PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Kennedy-Wilson Holdings, Inc. as of September 30, 2019, and for the three and nine-month periods then ended [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$6,935.8 million** from **$7,381.8 million** at year-end 2018, primarily due to reduced real estate assets Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $385.8 | $488.0 | | Real estate, net | $5,075.4 | $5,702.5 | | Unconsolidated investments | $1,110.2 | $859.9 | | **Total Assets** | **$6,935.8** | **$7,381.8** | | **Liabilities** | | | | Mortgage debt | $2,644.7 | $2,950.3 | | KW unsecured debt | $1,280.7 | $1,202.0 | | KWE unsecured bonds | $1,207.6 | $1,260.5 | | **Total Liabilities** | **$5,660.1** | **$5,950.6** | | **Total Equity** | **$1,275.7** | **$1,431.2** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2019, total revenues decreased to **$427.4 million**, resulting in lower net income attributable to common shareholders Statement of Operations Highlights (in millions, except per share data) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $143.0 | $185.8 | $427.4 | $593.7 | | Gain on sale of real estate, net | $6.3 | $39.4 | $252.4 | $304.2 | | Net Income | $19.4 | $12.9 | $162.2 | $179.2 | | Net Income Attributable to KWH | $20.7 | $12.1 | $66.2 | $119.3 | | Diluted EPS | $0.15 | $0.09 | $0.47 | $0.83 | | Dividends declared per share | $0.21 | $0.19 | $0.63 | $0.57 | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the nine months ended September 30, 2019, total comprehensive income attributable to common shareholders decreased to **$71.1 million** from **$103.0 million** Comprehensive Income Highlights (in millions) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $19.4 | $12.9 | $162.2 | $179.2 | | Other Comprehensive (Loss) Income | $(8.3) | $(7.6) | $13.9 | $(11.2) | | Comprehensive Income | $11.1 | $5.3 | $176.1 | $168.0 | | Comprehensive Income Attributable to KWH | $13.4 | $5.4 | $71.1 | $103.0 | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$39.5 million** for the nine months ended September 30, 2019, leading to a **$102.2 million** net decrease in cash Cash Flow Summary (in millions) | Activity | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(39.5) | $91.8 | | Net cash provided by investing activities | $106.0 | $512.6 | | Net cash used in financing activities | $(179.2) | $(520.8) | | **Net change in cash and cash equivalents** | **$(102.2)** | **$68.1** | - During the nine months ended September 30, 2019, the Company deconsolidated interests in several Dublin properties, recorded as a non-cash investing activity, increasing unconsolidated investments by **$125.5 million**[48](index=48&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and breakdowns of financial statement line items, including lease accounting and real estate activities - Effective January 1, 2019, the Company adopted the new lease standard ASU 2016-02 (Topic 842), recognizing a right-of-use asset and corresponding lease liability of **$13.6 million**[74](index=74&type=chunk)[77](index=77&type=chunk) - During the nine months ended September 30, 2019, the company recognized a net gain on sale of real estate of **$252.3 million**, largely from the deconsolidation of Dublin properties into a joint venture with AXA, resulting in a gain of **$205.6 million**[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) - As of September 30, 2019, the company had unfulfilled capital commitments of **$39.8 million** to three unconsolidated joint ventures, primarily closed-end funds[110](index=110&type=chunk) - In October 2019, the Company announced a **$300 million** perpetual preferred equity investment from Eldridge Industries at a **5.75%** annual dividend rate and an initial conversion price of **$25.00** per share[231](index=231&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's real estate investment business model, financial results, liquidity, and capital resources, including key performance metrics and development pipeline [Overview and Business Segments](index=57&type=section&id=Overview%20and%20Business%20Segments) Kennedy Wilson operates as a global real estate investment company with two core segments: KW Investments and KW Investment Management and Real Estate Services (IMRES) - The company's primary business involves owning, operating, and investing in multifamily and office properties across the Western U.S., U.K., and Ireland[234](index=234&type=chunk) - The company operates through two symbiotic business segments: **KW Investments** (capital investment) and **KW Investment Management and Real Estate Services (IMRES)** (fee-generating services)[237](index=237&type=chunk)[238](index=238&type=chunk) - As of September 30, 2019, the company holds investments in **28,173 multifamily units** and **192 commercial properties** totaling over **20.8 million square feet**[241](index=241&type=chunk)[245](index=245&type=chunk) - The IMRES segment manages approximately **$16.2 billion** of Assets under Management (AUM) and has **$2.5 billion** in fee-bearing capital[259](index=259&type=chunk)[261](index=261&type=chunk) [Financial Results Comparison](index=65&type=section&id=Financial%20Results%20Comparison) GAAP net income and Adjusted EBITDA showed mixed results for Q3 and the nine-month period, with same-property NOI demonstrating positive performance Q3 Financial Comparison (in millions) | Metric | Q3 2019 | Q3 2018 | | :--- | :--- | :--- | | GAAP Net Income to KWH | $20.7 | $12.1 | | Adjusted EBITDA | $142.5 | $141.9 | Nine-Month Financial Comparison (in millions) | Metric | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | | GAAP Net Income to KWH | $66.2 | $119.3 | | Adjusted EBITDA | $450.0 | $535.0 | - Same-property performance for Q3 2019 was strong, with multifamily NOI increasing **6.5%** and commercial NOI increasing **4.8%** year-over-year[278](index=278&type=chunk) - Adjusted Fees for Q3 2019 increased to **$27.5 million** from **$20.0 million** in Q3 2018, driven by higher performance fees[285](index=285&type=chunk) [Liquidity and Capital Resources](index=80&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through consolidated cash and credit lines, manages a significant development pipeline, and has an active share repurchase plan - As of September 30, 2019, the company had **$385.8 million** in consolidated cash and **$425.0 million** available under its lines of credit[347](index=347&type=chunk) - The company has a development pipeline with an estimated total cost of **$1.1 billion**, of which **$812.0 million** remains to be funded, with **$406 million** expected to be funded by the company's own cash[352](index=352&type=chunk)[357](index=357&type=chunk) - The company has **12 unstabilized assets** requiring an estimated **$85.3 million** in costs to complete stabilization[359](index=359&type=chunk)[360](index=360&type=chunk) - A **$250 million** share repurchase plan is in effect, with **$67.9 million** remaining available for repurchases as of September 30, 2019[363](index=363&type=chunk) [Certain Non-GAAP Measures and Reconciliations](index=87&type=section&id=Certain%20Non-GAAP%20Measures%20and%20Reconciliations) This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, to their most directly comparable GAAP measures Reconciliation of Net Income to Adjusted EBITDA (in millions) | Period | Net Income | Adjusted EBITDA | | :--- | :--- | :--- | | **Q3 2019** | $19.4 | $142.5 | | **Q3 2018** | $12.9 | $141.9 | | **9 Months 2019** | $162.2 | $450.0 | | **9 Months 2018** | $179.2 | $535.0 | Reconciliation of Net Income to Adjusted Net Income (in millions) | Period | Net Income | Adjusted Net Income | | :--- | :--- | :--- | | **Q3 2019** | $19.4 | $73.9 | | **Q3 2018** | $12.9 | $74.1 | | **9 Months 2019** | $162.2 | $232.8 | | **9 Months 2018** | $179.2 | $308.2 | [Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency fluctuations, which are managed through debt structure and hedging strategies - As of September 30, 2019, **86%** of the company's consolidated debt is fixed rate, mitigating exposure to interest rate volatility[404](index=404&type=chunk) - A hypothetical **100-basis point** increase in interest rates would result in a **$19.0 million** increase in annual interest expense on current consolidated mortgages[407](index=407&type=chunk) - Approximately **47%** of the company's investment account is in foreign currencies, with **93%** of euro-denominated and **104%** of GBP-denominated gross asset values hedged[412](index=412&type=chunk)[413](index=413&type=chunk) - A **5%** change in foreign exchange rates against the U.S. Dollar would change the company's net asset value by approximately **$5.3 million to $5.4 million**[416](index=416&type=chunk) [Controls and Procedures](index=94&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the company's disclosure controls and procedures are effective[417](index=417&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter[418](index=418&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=95&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, none of which are considered material to its financial statements - The company is not currently involved in any material legal proceedings[421](index=421&type=chunk) [Risk Factors](index=95&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 were reported - No material changes from the risk factors disclosed in the 2018 Form 10-K were reported[422](index=422&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity, including shares repurchased during the quarter and remaining availability under the current plan Share Repurchase Activity (Q3 2019) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2019 | 85,304 | $21.49 | | August 2019 | — | $— | | September 2019 | — | $— | | **Total** | **85,304** | **$21.49** | - As of September 30, 2019, **$67.9 million** remained available for repurchase under the company's **$250 million** stock repurchase program authorized in March 2018[423](index=423&type=chunk) [Defaults Upon Senior Securities](index=95&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period [Exhibits](index=95&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including certifications from the Chief Executive Officer and Chief Financial Officer

KENNEDY WILSON Q1-19 Investor Update (As of March 31, 2019) Disclaimer/Forward-Looking Statements Statements made by us in this presentation and in other reports and statements released by us that are not historical facts constitute "forwardlooking 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 for-ward-looking statements are necessarily estimates reflecting the judgment of our senior manageme ...

Financial Data and Key Metrics Changes - For Q2 2019, GAAP EPS was $0.36 per share, down from $0.77 per share in Q2 2018 [8] - Adjusted EBITDA decreased to $187 million from $271 million in Q2 2018 [8] - Adjusted net income fell to $105 million compared to $171 million in Q2 2018 [8] - The quarter experienced $68 million in fewer gains compared to Q2 2018, but it was still one of the strongest quarters in the last decade [9] Business Line Data and Key Metrics Changes - Global same property revenue increased by 4% and NOI rose by 6% [10] - The Western U.S. multifamily portfolio saw same-store revenue up 5% and NOI up 8% [11] - The Mountain State portfolio reported same-store revenue growth of 7% and NOI growth of 9% [12] - The commercial portfolio had revenue growth of 5% and NOI growth of 6% on a same property basis [17] Market Data and Key Metrics Changes - The Greater Salt Lake area had an unemployment rate of 2.8%, the lowest in 12 years, with significant job growth [13] - The Pacific Northwest saw NOI growth of over 7% [15] - In Ireland, the multifamily sector's same property NOI increased by 5%, with a significant undersupply in the market [16] Company Strategy and Development Direction - The company focuses on three key strategic initiatives: growing NOI at the property level, expanding investment management, and executing capital recycling and asset sale programs [20] - The company aims to complete strategic value-add CapEx projects to grow NOI organically [22] - The development pipeline includes 4,300 multifamily units and 2.9 million square feet of commercial property [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic activity in the Mountain States and the Pacific Northwest, expecting continued strong growth [14][15] - The company anticipates an increase in transaction levels for the second half of the year, with over $800 million in investment transactions in the pipeline [50] - Management noted a strong demand for multifamily assets in the Western U.S. driven by job growth and low interest rates [79] Other Important Information - The company ended the quarter with $404 million in cash and $450 million available under its line of credit [51] - The weighted average interest rate on debt is 3.9%, with only 3% maturing by the end of 2019 [51] Q&A Session Summary Question: Concerns about rising development costs - Management indicated that they have not faced significant issues with construction costs or timing, thanks to their experienced construction management teams [56] Question: Details on asset sales and sectors involved - Management confirmed that asset sales would span multiple sectors, including multifamily and office assets, generating significant cash [58] Question: Insights on fundraising and new relationships - Management noted success in both new and existing relationships, particularly in the insurance sector [59] Question: Transaction environment and deal flow - Management highlighted the efficiency of their acquisition teams and the importance of being nimble in the current market [62] Question: Opportunities in the Mountain States - Management stated that multifamily will remain the dominant product type in the Mountain States, with some office assets also being considered [67] Question: Update on the Shelbourne hotel performance - Management reported a positive trend in high-end leisure bookings and group inquiries following the completion of renovations [76] Question: Cap rates in Dublin market - Management indicated that Dublin Class A office yields are holding at about 4%, with significant spreads compared to their development yields [78] Question: Interest in multifamily portfolio in the Western U.S. - Management noted high demand for multifamily assets, with competitive bidding observed during recent sales [79] Question: General and administrative expenses reduction - Management explained that they have consciously reduced payroll and G&A costs, stabilizing their workforce without significant additions [82]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 Or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-33824 Kennedy-Wilson Holdings, Inc. (Exact name of Registrant as specified in its charter) (State or other jurisd ...

Financial Data and Key Metrics Changes - GAAP EPS was a loss of $0.04 per share compared to a loss of $0.02 in Q1 2018 [9] - Adjusted EBITDA was $120 million in the quarter, down from $123 million in Q1 2018 [9] - Adjusted net income totaled $54 million, compared to $63 million in Q1 2018 [9] - Estimated annual NOI of the real estate portfolio was $405 million, with 49% from the western U.S. and 51% from Europe [9][10] Business Line Data and Key Metrics Changes - Same property revenue and NOI grew by 3% across the global same property portfolio [11] - Excluding hotels, same property portfolio had a 5% NOI growth [11] - Multifamily portfolio saw same property revenue up 6% and NOI up 7% [12] - Southern California multifamily portfolio had an NOI growth of 10% [12] Market Data and Key Metrics Changes - The Irish multifamily portfolio had same property NOI growth of over 6% [14] - The Pacific Northwest same-store property portfolio had occupancies up 2% and NOI up almost 8% [14] - Office takeup in Dublin was the highest ever recorded in Q1 at over 1 million square feet [27] Company Strategy and Development Direction - Focus on growing NOI, investment management, and capital recycling [16] - Expecting to add $100 million of annualized NOI by the end of 2023 from current development projects [18] - Aiming to grow the multifamily portfolio in Dublin to 5,000 units [24] - Strategic asset sales to focus on high-quality investment opportunities [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals supporting rental growth in the multifamily portfolio [12] - The Irish economy is growing at a strong pace with GDP growth among the highest in the EU [27] - Anticipated strong performance in the hotel sector following renovations [61] Other Important Information - The company sold $323 million of assets during the quarter, generating $93 million in cash [41] - The company completed a EUR 261 million refinance on Capital Dock, achieving a low effective interest rate of 1.56% [44] Q&A Session Summary Question: Retail sector exposure and strategy - Management is both selling and adding value to retail assets, studying specific geographic markets for opportunities [47][49] Question: Impact of construction costs on development pipeline - Construction costs are manageable, but land prices have escalated, prompting caution in new acquisitions [51][52] Question: Revenue expectations for the Shelbourne hotel post-renovation - Management expects a return to strong performance with high occupancy rates and increased ADR [54][56] Question: Apartment pricing power in mountain states - Strong pricing power due to affordability and employment growth in markets like Boise and Reno [70][72] Question: Update on Dublin's apartment supply - There is a significant need for new housing, with estimates of 25,000 to 30,000 units needed annually [75] Question: Capital raising pipeline - The company has a robust pipeline for separate accounts and discretionary funds, with expectations for continued growth [80][82] Question: Future acquisition and disposition strategy - The company plans to prioritize high-quality assets and reduce the number of properties while increasing cash from sales [106]

Financial Performance - Total revenue for the three months ended March 31, 2019, was $140.7 million, compared to $131.9 million for the same period in 2018, representing a year-over-year increase of approximately 5.9%[246] - Adjusted EBITDA for the three months ended March 31, 2019, was $120.2 million, compared to $122.7 million for the same period in 2018, indicating a slight decrease of about 2.0%[246] - Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders for the three months ended March 31, 2019, was a loss of $5.3 million, compared to a profit of $31.4 million for the same period in 2018[246] - Total revenue for the three months ended March 31, 2019, was $190.1 million, a decrease from $190.1 million in the same period in 2018[247] - Adjusted EBITDA for the three months ended March 31, 2019, was $120.2 million, compared to $122.6 million for the same period in 2018[249] - Comprehensive income attributable to Kennedy-Wilson Holdings, Inc. common shareholders was $11.6 million for the three months ended March 31, 2019, down from $20.4 million in 2018[283] - Adjusted Net Income for the three months ended March 31, 2019, was $53.9 million, down from $63.2 million in 2018[330] - The company reported a net income of $1.6 million for Q1 2019, compared to a net loss of $1.0 million in Q1 2018[333] Revenue Breakdown - Rental revenue for the three months ended March 31, 2019, was $115.8 million, while hotel revenue was $15.0 million, contributing significantly to total revenue[246] - Rental income decreased by $18.5 million to $115.8 million due to the deconsolidation of Irish multifamily assets sold into the AXA Joint Venture[253] - Hotel income fell by $21.3 million to $15.0 million primarily due to the sale of the Ritz Carlton, Lake Tahoe hotel and other properties[254] - Sale of real estate revenue decreased to $1.1 million from $9.4 million, attributed to the completion of the 200 Capital Dock project[255] - Same Property Revenue for Q1 2019 was $119.4 million, an increase from $115.8 million in Q1 2018, representing a growth of 2.8%[335] - Commercial Same Property Revenue increased to $46.0 million in Q1 2019 from $44.1 million in Q1 2018, a growth of 4.3%[335] - Multifamily Market Rate Portfolio Same Property Revenue rose to $54.4 million in Q1 2019, compared to $51.7 million in Q1 2018, marking a 5.2% increase[335] - Hotel Same Property Revenue decreased to $12.8 million in Q1 2019 from $14.1 million in Q1 2018, a decline of 9.2%[335] Expenses and Costs - Total expenses for the three months ended March 31, 2019, were $153.1 million, compared to $128.5 million for the same period in 2018, reflecting an increase of approximately 19.2%[246] - Interest expense for the three months ended March 31, 2019, was $55.3 million, which included $37.1 million in interest expense and $18.2 million from corporate debt[246] - The company incurred acquisition-related expenses of $0.8 million during the three months ended March 31, 2019[246] - The share-based compensation expense for the three months ended March 31, 2019, was $10.4 million, reflecting the company's ongoing commitment to employee incentives[246] - Hotel expenses decreased to $14.6 million for the three months ended March 31, 2019, down from $30.8 million in the same period in 2018, attributed to the sale of Park Inns hotels and the Ritz Carlton, Lake Tahoe hotel[267] - Interest expense decreased to $55.3 million for the three months ended March 31, 2019, from $58.9 million in 2018, due to the deconsolidation of multifamily assets and increased capitalized interest[277] Investments and Development - The company raised an additional $200 million of fee-bearing capital during the first quarter of 2019[249] - The company expects to incur an additional $702.0 million to complete ongoing development and redevelopment projects, with $342 million expected to be funded through cash[288] - The company is developing 2,531 affordable and/or age-restricted multifamily units, expecting to receive $27.9 million in cash from developer fees and tax credit sales upon completion[289] - The company has a total of 817,000 square feet in development projects, with an estimated total cost of $1.557 billion, of which $981 million is expected to be incurred[293] - The company typically invests between $50 million to $100 million annually for capital expenditures in its consolidated and unconsolidated investment portfolio[297] Cash Flow and Liquidity - For the three months ended March 31, 2019, the company reported net cash used in operating activities of $25.1 million, compared to cash provided of $48.8 million in the same period of 2018[300][301] - The company generated net cash provided by investing activities of $100.8 million for the three months ended March 31, 2019, primarily from the sale of Ritz Carlton Lake Tahoe hotel and non-core retail properties[302] - Net cash used in financing activities totaled $122.9 million for the three months ended March 31, 2019, with significant repayments of mortgage debt totaling $251.4 million[304] - The company has unfulfilled capital commitments totaling $97.6 million to its unconsolidated investments as of March 31, 2019[298][309] - The company expects to fund $342 million of its share of remaining costs to complete projects with cash, subject to changes in financing availability[294] - As of March 31, 2019, the company had approximately $943.0 million of potential liquidity, including $500.0 million available under lines of credit and $442.9 million in cash[285] Debt and Financing - As of March 31, 2019, total contractual cash obligations amount to $5.556 billion, including mortgage debt of $3.008 billion[307] - The company has a share repurchase plan approved for up to $250 million, with $76.8 million remaining under the plan as of March 31, 2019[296] - As of March 31, 2019, the total amount of 2024 Notes included in the consolidated balance sheets was $1.1 billion[313] - KWE has approximately $651.5 million in outstanding KWE Bonds with a fixed interest rate of 3.95%, effectively reduced to 3.35% through swap arrangements[314] - KWE established a £2.0 billion (approximately $2.6 billion) Euro Medium Term Note Programme, with $617.0 million drawn down under this programme[315] - The A&R Facility consists of a $500 million revolving line of credit and a $200 million term loan facility, with a maturity date of March 31, 2021[317] - As of March 31, 2019, the Company had an outstanding balance of $75.0 million on the A&R Facility, leaving $500.0 million available to be drawn[318] - The A&R Facility requires a maximum consolidated leverage ratio of not greater than 65% and a minimum fixed charge coverage ratio of at least 1.70 to 1.00[320] - As of March 31, 2019, the Company was in compliance with all covenant calculations[322] Operational Metrics - The company reported net operating income (NOI) of $41.7 million from unconsolidated investments, net of depreciation and amortization, for the three months ended March 31, 2019[246] - On 14,583 same property multifamily units, total revenues increased by 5.5% and net operating income increased by 7.1%[250] - Occupancy for same property commercial real estate increased to 97.1% from 96.8% year-over-year[250] - Income from unconsolidated investments increased to $41.7 million for the three months ended March 31, 2019, compared to $26.0 million in 2018, driven by the deconsolidation of multifamily assets into the AXA Joint Venture[273] - The company experienced a decrease in income from unconsolidated investments, reporting a loss of $41.7 million in Q1 2019 compared to a loss of $26.0 million in Q1 2018[333] - The company’s same property analysis reflects a weighted ownership in each underlying property, indicating a strategic focus on property management and performance metrics[332]

PART I [Business](index=5&type=section&id=Item%201.%20Business) Kennedy Wilson is a global real estate investment company focused on multifamily and office properties, operating through investment and fee-generating segments - The company's primary focus is on owning, operating, and investing in multifamily and office properties located in the Western United States, United Kingdom, and Ireland[13](index=13&type=chunk) - Kennedy Wilson's business is structured into two core, symbiotic units: KW Investments (capital investment) and KW Investment Management and Real Estate Services (IMRES, fee-generating services)[18](index=18&type=chunk)[19](index=19&type=chunk) Company Portfolio Snapshot (as of Dec 31, 2018) | Metric | Value | | :--- | :--- | | Total Portfolio Book Value | ~$11.3 billion | | Global Property Square Footage | ~53 million sq. ft. | | Multifamily Rental Units | 28,613 units | | Commercial Property Square Footage | 18.9 million sq. ft. | | Average Company Ownership Interest | ~63% | Five-Year Financial Performance Highlights (2014-2018) | Metric (in millions, except per share) | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $773.5 | $801.8 | $690.4 | $583.8 | $384.9 | | **Net Income to Common Shareholders** | $150.0 | $100.5 | $2.8 | $71.1 | $13.8 | | **Adjusted EBITDA** | $712.7 | $455.7 | $349.9 | $371.2 | $317.8 | | **Dividends Declared per Share** | $0.78 | $0.70 | $0.56 | $0.48 | $0.36 | | **Total Assets** | $7,357.1 | $7,724.8 | $7,656.6 | $7,595.6 | $6,297.6 | [Business Segments](index=6&type=section&id=Business%20Segments) The company operates through KW Investments for direct real estate and IMRES for fee-generating investment management and services - The KW Investments segment invests the company's capital in real estate assets, either wholly-owned or with equity partners, with an average ownership interest of approximately **63%** as of December 31, 2018[20](index=20&type=chunk) - The IMRES segment manages approximately **$16 billion** of Assets Under Management (AUM) and includes investment management, property services, brokerage, and auction/sales businesses[37](index=37&type=chunk)[36](index=36&type=chunk) - As of December 31, 2018, the company manages a total of **$2.2 billion** in fee-bearing capital through its investment management platform[40](index=40&type=chunk) - In December 2018, the company sold its research business, Meyers Research LLC, for **$48.0 million**, recognizing a gain of **$40.4 million**, and reinvested **$15.0 million** for an **11%** stake in a new partnership[47](index=47&type=chunk) [Industry Overview and Key Investment Markets](index=10&type=section&id=Industry%20Overview%20and%20Key%20Investment%20Markets) Key real estate markets in the Western U.S., UK, Ireland, and Spain demonstrated strong demand and economic resilience across multifamily and office sectors - **Western U.S.:** The market saw strong demand for multifamily housing, particularly suburban workforce housing, and moderate growth in the office sector fueled by tech companies[54](index=54&type=chunk)[55](index=55&type=chunk) - **United Kingdom:** Despite Brexit uncertainty, the UK economy remained resilient with near-record low unemployment. London's office market fundamentals are strong, though the retail sector is under pressure[59](index=59&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - **Ireland:** As Europe's best-performing economy for the fifth straight year, Ireland saw significant investment volume in 2018, with office and multifamily transactions representing nearly one-third of the total[64](index=64&type=chunk) - **Spain:** The retail sector continues to improve, driven by economic growth, decreased unemployment, and strong tourism, leading to positive foot traffic and institutional demand[69](index=69&type=chunk)[70](index=70&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces various business, company-specific, and stock ownership risks, including economic sensitivity, foreign operations, and capital market reliance [Risks Related to Our Business](index=15&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include sensitivity to economic conditions, real estate cyclicality, credit market volatility, and foreign operation risks, especially Brexit - The business is highly sensitive to general economic conditions and real estate market cyclicality, which can harm asset values, sales, and leasing activities[94](index=94&type=chunk) - Significant operations in the UK and Ireland (sourcing **57%** of 2018 revenues) expose the business to foreign market risks, including political instability, currency fluctuations, and regulatory changes[102](index=102&type=chunk) - The UK's withdrawal from the European Union (Brexit) creates significant uncertainty that could negatively affect global economic conditions, financial markets, and the UK real estate market, where **31%** of the company's consolidated investment account is located[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The company faces risks from its real estate development and redevelopment strategies, including potential delays, cost overruns, and failure to achieve sufficient occupancy or sales levels[100](index=100&type=chunk) [Risks Related to Our Company](index=22&type=section&id=Risks%20Related%20to%20Our%20Company) Company-specific risks include reliance on capital markets, loss of key personnel, foreign currency fluctuations, significant debt obligations, and tax law impacts - The company depends on capital markets to fund growth, and an inability to raise additional debt and equity could impede future prospects[138](index=138&type=chunk) - The loss of key personnel, particularly the CEO, could materially harm operations and relationships with lenders, partners, and clients[139](index=139&type=chunk) - Significant debt obligations impose operating and financial restrictions, including covenants for maximum leverage and fixed charge coverage ratios, which could limit the pursuit of business opportunities[147](index=147&type=chunk)[149](index=149&type=chunk) - The ability to use significant net operating loss carryforwards (**$60.7 million** federal, **$71.9 million** California, **$224.8 million** foreign) may be limited by ownership changes under tax laws[152](index=152&type=chunk) [Risks Related to Ownership of Our Common Stock](index=25&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Stock ownership risks include significant influence by directors and officers, potential dilution, stock price volatility, and anti-takeover provisions - As of December 31, 2018, directors, executive officers, and their affiliates owned approximately **14%** of the common stock, giving them significant influence over stockholder matters[158](index=158&type=chunk) - The company's staggered board and other anti-takeover provisions may entrench management and discourage takeover attempts that could be in the best interests of stockholders[161](index=161&type=chunk) - The company's dividend policy is subject to change at the discretion of the board of directors, and there is no assurance that the current dividend level will be maintained[164](index=164&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) The company's consolidated portfolio includes **10.3 million** sq. ft. commercial and **10,404** multifamily units, mainly in the Western U.S. and Europe Consolidated Properties by Region (as of Dec 31, 2018) | Property Type | Region | Sq. Feet / Units | Occupancy/Leased % | KW Ownership % | of Assets | | :--- | :--- | :--- | :--- | :--- | :--- | | **Commercial** | Western U.S. | 1.9M sq. ft. | 96% | 84% | 15 | | | Europe | 8.4M sq. ft. | 97% | 94% | 138 | | **Total Commercial** | | **10.3M sq. ft.** | **97%** | **92%** | **153** | | **Multifamily** | Western U.S. | 9,642 units | 94% | 99% | 30 | | | Europe | 762 units | 97% | 100% | 3 | | **Total Multifamily** | | **10,404 units** | **94%** | **99%** | **33** | Commercial Lease Expiration Schedule (as of Dec 31, 2018) | Year of Expiration | Rentable Square Feet (M) | Annualized Base Rent (M) | % of Total Rent | | :--- | :--- | :--- | :--- | | 2019 | 1.4 | $26.4 | 12% | | 2020 | 1.0 | $15.6 | 7% | | 2021 | 0.6 | $21.9 | 10% | | 2022 | 1.4 | $28.2 | 13% | | 2023 | 1.1 | $23.0 | 11% | | Thereafter | 4.4 | $80.5 | 36% | [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings arising from ordinary business, none of which are currently considered material - The company is involved in routine legal proceedings arising from the ordinary course of business, none of which are expected to be material[173](index=173&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE, with **$0.78** per share dividends paid and an active **$250 million** share repurchase program in 2018 - In 2018, the company declared and paid total dividends of **$0.78** per share[177](index=177&type=chunk) - On March 20, 2018, the board authorized a new share repurchase program for up to **$250 million** of common stock[181](index=181&type=chunk) - During the year ended December 31, 2018, the company repurchased and retired **9.7 million** shares of its common stock at a weighted average price of **$17.94** per share[182](index=182&type=chunk) [Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five-year historical financial data (2014-2018), highlighting revenue growth, increased net income, and strong Adjusted EBITDA Selected Historical Financial Data (2014-2018) | (In millions, except per share amounts) | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $773.5 | $801.8 | $690.4 | $583.8 | $384.9 | | **Net income to common shareholders** | $150.0 | $100.5 | $2.8 | $71.1 | $13.8 | | **Adjusted EBITDA** | $712.7 | $455.7 | $349.9 | $371.2 | $317.8 | | **Total assets** | $7,357.1 | $7,724.8 | $7,656.6 | $7,595.6 | $6,297.6 | | **Total equity** | $1,431.2 | $1,577.5 | $2,343.1 | $2,865.1 | $3,043.9 | - Investment Management and Real Estate Services Assets under Management (IMRES AUM) increased by **4%** from **$15.7 billion** at year-end 2017 to **$16.3 billion** at year-end 2018, driven by new acquisitions and value appreciation[189](index=189&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2018 financial condition and operations, highlighting increased net income and Adjusted EBITDA, robust liquidity, and a significant development pipeline [Results of Operations](index=36&type=section&id=Results%20of%20Operations) In 2018, GAAP net income increased to **$150.0 million** and Adjusted EBITDA rose **56%** to **$712.7 million**, driven by real estate and business sales Financial Results Comparison (2018 vs. 2017) | Metric (in millions) | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | **GAAP Net Income to Common Shareholders** | $150.0 | $100.5 | +49.3% | | **Adjusted EBITDA** | $712.7 | $455.7 | +56.4% | | **Total Revenue** | $773.5 | $801.8 | -3.5% | | **Gain on sale of real estate, net** | $371.8 | $226.7 | +64.0% | | **Gain on sale of business** | $40.4 | $0.0 | N/A | - Adjusted Fees remained flat year-over-year at **$86.3 million** in 2018 compared to **$86.6 million** in 2017. A significant increase in performance fees (**$36.6 million** vs **$8.7 million**) was offset by a decrease in base management fees, primarily because the company no longer receives fees from KWE after its full acquisition[242](index=242&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - For 2017 vs. 2016, Adjusted EBITDA increased **30%** to **$455.7 million**, driven by higher realized gains on investments and an increased ownership stake in KWE[269](index=269&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$988.0 million** available, a **$1.1 billion** development pipeline, and positive cash flow from operations - As of December 31, 2018, the company had potential liquidity of approximately **$988.0 million**, consisting of **$488.0 million** in cash and **$500.0 million** available under its lines of credit[310](index=310&type=chunk) - The company has a development and redevelopment pipeline with an estimated total cost for its share of **$1.1 billion**. As of year-end 2018, **$321.0 million** had been incurred, with an estimated **$730 million** remaining to complete the projects[312](index=312&type=chunk) Cash Flow Summary (2016-2018) | (In millions) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $93.1 | $73.0 | $102.9 | | **Net cash provided by (used in) investing activities** | $593.1 | $(70.2) | $(286.7) | | **Net cash (used in) provided by financing activities** | $(528.8) | $(565.3) | $419.8 | - As of December 31, 2018, the company has unfulfilled capital commitments totaling **$99.3 million** to its unconsolidated investments[323](index=323&type=chunk) [Indebtedness and Related Covenants](index=52&type=section&id=Indebtedness%20and%20Related%20Covenants) Total borrowings were **$5.5 billion** as of year-end 2018, comprising mortgage debt, senior unsecured notes, and KWE bonds, all in compliance with covenants Contractual Cash Obligations (as of Dec 31, 2018) | (In millions) | Total | Less than 1 year | 1 - 3 years | 4 - 5 years | After 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total borrowings** | $5,458.8 | $266.2 | $1,280.0 | $1,720.8 | $2,191.8 | | **Operating leases** | $6.9 | $2.2 | $4.0 | $0.6 | $0.1 | | **Ground leases** | $106.8 | $1.2 | $3.5 | $2.3 | $99.8 | | **Total** | **$5,572.5** | **$269.6** | **$1,287.5** | **$1,723.7** | **$2,291.7** | - The company has **$1.15 billion** in aggregate principal of **5.875%** Senior Notes due 2024[342](index=342&type=chunk) - The company's **$700 million** credit facility includes a **$500 million** revolving line of credit and a **$200 million** term loan. As of year-end 2018, the revolver was fully available and **$75.0 million** was outstanding on the term loan[349](index=349&type=chunk)[350](index=350&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks are interest rate and foreign currency fluctuations, with **84%** fixed-rate debt and significant foreign investment account hedging - As of December 31, 2018, **84%** of the company's consolidated debt is fixed rate, mitigating exposure to interest rate volatility[365](index=365&type=chunk) - A hypothetical **100-basis point** increase in interest rates would lead to a **$5.5 million** increase in annual interest expense on current consolidated mortgages[366](index=366&type=chunk) - Approximately **49%** of the company's investment account is invested in foreign currencies. The company hedges its book equity exposure, with **92%** of euro and **100%** of GBP gross asset carrying value hedged as of year-end 2018[371](index=371&type=chunk) - A **5%** adverse movement in foreign exchange rates against the U.S. Dollar would decrease the company's net asset value by approximately **$13.3 million**[374](index=374&type=chunk) [Financial Statements and Supplementary Data](index=59&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2018, including balance sheets, income statements, cash flows, and detailed notes [Consolidated Financial Statements](index=63&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show **$7.36 billion** in total assets, **$773.5 million** in revenue, and **$150.0 million** net income for 2018 Consolidated Balance Sheet Summary (as of Dec 31, 2018) | (In millions) | Amount | | :--- | :--- | | **Total Assets** | **$7,357.1** | | Cash and cash equivalents | $488.0 | | Real estate, net | $5,702.5 | | Unconsolidated investments | $859.9 | | **Total Liabilities** | **$5,925.9** | | Mortgage debt | $2,950.3 | | KW unsecured debt | $1,202.0 | | KWE unsecured bonds | $1,260.5 | | **Total Equity** | **$1,431.2** | Consolidated Statement of Income Summary (Year Ended Dec 31, 2018) | (In millions, except per share data) | Amount | | :--- | :--- | | **Total Revenue** | **$773.5** | | Rental | $514.6 | | Hotel | $155.7 | | **Total Expenses** | **$766.4** | | Gain on sale of real estate, net | $371.8 | | **Net Income** | **$212.1** | | Net income attributable to common shareholders | $150.0 | | **Diluted Earnings per share** | **$1.04** | [Notes to Consolidated Financial Statements](index=69&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, 2018 acquisitions, unconsolidated investments, and specifics on mortgage debt and unsecured bonds - The company adopted ASC 606 (Revenue from Contracts with Customers) on January 1, 2018. The adoption resulted in performance fees being reclassified from revenue to 'Income from unconsolidated investments' on a retrospective basis[436](index=436&type=chunk)[441](index=441&type=chunk) - During 2018, the company acquired consolidated properties with a total purchase price allocation of **$354.2 million**, primarily in multifamily and commercial assets in the Western U.S. and Ireland[502](index=502&type=chunk) - The company's investment in unconsolidated joint ventures increased from **$519.3 million** in 2017 to **$859.9 million** in 2018, primarily due to the formation of the AXA joint venture for Irish multifamily assets[520](index=520&type=chunk)[523](index=523&type=chunk) - As of December 31, 2018, the company had **$2.95 billion** in mortgage debt with a weighted average interest rate of **3.40%**[569](index=569&type=chunk)[572](index=572&type=chunk) [Controls and Procedures](index=120&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2018, with an unqualified audit opinion - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2018[704](index=704&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2018[706](index=706&type=chunk) PART III [Directors, Executive Compensation, and Corporate Governance](index=121&type=section&id=Items%2010-14) Information for Items 10-14, including directors, executive compensation, and corporate governance, is incorporated by reference from the forthcoming proxy statement - Information regarding Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accounting Fees is incorporated by reference from the company's forthcoming definitive proxy statement[712](index=712&type=chunk)[713](index=713&type=chunk)[714](index=714&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the annual report, including corporate governance documents and certifications - This section contains the index of all financial statements, schedules, and exhibits filed with the annual report, including consents and certifications[719](index=719&type=chunk)[720](index=720&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2018, GAAP EPS was $0.21 per share, down from $0.69 a year ago. For the full year, GAAP EPS reached a record $1.04, a 25% increase from $0.83 in 2017 [9] - The company achieved a record annual adjusted EBITDA of $713 million, which is 56% higher than the $456 million produced in 2017. Adjusted net income totaled a record $397 million in 2018, compared to $243 million last year, marking a 63% increase [10] Business Line Data and Key Metrics Changes - Same property revenue grew by 4% and NOI increased by 7% across the global same property portfolio for the quarter. For the year, same property revenue and NOI grew by 5% [11] - The market rate multi-family portfolio saw same property revenue up 5% and NOI growth of 6%, outperforming other public real estate companies that averaged 2.5% NOI growth for the quarter [11] - The Mountain State portfolio, which includes properties in Salt Lake City, Boise, Seattle, and Reno, experienced same property revenue and NOI growth of over 7% each [12] Market Data and Key Metrics Changes - The stabilized assets had an estimated annual NOI of $407 million, with 48% from the Western U.S. and 52% from Europe, primarily in Ireland and the UK [10] - In Europe, the company completed 195 commercial leasing transactions across 3.1 million square feet, adding $13 million of annual rent, representing a 12% increase on previous rents [18] Company Strategy and Development Direction - The company focuses on three key strategic initiatives: growing property NOI, expanding investment management and fee business, and executing capital recycling and asset sale programs [19] - The development pipeline includes over 4,100 market rate and affordable multifamily units, 2.9 million square feet of commercial property, and a 150-room hotel, expected to add $100 million to annual NOI by the end of 2023 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising significant new fee-bearing capital in 2019 without meaningful changes in overhead, resulting in high-margin growth [48] - The Irish economy is performing strongly with an estimated GDP growth of almost 9% for 2018 and a forecast of 4.5% for 2019, supporting sustained job creation [43] Other Important Information - The company sold $313 million of assets in the quarter, with its share being $264 million. Europe accounted for 86% of asset sales [50] - The company returned a record $290 million of capital to shareholders in 2018 through dividends and share repurchases, equating to approximately $2 per share [52] Q&A Session Summary Question: Will rent controls in London impact the business? - Management does not expect rent controls to impact their single asset in London, as the multifamily market is undersupplied [60][61] Question: Will asset sales reduce leverage? - Management indicated that asset sales will not increase leverage points, as they plan to pay down existing debt [68] Question: Is the strong apartment same-store growth sustainable? - Management aims to outperform the market, targeting 4% revenue growth assuming market growth remains around 2% [75] Question: How is cost inflation affecting development in Dublin? - Management noted that they have fixed-price contracts with contractors, mitigating risks of cost overruns [80] Question: What is the outlook for cap rate spreads in different regions? - Management highlighted attractive cap rate spreads in the U.S., Ireland, and the UK, with strong job growth supporting real estate investments [98]