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What changed in Kennedy-Wilson Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Kennedy-Wilson Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+549 added−485 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in Kennedy-Wilson Holdings, Inc.'s 2023 10-K

549 paragraphs added · 485 removed · 360 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

85 edited+52 added−30 removed46 unchanged
Biggest changeInvestment 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 long-lasting relationships, primarily with financial institutions • 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 with strategic partners • Reposition assets to enhance cash flows post-acquisition • Explore development opportunities on underutilized portions of assets, 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 2 Table of Contents The table below highlights some of the Company's key metrics over the past five years: Year Ended December 31, ($ in millions, except fee bearing capital which $ in billions) 2022 2021 2020 2019 2018 Revenue $ 540.0 $ 453.6 $ 454.0 $ 569.7 $ 773.5 Net income to Kennedy-Wilson Holdings Inc. common shareholders 64.8 313.2 92.9 224.1 150.0 Basic income per share 0.47 2.26 0.66 1.60 1.04 Dividends declared per share of common stock 0.96 0.90 0.88 0.85 0.78 Adjusted EBITDA (1) 591.5 927.9 608.0 728.1 712.7 % change (36.3) % 52.6 % (16.5) % 2.2 % — % Adjusted Net Income (1) 264.9 509.0 306.9 442.5 397.0 Adjusted Net Income annual increase (decrease) (48.0) % 65.9 % (31.3) % 11.5 % 63.7 % Consolidated NOI (1) 294.2 255.8 262.3 305.2 368.3 % change 15.0 % (2.5) % (14.1) % (17.1) % — % JV NOI (1) 157.6 124.4 102.5 77.8 55.3 % change 26.7 % 21.4 % 31.7 % 40.7 % — % Fee-bearing capital 5.9 5.0 3.9 3.0 2.2 % change 18.0 % 28.2 % 30.0 % 36.4 % — % AUM 23.0 21.6 17.6 18.1 16.3 % change 6.5 % 22.7 % (2.8) % 11.0 % — % (1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S.
Biggest changeInvestment 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 long-lasting relationships, primarily with financial institutions • 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 with strategic partners • Reposition assets to enhance cash flows post-acquisition • Explore development opportunities on underutilized portions of assets, 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 2 Table of Contents The table below highlights some of the Company's key metrics over the past five years: Year Ended December 31, ($ in millions, except fee bearing capital which $ in billions) 2023 2022 2021 2020 2019 Revenue $ 562.6 $ 540.0 $ 453.6 $ 454.0 $ 569.7 Net (loss) income to Kennedy-Wilson Holdings Inc. common shareholders (341.8) 64.8 313.2 92.9 224.1 Basic (loss) income per share (2.46) 0.47 2.26 0.66 1.60 Adjusted EBITDA (1) 189.8 591.5 927.9 608.0 728.1 % change (67.9) % (36.3) % 52.6 % (16.5) % — % Adjusted Net (Loss) Income (1) (151.3) 264.9 509.0 306.9 442.5 Adjusted Net (Loss) Income annual increase (decrease) (157.1) % (48.0) % 65.9 % (30.6) % — % Non-cash fair value (losses) gains (229.3) 114.6 213.5 47.2 64.7 Non-cash performance allocations (64.3) (21.1) 117.9 2.7 36.3 Consolidated NOI (1) 274.3 294.2 255.8 262.3 305.2 % change (6.8) % 15.0 % (2.5) % (14.1) % — % JV NOI (1) 168.3 157.6 124.4 102.5 77.8 % change 6.8 % 26.7 % 21.4 % 31.7 % — % Fee-bearing capital 8.4 5.9 5.0 3.9 3.0 % change 42.4 % 18.0 % 28.2 % 30.0 % — % AUM 24.5 23.0 21.6 17.6 18.1 % change 6.5 % 6.5 % 22.7 % (2.8) % — % (1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S.
We also incorporate spaces for rest and socialization across 5 Table of Contents 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.
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. 5 Table of Contents Lastly, we utilize real-time market data and artificial intelligence-based applications to ensure we are attaining current market rents.
In many cases, this may lead to significant additional returns, such as a carried interest (where we have partners), based on the performance of the assets. • Our long-lasting and deep relationships with financial institutions allow us to refinance loans (generally after we implement our value-add initiatives) to reduce interest rates and/or increase borrowings due to property appreciation and thereby obtain cash flow to use for new investments. • We have been able to attract third party capital due to our ability to generate above-market returns for our partners, diversity of geographic markets and investment product types as well as our flexibility in structuring deals through funds, separate accounts and equity partner arrangements. • We understand that real estate is cyclical.
In many cases, this may lead to significant additional returns, such as a performance allocation (where we have partners), based on the performance of the assets. • Our long-lasting and deep relationships with financial institutions allow us to refinance loans (generally after we implement our value-add initiatives) to reduce interest rates and/or increase borrowings due to property appreciation and thereby obtain cash flow to use for new investments. • We have been able to attract third party capital due to our ability to generate above-market returns for our partners, diversity of geographic markets and investment product types as well as our flexibility in structuring deals through funds, separate accounts and equity partner arrangements. • We understand that real estate is cyclical.
Item 1. Business Company Overview Kennedy Wilson is a global real estate investment company. We own, operate and develop high-quality real estate across growing markets in the Western United States, the United Kingdom and Ireland with the objective of generating long-term risk-adjusted returns for our shareholders and partners.
Item 1. Business Company Overview Kennedy Wilson is a global real estate investment company. We own, operate and develop high-quality real estate across markets in the Western United States, the United Kingdom and Ireland with the objective of generating long-term risk-adjusted returns for our shareholders and partners.
These capitalization rates and future income streams are derived from comparable property and leasing transactions and are considered to be key inputs in the valuation. Other factors that are taken into consideration include tenancy details, planning, building and environmental factors that might affect the property.
These estimated capitalization rates and future income streams are derived from comparable property and leasing transactions and are considered to be key inputs in the valuation. Other factors that are taken into consideration include tenancy details, planning, building and environmental factors that might affect the property.
Their local presence and reputation in these markets have enabled them to cultivate key relationships with major holders of property inventory, in particularly financial institutions, throughout the real estate community. 9 Table of Contents • Structuring expertise and speed of execution: Prior acquisitions completed by us have taken a variety of forms, including direct property investments, joint ventures, exchanges involving stock or operating partnership units, participating loans and investments in performing and non-performing mortgages at various capital stack positions with the objective of long-term ownership.
Their local presence and reputation in these markets have enabled them to cultivate key relationships with major holders of property inventory, in particularly financial institutions, throughout the real estate community. • Structuring expertise and speed of execution: Prior acquisitions completed by us have taken a variety of forms, including direct property investments, joint ventures, exchanges involving stock or operating partnership units, participating loans and investments in performing and non-performing mortgages at various capital stack positions 10 Table of Contents with the objective of long-term ownership.
We focus on sourcing investors in the U.S., Europe and Middle East and target 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.
We focus on sourcing investors in the U.S., Europe, Japan and Middle East and target 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.
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.
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 make available on our website, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports 13 Table of Contents on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and amendments to those reports and other statements filed or furnished pursuant to Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after filing or submitting such material electronically or otherwise furnishing it to the SEC.
We make available on our website, free of charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and amendments to those reports and other statements filed or furnished pursuant to Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after filing or submitting such material electronically or otherwise furnishing it to the SEC.
As of December 31, 2022, our weighted average ownership interest in the commingled funds that we manage was 13%. 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.
As of December 31, 2023, our weighted average ownership interest in the commingled funds that we manage was 13%. Vintage Housing Holdings ("VHH") Through our VHH partnership, we acquire and develop income and age restricted properties. See a detailed discussion of this business in the Multifamily section below.
As of December 31, 2022, our weighted average ownership interest in the various joint ventures that we manage was 45%. Commingled funds We currently have four closed-end funds that we manage and through which we receive investment management fees and potentially performance allocations.
As of December 31, 2023, our weighted average ownership interest in the various joint ventures that we manage was 45%. Commingled funds We currently have four closed-end funds that we manage and through which we receive investment management fees and potentially performance allocations.
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 in Dublin and Madrid. In our Western United States retail portfolio, we invest in shopping centers that are generally grocery anchored.
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 in Dublin and Madrid. In our Western United States retail portfolio, we have investments in shopping centers that are generally grocery anchored.
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, including loans secured by real estate, that we have made through the commingled funds and joint ventures that we manage; (ii) fees (including, without limitation, asset management fees and construction management fees); and (iii) performance allocations that we earn on our fee bearing capital.
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, including loans secured by real estate, that we have made through the commingled funds and joint ventures that we manage; (ii) fees (including, without limitation, asset management fees, construction management fees, and/or acquisition and disposition fees); and (iii) performance allocations that we earn on our fee bearing capital.
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.
The accuracy of estimating fair value 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.
Our competitive strengths include: • Transaction experience: Our senior management team has an average of over 25 years of real estate experience and has been working and investing together on average for almost 20 years.
Our competitive strengths include: • Transaction experience: Our senior management team has an average of over 25 years of real estate experience and has been working and investing together on average for almost 18 years.
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.
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.
Coupled with our ability to structure acquisitions in a variety of ways that fit the needs of our strategic partners, we have been able to access various forms of capital due to our experience and versatility. • Vertically integrated platform for operational enhancement: We have 230 employees in 12 offices throughout the United States, the United Kingdom, Ireland, Spain and Jersey.
Coupled with our ability to structure acquisitions in a variety of ways that fit the needs of our strategic partners, we have been able to access various forms of capital due to our experience and versatility. • Vertically integrated platform for operational enhancement: We have 259 employees in 13 offices throughout the United States, the United Kingdom, Ireland, Spain and Jersey.
Competition We compete with a range of global, national and local real estate firms, individual investors and other corporations, both private and public. Our investment business competes with real estate investment partnerships, real estate investments trusts, private equity firms and other investment companies and regional investors and developers.
Competition 13 Table of Contents We compete with a range of global, national and local real estate firms, individual investors and other corporations, both private and public. Our investment business competes with real estate investment partnerships, real estate investments trusts, private equity firms and other investment companies and regional investors and developers.
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-Investment Portfolio").
In addition to investing our shareholder's capital, we invest capital on behalf of our partners in real estate and real estate related loans through our Co-Investment Portfolio ("Co-Investment Portfolio").
The cash flows include a projection of the net sales proceeds at the end of the holding period, computed using a market reversionary capitalization rate. Under the direct capitalization approach, the Company applies a market derived capitalization rate to current and future income streams with appropriate adjustments for tenant vacancies or rent-free periods.
The cash flows include a projection of the net sales proceeds at the end of the holding period, computed using a market reversionary capitalization rate. 8 Table of Contents Under the direct capitalization approach, the Company applies a market derived estimated capitalization rate to current and future income streams with appropriate adjustments for tenant vacancies or rent-free periods.
As a result of the rapid development, fluidity and uncertainty surrounding these situations, the Company expects that information with respect to fair value measurement may change, potentially significantly, going forward and may not be indicative of the 8 Table of Contents actual impact on our business, operations, cash flows and financial condition for the year ended December 31, 2022 and future periods.
As a result of the rapid development, fluidity and uncertainty surrounding these situations, 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 on our business, operations, cash flows and financial condition for the year ended December 31, 2023 and future periods.
Our total share of development project costs with respect to these investments are estimated at $379.0 million over the next three years. These costs are generally financed by cash from our balance sheet, capital provided by partners (if applicable), cash flows from investment and construction loans.
Our total share of development project costs with respect to these investments are estimated at $95.0 million over the next two years. These costs are generally financed by cash from our balance sheet, capital provided by partners (if applicable), cash flows from investment and construction loans.
We believe that our relationships with the sellers and our ability to close an investment transaction in a short time period at competitive pricing provide us a competitive advantage. Foreign Currency Approximately 37% of our investment account is invested through our foreign platforms in their local currencies.
We believe that our relationships with the sellers and our ability to close an investment transaction in a short time period at competitive pricing provides us a competitive advantage. Foreign Currency Approximately 36% of our investment account is invested through our foreign platforms in their local currencies.
We use this analysis to develop our disciplined acquisition strategies. • Management's alignment with shareholders : As of December 31, 2022, our directors and executive officers and their respective affiliates owned an aggregate of approximately 14% of the outstanding shares of our common stock.
We use this analysis to develop our disciplined acquisition strategies. • Management's alignment with shareholders : As of December 31, 2023, our directors and executive officers and their respective affiliates owned an aggregate of approximately 13% of the outstanding shares of our common stock.
The table below describes the range of inputs used as of December 31, 2022 for real estate assets: Estimated Rates Used For Capitalization Rates Discount Rates Multifamily Income approach - discounted cash flow 5.80% — 7.50% 8.00% — 9.80% Income approach - direct capitalization 3.80% — 5.70% N/A Office Income approach - discounted cash flow 5.20% — 7.50% 7.50% — 9.30% Income approach - direct capitalization 4.20% — 8.70% N/A Industrial Income approach - discounted cash flow 5.00% —6.30% 6.30% — 7.80% Income approach - direct capitalization 3.80% — 8.30% N/A Retail Income approach - discounted cash flow 6.50% 8.30% Hotel Income approach - discounted cash flow 6.00% 8.30% In valuing indebtedness, Kennedy Wilson considers significant inputs to be 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 table below describes the range of inputs used as of December 31, 2023 for real estate assets: Estimated Rates Used For Capitalization Rates Discount Rates Multifamily Income approach - discounted cash flow 5.70% — 7.50% 7.30% — 11.00% Income approach - direct capitalization 4.30% — 5.80% N/A Office Income approach - discounted cash flow 5.20% — 7.50% 7.50% — 9.30% Income approach - direct capitalization 4.50% — 9.30% N/A Industrial Income approach - discounted cash flow 5.00% —6.30% 6.30% — 7.80% Income approach - direct capitalization 4.10% — 9.00% N/A Retail Income approach - discounted cash flow 6.50% 8.30% Hotel Income approach - discounted cash flow 6.00% 8.30% In valuing indebtedness, the Company considers significant inputs to be the term of the debt, value of collateral, market loan-to-value ratios, market interest rates and spreads, and credit quality of investment entities.
Co-Investment 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 our Co-Investment Portfolio balance sheet which is primarily at fair value, at our share of the underlying investments as of December 31, 2022 and December 31, 2021.
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 our Co-Investment Portfolio balance sheet which is primarily at fair value (approximately 93% and 88%), at our share of the underlying investments as of December 31, 2023 and 2022.
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.
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.
Historically, this variability has caused our revenue, net income and cash flows to be tied to transaction activity, which is not necessarily concentrated in any one quarter. Employees As of December 31, 2022, we have 230 employees in 12 offices throughout the United States, the United Kingdom, Ireland, Spain and Jersey.
Historically, this variability has caused our revenue, net income and cash flows to be tied to transaction activity, which is not necessarily concentrated in any one quarter. Employees As of December 31, 2023, we have 259 employees in 13 offices throughout the United States, the United Kingdom, Ireland, Spain and Jersey.
The table below highlights some of the Company's balance sheet metrics over the past five years: (In millions) As of December 31, 2022 2021 2020 2019 2018 Balance sheet data: Cash and cash equivalents $ 439.3 $ 524.8 $ 965.1 $ 573.9 $ 488.0 Total assets 8,271.8 7,876.5 7,329.0 7,304.5 7,381.8 Mortgage debt 3,018.0 2,959.8 2,589.8 2,641.0 2,950.3 KW unsecured debt 2,062.6 1,852.3 1,332.2 1,131.7 1,202.0 KWE unsecured bonds 506.4 622.8 1,172.5 1,274.2 1,260.5 Kennedy Wilson equity 1,964.0 1,777.6 1,644.5 1,678.7 1,246.7 Noncontrolling interests 46.4 26.3 28.2 40.5 184.5 Total equity 2,010.4 1,803.9 1,672.7 1,719.2 1,431.2 Common shares outstanding 137.8 138.0 141.4 151.6 143.2 The following table shows the historical U.S. federal income tax treatment of the Company’s common stock dividend for the years ended December 31, 2022 through 2018: December 31, 2022 2021 2020 2019 2018 Taxable Dividend 37.81 % — % 27.14 % 10.53 % 23.43 % Non-Taxable Return of Capital 62.19 % 100.00 % 72.86 % 89.47 % 76.57 % Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 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") 3 Table of Contents • 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.
The table below highlights some of the Company's balance sheet metrics over the past five years: (In millions) As of December 31, 2023 2022 2021 2020 2019 Balance sheet data: Cash and cash equivalents $ 313.7 $ 439.3 $ 524.8 $ 965.1 $ 573.9 Total assets 7,712.1 8,271.8 7,876.5 7,329.0 7,304.5 Mortgage debt 2,840.9 3,018.0 2,959.8 2,589.8 2,641.0 KW unsecured debt 1,934.3 2,062.6 1,852.3 1,332.2 1,131.7 KWE unsecured bonds 522.8 506.4 622.8 1,172.5 1,274.2 Kennedy Wilson equity 1,755.1 1,964.0 1,777.6 1,644.5 1,678.7 Noncontrolling interests 43.3 46.4 26.3 28.2 40.5 Total equity 1,798.4 2,010.4 1,803.9 1,672.7 1,719.2 Common shares outstanding 138.7 137.8 138.0 141.4 151.6 The following table shows the historical U.S. federal income tax treatment of the Company’s common stock dividend for the years ended December 31, 2023 through 2019: December 31, 2023 2022 2021 2020 2019 Taxable Dividend — % 37.81 % — % 27.14 % 10.53 % Non-Taxable Return of Capital 100.00 % 62.19 % 100.00 % 72.86 % 89.47 % Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Business Segments 3 Table of Contents Our operations are defined by two primary 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.
Our investment in VHH is our largest unconsolidated investment held at estimated fair value and was held at $272.3 million and $157.9 million as of December 31, 2022 and 2021, respectively.
Our investment in VHH is our largest unconsolidated investment held at estimated fair value and was held at $285.9 million and $272.3 million as of December 31, 2023 and 2022, respectively.
Value Creation Our differentiated and unique approach to investing is the cornerstone of how we create value for our shareholders.
Value Creation 9 Table of Contents Our differentiated and unique approach to investing is the cornerstone of how we create value for our shareholders.
If these projects are brought to completion, the Company’s estimated share of the total capitalization of these projects would be approximately $1.1 billion (approximately 70% 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.
If these projects are brought to completion, the Company’s estimated share of the total capitalization of these projects would be approximately $613.0 million (approximately 91% 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.
Accordingly, the Company's determination of fair value of the Company's 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.
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.
For the year ended December 31, 2022, the $20.5 billion of operating properties within our AUM as of December 31, 2022 produced total revenue of $1.4 billion (KW's share of which was $706.0 million) compared to $18.7 billion of operating properties as of December 31, 2021 with total revenue of $1.2 billion (KW's share of which was $583.0 million) during the same period in 2021.
For the year ended December 31, 2023, the $22.8 billion of operating properties within our AUM as of December 31, 2023 produced total revenue of $1.8 billion (KW's share of which was $736.0 million) compared to $20.5 billion of operating properties as of December 31, 2022 with total revenue of $1.4 billion (KW's share of which was $706.0 million) during the same period in 2022.
Our Consolidated Portfolio held over 4.8 million square feet of office space and 2.5 million square feet of retail space. Our Co-Investment Portfolio held 6.9 million square feet of office space, 10.6 million square feet of industrial space and 1.4 million square feet of retail space.
Our Consolidated Portfolio held over 4.4 million square feet of office space and 1.5 million square feet of retail space. Our Co-Investment Portfolio held 6.5 million square feet of office space, 11.4 million square feet of industrial space and 1.5 million square feet of retail space.
The ESG Committee is also responsible for overseeing Kennedy Wilson’s management-level Global ESG Committee. The Global ESG Committee, chaired by our President and Board of Directors member Mary Ricks, manages the Company’s ESG responsibilities and commitments and is responsible for formulating and implementing procedures and priorities to deliver the Company’s ESG strategy.
The ESG Committee is also responsible for overseeing Kennedy Wilson’s management-level Global ESG Committee. The Global ESG Committee, chaired by our President, Matt Windisch, manages the Company’s ESG responsibilities and commitments and is responsible for formulating and implementing procedures and priorities to deliver the Company’s ESG strategy.
The Co-Investment Portfolio consists of our unconsolidated investments as well as our loan purchases and originations. 4 Table of Contents ($ in millions) December 31, 2022 December 31, 2021 Cash and cash equivalents $ 86.9 $ 103.7 Real estate and acquired in place lease values 4,319.1 3,667.9 Loan purchases and originations 158.7 143.4 Accounts receivable and other assets, net 298.0 311.9 Total Assets $ 4,862.7 $ 4,226.9 Accounts payable, accrued expenses and other liabilities 88.0 87.1 Mortgage debt 2,387.2 2,061.9 Total Liabilities 2,475.2 2,149.0 Equity $ 2,387.5 $ 2,077.9 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 and other fees.
The Co-Investment Portfolio consists of our unconsolidated investments as well as our loan purchases and originations. 4 Table of Contents ($ in millions) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 94.8 $ 86.9 Real estate and acquired in place lease values 4,619.7 4,319.1 Loan purchases and originations 259.3 158.7 Accounts receivable and other assets, net 227.3 298.0 Total Assets $ 5,201.1 $ 4,862.7 Accounts payable, accrued expenses and other liabilities 125.0 88.0 Mortgage debt 2,759.8 2,387.2 Total Liabilities 2,884.8 2,475.2 Equity $ 2,316.3 $ 2,387.5 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 and other fees.
The holding period in the analysis is typically ten years. Although the ten year holding period is consistent with how market participants often estimate values in connection with buying real estate, these holding periods can be shorter depending on the life of the structure an investment is held within.
This is consistent with how market participants often estimate values in connection with buying real estate but these holding periods can be shorter depending on the life of the structure an investment is held within.
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.
Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including market-derived estimated capitalization rates, discount rates, liquidity risks, and estimates of future cash flows could significantly affect the fair value measurement amounts. All valuations of real estate involve subjective judgments.
Fair Value Investments As of December 31, 2022, $2.1 billion, or 88%, of our investments in unconsolidated investments (25% of total assets) were held at estimated fair value. As of December 31, 2022, there were cumulative fair value gains of $546.1 million which comprises 26% of the $2.1 billion carrying value of fair value unconsolidated investments that are currently held.
As of December 31, 2023, $1.9 billion, or 93%, of our investments in unconsolidated investments (25% of total assets) were held at estimated fair value. As of December 31, 2023, there were cumulative fair value gains of $322.1 million which comprises 17% of the $1.9 billion carrying value of fair value unconsolidated investments that are currently held.
We typically have a 5% to 50% ownership interest in the assets in our Co-Investment Portfolio. We have a weighted average ownership of 41% as of December 31, 2022. 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 its sale in October 2020.
We typically have a 5% to 50% ownership interest in the assets in our Co-Investment Portfolio. We have a weighted average ownership of 40% as of December 31, 2023. In addition to our two primary business segments, our Corporate segment includes, among other things, our corporate overhead and our auction group.
Multifamily - Affordable Housing Through our VHH platform we focus on affordable units based on income or age restrictions.
Multifamily - Affordable Housing Through our VHH platform we focus on affordable units based on income and in some cases age restrictions.
As of December 31, 2022, we hold investments in 58 office properties totaling over 11.7 million square feet, 109 industrial properties totaling 10.6 million square feet and 39 retail properties totaling 3.9 million square feet, predominately in the United Kingdom and Ireland with additional investments in the Pacific Northwest, Southern California, Spain and Italy.
As of December 31, 2023, we hold investments in 55 office properties totaling over 10.9 million square feet, 115 industrial properties totaling 11.4 million square feet and 13 retail properties totaling 3.0 million square feet, predominately in the United Kingdom and Ireland with additional investments in the Pacific Northwest, Southern California, Spain and Italy.
As of December 31, 2022, the following key metrics of our Consolidated and Co-Investment Portfolio are as follows: 1 Table of Contents Consolidated Co-Investments Multifamily units - market rate 11,475 14,780 Multifamily units - affordable — 11,526 Office square feet (millions) 4.8 6.9 Industrial square feet (millions) — 10.6 Retail square feet (millions) 2.5 1.4 Hotels 1 1 Real estate debt investments - 100% (billions) $ — $ 2.4 Real estate debt investments - KW Share (millions) $ — $ 155.1 Revenues (millions) $ 481.8 $ 276.0 NOI (millions) $ 294.2 $ 157.6 AUM (billions) $ 9.2 $ 13.8 In our Co-Investment Portfolio, 88% of our carrying value is accounted for at fair value.
As of December 31, 2023, the following key metrics of our Consolidated and Co-Investment Portfolio are as follows: 1 Table of Contents Consolidated Co-Investments AUM (billions) $ 10.7 $ 13.9 Multifamily units - market rate 10,192 15,481 Multifamily units - affordable — 11,971 Office square feet (millions) 4.4 6.5 Industrial square feet (millions) — 11.4 Retail square feet (millions) 1.5 1.5 Hotels 1 1 Real estate debt investments - 100% (billions) $ — $ 4.9 Real estate debt investments - KW Share (millions) $ — $ 263.0 In our Co-Investment Portfolio, 93% of our carrying value is accounted for at fair value.
As of December 31, 2022, we held investments in 149 multifamily assets that include 11,475 consolidated market rate multifamily apartment units, 14,780 market rate units within our Co-Investment Portfolio and 11,526 affordable units in our VHH platform. The unit accounts above include units that are unstabilized and undergoing development.
As of December 31, 2023, we held investments in 149 multifamily assets that include 10,192 consolidated market rate multifamily apartment units, 15,481 market rate units within our Co-Investment Portfolio and 11,971 affordable units in our VHH platform. The unit counts above include units that are unstabilized and undergoing development.
($ in millions) December 31, 2022 December 31, 2021 Cash and cash equivalents (1) $ 316.7 $ 362.3 Real estate and acquired in place lease values 5,188.1 5,059.8 Accounts receivable and other assets, net 135.1 111.7 Total Assets $ 5,639.9 $ 5,533.8 Accounts payable, accrued expenses and other liabilities 156.6 142.1 Mortgage debt 3,018.0 2,959.8 KWE unsecured bonds 506.4 622.8 Total Liabilities 3,681.0 3,724.7 Equity $ 1,958.9 $ 1,809.1 (1) Excludes $122.5 million and $162.5 million as of December 31, 2022 and December 31, 2021, respectively, of corporate non-property level cash.
($ in millions) December 31, 2023 December 31, 2022 Cash and cash equivalents (1) $ 184.2 $ 316.7 Real estate and acquired in place lease values 4,837.3 5,188.1 Accounts receivable and other assets, net 146.1 135.1 Total Assets $ 5,167.6 $ 5,639.9 Accounts payable, accrued expenses and other liabilities 154.3 156.6 Mortgage debt 2,840.9 3,018.0 KWE unsecured bonds 522.8 506.4 Total Liabilities 3,518.0 3,681.0 Equity $ 1,649.6 $ 1,958.9 (1) Excludes $129.5 million and $122.5 million as of December 31, 2023 and 2022, respectively, of corporate non-property level cash.
As of December 31, 2022, we held interests in 39 loans, 87% of which have floating interest rates, with collateral located in the Western United States and the United Kingdom, with an average interest rate of 10.0% per annum and an unpaid principal balance ("UPB") of $2.4 billion (of which our share was a UPB of $155.1 million).
As of December 31, 2023, we held interests in 101 loans in our global debt platform, 85% of which have floating interest rates, with collateral located in the Western United States and the United Kingdom, with an average interest rate of 9.4% per annum and an unpaid principal balance ("UPB") of $4.9 billion (of which our share was a UPB of $263.0 million).
For the year ended December 31, 2022, our 230 employees managed a total of $23.0 billion of Real Estate Assets Under Management ("AUM"), which includes 37,781 multifamily units (including 4,994 units under lease up or in process of being developed), 11.7 million office square feet, 10.6 million industrial square feet and 3.9 million retail square feet (including 1.7 million square feet under lease up or in process of being developed), and $2.5 billion of development, residential and other.
As of December 31, 2023, our 259 employees, managed a total of $24.5 billion of Real Estate Assets Under Management ("AUM"), which includes 37,644 multifamily units (including 3,824 units under lease up or in process of being developed), 10.9 million office square feet, 11.4 million industrial square feet and 3.0 million retail square feet (including 2.3 million square feet under lease up or in process of being developed), and $1.8 billion of development, residential and other.
Our largest Western United States multifamily regions are the Mountain West region (Idaho, Utah, 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.
Our largest Western United States multifamily regions are the Mountain West region (which includes our investments in Idaho, Utah, Nevada, Arizona and New Mexico) and the Pacific Northwest (primarily the state of Washington). The remainder of the Western United States portfolio is located in Northern and Southern California.
The Western United States represents 61% of our portfolio, with a focus on the Mountain West region, our largest global region which includes our investments in Idaho, Utah, Nevada, Arizona, and New Mexico. We also invest in the Pacific Northwest, including the state of Washington, and Northern and Southern California.
The Mountain West region is our largest global region and includes our investments in Idaho, Utah, Nevada, Arizona, and New Mexico. We also invest in the Pacific Northwest, including the state of Washington, and Northern and Southern California.
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 hedges) for non-dollar denominated investments. During the year ended December 31, 2022, we recognized $93.5 million of fair value gains and performance allocations on unconsolidated investments.
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 hedges) for non-dollar denominated investments. During the year ended December 31, 2023, we recognized $229.3 million and $64.3 million, respectively, of net fair value losses and write downs of performance allocations on Co-Investment portfolio investments.
Details of this framework can be found on our ESG website (esg.kennedywilson.com) (this website address is not intended to function as a hyperlink, and the information contained in, or accessible from, our website is not intended to be a part of this filing).
Details of this framework can be found on our ESG website (esg.kennedywilson.com) (this website address is not intended to function as a hyperlink, and the information contained in, or accessible from, our website is not intended to be a part of this filing). 12 Table of Contents The ESG Committee of the Board of Directors (the "ESG Committee") oversees the Company’s ESG program, including opportunities and risk management strategies.
After acquisition, the properties are generally repositioned to enhance market value. Our industrial portfolio consists mainly of distribution centers located in the United Kingdom, Ireland, Spain and Mountain West regions. Our retail portfolio has different characteristics based on the geographic markets wherein the properties are located.
Our industrial portfolio consists mainly of distribution centers located in the United Kingdom, Ireland, Spain and Mountain West regions. 6 Table of Contents Our retail portfolio has different characteristics based on the geographic markets where the properties are located.
Please also see the section titled “ Liquidity and Capital Resources - Development and redevelopment ” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report for additional detail on these investments. 6 Table of Contents Real Estate Debt Investment We have a global real estate debt platform with multiple partners.
Please also see the section titled “ Liquidity and Capital Resources - Development and redevelopment ” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report for additional detail on these investments.
In our role as asset manager, we earn customary fees for managing the platform. Currently, our global debt platform investments have been made without the use of any leverage and are invested through our Co-Investment Portfolio.
Currently, our global debt platform investments have been made without the use of any leverage and are invested through our Co-Investment Portfolio.
Rising mortgage rates further drove demand due to the high cost of home ownership, and domestic migration patterns demonstrated that renters continued to move out of high cost cities and into more affordable markets.
The multifamily sector continued to see strong rental growth in 2023 as overall demand for rental housing remained strong due to high mortgage rates, that further drove demand due to the high cost of home ownership, and domestic migration patterns that demonstrated that renters continued to move out of high cost cities and into more affordable markets.
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.
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, and/or acquisition and disposition fees. As of December 31, 2023, our fee-bearing capital was $8.4 billion, which increased $2.5 billion, or 42.4%, in 2023.
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.
Fundamental to VHH’s 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.
As of December 31, 2022, our fee-bearing capital was $5.9 billion and we recognized $44.8 million in recurring investment management fees during the year ended December 31, 2022. In our Co-Investment Portfolio, we are also eligible to earn performance allocations (amounts that are allocated to us on co-investments we manage based on the cumulative performance of the underlying investment).
During the year ended December 31, 2023, fees recorded through revenues were $61.9 million. In our Co-Investment Portfolio, we are also eligible to earn performance allocations (amounts that are allocated to us on co-investments we manage based on the cumulative performance of the underlying investment).
During the year ended December 31, 2022, we had a reversal of $21.1 million in performance allocations that we previously recognized based on the fair value of the underlying investment. Please see “Fair Value Investments” below for a discussion of our assets held at estimated fair value and our methodology with respect to the same.
During the year ended December 31, 2023, we recorded a $64.3 million decrease in the accrual (non-cash) for performance allocations primarily related to the fair value decreases. Please see “Fair Value Investments” below for a discussion of our assets held at estimated fair value and our methodology with respect to the same.
In March 2022, we announced the expansion of our global debt platform to over $6 billion. Our global debt platform, which includes partners across insurance and sovereign wealth, seeks out investment opportunities 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.
Our global debt platform, which includes partners across insurance and sovereign wealth funds, 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 for managing the platform.
Our global team, located in offices throughout the United States, the United Kingdom, Ireland, Spain and Jersey, also managed the consummation of $1.9 billion of gross acquisitions and $970.0 million of loan investments (KW's ownership interest of 51% and 5%, respectively) and $1.3 billion of gross dispositions and $412.8 million of loan repayments (KW's ownership interest of 40% and 9%, respectively) during the year ended December 31, 2022.
Our global team, located primarily in offices throughout the United States, the United Kingdom and Ireland, also managed the consummation of $283.2 million of gross acquisitions and $2.3 billion of loan investments, which includes $2.1 billion relating to loans acquired in our newly formed Construction Loan Portfolio, (KW's ownership interest of 18% and 5%, respectively) and $823.1 million of gross dispositions and $614.8 million of loan repayments (KW's ownership interest of 69% and 6%, respectively) during the year ended December 31, 2023.
Our global real estate portfolio is primarily comprised of multifamily communities (57%), commercial properties (39%) and hotel and other properties (4%) based on our share of net operating income ("NOI").
Our global real estate portfolio is primarily comprised of multifamily communities (57%), commercial properties (35%), loans (6%) and hotel and other properties (2%) based on our share of net operating income ("NOI"). Geographically, we focus on the Western United States (62%), the United Kingdom (13%) and Ireland (24%).
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.
We underwrite such loan portfolios 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.
In Europe, our portfolio is focused in the United Kingdom (16%) and Ireland (21%). Our investment activities in our Consolidated Portfolio (as defined below) involve ownership of multifamily units, office, retail and industrial space and one hotel. Our ownership interests in such consolidated properties make up our Consolidated Portfolio ("Consolidated Portfolio") business segment as discussed in detail throughout this report.
Our investment activities in our Consolidated Portfolio (as defined below) involve ownership of multifamily units and other real estate asset types in the markets described above. Our ownership interests in such consolidated properties make up our Consolidated Portfolio ("Consolidated Portfolio") business segment as discussed in detail throughout this report.
The credit spreads used by Kennedy Wilson for these types of investments range from 1.22% to 7.25%. 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.
The credit spreads used by the Company to value floating rate indebtedness range from 2.00% to 4.60%, while the market rates used to value fixed rate indebtedness range from 4.90% to 9.30%. 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.
These alongside our regular global senior management calls continue to develop our managers to become more effective leaders. A dynamic internship and internal transfer program also helps promote personal development and improves leadership skills across all departments.
A dynamic internship and internal transfer program also helps promote personal development and improves leadership skills across all departments.
We strive to maintain a culture that fosters collaboration and innovation, and we take great pride in building and maintaining a driven, results-oriented workforce. 12 Table of Contents Our talent development program includes access to formal and informal mentorships, tuition reimbursement, where we are supporting employees who are seeking advanced certificates in areas of specialty that pertain to their role at Kennedy Wilson, and "Lunch and Learn" sessions.
Our talent development program includes access to formal and informal mentorships, tuition reimbursement, where we are supporting employees who are seeking advanced certificates in areas of specialty that pertain to their role at Kennedy Wilson, and "Lunch and Learn" sessions. These alongside our regular global senior management calls continue to develop our managers to become more effective leaders.
Within KWE we have historically utilized three types of contracts to hedge our GBP/EUR exposure: foreign forward currency contracts; a cross currency swap (until its settlement in September 2021) on the 3.95% pound sterling-denominated bonds due 2022 (the "KWE Bonds") (swapped GBP to EUR); and the KWE Euro Medium Term Notes ("KWE Notes").
Within KWE we have historically utilized two types of contracts to hedge our GBP/EUR exposure: foreign forward and option currency contracts and the KWE Euro Medium Term Notes ("KWE Notes").
In determining estimated fair market values, the Company utilizes two approaches to value real estate, a discounted cash flow analysis and direct capitalization approach. 7 Table of Contents Discounted cash flow models estimate future cash flows from a buyer's perspective (including terminal values) and compute a present value using a market discount rate.
Discounted cash flow models estimate future cash flows from a buyer's perspective (including terminal values) and compute a present value using a market discount rate. The holding period in the analysis is typically ten years.
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 that factor into our investment decision, including, without limitation, location, financing (unencumbered properties) or hold periods.
In our separate account portfolios, our partners have certain characteristics that factor into our investment decision, including, without limitation, location, financing (unencumbered properties) or hold periods. In our commingled funds that we manage, we typically look for opportunities that have a value-add component that can benefit from our asset management expertise.
As of December 31, 2022, we are actively developing 2,220 multifamily units, 0.4 million commercial rentable square feet and 150 hotel rooms.
As of December 31, 2023, we are actively developing 1,462 multifamily units and 415,000 commercial rentable square feet.
As of December 31, 2022, these investments had a Gross Asset Value of $224.3 million and the Company had a weighted average ownership in such investments of 76%. These investments are in various stages of completion, ranging from securing the proper entitlements on land positions to sales of units/lots.
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 The Company accounts for a number of unconsolidated investments under fair value accounting.
In addition to interest income (which includes origination, exit and extension fees), we also earn customary asset management fees from our partners for managing these loan investments. Our current loan portfolio is focused on performing loans.
In addition to interest income (which includes origination, exit and extension fees), we also earn customary asset management fees from our partners for managing these loan investments. As a result of market conditions, we expect more opportunities to arise in acquiring loan portfolios at a discount from their contractual balance due.
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 which is held at historical depreciated cost as of December 31, 2022 and 2021.
The non-GAAP table below represents a summarized balance sheet of our Consolidated Portfolio, which is held at historical depreciated cost as of December 31, 2023 and 2022. This table does not include amounts from our corporate segment such as corporate cash and the KWI Notes.
Ireland Ireland’s economy is estimated to have had the strongest GDP growth across the EU at 10.1% in 2022 and the Organization for Economic Co-operation and Development is forecasting Ireland to have the highest GDP growth of any major European economy over the next two years.
Ireland Ireland’s economy is estimated to have had nominal GDP growth of 2.9% in 2023, and the Organisation for Economic Co-operation and Development is forecasting Ireland to have progressively higher GDP growth over the next two years to reach 5.4% by year-end 2025.
In the UK Retail sector, economic headwinds proved strong in the second half of 2022, suppressing deal volumes to £2.75 billion (down 33% on the same period for 2021), contrasting against the high deal volumes of first half of 2022 at £3.58 billion (up 11% on the same period for 2021). 11 Table of Contents Environmental, Social and Governance (ESG) Kennedy Wilson’s approach to ESG aligns with its business strategy to maximize the inherent value of our assets and by striving to deliver long-term social, environmental, and economic value across our portfolio and to our key stakeholders.
Environmental, Social and Governance (ESG) Kennedy Wilson’s approach to ESG aligns with its business strategy to maximize the inherent value of our assets and by striving to deliver long-term social, environmental, and economic value across our portfolio and to our key stakeholders.
Ongoing macroeconomic conditions, such as, but not limited to, high inflation, central banks raising interest rates to curtail high inflation, currency fluctuations, the COVID-19 pandemic and the ongoing military conflict between Russia and Ukraine and international sanctions against Russia, continue to fuel recessionary fears and create volatility in our business results and operations.
Ongoing macroeconomic conditions, such as, but not limited to, elevated levels of inflation and interest rates, banks' ability and willingness to lend, recent adverse developments affecting regional banks and other financial institutions, currency fluctuations and ongoing military conflicts around the world, continue to fuel recessionary fears and create volatility in our business results and operations.
In our commingled funds that we manage, we typically look for opportunities that have a value-add component that can benefit from our asset management expertise. We do not typically own high-rise buildings in city centers and instead look to invest in mid-to-low rise buildings in areas adjacent to city centers and suburban markets.
We do not typically own high-rise buildings in city centers and instead look to invest in mid-to-low rise buildings in areas adjacent to city centers and suburban markets. After acquisition, the properties are generally repositioned to enhance market value.
As of December 31, 2022, we have contributed an additional $121.8 million into VHH and have received $267.9 million in cash distributions. VHH is an unconsolidated investment that we account for using the fair value option, which had a carrying value of $272.3 million as of December 31, 2022.
VHH is an unconsolidated investment that we account for using the fair value option which had a carrying value of $285.9 million as of December 31, 2023. Since we acquired our ownership interests in VHH, we have recorded $320.0 million worth of fair value gains on our investment in VHH, including $51.5 million during the year ended December 31, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks include, among others, the following : • The success of our business is significantly related to general economic conditions and the real estate industry, and, accordingly, our business could be harmed by an economic slowdown, recession and downturn in real estate asset values, property sales and leasing activities. • Adverse developments in the credit markets and rising interest rates may harm our business, financial condition and results of operations. • Inflation may adversely affect our financial condition and results of operations. • Our business and those of our tenants may be adversely affected by epidemics, pandemics or other outbreaks. • Our significant operations in the United Kingdom and Ireland and, to a lesser extent, Spain and Italy, expose our business to risks inherent in conducting business in foreign markets. • Our revenues and earnings may be materially and adversely affected by fluctuations in foreign currency exchange rates due to our international operations. • Some of our portfolio investments may be recorded at fair value, and, as a result, there will be uncertainty as to the value of these investments. • Our real estate development and redevelopment strategies may not be successful. • Poor performance of our commingled funds would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future funds. • Our joint venture activities subject us to third-party risks, including risks that other participants may become bankrupt or take action contrary to our best interests. • If we are unable to identify, acquire and integrate suitable investment opportunities and acquisition targets, our future growth will be impeded. • Our real estate debt investment business operates in a highly competitive market for lending and investment opportunities through our debt platforms. • Our reliance on third parties to operate certain of our properties may harm our business. • Our leasing activities depend on various factors, including tenant occupancy and rental rates, which, if adversely affected, could cause our operating results to suffer. • Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. • We have in the past incurred and may continue in the future to incur significant amounts of debt and, to a lesser extent, preferred stock, to finance acquisitions, which could negatively affect our cash flows and subject our properties or other assets to the risk of foreclosure. • Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions. • If we are unable to raise additional debt and equity capital, our growth prospects may suffer. • The loss of one or more key personnel, particularly our CEO, could have a material adverse effect on our operations. • Our results are subject to significant volatility from quarter to quarter due to the varied timing and magnitude of our strategic acquisitions and dispositions, the incurrence of any impairment losses and other transactions. • Our directors and officers and their affiliates are significant stockholders, which makes it possible for them to have significant influence over the outcome of all matters submitted to stockholders for approval and which influence may be in conflict with our interests and the interests of our other stockholders. 14 Table of Contents Risk Factors Our results of operations and financial condition can be adversely affected by numerous risks.
Biggest changeThese risks include, among others, the following : • The success of our business is significantly related to general economic conditions and the real estate industry, and, accordingly, our business could be harmed by an economic slowdown, recession and downturn in real estate asset values, property sales and leasing activities. • Adverse developments in the credit markets and rising or elevated interest rates may harm our business, financial condition and results of operations. • Inflation may adversely affect our financial condition and results of operations. • Some of our portfolio investments are recorded at fair value, and, as a result, there will be uncertainty as to the value of these investments and fluctuations (without actual realization events) will be recorded in our financial statements. • Our significant operations in the United Kingdom and Ireland and, to a lesser extent, Spain and Italy, expose our business to risks inherent in conducting business in foreign markets. • Our revenues and earnings may be materially and adversely affected by fluctuations in foreign currency exchange rates due to our international operations. • Our real estate development and redevelopment strategies may not be successful. • We have in the past incurred and may continue in the future to incur significant amounts of debt and, to a lesser extent, preferred stock, to finance acquisitions, which could negatively affect our cash flows and subject our properties or other assets to the risk of foreclosure. • Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions. • If we are unable to raise additional debt and equity capital, our growth prospects may suffer. • Poor performance of our commingled funds would cause a decline in our results of operations and could adversely affect our ability to raise capital for future funds. • Our joint venture activities subject us to third-party risks, including risks that other participants may become bankrupt or take action contrary to our best interests. • If we are unable to identify, acquire and integrate suitable investment opportunities and acquisition targets, our future growth will be impeded. • Our real estate debt investments may not perform as expected at the time of purchase or origination and borrowers may default under the loans and we may be forced to pursue certain remedies • Our reliance on third parties to operate certain of our properties may harm our business. • Our leasing activities depend on various factors, including tenant occupancy and rental rates, which, if adversely affected, could cause our operating results to suffer. • Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. • The loss of one or more key personnel, particularly our CEO, could have a material adverse effect on our operations. • Our results are subject to significant volatility from quarter to quarter due to the varied timing and magnitude of our strategic acquisitions and dispositions, the incurrence of any impairment losses, fair value gains and losses and other transactions. • Our directors and officers and their affiliates are significant stockholders, which makes it possible for them to have significant influence over the outcome of all matters submitted to stockholders for approval and which influence may be in conflict with our interests and the interests of our other stockholders.
In addition to originating and acquiring senior loans, we also originate and invest in mezzanine loans, B-and C-Notes and preferred equity and these types of investments generally i nvolve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property.
In addition to originating and acquiring senior loans, we also originate and invest in mezzanine loans, B-and C-Notes and preferred equity. These types of investments generally i nvolve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property.
If our business performance and profitability deteriorate, we could fail to comply with certain financial covenants in our unsecured bond and revolving credit facility, which would force us to seek an amendment with our lenders.
If our business performance and profitability deteriorate, we could fail to comply with certain financial covenants in our unsecured bond and revolving credit facility, which would force us to seek an amendment with our lenders.
The trading price of our common stock has historically been and may in the future continue to be volatile due to factors such as: • changes in real estate prices; • actual or anticipated fluctuations in our quarterly and annual results and those of our publicly held competitors; • mergers and strategic alliances among any real estate companies; • market conditions in the industry; • changes in government regulation and taxes; • shortfalls in our operating results from levels forecasted by securities analysts; • investor sentiment toward the stock of real estate companies in general; 29 Table of Contents • announcements concerning us or our competitors; and • the general state of the securities markets.
The trading price of our common stock has historically been and may in the future continue to be volatile due to factors such as: • changes in real estate values and prices; • actual or anticipated fluctuations in our quarterly and annual results and those of our publicly held competitors; • mergers and strategic alliances among any real estate companies; • market conditions in the industry; • changes in government regulation and taxes; • shortfalls in our operating results from levels forecasted by securities analysts; • investor sentiment toward the stock of real estate companies in general; 29 Table of Contents • announcements concerning us or our competitors; and • the general state of the securities markets.
We depend on debt financing from a combination of financial institutions, the assumption of existing loans, government agencies and seller financing. We depend on equity financing from equity partners, which include public companies, pension funds, family offices, financial institutions, endowments, sovereign wealth and money managers. Our access to capital funding is uncertain.
We depend on debt financing from a combination of financial institutions, the assumption of existing loans, government agencies and seller financing. We depend on equity financing from equity partners, which include public companies, insurance companies, pension funds, family offices, financial institutions, endowments, sovereign wealth and money managers. Our access to capital funding is uncertain.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many stockholders. As a result, stockholders may be limited in their ability to obtain a premium for their shares. We may change our dividend policy.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many stockholders. As a result, stockholders may be limited in their ability to obtain a premium for their shares. We may change our dividend.
Our board of directors may change our dividend policy at any time, and there can be no assurance as to the manner in which future dividends will be paid or that the current dividend level will be maintained in future periods.
Our board of directors may change our dividend at any time, and there can be no assurance as to the manner in which future dividends will be paid or that the current dividend level will be maintained in future periods.
Although we continue to seek investments in markets where we see opportunities for stronger relative growth, including multifamily assets with leases that have an initial term of 12 months or less, and continue to work to manage cost overrun risks for our development and redevelopment projects with detailed architectural plans, guaranteed, or fixed price, contracts and close supervision by expert Company executives and personnel, if we are unable to execute our business strategy or if there is a substantial increase in inflation, such circumstances could adversely affect our financial condition, liquidity, results of operations and prospects.
Although we continue to seek investments 17 Table of Contents in markets where we see opportunities for stronger relative growth, including multifamily assets with leases that have an initial term of 12 months or less, and continue to work to manage cost overrun risks for our development and redevelopment projects with detailed architectural plans, guaranteed, or fixed price, contracts and close supervision by expert Company executives and personnel, if we are unable to execute our business strategy or if there is a substantial increase in inflation, such circumstances could adversely affect our financial condition, liquidity, results of operations and prospects.
Investments in joint ventures involve additional risks, including the possibility that the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with ours, that we will not have the right or power to direct the management and policies of the joint ventures and that other participants may take action contrary to our instructions or requests and against our policies and objectives.
Investments in joint ventures involve additional risks, including the possibility that the other participants may become bankrupt or have economic or other business interests or goals that are inconsistent with ours, we may not have the right or power to direct the management and policies of certain joint ventures and other participants may take action contrary to our instructions or requests and against our policies and objectives.
Although our management has concluded that our internal control over financial reporting was effective as of December 31, 2022 and our independent registered public accounting firm has issued an unqualified report as to the same, our management or our independent registered public accounting firm may not be able to come to the same conclusion in future periods.
Although our management has concluded that our internal control over financial reporting was effective as of December 31, 2023 and our independent registered public accounting firm has issued an unqualified report as to the same, our management or our independent registered public accounting firm may not be able to come to the same conclusion in future periods.
For example, small changes in the inputs and assumptions that we use from period to period to estimate these fair values may result in large changes in the carrying value of these investments and could materially and adversely impact our reported earnings.
For example, small changes in the inputs and assumptions that we use from period to period to estimate these fair values may result in large changes in the carrying value of these investments and could materially and adversely impact our reporting earnings.
Similarly, if a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt and may become unsecured as a result of foreclosure by the senior lender.
Similarly, if a borrower defaults on our junior loan or debt senior to our loan, or in the event of a borrower bankruptcy, our junior loan will be satisfied only after the senior debt and may become unsecured as a result of foreclosure by the senior lender.
We are subject to certain "non-recourse carve out guarantees" that may be triggered in the future and have guaranteed a number of loans in connection with various real estate investments, which may result in us being obligated to make certain payments. 27 Table of Contents Most of our real estate properties are encumbered by traditional non-recourse debt obligations.
We are subject to certain "non-recourse carve out guarantees" that may be triggered in the future and have guaranteed a number of loans in connection with various real estate investments, which may result in us being obligated to make certain payments. Most of our real estate properties are encumbered by traditional non-recourse debt obligations.
Our stockholders may experience dilution upon the conversion of our Series A Cumulative Perpetual Convertible Preferred Stock or warrants, and we may issue additional equity securities, which may also dilute our stockholders’ interest in us.
Our stockholders may experience dilution upon the conversion of our Cumulative Perpetual Convertible Preferred Stock or warrants, and we may issue additional equity securities, which may also dilute our stockholders’ interest in us.
In addition, a default under one series of our indebtedness may also constitute a default under another series of our indebtedness. Our unsecured revolving credit facility and the indentures governing our KWI Notes, and the KWE Notes require us to maintain compliance with specified financial covenants, including maximum balance sheet leverage and fixed charge coverage ratios.
In addition, a default under one series of our indebtedness may also constitute a default under another series of our indebtedness. Our unsecured revolving credit facility and the indentures governing our KWI Notes, and the KWE Notes require us to maintain compliance with specified financial covenants, including maximum balance sheet leverage and fixed charge coverage 26 Table of Contents ratios.
Decreased demand for office space, either due to hybrid or remote workforces or reductions in tenants’ workforces, may impact our prospective or current commercial tenants’ ability or willingness to enter into, maintain or renew their leases for certain office space, which may have an adverse effect on our 15 Table of Contents business and results of operations.
Decreased demand for office space, either due to hybrid or remote workforces or reductions in tenants’ workforces, may impact our prospective or current commercial tenants’ ability or willingness to enter into, maintain or renew their leases for certain office space, which may have an adverse effect on our business and results of operations.
Should a participant in a material joint venture investment act contrary to our interests, our business, results of operations and financial condition could significantly suffer. If we are unable to identify, acquire and integrate suitable investment opportunities and acquisition targets, our future growth will be impeded.
Should a participant in a material joint venture investment act contrary to our interests, our business, results of operations and financial condition could significantly suffer. 20 Table of Contents If we are unable to identify, acquire and integrate suitable investment opportunities and acquisition targets, our future growth will be impeded.
Our outstanding warrants are convertible into approximately 13 million shares of common stock and our Series A Cumulative Perpetual Convertible Preferred Stock are convertible into approximately 12 million shares of common stock. We also have an at-the-market equity offering program ("ATM program") in place pursuant to which we may issue up to $200 million of shares of common stock.
Our outstanding warrants are convertible into approximately 25 million shares of common stock and our Series A Cumulative Perpetual Convertible Preferred Stock are convertible into approximately 12 million shares of common stock. We also have an at-the-market equity offering program in place pursuant to which we may issue up to $200 million of shares of common stock.
A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be 26 Table of Contents immediately due and payable and proceed against any collateral securing that indebtedness.
A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.
These factors impede us from responding quickly to changes in the performance of our investments and could adversely impact our business, financial condition and results of operations.
These factors, among others, impede us from responding quickly to changes in the performance of our investments and could adversely impact our business, financial condition and results of operations.
The condition of the real estate markets in which we operate is cyclical and primarily depends on the condition of the economy in the United States, United Kingdom, Ireland and, to a lesser extent, Spain and Italy, as a whole and on the perceptions of investors on the overall economic outlook.
The condition of the real estate markets in which we operate is cyclical and primarily depends on the condition of the economy in the United States, United Kingdom, Ireland and, to a lesser 15 Table of Contents extent, Spain and Italy, as a whole and on the perceptions of investors on the overall economic outlook.
For example, if a borrower defaults, there may not be sufficient funds remaining 16 Table of Contents for a B-Note holder after payment to the A-Note holder . While our income from such variable rate loans and investments has increased as the market interest rates increased, borrowers may be unable to continue to service their debt at the applicable rates.
For example, if a borrower defaults, there may not be sufficient funds remaining for a B-Note holder after payment to the A-Note holder . While our income from such variable rate loans and investments has increased as the market interest rates increased, borrowers may be unable to continue to service their debt at the applicable rates.
Item 1A. Risk Factor Summary Our business is subject to a number of risks and uncertainties. These risks are more fully described in the section titled “Risk Factors” included in Part I, Item 1A of this report.
Item 1A. Risk Factor Summary 14 Table of Contents Our business is subject to a number of risks and uncertainties. These risks are more fully described in the section titled “Risk Factors” included in Part I, Item 1A of this report.
Thus, the success of our business 22 Table of Contents may depend in large part on the ability of our third-party property managers to manage the day-to-day operations, and any adversity experienced by our property managers could adversely impact the operation and profitability of our properties.
Thus, the success of our business may depend in large part on the ability of our third-party property managers to manage the day-to-day operations, and any adversity experienced by our property managers could adversely impact the operation and profitability of our properties.
In connection with most of these loans, however, we entered into certain “non-recourse carve out” guarantees, which provide for the loans to become partially or fully recourse against us if certain triggering events occur.
In connection with most of these loans, however, we entered into certain “non-recourse carve out” guarantees, which provide for the loans to 27 Table of Contents become partially or fully recourse against us if certain triggering events occur.
Previous recessions and downturns in the real estate market have resulted in and may result in: • a general decline in rents due to defaulting tenants or less favorable terms for renewed or new leases; • a general decline in demand for new office space and commercial real estate, which in turn led to a general increase in the levels of vacancy across our office and commercial portfolio; • a decline in actual and projected sale prices of our properties, resulting in lower returns on the properties in which we have invested; • higher interest rates, higher loan costs, less desirable loan terms and a reduction in the availability of mortgage loans, all of which could increase costs and limit our ability to acquire additional real estate assets; and • a decrease in the availability of lines of credit and the capital markets and other sources of capital used to grow, operate and maintain our business.
Previous recessions and downturns in the real estate market have resulted in and may result in: • a general decline in rents due to defaulting tenants or less favorable terms for renewed or new leases; • a general decline in demand for new office space and commercial real estate partly as a result of businesses adopting a remote working or similar policies, which in turn led to a general increase in the levels of vacancy across our office and commercial portfolio; • a decline in actual and projected sale prices of our properties, resulting in lower returns on the properties in which we have invested; • higher interest rates, higher loan costs, less desirable loan terms and a reduction in the availability of mortgage loans, all of which could increase costs and limit our ability to acquire additional real estate assets; and • a decrease in the availability of lines of credit and the capital markets and other sources of capital used to grow, operate and maintain our business.
Similar provisions of state tax law may also apply. Federal net operating loss carryforwards generated after December 31, 2017 may be carried forward indefinitely, but they may only be used to offset 80% of taxable income in a given year. The entire balance of $3.4 million of federal net operating loss carryforwards was generated after December 31, 2017.
Similar provisions of state tax law may also apply. Federal net operating loss carryforwards generated after December 31, 2017 may be carried forward indefinitely, but they may only be used to offset 80% of taxable income in a given year. The entire balance of $47.5 million of federal net operating loss carryforwards was generated after December 31, 2017.
You should carefully consider the risk factors detailed below in conjunction with the other information contained in this report. If any of the following risks actually occur, our business, financial condition, operating results, cash flows and future prospects could be materially adversely affected.
Risk Factors Our results of operations and financial condition can be adversely affected by numerous risks. You should carefully consider the risk factors detailed below in conjunction with the other information contained in this report. If any of the following risks actually occur, our business, financial condition, operating results, cash flows and future prospects could be materially adversely affected.
As of December 31, 2022, our directors and executive officers and their respective affiliates owned an aggregate of approximately 14% of the outstanding shares of our common stock. These stockholders will have significant influence over the outcome of all matters submitted for stockholder approval, including the election of our directors and other corporate actions.
As of December 31, 2023, our directors and executive officers and their respective affiliates owned an aggregate of approximately 13% of the outstanding shares of our common stock. These stockholders will have significant influence over the outcome of all matters submitted for stockholder approval, including the election of our directors and other corporate actions.
These laws and regulations can (i) limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses, (ii) negatively impact our ability to attract higher-paying tenants, (iii) require us to increase spend for reporting and compliance, and (iv) make it more difficult for us to dispose of properties in certain circumstances.
These laws and regulations can (i) limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses, (ii) negatively impact our ability to attract higher-paying tenants and (iii) make it more difficult for us to dispose of properties in certain circumstances.
As of December 31, 2022, approximately 41% of our revenues were sourced from our foreign operations in the United Kingdom, Ireland, Spain and Italy, 93% of which was sourced from our operations in the United Kingdom and Ireland. Accordingly, our firm-wide results of operations depend significantly on our foreign operations.
As of December 31, 2023, approximately 41% of our revenues were sourced from our foreign operations in the United Kingdom, Ireland, Spain and Italy, 92% of which was sourced from our operations in the United Kingdom and Ireland. Accordingly, our firm-wide results of operations depend significantly on our foreign operations.
Certain significant expenditures, such as debt service costs, which have increased with the rapid rise of interest rates in response to high inflation, real estate taxes and operating and maintenance costs, are generally not reduced when market conditions are poor.
Certain significant expenditures, such as debt service costs, which increased with the rapid rise of interest rates during the course of 2022 and 2023 in response to high inflation, real estate taxes and operating and maintenance costs, are generally not reduced when market conditions are poor.
As the fair value of underlying investments varies between reporting periods, if we were to have negative performance in a period that causes the amount due to us to be less than the amount previously recognized, this could result in a negative adjustment to performance allocations to the general partner or asset manager.
As the fair value of underlying investments varies between reporting periods, if we were to have negative performance allocations in a period that causes the amount due to us to be less than the amount previously recognized, this could result in a negative adjustment to performance allocations.
The timing of purchases and sales of our real estate investments has varied, and will continue to vary, widely from quarter to quarter due to variability in market opportunities, changes in interest rates, and the overall demand for multifamily and commercial real estate, among other things.
The timing of purchases and sales of our real estate investments has varied, and will continue to vary, widely from quarter to quarter due to variability in market opportunities, changes in interest rates, changes in fair value due to fluctuating property values, and the overall demand for multifamily and commercial real estate, among other things.
Poor performance of our commingled funds would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future funds. When any of our commingled closed-end funds perform poorly, our investment record suffers.
Poor performance of our commingled funds would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future funds. When any of the commingled closed-end funds we manage performs poorly, our investment record suffers.
In addition, in the event of a decline in real estate values, the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan significantly increases. Our reliance on third-parties to operate certain of our properties may harm our business.
In addition, in the event of a decline in real estate values, we are more likely to incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan significantly increases. Our reliance on third-parties to operate certain of our properties may harm our business.
Some of our portfolio investments may be recorded at fair value, and, as a result, there will be uncertainty as to the value of these investments. As of December 31, 2022, $2.1 billion, or approximately 88% of our unconsolidated investments and approximately 25% of our total assets were recorded on our financial statements at estimated fair value.
Some of our portfolio investments may be recorded at fair value, and, as a result, there will be uncertainty as to the value of these investments. As of December 31, 2023, $1.9 billion, or approximately 93% of our unconsolidated investments and approximately 25% of our total assets were recorded on our financial statements at estimated fair value.
Furthermore, competition for originations of, and investments in, our target assets may lead to the yield of such assets decreasing, which may further limit our ability to generate desired returns for ourselves and our partners. Also, as a result of this competition, desirable loans and investments in specific types of target assets may be limited in the future.
Furthermore, competition for originations of, and investments in, our target assets may lead to decreasing yields for such assets, which may further limit our ability to generate desired returns for ourselves and our partners. Also, as a result of this competition, desirable loans and investments in specific types of target assets are limited.
These risks include operational interruption, private data exposure and damage to our relationship with our customers, among others. A security breach involving our networks and related systems could disrupt our operations in numerous ways that could ultimately have an adverse effect on our financial condition and results of operations.
These risks include operational interruption, private data exposure and damage to our relationship with our customers, among others. A security breach involving our IT Systems could disrupt our operations in numerous ways that could ultimately have an adverse effect on our financial condition and results of operations. It is possible that our IT Systems could be compromised.
In addition to the general risks with respect to development and redevelopment projects as discussed above, Hawaii’s remote and isolated location may create additional operational costs and expenses (general operating and development-related costs), which could have a material adverse impact on our financial results.
In addition to the general risks with respect to development and redevelopment projects as discussed above, Hawaii’s remote and isolated location may create additional operational costs and expenses (general operating and development-related costs), and result in significant delays, which could have a material adverse impact on our business, financial condition and results of operations.
We acquire development assets to the extent attractive projects become available. As part of our investment strategy, we seek to locate and acquire real estate assets that we believe are undervalued and improve them to increase their resale value.
Our real estate development and redevelopment strategies may not be successful. We acquire development assets to the extent attractive projects become available. As part of our investment strategy, we seek to locate and acquire real estate assets that we believe are undervalued and improve them to increase their resale value.
In connection with the direct or indirect ownership, operation, management and development of real properties, we may be considered an owner or operator of those properties or as having arranged for the disposal or treatment of hazardous or toxic substances. Therefore, we may be potentially liable for removal or remediation costs.
In connection with the direct or indirect ownership, operation, management and development of real properties, we may be considered an owner or operator of those properties or as having arranged for the disposal or treatment of hazardous or toxic substances.
As of December 31, 2022, the Company was in compliance with all property-level mortgages (other than discussed immediately above) and was current on all payments (principal and interest) with respect to the same. If we are unable to raise additional debt and equity capital, our growth prospects may suffer.
As of December 31, 2023, the Company was in compliance with all property-level mortgages and was current on all payments (principal and interest) with respect to the same. If we are unable to raise additional debt and equity capital, our growth prospects may suffer.
The gross asset value of our investments in Hawaii is $481.4 million and $386.5 million as of December 31, 2022 and 2021, respectively. The success of our investments in Hawaii depends on and is affected by general trends in Hawaii’s economy and real estate market.
The gross asset value of our investments in Hawaii is $527.2 million and $481.4 million as of December 31, 2023 and 2022, respectively. The success of our investments in Hawaii depends on and is affected by general trends in Hawaii’s economy and real estate market.
Our results are subject to significant volatility from quarter to quarter due to the varied timing and magnitude of our strategic acquisitions and dispositions, the incurrence of any impairment losses and other transactions.
Our results are subject to significant volatility from quarter to quarter due to the varied timing and magnitude of our strategic acquisitions and dispositions, the incurrence of any impairment losses, fair value gains and losses and other transactions and market conditions.
While these factors have contributed to our increased operating income and earnings in past years, we may be unable to continue to perform well due to the significant variability in these factors.
While these factors have contributed to our increased operating income and earnings in past years, we may be unable to continue to perform in line with historical levels due to the significant variability in these factors.
We are subject to section 404 of The Sarbanes-Oxley Act of 2002 and the related rules of the SEC, which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.
We may fail to comply with section 404 of the Sarbanes-Oxley Act of 2002. 28 Table of Contents We are subject to section 404 of The Sarbanes-Oxley Act of 2002 and the related rules of the SEC, which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting.
The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages is 2.32% and approximately 2.1 years, respectively, as of December 31, 2022.
The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages is 2.53% and approximately 1.6 years, respectively, as of December 31, 2023.
In each of the markets in which we operate, rising interest rates, foreign currency fluctuations, inflation, declining demand for real estate, declining real estate values, potentially declining employment levels, periods of general economic slowdown and recession fears, or the perception that any of these events may continue or worsen, have negatively impacted the real estate market and our operating performance.
In each of the markets in which we operate, rising interest rates, foreign currency fluctuations, inflation, declining demand for real estate, declining real estate values, potentially declining employment levels, periods of general economic slowdown and recession fears, recent adverse developments affecting regional banks and other financial institutions, or the perception that any of these events may occur, continue or worsen, have negatively impacted the real estate market and our operating performance.
We have used joint ventures for large real estate investments and developments. We plan to continue to acquire interests in additional joint ventures formed to own or develop real property or interests in real property, however, we cannot be certain that we will continue to identify suitable joint venture partners and form new joint ventures in the future.
We plan to continue to acquire interests in additional joint ventures formed to own or develop real property or interests in real property, however, we cannot be certain that we will continue to identify suitable joint venture partners and form new joint ventures in the future.
The maximum potential undiscounted amount of future payments that we could be required to make under these guarantees was approximately $142.9 million at December 31, 2022.
The maximum potential undiscounted amount of future payments that we could be required to make under these guarantees was approximately $151.1 million at December 31, 2023.
As of December 31, 2022, the exercise price of the warrants was $23.00 per share and the conversion price of the Series A stock was $25.00 per share, in each case subject to further adjustments in certain circumstances.
As of December 31, 2023, the exercise price of the warrants was $23.00 per share for the Series B and $16.21 per share for the Series C and the conversion price of the Series A stock was $25.00 per share, in each case subject to further adjustments in certain circumstances.
Moreover, the estimated fair values used in preparing our financial statements may not represent amounts that could be realized in a current sale or an immediate settlement of the related asset or liability, nor would those estimated fair values necessarily reflect the returns we may actually realize. Our real estate development and redevelopment strategies may not be successful.
Moreover, the estimated fair values used in preparing our 19 Table of Contents financial statements may not represent amounts that could be realized in a current sale or an immediate settlement of the related asset or liability, nor would those estimated fair values necessarily reflect the returns we may actually realize.
From time to time, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services (“S&P”), a division of The McGraw-Hill Companies, Inc., rate our outstanding debt. These ratings are based on a variety of factors, including our current leverage and transactional activity.
From time to time, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services (“S&P”), a division of The McGraw-Hill Companies, Inc., rate our outstanding debt. These ratings are based on a variety of factors, including our current leverage and transactional activity. Downgrades in our credit ratings may further limit our ability to access capital markets.
There may also be instances when we are able to acquire title to an underlying property and sell it but not make a profit on its investment.
There may also be instances when we are able to acquire title to an underlying property, but we may not be able to successfully reposition the property or sell it to make a profit on our investment.
Downgrades in our credit ratings may further limit our ability to access capital markets. Any of these factors could lead to a significant deterioration of our business, and we could have insufficient liquidity to meet our debt service obligations when they come due in future years or maintain our common stock or preferred stock dividends.
Any of these factors could lead to a significant deterioration of our business, and we could have insufficient liquidity to meet our debt service obligations when they come due in future years or maintain our common stock or preferred stock dividends.
Volatility and uncertainty in the credit markets, including increasing interest rates, have increased the cost of borrowing, on both a corporate and property level, and may negatively impact our ability to access future additional financing for our capital needs or refinance or extend our existing debt on favorable terms, if at all.
Volatility and uncertainty in the credit markets, including past and prospective interest rate increases and/or the actual or perception that interest rates will not be decreasing in the near future, have increased the cost of borrowing, on both a corporate and property level, and may negatively impact our ability to access future additional financing for our capital needs or refinance or extend our existing debt on favorable terms, if at all.
The other tenant has a lease termination option in January 2025. While we are working on securing new long-term leases with high-credit tenants at the property, there is no assurance that we will be able to do so at favorable terms or at all.
While we are working on securing new long-term leases with high-credit tenants at the property, there is no assurance that we will be able to do so at favorable terms or at all.
To date, our foreign currency exposure has been limited to the GBP and the euro. Recent volatility in currency exchange rates have led to fluctuations in our earnings because of corresponding fluctuations in the GBP and euro currency exchange rates. The GBP dropped to a record low of $1.07 against the U.S.
To date, our foreign currency exposure has been limited to the GBP and the euro. Recent volatility in currency exchange rates have led to fluctuations in our earnings because of corresponding fluctuations in the GBP and euro currency exchange rates.
As of December 31, 2022, we had approximately $3.4 million and $90.9 million of federal and California net operating loss carryforwards, respectively, as well as approximately $92.0 million of foreign tax credits, which generally can be used to offset future taxable income or taxes, as applicable.
As of December 31, 2023, we had approximately $47.5 million and $100.8 million of federal and California net operating loss carryforwards, respectively, as well as approximately $100.5 million of foreign tax credits, which generally can be used to offset future taxable income or taxes, as applicable.
Please also see “Adverse developments in the credit markets and rising interest rates may harm our business, financial condition and results of operations” below. Adverse developments in the credit markets and rising interest rates may harm our business, financial condition and results of operations. The credit markets are experiencing significant price volatility, dislocations and liquidity disruptions.
Adverse developments in the credit markets and rising or elevated interest rates may harm our business, financial condition and results of operations. 16 Table of Contents The credit markets are experiencing significant price volatility, dislocations and liquidity disruptions.
Similarly, under current Irish law, for rent controlled properties we are restricted from increasing rents to market rates for renewing tenants or replacement tenants, and any rent increases in these circumstances are generally capped, save in certain limited circumstances.
Under current Irish law, for rent controlled properties we are restricted from increasing rents to market rates for renewing tenants and replacement tenants, and any rent increases in these circumstances are generally capped to the lower of 2% and Harmonised Index of Consumer Prices ("HICP") per annum, save in certain limited circumstances.
The other tenant has a lease termination option in January 2025. Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance (“ESG”) practices.
Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. 22 Table of Contents Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance (“ESG”) practices.
We may be unable to collect on a defaulted loan or foreclose on security successfully or in a timely fashion, either of which may adversely affect our business and results of operations.
Returns on loan investments depend on the borrower’s ability to make required payments or, in the event of default, our security interest. We may be unable to collect on a defaulted loan or foreclose on security successfully or in a timely fashion, either of which may adversely affect our business and results of operations.
If there was a 100-basis point increase or decrease, we would have a $6.3 million increase in interest expense or $9.5 million of interest expense savings during 2023 on our current share of indebtedness.
If there was a 100-basis point increase or decrease from rates as of December 31, 2023, we would have a $1.0 million increase in interest expense or $2.2 million of interest expense savings during 2024 on our current share of indebtedness.
This is consistent with how market participants often estimate values in connection with buying real estate but these holding periods can be shorter depending on the life of the structure an investment is held within. The cash flows include a projection of the net sales proceeds at the end of the holding period, computed using a market reversionary capitalization rate.
This is consistent with how market participants often estimate values in connection with buying real estate but these holding periods can be shorter depending on the life of the structure an investment is held within.
Dollar, but it is still below its rate of $1.14 as of December 31, 2021. 18 Table of Contents Due to the constantly changing currency exposures to which we will be subject and the volatility of currency exchange rates, we may experience currency losses in the future, and we cannot predict the effect of exchange rate fluctuations on future operating results.
Due to the constantly changing currency exposures to which we will be subject and the volatility of currency exchange rates, we may experience currency losses in the future, and we cannot predict the effect of exchange rate fluctuations on future operating results.
Before consummating the acquisition of a particular piece of real property, it is our policy to retain independent environmental consultants to conduct an environmental review of the real property, including performing a Phase I environmental review.
Therefore, we may be potentially liable for removal or remediation costs. 23 Table of Contents Before consummating the acquisition of a particular piece of real property, it is our policy to retain independent environmental consultants to conduct an environmental review of the real property, including performing a Phase I environmental review.
One of the two tenants that make up our entire tenant population at one of our office properties located in Bellevue, Washington (the third largest asset by our share of net operating income), has given us notice of its intent to vacate the property at the end of their current lease (October 2023).
One of the two tenants that made up our entire tenant population at one of our office properties located in Bellevue, Washington (the third largest asset by our share of net operating income at December 31, 2022), vacated the property at the end of their current lease (October 2023). The other tenant has a lease termination option in January 2025.
The occurrence of such an attack could lead to financial losses and have a material adverse effect on our business, financial condition and results of operations. Economic and social volatility and geopolitical instability outside of the United States due to large-scale conflicts, including warfare among countries, may adversely impact us, the United States, and global economies.
If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected. Economic and social volatility and geopolitical instability outside of the United States due to large-scale conflicts, including warfare among countries, may adversely impact us, the United States, and global economies.
One of the two tenants that make up our entire tenant population at one of our office properties located in Bellevue, Washington (the third largest asset by our share of net operating income), has given us notice of its intent to vacate the property at the end of their current lease (October 2023).
One of the two tenants that made up our entire tenant population at one of our office properties located in Bellevue, Washington (the third largest asset by our share of net operating income at December 31, 2022), vacated the property upon the expiration of its lease (October 2023). The other tenant has a lease termination option in January 2025.
As of December 31, 2022, we also had $175.5 million of foreign net operating loss carryforwards which could be subject to similar limitations in foreign jurisdictions based upon changes in equity ownership. 28 Table of Contents We may fail to comply with section 404 of the Sarbanes-Oxley Act of 2002.
As of December 31, 2023, we also had $197.4 million of foreign net operating loss carryforwards which could be subject to similar limitations in foreign jurisdictions based upon changes in equity ownership.
Any distressed loans and loan portfolios that we may purchase, or investments that may become "sub-performing" or "non-performing" following our origination or acquisition thereof, may have a higher risk of default and delinquencies than newly originated loans, and, as a result, we may lose part or all of our investment in such loans and loan portfolios.
In addition, in the event a borrower defaults on a loan, there is no guarantee or assurance that we will be able to successfully foreclose and take control of the underlying collateral (to the extent available) and, to the extent we do successfully foreclose on the property, there is no guarantee or assurance that we will be able to reposition the asset and/or we may lose part or all of our investment. 21 Table of Contents Any distressed loans and loan portfolios that we may purchase, or investments that may become "sub-performing" or "non-performing" following our origination or acquisition thereof, may have a higher risk of default and delinquencies than newly originated loans, and, as a result, we may lose part or all of our investment in such loans and loan portfolios.
We presently expect to continue operating and acquiring properties in areas that have adopted laws and regulations imposing restrictions on the timing or amount of rent increases. Although, we are able to increase rents to market rates once a tenant vacates a rent-controlled or stabilized unit, increases in rental rates for renewing tenants are limited by such regulations.
We presently expect to continue operating and acquiring properties in areas that have adopted laws and regulations imposing restrictions on the timing or amount of rent increases and a landlord's ability to evict a tenant.
To attempt to minimize our overall cost of debt, we have established an interest rate management policy to maintain a combination of variable and fixed rate debt and as of December 31, 2022, 76% of our consolidated debt is fixed rate, 20% is floating rate with interest caps and 4% is floating rate without interest caps and 55% of our share unconsolidated mortgages was fixed rate, 34% was floating rate with interest caps and 11% was floating rate.
As part of this policy, we have elected to maintain a combination of variable and fixed rate debt and as of December 31, 2023, 78% of our consolidated debt is fixed rate, 22% is floating rate with interest caps we have no debt that is floating rate without interest caps and 63% of our share unconsolidated mortgages was fixed rate, 34% was floating rate with interest caps and 3% was floating rate.
Other factors that are taken into consideration include tenancy details, planning, building and environmental factors that might affect the property. 19 Table of Contents The Company also utilizes valuations from independent real estate appraisal firms on some of its investments ("appraised valuations"), with certain investment structures requiring appraised valuations periodically (typically annually).
The Company also utilizes valuations from independent real estate appraisal firms on some of its investments ("appraised valuations"), with certain investment structures requiring appraised valuations periodically (typically annually). All appraised valuations are reviewed and approved by the Company.
High inflation has led to rapidly rising interest rates, the effects of which are discussed throughout this report. Increasing inflation could, among other things, have an adverse impact on our floating rate mortgages and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue.
Please also see " Adverse developments in the credit markets and rising or elevated interest rates may harm our business, financial condition and results of operations." Increasing inflation could, among other things, have an adverse impact on our floating rate mortgages and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue.
Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.
Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. 18 Table of Contents The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates.
In addition to the statewide rent control programs, various municipalities, including certain cities where we hold investments, have enacted or are considering rent control or rent stabilization legislation.
The state of Oregon and Washington have also implemented a statewide rent control program that caps annual increases to 7% + CPI with the city of Portland, Oregon limiting increases to 9.2%. In addition to the statewide rent control programs, various municipalities, including certain cities where we hold investments, have enacted or are considering rent control or rent stabilization legislation.
There are, however, certain types of extraordinary losses that either 24 Table of Contents may be uninsurable or are not generally insured because it is not economically feasible to insure against those losses.
There are, however, certain types of extraordinary losses that either may be uninsurable or are not generally insured because it is not economically feasible to insure against those losses. Should any uninsured loss occur, we could lose our investment in, and anticipated revenues from, a property, and these losses could have a material adverse effect on our operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeConsolidated Properties by Region Residential and Land Units/Lots Acres KW Ownership % # of Investments Western U.S. 73 2,708 100 % 3 Europe — 1 100 % 1 Total Residential and Land 73 2,708 100 % 4 Consolidated Properties by Region Hotel Rooms KW Ownership % # of Investments Europe 265 100 % 1 Total Hotel 265 100 % 1 31 Table of Contents The following table sets forth a summary schedule of commercial lease expirations for leases in place as of December 31, 2022, plus available space, in our consolidated commercial portfolio assuming non-exercise of renewal options and early termination rights (dollars in millions): Year of Lease Expiration Number of Leases Expiring Rentable Square Feet (1) Annualized Base Rent (1) Expiring Annualized Base Rent as a Percent of Total 2023 267 1.9 34.7 21 % 2024 91 0.6 18.1 11 % 2025 71 0.6 18.9 11 % 2026 56 0.4 14.1 8 % 2027 86 0.5 18.2 11 % 2028 28 0.3 11.1 7 % 2029 29 0.4 16.7 10 % 2030 26 0.2 4.7 3 % 2031 24 0.3 9.9 6 % 2032 19 0.2 5.6 3 % Thereafter 43 0.7 15.8 9 % Total 740 6.1 $ 167.8 100 % (1) Dollars and square footage in millions.
Biggest change(4) Excludes properties that are under development or undergoing lease up, which includes 6 properties totaling 962 units. 32 Table of Contents Consolidated Properties by Region Residential and Land Units/Lots Acres KW Ownership % # of Investments Western U.S. 3 — 100 % 1 Europe — 1 100 % 1 Total Residential and Land 3 1 100 % 2 Consolidated Properties by Region Hotel Rooms KW Ownership % # of Investments Europe 265 100 % 1 Total Hotel 265 100 % 1 The following table sets forth a summary schedule of commercial lease expirations for leases in place as of December 31, 2023, plus available space, in our consolidated commercial portfolio assuming non-exercise of renewal options and early termination rights (dollars in millions): Year of Lease Expiration Number of Leases Expiring Rentable Square Feet (1) Annualized Base Rent (1) Expiring Annualized Base Rent as a Percent of Total 2024 226 1.4 $ 23.2 15 % 2025 69 0.5 20.2 13 % 2026 60 0.6 21.3 14 % 2027 59 0.5 18.9 12 % 2028 47 0.4 14.9 10 % 2029 37 0.4 18.2 12 % 2030 12 0.1 3.7 2 % 2031 18 0.3 9.9 6 % 2032 13 0.2 4.6 3 % 2033 12 0.2 6.5 4 % Thereafter 26 0.4 12.4 9 % Total 579 5.0 $ 153.8 100 % (1) Dollars and square footage in millions.
The Beverly Hills office operates as the main investment and asset management center for us in the United States, while the UK, Ireland, Jersey, Luxembourg and Spain offices are the main investment and asset management centers for our European operations. We own our corporate headquarters and our office in Dublin, Ireland and lease all of our remaining offices.
The Beverly Hills office operates as the main investment and asset management center for us in the United States, while the UK, Ireland, Jersey and Spain offices are the main investment and asset management centers for our European operations. We own our corporate headquarters and our office in Dublin, Ireland and lease all of our remaining offices.
(1) Represents annualized cash base rent (excludes tenant reimbursements and other revenue). (2) Excludes properties that are under development or undergoing lease up, which includes 10 properties totaling 0.9 million square feet. (3) Annualized effective rent represents annualized base rent net of rental concessions and abatements.
(1) Represents annualized cash base rent (excludes tenant reimbursements and other revenue). (2) Excludes properties that are under development or undergoing lease up, which includes 9 properties totaling 1.1 million square feet. (3) Annualized effective rent represents annualized base rent net of rental concessions and abatements.
Our corporate headquarters are located in Beverly Hills, California. We also have six other offices throughout the United States, one office in London, UK, one office in Dublin, Ireland, one office in Madrid, Spain, one office in Jersey and one office in Luxembourg.
Our corporate headquarters are located in Beverly Hills, California. We also have eight other offices throughout the United States, one office in London, UK, one office in Dublin, Ireland, one office in Madrid, Spain and one office in Jersey.
Properties The following table sets forth certain information regarding our consolidated properties at December 31, 2022: Consolidated Properties by Region Commercial (2) Square Feet Ending % Occupancy Annualized Base Rent (1) Annualized Effective Rent (3) KW Ownership % # of Assets Western U.S. 1.5 93 % $ 45.6 $ 44.7 94 % 10 Europe 4.8 95 122.2 107.2 94 49 Total Commercial 6.3 95 % $ 167.8 $ 151.9 94 % 59 Multifamily (4) Units Ending % Leased Annualized Base Rent (1) Average Effective Rent (3) KW Ownership % # of Assets Western U.S. 10,513 93 % $ 205.6 $ 205.6 98 % 35 Total Multifamily 10,513 93 % $ 205.6 $ 205.6 98 % 35 Note: Dollars and square footage in millions.
Properties The following table sets forth certain information regarding our consolidated properties at December 31, 2023: Consolidated Properties by Region Commercial (2) Square Feet Ending % Occupancy Annualized Base Rent (1) Annualized Effective Rent (3) KW Ownership % # of Assets Western U.S. 1.0 96 % $ 38.0 $ 35.8 100 % 6 Europe 4.0 94 115.9 110.8 92 27 Total Commercial 5.0 93 % $ 153.9 $ 146.6 94 % 33 Multifamily (4) Units Ending % Leased Annualized Base Rent (1) Average Effective Rent (3) KW Ownership % # of Assets Western U.S. 9,230 94 % $ 187.5 $ 187.5 97 % 31 Total Multifamily 9,230 94 % $ 187.5 $ 187.5 97 % 31 Note: Dollars and square footage in millions.
Removed
(4) Excludes properties that are under development or undergoing lease up, which includes 5 properties totaling 962 units.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur standard management agreement contains an indemnity provision whereby the building owner agrees to indemnify us and defend our real estate management division against such claims. In such cases, we are defended by the building owner’s liability insurer. Item 4. Mine Safety Disclosures Not Applicable 32 Table of Contents PART II
Biggest changeOur standard management agreement contains an indemnity provision whereby the building owner agrees to indemnify us and defend our real estate management division against such claims. In such cases, we are defended by the building owner’s liability insurer.
Item 3. Legal Proceedings We may be involved in various legal proceedings arising in the ordinary course of business, none of which we currently believe is material to our business. From time to time, our real estate management division is named in “slip and fall” type litigation relating to buildings we manage.
Item 3. Legal Proceedings We may be involved in various legal proceedings arising in the ordinary course of business, none of which we currently believe is material to our business. From time to time, our real estate management division is named in “slip and fall” 33 Table of Contents type litigation relating to buildings we manage.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Company Months Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (1) Maximum Amount that May Yet be Purchased Under the Plan (1) October 1 - October 31, 2022 — $ — 23,388,073 $ 144,754,285 November 1 - November 30, 2022 — — 23,388,073 144,754,285 December 1 - December 31, 2022 — — 23,388,073 144,754,285 Total — $ — 23,388,073 $ 144,754,285 (1) On March 20, 2018, our board of directors authorized us to repurchase up to $250 million of our common shares, from time to time, subject to market conditions.
Biggest changeThe information under this caption, “Performance Graph,” is deemed not to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that such filing specifically states otherwise. 35 Table of Contents Purchases of Equity Securities by the Company Months Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (1) Maximum Amount that May Yet be Purchased Under the Plan (1) October 1 - October 31, 2023 — $ — 24,167,472 $ 131,926,229 November 1 - November 30, 2023 666,701 11.17 24,834,173 124,479,179 December 1 - December 31, 2023 — — 24,834,173 124,479,179 Total 666,701 $ 11.17 24,834,173 $ 124,479,179 (1) On March 20, 2018, our board of directors authorized us to repurchase up to $250 million of our common shares, from time to time, subject to market conditions.
The graph plots the growth in value of an initial investment of $100 in each of our common stock, the S&P 500 Index, and the MSCI World Real Estate Index for the five-year period ended December 31, 2022, and assumes reinvestment of all dividends, if any, paid on the securities.
The graph plots the growth in value of an initial investment of $100 in each of our common stock, the S&P 500 Index, and the MSCI World Real Estate Index for the five-year period ended December 31, 2023, and assumes reinvestment of all dividends, if any, paid on the securities.
Shares that vested during the year ended December 31, 2022 and 2021 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities.
Shares that vested during the year ended December 31, 2023 and 2022 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities.
Equity Compensation Plan Information See Item 12—“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Performance Graph The graph below compares the cumulative total return of our common stock from December 31, 2017 through December 31, 2022, with the comparable cumulative return of companies comprising the S&P 500 Index and the MSCI World Real Estate Index.
Equity Compensation Plan Information See Item 12—“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Performance Graph The graph below compares the cumulative total return of our common stock from December 31, 2018 through December 31, 2023, with the comparable cumulative return of companies comprising the S&P 500 Index and the MSCI World Real Estate Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Price Information Our common stock trades on the NYSE under the symbol “KW.” Holders As of February 21, 2023, we had approximately 82 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Price Information Our common stock trades on the NYSE under the symbol “KW.” Holders As of February 21, 2024, we had approximately 73 holders of record of our common stock.
On November 4, 2020, our board of directors authorized us to repurchase an additional $250 million of our common shares, from time to time, subject to market conditions. During the year ended December 31, 2022, the Company repurchased and retired a total of 0.6 million shares of its common stock at a weighted average price of $22.95.
On November 4, 2020, our board of directors authorized us to repurchase an additional $250 million of our common shares, from time to time, subject to market conditions. During the year ended December 31, 2023, the Company repurchased and retired a total of 0.7 million shares of its common stock at a weighted average price of $11.17.
Foreign currency and currency derivative instruments Please refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation for a discussion regarding foreign currency and currency derivative instruments. Item 6. Reserved 34 Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operation for a discussion regarding foreign currency and currency derivative instruments. Item 6. Reserved 36 Table of Contents
During the year ended December 31, 2021, the Company repurchased and retired a total of 2.8 million shares of its common stock at a weighted average price of $22.20.
During the year ended December 31, 2022, the Company repurchased and retired a total of 0.6 million shares of its common stock at a weighted average price of $22.95.
During the year ended December 31, 2022 and 2021, total payments for the employees’ tax obligations to the taxing authorities were $18.6 million (834,911 shares withheld) and $20.5 million (967,536 shares withheld), respectively.
During the year ended December 31, 2023 and 2022, total payments for the employees’ tax obligations to the taxing authorities were $13.4 million (781,303 shares withheld) and $18.6 million (834,911 shares withheld), respectively.
Dividends We declared and paid quarterly dividends of $0.24 per share each quarter of 2022. We declared and paid quarterly dividends of $0.22 per share for the first three quarters of 2021 and $0.24 per share for the fourth quarter of 2021. Recent Sales of Unregistered Securities None.
Dividends We declared and paid quarterly dividends of $0.24 per share each quarter of 2023 and 2022. Recent Sales of Unregistered Securities None.
The table below details the changes in the Company's AUM for the twelve months ended December 31, 2022: (in millions) December 31, 2021 Increases Decreases December 31, 2022 AUM $ 21,569.2 $ 4,210.8 $ 2,751.6 $ 23,028.4 AUM increased 7% to approximately $23.0 billion as of December 31, 2022.
The table below details the changes in the Company's AUM for the twelve months ended December 31, 2023: (in millions) December 31, 2022 Increases Decreases December 31, 2023 AUM $ 23,028.4 $ 4,412.1 $ 2,897.6 $ 24,542.9 AUM increased 7% to approximately $24.5 billion as of December 31, 2023.
Removed
The information under this caption, “Performance Graph,” is deemed not to be incorporated by 33 Table of Contents reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that such filing specifically states otherwise.
Added
The increase is primarily due to the growth of our global debt platform with the acquisition of the Construction Loan Portfolio from Pacific Western Bank (as discussed in Item 7.
Removed
The increase is primarily due new acquisitions for consolidated multifamily properties in the Western United Sates, industrial properties in our European industrial separate account and loan originations in our debt platform. These were offset by foreign exchange losses on European assets and sales of non-core retail and office assets in the Western United States and United Kingdom.
Added
Management's Discussion and Analysis of Financial Condition and Results of Operation below), and Western United States multifamily separate account, capital expenditures on development projects and fair value gains on our investment in VHH.
Added
These increases were offset by the sale of non-core residential and retail assets in the Western United States and retail and office assets in the United Kingdom, sales in our comingled funds after completion of their business plans and had fair value declines primarily on market rate multifamily apartments, office and retail assets in our global portfolio recorded during the period.
Added
Please also see "Fair Value Investments" in Item 1. Business for a discussion of our fair value investments and accounting methodology and any limitations with respect to the same. Foreign currency and currency derivative instruments Please refer to Item 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet Operating Income 56 Table of Contents Years Ended December 31, 2022 2021 2020 Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Net income 101.9 $ 178.4 $ 336.4 $ 389.0 $ 107.8 $ 81.0 Add: Provision for income taxes 36.2 2.7 7.0 126.2 — 43.6 1.0 Less: Income from unconsolidated investments (178.4) — (389.0) — (81.0) — Less: (Gain) loss on sale of real estate, net (103.7) (4.9) (412.7) 3.1 (338.0) 11.5 Add: Interest expense 220.8 60.1 192.4 40.0 201.9 33.1 Less: (Gain) loss on early extinguishment of debt (27.5) — 45.7 — 9.3 — Less: Other income (36.1) 17.9 5.0 17.9 2.3 13.7 Less: Sale of real estate — (52.0) — (39.5) — (11.5) Less: Interest income (11.7) — (8.6) — (3.1) — Less: Investment management and property services (46.5) 21.1 (37.4) (117.9) (33.1) (2.6) Add: Cost of real estate sold — 40.7 — 36.8 — 13.3 Add: Compensation and related 111.3 — 133.9 — 111.9 — Add: Share-based compensation 29.0 — 28.7 — 32.3 — Add: Performance allocation expense (4.3) — 42.0 — 0.2 — Add: General and administrative 37.2 — 33.3 — 34.6 — Add: Depreciation 172.9 3.8 166.3 5.6 179.6 6.9 Less: Fair value adjustments — (110.2) — (210.6) — (43.9) Less: NCI adjustments (6.9) — (6.4) — (6.0) — Net Operating Income $ 294.2 $ 157.6 $ 255.8 $ 124.4 $ 262.3 $ 102.5 57 Table of Contents Years Ended December 31, 2019 2018 Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Net income $ 321.1 $ 179.7 $ 212.1 $ 78.7 Add: Provision for income taxes 41.4 — 58.0 — Less: Income from unconsolidated investments (179.7) — (78.7) — Less: Gain on sale of real estate, net (434.4) (53.5) (371.8) (23.0) Less: Gain on sale of business — — (40.4) — Add: Interest expense 214.2 32.1 238.2 26.0 Add: Loss on extinguishment of debt 0.9 — — — Less: Other loss 10.6 8.0 (8.7) (2.5) Less: Sale of real estate — (26.7) — (19.2) Less: Interest income (0.3) — (1.1) — Less: Investment management and property services (40.6) (36.2) (45.3) (27.5) Add: Cost of real estate sold — 23.9 — 18.6 Add: Compensation and related 121.5 — 131.7 — Add: Share-based compensation 30.1 — 37.1 — Add: Performance allocation expense 0.1 — — — Add: General and administrative 42.4 — 50.8 — Add: Depreciation 187.6 8.2 206.1 13.4 Less: Fair value adjustments — (57.7) — (9.2) Less: NCI adjustments (9.7) — (19.7) — Net Operating Income $ 305.2 $ 77.8 $ 368.3 $ 55.3 December 31, 2022 ($ in millions) Consolidated Co-Investment Corporate Total Cash (1) $ 316.7 $ — $ 122.6 $ 439.3 Real estate 5,188.1 — — 5,188.1 Unconsolidated Investments — 2,238.1 — 2,238.1 Loan purchases and originations — 149.4 — 149.4 Accounts receivable and other assets 135.1 — 121.8 256.9 Total Assets $ 5,639.9 $ 2,387.5 $ 244.4 $ 8,271.8 Accounts payable and accrued expenses 156.6 — 517.8 674.4 Mortgage debt 3,018.0 — — 3,018.0 KW unsecured debt — — 2,062.6 2,062.6 KWE bonds 506.4 — — 506.4 Total Liabilities 3,681.0 — 2,580.4 6,261.4 Equity 1,958.9 2,387.5 (2,336.0) 2,010.4 Total liabilities and equity $ 5,639.9 $ 2,387.5 $ 244.4 $ 8,271.8 58 Table of Contents December 31, 2021 ($ in millions) Consolidated Co-Investment Corporate Total Cash (1) $ 362.3 $ — $ 162.5 $ 524.8 Real estate 5,059.8 — — 5,059.8 Unconsolidated Investments — 1,947.6 — 1,947.6 Loan purchases and originations — 130.3 — 130.3 Accounts receivable and other assets 111.7 — 102.3 214.0 Total Assets $ 5,533.8 $ 2,077.9 $ 264.8 $ 7,876.5 Accounts payable and accrued expenses 142.1 — 495.6 637.7 Mortgage debt 2,959.8 — — 2,959.8 KW unsecured debt — — 1,852.3 1,852.3 KWE bonds 622.8 — — 622.8 Total Liabilities 3,724.7 — 2,347.9 6,072.6 Equity 1,809.1 2,077.9 (2,083.1) 1,803.9 Total liabilities and equity $ 5,533.8 $ 2,077.9 $ 264.8 $ 7,876.5 Same property analysis The same property analysis reflects, and is weighted by, Kennedy Wilson's ownership in each underlying property.
Biggest changeNet Operating Income 60 Table of Contents Years Ended December 31, 2023 2022 2021 Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Net (loss) income $ (281.4) $ (252.8) $ 101.9 $ 178.4 $ 336.4 $ 389.0 Less: (Benefit from) provision for income taxes (55.3) 0.2 36.2 2.7 126.2 — Less: Loss (income) from unconsolidated investments 252.8 — (178.4) — (389.0) — Less: (Gain) loss on sale of real estate, net (1) (127.6) — (103.7) (4.9) (412.7) 3.1 Add: Interest expense 259.2 99.0 220.8 60.1 192.4 40.0 Less: Loss (gain) on early extinguishment of debt 1.6 — (27.5) — 45.7 — Less: Other loss (income) 5.0 26.6 (36.1) 17.9 5.0 17.9 Less: Sale of real estate (1) — (19.5) — (52.0) — (39.5) Less: Interest income (26.1) — (11.7) — (8.6) — Less: Investment management and property services (64.1) 64.3 (46.5) 21.1 (37.4) (117.9) Add: Cost of real estate sold (1) — 13.6 — 40.7 — 36.8 Add: Compensation and related 139.4 — 140.3 — 162.6 — Add: Performance allocation expense (15.1) — (4.3) — 42.0 — Add: General and administrative 35.7 — 37.2 — 33.3 — Add: Depreciation 157.8 3.2 172.9 3.8 166.3 5.6 Less: Fair value adjustments — 233.7 — (110.2) — (210.6) Less: NCI adjustments (7.6) — (6.9) — (6.4) — Net Operating Income $ 274.3 $ 168.3 $ 294.2 $ 157.6 $ 255.8 $ 124.4 (1) The Company’s joint ventures in its Co-Investment business segment predominantly acquire and hold and may ultimately dispose of operating properties which are presented by the Company as net gain or loss on disposition under ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) because the disposition is not considered an “output of the entity’s ordinary activities.” Certain joint ventures in the same business segment, however, dispose of non-operating properties (such as land and condominiums) from time-to-time, and such sales are an “output of the entity’s ordinary activities” under Topic 606.
Currently structures participating in the Performance Allocation Sharing Program have allocated a range of 20% - 35% of performance allocations to employees.
Currently structures participating in the Performance Allocation Sharing Program have allocated a range of 20% to 35% of performance allocations to employees.
Also, in May 2022, we established an ATM Program pursuant to which we may issue and sell shares of the Company’s common stock having an aggregate gross sales price of up to $200.0 million in amounts and at times as the Company determines from time to time.
Also, in May 2022, we established an at-the-market ("ATM Program") pursuant to which we may issue and sell shares of the Company’s common stock having an aggregate gross sales price of up to $200.0 million in amounts and at times as the Company determines from time to time.
We also contributed $361.3 million to unconsolidated investments that were primarily used to fund our share of capital calls on Kona Village and new acquisitions made within our European Industrial JV platform and commingled funds.
We also contributed $361.3 million to unconsolidated investments that were primarily used to fund our share of capital calls on Kona Village Resort and new acquisitions made within our European Industrial JV platform and commingled funds.
Accordingly, the projects identified may not be completed when expected, or at all. (2) Figures shown in this column are an estimate of our remaining costs to develop to completion or to complete the entitlement process, as applicable, as of December 31, 2022. Total remaining costs may be financed with third-party cash contributions, proceeds from projected sales, and/or debt financing.
Accordingly, the projects identified may not be completed when expected, or at all. (2) Figures shown in this column are an estimate of our remaining costs to develop to completion or to complete the entitlement process, as applicable, as of December 31, 2023. Total remaining costs may be financed with third-party cash contributions, proceeds from projected sales, and/or debt financing.
Please refer to the section titled " Off Balance Sheet Arrangements " for further information. Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties, dividend payments to our common and preferred shareholders, interest on our unsecured corporate debt, development, redevelopment and capital expenditures and, potentially, share repurchases and acquisitions.
Please refer to the section titled " Off Balance Sheet Arrangements " for further information. Our short-term liquidity requirements primarily consist of operating expenses and other expenditures associated with our properties and loan investments, dividend payments to our common and preferred shareholders, interest on our unsecured corporate debt, development, redevelopment and capital expenditures and, potentially, share repurchases and acquisitions.
(1) Figures shown in this column are an estimate of KW's remaining costs to develop to completion or to complete the entitlement process, as applicable, as of December 31, 2022. Total remaining costs may be financed with third-party cash contributions, proceeds from projected sales, and/or debt financing. These figures are budgeted costs and are subject to change.
(1) Figures shown in this column are an estimate of KW's remaining costs to develop to completion or to complete the entitlement process, as applicable, as of December 31, 2023. Total remaining costs may be financed with third-party cash contributions, proceeds from projected sales, and/or debt financing. These figures are budgeted costs and are subject to change.
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 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.
The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in the Company's debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and the Company's ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
We received $157.1 million in investing distributions from our co-investments primarily from the sale of assets within our comingled funds and financing distributions from multifamily properties in Ireland. Our share of new loans issued as part of our global debt platform were $50.9 million, and we received $34.5 million of proceeds from repayments on loans previously issued.
We received $157.1 million in investing distributions from our co-investments primarily from the sale of assets within our comingled funds and financing distributions from multifamily properties in Ireland. Our share of new loans issued as part of our global debt platform was $50.9 million, and we received $34.5 million of proceeds from repayments on loans previously issued.
We expect to fund $133 million of our share of remaining costs to complete with cash over the life of these projects. These figures are budgeted costs and are subject to change. There is no guarantee that we will be able to secure the project-level debt financing that is assumed in the figures above.
We expect to fund $24 million of our share of remaining costs to complete with cash over the life of these projects. These figures are budgeted costs and are subject to change. There is no guarantee that we will be able to secure the project-level debt financing that is assumed in the figures above.
In order to stabilize these assets we project our share of costs to complete to be $26.9 million. The cost to complete this work and the time frame described is subject to many uncertainties that are beyond our control, and the actual costs may be significantly higher than the estimates shown below.
In order to stabilize these assets we project our share of costs to complete to be $30.9 million. The cost to complete this work and the time frame described is subject to many uncertainties that are beyond our control, and the actual costs may be significantly higher than the estimates shown below.
Debt Covenants The Second A&R Facility and the indentures governing the notes contain numerous restrictive covenants that, among other things, limit the Company and certain of its subsidiaries' ability to incur additional indebtedness, pay dividends or make distributions to stockholders, repurchase capital stock or debt, make investments, 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.
Debt Covenants 53 Table of Contents The Second A&R Facility and the indentures governing the notes contain numerous restrictive covenants that, among other things, limit the Company and certain of its subsidiaries' ability to incur additional indebtedness, pay dividends or make distributions to stockholders, repurchase capital stock or debt, make investments, 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 covenants associated with KWE Notes are not an obligation of KWH and these amounts are presented as a component of our investment debt as it is an unsecured obligation relating to an underlying investment of ours. As of December 31, 2022, the Company was in compliance with these covenants.
The covenants associated with KWE Notes are not an obligation of KWH and these amounts are presented as a component of our investment debt as it is an unsecured obligation relating to an underlying investment of ours. As of December 31, 2023, the Company was in compliance with these covenants.
Currency translation gains and losses and currency derivative gains and losses will remain in other comprehensive income unless and until the Company substantially liquidates underlying investments. Approximately 37% of our investment account is invested through our foreign platforms in their local currencies.
Currency translation gains and losses and currency derivative gains and losses will remain in other comprehensive income unless and until the Company substantially liquidates underlying investments. Approximately 36% of our investment account is invested through our foreign platforms in their local currencies.
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.
However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing its operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP.
We finance these activities with internally generated funds through general operations including rental income, asset sales, borrowings under our revolving line of credit, sales of equity (common and preferred) and debt securities and cash out refinancings to the extent they are available and fit within our overall portfolio leverage strategy.
We finance these activities with internally generated funds through general operations including rental income, interest income, asset management fees, asset sales, borrowings under our revolving line of credit, sales of equity (common and preferred) and debt securities and cash out refinancings to the extent they are available and fit within our overall portfolio leverage strategy.
We also had fair value foreign exchange losses, net of any hedges on our foreign fair value investments as the euro and the GBP were at historically low levels against the U.S. Dollar.
In 2022, we also had fair value foreign exchange losses, net of any hedges on our foreign fair value investments as the euro and the GBP were at historically low levels against the U.S. Dollar.
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.
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.
As of December 31, 2022, the Company was in compliance with the foregoing financial covenants. The obligations of the Borrower pursuant to the Credit Agreement are guaranteed by the Company and certain wholly-owned subsidiaries of the Company.
As of December 31, 2023, the Company was in compliance with the foregoing financial covenants. The obligations of the Borrower pursuant to the Credit Agreement are guaranteed by the Company and certain wholly-owned subsidiaries of the Company.
Fees earned from consolidated investments are eliminated in consolidation with the amount relating to our equity partners being recognized through income attributable to noncontrolling interests. Loans and other income - Interest income earned on consolidated loans.
Fees earned from consolidated investments are eliminated in consolidation with the amount relating to our equity partners being recognized through income attributable to noncontrolling interests. Loans - Interest income earned on consolidated loans.
Additionally, we acquired $408.2 million of consolidated real estate assets, including an office building in Scotland and four multifamily properties in the Mountain West. We spent $160.9 million on capital expenditures on consolidated assets, as well as continued investments in our development properties and value add on our operating properties.
Additionally, we acquired $408.2 million of consolidated real estate assets, including an office building in Scotland and four multifamily properties in the Mountain West. We spent $160.9 million on capital expenditures on consolidated assets, as well as continued investments in our 51 Table of Contents development properties and value add on our operating properties.
Results of Operations The following tables summarize our results of operations by segment for the years ended December 31, 2022 and 2021 and is intended to be helpful in understanding the year over year explanations following the tables. Our results of operations for 2021 and 2020 compared to 2020 can be found under Item 7.
Results of Operations The following tables summarize our results of operations by segment for the years ended December 31, 2023 and 2022 and is intended to be helpful in understanding the year over year explanations following the tables. Our results of operations for 2022 and 2021 can be found under Item 7.
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.
Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of the Company's properties resulting from its value-add initiatives or changing market conditions.
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.
AUM is principally intended to reflect the extent of the Company's presence in the real estate market, not the basis for determining management fees.
With respect to these instruments, we extinguished certain amounts at discounts to their carrying value resulting in gains on extinguishment. These gains were offset by prepayment penalties on mortgage loans that were refinanced during the year.
With respect to these instruments, we extinguished certain amounts at discounts to their carrying value resulting in gains on extinguishment. These gains were offset by prepayment penalties on mortgage loans that were refinanced during 2022.
Participants in the Co-Investment Program will make commitments to the program every year. Generally (with limited exceptions), participants in the Co-Investment Program will invest in every investment made by the Company (investments that such employee has an active role in acquiring and managing) in the applicable year.
Generally (with limited exceptions), participants in the Co-Investment Program will invest in every investment made by the Company (investments that such employee has an active role in acquiring and managing) in the applicable year.
The table below represents the change in rates over the years ended December 31, 2022 and 2021 as compared to the U.S.
The table below represents the change in rates over the years ended December 31, 2023 and 2022 as compared to the U.S.
Our cost to complete differs from our share total capitalization as the latter includes costs that have already been incurred to date while the former relates to future estimated costs (3) Estimated foreign exchange rates are €0.93 = $1 USD and £0.83 = $1 USD, related to NOI. (4) Includes land costs.
Our cost to complete differs from our share total capitalization as the latter includes costs that have already been incurred to date while the former relates to future estimated costs (3) Estimated foreign exchange rates are €1.00 = $1 USD and £1.00 = $1 USD, related to NOI. (4) Includes land costs.
(5) Included in Consolidated Portfolio Segment (6) Included in Co-Investment Portfolio Segment Unstabilized and Value Add Capital Expenditure Programs We currently have six assets that comprise 0.8 million commercial square feet that are currently unstabilized and are undergoing various stages of lease-up, value-add or development.
(5) Included in Consolidated Portfolio Segment (6) Included in Co-Investment Portfolio Segment Unstabilized and Value Add Capital Expenditure Programs We currently have seven assets that comprise 0.7 million commercial square feet that are currently unstabilized and are undergoing various stages of lease-up, value-add or development.
(7) Table above excludes $246.6 million unfulfilled capital commitments to our unconsolidated investments. (8) Ground leases on consolidated assets. Amounts are undiscounted and have leases that expire as far out as 2258. (9) Principal debt payments include the effect of extension options. Indebtedness and Related Covenants The following describes certain indebtedness and related covenants.
(7) Table above excludes $187.7 million unfulfilled capital commitments to our unconsolidated investments and $87.7 million on loan investments. (8) Ground leases on consolidated assets. Amounts are undiscounted and have leases that expire as far out as 2258. (9) Principal debt payments include the effect of extension options. Indebtedness and Related Covenants The following describes certain indebtedness and related covenants.
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.
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 the Company or held by joint ventures and other entities in which its sponsored funds or investment vehicles and client accounts have invested.
Rental - Rental income is comprised of rental revenue earned by our consolidated real estate investments. Hotel - Hotel income is comprised of hotel revenue earned by our consolidated hotels. Investment Management Fees - Investment management fees are primarily comprised of base asset management fees and acquisition fees generated by our investment management division.
Rental - Rental income is comprised of rental revenue earned by our consolidated real estate investments. 56 Table of Contents Hotel - Hotel income is comprised of hotel revenue earned by our consolidated hotels. Investment Management Fees - Investment management fees are primarily comprised of base asset management fees and acquisition fees generated by our investment management division.
We expect to have no cash equity basis in these projects at completion due to the use of property level debt and proceeds from the sale of tax credits. If these projects are brought to completion, we expect to receive $34.3 million in cash from paid developer fees and proceeds from the sale of tax credits.
We expect to have no cash equity basis in these projects at completion due to the use of property level debt and proceeds from the sale of tax credits. If these projects are brought to completion, we expect to receive $11.0 million in cash from paid developer fees and proceeds from the sale of tax credits.
Accumulated other comprehensive income (loss) - Accumulated other comprehensive income (loss) represents the Company's share of foreign currency movement on translating Kennedy Wilson's foreign subsidiaries from their functional currency into the Company's reporting currency. These amounts are offset by Kennedy Wilson's effective portion of currency related hedge instruments.
Accumulated other comprehensive income (loss) - Accumulated other comprehensive income (loss) represents the Company's share of foreign currency movement on translating Kennedy Wilson's foreign subsidiaries from their functional currency into the Company's reporting currency. These amounts are offset by Kennedy Wilson's effective portion of currency related hedge instruments that have been designated.
In addition to the market rate development and redevelopment projects described above, we have 2,369 affordable and/or age-restricted multifamily units within our VHH platform that we are currently developing or in the process of stabilizing.
In addition to the market rate development and redevelopment projects described above, we have 1,604 affordable and/or age-restricted multifamily units within our VHH platform that we are currently developing or in the process of stabilizing.
Impact of Inflation and Changing Prices However, as discussed throughout this report, high inflation impacted the global economy during the year ended December 31, 2022 and continues to impact the global economy.
Impact of Inflation and Changing Prices As discussed throughout this report, high inflation impacted the global economy during the year ended December 31, 2023 and continues to impact the global economy.
The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages are 2.32% and approximately 2.1 years, respectively, as of December 31, 2022. The table below represents contractual balances of our financial instruments at the expected maturity dates as well as the fair value as of December 31, 2022.
The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages are 2.53% and approximately 1.6 years, respectively, as of December 31, 2023. The table below represents contractual balances of our financial instruments at the expected maturity dates as well as the fair value as of December 31, 2023.
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.
Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not remove all non-cash items or consider certain cash requirements such as tax and debt service payments.
The program does not obligate the Company to repurchase any specific number of shares and, subject to compliance with applicable laws, may be suspended or terminated at any time without prior notice. As of December 31, 2022, we had $144.8 million remaining under the plan for stock repurchases.
The program does not obligate the Company to repurchase any specific number of shares and, subject to compliance with applicable laws, may be suspended or terminated at any time without prior notice. As of December 31, 2023, we had $124.5 million remaining under the plan for stock repurchases.
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.
Loans under the Second A&R Facility bear interest at a rate equal to SOFR plus 1.00% 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 September 25, 2024.
Non-GAAP Measures and Certain Definitions “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.
Non-GAAP Measures and Certain Definitions “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.
During the year ended December 31, 2022 , we had realized performance fees of $6.8 million relating to the sale of two multifamily properties in the Western United States, of which the Company paid $1.2 million of performance allocation compensation to employees for performance allocations that were realized during the period.
During the year ended December 31, 2022, we had realized performance fees of $6.8 million relating to the sale of two multifamily properties in the Western United States, of which the Company paid $1.2 million of performance allocation compensation to employees for performance allocations that were realized during the period. Please also see Part I. Item 1.
This information is not audited or reviewed by independent accountants and may be presented in a manner that is different from similar information included in our financial statements prepared in accordance with GAAP. In addition, cap rates represent historical performance and are not a guarantee of future NOI.
This information is not audited or reviewed by independent accountants and may be presented in a manner that is different from similar information included in the Company's financial statements prepared in accordance with GAAP. In addition, cap rates represent historical performance and are not a guarantee of future net operating income ("NOI").
Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Because not all companies use identical calculations, the Company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
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.
The Company's management uses Adjusted EBITDA to analyze its business because it adjusts net income for items the Company believes do not accurately reflect the nature of its business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance.
The Company experienced net unrealized losses on foreign currency through other comprehensive income for the period due to the EUR and GBP weakening against the U.S. Dollar. Unrealized hedge gains were driven by hedges that the Company has on its GBP-denominated investments.
The Company experienced net unrealized gains 46 Table of Contents on foreign currency through other comprehensive income for the period due to the EUR and GBP strengthening against the U.S. Dollar. Unrealized hedge losses were driven by hedges that the Company has on its GBP-denominated investments.
Off-Balance Sheet Arrangements Guarantees We have provided guarantees associated with loans secured by consolidated assets. At December 31, 2022, the maximum potential amount of future payments (undiscounted) we could be required to make under the guarantees was approximately $142.9 million at December 31, 2022.
Off-Balance Sheet Arrangements Guarantees We have provided guarantees associated with loans secured by consolidated assets. At December 31, 2023, the maximum potential amount of future payments (undiscounted) we could be required to make under the guarantees was approximately $151.1 million at December 31, 2023.
Years Ended December 31, (Dollars in millions) 2022 2021 2020 2019 2018 Net income $ 101.9 $ 336.4 $ 107.8 $ 321.1 $ 212.1 Non-GAAP adjustments: Add back (less): Depreciation and amortization 172.9 166.3 179.6 187.6 206.1 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments 3.5 5.3 6.9 8.2 13.2 Share-based compensation 29.0 28.7 32.3 30.2 37.1 Net income attributable to the noncontrolling interests, before depreciation and amortization (1) (13.5) (10.5) (2.5) (102.0) (71.5) Preferred dividends (28.9) (17.2) (17.2) (2.6) — Adjusted Net Income (2) $ 264.9 $ 509.0 $ 306.9 $ 442.5 $ 397.0 (1) (2) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted Net Income .
Years Ended December 31, (Dollars in millions) 2023 2022 2021 2020 2019 Net (loss) income $ (281.4) $ 101.9 $ 336.4 $ 107.8 $ 321.1 Non-GAAP adjustments: Add back (less): Depreciation and amortization 157.8 172.9 166.3 179.6 187.6 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments 3.2 3.5 5.3 6.9 8.2 Share-based compensation 34.5 29.0 28.7 32.3 30.2 Net income attributable to the noncontrolling interests, before depreciation and amortization (1) (27.4) (13.5) (10.5) (2.5) (102.0) Preferred dividends (38.0) (28.9) (17.2) (17.2) (2.6) Adjusted Net (Loss) Income (2) $ (151.3) $ 264.9 $ 509.0 $ 306.9 $ 442.5 (1) (2) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted Net Income .
Of the $379.0 million of remaining costs to complete, we currently expect $133.0 million of it to be funded through cash from us over the life of the projects.
Of the $95.0 million of remaining costs to complete, we currently expect $24.0 million of it to be funded through cash from us over the life of the projects.
A reconciliation of net income to Adjusted EBITDA and Adjusted Net Income is presented below: 55 Table of Contents Years Ended December 31, (Dollars in millions) 2022 2021 2020 2019 2018 Net income $ 101.9 $ 336.4 $ 107.8 $ 321.1 $ 212.1 Non-GAAP adjustments: Add back (less): Interest expense 220.8 192.4 201.9 214.2 238.2 (Gain) loss on early extinguishment of debt (27.5) 45.7 9.3 0.9 — Kennedy Wilson's share of interest expense included in unconsolidated investments 60.2 40.2 33.0 32.1 26.0 Depreciation and amortization 172.9 166.3 179.6 187.6 206.1 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments 3.5 5.3 6.9 8.2 13.2 Provision for income taxes 36.2 126.2 43.6 41.4 58.0 Kennedy Wilson's share of taxes included in unconsolidated investments 2.7 — 1.1 — — Share-based compensation 29.0 28.7 32.3 30.2 37.1 EBITDA attributable to noncontrolling interests (1) (8.2) (13.3) (7.5) (107.6) (78.0) Adjusted EBITDA (2) $ 591.5 $ 927.9 $ 608.0 $ 728.1 $ 712.7 (1) (2) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA .
A reconciliation of net income to Adjusted EBITDA and Adjusted Net Income is presented below: Years Ended December 31, (Dollars in millions) 2023 2022 2021 2020 2019 Net (loss) income $ (281.4) $ 101.9 $ 336.4 $ 107.8 $ 321.1 Non-GAAP adjustments: Add back (less): Interest expense 259.2 220.8 192.4 201.9 214.2 Loss (gain) on early extinguishment of debt 1.6 (27.5) 45.7 9.3 0.9 Kennedy Wilson's share of interest expense included in unconsolidated investments 99.1 60.2 40.2 33.0 32.1 Depreciation and amortization 157.8 172.9 166.3 179.6 187.6 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments 3.2 3.5 5.3 6.9 8.2 (Benefit from) provision for income taxes (55.3) 36.2 126.2 43.6 41.4 Kennedy Wilson's share of taxes included in unconsolidated investments 0.1 2.7 — 1.1 — Share-based compensation 34.5 29.0 28.7 32.3 30.2 EBITDA attributable to noncontrolling interests (1) (29.0) (8.2) (13.3) (7.5) (107.6) Adjusted EBITDA (2) $ 189.8 $ 591.5 $ 927.9 $ 608.0 $ 728.1 (1) (2) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA .
"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.
"Real Estate Assets under Management" ("AUM") generally refers to the properties and other assets with respect to which the Company provides (or participates in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP measures” for a reconciliation of Adjusted EBITDA to net income as reported under GAAP.
Please see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP measures ” for a reconciliation of Adjusted EBITDA to net income as reported under GAAP.
As of December 31, 2022, we have incurred $797.0 million of costs to date and expect to spend an additional $379.0 million to develop to completion or complete the entitlement process on these projects.
As of December 31, 2023, we have incurred $550.0 million of costs to date and expect to spend an additional $95.0 million to develop to completion or complete the entitlement process on these projects.
“Cap rate” represents the net operating income of an investment for the year preceding its acquisition or disposition, as applicable, divided by the purchase or sale price, as applicable. Cap rates set forth in this report only include data from income-producing properties. We calculate cap rates based on information that is supplied to us during the acquisition diligence process.
“Cap rate” represents the net operating income of an investment for the year preceding its acquisition or disposition, as applicable, divided by the purchase or sale price, as applicable. Capitalization ("Cap") rates discussed in this report only include data from income-producing properties. The Company calculates cap rates based on information that is supplied to it during the acquisition diligence process.
Please also see Part I. Item 1. "Fair Value Investments" for additional details. During the year ended December 31, 2022 , we recorded a $21.1 million decrease in the accrual for performance allocations relating to our commingled funds and certain separate account investments due to declines in fair value of the applicable investments.
During the year ended December 31, 2022 , we recorded a $21.1 million decrease in the accrual for performance allocations relating to our commingled funds and certain separate account investments due to declines in fair value of the applicable investments.
During the years ended December 31, 2022 and 2021 the Company recognized $9.2 million and $11.7 million, respectively, under the Deferred Cash Bonus Program. The Company also maintains a performance allocation sharing program for certain employees of the Company (the “Performance Allocation Sharing Program”). The named executive officers of the Company are not participants of the Performance Allocation Sharing Program.
During the years ended December 31, 2023, 2022 and 2021 the Company recognized $8.2 million, $9.2 million and $11.7 million, respectively, under the Deferred Cash Bonus Program. The Company also maintains a performance allocation sharing program for certain employees of the Company (the “Performance Allocation Sharing Program”).
Financing Our net cash related to financing activities is generally impacted by capital-raising activities net of dividends and distributions paid to common and preferred shareholders and noncontrolling interests as well as financing activities for consolidated real estate investments. Year Ended December 31, 2022 Net cash provided by financing activities totaled $264.2 million for the year ended December 31, 2022.
Financing Our net cash related to financing activities is generally impacted by capital-raising activities net of dividends and distributions paid to common and preferred shareholders and noncontrolling interests as well as financing activities for consolidated real estate investments. Year Ended December 31, 2023 Net cash used in financing activities totaled $164.8 million for the year ended December 31, 2023.
Cash Flows The following table summarizes the cash provided by or used in our operating, investing and financing activities for the years ended December 31, 2022 and 2021: Year ended December 31, (Dollars in millions) 2022 2021 Net cash provided by (used in) operating activities $ 32.9 $ (30.3) Net cash used in investing activities (361.6) (1,038.0) Net cash provided by financing activities 264.2 632.0 Operating Our cash flows from operating activities are primarily dependent upon operations from consolidated properties, the operating distributions and fees from our Co-Investment Platform, general and administrative costs, compensation and interest expense payments.
Cash Flows The following table summarizes the cash provided by or used in our operating, investing and financing activities for the years ended December 31, 2023 and 2022: Year ended December 31, (Dollars in millions) 2023 2022 Net cash provided by operating activities $ 48.9 $ 32.9 Net cash used in investing activities (11.7) (361.6) Net cash (used in) provided by financing activities (164.8) 264.2 Operating Our cash flows from operating activities are primarily dependent upon operations from consolidated properties, the operating distributions and fees from our Co-Investment Platform, general and administrative costs, compensation and interest expense payments.
Year Ended December 31, 2022 Consolidated Co-Investment Total Revenues $ (20.6) (4) % $ (1.1) — % $ (21.7) (4) % Net Income (7.8) (12) % (6.0) (9) % (13.8) (21) % Adjusted EBITDA (21.9) (4) % (8.2) (1) % (30.1) (5) % 38 Table of Contents Year Ended December 31, 2021 Consolidated Co-Investment Total Revenues $ 0.8 — % $ (0.4) — % $ 0.4 — % Net Income (3.2) (1) % (15.6) (5) % (18.8) (6) % Adjusted EBITDA (2.2) — % (16.2) (2) % (18.4) (2) % Consolidated Portfolio Segment Rental income was $434.9 million for the year ended December 31, 2022 as compared to $390.5 million for the same period in 2021.
Year Ended December 31, 2023 Consolidated Co-Investment Total Revenues $ 5.9 1 % $ 0.1 — % $ 6.0 1 % Net Income (5.2) (2) % — — % (5.2) (2) % Adjusted EBITDA (1.3) (1) % 0.6 1 % (0.7) — % Year Ended December 31, 2022 Consolidated Co-Investment Total Revenues $ (20.6) (4) % $ (1.1) — % $ (21.7) (4) % Net Income (7.8) (12) % (6.0) (9) % (13.8) (21) % Adjusted EBITDA (21.9) (4) % (8.2) (1) % (30.1) (5) % Consolidated Portfolio Segment Rental income was $415.3 million for the year ended December 31, 2023 as compared to $434.9 million for the same period in 2022.
“Adjusted Net Income” represents net income before depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, share-based compensation, net income attributable to the noncontrolling interests, before depreciation and amortization and preferred dividends.
“Adjusted Net Income (Loss)” represents net income (loss) before depreciation and amortization, the Company's share of depreciation and amortization included in unconsolidated investments, share-based compensation, and excluding net income attributable to noncontrolling interests, before depreciation and amortization and preferred dividends.
The table below describes assets that are currently unstabilized ($ in millions): 45 Table of Contents Property Location Type KW Ownership # of Assets Commercial Sq. Ft. Leased % KW Est.
The table below describes assets that are currently unstabilized ($ in millions): Property Location Type KW Ownership % # of Assets Commercial Sq. Ft. Hotel Rooms/MF Units Leased % KW Est.
“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 Properties business segment.
“Consolidated Portfolio NOI” refers to the NOI that is generated from the properties that the Company has an ownership interest in and are held in the Company's Consolidated Portfolio business segment.
The increase was due to the issuance of $300 million of our Series B cumulative perpetual preferred stock to affiliates of Fairfax Financial Holdings Limited (collectively, "Fairfax") during 2022.
The increase was due to the issuance of $200 million of our Series C cumulative perpetual preferred stock to affiliates of Fairfax Financial Holdings Limited (collectively, "Fairfax") during 2023.
Dollar: Year Ended December 31, 2022 2021 Euro (5.9) % (6.9) % GBP (10.6) % (1.1) % Comprehensive income, net of taxes and noncontrolling interests, for the year ended December 31, 2022 and 2021 was $24.3 million and $317.3 million, respectively.
Dollar: Year Ended December 31, 2023 2022 Euro 3.1 % (5.9) % GBP 5.2 % (10.6) % Comprehensive (loss) income, net of taxes and noncontrolling interests, for the year ended December 31, 2023 and 2022 was a loss of $316.0 million and income of $24.3 million, respectively.
Below is a table that details the activity for the years ended December 31, 2022 and 2021. 42 Table of Contents Year Ended December 31, (Dollars in millions) 2022 2021 Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ 64.8 $ 313.2 Unrealized foreign currency translation loss, net of noncontrolling interests and tax (68.7) (57.5) Amounts reclassified out of accumulated other comprehensive loss during the period (0.8) 2.2 Unrealized foreign currency derivative contract gain, net of noncontrolling interests and tax 23.4 56.2 Unrealized gain on interest rate swaps, net of tax 5.6 3.2 Comprehensive income attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ 24.3 $ 317.3 The main currencies that the Company has exposure to are the euro and pound sterling.
Year Ended December 31, (Dollars in millions) 2023 2022 Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ (341.8) $ 64.8 Unrealized foreign currency translation gain (loss), net of noncontrolling interests and tax 31.3 (68.7) Amounts reclassified out of accumulated other comprehensive loss during the period — (0.8) Unrealized foreign currency derivative contract (loss) gain, net of noncontrolling interests and tax (5.5) 23.4 Unrealized gain on interest rate swaps, net of tax — 5.6 Comprehensive (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ (316.0) $ 24.3 The main currencies that the Company has exposure to are the euro and pound sterling.
(2) Estimated foreign exchange rates are €0.93 = $1 USD and £0.83 = $1 USD, related to NOI. In addition to our development, redevelopment and stabilization initiatives, we regularly implement a value-add approach to our consolidated and unconsolidated investments, which includes rehabbing properties and adding or updating property amenities.
(2) Estimated foreign exchange rates are €1.00 = $1.10 and £1.00 = $1.27, related to NOI. 49 Table of Contents In addition to our development, redevelopment and stabilization initiatives, we regularly implement a value-add approach to our consolidated and unconsolidated investments, which includes rehabbing properties and adding or updating property amenities.
Properties for which a cap rate is provided may not continue to perform at that cap rate. “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-Investment Portfolio business segment.
Properties for which a cap rate is discussed may not continue to perform at that cap rate. “Co-Investment Portfolio NOI” refers to the Company's share of NOI that is generated from the properties in which the Company has an ownership interest and that are held in the Company's Co-Investment Portfolio business segment.
Year Ended December 31, 2022 Net cash used in investing activities totaled $361.6 million for the year ended December 31, 2022. During the year ended December 31, 2022, we received $325.9 million primarily from the sale of non-core retail assets in the United Kingdom and Western United States and a multifamily property in the Western United States.
During the year ended December 31, 2022, we received $325.9 million primarily from the sale of non-core retail assets in the United Kingdom and Western United States and a multifamily property in the Western United States.
The interest payments on variable rate debt have been calculated at the interest rate in effect as of December 31, 2022. (2) Excludes $0.6 million net unamortized debt discount on mortgage debt. (3) Excludes $3.5 million unamortized debt premium on senior notes.
The interest payments on variable rate debt have been calculated at the interest rate in effect as of December 31, 2023. (2) Excludes $1.0 million net unamortized debt discount on mortgage debt. (3) Excludes $3.1 million unamortized debt premium on senior notes. (4) Excludes $33.4 million of unamortized loan fees.
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 year ended December 31, 2022, fees recorded through revenues were $44.8 million as compared to $35.3 million for the same period in 2021.
Co-Investment Portfolio Segment Investment Management We receive fees, including asset management fees, construction management fees, and/or acquisition and disposition fees, for managing assets in our Co-Investment Portfolio on behalf of our partners. During the year ended December 31, 2023, fees recorded through revenues were $61.9 million as compared to $44.8 million for the same period in 2022.
Please also see the “Current Economic Conditions and Market Dynamics” above for additional details. In addition to such market conditions, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services (“S&P”), a division of The McGraw-Hill Companies, Inc., rate our outstanding debt. These ratings are based on a variety of factors, including our current leverage and transactional activity.
In addition to such market conditions, Moody’s Investors Service, Inc. ("Moody's") and Standard & Poor’s Ratings Services (“S&P”), a division of The McGraw-Hill Companies, Inc., rate our outstanding debt. These ratings are 47 Table of Contents based on a variety of factors, including our current leverage and transactional activity.
Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make the following interest payments: Less than 1 year - $142.2 million; 1-3 years - $351.6 million; 4-5 years - $100.5 million; After 5 years - $83.3 million.
Figures do not include scheduled interest payments. Assuming each debt obligation is held until maturity, we estimate that we will make the following interest payments: Less than 1 year - $163.6 million; 1-3 years - $368.1 million; 4-5 years - $106.8 million; After 5 years - $90.9 million.
During the year ended December 31, 2022, the Company received proceeds of $297.3 million from the issuance of its perpetual preferred stock and warrants to Fairfax. We drew $528.4 million on our revolving line of credit and repaid $325.0 million on our revolving line of credit during the year ended December 31, 2022.
During the year ended December 31, 2023, the Company received proceeds of $197.4 million from the issuance of its Series C perpetual preferred stock and warrants to Fairfax. We drew $50.0 million on our revolving line of credit and repaid $185.0 million on our revolving line of credit during the year ended December 31, 2023.
If there was a 100-basis point increase or decrease, we would have a $6.3 million increase in interest expense or $9.5 million decrease in interest expense savings during 2023 on our current share of indebtedness.
If there was a 100-basis point increase or decrease, we would have a $1.0 million increase in interest expense or $2.2 million decrease in interest expense savings during 2024 on our current share of indebtedness.
Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.
Additionally, the Company believes Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of the Company's results from operations.
Borrowings Under Line of Credit On March 25, 2020, Kennedy-Wilson, Inc. (the “Borrower”), a wholly-owned subsidiary of Kennedy-Wilson Holdings, Inc. (the “Company”), the Company, as a guarantor and certain subsidiaries of the Company (such subsidiaries, the “Subsidiary Guarantors”) on March 25, 2020 entered into a $500 million revolving line of credit ("Second A&R Facility").
(the “Company”), the Company, as a guarantor and certain subsidiaries of the Company (such subsidiaries, the “Subsidiary Guarantors”) on March 25, 2020 entered into a $500 million revolving line of credit ("Second A&R Facility").
As of December 31, 2022, we and our consolidated subsidiaries had approximately $439.3 million ($278.7 million of which is in foreign currencies of GBP or EUR) of consolidated cash (as shown on our consolidated balance sheet), our share of cash held at unconsolidated Co-Investment Portfolio assets was $86.9 million and we had $218.0 million of availability under lines of credit.
As of December 31, 2023, we and our consolidated subsidiaries had approximately $313.7 million ($126.1 million of which is in foreign currencies of GBP or EUR) of consolidated cash (as shown on our consolidated balance sheet), our share of cash held at unconsolidated Co-Investment Portfolio assets was $94.8 million and we had $349.6 million of availability under lines of credit.
Other income was $20.8 million for the year ended December 31, 2022 as compared to other loss of $4.7 million for the year ended December 31, 2021.
Other income was $2.3 million for the year ended December 31, 2023 as compared to other income of $20.8 million for the year ended December 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference herein to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022, and is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.ir.kennedywilson.com. 35 Table of Contents Year Ended December 31, 2022 (Dollars in millions) Consolidated Co-Investments Corporate Total Revenue Rental $ 434.9 $ — $ — $ 434.9 Hotel 46.9 — — 46.9 Investment management fees — 44.8 — 44.8 Property services fees — — 1.7 1.7 Loans and other — 11.7 — 11.7 Total revenue 481.8 56.5 1.7 540.0 Income from unconsolidated investments Principal co-investments — 199.5 — 199.5 Performance allocations — (21.1) — (21.1) Income from unconsolidated investments — 178.4 — 178.4 Gain on sale of real estate, net 103.7 — — 103.7 Expenses Rental 151.2 — — 151.2 Hotel 29.5 — — 29.5 Compensation and related 41.5 44.6 25.2 111.3 Share-based compensation — — 29.0 29.0 Performance allocation compensation — (4.3) — (4.3) General and administrative 14.7 14.8 7.7 37.2 Depreciation and amortization 172.9 — — 172.9 Total expenses 409.8 55.1 61.9 526.8 Interest expense (128.2) — (92.6) (220.8) Gain on early extinguishment of debt 27.5 — — 27.5 Other income 20.8 — 15.3 36.1 Provision for income taxes (21.0) — (15.2) (36.2) Net income (loss) 74.8 179.8 (152.7) 101.9 Net income attributable to the noncontrolling interests (8.2) — — (8.2) Preferred dividends — — (28.9) (28.9) Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders 66.6 179.8 (181.6) 64.8 Add back (less): Interest expense 128.2 — 92.6 220.8 Gain on early extinguishment of debt (27.5) — — (27.5) Kennedy Wilson's share of interest expense included in unconsolidated investments — 60.2 — 60.2 Depreciation and amortization 172.9 — — 172.9 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments — 3.5 — 3.5 Provision for income taxes 21.0 — 15.2 36.2 Kennedy Wilson's share of taxes included in unconsolidated investments — 2.7 — 2.7 Fees eliminated in consolidation (0.4) 0.4 — — Share-based compensation — — 29.0 29.0 Preferred dividends — — 28.9 28.9 EBITDA adjustments attributable to noncontrolling interests (1) — — — — Adjusted EBITDA (1) $360.8 $246.6 $(15.9) $591.5 (1) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA. 36 Table of Contents Year Ended December 31, 2021 (Dollars in millions) Consolidated Co-Investments Corporate Total Revenue Rental $ 390.5 $ — $ — $ 390.5 Hotel 17.1 — — 17.1 Investment management fees — 35.3 — 35.3 Property services fees — — 2.1 2.1 Loans and other — 8.6 — 8.6 Total revenue 407.6 43.9 2.1 453.6 Income from unconsolidated investments Principal co-investments — 271.1 — 271.1 Performance allocations — 117.9 — 117.9 Income from unconsolidated investments — 389.0 — 389.0 Gain on sale of real estate, net 412.7 — — 412.7 Expenses Rental 132.7 — — 132.7 Hotel 12.7 — — 12.7 Compensation and related 60.4 40.4 33.1 133.9 Share-based compensation — — 28.7 28.7 Performance allocation compensation — 42.0 — 42.0 General and administrative 18.5 8.5 6.3 33.3 Depreciation and amortization 166.3 — — 166.3 Total expenses 390.6 90.9 68.1 549.6 Interest expense (119.1) — (73.3) (192.4) Loss on early extinguishment of debt (19.2) — (26.5) (45.7) Other loss (4.7) — (0.3) (5.0) Provision for income taxes (23.0) — (103.2) (126.2) Net income (loss) 263.7 342.0 (269.3) 336.4 Net income attributable to the noncontrolling interests (6.0) — — (6.0) Preferred dividends — — (17.2) (17.2) Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders 257.7 342.0 (286.5) 313.2 Add back (less): Interest expense 119.1 — 73.3 192.4 Loss on early extinguishment of debt 19.2 — 26.5 45.7 Kennedy Wilson's share of interest expense included in unconsolidated investments — 40.2 — 40.2 Depreciation and amortization 166.3 — — 166.3 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments — 5.3 — 5.3 Provision for income taxes 23.0 — 103.2 126.2 Fees eliminated in consolidation (0.5) 0.5 — — Share-based compensation — — 28.7 28.7 Preferred dividends — — 17.2 17.2 EBITDA adjustments attributable to noncontrolling interests (1) (7.3) — — (7.3) Adjusted EBITDA (1) $ 577.5 $ 388.0 $ (37.6) $ 927.9 (1) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA. 37 Table of Contents Kennedy Wilson Consolidated Financial Results: Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Financial Highlights GAAP net income to common shareholders was $64.8 million and $313.2 million for the years ended December 31, 2022 and 2021, respectively.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference herein to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 22, 2023, and is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.ir.kennedywilson.com. 38 Table of Contents Year Ended December 31, 2023 (Dollars in millions) Consolidated Co-Investments Corporate Total Revenue Rental $ 415.3 $ — $ — $ 415.3 Hotel 57.1 — — 57.1 Investment management fees — 61.9 — 61.9 Loan — 26.1 — 26.1 Other — — 2.2 2.2 Total revenue 472.4 88.0 2.2 562.6 Loss from unconsolidated investments Principal co-investments — (188.5) — (188.5) Performance allocations — (64.3) — (64.3) Loss from unconsolidated investments — (252.8) — (252.8) Gain on sale of real estate, net 127.6 — — 127.6 Expenses Rental 152.6 — — 152.6 Hotel 37.9 — — 37.9 Compensation and related 42.7 39.0 57.7 139.4 Performance allocation compensation — (15.1) — (15.1) General and administrative 15.5 12.7 7.5 35.7 Depreciation and amortization 157.8 — — 157.8 Total expenses 406.5 36.6 65.2 508.3 Interest expense (162.0) — (97.2) (259.2) Loss on early extinguishment of debt (1.6) — — (1.6) Other income (loss) 2.3 (7.0) (0.3) (5.0) (Provision for) benefit from income taxes (9.6) — 64.9 55.3 Net income (loss) 22.6 (208.4) (95.6) (281.4) Net income attributable to the noncontrolling interests (22.4) — — (22.4) Preferred dividends — — (38.0) (38.0) Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders 0.2 (208.4) (133.6) (341.8) Add back (less): Interest expense 162.0 — 97.2 259.2 Loss on early extinguishment of debt 1.6 — — 1.6 Kennedy Wilson's share of interest expense included in unconsolidated investments — 99.1 — 99.1 Depreciation and amortization 157.8 — — 157.8 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments — 3.2 — 3.2 Provision for (benefit from) income taxes 9.6 — (64.9) (55.3) Kennedy Wilson's share of taxes included in unconsolidated investments — 0.1 — 0.1 Fees eliminated in consolidation (0.3) 0.3 — — Share-based compensation — — 34.5 34.5 Preferred dividends — — 38.0 38.0 EBITDA adjustments attributable to noncontrolling interests (1) (6.6) — — (6.6) Adjusted EBITDA (1) $ 324.3 $ (105.7) $ (28.8) $ 189.8 (1) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA. 39 Table of Contents Year Ended December 31, 2022 (Dollars in millions) Consolidated Co-Investments Corporate Total Revenue Rental $ 434.9 $ — $ — $ 434.9 Hotel 46.9 — — 46.9 Investment management fees — 44.8 — 44.8 Loan — 11.7 — 11.7 Other — — 1.7 1.7 Total revenue 481.8 56.5 1.7 540.0 Income from unconsolidated investments Principal co-investments — 199.5 — 199.5 Performance allocations — (21.1) — (21.1) Income from unconsolidated investments — 178.4 — 178.4 Gain on sale of real estate, net 103.7 — — 103.7 Expenses Rental 151.2 — — 151.2 Hotel 29.5 — — 29.5 Compensation and related 41.5 44.6 54.2 140.3 Performance allocation compensation — (4.3) — (4.3) General and administrative 14.7 14.8 7.7 37.2 Depreciation and amortization 172.9 — — 172.9 Total expenses 409.8 55.1 61.9 526.8 Interest expense (128.2) — (92.6) (220.8) Gain on early extinguishment of debt 27.5 — — 27.5 Other income 20.8 — 15.3 36.1 Provision for income taxes (21.0) — (15.2) (36.2) Net income (loss) 74.8 179.8 (152.7) 101.9 Net income attributable to the noncontrolling interests (8.2) — — (8.2) Preferred dividends — — (28.9) (28.9) Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders 66.6 179.8 (181.6) 64.8 Add back (less): Interest expense 128.2 — 92.6 220.8 Gain on early extinguishment of debt (27.5) — — (27.5) Kennedy Wilson's share of interest expense included in unconsolidated investments — 60.2 — 60.2 Depreciation and amortization 172.9 — — 172.9 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments — 3.5 — 3.5 Provision for income taxes 21.0 — 15.2 36.2 Kennedy Wilson's share of taxes included in unconsolidated investments — 2.7 — 2.7 Fees eliminated in consolidation (0.4) 0.4 — — Share-based compensation — — 29.0 29.0 Preferred dividends — — 28.9 28.9 EBITDA adjustments attributable to noncontrolling interests (1) — — — — Adjusted EBITDA (1) $ 360.8 $ 246.6 $ (15.9) $ 591.5 (1) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA. 40 Table of Contents Kennedy Wilson Consolidated Financial Results: Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Financial Highlights GAAP net loss to common shareholders was $341.8 million for the year ended December 31, 2023 and GAAP net income to common shareholders was $64.8 million for the year ended December 31, 2022.
Performance allocation compensation - Compensation associated with up to thirty-five percent (35%) of any performance allocation earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.
Compensation and related - Employee compensation, comprising of salary, bonus, employer payroll taxes and benefits paid on behalf of employees. Performance allocation compensation - Compensation associated with up to thirty-five percent (35%) of any performance allocation earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.

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