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What changed in Kennedy-Wilson Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kennedy-Wilson Holdings, Inc.'s 2023 and 2024 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 2024 report.

+456 added−547 removedSource: 10-K (2025-02-28) vs 10-K (2023-12-31)

Top changes in Kennedy-Wilson Holdings, Inc.'s 2024 10-K

456 paragraphs added · 547 removed · 351 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

86 edited+46 added−64 removed33 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) 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.
Biggest changeThe 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) 2024 2023 2022 2021 2020 GAAP Revenue $ 531.4 $ 562.6 $ 540.0 $ 453.6 $ 454.0 Net (loss) income to Kennedy-Wilson Holdings Inc. common shareholders (76.5) (341.8) 64.8 313.2 92.9 Basic (loss) income per share of common stock (0.56) (2.46) 0.47 2.26 0.66 Diluted (loss) earnings per share of common stock (0.56) (2.46) 0.47 2.24 0.66 Non-GAAP (1) Adjusted EBITDA (1) 539.7 189.8 591.5 927.9 608.0 % change 184.4 % (67.9) % (36.3) % 52.6 % — % Adjusted Net Income (Loss) (1) 94.3 (151.3) 264.9 509.0 306.9 Adjusted Net Income (Loss) percentage change 162.3 % (157.1) % (48.0) % 65.9 % — % Non-cash fair value (losses) gains (6.3) (229.3) 114.6 213.5 47.2 Non-cash carried interests (decreases) increases (49.7) (64.3) (21.1) 117.9 2.7 Consolidated Portfolio NOI (1) 234.2 274.3 294.2 255.8 262.3 % change (14.6) % (6.8) % 15.0 % (2.5) % — % Co-Investment Portfolio NOI (1) 190.5 168.3 157.6 124.4 102.5 % change 13.2 % 6.8 % 26.7 % 21.4 % — % Fee-bearing capital 8.8 8.4 5.9 5.0 3.9 % change 4.8 % 42.4 % 18.0 % 28.2 % — % AUM 28.0 24.5 23.0 21.6 17.6 % change 14.3 % 6.5 % 6.5 % 22.7 % — % (1) Please refer to "Certain Non-GAAP Measures and Reconciliations" for a reconciliation of certain non-GAAP items to U.S.
Currently our U.S.-based funds focus on value-add properties that have an expected hold period of 5 to 7 years. Our European fund focuses on value add commercial properties in the United Kingdom, Ireland and Spain that also have expected hold periods of 5 to 7 years.
Currently our U.S.-based funds focus on value-add properties in the U.S. that have an expected hold period of 5 to 7 years. Our European fund focuses on value-add commercial properties in the United Kingdom, Ireland and Spain that also have expected hold periods of 5 to 7 years.
The Global ESG Committee focuses on the following: monitoring compliance with existing and future material ESG-related laws and regulations applicable to the Company and its investments that would have a material impact on business operations; setting appropriate global ESG priorities aim to align across target markets; monitoring delivery progress; and supporting ESG communication to investors and other stakeholders.
The Global ESG Committee focuses on the following: monitoring compliance with existing and future material ESG-related laws and regulations applicable to the Company and its investments that would have a material impact on business operations; setting appropriate global ESG priorities with the aim to align across target markets; monitoring delivery progress; and supporting ESG communication to investors and other 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.
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 value across our portfolio and to our key stakeholders.
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.
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, 2024 and future periods.
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.
In many cases, this may lead to significant additional returns, such as carried interests (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.
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.
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 with the objective of long-term ownership.
Human Capital Management Company Overview and Values We operate as a non -bureaucratic, teamwork-oriented, and nimble organization. We promote an entrepreneurial culture, and at our core, we are powered by a team of focused, high-performance people who thrive on excellence in the workplace and a shared desire to make an impact.
Human Capital Management Company Overview and Values We operate as a teamwork-oriented, and nimble organization. We promote an entrepreneurial culture, and at our core, we are powered by a team of focused, high-performance people who thrive on excellence in the workplace and a shared desire to make an impact.
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.
We use this analysis to develop our disciplined acquisition strategies. • Management's alignment with shareholders : As of December 31, 2024, our directors and executive officers and their respective affiliates owned an aggregate of approximately 13% of the outstanding shares of our common stock.
We have a hands-on approach to real estate investing and possess the local expertise in property and asset management, leasing, construction management, development and investment sales, which we believe enable us to invest successfully in selected submarkets. • Calculated risk taking: We underwrite our investments based upon a thorough examination of property economics and a critical understanding of market dynamics and risk management strategies.
We have a hands-on approach to real estate investing and possess the 10 Table of Contents local expertise in property and asset management, leasing, construction management, development and investment sales, which we believe enable us to invest successfully in selected submarkets. • Calculated risk taking: We underwrite our investments based upon a thorough examination of property economics and a critical understanding of market dynamics and risk management strategies.
Any prolonged downturn in the financial markets or a recession, either globally or locally in the United States or in other countries in which we conduct business, could impact the fair value of investments held by the Company.
Any prolonged downturn in the financial markets or a recession or continued volatility in the financial markets, either globally or locally in the United States or in other countries in which we conduct business, could impact the fair value of investments held by the Company.
Kennedy Wilson is able to create value for its shareholders in the following ways: • We are able to identify and acquire attractive real estate assets across many markets, in part due to the significant proprietary deal flow driven from an established global network of industry relationships, particularly with financial institutions.
Kennedy Wilson is able to create value for its shareholders in the following ways: 9 Table of Contents • We are able to identify and acquire attractive real estate assets across many markets, in part due to the significant proprietary deal flow driven from an established global network of industry relationships, particularly with financial institutions.
Investment Types The following are the product types we invest in through our Consolidated Portfolio and Co-Investment Portfolio segments: Multifamily We pursue multifamily acquisition opportunities where we can unlock value through a myriad of strategies, including institutional management, asset rehabilitation, repositioning and recapitalization. We focus primarily on apartments in supply-constrained, infill markets.
Investment Product Types The following are the product types we invest in both through our Consolidated Portfolio and Co-Investment Portfolio segments. Rental Housing We pursue multifamily acquisition opportunities where we can unlock value through a myriad of strategies, including institutional management, asset rehabilitation, repositioning and recapitalization. We focus primarily on apartments in supply-constrained, infill markets.
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.
The credit spreads used by the Company to value floating rate indebtedness range from 2.00% to 3.60%, while the market rates used to value fixed rate indebtedness range from 4.10% 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.
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.
If these projects are brought to completion, the Company’s estimated share of the total capitalization of these projects would be approximately $46.0 million (approximately 48% 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.
Recently, there has also been a lack of liquidity in the capital markets as well as limited transactions which has had impact on the inputs associated with fair values.
In recent years, there has also been a lack of liquidity in the capital markets as well as limited transactions which has had impact on the inputs associated with fair values.
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").
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 assets, primarily construction loans, through our Co-Investment Portfolio.
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.
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 246 employees in 14 offices throughout the United States, the United Kingdom and Ireland.
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.
Our competitive strengths include: • Transaction experience: Our senior management team has an average of over 23 years of real estate experience and has been working and investing together on average for almost 19 years.
Value Creation 9 Table of Contents Our differentiated and unique approach to investing is the cornerstone of how we create value for our shareholders.
Value Creation Our differentiated and unique approach to investing is the cornerstone of how we create value for our shareholders.
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, 2024, our weighted average ownership interest in the commingled funds that we manage was 14%. Vintage Housing Holdings ("VHH"): 4 Table of Contents 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.
The VHH portfolio includes 10,367 operating units and 1,604 units that are under development or lease up, as of December 31, 2023. When we acquired our interest in VHH in 2015, the portfolio consisted of a total of 5,485 units. All of the VHH platform's units are included in our multifamily unit count discussed throughout this report.
The VHH portfolio includes 12,695 units (10,825 operating units and 1,870 units that are under development or lease up), as of December 31, 2024. When we acquired our interest in VHH in 2015, the portfolio consisted of a total of 5,485 units. All of the VHH platform's units are included in our multifamily unit count discussed throughout this report.
In the event of a borrower defaulting on its obligations under any loan agreement, we will explore all options of recouping our loan investments including, without limitation, pursuing a foreclosure action to take control of the 7 Table of Contents underlying collateral securing the loans, although there is no guarantee or assurance that we will be able to do so successfully.
In the event of a borrower defaulting on its obligations under any loan agreement, we will explore all of our remedies including, without limitation, pursuing a foreclosure action or deed in lieu of foreclosure to take control of the underlying collateral securing the loans, although there is no guarantee or assurance that we will be able to do so successfully.
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.
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, 2024, we have 246 employees in 14 offices throughout the United States, the United Kingdom and Ireland.
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.
Our investment in VHH is our largest unconsolidated investment held at estimated fair value and was held at $333.9 million and $285.9 million as of December 31, 2024 and 2023, respectively.
Some of our loans contain additional funding commitments that will increase our loan balances if they are utilized. As of December 31, 2023, our loans had unfulfilled capital commitments totaling $1.8 billion (our share of which was $87.7 million).
Some of our loans contain additional funding commitments that will increase our loan balances if they are utilized. As of December 31, 2024, our loans had unfulfilled capital commitments totaling $4.1 billion (our share of which was $123.4 million).
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.
As of December 31, 2024, our weighted average ownership interest in the various joint ventures that we manage was 44%. Commingled funds: We currently have four closed-end funds that we manage and through which we receive investment management fees and potentially carried interests.
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.
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, 2024, we recognized $6.3 million and $49.7 million, respectively, of net fair value losses and write downs of carried interests on Co-Investment portfolio investments.
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.
GAAP. 2 Table of Contents The table below highlights some of the Company's balance sheet metrics over the past five years: (In millions) As of December 31, 2024 2023 2022 2021 2020 Balance sheet data: Cash and cash equivalents $ 217.5 $ 313.7 $ 439.3 $ 524.8 $ 965.1 Total assets 6,961.1 7,712.1 8,271.8 7,876.5 7,329.0 Mortgage debt 2,597.2 2,840.9 3,018.0 2,959.8 2,589.8 KW unsecured debt 1,877.9 1,934.3 2,062.6 1,852.3 1,332.2 KWE unsecured bonds 309.8 522.8 506.4 622.8 1,172.5 Kennedy Wilson equity 1,601.2 1,755.1 1,964.0 1,777.6 1,644.5 Noncontrolling interests 34.8 43.3 46.4 26.3 28.2 Total equity 1,636.0 1,798.4 2,010.4 1,803.9 1,672.7 Common shares outstanding 137.4 138.7 137.8 138.0 141.4 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, 2024 through 2020: December 31, 2024 2023 2022 2021 2020 Taxable Dividend 100.00 % — % 37.81 % — % 27.14 % Non-Taxable Return of Capital — % 100.00 % 62.19 % 100.00 % 72.86 % Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Business Segments 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").
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 committee is also responsible for overseeing Kennedy Wilson’s management-level Global ESG Committee. That Global ESG Committee, 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.
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.
As of December 31, 2024, $1.9 billion, or 92%, of our investments in unconsolidated investments (27% of total assets) were held at estimated fair value. As of December 31, 2024, there were cumulative fair value gains of $315.4 million which comprises 17% of the $1.9 billion carrying value of fair value unconsolidated investments that are currently held.
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.
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. Fair Value Accounting The Company accounts for a number of unconsolidated investments under fair value accounting.
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.
The methodology to determine the value of the Company’s investment in VHH is described above under "Multifamily-Affordable Housing." The table below describes the range of inputs used as of December 31, 2024 for real estate assets: Estimated Rates Used For Capitalization Rates Discount Rates Multifamily - Affordable Income approach - discounted cash flow 6.30% — 7.20% 8.30% — 9.20% Multifamily - Affordable GP interest Income approach - discounted cash flow N/A 16.00% — 19.50% Multifamily - Market Rate Income approach - direct capitalization 4.60% — 6.50% N/A Office Income approach - discounted cash flow 5.20% — 7.50% 7.30% — 9.30% Income approach - direct capitalization 5.30% — 10.30% N/A Industrial Income approach - discounted cash flow 5.00% —6.30% 6.30% — 7.80% Income approach - direct capitalization 4.00% — 8.90% N/A 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.
Development and redevelopment We have a number of development, redevelopment and entitlement projects that are underway or in the planning stages. Unlike the residential projects that are held for sale and described in the Residential and Other section below, these initiatives may ultimately result in income-producing assets.
Development and redevelopment We have development, redevelopment and entitlement projects that are underway or in the planning stages. Unlike the residential projects that are held for sale and described in the Residential and Other section below, these initiatives may ultimately result in income-producing assets. As of December 31, 2024, we are actively developing 288 multifamily units.
In addition, we have previously filed registration statements and other documents with the SEC. Any document we file is available at the SEC's internet address at http://www.sec.gov (this website address is not intended to function as a hyperlink, and the information contained in, or accessible from, the SEC's website is not intended to be a part of this filing).
Any document we file is available 13 Table of Contents at the SEC's internet address at http://www.sec.gov (this website address is not intended to function as a hyperlink, and the information contained in, or accessible from, the SEC's website is not intended to be a part of this filing).
The ESG Committee's main areas of focus include: • Overseeing and reviewing the Company’s ESG strategies, initiatives, and policies, including the Company’s ESG-related reporting and disclosures. • In conjunction with the Compensation Committee, overseeing and reviewing the Company’s culture and human capital management strategy, initiatives, and policies, including our inclusion, diversity, and equity efforts; and • In conjunction with the Audit Committee, overseeing risk management and oversight programs and performance-related material to ESG matters affecting Kennedy Wilson.
The committee's main areas of focus include: • Overseeing and reviewing the Company’s ESG strategies, initiatives, and policies, including the Company’s ESG-related reporting and disclosures. • In conjunction with the Compensation Committee, overseeing and reviewing the Company’s culture and human capital management strategy, initiatives, and policies • In conjunction with the Audit Committee, overseeing risk management and oversight programs and performance-related material to ESG matters affecting Kennedy Wilson. • Compliance with all federal, state and local ESG-related mandates, including those related to climate risk and building performance.
During the year ended December 31, 2022, we recognized $114.6 million and $21.1 million, respectively, of net fair value gains and write downs of performance allocations on Co-Investment portfolio investments. In determining estimated fair market values, the Company utilizes two approaches to value real estate, a discounted cash flow analysis and direct capitalization approach.
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 carried interests on Co-Investment portfolio investments. In determining estimated fair market values, the Company utilizes two approaches to value real estate, a discounted cash flow analysis and direct capitalization approach.
We have three loans out of the 101 loans in our global debt platform with a $8.7 million carrying value at our share and net of any loan reserves that are not paying interest current on a contractual basis.
As of December 31, 2024, we had three loans (in our bridge loan portfolio) out of the 118 loans in our global debt platform with a $12.7 million carrying value at our share and net of any loan reserves that are not paying interest current on a contractual basis.
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.
Ireland Ireland’s economy is estimated to have had nominal GDP growth of 1.4% in 2024, and the Organization for Economic Co-operation and Development is forecasting Ireland to have progressively higher GDP growth over the next two years reach 11 Table of Contents 5.4% by year-end 2026.
Through our annual summer internship program, we continue to find ways to better support our equality, diversity, and inclusion aspirations by building a diverse pipeline of talented individuals in the real estate industry with the intention to introduce our business to those who may not have considered a career in real estate.
Through our annual summer internship program, we continue to build a diverse pipeline of talented individuals in the real estate industry with the intention to introduce our business to those who may not have considered a career in real estate.
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.
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.
We aim to integrate ESG factors into key business processes, underpinned by a measure, manage, and monitor approach framed by our four ESG pillars most relevant to our business: Optimizing Resources, Creating Great Places, Building Communities and Operating Responsibly.
We aim to integrate ESG factors into key business processes, underpinned by a measure, manage, and monitor approach framed by four pillars most relevant to our business: Optimizing Resources, Creating Great Places, Building Communities and Operating Responsibly. The ESG Committee of the Board of Directors (the "committee") oversees the Company’s ESG program, including opportunities and risk management strategies.
($ 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 $122.5 million as of December 31, 2023 and 2022, respectively, of corporate non-property level cash.
($ in millions) December 31, 2024 December 31, 2023 Cash and cash equivalents (1) $ 117.4 $ 184.2 Real estate and acquired in place lease values 4,290.4 4,837.3 Accounts receivable and other assets, net 99.7 146.1 Total Assets $ 4,507.5 $ 5,167.6 Accounts payable, accrued expenses and other liabilities 118.7 154.3 Mortgage debt 2,597.2 2,840.9 KWE unsecured bonds 309.8 522.8 Total Liabilities 3,025.7 3,518.0 Equity $ 1,481.8 $ 1,649.6 3 Table of Contents (1) Excludes $100.1 million and $129.5 million as of December 31, 2024 and 2023, respectively, of corporate non-property level cash.
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 credit platform, which includes institutional partners across insurance and sovereign wealth funds, invests across the entire real estate credit capital structure in the United States, United Kingdom and Europe and primarily targets loans secured by high-quality real estate located in such jurisdictions.
In addition, as of December 31, 2023, we held interests in 101 real estate loans in our global debt platform, 85% of which have floating interest rates (average interest rate of 9.4% per annum) and an unpaid principal balance of $4.9 billion (of which our share was $263.0 million).
In addition, as of December 31, 2024, we held interests in 118 real estate loans in our global debt platform, 81% of which have floating interest rates, with an average interest rate of 8.0% per annum, and an unpaid principal balance of $4.9 billion ($256.1 million at KW's share) compared to 101 real estate loans, 85% of which had floating interest rates, with an average interest rates of 9.4% per annum, and an unpaid principal balance of $4.9 billion ($263.0 million at KW's share) during the same period in 2023.
KWE has investments in assets that have functional currencies of GBP and euros. Kennedy-Wilson Holdings, Inc. does not have a direct interest in the euro-denominated investments but has indirect ownership through its interest in KWE.
We wholly-own Kennedy Wilson Europe Real Estate Limited ("KWE"), which is domiciled in the United Kingdom and has GBP as its functional currency. KWE has investments in assets that have functional currencies of GBP and euros. Kennedy-Wilson Holdings, Inc. does not have a direct interest in the euro-denominated investments but has indirect ownership through its interest in KWE.
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.
We typically wholly-own these assets, which have longer hold periods and accretive asset management opportunities. 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, 2024 and 2023. This table does not include amounts such as corporate cash and the KWI Notes.
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.
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.
Due to certain prevailing market conditions or other circumstance on a case by case basis, we have and may stop accruing for interest income if loans become non-performing and account for loans on a cash basis.
We have stopped and may stop accruing for interest income if certain loans become non-performing and account for loans on a cash basis.
Real Estate Debt Investment We have a global debt platform with multiple partners that has a total current capacity of $10.8 billion with $6.7 billion currently invested or committed to future fundings as of December 31, 2023.
Real Estate Debt Credit We have a global credit platform that, as of December 31, 2024, had a total capacity of $12 billion with $9 billion invested or committed to future fundings.
Investment level debt is generally incurred in local currencies and we consider our equity investment as the appropriate exposure to evaluate for balance sheet hedging purposes. We typically do not hedge foreign exchange rates for future operations or cash flows of operations, which may have a significant impact on the results of our operations.
We typically do not hedge foreign exchange rates for future operations or cash flows of operations, which may have a significant impact on the results of our operations. In order to manage the effect of fluctuations in foreign exchange rates, we generally hedge our book equity exposure to foreign currencies through currency forward contracts and options.
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.
We also earn fees for managing our fee-bearing capital (total third-party committed or invested capital that we manage in our joint ventures and commingled funds), including, without limitation, asset management fees, construction management fees, acquisition and disposition fees and origination fees.
In Ireland we focus on Dublin city center and the suburbs of the city. Our asset management strategy entails installing strong property management teams to drive leasing activity and upkeep of the properties. We also seek to add amenities designed to promote health and wellness, celebrate local and cultural events and enhance the lives of residents living in our communities.
In Europe, we focus on Ireland, particularly Dublin city center and its immediately surrounding suburbs. Our asset management strategy entails installing strong property management teams to drive leasing activity and upkeep of the properties.
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).
We also invest in certain mezzanine loans that are fixed rate and tend to have maturities of 5 to 10 years and are secured by multifamily or office properties in the Western United States. 6 Table of Contents As of December 31, 2024, we held interests in 118 loans in our global debt platform, 81% of which have floating interest rates with an average interest rate of 8.0% per annum and an unpaid principal balance ("UPB") of $4.9 billion (of which our share was a UPB of $256.1 million).
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.
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. These estimated capitalization 8 Table of Contents rates and future income streams are derived from comparable property and leasing transactions and are considered to be key inputs in the valuation.
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.
The non-GAAP table below represents the carrying value of our Co-Investment Portfolio balance sheet which is primarily at fair value (approximately 92% and 93%, respectively), at our share of the underlying investments as of December 31, 2024 and 2023. The Co-Investment Portfolio consists of our unconsolidated investments as well as our loan purchases and originations.
Typically, VHH will seek a bridge to long-term financing solution, whereby a floating interest rate loan is utilized during the construction and lease-up period and then replaced substantially concurrently upon conversion or stabilization by a long-term, fixed interest rate loan. The typical term for these loan facilities is 17 years.
Typical financing includes a bridge to permanent financing solution, where a floating rate option is utilized during the construction and lease-up period and a permanent loan with a fixed rate locked at the time of closing becomes effective upon conversion/stabilization. The typical term for these loan facilities is 17 years.
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.
Ongoing macroeconomic conditions, such as, but not limited to, elevated levels of inflation and interest rates, banks' ability and willingness to lend, adverse developments affecting financial institutions and other geopolitical issues, including large-scale conflicts and warfare, and government responses to the same, continue to adversely impact the global economy and create volatility in the financial markets.
Per the terms of the applicable loan agreements, however, we have implemented a full cash sweep of any cash flow that is generated from the collateral. We are no longer accruing interest under these loans and accounting for them on a cash basis going forward.
Per the terms of the applicable loan agreements, however, we have implemented a full cash sweep of any cash flow that is generated from the collateral and are working on exercising our available remedies, which may include taking control of the underlying collateral.
Further, for properties where tax credits are sold to a third party, VHH typically utilizes tax-exempt bond financing to help finance its partnership investments.
VHH is paid developer fees for its work as development manager and receive a conversion fee when the property is placed into operation. Further, on properties where tax credits are sold, VHH typically utilizes tax-exempt bond financing to help finance its partnership investments.
As of December 31, 2023, we held 12 investments primarily comprised of 1,070 acres of land located in Hawaii and the Western United States and are primarily invested through our Co-Investment Portfolio. As of December 31, 2023, these investments had a Gross Asset Value of $211.9 million.
As of December 31, 2024, we held 19 investments primarily comprised of 1,069 acres of land located in Hawaii and the Western United States and are primarily invested through our Co-Investment Portfolio. These investments are in various stages of completion, ranging from securing the proper entitlements on land positions to sales of units/lots.
Currently, our global debt platform investments have been made without the use of any leverage and are invested through our Co-Investment Portfolio.
In addition to interest income (which includes origination, exit and extension fees), in our role as asset manager, we earn customary fees for managing the platform. Currently, our global credit investment platform investments have been made without the use of any leverage and are invested through our Co-Investment Portfolio.
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, 2024 this joint venture has acquired ownership interest in nine sites which consists of 901 single family rental units. Multifamily - Affordable Housing Through our VHH platform we focus on affordable units based on income and in some cases age restrictions.
The terms are generally three years with short-term, performance-based extension options. Interest typically accrues into principal balance during the construction period, with principal and interest being paid at maturity. The Bridge Loan Portfolio consists of predominantly variable rate loans, with terms that are generally three-years with one or two 12 month extension options.
Our construction loan originations typically finance 50% to 65% of the cost to construct the underlying properties, with loan fundings typically occurring after sponsor capital has been invested. The terms are generally three years with short-term, performance-based extension options. Interest typically accrues into principal balance during the construction period, with principal and interest being paid at maturity.
The Company also utilizes valuations from independent real estate appraisal firms on some of its investments ("appraised valuations"), with certain investment structures periodically (typically annually) requiring appraised valuations. All appraised valuations are reviewed and approved by the Company.
Other factors that we take into account under both approaches may include transaction structuring efficiencies, tenancy details, planning, building and environmental factors that might affect the property. The Company also utilizes valuations from independent real estate appraisal firms on some of its investments ("appraised valuations"), with certain investment structures periodically (typically annually) requiring appraised valuations.
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.
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. 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.
A dynamic internship and internal transfer program also helps promote personal development and improves leadership skills across all departments.
These alongside our regular global senior management calls continue to develop our 12 Table of Contents 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.
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.
We invest alongside our partners and typically have a 5% to 50% ownership interest in the assets in our Co-Investment Portfolio and through our ownership positions, we have the potential to earn carried interest as further discussed below. As of December 31, 2024, we have a weighted average ownership of 40% in our Co-Investment Portfolio.
This structure results in VHH maintaining on average 75% of the economic ownership interests in the assets across the portfolio. During the year ended December 31, 2023, we received $59.1 million of proceeds from VHH, including $9.7 million from recurring monthly distributions, $3.2 million from paid developer fees at conversion and $46.2 million from sales and refinancings.
During the year ended December 31, 2024, we received $27.4 million of proceeds from VHH, including $10.3 million from recurring monthly distributions, $6.8 million from paid developer fees at conversion and $10.3 million from sales and refinancings. We acquired our ownership interest in VHH in 2015 for approximately $80.0 million.
Dublin office absorption was more than 2.4 million square feet in 2023. Prime headline city center rents declined marginally to €62.50 per square foot but are expected to remain stable over 2024 and trend upwards again in 2025.
Real estate investment volumes were 30% higher year over year comparing 2024 with 2024 with €2.4 billion of investment during 2024. Dublin office take-up was more than 2.26 million square feet in 2024 with prime headline city center rents remained unchanged at €62.50 per square foot but are expected to increase to €65.00 per square foot over 2025.
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.
As of December 31, 2024, we have contributed an additional $186.2 million into VHH and have received $380.9 million in cash distributions. VHH is an unconsolidated investment that we account for using the fair value option which had a carrying value of $333.9 million as of December 31, 2024.
Such bridge loans are secured by multifamily, office, retail, industrial and hotel assets in the Western United States or United Kingdom. We also invest in certain mezzanine loans that are fixed rate and tend to have maturities of 5 to 10 years and are secured by multifamily or office properties in the Western United States.
In addition to our Construction Loan Portfolio, we have originated and purchased bridge loans that consist of predominantly variable rate loans, with terms that are generally three-years with one or two 12-month extension options (the "Bridge Loan Portfolio"). Our bridge loans are secured by multifamily, office, retail, industrial and hotel assets in the Western United States or United Kingdom.
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.
Through our own efforts, and through partnerships with organizations, our aim continues to be training and developing the next group of leaders. Competition We compete with a range of global, national and local real estate firms, individual investors and other corporations, both private and public. In our real estate credit debt business we compete with banks and life insurance companies.
Our ownership interest in VHH is approximately 50%, and VHH acts as the general partner (developer/asset manager) of 57 affordable housing projects totaling 11,971 units (including 11 investments held without a tax credit investor (“tax credit LPs”), and 46 investments held with a tax credit limited partner) as of December 31, 2023.
As of December 31, 2024, we hold an approximate 50% interest in VHH which acts as the general partner ("GP interest") (developer/asset manager) of 60 affordable housing projects totaling 12,695 units (48 investments held with a tax credit limited partner ("tax credit LP") and 12 investments held fee simple which does not have any outside tax credit LPs).
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.
($ in millions) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 137.5 $ 94.8 Real estate and acquired in place lease values 4,564.9 4,619.7 Loan purchases and originations 243.2 259.3 Accounts receivable and other assets, net 236.9 227.3 Total Assets $ 5,182.5 $ 5,201.1 Accounts payable, accrued expenses and other liabilities 151.5 125.0 Mortgage debt 2,757.5 2,759.8 Total Liabilities 2,909.0 2,884.8 Equity $ 2,273.5 $ 2,316.3 As of December 31, 2024, our fee-bearing capital was $8.8 billion and we recognized $98.9 million in base investment management fees and had $27.6 million in net accrued carried interests receivable (allocated amounts to us on co-investments we managed based on the cumulative performance of the underlying investment), which included a non-cash write down of $64.3 million of carried interests during the year ended December 31, 2024.
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.
We also seek to add amenities designed to promote health and wellness, celebrate local and cultural events and enhance the lives of residents living in our communities. We also incorporate spaces for rest and socialization across our global multifamily portfolio, including clubhouses, fitness centers, business suites, outdoor play areas, pools and dog parks.
Within Kennedy Wilson’s total workforce of approximately 259 employees, 40% are women, with many serving in leadership positions throughout the company. Training and Development Kennedy Wilson would not exist without our most important asset: our people. 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.
We strive to maintain a corporate culture, that allows for better representation of different viewpoints, perspective and can bring fresh ideas to all levels of the Company. Within Kennedy Wilson’s total workforce comprises 246 employees. Training and Development Kennedy Wilson would not exist without our most important asset: our people.
Additionally, in our Co-Investment Portfolio, we have the five-star Rosewood flagged Kona Village Resort that consists of 150 rooms in Kona, Hawaii, which opened in July 2023. Residential and Other In certain cases, we may pursue for-sale housing acquisition opportunities, including land for entitlements, finished lots, urban infill housing sites and partially finished and finished housing projects.
In addition to our ownership interest, we manage the Kohanaiki asset and develop residential lots and homes for sale. We also hold ownership interests in the five-star, Rosewood flagged Kona Village Resort that consists of 150 rooms in Kona, Hawaii and which sits in our Co-Investment Portfolio.
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.
As of December 31, 2024, our global team, managed $28.0 billion of AUM (as noted above) of which $27.0 billion is operating properties and real estate loans (excluding development properties) which produced total revenue of $2.0 billion ($739.9 million at KW's share) compared to $22.8 billion of operating properties as of December 31, 2023 with total revenue of $1.8 billion ($736.0 million at KW's share).
On certain income-producing acquisitions, there are adjacent land parcels for which we may pursue entitlement activities or, in some cases, development or re-development opportunities. This group also includes our investment in liquid non-real estate investments which include investment funds that hold marketable securities and private equity investments.
We account for our ownership interest at fair value and it is included within our unconsolidated investments. 7 Table of Contents This group also includes our investment in liquid non-real estate investments which include investment funds that hold marketable securities and private equity investments.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur real estate debt investment business operates in a highly competitive market for lending and investment opportunities through our debt platforms, including originating and investing in senior loans, mezzanine loans, B- and C-Notes and preferred equity, which may limit our ability to originate or acquire desirable loans and investments in our target assets and are subject to increased risks.
Biggest changeIn addition, changes in federal, state and local legislation and regulation on climate change or natural disaster response could result in temporary rent control, changes in building regulations, temporary eviction moratoria, increased operating costs and/or increased capital expenditures to improve the energy efficiency of our existing communities (for example, increased costs associated with meeting electric vehicle charging mandates) and could also require us to spend more on new developments without a corresponding increase in revenue. 18 Table of Contents Our real estate debt investment business operates in a highly competitive market for lending and investment opportunities through our debt platforms, including originating and investing in senior loans, mezzanine loans, B- and C-Notes and preferred equity, which may limit our ability to originate or acquire desirable loans and investments in our target assets and are subject to increased risks.
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 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.
The trading price of our common stock has historically been and may in the future continue to be volatile due to factors such as: 26 Table of Contents • 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; • announcements concerning us or our competitors; and • the general state of the securities markets.
We rely on third party property managers and hotel operators to manage the daily operations of our properties. We are also parties to hotel management agreements under which unaffiliated third-party property managers manage our hotels.
We rely on third party property managers and hotel operators to manage the daily operations of our properties. We are also parties to hotel management agreements under which unaffiliated third-party property managers manage our hotel.
Our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by the law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees or our stockholders to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated 30 Table of Contents certificate of incorporation or our amended and restated bylaws or to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (4) any action asserting a claim governed by the internal affairs doctrine.
Our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by the law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees or our stockholders to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (4) any action asserting a claim governed by the internal affairs doctrine.
The loss of any property or asset to foreclosure could have a material adverse effect on our business, financial condition and results of operations. In addition, agreements governing certain of our financings contain cross-default and/or cross-acceleration provisions, including, without limitation, the indentures governing our KWI Notes and the documents governing the Second A&R Facility and the KWE Notes.
The loss of any property or asset to foreclosure could have a material adverse effect on our business, financial condition and results of operations. In addition, agreements governing certain of our financings contain cross-default and/or cross-acceleration provisions, including, without limitation, the indentures governing our KWI Notes and the documents governing the Third A&R Facility and the KWE Notes.
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. The state of California has implemented a statewide rent control initiative that limits rental increases to 5% + CPI.
In the United States, 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. The state of California has implemented a statewide rent control initiative that limits rental increases to 5% + CPI.
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.
As of December 31, 2024, 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.
Please also see “Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.” In addition, due to, among other things, a decrease in transactional activity and the macroeconomic conditions discussed above, we may become more highly leveraged, resulting in an increase in debt service costs that could adversely affect our results of operations or our credit ratings.
Please also see “Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.” In 14 Table of Contents addition, due to, among other things, a decrease in transactional activity and the macroeconomic conditions discussed above, we may become more highly leveraged, resulting in an increase in debt service costs that could adversely affect our results of operations or our credit ratings.
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.
In addition to originating and acquiring senior loans, to a lesser extent, 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.
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.
Although our management has concluded that our internal control over financial reporting was effective as of December 31, 2024 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.
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.
As of December 31, 2024, 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.
When we engage in development activities, we are subject to risks associated with those activities that could adversely affect our financial condition, results of operations, cash flows and the market price of, our common stock, including, but not limited to: • we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations; • we may not be able to obtain financing for development projects, or obtain financing on favorable terms; • construction costs of a project may exceed the original estimates or construction may not be concluded on schedule, making the project less profitable than originally estimated or not profitable at all (including the possibility of errors or omissions in the project's design, contract default, contractor or subcontractor default, performance bond surety default, the effects of local weather conditions, natural disasters and pandemics, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment); • tenants who pre-lease space or contract with us for a build-to-suit project may default prior to occupying the project; • upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we financed through construction loans; • we may not achieve sufficient occupancy levels, sales levels and/or obtain sufficient rents to ensure the profitability of a completed project; • we may overestimate the value of the property; • such development activities typically require a significant amount of management's time and attention, diverting their attention from our other operations; and • development projects in which we have invested may be abandoned and the related investment will be impaired.
When we engage in development activities, we are subject to risks associated with those activities that could adversely affect our financial condition, results of operations, cash flows and the market price of, our common stock, including, but not limited to: • we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations; • we may not be able to obtain financing for development projects, or obtain financing on favorable terms; • inflation and domestic tariff policies, among other things, may increase construction costs of a project in excess of the original estimates or construction may not be concluded on schedule, making the project less profitable than originally estimated or not profitable at all (including the possibility of errors or omissions in the project's design, contract default, contractor or subcontractor default, performance bond surety default, the effects of local weather conditions, natural disasters and pandemics, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment); • tenants who pre-lease space or contract with us for a build-to-suit project may default prior to occupying the project; • upon completion of construction, we may not be able to obtain, or obtain on advantageous terms, permanent financing for activities that we financed through construction loans; • we may not achieve sufficient occupancy levels, sales levels and/or obtain sufficient rents to ensure the profitability of a completed project; • we may overestimate the value of the property; • such development activities typically require a significant amount of management's time and attention, diverting their attention from our other operations; and • development projects in which we have invested may be abandoned and the related investment will be impaired.
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.
As of December 31, 2024, 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.
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.
We presently expect to continue operating and acquiring properties in areas that have adopted or may adopt laws and regulations imposing restrictions on the timing or amount of rent increases and a landlord's ability to evict a tenant.
The documents governing the Second A&R Facility and KWE Notes contain similar provisions. Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.
The documents governing the Third A&R Facility and KWE Notes contain similar provisions. Our debt obligations impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions.
The cash flows include a projection of the net sales proceeds at the end of the holding period, computed using an estimated market reversionary capitalization rate. Under the direct capitalization approach, the Company applies an estimated 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 an estimated market reversionary capitalization rate. 16 Table of Contents Under the direct capitalization approach, the Company applies an estimated market derived capitalization rate to current and future income streams with appropriate adjustments for tenant vacancies or rent-free periods.
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.
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.
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.
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.
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.
We may fail to comply with section 404 of the Sarbanes-Oxley Act of 2002. 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.
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.
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 23 Table of Contents immediately due and payable and proceed against any collateral securing that indebtedness.
We have historically financed new acquisitions with cash derived from secured and unsecured loans and lines of credit and, to a lesser extent, preferred stock. We typically purchase real property with loans secured by a mortgage on the property acquired and we anticipate continuing this trend.
We have historically financed new acquisitions with cash derived from secured and unsecured loans and lines of credit and, to a lesser extent, preferred stock. We typically purchase real property with loans secured by a mortgage on the property 22 Table of Contents acquired and we anticipate continuing this trend.
If the market interest rates continue to increase, our cash flow and results of operations will be adversely affected and we may need to adjust our interest rate management policy, either or both of which may adversely affect our business, financial condition, liquidity and results of operations.
If the market interest rates continue to remain high, our cash flow and results of operations will be adversely affected and we may need to adjust our interest rate management policy, either or both of which may adversely affect our business, financial condition, liquidity and results of operations.
Although we utilize various procedures and controls to mitigate 24 Table of Contents our exposure to such risk, cybersecurity attacks are evolving and unpredictable. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and data.
Although we utilize various procedures and controls to mitigate our exposure to such risk, cybersecurity attacks are evolving and unpredictable. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and data.
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.
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.
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.
As of December 31, 2024, approximately 31% of our revenues were sourced from our foreign operations in the United Kingdom, Ireland, Italy and Spain, 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.
These third parties are directly responsible for the day-to-day operation of our properties with limited supervision by us, and they often have potentially significant decision-making authority with respect to those properties.
These 19 Table of Contents third parties are directly responsible for the day-to-day operation of our properties with limited supervision by us, and they often have potentially significant decision-making authority with respect to those properties.
Also, our organizational documents do not limit the amount of debt that we may incur. Accordingly, our management and board of directors have discretion to 25 Table of Contents increase the amount of our outstanding debt at any time.
Also, our organizational documents do not limit the amount of debt that we may incur. Accordingly, our management and board of directors have discretion to increase the amount of our outstanding debt at any time.
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.
As the fair value of underlying investments varies between reporting periods, if we were to have negative carried interests 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 carried interests.
Disruptions in the credit markets may also adversely affect our business of providing investment management services to our limited partners in our commingled funds and joint venture partners, which would lead to a decrease in the performance allocations we generate.
Disruptions in the credit markets may also adversely affect our business of providing investment management services to our limited partners in our commingled funds and joint venture partners, which would lead to a decrease in carried interests we generate.
The current high interest rates and inflationary pressures in our markets, however, have led to a general decrease in transactional activity, leading to lower levels of gains recognized and cash generated to reinvest in our business.
The current high interest rates and inflationary pressures in our markets, however, have led to a general decrease in transactional activity as compared to previous periods, leading to lower levels of gains recognized and cash generated to reinvest in 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, 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.
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, 2024, $1.9 billion, or approximately 92% of our unconsolidated investments and approximately 27% of our total assets were recorded on our financial statements at estimated fair value.
If a fund performs poorly, our performance allocations and income from such fund will decrease and we may not receive any performance allocations and may experience possible losses from our own principal investment in such fund.
If a fund performs poorly, our carried interests and income from such fund will decrease and we may not receive any carried interests and may experience possible losses from our own principal investment in such fund.
Please also see “Adverse developments in the credit markets and rising interest rates may harm our business, financial condition and results of operations” below.
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 increased interested rates may harm our business, financial condition and results of operations.
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.
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 20 Table of Contents properties and achieve targeted returns for our investors in certain circumstances.
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.
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.
Additionally, potential borrowers may be unable or unwilling to accept variable rate loans, which would result in less transaction activity for our real estate debt investment business and could adversely affect our business, financial condition, liquidity and results of operations.
Additionally, potential borrowers may be unable or unwilling to accept variable rate loans, which would result in less transaction activity for our real estate debt investment business and could adversely affect our business, financial condition, liquidity and results of operations. Our reliance on third-parties to operate certain of our properties may harm our business.
Conducting a global business carries significant risks, including: • restrictions and problems relating to the repatriation of capital; • difficulties and costs of staffing and managing international operations; • the burden of complying with multiple and potentially conflicting laws, including local laws related to public health; • laws restricting foreign companies from conducting business; • political instability, civil unrest, acts of war and terrorism, pandemics, epidemics, acts of God, including earthquakes, hurricanes, volcanic eruptions and other natural disasters (which may result in uninsured or under insured losses); • greater difficulty in perfecting our security interests, collecting accounts receivable, foreclosing on secured assets and protecting our interests as a creditor in bankruptcies in certain geographic regions; • potentially adverse tax consequences; • share ownership restrictions on foreign operations; and • tariff regimes of the countries in which we do business Our revenues and earnings may be materially and adversely affected by fluctuations in foreign currency exchange rates due to our international operations.
Conducting a global business carries significant risks, including: • restrictions and problems relating to the repatriation of capital; • difficulties and costs of staffing and managing international operations; • the burden of complying with multiple and potentially conflicting laws, including local laws related to public health; • laws restricting foreign companies from conducting business; • political instability, civil unrest, acts of war and terrorism, pandemics, epidemics, acts of God, including earthquakes, hurricanes, volcanic eruptions and other natural disasters (which may result in uninsured or under insured losses); • greater difficulty in perfecting our security interests, collecting accounts receivable, foreclosing on secured assets and protecting our interests as a creditor in bankruptcies in certain geographic regions; • potentially adverse tax consequences; • share ownership restrictions on foreign operations; and • tariff regimes of the countries in which we do business 15 Table of Contents Our revenues from foreign operations have been primarily denominated in the local currency where the associated revenues were earned.
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 significant operations in the United Kingdom and Ireland and to a lesser extent, Italy and Spain expose our business to risks inherent in conducting business in foreign markets, including fluctuations in foreign currency exchange rates.
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.
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, which may limit desirable loans and investments in specific types of target assets.
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.
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.
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.
The maximum potential undiscounted amount of future payments that we could be required to make under these guarantees was approximately $119.4 million at December 31, 2024.
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.
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. Please also see Part I – Item 1.
Please also see “ 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. ” Inflation may adversely affect our financial condition and results of operations.
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.
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.
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.
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.
Certain significant expenditures, such as debt service costs, which increased with the rapid rise of interest rates recently in response to high inflation, real estate taxes and operating and maintenance costs, are not necessarily reduced when market conditions are poor (even if reduced, timing of such reductions are delayed).
Returns on loan investments depend on the borrower’s ability to make required payments or, in the event of default, our security interests and our ability to foreclose and liquidate whatever property that secures the loans and loan portfolios. We may be unable to collect on a defaulted loan or foreclose on security successfully or in a timely fashion.
Returns on loan investments depend on the borrower’s ability to make required payments or, in the event of default, our security interests and our ability to foreclose and liquidate whatever property that secures the loans and loan portfolios.
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.
We may be unable to collect on a defaulted loan or foreclose on security successfully or in a timely fashion in the future. 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.
The value of the Company’s investment in VHH is determined through several approaches including a discounted cash flow analysis on a partnership-by-partnership basis that factors in the distinct economic splits between VHH and its tax credit LPs (where applicable). This methodology assumes ordinary distributions and future sale of the underlying property after the tax credit period has expired.
The value of the Company’s investment in VHH is determined through several approaches including a discounted cash flow analysis on a partnership-by-partnership basis that factors in the distinct economic splits between VHH and its tax credit LPs (where applicable).
These circumstances have, and may continue to, materially impact liquidity in the financial markets, making terms for certain financings less attractive, and, in some cases, unavailable, even for companies that are otherwise qualified to obtain financing.
During the last several years, the credit markets have experienced and continue to experience significant price volatility, dislocations, liquidity disruptions and uncertainty. These circumstances have, and may continue to, materially impact liquidity in the financial markets, making terms for certain financings less attractive, and, in some cases, unavailable, even for companies that are otherwise qualified to obtain financing.
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.
Most of our real estate properties are encumbered by traditional non-recourse debt obligations. 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.
As a result, our economic performance, the value of our real estate and our ability to implement our business strategies may be significantly and adversely affected by changes in national and local economic conditions.
As a result, our economic performance, the value of our real estate and our ability to implement our business strategies may be significantly and adversely affected by changing macroeconomic trends in the real estate markets in which we operate.
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.
Macroeconomic trends, including increases in inflation and interest rates, foreign currency fluctuations, inflation, declining demand for real estate, declining real estate values, periods of general economic slowdown and recession fears, adverse developments affecting financial institutions and government responses to the same, or the perception that any of these events may occur, continue or worsen, have negatively impacted the real estate market and our operating performance.
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.
Item 1A. 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.
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.
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. In December 2024, S&P downgraded us to ‘B+’ from ‘BB-’.
Our business could be adversely affected by cybersecurity incidents or threats, including, security breaches, cyber-attacks, cyber intrusions or otherwise. We rely on our own and our third-party service provider’s computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, "IT Systems").
We rely on our own and our third-party service provider’s computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, "IT Systems").
The unavailability of suitable investment opportunities and acquisition targets, or our inability to find or be successful in competing for them, may result in a decline in business, financial condition and results of operations.
The unavailability of suitable investment opportunities and acquisition targets, or our inability to find or be successful in competing for them, may result in a decline in business, financial condition and results of operations. Climate change-related risks including natural disasters, severe weather, or other catastrophic events may materially adversely affect our business.
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.
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.
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.
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.
Our revenues from foreign operations have been primarily denominated in the local currency where the associated revenues were earned. Fluctuations in currency exchange rates create volatility in our reported results as we translate the balance sheets, operational results and cash flows of our subsidiaries into U.S. Dollars for consolidated reporting.
Fluctuations in currency exchange rates create volatility in our reported results as we translate the balance sheets, operational results and cash flows of our subsidiaries into U.S. Dollars for consolidated reporting. To date, our foreign currency exposure has been limited to the GBP and the Euro.
Any failure to complete a redevelopment project in a timely manner and within budget or to sell or lease the project after completion could have a material adverse effect upon our business, results of operation and financial condition.
Any failure to complete a redevelopment project in a timely manner and within budget or to sell or lease the project after completion could have a material adverse effect upon our business, results of operation and financial condition. 17 Table of Contents 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.
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.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2024, we had $99.6 million of California net operating loss carryforwards as well as approximately $87.6 million of foreign tax credits, which generally can be used to offset future taxable income or taxes, as applicable.
However, our stakeholders may look to us to implement more or different ESG procedures, standards or goals in order to continue engaging with us, to remain invested in us, or before they make further investments in us.
However, investors or other stakeholders are increasingly looking to us to implement differing and sometimes conflicting ESG procedures, standards or goals in order to continue engaging with us, to remain invested in us, or before they make further investments in us.
In the face of poor fund performance, our management fees and performance allocations and our ability to raise additional capital from our partners may be adversely affected. Current and future investors could demand lower fees or significant fee concessions for existing or future funds, which would decrease our revenue or hamper our ability to raise capital.
Current and future investors could demand lower fees or significant fee concessions for existing or future funds, which would decrease our revenue or hamper our ability to raise capital.
The economic condition of each local market where we operate may depend on one or more key industries within that market, which, in turn, makes our business sensitive to the performance of those industries. Real estate investments are generally illiquid, which may affect our ability to promptly change our portfolio in response to changes in economic and other conditions.
The economic condition of each local market where we operate, and primarily in the United States, United Kingdom and Ireland may depend on one or more key industries within that market, which, in turn, makes our business sensitive to the performance of those industries.
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.
Please also see " 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 " above. 24 Table of Contents 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.
Our amended and restated bylaws designate the Court of Chancery within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a different judicial forum for disputes with us.
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. 27 Table of Contents Our amended and restated bylaws designate the Court of Chancery within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a different judicial forum for disputes with us.
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.
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.
Currently, we also insure some of our properties for loss caused by earthquakes in levels we deem appropriate and, where we believe necessary, for loss caused by flood. The occurrence of an earthquake, flood or other natural disaster may materially and adversely affect our business, financial condition and results of operations.
Currently, we also insure some of our properties for loss caused by earthquakes in levels we deem appropriate and, where we believe necessary, for loss caused by flood.
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.
As of December 31, 2024, we also had $156.5 million of foreign net operating loss carryforwards which could be subject to similar limitations in foreign jurisdictions based upon changes in equity ownership. 25 Table of Contents Additionally, state and federal tax laws are subject to change and could result in increased future tax liability to the Company.
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.
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.
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.
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 occurrence of any of the foregoing could have a material adverse effect on our business and financial condition and expose us to market, operational and execution costs or risks. Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants.
Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants.
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.
When any of the commingled closed-end funds we manage performs poorly, our investment record suffers. In the face of poor fund performance, our management fees and carried interests and our ability to raise additional capital from our partners may be adversely affected.
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.
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 that could have a material adverse effect on us.
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.
Additionally, our real estate debt investment business primarily originates and invests in floating interest rate instruments. 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.
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.
If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.
Removed
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.
Added
If any of the following risks actually occur, our business, financial condition, operating results, cash flows and future prospects could be materially adversely affected.
Removed
These 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk factors” in this annual report on Form 10-K, including “ Our business could be adversely affected by security breaches through cyber-attacks, cyber intrusions or otherwise. ”, for additional discussion about cybersecurity-related risks. Governance Our Board of Directors holds oversight responsibility over the Company’s strategy and risk management, including material risks related to cybersecurity threats.
Biggest changeRisk factors” in this annual report on Form 10-K, including “ Our 28 Table of Contents business could be adversely affected by security breaches through cyber-attacks, cyber intrusions or otherwise. ”, for additional discussion about cybersecurity-related risks. Governance Our Board of Directors holds oversight responsibility over the Company’s strategy and risk management, including material risks related to cybersecurity threats.
Through the policies and controls described above, including our incident response policy, members of our management team, including our Chief Financial Officer, our Executive Vice President, Global Risk Management and our General Counsel, as well as representatives of the third-party IT and cybersecurity team are informed about cybersecurity threats and incidents affecting our information systems and direct our efforts to prevent, detect, mitigate, and remediate cybersecurity threats and incidents.
Through the policies and controls described above, including our incident response policy, members of our management team, including our Chief Financial Officer, our Executive Vice President, Global Risk Management and our Executive Vice President, General Counsel, as well as representatives of the third-party IT and cybersecurity team are informed about cybersecurity threats and incidents affecting our information systems and direct our efforts to prevent, detect, mitigate, and remediate cybersecurity threats and incidents.
Members of this third-party IT and cybersecurity team have collectively over 54 years of prior work experience and are responsible for the implementation of our cybersecurity strategy and responses as well as individuals having the position of cybersecurity analyst, cybersecurity engineer.
Members of this third-party IT and cybersecurity team have collectively over 55 years of prior work experience and are responsible for the implementation of our cybersecurity strategy and responses as well as individuals having the position of cybersecurity analyst, cybersecurity engineer.
In addition, our Vice President, Information Systems, has 38 years of prior work experience in information systems and technology, including with respect to cybersecurity issues and threats.
In addition, our Vice President, Information Systems, has 40 years of prior work experience in information systems and technology, including with respect to cybersecurity issues and threats.
The Audit Committee engages in regular discussions with management and engaged consultants 31 Table of Contents and legal advisers regarding the Company’s significant financial risk exposures and the measures implemented to monitor and control these risks, including those that may result from material cybersecurity threats. These discussions include the Company’s risk assessment and risk management policies.
The Audit Committee engages in regular discussions with management and engaged consultants and legal advisers regarding the Company’s significant financial risk exposures and the measures implemented to monitor and control these risks, including those that may result from material cybersecurity threats. These discussions include the Company’s risk assessment and risk management policies.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeConsolidated Properties by Region Residential and Land Units/Lots Acres KW Ownership % # of Investments Western U.S. 3 — 100 % 2 Total Residential and Land 3 — 100 % 2 The following table sets forth a summary schedule of commercial lease expirations for leases in place as of December 31, 2024, 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 2025 92 0.9 $ 24.6 18 % 2026 50 0.6 20.2 15 % 2027 46 0.4 10.9 8 % 2028 38 0.4 15.0 11 % 2029 53 0.5 26.7 20 % 2030 17 0.2 4.4 3 % 2031 15 0.2 9.0 7 % 2032 13 0.2 4.8 4 % 2033 11 0.2 6.3 5 % 2034 21 0.1 11.8 8 % Thereafter 11 0.1 2.0 1 % Total 367 3.8 $ 135.7 100 % (1) Dollars and square footage in millions.
In addition, our management believes there is adequate alternative office space available at acceptable rental rates to meet our needs, although adverse movements in rental rates in some markets may negatively affect our profits in those markets when we enter into new leases. The following table sets forth certain information regarding our corporate headquarters and regional offices.
In addition, our management believes there is adequate alternative office space available at acceptable rental rates to meet our needs, although adverse movements in rental rates in some markets may negatively affect our profits in those markets when we enter into new leases. The following table sets forth certain information regarding our corporate headquarters and foreign regional 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 9 properties totaling 1.1 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 1.0 million square feet. (3) Annualized effective rent represents annualized base rent net of rental concessions and abatements.
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.
The Beverly Hills office operates as the main investment and asset management center for us in the United States, while the UK and Ireland 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.
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.
Our corporate headquarters are located in Beverly Hills, California. We also have ten other offices throughout the United States, one office in London, UK, one office in Dublin, Ireland and one office in Tokyo, Japan.
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.
Properties The following table sets forth certain information regarding our stabilized consolidated properties at December 31, 2024: Consolidated Properties by Region Multifamily (4) Units Ending % Leased Annualized Base Rent (1) Average Effective Rent (3) KW Ownership % # of Assets Western U.S. 9,258 95 % $ 198.7 $ 198.7 97 % 32 Total Multifamily 9,258 95 % $ 198.7 $ 198.7 97 % 32 Commercial (2) Square Feet Ending % Occupancy Annualized Base Rent (1) Annualized Effective Rent (3) KW Ownership % # of Assets Western U.S. 0.8 87 % $ 34.6 $ 32.9 100 % 5 Europe 3.4 91 101.1 95.2 91 24 Total Commercial 4.2 90 % $ 135.7 $ 128.1 93 % 29 29 Table of Contents Note: Dollars and square footage in millions.
Added
(4) Excludes properties that are under development or undergoing lease up, which includes 2 European properties where the scope is still being explored.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 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.
Biggest changeItem 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. 30 Table of Contents Item 4. Mine Safety Disclosures Not Applicable. 31 Table of Contents PART II
Removed
Our 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
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, 2024 — $ — 26,528,959 $ 109,739,985 November 1 - November 30, 2024 — — 26,528,959 109,739,985 December 1 - December 31, 2024 2,105 10.66 26,531,064 109,717,542 Total 2,105 $ — 26,531,064 $ 109,717,542 (1) On March 20, 2018, we announced that our board of directors authorized us to repurchase up to $250 million of our common shares, from time to time, subject to market conditions.
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.
Shares that vested during the year ended December 31, 2024 and 2023 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.
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.
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 GICS Level 1 Index for the five-year period ended December 31, 2024, and assumes reinvestment of all dividends, if any, paid on the securities.
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.
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, 2019 through December 31, 2024, with the comparable cumulative return of companies comprising the S&P 500 Index and the MSCI World Real Estate GICS Level 1 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, 2024, we had approximately 73 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 20, 2025, we had approximately 65 holders of record of our common stock.
The stock price performance shown on the graph is not necessarily indicative of future price performance. Kennedy Wilson uses the MSCI World Real Estate Index, which includes international real estate companies as a comparable benchmark.
The stock price performance shown on the graph is not necessarily indicative of future price performance. 32 Table of Contents Kennedy Wilson uses the MSCI World Real Estate GICS Level 1 Index, which includes international real estate companies as a comparable benchmark.
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.
On November 4, 2020, we announced that 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, 2024, the Company repurchased and retired a total of 1.6 million shares of its common stock at a weighted average price of $8.50.
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, 2023, the Company repurchased and retired a total of 0.7 million shares of its common stock at a weighted average price of $11.15.
Dividends We declared and paid quarterly dividends of $0.24 per share each quarter of 2023 and 2022. Recent Sales of Unregistered Securities None.
Dividends We declared and paid quarterly dividends of $0.12 for the last three quarters of 2024 and $0.24 per share for the first quarter of 2024 and each quarter of 2023. Recent Sales of Unregistered Securities None.
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.
The table below details the changes in the Company's AUM for the twelve months ended December 31, 2024: (in millions) December 31, 2023 Increases Decreases December 31, 2024 AUM $ 24,542.9 $ 6,400.7 $ 2,990.7 $ 27,952.9 AUM increased 14% to approximately $28.0 billion as of December 31, 2024.
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.
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. 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
Real Estate Assets Under Management (AUM) AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures.
During the year ended December 31, 2024 and 2023, total payments for the employees’ tax obligations to the taxing authorities were $1.6 million (131,116 shares withheld) and $13.4 million (781,303 shares withheld), respectively. 33 Table of Contents Real Estate Assets Under Management (AUM) AUM generally refers to the properties and other assets with respect to which we provide (or participate in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures.
Removed
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.
Added
The 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.
Removed
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.
Added
The increase is due to the inclusion of future loan commitments, asset acquisitions in our comingled funds and loan fundings in our debt platform. These increases were offset by consolidated asset sales and fair value losses in our Co-Investment portfolio. Please also see "Fair Value Investments" in Item 1.
Removed
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.
Removed
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.
Removed
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

Item 7. Management's Discussion & Analysis

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

164 edited+36 added−82 removed112 unchanged
Biggest changeManagement’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.
Biggest changeCommon Shareholders Other revenue 1.4 Compensation and related, corporate (46.3) General and administrative, corporate (7.2) Depreciation and amortization (148.3) Interest expense (261.1) Loss on early extinguishment of debt (1.7) Other income 14.2 Provision for income taxes (10.2) Company's share of Interest, Depreciation, and Taxes included in income from unconsolidated investments (135.4) EBITDA adjustments to NCI 6.9 Net loss (33.7) Net loss attributable to noncontrolling interests 0.7 Preferred dividends (43.5) Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ (76.5) 36 Table of Contents Year Ended December 31, 2023 (Dollars in millions) Consolidated Co-Investments Total Segment Revenue Rental $ 415.3 $ — $ 415.3 Hotel 57.1 — 57.1 Investment management fees — 61.9 61.9 Loans — 26.1 26.1 Total segment revenue 472.4 88.0 560.4 Loss from unconsolidated investments Principal co-investments — (188.5) (188.5) Carried interests — (64.3) (64.3) Company's share of Interest, Depreciation, and Taxes included in income from unconsolidated investments — 102.4 102.4 Loss from unconsolidated investments — (150.4) (150.4) 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 81.7 Carried interests compensation — (15.1) (15.1) General and administrative 15.5 12.7 28.2 Other (income) loss (2.3) 7.0 4.7 Other segment items (1) 29.3 (0.3) 29.0 Total expenses 275.7 43.3 319.0 Segment Adjusted EBITDA $ 324.3 $ (105.7) $ 218.6 Reconciliation of Segment Adjusted EBITDA to Net Income attributable to Kennedy-Wilson Holdings, Inc.
These variable rates generally are based on the lender’s base rate, prime rate, EURIBOR, GBP LIBOR, LIBOR, SOFR, SONIA plus an applicable borrowing margin. Additionally, in order to mitigate some of the risk associated with increasing interest rates, we have purchased interest rate caps that limit the amount that interest expense can increase with rate increases.
These variable rates generally are based on the lender’s base rate, prime rate, EURIBOR, GBP LIBOR, SOFR, SONIA plus an applicable borrowing margin. Additionally, in order to mitigate some of the risk associated with increasing interest rates, we have purchased interest rate caps that limit the amount that interest expense can increase with rate increases.
(3) Represents properties excluded from the same property population that were purchased or sold during the applicable period. (4) Represents properties excluded from the same property population that were not stabilized during the applicable period, or retail or industrial properties.
(3) Represents properties excluded from the same property population that were purchased or sold during the applicable period. (4) Represents properties excluded from the same property population that were not stabilized during the applicable period, or retail or industrial properties.
(5) Represents other properties excluded from the same property population that were not classified as a commercial or multifamily property within the Company’s portfolio. Also includes immaterial adjustments for foreign exchange rates, changes in ownership percentages, and certain non-recurring income and expenses.
(5) Represents other properties excluded from the same property population that were not classified as a commercial or multifamily property within the Company’s portfolio. Also includes immaterial adjustments for foreign exchange rates, changes in ownership percentages, and certain non-recurring income and expenses.
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.
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, 2024. Total remaining costs may be financed with third-party cash contributions, proceeds from projected sales, and/or debt financing.
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.
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 June 2023.
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.
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.
Property-level non-recourse financings with such loan-to-value covenants require that the underlying properties are valued on a periodic basis (at least annually). 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.
Property-level non-recourse financings with such loan-to-value covenants require that the underlying properties are valued on a periodic basis (at least annually). As of December 31, 2024, the Company was in compliance with all property-level mortgages and was current on all payments (principal and interest) with respect to the same.
During the year ended December 31, 2023, our net deferred tax asset (and associated valuation allowance) related to our excess tax basis in the legacy UK real estate assets increased due to book depreciation taken on UK real estate buildings, which is not subjected to depreciation for UK tax purposes.
During the year ended December 31, 2024, our net deferred tax asset (and associated valuation allowance) related to our excess tax basis in the legacy UK real estate assets increased due to book depreciation taken on UK real estate buildings, which is not subjected to depreciation for UK tax purposes.
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.
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, 2024, the Company was in compliance with these covenants.
Please refer to the section titled " Currency Risk - Foreign Currencies" in Item 3 for a discussion of risks relating to foreign currency and our hedging strategy and the " Other Comprehensive Income " section below for a discussion of the balance sheet impact of foreign currency movements on our results of operations.
Please refer to the section titled " Currency Risk - Foreign Currencies" in Item 7 for a discussion of risks relating to foreign currency and our hedging strategy and the " Other Comprehensive Income " section below for a discussion of the balance sheet impact of foreign currency movements on our results of operations.
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.
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 34% of our investment account is invested through our foreign platforms in their local currencies.
Income from unconsolidated investments - performance allocations - Performance allocations relate to allocations to the general partner, special limited partner or asset manager of Kennedy Wilson's co-investments it manages based on the cumulative performance of the fund and are subject to preferred return thresholds of the limited partners.
Income from unconsolidated investments - carried interests - Carried interests relate to allocations to the general partner, special limited partner or asset manager of Kennedy Wilson's co-investments it manages based on the cumulative performance of the fund and are subject to preferred return thresholds of the limited partners.
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.
Please refer to the section titled "Off Balance Sheet Arrangements" for further information. 43 Table of Contents 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.
As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as performance allocations to reflect either (a) positive performance resulting in an increase in the performance allocations to the general partner or asset manager or (b) negative performance that would cause the amount due to Kennedy Wilson to be less than the amount previously recognized, resulting 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, it is necessary to make adjustments to amounts recorded as carried interests to reflect either (a) positive performance resulting in an increase in the carried interests to the general partner or asset manager or (b) negative performance that would cause the amount due to Kennedy Wilson to be less than the amount previously recognized, resulting in a negative adjustment to carried interests to the general partner or asset manager.
To the extent that a fund or investment has a performance allocation sharing program, a portion of performance allocations will be recorded to performance allocation compensation. The Company has concluded that performance allocations to the Company from equity method investments, based on cumulative performance to-date, represent carried interests.
To the extent that a fund or investment has a carried interests sharing program, a portion of carried interests will be recorded to carried interests compensation. The Company has concluded that carried interests to the Company from equity method investments, based on cumulative performance to-date, represent carried interests.
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.
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.
Fair Value During the year ended December 31, 2023 , valuations continued to pull back primarily as a result of continued expansion of estimated capitalization rates and significant reductions in transaction volumes and liquidity, primarily as a result of increased borrowing rates as the Federal Reserve continued its interest rate hikes and increased the federal funds rate by 100 basis points during 2023.
During the year ended December 31, 2023, valuations continued to pull back primarily as a result of continued expansion of estimated capitalization rates and significant reductions in transaction volumes and liquidity due to, increased borrowing rates as the Federal Reserve continued its interest rate hikes and increased the federal funds rate by 100 basis points during 2023.
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.
As of December 31, 2024, 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.
Our investments in real estate are typically financed with equity from our balance sheet, third party equity and mortgage loans secured by that real estate. These mortgage loans are generally nonrecourse in that, in the event of default, recourse will be limited to the mortgaged property serving as collateral, subject to limited customary exceptions.
Our investments in real estate are typically financed with equity from our balance sheet, third party equity and mortgage loans secured by such real estate. These mortgage loans are generally non-recourse in that, in the event of default, recourse will be limited to the mortgaged property serving as collateral, subject to limited customary exceptions.
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.
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 based on a variety of factors, including our current leverage and transactional activity.
Please also see 59 Table of Contents “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of “same property” results to the most comparable measure reported under GAAP. We use certain non-GAAP measures to analyze our business, including Adjusted EBITDA and Adjusted Net Income.
Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of “same property” results to the most comparable measure reported under GAAP. We use certain non-GAAP measures to analyze our business, including Adjusted EBITDA and Adjusted Net Income.
As such, during the year ended December 31, 2023 the Company recorded fair value decreases with 44 Table of Contents respect to: (i) certain office properties in the Western United States, Ireland and United Kingdom primarily due to expansion in estimated capitalization rates, primarily as a result of increased interest rates, which also led to us recording a decrease of the accrued performance allocations with respect to funds that held these investments as discussed below; (ii) certain market rate multifamily properties in the Western United States and Ireland primarily due to expansion in estimated capitalization rates; (iii) the write off of a $5 million investment in a social impact real estate fund manager; and (iv) a decrease in the fair value of a building that we hold a 10% ownership interest in due to a national co-working office tenant no longer paying rent at such property.
As such, during the year ended December 31, 2023 the Company recorded fair value decreases with respect to: (i) certain office properties in the Western United States, Ireland and United Kingdom primarily due to expansion in estimated capitalization rates, primarily as a result of increased interest rates, which also led to us recording a decrease of the accrued carried interests with respect to funds that held these investments as discussed below; (ii) certain market rate multifamily properties in the Western United States and Ireland primarily due to expansion in estimated capitalization rates; (iii) the write off of a $5 million investment in a social impact real estate fund manager; and (iv) a decrease in the fair value of a building that we hold a 10% ownership interest in due to a national co-working office tenant no longer paying rent at such property.
Performance Allocations Performance allocations or carried interest are allocated to the general partner, special limited partner or asset manager of Kennedy Wilson's real estate funds and fair value option unconsolidated investments based on the cumulative performance of the fund or underlying investments and are subject to preferred return thresholds of the limited partners and participants.
Carried Interests Carried interests are allocated to the general partner, special limited partner or asset manager of Kennedy Wilson's real estate funds and fair value option unconsolidated investments based on the cumulative performance of the fund or underlying investments and are subject to preferred return thresholds of the limited partners and participants.
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.
Impact of Inflation and Changing Prices As discussed throughout this report, high inflation impacted the global economy during the year ended December 31, 2024 and continues to impact the global economy.
Thus, the Funds reflect their investments at fair value, with unrealized 64 Table of Contents gains and losses resulting from changes in fair value reflected in their earnings.
Thus, the Funds reflect their investments at fair value, with unrealized 60 Table of Contents gains and losses resulting from changes in fair value reflected in their earnings.
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.
Debt Covenants The Third 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.
However, the arrangement per the Agreement is considered a modification of her awards and the Company has revalued her share awards over the remaining periods, resulting in a one-time $5.5 million of additional expense year ended December 31, 2023.
However, the arrangement per the Agreement is considered a modification of her awards and the Company has revalued her share awards over the remaining periods, which resulted in a one-time $5.5 million of additional expense year ended December 31, 2023.
Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Certain Non-GAAP Measures and Reconciliations” for a reconciliation of Net Operating Income to net income as reported under GAAP and a reconciliation of Net Operating Income (Net Effective) (with respect to same property) to net income as reported under GAAP.
Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Certain Non-GAAP Measures and Reconciliations” for a 54 Table of Contents reconciliation of Net Operating Income to net income as reported under GAAP and a reconciliation of Net Operating Income (Net Effective) (with respect to same property) to net income as reported under GAAP.
Pursuant to the terms of the former executive's separation and consulting agreement with the Company (the "Agreement"), the former executive's outstanding restricted shares, held as of her separation date, will continue to vest in future periods in accordance with the terms of the applicable restricted stock unit grants agreements.
Pursuant to the terms of the former executive's separation and consulting agreement with the Company (the "Agreement"), the former executive's outstanding restricted share units, held as of her separation date, will continue to vest in future periods in accordance with the terms of the applicable restricted stock unit grants agreements.
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.
Compensation and related - Employee compensation, comprising of salary, bonus, employer payroll taxes and benefits paid on behalf of employees. Carried interests compensation - Compensation associated with up to thirty-five percent (35%) of any carried interests earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.
The table below represents the change in rates over the years ended December 31, 2023 and 2022 as compared to the U.S.
The table below represents the change in rates over the years ended December 31, 2024 and 2023 as compared to the U.S.
(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.
(7) Table above excludes $284.7 million unfulfilled capital commitments to our unconsolidated investments and $123.4 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.
During the year ended December 31, 2023, we recorded $4.3 million of mark to market fair value gains on interest rate caps and swaps that the Company bought to hedge its variable rate interest rate exposure as compared to $18.4 million in year ended December 31, 2022.
During the year ended December 31, 2024, we recorded $5.5 million of mark to market fair value gains on interest rate caps and swaps that the Company bought to hedge its variable rate interest rate exposure as compared to $4.3 million in year ended December 31, 2023.
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.
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, 2024, fees recorded through revenues were $98.9 million as compared to $61.9 million for the same period in 2023.
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.
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 $23.2 million in cash from paid developer fees and proceeds from the sale of tax credits.
Please refer to the section titled " Currency Risk - Foreign Currencies" in Item 3 for a discussion of our risks relating to foreign currency and our hedging strategy. Below is a table that details the activity for the years ended December 31, 2023 and 2022.
Please refer to the section titled " Currency Risk - Foreign Currencies" in Item 7 for a discussion of our risks relating to foreign currency and our hedging strategy. Below is a table that details the activity for the years ended December 31, 2024 and 2023.
During the year ended December 31, 2023, the Company issued 1.7 million shares at a weighted average price of $18.07 per share for net proceeds of $29.8 million under our ATM Program. The Company has no obligation to sell any of such shares under its ATM Program.
The Company did not issue any shares under the ATM program in 2024. During the year ended December 31, 2023, the Company issued 1.7 million shares at a weighted average price of $18.07 per share for net proceeds of $29.8 million under our ATM Program. The Company has no obligation to sell any of such shares under its ATM Program.
The total amount of the 2029 Notes, 2030 Notes and 2031 Notes included in the Company's consolidated balance sheets was $1.8 billion at December 31, 2023. KWE Notes As of December 31, 2023, KWE has notes outstanding ("KWE Notes") of $523.3 million (based on December 31, 2023 rates), have an annual fixed coupon of 3.25% and mature in 2025.
The total amount of the 2029 Notes, 2030 Notes and 2031 Notes included in the Company's consolidated balance sheets was $1.8 billion at December 31, 2024. KWE Notes As of December 31, 2024, KWE has notes outstanding ("KWE Notes") of $310.0 million (based on December 31, 2024 rates), have an annual fixed coupon of 3.25% and mature in 2025.
Sixty percent of the award to each employee vests ratably over four years and the remaining forty percent vest upon the consummation of a liquidity event of the investment whereby the Company actually receives cash performance allocations from its partner.
Sixty percent of the award to each employee vests ratably over four years and the remaining forty percent vest upon the consummation of a liquidity event of the investment whereby the Company actually receives cash carried interests from its partner.
At any time prior to March 1, 2024 (in the case of the 2029 Notes), September 1, 2024 (in the case of the 2030 Notes) or March 1, 2026 (in the case of the 2031 notes), Kennedy Wilson may redeem the notes of the applicable series, in whole or in part, at a redemption price equal to 100% of their principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to the redemption date.
At any time prior to March 1, 2024 (in the case of the 2029 Notes), September 1, 2024 (in the case of the 2030 Notes) or March 1, 2026 (in the case of the 2031 notes), Kennedy Wilson had the right to (with the respect to the 2029 Notes and 20230 Notes) and may redeem the 2031 Notes, in whole or in part, at a redemption price equal to 100% of their principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to the redemption date.
Co-Investment Operations - Loans Loans income from loan investments increased to $26.1 million for the year ended December 31, 2023 as compared to $11.7 million for the same period in 2022. These amounts represent interest income on our share of loan investments within our global debt platform.
Co-Investment Operations - Loans Loan income from loan investments increased to $31.2 million for the year ended December 31, 2024 as compared to $26.1 million for the same period in 2023. These amounts represent interest income on our share of loan investments within our global debt platform.
At the end of each reporting period, Kennedy Wilson calculates the performance allocation that would be due as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized.
At the end of each reporting period, Kennedy Wilson calculates the carried interests that would be due as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized.
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 noted above. VHH does not have a performance allocation arrangement associated with the investment, and therefore, such increases in non-cash fair value noted above did not contribute to the performance allocation results.
During the year ended December 31, 2023, we recorded a $64.3 million decrease in the accrual (non-cash) for carried interests primarily related to the fair value decreases noted above. VHH does not have a carried interests arrangement associated with the investment, and therefore, such increases in non-cash fair value noted above did not contribute to the caried interests results.
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.
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, 2024, we had $109.7 million remaining under the plan for stock repurchases.
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.
Fees earned from consolidated investments are 52 Table of Contents 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.
The gains recognized during the year ended December 31, 2023 are primarily due to (i) the Company's sale of 49% of its equity interest in two previously wholly-owned market-rate multifamily properties into an existing joint venture platform managed by the Company and retained a noncontrolling 51% interest in such properties, which resulted in a gain on sale of real estate of $79.5 million; (ii) the sale of a Western United States property to VHH, pursuant to which the Company retains an interest in the asset through its ownership interest in VHH, which resulted in a gain of $15.1 million; (iii) the sale of a consolidated multifamily property owned with a noncontrolling interest partner which resulted in a gain of $37.6 million ($20.1 million of which was at the Company's share) and (iv) the remainder of gain on sale of real estate relates to the sale of non-core retail and residential properties in the Western United States, United Kingdom, Ireland, and Spain These gains are net of $28.6 million of impairments relating to retail assets in the United Kingdom, Ireland and the Western United States that have been identified for sale.
The gains recognized during the year ended December 31, 2023 are primarily due to (i) the Company's sale of 49% of its equity interest in two previously wholly-owned market-rate multifamily properties into an existing joint venture platform managed by the Company and retained a noncontrolling 51% interest in such properties, which resulted in a gain on sale of real estate of $79.5 million; (ii) the sale of a property in the Western United States to our VHH platform, pursuant to which the Company retained an interest in the asset through its ownership interest in VHH, which resulted in a gain of $15.1 million; (iii) the sale of a consolidated multifamily property owned with a noncontrolling interest partner which resulted in a gain of $37.6 million ($20.1 million of which was at the Company's share) and (iv) the remainder of gain on sale of real estate relates to the sale of non-core retail and residential properties in the Western United States, United Kingdom, Ireland, and Spain.
Liquidity and Capital Resources Our liquidity and capital resources requirements include acquisitions of real estate and real estate related assets, funding development projects, capital expenditures for consolidated real estate and unconsolidated investments, working capital needs, interest and principal payments on our debt and dividends to our common and preferred shareholders.
Liquidity and Capital Resources Our liquidity and capital resources requirements include acquisitions of real estate and real estate related assets, funding development projects, loan draws (particularly on our construction loan business), capital expenditures for consolidated real estate and unconsolidated investments, working capital needs, interest and principal payments on our debt and dividends to our common and preferred shareholders.
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.
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.
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.
The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages are 3.17% and approximately 1.2 years, respectively, as of December 31, 2024. 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, 2024.
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.
Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
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 .
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) 2024 2023 2022 2021 2020 Net (loss) income $ (33.7) $ (281.4) $ 101.9 $ 336.4 $ 107.8 Non-GAAP adjustments: Add back (less): Interest expense 261.1 259.2 220.8 192.4 201.9 Loss (gain) on early extinguishment of debt 1.7 1.6 (27.5) 45.7 9.3 Kennedy Wilson's share of interest expense included in unconsolidated investments 131.0 99.1 60.2 40.2 33.0 Depreciation and amortization 148.3 157.8 172.9 166.3 179.6 Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments 4.0 3.2 3.5 5.3 6.9 Provision for (benefit from) income taxes 10.2 (55.3) 36.2 126.2 43.6 Kennedy Wilson's share of taxes included in unconsolidated investments 0.4 0.1 2.7 — 1.1 Share-based compensation 23.6 34.5 29.0 28.7 32.3 EBITDA attributable to noncontrolling interests (1) (6.9) (29.0) (8.2) (13.3) (7.5) Adjusted EBITDA (2) $ 539.7 $ 189.8 $ 591.5 $ 927.9 $ 608.0 (1) (2) See "Non-GAAP Measures and Certain Definitions" for definitions and discussion of Adjusted EBITDA .
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.
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.
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.
Off-Balance Sheet Arrangements Guarantees We have provided guarantees associated with loans secured by consolidated assets. At December 31, 2024, the maximum potential amount of future payments (undiscounted) we could be required to make under the guarantees was approximately $119.4 million at December 31, 2024.
The accuracy of estimating fair value for investments cannot be determined with precision and cannot be substantiated by comparison to quoted prices in active markets and may not be realized in a current sale or immediate settlement of the asset or liability (particularly given the ongoing macroeconomic conditions such as, but not limited to, 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 the ongoing military conflicts around the world, continue to fuel recessionary fears and create volatility in Kennedy Wilson's business results and operations).
The accuracy of estimating fair value for investments cannot be determined with precision and cannot be substantiated by comparison to quoted prices in active markets and may not be realized in a current sale or immediate settlement of the asset or liability (particularly given the ongoing macroeconomic conditions such as, but not limited to recent adverse developments affecting regional banks and other financial institutions, and ongoing military conflicts around the world and uncertainty with respect to fluctuating interest rates continue to fuel recessionary fears and create volatility in Kennedy Wilson's business results and operations).
“Performance allocation compensation” - the compensation committee of the Company’s board of directors approved and reserved between twenty percent (20%) and 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.
“Carried interests compensation” - the compensation committee of the Company’s board of directors approved and reserved between twenty percent (20%) and thirty-five percent (35%) of any carried interests earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.
The increase is due to allocation of gains from the sale of real estate, net on a consolidated multifamily property and a non-core retail asset both in the Western United States.
The decrease is due to allocation of gains from the sale of real estate, net on a consolidated multifamily property and a non-core retail asset both in the Western United States during the prior period.
As of December 31, 2023, 78% of our consolidated debt is fixed rate, 22% is floating rate with interest caps. As such, fluctuations in interest rates may impact our floating rate debt (and floating rate debt with interest caps to a lesser extent) and cause our consolidated interest expense and income from unconsolidated investments to fluctuate.
As of December 31, 2024, 82% of our consolidated debt is fixed rate, 17% is floating rate with interest caps. As such, fluctuations in interest rates may impact our floating rate debt (and floating rate debt with interest caps to a lesser extent) and cause our consolidated interest expense and income from unconsolidated investments to fluctuate.
The table below describes the market rate development or redevelopment projects that the Company is undergoing or considering, and excludes the affordable and/or age-restricted multifamily units that it is developing in its VHH platform and its residential investments ($ in millions). 48 Table of Contents If Completed Current Location Type Investment Status Est. Completion Date (1) Commercial Sq. Ft.
The table below describes the market rate development or redevelopment projects that the Company is undergoing or considering, and excludes the affordable and/or age-restricted multifamily units that it is developing in its VHH platform and its residential investments ($ in millions). If Completed Current Location Type Investment Status Est. Completion Date (1) MF Units KW Est.
The Company also recorded realized foreign exchange losses of $3.3 million for the year ended December 31, 2023 as compared to realized losses of $3.6 million in the prior period primarily due to increases in the euro exchange rate on portion of its line of credit that was drawn in euros.
The Company recorded realized foreign exchange gains of $6.5 million for the year ended December 31, 2024 as compared to realized losses of $3.3 million in the prior period primarily due to decreases in the euro exchange rate on portion of its line of credit that was drawn in euros.
As of December 31, 2023, we have $69.6 million of restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on properties and reserves held on loans in the newly acquired Construction Loan Portfolio (as defined herein) on behalf of the borrowers under such loans.
As of December 31, 2024, we have $94.5 million of restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on properties and reserves held on loans in the Construction Loan Portfolio (as defined herein) on behalf of the borrowers under such loans.
KWI Notes On February 11, 2021, Kennedy-Wilson, Inc., issued $500.0 million aggregate principal amount of 2029 Notes and $500.0 million aggregate principal amount of 2031 Notes (together with the 2029 Notes, the “initial notes”). On March 15, 2021, Kennedy-Wilson, Inc. issued an additional $100 million aggregate principal of the 2029 Notes and an additional $100 million of the 2031 Notes.
KWI Notes On February 11, 2021, Kennedy-Wilson, Inc., issued $500.0 million aggregate principal amount of 2029 Notes and $500.0 million aggregate principal amount of 2031 Notes (together with the 2029 Notes, the “initial notes”).
As of December 31, 2023, we have hedged 97% of the gross asset carrying value of our euro-denominated investments and 95% of the gross asset carrying value of our GBP-denominated investments.
As of December 31, 2024, we have hedged 95% of the gross asset carrying value of our euro-denominated investments and 83% of the gross asset carrying value of our GBP-denominated investments.
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.
The interest payments on variable rate debt have been calculated at the interest rate in effect as of December 31, 2024. (2) Excludes $1.4 million net unamortized debt discount on mortgage debt. (3) Excludes $2.7 million unamortized debt premium on senior notes. (4) Excludes $37.8 million of unamortized loan fees.
Benefit from income taxes was $55.3 million for the year ended December 31, 2023 as compared to a tax provision of $36.2 million for the year ended December 31, 2022.
Provision for income taxes was $10.2 million for the year ended December 31, 2024 as compared to a benefit from taxes of $55.3 million for the year ended December 31, 2023.
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.
If there was a 100-basis point increase or decrease, we would have a $3.3 million increase in interest expense or $8.0 million decrease in interest expense savings during 2025 on our current share of indebtedness.
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.
The Company experienced net unrealized loss 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.
Accordingly the sale of such real estate is presented by the Company on a gross basis (sale of real estate and cost of real estate sold), and, therefore, the portion of the same that is not attributable to the Company’s ownership share is excluded from Co-Investment NOI. 61 Table of Contents Years Ended December 31, 2020 2019 Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Net income $ 107.8 $ 81.0 $ 321.1 $ 179.7 Add: Provision for income taxes 43.6 1.0 41.4 — Less: Income from unconsolidated investments (81.0) — (179.7) — Less: (Gain) loss on sale of real estate, net (1) (338.0) 11.5 (434.4) (53.5) Add: Interest expense 201.9 33.1 214.2 32.1 Add: Loss on extinguishment of debt 9.3 — 0.9 — Add: Other loss 2.3 13.7 10.6 8.0 Less: Sale of real estate (1) — (11.5) — (26.7) Less: Interest income (3.1) — (0.3) — Less: Investment management and property services (33.1) (2.6) (40.6) (36.2) Add: Cost of real estate sold (1) — 13.3 — 23.9 Add: Compensation and related 144.2 — 151.6 — Add: Performance allocation expense 0.2 — 0.1 — Add: General and administrative 34.6 — 42.4 — Add: Depreciation 179.6 6.9 187.6 8.2 Less: Fair value adjustments — (43.9) — (57.7) Less: NCI adjustments (6.0) — (9.7) — Net Operating Income $ 262.3 $ 102.5 $ 305.2 $ 77.8 (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.
Accordingly the sale of such real estate is presented by the Company on a gross basis (sale of real estate and cost of real estate sold), and, therefore, the portion of the same that is not attributable to the Company’s ownership share is excluded from Co-Investment NOI. 57 Table of Contents Years Ended December 31, 2021 2020 Consolidated Portfolio Co-Investment Portfolio Consolidated Portfolio Co-Investment Portfolio Net income $ 336.4 $ 389.0 $ 107.8 $ 81.0 Add: Provision for income taxes 126.2 — 43.6 1.0 Less: Income from unconsolidated investments (389.0) — (81.0) — Less: (Gain) loss on sale of real estate, net (1) (412.7) 3.1 (338.0) 11.5 Add: Interest expense 192.4 40.0 201.9 33.1 Add: Loss on extinguishment of debt 45.7 — 9.3 — Add: Other loss 5.0 17.9 2.3 13.7 Less: Sale of real estate (1) — (39.5) — (11.5) Less: Interest income (8.6) — (3.1) — Less: Investment management and property services (37.4) — (33.1) — Add: Carried interests expense — (117.9) — (2.6) Add: Cost of real estate sold (1) — 36.8 — 13.3 Add: Compensation and related 162.6 — 144.2 — Add: Carried interests expense 42.0 — 0.2 — Add: General and administrative 33.3 — 34.6 — Add: Depreciation 166.3 5.6 179.6 6.9 Less: Fair value adjustments — (210.6) — (43.9) Less: NCI adjustments (6.4) — (6.0) — Net Operating Income $ 255.8 $ 124.4 $ 262.3 $ 102.5 (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.
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.
Cash Flows 46 Table of Contents The following table summarizes the cash provided by or used in our operating, investing and financing activities for the years ended December 31, 2024 and 2023: Year ended December 31, (Dollars in millions) 2024 2023 Net cash provided by operating activities $ 55.1 $ 48.9 Net cash provided by (used in) investing activities 414.2 (11.7) Net cash (used in) provided by financing activities (565.5) (164.8) 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.
Gain on sale of real estate, net was $127.6 million for the year ended December 31, 2023 as compared to $103.7 million in the prior period.
Gain on sale of real estate, net was $160.1 million for the year ended December 31, 2024 as compared to $127.6 million in the prior period.
“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.
“Adjusted Net Income (Loss)” represents net income (loss) before depreciation and amortization, Kennedy Wilson'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.
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.
Year Ended December 31, 2024 Consolidated Co-Investment Total Revenues $ 0.3 — % $ (0.2) — % $ 0.1 — % Net Income 1.4 2 % 1.0 1 % 2.4 3 % Adjusted EBITDA 1.7 — % 0.4 — % 2.1 — % 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) — % Consolidated Portfolio Segment Rental income was $390.6 million for the year ended December 31, 2024 as compared to $415.3 million for the same period in 2023.
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.
Dollar: Year Ended December 31, 2024 2023 Euro (6.2) % 3.1 % GBP (1.7) % 5.2 % Comprehensive loss, net of taxes and noncontrolling interests, for the year ended December 31, 2024 and 2023 was a loss of $78.0 million and $316.0 million, respectively.
There is no guarantee that the Company will be able to secure the project-level debt financing that is assumed in the figures above. If the Company is unable to secure such financing, the amount of capital that the Company will have to invest to complete the projects above may significantly increase.
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. If we are unable to secure such financing, the amount of capital we will have to invest to complete the projects above may significantly increase.
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 certain exceptions), participants in the Co-Investment Program will make commitments to the program on an annual basis and invest in every investment made by the Company (investments that such employee has an active role in acquiring and managing) in the applicable year.
We recorded $5.9 million in expenses associated with future compensation and consulting fees in connection with the former executive's Agreement, as discussed above.
We recorded $5.9 million in expenses associated with future compensation and consulting fees in connection with the former executive's Agreement, as discussed above during the prior period with no comparable activity in the current period.
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.
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.
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.
As of December 31, 2024, we and our consolidated subsidiaries had approximately $217.5 million ($62.6 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 $137.5 million and we had $451.7 million of availability under lines of credit.
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 have 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. As of December 31, 2024, the Company has $169.9 million available under the ATM Program.
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.
Year Ended December 31, (Dollars in millions) 2024 2023 Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ (76.5) $ (341.8) Unrealized foreign currency translation (loss) gain, net of noncontrolling interests and tax (36.1) 31.3 Amounts reclassified out of accumulated other comprehensive loss during the period 5.1 — Unrealized foreign currency derivative contract gain (loss), net of noncontrolling interests and tax 29.5 (5.5) Comprehensive loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders $ (78.0) $ (316.0) The main currencies that the Company has exposure to are the euro and pound sterling.

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