Market Overview

Kennedy Wilson Reports First Quarter 2019 Results

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Kennedy-Wilson Holdings, Inc. (NYSE:KW)
today reported results for 1Q-2019:

     
  1Q
(Amounts in millions, except per share data) 2019   2018

GAAP Results

GAAP Net Loss to Common Shareholders ($5.3 ) ($2.4 )
Per Diluted Share (0.04 ) (0.02 )
 

Non-GAAP Results

Adjusted EBITDA $ 120.2 $ 122.6

Adjusted Net Income

  53.9     63.2  
                 

"In Q1, we saw strong same-property trends and continued to execute on
our strategic initiatives, with a focus on progressing our development
pipeline and growing our fee-bearing capital," said William McMorrow,
Chairman and CEO of Kennedy Wilson. "We remain focused on our strategic
asset recycling plan, which includes the sale of non-core assets and the
re-investment of capital into capex and development initiatives, aimed
at growing our long-term cash flow."

1Q Highlights

  • Same Property Performance: NOI up 3% Driven by Multifamily Portfolio
    • Excluding hotels, revenue and NOI grew by 5%. Hotel performance
      was impacted by the Shelbourne Hotel that underwent significant
      lobby and reception renovations in 1Q-19.
             
  1Q - 2019 vs 1Q - 2018
Occupancy   Revenue   NOI
Multifamily - Market Rate 0.9% 5.5% 7.1%
Multifamily - Affordable (0.3)% 4.7% 5.7%
Commercial 0.3% 3.9% 3.6%
Hotel N/A   (9.4)%   n/m
Total       3.1%   3.5%
 
  • 1Q-19 Adjusted EBITDA of $120 million (vs. $123 million in 1Q-18):
    • KW's share of property NOI totaled $89 million in 1Q-19 (vs. $104
      million in 1Q-18). The decrease is primarily due to the sale of
      assets from 2Q-18 through 1Q-19, resulting in an $11 million
      decrease of property NOI.
    • KW's share of gains, including the sale of real estate and
      fair-value gains, totaled $54 million in 1Q-19, an increase of $14
      million from 1Q-18.
    • Promotes totaled $6 million in 1Q-19, a decrease of $5 million
      from 1Q-18.
    • For 1Q-19, changes in foreign currency rates decreased Adjusted
      EBITDA by $4 million (or 3%) compared to foreign currency rates as
      of 1Q-18.
  • Consolidated Rental/Hotel Revenue: Consolidated rental and
    hotel revenue was $131 million in 1Q-19, down $40 million from 1Q-18.
    The decrease was due to asset sales ($30 million), the deconsolidation
    of Irish multifamily assets that were sold into the AXA Joint Venture
    in 3Q-18, which are now accounted for as unconsolidated investments
    ($6 million), and a negative impact from the change in foreign
    currency rates ($4 million).
  • In-Place Estimated Annual NOI of $405 Million; Targeting an
    Additional $100 Million from Development and Leasing by 2023:
    • Estimated Annual NOI from the Company's stabilized portfolio
      decreased by $2 million to $405 million from $407 million at
      year-end 2018 primarily driven by the net sale of assets during
      1Q-19.
    • Targeting an additional $32 million of Estimated Annual NOI to be
      in place by the end of 2020, and an incremental $72-78 million to
      be in place by the end of 2023, through the expected completion of
      development and stabilization initiatives.
  • Fee-Bearing Capital Growth: The Company raised an additional
    $200 million in Fee-Bearing Capital through joint-venture asset
    acquisitions offset by a decrease of $80 million due to asset
    dispositions. Fee-Bearing Capital was $2.3 billion as of March 31,
    2019.

1Q-19 Investment Activity

  • Capital Recycling: Invested $78 million of capital, allocating
    71% to capex and development, 19% to new investments, and 10% to share
    repurchases.
  • Acquisitions: Completed $249 million of acquisitions, of which
    the Company's share was $16 million.
  • Dispositions: Completed $323 million of dispositions, of which
    the Company's share was $145 million, generating $93 million of cash
    to KW and produced a weighted-average IRR of 20% to KW. Key
    dispositions in the quarter included:
    • Ritz-Carlton, Lake Tahoe Sale: The Company and its equity
      partner sold the 170-room Ritz-Carlton, Lake Tahoe hotel for $120
      million. Over the life of the investment, KW earned a cash profit
      of $37 million, including $12 million of gains and promotes in
      1Q-19.
    • Mountain States Retail Sales: The Company sold three
      non-core retail properties in the Mountain States for $53 million.
      KW had a 95% ownership in these properties, and recognized a gain
      on sale of $11 million.

Balance Sheet and Liquidity

  • Liquidity: Liquidity totaled $943 million, including cash of
    $443 million(1) and $500 million of capacity on the
    Company's undrawn revolving line of credit.
  • 1.56% Capital Dock Refinance: Completed a €261 million ($293
    million) refinance of the construction loan on Capital Dock, of which
    the Company's share was €111 million ($124 million). The five-year
    floating-rate interest-only loan bears an effective interest rate
    1.56%.
  • Global Debt Profile: Kennedy Wilson's debt had a weighted
    average interest rate of 3.9% and a weighted average remaining
    maturity of 5.6 years, with 81% of total debt (at share) fixed and
    another 11% hedged against increases in interest rates. 45% of the
    Company's debt is either Euro or Sterling denominated and 55% is U.S.
    dollar denominated.
  • Share Repurchase Program(2): Repurchased
    and retired 0.4 million shares for $7.9 million at a weighted-average
    price of $19.66. As of March 31, 2019, the Company had $77 million
    remaining available under its $250 million share repurchase plan.

Footnotes

(1) Includes $36.2 million of restricted cash, which is
included in cash and cash equivalents.

(2) Future purchases under the program may be made in the
open market, in privately negotiated transactions, through the net
settlement of the company's restricted stock grants or otherwise, with
the amount and timing of the repurchases dependent on market conditions
and subject to the Company's discretion.

Conference Call and Webcast Details

Kennedy Wilson will hold a live conference call and webcast to discuss
results at 7:00 a.m. PT/ 10:00 a.m. ET on Thursday, May 2. The direct
dial-in number for the conference call is (800) 479-1004 for U.S.
callers and (786) 789-4772 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 (888) 203-1112 for U.S.
callers and +1 (719) 457-0820 for international callers. The passcode
for the replay is 9282106.

The webcast will be available at: https://services.choruscall.com/links/kw1905023gs5x7Bd.html.
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 global real estate investment
company. We own, operate, and invest in real estate both on our own and
through our investment management platform. We focus on multifamily and
office properties located in the Western U.S., UK, and Ireland. For
further information on Kennedy Wilson, please visit www.kennedywilson.com.

Kennedy-Wilson Holdings, Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in millions)

   
March 31,
2019
December 31,
2018
Assets
Cash and cash equivalents $ 442.9 $ 488.0
Accounts receivable 43.5 56.6
Real estate and acquired in place lease values, net of accumulated
depreciation and amortization
5,561.9 5,702.5
Unconsolidated investments (including $710.0 and $662.2 at fair
value)
907.3 859.9
Other assets 284.0   274.8  
Total assets $ 7,239.6   $ 7,381.8  
 
Liabilities
Accounts payable $ 18.4 $ 24.1
Accrued expenses and other liabilities 464.9 513.7
Mortgage debt 2,988.8 2,950.3
KW unsecured debt 1,203.3 1,202.0
KWE unsecured bonds 1,262.0   1,260.5  
Total liabilities 5,937.4   5,950.6  
Equity
Common stock
Additional paid-in capital 1,747.2 1,744.6
Accumulated deficit (92.1 ) (56.4 )
Accumulated other comprehensive loss (424.6 ) (441.5 )

Total Kennedy-Wilson Holdings, Inc. shareholders' equity

1,230.5 1,246.7
Noncontrolling interests 71.7   184.5  
Total equity 1,302.2   1,431.2  
Total liabilities and equity $ 7,239.6   $ 7,381.8  
 

Kennedy-Wilson Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

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

 
Three Months Ended March 31,
2019   2018
Revenue
Rental $ 115.8 $ 134.3
Hotel 15.0 36.3
Sale of real estate 1.1 9.4
Investment management, property services and research fees 8.8   10.1  
Total revenue 140.7 190.1
Expenses
Rental operating 41.0 41.6
Hotel operating 14.6 30.8
Cost of real estate sold 1.2 8.4
Commission and marketing 1.0 1.4
Compensation and related (includes $10.4 and $9.9 of share-based
compensation)
35.3 39.6
General and administrative 10.9 11.4
Depreciation and amortization 49.1   55.7  
Total expenses 153.1 188.9
Income from unconsolidated investments, net of depreciation and
amortization
41.7 26.0
Gain on sale of real estate, net 34.9 28.0
Acquisition-related expenses (0.8 )
Interest expense (55.3 ) (58.9 )
Other (loss) income (2.5 ) 0.1  
Income before (provision for) benefit from income taxes 5.6 (3.6 )
(Provision for) benefit from income taxes (4.0 ) 2.6  
Net income (loss) 1.6 (1.0 )
Net (income) attributable to noncontrolling interests (6.9 ) (1.4 )
Net loss attributable to Kennedy-Wilson Holdings, Inc. common
shareholders
$ (5.3 ) $ (2.4 )
Basic and diluted loss per share(1)
Loss per share $ (0.04 ) $ (0.02 )
Weighted average shares outstanding 139,756,358 147,941,982
Dividends declared per common share $ 0.21 $ 0.19

(1) Includes impact of the Company allocating income
and dividends per basic and diluted share to participating
securities.

 

Kennedy-Wilson Holdings, Inc.

Adjusted EBITDA

(Unaudited)

(Dollars in millions)

 

The table below reconciles Adjusted EBITDA to net income
attributable to Kennedy-Wilson Holdings, Inc. common shareholders,
using Kennedy Wilson's pro-rata share amounts for each adjustment
item.

 
Three Months Ended
March 31,
2019   2018
Net loss attributable to Kennedy-Wilson Holdings, Inc. common
shareholders
$ (5.3 ) $ (2.4 )
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Interest expense 62.3 62.0
Depreciation and amortization 48.8 55.7
Provision for (benefit from) income taxes 4.0 (2.6 )
Share-based compensation 10.4   9.9  
Adjusted EBITDA $ 120.2   $ 122.6  

(1) See Appendix for reconciliation of Kennedy Wilson's
Share amounts.

 

The table below provides a detailed reconciliation of Adjusted
EBITDA to net income.

 
Three Months Ended
March 31,
2019 2018
Net loss attributable to Kennedy-Wilson Holdings, Inc. common
shareholders
$ (5.3 ) $ (2.4 )
Non-GAAP adjustments:
Add back:
Interest expense 55.3 58.9
Kennedy Wilson's share of interest expense included in
unconsolidated investments
8.5 5.1
Depreciation and amortization 49.1 55.7
Kennedy Wilson's share of depreciation and amortization included in
unconsolidated investments
2.1 3.5
Provision for (benefit from) income taxes 4.0 (2.6 )
Share-based compensation 10.4 9.9
EBITDA add backs attributable to noncontrolling interests(1) (3.9 ) (5.5 )
Adjusted EBITDA $ 120.2   $ 122.6  

(1) EBITDA attributable to noncontrolling interest
includes $2.4 million and $3.5 million of depreciation and
amortization, $1.5 million and $2.1 million of interest for the
three months ended March 31, 2019 and 2018, respectively.

Kennedy-Wilson Holdings, Inc.

Adjusted Net Income

(Unaudited)

(Dollars in millions, except share data)

 

The table below reconciles Adjusted Net Income to net income
attributable to Kennedy-Wilson Holdings, Inc. common shareholders,
using Kennedy Wilson's pro-rata share amounts for each adjustment
item.

 
Three Months Ended
March 31,
2019   2018
Net loss attributable to Kennedy-Wilson Holdings, Inc. common
shareholders
$ (5.3 ) $ (2.4 )
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Depreciation and amortization 48.8 55.7
Share-based compensation 10.4   9.9  
Adjusted Net Income $ 53.9   $ 63.2  
 
Weighted average shares outstanding for diluted 139,756,358 147,941,982
 

(1) See Appendix for reconciliation of Kennedy Wilson's
Share amounts.

 

The table below provides a detailed reconciliation of Adjusted Net
Income to net income.

 

 

Three Months Ended
March 31,
2019 2018
Net income (loss) $ 1.6 $ (1.0 )
Non-GAAP adjustments:
Add back (less):
Depreciation and amortization 49.1 55.7
Kennedy Wilson's share of depreciation and amortization included in
unconsolidated investments
2.1 3.5
Share-based compensation 10.4 9.9
Net income attributable to the noncontrolling interests, before
depreciation and amortization(1)
(9.3 ) (4.9 )
Adjusted Net Income $ 53.9   $ 63.2  
 
Weighted average shares outstanding for diluted 139,756,358 147,941,982

(1) Includes $2.4 million and $3.5 million of
depreciation and amortization for the three months ended March 31,
2019 and 2018, respectively.

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, 2018, 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, our
share of interest expense included in income from investments in
unconsolidated investments, depreciation and amortization, our share of
depreciation and amortization included in income from unconsolidated
investments, loss on early extinguishment of corporate debt and income
taxes, 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 our management's discretionary use, as it
does not remove all non-cash items (such as acquisition-related gains)
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, property services and research fees adjusted to include
Kennedy Wilson's share of fees eliminated in consolidation, Kennedy
Wilson's share of fees in unconsolidated service businesses and
performance fees included in unconsolidated investments. Effective
January 1, 2018, we adopted new GAAP guidance on revenue recognition and
implemented a change in accounting principles related to performance
allocations, which resulted in us now accounting for performance
allocations (commonly referred to as "performance fees" or "carried
interest") under the GAAP guidance for equity method investments and
presenting performance allocations as a component of income from
unconsolidated investments. Our management uses Adjusted fees to analyze
our investment management and real estate services 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,
property services and research fees and makes the Company comparable to
other real estate companies that provide investment management and real
estate services 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 before depreciation and
amortization, our share of depreciation and amortization included in
income from unconsolidated investments, share-based compensation and net
income attributable to noncontrolling interests, before depreciation and
amortization. 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.

· "Cap rate" represents the net operating income of an investment for
the year preceding its acquisition or disposition, as applicable,
divided by the purchase or sale price, as applicable. Cap rates set
forth in this presentation only includes data from income-producing
properties. We calculate cap rates based on information that is supplied
to us 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 our
financial statements prepared in accordance with GAAP. In addition, cap
rates represent historical performance and are not a guarantee of future
NOI. Properties for which a cap rate is provided may not continue to
perform at that cap rate.

· "Consolidated investment account" refers to the sum of Kennedy
Wilson's equity in: cash held by consolidated investments, consolidated
real estate and acquired in-place leases gross of accumulated
depreciation and amortization, net hedge asset or liability,
unconsolidated investments, consolidated loans, and net other assets.

· "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. 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 2019, the NOI represents estimated Year 1 NOI from our
original underwriting. Estimated year 1 NOI for properties purchased in
2019 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.
The Company does not provide a reconciliation for estimated annual NOI
to its most directly comparable forward-looking GAAP financial measure,
because it is unable to provide a meaningful or accurate estimation of
each of the component reconciling items, and the information is not
available without unreasonable effort. This is due to the inherent
difficulty of forecasting the timing and/or amount of various items that
would impact estimated annual NOI, including, for example, gains on
sales of depreciable real estate and other items that have not yet
occurred and are out of the Company's control. For the same reasons, the
Company is unable to meaningfully address the probable significance of
the unavailable information and believes that providing a reconciliation
for estimated annual NOI would imply a degree of precision as to its
forward-looking net operating income that would be confusing or
misleading to investors.

· "Estimated Forward Yield on Cost" represents the Company's estimate of
future net operating income, assuming it has completed its planned
value-add asset management initiatives, divided by the sum of the
purchase price and additional capital expenditure costs that are
expected to be incurred in accordance with the Company's original
underwriting at the time of acquisition. This information is not audited
or reviewed by independent accountants and may be presented in a manner
that is different from similar information included in our financial
statements prepared in accordance with GAAP. Estimated Forward Return on
Cost is based on management's current expectations and are based on
assumptions that may prove to be inaccurate and involve known and
unknown risks. For example, Estimated Forward Return on Cost is based in
part on data made available to us during the course of our due diligence
process in connection with asset acquisitions and assumes the timely and
on-budget completion of our value-add initiatives, the timely leasing of
all additional capacity and the absence of customer defaults or early
lease terminations. Accordingly, the actual return on cost of an
investment made by the Company may differ materially and adversely from
the Estimated Forward Return on Cost figures set forth in this release,
and we caution you not to place undue reliance on such figures. This
information is not provided for development assets with no current
income-producing component.

· "Fee-Bearing Capital" represents total
third-party committed or invested capital that we manage in our
joint-ventures and commingled funds that entitle us to earn fees,
including without limitation, asset management fees, construction
management fees, acquisition and disposition fees and/or promoted
interest, if applicable.

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

· "Internal Rate of Return" ("IRR") is based on cumulative contributions
and distributions to Kennedy Wilson on each investment that has been
sold and is the leveraged internal rate of return on equity invested in
the investment. The IRR measures the return to Kennedy Wilson on each
investment, expressed as a compound rate of interest over the entire
investment period. This return does take into account carried interest,
if applicable, but excludes management fees, organizational fees, or
other similar expenses.

· "Investment account" refers to the consolidated investment account
presented after noncontrolling interest on invested assets gross of
accumulated depreciation and amortization.

· "Investment Management and Real Estate Services Assets under
Management" ("IMRES AUM") generally refers to the properties and other
assets with respect to which we provide (or participate in) oversight,
investment management services and other advice, and which generally
consist of real estate properties or loans, and investments in joint
ventures. Our IMRES AUM is principally intended to reflect the extent of
our presence in the real estate market, not the basis for determining
our management fees. Our IMRES AUM consists of the total estimated fair
value of the real estate properties and other real estate related assets
either owned by third parties, wholly owned by us or held by joint
ventures and other entities in which our sponsored funds or investment
vehicles and client accounts have invested. Committed (but unfunded)
capital from investors in our sponsored funds is not included in our
IMRES AUM. The estimated value of development properties is included at
estimated completion cost.

· "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.

· "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 and hotel 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.

· "Return on Equity" is a ratio calculated by dividing the net cash
distributions of an investment to Kennedy Wilson, after the cost of
leverage, if applicable, by the total cash contributions by Kennedy
Wilson over the lifetime of the investment.

· "Same property" refers to properties in which Kennedy Wilson has an
ownership interest during the entire span of both periods being
compared. The same property information presented throughout this report
is shown on a cash basis and excludes non-recurring expenses. This
analysis excludes properties that are either under development or
undergoing lease up as part of our asset management strategy.

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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