dublin, Ireland and the United Kingdom.
    As of August 2, 2021, we have collected a total of 96% of our share of first half 2021 rents from our properties in our global investment portfolio which is in line with rent collection levels that we achieved during 2020. Such collection rates may not be indicative of collections in any future period. As of June 30, 2021, 87% of our share of the total rents that we collect are generated from our global multifamily and office properties. During the six months ended June 30, 2021, we identified $6.2 million of receivables and other lease-related assets that are no longer probable of being collected. Accordingly, the Company will account for these leases on a cash basis and recognize rental income to the extent the Company receives cash from the tenants. Of the $6.2 million identified, $5.6 million related to our Consolidated portfolio and was recorded as a reduction of rental income and $0.6 million related to our share of rental income on our Co-Investments portfolio investments and was recorded as a reduction of income from unconsolidated investments. We have, however, received $1.9 million in cash collections relating to previously uncollectible amounts during the six months ended June 30, 2021, which we have recorded to rental income. Cash collections are from asset management teams working to collect from tenants and the receipt of rental relief amounts from various government programs. We intend to continue to work with our tenants and utilize programs available to us to make further cash collections on previously reserved receivables. In addition to the $1.9 million we have
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collected above we have submitted $2.5 million of claims to rental relief programs that have not yet been approved and have $1.2 million that have been approved for payment but not yet been received. We will record additional rental income when we receive cash from these claims.

    Global Multifamily Property Portfolio Rents and Leasing Update
    
As of August 2, 2021, we have collected a total of 97% of our share of the first half 2021 rent from our properties in our global multifamily property portfolio. We have benefited from certain of our tenants participating in rent relief or assistance programs available pursuant to certain legislation passed in the United States and other jurisdictions where we hold multifamily assets. Our multifamily tenants typically pay through direct debit transactions, and tenants within our affordable unit portfolio generally receive some assistance from various government programs, which helps enhance our collection efforts. As the COVID-19 pandemic continues, however, some of our multifamily tenants may have difficulty in making rental payments on time, or at all.  
Global Commercial Property Portfolio Rents and Leasing Update
As of August 2, 2021, we have collected 98% of the first half of 2021 rents from properties in our global office property portfolio, 79% of first half of 2021 rents from the properties in our global retail property portfolio and 94% of rents from our global industrial property portfolio. As of June 30, 2021, 11% of the total rents that we collect are generated from our global retail portfolio, 29% are generated from our global office portfolio and 1% from our global industrial portfolio.
Global Development and Hotel Update
In our development and redevelopment portfolio we have experienced delays on isolated projects, but we currently do not expect significant material cost increases as we have fixed-rate construction contracts on projects that are currently under construction and for projects that are in early phases we have not had to halt activities because we are mainly in the pre-construction phase and are able to continue progress on projects. Ireland has incurred two construction impact lockdowns, the first occurred during the second quarter of 2020 and lasted for six weeks and most recently was in a lockdown for all of the first quarter 2021 and has undergone a phased reopening that started on April 12, 2021. Construction activity was halted during these lockdowns. We expect that this will push out our timeline on development projects, which we were on site, by four to five months but we believe that any associated costs can be covered within our existing contingency plans on the assumption that there are no further extended national lockdowns. We have one property that consists of 69,000 square feet of office space that we currently expect construction to be completed by the end of 2021. We also have two properties consisting of 48,000 square feet of commercial space and 190 market rate multifamily units that are undergoing lease up that we currently expect will be stabilized by the end of 2021. Our VHH portfolio also has 354 units that we expect will finish construction or complete lease up by the end of 2021. Please refer to Development and Redevelopment in the Liquidity and Capital Resources section for a more detailed discussion regarding our development initiatives.
    The COVID-19 pandemic continues to significantly impact the hospitality industry due to travel restrictions and stay-at-home or similar directives resulting in cancellations and significantly reduced travel around the world. We voluntarily closed the Shelbourne hotel on March 15, 2020 and reopened the hotel on June 29, 2020 when we were permitted to do so under applicable laws and guidelines. Subsequent to the reopening, Ireland experienced multiple lockdowns and was in lockdown for the majority of the first half of 2021. The Shelbourne continues to remain open during this period but we expect continued significantly limited activity at the property due to travel restrictions, among other factors, as a result of the ongoing COVID-19 pandemic. Revenues at The Shelbourne hotel for the six months ended June 30, 2021 were down 59% and Consolidated NOI was down approximately $0.2 million compared to the prior year.
Company Overview
    We own, operate and develop real estate with the objective of maximizing earnings over the long run for ourselves and our equity partners. As of June 30, 2021, we had 212 employees in 12 offices throughout the United States, the United Kingdom, Ireland and Spain. As of June 30, 2021, our Real Estate Assets Under Management ("AUM") stood at $18.5 billion. The real estate that we hold in our global portfolio consists primarily of (58%) multifamily apartments and (42%) commercial based on Consolidated NOI and JV NOI. Geographically, we focus on the (66%) Western United States, (14%) the United Kingdom and (19%) Ireland (including 1% in other).
    Our investment activities involve the ownership of 8,765 multifamily units, 4.8 million square feet of office space, 3.7 million square feet of retail and industrial space and one hotel that are consolidated on our financial statements with revenues of $186.6 million and, consolidated net operating income ("Consolidated Portfolio NOI") of $113.8 million during the six months ended June 30, 2021 and AUM of $7.4 billion. Our ownership interests in such consolidated properties make up our Consolidated Portfolio ("Consolidated Portfolio") business segment as discussed in detail throughout this report.
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    In addition to investing our shareholder's capital, we invest capital on behalf of our partners in real estate and real estate related assets through our Co-investment Portfolio ("Co-investments Portfolio"). This fee-bearing capital represents total third-party committed or invested capital that we manage in our joint ventures and commingled funds that entitle us to earn fees, including without limitation, asset management fees, construction management fees, acquisition and disposition fees and/or promoted interest, if applicable. As of June 30, 2021, our fee-bearing capital was $4.5 billion and we recognized $16.1 million in investment management fees from equity partners in these vehicles during the six months ended June 30, 2021. We generally invest our own capital alongside our equity partners in these joint ventures and commingled funds that we manage. As of June 30, 2021, we held ownership interests in 12,990 market rate multifamily units, 10,162 affordable rate multifamily units, 7.0 million square feet of office space, 6.0 million square feet of retail and industrial space, one hotel and $1.2 billion of real estate debt (of which our share was $126.0 million), all of which are held through joint ventures and three commingled funds that we manage (which are represented as unconsolidated investments on our financial statements). For the six months ended June 30, 2021, these joint ventures and commingled funds that we manage generated revenues and JV NOI of $110.8 million and $53.4 million, respectively, and had AUM of $10.9 billion as of June 30, 2021. In our Co-investments Portfolio 91% of our carrying value is accounted for at fair value. The revenue and JV NOI amounts above include the operations of the underlying investments but exclude gains or losses from changes in fair value. Our interests in such joint ventures and commingled funds and the fees that we earn from such vehicles make up our Co-investments Portfolio segment as discussed in detail throughout this report.
    In addition to our income-producing real estate, we engage in development, redevelopment and value add initiatives through which we enhance cash flows or reposition assets to increase value. Our total share of development project costs with respect to these investments are estimated at $711.0 million over the next four years. These costs are generally financed by cash from our balance sheet, capital provided by partners (if applicable), cash flow from the investment and construction loans. Cost overrun risks are reduced by detailed architectural plans, guaranteed price contracts and supervision by expert Company executives and personnel. When completed, the construction loans are generally replaced by long-term mortgage financing. See additional details in the section titled Development and Redevelopment below.
Investment Approach    
    The following is our investment approach:
Identify countries and markets with an attractive investment landscape
Establish operating platforms in our target markets
Develop local intelligence and create and maintain long-lasting relationships, primarily with financial institutions and the brokerage community
Leverage relationships and local knowledge to drive proprietary investment opportunities with a focus on off-market transactions that we expect will result in above average cash flows and returns over the long term
Acquire high quality assets, either on our own or through investment management platform with strategic partners
Reposition assets to enhance cash flows post-acquisition
Disposing of non-core assets or assets that have completed their business plans and investing the proceeds from such sales into value-add capital expenditures, development and acquisitions with higher expected rent growth or recurring net operating income than assets sold
Explore development opportunities or acquire development assets that fit within our overall investment strategy
Continuously evaluate and selectively harvest asset and entity value through strategic realizations using both the public and private markets
    During the last five years, occupancy, NOI, Adjusted EBITDA and fee-bearing capital of KW was as follows (at share):
46

Three Months Ended June 30,
($ in millions, except fee bearing capital which $ in billions)20212020201920182017
Multifamily Occupancy95.9 %93.9 %94.6 %93.7 %94.5 %
% change2.1 %(0.7)%1.0 %(0.8)%— %
Commercial Occupancy92.7 %91.8 %96.9 %97.0 %96.0 %
% change1.0 %(5.3)%(0.1)%1.0 %— %
Consolidated NOI(1)
60.663.482.998.752.8
% change(4.4)%(23.5)%(16.0)%86.9 %— %
JV NOI(1)
27.022.819.513.612.1
% change18.4 %16.9 %43.4 %12.4 %— %
Adjusted EBITDA(1)
410.272.8187.4270.5102.3
% change463.5 %(61.2)%(30.7)%164.4 %— %
Fee-bearing capital(2)
4.53.52.41.81.6
% change28.6 %45.8 %33.3 %12.5 %— %
Six Months Ended June 30,
($ in millions, except fee bearing capital which $ in billions)20212020201920182017
Multifamily Occupancy95.9 %93.9 %94.5 %93.5 %94.3 %
% change2.1 %(0.6)%1.1 %(0.8)%— %
Commercial Occupancy92.7 %91.8 %96.8 %97.5 %96.2 %
% change1.0 %(5.2)%(0.7)%1.4 %— %
Consolidated NOI(1)
113.8133.7154.9189.4104.5
% change(14.9)%(13.7)%(18.2)%81.2 %— %
JV NOI(1)
53.452.736.026.823.8
% change1.3 %46.4 %34.3 %12.6 %— %
Adjusted EBITDA(1)
537.8184.8307.5393.1179.5
% change191.0 %(39.9)%(21.8)%119.0 %— %
Fee-bearing capital(2)
4.53.52.41.81.6
% change28.6 %45.8 %33.3 %12.5 %— %
(1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S. GAAP.     
(2) Amounts in fee-bearing capital exclude $1.3 billion as of June 30, 2017 relating to KWE prior to it being wholly-owned.
Business Segments
    Our operations are defined by two business segments: our consolidated investment portfolio (the "Consolidated Portfolio") and our co-investment portfolio (the "Co-Investment Portfolio")
Our Consolidated Portfolio consists of the investments in real estate and real estate-related assets that we have made and consolidate on our balance sheet.  We typically wholly-own the assets in our Consolidated Portfolio. 
Our Co-investment Portfolio consists of (i) the co-investments in real estate and real estate-related assets that we have made through the commingled funds and joint ventures that we manage; and (ii) the fees (including, without limitation, asset management fees, construction management fees and performance fees) that we earn on our fee bearing capital.  We typically own a 5-50% ownership interest in the assets in our Co-investment Portfolio. We have a weighted average ownership of 40% as of June 30, 2021.
    In addition to our two primary business segments our Corporate segment includes, among other things, our corporate overhead and our property services group (prior to the sale of the group in October 2020).     
Consolidated Portfolio
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    Our Consolidated Portfolio is a permanent capital vehicle focused on maximizing property cash flow. These assets are primarily wholly-owned and tend to have longer hold periods and we target investments with accretive asset management opportunities. We typically focus on office and multifamily assets in the Western United States and commercial assets in the United Kingdom and Ireland within this segment.
    The non-GAAP table below represents a summarized balance sheet of our Consolidated Portfolio as of June 30, 2021 and December 31, 2020:
($ in millions)June 30, 2021December 31, 2020
Cash(1)
$508.2 $733.2 
Real estate4,556.7 4,720.5 
Accounts receivable and other assets121.4 146.5 
Total Assets$5,186.3 $5,600.2 
Accounts payable16.4 28.9 
Accrued expenses187.9 184.5 
Mortgage debt2,332.4 2,589.8 
KWE bonds951.5 1,172.5 
Total Liabilities3,488.2 3,975.7 
Equity$1,698.1 $1,624.5 
(1)Excludes $178.3 million and $231.9 million as of June 30, 2021 and December 31, 2020 of corporate non-property level cash.
Co-Investments Portfolio
    We utilize different platforms in the Co-investment Portfolio segment depending on the asset and risk return profiles.
    The table below represents the carrying value of balance sheet of our Co-Investment Portfolio at our share of the underlying investments as of June 30, 2021 and December 31, 2020:
($ in millions)June 30, 2021December 31, 2020
Cash$127.1 $77.3 
Real estate3,198.4 2,654.4 
Loans134.8 107.1 
Accounts receivable and other assets226.1 205.0 
Total Assets$3,686.4 $3,043.8 
Accounts payable and accrued expenses70.4 64.6 
Mortgage debt1,903.7 1,582.8 
Total Liabilities1,974.1 1,647.4 
Equity$1,712.3 $1,334.6 
        Commingled funds
    We currently have three closed end funds that we manage and receive investment management fees. We focus on sourcing investors in the U.S., Europe and Middle East and investments in the U.S. and Europe with respect to our commingled funds. Each of our funds have, among other things, defined investment guidelines, investment hold periods and target returns. Currently our U.S. based funds focus on value-add properties that have an expected hold period of 5 to 7 years. Our European fund focuses on value add commercial properties in the United Kingdom, Ireland and Spain that also have expected hold periods of 5 to 7 years. As of June 30, 2021, our weighted average ownership interest in the commingled funds that we manage was 12%. 
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        Separate accounts
    We have several equity partners whereby we act as the general partner and receive investment management fees including acquisition, disposition, financing, construction management, performance and other fees. In addition to acting as the asset manager and general partner of those joint ventures, we are also a co-investor in these properties. Our separate account platforms have defined investment parameters such as asset types, leverage and return profiles and expected hold periods. As of June 30, 2021, our weighted average ownership interest in the various joint ventures that we manage was 45%. 
        VHH
     Through our Vintage Housing Holdings ("VHH") partnership we acquire and develop income and age restricted properties. See a detailed discussion of this business in the Multifamily section below.
    Investment Types
    The following are the product types we invest in through our Consolidated Portfolio and Co-Investment Portfolio segments:
    Multifamily
    We pursue multifamily acquisition opportunities where we can unlock and enhance asset value through a myriad of strategies, including institutional management, asset renovation and rehabilitation, repositioning and creative recapitalization. We focus primarily on apartment communities in supply-constrained, infill markets.
Our global multifamily portfolio has 31,917 units as of June 30, 2021, which consists of 27,663 stabilized units and 4,254 units that are undergoing lease up or are in the process of being developed.
    As of June 30, 2021, we hold ownership interests in 124 assets that include 8,765 consolidated multifamily apartment units and 12,990 units within our Co-Investment Portfolio and 10,162 affordable units in our VHH platform. Our largest Western United States multifamily regions are the Mountain States region, which includes Utah, Idaho, Montana, Colorado, Arizona, New Mexico and Nevada and the Pacific Northwest, primarily the greater Seattle area and Portland, Oregon. The remainder of the Western United States portfolio is located in Northern and Southern California. In Ireland we focus on Dublin city center and the suburbs of the city.
    Our asset management strategy entails installing strong property management teams to drive leasing activity and upkeep of the properties. We also add amenities designed to promote health and wellness, celebrate local and cultural events and enhance the lives of residents living in our communities. We also incorporate spaces for rest and socialization across our global multifamily portfolio, including clubhouses, fitness centers, business suites, outdoor play areas, pools and dog parks. Lastly, we utilize real-time market data and artificial intelligence based applications to ensure we are attaining current market rents.
Multifamily - Affordable Housing
Through our VHH platform we also focus on affordable units based on income or age restrictions. With homes reserved for residents that make 50%-60% of the area’s median income, VHH provides an affordable long-term solution for qualifying working families and active senior citizens, coupled with modern amenities that are a hallmark of our traditional multifamily portfolio. Fundamental to our success is a shared commitment to delivering quality affordable homes and building communities that enrich residents’ lives, including providing programs such as social support groups, after-school programs, transportation assistance, computer training, and wellness classes.

VHH typically utilizes tax-exempt bond financing and the sale of federal tax credits to help finance its investments. We are entitled to 50% of the operating cash flows from the VHH partnership in addition to any investing distributions we receive from federal tax credits or refinancing activity at the property level.

When we acquired VHH in 2015, the portfolio consisted of 5,485 units. As of June 30, 2021, the VHH portfolio includes 8,595 stabilized rental units with another 1,567 units currently under stabilization, development or undergoing entitlements in the Western United States. We acquired our ownership interest in VHH in 2015 for approximately $80.0 million. As of June 30, 2021 we have contributed an additional $89.2 million into VHH and have received $223.2 million in cash distributions. VHH is an unconsolidated investment that we account for using the fair value option which had a carrying value of $137.6 million as of June 30, 2021. We have recorded $139.3 million worth of fair value gains on our investment in VHH including $8.5 million during the six months ended June 30, 2021.
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    Commercial
    Our investment approach for office acquisition criteria differs across our various investment platforms. For our Consolidated Portfolio we look to invest in large high quality properties with high replacement costs. In our separate account portfolios our partners have certain characteristics whether it be location, financing (unencumbered properties) or hold period. The commingled funds typically look for opportunities that have a value-add component that can benefit from our asset management expertise. After acquisition, the properties are generally repositioned to enhance market value.
    Our retail portfolio has different characteristics based on the geographic markets wherein the properties are located. In Europe, we have a mixture of high street retail, suburban shopping centers and leisure assets which are mainly located in the United Kingdom as well as Dublin and Madrid. In our Western United States retail portfolio, we invest in shopping centers that are generally grocery anchored.
    Our industrial portfolio consists mainly of distribution centers located in the United Kingdom and Mountain States.    
    As of June 30, 2021, our Consolidated portfolio held over 4.8 million square feet of office space and 3.7 million square feet of retail and industrial space. Our Co-Investment portfolio has 7.0 million square feet of office space and 6.0 million square feet of retail and industrial space.     
    Development and Redevelopment

    We have a number of development, redevelopment and entitlement projects that are underway or in the planning stages. Unlike the residential projects that are held for sale and described in Residential and Other section below, these initiatives may ultimately result in income-producing assets. As of June 30, 2021 we have 2,497 multifamily units, 0.6 million commercial rentable square feet and 150 hotel rooms we are actively developing. If these projects are brought to completion, our estimated share of the total capitalization of these projects would be approximately $1.2 billion (approximately 38% of which has already been funded), which we expect would be funded through our existing equity, third party equity, project sales, tax credit financing and secured debt financing.  This represents total capital over the life of the projects and is not a representation of peak capital and does not take into account any distributions over the course of the investment. We and our equity partners are under no obligation to complete these projects and may dispose of any such assets after adding value through the entitlement process. Please also see the section titled “Liquidity and Capital Resources - Development and redevelopment” section for additional detail on these investments.
    Real Estate Debt
    We have a global debt platform with multiple equity partners. In July 2021, we announced the expansion of our global debt platform to over $3 billion, including the launch of a new European partnership with a global institutional investor to target loans secured by high-quality real estate in the United Kingdom and Europe. Our global debt platform, which includes partners across insurance and sovereign wealth, invests across the entire real estate debt capital structure in the United States, United Kingdom and Europe and targets loans secured by high-quality real estate located in such jurisdictions. In our role as asset manager, we earn customary fees under our platform. The current investments in these platforms have been made without the use of any leverage.
    As of June 30, 2021, we held interests in 23 loans with an average interest rate of 6.6% per annum and an unpaid principal balance ("UPB") of $1.2 billion of real estate debt (of which our share was a UPB of $126.0 million) located in the Western U.S and are invested through our Co-Investment Portfolio. Some of our loans contain additional funding commitments that will increase our loan balances if they are utilized. All of the loans in our global debt platform are performing in line with expectations and making payments as contractually agreed.
    Our current loan portfolio is focused on performing loans. However, if market conditions deteriorate, we expect more opportunities to arise in acquiring loan portfolios at a discount from their contractual balance due as a result of deteriorated credit quality of the borrower or market conditions. Such loans are underwritten by us based on the value of the underlying real estate collateral. Due to the discounted purchase price for such loans, we seek, and are generally able to, accomplish near term realization of the loan in a cash settlement or by obtaining title to the property. Accordingly, the credit quality of the borrower is not of substantial importance to our evaluation of the risk of recovery from such investments.
Hotel
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    We acquire hotels in certain opportunistic situations in which we are able to purchase at a discount to replacement cost or can implement our value-add investment approach. As of June 30, 2021, we owned one consolidated operating hotel with 265 hotel rooms located in Dublin, Ireland. Additionally, in our Co-investment Portfolio, we have a five-star resort development that will contain 150 rooms in Kona, Hawaii and a hotel property in Hawaii that consists of 72 rooms which is owned in one of our commingled funds.
    Residential and Other
    In certain cases, we may pursue for-sale housing acquisition opportunities, including land for entitlements, finished lots, urban infill housing sites and partially finished and finished housing projects. On certain income-producing acquisitions, there are adjacent land parcels for which we may pursue entitlement activities or, in some cases, development or re-development opportunities.
    This group also includes our investment in liquid non-real estate investments which include investment funds that hold marketable securities and private equity investments.
    As of June 30, 2021, we held 19 investments that are primarily comprised of 232 residential units/lots and 3,876 acres located in Hawaii and the Western United States and are primarily invested through our Co-investment Portfolio. As of June 30, 2021, these investments had a gross asset value of $298.4 million and we had a weighted average ownership in such investments of 74%. These investments are in various stages of completion, ranging from securing the proper entitlements on land positions to sales of units/lots.

    Fair Value Investments
        
    As of June 30, 2021, $1,429.5 million or 91% of our investments in our Co-Investment Portfolio (20% of total assets) are held at estimated fair value. We have elected fair value options or are carrying commingled fund investments at fair value for these unconsolidated investments in order to report the change in the value in the underlying investments in the results of our current operations. As of June 30, 2021, there were cumulative fair value gains on investments still held of $314.2 million which comprises 22% of the $1,429.5 million carrying value of fair value unconsolidated investments that are currently held. Our investment in VHH accounts for $139.4 million of the $314.2 million cumulative fair value gains. See discussion of VHH above for more detail.   Fair value changes consist of changes in the underlying value of properties and associated mortgage debt as well as foreign currency fluctuations (net of any direct hedges) for non-dollar denominated investments. During the six months ended June 30, 2021, we recognized $32.1 million and $15.8 million, respectively, of net fair value gains and performance fees on co-investment portfolio investments. 

    In determining these estimated fair market values, we use discounted cash flow models that estimate future cash flows (including terminal values) and discount those cash flows back to the current period. 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. 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. As such, below are ranges of the key metrics included in determining these estimated values.
Estimated Rates Used for
Capitalization RatesDiscount Rates
Multifamily3.80% —5.75%5.75% — 8.15%
Office4.00% — 7.00%5.00% — 9.00%
Retail5.00% — 8.75%7.50% — 11.25%
Hotel6.00% —6.00%7.50% — 8.25%
ResidentialN/AN/A — N/A

    In valuing indebtedness, we consider significant inputs such as the term of the debt, value of collateral, market loan-to-value ratios, market interest rates and spreads, and credit quality of investment entities. The credit spreads used by Kennedy Wilson for these types of investments range from 0.37% to 4.90%.

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    There is no active secondary market for our development projects and no readily available market value given the uncertainty of the amount and timing of future cash flows. Accordingly, our determination of fair value of our development projects requires judgment and extensive use of estimates. Therefore, we typically use investment cost as the estimated fair value until future cash flows become more predictable. Additionally, the fair value of our development projects may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. If we were required to liquidate an investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized or incurred on these investments to be different than the unrealized gains or losses reflected in the currently assigned valuations.

    We assessed the impact of the COVID-19 pandemic and its impact on the fair value of investments. Valuations of our assets that are reported at fair value and the markets in which they operate, to date, have not been significantly impacted by the COVID-19 pandemic as there has been little disruption to projected cash flows or market driven inputs on the underlying properties as a result of COVID-19. As a result of the rapid development, fluidity and uncertainty surrounding this situation, we expect that information with respect to fair value measurement may change, potentially significantly, going forward and may not be indicative of the actual impact of the COVID-19 pandemic on its business, operations, cash flows and financial condition for the six months ended June 30, 2021 and future periods.

Selected Financial Data
    
In order to help the user of the financial statements understand our company, we have included certain five-year selected financial data. The following table shows selected financial items for the three and six months ended June 30, 2021 dating back to 2017.
Three Months Ended June 30,
(Dollars in millions, except per share amounts)20212020201920182017
GAAP
Revenues$108.4 $107.1 $143.7 $217.8 $175.9 
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders215.4 (42.1)50.8 109.6 9.4 
Basic income (loss) per share of common stock1.55 (0.30)0.36 0.77 0.08 
Diluted income (loss) per share of common stock1.55 (0.30)0.36 0.77 0.08 
Dividends declared per share of common stock0.22 0.22 0.21 0.19 0.17 
Non-GAAP(1)
Adjusted EBITDA410.2 72.8 187.4 270.5 102.3 
Adjusted EBITDA percentage change463 %(61)%(31)%164 %— %
Adjusted Net Income264.6 12.0 105.1 170.9 51.0 
Adjusted Net Income percentage change2,105 %(89)%(39)%235 %— %
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(1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S. GAAP.
Six Months Ended June 30,
(Dollars in millions, except per share amounts)20212020201920182017
GAAP
Revenues$207.8 $230.4 $284.4 $407.9 $344.5 
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders209.8 (52.0)45.5 107.2 10.2 
Basic income (loss) per share of common stock1.51 (0.37)0.33 0.74 0.09 
Diluted income (loss) per share of common stock1.50 (0.37)0.33 0.74 0.09 
Dividends declared per share of common stock0.44 0.44 0.42 0.38 0.34 
Non-GAAP(1)
Adjusted EBITDA537.8 184.8 307.5 393.1 179.5 
Adjusted EBITDA percentage change191 %(40)%(22)%119 %— %
Adjusted Net Income311.6 56.8 158.9 234.1 93.7 
Adjusted Net Income percentage change449 %(64)%(32)%150 %— %
(1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S. GAAP.
    The following tables show selected financial items as of June 30, 2021 and as of December 31, 2020 through 2017:
June 30,December 31,
(in millions)20212020201920182017
Cash and cash equivalents$686.5 $965.1 $573.9 $488.0 $351.3 
Total assets7,187.9 7,329.0 7,304.5 7,381.8 7,724.8 
Mortgage debt2,332.4 2,589.8 2,641.0 2,950.3 3,156.6 
KW unsecured debt1,472.1 1,332.2 1,131.7 1,202.0 1,179.4 
KWE unsecured bonds951.5 1,172.5 1,274.2 1,260.5 1,325.9 
Kennedy Wilson equity1,797.2 1,644.5 1,678.7 1,246.7 1,365.6 
Noncontrolling interests30.6 28.2 40.5 184.5 211.9 
Total equity1,827.8 1,672.7 1,719.2 1,431.2 1,577.5 
Common shares outstanding140.8 141.4 142.3 143.2 151.6 

The following table shows the historical U.S. federal income tax treatment of Company’s common stock dividend for the years ended December 31, 2020 through 2016:

December 31,
20202019201820172016
Taxable Dividend27.14 %10.53 %23.43 %— %45.32 %
Non-Taxable Return of Capital72.86 %89.47 %76.57 %100.00 %54.68 %
Total100.00 %100.00 %100.00 %100.00 %100.00 %

Real Estate Assets Under Management (AUM)
    AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. Our AUM is principally intended to reflect the extent of our presence in the real estate market, not the basis for determining our management fees. Our AUM consists of the total estimated fair value of the real estate properties and other real estate related assets either owned by third parties, wholly-owned by us or held by joint ventures and other entities in which our sponsored funds or investment vehicles and client accounts have invested. Committed (but unfunded) capital from investors in our sponsored funds is not included in our AUM. The estimated value of development properties is included at estimated completion cost.
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    The table below details the changes in the Company's AUM for the six months ended June 30, 2021:
(in millions)December 31, 2020IncreasesDecreasesJune 30, 2021
IMRES AUM$17,569.3 $2,248.1 $(1,307.6)$18,509.8 
    AUM increased 5.4% to approximately $18.5 billion as of June 30, 2021. The increase is due to acquisitions of Embassy Gardens, a London office building, multifamily properties in the Mountain States, industrial assets in our UK Industrial portfolio and new loan originations in our global debt platform. These were offset by decreases from asset sales in our commingled funds and cash to fund acquisitions discussed above.
Foreign Currency and Currency Derivative Instruments
    Please refer to item 3. Quantitative and Qualitative Disclosures About Market Risk for our discussion regarding foreign currency and currency derivative instruments.































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Kennedy Wilson Consolidated Financial Results: Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
Three Months Ended June 30, 2021
(Dollars in millions)ConsolidatedCo-InvestCorporateTotal
Revenue
Rental$94.7 $— $— $94.7 
Hotel2.2 — — 2.2 
Investment management and property services fees
— 8.7 0.6 9.3 
Loans and other— 2.2 — 2.2 
Total revenue96.9 10.9 0.6 108.4 
Expenses
Rental32.4 — — 32.4 
Hotel2.5 — — 2.5 
Commission and marketing— — 0.3 0.3 
Compensation and related23.8 6.4 18.4 48.6 
General and administrative5.9 1.4 1.7 9.0 
Depreciation and amortization41.7 — — 41.7 
Total expenses106.3 7.8 20.4 134.5 
Income from unconsolidated investments, net of depreciation and amortization— 52.4 — 52.4 
Gain on sale of real estate, net328.5 — — 328.5 
Interest expense(30.1)— (14.4)(44.5)
Loss on early extinguishment of debt(12.1)— (11.7)(23.8)
Transaction-related expenses(0.4)— — (0.4)
Other (loss) income(0.1)— 0.1 — 
Benefit from (provision for) income taxes1.7 — (66.6)(64.9)
Net income (loss)278.1 55.5 (112.4)221.2 
Net income attributable to the noncontrolling interests(1.5)— — (1.5)
  Preferred dividends and accretion of preferred stock issuance costs— — (4.3)(4.3)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders276.6 55.5 (116.7)215.4 
Add back (less):
Interest expense30.1 — 14.4 44.5 
Loss on early extinguishment of debt12.1 — 11.7 23.8 
Kennedy Wilson's share of interest expense included in unconsolidated investments— 8.9 — 8.9 
Depreciation and amortization41.7 — — 41.7 
Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments— 1.4 — 1.4 
Provision for (benefit from) income taxes(1.7)— 66.6 64.9 
Fees eliminated in consolidation(0.2)0.2 — — 
EBITDA adjustments attributable to noncontrolling interests(2.0)— — (2.0)
Preferred dividends and accretion of preferred stock issuance costs— — 4.3 4.3 
Share-based compensation— — 7.3 7.3 
Adjusted EBITDA(1)
$356.6 $66.0 $(12.4)$410.2 
(1) See "Non-GAAP Measures and Certain Definitions" section for definitions and discussion of Adjusted EBITDA.

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Three Months Ended June 30, 2020
(Dollars in millions)ConsolidatedCo-InvestCorporateTotal
Revenue
Rental$98.9 $— $— $98.9 
Hotel0.1 — — 0.1 
Investment management and property services fees
— 5.2 2.7 7.9 
Loans and other— 0.2 — 0.2 
Total revenue99.0 5.4 2.7 107.1 
Expenses
Rental32.0 — — 32.0 
Hotel2.2 — — 2.2 
Commission and marketing— — 0.9 0.9 
Compensation and related9.0 4.9 13.5 27.4 
General and administrative4.2 1.6 2.2 8.0 
Depreciation expense45.3 — — 45.3 
Total expenses92.7 6.5 16.6 115.8 
Income from unconsolidated investments, net of depreciation and amortization— 19.2 — 19.2 
Loss on sale of real estate, net(0.5)— — (0.5)
Interest expense(32.3)— (18.1)(50.4)
Loss on early extinguishment of debt(1.3)— — (1.3)
Transaction related expense(0.3)— — (0.3)
Other (loss) income(0.6)— 0.3 (0.3)
(Provision for) benefit from income taxes(2.5)— 5.7 3.2 
Net (loss) income(31.2)18.1 (26.0)(39.1)
Net loss attributable to the noncontrolling interests1.3 — — 1.3 
Preferred dividends— — (4.3)(4.3)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders(29.9)18.1 (30.3)(42.1)
Add back (less):
Interest expense32.3 — 18.1 50.4 
Loss on early extinguishment of debt1.3 — — 1.3 
Kennedy Wilson's share of interest expense included in unconsolidated investments— 9.1 — 9.1 
Depreciation and amortization45.3 — — 45.3 
Kennedy Wilson's share of depreciation and amortization included in    unconsolidated investments— 1.8 — 1.8 
Provision for (benefit from) income taxes2.5 — (5.7)(3.2)
Fees eliminated in consolidation(0.1)— 0.1 — 
EBITDA adjustments attributable to noncontrolling interests(2.4)— — (2.4)
 Preferred dividends— — 4.3 4.3 
Share-based compensation— — 8.3 8.3 
Adjusted EBITDA(1)
$49.0 $29.0 $(5.2)$72.8 
(1) See "Non-GAAP Measures and Certain Definitions" section for definitions and discussion of Adjusted EBITDA
    Financial Highlights
    GAAP net income to common shareholders was $215.4 million and GAAP net loss to common shareholders was $42.1 million for the three months ended June 30, 2021 and 2020, respectively.
    Adjusted EBITDA was $410.2 million and $72.8 million for the three months ended June 30, 2021 and 2020, respectively.
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    The increase in GAAP net income to common shareholders and Adjusted EBITDA is due to higher gains on sale of real estate relating to the sale of a 49% interest and deconsolidation of nine multifamily assets that made up the seed portfolio in our new U.S. multifamily separate account (the "MF seed portfolio") offset by losses on early extinguishment of debt during the three months ended June 30, 2021 as compared to the prior period.
    Operational Highlights
    Same store property highlights for the three months ended June 30, 2021 include:
For our 12,774 same property multifamily units for the three months ended June 30, 2021 as compared to the prior period:
occupancy increased slightly to 95.5% from 94.7%
net operating income increased by 0.8%
total revenues increased by 1.9%
For 4.2 million square feet of same property office real estate for the three months ended June 30, 2021 as compared to the prior period:
occupancy decreased slightly to 95.4% from 96.5%
net operating income increased by 0.5%
total revenues increased by 1.7%
Investment Transactions
acquired $870.7 million of real estate assets and $264.7 million of loans (our share of which was $548.2 million and $38.2 million) and sold $465.8 million of assets (our share of which was $403.8 million)
Significant Transactions
As previously discussed throughout this report, during the three months ended June 30, 2021, the Company and a global institutional investor partner launched a new joint venture with respect to core-plus multifamily properties located in the Western United States with the sale of 49% ownership interest in the MF seed portfolio.
A portion of the proceeds from the 2029 notes and 2031 notes were used to redeem balance of 2024 Notes that was outstanding after the Company completed a tender offer for a portion of the 2024 Notes during the quarter ended March 31, 2021. The Company completed the redemption of a total of $573.5 million on April 1, 2021. We recognized a loss of $11.7 million on early extinguishment of debt due to the redemption.
On April 26, 2021, KWE completed the redemption of £150.0 million in aggregate nominal amount of the KWE Bonds outstanding which resulted in a $9.3 million loss on early extinguishment of debt due to premium paid as part of redemption and proportionate write off of loan fees.
    Foreign Exchange - Results of Operations
    A significant portion of our investments are located outside of the United States and denominated in foreign currencies. In order to reduce the impact of foreign currency exchange rates we hedge some of our exposure. However we typically do not hedge future operations or cash flows and, therefore, changes in foreign currency rates will have an impact on our results of operations. We have included the table below to illustrate the impact these fluctuations have had on our revenues, net income and Adjusted EBITDA by applying the relevant exchange rates for the prior period. Please refer to the Currency Risk - Foreign Currencies section in Item 3 for a discussion of risks relating to foreign currency and our hedging strategy and the "Other Comprehensive Income" section below for a discussion of the balance sheet impact of foreign currency movements on our results of operations.
Three Months Ended June 30, 2021
(dollars in millions)ConsolidatedCo-InvestmentTotal
Revenues$0.8 %$— — %$0.8 %
Net (loss) income(0.4)— %(0.3)— %(0.7)— %
Adjusted EBITDA0.3 — %— — %0.3 — %
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Three Months Ended June 30, 2020
(dollars in millions)ConsolidatedCo-InvestmentTotal
Revenues$(2.4)(2)%$— — %$(2.4)(2)%
Net Income0.9 (2)%(0.2)— %0.7 (2)%
Adjusted EBITDA(1.5)(2)%(0.3)— %(1.8)(2)%
    Consolidated Portfolio Segment
    Revenues
    Rental income was $94.7 million for the three months ended June 30, 2021 as compared to $98.9 million for the same period in 2020. The $4.2 million decrease is due to us being a net seller of consolidated assets in the prior year with proceeds from dispositions generally going towards investments in our Co-Investment segment or to fund development initiatives. Additionally, we had a $3.8 million reduction to rental income for the three months ended June 30, 2021 as we assessed the full collection of these rents as no longer probable. This reduction was offset by the cash collection of $1.7 million in previously reserved receivables which increased rental income. We incurred a $2.8 million reduction to rental income due to the full collection of rents being no longer being probable for the three months ended June 30, 2020.
    Hotel income was $2.2 million for the three months ended June 30, 2021 as compared to $0.1 million for the same period in 2020. The $2.1 million increase is primarily due to the reopening of operations at some capacity at the Shelbourne Hotel during the reporting period as compared to the severely limited operations of the Shelbourne hotel during the three months ended June 30, 2020 as Ireland was in lockdown and government regulations only allowed essential employees to book rooms at the hotel.
    Expenses
    Rental expenses were essentially flat at $32.4 million for the three months ended June 30, 2021 as compared to $32.0 million for the three months ended June 30, 2020.
    Hotel expenses increased to $2.5 million for the three months ended June 30, 2021 as compared to $2.2 million for the three months ended June 30, 2020 primarily due to increased activity at the hotel in the current period as compared to the prior period as described above.
    Compensation expense increased to $23.8 million for the three months ended June 30, 2021 as compared to $9.0 million for the three months ended June 30, 2020 due to higher bonus accrual during the three months ended June 30, 2021 as compared to the prior period.
General and administrative expenses increased to $5.9 million for three months ended June 30, 2021 as compared to $4.2 million for the three months ended June 30, 2020 due to increased travel expenses as COVID restrictions have been eased and higher professional fees during the reporting period.
Depreciation and amortization decreased to $41.7 million during the three months ended June 30, 2021 as compared to $45.3 million. The decrease is primarily due to the Company being a net seller of consolidated assets in the prior year as discussed above.
    Other
    Gain on sale of real estate, net was $328.5 million for the three months ended June 30, 2021 compared to $0.5 million loss during the same period in 2020. The gain recognized during the three months ended June 30, 2021 relates to the sale of a 49% interest in and the resulting deconsolidation of the assets that made up the MF seed portfolio (as discussed above).
    Interest expense was $30.1 million for the three months ended June 30, 2021 as compared to $32.3 million for the same period in 2020. The decrease is due to the decrease in consolidated property level debt resulting from the sale of assets.

Loss on early extinguishment of debt was $12.1 million for the three months ended June 30, 2021 with no comparable activity in the prior period. We incurred a $9.3 million loss associated with redemption of a total of £150.0 million of the KWE Bonds and the remainder related to prepayment penalties on the refinance of three multifamily property level mortgages. We also incurred a loss associated with the redemption of the total balance of the 2024 Notes during the quarter ended June 30, 2021 as explained in the description of the "Corporate" segment below.
    Co-Investment Portfolio Segment
Investment Management
    On our Co-Investment Portfolio assets, we receive asset management fees for managing assets on behalf of our partners. During the three months ended June 30, 2021 we had fees recorded through revenues of $8.7 million as compared to
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$5.2 million from the same period in 2020. During the three months ended June 30, 2021 we had higher base management fees as a result of having more assets under management in our Co-Investment platform mainly from bringing in additional investors into our Europe Fund, new assets under management in our UK Industrial separate account and additional assets under management in our global real estate debt platform. Performance fees are recorded as part of income from unconsolidated investments and discussed below.
Loans and other income increased to $2.2 million three months ended June 30, 2021 as compared to $0.2 million for the same period in 2020. These amounts represent interest income on our share of loans within our global real estate debt platform and the increase is due to the growth of the platform over the last year.
    Expenses increased to $7.8 million for the three months ended June 30, 2021 as compared to $6.5 million primarily due to higher discretionary compensation expense.
Co-investment operations
    In addition to our management of investments in the Co-Investment Portfolio, we have ownership interests in the properties that sit within our Co-Investments Portfolio. The table below represents a breakout of the amounts within income from unconsolidated investments which represents our share of underlying property investments in the Co-Investment Portfolio assets for the three months ended June 30, 2021 and the three months ended June 30, 2020:
Three Months Ended June 30,
20212020
Revenue
Rental$38.3 $33.4 
Sale of real estate0.5 0.8 
Investment management fees - performance fees16.1 (0.2)
Total revenue54.9 34.0 
Expenses
Rental11.3 10.6 
Cost of real estate sold1.1 1.3 
Depreciation and amortization1.5 1.7 
Total expenses13.9 13.6 
Loss on sale of real estate, net(3.1)— 
Interest expense(8.8)(9.0)
Other loss(2.6)(1.8)
Fair Value/other adjustments25.9 9.6 
Income from unconsolidated investments$52.4 $19.2 
    The increase in income from unconsolidated investments increased due to higher fair values primarily from certain assets within our VHH platform and in our retained unconsolidated investment interest in the Zonda business from Meyers Research after our sale of a significant interest in that business in 2018 and our UK Industrial portfolio. Our share of JV NOI (rental income net of rental operating expenses) increased due to additional investments in the Co-Investments portfolio including the deconsolidation of the UK industrial portfolio in the fourth quarter of 2020. The increases in JV NOI offsets some of the decrease in our consolidated portfolio as the assets have moved into this portfolio.
During the three months ended June 30, 2021, we recorded a $16.1 million increase in the accrual for performance fees relating to our commingled funds and a separate account investment. The increase in the accrual is due to higher fair values on assets being brought to market and the completion of development on a multifamily asset. During the three months ended June 30, 2020 we had $0.2 million decrease in the accrual for performance fees relating to our commingled funds business.
    Corporate    
    Property services fees decreased to $0.6 million during the three months ended June 30, 2021 as compared to $2.7 million for the same period in 2020 due to the sale of the Property Services group in October 2020. The Company still maintains its estate sales and marketing business which generates certain real estate related services activity.
    Expenses increased to $20.4 million for the three months ended June 30, 2021 as compared to $16.6 million due to higher discretionary bonus compensation expense and charitable contributions for the three months ended June 30, 2021. These increases were offset by lower share based compensation during the reporting period.
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    Interest expense was $14.4 million for the three months ended June 30, 2021 as compared to $18.1 million for the same period in 2020. The decrease is due to lower interest associated with the 2029 and 2031 Notes as compared to the 2024 Notes which were outstanding in the prior period.
The $11.7 million loss on the early extinguishment of debt is due to the extinguishment of the 2024 Notes and resulting premium and write off of capitalized debt costs and debt discount with no comparable activity in the prior period.
    
Our income tax expense was $64.9 million for the three months ended June 30, 2021 as compared to an income tax benefit of $3.2 million in 2020. The increase in income tax expense is primarily attributable to an increase in worldwide pre-tax book income in 2021. Our overall effective tax rate for the three months ended June 30, 2021 was 22.7% as compared to an overall effective tax rate of 7.7% in 2020. The overall effective tax benefit rate on pre-tax book losses in 2020 was lower due to the adverse impact of disallowed executive compensation, increases in the valuation allowance on deferred tax assets, and foreign permanent differences.
    Other Comprehensive Income
The two major components that drive the change in other comprehensive income are the change in foreign currency rates and the gain or loss of any associated foreign currency hedges. Please refer to the Currency Risk - Foreign Currencies section in Item 3 for a discussion of our risks relating to foreign currency and our hedging strategy. Below is a table that details the activity for the three months ended June 30, 2021 and 2020.
Three Months Ended June 30,
(Dollars in millions)20212020
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$215.4 $(42.1)
Unrealized foreign currency translation gains, net of noncontrolling interests and tax1.0 21.3 
Amounts reclassified out of accumulated other comprehensive loss during the period2.2 — 
Unrealized foreign currency derivative contract loss, net of noncontrolling interests and tax(9.0)(19.3)
Unrealized income (loss) on interest rate swaps— (0.7)
Comprehensive income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders$209.6 $(40.8)

The main currencies that we have exposure to are the euro and pound sterling. The table below represents the change in rates over the three months ended June 30, 2021 and 2020 as compared to the U.S. Dollar:
Three Months Ended June 30,
20212020
Euro0.6 %2.9 %
GBP(0.1)%(0.1)%
Comprehensive income (loss), net of taxes and noncontrolling interests, for the three months ended June 30, 2021 and 2020 was income of $209.6 million and a loss of $40.8 million, respectively.  The Company experienced net unrealized gains on foreign currency through other comprehensive income for the period due to EUR strengthening against the U.S. Dollar and GBP. Unrealized hedge losses were driven by hedges that KWE holds on its euro denominated investments and hedges that the Company has on its GBP denominated investments.
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Kennedy Wilson Consolidated Financial Results: Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
Six Months Ended June 30, 2021
(Dollars in millions)ConsolidatedCo-InvestCorporateTotal
Revenue
Rental$183.6 $— $— $183.6 
Hotel3.0 — — 3.0 
Investment management and property services fees
— 16.1 1.3 17.4 
Loans and other— 3.8 — 3.8 
Total revenue186.6 19.9 1.3 207.8 
Expenses
Rental65.4 — — 65.4 
Hotel4.1 — — 4.1 
Commission and marketing— — 0.6 0.6 
Compensation and related38.9 12.3 32.1 83.3 
General and administrative10.2 2.7 2.9 15.8 
Depreciation and amortization86.1 — — 86.1 
Total expenses204.7 15.0 35.6 255.3 
Income from unconsolidated investments, net of depreciation and amortization— 70.8 — 70.8 
Gain on sale of real estate, net402.0 — — 402.0 
Transaction-related expenses(0.4)— — (0.4)
Interest expense(62.2)— (33.9)(96.1)
Loss on early extinguishment of debt(12.1)— (26.5)(38.6)
Other loss(2.5)— (0.5)(3.0)
Provision for income taxes(2.2)— (65.4)(67.6)
Net income (loss)304.5 75.7 (160.6)219.6 
Net income attributable to the noncontrolling interests(1.2)— — (1.2)
  Preferred dividends and accretion of preferred stock issuance costs— — (8.6)(8.6)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders303.3 75.7 (169.2)209.8 
Add back (less):
Interest expense62.2 — 33.9 96.1 
Loss on early extinguishment of debt12.1 — 26.5 38.6 
Kennedy Wilson's share of interest expense included in unconsolidated investments— 16.8 — 16.8 
Depreciation and amortization86.1 — — 86.1 
Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments— 3.1 — 3.1 
Provision for income taxes2.2 — 65.4 67.6 
Fees eliminated in consolidation(0.5)0.5 — — 
EBITDA adjustments attributable to noncontrolling interests(3.9)— — (3.9)
Preferred dividends and accretion of preferred stock issuance costs— — 8.6 8.6 
Share-based compensation— — 15.0 15.0 
Adjusted EBITDA(1)
$461.5 $96.1 $(19.8)$537.8 
(1) See "Non-GAAP Measures and Certain Definitions" section for definitions and discussion of Adjusted EBITDA.

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Six Months Ended June 30, 2020
(Dollars in millions)ConsolidatedCo-InvestCorporateTotal
Revenue
Rental$206.6 $— $— $206.6 
Hotel7.3 — — 7.3 
Investment management and property services fees
— 9.7 6.6 16.3 
Loans and other— 0.2 — 0.2 
Total revenue213.9 9.9 6.6 230.4 
Expenses
Rental68.7 — — 68.7 
Hotel8.2 — — 8.2 
Commission and marketing— — 1.6 1.6 
Compensation and related20.9 9.5 28.4 58.8 
General and administrative9.8 3.3 4.4 17.5 
Depreciation expense90.8 — — 90.8 
Total expenses198.4 12.8 34.4 245.6 
Income from unconsolidated investments, net of depreciation and amortization— 30.1 — 30.1 
Gain on sale of real estate, net43.7 — — 43.7 
Transaction-related expenses(0.5)— — (0.5)
Interest expense(65.7)— (33.5)(99.2)
Loss on early extinguishment of debt(1.3)— — (1.3)
Other (loss) income(1.3)— 1.2 (0.1)
(Provision for) benefit from income taxes(7.6)— 5.1 (2.5)
Net (loss) income(17.2)27.2 (55.0)(45.0)
Net loss attributable to the noncontrolling interests1.6 — — 1.6 
Preferred dividends— — (8.6)(8.6)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders(15.6)27.2 (63.6)(52.0)
Add back (less):
Interest expense65.7 — 33.5 99.2 
Loss on early extinguishment of debt1.3 — — 1.3 
Kennedy Wilson's share of interest expense included in unconsolidated investments— 17.2 — 17.2 
Depreciation and amortization90.8 — — 90.8 
Kennedy Wilson's share of depreciation and amortization included in    unconsolidated investments— 3.5 — 3.5 
Provision for (benefit from) income taxes7.6 — (5.1)2.5 
Kennedy Wilson's share of provision for income taxes included in unconsolidated investments— 1.1 — 1.1 
Fees eliminated in consolidation(0.2)— 0.2 — 
EBITDA adjustments attributable to noncontrolling interests(4.3)— — (4.3)
 Preferred dividends— — 8.6 8.6 
Share-based compensation— — 16.9 16.9 
Adjusted EBITDA(1)
$145.3 $49.0 $(9.5)$184.8 
(1) See "Non-GAAP Measures and Certain Definitions" section for definitions and discussion of Adjusted EBITDA
    Financial Highlights
    GAAP net income to common shareholders was $209.8 million and GAAP net loss to common shareholders of $52.0 million for the six months ended June 30, 2021 and 2020, respectively.
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    Adjusted EBITDA was $537.8 million and $184.8 million for the six months ended June 30, 2021 and 2020, respectively.
    The increase in GAAP net income to common shareholders and Adjusted EBITDA is due to higher gains on sale of real estate offset by losses on early extinguishment of debt during the six months ended June 30, 2021 as compared to the prior period.
    Operational Highlights
    Same store property highlights for the six months ended June 30, 2021 include:
For our 12,774 same property multifamily units for the six months ended June 30, 2021 as compared to the prior period:
occupancy increased slightly to 95.4% from 94.7%
net operating income decreased by 2.0%
total revenues decreased by 0.1%
For 4.2 million square feet of same property office real estate for the six months ended June 30, 2021 as compared to the prior period:
occupancy decreased slightly to 95.6% from 96.7%
net operating income increased by 6.1%
total revenues increased by 6.0%
Investment Transactions
acquired $1.1 billion of real estate assets and $401.5 million of loans (our share of which was $591.4 million and $50.7 million) and sold $1.1 billion of assets (our share of which was $691.9 million)
Significant Transactions
See above for a description of the launching of a new U.S. multifamily separate account with a global institutional investor.
During the six months ended June 30, 2021, we also sold Friars Bridge Court a wholly-owned office property in the United Kingdom for a gain on sale of real estate of $73.9 million. Prior to the sale, during the six months ended June 30, 2021, we terminated the lease of the building's sole tenant (and subsequently leased the entire building to another tenant prior to the completion of the sale during the quarter). As a result of terminating the lease we wrote-off $7.7 million of lease related assets to rental income and $2.5 million of leasing commissions to amortization expense relating to the prior tenant.
Our 2024 notes had an outstanding balance of $1.15 billion at the beginning of 2021. We completed a tender offer of $576.9 million of aggregate principal on our 2024 notes and a subsequent redemption of the total remaining outstanding balance during the six months ended June 30, 2021 which resulted in a total of $38.6 million loss on early extinguishment of debt due to a tender premium paid and the write off of the proportionate share of capitalized loan fees and debt discounts on the 2024 notes. The tender offer and subsequent redemption were funded by the $1.2 billion issuance of 2029 notes and 2031 notes during the six months ended June 30, 2021.
On April 26, 2021, KWE completed the redemption of £150.0 million in aggregate nominal amount of the KWE Bonds outstanding which resulted in a $9.3 million loss on early extinguishment of debt due to premium paid as part of redemption and proportionate write off of loan fees.
    Foreign Exchange - Results of Operations
    A significant portion of our investments are located outside of the United States and denominated in foreign currencies. In order to reduce the impact of foreign currency exchange rates we hedge some of our exposure. However we typically do not hedge future operations or cash flows and, therefore, changes in foreign currency rates will have an impact on our results of operations. We have included the table below to illustrate the impact these fluctuations have had on our revenues, net income and Adjusted EBITDA by applying the relevant exchange rates for the prior period. Please refer to the Currency Risk - Foreign Currencies section in Item 3 for a discussion of risks relating to foreign currency and our hedging strategy and the "Other Comprehensive Income" section below for a discussion of the balance sheet impact of foreign currency movements on our results of operations.
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Six Months Ended June 30, 2021
(dollars in millions)ConsolidatedCo-InvestmentTotal
Revenues$1.2 %$(0.1)— %$1.1 %
Net (loss) income0.3 — %(0.1)— %0.2 — %
Adjusted EBITDA1.5 — %(0.2)— %1.3 — %
Six Months Ended June 30, 2020
(dollars in millions)ConsolidatedCo-InvestmentTotal
Revenues$(4.3)(2)%$(0.1)— %$(4.4)(2)%
Net Income(0.2)— %(0.3)(1)%(0.5)(1)%
Adjusted EBITDA(4.1)(2)%(0.6)— %(4.7)(2)%
    Consolidated Portfolio Segment
    Revenues
    Rental income was $183.6 million for the six months ended June 30, 2021 as compared to $206.6 million for the same period in 2020. The $23.0 million decrease is partially due to the $7.7 million write off of lease related assets related to the termination of a lease at Friars Bridge Court prior to its sale as discussed above. The remaining factors contributing to the decrease relate to us being a net seller of consolidated assets in the prior year with proceeds from dispositions generally going towards investments in our Co-Investment segment or to fund development initiatives. Additionally, we had a $5.6 million reduction to rental income for the six months ended June 30, 2021 as we assessed the full collection of these rents as no longer probable. This was driven by the impact of COVID-19 pandemic with a $2.8 million reduction to rental income for the six months ended June 30, 2020. This reduction was offset by the cash collection of $1.9 million we received during the six months ended June 30, 2021 on previously reserved receivables which increased rental income.
    Hotel income was $3.0 million for the six months ended June 30, 2021 as compared to $7.3 million for the same period in 2020. The $4.3 million decrease is primarily due to severely limited operations of the Shelbourne hotel during the six months ended June 30, 2021 as Ireland was in lockdown and government regulations only allowed essential employees to book rooms at the hotel. Conversely, in the six months ended June 30, 2020, the hotel was open for normal operations through March 15, 2020.
    Expenses
    Rental expenses decreased to $65.4 million for the six months ended June 30, 2021 as compared to $68.7 million for the six months ended June 30, 2020. The decrease is due to the Company being a net seller of assets in the prior period which has led to a decrease in assets in the Consolidated portfolio which has led to lower rental expenses.
    Hotel expenses decreased to $4.1 million for the six months ended June 30, 2021 as compared to $8.2 million for the six months ended June 30, 2020 primarily due to limited operations of the Shelbourne hotel during 2021 as described above.
    Compensation expense increased to $38.9 million for the six months ended June 30, 2021 as compared to $20.9 million for the six months ended June 30, 2020 due to higher bonus accrual during the six months ended June 30, 2021 as compared to the prior period.
General and administrative expenses increased to $10.2 million for six months ended June 30, 2021 as compared to $9.8 million for the six months ended June 30, 2020 due to increased travel expenses as COVID restrictions have been eased and higher professional fees during the reporting period.
Depreciation and amortization decreased to $86.1 million during the six months ended June 30, 2021 as compared to $90.8 million. The decrease is primarily due to the Company being a net seller of consolidated assets in the prior year as discussed above. This decrease was offset by a $2.5 million increase relating to the write off of leasing commissions to depreciation expense from the termination of a lease with a tenant at Friars Bridge Court.
    Other
    Gain on sale of real estate, net was $402.0 million for the six months ended June 30, 2021 compared to $43.7 million during the same period in 2020. The gain recognized during the six months ended June 30, 2021 relates to the sale of a 49% interest in and resulting deconsolidation of the assets that made up the MF seed portfolio and Friars Bridge Court, an office building in the United Kingdom. The gains recognized during the six months ended June 30, 2020 primarily relate to the sale of non-core assets in Europe including Pioneer Point, a multifamily property in United Kingdom and a loan investment secured by a multifamily property in Dublin.
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    Interest expense was $62.2 million for the six months ended June 30, 2021 as compared to $65.7 million for the same period in 2020. The decrease is due to the decrease in consolidated property level debt resulting from the sale of assets.
Loss on early extinguishment of debt was $12.1 million for the six months ended June 30, 2021 with no comparable activity in the prior period. We incurred a $9.3 million loss associated with the tender offer on the KWE Bonds and the remainder related to prepayment penalties on the refinance of three multifamily property level mortgages. We also incurred a loss associated with the partial tender offer and subsequent redemption of the total balance of the 2024 Notes during the six months ended June 30, 2021 as explained in the description of the "Corporate" segment below.
    Co-Investment Portfolio Segment
Investment Management
    On our Co-Investment Portfolio assets, we receive asset management fees for managing assets on behalf of our partners. During the six months ended June 30, 2021 we had fees recorded through revenues of $16.1 million as compared to $9.7 million from the same period in 2020. During the six months ended June 30, 2021 we had higher base management fees as a result of having more assets under management in our Co-Investment platform mainly from bringing in additional investors into our Europe Fund, new assets under management in our UK Industrial separate account and additional assets under management in our global real estate debt platform. Performance fees are recorded as part of income from unconsolidated investments and discussed below.
    Expenses increased to $15.0 million for the six months ended June 30, 2021 as compared to $12.8 million primarily due to higher discretionary compensation expenses.
Co-investment operations
    In addition to our management of investments in the Co-Investment Portfolio, we have ownership interests in the properties that sit within our Co-Investments Portfolio. The table below represents a breakout of the amounts within income from unconsolidated investments which represents our share of underlying property investments in the Co-Investment Portfolio assets for the six months ended June 30, 2021 and the six months ended June 30, 2020:
Six Months Ended June 30,
20212020
Revenue
Rental$76.0 $74.0 
Sale of real estate19.1 2.8 
Investment management fees - performance fees15.7 (1.2)
Total revenue110.8 75.6 
Expenses
Rental22.6 21.3 
Cost of real estate sold17.0 3.8 
Depreciation and amortization3.3 3.4 
Total exp