Kennedy Wilson Reports Second Quarter 2024 Results

Kennedy-Wilson Holdings, Inc. (NYSE: KW), a leading global real estate investment company with $27 billion in AUM across its real estate equity and debt investment portfolio, today reported results for Q2-2024:

Financial Results

(Amounts in millions, except per share data)	Q2				YTD
GAAP Results	2024		2023		2024		2023
GAAP Net (Loss) Income to Common Shareholders1	($59.1)		$39.0		($32.2)		($1.8)
Per Diluted Share	(0.43)		0.28		(0.23)		(0.01)

(Amounts in millions)	Q2				YTD
Non-GAAP Results	2024		2023		2024		2023
Adjusted EBITDA	$79.3		$195.1		$282.5		$286.0
Adjusted Net (Loss) Income	(16.8)		86.0		53.7		91.3
Adjusted EBITDA - Key Components (at KW share)
Baseline EBITDA: Property NOI, loan income, and inv. mgt fees (net of compensation and general and administrative expenses)	$ 104.5		$ 99.5		$ 207.6		$ 195.0
Realized gain on the sale of real estate	1.9		93.7		110.2		108.7
Change in the fair value of the Co-investment portfolio	(20.6)		(22.8)		(30.7)		(33.7)
Other income/(loss)	(6.5)		24.7		(4.6)		16.0
Adjusted EBITDA	$ 79.3		$ 195.1		$ 282.5		$ 286.0
1Includes $62.7 million, $69.8 million, $116.6 million and $126.8 million for Q2-24, Q2-23, YTD-24, and YTD-23, respectively of non-cash charges (depreciation and amortization, fair-value changes, and share-based compensation).

“We had an excellent first half of 2024. Baseline EBITDA grew by 6% from last year, driven by our rapidly expanding investment management business that generated record fees which increased by 57% from 2023, asset stabilizations, and NOI growth in our multifamily business,” said William McMorrow, Chairman and CEO of Kennedy Wilson. “We have deployed $2 billion of new capital this year, of which $1.7 billion was deployed through our credit business for the construction of new multifamily and student housing communities. The company generated $295 million of cash from asset sales and loan repayments, and we have a strong pipeline of non-core sales, with proceeds to be used primarily to reduce unsecured debt and for future investment opportunities. Given the recent decline in interest rates, we are optimistic about our disposition program, our ability to continue to raise third party capital, and valuations within our existing portfolio.”

Portfolio Update

• Asset Stabilizations Add $16 million to Estimated Annual NOI: The Company stabilized five multifamily properties totaling 1,436 units during Q2-24, including Coopers Cross and Grange West in Dublin, Dovetail and Oxbow in the Mountain West, and Vintage at Anacapa Canyon in Southern California. These assets added $16 million in Estimated Annual NOI.
• Estimated Annual NOI of $485 million and Fee-Bearing Capital of $8.7 billion:
  • 5% Growth from Q1: From Q1-24, Estimated Annual NOI grew by 5% driven by asset stabilizations and growing property NOI from our stabilized portfolio.
  • Record Quarterly Investment Management Fees: Investment Management fees grew by 37% (vs Q2-23) to $26 million as a result of record new originations from KW's debt investment platform and increasing levels of recurring base management fees.

	Est. Annual NOI To KW ($ in millions)			Fee-Bearing Capital ($ in billions)
As of Q2-23	$499			$7.9
As of Q4-23	$492			$8.4
As of Q1-24	$464			$8.6
Transaction activity, net1	2			0.1
Assets stabilized/(unstabilized)	16			—
Operations	4			—
FX and other	(1	)		—
Total as of Q2-24	$485			$8.7
1 Includes real estate acquisitions, dispositions, loan fundings and loan repayments completed during Q2-24. The Company also completed $949 million in loan originations during Q2-24, which will primarily be funded in future quarters.

• Development and Lease-up Portfolio To Add $72-77 million in Estimated Annual NOI:
  • Near Term Stabilization Expectation: $47 million expected to stabilize by YE-25
  • U.S. Multifamily Completes Construction of 778 Units:
    • In addition to completing and stabilizing Oxbow (268 units) and Vintage at Anacapa Canyon (170 units), the Company also completed construction at Anacapa Canyon (310 units) in Southern California and 38° North Phase III (30 units) in Northern California, which are both currently in lease-up. Based on current lease velocity, both communities (including 38° North Phase II) are expected to stabilize in Q4-24 and add $12 million in Estimated Annual NOI.
    • In total, the Company has 2,479 units in the Western U.S. undergoing lease-up or development, which is expected to add $26 million in Estimated Annual NOI upon stabilization.

• Multifamily Same Property Performance⁽¹⁾ : Improving Occupancy Leads to NOI Growth

	Q2 - 2024 vs. Q2 - 2023							YTD - 2024 vs. YTD - 2023
	Occupancy		Revenue		Expenses		NOI (Net Effective)	Occupancy		Revenue		Expenses		NOI (Net Effective)
Multifamily - Market Rate	1.7%		3.4%		4.6%		2.8%	0.9%		3.2%		4.4%		2.6%
Multifamily - Affordable	(1.7)%		4.8%		8.4%		3.0%	(0.3)%		4.3%		10.0%		1.5%
Total	0.8%		3.6%		5.2%		2.8%	0.6%		3.4%		5.4%		2.4%
(1) Excludes minority-held investments and assets undergoing development or lease-up.

Investment Management Business

• 37% Growth in Investment Management Fees:
  • Q2-24 Investment Management fees grew by 37% to $26 million (vs Q2-23) driven by higher levels of Fee-Bearing Capital and $949 million of new originations from its Debt Investment Platform
  • YTD-24 Investment Management fees grew by 57% to $47 million (vs. YTD-23).
  • Japanese Office Opening: The Company has reestablished its Tokyo office subsequent to the completion of its equity joint-venture with a Japanese institutional investor in Q1-24.
• Fee-Bearing Capital Grew to a Record $8.7 billion in Q2-24, +4% YTD:
  • In addition to the $8.7 billion in Fee-Bearing Capital, the Company has future incremental Fee-Bearing Capital consisting of the following:
    • $2.9 billion in future fundings on previously originated loans within the debt investment platform.
    • $3.4 billion in incremental non-discretionary capital available from certain strategic partners for equity and debt investment.
• Debt Investment Platform Grows to $8.0 billion in Q2-24:
  • Q2-24 Investment Activity Increases Platform By 9%: In Q2-24, originated $949 million in new construction loans, completed $301 million in additional fundings on existing loans, and realized $248 million in repayments
  • Debt Platform, in which KW has an average ownership of 5% ownership, includes $5.1 billion in outstanding loans ($4.8 billion of Fee-Bearing Capital) and $2.9 billion of future funding commitments.
  • The Company has completed $1.9 billion in new originations since June 30, 2023, with $500 million in new originations in process and expected to close in Q3-24.

Real Estate Investment Activity

• $235 million in Gross Acquisitions ($53 million at share):
  • Co-Investment Acquisitions: Completed $228 million in gross real estate acquisitions, including $182 million invested in two industrial properties located in Northern California and the UK, and $47 million invested in a multifamily property in the Mountain West. The Company had a weighted-average 20% ownership interest in these acquisitions.
• $49 million in Gross Dispositions ($22 million at share):
  • Co-Investment Portfolio: Sold $47 million of real estate investments, in which KW's weighted-average ownership was 43%. These asset sales generated cash of $19 million to KW.

Balance Sheet and Liquidity

• Cash and Line of Credit Availability: In Q2-24, the Company paid down its revolving credit facility by $76 million. As of June 30, 2024, Kennedy Wilson had a total of $367 million⁽¹⁾ in cash and cash equivalents and $172 million drawn on its $500 million revolving credit facility.
• Debt Profile: Kennedy Wilson's share of debt had a weighted average effective interest rate of 4.6% per annum and a weighted average maturity of 5.0 years as of June 30, 2024. Approximately 98% of the Company's debt is either fixed or hedged with interest rate hedges.
• Interest Rate Hedging Strategy: The Company hedges its floating rate exposure through the use of interest rate caps and swaps. The Company's interest rate hedges have a weighted average maturity of 1.2 years. The Company received $11 million of cash from its interest rate derivatives in Q2-24, which is not reflected as an offset to interest expense. Since 2022, the Company has received $63 million from its interest rate hedges.
• Foreign Currency Hedging Strategy: Kennedy Wilson hedges its exposure to foreign currency fluctuations by borrowing in the currency in which it invests and using foreign currency hedging instruments. As of June 30, 2024, the Company has hedged approximately 97% of the carrying value of its foreign currency investments, using local currency debt and hedging instruments with a weighted average term of 2.2 years.
• Share Repurchases: The Company repurchased 1.7 million shares, or approximately 1.2% of its outstanding common shares, in 2024 (through July 31, 2024) at a weighted average price of $8.70, including 0.6 million shares repurchased in Q2-24 at a weighted average price of $8.60. As of the end of Q2-24, the Company has approximately $110 million remaining on its $500 million share repurchase authorization.

Subsequent Events

The Company sold its only remaining wholly-owned investment in Spain (a 337,000 square foot retail property) for $71 million, resulting in $35 million of cash to KW. The sale increases cash received from our asset sales in 2024 to $330 million (excluding closing costs).

The Company completed the refinancing of its residential construction loan on Coopers Cross residential, which is comprised of 471 newly constructed multifamily units in Dublin Ireland, which was maturing in 2027. The interest rate decreased from a contractual rate of 8.3% (effective rate of 6.2%) to 4.5% fixed. Coopers Cross is held in a 50/50 joint-venture with a major financial institution. The loan amount is $148 million (KW share is 50%).

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Footnotes

⁽¹⁾ Represents consolidated cash and includes $104 million of restricted cash, which is included in cash and cash equivalents and primarily relates to lender reserves associated with consolidated mortgages that we hold on properties. These reserves typically relate to interest, tax, insurance and future capital expenditures at the properties. Additionally, we are subject to withholding taxes to the extent we repatriate cash from certain of our foreign subsidiaries. Under the KWE Notes covenants we have to maintain certain interest coverage and leverage ratios to remain in compliance (see "Indebtedness and Related Covenants" for more detail on KWE Notes in the Company's quarterly report). Due to these covenants, we evaluate the tax and covenant implications before we distribute cash, which could impact the availability of funds at the corporate level. The Company's share of cash, including unconsolidated joint-ventures, totals $485 million.

Conference Call and Webcast Details

Kennedy Wilson will hold a live conference call and webcast to discuss results at 9:00 a.m. PT/ 12:00 p.m. ET on Thursday, August 8. The direct dial-in number for the conference call is (844) 340-4761 for U.S. callers and (412) 717-9616 for international callers. A replay of the call will be available for one week beginning one hour after the live call and can be accessed by (877) 344-7529 for U.S. callers and (412) 317-0088 for international callers. The passcode for the replay is 5795146.

The webcast will be available at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=zkcxis32. A replay of the webcast will be available one hour after the original webcast on the Company’s investor relations web site for three months.

About Kennedy Wilson

Kennedy Wilson (NYSE: KW) is a leading real estate investment company with over $27 billion of assets under management in high growth markets across the United States, the UK and Ireland. Drawing on decades of experience, our relationship-oriented team excels at identifying opportunities and building value through market cycles, closing more than $50 billion in total transactions across the property spectrum since going public in 2009. Kennedy Wilson owns, operates, and builds real estate within our high-quality, core real estate portfolio and through our investment management platform, where we target opportunistic equity and debt investments alongside our partners. For further information, please visit www.kennedywilson.com.

Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets (Unaudited) (Dollars in millions)
		June 30, 2024				December 31, 2023
Assets
Cash and cash equivalents		$	366.5			$	313.7
Accounts receivable, net			41.4				57.3
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of $938.5 and $957.8)			4,605.0				4,837.3
Unconsolidated investments (including $1,914.0 and $1,927.0 at fair value)			2,056.0				2,069.1
Other assets, net			178.1				187.5
Loan purchases and originations, net			248.3				247.2
Total assets		$	7,495.3			$	7,712.1
Liabilities
Accounts payable		$	12.1			$	17.9
Accrued expenses and other liabilities (including $237.1 and $234.4 of deferred tax liabilities)			551.3				597.8
Mortgage debt			2,756.3				2,840.9
KW unsecured debt			1,957.4				1,934.3
KWE unsecured bonds			507.8				522.8
Total liabilities			5,784.9				5,913.7
Equity
Cumulative perpetual preferred stock			789.9				789.9
Common stock			—				—
Additional paid-in capital			1,700.6				1,718.6
Retained (deficit) earnings			(416.6	)			(349.0	)
Accumulated other comprehensive loss			(404.4	)			(404.4	)
Total Kennedy-Wilson Holdings, Inc. shareholders’ equity			1,669.5				1,755.1
Noncontrolling interests			40.9				43.3
Total equity			1,710.4				1,798.4
Total liabilities and equity		$	7,495.3			$	7,712.1

Kennedy-Wilson Holdings, Inc. Consolidated Statements of Operations (Unaudited) (Dollars in millions, except share amounts and per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
			2024				2023				2024				2023
Revenue
Rental		$	97.8			$	106.6			$	195.2			$	213.2
Hotel			—				15.5				9.3				26.1
Investment management fees			26.1				19.1				47.4				30.1
Loan			8.0				4.7				16.1				8.4
Other			0.1				0.6				0.4				0.9
Total revenue			132.0				146.5				268.4				278.7
(Loss) income from unconsolidated investments
Principal co-investments			(5.8	)			6.3				3.9				22.7
Carried interests			(12.3	)			(7.7	)			(28.7	)			(18.4	)
Total (loss) income from unconsolidated investments			(18.1	)			(1.4	)			(24.8	)			4.3
Gain on sale of real estate, net			0.2				89.0				106.6				108.2
Expenses
Rental			37.0				38.7				74.2				75.3
Hotel			—				9.7				7.6				17.6
Compensation and related (including $6.0, $7.3, $11.2 , $14.4 of share-based compensation)			31.8				37.0				59.4				67.6
Carried interests compensation			(4.5	)			(1.1	)			(10.0	)			0.5
General and administrative			9.5				8.7				17.8				17.1
Depreciation and amortization			36.4				40.1				75.3				79.5
Total expenses			110.2				133.1				224.3				257.6
Interest expense			(63.8	)			(66.0	)			(128.5	)			(128.3	)
Loss on early extinguishment of debt			(0.5	)			(1.7	)			(0.2	)			(1.6	)
Other income			0.3				24.3				7.1				21.3
(Loss) income before provision for income taxes			(60.1	)			57.6				4.3				25.0
Benefit from (provision for) income taxes			11.8				(10.3	)			(14.9	)			(6.4	)
Net (loss) income			(48.3	)			47.3				(10.6	)			18.6
Net loss (income) attributable to noncontrolling interests			0.1				0.1				0.2				(4.1	)
Preferred dividends			(10.9	)			(8.4	)			(21.8	)			(16.3	)
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	(59.1	)		$	39.0			$	(32.2	)		$	(1.8	)
Basic (loss) earnings per share
(Loss) earnings per share		$	(0.43	)		$	0.28			$	(0.23	)		$	(0.01	)
Weighted average shares outstanding			137,588,910				139,389,170				138,142,769				138,674,109
Diluted (loss) earnings share
(Loss) earnings per share		$	(0.43	)		$	0.28			$	(0.23	)		$	(0.01	)
Weighted average shares outstanding			137,588,910				139,545,944				138,142,769				138,674,109
Dividends declared per common share		$	0.12			$	0.24			$	0.36			$	0.48

Kennedy-Wilson Holdings, Inc. Adjusted EBITDA (Unaudited) (Dollars in millions)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted EBITDA, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2024				2023			2024				2023
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	(59.1	)		$	39.0		$	(32.2	)		$	(1.8	)
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Interest expense			96.5				88.7			191.7				170.2
Loss on early extinguishment of debt			0.5				1.7			0.2				1.6
Depreciation and amortization			36.3				39.7			74.7				78.7
(Benefit from) provision for income taxes			(11.8	)			10.3			15.1				6.6
Preferred dividends			10.9				8.4			21.8				16.3
Share-based compensation			6.0				7.3			11.2				14.4
Adjusted EBITDA		$	79.3			$	195.1		$	282.5			$	286.0
(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts.

Adjusted Net Income (Unaudited) (Dollars in millions, except share data)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted Net Income, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2024				2023			2024				2023
Net (loss) income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	(59.1	)		$	39.0		$	(32.2	)		$	(1.8	)
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Depreciation and amortization			36.3				39.7			74.7				78.7
Share-based compensation			6.0				7.3			11.2				14.4
Adjusted Net (Loss) Income		$	(16.8	)		$	86.0		$	53.7			$	91.3
Weighted average shares outstanding for diluted			137,588,910				139,545,944			138,142,769				138,674,109
(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts.

Forward-Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as "believe," "anticipate," "estimate," "intend," "may," "could," "plan," "expect," "project" or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties may include the factors and the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the "SEC"), including the Item 1A. "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2023, as amended by our subsequent filings with the SEC. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed in our filings with the SEC. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.

Common Definitions

• “KWH,” "KW," “Kennedy Wilson,” the "Company," "we," "our," or "us" refers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries.
• “Adjusted EBITDA” represents net income before interest expense, loss (gain) on early extinguishment of debt, our share of interest expense included in unconsolidated investments, depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, provision for (benefit from) income taxes, our share of taxes included in unconsolidated investments, share-based compensation expense for the Company, and EBITDA attributable to noncontrolling interests.
  
  
  
  Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com. Our management uses Adjusted EBITDA to analyze our business because it adjusts net income for items we believe do not accurately reflect the nature of our business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not remove all non-cash items or consider certain cash requirements such as tax and debt service payments. The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in 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.

• "Adjusted Fees" refers to Kennedy Wilson’s gross investment management and property services fees adjusted to include Kennedy Wilson's share of fees eliminated in consolidation, and performance fees included in unconsolidated investments. Our management uses Adjusted Fees to analyze our investment management and business because the measure removes required eliminations under GAAP for properties in which the Company provides services but also has an ownership interest. These eliminations understate the economic value of the investment management and property services fees and makes the Company comparable to other real estate companies that provide investment management but do not have an ownership interest in the properties they manage. Our management believes that adjusting GAAP fees to reflect these amounts eliminated in consolidation presents a more holistic measure of the scope of our investment management and real estate services business.
• "Adjusted Net Income" 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 and preferred dividends. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "Baseline EBITDA" represents total consolidated revenues, total consolidated rental and hotel expenses, and KW’s share of net operating income from its unconsolidated investments, excluding share-based compensation and net of non-controlling interest.
• "Cap rate" represents the net operating income of an investment for the year preceding its acquisition or disposition, as applicable, divided by the purchase or sale price, as applicable. Capitalization ("Cap") rates discussed in this report only include data from income-producing properties. The Company calculates cap rates based on information that is supplied to it during the acquisition diligence process. This information is not audited or reviewed by independent accountants and may be presented in a manner that is different from similar information included in the Company's financial statements prepared in accordance with GAAP. In addition, cap rates represent historical performance and are not a guarantee of future net operating income ("NOI"). Properties for which a cap rate is discussed may not continue to perform at that cap rate.
• "Carried interests” refers to amounts that are allocated to the Company under Funds and the Co-Investment investments based on the cumulative performance of such venture and are subject to preferred return thresholds of the partners of such venture. In the case of Funds, carried interests represent an allocation relating to the performance of investment management services, whereas in the case of a Co-Investment, carried interests represent returns for the performance of the underlying investments in the Co-Investment investments structures subject to collaborative decision-making.
• "Carried interests compensation” refers to any carried interests earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company, as approved by the compensation committee of the Company’s board of directors.
• "Equity partners" refers to non-wholly-owned subsidiaries that we consolidate in our financial statements under U.S. GAAP and third-party equity providers.
• "Estimated Annual NOI" is a property-level non-GAAP measure representing the estimated annual net operating income from each property as of the date shown, inclusive of rent abatements (if applicable). The calculation excludes depreciation and amortization expense, and does not capture the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements, and leasing commissions necessary to maintain the operating performance of our properties. For assets wholly-owned and fully occupied by KW, the Company provides an estimated NOI for valuation purposes of $4.3 million, which includes an assumption for applicable market rents. Any of the enumerated items above could have a material effect on the performance of our properties. Also, where specifically noted, for properties purchased in 2024, the NOI represents estimated Year 1 NOI from our original underwriting. Estimated year 1 NOI for properties purchased in 2024 may not be indicative of the actual results for those properties. Estimated annual NOI is not an indicator of the actual annual net operating income that the Company will or expects to realize in any period. Please also see the definition of "Net operating income" below. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "Fee-Bearing Capital" represents total third-party committed or invested capital that we manage in our joint-ventures, commingled funds, and debt platform that entitle us to earn fees, including without limitation, asset management fees, construction management fees, acquisition and disposition fees and/or promoted interest, if applicable.
• "Gross Asset Value” refers to the gross carrying value of assets, before debt, depreciation and amortization, and net of noncontrolling interests.
• "Net operating income" or "NOI” is a non-GAAP measure representing the income produced by a property calculated by deducting certain property expenses from property revenues. Our management uses net operating income to assess and compare the performance of our properties and to estimate their fair value. Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of our properties resulting from our value-add initiatives or changing market conditions. Our management believes that net operating income reflects the core revenues and costs of operating our properties and is better suited to evaluate trends in occupancy and lease rates. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.
• "Principal co-investments” consists of the Company’s share of income or loss earned on investments in which the Company can exercise significant influence but does not have control. Income from unconsolidated investments includes income from ordinary course operations of the underlying investment, gains on sale, fair value gains and losses.
• "Pro-Rata" represents Kennedy Wilson's share calculated by using our proportionate economic ownership of each asset in our portfolio. Please also refer to the pro-rata financial data in our supplemental financial information.
• "Property NOI" or "Property-level NOI" is a non-GAAP measure calculated by deducting the Company's Pro-Rata share of rental and hotel property expenses from the Company's Pro-Rata rental, hotel and loans and other revenues. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "Real Estate Assets under Management" ("AUM") generally refers to the properties and other assets with respect to which the Company provides (or participates in) oversight, investment management services and other advice, and which generally consist of real estate properties or loans, and investments in joint ventures. AUM is principally intended to reflect the extent of the Company's presence in the real estate market, not the basis for determining management fees. AUM consists of the total estimated fair value of the real estate properties, total loan commitments made through out debt investment platform, inclusive of both currently outstanding loan amounts and contractual future fundings, and other real estate-related assets either owned by third parties, wholly-owned by the Company or held by joint ventures and other entities in which its sponsored funds or investment vehicles and client accounts have invested. The estimated value of development properties is included at estimated completion cost. The accuracy of estimating fair value for investments cannot be determined with precision and cannot be substantiated by comparison to quoted prices in active markets and may not be realized in a current sale or immediate settlement of the asset or liability (particularly given the ongoing macroeconomic conditions such as, but not limited to recent adverse developments affecting regional banks and other financial institutions, 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). Recently, there has also been a lack of liquidity in the capital markets as well as limited transactions which has had an impact on the inputs associated with fair values. Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including capitalization rates, discount rates, liquidity risks, and estimates of future cash flows could significantly affect the fair value measurement amounts. All valuations of real estate involve subjective judgments.
• "Same property" refers to stabilized consolidated and unconsolidated properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared. This analysis excludes properties that during the comparable periods (i) were acquired, (ii) were sold, (iii) are either under development or undergoing lease up or major repositioning as part of the Company’s asset management strategy, (iv) were investments in which the Company holds a minority ownership position, and (v) certain non-recurring income and expenses. The analysis only includes Office, Multifamily and Hotel properties, where applicable. To derive an appropriate measure of operating performance across the comparable periods, the Company removes the effects of foreign currency exchange rate movements by using the reported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods. Amounts are calculated using Kennedy Wilson’s ownership share in the Company’s consolidated and unconsolidated properties. Management evaluates the performance of the operating properties the Company owns and manages using a “same property” analysis because the population of properties in this analysis is consistent from period to period, which allows management and investors to analyze (i) the Company’s ongoing business operations and (ii) the revenues and expenses directly associated with owning and operating the Company’s properties and the impact to operations from trends in occupancy rates, rental rates and operating costs. Same property metrics are widely recognized measures in the real estate industry, however, other publicly-traded real estate companies may not calculate and report same property results in the same manner as the Company. Please also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures and Reconciliations” for a reconciliation of “same property” results to the most comparable measure reported under GAAP.

Note about Non-GAAP and certain other financial information included in this presentation

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

KW-IR

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