Kennedy-Wilson Annual Report 2022

Plain-text annual report

ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 1 Kennedy Wilson grew out of a small ofﬁce in Santa Monica, California built on trust and a people-ﬁrst attitude. Relationships are still at the heart of our global real estate investment company as we have grown to $23B of real estate assets under management (AUM). It is those relationships and mutual trust that enable us to empower the communities we activate and to design high-quality places for people to live, create, and ﬂourish. Today, we are a leading global real estate investment company. We own, operate, and invest in real estate through our balance sheet and through our investment management platform across the Western United States, United Kingdom, and Ireland. We focus on multifamily and ofﬁce properties as well as industrial and debt investments in our investment management business. 410 37,800 26M $2.8B Global Real Estate Investments Multifamily Units Commercial Square Feet Assets Under Development On the Cover: Atlas | Issaquah, WA Above: Ten Hanover Quay Dublin, Ireland (cid:34)(cid:59)(cid:59)(cid:2)(cid:114)(cid:45)(cid:93)(cid:59)(cid:2)(cid:1141)(cid:1141)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:49)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:55)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:117)(cid:59)(cid:49)(cid:111)(cid:109)(cid:49)(cid:98)(cid:1140)(cid:98)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:108)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:108)(cid:111)(cid:118)(cid:124)(cid:2)(cid:55)(cid:98)(cid:117)(cid:59)(cid:49)(cid:124)(cid:1140)(cid:139)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:45)(cid:117)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:108)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:314)(cid:2) (cid:17)(cid:109)(cid:61)(cid:111)(cid:117)(cid:108)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:118)(cid:95)(cid:111)(cid:137)(cid:109)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:311)(cid:2)(cid:59)(cid:138)(cid:49)(cid:59)(cid:114)(cid:124)(cid:2)(cid:137)(cid:95)(cid:59)(cid:117)(cid:59)(cid:2)(cid:98)(cid:109)(cid:55)(cid:98)(cid:49)(cid:45)(cid:124)(cid:59)(cid:55)(cid:314) 2 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 3 William J. McMorrow (cid:7)(cid:95)(cid:45)(cid:98)(cid:117)(cid:108)(cid:45)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:7)(cid:95)(cid:98)(cid:59)(cid:61)(cid:2)(cid:11)(cid:138)(cid:59)(cid:49)(cid:134)(cid:2462)(cid:136)(cid:59)(cid:2)(cid:27)(cid:76)(cid:49)(cid:59)(cid:117) Dear Fellow Shareholders, I want to begin by wishing you and your families a happy and healthy 2023. We have all come through a challenging three years, starting with the shutdown in March 2020 that launched us into a period of uncertainty with far reaching effects to global health, economic systems, and workplace dynamics across the world. Today, we are in the midst of yet another challenging period created by higher interest rates, inﬂationary pressures, global political tensions, and continued supply chain issues. As I reﬂect on the past three years, I am proud that Kennedy Wilson has shown remarkable resilience navigating through this uncertainty and delivered outstanding results, including generating over $2 billion of adjusted EBITDA, over $1 billion of adjusted net income, and collecting $4 billion of property-level rental income (Kennedy Wilson’s share of which was 50%). At year-end 2022, our recurring estimated annual net operating income (NOI) grew to its highest level in our history – $491 million – and Kennedy Wilson’s fee-bearing capital rose to a record $5.9 billion. As a result of our performance, we returned $1.23 per basic share or $168 million to shareholders through common dividends and share repurchases in 2022. People, Portfolio, and Partnerships I am extremely honored to work alongside our dedicated team of professionals at Kennedy Wilson who never back down from a challenge, have worked together through several economic cycles, and most of all, are committed to working together to grow the company in a thoughtful way. Kennedy Wilson’s ability to innovate, ﬁnd opportunity, and navigate challenging periods is driven by our people who are constantly communicating, sharing ideas, and working as one global team. The Bristol at Southport Renton, WA 4 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 5 During 2022, our team completed a total of $1.9 billion of gross real estate acquisitions, including 3,200 multifamily units and 4.5 million commercial square feet of industrial assets, as well as $1 billion in loan originations. Geo | Shoreline, WA Our people and the long-standing relationships we maintain in our key markets drive our business. Kennedy Wilson’s on-the-ground teams have grown stronger over the past decade after working together through the great recession and the pandemic, and as a group, we have created a ﬁrst-class reputation for following through on our word. This commitment to doing what we say we’re going to do has only strengthened our ties with our partners around the globe including Fairfax Financial, which made a $300 million strategic preferred equity investment in Kennedy Wilson in 2022. This partnership, along with our relationships with AXA, sovereign wealth funds, and Security Beneﬁt, as well as owners, investors, brokers, lenders, and real estate industry professionals, has fueled our rapid growth, including the execution of $31 billion in acquisitions and $17 billion of real estate sales since going public in 2009. In the past two years, we have added $5 billion to our AUM, an increase of 31% over that period, concentrating almost two thirds of our stabilized portfolio in property sectors where we see strong cash ﬂow growth, including rental apartments, logistics assets, and our ﬂoating-rate real estate loan portfolio. During 2022, our team completed a total of $1.9 billion of gross real estate acquisitions, including 3,200 multifamily units and 4.5 million commercial square feet of industrial assets, as well as $1 billion in loan originations. In total, our new investments added $43 million of estimated annual NOI to Kennedy Wilson. The key components of our high-quality global portfolio include: • Multifamily: This is the largest sector of our global portfolio, totaling nearly 37,800 multifamily units. Kennedy Wilson has an approximate 60% ownership interest in our multifamily assets, which represent 54% of our estimated annual NOI. Our portfolio is concentrated in supply-constrained inﬁll markets across the Western U.S. and Dublin, Ireland. In the U.S., which represents 90% of our multifamily NOI, we seek areas that offer a lower-cost, high quality of life. Our primary markets include the Mountain West, the greater suburban Seattle region, and suburban areas in Northern and Southern California. Leighton Buzzard | Bedfordshire, UK The Shelbourne | Dublin, Ireland Sunset North | Bellevue, WA 6 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 7 Our capital recycling strategy enables us to upgrade the quality of our portfolio by selling non-core assets and harvesting value in investments where we have completed our business plan and then investing capital into our development projects and newer, better- located assets with superior long-term growth potential. 20 Kildare Street | Dublin, Ireland • Industrial: Our industrial platform has seen rapid growth and now totals 10.6 million square feet (Kennedy Wilson ownership 18%) primarily across the UK and Ireland. We continue to focus on last-mile urban logistics assets with signiﬁcant cash ﬂow growth potential. • Ofﬁce: Kennedy Wilson has an approximate 57% ownership interest in our ofﬁce portfolio, which represents 30% of Kennedy Wilson’s estimated annual NOI. 70% of our ofﬁce NOI is generated from our European portfolio, primarily from the UK and Ireland. The majority of our European ofﬁce NOI is derived from major credit tenants with a strong weighted-average lease term of approximately eight years. Nearly all our European ofﬁce assets are either low- or mid-rise, with two thirds of our assets either single-tenant or located within a business park. Our U.S. consolidated ofﬁce portfolio includes ﬁve stabilized assets with 95% occupancy (at share) with credit tenants across diverse industries. Our global ofﬁce portfolio has strong occupancy of 95% (at share), an attractive weighted-average unexpired lease term of six years, and no material near-term debt maturities. • Hospitality: Kennedy Wilson owns two hotels - the ﬁve-star, landmark Shelbourne hotel, which enjoyed record growth in 2022 and will celebrate its 200-year anniversary in 2024, and the iconic Kona Village resort opening this summer in Hawaii. Our capital recycling strategy enables us to upgrade the quality of our portfolio by selling non-core assets and harvesting value in investments where we have completed our business plan and then investing capital into our development projects and newer, better-located assets with superior long-term growth potential. In 2022, we generated approximately $325 million in cash and over $100 million in consolidated gains on asset sales earmarked for this strategy, for a total of $850 million in gains on asset sales since 2020, which generated cash of $1.6 billion. In anticipation of the risks associated with today’s inﬂationary and interest rate envi- ronment, our teams have been focused on reﬁnancing both unsecured corporate debt and property-level debt on a long-term, ﬁxed-rate basis. We never believed inﬂation was transitory and we executed a global plan to manage our debt maturities over the past several years to minimize our exposure to rising interest rates. Our overall debt now has a weighted average maturity of nearly six years and an effective interest rate of 4.2%. In 2022, we also completed $100 million of discounted debt repurchases that resulted in $22 million of gains on our early extinguishment of debt. Today, 97% of our share of debt is either ﬁxed-rate or hedged against increases in interest rates. Looking ahead to 2023 and beyond, we believe we have a clear path to continue growing both our recurring NOI and our fee income. Our extensive network of relationships with institutional partners combined with the signiﬁcant amount of capital we can deploy, including approximately $3.5 billion of non-discretionary fee-bearing capital from announced platforms, will enable us to act quickly as opportunities present themselves. Additionally, we are nearing the completion of many signiﬁcant development projects, which will further grow our recurring cash ﬂow. 8 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 9 Development Portfolio Nears Completion Kennedy Wilson’s development pipeline has played a key role in our progress towards growing our estimated annual NOI and will be an important driver of NOI growth from 2023 through 2025. Our development and lease-up portfolio is expected to generate $96 million of additional estimated annual NOI to Kennedy Wilson when assets in our pipeline are stabilized. In 2023 and 2024, we are on track to complete and deliver $2.4 billion of development, including 3,400 market rate and affordable multifamily units across the Western U.S. and Dublin, 420,000 commercial square feet in Dublin, and one hotel property in Hawaii, all of which are expected to stabilize between 12 to 18 months following construction. Following the completion and lease-up of the award-winning Capital Dock project, with 370,000 commercial square feet and 190 multifamily units, the 877-unit Clancy Quay community in Dublin, and the 277-unit Clara community in Boise in recent years, we stabilized ﬁve additional multifamily and ofﬁce assets in 2022 that have added $10 million of estimated annual NOI. Our major accomplishments in 2022 included completing and nearly fully leasing the 65,000 square-foot 20 Kildare Street ofﬁce development in Dublin, and completing the development and full lease-up of Ten Hanover Quay, a Grade-A, 69,000 square-foot ofﬁce warehouse in Dublin that was built to LEED and WELL Gold credentials. Both properties are now generating meaningful cash ﬂow from long-term leases with very high-quality companies that we are grateful to have as clients. In 2023 and 2024, we are aiming to complete and deliver approximately $2.4 billion in development, including 3,400 market rate and affordable multifamily units across the Western U.S. and Dublin, 420,000 commercial square feet in Dublin, and one hotel property in Hawaii, all of which are expected to stabilize between 12 to 18 months following construction. Our Vintage Housing senior and affordable housing joint venture is an important area of growth for our U.S. multifamily business. Together with our partners, we have grown this platform by over 100% since acquiring our partnership interest in Vintage Housing’s 5,500-unit portfolio in 2015. We are continuing to build high-quality, affordable rental communities in a very capital light manner to meet the extraordinary demand for senior and affordable housing that we are seeing in our Western U.S. markets. We look forward to delivering 2,400 new units by the end of 2025, which will bring the total units in the Vintage Housing platform to approximately 12,000. Developments Completing 2023-2024 Kona Village | Kona Coast, HI Cooper’s Cross | Dublin, Ireland The Cornerstone | Dublin, Ireland Dovetail | Meridian, ID The Grange | Dublin, Ireland Anacapa Canyon | Camarillo, CA The Oxbow | Bozeman, MT 10 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 11 Kona Village | Kona Coast, HI Among the projects we expect to be completed in 2023 is the redevelopment of Kona Village, A Rosewood Resort, which concludes a seven-year effort to bring this beloved resort back to life on the Island of Hawaii’s renowned Kona Coast. The reconstructed luxury resort will generate and store 100% of renewable energy onsite, target LEED certiﬁcation, and models the spirit of the original Kona Village in its low-density architectural layout while embracing local culture and providing incredible guest amenities on 81 acres. Also delivering this year is Coopers Cross, our six-acre mixed-use campus with 471 multifamily units and 395,000 square feet of commercial space that will be a sustainable, Grade-A ofﬁce and residential offering in the heart of Dublin, Ireland. The reconstructed luxury resort will generate and store 100% of renewable energy onsite, target LEED certiﬁcation, and models the spirit of the original Kona Village in its low-density architectural layout while embracing local culture and providing incredible guest amenities on 81 acres. The upcoming delivery of our major construction projects is the result of the long-term strategy we embarked on nearly ten years ago. We initially focused on new developments on land adjacent to properties we already owned that had proven income streams. These properties were all in markets with strong demographics, plentiful job opportunities, and great lifestyle beneﬁts. Over the years, we’ve built out our own talented in-house global construction management team both in the U.S. and in Europe. We continued to move forward over the last three years on all our projects with minimal disruptions from mandated site closures and we are completing our projects on time and on budget. 12 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 13 54% 20%+ Multifamily Assets in Global Portfolio Return on Renovated Units Coppins Well | Seattle, WA A Unique Multifamily Portfolio We continue to weight our investments towards multifamily rental properties, which today is our largest sector representing 54% of our portfolio, compared to just 39% in 2017. In the U.S., we saw strong performance in 2022 from our two top apartment regions, the Mountain West and the Paciﬁc Northwest, which experienced same-property NOI growth of 14% and 12%, respectively. Idaho, Arizona, Nevada, and Utah offer lower state taxes and are top ranked for domestic net migration and job creation, consistent with the trends we see on the ground as greater remote connectivity and ﬂexible work arrangements enable high-skilled renters to enjoy the lifestyle beneﬁts of the Mountain West. In the Paciﬁc Northwest, our second largest region where many of our largely suburban assets have undergone value-add upgrades, rents grew by 10% in 2022. More than half of our multifamily units in the Western U.S. are yet to be renovated, which provides a solid runway for continued growth, as we are earning over 20% returns on cost on renovated units. In the U.S., we saw strong performance in 2022 from our two top apartment regions, the Mountain West and the Paciﬁc Northwest, which experienced same-property NOI growth of 14% and 12%, respectively. In Dublin, our 2,500 multifamily units are currently 99% occupied, the highest level in Kennedy Wilson’s history, which speaks to the continued demand for amenity-rich rental housing. Ireland was once again Europe’s fastest growing economy in 2022. Given the continued undersupply of housing in Dublin, we are anticipating great leasing activity on our approximately 1,000 Irish multifamily units under development at Coopers Cross, The Grange, and the Cornerstone that are scheduled to be completed by the ﬁrst quarter of 2024. 14 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 15 111 Buckingham Palace Road London, UK 2.5M 95% Commercial SF Leased in 2022 Commercial Portfolio Occupancy Leasing Success Our very talented global asset management teams continue to drive impressive operating results within our global commercial portfolio. In 2022, we completed approximately 2.5 million square feet of leasing, which resulted in strong occupancy of 95% across our commercial portfolio at year-end. We continue to see a ﬂight to quality as occupiers look for buildings with best-in-class space, which is leading to solid leasing demand and improvements in occupancy across our ofﬁce assets. At 111 Buckingham Palace Road in Central London, our largest ofﬁce asset, occupancy improved from 80% in Q4 2021 to 100% in Q4 2022. Similarly, occupancy grew from 84% to 100% at One Embassy Gardens, a 156,000 square-foot property located in the growing Nine Elms London submarket. We continue to see a ﬂight to quality as occupiers look for buildings with best-in-class space, which is leading to solid leasing demand and improvements in occupancy across our ofﬁce assets. At 111 Buckingham Palace Road in Central London, our largest ofﬁce asset, occupancy improved from 80% in Q4 2021 to 100% in Q4 2022. We also continue to see strong rent growth across our UK logistics portfolio. Most regions in the UK saw double-digit growth in rents in 2022 and UK vacancy remained tight at 2%. Occupancy in our portfolio was strong at 98% as we completed 40 lease transactions totaling 700,000 square feet in 2022, resulting in a 32% increase in rents. In-place rents were 33% under market at the end of 2022, with further rent growth projected as new developments in our markets slow down. 16 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 17 The Heights | Weybridge, UK Investment Management Platform Momentum Our investment management platform has been a fast growing part of our business in recent years driven by the successful launch of our new debt and logistic strategies. Kennedy Wilson now has $5.9 billion in fee-bearing capital, representing 100% growth in the past three years, with an incremental $3.5 billion in capital from announced platforms available to continue growing our fee business. The growth in our investment management platform has led to a 27% year-over-year increase in the base investment management fees that we earn. Our debt platform has rapidly grown to $2.7 billion since we started from scratch in May 2020, and as traditional sources of capital continue to pull back and debt capital becomes harder to ﬁnd, we are well positioned to take advantage of the current lending opportunities. We are lending to higher-quality sponsors at lower leverage points with higher base rates, resulting in attractive unlevered returns to Kennedy Wilson north of 17%, including our asset management fees. We have a 6% ownership in our debt platform that was launched alongside our fantastic long-term partners Fairfax Financial and Security Beneﬁt, and we have an additional loan capacity of approximately $3 billion. Our global logistics portfolio is also a signiﬁcant driver of growth within our investment management platform. In 2022, our industrial portfolio grew to over 100 assets across 11 million square feet with total AUM of $1.7 billion. The majority of our growth in this sector has been through our logistics platform, where we invest primarily in the UK and Ireland with our sovereign wealth fund partner. In this platform, we are focused on institutional-quality, last-mile assets with signiﬁcant potential for NOI growth. We are looking to continue expanding our logistics platform along with our partner, who has committed to target total AUM of $2.5 billion. Fee-Bearing Capital dollars in billions +168% $6 $5 $4 $3 $2 $1 $0 $5.9 $5.0 $3.9 $3.0 $2.2 2018 2019 2020 2021 2022 18 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 19 USC Neighborhood Academic Initiative and Kennedy Wilson Book Drive Kennedy Wilson supports biodiversity and the surrounding ecosystems by sponsoring beehives at Alvéole, a local atrium in Los Angeles. Clancy Quay, a mixed use community in Dublin, was selected as the overall 2022 winner of the ULI Excellence in Placemaking Awards. Responsible Investing and Thank You We have been through ﬁve economic cycles over the last four decades at Kennedy Wilson, which has provided important perspective in dealing with current market conditions. We are focused on a long-term approach to our investment decisions while at the same time creating deep relationship ties in the markets where we do business. That long- term perspective also drives our desire to improve the communities where we operate, and is reﬂected in the main pillars of our environmental, social, and governance (ESG) program that is integrated across our business: optimizing resources for a healthy work environment and productive business; creating great places for people to live, work, and thrive; building communities for a prosperous society; and operating responsibly to ensure business-wide transparency and accountability, with a clear focus on empowering our employees. We are focused on a long-term approach to our investment decisions while at the same time creating deep relationship ties in the markets where we do business. That long-term perspective also drives our desire to improve the communities where we operate, and is reﬂected in the main pillars of our environmental, social, and governance (ESG) program that is integrated across our business. I am proud of our team’s performance in 2022, and we are moving forward from a place of strength with a high-quality, diverse portfolio combined with well-located assets and an experienced, dedicated team that has a tireless work ethic. The key to our success over the past three decades has been our ability to keep the same group of people together, all operating within our unique culture to grow Kennedy Wilson in a sound manner with a long-term outlook on our decisions. Thank you to the entire Kennedy Wilson team for your commitment to our company and to our Board of Directors for your leadership, counsel, and for constantly challenging us, which has played an extremely important role in our shared success. Finally, thank you to our shareholders, lenders, and strategic partners for your ongoing support of our company. Kennedy Wilson Women Speaker Series William J. McMorrow Chairman and Chief Executive Ofﬁcer 20 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 21 The Clara | Boise, ID FINANCIAL REPORT 2022 22 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON KENNEDY WILSON ANNUAL REPORT 2022 / 23 ANNUAL REPORT 2022 / 23 Financial Report 23 Business 40 (cid:24)anagement(cid:317)s (cid:9)iscussion and (cid:3)nalysis o(cid:61) (cid:13)inancial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) (cid:27)pera(cid:2462)ons 76 (cid:33)eport o(cid:61) (cid:17)ndependent (cid:33)egistered (cid:30)ublic (cid:3)ccoun(cid:2462)ng (cid:13)irm 80 (cid:7)onsolidated Balance Sheets 81 (cid:7)onsolidated Statements o(cid:61) (cid:17)ncome 82 (cid:7)onsolidated Statements o(cid:61) (cid:7)omprehensive (cid:17)ncome 84 (cid:7)onsolidated Statements o(cid:61) (cid:11)quity 86 (cid:7)onsolidated Statements o(cid:61) (cid:7)ash (cid:13)lows 88 (cid:25)otes to (cid:7)onsolidated (cid:13)inancial Statements 136 (cid:30)er(cid:61)ormance (cid:14)raph 137 (cid:24)arket (cid:61)or (cid:33)egistrant(cid:317)s (cid:7)ommon (cid:11)quity, (cid:33)elated Stockholder (cid:24)a(cid:130)ers and (cid:17)ssuer (cid:30)urchases o(cid:61) (cid:11)quity Securi(cid:2462)es 139 Forward-Looking Statements Business Company Overview Kennedy Wilson is a global real estate investment company. We own, operate and develop high- quality real estate across growing markets in the Western United States, the United Kingdom and (cid:17)reland with the ob(cid:102)ec(cid:2462)ve o(cid:61) genera(cid:2462)ng long-term risk-ad(cid:102)usted returns (cid:61)or our shareholders and partners. 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(cid:13)or the year ended (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401), the (cid:362)(cid:401)(cid:399).(cid:404) billion o(cid:61) opera(cid:2462)ng proper(cid:2462)es within our (cid:3)U(cid:24) as o(cid:61) (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401) produced total revenue o(cid:61) (cid:362)(cid:400).(cid:403) billion (cid:336)KW(cid:317)s share o(cid:61) which was (cid:362)(cid:405)(cid:399)(cid:1141).(cid:399) million(cid:337) compared to (cid:362)(cid:400)(cid:1142).(cid:405) billion o(cid:61) opera(cid:2462)ng proper(cid:2462)es as o(cid:61) (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:400) with total revenue o(cid:61) (cid:362)(cid:400).(cid:401) billion (cid:336)KW(cid:317)s share o(cid:61) which was (cid:362)(cid:404)(cid:1142)(cid:402).(cid:399) million(cid:337) during the same period in (cid:401)(cid:399)(cid:401)(cid:400). (cid:27)ur global team, located in o(cid:76)ces throughout the United States, the United Kingdom, (cid:17)reland, Spain and (cid:19)ersey, also managed the consumma(cid:2462)on o(cid:61) (cid:362)(cid:400).(cid:406) billion o(cid:61) gross acquisi(cid:2462)ons and (cid:362)(cid:406)(cid:405)(cid:399).(cid:399) million o(cid:61) loan investments (cid:336)KW(cid:317)s ownership interest o(cid:61) (cid:404)(cid:400)(cid:1143) and (cid:404)(cid:1143), respec(cid:2462)vely(cid:337) and (cid:362)(cid:400).(cid:402) billion o(cid:61) gross disposi(cid:2462)ons and (cid:362)(cid:403)(cid:400)(cid:401).(cid:1142) million o(cid:61) loan repayments (cid:336)KW(cid:317)s ownership interest o(cid:61) (cid:403)(cid:399)(cid:1143) and (cid:406)(cid:1143), respec(cid:2462)vely(cid:337) during the year ended (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401). (cid:27)ur global real estate por(cid:127)olio is primarily comprised o(cid:61) mul(cid:2462)(cid:61)amily communi(cid:2462)es (cid:336)(cid:404)(cid:405)(cid:1143)(cid:337), commercial proper(cid:2462)es (cid:336)(cid:402)(cid:406)(cid:1143)(cid:337) and hotel and other proper(cid:2462)es (cid:336)(cid:403)(cid:1143)(cid:337) based on our share o(cid:61) net opera(cid:2462)ng income (cid:336)(cid:318)(cid:25)(cid:27)(cid:17)(cid:319)(cid:337). (cid:36)he Western United States represents (cid:1141)(cid:400)(cid:1143) o(cid:61) our por(cid:127)olio, with a (cid:61)ocus on the (cid:24)ountain West region, our largest global region which includes our investments in (cid:17)daho, Utah, (cid:25)evada, (cid:3)ri(cid:140)ona, and (cid:25)ew (cid:24)e(cid:138)ico. We also invest in the (cid:30)aci(cid:67)c (cid:25)orthwest, including the state o(cid:61) Washington, and (cid:25)orthern and Southern (cid:7)ali(cid:61)ornia. (cid:17)n (cid:11)urope, our por(cid:127)olio is (cid:61)ocused in the United Kingdom (cid:336)(cid:400)(cid:1141)(cid:1143)(cid:337) and (cid:17)reland (cid:336)(cid:401)(cid:400)(cid:1143)(cid:337). (cid:27)ur investment ac(cid:2462)vi(cid:2462)es in our (cid:7)onsolidated (cid:30)or(cid:127)olio (cid:336)as de(cid:67)ned below(cid:337) involve ownership o(cid:61) mul(cid:2462)(cid:61)amily units, o(cid:76)ce, retail and industrial space and one hotel. (cid:27)ur ownership interests in such consolidated proper(cid:2462)es make up our (cid:7)onsolidated (cid:30)or(cid:127)olio (cid:336)(cid:318)(cid:7)onsolidated (cid:30)or(cid:127)olio(cid:319)(cid:337) business segment as discussed in detail throughout this report. (cid:17)n addi(cid:2462)on to inves(cid:2462)ng our shareholder(cid:317)s capital, we invest capital on behal(cid:61) o(cid:61) our partners in real estate and real estate related assets through our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio (cid:336)(cid:318)(cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio(cid:319)(cid:337). (cid:36)his (cid:61)ee-bearing capital represents total third-party commi(cid:130)ed or invested capital that we manage in our (cid:102)oint ventures and commingled (cid:61)unds that en(cid:2462)tle us to earn (cid:61)ees, including, without limita(cid:2462)on, asset management (cid:61)ees, construc(cid:2462)on management (cid:61)ees, acquisi(cid:2462)on and disposi(cid:2462)on (cid:61)ees and(cid:326)or promoted interest, i(cid:61) applicable. (cid:3)s o(cid:61) (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401), our (cid:61)ee-bearing capital was (cid:362)(cid:404).(cid:406) billion and we recogni(cid:140)ed (cid:362)(cid:403)(cid:403).(cid:1142) million in recurring investment management (cid:61)ees during the year ended (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401). (cid:17)n our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio, we are also eligible to earn per(cid:61)ormance alloca(cid:2462)ons (cid:336)amounts that are allocated to us on co-investments we manage based on the cumula(cid:2462)ve per(cid:61)ormance o(cid:61) the underlying investment(cid:337). (cid:9)uring the year ended (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401), we had a reversal o(cid:61) (cid:362)(cid:401)(cid:400).(cid:400) million in per(cid:61)ormance alloca(cid:2462)ons that we previously recogni(cid:140)ed based on the (cid:61)air value o(cid:61) the underlying investment. (cid:30)lease see (cid:318)(cid:13)air (cid:40)alue (cid:17)nvestments(cid:319) below (cid:61)or a discussion o(cid:61) our assets held at es(cid:2462)mated (cid:61)air value and our methodology with respect to the same. We generally invest our own capital alongside our equity partners in these (cid:102)oint ventures and commingled (cid:61)unds that we manage. 24 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 25 (cid:3)s o(cid:61) (cid:9)ecember (cid:402)(cid:400), (cid:401)(cid:399)(cid:401)(cid:401), the (cid:61)ollowing key metrics o(cid:61) our (cid:7)onsolidated and (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio are as (cid:61)ollows(cid:313) (cid:36)he table below highlights some o(cid:61) the (cid:7)ompany(cid:317)s key metrics over the past (cid:67)ve years(cid:313) (cid:7)onsolidated (cid:7)o-(cid:17)nvestments ($ in millions, except fee-bearing capital which $ in billions) (cid:24)ul(cid:2462)(cid:61)amily units(cid:331)market rate (cid:24)ul(cid:2462)(cid:61)amily units(cid:331)a(cid:64)ordable (cid:27)(cid:76)ce square (cid:61)eet (cid:336)millions(cid:337) (cid:17)ndustrial square (cid:61)eet (cid:336)millions(cid:337) (cid:33)etail square (cid:61)eet (cid:336)millions(cid:337) Hotels (cid:33)eal estate debt investments(cid:331)1(cid:399)(cid:399)(cid:1143) (cid:336)billions(cid:337) (cid:33)eal estate debt investments(cid:331)KW Share (cid:336)millions(cid:337) (cid:33)evenues (cid:336)millions(cid:337) (cid:25)(cid:27)(cid:17) (cid:336)millions(cid:337) (cid:3)U(cid:24) (cid:336)billions(cid:337) (cid:400)(cid:400),(cid:403)(cid:405)(cid:404) — (cid:403).(cid:1142) — (cid:401).(cid:404) 1 (cid:362) — (cid:362) — (cid:362) (cid:403)(cid:1142)1.(cid:1142) (cid:362) (cid:401)(cid:406)(cid:403).(cid:401) (cid:362) (cid:406).(cid:401) (cid:400)(cid:403),(cid:405)(cid:1142)(cid:399) (cid:400)(cid:400),(cid:404)(cid:401)(cid:1141) (cid:1141).(cid:406) (cid:400)(cid:399).(cid:1141) (cid:400).(cid:403) 1 (cid:362) (cid:401).(cid:403) (cid:362) 1(cid:404)(cid:404).1 (cid:362) (cid:401)(cid:405)(cid:1141).(cid:399) (cid:362) 1(cid:404)(cid:405).(cid:1141) (cid:362) 1(cid:402).(cid:1142) (cid:17)n our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio, (cid:1142)(cid:1142)(cid:1143) o(cid:61) our carrying value is accounted (cid:61)or at (cid:61)air value. (cid:27)ur interests in such (cid:102)oint ventures and commingled (cid:61)unds and the (cid:61)ees that we earn (cid:61)rom such vehicles make up our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio segment as discussed in detail throughout this report. (cid:17)n addi(cid:2462)on to our income-producing real estate, we also engage in development, redevelopment and value add ini(cid:2462)a(cid:2462)ves through which we enhance cash (cid:89)ows or reposi(cid:2462)on assets to increase value. (cid:27)ur total share o(cid:61) development pro(cid:102)ect costs with respect to these investments are es(cid:2462)mated at (cid:362)(cid:402)(cid:405)(cid:406).(cid:399) million over the ne(cid:138)t three years. (cid:36)hese costs are generally (cid:67)nanced by cash (cid:61)rom our balance sheet, capital provided by partners (cid:336)i(cid:61) applicable(cid:337), cash (cid:89)ows (cid:61)rom investment and construc(cid:2462)on loans. (cid:7)ost overrun risks are reduced by detailed architectural plans, guaranteed price contracts and supervision by e(cid:138)pert (cid:7)ompany e(cid:138)ecu(cid:2462)ves and personnel. When completed, the construc(cid:2462)on loans are generally replaced by long-term mortgage (cid:67)nancing. See addi(cid:2462)onal detail in the sec(cid:2462)on (cid:2462)tled Development and Redevelopment below. Investment Approach (cid:36)he (cid:61)ollowing is our investment approach(cid:313) • (cid:17)den(cid:2462)(cid:61)y countries and markets with an a(cid:130)rac(cid:2462)ve investment landscape • (cid:11)stablish opera(cid:2462)ng pla(cid:127)orms in our target markets • (cid:9)evelop local intelligence and create long-las(cid:2462)ng rela(cid:2462)onships, primarily with (cid:67)nancial ins(cid:2462)tu(cid:2462)ons • Leverage rela(cid:2462)onships and local knowledge to drive proprietary investment opportuni(cid:2462)es with a (cid:61)ocus on o(cid:64)-market transac(cid:2462)ons that we e(cid:138)pect will result in above average cash (cid:89)ows and returns over the long term • (cid:3)cquire high quality assets, either on our own or with strategic partners • (cid:33)eposi(cid:2462)on assets to enhance cash (cid:89)ows post-acquisi(cid:2462)on • (cid:11)(cid:138)plore development opportuni(cid:2462)es on underu(cid:2462)li(cid:140)ed por(cid:2462)ons o(cid:61) assets, or acquire development assets that (cid:67)t within our overall investment strategy • (cid:7)on(cid:2462)nuously evaluate and selec(cid:2462)vely harvest asset and en(cid:2462)ty value through strategic reali(cid:140)a(cid:2462)ons using both the public and private markets (cid:33)evenue (cid:25)et income to Kennedy-Wilson Holdings (cid:17)nc. (cid:1354)common shareholders Basic income per share (cid:9)ividends declared per share o(cid:61) common stock (cid:3)d(cid:102)usted (cid:11)B(cid:17)(cid:36)(cid:9)(cid:3)(cid:336)1(cid:337) (cid:1143) change (cid:3)d(cid:102)usted (cid:25)et (cid:17)ncome(cid:336)1(cid:337) (cid:3)d(cid:102)usted (cid:25)et (cid:17)ncome annual increase (cid:336)decrease(cid:337) (cid:7)onsolidated (cid:25)(cid:27)(cid:17)(cid:336)1(cid:337) (cid:1143) change (cid:19)(cid:40) (cid:25)(cid:27)(cid:17)(cid:336)1(cid:337) (cid:1143) change Fee-bearing capital (cid:1143) change (cid:3)U(cid:24) (cid:1143) change Year Ended December 31, 2022 (cid:404)(cid:403)0.0 (cid:1141)(cid:403).(cid:1142) 0.(cid:403)(cid:405) 0.(cid:406)(cid:1141) (cid:404)(cid:406)1.(cid:404) (cid:336)3(cid:1141).3(cid:337)(cid:1143) 2(cid:1141)(cid:403).(cid:406) (cid:336)(cid:403)(cid:1142).0(cid:337)(cid:1143) 2(cid:406)(cid:403).2 1(cid:404).0 (cid:1143) 1(cid:404)(cid:405).(cid:1141) 2(cid:1141).(cid:405) (cid:1143) (cid:404).(cid:406) 1(cid:1142).0 (cid:1143) 23.0 (cid:1141).(cid:404) (cid:1143) 2021 (cid:403)(cid:404)(cid:402).(cid:1141) 313.2 2.2(cid:1141) 0.(cid:406)0 (cid:406)2(cid:405).(cid:406) (cid:404)2.(cid:1141) (cid:1143) (cid:404)0(cid:406).0 (cid:1141)(cid:404).(cid:406) (cid:1143) 2(cid:404)(cid:404).(cid:1142) (cid:336)2.(cid:404)(cid:337)(cid:1143) 12(cid:403).(cid:403) 21.(cid:403) (cid:1143) (cid:404).0 2(cid:1142).2 (cid:1143) 21.(cid:1141) 22.(cid:405) (cid:1143) 2020 (cid:403)(cid:404)(cid:403).0 (cid:406)2.(cid:406) 0.(cid:1141)(cid:1141) 0.(cid:1142)(cid:1142) (cid:1141)0(cid:1142).0 (cid:336)1(cid:1141).(cid:404)(cid:337)(cid:1143) 30(cid:1141).(cid:406) (cid:336)31.3(cid:337)(cid:1143) 2(cid:1141)2.3 (cid:336)1(cid:403).1(cid:337)(cid:1143) 102.(cid:404) 31.(cid:405) (cid:1143) 3.(cid:406) 30.0 (cid:1143) 1(cid:405).(cid:1141) (cid:336)2.(cid:1142)(cid:337)(cid:1143) 201(cid:406) (cid:404)(cid:1141)(cid:406).(cid:405) 22(cid:403).1 1.(cid:1141)0 0.(cid:1142)(cid:404) (cid:405)2(cid:1142).1 2.2 (cid:1143) (cid:403)(cid:403)2.(cid:404) 11.(cid:404) (cid:1143) 30(cid:404).2 (cid:336)1(cid:405).1(cid:337)(cid:1143) (cid:405)(cid:405).(cid:1142) (cid:403)0.(cid:405) (cid:1143) 3.0 3(cid:1141).(cid:403) (cid:1143) 1(cid:1142).1 11.0 (cid:1143) 201(cid:1142) (cid:405)(cid:405)(cid:402).(cid:404) 1(cid:404)0.0 1.0(cid:403) 0.(cid:405)(cid:1142) (cid:405)12.(cid:405) — (cid:1143) 3(cid:406)(cid:405).0 (cid:1141)3.(cid:405) (cid:1143) 3(cid:1141)(cid:1142).3 — (cid:1143) (cid:404)(cid:404).3 — (cid:1143) 2.2 — (cid:1143) 1(cid:1141).3 — (cid:1143) (1)(cid:2)(cid:30)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:2)(cid:117)(cid:59)(cid:61)(cid:59)(cid:117)(cid:2)(cid:124)(cid:111)(cid:2)(cid:318)(cid:7)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:25)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:24)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:33)(cid:59)(cid:49)(cid:111)(cid:109)(cid:49)(cid:98)(cid:1140)(cid:98)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:319)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:45)(cid:2)(cid:117)(cid:59)(cid:49)(cid:111)(cid:109)(cid:49)(cid:98)(cid:1140)(cid:98)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:98)(cid:124)(cid:59)(cid:108)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:38)(cid:314)(cid:34)(cid:314)(cid:2)(cid:14)(cid:3)(cid:3)(cid:30)(cid:314)(cid:2)(cid:2)(cid:2)(cid:2)(cid:2) (cid:36)he table below highlights some o(cid:61) the (cid:7)ompany(cid:317)s balance sheet metrics over the past (cid:67)ve years(cid:313) (In millions) Balance sheet data: (cid:7)ash and cash equivalents (cid:36)otal assets (cid:24)ortgage debt KW unsecured debt KW(cid:11) unsecured bonds Kennedy Wilson equity (cid:25)oncontrolling interests (cid:36)otal equity (cid:7)ommon shares outstanding 2022 2021 2020 201(cid:406) 201(cid:1142) As of December 31, (cid:362) (cid:403)3(cid:406).3 (cid:1142),2(cid:405)1.(cid:1142) 3,01(cid:1142).0 2,0(cid:1141)2.(cid:1141) (cid:404)0(cid:1141).(cid:403) 1,(cid:406)(cid:1141)(cid:403).0 (cid:403)(cid:1141).(cid:403) 2,010.(cid:403) 13(cid:405).(cid:1142) (cid:362) (cid:404)2(cid:403).(cid:1142) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 2,(cid:406)(cid:404)(cid:406).(cid:1142) 1,(cid:1142)(cid:404)2.3 (cid:1141)22.(cid:1142) 1,(cid:405)(cid:405)(cid:405).(cid:1141) 2(cid:1141).3 1,(cid:1142)03.(cid:406) 13(cid:1142).0 (cid:362) (cid:406)(cid:1141)(cid:404).1 (cid:405),32(cid:406).0 2,(cid:404)(cid:1142)(cid:406).(cid:1142) 1,332.2 1,1(cid:405)2.(cid:404) 1,(cid:1141)(cid:403)(cid:403).(cid:404) 2(cid:1142).2 1,(cid:1141)(cid:405)2.(cid:405) 1(cid:403)1.(cid:403) (cid:362) (cid:404)(cid:405)3.(cid:406) (cid:405),30(cid:403).(cid:404) 2,(cid:1141)(cid:403)1.0 1,131.(cid:405) 1,2(cid:405)(cid:403).2 1,(cid:1141)(cid:405)(cid:1142).(cid:405) (cid:403)0.(cid:404) 1,(cid:405)1(cid:406).2 1(cid:404)1.(cid:1141) (cid:362) (cid:403)(cid:1142)(cid:1142).0 (cid:405),3(cid:1142)1.(cid:1142) 2,(cid:406)(cid:404)0.3 1,202.0 1,2(cid:1141)0.(cid:404) 1,2(cid:403)(cid:1141).(cid:405) 1(cid:1142)(cid:403).(cid:404) 1,(cid:403)31.2 1(cid:403)3.2 (cid:36)he (cid:61)ollowing table shows the historical U.S. (cid:61)ederal income ta(cid:138) treatment o(cid:61) the (cid:7)ompany(cid:317)s common stock dividend (cid:61)or the years ended (cid:9)ecember 31, 2022 through 201(cid:1142)(cid:313) (cid:36)a(cid:138)able (cid:9)ividend (cid:25)on-(cid:36)a(cid:138)able (cid:33)eturn o(cid:61) (cid:7)apital (cid:36)otal December 31, 2022 3(cid:405).(cid:1142)1 (cid:1143) (cid:1141)2.1(cid:406) (cid:1143) 2021 — (cid:1143) 100.00 (cid:1143) 2020 2(cid:405).1(cid:403) (cid:1143) (cid:405)2.(cid:1142)(cid:1141) (cid:1143) 201(cid:406) 10.(cid:404)3 (cid:1143) (cid:1142)(cid:406).(cid:403)(cid:405) (cid:1143) 201(cid:1142) 23.(cid:403)3 (cid:1143) (cid:405)(cid:1141).(cid:404)(cid:405) (cid:1143) 100.00 (cid:1143) 100.00 (cid:1143) 100.00 (cid:1143) 100.00 (cid:1143) 100.00 (cid:1143) 26 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 27 Business Segments (cid:27)ur opera(cid:2462)ons are de(cid:67)ned by two business segments(cid:313) our consolidated investment por(cid:127)olio (cid:336)the (cid:318)(cid:7)onsolidated (cid:30)or(cid:127)olio(cid:319)(cid:337) and our co-investment por(cid:127)olio (cid:336)the (cid:318)(cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio(cid:319)(cid:337) • (cid:27)ur (cid:7)onsolidated (cid:30)or(cid:127)olio consists o(cid:61) the investments in real estate and real estate-related assets that we have made and consolidate on our balance sheet. We typically wholly-own the assets in our (cid:7)onsolidated (cid:30)or(cid:127)olio. • (cid:27)ur (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio consists o(cid:61) (cid:336)i(cid:337) the co-investments in real estate and real estate- related assets, including loans secured by real estate, that we have made through the commingled (cid:61)unds and (cid:102)oint ventures that we manage(cid:312) (cid:336)ii(cid:337) (cid:61)ees (cid:336)including, without limita(cid:2462)on, asset management (cid:61)ees and construc(cid:2462)on management (cid:61)ees(cid:337)(cid:312) and (cid:336)iii(cid:337) per(cid:61)ormance alloca(cid:2462)ons that we earn on our (cid:61)ee-bearing capital. We typically have a (cid:404)(cid:1143) to (cid:404)0(cid:1143) ownership interest in the assets in our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio. We have a weighted average ownership o(cid:61) (cid:403)1(cid:1143) as o(cid:61) December 31, 2022. (cid:17)n addi(cid:2462)on to our two primary business segments, our (cid:7)orporate segment includes, among other things, our corporate overhead and our property services group prior to its sale in October 2020. Consolidated Portfolio Our (cid:7)onsolidated (cid:30)or(cid:127)olio is a permanent capital vehicle (cid:61)ocused on ma(cid:138)imi(cid:140)ing property cash (cid:89)ow. (cid:36)hese assets are primarily wholly-owned and tend to have longer hold periods and we target investments with accre(cid:2462)ve asset management opportuni(cid:2462)es. We typically (cid:61)ocus on o(cid:76)ce and mul(cid:2462)(cid:61)amily assets in the Western United States and commercial assets in the United Kingdom and Ireland within this segment. (cid:36)he non-(cid:14)(cid:3)(cid:3)(cid:30) table below represents a summari(cid:140)ed balance sheet o(cid:61) our (cid:7)onsolidated (cid:30)or(cid:127)olio which is held at historical depreciated cost as o(cid:61) December 31, 2022 and 2021. (cid:36)his table does not include amounts (cid:61)rom our corporate segment such as corporate cash and the KWH Senior (cid:25)otes. ($ in millions) (cid:7)ash and cash equivalents(cid:336)1(cid:337) (cid:33)eal estate and acquired in place lease values (cid:3)ccounts receivable and other assets, net (cid:36)otal (cid:3)ssets (cid:3)ccounts payable, accrued e(cid:138)penses and other liabili(cid:2462)es (cid:24)ortgage debt KW(cid:11) unsecured bonds (cid:36)otal Liabili(cid:2462)es (cid:11)quity December 31, 2022 December 31, 2021 (cid:362) (cid:362) (cid:362) (cid:362) 31(cid:1141).(cid:405) (cid:404),1(cid:1142)(cid:1142).1 13(cid:404).1 (cid:404),(cid:1141)3(cid:406).(cid:406) (cid:362) 1(cid:404)(cid:1141).(cid:1141) 3,01(cid:1142).0 (cid:404)0(cid:1141).(cid:403) 3,(cid:1141)(cid:1142)1.0 1,(cid:406)(cid:404)(cid:1142).(cid:406) (cid:362) 3(cid:1141)2.3 (cid:404),0(cid:404)(cid:406).(cid:1142) 111.(cid:405) (cid:404),(cid:404)33.(cid:1142) 1(cid:403)2.1 2,(cid:406)(cid:404)(cid:406).(cid:1142) (cid:1141)22.(cid:1142) 3,(cid:405)2(cid:403).(cid:405) 1,(cid:1142)0(cid:406).1 (1)(cid:2)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:400)(cid:401)(cid:401)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:400)(cid:1141)(cid:401)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:400)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:311)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:111)(cid:117)(cid:114)(cid:111)(cid:117)(cid:45)(cid:124)(cid:59)(cid:2) (cid:109)(cid:111)(cid:109)(cid:330)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:1140)(cid:59)(cid:136)(cid:59)(cid:1140)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:314) Co-Investment Portfolio We u(cid:2462)li(cid:140)e di(cid:64)erent pla(cid:127)orms in the (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio segment depending on the asset and risk return pro(cid:67)les. (cid:36)he table below represents the carrying value o(cid:61) our (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio balance sheet which is primarily at (cid:61)air value, at our share o(cid:61) the underlying investments as o(cid:61) (cid:9)ecember 31, 2022 and (cid:9)ecember 31, 2021. (cid:36)he (cid:7)o-(cid:17)nvestment (cid:30)or(cid:127)olio consists o(cid:61) our unconsolidated investments as well as our loan purchases and origina(cid:2462)ons. ($ in millions) (cid:7)ash and cash equivalents (cid:33)eal estate and acquired in place lease values Loan purchases and origina(cid:2462)ons (cid:3)ccounts receivable and other assets, net (cid:36)otal (cid:3)ssets (cid:3)ccounts payable, accrued e(cid:138)penses and other liabili(cid:2462)es (cid:24)ortgage debt (cid:36)otal Liabili(cid:2462)es (cid:11)quity December 31, 2022 December 31, 2021 (cid:362) (cid:362) (cid:362) (cid:362) (cid:1142)(cid:1141).(cid:406) (cid:403),31(cid:406).1 1(cid:404)(cid:1142).(cid:405) 2(cid:406)(cid:1142).0 (cid:403),(cid:1142)(cid:1141)2.(cid:405) (cid:362) (cid:1142)(cid:1142).0 2,3(cid:1142)(cid:405).2 2,(cid:403)(cid:405)(cid:404).2 2,3(cid:1142)(cid:405).(cid:404) (cid:362) 103.(cid:405) 3,(cid:1141)(cid:1141)(cid:405).(cid:406) 1(cid:403)3.(cid:403) 311.(cid:406) (cid:403),22(cid:1141).(cid:406) (cid:1142)(cid:405).1 2,0(cid:1141)1.(cid:406) 2,1(cid:403)(cid:406).0 2,0(cid:405)(cid:405).(cid:406) Separate accounts We have several equity partners whereby we act as the general partner and receive investment management (cid:61)ees including acquisi(cid:2462)on, disposi(cid:2462)on, (cid:67)nancing, construc(cid:2462)on management and other (cid:61)ees. We also can earn per(cid:61)ormance alloca(cid:2462)ons i(cid:61) investments e(cid:138)ceed certain return hurdles. (cid:17)n addi(cid:2462)on to ac(cid:2462)ng as the asset manager and general partner o(cid:61) those (cid:102)oint ventures, we are also a co-investor in these investments. (cid:27)ur separate account pla(cid:127)orms have de(cid:67)ned investment parameters such as asset types, leverage and return pro(cid:67)les and e(cid:138)pected hold periods. (cid:3)s o(cid:61) December 31, 2022, our weighted average ownership interest in the various (cid:102)oint ventures that we manage was (cid:403)(cid:404)(cid:1143). Commingled funds We currently have (cid:61)our closed-end (cid:61)unds that we manage and through which we receive investment management (cid:61)ees and poten(cid:2462)ally per(cid:61)ormance alloca(cid:2462)ons. We (cid:61)ocus on sourcing investors in the U.S., (cid:11)urope and (cid:24)iddle (cid:11)ast and target investments in the U.S. and (cid:11)urope with respect to our commingled (cid:61)unds. (cid:11)ach o(cid:61) our (cid:61)unds have, among other things, de(cid:67)ned investment guidelines, investment hold periods and target returns. (cid:7)urrently our U.S.-based (cid:61)unds (cid:61)ocus on value-add proper(cid:2462)es that have an e(cid:138)pected hold period o(cid:61) (cid:404) to (cid:405) years. (cid:27)ur (cid:11)uropean (cid:61)und (cid:61)ocuses on value add commercial proper(cid:2462)es in the United Kingdom, (cid:17)reland and Spain that also have e(cid:138)pected hold periods o(cid:61) (cid:404) to (cid:405) years. (cid:3)s o(cid:61) December 31, 2022, our weighted average ownership interest in the commingled (cid:61)unds that we manage was 13(cid:1143). VHH (cid:36)hrough our (cid:40)intage Housing Holdings (cid:336)(cid:318)(cid:40)HH(cid:319)(cid:337) partnership, we acquire and develop income and age restricted proper(cid:2462)es. See a detailed discussion o(cid:61) this business in the (cid:24)ul(cid:2462)(cid:61)amily sec(cid:2462)on below. 28 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 29 Investment Types (cid:36)he (cid:61)ollowing are the product types we invest in through our (cid:7)onsolidated (cid:30)or(cid:127)olio and (cid:7)o-Investment (cid:30)or(cid:127)olio segments(cid:313) (cid:24)ul(cid:2236)famil(cid:139) We pursue mul(cid:2462)(cid:61)amily acquisi(cid:2462)on opportuni(cid:2462)es where we can unlock value through a myriad o(cid:61) strategies, including ins(cid:2462)tu(cid:2462)onal management, asset rehabilita(cid:2462)on, reposi(cid:2462)oning and recapitali(cid:140)a(cid:2462)on. We (cid:61)ocus primarily on apartments in supply-constrained, in(cid:67)ll markets. (cid:3)s o(cid:61) December 31, 2022, we held investments in 1(cid:403)(cid:406) mul(cid:2462)(cid:61)amily assets that include 11,(cid:403)(cid:405)(cid:404) consolidated market rate mul(cid:2462)(cid:61)amily apartment units, 1(cid:403),(cid:405)(cid:1142)0 market rate units within our (cid:7)o-Investment (cid:30)or(cid:127)olio and 11,(cid:404)2(cid:1141) a(cid:64)ordable units in our (cid:40)HH pla(cid:127)orm. (cid:36)he unit accounts above include units that are unstabili(cid:140)ed and undergoing development. Our largest Western United States mul(cid:2462)(cid:61)amily regions are the (cid:24)ountain West region (cid:336)Idaho, Utah, (cid:24)ontana, (cid:7)olorado, (cid:3)ri(cid:140)ona, (cid:25)ew (cid:24)e(cid:138)ico and (cid:25)evada(cid:337) and the (cid:30)aci(cid:67)c (cid:25)orthwest (cid:336)primarily the greater Sea(cid:130)le area and (cid:30)ortland, Oregon(cid:337). (cid:36)he remainder o(cid:61) the Western United States por(cid:127)olio is located in (cid:25)orthern and Southern (cid:7)ali(cid:61)ornia. In Ireland we (cid:61)ocus on Dublin city center and the suburbs o(cid:61) the city. Our asset management strategy entails installing strong property management teams to drive leasing ac(cid:2462)vity and upkeep o(cid:61) the proper(cid:2462)es. We also seek to add ameni(cid:2462)es designed to promote health and wellness, celebrate local and cultural events and enhance the lives o(cid:61) residents living in our communi(cid:2462)es. We also incorporate spaces (cid:61)or rest and sociali(cid:140)a(cid:2462)on across our global mul(cid:2462)(cid:61)amily por(cid:127)olio, including clubhouses, (cid:67)tness centers, business suites, outdoor play areas, pools and dog parks. Lastly, we u(cid:2462)li(cid:140)e real-(cid:2462)me market data and ar(cid:2462)(cid:67)cial intelligence-based applica(cid:2462)ons to ensure we are a(cid:130)aining current market rents. (cid:24)ul(cid:2236)famil(cid:139)(cid:330)A(cid:64)orda(cid:48)le Housing (cid:36)hrough our (cid:40)HH pla(cid:127)orm we (cid:61)ocus on a(cid:64)ordable units based on income or age restric(cid:2462)ons. With homes reserved (cid:61)or residents that make (cid:404)0(cid:1143) to (cid:1141)0(cid:1143) o(cid:61) the area(cid:317)s median income, (cid:40)HH provides an a(cid:64)ordable long-term solu(cid:2462)on (cid:61)or quali(cid:61)ying working (cid:61)amilies and ac(cid:2462)ve senior ci(cid:2462)(cid:140)ens, coupled with modern ameni(cid:2462)es that are a hallmark o(cid:61) our tradi(cid:2462)onal mul(cid:2462)(cid:61)amily por(cid:127)olio. Fundamental to our success is a shared commitment to delivering quality a(cid:64)ordable homes and building communi(cid:2462)es that enrich residents(cid:317) lives, including providing programs such as social support groups, a(cid:91)er-school programs, transporta(cid:2462)on assistance, computer training, and wellness classes. (cid:40)HH typically u(cid:2462)li(cid:140)es ta(cid:138)-e(cid:138)empt bond (cid:67)nancing and the sale o(cid:61) (cid:61)ederal ta(cid:138) credits to help (cid:67)nance its investments. We are en(cid:2462)tled to (cid:404)0(cid:1143) o(cid:61) the opera(cid:2462)ng cash (cid:89)ows (cid:61)rom the (cid:40)HH partnership in addi(cid:2462)on to any inves(cid:2462)ng distribu(cid:2462)ons we receive (cid:61)rom (cid:61)ederal ta(cid:138) credits or re(cid:67)nancing ac(cid:2462)vity at the property level. When we acquired (cid:40)HH in 201(cid:404), the por(cid:127)olio consisted o(cid:61) (cid:404),(cid:403)(cid:1142)(cid:404) units. (cid:3)s o(cid:61) December 31, 2022, the (cid:40)HH por(cid:127)olio includes (cid:406),1(cid:404)(cid:405) stabili(cid:140)ed rental units with another 2,3(cid:1141)(cid:406) units currently under stabili(cid:140)a(cid:2462)on, development or undergoing en(cid:2462)tlements in the Western United States. We acquired our ownership interest in (cid:40)HH in 201(cid:404) (cid:61)or appro(cid:138)imately (cid:362)(cid:1142)0.0 million. (cid:3)s o(cid:61) December 31, 2022, we have contributed an addi(cid:2462)onal (cid:362)121.(cid:1142) million into (cid:40)HH and have received (cid:362)2(cid:1141)(cid:405).(cid:406) million in cash distribu(cid:2462)ons. (cid:40)HH is an unconsolidated investment that we account (cid:61)or using the (cid:61)air value op(cid:2462)on, which had a carrying value o(cid:61) (cid:362)2(cid:405)2.3 million as o(cid:61) December 31, 2022. We have recorded (cid:362)2(cid:1141)(cid:1142).(cid:404) million worth o(cid:61) (cid:61)air value gains on our investment in (cid:40)HH over the li(cid:61)e o(cid:61) the investment, including (cid:362)10(cid:1142).(cid:403) million during the year ended December 31, 2022. Commercial Our investment approach (cid:61)or o(cid:76)ce acquisi(cid:2462)ons di(cid:64)ers across our various investment pla(cid:127)orms. For our (cid:7)onsolidated (cid:30)or(cid:127)olio, we look to invest in large high quality proper(cid:2462)es with high replacement costs. In our separate account por(cid:127)olios, our partners have certain characteris(cid:2462)cs that (cid:61)actor into our investment decision, including, without limita(cid:2462)on, loca(cid:2462)on, (cid:67)nancing (cid:336)unencumbered proper(cid:2462)es(cid:337) or hold periods. In our commingled (cid:61)unds that we manage, we typically look (cid:61)or opportuni(cid:2462)es that have a value-add component that can bene(cid:67)t (cid:61)rom our asset management e(cid:138)per(cid:2462)se. We do not typically own high-rise buildings in city centers and instead look to invest in mid-to-low rise buildings in areas ad(cid:102)acent to city centers and suburban markets. (cid:3)(cid:91)er acquisi(cid:2462)on, the proper(cid:2462)es are generally reposi(cid:2462)oned to enhance market value. Our industrial por(cid:127)olio consists mainly o(cid:61) distribu(cid:2462)on centers located in the United Kingdom, Ireland, Spain and (cid:24)ountain West regions. Our retail por(cid:127)olio has di(cid:64)erent characteris(cid:2462)cs based on the geographic markets wherein the proper(cid:2462)es are located. In (cid:11)urope, we have a mi(cid:138)ture o(cid:61) high street retail, suburban shopping centers and leisure assets which are mainly located in the United Kingdom, as well as in Dublin and (cid:24)adrid. In our Western United States retail por(cid:127)olio, we invest in shopping centers that are generally grocery anchored. (cid:3)s o(cid:61) December 31, 2022, we hold investments in (cid:404)(cid:1142) o(cid:76)ce proper(cid:2462)es totaling over 11.(cid:405) million square (cid:61)eet, 10(cid:406) industrial proper(cid:2462)es totaling 10.(cid:1141) million square (cid:61)eet and 3(cid:406) retail proper(cid:2462)es totaling 3.(cid:406) million square (cid:61)eet, predominately in the United Kingdom and Ireland with addi(cid:2462)onal investments in the (cid:30)aci(cid:67)c (cid:25)orthwest, Southern (cid:7)ali(cid:61)ornia, Spain and Italy. Our (cid:7)onsolidated (cid:30)or(cid:127)olio held over (cid:403).(cid:1142) million square (cid:61)eet o(cid:61) o(cid:76)ce space and 2.(cid:404) million square (cid:61)eet o(cid:61) retail space. Our (cid:7)o-Investment (cid:30)or(cid:127)olio held (cid:1141).(cid:406) million square (cid:61)eet o(cid:61) o(cid:76)ce space, 10.(cid:1141) million square (cid:61)eet o(cid:61) industrial space and 1.(cid:403) million square (cid:61)eet o(cid:61) retail space. Development and redevelopment We have a number o(cid:61) development, redevelopment and en(cid:2462)tlement pro(cid:102)ects that are underway or in the planning stages. Unlike the residen(cid:2462)al pro(cid:102)ects that are held (cid:61)or sale and described in the Re(cid:118)(cid:98)den(cid:2236)al and (cid:27)t(cid:95)e(cid:117) sec(cid:2462)on below, these ini(cid:2462)a(cid:2462)ves may ul(cid:2462)mately result in income-producing assets. (cid:3)s o(cid:61) December 31, 2022, we are ac(cid:2462)vely developing 2,220 mul(cid:2462)(cid:61)amily units, 0.(cid:403) million commercial rentable square (cid:61)eet and 1(cid:404)0 hotel rooms. I(cid:61) these pro(cid:102)ects are brought to comple(cid:2462)on, the (cid:7)ompany(cid:317)s es(cid:2462)mated share o(cid:61) the total capitali(cid:140)a(cid:2462)on o(cid:61) these pro(cid:102)ects would be appro(cid:138)imately (cid:362)1.1 billion (cid:336)appro(cid:138)imately (cid:405)0(cid:1143) o(cid:61) which has already been (cid:61)unded(cid:337), which we e(cid:138)pect would be (cid:61)unded through our e(cid:138)is(cid:2462)ng equity, third-party equity, pro(cid:102)ect sales, ta(cid:138) credit (cid:67)nancing and secured debt (cid:67)nancing. (cid:36)his represents total capital over the li(cid:61)e o(cid:61) the pro(cid:102)ects and is not a representa(cid:2462)on o(cid:61) peak capital and does not take into account any distribu(cid:2462)ons over the course o(cid:61) the investment. We and our equity partners are under no obliga(cid:2462)on to complete these pro(cid:102)ects and may dispose o(cid:61) any such assets a(cid:91)er adding value through the en(cid:2462)tlement process. (cid:30)lease also see the sec(cid:2462)on (cid:2462)tled (cid:318)(cid:21)(cid:98)(cid:116)(cid:134)(cid:98)d(cid:98)t(cid:139) and (cid:7)ap(cid:98)tal Re(cid:118)o(cid:134)(cid:117)(cid:49)e(cid:118)(cid:330)Development and (cid:117)edevelopment(cid:319) in (cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons included in this report (cid:61)or addi(cid:2462)onal detail on these investments. 30 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 31 (cid:33)eal (cid:11)state De(cid:48)t Investment We have a global real estate debt pla(cid:127)orm with mul(cid:2462)ple partners. In (cid:24)arch 2022, we announced the e(cid:138)pansion o(cid:61) our global debt pla(cid:127)orm to over (cid:362)(cid:1141) billion. Our global debt pla(cid:127)orm, which includes partners across insurance and sovereign wealth, seeks out investment opportuni(cid:2462)es across the en(cid:2462)re real estate debt capital structure in the United States, United Kingdom and (cid:11)urope and targets loans secured by high-quality real estate located in such (cid:102)urisdic(cid:2462)ons. In our role as asset manager, we earn customary (cid:61)ees (cid:61)or managing the pla(cid:127)orm. (cid:7)urrently, our global debt pla(cid:127)orm investments have been made without the use o(cid:61) any leverage and are invested through our (cid:7)o-Investment (cid:30)or(cid:127)olio. (cid:3)s o(cid:61) December 31, 2022, we held interests in 3(cid:406) loans, (cid:1142)(cid:405)(cid:1143) o(cid:61) which have (cid:89)oa(cid:2462)ng interest rates, with collateral located in the Western United States and the United Kingdom, with an average interest rate o(cid:61) 10.0(cid:1143) per annum and an unpaid principal balance (cid:336)(cid:318)U(cid:30)B(cid:319)(cid:337) o(cid:61) (cid:362)2.(cid:403) billion (cid:336)o(cid:61) which our share was a U(cid:30)B o(cid:61) (cid:362)1(cid:404)(cid:404).1 million(cid:337). Some o(cid:61) our loans contain addi(cid:2462)onal (cid:61)unding commitments that will increase our loan balances i(cid:61) they are u(cid:2462)li(cid:140)ed. (cid:3)ll o(cid:61) the loans in our global debt pla(cid:127)orm are per(cid:61)orming and making payments as contractually agreed. In addi(cid:2462)on to interest income (cid:336)which includes origina(cid:2462)on, e(cid:138)it and e(cid:138)tension (cid:61)ees(cid:337), we also earn customary asset management (cid:61)ees (cid:61)rom our partners (cid:61)or managing these loan investments. Our current loan por(cid:127)olio is (cid:61)ocused on per(cid:61)orming loans. However, i(cid:61) market condi(cid:2462)ons deteriorate, we e(cid:138)pect more opportuni(cid:2462)es to arise in acquiring loan por(cid:127)olios at a discount to their contractual balance due as a result o(cid:61) deteriorated credit quality o(cid:61) the borrower. Such loans are underwri(cid:130)en by us based on the value o(cid:61) the underlying real estate collateral. Due to the discounted purchase price (cid:61)or such loans, we seek, and are generally able to, accomplish near term reali(cid:140)a(cid:2462)on o(cid:61) the loan in a cash se(cid:130)lement or by obtaining (cid:2462)tle to the property. (cid:3)ccordingly, the credit quality o(cid:61) the borrower is not o(cid:61) substan(cid:2462)al importance to our evalua(cid:2462)on o(cid:61) the risk o(cid:61) recovery (cid:61)rom such investments. Hotel We originally acquired debt interests in each o(cid:61) the hotels in our (cid:7)onsolidated and (cid:7)o-Investment por(cid:127)olios and were able to u(cid:2462)li(cid:140)e these debt posi(cid:2462)ons to take ownership o(cid:61) the real estate. (cid:36)hese proper(cid:2462)es are e(cid:138)amples o(cid:61) how we are able to leverage di(cid:64)erent pla(cid:127)orms within the (cid:7)ompany to add value to proper(cid:2462)es and shareholders. (cid:3)s o(cid:61) December 31, 2022, we owned one consolidated opera(cid:2462)ng hotel with 2(cid:1141)(cid:404) hotel rooms located in Dublin, Ireland. (cid:3)ddi(cid:2462)onally, in our (cid:7)o-Investment (cid:30)or(cid:127)olio, we have a (cid:67)ve-star resort development that will consist o(cid:61) 1(cid:404)0 rooms in Kona, Hawaii and is currently e(cid:138)pected to open in the second hal(cid:61) o(cid:61) 2023. (cid:33)esiden(cid:2236)al and (cid:27)ther In certain cases, we may pursue (cid:61)or-sale housing acquisi(cid:2462)on opportuni(cid:2462)es, including land (cid:61)or en(cid:2462)tlements, (cid:67)nished lots, urban in(cid:67)ll housing sites and par(cid:2462)ally (cid:67)nished and (cid:67)nished housing pro(cid:102)ects. On certain income-producing acquisi(cid:2462)ons, there are ad(cid:102)acent land parcels (cid:61)or which we may pursue en(cid:2462)tlement ac(cid:2462)vi(cid:2462)es or, in some cases, development or re-development opportuni(cid:2462)es. (cid:36)his group also includes our investment in liquid non-real estate investments which include investment (cid:61)unds that hold marketable securi(cid:2462)es and private equity investments. (cid:3)s o(cid:61) December 31, 2022, we held 1(cid:404) investments primarily comprised o(cid:61) (cid:406)(cid:405) residen(cid:2462)al units(cid:326)lots and 3,(cid:405)(cid:405)0 acres o(cid:61) land located in Hawaii and the Western United States. (cid:3)s o(cid:61) December 31, 2022, these investments had a (cid:14)ross (cid:3)sset (cid:40)alue o(cid:61) (cid:362)22(cid:403).3 million and the (cid:7)ompany had a weighted average ownership in such investments o(cid:61) (cid:405)(cid:1141)(cid:1143). (cid:36)hese investments are in various stages o(cid:61) comple(cid:2462)on, ranging (cid:61)rom securing the proper en(cid:2462)tlements on land posi(cid:2462)ons to sales o(cid:61) units(cid:326)lots. Fair Value Investments (cid:3)s o(cid:61) December 31, 2022, (cid:362)2.1 billion, or (cid:1142)(cid:1142)(cid:1143), o(cid:61) our investments in unconsolidated investments (cid:336)2(cid:404)(cid:1143) o(cid:61) total assets(cid:337) were held at es(cid:2462)mated (cid:61)air value. (cid:3)s o(cid:61) December 31, 2022, there were cumula(cid:2462)ve (cid:61)air value gains o(cid:61) (cid:362)(cid:404)(cid:403)(cid:1141).1 million which comprises 2(cid:1141)(cid:1143) o(cid:61) the (cid:362)2.1 billion carrying value o(cid:61) (cid:61)air value unconsolidated investments that are currently held. Our investment in (cid:40)HH is our largest unconsolidated investment held at es(cid:2462)mated (cid:61)air value and was held at (cid:362)2(cid:405)2.3 million and (cid:362)1(cid:404)(cid:405).(cid:406) million as o(cid:61) December 31, 2022 and 2021, respec(cid:2462)vely. Fair value changes consist o(cid:61) changes in the underlying value o(cid:61) proper(cid:2462)es and associated mortgage debt as well as (cid:61)oreign currency (cid:89)uctua(cid:2462)ons (cid:336)net o(cid:61) any hedges(cid:337) (cid:61)or non-dollar denominated investments. During the year ended December 31, 2022, we recogni(cid:140)ed (cid:362)(cid:406)3.(cid:404) million o(cid:61) (cid:61)air value gains and per(cid:61)ormance alloca(cid:2462)ons on unconsolidated investments. In determining es(cid:2462)mated (cid:61)air market values, the (cid:7)ompany u(cid:2462)li(cid:140)es two approaches to value real estate, a discounted cash (cid:89)ow analysis and direct capitali(cid:140)a(cid:2462)on approach. Discounted cash (cid:89)ow models es(cid:2462)mate (cid:61)uture cash (cid:89)ows (cid:61)rom a buyer(cid:317)s perspec(cid:2462)ve (cid:336)including terminal values(cid:337) and compute a present value using a market discount rate. (cid:36)he holding period in the analysis is typically ten years. (cid:3)lthough the ten year holding period is consistent with how market par(cid:2462)cipants o(cid:91)en es(cid:2462)mate values in connec(cid:2462)on with buying real estate, these holding periods can be shorter depending on the li(cid:61)e o(cid:61) the structure an investment is held within. (cid:36)he cash (cid:89)ows include a pro(cid:102)ec(cid:2462)on o(cid:61) the net sales proceeds at the end o(cid:61) the holding period, computed using a market reversionary capitali(cid:140)a(cid:2462)on rate. Under the direct capitali(cid:140)a(cid:2462)on approach, the (cid:7)ompany applies a market derived capitali(cid:140)a(cid:2462)on rate to current and (cid:61)uture income streams with appropriate ad(cid:102)ustments (cid:61)or tenant vacancies or rent-(cid:61)ree periods. (cid:36)hese capitali(cid:140)a(cid:2462)on rates and (cid:61)uture income streams are derived (cid:61)rom comparable property and leasing transac(cid:2462)ons and are considered to be key inputs in the valua(cid:2462)on. Other (cid:61)actors that are taken into considera(cid:2462)on include tenancy details, planning, building and environmental (cid:61)actors that might a(cid:64)ect the property. (cid:36)he (cid:7)ompany also u(cid:2462)li(cid:140)es valua(cid:2462)ons (cid:61)rom independent real estate appraisal (cid:67)rms on some o(cid:61) its investments (cid:336)(cid:318)appraised valua(cid:2462)ons(cid:319)(cid:337), with certain investment structures periodically (cid:336)typically annually(cid:337) requiring appraised valua(cid:2462)ons. (cid:3)ll appraised valua(cid:2462)ons are reviewed and approved by the (cid:7)ompany. (cid:36)he accuracy o(cid:61) es(cid:2462)ma(cid:2462)ng (cid:61)air value (cid:61)or investments cannot be determined with precision and cannot be substan(cid:2462)ated by comparison to quoted prices in ac(cid:2462)ve markets and may not be reali(cid:140)ed in a current sale or immediate se(cid:130)lement o(cid:61) the asset or liability. (cid:3)ddi(cid:2462)onally, there are inherent uncertain(cid:2462)es in any (cid:61)air value measurement technique, and changes in the underlying assump(cid:2462)ons used, including capitali(cid:140)a(cid:2462)on rates, discount rates, liquidity risks, and es(cid:2462)mates o(cid:61) (cid:61)uture cash (cid:89)ows could signi(cid:67)cantly a(cid:64)ect the (cid:61)air value measurement amounts. (cid:3)ll valua(cid:2462)ons o(cid:61) real estate involve sub(cid:102)ec(cid:2462)ve (cid:102)udgments, and the actual market price o(cid:61) real estate can only be determined by nego(cid:2462)a(cid:2462)on between independent par(cid:2462)es in a sales transac(cid:2462)on. 32 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 33 (cid:36)he table below describes the range o(cid:61) inputs used as o(cid:61) December 31, 2022 (cid:61)or real estate assets(cid:313) • Selec(cid:2462)vely invest in opportuni(cid:2462)es across many real estate product types with a goal o(cid:61) (cid:24)ul(cid:2462)(cid:61)amily O(cid:76)ce Industrial (cid:33)etail Hotel Income approach(cid:331)discounted cash (cid:89)ow Income approach(cid:331)direct capitali(cid:140)a(cid:2462)on Income approach(cid:331)discounted cash (cid:89)ow Income approach(cid:331)direct capitali(cid:140)a(cid:2462)on Income approach(cid:331)discounted cash (cid:89)ow Income approach(cid:331)direct capitali(cid:140)a(cid:2462)on Income approach(cid:331)discounted cash (cid:89)ow Income approach(cid:331)discounted cash (cid:89)ow Estimated Rates Used For (cid:7)apitali(cid:140)a(cid:2462)on (cid:33)ates Discount (cid:33)ates (cid:404).(cid:1142)0(cid:1143)—(cid:405).(cid:404)0(cid:1143) 3.(cid:1142)0(cid:1143)—(cid:404).(cid:405)0(cid:1143) (cid:404).20(cid:1143)—(cid:405).(cid:404)0(cid:1143) (cid:403).20(cid:1143)—(cid:1142).(cid:405)0(cid:1143) (cid:404).00(cid:1143)—(cid:1141).30(cid:1143) 3.(cid:1142)0(cid:1143)—(cid:1142).30(cid:1143) (cid:1141).(cid:404)0(cid:1143) (cid:1141).00(cid:1143) (cid:1142).00(cid:1143)—(cid:406).(cid:1142)0(cid:1143) (cid:25)(cid:326)(cid:3) (cid:405).(cid:404)0(cid:1143)—(cid:406).30(cid:1143) (cid:25)(cid:326)(cid:3) (cid:1141).30(cid:1143)—(cid:405).(cid:1142)0(cid:1143) (cid:25)(cid:326)(cid:3) (cid:1142).30(cid:1143) (cid:1142).30(cid:1143) In valuing indebtedness, Kennedy Wilson considers signi(cid:67)cant inputs to be the term o(cid:61) the debt, value o(cid:61) collateral, market loan-to-value ra(cid:2462)os, market interest rates and spreads, and credit quality o(cid:61) investment en(cid:2462)(cid:2462)es. (cid:36)he credit spreads used by Kennedy Wilson (cid:61)or these types o(cid:61) investments range (cid:61)rom 1.22(cid:1143) to (cid:405).2(cid:404)(cid:1143). (cid:36)here is no ac(cid:2462)ve secondary market (cid:61)or the (cid:7)ompany(cid:317)s development pro(cid:102)ects and no readily available market value given the uncertainty o(cid:61) the amount and (cid:2462)ming o(cid:61) (cid:61)uture cash (cid:89)ows. (cid:3)ccordingly, the (cid:7)ompany(cid:317)s determina(cid:2462)on o(cid:61) (cid:61)air value o(cid:61) the (cid:7)ompany(cid:317)s development pro(cid:102)ects requires (cid:102)udgment and e(cid:138)tensive use o(cid:61) es(cid:2462)mates. (cid:36)here(cid:61)ore, the (cid:7)ompany typically uses investment cost as the es(cid:2462)mated (cid:61)air value un(cid:2462)l (cid:61)uture cash (cid:89)ows become more predictable. (cid:3)ddi(cid:2462)onally, the (cid:61)air value o(cid:61) its development pro(cid:102)ects may di(cid:64)er signi(cid:67)cantly (cid:61)rom the values that would have been used had a ready market e(cid:138)isted (cid:61)or such investments and may di(cid:64)er materially (cid:61)rom the values that the (cid:7)ompany may ul(cid:2462)mately reali(cid:140)e. I(cid:61) the (cid:7)ompany were required to liquidate an investment in a (cid:61)orced or liquida(cid:2462)on sale, it could reali(cid:140)e signi(cid:67)cantly less than the value at which the (cid:7)ompany have recorded it. In addi(cid:2462)on, changes in the market environment and other events that may occur over the li(cid:61)e o(cid:61) the investments may cause the gains or losses ul(cid:2462)mately reali(cid:140)ed on these investments to be di(cid:64)erent than the unreali(cid:140)ed gains or losses re(cid:89)ected in the currently assigned valua(cid:2462)ons. Ongoing macroeconomic condi(cid:2462)ons, such as, but not limited to, high in(cid:89)a(cid:2462)on, central banks raising interest rates to curtail high in(cid:89)a(cid:2462)on, currency (cid:89)uctua(cid:2462)ons, the (cid:7)O(cid:40)ID-1(cid:406) pandemic and the ongoing military con(cid:89)ict between (cid:33)ussia and Ukraine and interna(cid:2462)onal sanc(cid:2462)ons against (cid:33)ussia, con(cid:2462)nue to (cid:61)uel recessionary (cid:61)ears and create vola(cid:2462)lity in our business results and opera(cid:2462)ons. (cid:3)ny prolonged downturn in the (cid:67)nancial markets or a recession, either globally or locally in the United States or in other countries in which we conduct business, could impact the (cid:61)air value o(cid:61) investments held by the (cid:7)ompany. (cid:3)s a result o(cid:61) the rapid development, (cid:89)uidity and uncertainty surrounding these situa(cid:2462)ons, the (cid:7)ompany e(cid:138)pects that in(cid:61)orma(cid:2462)on with respect to (cid:61)air value measurement may change, poten(cid:2462)ally signi(cid:67)cantly, going (cid:61)orward and may not be indica(cid:2462)ve o(cid:61) the actual impact on our business, opera(cid:2462)ons, cash (cid:89)ows and (cid:67)nancial condi(cid:2462)on (cid:61)or the year ended December 31, 2022 and (cid:61)uture periods. Value Creation Our di(cid:64)eren(cid:2462)ated and unique approach to inves(cid:2462)ng is the cornerstone o(cid:61) how we create value (cid:61)or our shareholders. Our investment philosophy is based on three core (cid:61)undamentals(cid:313) • Leverage our global (cid:61)ootprint and complementary investment and investment management businesses to iden(cid:2462)(cid:61)y a(cid:130)rac(cid:2462)ve investment markets across the world. ma(cid:138)imi(cid:140)ing cash (cid:89)ow and risk-ad(cid:102)usted return on capital. • (cid:3)c(cid:2462)vely manage assets and (cid:67)nance our assets in a manner designed to generate stable, predictable and growing cash (cid:89)ows (cid:61)or shareholders and clients. Kennedy Wilson is able to create value (cid:61)or its shareholders in the (cid:61)ollowing ways(cid:313) • We are able to iden(cid:2462)(cid:61)y and acquire a(cid:130)rac(cid:2462)ve real estate assets across many markets, in part due to the signi(cid:67)cant proprietary deal (cid:89)ow driven (cid:61)rom an established global network o(cid:61) industry rela(cid:2462)onships, par(cid:2462)cularly with (cid:67)nancial ins(cid:2462)tu(cid:2462)ons. (cid:36)his can create value by allowing us to maintain and develop a large pipeline o(cid:61) a(cid:130)rac(cid:2462)ve opportuni(cid:2462)es. • Our opera(cid:2462)ng e(cid:138)per(cid:2462)se allows us to (cid:61)ocus on opportunis(cid:2462)c investments where we believe we can increase the value o(cid:61) assets and cash (cid:89)ows and include transac(cid:2462)ons with distressed real estate owners or lenders seeking liquidity, or purchases o(cid:61) under-managed or under-leased assets, and reposi(cid:2462)oning opportuni(cid:2462)es. • We have been able to create place-making areas in our investment loca(cid:2462)ons where we are able to make mul(cid:2462)ple investments in a par(cid:2462)cular city either through direct investments or development ini(cid:2462)a(cid:2462)ves that (cid:61)urther drives interest in the area. • (cid:24)any (cid:2462)mes, these investments are acquired at a discount to replacement cost or recent compara(cid:2462)ve sales, thereby o(cid:64)ering opportuni(cid:2462)es to achieve above average total returns. In many cases, this may lead to signi(cid:67)cant addi(cid:2462)onal returns, such as a carried interest (cid:336)where we have partners(cid:337), based on the per(cid:61)ormance o(cid:61) the assets. • Our long-las(cid:2462)ng and deep rela(cid:2462)onships with (cid:67)nancial ins(cid:2462)tu(cid:2462)ons allow us to re(cid:67)nance loans (cid:336)generally a(cid:91)er we implement our value-add ini(cid:2462)a(cid:2462)ves(cid:337) to reduce interest rates and(cid:326)or increase borrowings due to property apprecia(cid:2462)on and thereby obtain cash (cid:89)ow to use (cid:61)or new investments. • We have been able to a(cid:130)ract third party capital due to our ability to generate above-market returns (cid:61)or our partners, diversity o(cid:61) geographic markets and investment product types as well as our (cid:89)e(cid:138)ibility in structuring deals through (cid:61)unds, separate accounts and equity partner arrangements. • We understand that real estate is cyclical. Our management team employs a mul(cid:2462)-cyclical approach that has resulted in our (cid:3)U(cid:24) being globally diversi(cid:67)ed across many sectors o(cid:61) real estate while maintaining a healthy liquidity posi(cid:2462)on and adequate access to capital. Competitive Strengths We have a unique pla(cid:127)orm (cid:61)rom which to e(cid:138)ecute our investment and investment management strategy. (cid:36)he combina(cid:2462)on o(cid:61) an investment and investment management pla(cid:127)orm provides several compe(cid:2462)(cid:2462)ve strengths when compared to other real estate buyers and asset managers opera(cid:2462)ng stand-alone or investment-(cid:61)ocused (cid:67)rms and may allow us to generate superior risk-ad(cid:102)usted returns. Our investment strategy (cid:61)ocuses on investments that o(cid:64)er signi(cid:67)cant apprecia(cid:2462)on poten(cid:2462)al through intensive asset management, leasing, reposi(cid:2462)oning, redevelopment and the opportunis(cid:2462)c use o(cid:61) capital. We di(cid:64)eren(cid:2462)ate ourselves (cid:61)rom other (cid:67)rms in the industry with our (cid:61)ull service, investment-oriented structure. 34 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 35 Our compe(cid:2462)(cid:2462)ve strengths include(cid:313) Industry Overview • (cid:36)(cid:117)an(cid:118)a(cid:49)(cid:2236)on e(cid:138)pe(cid:117)(cid:98)en(cid:49)e(cid:1579) Our senior management team has an average o(cid:61) over 2(cid:404) years o(cid:61) real estate e(cid:138)perience and has been working and inves(cid:2462)ng together on average (cid:61)or almost 20 years. (cid:24)embers o(cid:61) the senior management team have collec(cid:2462)vely acquired, developed and managed in e(cid:138)cess o(cid:61) (cid:362)30 billion o(cid:61) real estate investments in the United States, the United Kingdom, Ireland, Spain, Italy and (cid:19)apan throughout various economic cycles, both at our (cid:7)ompany and throughout their careers. • (cid:11)(cid:138)ten(cid:118)(cid:98)ve (cid:117)ela(cid:2236)on(cid:118)(cid:95)(cid:98)p and (cid:118)o(cid:134)(cid:117)(cid:49)(cid:98)n(cid:93) net(cid:137)o(cid:117)(cid:104)(cid:1579) We leverage our rela(cid:2462)onships in order to source a(cid:130)rac(cid:2462)ve on and o(cid:64)-market deals. In addi(cid:2462)on, the senior management team and our acquisi(cid:2462)on team have transacted deals in nearly every ma(cid:102)or metropolitan market on the West (cid:7)oast o(cid:61) the United States, as well as in the United Kingdom, Ireland, Spain, Italy and (cid:19)apan. (cid:36)heir local presence and reputa(cid:2462)on in these markets have enabled them to cul(cid:2462)vate key rela(cid:2462)onships with ma(cid:102)or holders o(cid:61) property inventory, in par(cid:2462)cularly (cid:67)nancial ins(cid:2462)tu(cid:2462)ons, throughout the real estate community. • (cid:34)t(cid:117)(cid:134)(cid:49)t(cid:134)(cid:117)(cid:98)n(cid:93) e(cid:138)pe(cid:117)(cid:2236)(cid:118)e and (cid:118)peed o(cid:61) e(cid:138)e(cid:49)(cid:134)(cid:2236)on(cid:1579) (cid:30)rior acquisi(cid:2462)ons completed by us have taken a variety o(cid:61) (cid:61)orms, including direct property investments, (cid:102)oint ventures, e(cid:138)changes involving stock or opera(cid:2462)ng partnership units, par(cid:2462)cipa(cid:2462)ng loans and investments in per(cid:61)orming and non-per(cid:61)orming mortgages at various capital stack posi(cid:2462)ons with the ob(cid:102)ec(cid:2462)ve o(cid:61) long-term ownership. We believe we have developed a reputa(cid:2462)on o(cid:61) being able to quickly e(cid:138)ecute, as well as originate and crea(cid:2462)vely structure acquisi(cid:2462)ons, disposi(cid:2462)ons and (cid:67)nancing transac(cid:2462)ons. • (cid:34)t(cid:117)ate(cid:93)(cid:98)(cid:49) pa(cid:117)tne(cid:117)(cid:118)(cid:95)(cid:98)p(cid:118)(cid:1579) (cid:36)hrough our rela(cid:2462)onships and transac(cid:2462)on e(cid:138)perience we have been able to establish various strategic partnerships with a variety o(cid:61) di(cid:64)erent companies and ins(cid:2462)tu(cid:2462)ons in which we are highly collabora(cid:2462)ve and aligned with our partners in the deals. (cid:7)oupled with our ability to structure acquisi(cid:2462)ons in a variety o(cid:61) ways that (cid:67)t the needs o(cid:61) our strategic partners, we have been able to access various (cid:61)orms o(cid:61) capital due to our e(cid:138)perience and versa(cid:2462)lity. • (cid:40)e(cid:117)(cid:2236)(cid:49)all(cid:139) (cid:98)nte(cid:93)(cid:117)ated pla(cid:127)o(cid:117)m (cid:61)o(cid:117) ope(cid:117)a(cid:2236)onal en(cid:95)an(cid:49)ement(cid:1579) We have 230 employees in 12 o(cid:76)ces throughout the United States, the United Kingdom, Ireland, Spain and Jersey. We have a hands- on approach to real estate inves(cid:2462)ng and possess the local e(cid:138)per(cid:2462)se in property and asset management, leasing, construc(cid:2462)on management, development and investment sales, which we believe enable us to invest success(cid:61)ully in selected submarkets. • (cid:7)al(cid:49)(cid:134)lated (cid:117)(cid:98)(cid:118)(cid:104) ta(cid:104)(cid:98)n(cid:93)(cid:1579) We underwrite our investments based upon a thorough e(cid:138)amina(cid:2462)on o(cid:61) property economics and a cri(cid:2462)cal understanding o(cid:61) market dynamics and risk management strategies. We conduct an in-depth sensi(cid:2462)vity analysis on each o(cid:61) our acquisi(cid:2462)ons. (cid:36)his analysis applies various economic scenarios that include changes to rental rates, absorp(cid:2462)on periods, opera(cid:2462)ng e(cid:138)penses, interest rates, e(cid:138)it values and holding periods. We use this analysis to develop our disciplined acquisi(cid:2462)on strategies. • (cid:24)ana(cid:93)ement(cid:315)(cid:118) al(cid:98)(cid:93)nment (cid:137)(cid:98)t(cid:95) (cid:118)(cid:95)a(cid:117)e(cid:95)olde(cid:117)(cid:118)(cid:1579) (cid:3)s o(cid:61) December 31, 2022, our directors and e(cid:138)ecu(cid:2462)ve o(cid:76)cers and their respec(cid:2462)ve a(cid:76)liates owned an aggregate o(cid:61) appro(cid:138)imately 1(cid:403)(cid:1143) o(cid:61) the outstanding shares o(cid:61) our common stock. Due to our management team(cid:317)s ownership interest in the (cid:7)ompany its interests are in alignment with common shareholders o(cid:61) the (cid:7)ompany and gives us an owner(cid:317)s mentality on the investments we own and manage. (cid:36)he real estate business is cyclical. (cid:33)eal estate cycles are generally impacted by many (cid:61)actors, including availability o(cid:61) equity and debt capital, borrowing cost, rent levels, and asset values. Our strategy has resulted in a strong track record o(cid:61) crea(cid:2462)ng both asset and en(cid:2462)ty value (cid:61)or the bene(cid:67)t o(cid:61) our shareholders and partners over these various real estate cycles. Key Investment Markets Western United States In 2022, the U.S. economy began to ad(cid:102)ust to signi(cid:67)cant changes in monetary policy. For the (cid:67)rst (cid:2462)me since 201(cid:1142), the Federal (cid:33)eserve began to raise its key (cid:61)ederal (cid:61)unds rate in 2022, ending the year by increasing rates (cid:403)2(cid:404) basis points, aiming to o(cid:64)set rising in(cid:89)a(cid:2462)on. (cid:14)D(cid:30) decelerated to a 2.(cid:406)(cid:1143) annuali(cid:140)ed pace in the (cid:61)ourth quarter o(cid:61) 2022, even though na(cid:2462)onal unemployment rate improved to 3.(cid:404)(cid:1143) (cid:61)rom 3.(cid:406)(cid:1143) at the beginning o(cid:61) the year. (cid:3)s a result o(cid:61) rapidly rising interest rates, the real estate transac(cid:2462)on market in the U.S. (cid:61)ell sharply in the second hal(cid:61) o(cid:61) the year, with transac(cid:2462)ons in the (cid:61)ourth quarter declining by over (cid:1141)0(cid:1143) according to (cid:33)eal (cid:7)apital (cid:3)naly(cid:2462)cs. (cid:36)he US equity markets, as measured by the S(cid:351)(cid:30) (cid:404)00, e(cid:138)perienced its worse year since 200(cid:1142), driven by the onset o(cid:61) aggressive (cid:61)ed policy and poten(cid:2462)al risk o(cid:61) the U.S. economy e(cid:138)periencing a recession. (cid:36)he mul(cid:2462)(cid:61)amily sector con(cid:2462)nued to see strong rental growth in 2022 as overall demand (cid:61)or rental housing remained strong. (cid:33)ising mortgage rates (cid:61)urther drove demand due to the high cost o(cid:61) home ownership, and domes(cid:2462)c migra(cid:2462)on pa(cid:130)erns demonstrated that renters con(cid:2462)nued to move out o(cid:61) high cost ci(cid:2462)es and into more a(cid:64)ordable markets. However, rising interest rates and borrowing costs resulted in declining transac(cid:2462)on volumes, with (cid:61)ourth quarter 2022 mul(cid:2462)(cid:61)amily volumes declining by an es(cid:2462)mated (cid:405)0(cid:1143) on a year-over-year basis. Investment volumes are e(cid:138)pected to rebound when interest rates stabili(cid:140)e, as more debt capital is e(cid:138)pected to be available (cid:61)or ins(cid:2462)tu(cid:2462)onal investors, who remained on the sidelines during the (cid:61)ourth quarter o(cid:61) 2022. While the delivery o(cid:61) new supply is e(cid:138)pected to rise in 2023, there con(cid:2462)nues to be a long-term undersupply o(cid:61) rental housing in the U.S., with (cid:7)B(cid:33)(cid:11) es(cid:2462)ma(cid:2462)ng appro(cid:138)imately 3.(cid:404) million new units that will be needed in the U.S. by 203(cid:404) to keep pace with demand. Kennedy Wilson(cid:317)s U.S. mul(cid:2462)(cid:61)amily por(cid:127)olio is largely comprised o(cid:61) garden style communi(cid:2462)es in suburban markets. In addi(cid:2462)on to our meaning(cid:61)ul por(cid:127)olio in the surrounding Sea(cid:130)le region, the (cid:7)ompany has shi(cid:91)ed its market-rate por(cid:127)olio to the (cid:24)ountain states, which now is the largest market-rate region by unit count and primarily consists o(cid:61) its assets in Utah, Idaho, and (cid:25)evada. (cid:36)he outlook (cid:61)or o(cid:76)ce con(cid:2462)nued to be impacted by (cid:7)O(cid:40)ID-1(cid:406) variants and the ability (cid:61)or workers to return to the o(cid:76)ce in 2022. O(cid:76)ce investment volumes (cid:61)ell in (cid:61)ourth quarter o(cid:61) 2022 by (cid:1141)(cid:1141)(cid:1143), compared to (cid:61)ourth quarter o(cid:61) 2021. Occupier demand (cid:61)or o(cid:76)ce is e(cid:138)pected to improve in 2023, although there is a large divide between best-in-class primary o(cid:76)ce and secondary space. Hybrid working arrangements con(cid:2462)nues to see widespread adop(cid:2462)on as occupiers (cid:61)ocus on energy-e(cid:76)cient workplaces that o(cid:64)er a variety o(cid:61) ameni(cid:2462)es, new desirable technology, and (cid:89)e(cid:138)ible con(cid:67)gura(cid:2462)ons. Kennedy Wilson(cid:317)s U.S. o(cid:76)ce por(cid:127)olio is primarily located in Southern (cid:7)ali(cid:61)ornia and the (cid:14)reater Sea(cid:130)le market. (cid:36)he ma(cid:102)ority o(cid:61) the U.S. o(cid:76)ce is owned with partners through the (cid:7)ompany(cid:317)s (cid:7)o- Investment segment. Hawaii (cid:36)he Hawaiian economy was nega(cid:2462)vely impacted by the (cid:7)O(cid:40)ID-1(cid:406) pandemic but con(cid:2462)nues to e(cid:138)perience a strong recovery. (cid:36)ravel to the islands has rebounded with (cid:406).3 million visitors traveling to Hawaii in 2022, an increase o(cid:61) 3(cid:405)(cid:1143) (cid:61)rom 2021. (cid:36)he lu(cid:138)ury real estate market in Hawaii started o(cid:64) on a strong pace in 2022(cid:312) however, as interest rates began to rise, transac(cid:2462)on volumes slowed with total sales and transac(cid:2462)ons in 2022 decreasing by appro(cid:138)imately 22(cid:1143) (cid:61)rom 2021. However, property values in Hawaii con(cid:2462)nued to rise throughout every segment in 2022. (cid:36)he outlook remains posi(cid:2462)ve (cid:61)or Hawaii, with almost 10 million visitors e(cid:138)pected in 2023. 36 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 37 Ireland Ireland(cid:317)s economy is es(cid:2462)mated to have had the strongest (cid:14)D(cid:30) growth across the (cid:11)U at 10.1(cid:1143) in 2022 and the Organi(cid:140)a(cid:2462)on (cid:61)or (cid:11)conomic (cid:7)o-opera(cid:2462)on and Development is (cid:61)orecas(cid:2462)ng Ireland to have the highest (cid:14)D(cid:30) growth o(cid:61) any ma(cid:102)or (cid:11)uropean economy over the ne(cid:138)t two years. (cid:33)eal estate investment volumes reached appro(cid:138)imately (cid:360)(cid:1141).0 billion (cid:61)or 2022 which is the second strongest year on record. (cid:36)he overall investment volumes recorded in 2022 was up (cid:406)(cid:1143) on 2021 and almost (cid:403)0(cid:1143) up on the 10-year average o(cid:61) (cid:360)(cid:403).3 billion, a strong (cid:67)gure given the uncertain macroeconomic backdrop. Demonstra(cid:2462)ng Ireland(cid:317)s posi(cid:2462)on as an a(cid:130)rac(cid:2462)ve global real estate market, (cid:1141)2(cid:1143) o(cid:61) investments were (cid:61)rom ins(cid:2462)tu(cid:2462)onal investors, and (cid:61)oreign investors accounted (cid:61)or (cid:1141)(cid:1142)(cid:1143) o(cid:61) the volume. Dublin o(cid:76)ce absorp(cid:2462)on was more than 2.(cid:404) million square (cid:61)eet in 2022 with (cid:1141)0(cid:1143) occurring in the second hal(cid:61) o(cid:61) 2022 demonstra(cid:2462)ng a renewed level o(cid:61) employer con(cid:67)dence in the (cid:61)uture o(cid:61) physical o(cid:76)ces. (cid:30)rime headline city center rents increased to (cid:360)(cid:1141)(cid:404).00 per square (cid:61)oot up (cid:61)rom (cid:360)(cid:404)(cid:405).(cid:404)0 in 2021 and are e(cid:138)pected to remain stable over 2023. (cid:36)he Irish mul(cid:2462)(cid:61)amily sector remains the dominant investment sector accoun(cid:2462)ng (cid:61)or 33(cid:1143) o(cid:61) all transac(cid:2462)ons in 2022. (cid:3)s a result o(cid:61) the persis(cid:2462)ng supply-demand gap in the Dublin rental market, average rent prices are e(cid:138)pected to see (cid:61)urther upward pressure in 2023. United Kingdom (cid:3)nnual (cid:14)D(cid:30) in the UK is es(cid:2462)mated to have grown by (cid:403).1(cid:1143) in 2022, (cid:61)ollowing growth o(cid:61) (cid:405).(cid:403)(cid:1143) in 2021. Similar to trends in the U.S., the UK (cid:7)onsumer price inde(cid:138) (cid:336)(cid:318)(cid:7)(cid:30)I(cid:319)(cid:337) has con(cid:2462)nued on an upward tra(cid:102)ectory to 10.(cid:404)(cid:1143) in December. (cid:3)s o(cid:61) the beginning o(cid:61) February 2023 base rates have increased (cid:404)0 basis points to (cid:403)(cid:1143) and headline (cid:7)(cid:30)I in(cid:89)a(cid:2462)on has begun to edge back and is likely to (cid:61)all over the rest o(cid:61) the year as a result o(cid:61) past movements in energy and other goods prices. (cid:36)he UK labor market remained strong, with the unemployment rate es(cid:2462)mated at 3.(cid:405)(cid:1143) at December 31, 2022. Investment in UK commercial property (cid:61)ell by 2(cid:403).(cid:406)(cid:1143) to (cid:364)10.1 billion during the (cid:61)ourth quarter 2022, (cid:61)rom (cid:364)13.(cid:403) billion at the end o(cid:61) September 2022, (cid:1141)(cid:1143) higher than the (cid:61)ourth quarter ten-year quarterly average and 32(cid:1143) lower than the ten-year quarterly average. (cid:7)apital deployed was split evenly with domes(cid:2462)c investment accoun(cid:2462)ng (cid:61)or (cid:403)(cid:406)(cid:1143) and interna(cid:2462)onal investment accoun(cid:2462)ng (cid:61)or (cid:404)1(cid:1143). In regards to South (cid:11)ast London O(cid:76)ces, the 2022 annual transac(cid:2462)on volume o(cid:61) (cid:364)3 billion showed a 1(cid:403)(cid:1143) decrease on the (cid:67)ve year annual average o(cid:61) (cid:364)3.(cid:404) billion and a 30(cid:1143) decrease on 2021. (cid:40)acancy across the wider (cid:24)2(cid:404) market now stands at 11.2(cid:1143), seeing a marginal decline quarter on quarter. For the Industrial and Logis(cid:2462)cs sectors (cid:61)ourth quarter 2022 investment volumes totaled (cid:364)1.(cid:404) billion (cid:336)down 3(cid:406)(cid:1143) when compared to third quarter 2022(cid:337), with mul(cid:2462)-lets only capturing 2(cid:1141)(cid:1143) o(cid:61) investment, down (cid:61)rom (cid:403)1(cid:1143) in third quarter 2022. (cid:36)ake up was 1(cid:403).(cid:405) million square (cid:61)eet in (cid:61)ourth quarter 2022, almost e(cid:138)actly the same as in third quarter 2022 and (cid:404)(cid:1143) below the (cid:404)-year quarterly average. However, occupier take up (cid:61)or 2022 as a whole was (cid:1141)(cid:404).(cid:1142) million square (cid:61)eet, down 2(cid:404)(cid:1143) on the record high in 2021, but s(cid:2462)ll the second most ac(cid:2462)ve year on record. In the UK (cid:33)etail sector, economic headwinds proved strong in the second hal(cid:61) o(cid:61) 2022, suppressing deal volumes to (cid:364)2.(cid:405)(cid:404) billion (cid:336)down 33(cid:1143) on the same period (cid:61)or 2021(cid:337), contras(cid:2462)ng against the high deal volumes o(cid:61) (cid:67)rst hal(cid:61) o(cid:61) 2022 at (cid:364)3.(cid:404)(cid:1142) billion (cid:336)up 11(cid:1143) on the same period (cid:61)or 2021(cid:337). Environmental, Social and Governance (ESG) Kennedy Wilson(cid:317)s approach to (cid:11)S(cid:14) aligns with its business strategy to ma(cid:138)imi(cid:140)e the inherent value o(cid:61) our assets and by striving to deliver long-term social, environmental, and economic value across our por(cid:127)olio and to our key stakeholders. We aim to integrate (cid:11)S(cid:14) (cid:61)actors into key business processes, underpinned by a measure, manage, and monitor approach (cid:61)ramed by our (cid:61)our (cid:11)S(cid:14) pillars most relevant to our business(cid:313) Op(cid:2462)mi(cid:140)ing (cid:33)esources, (cid:7)rea(cid:2462)ng (cid:14)reat (cid:30)laces, Building (cid:7)ommuni(cid:2462)es and Opera(cid:2462)ng (cid:33)esponsibly. Details o(cid:61) this (cid:61)ramework can be (cid:61)ound on our (cid:11)S(cid:14) website (cid:336)esg. kennedywilson.com(cid:337) (cid:336)this website address is not intended to (cid:61)unc(cid:2462)on as a hyperlink, and the in(cid:61)orma(cid:2462)on contained in, or accessible (cid:61)rom, our website is not intended to be a part o(cid:61) this (cid:67)ling(cid:337). (cid:36)he (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee o(cid:61) the Board o(cid:61) Directors (cid:336)the (cid:318)(cid:11)S(cid:14) (cid:7)ommi(cid:130)ee(cid:319)(cid:337) oversees the (cid:7)ompany(cid:317)s (cid:11)S(cid:14) program, including opportuni(cid:2462)es and risk management strategies. (cid:36)he (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee(cid:317)s main areas o(cid:61) (cid:61)ocus include(cid:313) • Overseeing and reviewing the (cid:7)ompany(cid:317)s (cid:11)S(cid:14) strategies, ini(cid:2462)a(cid:2462)ves, and policies, including the (cid:7)ompany(cid:317)s (cid:11)S(cid:14)-related repor(cid:2462)ng and disclosures. • In con(cid:102)unc(cid:2462)on with the (cid:7)ompensa(cid:2462)on (cid:7)ommi(cid:130)ee, overseeing and reviewing the (cid:7)ompany(cid:317)s culture and human capital management strategy, ini(cid:2462)a(cid:2462)ves, and policies, including our inclusion, diversity, and equity e(cid:64)orts(cid:312) and • In con(cid:102)unc(cid:2462)on with the (cid:3)udit (cid:7)ommi(cid:130)ee, overseeing risk management and oversight programs and per(cid:61)ormance-related material to (cid:11)S(cid:14) ma(cid:130)ers a(cid:64)ec(cid:2462)ng Kennedy Wilson. (cid:36)he (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee is also responsible (cid:61)or overseeing Kennedy Wilson(cid:317)s management-level (cid:14)lobal (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee. (cid:36)he (cid:14)lobal (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee, chaired by our (cid:30)resident and Board o(cid:61) Directors member (cid:24)ary (cid:33)icks, manages the (cid:7)ompany(cid:317)s (cid:11)S(cid:14) responsibili(cid:2462)es and commitments and is responsible (cid:61)or (cid:61)ormula(cid:2462)ng and implemen(cid:2462)ng procedures and priori(cid:2462)es to deliver the (cid:7)ompany(cid:317)s (cid:11)S(cid:14) strategy. (cid:36)he (cid:14)lobal (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee (cid:61)ocuses on the (cid:61)ollowing(cid:313) monitoring compliance with e(cid:138)is(cid:2462)ng and (cid:61)uture material (cid:11)S(cid:14)-related laws and regula(cid:2462)ons applicable to the (cid:7)ompany and its investments that would have a material impact on business opera(cid:2462)ons(cid:312) se(cid:2478)ng appropriate global (cid:11)S(cid:14) priori(cid:2462)es aim to align across target markets(cid:312) monitoring delivery progress(cid:312) and suppor(cid:2462)ng (cid:11)S(cid:14) communica(cid:2462)on to investors and other stakeholders. (cid:36)he (cid:14)lobal (cid:11)S(cid:14) (cid:7)ommi(cid:130)ee is supported by two e(cid:138)ecu(cid:2462)ve level (cid:11)S(cid:14) commi(cid:130)ees in the US and (cid:11)urope, each o(cid:61) which (cid:61)ocus on the implementa(cid:2462)on o(cid:61) (cid:11)S(cid:14) policies and strategies in their respec(cid:2462)ve regions. It is Kennedy Wilson(cid:317)s inten(cid:2462)on to manage (cid:11)S(cid:14) (cid:61)actors, both opportuni(cid:2462)es and risks, at the corporate, (cid:61)und and individual assets level, with the goal o(cid:61) integra(cid:2462)ng robust procedures across all stages o(cid:61) its investment process. (cid:36)he (cid:7)ompany(cid:317)s policies can be reviewed on its corporate website (cid:336)h(cid:130)ps(cid:313)(cid:326)(cid:326)www.kennedywilson.com(cid:326)corporate-responsibility(cid:337) (cid:336)this website address is not intended to (cid:61)unc(cid:2462)on as a hyperlink, and the in(cid:61)orma(cid:2462)on contained in, or accessible (cid:61)rom, the (cid:7)ompany(cid:317)s website is not intended to be a part o(cid:61) this (cid:67)ling(cid:337) and cover guidelines and rules regarding (cid:11)S(cid:14), an(cid:2462)-discrimina(cid:2462)on, an(cid:2462)-harassment, non-retalia(cid:2462)on, human tra(cid:76)cking and slavery, (cid:61)raud preven(cid:2462)on, data security and data privacy. Human Capital Management Compan(cid:139) (cid:27)verview and Values We operate as a non-bureaucra(cid:2462)c, teamwork-oriented, and nimble organi(cid:140)a(cid:2462)on. We promote an entrepreneurial culture, and at our core, we are powered by a team o(cid:61) (cid:61)ocused, high-per(cid:61)ormance people who thrive on e(cid:138)cellence in the workplace and a shared desire to make an impact. 38 / KENNEDY WILSON Business (continued) ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 39 Wor(cid:104)place Diversit(cid:139) We strive to maintain a diverse corporate culture, celebra(cid:2462)ng and promo(cid:2462)ng equality across gender, socio-economic backgrounds, educa(cid:2462)on, and ethnicity. (cid:36)his allows (cid:61)or be(cid:130)er representa(cid:2462)on o(cid:61) di(cid:64)erent viewpoints, historical perspec(cid:2462)ve and can bring (cid:61)resh ideas to all levels o(cid:61) the (cid:7)ompany. Within Kennedy Wilson(cid:317)s total work(cid:61)orce o(cid:61) appro(cid:138)imately 230 employees, (cid:403)0(cid:1143) are women, with many serving in leadership posi(cid:2462)ons throughout the company. Women also hold 2(cid:404)(cid:1143) o(cid:61) the board o(cid:61) director posi(cid:2462)ons. In 2022, we con(cid:2462)nued Kennedy Wilson Woman speaker series as part o(cid:61) our e(cid:64)orts to advance women in real estate and (cid:67)nance and deepen our industry(cid:317)s talent pool. Training and Development Kennedy Wilson would not e(cid:138)ist without our most important asset(cid:313) our people. We strive to maintain a culture that (cid:61)osters collabora(cid:2462)on and innova(cid:2462)on, and we take great pride in building and maintaining a driven, results-oriented work(cid:61)orce. Our talent development program includes access to (cid:61)ormal and in(cid:61)ormal mentorships, tui(cid:2462)on reimbursement, where we are suppor(cid:2462)ng employees who are seeking advanced cer(cid:2462)(cid:67)cates in areas o(cid:61) specialty that pertain to their role at Kennedy Wilson, and (cid:318)Lunch and Learn(cid:319) sessions. (cid:36)hese alongside our regular global senior management calls con(cid:2462)nue to develop our managers to become more e(cid:64)ec(cid:2462)ve leaders. (cid:3) dynamic internship and internal trans(cid:61)er program also helps promote personal development and improves leadership skills across all departments. (cid:36)hrough our annual summer internship program, we con(cid:2462)nue to (cid:67)nd ways to be(cid:130)er support our equality, diversity, and inclusion aspira(cid:2462)ons by building a diverse pipeline o(cid:61) talented individuals in the real estate industry with the inten(cid:2462)on to introduce our business to those who may not have considered a career in real estate. Competition We compete with a range o(cid:61) global, na(cid:2462)onal and local real estate (cid:67)rms, individual investors and other corpora(cid:2462)ons, both private and public. Our investment business competes with real estate investment partnerships, real estate investments trusts, private equity (cid:67)rms and other investment companies and regional investors and developers. We believe that our rela(cid:2462)onships with the sellers and our ability to close an investment transac(cid:2462)on in a short (cid:2462)me period at compe(cid:2462)(cid:2462)ve pricing provide us a compe(cid:2462)(cid:2462)ve advantage. Foreign Currency (cid:3)ppro(cid:138)imately 3(cid:405)(cid:1143) o(cid:61) our investment account is invested through our (cid:61)oreign pla(cid:127)orms in their local currencies. Investment level debt is generally incurred in local currencies and we consider our equity investment as the appropriate e(cid:138)posure to evaluate (cid:61)or balance sheet hedging purposes. We typically do not hedge (cid:61)oreign e(cid:138)change rates (cid:61)or (cid:61)uture opera(cid:2462)ons or cash (cid:89)ows o(cid:61) opera(cid:2462)ons, which may have a signi(cid:67)cant impact on the results o(cid:61) our opera(cid:2462)ons. In order to manage the e(cid:64)ect o(cid:61) (cid:89)uctua(cid:2462)ons in (cid:61)oreign e(cid:138)change rates, we generally hedge our book equity e(cid:138)posure to (cid:61)oreign currencies through currency (cid:61)orward contracts and op(cid:2462)ons. We wholly-own Kennedy Wilson (cid:11)urope (cid:33)eal (cid:11)state Limited (cid:336)(cid:318)KW(cid:11)(cid:319)(cid:337), which is domiciled in the United Kingdom and has (cid:14)B(cid:30) as its (cid:61)unc(cid:2462)onal currency. KW(cid:11) has investments in assets that have (cid:61)unc(cid:2462)onal currencies o(cid:61) (cid:14)B(cid:30) and euros. Kennedy-Wilson Holdings, Inc. does not have a direct interest in the euro-denominated investments but has indirect ownership through its interest in KW(cid:11). We cannot directly hedge the (cid:61)oreign currency movements in these euro-denominated assets but we do hedge (cid:61)oreign currency movements in euro assets at the KW(cid:11) level through (cid:14)B(cid:30)(cid:326)(cid:11)U(cid:33) hedging instruments. We then are able to hedge the USD(cid:326)(cid:14)B(cid:30) (cid:61)oreign currency e(cid:138)posure through our direct interest in KW(cid:11). Within KW(cid:11) we have historically u(cid:2462)li(cid:140)ed three types o(cid:61) contracts to hedge our (cid:14)B(cid:30)(cid:326)(cid:11)U(cid:33) e(cid:138)posure(cid:313) (cid:61)oreign (cid:61)orward currency contracts(cid:312) a cross currency swap (cid:336)un(cid:2462)l its se(cid:130)lement in September 2021(cid:337) on the 3.(cid:406)(cid:404)(cid:1143) pound sterling-denominated bonds due 2022 (cid:336)the (cid:318)KW(cid:11) Bonds(cid:319)(cid:337) (cid:336)swapped (cid:14)B(cid:30) to (cid:11)U(cid:33)(cid:337)(cid:312) and the KW(cid:11) (cid:11)uro (cid:24)edium (cid:36)erm (cid:25)otes (cid:336)(cid:318)KW(cid:11) (cid:25)otes(cid:319)(cid:337). (cid:36)he KW(cid:11) (cid:25)otes were issued in euros and held by KW(cid:11) but we have elected to treat the (cid:61)oreign currency movements as a net investment hedge on our euro-denominated investments in KW(cid:11). (cid:36)he (cid:61)oreign currency movements on these hedge items above are recorded to unreali(cid:140)ed (cid:61)oreign currency deriva(cid:2462)ve contract gains(cid:326)losses within other comprehensive income (cid:61)or (cid:14)B(cid:30)(cid:326)(cid:11)U(cid:33) movements. However, when we translate our investment in KW(cid:11) (cid:61)rom USD(cid:326)(cid:14)B(cid:30), the (cid:61)oreign currency movements on these items go through unreali(cid:140)ed (cid:61)oreign currency transla(cid:2462)on gains(cid:326)losses within other comprehensive income. (cid:30)lease re(cid:61)er to Item (cid:405). (cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)on (cid:61)or a discussion regarding (cid:61)oreign currency and currency deriva(cid:2462)ve instruments. Transaction-Based Results (cid:3) signi(cid:67)cant por(cid:2462)on o(cid:61) our cash (cid:89)ow is (cid:2462)ed to transac(cid:2462)on ac(cid:2462)vity which can a(cid:64)ect an investor(cid:317)s ability to compare our (cid:67)nancial condi(cid:2462)on and results o(cid:61) opera(cid:2462)ons on a quarter-by-quarter or year-over-year basis or to easily evaluate the breadth o(cid:61) our opera(cid:2462)on. Historically, this variability has caused our revenue, net income and cash (cid:89)ows to be (cid:2462)ed to transac(cid:2462)on ac(cid:2462)vity, which is not necessarily concentrated in any one quarter. Employees (cid:3)s o(cid:61) December 31, 2022, we have 230 employees in 12 o(cid:76)ces throughout the United States, the United Kingdom, Ireland, Spain and Jersey. We believe that we have been able to a(cid:130)ract and maintain high quality employees. (cid:36)here are no employees sub(cid:102)ect to collec(cid:2462)ve bargaining agreements. In addi(cid:2462)on, we believe we have a strong rela(cid:2462)onship with our employees. Available Information In(cid:61)orma(cid:2462)on about us is available on our website (cid:336)h(cid:130)p(cid:313)(cid:326)(cid:326)www.kennedywilson.com(cid:337) (cid:336)this website address is not intended to (cid:61)unc(cid:2462)on as a hyperlink, and the in(cid:61)orma(cid:2462)on contained in, or accessible (cid:61)rom, our website is not intended to be a part o(cid:61) this (cid:67)ling(cid:337). We make available on our website, (cid:61)ree o(cid:61) charge, copies o(cid:61) our (cid:3)nnual (cid:33)eport on Form 10-K, (cid:32)uarterly (cid:33)eports on Form 10-(cid:32), (cid:7)urrent (cid:33)eports on Form (cid:1142)-K, (cid:30)ro(cid:138)y Statements on Schedule 1(cid:403)(cid:3) and amendments to those reports and other statements (cid:67)led or (cid:61)urnished pursuant to Sec(cid:2462)on 13(cid:336)a(cid:337), 1(cid:403) or 1(cid:404)(cid:336)d(cid:337) o(cid:61) the Securi(cid:2462)es (cid:11)(cid:138)change (cid:3)ct o(cid:61) 1(cid:406)3(cid:403), as amended, as soon as reasonably prac(cid:2462)cable a(cid:91)er (cid:67)ling or submi(cid:2478)ng such material electronically or otherwise (cid:61)urnishing it to the S(cid:11)(cid:7). In addi(cid:2462)on, we have previously (cid:67)led registra(cid:2462)on statements and other documents with the S(cid:11)(cid:7). (cid:3)ny document we (cid:67)le is available at the S(cid:11)(cid:7)(cid:317)s internet address at h(cid:130)p(cid:313)(cid:326)(cid:326)www.sec.gov (cid:336)this website address is not intended to (cid:61)unc(cid:2462)on as a hyperlink, and the in(cid:61)orma(cid:2462)on contained in, or accessible (cid:61)rom, the S(cid:11)(cid:7)(cid:317)s website is not intended to be a part o(cid:61) this (cid:67)ling(cid:337). 40 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 41 Management’s Discussion and Analysis of Financial Condition and Results of Operations (cid:36)(cid:95)e (cid:61)ollo(cid:137)(cid:98)n(cid:93) d(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)on and anal(cid:139)(cid:118)(cid:98)(cid:118) (cid:118)(cid:95)o(cid:134)ld (cid:48)e (cid:117)ead (cid:98)n (cid:49)on(cid:102)(cid:134)n(cid:49)(cid:2236)on (cid:137)(cid:98)t(cid:95) t(cid:95)e (cid:67)nan(cid:49)(cid:98)al (cid:118)tatement(cid:118) and (cid:117)elated note(cid:118) and t(cid:95)e ot(cid:95)e(cid:117) (cid:67)nan(cid:49)(cid:98)al (cid:98)n(cid:61)o(cid:117)ma(cid:2236)on appea(cid:117)(cid:98)n(cid:93) el(cid:118)e(cid:137)(cid:95)e(cid:117)e (cid:98)n t(cid:95)(cid:98)(cid:118) (cid:117)epo(cid:117)t(cid:312) (cid:36)(cid:95)(cid:98)(cid:118) d(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)on and anal(cid:139)(cid:118)(cid:98)(cid:118) (cid:49)onta(cid:98)n(cid:118) (cid:61)o(cid:117)(cid:137)a(cid:117)d(cid:328)loo(cid:104)(cid:98)n(cid:93) (cid:118)tatement(cid:118) t(cid:95)at (cid:98)nvolve (cid:117)(cid:98)(cid:118)(cid:104)(cid:118)(cid:310) (cid:134)n(cid:49)e(cid:117)ta(cid:98)n(cid:2236)e(cid:118) and a(cid:118)(cid:118)(cid:134)mp(cid:2236)on(cid:118)(cid:312) (cid:34)ee t(cid:95)e (cid:118)e(cid:49)(cid:2236)on (cid:2236)tled (cid:316)(cid:13)o(cid:117)(cid:137)a(cid:117)d(cid:328)(cid:21)oo(cid:104)(cid:98)n(cid:93) (cid:34)tatement(cid:118)(cid:317) (cid:61)o(cid:117) mo(cid:117)e (cid:98)n(cid:61)o(cid:117)ma(cid:2236)on(cid:312) (cid:3)(cid:49)t(cid:134)al (cid:117)e(cid:118)(cid:134)lt(cid:118) (cid:49)o(cid:134)ld d(cid:98)(cid:64)e(cid:117) mate(cid:117)(cid:98)all(cid:139) (cid:61)(cid:117)om t(cid:95)o(cid:118)e an(cid:2236)(cid:49)(cid:98)pated (cid:98)n t(cid:95)e (cid:61)o(cid:117)(cid:137)a(cid:117)d(cid:328)loo(cid:104)(cid:98)n(cid:93) (cid:118)tatement(cid:118) a(cid:118) a (cid:117)e(cid:118)(cid:134)lt o(cid:61) man(cid:139) (cid:61)a(cid:49)to(cid:117)(cid:118)(cid:310) (cid:98)n(cid:49)l(cid:134)d(cid:98)n(cid:93) t(cid:95)o(cid:118)e d(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)ed (cid:98)n t(cid:95)e (cid:118)e(cid:49)(cid:2236)on (cid:2236)tled (cid:316)R(cid:98)(cid:118)(cid:104) (cid:13)a(cid:49)to(cid:117)(cid:118)(cid:317) and el(cid:118)e(cid:137)(cid:95)e(cid:117)e (cid:98)n t(cid:95)(cid:98)(cid:118) (cid:117)epo(cid:117)t(cid:312) (cid:38)nle(cid:118)(cid:118) (cid:118)pe(cid:49)(cid:98)(cid:67)(cid:49)all(cid:139) noted ot(cid:95)e(cid:117)(cid:137)(cid:98)(cid:118)e(cid:310) a(cid:118) (cid:134)(cid:118)ed t(cid:95)(cid:117)o(cid:134)(cid:93)(cid:95)o(cid:134)t t(cid:95)(cid:98)(cid:118) (cid:24)ana(cid:93)ement(cid:315)(cid:118) D(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)on and (cid:3)nal(cid:139)(cid:118)(cid:98)(cid:118) (cid:118)e(cid:49)(cid:2236)on(cid:310) (cid:316)(cid:137)e(cid:310)(cid:317) (cid:316)o(cid:134)(cid:117)(cid:310)(cid:317) (cid:316)(cid:134)(cid:118)(cid:310)(cid:317) (cid:316)t(cid:95)e (cid:7)ompan(cid:139)(cid:317) o(cid:117) (cid:316)(cid:20)enned(cid:139) (cid:41)(cid:98)l(cid:118)on(cid:317) (cid:117)e(cid:61)e(cid:117)(cid:118) to (cid:20)enned(cid:139)(cid:328)(cid:41)(cid:98)l(cid:118)on (cid:15)old(cid:98)n(cid:93)(cid:118)(cid:310) (cid:17)n(cid:49)(cid:312) and (cid:98)t(cid:118) (cid:137)(cid:95)oll(cid:139)(cid:328)o(cid:137)ned (cid:118)(cid:134)(cid:48)(cid:118)(cid:98)d(cid:98)a(cid:117)(cid:98)e(cid:118)(cid:312) (cid:316)(cid:11)(cid:116)(cid:134)(cid:98)t(cid:139) pa(cid:117)tne(cid:117)(cid:118)(cid:317) (cid:117)e(cid:61)e(cid:117)(cid:118) to t(cid:95)e (cid:118)(cid:134)(cid:48)(cid:118)(cid:98)d(cid:98)a(cid:117)(cid:98)e(cid:118) t(cid:95)at (cid:137)e (cid:49)on(cid:118)ol(cid:98)date (cid:98)n o(cid:134)(cid:117) (cid:67)nan(cid:49)(cid:98)al (cid:118)tatement(cid:118) (cid:134)nde(cid:117) (cid:38)(cid:312)(cid:34)(cid:312) (cid:14)(cid:3)(cid:3)(cid:30) (cid:334)ot(cid:95)e(cid:117) t(cid:95)an (cid:137)(cid:95)oll(cid:139)(cid:328)o(cid:137)ned (cid:118)(cid:134)(cid:48)(cid:118)(cid:98)d(cid:98)a(cid:117)(cid:98)e(cid:118)(cid:335) and t(cid:95)(cid:98)(cid:117)d(cid:328)pa(cid:117)t(cid:139) e(cid:116)(cid:134)(cid:98)t(cid:139) p(cid:117)ov(cid:98)de(cid:117)(cid:118)(cid:312) (cid:30)lea(cid:118)e (cid:117)e(cid:61)e(cid:117) to (cid:316)(cid:25)on(cid:328)(cid:14)(cid:3)(cid:3)(cid:30) (cid:24)ea(cid:118)(cid:134)(cid:117)e(cid:118) and (cid:7)e(cid:117)ta(cid:98)n De(cid:67)n(cid:98)(cid:2236)on(cid:118)(cid:317) (cid:61)o(cid:117) de(cid:67)n(cid:98)(cid:2236)on(cid:118) o(cid:61) (cid:49)e(cid:117)ta(cid:98)n te(cid:117)m(cid:118) (cid:134)(cid:118)ed t(cid:95)(cid:117)o(cid:134)(cid:93)(cid:95)o(cid:134)t t(cid:95)(cid:98)(cid:118) (cid:117)epo(cid:117)t(cid:312) Overview Kennedy Wilson is a global real estate investment company. We own, operate and develop high-quality real estate across growing markets in the Western United States, the United Kingdom and Ireland with the ob(cid:102)ec(cid:2462)ve o(cid:61) genera(cid:2462)ng long-term risk ad(cid:102)usted returns (cid:61)or our shareholders and partners. (cid:3)s o(cid:61) December 31, 2022, we have 230 employees in 12 o(cid:76)ces primarily located throughout the United States, the United Kingdom, Ireland and Spain. (cid:3)s o(cid:61) December 31, 2022, our (cid:3)U(cid:24) stood at (cid:362)23.0 billion. (cid:36)he real estate that we hold in our global por(cid:127)olio consists primarily o(cid:61) mul(cid:2462)(cid:61)amily apartments (cid:336)(cid:404)(cid:405)(cid:1143)(cid:337) and commercial (cid:336)3(cid:406)(cid:1143)(cid:337) based on (cid:7)onsolidated (cid:25)OI and J(cid:40) (cid:25)OI. (cid:14)eographically, we (cid:61)ocus on the Western United States (cid:336)(cid:1141)1(cid:1143)(cid:337), the United Kingdom (cid:336)1(cid:1141)(cid:1143)(cid:337) and Ireland (cid:336)(cid:336)21(cid:1143)(cid:337). 2022 Highlights • For the year ended December 31, 2022, we had net income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. common shareholders o(cid:61) (cid:362)(cid:1141)(cid:403).(cid:1142) million as compared to net income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. common shareholders o(cid:61) (cid:362)313.2 million (cid:61)or the same period in 2021. • For the year ended December 31, 2022 we had (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) o(cid:61) (cid:362)(cid:404)(cid:406)1.(cid:404) million as compared to (cid:362)(cid:406)2(cid:405).(cid:406) million (cid:61)or the same period in 2021. • (cid:36)he decreases in net income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. common shareholders and (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) are due to higher gains on sale o(cid:61) real estate and higher (cid:61)air value gains on unconsolidated investments during the year ended December 31, 2021, o(cid:64)set by higher (cid:61)air value gains on interest rate deriva(cid:2462)ves and gains on e(cid:138)(cid:2462)nguishment o(cid:61) debt during the year ended December 31, 2022. • We recorded (cid:61)air value gains and unreali(cid:140)ed promotes (cid:336)aggregate o(cid:61) (cid:362)(cid:406)3.(cid:404) million(cid:337) during the year ended December 31, 2022, primarily due to (cid:61)air value gains associated with (cid:67)(cid:138)ed rate mortgages secured by our real estate assets, (cid:61)air value gains associated with interest rate deriva(cid:2462)ves that we held on property level mortgages that have increased in value with rising interest rates and increases in (cid:61)air value on our a(cid:64)ordable housing por(cid:127)olio (cid:40)HH. Results of Operations (cid:36)he (cid:61)ollowing tables summari(cid:140)e our results o(cid:61) opera(cid:2462)ons by segment (cid:61)or the years ended December 31, 2022 and 2021 and is intended to be help(cid:61)ul in understanding the year over year e(cid:138)plana(cid:2462)ons (cid:61)ollowing the tables. Our results o(cid:61) opera(cid:2462)ons (cid:61)or 2021 and 2020 compared to 2020 can be (cid:61)ound under Item (cid:405). (cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons, which is incorporated by re(cid:61)erence herein to our (cid:3)nnual (cid:33)eport on Form 10-K (cid:61)or the (cid:67)scal year ended December 31, 2021, (cid:67)led with the S(cid:11)(cid:7) on February 2(cid:404), 2022, and is available on the S(cid:11)(cid:7)(cid:317)s website at www.sec.gov and our Investor (cid:33)ela(cid:2462)ons website at www.ir.kennedywilson.com. (Dollars in millions) Revenue (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)Investment management (cid:61)ees (cid:1354)(cid:30)roperty services (cid:61)ees (cid:1354)Loans and other (cid:1354)(cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)(cid:1354)Income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)(cid:14)ain on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)Other income (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:1354)Net income (loss) (cid:1354)(cid:25)et income a(cid:130)ributable to the noncontrolling interests (cid:1354)(cid:30)re(cid:61)erred dividends (cid:1354)(cid:1354) Net income (loss) a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:1354)(cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (cid:3)dd back (cid:336)less(cid:337)(cid:313) (cid:1354)Interest e(cid:138)pense (cid:1354)(cid:14)ain on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) interest e(cid:138)pense included in (cid:1354)unconsolidated investments (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)included in unconsolidated investments (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) ta(cid:138)es included in unconsolidated (cid:1354)investments (cid:1354)Fees eliminated in consolida(cid:2462)on (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)re(cid:61)erred dividends (cid:1354)(cid:11)BI(cid:36)D(cid:3) ad(cid:102)ustments a(cid:130)ributable to noncontrolling interests(cid:336)1(cid:337) (cid:7)onsolidated (cid:7)o-Investments (cid:7)orporate (cid:36)otal Year Ended December 31, 2022 (cid:362) (cid:362) (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) — — — (cid:403)(cid:1142)1.(cid:1142) — — — 103.(cid:405) 1(cid:404)1.2 2(cid:406).(cid:404) (cid:403)1.(cid:404) — — 1(cid:403).(cid:405) 1(cid:405)2.(cid:406) (cid:403)0(cid:406).(cid:1142) (cid:336)12(cid:1142).2(cid:337) 2(cid:405).(cid:404) 20.(cid:1142) (cid:336)21.0(cid:337) (cid:405)(cid:403).(cid:1142) (cid:336)(cid:1142).2(cid:337) — (cid:1141)(cid:1141).(cid:1141) 12(cid:1142).2 (cid:336)2(cid:405).(cid:404)(cid:337) — 1(cid:405)2.(cid:406) — 21.0 — (cid:336)0.(cid:403)(cid:337) — — — (cid:362) — — (cid:403)(cid:403).(cid:1142) — 11.(cid:405) (cid:404)(cid:1141).(cid:404) 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) 1(cid:405)(cid:1142).(cid:403) — — — (cid:403)(cid:403).(cid:1141) — (cid:336)(cid:403).3(cid:337) 1(cid:403).(cid:1142) — (cid:404)(cid:404).1 — — — — 1(cid:405)(cid:406).(cid:1142) — — — — — 1.(cid:405) — 1.(cid:405) — — — — — — 2(cid:404).2 2(cid:406).0 — (cid:405).(cid:405) — (cid:1141)1.(cid:406) (cid:336)(cid:406)2.(cid:1141)(cid:337) — 1(cid:404).3 (cid:336)1(cid:404).2(cid:337) (cid:336)1(cid:404)2.(cid:405)(cid:337) — (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:362) (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) (cid:403)(cid:403).(cid:1142) 1.(cid:405) 11.(cid:405) (cid:404)(cid:403)0.0 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) 1(cid:405)(cid:1142).(cid:403) 103.(cid:405) 1(cid:404)1.2 2(cid:406).(cid:404) 111.3 2(cid:406).0 (cid:336)(cid:403).3(cid:337) 3(cid:405).2 1(cid:405)2.(cid:406) (cid:404)2(cid:1141).(cid:1142) (cid:336)220.(cid:1142)(cid:337) 2(cid:405).(cid:404) 3(cid:1141).1 (cid:336)3(cid:1141).2(cid:337) 101.(cid:406) (cid:336)(cid:1142).2(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) 1(cid:405)(cid:406).(cid:1142) (cid:336)1(cid:1142)1.(cid:1141)(cid:337) (cid:1141)(cid:403).(cid:1142) — — (cid:1141)0.2 — 3.(cid:404) — 2.(cid:405) 0.(cid:403) — — — (cid:406)2.(cid:1141) — — — — 1(cid:404).2 — — 2(cid:406).0 2(cid:1142).(cid:406) — 220.(cid:1142) (cid:336)2(cid:405).(cid:404)(cid:337) (cid:1141)0.2 1(cid:405)2.(cid:406) 3.(cid:404) 3(cid:1141).2 2.(cid:405) — 2(cid:406).0 2(cid:1142).(cid:406) — Adjusted EBITDA(1) (cid:362)3(cid:1141)0.(cid:1142) (cid:362)2(cid:403)(cid:1141).(cid:1141) (cid:362)(cid:336)1(cid:404).(cid:406)(cid:337) (cid:362) (cid:404)(cid:406)1.(cid:404) (1)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:318)(cid:25)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:24)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:7)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:9)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:319)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:3)(cid:55)(cid:102)(cid:134)(cid:118)(cid:124)(cid:59)(cid:55)(cid:2)(cid:11)(cid:6)(cid:17)(cid:36)(cid:9)(cid:3)(cid:314) 42 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 43 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:7)onsolidated (cid:7)o-Investments (cid:7)orporate (cid:36)otal Year Ended December 31, 2021 Kennedy Wilson Consolidated Financial Results: Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 (Dollars in millions) Revenue (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)Investment management (cid:61)ees (cid:1354)(cid:30)roperty services (cid:61)ees (cid:1354)Loans and other (cid:1354)(cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)(cid:1354)Income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)Loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)Other loss (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:1354)Net income (loss) (cid:1354)(cid:25)et income a(cid:130)ributable to the noncontrolling interests (cid:1354)(cid:30)re(cid:61)erred dividends (cid:1354)(cid:1354) Net income (loss) a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:1354)(cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (cid:3)dd back (cid:336)less(cid:337)(cid:313) (cid:1354)(cid:1354)Interest e(cid:138)pense (cid:1354)(cid:1354)Loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)(cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) interest e(cid:138)pense included in (cid:1354)unconsolidated investments (cid:1354)(cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)included in unconsolidated investments (cid:1354)(cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:1354)Fees eliminated in consolida(cid:2462)on (cid:1354)(cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:1354)(cid:30)re(cid:61)erred dividends (cid:1354)(cid:1354)(cid:11)BI(cid:36)D(cid:3) ad(cid:102)ustments a(cid:130)ributable to noncontrolling interests(cid:336)1(cid:337) (cid:362) 3(cid:406)0.(cid:404) (cid:362) 1(cid:405).1 — — — (cid:403)0(cid:405).(cid:1141) — — — (cid:403)12.(cid:405) 132.(cid:405) 12.(cid:405) (cid:1141)0.(cid:403) — — 1(cid:1142).(cid:404) 1(cid:1141)(cid:1141).3 3(cid:406)0.(cid:1141) (cid:336)11(cid:406).1(cid:337) (cid:336)1(cid:406).2(cid:337) (cid:336)(cid:403).(cid:405)(cid:337) (cid:336)23.0(cid:337) 2(cid:1141)3.(cid:405) (cid:336)(cid:1141).0(cid:337) — 2(cid:404)(cid:405).(cid:405) 11(cid:406).1 1(cid:406).2 — 1(cid:1141)(cid:1141).3 — 23.0 (cid:336)0.(cid:404)(cid:337) — — (cid:336)(cid:405).3(cid:337) — (cid:362) — 3(cid:404).3 — (cid:1142).(cid:1141) (cid:403)3.(cid:406) — (cid:362) 3(cid:406)0.(cid:404) 1(cid:405).1 — 3(cid:404).3 — 2.1 2.1 (cid:1142).(cid:1141) — 2.1 (cid:403)(cid:404)3.(cid:1141) 2(cid:405)1.1 11(cid:405).(cid:406) 3(cid:1142)(cid:406).0 — — — (cid:403)0.(cid:403) — (cid:403)2.0 (cid:1142).(cid:404) — (cid:406)0.(cid:406) — — — — 3(cid:403)2.0 — — — — — — — — 33.1 2(cid:1142).(cid:405) — (cid:1141).3 — (cid:1141)(cid:1142).1 (cid:336)(cid:405)3.3(cid:337) (cid:336)2(cid:1141).(cid:404)(cid:337) (cid:336)0.3(cid:337) (cid:336)103.2(cid:337) (cid:336)2(cid:1141)(cid:406).3(cid:337) — (cid:336)1(cid:405).2(cid:337) 2(cid:405)1.1 11(cid:405).(cid:406) 3(cid:1142)(cid:406).0 (cid:403)12.(cid:405) 132.(cid:405) 12.(cid:405) 133.(cid:406) 2(cid:1142).(cid:405) (cid:403)2.0 33.3 1(cid:1141)(cid:1141).3 (cid:404)(cid:403)(cid:406).(cid:1141) (cid:336)1(cid:406)2.(cid:403)(cid:337) (cid:336)(cid:403)(cid:404).(cid:405)(cid:337) (cid:336)(cid:404).0(cid:337) (cid:336)12(cid:1141).2(cid:337) 33(cid:1141).(cid:403) (cid:336)(cid:1141).0(cid:337) (cid:336)1(cid:405).2(cid:337) Financial Highlights (cid:14)(cid:3)(cid:3)(cid:30) net income to common shareholders was (cid:362)(cid:1141)(cid:403).(cid:1142) million and (cid:362)313.2 million (cid:61)or the years ended December 31, 2022 and 2021, respec(cid:2462)vely. (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) was (cid:362)(cid:404)(cid:406)1.(cid:404) million (cid:61)or the year ended December 31, 2022, a 3(cid:1141)(cid:1143) decrease (cid:61)rom (cid:362)(cid:406)2(cid:405).(cid:406) million (cid:61)or 2021. (cid:36)he decreases in (cid:14)(cid:3)(cid:3)(cid:30) net income to common shareholders and (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) are due to lower gains on sale o(cid:61) real estate and (cid:61)air value increases on our (cid:7)o-Investment assets. (cid:27)pera(cid:2236)onal Highlights Same store property highlights (cid:61)or the year ended December 31, 2022 include(cid:313) • For our 12,(cid:406)1(cid:405) same property market rate mul(cid:2462)(cid:61)amily units (cid:61)or the year ended December 31, 2022 as compared to the prior period(cid:313) • occupancy decreased 1(cid:1143) to (cid:406)(cid:403)(cid:1143) • net opera(cid:2462)ng income increased 11(cid:1143) • total revenues increased 10(cid:1143) • For our (cid:1142),01(cid:405) same property a(cid:64)ordable rate mul(cid:2462)(cid:61)amily units (cid:61)or the year ended December 31, 2022 as compared to the prior period(cid:313) • occupancy remained (cid:89)at at (cid:406)(cid:405)(cid:1143) • net opera(cid:2462)ng income increased (cid:1141)(cid:1143) • total revenues increased (cid:405)(cid:1143) 3(cid:403)2.0 (cid:336)2(cid:1142)(cid:1141).(cid:404)(cid:337) 313.2 31, 2022 as compared to the prior period(cid:313) • For our 3.(cid:1142) million square (cid:61)eet o(cid:61) same property o(cid:76)ce real estate (cid:61)or the year ended December — — (cid:403)0.2 — (cid:404).3 — 0.(cid:404) — — — (cid:405)3.3 2(cid:1141).(cid:404) — — — 103.2 — 2(cid:1142).(cid:405) 1(cid:405).2 — 1(cid:406)2.(cid:403) (cid:403)(cid:404).(cid:405) (cid:403)0.2 1(cid:1141)(cid:1141).3 (cid:404).3 12(cid:1141).2 — 2(cid:1142).(cid:405) 1(cid:405).2 (cid:336)(cid:405).3(cid:337) • occupancy remained (cid:89)at at (cid:406)(cid:404)(cid:1143) (cid:61)rom the same period in 2021 • net opera(cid:2462)ng income increased 1(cid:1143) • total revenues increased 1(cid:1143) • Investment (cid:36)ransac(cid:2462)ons • acquired (cid:362)1.(cid:406) billion o(cid:61) assets (cid:336)our share o(cid:61) which was (cid:362)(cid:406)(cid:1142)(cid:403).(cid:406) million(cid:337) and sold (cid:362)1.3 billion o(cid:61) assets (cid:336)our share o(cid:61) which was (cid:362)(cid:404)1(cid:1142).0 million(cid:337) during the year ended December 31, 2022. For the year ended December 31, 2021, we acquired (cid:362)2.(cid:406) billion o(cid:61) assets (cid:336)our share o(cid:61) which was (cid:362)1.(cid:403) billion(cid:337) and sold (cid:362)1.(cid:404) billion o(cid:61) assets (cid:336)our share o(cid:61) which was (cid:362)(cid:1142)11.(cid:406) million(cid:337). • originated (cid:362)(cid:406)(cid:405)0.0 million o(cid:61) loans (cid:336)our share o(cid:61) which was (cid:362)(cid:403)(cid:406).(cid:404) million(cid:337) and had (cid:362)(cid:403)12.(cid:1142) million o(cid:61) loans that were repaid (cid:336)our share o(cid:61) which was (cid:362)3(cid:404).(cid:404) million(cid:337) during the year ended December 31, 2022. For the year ended December 31, 2021, we originated (cid:362)1.2 billion o(cid:61) loans (cid:336)our share o(cid:61) which was (cid:362)(cid:406)(cid:403).3 million(cid:337) and had (cid:362)2(cid:404)3.1 million o(cid:61) loans that were repaid (cid:336)our share o(cid:61) which was (cid:362)3(cid:404).1 million(cid:337). Adjusted EBITDA(1) (cid:362) (cid:404)(cid:405)(cid:405).(cid:404) (cid:362) 3(cid:1142)(cid:1142).0 (cid:362) (cid:336)3(cid:405).(cid:1141)(cid:337) (cid:362) (cid:406)2(cid:405).(cid:406) (1)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:318)(cid:25)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:24)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:7)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:9)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:319)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:3)(cid:55)(cid:102)(cid:134)(cid:118)(cid:124)(cid:59)(cid:55)(cid:2)(cid:11)(cid:6)(cid:17)(cid:36)(cid:9)(cid:3)(cid:314) 44 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 45 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Foreign (cid:11)(cid:138)change(cid:330)(cid:33)esults of (cid:27)pera(cid:2236)ons (cid:3) signi(cid:67)cant por(cid:2462)on o(cid:61) our investments are in (cid:61)oreign currencies. We typically do not hedge (cid:61)uture opera(cid:2462)ons or cash (cid:89)ows so changes in (cid:61)oreign currency rates will have an impact on our results o(cid:61) opera(cid:2462)ons. We have included the table below to illustrate the impact these (cid:89)uctua(cid:2462)ons have had on our revenues, net income and (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) by applying the relevant e(cid:138)change rates (cid:61)or the prior period. (cid:30)lease re(cid:61)er to the sec(cid:2462)on (cid:2462)tled (cid:318)(cid:7)(cid:134)(cid:117)(cid:117)en(cid:49)(cid:139) R(cid:98)(cid:118)(cid:104) (cid:328) (cid:13)o(cid:117)e(cid:98)(cid:93)n (cid:7)(cid:134)(cid:117)(cid:117)en(cid:49)(cid:98)e(cid:118)(cid:319) in Item 3 (cid:61)or a discussion o(cid:61) risks rela(cid:2462)ng to (cid:61)oreign currency and our hedging strategy and the (cid:318)(cid:27)t(cid:95)e(cid:117) (cid:7)omp(cid:117)e(cid:95)en(cid:118)(cid:98)ve (cid:17)n(cid:49)ome(cid:319) sec(cid:2462)on below (cid:61)or a discussion o(cid:61) the balance sheet impact o(cid:61) (cid:61)oreign currency movements on our results o(cid:61) opera(cid:2462)ons. (cid:33)evenues (cid:25)et Income (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) (cid:33)evenues (cid:25)et Income (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3) (cid:7)onsolidated Year Ended December 31, 2022 (cid:36)otal (cid:7)o-Investment (cid:362) (cid:336)20.(cid:1141)(cid:337) (cid:336)(cid:405).(cid:1142)(cid:337) (cid:336)21.(cid:406)(cid:337) (cid:336)(cid:403)(cid:337)(cid:1143) (cid:362) (cid:336)12(cid:337)(cid:1143) (cid:336)(cid:403)(cid:337)(cid:1143) (cid:336)1.1(cid:337) (cid:336)(cid:1141).0(cid:337) (cid:336)(cid:1142).2(cid:337) — (cid:1143) (cid:336)(cid:406)(cid:337)(cid:1143) (cid:336)1(cid:337)(cid:1143) (cid:362) (cid:336)21.(cid:405)(cid:337) (cid:336)13.(cid:1142)(cid:337) (cid:336)30.1(cid:337) (cid:336)(cid:403)(cid:337)(cid:1143) (cid:336)21(cid:337)(cid:1143) (cid:336)(cid:404)(cid:337)(cid:1143) (cid:7)onsolidated Year Ended December 31, 2021 (cid:36)otal (cid:7)o-Investment (cid:362) 0.(cid:1142) (cid:336)3.2(cid:337) (cid:336)2.2(cid:337) —(cid:1143) (cid:336)1(cid:337)(cid:1143) — (cid:1143) (cid:362) (cid:336)0.(cid:403)(cid:337) (cid:336)1(cid:404).(cid:1141)(cid:337) (cid:336)1(cid:1141).2(cid:337) — (cid:1143) (cid:336)(cid:404)(cid:337)(cid:1143) (cid:336)2(cid:337)(cid:1143) (cid:362) 0.(cid:403) (cid:336)1(cid:1142).(cid:1142)(cid:337) (cid:336)1(cid:1142).(cid:403)(cid:337) — (cid:1143) (cid:336)(cid:1141)(cid:337)(cid:1143) (cid:336)2(cid:337)(cid:1143) Consolidated (cid:30)or(cid:127)olio Segment (cid:33)ental income was (cid:362)(cid:403)3(cid:403).(cid:406) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)3(cid:406)0.(cid:404) million (cid:61)or the same period in 2021. (cid:36)he (cid:362)(cid:403)(cid:403).(cid:403) million increase is primarily due to the acquisi(cid:2462)on o(cid:61) o(cid:76)ce proper(cid:2462)es in the United Kingdom and mul(cid:2462)(cid:61)amily proper(cid:2462)es in the Western United States. (cid:3)ddi(cid:2462)onally, we had a (cid:362)(cid:406).(cid:403) million reduc(cid:2462)on to rental income (cid:61)or the year ended December 31, 2022, as we assessed the (cid:61)ull collec(cid:2462)on o(cid:61) these rents as improbable, primarily driven by the impact o(cid:61) the (cid:7)O(cid:40)ID-1(cid:406) pandemic. (cid:36)his reduc(cid:2462)on was o(cid:64)set by the cash collec(cid:2462)on o(cid:61) (cid:362)(cid:405).(cid:404) million we received during the year ended December 31, 2022 on previously reserved receivables, which increased rental income. We had a (cid:362)12.(cid:406) million reduc(cid:2462)on to rental income (cid:61)or the year ended December 31, 2021, as we assessed the (cid:61)ull collec(cid:2462)on o(cid:61) these rents as improbable, primarily driven by the impact o(cid:61) the (cid:7)O(cid:40)ID-1(cid:406) pandemic. We received (cid:362)11.(cid:405) million on previously reserved receivables during the year ended December 31, 2021. (cid:36)he cash collec(cid:2462)ons were primarily (cid:61)rom governmental assistance programs (cid:61)or mul(cid:2462)(cid:61)amily proper(cid:2462)es and collec(cid:2462)ons o(cid:61) past due receivables at retail proper(cid:2462)es. Hotel income was (cid:362)(cid:403)(cid:1141).(cid:406) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)1(cid:405).1 million (cid:61)or 2021. (cid:36)he (cid:362)2(cid:406).(cid:1142) million increase is due to improved opera(cid:2462)ons o(cid:61) the Shelbourne Hotel during the year ended December 31, 2022, as (cid:7)O(cid:40)ID-1(cid:406) related restric(cid:2462)ons in Ireland have eased. (cid:14)ain on sale o(cid:61) real estate, net was (cid:362)103.(cid:405) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)(cid:403)12.(cid:405) million in the prior period. (cid:36)he gains recogni(cid:140)ed during the year ended December 31, 2022 related to the sale o(cid:61) non-core retail assets in the United Kingdom and the Western United States and a mul(cid:2462)(cid:61)amily property in the Western United States. During the year ended December 31, 2022, we also recorded a gain o(cid:61) (cid:362)(cid:404)(cid:1141).(cid:405) million in connec(cid:2462)on with the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) interest in a previously wholly-owned mul(cid:2462)(cid:61)amily asset to a strategic partner and the resul(cid:2462)ng deconsolida(cid:2462)on o(cid:61) the investment (cid:61)rom the (cid:7)ompany(cid:317)s (cid:67)nancial statements. For the year ended December 31, 2021, gain on sale o(cid:61) real estate, net primarily related to the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) interest in nine o(cid:61) our previously wholly- owned assets to a global ins(cid:2462)tu(cid:2462)onal partner to commence our J(cid:40) with such partner (cid:336)the (cid:318)(cid:24)F seed por(cid:127)olio(cid:319)(cid:337) and resul(cid:2462)ng deconsolida(cid:2462)on o(cid:61) the assets that made up the (cid:24)F seed por(cid:127)olio and the sale o(cid:61) Friars Bridge (cid:7)ourt, an o(cid:76)ce building in the United Kingdom. Included in the gain on sale o(cid:61) real estate, net (cid:61)or December 31, 2022 is an impairment loss o(cid:61) (cid:362)13.3 million on non-core retail and o(cid:76)ce proper(cid:2462)es in the United Kingdom that were being prepared (cid:61)or sale and have carrying values above an(cid:2462)cipated sales prices. For the year ended December 31, 2021, we recorded an impairment loss o(cid:61) (cid:362)20.(cid:406) million on two retail proper(cid:2462)es in the United Kingdom and a residen(cid:2462)al property in the Western United States. (cid:33)ental e(cid:138)penses increased to (cid:362)1(cid:404)1.2 million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)132.(cid:405) million (cid:61)or the year ended December 31, 2021. (cid:36)he increase was due to new acquisi(cid:2462)ons o(cid:61) o(cid:76)ce proper(cid:2462)es in the United Kingdom and mul(cid:2462)(cid:61)amily proper(cid:2462)es in the Western United States as discussed above. Hotel e(cid:138)penses increased to (cid:362)2(cid:406).(cid:404) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)12.(cid:405) million (cid:61)or the year ended December 31, 2021, and is due to an increased level o(cid:61) ac(cid:2462)vity and opera(cid:2462)ons at the Shelbourne Hotel during 2022 as described above. (cid:7)ompensa(cid:2462)on and related e(cid:138)penses decreased to (cid:362)(cid:403)1.(cid:404) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)(cid:1141)0.(cid:403) million (cid:61)or the year ended December 31, 2021 as a result o(cid:61) a more challenging global real estate environment with rising rates in addi(cid:2462)on to lower (cid:3)d(cid:102)usted (cid:11)BI(cid:36)D(cid:3), (cid:61)or the year ended December 31, 2022 compared to the prior period which drove a lower discre(cid:2462)onary bonus compensa(cid:2462)on accrual. (cid:14)eneral and administra(cid:2462)ve e(cid:138)penses decreased to (cid:362)1(cid:403).(cid:405) million (cid:61)or year the ended December 31, 2022 as compared to (cid:362)1(cid:1142).(cid:404) million (cid:61)or the year ended December 31, 2021. While overall general and administra(cid:2462)ve e(cid:138)penses increased during the year there was a decrease in indirect costs associated with the (cid:7)onsolidated segment in the year the ended December 31, 2022. Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on increased to (cid:362)1(cid:405)2.(cid:406) million as compared to (cid:362)1(cid:1141)(cid:1141).3 million (cid:61)or the year ended December 31, 2021. (cid:36)he increase was due to new acquisi(cid:2462)ons o(cid:61) o(cid:76)ce proper(cid:2462)es in the United Kingdom and mul(cid:2462)(cid:61)amily proper(cid:2462)es in the Western United States as discussed above. Interest e(cid:138)pense was (cid:362)12(cid:1142).2 million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)11(cid:406).1 million (cid:61)or the year ended December 31, 2021. (cid:36)he increase is due to higher mortgage loan balance in the current year primarily due to consolidated mul(cid:2462)(cid:61)amily acquisi(cid:2462)ons and increases in rates on variable and new (cid:67)(cid:138)ed rate loans. (cid:14)ain on early e(cid:138)(cid:2462)nguishment o(cid:61) debt was (cid:362)2(cid:405).(cid:404) million (cid:61)or the year ended December 31, 2022 as compared to a loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt o(cid:61) (cid:362)1(cid:406).2 million in the same period in 2021. During the year ended December 31, 2022 we had gains associated with KW(cid:11)(cid:317)s cash tender o(cid:64)er (cid:61)or up to (cid:360)1(cid:404)0 million in aggregate nominal amount o(cid:61) the KW(cid:11) (cid:25)otes, which resulted in acceptance o(cid:61) all o(cid:61) the (cid:360)(cid:405)(cid:404).0 million (cid:336)appro(cid:138)imately (cid:362)(cid:1142)0.3 million based on December 31, 2022 rates(cid:337) in aggregate nominal amount o(cid:61) KW(cid:11) (cid:25)otes validly tendered pursuant to the tender o(cid:64)er (cid:61)or a purchase price equal to (cid:1142)2(cid:1143) o(cid:61) the nominal amount o(cid:61) the KW(cid:11) (cid:25)otes, and a mortgage on a retail property in the United Kingdom. With respect to these instruments, we e(cid:138)(cid:2462)nguished certain amounts at discounts to their carrying value resul(cid:2462)ng in gains on e(cid:138)(cid:2462)nguishment. (cid:36)hese gains were o(cid:64)set by prepayment penal(cid:2462)es on mortgage loans 46 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 47 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) that were re(cid:67)nanced during the year. In the year ended December 31, 2021, we incurred a (cid:362)1(cid:1141).3 million loss associated with the redemp(cid:2462)on o(cid:61) the KW(cid:11) Bonds and the remaining balance was related to prepayment penal(cid:2462)es on the re(cid:67)nancing o(cid:61) three mul(cid:2462)(cid:61)amily property level mortgages. We also incurred a loss associated with the par(cid:2462)al tender o(cid:64)er and subsequent redemp(cid:2462)on o(cid:61) the total balance o(cid:61) the 202(cid:403) (cid:25)otes during the year ended December 31, 2021 as e(cid:138)plained in the descrip(cid:2462)on o(cid:61) the (cid:318)(cid:7)orporate(cid:319) segment below. Other income was (cid:362)20.(cid:1142) million (cid:61)or the year ended December 31, 2022 as compared to other loss o(cid:61) (cid:362)(cid:403).(cid:405) million (cid:61)or the year ended December 31, 2021. We had mark to market (cid:61)air value gains o(cid:61) (cid:362)2(cid:403).0 million on the (cid:7)ompany(cid:317)s undesignated interest rate caps and swap contracts held by KW(cid:11) and consolidated mul(cid:2462)(cid:61)amily proper(cid:2462)es in the year ended December 31, 2022. (cid:30)lease also see (cid:30)art I. Item 1. (cid:318)Fair (cid:40)alue Investments(cid:319) (cid:61)or addi(cid:2462)onal details. We have entered into these undesignated contracts to hedge against rising interest rates. (cid:36)he gains (cid:61)rom the interest rate contracts were o(cid:64)set by reali(cid:140)ed (cid:61)oreign currency e(cid:138)change losses o(cid:61) (cid:362)2.0 million. Other loss (cid:61)or the year ended December 31, 2021 was due to reali(cid:140)ed (cid:61)oreign currency e(cid:138)change losses. Co-Investment Portfolio Segment Investment Management On our (cid:7)o-Investment (cid:30)or(cid:127)olio assets, we receive asset management (cid:61)ees (cid:61)or managing assets on behal(cid:61) o(cid:61) our partners. During the year ended December 31, 2022, (cid:61)ees recorded through revenues were (cid:362)(cid:403)(cid:403).(cid:1142) million as compared to (cid:362)3(cid:404).3 million (cid:61)or the same period in 2021. During the year ended December 31, 2022, we had higher base management (cid:61)ees as a result o(cid:61) having more (cid:3)U(cid:24) in our (cid:7)o-Investment (cid:30)or(cid:127)olio mainly (cid:61)rom growth in our (cid:11)uropean industrial pla(cid:127)orm and Western United States mul(cid:2462)(cid:61)amily separate accounts. (cid:36)here was also an increase in (cid:3)U(cid:24) in our global real estate debt pla(cid:127)orm. (cid:30)er(cid:61)ormance alloca(cid:2462)ons are recorded as part o(cid:61) income (cid:61)rom unconsolidated investments and discussed below. Loans and other income increased to (cid:362)11.(cid:405) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)(cid:1142).(cid:1141) million (cid:61)or the same period in 2021. (cid:36)hese amounts represent interest income on our share o(cid:61) loans within our global real estate debt pla(cid:127)orm and the increase was due to the growth o(cid:61) the pla(cid:127)orm over the last year. (cid:11)(cid:138)penses decreased to (cid:362)(cid:404)(cid:404).1 million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)(cid:406)0.(cid:406) million (cid:61)or the same period in 2021, primarily due to a (cid:362)(cid:403)(cid:1141).3 million decrease to per(cid:61)ormance alloca(cid:2462)on e(cid:138)pense. (cid:30)er(cid:61)ormance alloca(cid:2462)on e(cid:138)pense is a percentage o(cid:61) accrued per(cid:61)ormance alloca(cid:2462)ons which declined over the year ended December 31, 2022 due to lower (cid:61)air values on separate accounts and commingled (cid:61)unds that have per(cid:61)ormance alloca(cid:2462)on sharing programs. Co(cid:328)Investment (cid:27)pera(cid:2236)ons In addi(cid:2462)on to our management o(cid:61) investments in the (cid:7)o-Investment (cid:30)or(cid:127)olio, we have ownership interests in the proper(cid:2462)es. (cid:36)he table below represents a breakout o(cid:61) the amounts within income (cid:61)rom unconsolidated investments which represents our share o(cid:61) underlying property investments in the (cid:7)o-Investment (cid:30)or(cid:127)olio assets and any per(cid:61)ormance alloca(cid:2462)ons rela(cid:2462)ng to our management o(cid:61) these proper(cid:2462)es (cid:61)or the year ended December 31, 2022 and the year ended December 31, 2021(cid:313) Revenue (cid:1354)(cid:33)ental (cid:1354)Sale o(cid:61) real estate (cid:1354)(cid:1354)Total revenue (cid:1354)Fair value(cid:326)other ad(cid:102)ustments (cid:1354)(cid:14)ain (cid:336)loss(cid:337) on sale o(cid:61) real estate, net (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons Expenses (cid:1354)(cid:33)ental (cid:1354)(cid:7)ost o(cid:61) real estate sold (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)Other loss (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es Year Ended December 31, 2022 2021 (cid:362) 22(cid:403).0 (cid:404)2.0 2(cid:405)(cid:1141).0 110.2 (cid:403).(cid:406) (cid:336)21.1(cid:337) (cid:1141)(cid:1141).(cid:403) (cid:403)0.(cid:405) 3.(cid:1142) 110.(cid:406) (cid:336)(cid:1141)0.1(cid:337) (cid:336)1(cid:405).(cid:406)(cid:337) (cid:336)2.(cid:405)(cid:337) (cid:362) 1(cid:405)(cid:405).(cid:1141) 3(cid:406).(cid:404) 21(cid:405).1 210.(cid:1141) (cid:336)3.1(cid:337) 11(cid:405).(cid:406) (cid:404)3.2 3(cid:1141).(cid:1142) (cid:404).(cid:1141) (cid:406)(cid:404).(cid:1141) (cid:336)(cid:403)0.0(cid:337) (cid:336)1(cid:405).(cid:406)(cid:337) — (cid:1354)(cid:1354)Income from unconsolidated investments (cid:362) 1(cid:405)(cid:1142).(cid:403) (cid:362) 3(cid:1142)(cid:406).0 (cid:36)he decrease in income (cid:61)rom unconsolidated investments is primarily due to the (cid:61)ollowing(cid:313) (cid:40)alua(cid:2462)ons o(cid:61) our market rate mul(cid:2462)(cid:61)amily assets globally and industrial assets in the United Kingdom were at historically high levels at the end o(cid:61) 2021 and into the (cid:67)rst quarter o(cid:61) 2022, and we have started to see valua(cid:2462)ons pull back slightly with cap rate e(cid:138)pansion, primarily as a result o(cid:61) increased borrowing rates, which led to (cid:61)air value losses on real estate during the year ended December 31, 2022. We also had (cid:61)air value (cid:61)oreign e(cid:138)change losses, net o(cid:61) any hedges on our (cid:61)oreign (cid:61)air value investments as the euro and the (cid:14)B(cid:30) were at historically low levels against the U.S. Dollar. (cid:36)hese (cid:61)air value losses were o(cid:64)set by (cid:61)air value increases on our a(cid:64)ordable mul(cid:2462)(cid:61)amily proper(cid:2462)es in our (cid:40)HH pla(cid:127)orm due to increased (cid:25)OI at the proper(cid:2462)es driven by rental increases and the stabili(cid:140)a(cid:2462)on o(cid:61) assets that recently completed development. Fair value losses on real estate were also o(cid:64)set by (cid:61)air value gains on our (cid:67)(cid:138)ed rate mortgages that are secured by certain proper(cid:2462)es. (cid:36)his was primarily related to our long term (cid:67)(cid:138)ed rate debt having lower rates than the current market rates as a result o(cid:61) higher base rates and spreads in today(cid:317)s (cid:67)nancing market driven by recent rate increases implemented by the Federal (cid:33)eserve and the (cid:11)uropean (cid:7)entral Bank (cid:336)(cid:318)(cid:11)(cid:7)B(cid:319)(cid:337). We also had (cid:61)air value gains associated with interest rate deriva(cid:2462)ves held by proper(cid:2462)es on variable rate mortgages which have increased in value with rising interest rates. Our investment in (cid:40)HH also had signi(cid:67)cant (cid:61)air value gains (cid:61)or the year ended December 31, 2022 due to gains on its (cid:67)(cid:138)ed rate property loans and increases in (cid:25)OI at the proper(cid:2462)es due to rental increases. (cid:40)HH does not have a per(cid:61)ormance alloca(cid:2462)on structure associated with the investment, and there(cid:61)ore, such gains did not contribute to per(cid:61)ormance alloca(cid:2462)ons. (cid:30)lease also see (cid:30)art I. Item 1. (cid:318)Fair (cid:40)alue Investments(cid:319) (cid:61)or addi(cid:2462)onal details. During the year ended December 31, 2022, we recorded a (cid:362)21.1 million decrease in the accrual (cid:61)or per(cid:61)ormance alloca(cid:2462)ons rela(cid:2462)ng to our commingled (cid:61)unds and certain separate account investments due to declines in (cid:61)air value o(cid:61) the applicable investments. During the year ended December 31, 2022, we had reali(cid:140)ed per(cid:61)ormance (cid:61)ees o(cid:61) (cid:362)(cid:1141).(cid:1142) million rela(cid:2462)ng to the sale o(cid:61) two mul(cid:2462)(cid:61)amily 48 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 49 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) proper(cid:2462)es in the Western United States, o(cid:61) which the (cid:7)ompany paid (cid:362)1.2 million o(cid:61) per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on to employees (cid:61)or per(cid:61)ormance alloca(cid:2462)ons that were reali(cid:140)ed during the period. Increases in rental income and rental e(cid:138)penses were a result o(cid:61) an increase in assets in the (cid:7)o-Investment (cid:30)or(cid:127)olio due to new acquisi(cid:2462)ons and the deconsolida(cid:2462)on o(cid:61) (cid:24)F seed por(cid:127)olio in June 2021. Interest e(cid:138)pense increased in encumbered assets, primarily due to increasing interest rates in 2022 as well as higher loan balances due to recent acquisi(cid:2462)ons in the (cid:7)o-Investment por(cid:127)olio. (cid:36)he increase in sale o(cid:61) real estate and cost o(cid:61) real estate sold was due to higher sales o(cid:61) homes in our Kohanaiki residen(cid:2462)al community in Hawaii during the year ended December 31, 2022. During the year ended December 31, 2021, we had (cid:61)air value gains primarily (cid:61)rom increases in (cid:25)OI as a result o(cid:61) signi(cid:67)cant increases in market rents and cap rate compression in our market rate (cid:61)air value mul(cid:2462)(cid:61)amily assets in the Western United States. (cid:36)he cap rate compression was supported by recent transac(cid:2462)ons entered into by the (cid:7)ompany as well as third party transac(cid:2462)onal and market data. We also had (cid:61)air value gains due to resyndica(cid:2462)ons and cap rate compression in our (cid:40)HH por(cid:127)olio and (cid:61)air value increases in our retained unconsolidated investment interest in the (cid:44)onda business (cid:61)rom (cid:24)eyers (cid:33)esearch a(cid:91)er our sale o(cid:61) that business in 201(cid:1142). (cid:36)here were higher gains (cid:61)rom sales on homes at our Kohanaiki residen(cid:2462)al community in Hawaii (cid:61)or the year ended December 31, 2021 due to an increased volume o(cid:61) sales. During the year ended December 31, 2021, we had a (cid:362)11(cid:405).(cid:406) million increase in the accrual (cid:61)or per(cid:61)ormance (cid:61)ees rela(cid:2462)ng to our commingled (cid:61)unds and a separate account investment. (cid:36)he increase in the accrual was due to higher (cid:61)air values on market rate mul(cid:2462)(cid:61)amily proper(cid:2462)es as discussed above and UK industrial assets in commingled (cid:61)unds and separate account investments that we manage. We had (cid:362)(cid:406).(cid:1141) million o(cid:61) reali(cid:140)ed per(cid:61)ormance (cid:61)ees collected during the year ended December 31, 2021 (cid:61)rom a separate account that held o(cid:76)ce proper(cid:2462)es in the Sea(cid:130)le area that (cid:61)ully disposed o(cid:61) all its assets in the third quarter o(cid:61) 2021. Corporate (cid:11)(cid:138)penses (cid:61)or the year ended December 31, 2022 were (cid:362)(cid:1141)1.(cid:406) million as compared to (cid:362)(cid:1141)(cid:1142).1 million (cid:61)or the year ended December 31, 2021. (cid:36)he decrease in e(cid:138)penses is primarily due to lower discre(cid:2462)onary bonus compensa(cid:2462)on e(cid:138)pense. Interest e(cid:138)pense was (cid:362)(cid:406)2.(cid:1141) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)(cid:405)3.3 million (cid:61)or the same period in 2021. (cid:36)he increase was due to higher corporate debt balances (cid:61)or the year ended December 31, 2022, primarily (cid:61)rom higher balances on our revolving credit (cid:61)acility and higher average balance on our unsecured senior notes over the course o(cid:61) the year. (cid:36)he (cid:362)2(cid:1141).(cid:404) million loss on the early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:61)or the year ended December 31, 2021 was due to the e(cid:138)(cid:2462)nguishment o(cid:61) the 202(cid:403) (cid:25)otes and resul(cid:2462)ng premium and write o(cid:64) o(cid:61) capitali(cid:140)ed debt costs and debt discount with no comparable ac(cid:2462)vity in the year ended December 31, 2022. Other income increased to (cid:362)1(cid:404).3 million (cid:61)or the year ended December 31, 2022 as compared to other loss o(cid:61) (cid:362)0.3 million (cid:61)or the same period in 2021. We had mark to market (cid:61)air value gains on interest rate caps and swaps that the (cid:7)ompany holds to hedge its variable rate interest rate e(cid:138)posure during the year ended December 31, 2022. Our provision (cid:61)or income ta(cid:138)es was (cid:362)3(cid:1141).2 million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)12(cid:1141).2 million (cid:61)or the year ended December 31, 2021. (cid:36)he decrease in income ta(cid:138) e(cid:138)pense was primarily a(cid:130)ributable to a (cid:362)32(cid:403).(cid:403) million decrease in worldwide pre-ta(cid:138) book income in 2022 as compared to 2021. Our e(cid:64)ec(cid:2462)ve ta(cid:138) rate (cid:61)or the year ended December 31, 2022 was 2(cid:1141).2(cid:1143) as compared to an e(cid:64)ec(cid:2462)ve ta(cid:138) rate o(cid:61) 2(cid:405).3(cid:1143) in 2021. Signi(cid:67)cant items impac(cid:2462)ng the ta(cid:138) provision include(cid:313) ta(cid:138) charges associated with non-deduc(cid:2462)ble e(cid:138)ecu(cid:2462)ve compensa(cid:2462)on under (cid:7)ode Sec(cid:2462)on 1(cid:1141)2(cid:336)m(cid:337) and non-deduc(cid:2462)ble interest e(cid:138)pense in the United Kingdom, and changes in our es(cid:2462)mated state e(cid:64)ec(cid:2462)ve ta(cid:138) rate, o(cid:64)set by ta(cid:138) bene(cid:67)ts (cid:61)rom the par(cid:2462)al release o(cid:61) the valua(cid:2462)on allowance against our de(cid:61)erred ta(cid:138) assets associated with our e(cid:138)cess ta(cid:138) basis in UK real estate assets and our e(cid:138)cess ta(cid:138) basis in our investment in KW(cid:11). During the year ended December 31, 2022, our net de(cid:61)erred ta(cid:138) asset (cid:336)and associated valua(cid:2462)on allowance(cid:337) related to our e(cid:138)cess ta(cid:138) basis in the legacy UK real estate assets increased due to unreali(cid:140)ed (cid:61)oreign currency losses that is not currently deduc(cid:2462)ble. In addi(cid:2462)on, the de(cid:61)erred ta(cid:138) asset (cid:336)and associated valua(cid:2462)on allowance(cid:337) related to our investment in KW(cid:11) decreased due to book gains but ta(cid:138) losses reali(cid:140)ed on the sale o(cid:61) real estate and (cid:61)rom book (cid:61)air value gains not recogni(cid:140)ed (cid:61)or ta(cid:138). (cid:36)he e(cid:64)ec(cid:2462)ve ta(cid:138) rate (cid:61)or 2022 e(cid:138)ceeded the statutory ta(cid:138) rate due to non- deduc(cid:2462)ble e(cid:138)ecu(cid:2462)ve compensa(cid:2462)on in the United States and non-deduc(cid:2462)ble interest e(cid:138)pense in the United Kingdom. (cid:30)re(cid:61)erred dividends were (cid:362)2(cid:1142).(cid:406) million (cid:61)or the year ended December 31, 2022 as compared to (cid:362)1(cid:405).2 million (cid:61)or the year ended December 31, 2021. (cid:36)he increase was due to the issuance o(cid:61) (cid:362)300 million o(cid:61) our Series B cumula(cid:2462)ve perpetual pre(cid:61)erred stock to a(cid:76)liates o(cid:61) Fair(cid:61)a(cid:138) Financial Holdings Limited (cid:336)collec(cid:2462)vely, (cid:318)Fair(cid:61)a(cid:138)(cid:319)(cid:337) during 2022. Comprehensive Income (cid:36)he two ma(cid:102)or components that drive the change in other comprehensive income are the changes in (cid:61)oreign currency rates and the gains or loss o(cid:61) any associated (cid:61)oreign currency hedges. (cid:30)lease re(cid:61)er to the sec(cid:2462)on (cid:2462)tled (cid:318)(cid:7)(cid:134)(cid:117)(cid:117)en(cid:49)(cid:139) R(cid:98)(cid:118)(cid:104) (cid:328) (cid:13)o(cid:117)e(cid:98)(cid:93)n (cid:7)(cid:134)(cid:117)(cid:117)en(cid:49)(cid:98)e(cid:118)(cid:319) in Item 3 (cid:61)or a discussion o(cid:61) our risks rela(cid:2462)ng to (cid:61)oreign currency and our hedging strategy. Below is a table that details the ac(cid:2462)vity (cid:61)or the years ended December 31, 2022 and 2021. (Dollars in millions) (cid:25)et income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. common shareholders Unreali(cid:140)ed (cid:61)oreign currency transla(cid:2462)on loss, net o(cid:61) noncontrolling interests and ta(cid:138) (cid:3)mounts reclassi(cid:67)ed out o(cid:61) accumulated other comprehensive loss during the period Unreali(cid:140)ed (cid:61)oreign currency deriva(cid:2462)ve contract gain, net o(cid:61) noncontrolling interests and ta(cid:138) Unreali(cid:140)ed gain on interest rate swaps, net o(cid:61) ta(cid:138) Year Ended December 31, 2021 2022 (cid:362) (cid:1141)(cid:403).(cid:1142) (cid:336)(cid:1141)(cid:1142).(cid:405)(cid:337) (cid:336)0.(cid:1142)(cid:337) 23.(cid:403) (cid:404).(cid:1141) (cid:362) 313.2 (cid:336)(cid:404)(cid:405).(cid:404)(cid:337) 2.2 (cid:404)(cid:1141).2 3.2 (cid:7)omprehensive income a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (cid:362) 2(cid:403).3 (cid:362) 31(cid:405).3 50 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 51 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:36)he main currencies that the (cid:7)ompany has e(cid:138)posure to are the euro and pound sterling. (cid:36)he table below represents the change in rates over the years ended December 31, 2022 and 2021 as compared to the U.S. Dollar(cid:313) (cid:11)uro (cid:14)B(cid:30) Year Ended December 31, 2022 (cid:336)(cid:404).(cid:406)(cid:337)(cid:1143) (cid:336)10.(cid:1141)(cid:337)(cid:1143) 2021 (cid:336)(cid:1141).(cid:406)(cid:337)(cid:1143) (cid:336)1.1(cid:337)(cid:1143) (cid:7)omprehensive income, net o(cid:61) ta(cid:138)es and noncontrolling interests, (cid:61)or the year ended December 31, 2022 and 2021 was (cid:362)2(cid:403).3 million and (cid:362)31(cid:405).3 million, respec(cid:2462)vely. (cid:36)he (cid:7)ompany e(cid:138)perienced net unreali(cid:140)ed losses on (cid:61)oreign currency through other comprehensive income (cid:61)or the period due to the (cid:11)U(cid:33) and (cid:14)B(cid:30) weakening against the U.S. Dollar. Unreali(cid:140)ed hedge gains were driven by hedges that the (cid:7)ompany has on its (cid:14)B(cid:30)-denominated investments. (cid:36)he (cid:7)ompany also has interest rate swap contracts to swap some o(cid:61) its variable rate loans to (cid:67)(cid:138)ed rate terms, which resulted in unreali(cid:140)ed gains on interest rate swaps (cid:61)rom the reversal o(cid:61) prior losses as the contracts get closer to their maturity date. Liquidity and Capital Resources Our liquidity and capital resources requirements include acquisi(cid:2462)ons o(cid:61) real estate and real estate related assets, (cid:61)unding development pro(cid:102)ects, capital e(cid:138)penditures (cid:61)or consolidated real estate and unconsolidated investments, working capital needs, interest and principal payments on our debt and dividends to our common and pre(cid:61)erred shareholders. We (cid:67)nance these ac(cid:2462)vi(cid:2462)es with internally generated (cid:61)unds through general opera(cid:2462)ons including rental income, asset sales, borrowings under our revolving line o(cid:61) credit, sales o(cid:61) equity (cid:336)common and pre(cid:61)erred(cid:337) and debt securi(cid:2462)es and cash out re(cid:67)nancings to the e(cid:138)tent they are available and (cid:67)t within our overall por(cid:127)olio leverage strategy. Our investments in real estate are typically (cid:67)nanced with equity (cid:61)rom our balance sheet, third party equity and mortgage loans secured by that real estate. (cid:36)hese mortgage loans are generally nonrecourse in that, in the event o(cid:61) de(cid:61)ault, recourse will be limited to the mortgaged property serving as collateral, sub(cid:102)ect to limited customary e(cid:138)cep(cid:2462)ons. In some cases, we guarantee a por(cid:2462)on o(cid:61) the loan related to a consolidated property or an unconsolidated investment, usually un(cid:2462)l some condi(cid:2462)on, such as comple(cid:2462)on o(cid:61) construc(cid:2462)on or leasing or certain net opera(cid:2462)ng income criteria, has been met. We do not e(cid:138)pect these guarantees to materially a(cid:64)ect liquidity or capital resources. (cid:30)lease re(cid:61)er to the sec(cid:2462)on (cid:2462)tled (cid:318)(cid:27)(cid:64) (cid:6)alan(cid:49)e (cid:34)(cid:95)eet (cid:3)(cid:117)(cid:117)an(cid:93)ement(cid:118)(cid:319) (cid:61)or (cid:61)urther in(cid:61)orma(cid:2462)on. Our short-term liquidity requirements primarily consist o(cid:61) opera(cid:2462)ng e(cid:138)penses and other e(cid:138)penditures associated with our proper(cid:2462)es, dividend payments to our common and pre(cid:61)erred shareholders, interest on our unsecured corporate debt, development, redevelopment and capital e(cid:138)penditures and, poten(cid:2462)ally, share repurchases and acquisi(cid:2462)ons. Our short-term liquidity requirements primarily consist o(cid:61) opera(cid:2462)ng e(cid:138)penses and other e(cid:138)penditures associated with our proper(cid:2462)es, dividend payments to our common and pre(cid:61)erred shareholders, interest on our unsecured corporate debt, development, redevelopment and capital e(cid:138)penditures and, poten(cid:2462)ally, share repurchases and acquisi(cid:2462)ons. We currently e(cid:138)pect to meet our short-term liquidity requirements through our e(cid:138)is(cid:2462)ng cash and cash equivalents plus capital generated (cid:61)rom our investments, and sales o(cid:61) real estate as well as availability on our current revolving lines o(cid:61) credit. Our need to raise (cid:61)unds (cid:61)rom (cid:2462)me to (cid:2462)me to meet our capital requirements will depend on many (cid:61)actors, including the success and pace o(cid:61) the implementa(cid:2462)on o(cid:61) our strategy (cid:61)or strategic and accre(cid:2462)ve growth where appropriate. (cid:3)ddi(cid:2462)onally, we may opportunis(cid:2462)cally seek to raise capital (cid:336)equity or debt(cid:337) when we believe market condi(cid:2462)ons are (cid:61)avorable and when consistent with our growth and (cid:67)nancing strategies. We may also seek third party (cid:67)nancing to the e(cid:138)tent that we engage in addi(cid:2462)onal strategic investments, including in order to raise capital necessary to e(cid:138)ecute poten(cid:2462)al development or redevelopment strategies or acquire real estate, note por(cid:127)olios, or other real estate related companies or real estate related securi(cid:2462)es. Similarly, we may (cid:61)rom (cid:2462)me to (cid:2462)me seek to re(cid:67)nance our e(cid:138)is(cid:2462)ng indebtedness opportunis(cid:2462)cally in order to reduce our overall cost o(cid:61) debt capital or op(cid:2462)mi(cid:140)e the maturity schedule o(cid:61) our outstanding indebtedness, or (cid:61)or other strategic reasons. (cid:3)lso, in (cid:24)ay 2022, we established an (cid:3)(cid:36)(cid:24) (cid:30)rogram pursuant to which we may issue and sell shares o(cid:61) the (cid:7)ompany(cid:317)s common stock having an aggregate gross sales price o(cid:61) up to (cid:362)200.0 million in amounts and at (cid:2462)mes as the (cid:7)ompany determines (cid:61)rom (cid:2462)me to (cid:2462)me. During the year ended December 31, 2022, the (cid:7)ompany did not issue any shares under our (cid:3)(cid:36)(cid:24) (cid:30)rogram. (cid:36)he (cid:7)ompany has no obliga(cid:2462)on to sell any o(cid:61) such shares under its (cid:3)(cid:36)(cid:24) (cid:30)rogram. (cid:3)ctual sales will depend on a variety o(cid:61) (cid:61)actors to be determined by the (cid:7)ompany (cid:61)rom (cid:2462)me to (cid:2462)me, including, among others, market condi(cid:2462)ons, the trading price o(cid:61) its common stock, the (cid:7)ompany(cid:317)s determina(cid:2462)on o(cid:61) the appropriate sources o(cid:61) (cid:61)unding (cid:61)or the (cid:7)ompany, and poten(cid:2462)al uses o(cid:61) (cid:61)unding available. (cid:3)s o(cid:61) December 31, 2022, we and our consolidated subsidiaries had appro(cid:138)imately (cid:362)(cid:403)3(cid:406).3 million (cid:336)(cid:362)2(cid:405)(cid:1142).(cid:405) million o(cid:61) which is in (cid:61)oreign currencies o(cid:61) (cid:14)B(cid:30) or (cid:11)U(cid:33)(cid:337) o(cid:61) consolidated cash (cid:336)as shown on our consolidated balance sheet(cid:337), our share o(cid:61) cash held at unconsolidated (cid:7)o-Investment (cid:30)or(cid:127)olio assets was (cid:362)(cid:1142)(cid:1141).(cid:406) million and we had (cid:362)21(cid:1142).0 million o(cid:61) availability under lines o(cid:61) credit. (cid:3)s o(cid:61) December 31, 2022, we have (cid:362)21.(cid:403) million o(cid:61) restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on proper(cid:2462)es. (cid:36)hese reserves typically relate to interest, ta(cid:138), insurance and (cid:61)uture capital e(cid:138)penditures at the proper(cid:2462)es. (cid:3)ddi(cid:2462)onally, we are sub(cid:102)ect to withholding ta(cid:138)es to the e(cid:138)tent we repatriate cash (cid:61)rom certain o(cid:61) our (cid:61)oreign subsidiaries. Under the KW(cid:11) (cid:25)otes covenants, we have to maintain certain interest coverage and leverage ra(cid:2462)os to remain in compliance (cid:336)see (cid:318)Indebtedness and (cid:33)elated (cid:7)ovenants(cid:319) (cid:61)or more detail on KW(cid:11) (cid:25)otes(cid:337). Due to these covenants, we evaluate the ta(cid:138) and covenant implica(cid:2462)ons be(cid:61)ore we distribute cash, which could impact the availability o(cid:61) (cid:61)unds at the corporate level. (cid:3)s discussed throughout this report, ongoing macroeconomic condi(cid:2462)ons, such as, but not limited to, high in(cid:89)a(cid:2462)on and central banks raising interest rates to curtail high in(cid:89)a(cid:2462)on con(cid:2462)nue to (cid:61)uel recessionary (cid:61)ears and create vola(cid:2462)lity in our business results and opera(cid:2462)ons, including our ability to access the capital markets at desired terms or at all. (cid:30)lease also see the (cid:318)(cid:7)urrent (cid:11)conomic (cid:7)ondi(cid:2462)ons and (cid:24)arket Dynamics(cid:319) above (cid:61)or addi(cid:2462)onal details. In addi(cid:2462)on to such market condi(cid:2462)ons, (cid:24)oody(cid:317)s Investors Service, Inc. and Standard (cid:351) (cid:30)oor(cid:317)s (cid:33)a(cid:2462)ngs Services (cid:336)(cid:318)S(cid:351)(cid:30)(cid:319)(cid:337), a division o(cid:61) (cid:36)he (cid:24)c(cid:14)raw-Hill (cid:7)ompanies, Inc., rate our outstanding debt. (cid:36)hese ra(cid:2462)ngs are based on a variety o(cid:61) (cid:61)actors, including our current leverage and transac(cid:2462)onal ac(cid:2462)vity. In October o(cid:61) 2022, S(cid:351)(cid:30) placed us on nega(cid:2462)ve (cid:7)reditWatch due to a slowdown in investment transac(cid:2462)on ac(cid:2462)vity leading to elevated leverage and in February 2023, S(cid:351)(cid:30) downgraded us to (cid:316)BB(cid:317) (cid:61)rom (cid:316)BB(cid:435)(cid:317) and maintained their nega(cid:2462)ve (cid:7)reditWatch. (cid:3)ddi(cid:2462)onally, S(cid:351)(cid:30) downgraded the KW(cid:11) (cid:25)otes to (cid:316)BB(cid:435)(cid:317) (cid:61)rom (cid:316)BBB-(cid:317) and the KWI (cid:25)otes to (cid:316)BB-(cid:317) (cid:61)rom (cid:316)BB(cid:317). (cid:36)hese ra(cid:2462)ngs and downgrades thereo(cid:61) may impact our ability to access the debt market in the (cid:61)uture at desired terms or at all. (cid:30)lease also see (cid:30)art I. Item 1(cid:3). (cid:33)isk Factors. 52 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 53 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Development and Redevelopment Kennedy Wilson has a number o(cid:61) market rate development, redevelopment and en(cid:2462)tlement pro(cid:102)ects that are underway or are in the planning stages. (cid:36)hese ini(cid:2462)a(cid:2462)ves, i(cid:61) completed, will result in market- rate income producing assets. (cid:3)s o(cid:61) December 31, 2022, we have 2,220 mul(cid:2462)(cid:61)amily units, 0.(cid:403) million commercial rentable square (cid:61)eet and 1(cid:404)0 hotel rooms we are ac(cid:2462)vely developing. I(cid:61) these pro(cid:102)ects were brought to comple(cid:2462)on, the es(cid:2462)mated share o(cid:61) the (cid:7)ompany(cid:317)s total cost would be appro(cid:138)imately (cid:362)1.1 billion, which we e(cid:138)pect would be (cid:61)unded through our e(cid:138)is(cid:2462)ng equity, third-party equity, pro(cid:102)ect sales and secured debt (cid:67)nancing. (cid:3)s o(cid:61) December 31, 2022, we have incurred (cid:362)(cid:405)(cid:406)(cid:405).0 million o(cid:61) costs to date and e(cid:138)pect to spend an addi(cid:2462)onal (cid:362)3(cid:405)(cid:406).0 million to develop to comple(cid:2462)on or complete the en(cid:2462)tlement process on these pro(cid:102)ects. O(cid:61) the (cid:362)3(cid:405)(cid:406).0 million o(cid:61) remaining costs to complete, we currently e(cid:138)pect (cid:362)133.0 million o(cid:61) it to be (cid:61)unded through cash (cid:61)rom us over the li(cid:61)e o(cid:61) the pro(cid:102)ects. (cid:36)his represents total capital over the li(cid:61)e o(cid:61) the pro(cid:102)ects and is not a representa(cid:2462)on o(cid:61) peak equity and does not take into account any distribu(cid:2462)ons over the course o(cid:61) the investment. When development pro(cid:102)ects are completed, they typically move into our unstabili(cid:140)ed category as they undergo lease up post-comple(cid:2462)on. In addi(cid:2462)on to the market rate development and redevelopment pro(cid:102)ects described above, we have 2,3(cid:1141)(cid:406) a(cid:64)ordable and(cid:326)or age-restricted mul(cid:2462)(cid:61)amily units within our (cid:40)HH pla(cid:127)orm that we are currently developing or in the process o(cid:61) stabili(cid:140)ing. We e(cid:138)pect to have no cash equity basis in these pro(cid:102)ects at comple(cid:2462)on due to the use o(cid:61) property level debt and proceeds (cid:61)rom the sale o(cid:61) ta(cid:138) credits. I(cid:61) these pro(cid:102)ects are brought to comple(cid:2462)on, we e(cid:138)pect to receive (cid:362)3(cid:403).3 million in cash (cid:61)rom paid developer (cid:61)ees and proceeds (cid:61)rom the sale o(cid:61) ta(cid:138) credits. (cid:36)he (cid:67)gures described in the two preceding paragraphs and in the table below are budgeted costs and are sub(cid:102)ect to change. (cid:36)here is no certainty that the (cid:7)ompany will develop or redevelop any or all o(cid:61) these poten(cid:2462)al pro(cid:102)ects and the (cid:7)ompany and its equity partners are under no obliga(cid:2462)on to complete these pro(cid:102)ects and may dispose o(cid:61) any such assets a(cid:91)er adding value through the en(cid:2462)tlement process. (cid:36)hese are budgeted (cid:67)gures and are sub(cid:102)ect to change (cid:336)increase or decrease(cid:337) due to a number o(cid:61) (cid:61)actors (cid:336)some o(cid:61) which are beyond our control(cid:337), including, that these pro(cid:102)ects are being developed under construc(cid:2462)on management contracts with the general contractors and there(cid:61)ore we and our equity partners could be called upon to contribute addi(cid:2462)onal capital in the event that actual costs e(cid:138)ceed budgeted costs. (cid:36)he scope o(cid:61) these pro(cid:102)ects may also change. (cid:36)he es(cid:2462)mated costs and amounts o(cid:61) cash to complete pro(cid:102)ects re(cid:89)ected in the table below represent management(cid:317)s current e(cid:138)pecta(cid:2462)ons and the total costs incurred to date include the land costs o(cid:61) these projects. (cid:36)he table below describes the market rate development or redevelopment projects that the (cid:7)ompany is undergoing or considering, and e(cid:138)cludes the a(cid:64)ordable and(cid:326)or age-restricted mul(cid:2462)(cid:61)amily units that it is developing in its (cid:40)HH pla(cid:127)orm and its residen(cid:2462)al investments (cid:336)(cid:362) in millions(cid:337). I(cid:61) (cid:7)ompleted (cid:7)urrent Investment (cid:36)ype (cid:24)ul(cid:2462)(cid:61)amily 3(cid:1142)o (cid:25)orth Loca(cid:2462)on (cid:25)or (cid:7)ali(cid:61)ornia (cid:25)or. (cid:7)ali(cid:61)ornia (cid:24)ul(cid:2462)(cid:61)amily 3(cid:1142)o (cid:25)orth (cid:30)hase II(cid:336)(cid:404)(cid:337) (cid:24)ountain West (cid:24)ountain West Ireland(cid:336)3(cid:337) (cid:30)hase III(cid:336)(cid:404)(cid:337) (cid:24)ul(cid:2462)(cid:61)amily Dovetail(cid:336)(cid:404)(cid:337) (cid:24)ul(cid:2462)(cid:61)amily O(cid:138)bow O(cid:76)ce (cid:7)oopers (cid:7)ross(cid:336)(cid:1141)(cid:337) Ireland(cid:336)3(cid:337) (cid:24)ul(cid:2462)(cid:61)amily (cid:7)oopers (cid:7)ross(cid:336)(cid:1141)(cid:337) Ireland(cid:336)3(cid:337) (cid:24)ul(cid:2462)(cid:61)amily (cid:14)range(cid:336)(cid:1141)(cid:337) Hawaii (cid:30)aci(cid:67)c (cid:25)orthwest Ireland(cid:336)3(cid:337) Hotel Kona (cid:40)illage (cid:33)esort(cid:336)(cid:1141)(cid:337) (cid:24)ul(cid:2462)(cid:61)amily (cid:36)wo10 (cid:24)i(cid:138)ed-Use (cid:36)he (cid:7)ornerstone(cid:336)(cid:404)(cid:337) So. (cid:7)ali(cid:61)ornia (cid:24)ul(cid:2462)(cid:61)amily University (cid:14)len (cid:30)hase II(cid:336)(cid:404)(cid:337) So. (cid:7)ali(cid:61)ornia (cid:24)ul(cid:2462)(cid:61)amily (cid:14)ateway (cid:352) (cid:36)he Oaks Status Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on Under (cid:7)onstruc(cid:2462)on In (cid:30)lanning (cid:30)aci(cid:67)c (cid:25)orthwest (cid:24)ul(cid:2462)(cid:61)amily Bend In (cid:30)lanning (cid:11)st. (cid:7)omple(cid:2462)on Date(cid:336)1(cid:337) 2023 (cid:7)ommercial Sq. Ft. — (cid:24)F Units(cid:326) Hotel (cid:33)ooms KW (cid:11)st. (cid:36)otal (cid:7)ost(cid:336)(cid:403)(cid:337) KW (cid:7)osts Incurred(cid:336)(cid:403)(cid:337) 1(cid:405)2 (cid:362) (cid:405)3 (cid:362) 31 (cid:362) KW (cid:11)st. (cid:7)osts to (cid:7)omplete(cid:336)2(cid:337) (cid:403)2 2023 2023 2023 — — — 30 2(cid:403)0 2(cid:1141)(cid:1142) 13 (cid:404)(cid:1141) (cid:403)1 2023 3(cid:406)(cid:404),000 — 1(cid:1141)0 2023 — (cid:403)(cid:405)1 131 2023 (cid:405),000 2(cid:1142)(cid:405) (cid:405)(cid:403) 1 32 2(cid:1142) 112 11(cid:404) (cid:1141)2 1(cid:404)0 3(cid:404)2 30(cid:404) 2023 2023 — — 210 202(cid:403) 20,000 232 (cid:1141)0 (cid:1141)(cid:1142) 202(cid:403) (cid:36)BD (cid:36)BD — — — 310 120 (cid:36)BD (cid:36)BD (cid:36)BD (cid:36)BD 20 3(cid:1142) 2(cid:404) 10 1(cid:1142) 12 2(cid:403) 13 (cid:403)(cid:1142) 1(cid:1141) 12 (cid:403)(cid:405) (cid:403)0 30 (cid:406)(cid:404) (cid:36)BD (cid:36)BD (cid:36)otal (cid:403)22,000 2,3(cid:405)0 (cid:362) 1,1(cid:403)(cid:1142) (cid:362) (cid:405)(cid:406)(cid:405) (cid:362) 3(cid:405)(cid:406) 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(cid:114)(cid:117)(cid:111)(cid:102)(cid:59)(cid:49)(cid:124)(cid:118)(cid:2)(cid:98)(cid:55)(cid:59)(cid:109)(cid:2462)(cid:67)(cid:59)(cid:55)(cid:2)(cid:108)(cid:45)(cid:139)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:48)(cid:59)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:1140)(cid:59)(cid:124)(cid:59)(cid:55)(cid:2)(cid:137)(cid:95)(cid:59)(cid:109)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:49)(cid:124)(cid:59)(cid:55)(cid:311)(cid:2)(cid:111)(cid:117)(cid:2)(cid:45)(cid:124)(cid:2)(cid:45)(cid:1140)(cid:1140)(cid:314) 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(cid:114)(cid:117)(cid:111)(cid:49)(cid:59)(cid:118)(cid:118)(cid:311)(cid:2)(cid:45)(cid:118)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:311)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:314)(cid:2)(cid:36)(cid:111)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:108)(cid:45)(cid:139)(cid:2)(cid:48)(cid:59)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:59)(cid:55)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:2)(cid:124)(cid:95)(cid:98)(cid:117)(cid:55)(cid:330)(cid:114)(cid:45)(cid:117)(cid:124)(cid:139)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:2)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:98)(cid:48)(cid:134)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:311)(cid:2) (cid:114)(cid:117)(cid:111)(cid:49)(cid:59)(cid:59)(cid:55)(cid:118)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:114)(cid:117)(cid:111)(cid:102)(cid:59)(cid:49)(cid:124)(cid:59)(cid:55)(cid:2)(cid:118)(cid:45)(cid:1140)(cid:59)(cid:118)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:326)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:98)(cid:109)(cid:93)(cid:314)(cid:2)(cid:41)(cid:59)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:49)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:61)(cid:134)(cid:109)(cid:55)(cid:2)(cid:362)(cid:400)(cid:402)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2) 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(cid:49)(cid:111)(cid:118)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:1140)(cid:59)(cid:124)(cid:59)(cid:2)(cid:55)(cid:98)(cid:64)(cid:59)(cid:117)(cid:118)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:2)(cid:124)(cid:111)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:49)(cid:45)(cid:114)(cid:98)(cid:124)(cid:45)(cid:1140)(cid:98)(cid:140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:45)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:1140)(cid:45)(cid:130)(cid:59)(cid:117)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:95)(cid:45)(cid:136)(cid:59)(cid:2)(cid:45)(cid:1140)(cid:117)(cid:59)(cid:45)(cid:55)(cid:139)(cid:2)(cid:48)(cid:59)(cid:59)(cid:109)(cid:2)(cid:98)(cid:109)(cid:49)(cid:134)(cid:117)(cid:117)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:55)(cid:45)(cid:124)(cid:59)(cid:2) (cid:137)(cid:95)(cid:98)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:111)(cid:117)(cid:108)(cid:59)(cid:117)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:61)(cid:134)(cid:124)(cid:134)(cid:117)(cid:59)(cid:2)(cid:59)(cid:118)(cid:2462)(cid:108)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:314) (cid:336)(cid:402)(cid:337)(cid:2)(cid:11)(cid:118)(cid:2462)(cid:108)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:61)(cid:111)(cid:117)(cid:59)(cid:98)(cid:93)(cid:109)(cid:2)(cid:59)(cid:138)(cid:49)(cid:95)(cid:45)(cid:109)(cid:93)(cid:59)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:360)(cid:399)(cid:314)(cid:406)(cid:402)(cid:2)(cid:439)(cid:2)(cid:362)(cid:400)(cid:2)(cid:38)(cid:34)(cid:9)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:364)(cid:399)(cid:314)(cid:1142)(cid:402)(cid:2)(cid:439)(cid:2)(cid:362)(cid:400)(cid:2)(cid:38)(cid:34)(cid:9)(cid:311)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:25)(cid:27)(cid:17)(cid:314) (4)(cid:2)(cid:17)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:1140)(cid:45)(cid:109)(cid:55)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:314) (cid:336)(cid:404)(cid:337)(cid:2)(cid:17)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:7)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:30)(cid:111)(cid:117)(cid:127)(cid:111)(cid:1140)(cid:98)(cid:111)(cid:2)(cid:34)(cid:59)(cid:93)(cid:108)(cid:59)(cid:109)(cid:124)(cid:314) (cid:336)(cid:1141)(cid:337)(cid:2)(cid:17)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:7)(cid:111)(cid:330)(cid:17)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:2)(cid:30)(cid:111)(cid:117)(cid:127)(cid:111)(cid:1140)(cid:98)(cid:111)(cid:2)(cid:34)(cid:59)(cid:93)(cid:108)(cid:59)(cid:109)(cid:124)(cid:314) Unsta(cid:48)ili(cid:140)ed and Value Add Capital (cid:11)(cid:138)penditure (cid:30)rograms We currently have si(cid:138) assets that comprise 0.(cid:1142) million commercial square (cid:61)eet that are currently unstabili(cid:140)ed and are undergoing various stages o(cid:61) lease-up, value-add or development. In order to stabili(cid:140)e these assets we project our share o(cid:61) costs to complete to be (cid:362)2(cid:1141).(cid:406) million. (cid:36)he cost to complete this work and the (cid:2462)me (cid:61)rame described is subject to many uncertain(cid:2462)es that are beyond our control, and the actual costs may be signi(cid:67)cantly higher than the es(cid:2462)mates shown below. 54 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 55 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:36)he table below describes assets that are currently unstabili(cid:140)ed (cid:336)(cid:362) in millions(cid:337)(cid:313) (cid:30)roperty Loca(cid:2462)on (cid:36)ype KW Ownership (cid:370) o(cid:61) (cid:3)ssets (cid:7)ommercial Sq. Ft. Leased (cid:1143) KW (cid:11)st. (cid:7)osts to (cid:7)omplete(cid:336)1(cid:337) Stockley (cid:30)ark (cid:36)he Oaks (cid:36)he Heights (cid:1354)Building (cid:403) Hamilton Landing (cid:1354)H(cid:405) (cid:40)arious United Kingdom(cid:336)2(cid:337) O(cid:76)ce Southern (cid:7)ali(cid:61)ornia O(cid:76)ce United Kingdom(cid:336)2(cid:337) O(cid:76)ce (cid:25)orthern (cid:7)ali(cid:61)ornia O(cid:76)ce United Kingdom(cid:336)2(cid:337) O(cid:76)ce (cid:36)otal Lease-Up 100(cid:1143) 100(cid:1143) (cid:404)1(cid:1143) 100(cid:1143) 100(cid:1143) 1 1 1 1 2 (cid:1141) (cid:404)(cid:403),000 3(cid:404)(cid:405),000 (cid:405)(cid:403),000 (cid:1141)1,000 2(cid:1142)1,000 (cid:1142)2(cid:405),000 (cid:362) — (cid:1142)2 (cid:1143) — — 3(cid:403) (cid:403)(cid:405) (cid:1143) (cid:362) — (cid:404).(cid:1141) — (cid:403).3 1(cid:405).0 2(cid:1141).(cid:406) (cid:25)(cid:111)(cid:124)(cid:59)(cid:313)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:124)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:45)(cid:48)(cid:111)(cid:136)(cid:59)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:108)(cid:98)(cid:109)(cid:111)(cid:117)(cid:98)(cid:124)(cid:139)(cid:330)(cid:95)(cid:59)(cid:1140)(cid:55)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:137)(cid:111)(cid:2)(cid:137)(cid:95)(cid:111)(cid:1140)(cid:1140)(cid:139)(cid:330)(cid:111)(cid:137)(cid:109)(cid:59)(cid:55)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:49)(cid:124)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:118)(cid:59)(cid:1140)(cid:1140)(cid:311)(cid:2)(cid:124)(cid:111)(cid:124)(cid:45)(cid:1140)(cid:98)(cid:109)(cid:93)(cid:2)(cid:403)(cid:399)(cid:404)(cid:2)(cid:134)(cid:109)(cid:98)(cid:124)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2) (cid:399)(cid:314)(cid:1142)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:49)(cid:111)(cid:108)(cid:108)(cid:59)(cid:117)(cid:49)(cid:98)(cid:45)(cid:1140)(cid:2)(cid:118)(cid:116)(cid:314)(cid:2)(cid:91)(cid:314) (1)(cid:2)(cid:2)(cid:13)(cid:98)(cid:93)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:118)(cid:95)(cid:111)(cid:137)(cid:109)(cid:2)(cid:98)(cid:109)(cid:2)(cid:124)(cid:95)(cid:98)(cid:118)(cid:2)(cid:49)(cid:111)(cid:1140)(cid:134)(cid:108)(cid:109)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:45)(cid:109)(cid:2)(cid:59)(cid:118)(cid:2462)(cid:108)(cid:45)(cid:124)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:20)(cid:41)(cid:317)(cid:118)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:55)(cid:59)(cid:136)(cid:59)(cid:1140)(cid:111)(cid:114)(cid:2)(cid:124)(cid:111)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:1140)(cid:59)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:111)(cid:117)(cid:2)(cid:124)(cid:111)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:1140)(cid:59)(cid:124)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:59)(cid:109)(cid:2462)(cid:124)(cid:1140)(cid:59)(cid:108)(cid:59)(cid:109)(cid:124)(cid:2) (cid:114)(cid:117)(cid:111)(cid:49)(cid:59)(cid:118)(cid:118)(cid:311)(cid:2)(cid:45)(cid:118)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:311)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:314)(cid:2)(cid:36)(cid:111)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:108)(cid:45)(cid:139)(cid:2)(cid:48)(cid:59)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:59)(cid:55)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:2)(cid:124)(cid:95)(cid:98)(cid:117)(cid:55)(cid:330)(cid:114)(cid:45)(cid:117)(cid:124)(cid:139)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:2)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:98)(cid:48)(cid:134)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:311)(cid:2) (cid:114)(cid:117)(cid:111)(cid:49)(cid:59)(cid:59)(cid:55)(cid:118)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:114)(cid:117)(cid:111)(cid:102)(cid:59)(cid:49)(cid:124)(cid:59)(cid:55)(cid:2)(cid:118)(cid:45)(cid:1140)(cid:59)(cid:118)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:326)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:98)(cid:109)(cid:93)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:118)(cid:59)(cid:2)(cid:67)(cid:93)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:48)(cid:134)(cid:55)(cid:93)(cid:59)(cid:124)(cid:59)(cid:55)(cid:2)(cid:49)(cid:111)(cid:118)(cid:124)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:118)(cid:134)(cid:48)(cid:102)(cid:59)(cid:49)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:49)(cid:95)(cid:45)(cid:109)(cid:93)(cid:59)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:117)(cid:59)(cid:2)(cid:98)(cid:118)(cid:2)(cid:109)(cid:111)(cid:2) (cid:93)(cid:134)(cid:45)(cid:117)(cid:45)(cid:109)(cid:124)(cid:59)(cid:59)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:2)(cid:137)(cid:98)(cid:1140)(cid:1140)(cid:2)(cid:48)(cid:59)(cid:2)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:118)(cid:59)(cid:49)(cid:134)(cid:117)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:102)(cid:59)(cid:49)(cid:124)(cid:330)(cid:1140)(cid:59)(cid:136)(cid:59)(cid:1140)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:98)(cid:118)(cid:2)(cid:45)(cid:118)(cid:118)(cid:134)(cid:108)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:67)(cid:93)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:48)(cid:111)(cid:136)(cid:59)(cid:314)(cid:2)(cid:17)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2) (cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:2)(cid:98)(cid:118)(cid:2)(cid:134)(cid:109)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:118)(cid:59)(cid:49)(cid:134)(cid:117)(cid:59)(cid:2)(cid:118)(cid:134)(cid:49)(cid:95)(cid:2)(cid:67)(cid:109)(cid:45)(cid:109)(cid:49)(cid:98)(cid:109)(cid:93)(cid:311)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:45)(cid:114)(cid:98)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:2)(cid:137)(cid:98)(cid:1140)(cid:1140)(cid:2)(cid:95)(cid:45)(cid:136)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:1140)(cid:59)(cid:124)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:102)(cid:59)(cid:49)(cid:124)(cid:118)(cid:2) (cid:45)(cid:48)(cid:111)(cid:136)(cid:59)(cid:2)(cid:108)(cid:45)(cid:139)(cid:2)(cid:118)(cid:98)(cid:93)(cid:109)(cid:98)(cid:67)(cid:49)(cid:45)(cid:109)(cid:124)(cid:1140)(cid:139)(cid:2)(cid:98)(cid:109)(cid:49)(cid:117)(cid:59)(cid:45)(cid:118)(cid:59)(cid:314)(cid:2) (2)(cid:2)(cid:11)(cid:118)(cid:2462)(cid:108)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:61)(cid:111)(cid:117)(cid:59)(cid:98)(cid:93)(cid:109)(cid:2)(cid:59)(cid:138)(cid:49)(cid:95)(cid:45)(cid:109)(cid:93)(cid:59)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:360)(cid:399)(cid:314)(cid:406)(cid:402)(cid:2)(cid:439)(cid:2)(cid:362)(cid:400)(cid:2)(cid:38)(cid:34)(cid:9)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:364)(cid:399)(cid:314)(cid:1142)(cid:402)(cid:2)(cid:439)(cid:2)(cid:362)(cid:400)(cid:2)(cid:38)(cid:34)(cid:9)(cid:311)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:25)(cid:27)(cid:17)(cid:314) In addi(cid:2462)on to our development, redevelopment and stabili(cid:140)a(cid:2462)on ini(cid:2462)a(cid:2462)ves, we regularly implement a value-add approach to our consolidated and unconsolidated investments, which includes rehabbing proper(cid:2462)es and adding or upda(cid:2462)ng property ameni(cid:2462)es. (cid:36)he capital required to implement these value-add ini(cid:2462)a(cid:2462)ves is typically (cid:61)unded with capital calls, re(cid:67)nancing or supplemental (cid:67)nancings at the property level. We are not required to make these investments, but they are a key driver in our ability to increase net opera(cid:2462)ng income at our proper(cid:2462)es post acquisi(cid:2462)on. (cid:27)ther Items On (cid:25)ovember 3, 2020, the (cid:7)ompany(cid:317)s board o(cid:61) directors authori(cid:140)ed an e(cid:138)pansion o(cid:61) its e(cid:138)is(cid:2462)ng (cid:362)2(cid:404)0 million share repurchase plan to (cid:362)(cid:404)00 million. (cid:33)epurchases under the program may be made in the open market, in privately nego(cid:2462)ated transac(cid:2462)ons, through the net se(cid:130)lement o(cid:61) the (cid:7)ompany(cid:317)s restricted stock grants or otherwise, with the amount and (cid:2462)ming o(cid:61) repurchases dependent on market condi(cid:2462)ons and subject to the (cid:7)ompany(cid:317)s discre(cid:2462)on. (cid:36)he program does not obligate the (cid:7)ompany to repurchase any speci(cid:67)c number o(cid:61) shares and, subject to compliance with applicable laws, may be suspended or terminated at any (cid:2462)me without prior no(cid:2462)ce. (cid:3)s o(cid:61) December 31, 2022, we had (cid:362)1(cid:403)(cid:403).(cid:1142) million remaining under the plan (cid:61)or stock repurchases. (cid:30)lease see the sec(cid:2462)on (cid:2462)tled (cid:318)(cid:30)(cid:134)(cid:117)(cid:49)(cid:95)a(cid:118)e(cid:118) o(cid:61) (cid:11)(cid:116)(cid:134)(cid:98)t(cid:139) (cid:34)e(cid:49)(cid:134)(cid:117)(cid:98)(cid:2236)e(cid:118) (cid:48)(cid:139) t(cid:95)e (cid:7)ompan(cid:139)(cid:319) in (cid:30)art II o(cid:61) this annual report on Form 10-K (cid:61)or addi(cid:2462)onal in(cid:61)orma(cid:2462)on. (cid:36)he (cid:7)ompany maintains a de(cid:61)erred compensa(cid:2462)on program (cid:61)or certain employees o(cid:61) the (cid:7)ompany (cid:336)the (cid:318)De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram(cid:319)(cid:337). (cid:36)he named e(cid:138)ecu(cid:2462)ve o(cid:76)cers o(cid:61) the (cid:7)ompany are not par(cid:2462)cipants o(cid:61) the De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram. (cid:36)he compensa(cid:2462)on commi(cid:130)ee o(cid:61) the (cid:7)ompany(cid:317)s board o(cid:61) directors approves an amount annually to be allocated to certain employees o(cid:61) the (cid:7)ompany in the United States and in (cid:11)urope. (cid:36)he amount allocated to each employee vests ratably over a three-year ves(cid:2462)ng period, subject to con(cid:2462)nued employment with the (cid:7)ompany. (cid:30)rior to 2022, hal(cid:61) o(cid:61) the allocated amount was (cid:2462)ed speci(cid:67)cally to the per(cid:61)ormance and value o(cid:61) the (cid:7)ompany(cid:317)s common stock at the (cid:2462)me o(cid:61) each ves(cid:2462)ng (cid:336)(cid:318)Bonus Units(cid:319)(cid:337). Beginning in 2022, the en(cid:2462)re amount allocated to each employee consisted o(cid:61) Bonus Units. Under the De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram, at the (cid:2462)me o(cid:61) each ves(cid:2462)ng, the employees receive an amount equal to either the dividend yield o(cid:61) the (cid:7)ompany(cid:317)s common stock or the actual amount o(cid:61) dividends paid on the (cid:7)ompany common stock (cid:336)in the case o(cid:61) Bonus Units(cid:337) during the immediately preceding year on the amount that is subject to such ves(cid:2462)ng. During the years ended December 31, 2022 and 2021 the (cid:7)ompany recogni(cid:140)ed (cid:362)(cid:406).2 million and (cid:362)11.(cid:405) million, respec(cid:2462)vely, under the De(cid:61)erred (cid:7)ash Bonus (cid:30)rogram. (cid:36)he (cid:7)ompany also maintains a per(cid:61)ormance alloca(cid:2462)on sharing program (cid:61)or certain employees o(cid:61) the (cid:7)ompany (cid:336)the (cid:318)(cid:30)er(cid:61)ormance (cid:3)lloca(cid:2462)on Sharing (cid:30)rogram(cid:319)(cid:337). (cid:36)he named e(cid:138)ecu(cid:2462)ve o(cid:76)cers o(cid:61) the (cid:7)ompany are not par(cid:2462)cipants o(cid:61) the (cid:30)er(cid:61)ormance (cid:3)lloca(cid:2462)on Sharing (cid:30)rogram. (cid:36)he compensa(cid:2462)on commi(cid:130)ee o(cid:61) the (cid:7)ompany(cid:317)s board o(cid:61) directors approved, reserved and authori(cid:140)ed e(cid:138)ecu(cid:2462)ve management to issue up to thirty-(cid:67)ve percent (cid:336)3(cid:404)(cid:1143)(cid:337) o(cid:61) any per(cid:61)ormance alloca(cid:2462)ons earned by certain commingled (cid:61)unds and separate account investments to be allocated to certain non-(cid:25)(cid:11)O employees o(cid:61) the (cid:7)ompany. (cid:7)urrently structures par(cid:2462)cipa(cid:2462)ng in the (cid:30)er(cid:61)ormance (cid:3)lloca(cid:2462)on Sharing (cid:30)rogram have allocated a range o(cid:61) 20(cid:1143) - 3(cid:404)(cid:1143) o(cid:61) per(cid:61)ormance alloca(cid:2462)ons to employees. Si(cid:138)ty percent o(cid:61) the award to each employee vests ratably over (cid:61)our years and the remaining (cid:61)orty percent vest upon the consumma(cid:2462)on o(cid:61) a liquidity event o(cid:61) the investment whereby the (cid:7)ompany actually receives cash per(cid:61)ormance alloca(cid:2462)ons (cid:61)rom its partner. (cid:36)he (cid:61)ull per(cid:61)ormance alloca(cid:2462)on earned by the (cid:7)ompany will be recorded to income (cid:61)rom unconsolidated investments and the amount allocated to employees is recorded as per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on. During the years ended December 31, 2022 and 2021, the (cid:7)ompany recogni(cid:140)ed (cid:362)(cid:336)(cid:403).3(cid:337) million and (cid:362)(cid:403)2.0 million, respec(cid:2462)vely, related to this program. (cid:36)he (cid:7)ompany also recently implemented a global employee co-investment program (cid:336)the (cid:318)(cid:7)o-Investment (cid:30)rogram(cid:319)(cid:337). (cid:36)he named e(cid:138)ecu(cid:2462)ve o(cid:76)cers are not par(cid:2462)cipants o(cid:61) the (cid:7)o-Investment (cid:30)rogram. Under the (cid:7)o-Investment (cid:30)rogram, certain employees are provided the opportunity to invest alongside the (cid:7)ompany in its investments (cid:336)in all (cid:61)uture investments and certain recently acquired transac(cid:2462)ons(cid:337). (cid:36)he amount o(cid:61) (cid:61)unds that the employees, as a group, can invest in the (cid:7)ompany(cid:317)s investments is capped at 1.(cid:404)(cid:1143) o(cid:61) the (cid:7)ompany(cid:317)s equity. (cid:30)ar(cid:2462)cipants in the (cid:7)o-Investment (cid:30)rogram will make commitments to the program every year. (cid:14)enerally (cid:336)with limited e(cid:138)cep(cid:2462)ons(cid:337), par(cid:2462)cipants in the (cid:7)o-Investment (cid:30)rogram will invest in every investment made by the (cid:7)ompany (cid:336)investments that such employee has an ac(cid:2462)ve role in acquiring and managing(cid:337) in the applicable year. Cash Flows (cid:36)he (cid:61)ollowing table summari(cid:140)es the cash provided by or used in our opera(cid:2462)ng, inves(cid:2462)ng and (cid:67)nancing ac(cid:2462)vi(cid:2462)es (cid:61)or the years ended December 31, 2022 and 2021(cid:313) (Dollars in millions) (cid:25)et cash provided by (cid:336)used in(cid:337) opera(cid:2462)ng ac(cid:2462)vi(cid:2462)es (cid:25)et cash used in inves(cid:2462)ng ac(cid:2462)vi(cid:2462)es (cid:25)et cash provided by (cid:67)nancing ac(cid:2462)vi(cid:2462)es Year ended December 31, (cid:362) 2022 32.(cid:406) (cid:336)3(cid:1141)1.(cid:1141)(cid:337) 2(cid:1141)(cid:403).2 (cid:362) 2021 (cid:336)30.3(cid:337) (cid:336)1,03(cid:1142).0(cid:337) (cid:1141)32.0 56 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 57 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:27)pera(cid:2236)ng Our cash (cid:89)ows (cid:61)rom opera(cid:2462)ng ac(cid:2462)vi(cid:2462)es are primarily dependent upon opera(cid:2462)ons (cid:61)rom consolidated proper(cid:2462)es, the opera(cid:2462)ng distribu(cid:2462)ons and (cid:61)ees (cid:61)rom our (cid:7)o-Investment (cid:30)la(cid:127)orm, general and administra(cid:2462)ve costs, compensa(cid:2462)on and interest e(cid:138)pense payments. For the years ended December 31, 2022 and 2021, cash (cid:89)ows used by opera(cid:2462)ons were (cid:362)32.(cid:406) million and (cid:362)30.3 million, respec(cid:2462)vely. (cid:36)he increase in cash used in opera(cid:2462)ons was primarily due to higher interest e(cid:138)pense (cid:61)or year ended December 31, 2021 (cid:61)rom premiums and accrued interest paid associated with repayment o(cid:61) the 202(cid:403) (cid:25)otes and the remaining outstanding por(cid:2462)on o(cid:61) the KW(cid:11) Bonds. Inves(cid:2236)ng Our cash (cid:89)ows (cid:61)rom inves(cid:2462)ng ac(cid:2462)vi(cid:2462)es are generally comprised o(cid:61) cash used to (cid:61)und property acquisi(cid:2462)ons, investments in unconsolidated investments, capital e(cid:138)penditures, purchases o(cid:61) loans secured by real estate, as well as cash received (cid:61)rom property sales and return o(cid:61) capital (cid:61)rom our co-investments. (cid:43)ear (cid:11)nded Decem(cid:48)er (cid:400)(cid:398)(cid:310) (cid:399)(cid:397)(cid:399)(cid:399) (cid:25)et cash used in inves(cid:2462)ng ac(cid:2462)vi(cid:2462)es totaled (cid:362)3(cid:1141)1.(cid:1141) million (cid:61)or the year ended December 31, 2022. During the year ended December 31, 2022, we received (cid:362)32(cid:404).(cid:406) million primarily (cid:61)rom the sale o(cid:61) non-core retail assets in the United Kingdom and Western United States and a mul(cid:2462)(cid:61)amily property in the Western United States. We received (cid:362)1(cid:404)(cid:405).1 million in inves(cid:2462)ng distribu(cid:2462)ons (cid:61)rom our co-investments primarily (cid:61)rom the sale o(cid:61) assets within our comingled (cid:61)unds and (cid:67)nancing distribu(cid:2462)ons (cid:61)rom mul(cid:2462)(cid:61)amily proper(cid:2462)es in Ireland. Our share o(cid:61) new loans issued as part o(cid:61) our global debt pla(cid:127)orm were (cid:362)(cid:404)0.(cid:406) million, and we received (cid:362)3(cid:403).(cid:404) million o(cid:61) proceeds (cid:61)rom repayments on loans previously issued. (cid:3)ddi(cid:2462)onally, we acquired (cid:362)(cid:403)0(cid:1142).2 million o(cid:61) consolidated real estate assets, including an o(cid:76)ce building in Scotland and (cid:61)our mul(cid:2462)(cid:61)amily proper(cid:2462)es in the (cid:24)ountain West. We spent (cid:362)1(cid:1141)0.(cid:406) million on capital e(cid:138)penditures on consolidated assets, as well as con(cid:2462)nued investments in our development proper(cid:2462)es and value add on our opera(cid:2462)ng proper(cid:2462)es. We also contributed (cid:362)3(cid:1141)1.3 million to unconsolidated investments that were primarily used to (cid:61)und our share o(cid:61) capital calls on Kona (cid:40)illage and new acquisi(cid:2462)ons made within our (cid:11)uropean Industrial J(cid:40) pla(cid:127)orm and commingled (cid:61)unds. (cid:36)he se(cid:130)lement o(cid:61) (cid:61)oreign currency deriva(cid:2462)ves generated (cid:362)112.(cid:1141) million o(cid:61) cash during the year ended December 31, 2022, primarily due to se(cid:130)lement o(cid:61) interest rate and (cid:61)oreign currency deriva(cid:2462)ves that had appreciated in value. We spent (cid:362)10.(cid:403) million in premiums on new deriva(cid:2462)ve contracts entered into during the year ended December 31, 2022. (cid:43)ear (cid:11)nded Decem(cid:48)er (cid:400)(cid:398)(cid:310) (cid:399)(cid:397)(cid:399)(cid:398) (cid:25)et cash used in investing activities totaled (cid:362)1,03(cid:1142).0 million (cid:61)or the year ended December 31, 2021. During the year ended December 31, 2021, we received (cid:362)(cid:403)(cid:1142)(cid:1141).(cid:403) million primarily (cid:61)rom the sale o(cid:61) the (cid:24)F seed port(cid:61)olio and an o(cid:61)(cid:61)ice building in the United Kingdom. We received (cid:362)(cid:1142)2.(cid:1142) million in investing distributions (cid:61)rom our co-investments primarily (cid:61)rom the sale o(cid:61) assets within our comingled (cid:61)unds, re(cid:61)inancing and resyndications with our (cid:40)HH port(cid:61)olio and a partial redemption o(cid:61) a hedge (cid:61)und investment. Our share o(cid:61) new loans issued as part o(cid:61) our debt plat(cid:61)orm was (cid:362)(cid:1142)3.(cid:403) million and we received (cid:362)(cid:404)(cid:1142).1 million o(cid:61) proceeds (cid:61)rom the sale o(cid:61) a portion o(cid:61) e(cid:138)isting loans to equity partners and repayments on loans issued. (cid:3)dditionally, we acquired (cid:362)1,131.(cid:1142) million o(cid:61) consolidated real estate assets, including an o(cid:61)(cid:61)ice building in London, and multi(cid:61)amily properties in the (cid:30)aci(cid:61)ic (cid:25)orthwest and (cid:24)ountain West regions. We spent (cid:362)13(cid:406).2 million on capital e(cid:138)penditures on consolidated assets, as well as continued investments in our development properties and value add on our operating properties. We also contributed (cid:362)2(cid:1142)0.(cid:1142) million to unconsolidated investments that were primarily used to (cid:61)und our share o(cid:61) capital calls on Kona (cid:40)illage and new acquisitions made within our (cid:11)uropean Industrial J(cid:40) plat(cid:61)orm and commingled (cid:61)unds. (cid:36)he settlement o(cid:61) (cid:61)oreign currency derivatives was (cid:362)30.1 million during the year ended December 31, 2021, primarily due to the cross currency swap on the KW(cid:11) Bonds. Financing Our net cash related to (cid:67)nancing ac(cid:2462)vi(cid:2462)es is generally impacted by capital-raising ac(cid:2462)vi(cid:2462)es net o(cid:61) dividends and distribu(cid:2462)ons paid to common and pre(cid:61)erred shareholders and noncontrolling interests as well as (cid:67)nancing ac(cid:2462)vi(cid:2462)es (cid:61)or consolidated real estate investments. (cid:43)ear (cid:11)nded Decem(cid:48)er (cid:400)(cid:398)(cid:310) (cid:399)(cid:397)(cid:399)(cid:399) (cid:25)et cash provided by (cid:67)nancing ac(cid:2462)vi(cid:2462)es totaled (cid:362)2(cid:1141)(cid:403).2 million (cid:61)or the year ended December 31, 2022. During the year ended December 31, 2022, the (cid:7)ompany received proceeds o(cid:61) (cid:362)2(cid:406)(cid:405).3 million (cid:61)rom the issuance o(cid:61) its perpetual pre(cid:61)erred stock and warrants to Fair(cid:61)a(cid:138). We drew (cid:362)(cid:404)2(cid:1142).(cid:403) million on our revolving line o(cid:61) credit and repaid (cid:362)32(cid:404).0 million on our revolving line o(cid:61) credit during the year ended December 31, 2022. Kennedy Wilson received proceeds o(cid:61) (cid:362)(cid:403)01.3 million (cid:61)rom mortgage loans to (cid:67)nance and re(cid:67)nance consolidated property acquisi(cid:2462)ons. (cid:36)hese proceeds were o(cid:64)set by the repayment o(cid:61) (cid:362)3(cid:1142)(cid:406).(cid:1141) million o(cid:61) mortgage debt and (cid:362)(cid:1141)(cid:404).(cid:1142) million on our KW(cid:11) (cid:25)otes. (cid:3)ddi(cid:2462)onally, we paid common dividends o(cid:61) (cid:362)13(cid:403).(cid:1141) million and pre(cid:61)erred dividends o(cid:61) (cid:362)2(cid:404).(cid:406) million, and we repurchased (cid:362)31.2 million o(cid:61) our common stock under our share repurchase plan. (cid:43)ear (cid:11)nded Decem(cid:48)er (cid:400)(cid:398)(cid:310) (cid:399)(cid:397)(cid:399)(cid:398) (cid:25)et cash provided by (cid:67)nancing ac(cid:2462)vi(cid:2462)es totaled (cid:362)(cid:1141)32.0 million (cid:61)or the year ended December 31, 2021. (cid:36)he (cid:7)ompany received proceeds o(cid:61) (cid:362)1,(cid:1142)0(cid:403).3 million (cid:61)rom the issuance o(cid:61) the 202(cid:406) (cid:25)otes, 2030 (cid:25)otes and 2031 (cid:25)otes and repaid (cid:362)1,1(cid:404)0.0 million o(cid:61) the 202(cid:403) (cid:25)otes. We drew (cid:362)31(cid:403).3 million on our revolving line o(cid:61) credit and repaid (cid:362)(cid:403)3(cid:1142).(cid:404) million on our revolving line o(cid:61) credit during the year ended December 31, 2021. We incurred (cid:362)3(cid:404).(cid:1141) million o(cid:61) debt issuance costs associated with the issuance o(cid:61) the 202(cid:406) (cid:25)otes, 2030 (cid:25)otes and 2031 (cid:25)otes. Kennedy Wilson received proceeds o(cid:61) (cid:362)1,1(cid:403)(cid:403).(cid:406) million (cid:61)rom mortgage loans to (cid:67)nance and re(cid:67)nance consolidated property acquisi(cid:2462)ons. (cid:36)hese proceeds were o(cid:64)set by the repayment o(cid:61) (cid:362)2(cid:1141)(cid:1142).2 million o(cid:61) mortgage debt and (cid:362)(cid:404)0(cid:403).(cid:403) million on our KW(cid:11) Bonds. During the year ended December 31, 2021, we paid common dividends o(cid:61) (cid:362)123.(cid:404) million and pre(cid:61)erred dividends o(cid:61) (cid:362)1(cid:405).2 million, and we repurchased (cid:362)(cid:1142)3.2 million o(cid:61) our common stock under our share repurchase plan. 58 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 59 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Contractual Obligations and Commercial Commitments (cid:3)t December 31, 2022, Kennedy Wilson(cid:317)s consolidated contractual cash obliga(cid:2462)ons, including debt, lines o(cid:61) credit, opera(cid:2462)ng leases and ground leases included the (cid:61)ollowing(cid:313) (Dollars in millions) (cid:7)ontractual obliga(cid:2462)ons Borrowings(cid:313)(cid:336)1(cid:337)(cid:336)(cid:403)(cid:337) (cid:1354)(cid:24)ortgage debt(cid:336)2(cid:337) (cid:1354)Senior notes(cid:336)3(cid:337) (cid:1354)(cid:7)redit (cid:61)acility (cid:1354)KW(cid:11) unsecured bonds(cid:336)(cid:404)(cid:337) (cid:1354)(cid:36)otal borrowings(cid:336)(cid:403)(cid:337) (cid:1354)Opera(cid:2462)ng leases (cid:1354)(cid:14)round leases(cid:336)(cid:1142)(cid:337) (cid:30)ayments due by period(cid:336)(cid:406)(cid:337) Less than 1 year (cid:36)otal 1(cid:331)3 years (cid:403)(cid:331)(cid:404) years (cid:3)(cid:91)er (cid:404) years (cid:362) (cid:362) 3,03(cid:403).(cid:406) 1,(cid:1142)00.0 2(cid:1142)2.0 (cid:404)0(cid:1142).(cid:403) (cid:404),(cid:1141)2(cid:404).3 10.(cid:1142) 2(cid:406).(cid:404) (cid:362) 2(cid:403)(cid:405).(cid:1142) — — — 2(cid:403)(cid:405).(cid:1142) 1.0 0.2 (cid:362) 1,11(cid:406).(cid:404) — 2(cid:1142)2.0 (cid:404)0(cid:1142).(cid:403) 1,(cid:406)0(cid:406).(cid:406) 2.1 0.(cid:404) (cid:362) (cid:1141)(cid:405)(cid:406).0 — — — (cid:1141)(cid:405)(cid:406).0 2.2 0.(cid:404) (cid:406)(cid:1142)(cid:1142).(cid:1141) 1,(cid:1142)00.0 — — 2,(cid:405)(cid:1142)(cid:1142).(cid:1141) (cid:404).(cid:404) 2(cid:1142).3 (cid:36)otal contractual cash obliga(cid:2462)ons(cid:336)(cid:1141)(cid:337)(cid:336)(cid:405)(cid:337) (cid:362) (cid:404),(cid:1141)(cid:1141)(cid:404).(cid:1141) (cid:362) 2(cid:403)(cid:406).0 (cid:362) 1,(cid:406)12.(cid:404) (cid:362) (cid:1141)(cid:1142)1.(cid:405) (cid:362) 2,(cid:1142)22.(cid:403) (1)(cid:2)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:25)(cid:111)(cid:124)(cid:59)(cid:118)(cid:2)(cid:405)(cid:330)(cid:406)(cid:2)(cid:111)(cid:61)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:25)(cid:111)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:7)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:13)(cid:98)(cid:109)(cid:45)(cid:109)(cid:49)(cid:98)(cid:45)(cid:1140)(cid:2)(cid:34)(cid:124)(cid:45)(cid:124)(cid:59)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:314)(cid:2)(cid:13)(cid:98)(cid:93)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:55)(cid:111)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:118)(cid:49)(cid:95)(cid:59)(cid:55)(cid:134)(cid:1140)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:114)(cid:45)(cid:139)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:314)(cid:2)(cid:3)(cid:118)(cid:118)(cid:134)(cid:108)(cid:98)(cid:109)(cid:93)(cid:2) (cid:59)(cid:45)(cid:49)(cid:95)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:111)(cid:48)(cid:1140)(cid:98)(cid:93)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:98)(cid:118)(cid:2)(cid:95)(cid:59)(cid:1140)(cid:55)(cid:2)(cid:134)(cid:109)(cid:2462)(cid:1140)(cid:2)(cid:108)(cid:45)(cid:124)(cid:134)(cid:117)(cid:98)(cid:124)(cid:139)(cid:311)(cid:2)(cid:137)(cid:59)(cid:2)(cid:59)(cid:118)(cid:2462)(cid:108)(cid:45)(cid:124)(cid:59)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:137)(cid:59)(cid:2)(cid:137)(cid:98)(cid:1140)(cid:1140)(cid:2)(cid:108)(cid:45)(cid:104)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:111)(cid:1140)(cid:1140)(cid:111)(cid:137)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:114)(cid:45)(cid:139)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:313)(cid:2)(cid:21)(cid:59)(cid:118)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:109)(cid:2)(cid:400)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:2)(cid:330)(cid:2) (cid:362)(cid:400)(cid:403)(cid:401)(cid:314)(cid:401)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:400)(cid:330)(cid:402)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2)(cid:362)(cid:402)(cid:404)(cid:400)(cid:314)(cid:1141)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:403)(cid:330)(cid:404)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2)(cid:362)(cid:400)(cid:399)(cid:399)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:3)(cid:91)(cid:59)(cid:117)(cid:2)(cid:404)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2)(cid:362)(cid:1142)(cid:402)(cid:314)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:114)(cid:45)(cid:139)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:111)(cid:109)(cid:2) (cid:136)(cid:45)(cid:117)(cid:98)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:95)(cid:45)(cid:136)(cid:59)(cid:2)(cid:48)(cid:59)(cid:59)(cid:109)(cid:2)(cid:49)(cid:45)(cid:1140)(cid:49)(cid:134)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:45)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:2)(cid:98)(cid:109)(cid:2)(cid:59)(cid:64)(cid:59)(cid:49)(cid:124)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:314) (2)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:399)(cid:314)(cid:1141)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:111)(cid:109)(cid:2)(cid:108)(cid:111)(cid:117)(cid:124)(cid:93)(cid:45)(cid:93)(cid:59)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:314) (cid:336)(cid:402)(cid:337)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:402)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:2)(cid:111)(cid:109)(cid:2)(cid:118)(cid:59)(cid:109)(cid:98)(cid:111)(cid:117)(cid:2)(cid:109)(cid:111)(cid:124)(cid:59)(cid:118)(cid:314) (4)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:403)(cid:399)(cid:314)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:1140)(cid:111)(cid:45)(cid:109)(cid:2)(cid:61)(cid:59)(cid:59)(cid:118)(cid:314) (cid:336)(cid:404)(cid:337)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:400)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:111)(cid:109)(cid:2)(cid:20)(cid:41)(cid:11)(cid:2)(cid:134)(cid:109)(cid:118)(cid:59)(cid:49)(cid:134)(cid:117)(cid:59)(cid:55)(cid:2)(cid:48)(cid:111)(cid:109)(cid:55)(cid:118)(cid:314) (cid:336)(cid:1141)(cid:337)(cid:2)(cid:2)(cid:20)(cid:59)(cid:109)(cid:109)(cid:59)(cid:55)(cid:139)(cid:2)(cid:41)(cid:98)(cid:1140)(cid:118)(cid:111)(cid:109)(cid:317)(cid:118)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:45)(cid:49)(cid:124)(cid:134)(cid:45)(cid:1140)(cid:2)(cid:111)(cid:48)(cid:1140)(cid:98)(cid:93)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:311)(cid:2)(cid:336)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:98)(cid:109)(cid:93)(cid:2)(cid:45)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:45)(cid:130)(cid:117)(cid:98)(cid:48)(cid:134)(cid:124)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:109)(cid:111)(cid:109)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:111)(cid:1140)(cid:1140)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:118)(cid:337)(cid:311)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:98)(cid:109)(cid:93)(cid:2) (cid:55)(cid:59)(cid:48)(cid:124)(cid:311)(cid:2)(cid:1140)(cid:98)(cid:109)(cid:59)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:117)(cid:59)(cid:55)(cid:98)(cid:124)(cid:311)(cid:2)(cid:111)(cid:114)(cid:59)(cid:117)(cid:45)(cid:2462)(cid:109)(cid:93)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:93)(cid:117)(cid:111)(cid:134)(cid:109)(cid:55)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:311)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:98)(cid:118)(cid:124)(cid:59)(cid:55)(cid:2)(cid:111)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:111)(cid:1140)(cid:1140)(cid:111)(cid:137)(cid:98)(cid:109)(cid:93)(cid:313)(cid:2)(cid:21)(cid:59)(cid:118)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:109)(cid:2)(cid:400)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:2)(cid:330)(cid:2)(cid:362)(cid:401)(cid:403)(cid:1142)(cid:314)(cid:1142)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:400)(cid:330)(cid:402)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2) (cid:362)(cid:400)(cid:311)(cid:406)(cid:400)(cid:399)(cid:314)(cid:401)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:403)(cid:330)(cid:404)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2)(cid:362)(cid:1141)(cid:405)(cid:405)(cid:314)(cid:399)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:312)(cid:2)(cid:3)(cid:91)(cid:59)(cid:117)(cid:2)(cid:404)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:330)(cid:2)(cid:362)(cid:401)(cid:311)(cid:405)(cid:404)(cid:1142)(cid:314)(cid:406)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:314) (cid:336)(cid:405)(cid:337)(cid:2)(cid:36)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:45)(cid:48)(cid:111)(cid:136)(cid:59)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:401)(cid:403)(cid:1141)(cid:314)(cid:1141)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:134)(cid:109)(cid:61)(cid:134)(cid:1140)(cid:67)(cid:1140)(cid:1140)(cid:59)(cid:55)(cid:2)(cid:49)(cid:45)(cid:114)(cid:98)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:49)(cid:111)(cid:108)(cid:108)(cid:98)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:134)(cid:109)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:314) (cid:336)(cid:1142)(cid:337)(cid:2)(cid:14)(cid:117)(cid:111)(cid:134)(cid:109)(cid:55)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2)(cid:111)(cid:109)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:314)(cid:2)(cid:3)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:134)(cid:109)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:59)(cid:55)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:95)(cid:45)(cid:136)(cid:59)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:59)(cid:138)(cid:114)(cid:98)(cid:117)(cid:59)(cid:2)(cid:45)(cid:118)(cid:2)(cid:61)(cid:45)(cid:117)(cid:2)(cid:111)(cid:134)(cid:124)(cid:2)(cid:45)(cid:118)(cid:2)(cid:401)(cid:401)(cid:404)(cid:1142)(cid:314) (cid:336)(cid:406)(cid:337)(cid:2)(cid:30)(cid:117)(cid:98)(cid:109)(cid:49)(cid:98)(cid:114)(cid:45)(cid:1140)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:45)(cid:139)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:59)(cid:64)(cid:59)(cid:49)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:59)(cid:138)(cid:124)(cid:59)(cid:109)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:114)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:314) Indebtedness and Related Covenants (cid:36)he (cid:61)ollowing describes certain indebtedness and related covenants. KWI Notes On February 11, 2021, Kennedy-Wilson, Inc., issued (cid:362)(cid:404)00.0 million aggregate principal amount o(cid:61) 202(cid:406) (cid:25)otes and (cid:362)(cid:404)00.0 million aggregate principal amount o(cid:61) 2031 (cid:25)otes (cid:336)together with the 202(cid:406) (cid:25)otes, the (cid:318)ini(cid:2462)al notes(cid:319)(cid:337). On (cid:24)arch 1(cid:404), 2021, Kennedy-Wilson, Inc. issued an addi(cid:2462)onal (cid:362)100 million aggregate principal o(cid:61) the 202(cid:406) (cid:25)otes and an addi(cid:2462)onal (cid:362)100 million o(cid:61) the 2031 (cid:25)otes. (cid:36)hese addi(cid:2462)onal notes were issued as (cid:318)addi(cid:2462)onal notes(cid:319) under the indentures pursuant to which Kennedy Wilson previously issued 202(cid:406) (cid:25)otes and the 2031 (cid:25)otes. On (cid:3)ugust 23, 2021, Kennedy-Wilson, Inc. issued (cid:362)(cid:1141)00.0 million aggregate principal amount o(cid:61) 2030 (cid:25)otes (cid:336)together with the 202(cid:406) (cid:25)otes, the 2031 (cid:25)otes and the addi(cid:2462)onal notes, the (cid:318)notes(cid:319)(cid:337). (cid:36)he notes are senior, unsecured obliga(cid:2462)ons o(cid:61) Kennedy Wilson and are guaranteed by Kennedy-Wilson Holdings, Inc. and certain subsidiaries o(cid:61) Kennedy Wilson. (cid:36)he notes accrue interest at a rate o(cid:61) (cid:403).(cid:405)(cid:404)0(cid:1143) (cid:336)in the case o(cid:61) the 202(cid:406) (cid:25)otes(cid:337), (cid:403).(cid:405)(cid:404)0(cid:1143) (cid:336)in the case o(cid:61) the 2030 (cid:25)otes(cid:337) and (cid:404).000(cid:1143) (cid:336)in the case o(cid:61) the 2031 (cid:25)otes(cid:337) per annum, payable semi-annually in arrears on (cid:24)arch 1 and September 1 o(cid:61) each year, beginning on September 1, 2021 (cid:61)or the 202(cid:406) (cid:25)otes and 2031 (cid:25)otes and (cid:24)arch 1, 2022 (cid:61)or the 2030 (cid:25)otes. (cid:36)he notes will mature on (cid:24)arch 1, 202(cid:406) (cid:336)in the case o(cid:61) the 202(cid:406) (cid:25)otes(cid:337), February 1, 2030 (cid:336)in case o(cid:61) 2030 (cid:25)otes(cid:337) and (cid:24)arch 1, 2031 (cid:336)in the case o(cid:61) the 2031 (cid:25)otes(cid:337), in each case unless earlier repurchased or redeemed. (cid:3)t any (cid:2462)me prior to (cid:24)arch 1, 202(cid:403) (cid:336)in the case o(cid:61) the 202(cid:406) (cid:25)otes(cid:337), September 1, 202(cid:403) (cid:336)in the case o(cid:61) the 2030 (cid:25)otes(cid:337) or (cid:24)arch 1, 202(cid:1141) (cid:336)in the case o(cid:61) the 2031 notes(cid:337), Kennedy Wilson may redeem the notes o(cid:61) the applicable series, in whole or in part, at a redemp(cid:2462)on price equal to 100(cid:1143) o(cid:61) their principal amount, plus an applicable (cid:318)make-whole(cid:319) premium and accrued and unpaid interest, i(cid:61) any, to the redemp(cid:2462)on date. (cid:3)t any (cid:2462)me and (cid:61)rom (cid:2462)me to (cid:2462)me on or a(cid:91)er (cid:24)arch 1, 202(cid:403) (cid:336)in the case o(cid:61) the 202(cid:406) (cid:25)otes(cid:337), September 1, 202(cid:403) (cid:336)in the case o(cid:61) the 2030 (cid:25)otes(cid:337) or (cid:24)arch 1, 202(cid:1141) (cid:336)in the case o(cid:61) the 2031 (cid:25)otes(cid:337), Kennedy Wilson may redeem the notes o(cid:61) the applicable series, in whole or in part, at speci(cid:67)ed redemp(cid:2462)on prices set (cid:61)orth in the indenture governing the notes o(cid:61) the applicable series, plus accrued and unpaid interest, i(cid:61) any, to the redemp(cid:2462)on date. In addi(cid:2462)on, prior to (cid:24)arch 1, 202(cid:403) (cid:336)(cid:61)or 202(cid:406) (cid:25)otes and 2031 (cid:25)otes(cid:337) and September 1, 202(cid:403) (cid:336)(cid:61)or 2030 (cid:25)otes(cid:337), Kennedy Wilson may redeem up to (cid:403)0(cid:1143) o(cid:61) the notes o(cid:61) either series (cid:61)rom the proceeds o(cid:61) certain equity o(cid:64)erings. (cid:25)o sinking (cid:61)und will be provided (cid:61)or the notes. Upon the occurrence o(cid:61) certain change o(cid:61) control or termina(cid:2462)on o(cid:61) trading events, holders o(cid:61) the notes may require Kennedy Wilson to repurchase their notes (cid:61)or cash equal to 101(cid:1143) o(cid:61) the principal amount o(cid:61) the notes to be repurchased, plus accrued and unpaid interest, i(cid:61) any, to, but e(cid:138)cluding, the applicable repurchase date. (cid:36)he total amount o(cid:61) the 202(cid:406) (cid:25)otes, 2030 (cid:25)otes and 2031 (cid:25)otes included in the (cid:7)ompany(cid:317)s consolidated balance sheets was (cid:362)1.(cid:1142) billion at December 31, 2022. KWE Notes (cid:36)he KW(cid:11) (cid:25)otes were issued at a discount and have a carrying value o(cid:61) (cid:362)(cid:404)0(cid:405).1 million at December 31, 2022 and have an annual (cid:67)(cid:138)ed coupon o(cid:61) 3.2(cid:404)(cid:1143) and mature in 202(cid:404). During the year ended December 31, 2022, KW(cid:11) launched a cash tender o(cid:64)er (cid:61)or up to (cid:360)1(cid:404)0 million in aggregate nominal amount o(cid:61) the KW(cid:11) (cid:25)otes and accepted all o(cid:61) the (cid:360)(cid:405)(cid:404).0 million (cid:336)appro(cid:138)imately (cid:362)(cid:1142)0.3 million based on December 31, 2022 rates(cid:337) in aggregate nominal amount o(cid:61) KW(cid:11) (cid:25)otes validly tendered pursuant to the tender o(cid:64)er (cid:61)or a purchase price equal to (cid:1142)2(cid:1143) o(cid:61) the nominal amount o(cid:61) the KW(cid:11) (cid:25)otes, which resulted in a gain on e(cid:138)(cid:2462)nguishment o(cid:61) debt o(cid:61) (cid:362)13.(cid:406) million. Borrowings Under Line of Credit On (cid:24)arch 2(cid:404), 2020, Kennedy-Wilson, Inc. (cid:336)the (cid:318)Borrower(cid:319)(cid:337), a wholly-owned subsidiary o(cid:61) Kennedy-Wilson Holdings, Inc. (cid:336)the (cid:318)(cid:7)ompany(cid:319)(cid:337), the (cid:7)ompany, as a guarantor and certain subsidiaries o(cid:61) the (cid:7)ompany (cid:336)such subsidiaries, the (cid:318)Subsidiary (cid:14)uarantors(cid:319)(cid:337) on (cid:24)arch 2(cid:404), 2020 entered into a (cid:362)(cid:404)00 million revolving line o(cid:61) credit (cid:336)(cid:318)Second (cid:3)(cid:351)(cid:33) Facility(cid:319)(cid:337). Loans under the Second (cid:3)(cid:351)(cid:33) Facility bear interest at a rate equal to LIBO(cid:33) plus between 1.(cid:405)(cid:404)(cid:1143) and 2.(cid:404)0(cid:1143), depending on the consolidated leverage ra(cid:2462)o as o(cid:61) the applicable measurement date. (cid:36)he Second (cid:3)(cid:351)(cid:33) Facility has a maturity date o(cid:61) (cid:24)arch 2(cid:404), 202(cid:403). Subject to certain condi(cid:2462)ons precedent and at the Borrower(cid:317)s op(cid:2462)on, the maturity date o(cid:61) the Second (cid:3)(cid:351)(cid:33) Facility may be e(cid:138)tended by one year. (cid:36)he (cid:7)ompany has (cid:362)2(cid:1142)2.0 million outstanding on the (cid:3)(cid:351)(cid:33) Facility as o(cid:61) December 31, 2022 with (cid:362)21(cid:1142).0 million available to be drawn under the revolving credit (cid:61)acility. Debt Covenants (cid:36)he Second (cid:3)(cid:351)(cid:33) Facility and the indentures governing the notes contain numerous restric(cid:2462)ve covenants that, among other things, limit the (cid:7)ompany and certain o(cid:61) its subsidiaries(cid:317) ability to incur addi(cid:2462)onal indebtedness, pay dividends or make distribu(cid:2462)ons to stockholders, repurchase capital 60 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 61 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) stock or debt, make investments, sell assets or subsidiary stock, create or permit liens, engage in transac(cid:2462)ons with a(cid:76)liates, enter into sale(cid:326)leaseback transac(cid:2462)ons, issue subsidiary equity and enter into consolida(cid:2462)ons or mergers. (cid:36)he Second (cid:3)(cid:351)(cid:33) Facility has certain covenants as set (cid:61)orth in that certain Second (cid:3)mended and (cid:33)estated (cid:7)redit (cid:3)greement, dated as o(cid:61) (cid:24)arch 2(cid:404), 2020 (cid:336)the (cid:318)(cid:7)redit (cid:3)greement(cid:319)(cid:337), that, among other things (cid:336)including the limita(cid:2462)ons set (cid:61)orth in the preceding paragraph(cid:337), requires the (cid:7)ompany to maintain (cid:336)i(cid:337) a ma(cid:138)imum consolidated leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than (cid:1141)(cid:404)(cid:1143), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)ii(cid:337) a minimum (cid:67)(cid:138)ed charge coverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not less than 1.(cid:405)0 to 1.00, measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter (cid:61)or the period o(cid:61) (cid:61)our (cid:61)ull (cid:67)scal quarters then ended, (cid:336)iii(cid:337) a minimum consolidated tangible net worth equal to or greater than the sum o(cid:61) (cid:362)1,(cid:405)00,000,000 plus an amount equal to (cid:67)(cid:91)y percent (cid:336)(cid:404)0(cid:1143)(cid:337) o(cid:61) net equity proceeds received by the (cid:7)ompany a(cid:91)er the date o(cid:61) the most recent (cid:67)nancial statements that are available as o(cid:61) (cid:24)arch 2(cid:404), 2020, measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)iv(cid:337) a ma(cid:138)imum recourse leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than an amount equal to consolidated tangible net worth as o(cid:61) the measurement date mul(cid:2462)plied by 1.(cid:404), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)v(cid:337) a ma(cid:138)imum secured recourse leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than an amount equal to 3.(cid:404)(cid:1143) o(cid:61) consolidated total asset value (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) and (cid:362)2(cid:406)(cid:406),000,000, (cid:336)vi(cid:337) a ma(cid:138)imum adjusted secured leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than (cid:404)(cid:404)(cid:1143), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, and (cid:336)vii(cid:337) liquidity (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) at least (cid:362)(cid:405)(cid:404).0 million. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany was in compliance with the (cid:61)oregoing (cid:67)nancial covenants. (cid:36)he obliga(cid:2462)ons o(cid:61) the Borrower pursuant to the (cid:7)redit (cid:3)greement are guaranteed by the (cid:7)ompany and certain wholly-owned subsidiaries o(cid:61) the (cid:7)ompany. (cid:36)he indentures governing the notes limit Kennedy-Wilson, Inc.(cid:317)s ability to incur addi(cid:2462)onal indebtedness i(cid:61), on the date o(cid:61) such incurrence and a(cid:91)er giving e(cid:64)ect to the new indebtedness, Kennedy-Wilson, Inc.(cid:317)s ma(cid:138)imum balance sheet leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the indenture(cid:337) is greater than 1.(cid:404)0 to 1.00. (cid:36)his ra(cid:2462)o is measured at the (cid:2462)me o(cid:61) incurrence o(cid:61) addi(cid:2462)onal indebtedness. (cid:36)he KW(cid:11) (cid:25)otes require KW(cid:11) to maintain (cid:336)i(cid:337) consolidated net indebtedness (cid:336)as de(cid:67)ned in the trust deed (cid:61)or the notes(cid:337) o(cid:61) no more than (cid:1141)0(cid:1143) o(cid:61) the total asset value(cid:312) (cid:336)ii(cid:337) consolidated secured indebtedness (cid:336)less cash and cash equivalents(cid:337) o(cid:61) no more than (cid:404)0(cid:1143) o(cid:61) total asset value(cid:312) (cid:336)iii(cid:337) an interest coverage ra(cid:2462)o o(cid:61) at least 1.(cid:404) to 1.0, and (cid:336)iv(cid:337) unencumbered assets o(cid:61) no less than 12(cid:404)(cid:1143) o(cid:61) the unsecured indebtedness (cid:336)less cash (cid:351) cash equivalents(cid:337). (cid:36)he covenants associated with KW(cid:11) (cid:25)otes are not an obliga(cid:2462)on o(cid:61) KWH and these amounts are presented as a component o(cid:61) our investment debt as it is an unsecured obliga(cid:2462)on rela(cid:2462)ng to an underlying investment o(cid:61) ours. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany was in compliance with these covenants. In addi(cid:2462)on, loan agreements that govern the (cid:7)ompany(cid:317)s property-level non-recourse (cid:67)nancings that are secured by its proper(cid:2462)es may contain opera(cid:2462)onal and (cid:67)nancial covenants, including but not limited to, debt yield related covenants and debt service coverage ra(cid:2462)o covenants and, with respect to mortgages secured by certain proper(cid:2462)es in (cid:11)urope, loan-to-value ra(cid:2462)o covenants. (cid:30)roperty-level non-recourse (cid:67)nancings with such loan-to-value covenants require that the underlying proper(cid:2462)es are valued on a periodic basis (cid:336)at least annually(cid:337). Subsequent to the year-ended December 31, 2022, the (cid:7)ompany resolved a breach o(cid:61) a loan-to-value covenant in a non-recourse loan agreement secured by retail and commercial assets in the United Kingdom. (cid:36)he (cid:7)ompany promptly resolved such breach by paying down the mortgage by (cid:362)(cid:406).1 million, (cid:362)(cid:405).(cid:1141) million o(cid:61) which was held at the proper(cid:2462)es that serves as the collateral (cid:61)or the subject mortgage. (cid:36)he loan totals (cid:362)1(cid:1141)(cid:404).(cid:1142) million or (cid:404).(cid:404)(cid:1143) o(cid:61) our consolidated mortgage balance. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany was in compliance with all property-level mortgages (cid:336)other than discussed immediately above(cid:337) and was current on all payments (cid:336)principal and interest(cid:337) with respect to the same. (cid:36)he (cid:61)ailure by the (cid:7)ompany to comply with such covenants and(cid:326)or secure waivers (cid:61)rom lenders could result in de(cid:61)aults under these instruments. In addi(cid:2462)on, i(cid:61) the (cid:7)ompany de(cid:61)aults under a mortgage loan and(cid:326)or such loan is accelerated by the lender, it may automa(cid:2462)cally be in de(cid:61)ault under any o(cid:61) its property and corporate unsecured loans that contain cross-de(cid:61)ault and(cid:326)or cross-accelera(cid:2462)on provisions. (cid:30)lease also see (cid:30)art I. Item 1(cid:3) R(cid:98)(cid:118)(cid:104) (cid:13)a(cid:49)to(cid:117)(cid:118)(cid:312) Off-Balance Sheet Arrangements Guarantees We have provided guarantees associated with loans secured by consolidated assets. (cid:3)t December 31, 2022, the ma(cid:138)imum poten(cid:2462)al amount o(cid:61) (cid:61)uture payments (cid:336)undiscounted(cid:337) we could be required to make under the guarantees was appro(cid:138)imately (cid:362)1(cid:403)2.(cid:406) million at December 31, 2022. (cid:36)he guarantees e(cid:138)pire through 2031 and our per(cid:61)ormance under the guarantees would be required to the e(cid:138)tent there is a shor(cid:127)all in liquida(cid:2462)on between the principal amount o(cid:61) the loan and the net sale proceeds o(cid:61) the applicable proper(cid:2462)es. I(cid:61) we were to become obligated to per(cid:61)orm on these guarantees, it could have an adverse e(cid:64)ect on our (cid:67)nancial condi(cid:2462)on. (cid:3)s o(cid:61) December 31, 2022, we have un(cid:61)ul(cid:67)lled capital commitments totaling (cid:362)2(cid:403)(cid:1141).(cid:1141) million to our unconsolidated investments and (cid:362)1(cid:405).(cid:405) million to our loan por(cid:127)olio. In addi(cid:2462)on to the un(cid:61)unded capital commitments on its joint venture investments, the (cid:7)ompany has (cid:362)(cid:1142)(cid:405).(cid:403) million o(cid:61) equity commitments rela(cid:2462)ng on consolidated and unconsolidated development projects. (cid:3)s we iden(cid:2462)(cid:61)y investment opportuni(cid:2462)es in the (cid:61)uture, we may be called upon to contribute addi(cid:2462)onal capital to unconsolidated investments in sa(cid:2462)s(cid:61)ac(cid:2462)on o(cid:61) our capital commitment obliga(cid:2462)ons. (cid:25)on(cid:328)Recourse Carve (cid:27)ut Guarantees (cid:24)ost o(cid:61) our real estate proper(cid:2462)es within our equity partnerships are encumbered by tradi(cid:2462)onal non-recourse debt obliga(cid:2462)ons. In connec(cid:2462)on with most o(cid:61) these loans, however, we entered into certain (cid:318)non-recourse carve out(cid:319) guarantees, which provide (cid:61)or the loans to become par(cid:2462)ally or (cid:61)ully recourse against us i(cid:61) certain triggering events occur. (cid:3)lthough these events are di(cid:64)erent (cid:61)or each guarantee, some o(cid:61) the common events include(cid:313) • the special purpose property-owning subsidiary(cid:317)s (cid:67)ling a voluntary pe(cid:2462)(cid:2462)on (cid:61)or bankruptcy(cid:312) • the special purpose property-owning subsidiary(cid:317)s (cid:61)ailure to maintain its status as a special purpose en(cid:2462)ty(cid:312) and • subject to certain condi(cid:2462)ons, the special purpose property-owning subsidiary(cid:317)s (cid:61)ailure to obtain lender(cid:317)s wri(cid:130)en consent prior to any subordinate (cid:67)nancing or other voluntary lien encumbering the associated property. In the event that any o(cid:61) these triggering events occur and the loans become par(cid:2462)ally or (cid:61)ully recourse against us, our business, (cid:67)nancial condi(cid:2462)on, results o(cid:61) opera(cid:2462)ons and common stock price could be materially adversely a(cid:64)ected. 62 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 63 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) In addi(cid:2462)on, other items that are customarily recourse to a non-recourse carve out guarantor include, but are not limited to, the payment o(cid:61) real property ta(cid:138)es, liens which are senior to the mortgage loan and outstanding security deposits. e(cid:138)pense or (cid:362)(cid:406).(cid:404) million decrease in interest e(cid:138)pense savings during 2023 on our current share o(cid:61) indebtedness. (cid:36)he weighted average strike price on caps and maturity o(cid:61) Kennedy Wilson(cid:317)s variable rate mortgages are 2.32(cid:1143) and appro(cid:138)imately 2.1 years, respec(cid:2462)vely, as o(cid:61) December 31, 2022. Impact of Inﬂation and Changing Prices However, as discussed throughout this report, high in(cid:89)a(cid:2462)on impacted the global economy during the year ended December 31, 2022 and con(cid:2462)nues to impact the global economy. Our e(cid:138)posure to market risk (cid:61)rom changing prices consists primarily o(cid:61) (cid:89)uctua(cid:2462)ons in rental rates o(cid:61) commercial and mul(cid:2462)(cid:61)amily proper(cid:2462)es, market interest rates on investment mortgages and debt obliga(cid:2462)ons and real estate property values. (cid:33)ental rate increases are dependent upon market condi(cid:2462)ons and the compe(cid:2462)(cid:2462)ve environments in the respec(cid:2462)ve loca(cid:2462)ons o(cid:61) the proper(cid:2462)es. (cid:36)o the e(cid:138)tent that we engage in development ac(cid:2462)vi(cid:2462)es, we may have e(cid:138)posure to changing prices in materials or cost o(cid:61) labor. (cid:36)he revenues o(cid:61) the investment management opera(cid:2462)ons with respect to rental proper(cid:2462)es are highly dependent upon the aggregate rents o(cid:61) the proper(cid:2462)es managed, which are a(cid:64)ected by rental rates and building occupancy rates. (cid:11)mployee compensa(cid:2462)on is the principal cost element o(cid:61) investment management. We may be able to recoup all or a signi(cid:67)cant por(cid:2462)on o(cid:61) any impact that we may su(cid:64)er (cid:61)rom rising costs through rental increases. (cid:36)o the e(cid:138)tent that the rate o(cid:61) increase in e(cid:138)penses is greater than the rate o(cid:61) increase in rental rates, changing price will have an adverse impact on the (cid:7)ompany. See also In(cid:89)a(cid:2462)on may adversely a(cid:64)ect our (cid:67)nancial condi(cid:2462)on and results o(cid:61) opera(cid:2462)ons in Item 1(cid:3). (cid:33)isk Factors (cid:61)or more detailed discussion on the impact o(cid:61) in(cid:89)a(cid:2462)on on the (cid:7)ompany. Qualitative and Quantitative Disclosures about Market Risk Our primary market risk e(cid:138)posure relates to changes in interest rates in connec(cid:2462)on with our short- term borrowings and (cid:89)uctua(cid:2462)ons in (cid:61)oreign currency e(cid:138)change rates in connec(cid:2462)on with our (cid:61)oreign opera(cid:2462)ons. Interest Rate Risk We have established an interest rate management policy, which a(cid:130)empts to minimi(cid:140)e our overall cost o(cid:61) debt while taking into considera(cid:2462)on the earnings implica(cid:2462)ons associated with the vola(cid:2462)lity o(cid:61) short-term interest rates. (cid:3)s part o(cid:61) this policy, we have elected to maintain a combina(cid:2462)on o(cid:61) variable and (cid:67)(cid:138)ed rate debt. (cid:3)s o(cid:61) December 31, 2022, (cid:405)(cid:1141)(cid:1143) o(cid:61) our consolidated debt is (cid:67)(cid:138)ed rate, 20(cid:1143) is (cid:89)oa(cid:2462)ng rate with interest caps and (cid:403)(cid:1143) is (cid:89)oa(cid:2462)ng rate without interest caps. (cid:3)s such, (cid:89)uctua(cid:2462)ons in interest rates may impact our (cid:89)oa(cid:2462)ng rate debt (cid:336)and (cid:89)oa(cid:2462)ng rate debt with interest caps to a lesser e(cid:138)tent(cid:337) and cause our consolidated interest e(cid:138)pense and income (cid:61)rom unconsolidated investments to (cid:89)uctuate. (cid:36)ypically, these (cid:89)uctua(cid:2462)ons do not give rise to a signi(cid:67)cant long-term interest rate risk because they generally have short maturi(cid:2462)es. We hold variable rate debt on some o(cid:61) our consolidated and unconsolidated proper(cid:2462)es that is subject to interest rate (cid:89)uctua(cid:2462)ons. (cid:36)hese variable rates generally are based on the lender(cid:317)s base rate, prime rate, (cid:11)U(cid:33)IBO(cid:33), (cid:14)B(cid:30) LIBO(cid:33), LIBO(cid:33), SO(cid:25)I(cid:3) plus an applicable borrowing margin. (cid:3)ddi(cid:2462)onally, in order to mi(cid:2462)gate some o(cid:61) the risk associated with increasing interest rates, we have purchased interest rate caps that limit the amount that interest e(cid:138)pense can increase with rate increases. However, some o(cid:61) our debt is uncapped and the mortgages that do have interest caps are subject to increased interest e(cid:138)pense un(cid:2462)l rates hit the level o(cid:61) caps that have been purchased. I(cid:61) there was a 100-basis point increase or decrease, we would have a (cid:362)(cid:1141).3 million increase in interest (cid:36)he table below represents contractual balances o(cid:61) our (cid:67)nancial instruments at the e(cid:138)pected maturity dates as well as the (cid:61)air value as o(cid:61) December 31, 2022. (cid:36)he weighted average interest rate (cid:61)or the various assets and liabili(cid:2462)es presented are actual as o(cid:61) December 31, 2022. We closely monitor the (cid:89)uctua(cid:2462)on in interest rates, and i(cid:61) rates were to increase signi(cid:67)cantly, we believe that we would be able to either hedge the change in the interest rate or re(cid:67)nance the loans with (cid:67)(cid:138)ed interest rate debt. (cid:3)ll instruments included in this analysis are non-trading. (cid:30)rincipal (cid:24)aturing in(cid:313) Fair (cid:40)alue December 31, 2023 202(cid:403) 202(cid:404) 202(cid:1141) 202(cid:405) (cid:36)herea(cid:91)er (cid:36)otal 2022 (Dollars in millions) Interest rate sensi(cid:2462)ve (cid:1354)(cid:1354)assets (cid:1354)(cid:7)ash equivalents (cid:1354)(cid:3)verage interest rate (cid:1354)Fi(cid:138)ed rate receivables (cid:1354)(cid:3)verage interest rate(cid:336)1(cid:337) (cid:1354)(cid:40)ariable rate (cid:1354)(cid:1354)receivables (cid:1354)(cid:3)verage interest rate (cid:362) (cid:403)3(cid:406).3 (cid:362) 1.32 (cid:1143) (cid:403).2 (cid:1142).(cid:406)0 (cid:1143) (cid:362) — — (cid:1143) (cid:362) — — (cid:1143) (cid:404).1 (cid:403).01 (cid:1143) (cid:1142).(cid:1142) (cid:1141).(cid:1142)(cid:406) (cid:1143) (cid:403)0.(cid:1141) 10.(cid:406)(cid:406) (cid:1143) 3(cid:405).2 10.(cid:404)2 (cid:1143) (cid:403)(cid:403).(cid:405) 10.(cid:403)(cid:1142) (cid:1143) (cid:362) — — (cid:1143) — — (cid:1143) — — (cid:1143) (cid:362) — — (cid:1143) — — (cid:1143) — — (cid:1143) — — (cid:1143) (cid:1142).1 (cid:405).3(cid:404) (cid:1143) 0.(cid:1142) (cid:1141).(cid:406)(cid:404) (cid:1143) (cid:362) (cid:403)3(cid:406).3 (cid:362) 1.32 (cid:1143) 2(cid:1141).2 (cid:404).(cid:1141)(cid:1142) (cid:1143) 123.3 (cid:405).03 (cid:1143) (cid:1354)(cid:1354)(cid:1354)(cid:36)otal (cid:362) (cid:403)(cid:1142)(cid:403).1 (cid:362) (cid:403)2.3 (cid:362) (cid:404)3.(cid:404) (cid:362) — (cid:362) — (cid:362) (cid:1142).(cid:406) (cid:362) (cid:404)(cid:1142)(cid:1142).(cid:1142) (cid:362) Weighted average (cid:1354)(cid:1354)interest rate(cid:336)1(cid:337) Interest rate sensi(cid:2462)ve (cid:1354)(cid:1354)liabili(cid:2462)es (cid:1354)(cid:40)ariable rate (cid:1354)(cid:1354)borrowings (cid:1354)(cid:3)verage interest rate (cid:1354)Fi(cid:138)ed rate borrowings (cid:1354)(cid:3)verage interest rate 2.1(cid:406) (cid:1143) (cid:406).(cid:405)(cid:403) (cid:1143) (cid:406).(cid:1142)(cid:406) (cid:1143) — (cid:1143) — (cid:1143) (cid:405).32 (cid:1143) 2.(cid:405)1 (cid:1143) (cid:362) (cid:405)1.(cid:1141) (cid:362) 1(cid:403)2.(cid:403) (cid:362) (cid:403)21.(cid:404) (cid:362) 32(cid:406).2 (cid:362) 1(cid:406)0.3 (cid:362) 220.(cid:1142) (cid:362)1,3(cid:405)(cid:404).(cid:1142) (cid:362) (cid:403).(cid:404)3 (cid:1143) 1(cid:1141)(cid:1141).(cid:406) 2.(cid:406)3 (cid:1143) (cid:403).(cid:405)3 (cid:1143) 3(cid:1142).(cid:405) 3.(cid:406)(cid:406) (cid:1143) (cid:404).(cid:404)(cid:404) (cid:1143) (cid:405)2(cid:1141).1 3.3(cid:404) (cid:1143) (cid:404).32 (cid:1143) (cid:1141).(cid:403)1 (cid:1143) (cid:404).(cid:1141)(cid:406) (cid:1143) (cid:404).(cid:404)0 (cid:1143) 2(cid:403)2.0 1(cid:1142)1.(cid:1141) 2,(cid:1142)(cid:406)(cid:403).2 (cid:403),2(cid:403)(cid:406).(cid:404) 3.(cid:404)3 (cid:1143) 3.(cid:1142)(cid:406) (cid:1143) (cid:403).32 (cid:1143) (cid:403).03 (cid:1143) (cid:1354)(cid:1354)(cid:1354)(cid:36)otal (cid:362) 23(cid:1142).(cid:404) (cid:362) 1(cid:1142)1.1 (cid:362) 1,1(cid:403)(cid:405).(cid:1141) (cid:362) (cid:404)(cid:405)1.2 (cid:362) 3(cid:405)1.(cid:406) (cid:362) 3,11(cid:404).0 (cid:362)(cid:404),(cid:1141)2(cid:404).3 (cid:362) Weighted average (cid:1354)(cid:1354)interest rate 3.(cid:403)1 (cid:1143) (cid:403).(cid:404)(cid:405) (cid:1143) (cid:403).1(cid:1141) (cid:1143) (cid:403).(cid:404)(cid:1141) (cid:1143) (cid:404).1(cid:1142) (cid:1143) (cid:403).(cid:403)1 (cid:1143) (cid:403).3(cid:406) (cid:1143) (1)(cid:2)(cid:17)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:2)(cid:118)(cid:59)(cid:109)(cid:118)(cid:98)(cid:2462)(cid:136)(cid:59)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:317)(cid:2)(cid:137)(cid:59)(cid:98)(cid:93)(cid:95)(cid:124)(cid:59)(cid:55)(cid:2)(cid:45)(cid:136)(cid:59)(cid:117)(cid:45)(cid:93)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:118)(cid:98)(cid:136)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:114)(cid:59)(cid:117)(cid:61)(cid:111)(cid:117)(cid:108)(cid:98)(cid:109)(cid:93)(cid:2)(cid:117)(cid:59)(cid:49)(cid:59)(cid:98)(cid:136)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:118)(cid:314) (cid:403)3(cid:406).3 — 2(cid:403).1 — 123.3 — (cid:404)(cid:1142)(cid:1141).(cid:405) 1,3(cid:405)(cid:404).(cid:405) — 3,(cid:404)(cid:1142)2.(cid:406) — (cid:403),(cid:406)(cid:404)(cid:1142).(cid:1141) Currenc(cid:139) Risk(cid:330)Foreign Currencies (cid:3) signi(cid:67)cant por(cid:2462)on o(cid:61) our business is located outside the United States. (cid:3)s such, we have (cid:61)oreign currency (cid:89)uctua(cid:2462)on risk with respect to those investments and business units. In certain instances, we u(cid:2462)li(cid:140)e (cid:61)oreign currency hedging deriva(cid:2462)ves to mi(cid:2462)gate the impact o(cid:61) this risk on our equity. (cid:36)he (cid:67)nancial statements o(cid:61) Kennedy Wilson(cid:317)s subsidiaries located outside the United States are measured using the local currency, as this is their (cid:61)unc(cid:2462)onal currency. (cid:36)he assets and liabili(cid:2462)es o(cid:61) these subsidiaries are translated at the rates o(cid:61) e(cid:138)change at the balance sheet date and income and e(cid:138)penses are translated at the average monthly rate. (cid:36)he (cid:61)oreign currencies include the euro and the Bri(cid:2462)sh pound sterling. (cid:7)umula(cid:2462)ve transla(cid:2462)on adjustments, to the e(cid:138)tent not included in cumula(cid:2462)ve net income, are included in the consolidated statement o(cid:61) equity as a component o(cid:61) accumulated other comprehensive income. (cid:7)urrency transla(cid:2462)on gains and losses and currency deriva(cid:2462)ve gains and losses will remain in other comprehensive income unless and un(cid:2462)l the (cid:7)ompany substan(cid:2462)ally liquidates underlying investments. 64 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 65 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:3)ppro(cid:138)imately 3(cid:405)(cid:1143) o(cid:61) our investment account is invested through our (cid:61)oreign pla(cid:127)orms in their local currencies. Investment level debt is generally incurred in local currencies and there(cid:61)ore we consider our equity investment as the appropriate e(cid:138)posure to evaluate (cid:61)or hedging purposes. (cid:3)ddi(cid:2462)onally, the costs to operate these businesses, such as compensa(cid:2462)on, overhead and interest e(cid:138)pense are incurred in local currencies. We typically do not hedge (cid:61)uture opera(cid:2462)ons or cash (cid:89)ows o(cid:61) opera(cid:2462)ons denominated in (cid:61)oreign currencies, which may have a signi(cid:67)cant impact on the results o(cid:61) our opera(cid:2462)ons (cid:61)or both the (cid:7)onsolidated and (cid:7)o-Invest segments. In order to manage the e(cid:64)ect o(cid:61) these (cid:89)uctua(cid:2462)ons, we generally hedge our book equity e(cid:138)posure to (cid:61)oreign currencies through currency (cid:61)orward contracts and op(cid:2462)ons. (cid:3)s o(cid:61) December 31, 2022, we have hedged (cid:406)1(cid:1143) o(cid:61) the gross asset carrying value o(cid:61) our euro-denominated investments and (cid:406)2(cid:1143) o(cid:61) the gross asset carrying value o(cid:61) our (cid:14)B(cid:30)-denominated investments. Our investment management businesses typically do not require much capital, so (cid:61)oreign currency transla(cid:2462)on and deriva(cid:2462)ve ac(cid:2462)vity primarily relates to the investments segment as that has greater balance sheet e(cid:138)posure to (cid:61)oreign currency (cid:89)uctua(cid:2462)ons. I(cid:61) there was a (cid:404)(cid:1143) increase or decrease in (cid:61)oreign e(cid:138)change rates on the currencies we invest to the U.S. Dollar our net asset value would increase by (cid:362)22.(cid:1141) million or decrease by (cid:362)23.1 million. I(cid:61) rates moved 10(cid:1143), we would have an increase o(cid:61) (cid:362)(cid:403)(cid:403).(cid:1141) million and a decrease o(cid:61) (cid:362)(cid:403)(cid:1141).(cid:1141) million. Financial Measures and Descriptions. Rental—(cid:33)ental income is comprised o(cid:61) rental revenue earned by our consolidated real estate investments. Hotel—Hotel income is comprised o(cid:61) hotel revenue earned by our consolidated hotels. Investment Management Fees—Investment management (cid:61)ees are primarily comprised o(cid:61) base asset management (cid:61)ees and acquisi(cid:2462)on (cid:61)ees generated by our investment management division. Fees earned (cid:61)rom consolidated investments are eliminated in consolida(cid:2462)on with the amount rela(cid:2462)ng to our equity partners being recogni(cid:140)ed through income a(cid:130)ributable to noncontrolling interests. Property Services—(cid:30)roperty services (cid:61)ees are primarily comprised o(cid:61) property management (cid:61)ees, leasing (cid:61)ees and sales commissions generated by our property services division un(cid:2462)l its sale in the (cid:61)ourth quarter o(cid:61) 2020. Fees earned (cid:61)rom consolidated investments are eliminated in consolida(cid:2462)on with the amount rela(cid:2462)ng to our equity partners being recogni(cid:140)ed through income a(cid:130)ributable to noncontrolling interests. Loans and other income—Interest income earned on consolidated loans. Income from unconsolidated investments—principal co-investments—Income (cid:61)rom unconsolidated investments—principal co-investments consists o(cid:61) the (cid:7)ompany(cid:317)s share o(cid:61) income or loss earned on investments in which the (cid:7)ompany can e(cid:138)ercise signi(cid:67)cant in(cid:89)uence but does not have control. Income (cid:61)rom unconsolidated investments includes income or loss (cid:61)rom ordinary course opera(cid:2462)ons o(cid:61) the underlying investment, gains or losses on sale and (cid:61)air value gains and losses. Income from unconsolidated investments—performance allocations—(cid:30)er(cid:61)ormance alloca(cid:2462)ons relate to alloca(cid:2462)ons to the general partner, special limited partner or asset manager o(cid:61) Kennedy Wilson(cid:317)s co-investments it manages based on the cumula(cid:2462)ve per(cid:61)ormance o(cid:61) the (cid:61)und and are subject to pre(cid:61)erred return thresholds o(cid:61) the limited partners. Gain on sale of real estate, net—(cid:14)ain on sale o(cid:61) real estate, net relates to the amount received over the carrying value o(cid:61) assets sold. Impairments on consolidated real estate assets are also recorded to this line to the e(cid:138)tent that do not require separate presenta(cid:2462)on. Rental—(cid:33)ental e(cid:138)penses consist o(cid:61) the e(cid:138)penses o(cid:61) our consolidated real estate investments, including items such as property ta(cid:138)es, insurance, maintenance and repairs, u(cid:2462)li(cid:2462)es, supplies, salaries and management (cid:61)ees. Hotel—Hotel e(cid:138)penses consist o(cid:61) e(cid:138)penses o(cid:61) our consolidated hotel investments, including items such as property ta(cid:138)es, insurance, maintenance and repairs, u(cid:2462)li(cid:2462)es, supplies, salaries and management (cid:61)ees. Compensation and related—(cid:11)mployee compensa(cid:2462)on, comprising o(cid:61) salary, bonus, employer payroll ta(cid:138)es and bene(cid:67)ts paid on behal(cid:61) o(cid:61) employees. Share-based compensation—(cid:7)ompensa(cid:2462)on associated with the grants o(cid:61) share-based awards. Performance allocation compensation—(cid:7)ompensa(cid:2462)on associated with up to thirty-(cid:67)ve percent (cid:336)3(cid:404)(cid:1143)(cid:337) o(cid:61) any per(cid:61)ormance alloca(cid:2462)on earned by certain commingled (cid:61)unds and separate account investments to be allocated to certain non-(cid:25)(cid:11)O employees o(cid:61) the (cid:7)ompany. General and administrative—(cid:14)eneral and administra(cid:2462)ve e(cid:138)penses represent administra(cid:2462)ve costs necessary to run Kennedy Wilson(cid:317)s businesses and include items such as occupancy and equipment e(cid:138)penses, pro(cid:61)essional (cid:61)ees, public company costs, travel and related e(cid:138)penses, and communica(cid:2462)ons and in(cid:61)orma(cid:2462)on services. Depreciation and amortization—Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on is comprised o(cid:61) deprecia(cid:2462)on e(cid:138)pense which is recogni(cid:140)ed ratably over the use(cid:61)ul li(cid:61)e o(cid:61) an asset and amor(cid:2462)(cid:140)a(cid:2462)on e(cid:138)pense which primarily consist o(cid:61) the amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) assets allocated to the value o(cid:61) in-place leases upon acquisi(cid:2462)on o(cid:61) a consolidated real estate asset. Interest expense—Interest e(cid:138)pense represents interest costs associated with our senior notes payable, revolving credit (cid:61)acility, mortgages on our consolidated real estate, and unsecured debt held by KW(cid:11). Other income (loss)—Other income (cid:336)loss(cid:337) includes the reali(cid:140)ed (cid:61)oreign currency e(cid:138)change income or loss rela(cid:2462)ng to the se(cid:130)lement o(cid:61) (cid:61)oreign transac(cid:2462)ons during the year which arise due to changes in currency e(cid:138)change rates, reali(cid:140)ed gains or losses related to the se(cid:130)lement o(cid:61) deriva(cid:2462)ve instruments, interest income on bank deposits, commission e(cid:138)penses on property services and transac(cid:2462)on related e(cid:138)penses related to unsuccess(cid:61)ul deals. Income taxes—(cid:36)he (cid:7)ompany(cid:317)s services business operates globally as corporate en(cid:2462)(cid:2462)es subject to (cid:61)ederal, state, and local income ta(cid:138)es and the investment business operates through various partnership structures to acquire wholly-owned or jointly-owned investments in mul(cid:2462)(cid:61)amily, commercial, residen(cid:2462)al and development proper(cid:2462)es. (cid:36)he (cid:7)ompany(cid:317)s distribu(cid:2462)ve share o(cid:61) income (cid:61)rom its partnership investments will be subject to (cid:61)ederal, state, and local ta(cid:138)es and the related ta(cid:138) provision a(cid:130)ributable to the (cid:7)ompany(cid:317)s share o(cid:61) the income ta(cid:138) is re(cid:89)ected in the consolidated (cid:67)nancial statements. Accumulated other comprehensive income (loss)—(cid:3)ccumulated other comprehensive income (cid:336)loss(cid:337) represents the (cid:7)ompany(cid:317)s share o(cid:61) (cid:61)oreign currency movement on transla(cid:2462)ng Kennedy Wilson(cid:317)s (cid:61)oreign subsidiaries (cid:61)rom their (cid:61)unc(cid:2462)onal currency into the (cid:7)ompany(cid:317)s repor(cid:2462)ng currency. (cid:36)hese amounts are o(cid:64)set by Kennedy Wilson(cid:317)s e(cid:64)ec(cid:2462)ve por(cid:2462)on o(cid:61) currency related hedge instruments. 66 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 67 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Non-GAAP Measures and Certain Deﬁnitions (cid:318)KWH,(cid:319) (cid:318)KW,(cid:319) (cid:318)Kennedy Wilson,(cid:319) the (cid:318)(cid:7)ompany,(cid:319) (cid:318)we,(cid:319) (cid:318)our,(cid:319) or (cid:318)us(cid:319) re(cid:61)ers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries. (cid:36)he consolidated (cid:67)nancial statements o(cid:61) the (cid:7)ompany include the results o(cid:61) the (cid:7)ompany(cid:317)s consolidated subsidiaries. (cid:318)KW(cid:11)(cid:319) re(cid:61)ers to Kennedy Wilson (cid:11)urope (cid:33)eal (cid:11)state Limited. (cid:318)(cid:3)djusted (cid:11)BI(cid:36)D(cid:3)(cid:319) represents net income be(cid:61)ore interest e(cid:138)pense, (cid:336)gain(cid:337) loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt, our share o(cid:61) interest e(cid:138)pense included in unconsolidated investments, deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on, our share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on included in unconsolidated investments, provision (cid:61)or income ta(cid:138)es, our share o(cid:61) ta(cid:138)es included in unconsolidated investments, share-based compensa(cid:2462)on e(cid:138)pense (cid:61)or the (cid:7)ompany and (cid:11)BI(cid:36)D(cid:3) a(cid:130)ributable to noncontrolling interests. (cid:30)lease see (cid:318)(cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons—(cid:25)on- (cid:14)(cid:3)(cid:3)(cid:30) measures(cid:319) (cid:61)or a reconcilia(cid:2462)on o(cid:61) (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) to net income as reported under (cid:14)(cid:3)(cid:3)(cid:30). Our management uses (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) to analy(cid:140)e our business because it adjusts net income (cid:61)or items we believe do not accurately re(cid:89)ect the nature o(cid:61) our business going (cid:61)orward or that relate to non-cash compensa(cid:2462)on e(cid:138)pense or noncontrolling interests. Such items may vary (cid:61)or di(cid:64)erent companies (cid:61)or reasons unrelated to overall opera(cid:2462)ng per(cid:61)ormance. (cid:3)ddi(cid:2462)onally, we believe (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) is use(cid:61)ul to investors to assist them in ge(cid:2478)ng a more accurate picture o(cid:61) our results (cid:61)rom opera(cid:2462)ons. However, (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) is not a recogni(cid:140)ed measurement under (cid:14)(cid:3)(cid:3)(cid:30) and when analy(cid:140)ing our opera(cid:2462)ng per(cid:61)ormance, readers should use (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) in addi(cid:2462)on to, and not as an alterna(cid:2462)ve (cid:61)or, net income as determined in accordance with (cid:14)(cid:3)(cid:3)(cid:30). Because not all companies use iden(cid:2462)cal calcula(cid:2462)ons, our presenta(cid:2462)on o(cid:61) (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) may not be comparable to similarly (cid:2462)tled measures o(cid:61) other companies. Furthermore, (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) is not intended to be a measure o(cid:61) (cid:61)ree cash (cid:89)ow (cid:61)or our management(cid:317)s discre(cid:2462)onary use, as it does not remove all non-cash items (cid:336)such as non-cash acquisi(cid:2462)on- related gains or e(cid:138)penses(cid:337) or consider certain cash requirements such as ta(cid:138) and debt service payments. (cid:36)he amount shown (cid:61)or (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) also di(cid:64)ers (cid:61)rom the amount calculated under similarly (cid:2462)tled de(cid:67)ni(cid:2462)ons in our debt instruments, which are (cid:61)urther adjusted to re(cid:89)ect certain other cash and non- cash charges and are used to determine compliance with (cid:67)nancial covenants and our ability to engage in certain ac(cid:2462)vi(cid:2462)es, such as incurring addi(cid:2462)onal debt and making certain restricted payments. (cid:318)(cid:3)djusted (cid:25)et Income(cid:319) represents net income be(cid:61)ore deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on, our share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on included in unconsolidated investments, share-based compensa(cid:2462)on, net income a(cid:130)ributable to the noncontrolling interests, be(cid:61)ore deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on and pre(cid:61)erred dividends. (cid:318)(cid:7)ap rate(cid:319) represents the net opera(cid:2462)ng income o(cid:61) an investment (cid:61)or the year preceding its acquisi(cid:2462)on or disposi(cid:2462)on, as applicable, divided by the purchase or sale price, as applicable. (cid:7)ap rates set (cid:61)orth in this report only include data (cid:61)rom income-producing proper(cid:2462)es. We calculate cap rates based on in(cid:61)orma(cid:2462)on that is supplied to us during the acquisi(cid:2462)on diligence process. (cid:36)his in(cid:61)orma(cid:2462)on is not audited or reviewed by independent accountants and may be presented in a manner that is di(cid:64)erent (cid:61)rom similar in(cid:61)orma(cid:2462)on included in our (cid:67)nancial statements prepared in accordance with (cid:14)(cid:3)(cid:3)(cid:30). In addi(cid:2462)on, cap rates represent historical per(cid:61)ormance and are not a guarantee o(cid:61) (cid:61)uture (cid:25)OI. (cid:30)roper(cid:2462)es (cid:61)or which a cap rate is provided may not con(cid:2462)nue to per(cid:61)orm at that cap rate. (cid:318)(cid:7)o-Investment (cid:30)or(cid:127)olio (cid:25)OI(cid:319) re(cid:61)ers to the (cid:25)OI that is generated (cid:61)rom the proper(cid:2462)es that we have an ownership interest in and are held in our (cid:7)o-Investment (cid:30)or(cid:127)olio business segment. (cid:30)lease also see (cid:318)(cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons—(cid:7)ertain (cid:25)on-(cid:14)(cid:3)(cid:3)(cid:30) (cid:24)easures and (cid:33)econcilia(cid:2462)ons(cid:319) (cid:61)or a reconcilia(cid:2462)on o(cid:61) (cid:7)o-Investment (cid:30)or(cid:127)olio (cid:25)OI to net income as reported under (cid:14)(cid:3)(cid:3)(cid:30). (cid:318)(cid:7)onsolidated (cid:30)or(cid:127)olio (cid:25)OI(cid:319) re(cid:61)ers to the (cid:25)OI that is generated (cid:61)rom the proper(cid:2462)es that we have an ownership interest in and are held in our (cid:7)onsolidated (cid:30)roper(cid:2462)es business segment. (cid:30)lease also see (cid:318)(cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons—(cid:7)ertain (cid:25)on-(cid:14)(cid:3)(cid:3)(cid:30) (cid:24)easures and (cid:33)econcilia(cid:2462)ons(cid:319) (cid:61)or a reconcilia(cid:2462)on o(cid:61) (cid:7)onsolidated (cid:30)or(cid:127)olio (cid:25)OI to net income as reported under (cid:14)(cid:3)(cid:3)(cid:30). (cid:318)(cid:11)quity partners(cid:319) re(cid:61)ers to non-wholly-owned subsidiaries that we consolidate in our (cid:67)nancial statements under U.S. (cid:14)(cid:3)(cid:3)(cid:30) and third-party equity providers. (cid:318)(cid:11)s(cid:2462)mated annual (cid:25)OI(cid:319) re(cid:61)ers to our consolidated (cid:25)OI (cid:336)comprised o(cid:61) rental revenues, hotel revenues, rental (cid:336)e(cid:138)penses(cid:337), hotel (cid:336)e(cid:138)penses(cid:337) and loans and other(cid:337), as adjusted to the property-level (cid:25)OI, at our share, as (cid:61)urther adjusted by assets acquired and disposed (cid:336)net(cid:337), lease-up and development por(cid:127)olio, hotel opera(cid:2462)ons, assets owned and occupied by us, amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) above(cid:326)below market leases (cid:336)net(cid:337), straight-line and (cid:61)ree rent (cid:336)net(cid:337) and non-recurring income(cid:326)e(cid:138)pense, F(cid:42), and other on an es(cid:2462)mated annuali(cid:140)ed basis. It is a property-level non-(cid:14)(cid:3)(cid:3)(cid:30) measure represen(cid:2462)ng the es(cid:2462)mated annual net opera(cid:2462)ng income (cid:61)rom each property as o(cid:61) the date shown, inclusive o(cid:61) rent abatements (cid:336)i(cid:61) applicable(cid:337). (cid:36)he calcula(cid:2462)on e(cid:138)cludes deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on e(cid:138)pense, and does not capture the changes in the value o(cid:61) our proper(cid:2462)es that result (cid:61)rom use or market condi(cid:2462)ons, nor the level o(cid:61) capital e(cid:138)penditures, tenant improvements, and leasing commissions necessary to maintain the opera(cid:2462)ng per(cid:61)ormance o(cid:61) our proper(cid:2462)es. For assets wholly-owned and (cid:61)ully occupied by KW, the (cid:7)ompany provides an es(cid:2462)mated (cid:25)OI (cid:61)or valua(cid:2462)on purposes o(cid:61) (cid:362)(cid:403).1 million, which includes an assump(cid:2462)on (cid:61)or applicable market rents. (cid:3)ny o(cid:61) the enumerated items above could have a material e(cid:64)ect on the per(cid:61)ormance o(cid:61) our proper(cid:2462)es. (cid:3)lso, where speci(cid:67)cally noted, (cid:61)or proper(cid:2462)es purchased in 2022, the (cid:25)OI represents es(cid:2462)mated (cid:43)ear 1 (cid:25)OI (cid:61)rom our original underwri(cid:2462)ng. (cid:11)s(cid:2462)mated year 1 (cid:25)OI (cid:61)or proper(cid:2462)es purchased in 2022 may not be indica(cid:2462)ve o(cid:61) the actual results (cid:61)or those proper(cid:2462)es. (cid:11)s(cid:2462)mated annual (cid:25)OI is not an indicator o(cid:61) the actual annual net opera(cid:2462)ng income that the (cid:7)ompany will or e(cid:138)pects to reali(cid:140)e in any period. (cid:318)Fee-bearing (cid:7)apital(cid:319) represents total third-party commi(cid:130)ed or invested capital that we manage in our joint-ventures and commingled (cid:61)unds that en(cid:2462)tle us to earn (cid:61)ees, including without limita(cid:2462)on, asset management (cid:61)ees, construc(cid:2462)on management (cid:61)ees, acquisi(cid:2462)on and disposi(cid:2462)on (cid:61)ees and(cid:326)or per(cid:61)ormance alloca(cid:2462)ons, i(cid:61) applicable. (cid:318)(cid:14)ross (cid:3)sset (cid:40)alue(cid:319) re(cid:61)ers to the gross carrying value o(cid:61) assets, be(cid:61)ore debt, deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on, and net o(cid:61) noncontrolling interests. (cid:318)(cid:25)et opera(cid:2462)ng income(cid:319) or (cid:318)(cid:25)OI(cid:319) is a non-(cid:14)(cid:3)(cid:3)(cid:30) measure represen(cid:2462)ng the income produced by a property calculated by deduc(cid:2462)ng certain property e(cid:138)penses (cid:61)rom property revenues. Our management uses net opera(cid:2462)ng income to assess and compare the per(cid:61)ormance o(cid:61) our proper(cid:2462)es and to es(cid:2462)mate their (cid:61)air value. (cid:25)et opera(cid:2462)ng income does not include the e(cid:64)ects o(cid:61) deprecia(cid:2462)on or amor(cid:2462)(cid:140)a(cid:2462)on or gains or losses (cid:61)rom the sale o(cid:61) proper(cid:2462)es because the e(cid:64)ects o(cid:61) those items do not necessarily represent the actual change in the value o(cid:61) our proper(cid:2462)es resul(cid:2462)ng (cid:61)rom our value- add ini(cid:2462)a(cid:2462)ves or changing market condi(cid:2462)ons. Our management believes that net opera(cid:2462)ng income re(cid:89)ects the core revenues and costs o(cid:61) opera(cid:2462)ng our proper(cid:2462)es and is be(cid:130)er suited to evaluate trends in occupancy and lease rates. 68 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 69 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:318)(cid:25)oncontrolling interests(cid:319) represents the por(cid:2462)on o(cid:61) equity ownership in a consolidated subsidiary not a(cid:130)ributable to Kennedy Wilson. (cid:318)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on(cid:319)—the compensa(cid:2462)on commi(cid:130)ee o(cid:61) the (cid:7)ompany(cid:317)s board o(cid:61) directors approved and reserved between twenty percent (cid:336)20(cid:1143)(cid:337) and thirty-(cid:67)ve percent (cid:336)3(cid:404)(cid:1143)(cid:337) o(cid:61) any per(cid:61)ormance alloca(cid:2462)on earned by certain commingled (cid:61)unds and separate account investments to be allocated to certain non-(cid:25)(cid:11)O employees o(cid:61) the (cid:7)ompany. (cid:318)(cid:30)er(cid:61)ormance alloca(cid:2462)ons(cid:319) relates to alloca(cid:2462)ons to the general partner, special limited partner or asset manager o(cid:61) Kennedy Wilson(cid:317)s co-investments it manages based on the cumula(cid:2462)ve per(cid:61)ormance o(cid:61) the (cid:61)und and are subject to pre(cid:61)erred return thresholds o(cid:61) the limited partners. (cid:318)(cid:30)rincipal co-investments(cid:319) consists o(cid:61) the (cid:7)ompany(cid:317)s share o(cid:61) income or loss earned on investments in which the (cid:7)ompany can e(cid:138)ercise signi(cid:67)cant in(cid:89)uence but does not have control. Income (cid:61)rom unconsolidated investments includes income (cid:61)rom ordinary course opera(cid:2462)ons o(cid:61) the underlying investment, gains on sale, (cid:61)air value gains and losses. (cid:318)(cid:33)eal (cid:11)state (cid:3)ssets under (cid:24)anagement(cid:319) (cid:336)(cid:318)(cid:3)U(cid:24)(cid:319)(cid:337) generally re(cid:61)ers to the proper(cid:2462)es and other assets with respect to which we provide (cid:336)or par(cid:2462)cipate in(cid:337) oversight, investment management services and other advice, and which generally consist o(cid:61) real estate proper(cid:2462)es or loans, and investments in joint ventures. Our (cid:3)U(cid:24) is principally intended to re(cid:89)ect the e(cid:138)tent o(cid:61) our presence in the real estate market, not the basis (cid:61)or determining our management (cid:61)ees. Our (cid:3)U(cid:24) consists o(cid:61) the total es(cid:2462)mated (cid:61)air value o(cid:61) the real estate proper(cid:2462)es and other real estate related assets either owned by third par(cid:2462)es, wholly-owned by us or held by joint ventures and other en(cid:2462)(cid:2462)es in which our sponsored (cid:61)unds or investment vehicles and client accounts have invested. (cid:7)ommi(cid:130)ed (cid:336)but un(cid:61)unded(cid:337) capital (cid:61)rom investors in our sponsored (cid:61)unds is not included in our (cid:3)U(cid:24). (cid:36)he es(cid:2462)mated value o(cid:61) development proper(cid:2462)es is included at es(cid:2462)mated comple(cid:2462)on cost. (cid:318)Same property(cid:319) re(cid:61)ers to proper(cid:2462)es in which Kennedy Wilson has an ownership interest during the en(cid:2462)re span o(cid:61) both periods being compared. (cid:36)he same property in(cid:61)orma(cid:2462)on presented throughout this report is shown on a cash basis and e(cid:138)cludes non-recurring e(cid:138)penses. (cid:36)his analysis e(cid:138)cludes proper(cid:2462)es that are either under development or undergoing lease up as part o(cid:61) our asset management strategy. We use certain non-(cid:14)(cid:3)(cid:3)(cid:30) measures to analy(cid:140)e our business, including (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) and (cid:3)djusted (cid:25)et Income. We use these metrics (cid:61)or evalua(cid:2462)ng the success o(cid:61) our company and believe that they enhance the understanding o(cid:61) our opera(cid:2462)ng results. (cid:3) reconcilia(cid:2462)on o(cid:61) net income to (cid:3)djusted (cid:11)BI(cid:36)D(cid:3) and (cid:3)djusted (cid:25)et Income is presented below(cid:313) (Dollars in millions) (cid:25)et income Non(cid:330)GAA(cid:30) adjustments: (cid:3)dd back (cid:336)less(cid:337)(cid:313) (cid:1354)Interest e(cid:138)pense (cid:1354)(cid:336)(cid:14)ain(cid:337) loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) interest e(cid:138)pense included (cid:1354)in unconsolidated investments (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)included in unconsolidated investments (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) ta(cid:138)es included in unconsolidated (cid:1354)investments (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:11)BI(cid:36)D(cid:3) a(cid:130)ributable to noncontrolling interests(cid:336)1(cid:337) Years Ended December 31, 2022 2021 2020 201(cid:406) 201(cid:1142) (cid:362) 101.(cid:406) (cid:362) 33(cid:1141).(cid:403) (cid:362) 10(cid:405).(cid:1142) (cid:362) 321.1 (cid:362) 212.1 220.(cid:1142) (cid:336)2(cid:405).(cid:404)(cid:337) (cid:1141)0.2 1(cid:405)2.(cid:406) 3.(cid:404) 3(cid:1141).2 2.(cid:405) 2(cid:406).0 (cid:336)(cid:1142).2(cid:337) 1(cid:406)2.(cid:403) (cid:403)(cid:404).(cid:405) (cid:403)0.2 1(cid:1141)(cid:1141).3 (cid:404).3 12(cid:1141).2 — 2(cid:1142).(cid:405) (cid:336)13.3(cid:337) 201.(cid:406) (cid:406).3 33.0 1(cid:405)(cid:406).(cid:1141) (cid:1141).(cid:406) (cid:403)3.(cid:1141) 1.1 32.3 (cid:336)(cid:405).(cid:404)(cid:337) 21(cid:403).2 0.(cid:406) 32.1 1(cid:1142)(cid:405).(cid:1141) (cid:1142).2 (cid:403)1.(cid:403) — 30.2 (cid:336)10(cid:405).(cid:1141)(cid:337) 23(cid:1142).2 — 2(cid:1141).0 20(cid:1141).1 13.2 (cid:404)(cid:1142).0 — 3(cid:405).1 (cid:336)(cid:405)(cid:1142).0(cid:337) Adjusted EBITDA(2) (cid:362) (cid:404)(cid:406)1.(cid:404) (cid:362) (cid:406)2(cid:405).(cid:406) (cid:362) (cid:1141)0(cid:1142).0 (cid:362) (cid:405)2(cid:1142).1 (cid:362) (cid:405)12.(cid:405) (1) (2)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:318)(cid:25)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:24)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:7)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:9)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:319)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:3)(cid:55)(cid:102)(cid:134)(cid:118)(cid:124)(cid:59)(cid:55)(cid:2)(cid:11)(cid:6)(cid:17)(cid:36)(cid:9)(cid:3)(cid:314) (Dollars in millions) (cid:25)et income Non(cid:330)GAA(cid:30) adjustments: (cid:3)dd back (cid:336)less(cid:337)(cid:313) (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354) Kennedy Wilson(cid:317)s share o(cid:61) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)included in unconsolidated investments (cid:1354)Share-based compensa(cid:2462)on (cid:1354) (cid:25)et income a(cid:130)ributable to the noncontrolling interests, (cid:1354)be(cid:61)ore deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on(cid:336)1(cid:337) (cid:1354)(cid:30)re(cid:61)erred dividends Adjusted Net Income(2) Years Ended December 31, 2022 2021 2020 201(cid:406) 201(cid:1142) (cid:362) 101.(cid:406) (cid:362) 33(cid:1141).(cid:403) (cid:362) 10(cid:405).(cid:1142) (cid:362) 321.1 (cid:362) 212.1 1(cid:405)2.(cid:406) 1(cid:1141)(cid:1141).3 1(cid:405)(cid:406).(cid:1141) 1(cid:1142)(cid:405).(cid:1141) 20(cid:1141).1 3.(cid:404) 2(cid:406).0 (cid:336)13.(cid:404)(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:404).3 2(cid:1142).(cid:405) (cid:336)10.(cid:404)(cid:337) (cid:336)1(cid:405).2(cid:337) (cid:1141).(cid:406) 32.3 (cid:336)2.(cid:404)(cid:337) (cid:336)1(cid:405).2(cid:337) (cid:1142).2 30.2 (cid:336)102.0(cid:337) (cid:336)2.(cid:1141)(cid:337) 13.2 3(cid:405).1 (cid:336)(cid:405)1.(cid:404)(cid:337) — (cid:362) 2(cid:1141)(cid:403).(cid:406) (cid:362) (cid:404)0(cid:406).0 (cid:362) 30(cid:1141).(cid:406) (cid:362) (cid:403)(cid:403)2.(cid:404) (cid:362) 3(cid:406)(cid:405).0 (1) (2)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:318)(cid:25)(cid:111)(cid:109)(cid:330)(cid:14)(cid:3)(cid:3)(cid:30)(cid:2)(cid:24)(cid:59)(cid:45)(cid:118)(cid:134)(cid:117)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:7)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:9)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:319)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:55)(cid:59)(cid:67)(cid:109)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:3)(cid:55)(cid:102)(cid:134)(cid:118)(cid:124)(cid:59)(cid:55)(cid:2)(cid:25)(cid:59)(cid:124)(cid:2)(cid:17)(cid:109)(cid:49)(cid:111)(cid:108)(cid:59)(cid:314) 70 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 71 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (cid:3) reconcilia(cid:2462)on o(cid:61) (cid:11)s(cid:2462)mated (cid:3)nnual (cid:25)OI as o(cid:61) December 31, 2022 (cid:336)(cid:362) in millions(cid:337) is presented below(cid:313) (cid:33)ental (cid:33)evenues Hotel (cid:33)evenues (cid:33)ental (cid:336)(cid:11)(cid:138)penses(cid:337) Hotel (cid:336)(cid:11)(cid:138)penses(cid:337) Loans and other Consolidated NOI (cid:3)djustments(cid:313) (cid:25)on-controlling interest (cid:25)OI (cid:61)rom Unconsolidated investments (cid:336)KW Share(cid:337) (cid:30)ropert(cid:139)(cid:330)(cid:21)evel NOI (cid:330) (cid:32)(cid:403)(cid:330)22 ((cid:20)(cid:41) (cid:34)hare)(1) Adjustments (cid:3)ssets acquired and disposed (cid:336)net(cid:337) Lease-up and development por(cid:127)olio Hotel opera(cid:2462)ons (cid:3)ssets owned and occupied by Kennedy Wilson (cid:3)mor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) above(cid:326)below market leases (cid:336)net(cid:337) Straight-line and (cid:61)ree rent (cid:336)net(cid:337) (cid:25)on-recurring income(cid:326)e(cid:138)pense, F(cid:42), and other (cid:32)(cid:403)(cid:330)22 Es(cid:2462)mated NOI Es(cid:2462)mated Annual NOI (cid:330) Decem(cid:48)er (cid:402)1, 2(cid:399)22 (1) (cid:34)(cid:59)(cid:59)(cid:2)(cid:48)(cid:59)(cid:1140)(cid:111)(cid:137)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:117)(cid:59)(cid:49)(cid:111)(cid:109)(cid:49)(cid:98)(cid:1140)(cid:98)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:30)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:330)(cid:21)(cid:59)(cid:136)(cid:59)(cid:1140)(cid:2)(cid:25)(cid:27)(cid:17)(cid:2)(cid:124)(cid:111)(cid:2)(cid:25)(cid:59)(cid:124)(cid:2)(cid:17)(cid:109)(cid:49)(cid:111)(cid:108)(cid:59)(cid:314) (cid:362)110.(cid:403) 13.(cid:405) (cid:336)(cid:403)0.(cid:404)(cid:337) (cid:336)(cid:406).0(cid:337) 3.(cid:405) (cid:362)(cid:405)(cid:1142)(cid:314)(cid:402) (cid:336)2.0(cid:337) 3(cid:406).(cid:403) (cid:362)11(cid:404)(cid:314)(cid:405) (cid:336)0.(cid:1141)(cid:337) 0.3 (cid:336)0.3(cid:337) 1.(cid:403) (cid:336)0.(cid:404)(cid:337) 2.(cid:1142) 3.(cid:1142) (cid:362)122(cid:314)(cid:1141) (cid:362)(cid:403)(cid:406)(cid:399)(cid:314)(cid:405) Net Operating Income 2022 (cid:7)o- Investment (cid:30)or(cid:127)olio 2021 (cid:7)o- Investment (cid:30)or(cid:127)olio (cid:7)onsolidated (cid:30)or(cid:127)olio (cid:7)onsolidated (cid:30)or(cid:127)olio 2020 (cid:7)o- Investment (cid:30)or(cid:127)olio (cid:7)onsolidated (cid:30)or(cid:127)olio Years Ended December 31, Net income (cid:3)dd(cid:313) (cid:30)rovision (cid:61)or income ta(cid:138)es Less(cid:313) Income (cid:61)rom unconsolidated (cid:1354)investments Less(cid:313) (cid:336)(cid:14)ain(cid:337) loss on sale o(cid:61) real estate, net (cid:3)dd(cid:313) Interest e(cid:138)pense Less(cid:313) (cid:336)(cid:14)ain(cid:337) loss on early (cid:1354)e(cid:138)(cid:2462)nguishment o(cid:61) debt Less(cid:313) Other income Less(cid:313) Sale o(cid:61) real estate Less(cid:313) Interest income Less(cid:313) Investment management and (cid:1354)property services (cid:3)dd(cid:313) (cid:7)ost o(cid:61) real estate sold (cid:3)dd(cid:313) (cid:7)ompensa(cid:2462)on and related (cid:3)dd(cid:313) Share-based compensa(cid:2462)on (cid:3)dd(cid:313) (cid:30)er(cid:61)ormance alloca(cid:2462)on (cid:1354)e(cid:138)pense (cid:3)dd(cid:313) (cid:14)eneral and administra(cid:2462)ve (cid:3)dd(cid:313) Deprecia(cid:2462)on Less(cid:313) Fair value adjustments Less(cid:313) (cid:25)(cid:7)I adjustments (cid:362) 101.(cid:406) 3(cid:1141).2 1(cid:405)(cid:1142).(cid:403) 2.(cid:405) (cid:362) 33(cid:1141).(cid:403) (cid:362) 12(cid:1141).2 (cid:362) 3(cid:1142)(cid:406).0 — (cid:362) 10(cid:405).(cid:1142) (cid:403)3.(cid:1141) (cid:336)1(cid:405)(cid:1142).(cid:403)(cid:1169) (cid:336)103.(cid:405)(cid:337) 220.(cid:1142) (cid:336)2(cid:405).(cid:404)(cid:337) (cid:336)3(cid:1141).1(cid:337) — (cid:336)11.(cid:405)(cid:337) (cid:336)(cid:403)(cid:1141).(cid:404)(cid:337) — 111.3 2(cid:406).0 (cid:336)(cid:403).3(cid:337) 3(cid:405).2 1(cid:405)2.(cid:406) — (cid:336)(cid:1141).(cid:406)(cid:337) — (cid:336)3(cid:1142)(cid:406).0(cid:337) — (cid:336)(cid:1142)1.0(cid:337) (cid:336)(cid:403).(cid:406)(cid:337) (cid:1141)0.1 — 1(cid:405).(cid:406) (cid:336)(cid:404)2.0(cid:337) — 21.1 (cid:403)0.(cid:405) — — — — 3.(cid:1142) (cid:336)110.2(cid:337) — (cid:336)(cid:403)12.(cid:405)(cid:337) 1(cid:406)2.(cid:403) (cid:403)(cid:404).(cid:405) (cid:404).0 — (cid:336)(cid:1142).(cid:1141)(cid:337) (cid:336)3(cid:405).(cid:403)(cid:337) — 133.(cid:406) 2(cid:1142).(cid:405) (cid:403)2.0 33.3 1(cid:1141)(cid:1141).3 — (cid:336)(cid:1141).(cid:403)(cid:337) 3.1 (cid:403)0.0 — 1(cid:405).(cid:406) (cid:336)3(cid:406).(cid:404)(cid:337) — (cid:336)11(cid:405).(cid:406)(cid:337) 3(cid:1141).(cid:1142) — — — — (cid:404).(cid:1141) (cid:336)210.(cid:1141)(cid:337) — (cid:336)33(cid:1142).0(cid:337) 201.(cid:406) (cid:406).3 2.3 — (cid:336)3.1(cid:337) (cid:336)33.1(cid:337) — 111.(cid:406) 32.3 0.2 3(cid:403).(cid:1141) 1(cid:405)(cid:406).(cid:1141) — (cid:336)(cid:1141).0(cid:337) (cid:1142)1.0 1.0 — 11.(cid:404) 33.1 — 13.(cid:405) (cid:336)11.(cid:404)(cid:337) — (cid:336)2.(cid:1141)(cid:337) 13.3 — — — — (cid:1141).(cid:406) (cid:336)(cid:403)3.(cid:406)(cid:337) — Net Opera(cid:2462)n(cid:93) Income (cid:362) 2(cid:406)(cid:403).2 (cid:362) 1(cid:404)(cid:405).(cid:1141) (cid:362) 2(cid:404)(cid:404).(cid:1142) (cid:362) 12(cid:403).(cid:403) (cid:362) 2(cid:1141)2.3 (cid:362) 102.(cid:404) Years Ended December 31, 201(cid:406) (cid:7)o- Investment (cid:30)or(cid:127)olio (cid:7)onsolidated (cid:30)or(cid:127)olio 201(cid:1142) (cid:7)o- Investment (cid:30)or(cid:127)olio (cid:7)onsolidated (cid:30)or(cid:127)olio Net income (cid:3)dd(cid:313) (cid:30)rovision (cid:61)or income ta(cid:138)es Less(cid:313) Income (cid:61)rom unconsolidated investments Less(cid:313) (cid:14)ain on sale o(cid:61) real estate, net Less(cid:313) (cid:14)ain on sale o(cid:61) business (cid:3)dd(cid:313) Interest e(cid:138)pense (cid:3)dd(cid:313) Loss on e(cid:138)(cid:2462)nguishment o(cid:61) debt Less(cid:313) Other loss Less(cid:313) Sale o(cid:61) real estate Less(cid:313) Interest income Less(cid:313) Investment management and property services (cid:3)dd(cid:313) (cid:7)ost o(cid:61) real estate sold (cid:3)dd(cid:313) (cid:7)ompensa(cid:2462)on and related (cid:3)dd(cid:313) Share-based compensa(cid:2462)on (cid:3)dd(cid:313) (cid:30)er(cid:61)ormance alloca(cid:2462)on e(cid:138)pense (cid:3)dd(cid:313) (cid:14)eneral and administra(cid:2462)ve (cid:3)dd(cid:313) Deprecia(cid:2462)on Less(cid:313) Fair value adjustments Less(cid:313) (cid:25)(cid:7)I adjustments (cid:362) (cid:362) 321.1 (cid:403)1.(cid:403) (cid:336)1(cid:405)(cid:406).(cid:405)(cid:337) (cid:336)(cid:403)3(cid:403).(cid:403)(cid:337) — 21(cid:403).2 0.(cid:406) 10.(cid:1141) — (cid:336)0.3(cid:337) (cid:336)(cid:403)0.(cid:1141)(cid:337) — 121.(cid:404) 30.1 0.1 (cid:403)2.(cid:403) 1(cid:1142)(cid:405).(cid:1141) — (cid:336)(cid:406).(cid:405)(cid:337) (cid:362) 1(cid:405)(cid:406).(cid:405) — — (cid:336)(cid:404)3.(cid:404)(cid:337) — 32.1 — (cid:1142).0 (cid:336)2(cid:1141).(cid:405)(cid:337) — (cid:336)3(cid:1141).2(cid:337) 23.(cid:406) — — — — (cid:1142).2 (cid:336)(cid:404)(cid:405).(cid:405)(cid:337) — (cid:362) 212.1 (cid:404)(cid:1142).0 (cid:336)(cid:405)(cid:1142).(cid:405)(cid:337) (cid:336)3(cid:405)1.(cid:1142)(cid:337) (cid:336)(cid:403)0.(cid:403)(cid:337) 23(cid:1142).2 — (cid:336)(cid:1142).(cid:405)(cid:337) — (cid:336)1.1(cid:337) (cid:336)(cid:403)(cid:404).3(cid:337) — 131.(cid:405) 3(cid:405).1 — (cid:404)0.(cid:1142) 20(cid:1141).1 — (cid:336)1(cid:406).(cid:405)(cid:337) Net Opera(cid:2462)n(cid:93) Income (cid:362) 30(cid:404).2 (cid:362) (cid:405)(cid:405).(cid:1142) (cid:362) 3(cid:1141)(cid:1142).3 (cid:362) (cid:405)(cid:1142).(cid:405) — — (cid:336)23.0(cid:337) — 2(cid:1141).0 — (cid:336)2.(cid:404)(cid:337) (cid:336)1(cid:406).2(cid:337) — (cid:336)2(cid:405).(cid:404)(cid:337) 1(cid:1142).(cid:1141) — — — — 13.(cid:403) (cid:336)(cid:406).2(cid:337) — (cid:404)(cid:404).3 72 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 73 Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) ($ in millions) (cid:7)ash(cid:336)1(cid:337) (cid:33)eal estate Unconsolidated Investments Loan purchases and origina(cid:2462)ons (cid:3)ccounts receivable and other assets (cid:36)otal (cid:3)ssets (cid:3)ccounts payable and accrued e(cid:138)penses (cid:24)ortgage debt KW unsecured debt KW(cid:11) bonds (cid:36)otal Liabili(cid:2462)es (cid:11)quity December 31, 2022 (cid:7)onsolidated (cid:7)o- Investment (cid:7)orporate (cid:362) (cid:362) (cid:362) 31(cid:1141).(cid:405) (cid:404),1(cid:1142)(cid:1142).1 — — 13(cid:404).1 — — 2,23(cid:1142).1 1(cid:403)(cid:406).(cid:403) — (cid:362) 122.(cid:1141) — — — 121.(cid:1142) (cid:36)otal (cid:403)3(cid:406).3 (cid:404),1(cid:1142)(cid:1142).1 2,23(cid:1142).1 1(cid:403)(cid:406).(cid:403) 2(cid:404)(cid:1141).(cid:406) (cid:362) (cid:404),(cid:1141)3(cid:406).(cid:406) (cid:362) 2,3(cid:1142)(cid:405).(cid:404) (cid:362) 2(cid:403)(cid:403).(cid:403) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) 1(cid:404)(cid:1141).(cid:1141) 3,01(cid:1142).0 — (cid:404)0(cid:1141).(cid:403) 3,(cid:1141)(cid:1142)1.0 1,(cid:406)(cid:404)(cid:1142).(cid:406) — — — — — 2,3(cid:1142)(cid:405).(cid:404) (cid:404)1(cid:405).(cid:1142) — 2,0(cid:1141)2.(cid:1141) — 2,(cid:404)(cid:1142)0.(cid:403) (cid:336)2,33(cid:1141).0(cid:337) (cid:1141)(cid:405)(cid:403).(cid:403) 3,01(cid:1142).0 2,0(cid:1141)2.(cid:1141) (cid:404)0(cid:1141).(cid:403) (cid:1141),2(cid:1141)1.(cid:403) 2,010.(cid:403) (cid:36)otal liabili(cid:2462)es and equity (cid:362) (cid:404),(cid:1141)3(cid:406).(cid:406) (cid:362) 2,3(cid:1142)(cid:405).(cid:404) (cid:362) 2(cid:403)(cid:403).(cid:403) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) ($ in millions) (cid:7)ash(cid:336)1(cid:337) (cid:33)eal estate Unconsolidated Investments Loan purchases and origina(cid:2462)ons (cid:3)ccounts receivable and other assets (cid:36)otal (cid:3)ssets (cid:3)ccounts payable and accrued e(cid:138)penses (cid:24)ortgage debt KW unsecured debt KW(cid:11) bonds (cid:36)otal Liabili(cid:2462)es (cid:11)quity (cid:7)onsolidated (cid:362) 3(cid:1141)2.3 (cid:362) (cid:404),0(cid:404)(cid:406).(cid:1142) — — 111.(cid:405) December 31, 2021 (cid:7)o- Investment (cid:7)orporate — (cid:362) — 1,(cid:406)(cid:403)(cid:405).(cid:1141) 130.3 — (cid:362) 1(cid:1141)2.(cid:404) — — — 102.3 (cid:36)otal (cid:404)2(cid:403).(cid:1142) (cid:404),0(cid:404)(cid:406).(cid:1142) 1,(cid:406)(cid:403)(cid:405).(cid:1141) 130.3 21(cid:403).0 (cid:362) (cid:404),(cid:404)33.(cid:1142) (cid:362) 2,0(cid:405)(cid:405).(cid:406) (cid:362) 2(cid:1141)(cid:403).(cid:1142) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 1(cid:403)2.1 2,(cid:406)(cid:404)(cid:406).(cid:1142) — (cid:1141)22.(cid:1142) 3,(cid:405)2(cid:403).(cid:405) 1,(cid:1142)0(cid:406).1 — — — — — 2,0(cid:405)(cid:405).(cid:406) (cid:403)(cid:406)(cid:404).(cid:1141) — 1,(cid:1142)(cid:404)2.3 — 2,3(cid:403)(cid:405).(cid:406) (cid:336)2,0(cid:1142)3.1(cid:337) (cid:1141)3(cid:405).(cid:405) 2,(cid:406)(cid:404)(cid:406).(cid:1142) 1,(cid:1142)(cid:404)2.3 (cid:1141)22.(cid:1142) (cid:1141),0(cid:405)2.(cid:1141) 1,(cid:1142)03.(cid:406) (cid:36)otal liabili(cid:2462)es and equity (cid:362) (cid:404),(cid:404)33.(cid:1142) (cid:362) 2,0(cid:405)(cid:405).(cid:406) (cid:362) 2(cid:1141)(cid:403).(cid:1142) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) Same property analysis (cid:36)he same property analysis re(cid:89)ects, and is weighted by, Kennedy Wilson(cid:317)s ownership in each underlying property. (cid:30)reviously, the (cid:7)ompany had presented this analysis without adjus(cid:2462)ng (cid:61)or Kennedy Wilson(cid:317)s ownership interest. (cid:36)he table below is a reconcilia(cid:2462)on o(cid:61) (cid:25)on-(cid:14)(cid:3)(cid:3)(cid:30) measures included within the (cid:7)ompany(cid:317)s same property analysis, to their most comparable (cid:14)(cid:3)(cid:3)(cid:30) measures. Year Ended December 31, 2022 Year Ended December 31, 2021 Same (cid:30)roperty Same (cid:30)roperty (cid:33)ental (cid:33)evenues Hotel (cid:33)evenues (cid:33)ental (cid:336)(cid:11)(cid:138)penses(cid:337) Hotel (cid:336)(cid:11)(cid:138)penses(cid:337) (cid:7)onsolidated (cid:36)otal (cid:1352)(cid:21)ess(cid:1579) (cid:25)(cid:7)I adjustments(cid:336)1(cid:337) (cid:1352)Add(cid:1579) Unconsolidated investment adjustments(cid:336)2(cid:337) (cid:1352)Add(cid:1579) Straight-line and above(cid:326)below market rents (cid:1352)(cid:21)ess(cid:1579) (cid:33)eimbursement o(cid:61) recoverable opera(cid:2462)ng e(cid:138)penses (cid:1352)(cid:21)ess(cid:1579) (cid:30)roper(cid:2462)es bought and sold(cid:336)3(cid:337) (cid:1352)(cid:21)ess(cid:1579) Other proper(cid:2462)es e(cid:138)cluded(cid:336)(cid:403)(cid:337) (cid:1352)Other (cid:33)econciling Items(cid:336)(cid:404)(cid:337) (cid:362) (cid:362) (cid:33)evenue (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) — — (cid:403)(cid:1142)1.(cid:1142) (cid:336)10.(cid:1141)(cid:337) 1(cid:403)0.3 (cid:336)3.(cid:1141)(cid:337) (cid:336)2(cid:1142).3(cid:337) (cid:336)(cid:406)0.1(cid:337) (cid:336)111.(cid:406)(cid:337) (cid:336)3.(cid:1141)(cid:337) (cid:362) (cid:25)OI (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) (cid:336)1(cid:404)1.2(cid:337) (cid:336)2(cid:406).(cid:404)(cid:337) 301.1 (cid:336)(cid:1141).(cid:404)(cid:337) 101.2 (cid:336)3.(cid:1141)(cid:337) — (cid:336)(cid:1141)(cid:403).(cid:404)(cid:337) (cid:336)(cid:404)(cid:1142).(cid:404)(cid:337) 1.3 (cid:362) (cid:33)evenue 3(cid:406)0.(cid:404) 1(cid:405).1 — — (cid:403)0(cid:405).(cid:1141) (cid:336)(cid:406).0(cid:337) 131.(cid:406) 0.(cid:404) (cid:336)22.(cid:405)(cid:337) (cid:336)(cid:1141)3.0(cid:337) (cid:336)(cid:1142)(cid:403).(cid:1142)(cid:337) (cid:336)10.(cid:403)(cid:337) (cid:34)ame (cid:30)ropert(cid:139) (cid:362) 3(cid:405)(cid:403).0 (cid:362) 2(cid:405)0.(cid:404) (cid:362) 3(cid:404)0.1 (cid:362) (cid:25)OI 3(cid:406)0.(cid:404) 1(cid:405).1 (cid:336)132.(cid:405)(cid:337) (cid:336)12.(cid:405)(cid:337) 2(cid:1141)2.2 (cid:336)(cid:404).1(cid:337) (cid:406)(cid:403).(cid:405) 0.(cid:404) — (cid:336)(cid:403)1.0(cid:337) (cid:336)(cid:404)1.1(cid:337) (cid:336)(cid:405).3(cid:337) 2(cid:404)2.(cid:406) (cid:34)ame (cid:30)ropert(cid:139) (Reported) (cid:1354)(cid:1354)O(cid:76)ce(cid:331)Same (cid:30)roperty (cid:1354)(cid:1354)(cid:24)ul(cid:2462)(cid:61)amily (cid:24)arket (cid:33)ate (cid:30)or(cid:127)olio(cid:331)Same (cid:30)roperty (cid:1354)(cid:1354)(cid:24)ul(cid:2462)(cid:61)amily (cid:3)(cid:64)ordable (cid:30)or(cid:127)olio(cid:331)Same (cid:30)roperty (cid:34)ame (cid:30)ropert(cid:139) Year Ended December 31, 2022 Year Ended December 31, 2021 Same (cid:30)roperty Same (cid:30)roperty (cid:33)evenue 10(cid:1141).(cid:404) 222.1 (cid:403)(cid:404).(cid:403) (cid:362) (cid:25)OI (cid:406)0.3 1(cid:403)(cid:1142).(cid:1142) 31.(cid:403) (cid:362) (cid:33)evenue 10(cid:404).(cid:403) 202.2 (cid:403)2.(cid:404) (cid:362) 3(cid:405)(cid:403).0 (cid:362) 2(cid:405)0.(cid:404) (cid:362) 3(cid:404)0.1 (cid:362) (cid:362) (cid:362) (cid:25)OI (cid:1142)(cid:406).(cid:405) 133.(cid:404) 2(cid:406).(cid:405) 2(cid:404)2.(cid:406) (1)(cid:2)(cid:33)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:136)(cid:59)(cid:109)(cid:134)(cid:59)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:95)(cid:111)(cid:124)(cid:59)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:136)(cid:59)(cid:109)(cid:134)(cid:59)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:95)(cid:111)(cid:124)(cid:59)(cid:1140)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:2)(cid:45)(cid:130)(cid:117)(cid:98)(cid:48)(cid:134)(cid:124)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:111)(cid:1140)(cid:1140)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:118)(cid:314) (2)(cid:2)(cid:2)(cid:33)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:317)(cid:118)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:134)(cid:109)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:136)(cid:59)(cid:109)(cid:134)(cid:59)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:311)(cid:2)(cid:45)(cid:118)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:311)(cid:2)(cid:137)(cid:95)(cid:98)(cid:49)(cid:95)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2) (cid:137)(cid:98)(cid:124)(cid:95)(cid:98)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:118)(cid:45)(cid:108)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:114)(cid:111)(cid:114)(cid:134)(cid:1140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:314) (cid:336)(cid:402)(cid:337)(cid:2)(cid:2)(cid:33)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:2462)(cid:59)(cid:118)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:118)(cid:45)(cid:108)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:114)(cid:111)(cid:114)(cid:134)(cid:1140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:137)(cid:59)(cid:117)(cid:59)(cid:2)(cid:114)(cid:134)(cid:117)(cid:49)(cid:95)(cid:45)(cid:118)(cid:59)(cid:55)(cid:2)(cid:111)(cid:117)(cid:2)(cid:118)(cid:111)(cid:1140)(cid:55)(cid:2)(cid:55)(cid:134)(cid:117)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:114)(cid:59)(cid:117)(cid:98)(cid:111)(cid:55)(cid:314) (4)(cid:2)(cid:2)(cid:33)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:2462)(cid:59)(cid:118)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:118)(cid:45)(cid:108)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:114)(cid:111)(cid:114)(cid:134)(cid:1140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:137)(cid:59)(cid:117)(cid:59)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:118)(cid:124)(cid:45)(cid:48)(cid:98)(cid:1140)(cid:98)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:134)(cid:117)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:114)(cid:114)(cid:1140)(cid:98)(cid:49)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:114)(cid:59)(cid:117)(cid:98)(cid:111)(cid:55)(cid:118)(cid:314) (cid:336)(cid:404)(cid:337)(cid:2)(cid:2)(cid:33)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:2462)(cid:59)(cid:118)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:118)(cid:45)(cid:108)(cid:59)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:114)(cid:111)(cid:114)(cid:134)(cid:1140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:137)(cid:59)(cid:117)(cid:59)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:49)(cid:1140)(cid:45)(cid:118)(cid:118)(cid:98)(cid:67)(cid:59)(cid:55)(cid:2)(cid:45)(cid:118)(cid:2)(cid:59)(cid:98)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2)(cid:45)(cid:2)(cid:49)(cid:111)(cid:108)(cid:108)(cid:59)(cid:117)(cid:49)(cid:98)(cid:45)(cid:1140)(cid:2)(cid:111)(cid:117)(cid:2) (cid:108)(cid:134)(cid:1140)(cid:2462)(cid:61)(cid:45)(cid:108)(cid:98)(cid:1140)(cid:139)(cid:2)(cid:114)(cid:117)(cid:111)(cid:114)(cid:59)(cid:117)(cid:124)(cid:139)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:98)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:317)(cid:118)(cid:2)(cid:114)(cid:111)(cid:117)(cid:127)(cid:111)(cid:1140)(cid:98)(cid:111)(cid:314)(cid:2)(cid:3)(cid:1140)(cid:118)(cid:111)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:98)(cid:108)(cid:108)(cid:45)(cid:124)(cid:59)(cid:117)(cid:98)(cid:45)(cid:1140)(cid:2)(cid:45)(cid:55)(cid:102)(cid:134)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:61)(cid:111)(cid:117)(cid:59)(cid:98)(cid:93)(cid:109)(cid:2)(cid:59)(cid:138)(cid:49)(cid:95)(cid:45)(cid:109)(cid:93)(cid:59)(cid:2)(cid:117)(cid:45)(cid:124)(cid:59)(cid:118)(cid:311)(cid:2)(cid:49)(cid:95)(cid:45)(cid:109)(cid:93)(cid:59)(cid:118)(cid:2)(cid:98)(cid:109)(cid:2) (cid:111)(cid:137)(cid:109)(cid:59)(cid:117)(cid:118)(cid:95)(cid:98)(cid:114)(cid:2)(cid:114)(cid:59)(cid:117)(cid:49)(cid:59)(cid:109)(cid:124)(cid:45)(cid:93)(cid:59)(cid:118)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:49)(cid:59)(cid:117)(cid:124)(cid:45)(cid:98)(cid:109)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:117)(cid:59)(cid:49)(cid:134)(cid:117)(cid:117)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:49)(cid:111)(cid:108)(cid:59)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:314) 74 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 75 Real (cid:11)state Ac(cid:116)uisi(cid:2236)ons (cid:36)he purchase price o(cid:61) acquired proper(cid:2462)es is recorded to land, buildings and building improvements and intangible lease value (cid:336)value o(cid:61) above-market and below-market leases, acquired in-place lease values, and tenant rela(cid:2462)onships, i(cid:61) any(cid:337). (cid:36)he ownership o(cid:61) the other interest holders in consolidated subsidiaries is re(cid:89)ected as noncontrolling interests. (cid:33)eal estate is recorded based on cumula(cid:2462)ve costs incurred and allocated based on rela(cid:2462)ve (cid:61)air value. (cid:36)he valua(cid:2462)ons o(cid:61) real estate are based on management es(cid:2462)mates o(cid:61) the real estate assets using income and market approaches. (cid:36)he indebtedness securing the real estate is valued, in part, based on third party valua(cid:2462)ons and management es(cid:2462)mates also using an income approach. (cid:36)he use o(cid:61) di(cid:64)erent assump(cid:2462)ons to value the acquired proper(cid:2462)es and intangible assets and assumed liabili(cid:2462)es could a(cid:64)ect the (cid:61)uture revenues and e(cid:138)penses we recogni(cid:140)e over the es(cid:2462)mated remaining use(cid:61)ul li(cid:61)e or lease term. Recently Issued Accounting Pronouncements See (cid:25)ote 2 to the (cid:7)onsolidated Financial Statements. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Critical Accounting Policies (cid:3) cri(cid:2462)cal accoun(cid:2462)ng policy is one that involves an es(cid:2462)mate or assump(cid:2462)on that is subjec(cid:2462)ve and requires judgment on the part o(cid:61) management about the e(cid:64)ect o(cid:61) a ma(cid:130)er that is inherently uncertain and is material to an en(cid:2462)ty(cid:317)s (cid:67)nancial condi(cid:2462)on and results o(cid:61) opera(cid:2462)ons. (cid:11)s(cid:2462)mates are prepared using management(cid:317)s best judgment, a(cid:91)er considering past and current economic condi(cid:2462)ons and e(cid:138)pecta(cid:2462)ons (cid:61)or the (cid:61)uture. (cid:7)hanges in es(cid:2462)mates could a(cid:64)ect our (cid:67)nancial posi(cid:2462)on and speci(cid:67)c items in our results o(cid:61) opera(cid:2462)ons that are used by stockholders, poten(cid:2462)al investors, industry analysts and lenders in their evalua(cid:2462)on o(cid:61) our per(cid:61)ormance. O(cid:61) the signi(cid:67)cant accoun(cid:2462)ng policies discussed in (cid:25)ote 2 to the (cid:7)onsolidated Financial Statements, those presented below have been iden(cid:2462)(cid:67)ed by us as mee(cid:2462)ng the criteria to be considered cri(cid:2462)cal accoun(cid:2462)ng policies. (cid:33)e(cid:61)er to (cid:25)ote 2 (cid:61)or more in(cid:61)orma(cid:2462)on on these cri(cid:2462)cal accoun(cid:2462)ng policies. Fair Value Investments Kennedy Wilson records its investments in certain commingled (cid:61)unds it manages and sponsors (cid:336)the (cid:318)Funds(cid:319)(cid:337) that are investment companies under the (cid:3)ccoun(cid:2462)ng Standards (cid:7)odi(cid:67)ca(cid:2462)on (cid:336)(cid:318)(cid:3)S(cid:7)(cid:319)(cid:337) (cid:36)opic (cid:406)(cid:403)(cid:1141), (cid:13)(cid:98)nan(cid:49)(cid:98)al (cid:34)e(cid:117)v(cid:98)(cid:49)e(cid:118)(cid:330)(cid:17)nve(cid:118)tment (cid:7)ompan(cid:98)e(cid:118)(cid:310) based upon the net assets that would be allocated to its interests in the Funds assuming the Funds were to liquidate their investments at (cid:61)air value as o(cid:61) the repor(cid:2462)ng date. (cid:36)hus, the Funds re(cid:89)ect their investments at (cid:61)air value, with unreali(cid:140)ed gains and losses resul(cid:2462)ng (cid:61)rom changes in (cid:61)air value re(cid:89)ected in their earnings. Kennedy Wilson has retained the speciali(cid:140)ed accoun(cid:2462)ng (cid:61)or the Funds as discussed in (cid:3)S(cid:7) (cid:36)opic 323, (cid:17)nve(cid:118)tment(cid:118)(cid:330)(cid:11)(cid:116)(cid:134)(cid:98)t(cid:139) (cid:24)et(cid:95)od and (cid:19)o(cid:98)nt (cid:40)ent(cid:134)(cid:117)e(cid:118) in recording its equity in joint venture income (cid:61)rom the Funds. (cid:3)ddi(cid:2462)onally, Kennedy Wilson elected the (cid:61)air value op(cid:2462)on (cid:61)or (cid:1141)(cid:405) investments in unconsolidated investment en(cid:2462)(cid:2462)es. Due to the nature o(cid:61) these investments, Kennedy Wilson elected to record these investments at (cid:61)air value in order to report the value in the underlying investments in the results o(cid:61) our current opera(cid:2462)ons. (cid:36)he use o(cid:61) di(cid:64)erent assump(cid:2462)ons to (cid:61)air value these investments could have material impact on the consolidated statements o(cid:61) income. See Item 1. Business (cid:318)Fair (cid:40)alue Investments(cid:319) (cid:61)or detail on (cid:61)air value methods and range o(cid:61) inputs that are used as part o(cid:61) valua(cid:2462)ons. (cid:30)erformance Alloca(cid:2236)ons (cid:30)er(cid:61)ormance alloca(cid:2462)ons or carried interest are allocated to the general partner, special limited partner or asset manager o(cid:61) Kennedy Wilson(cid:317)s real estate (cid:61)unds and (cid:61)air value op(cid:2462)on unconsolidated investments based on the cumula(cid:2462)ve per(cid:61)ormance o(cid:61) the (cid:61)und or underlying investments and are subject to pre(cid:61)erred return thresholds o(cid:61) the limited partners and par(cid:2462)cipants. (cid:3)t the end o(cid:61) each repor(cid:2462)ng period, Kennedy Wilson calculates the per(cid:61)ormance alloca(cid:2462)on that would be due as i(cid:61) the (cid:61)air value o(cid:61) the underlying investments were reali(cid:140)ed as o(cid:61) such date, irrespec(cid:2462)ve o(cid:61) whether such amounts have been reali(cid:140)ed. (cid:3)s the (cid:61)air value o(cid:61) underlying investments varies between repor(cid:2462)ng periods, it is necessary to make adjustments to amounts recorded as per(cid:61)ormance alloca(cid:2462)ons to re(cid:89)ect either (cid:336)a(cid:337) posi(cid:2462)ve per(cid:61)ormance resul(cid:2462)ng in an increase in the per(cid:61)ormance alloca(cid:2462)ons to the general partner or asset manager or (cid:336)b(cid:337) nega(cid:2462)ve per(cid:61)ormance that would cause the amount due to Kennedy Wilson to be less than the amount previously recogni(cid:140)ed, resul(cid:2462)ng in a nega(cid:2462)ve adjustment to per(cid:61)ormance alloca(cid:2462)ons to the general partner or asset manager. (cid:36)o the e(cid:138)tent that a (cid:61)und or investment has a per(cid:61)ormance alloca(cid:2462)on sharing program, a por(cid:2462)on o(cid:61) per(cid:61)ormance alloca(cid:2462)ons will be recorded to per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on. 76 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 77 (cid:11)valua(cid:2236)on of the fair value of certain unconsolidated investments and commingled funds (cid:3)s discussed in (cid:25)otes 2 and (cid:404) to the consolidated (cid:67)nancial statements, the (cid:7)ompany elected to record certain unconsolidated investments using the (cid:61)air value op(cid:2462)on to more accurately re(cid:89)ect the (cid:2462)ming o(cid:61) the value created in the underlying investments and report those changes in current opera(cid:2462)ons. (cid:3)ddi(cid:2462)onally, the (cid:7)ompany records its investments in its managed commingled (cid:61)unds (cid:336)the (cid:318)Funds(cid:319)(cid:337) based upon the net assets that would be allocated to its interests in the Funds, assuming the Funds were to liquidate their investments at (cid:61)air value as o(cid:61) the repor(cid:2462)ng date. (cid:3)s o(cid:61) December 31, 2022, these investments had a (cid:61)air value o(cid:61) (cid:362)2,0(cid:406)3.(cid:405) million. We iden(cid:2462)(cid:67)ed the evalua(cid:2462)on o(cid:61) the (cid:61)air value o(cid:61) certain unconsolidated investments and commingled (cid:61)unds as a cri(cid:2462)cal audit ma(cid:130)er. (cid:3) high degree o(cid:61) subjec(cid:2462)vity was required in applying and evalua(cid:2462)ng results (cid:61)rom procedures over the respec(cid:2462)ve discounted cash (cid:89)ow models used to calculate the (cid:61)air value o(cid:61) the underlying real estate investments. Speci(cid:67)cally, the respec(cid:2462)ve cash (cid:89)ow models were sensi(cid:2462)ve to changes in certain key assump(cid:2462)ons, including discount, terminal capitali(cid:140)a(cid:2462)on, and overall capitali(cid:140)a(cid:2462)on rates, which have a signi(cid:67)cant e(cid:64)ect on the determina(cid:2462)on o(cid:61) (cid:61)air value o(cid:61) these investments. (cid:36)he (cid:61)ollowing are the primary procedures we per(cid:61)ormed to address this cri(cid:2462)cal audit ma(cid:130)er. We evaluated the design and tested the opera(cid:2462)ng e(cid:64)ec(cid:2462)veness o(cid:61) certain internal controls over the (cid:7)ompany(cid:317)s (cid:61)air value process (cid:61)or unconsolidated investments and commingled (cid:61)unds, including controls related to the development o(cid:61) the discount rate and terminal capitali(cid:140)a(cid:2462)on rate assump(cid:2462)ons. For a selec(cid:2462)on o(cid:61) the (cid:7)ompany(cid:317)s investments, we involved valua(cid:2462)on pro(cid:61)essionals with speciali(cid:140)ed skills and knowledge who assisted in comparing the discount rate and terminal capitali(cid:140)a(cid:2462)on rate used by the (cid:7)ompany to independently developed ranges using market in(cid:61)orma(cid:2462)on obtained (cid:61)rom third-party real estate publica(cid:2462)ons or to rates observed in similar investments in the current period. (cid:326)s(cid:326) K(cid:30)(cid:24)(cid:14) LL(cid:30) We have served as the (cid:7)ompany(cid:317)s auditor since 2002. Los (cid:3)ngeles, (cid:7)ali(cid:61)ornia February 22, 2023 Report of Independent Registered Public Accounting Firm (cid:36)o the Shareholders and Board o(cid:61) Directors Kennedy-Wilson Holdings, Inc.(cid:313) (cid:27)pinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets o(cid:61) Kennedy-Wilson Holdings, Inc. and subsidiaries (cid:336)the (cid:7)ompany(cid:337) as o(cid:61) December 31, 2022 and 2021, the related consolidated statements o(cid:61) income, comprehensive income, equity, and cash (cid:89)ows (cid:61)or each o(cid:61) the years in the three-year period ended December 31, 2022, and the related notes and (cid:67)nancial statement schedule III—(cid:33)eal (cid:11)state and (cid:3)ccumulated Deprecia(cid:2462)on (cid:336)collec(cid:2462)vely, the consolidated (cid:67)nancial statements(cid:337). In our opinion, the consolidated (cid:67)nancial statements present (cid:61)airly, in all material respects, the (cid:67)nancial posi(cid:2462)on o(cid:61) the (cid:7)ompany as o(cid:61) December 31, 2022 and 2021, and the results o(cid:61) its opera(cid:2462)ons and its cash (cid:89)ows (cid:61)or each o(cid:61) the years in the three-year period ended December 31, 2022, in con(cid:61)ormity with U.S. generally accepted accoun(cid:2462)ng principles. We also have audited, in accordance with the standards o(cid:61) the (cid:30)ublic (cid:7)ompany (cid:3)ccoun(cid:2462)ng Oversight Board (cid:336)United States(cid:337) (cid:336)(cid:30)(cid:7)(cid:3)OB(cid:337), the (cid:7)ompany(cid:317)s internal control over (cid:67)nancial repor(cid:2462)ng as o(cid:61) December 31, 2022, based on criteria established in Internal (cid:7)ontrol—Integrated Framework (cid:336)2013(cid:337) issued by the (cid:7)ommi(cid:130)ee o(cid:61) Sponsoring Organi(cid:140)a(cid:2462)ons o(cid:61) the (cid:36)readway (cid:7)ommission, and our report dated February 22, 2023 e(cid:138)pressed an unquali(cid:67)ed opinion on the e(cid:64)ec(cid:2462)veness o(cid:61) the (cid:7)ompany(cid:317)s internal control over (cid:67)nancial repor(cid:2462)ng. (cid:6)asis for (cid:27)pinion (cid:36)hese consolidated (cid:67)nancial statements are the responsibility o(cid:61) the (cid:7)ompany(cid:317)s management. Our responsibility is to e(cid:138)press an opinion on these consolidated (cid:67)nancial statements based on our audits. We are a public accoun(cid:2462)ng (cid:67)rm registered with the (cid:30)(cid:7)(cid:3)OB and are required to be independent with respect to the (cid:7)ompany in accordance with the U.S. (cid:61)ederal securi(cid:2462)es laws and the applicable rules and regula(cid:2462)ons o(cid:61) the Securi(cid:2462)es and (cid:11)(cid:138)change (cid:7)ommission and the (cid:30)(cid:7)(cid:3)OB. We conducted our audits in accordance with the standards o(cid:61) the (cid:30)(cid:7)(cid:3)OB. (cid:36)hose standards require that we plan and per(cid:61)orm the audit to obtain reasonable assurance about whether the consolidated (cid:67)nancial statements are (cid:61)ree o(cid:61) material misstatement, whether due to error or (cid:61)raud. Our audits included per(cid:61)orming procedures to assess the risks o(cid:61) material misstatement o(cid:61) the consolidated (cid:67)nancial statements, whether due to error or (cid:61)raud, and per(cid:61)orming procedures that respond to those risks. Such procedures included e(cid:138)amining, on a test basis, evidence regarding the amounts and disclosures in the consolidated (cid:67)nancial statements. Our audits also included evalua(cid:2462)ng the accoun(cid:2462)ng principles used and signi(cid:67)cant es(cid:2462)mates made by management, as well as evalua(cid:2462)ng the overall presenta(cid:2462)on o(cid:61) the consolidated (cid:67)nancial statements. We believe that our audits provide a reasonable basis (cid:61)or our opinion. Cri(cid:2236)cal Audit Ma(cid:130)er (cid:36)he cri(cid:2462)cal audit ma(cid:130)er communicated below is a ma(cid:130)er arising (cid:61)rom the current period audit o(cid:61) the consolidated (cid:67)nancial statements that was communicated or required to be communicated to the audit commi(cid:130)ee and that(cid:313) (cid:336)1(cid:337) relates to accounts or disclosures that are material to the consolidated (cid:67)nancial statements and (cid:336)2(cid:337) involved our especially challenging, subjec(cid:2462)ve, or comple(cid:138) judgments. (cid:36)he communica(cid:2462)on o(cid:61) a cri(cid:2462)cal audit ma(cid:130)er does not alter in any way our opinion on the consolidated (cid:67)nancial statements, taken as a whole, and we are not, by communica(cid:2462)ng the cri(cid:2462)cal audit ma(cid:130)er below, providing a separate opinion on the cri(cid:2462)cal audit ma(cid:130)er or on the accounts or disclosures to which it relates. 78 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 79 only in accordance with authori(cid:140)a(cid:2462)ons o(cid:61) management and directors o(cid:61) the company(cid:312) and (cid:336)3(cid:337) provide reasonable assurance regarding preven(cid:2462)on or (cid:2462)mely detec(cid:2462)on o(cid:61) unauthori(cid:140)ed acquisi(cid:2462)on, use, or disposi(cid:2462)on o(cid:61) the company(cid:317)s assets that could have a material e(cid:64)ect on the (cid:67)nancial statements. Because o(cid:61) its inherent limita(cid:2462)ons, internal control over (cid:67)nancial repor(cid:2462)ng may not prevent or detect misstatements. (cid:3)lso, projec(cid:2462)ons o(cid:61) any evalua(cid:2462)on o(cid:61) e(cid:64)ec(cid:2462)veness to (cid:61)uture periods are subject to the risk that controls may become inadequate because o(cid:61) changes in condi(cid:2462)ons, or that the degree o(cid:61) compliance with the policies or procedures may deteriorate. (cid:326)s(cid:326) K(cid:30)(cid:24)(cid:14) LL(cid:30) Los (cid:3)ngeles, (cid:7)ali(cid:61)ornia February 22, 2023 Report of Independent Registered Public Accounting Firm (cid:36)o the Shareholders and Board o(cid:61) Directors Kennedy-Wilson Holdings, Inc.(cid:313) (cid:27)pinion on Internal Control (cid:27)ver Financial Repor(cid:2236)ng We have audited Kennedy-Wilson Holdings, Inc. and subsidiaries(cid:317) (cid:336)the (cid:7)ompany(cid:337) internal control over (cid:67)nancial repor(cid:2462)ng as o(cid:61) December 31, 2022, based on criteria established in Internal (cid:7)ontrol— Integrated Framework (cid:336)2013(cid:337) issued by the (cid:7)ommi(cid:130)ee o(cid:61) Sponsoring Organi(cid:140)a(cid:2462)ons o(cid:61) the (cid:36)readway (cid:7)ommission. In our opinion, the (cid:7)ompany maintained, in all material respects, e(cid:64)ec(cid:2462)ve internal control over (cid:67)nancial repor(cid:2462)ng as o(cid:61) December 31, 2022, based on criteria established in Internal (cid:7)ontrol—Integrated Framework (cid:336)2013(cid:337) issued by the (cid:7)ommi(cid:130)ee o(cid:61) Sponsoring Organi(cid:140)a(cid:2462)ons o(cid:61) the (cid:36)readway (cid:7)ommission. We also have audited, in accordance with the standards o(cid:61) the (cid:30)ublic (cid:7)ompany (cid:3)ccoun(cid:2462)ng Oversight Board (cid:336)United States(cid:337) (cid:336)(cid:30)(cid:7)(cid:3)OB(cid:337), the consolidated balance sheets o(cid:61) the (cid:7)ompany as o(cid:61) December 31, 2022 and 2021, the related consolidated statements o(cid:61) income, comprehensive income, equity, and cash (cid:89)ows (cid:61)or each o(cid:61) the years in the three-year period ended December 31, 2022, and the related notes and (cid:67)nancial statement schedule III- (cid:33)eal (cid:11)state and (cid:3)ccumulated Deprecia(cid:2462)on (cid:336)collec(cid:2462)vely, the consolidated (cid:67)nancial statements(cid:337), and our report dated February 22, 2023 e(cid:138)pressed an unquali(cid:67)ed opinion on those consolidated (cid:67)nancial statements. (cid:6)asis for (cid:27)pinion (cid:36)he (cid:7)ompany(cid:317)s management is responsible (cid:61)or maintaining e(cid:64)ec(cid:2462)ve internal control over (cid:67)nancial repor(cid:2462)ng and (cid:61)or its assessment o(cid:61) the e(cid:64)ec(cid:2462)veness o(cid:61) internal control over (cid:67)nancial repor(cid:2462)ng, included in the accompanying (cid:24)anagement(cid:317)s (cid:33)eport on Internal (cid:7)ontrol over Financial (cid:33)epor(cid:2462)ng. Our responsibility is to e(cid:138)press an opinion on the (cid:7)ompany(cid:317)s internal control over (cid:67)nancial repor(cid:2462)ng based on our audit. We are a public accoun(cid:2462)ng (cid:67)rm registered with the (cid:30)(cid:7)(cid:3)OB and are required to be independent with respect to the (cid:7)ompany in accordance with the U.S. (cid:61)ederal securi(cid:2462)es laws and the applicable rules and regula(cid:2462)ons o(cid:61) the Securi(cid:2462)es and (cid:11)(cid:138)change (cid:7)ommission and the (cid:30)(cid:7)(cid:3)OB. We conducted our audit in accordance with the standards o(cid:61) the (cid:30)(cid:7)(cid:3)OB. (cid:36)hose standards require that we plan and per(cid:61)orm the audit to obtain reasonable assurance about whether e(cid:64)ec(cid:2462)ve internal control over (cid:67)nancial repor(cid:2462)ng was maintained in all material respects. Our audit o(cid:61) internal control over (cid:67)nancial repor(cid:2462)ng included obtaining an understanding o(cid:61) internal control over (cid:67)nancial repor(cid:2462)ng, assessing the risk that a material weakness e(cid:138)ists, and tes(cid:2462)ng and evalua(cid:2462)ng the design and opera(cid:2462)ng e(cid:64)ec(cid:2462)veness o(cid:61) internal control based on the assessed risk. Our audit also included per(cid:61)orming such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis (cid:61)or our opinion. De(cid:67)ni(cid:2236)on and (cid:21)imita(cid:2236)ons of Internal Control (cid:27)ver Financial Repor(cid:2236)ng (cid:3) company(cid:317)s internal control over (cid:67)nancial repor(cid:2462)ng is a process designed to provide reasonable assurance regarding the reliability o(cid:61) (cid:67)nancial repor(cid:2462)ng and the prepara(cid:2462)on o(cid:61) (cid:67)nancial statements (cid:61)or e(cid:138)ternal purposes in accordance with generally accepted accoun(cid:2462)ng principles. (cid:3) company(cid:317)s internal control over (cid:67)nancial repor(cid:2462)ng includes those policies and procedures that (cid:336)1(cid:337) pertain to the maintenance o(cid:61) records that, in reasonable detail, accurately and (cid:61)airly re(cid:89)ect the transac(cid:2462)ons and disposi(cid:2462)ons o(cid:61) the assets o(cid:61) the company(cid:312) (cid:336)2(cid:337) provide reasonable assurance that transac(cid:2462)ons are recorded as necessary to permit prepara(cid:2462)on o(cid:61) (cid:67)nancial statements in accordance with generally accepted accoun(cid:2462)ng principles, and that receipts and e(cid:138)penditures o(cid:61) the company are being made 80 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 81 Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets Kennedy-Wilson Holdings, Inc. Consolidated Statements of Income (Dollars in millions) Assets (cid:1354)(cid:7)ash and cash equivalents (cid:1354)(cid:3)ccounts receivable, net (cid:336)including (cid:362)13.(cid:406) and (cid:362)1(cid:403).2 o(cid:61) related party(cid:337) (cid:1354) (cid:33)eal estate and acquired in place lease values (cid:336)net o(cid:61) accumulated deprecia(cid:2462)on and (cid:1354)amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) (cid:362)(cid:1142)(cid:1142)2.2 and (cid:362)(cid:1142)3(cid:1142).1(cid:337) (cid:1354)Unconsolidated investments (cid:336)including (cid:362)2,0(cid:406)3.(cid:405) and (cid:362)1,(cid:405)(cid:406)(cid:403).(cid:1142) at (cid:61)air value(cid:337) (cid:1354)Other assets (cid:1354)Loan purchases and origina(cid:2462)ons (cid:1354)(cid:1354)Total assets(1) (cid:21)ia(cid:48)ili(cid:2462)es (cid:1354)(cid:3)ccounts payable (cid:1354)(cid:3)ccrued e(cid:138)penses and other liabili(cid:2462)es (cid:1354)(cid:24)ortgage debt (cid:1354)KW unsecured debt (cid:1354)KW(cid:11) unsecured bonds (cid:1354)(cid:1354)Total lia(cid:48)ili(cid:2462)es(1) E(cid:116)uit(cid:139) (cid:1354) Series (cid:3) cumula(cid:2462)ve pre(cid:61)erred stock, (cid:362)0.0001 par value, (cid:362)1,000 per share liquida(cid:2462)on pre(cid:61)erence, (cid:1354) 1,000,000 shares authori(cid:140)ed, 300,000 shares outstanding as o(cid:61) December 31, 2022 and December 31, 2021 and Series B cumula(cid:2462)ve pre(cid:61)erred Stock, (cid:362)0.0001 par value, (cid:362)1,000 per share liquida(cid:2462)on pre(cid:61)erence, 1,000,000 shares authori(cid:140)ed and 300,000 shares outstanding as o(cid:61) December 31, 2022 (cid:1354) (cid:7)ommon Stock, (cid:362)0.0001 par value, 200,000,000 authori(cid:140)ed, 13(cid:405),(cid:405)(cid:406)0,(cid:405)(cid:1141)(cid:1142) and 13(cid:405),(cid:406)(cid:404)(cid:404),(cid:403)(cid:405)(cid:406) (cid:1354)shares issued outstanding as o(cid:61) December 31, 2022 and December 31, 2021, respec(cid:2462)vely (cid:1354)(cid:3)ddi(cid:2462)onal paid-in capital (cid:1354)(cid:33)etained earnings (cid:1354)(cid:3)ccumulated other comprehensive loss (cid:1354)(cid:1354)Total (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:15)oldin(cid:93)s, Inc(cid:314) shareholders(cid:317) e(cid:116)uit(cid:139) (cid:1354)(cid:25)oncontrolling interests (cid:1354)Total e(cid:116)uit(cid:139) (cid:1354)Total lia(cid:48)ili(cid:2462)es and e(cid:116)uit(cid:139) December 31, 2022 2021 (cid:362) (cid:403)3(cid:406).3 (cid:362) (cid:403)0.(cid:1142) (cid:404),1(cid:1142)(cid:1142).1 2,23(cid:1142).1 21(cid:1141).1 1(cid:403)(cid:406).(cid:403) (cid:404)2(cid:403).(cid:1142) 3(cid:1141).1 (cid:404),0(cid:404)(cid:406).(cid:1142) 1,(cid:406)(cid:403)(cid:405).(cid:1141) 1(cid:405)(cid:405).(cid:406) 130.3 (cid:362) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 1(cid:1141).2 (cid:362) (cid:1141)(cid:404)(cid:1142).2 3,01(cid:1142).0 2,0(cid:1141)2.(cid:1141) (cid:404)0(cid:1141).(cid:403) (cid:1141),2(cid:1141)1.(cid:403) 1(cid:1142).(cid:1141) (cid:1141)1(cid:406).1 2,(cid:406)(cid:404)(cid:406).(cid:1142) 1,(cid:1142)(cid:404)2.3 (cid:1141)22.(cid:1142) (cid:1141),0(cid:405)2.(cid:1141) (cid:404)(cid:406)2.(cid:404) 2(cid:406)(cid:404).2 — 1,(cid:1141)(cid:405)(cid:406).(cid:404) 122.1 (cid:336)(cid:403)30.1(cid:337) 1,(cid:406)(cid:1141)(cid:403).0 (cid:403)(cid:1141).(cid:403) 2,010.(cid:403) — 1,(cid:1141)(cid:405)(cid:406).(cid:1141) 1(cid:406)2.(cid:403) (cid:336)3(cid:1142)(cid:406).(cid:1141)(cid:337) 1,(cid:405)(cid:405)(cid:405).(cid:1141) 2(cid:1141).3 1,(cid:1142)03.(cid:406) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 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(cid:336)(cid:318)(cid:40)(cid:17)(cid:11)(cid:118)(cid:319)(cid:337)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:1140)(cid:98)(cid:45)(cid:48)(cid:98)(cid:1140)(cid:98)(cid:2462)(cid:59)(cid:118)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:400)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:362)(cid:400)(cid:1142)(cid:406)(cid:314)(cid:1141)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:336)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:2)(cid:95)(cid:59)(cid:1140)(cid:55)(cid:2)(cid:48)(cid:139)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2) (cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:362)(cid:400)(cid:400)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:117)(cid:59)(cid:45)(cid:1140)(cid:2)(cid:59)(cid:118)(cid:124)(cid:45)(cid:124)(cid:59)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:49)(cid:116)(cid:134)(cid:98)(cid:117)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:114)(cid:1140)(cid:45)(cid:49)(cid:59)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:118)(cid:311)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:45)(cid:49)(cid:49)(cid:134)(cid:108)(cid:134)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:114)(cid:117)(cid:59)(cid:49)(cid:98)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:2) (cid:111)(cid:61)(cid:2)(cid:362)(cid:400)(cid:404)(cid:401)(cid:314)(cid:1142)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:337)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:400)(cid:401)(cid:406)(cid:314)(cid:401)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:336)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:362)(cid:400)(cid:399)(cid:402)(cid:314)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:337)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:311)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:40)(cid:17)(cid:11)(cid:118)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:118)(cid:59)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:2)(cid:49)(cid:45)(cid:109)(cid:2)(cid:111)(cid:109)(cid:1140)(cid:139)(cid:2) (cid:48)(cid:59)(cid:2)(cid:134)(cid:118)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:118)(cid:59)(cid:130)(cid:1140)(cid:59)(cid:2)(cid:111)(cid:48)(cid:1140)(cid:98)(cid:93)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:40)(cid:17)(cid:11)(cid:118)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:1140)(cid:98)(cid:45)(cid:48)(cid:98)(cid:1140)(cid:98)(cid:2462)(cid:59)(cid:118)(cid:2)(cid:55)(cid:111)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:95)(cid:45)(cid:136)(cid:59)(cid:2)(cid:117)(cid:59)(cid:49)(cid:111)(cid:134)(cid:117)(cid:118)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:314) See accompanying notes to consolidated (cid:67)nancial statements. (Dollars in millions, except per share data) 2022 2021 Year ended December 31, Revenue (cid:1354)(cid:1354)(cid:33)ental (cid:1354)(cid:1354)Hotel (cid:1354)(cid:1354) Investment management (cid:61)ees (cid:336)includes (cid:362)(cid:403)(cid:403).(cid:1142), (cid:362)3(cid:404).3, and (cid:362)22.(cid:404) o(cid:61) (cid:1354)related party (cid:61)ees, respec(cid:2462)vely(cid:337) (cid:1354)(cid:1354) (cid:30)roperty service (cid:61)ees (cid:336)includes (cid:362)0.(cid:403), (cid:362)0.0, and (cid:362)0.3 o(cid:61) related party (cid:1354)(cid:61)ees, respec(cid:2462)vely(cid:337) (cid:1354)(cid:1354)Loans and other (cid:1354)(cid:1354)(cid:1354)(cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:1354)(cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:1354)(cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)(cid:1354)Total income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:1354)(cid:33)ental (cid:1354)(cid:1354)Hotel (cid:1354)(cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)(cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)(cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)(cid:1354)(cid:1354)Total expenses (cid:1354)(cid:1354)Interest e(cid:138)pense (cid:1354)(cid:1354)(cid:14)ain (cid:336)loss(cid:337) on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)(cid:1354)Other income (cid:336)loss(cid:337) (cid:1354)(cid:1354)(cid:1354)(cid:1354)Income (cid:48)efore provision for income taxes (cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:1354)(cid:1354)(cid:1354)Net income (cid:25)et (cid:336)income(cid:337) loss a(cid:130)ributable to the noncontrolling interests (cid:30)re(cid:61)erred dividends Net income a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:15)oldin(cid:93)s, Inc(cid:314) (cid:1354)common shareholders Basic Earnin(cid:93)s per share (cid:1354)(cid:1354)(cid:1354)Income per basic (cid:1354)(cid:1354)(cid:1354)Weighted average shares outstanding (cid:61)or basic Diluted Earnin(cid:93)s per share (cid:1354)(cid:1354)(cid:1354)Income per diluted (cid:1354)(cid:1354)(cid:1354)Weighted average shares outstanding (cid:61)or diluted Dividends declared per common share (cid:362) (cid:403)3(cid:403).(cid:406) (cid:362) 3(cid:406)0.(cid:404) (cid:362) (cid:403)(cid:1141).(cid:406) (cid:403)(cid:403).(cid:1142) 1.(cid:405) 11.(cid:405) (cid:404)(cid:403)0.0 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) 1(cid:405)(cid:1142).(cid:403) 103.(cid:405) 1(cid:404)1.2 2(cid:406).(cid:404) 111.3 2(cid:406).0 (cid:336)(cid:403).3(cid:337) 3(cid:405).2 1(cid:405)2.(cid:406) (cid:404)2(cid:1141).(cid:1142) (cid:336)220.(cid:1142)(cid:337) 2(cid:405).(cid:404) 3(cid:1141).1 13(cid:1142).1 (cid:336)3(cid:1141).2(cid:337) 101.(cid:406) (cid:336)(cid:1142).2(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) 1(cid:405).1 3(cid:404).3 2.1 (cid:1142).(cid:1141) (cid:403)(cid:404)3.(cid:1141) 2(cid:405)1.1 11(cid:405).(cid:406) 3(cid:1142)(cid:406).0 (cid:403)12.(cid:405) 132.(cid:405) 12.(cid:405) 133.(cid:406) 2(cid:1142).(cid:405) (cid:403)2.0 33.3 1(cid:1141)(cid:1141).3 (cid:404)(cid:403)(cid:406).(cid:1141) (cid:336)1(cid:406)2.(cid:403)(cid:337) (cid:336)(cid:403)(cid:404).(cid:405)(cid:337) (cid:336)(cid:404).0(cid:337) (cid:403)(cid:1141)2.(cid:1141) (cid:336)12(cid:1141).2(cid:337) 33(cid:1141).(cid:403) (cid:336)(cid:1141).0(cid:337) (cid:336)1(cid:405).2(cid:337) 2020 (cid:403)03.(cid:406) 13.(cid:406) 22.(cid:404) 10.(cid:1141) 3.1 (cid:403)(cid:404)(cid:403).0 (cid:405)(cid:1142).3 2.(cid:405) (cid:1142)1.0 33(cid:1142).0 13(cid:404).(cid:405) 13.(cid:1142) 111.(cid:406) 32.3 0.2 3(cid:403).(cid:1141) 1(cid:405)(cid:406).(cid:1141) (cid:404)0(cid:1142).1 (cid:336)201.(cid:406)(cid:337) (cid:336)(cid:406).3(cid:337) (cid:336)2.3(cid:337) 1(cid:404)1.(cid:403) (cid:336)(cid:403)3.(cid:1141)(cid:337) 10(cid:405).(cid:1142) 2.3 (cid:336)1(cid:405).2(cid:337) (cid:362) (cid:362) (cid:362) (cid:362) (cid:1141)(cid:403).(cid:1142) (cid:362) 313.2 (cid:362) (cid:406)2.(cid:406) 0.(cid:403)(cid:405) (cid:362) 2.2(cid:1141) (cid:362) 13(cid:1141),(cid:406)00,(cid:1142)(cid:405)(cid:404) 13(cid:1142),(cid:404)(cid:404)2,0(cid:404)(cid:1142) 0.(cid:403)(cid:405) (cid:362) 2.2(cid:403) (cid:362) 13(cid:1142),(cid:404)(cid:1141)(cid:405),(cid:404)3(cid:403) 1(cid:403)0,132,(cid:403)3(cid:404) 0.(cid:406)(cid:1141) (cid:362) 0.(cid:406)0 (cid:362) 0.(cid:1141)(cid:1141) 13(cid:406),(cid:405)(cid:403)1,(cid:403)11 0.(cid:1141)(cid:1141) 1(cid:403)0,3(cid:403)(cid:405),3(cid:1141)(cid:404) 0.(cid:1142)(cid:1142) See accompanying notes to consolidated (cid:67)nancial statements. 82 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 83 Kennedy-Wilson Holdings, Inc. Consolidated Statements of Comprehensive Income Kennedy-Wilson Holdings, Inc. Consolidated Statements of Equity (Dollars in millions) Net income Other comprehensive (cid:336)loss(cid:337) income, net o(cid:61) ta(cid:138)(cid:313) (cid:1354)Unreali(cid:140)ed (cid:61)oreign currency transla(cid:2462)on (cid:336)loss(cid:337) gain (cid:1354)(cid:3)mounts reclassi(cid:67)ed out o(cid:61) (cid:3)O(cid:7)I during the year (cid:1354)Unreali(cid:140)ed currency deriva(cid:2462)ve contracts gain (cid:336)loss(cid:337) (cid:1354)Unreali(cid:140)ed gain (cid:336)loss(cid:337) on interest rate swaps (cid:1354)(cid:36)otal other comprehensive (cid:336)loss(cid:337) income (cid:61)or the year (cid:7)omprehensive income (cid:7)omprehensive (cid:336)income(cid:337) loss a(cid:130)ributable to noncontrolling interests (cid:7)omprehensive income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. (cid:362) See accompanying notes to consolidated (cid:67)nancial statements. Year ended December 31, 2022 2021 2020 (cid:362) 101.(cid:406) (cid:362) 33(cid:1141).(cid:403) (cid:362) 10(cid:405).(cid:1142) (Dollars in millions, except share amounts) (cid:30)re(cid:61)erred Stock (cid:7)ommon Stock Shares (cid:3)mount Shares (cid:3)mount Year Ended December 31, 2022 (cid:3)ddi(cid:2462)onal (cid:30)aid-in (cid:7)apital (cid:33)etained (cid:11)arnings (cid:3)ccumulated Other (cid:7)omprehensive Loss (cid:25)on controlling Interests (cid:36)otal (cid:336)(cid:405)1.(cid:405)(cid:337) (cid:336)0.(cid:1142)(cid:337) 23.(cid:403) (cid:404).(cid:1141) (cid:336)(cid:403)3.(cid:404)(cid:337) (cid:404)(cid:1142).(cid:403) (cid:336)(cid:404).2(cid:337) (cid:404)3.2 (cid:362) (cid:336)(cid:404)(cid:1142).3(cid:337) 2.2 (cid:404)(cid:1141).2 3.2 3.3 33(cid:406).(cid:405) (cid:336)(cid:404).2(cid:337) 33(cid:403).(cid:404) (cid:362) (cid:1141)(cid:1141).(cid:404) 0.(cid:1142) (cid:336)3(cid:405).(cid:1142)(cid:337) (cid:336)(cid:404).3(cid:337) 2(cid:403).2 132.0 1.(cid:405) 133.(cid:405) — — — — — — 2(cid:406)(cid:405).3 300,000 1,221,3(cid:1141)2 Balance, December 31, 2021 300,000 (cid:362) 2(cid:406)(cid:404).2 13(cid:405),(cid:406)(cid:404)(cid:404),(cid:403)(cid:405)(cid:406) (cid:362) (cid:30)re(cid:61)erred stock issuance (cid:3)t-the-market equity (cid:1354)o(cid:64)ering program costs (cid:33)estricted stock (cid:1354)grants (cid:336)(cid:33)S(cid:14)(cid:337) Shares re(cid:2462)red due (cid:1354)to (cid:33)S(cid:14) ves(cid:2462)ng Shares re(cid:2462)red due to (cid:1354)common stock (cid:1354)repurchase program Stock based compensa(cid:2462)on Other comprehensive (cid:1354)(cid:336)loss(cid:337) income(cid:313) (cid:1354)Unreali(cid:140)ed (cid:61)oreign (cid:1354)(cid:1354)currency transla(cid:2462)on (cid:1354)(cid:1354)loss, net o(cid:61) ta(cid:138) (cid:1354) Unreali(cid:140)ed (cid:61)oreign currency (cid:1354) deriva(cid:2462)ve contract gain, (cid:336)(cid:404)(cid:404)1,1(cid:1141)2(cid:337) — (cid:336)(cid:1142)3(cid:403),(cid:406)11(cid:337) — — — — — — — — — net o(cid:61) ta(cid:138) (cid:1354)Unreali(cid:140)ed gain on (cid:1354)(cid:1354)interest rate (cid:1354)(cid:1354)swaps, net o(cid:61) ta(cid:138) (cid:7)ommon stock dividends (cid:30)re(cid:61)erred stock dividends (cid:25)et income (cid:7)ontribu(cid:2462)ons (cid:61)rom (cid:1354)noncontrolling interests Distribu(cid:2462)ons to (cid:1354)noncontrolling interests — — — — — — — — — — — — — — — — — — — — — — (cid:362) 1,(cid:1141)(cid:405)(cid:406).(cid:1141) (cid:362) 1(cid:406)2.(cid:403) (cid:362) — — — — — — — — — — — — — — — — (cid:336)0.(cid:405)(cid:337) — (cid:336)1(cid:1142).(cid:1141)(cid:337) — — — (cid:336)(cid:406).(cid:1142)(cid:337) 2(cid:406).0 (cid:336)2.(cid:1142)(cid:337) — — — — — — — — — — — — (cid:336)132.3(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:406)3.(cid:405) — — (cid:336)3(cid:1142)(cid:406).(cid:1141)(cid:337) (cid:362) — 2(cid:1141).3 (cid:362)1,(cid:1142)03.(cid:406) 2(cid:406)(cid:405).3 — — — — — — — — — — — (cid:336)0.(cid:405)(cid:337) — (cid:336)1(cid:1142).(cid:1141)(cid:337) (cid:336)12.(cid:1141)(cid:337) 2(cid:406).0 (cid:336)(cid:1141)(cid:1142).(cid:405)(cid:337) (cid:336)3.0(cid:337) (cid:336)(cid:405)1.(cid:405)(cid:337) 23.(cid:403) — 23.(cid:403) (cid:403).(cid:1142) — — — — — — — — (cid:1142).2 (cid:403).(cid:1142) (cid:336)132.3(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) 101.(cid:406) 2(cid:404).(cid:405) 2(cid:404).(cid:405) (cid:336)10.(cid:1142)(cid:337) (cid:336)10.(cid:1142)(cid:337) Balance, December 31, 2022 (cid:1141)00,000 (cid:362) (cid:404)(cid:406)2.(cid:404) 13(cid:405),(cid:405)(cid:406)0,(cid:405)(cid:1141)(cid:1142) (cid:362) — (cid:362) 1,(cid:1141)(cid:405)(cid:406).(cid:404) (cid:362) 122.1 (cid:362) (cid:336)(cid:403)30.1(cid:337) (cid:362) (cid:403)(cid:1141).(cid:403) (cid:362)2,010.(cid:403) See accompanying notes to consolidated (cid:67)nancial statements. 84 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 85 Kennedy-Wilson Holdings, Inc. Consolidated Statements of Equity Kennedy-Wilson Holdings, Inc. Consolidated Statements of Equity (Dollars in millions, except share amounts) (cid:30)re(cid:61)erred Stock Shares (cid:3)mount (cid:7)ommon Stock Shares (cid:3)mount Year Ended December 31, 2021 (cid:3)ddi(cid:2462)onal (cid:30)aid-in (cid:7)apital (cid:33)etained (cid:11)arnings (cid:3)ccumulated Other (cid:7)omprehensive Loss (cid:25)on controlling Interests (cid:36)otal — — — — — — (cid:336)(cid:406)(cid:1141)(cid:405),(cid:404)3(cid:1141)(cid:337) (cid:336)23(cid:405),(cid:404)(cid:1142)(cid:1142)(cid:337) (cid:1141)1(cid:406),(cid:406)(cid:403)(cid:404) Balance, December 31, 2020 300,000 (cid:362) 2(cid:406)(cid:404).2 1(cid:403)1,3(cid:1141)(cid:404),323 (cid:362) Shares (cid:61)or(cid:61)eited (cid:33)estricted stock grants Shares re(cid:2462)red due to (cid:1354)(cid:33)S(cid:14) ves(cid:2462)ng Shares re(cid:2462)red due to (cid:1354)common stock (cid:1354)repurchase program Stock based compensa(cid:2462)on Other comprehensive (cid:1354)(cid:336)loss(cid:337) income(cid:313) (cid:1354)Unreali(cid:140)ed (cid:61)oreign (cid:1354)(cid:1354)currency transla(cid:2462)on (cid:1354)(cid:1354)loss, net o(cid:61) ta(cid:138) (cid:1354) Unreali(cid:140)ed (cid:61)oreign currency (cid:1354) deriva(cid:2462)ve contract gain, (cid:336)2,(cid:1142)2(cid:403),(cid:1141)(cid:1141)(cid:404)(cid:337) — — — — — — — — net o(cid:61) ta(cid:138) (cid:1354)Unreali(cid:140)ed gain on (cid:1354)(cid:1354)interest rate swaps, (cid:1354)(cid:1354)net o(cid:61) ta(cid:138) (cid:7)ommon stock dividends (cid:30)re(cid:61)erred stock dividends (cid:25)et income (cid:7)ontribu(cid:2462)ons (cid:61)rom (cid:1354)noncontrolling interests Distribu(cid:2462)ons to (cid:1354)noncontrolling interests Incen(cid:2462)ve alloca(cid:2462)ons to (cid:1354)noncontrolling interests — — — — — — — — — — — — — — — — — — — — — — — — — (cid:362) 1,(cid:405)2(cid:404).2 (cid:362) — — — — 1(cid:405).(cid:405) (cid:362) — — (cid:336)3(cid:406)3.(cid:1141)(cid:337) (cid:362) — — 2(cid:1142).2 (cid:362) 1,(cid:1141)(cid:405)2.(cid:405) — — — — — (cid:336)20.(cid:404)(cid:337) — — — (cid:336)(cid:404)0.0(cid:337) 2(cid:1142).(cid:405) (cid:336)12.(cid:405)(cid:337) — — — — — (cid:336)20.(cid:404)(cid:337) — — (cid:336)(cid:1141)2.(cid:405)(cid:337) 2(cid:1142).(cid:405) — — — — — — — — — — — — — — — — — — (cid:336)3.(cid:1142)(cid:337) — — — (cid:336)12(cid:404).(cid:1142)(cid:337) (cid:336)1(cid:405).2(cid:337) 330.(cid:403) — — — 3.(cid:405) — — — — — — — — — (cid:1141).0 (cid:405).(cid:1142) 3.(cid:405) (cid:336)12(cid:404).(cid:1142)(cid:337) (cid:336)1(cid:405).2(cid:337) 33(cid:1141).(cid:403) (cid:405).(cid:1142) (cid:336)1(cid:1142).(cid:405)(cid:337) (cid:336)1(cid:1142).(cid:405)(cid:337) 3.(cid:1142) — Balance, December 31, 2021 300,000 (cid:362) 2(cid:406)(cid:404).2 13(cid:405),(cid:406)(cid:404)(cid:404),(cid:403)(cid:405)(cid:406) (cid:362) — (cid:362) 1,(cid:1141)(cid:405)(cid:406).(cid:1141) (cid:362) 1(cid:406)2.(cid:403) (cid:362) (cid:336)3(cid:1142)(cid:406).(cid:1141)(cid:337) (cid:362) 2(cid:1141).3 (cid:362) 1,(cid:1142)03.(cid:406) See accompanying notes to consolidated (cid:67)nancial statements. (cid:30)re(cid:61)erred Stock Shares (cid:3)mount (cid:7)ommon Stock Shares (cid:3)mount (cid:3)ddi(cid:2462)onal (cid:30)aid-in (cid:7)apital (cid:33)etained (cid:11)arnings (cid:3)ccumulated Other (cid:7)omprehensive Loss (cid:25)on controlling Interests (cid:36)otal Year Ended December 31, 2020 300,000 (cid:362) 2(cid:406)(cid:404).2 1(cid:403)2,2(cid:1142)3,10(cid:406) (cid:362) — — (cid:336)(cid:1141)2,(cid:405)10(cid:337) 2,(cid:404)(cid:403)3,(cid:404)(cid:404)1 — — — (cid:362) 1,(cid:405)(cid:404)(cid:403).(cid:404) (cid:362) — — — — (cid:403)(cid:1141).2 (cid:362) — — (cid:336)(cid:403)1(cid:405).2(cid:337) (cid:362) — — (cid:403)0.(cid:404) (cid:362)1,(cid:405)1(cid:406).2 — — — — — — (cid:336)(cid:404)(cid:405)1,(cid:406)(cid:1142)3(cid:337) — (cid:336)11.(cid:1141)(cid:337) — — — — — (cid:336)2,(cid:1142)2(cid:1141),(cid:1141)(cid:403)(cid:403)(cid:337) — — — (cid:336)(cid:404)0.0(cid:337) 32.3 (cid:403).2 — (Dollars in millions, except share amounts) Balance, December 31, 201(cid:406) Shares (cid:61)or(cid:61)eited (cid:33)estricted stock grants Shares re(cid:2462)red due to (cid:1354)(cid:33)S(cid:14) ves(cid:2462)ng Shares re(cid:2462)red due to (cid:1354)common stock (cid:1354)repurchase program Stock based compensa(cid:2462)on Other comprehensive (cid:1354)income (cid:336)loss(cid:337)(cid:313) (cid:1354)Unreali(cid:140)ed (cid:61)oreign (cid:1354)(cid:1354)currency transla(cid:2462)on (cid:1354)(cid:1354)gain, net o(cid:61) ta(cid:138) (cid:1354) Unreali(cid:140)ed (cid:61)oreign currency (cid:1354) deriva(cid:2462)ve contract loss, (cid:336)(cid:404)(cid:404).(cid:1142)(cid:337) (cid:336)0.(cid:1142)(cid:337) (cid:336)(cid:404)(cid:1141).(cid:1141)(cid:337) — — (cid:404)(cid:1141).1 — (cid:404)(cid:1141).1 net o(cid:61) ta(cid:138) — — (cid:1354)Unreali(cid:140)ed loss on (cid:1354)(cid:1354)interest rate swaps, (cid:1354)(cid:1354)net o(cid:61) ta(cid:138) (cid:7)ommon stock dividends (cid:30)re(cid:61)erred stock dividends (cid:25)et income (cid:7)ontribu(cid:2462)ons (cid:61)rom (cid:1354)noncontrolling interests Distribu(cid:2462)ons to (cid:1354)noncontrolling interests KW (cid:11)urope II deconsolida(cid:2462)on — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — (cid:336)12(cid:404).(cid:1141)(cid:337) (cid:336)1(cid:405).2(cid:337) 110.1 — — — Balance, December 31, 2020 300,000 (cid:362) 2(cid:406)(cid:404).2 1(cid:403)1,3(cid:1141)(cid:404),323 (cid:362) — (cid:362) 1,(cid:405)2(cid:404).2 (cid:362) 1(cid:405).(cid:405) (cid:362) (cid:336)3(cid:406)3.(cid:1141)(cid:337) (cid:362) 2(cid:1142).2 (cid:362)1,(cid:1141)(cid:405)2.(cid:405) See accompanying notes to consolidated (cid:67)nancial statements. — — — — (cid:336)11.(cid:1141)(cid:337) — — (cid:336)(cid:403)(cid:404).(cid:1142)(cid:337) 32.3 — (cid:1141)(cid:1141).1 0.(cid:1141) (cid:1141)(cid:1141).(cid:405) (cid:336)3(cid:405).(cid:1142)(cid:337) — (cid:336)3(cid:405).(cid:1142)(cid:337) (cid:336)(cid:403).(cid:405)(cid:337) — — — — — — — — — (cid:336)2.3(cid:337) (cid:336)(cid:403).(cid:405)(cid:337) (cid:336)12(cid:404).(cid:1141)(cid:337) (cid:336)1(cid:405).2(cid:337) 10(cid:405).(cid:1142) (cid:403).(cid:404) (cid:403).(cid:404) (cid:336)1(cid:1142).(cid:406)(cid:337) 3.(cid:1142) (cid:336)1(cid:1142).(cid:406)(cid:337) 3.(cid:1142) 86 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 87 Kennedy-Wilson Holdings, Inc. Consolidated Statements of Cash Flows (Dollars in millions) Cash (cid:89)o(cid:137)s from opera(cid:2462)n(cid:93) ac(cid:2462)vi(cid:2462)es: (cid:1354)(cid:25)et income (cid:1354)(cid:3)djustments to reconcile net income to net cash provided by (cid:336)used in(cid:337) (cid:1354)(cid:1354)opera(cid:2462)ng ac(cid:2462)vi(cid:2462)es(cid:313) (cid:1354)(cid:1354)(cid:14)ain on sale o(cid:61) real estate, net (cid:1354)(cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)(cid:3)bove(cid:326)below and straight-line rent amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)Uncollec(cid:2462)ble lease income (cid:1354)(cid:1354)(cid:30)rovision (cid:61)or de(cid:61)erred income ta(cid:138)es (cid:1354)(cid:1354)(cid:3)mor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) loan (cid:61)ees (cid:1354)(cid:1354)(cid:3)mor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) discount and accre(cid:2462)on o(cid:61) premium and transac(cid:2462)onal (cid:1354)(cid:1354)(cid:1354)(cid:61)oreign e(cid:138)change (cid:1354)(cid:1354)Unreali(cid:140)ed net gain on deriva(cid:2462)ves (cid:1354)(cid:1354)(cid:14)ain on e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)(cid:1354)Income (cid:61)rom unconsolidated investments (cid:1354)(cid:1354)(cid:3)ccre(cid:2462)on o(cid:61) interest income on loans (cid:1354)(cid:1354)Share-based compensa(cid:2462)on e(cid:138)pense (cid:1354)(cid:1354)De(cid:61)erred compensa(cid:2462)on (cid:1354)(cid:1354)Opera(cid:2462)ng distribu(cid:2462)ons (cid:61)rom unconsolidated investments (cid:1354)(cid:1354)Opera(cid:2462)ng distribu(cid:2462)ons (cid:61)rom loans (cid:1354)(cid:1354)(cid:7)hange in assets and liabili(cid:2462)es(cid:313) (cid:1354)(cid:1354)(cid:1354)(cid:3)ccounts receivable (cid:1354)(cid:1354)(cid:1354)Other assets (cid:1354)(cid:1354)(cid:1354)(cid:3)ccrued e(cid:138)penses and other liabili(cid:2462)es Net cash provided (cid:48)(cid:139) (used in) opera(cid:2462)n(cid:93) ac(cid:2462)vi(cid:2462)es Cash (cid:89)o(cid:137)s from inves(cid:2462)n(cid:93) ac(cid:2462)vi(cid:2462)es: (cid:1354)(cid:1354)Issuance o(cid:61) loans (cid:1354)(cid:1354)(cid:30)roceeds (cid:61)rom collec(cid:2462)on o(cid:61) loans (cid:1354)(cid:1354)(cid:25)et proceeds (cid:61)rom sale o(cid:61) consolidated real estate (cid:1354)(cid:1354)(cid:30)urchases o(cid:61) consolidated real estate (cid:1354)(cid:1354)(cid:7)apital e(cid:138)penditures to real estate (cid:1354)(cid:1354)Investment in marketable securi(cid:2462)es (cid:1354)(cid:1354)(cid:30)roceeds (cid:61)rom sale o(cid:61) marketable securi(cid:2462)es (cid:1354)(cid:1354)Inves(cid:2462)ng distribu(cid:2462)ons (cid:61)rom unconsolidated investments (cid:1354)(cid:1354)(cid:7)ontribu(cid:2462)ons to unconsolidated investments (cid:1354)(cid:1354)(cid:30)roceeds (cid:61)rom se(cid:130)lement o(cid:61) deriva(cid:2462)ve contracts (cid:1354)(cid:1354)(cid:30)remiums (cid:61)rom se(cid:130)lement o(cid:61) deriva(cid:2462)ve contracts (cid:1354)(cid:1354)(cid:30)roceeds (cid:61)rom sale o(cid:61) development project asset Net cash (used in) provided (cid:48)(cid:139) inves(cid:2462)n(cid:93) ac(cid:2462)vi(cid:2462)es Cash (cid:89)o(cid:137) from (cid:67)nancin(cid:93) ac(cid:2462)vi(cid:2462)es: (cid:1354)(cid:1354)Borrowings under senior notes payable (cid:1354)(cid:1354)(cid:33)epayment o(cid:61) senior notes payable (cid:1354)(cid:1354)Borrowings under line o(cid:61) credit(cid:326)term loan (cid:1354)(cid:1354)(cid:33)epayment o(cid:61) line o(cid:61) credit(cid:326)term loan (cid:1354)(cid:1354)Borrowings under mortgage debt (cid:1354)(cid:1354)(cid:33)epayment o(cid:61) mortgage debt (cid:1354)(cid:1354)(cid:33)epayment o(cid:61) KW(cid:11) Bonds (cid:1354)(cid:1354)(cid:30)ayment o(cid:61) loan (cid:61)ees (cid:1354)(cid:1354)(cid:3)t-the-market equity o(cid:64)ering program costs (cid:1354)(cid:1354)(cid:33)epurchase o(cid:61) common stock (cid:1354)(cid:1354)(cid:30)re(cid:61)erred stock issuance (cid:1354)(cid:1354)(cid:7)ommon stock dividends paid (cid:1354)(cid:1354)(cid:30)re(cid:61)erred stock dividends paid (cid:1354)(cid:1354)Borrowings on shareholder loans to noncontrolling interests (cid:1354)(cid:1354)(cid:7)ontribu(cid:2462)ons (cid:61)rom noncontrolling interests (cid:1354)(cid:1354)Distribu(cid:2462)ons to noncontrolling interests Net cash provided (cid:48)(cid:139) (used in) (cid:67)nancin(cid:93) ac(cid:2462)vi(cid:2462)es (cid:1354)(cid:1354)(cid:11)(cid:64)ect o(cid:61) currency e(cid:138)change rate changes on cash and cash equivalents Net chan(cid:93)e in cash and cash e(cid:116)uivalents (cid:1354)(cid:1354)(cid:7)ash and cash equivalents, beginning o(cid:61) year Year ended December 31, 2022 2021 2020 (cid:362) 101.(cid:406) (cid:362) 33(cid:1141).(cid:403) (cid:362) 10(cid:405).(cid:1142) Supplemental cash ﬂow information: (Dollars in millions) (cid:7)ash paid (cid:61)or(cid:313) (cid:1354)(cid:1354)Interest(cid:336)1(cid:337)(cid:336)2(cid:337) (cid:1354)(cid:1354)Income ta(cid:138)es Year ended December 31, 2022 2021 2020 (cid:362) 21(cid:403).(cid:403) (cid:362) 1(cid:1142)3.(cid:405) (cid:362) 20(cid:406).(cid:405) 12.(cid:1141) 1(cid:406).(cid:406) 1(cid:1141).(cid:404) (cid:336)103.(cid:405)(cid:337) 1(cid:405)2.(cid:406) (cid:336)(cid:1142).0(cid:337) (cid:1142).0 1(cid:1142).3 (cid:406).1 2.(cid:1141) (cid:336)(cid:403)(cid:404).(cid:406)(cid:337) (cid:336)2(cid:405).(cid:404)(cid:337) (cid:336)1(cid:405)(cid:1142).(cid:403)(cid:337) — 2(cid:406).0 (cid:405).(cid:1141) (cid:405)(cid:1142).1 — (cid:336)13.(cid:403)(cid:337) (cid:336)(cid:406).(cid:405)(cid:337) (cid:336)(cid:1142).0(cid:337) 32.(cid:406) (cid:336)(cid:404)0.(cid:406)(cid:337) 3(cid:403).(cid:404) 32(cid:404).(cid:406) (cid:336)(cid:403)0(cid:1142).2(cid:337) (cid:336)1(cid:1141)0.(cid:406)(cid:337) — — 1(cid:404)(cid:405).1 (cid:336)3(cid:1141)1.3(cid:337) 112.(cid:1141) (cid:336)10.(cid:403)(cid:337) — (cid:336)3(cid:1141)1.(cid:1141)(cid:337) — — (cid:404)2(cid:1142).(cid:403) (cid:336)32(cid:404).0(cid:337) (cid:403)01.3 (cid:336)3(cid:1142)(cid:406).(cid:1141)(cid:337) (cid:336)(cid:1141)(cid:404).(cid:1142)(cid:337) (cid:336)(cid:404).0(cid:337) (cid:336)0.(cid:405)(cid:337) (cid:336)31.2(cid:337) 2(cid:406)(cid:405).3 (cid:336)13(cid:403).(cid:1141)(cid:337) (cid:336)2(cid:404).(cid:406)(cid:337) — 2(cid:404).(cid:1142) (cid:336)10.(cid:1142)(cid:337) 2(cid:1141)(cid:403).2 (cid:336)21.0(cid:337) (cid:336)(cid:1142)(cid:404).(cid:404)(cid:337) (cid:404)2(cid:403).(cid:1142) (cid:336)(cid:403)12.(cid:405)(cid:337) 1(cid:1141)(cid:1141).3 (cid:1141).(cid:1142) 12.(cid:406) 112.2 1(cid:1141).2 2.(cid:403) (cid:336)(cid:403).(cid:1141)(cid:337) — (cid:336)3(cid:1142)(cid:406).0(cid:337) (cid:336)0.(cid:404)(cid:337) 2(cid:1142).(cid:405) (cid:404)(cid:1141).3 (cid:1142)2.2 — (cid:336)0.(cid:404)(cid:337) (cid:336)1(cid:1142).(cid:1142)(cid:337) (cid:336)2(cid:403).(cid:1141)(cid:337) (cid:336)30.3(cid:337) (cid:336)(cid:1142)3.(cid:403)(cid:337) (cid:404)(cid:1142).1 (cid:403)(cid:1142)(cid:1141).(cid:403) (cid:336)1,131.(cid:1142)(cid:337) (cid:336)13(cid:406).2(cid:337) — — (cid:1142)2.(cid:1142) (cid:336)2(cid:1142)0.(cid:1142)(cid:337) — (cid:336)30.1(cid:337) — (cid:336)1,03(cid:1142).0(cid:337) 1,(cid:1142)0(cid:403).3 (cid:336)1,1(cid:404)0.0(cid:337) 31(cid:403).3 (cid:336)(cid:403)3(cid:1142).(cid:404)(cid:337) 1,1(cid:403)(cid:403).(cid:406) (cid:336)2(cid:1141)(cid:1142).2(cid:337) (cid:336)(cid:404)0(cid:403).(cid:403)(cid:337) (cid:336)3(cid:404).(cid:1141)(cid:337) — (cid:336)(cid:1142)3.2(cid:337) — (cid:336)123.(cid:404)(cid:337) (cid:336)1(cid:405).2(cid:337) — (cid:405).(cid:1142) (cid:336)1(cid:1142).(cid:405)(cid:337) (cid:1141)32.0 (cid:336)(cid:403).0(cid:337) (cid:336)(cid:403)(cid:403)0.3(cid:337) (cid:406)(cid:1141)(cid:404).1 (1)(cid:2)(cid:2)(cid:362)(cid:403)(cid:314)(cid:399)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:362)(cid:403)(cid:314)(cid:400)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:403)(cid:314)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:130)(cid:117)(cid:98)(cid:48)(cid:134)(cid:124)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:109)(cid:111)(cid:109)(cid:330)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:111)(cid:1140)(cid:1140)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:118)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:59)(cid:109)(cid:55)(cid:59)(cid:55)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:311)(cid:2) (cid:401)(cid:399)(cid:401)(cid:400)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:401)(cid:399)(cid:401)(cid:399)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:314) (2)(cid:2)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:402)(cid:314)(cid:402)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:362)(cid:402)(cid:314)(cid:401)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:402)(cid:314)(cid:403)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:49)(cid:45)(cid:114)(cid:98)(cid:124)(cid:45)(cid:1140)(cid:98)(cid:140)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:55)(cid:134)(cid:117)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:111)(cid:117)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:139)(cid:59)(cid:45)(cid:117)(cid:118)(cid:2)(cid:59)(cid:109)(cid:55)(cid:59)(cid:55)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:311)(cid:2) (cid:401)(cid:399)(cid:401)(cid:400)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:401)(cid:399)(cid:401)(cid:399)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:314) (cid:3)s o(cid:61) December 31, 2022, 2021, and 2020, we have (cid:362)21.(cid:403) million, (cid:362)2(cid:403).2 million, and (cid:362)101.(cid:405) million, respec(cid:2462)vely, o(cid:61) restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on proper(cid:2462)es as well as escrow deposits associated with acquisi(cid:2462)ons and disposi(cid:2462)ons. (cid:36)hese reserves typically relate to interest, ta(cid:138), insurance and (cid:61)uture capital e(cid:138)penditures at the proper(cid:2462)es. Supplemental disclosure of non-cash investing and ﬁnancing activities: During the year ended December 31, 2022, the noncontrolling (cid:404)1(cid:1143) interest that the (cid:7)ompany retained as part o(cid:61) the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) ownership interest in the (cid:24)on(cid:2462)avo mul(cid:2462)(cid:61)amily asset in the Western United States (cid:336)(cid:318)(cid:24)on(cid:2462)avo(cid:319)(cid:337) (cid:336)see gain on sale o(cid:61) real estate in (cid:25)ote 3 (cid:61)or (cid:61)urther descrip(cid:2462)on o(cid:61) the transac(cid:2462)on(cid:337) was treated as a non-cash ac(cid:2462)vity with the remaining share o(cid:61) real estate, mortgage loan and other balance sheet items being removed (cid:61)rom the consolidated balance sheet resul(cid:2462)ng in an increase o(cid:61) (cid:362)31.(cid:406) million to unconsolidated investments. During the year ended December 31, 2021, the noncontrolling (cid:404)1(cid:1143) interest that the (cid:7)ompany retained in the (cid:24)F seed por(cid:127)olio (cid:336)see gain on sale o(cid:61) real estate in (cid:61)ootnote 3 (cid:61)or (cid:61)urther descrip(cid:2462)on o(cid:61) the transac(cid:2462)on(cid:337) was treated as a non-cash ac(cid:2462)vity with the remaining share o(cid:61) real estate, mortgage loan and other balance sheet items being removed (cid:61)rom the consolidated balance sheet resul(cid:2462)ng in an increase o(cid:61) (cid:362)1(cid:405)(cid:1142).(cid:1142) million to unconsolidated investments. During the year ended December 31, 2020, the (cid:7)ompany deconsolidated its interest in KW (cid:33)eal (cid:11)state II (cid:336)(cid:318)KW (cid:11)urope Fund II(cid:319)(cid:337) that was previously consolidated in the (cid:7)ompany(cid:317)s (cid:67)nancial statements due to addi(cid:2462)onal investors coming into the (cid:61)und and the (cid:7)ompany no longer controlling it. (cid:36)he por(cid:2462)on o(cid:61) the (cid:7)ompany(cid:317)s share o(cid:61) real estate, mortgage loan and other balance sheet items were removed (cid:61)rom the consolidated balance sheet. (cid:36)hese items along with an increase o(cid:61) (cid:362)(cid:405).(cid:1142) million to unconsolidated investments (cid:61)or the (cid:7)ompany(cid:317)s retained share o(cid:61) the (cid:61)und were all recorded as non-cash ac(cid:2462)vi(cid:2462)es. During the year ended December 31, 2020, the (cid:7)ompany sold its interest in a development project in the Western United States to its equity partner. (cid:36)he (cid:7)ompany received cash, a loan receivable and three parcels o(cid:61) land valued at (cid:362)1(cid:1141).(cid:404) million that the (cid:7)ompany now wholly owns. (cid:36)he parcels o(cid:61) land were treated as a non-cash increase to the real estate balance. (cid:336)33(cid:1142).0(cid:337) 1(cid:405)(cid:406).(cid:1141) (cid:336)10.2(cid:337) 13.(cid:404) 2(cid:405).2 0.(cid:1142) (cid:1142).(cid:404) (cid:336)(cid:404).(cid:403)(cid:337) — (cid:336)(cid:1142)1.0(cid:337) (cid:336)0.(cid:406)(cid:337) 32.3 (cid:1141).(cid:403) (cid:404)(cid:406).(cid:405) 0.(cid:405) (cid:336)(cid:406).0(cid:337) — (cid:336)(cid:403).(cid:1141)(cid:337) (cid:336)12.(cid:1141)(cid:337) (cid:336)(cid:1142)(cid:1142).(cid:1141)(cid:337) 3(cid:403).1 (cid:1142)2(cid:405).(cid:1142) (cid:336)(cid:405)0.1(cid:337) (cid:336)1(cid:406)(cid:403).1(cid:337) (cid:336)12.1(cid:337) 10.2 1(cid:405)(cid:405).(cid:404) (cid:336)111.(cid:1141)(cid:337) 32.(cid:404) (cid:336)1(cid:405).0(cid:337) 2.2 (cid:404)(cid:406)0.(cid:1142) — — 200.0 — 2(cid:406)(cid:1141).(cid:403) (cid:336)(cid:403)(cid:1142)(cid:405).1(cid:337) — (cid:336)(cid:404).(cid:1141)(cid:337) — (cid:336)(cid:404)(cid:405).(cid:403)(cid:337) — (cid:336)12(cid:1141).1(cid:337) (cid:336)13.(cid:1141)(cid:337) 1.2 (cid:403).(cid:404) (cid:336)1(cid:1142).(cid:406)(cid:337) (cid:336)20(cid:1141).(cid:1141)(cid:337) 1(cid:406).(cid:1141) 3(cid:406)1.2 (cid:404)(cid:405)3.(cid:406) (cid:406)(cid:1141)(cid:404).1 Cash and cash e(cid:116)uivalents, end of (cid:139)ear (cid:362) (cid:403)3(cid:406).3 (cid:362) (cid:404)2(cid:403).(cid:1142) (cid:362) See accompanying notes to consolidated (cid:67)nancial statements. 88 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 89 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 NOTE 1—ORGANIZATION Kennedy-Wilson Holdings, Inc. (cid:336)(cid:318)KWH,(cid:319) (cid:25)(cid:43)S(cid:11)(cid:313) KW(cid:337), a Delaware corpora(cid:2462)on and its wholly owned and consolidated subsidiaries (cid:336)collec(cid:2462)vely the (cid:318)(cid:7)ompany(cid:319) or (cid:318)Kennedy Wilson(cid:319)(cid:337), is a global real estate investment company. (cid:36)he (cid:7)ompany owns, operates, and invests in real estate both on its own and through its investment management pla(cid:127)orm. (cid:36)he (cid:7)ompany primarily (cid:61)ocuses on mul(cid:2462)(cid:61)amily and o(cid:76)ce proper(cid:2462)es, as well as industrial and debt investments in its Investment (cid:24)anagement business in the Western United States, United Kingdom and Ireland. (cid:36)he (cid:7)ompany(cid:317)s opera(cid:2462)ons are de(cid:67)ned by two business segments(cid:312) its (cid:7)onsolidated (cid:30)or(cid:127)olio and (cid:7)o-Investment (cid:30)or(cid:127)olio. Investment ac(cid:2462)vi(cid:2462)es in the (cid:7)onsolidated (cid:30)or(cid:127)olio involve ownership o(cid:61) mul(cid:2462)(cid:61)amily units, o(cid:76)ce, retail and industrial space and one hotel. (cid:36)he (cid:7)o-Investment (cid:30)or(cid:127)olio segment consists o(cid:61) investments the (cid:7)ompany makes with partners in which it receives (cid:336)i(cid:337) (cid:61)ees (cid:336)including, without limita(cid:2462)on, asset management (cid:61)ees and construc(cid:2462)on management (cid:61)ees(cid:337), (cid:336)ii(cid:337) per(cid:61)ormance alloca(cid:2462)ons that it earns on its (cid:61)ee-bearing capital, and (cid:336)iii(cid:337) distribu(cid:2462)ons and pro(cid:67)ts (cid:61)rom its ownership interest in the underlying opera(cid:2462)ons o(cid:61) its co-investments. NOTE 2—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B(cid:3)SIS OF (cid:30)(cid:33)(cid:11)S(cid:11)(cid:25)(cid:36)(cid:3)(cid:36)IO(cid:25)—(cid:36)he consolidated (cid:67)nancial statements include the accounts o(cid:61) Kennedy Wilson and vo(cid:2462)ng interest en(cid:2462)(cid:2462)es which it controls. (cid:3)ll intercompany balances and transac(cid:2462)ons have been eliminated in consolida(cid:2462)on. In addi(cid:2462)on, Kennedy Wilson evaluates its rela(cid:2462)onships with other en(cid:2462)(cid:2462)es to iden(cid:2462)(cid:61)y whether they are variable interest en(cid:2462)(cid:2462)es (cid:336)(cid:318)(cid:40)I(cid:11)(cid:319)(cid:337) as de(cid:67)ned by Financial (cid:3)ccoun(cid:2462)ng Standards Board (cid:336)(cid:318)F(cid:3)SB(cid:319)(cid:337) (cid:3)ccoun(cid:2462)ng Standards (cid:7)odi(cid:67)ca(cid:2462)on (cid:336)(cid:318)(cid:3)S(cid:7)(cid:319)(cid:337) Subtopic (cid:1142)10, (cid:7)onsolida(cid:2462)on, and to assess whether it is the primary bene(cid:67)ciary o(cid:61) such en(cid:2462)(cid:2462)es. In determining whether Kennedy Wilson is the primary bene(cid:67)ciary o(cid:61) a (cid:40)I(cid:11), qualita(cid:2462)ve and quan(cid:2462)ta(cid:2462)ve (cid:61)actors are considered, including, but not limited to(cid:313) the amount and characteris(cid:2462)cs o(cid:61) Kennedy Wilson(cid:317)s investment(cid:312) the obliga(cid:2462)on or likelihood (cid:61)or Kennedy Wilson to provide (cid:67)nancial support(cid:312) Kennedy Wilson(cid:317)s ability to control or signi(cid:67)cantly in(cid:89)uence key decisions (cid:61)or the (cid:40)I(cid:11)(cid:312) and the similarity with and signi(cid:67)cance to the business ac(cid:2462)vi(cid:2462)es o(cid:61) Kennedy Wilson. (cid:36)he (cid:7)ompany determines the appropriate accoun(cid:2462)ng method with respect to all investments that are not (cid:40)I(cid:11)s based on the control-based (cid:61)ramework (cid:336)controlled en(cid:2462)(cid:2462)es are consolidated(cid:337) provided by the consolida(cid:2462)on guidance in (cid:3)S(cid:7) Subtopic (cid:1142)10. (cid:36)he (cid:7)ompany accounts (cid:61)or joint ventures where it is deemed that the (cid:7)ompany does not have control through the equity method o(cid:61) accoun(cid:2462)ng while joint ventures that the (cid:7)ompany controls are consolidated in Kennedy Wilson(cid:317)s (cid:67)nancial statements. US(cid:11) OF (cid:11)S(cid:36)I(cid:24)(cid:3)(cid:36)(cid:11)S—(cid:36)he prepara(cid:2462)on o(cid:61) the accompanying consolidated (cid:67)nancial statements in con(cid:61)ormity with U.S. generally accepted accoun(cid:2462)ng principles (cid:336)(cid:318)(cid:14)(cid:3)(cid:3)(cid:30)(cid:319)(cid:337) requires management to make es(cid:2462)mates and assump(cid:2462)ons about (cid:61)uture events. (cid:36)hese es(cid:2462)mates and the underlying assump(cid:2462)ons a(cid:64)ect the amounts o(cid:61) assets and liabili(cid:2462)es reported, disclosure about con(cid:2462)ngent assets and liabili(cid:2462)es, and reported amounts o(cid:61) revenues and e(cid:138)penses. (cid:24)anagement evaluates its es(cid:2462)mates and assump(cid:2462)ons on an ongoing basis using historical e(cid:138)perience and other (cid:61)actors, including the current economic environment, which management believes to be reasonable under the circumstances. (cid:24)anagement adjusts such es(cid:2462)mates and assump(cid:2462)ons when (cid:61)acts and circumstances dictate. (cid:3)s (cid:61)uture events and their e(cid:64)ects cannot be determined with precision, actual results could di(cid:64)er signi(cid:67)cantly (cid:61)rom these es(cid:2462)mates. (cid:7)hanges in those es(cid:2462)mates will be re(cid:89)ected in the (cid:67)nancial statements in (cid:61)uture periods. (cid:33)(cid:11)(cid:40)(cid:11)(cid:25)U(cid:11) (cid:33)(cid:11)(cid:7)O(cid:14)(cid:25)I(cid:36)IO(cid:25)—(cid:33)evenue consists o(cid:61) rental and hotel income, management (cid:61)ees, leasing and commission (cid:61)ees, loan interest income and sales o(cid:61) real estate. (cid:3)S(cid:7) (cid:36)opic (cid:1141)0(cid:1141), Reven(cid:134)e (cid:61)(cid:117)om (cid:7)ont(cid:117)a(cid:49)t(cid:118) (cid:137)(cid:98)t(cid:95) (cid:7)(cid:134)(cid:118)tome(cid:117)(cid:118)(cid:310) is a (cid:67)ve step model to recogni(cid:140)e revenue (cid:61)rom customer contracts. (cid:36)he model iden(cid:2462)(cid:67)es the contract, any separate per(cid:61)ormance obliga(cid:2462)ons in the contract, determines the transac(cid:2462)on price, allocates the transac(cid:2462)on price and recogni(cid:140)es revenue when the per(cid:61)ormance obliga(cid:2462)ons are sa(cid:2462)s(cid:67)ed. (cid:24)anagement has concluded that, with the e(cid:138)cep(cid:2462)on o(cid:61) per(cid:61)ormance alloca(cid:2462)ons, the nature o(cid:61) the (cid:7)ompany(cid:317)s revenue streams is such that the requirements are generally sa(cid:2462)s(cid:67)ed at the (cid:2462)me that the (cid:61)ee becomes receivable. (cid:33)ental income (cid:61)rom opera(cid:2462)ng leases is generally recogni(cid:140)ed on a straight-line basis over the terms o(cid:61) the leases in accordance with (cid:3)S(cid:7) (cid:36)opic (cid:1142)(cid:403)2, Leases. Hotel income is earned when rooms are occupied or goods and services have been delivered or rendered. (cid:24)anagement (cid:61)ees are primarily comprised o(cid:61) investment management and property services (cid:61)ees. Investment management (cid:61)ees are earned (cid:61)rom limited partners o(cid:61) (cid:61)unds, co-investments, or separate accounts and are generally based on a (cid:67)(cid:138)ed percentage o(cid:61) commi(cid:130)ed capital or net asset value. (cid:30)roperty services (cid:61)ees are earned (cid:61)or managing the opera(cid:2462)ons o(cid:61) real estate assets and are generally based on a (cid:67)(cid:138)ed percentage o(cid:61) the revenues generated (cid:61)rom the respec(cid:2462)ve real estate assets. (cid:36)he (cid:7)ompany sold its property services group (cid:336)(cid:318)(cid:30)roperty Services(cid:319)(cid:337) in the (cid:61)ourth quarter 2020 with the sale o(cid:61) KW(cid:30) (cid:336)as (cid:61)urther discussed in (cid:25)ote 10—(cid:33)elated (cid:30)arty (cid:36)ransac(cid:2462)ons(cid:337) and will have minimal property services (cid:61)ees going (cid:61)orward (cid:61)rom its auc(cid:2462)on sales and marke(cid:2462)ng business. (cid:36)he (cid:7)ompany provides investment management and property services on investments it also has an ownership interest in. Fees earned on consolidated proper(cid:2462)es are eliminated in consolida(cid:2462)on and (cid:61)ees on unconsolidated investments are eliminated (cid:61)or the por(cid:2462)on that relate to the (cid:7)ompany(cid:317)s ownership interest. (cid:7)ommissions primarily consist o(cid:61) acquisi(cid:2462)on and disposi(cid:2462)on (cid:61)ees, auc(cid:2462)on and consul(cid:2462)ng (cid:61)ees and, prior to the sale o(cid:61) (cid:30)roperty Services, also consisted o(cid:61) real estate sales commissions, and leasing commissions. (cid:3)cquisi(cid:2462)on and disposi(cid:2462)on (cid:61)ees are earned (cid:61)or iden(cid:2462)(cid:61)ying and closing investments on behal(cid:61) o(cid:61) investors and are based on a (cid:67)(cid:138)ed percentage o(cid:61) the acquisi(cid:2462)on or disposi(cid:2462)on price, as applicable. (cid:3)cquisi(cid:2462)on and disposi(cid:2462)on (cid:61)ees are recogni(cid:140)ed upon the success(cid:61)ul comple(cid:2462)on o(cid:61) an acquisi(cid:2462)on or disposi(cid:2462)on a(cid:91)er all required services have been per(cid:61)ormed. In the case o(cid:61) auc(cid:2462)on and real estate sales commissions, the revenue is generally recogni(cid:140)ed when escrow closes. In accordance with the guidelines established (cid:61)or (cid:33)epor(cid:2462)ng (cid:33)evenue (cid:14)ross as a (cid:30)rincipal versus (cid:25)et as an (cid:3)gent in the (cid:3)S(cid:7) (cid:36)opic (cid:1141)0(cid:1141), Kennedy Wilson records commission revenues and e(cid:138)penses on a gross basis. O(cid:61) the criteria listed in (cid:3)S(cid:7) (cid:36)opic (cid:1141)0(cid:1141), Kennedy Wilson is the primary obligor in the transac(cid:2462)on, does not have inventory risk, per(cid:61)orms all or part o(cid:61) the service, has credit risk, and has wide la(cid:2462)tude in establishing the price o(cid:61) services rendered and discre(cid:2462)on in selec(cid:2462)on o(cid:61) agents and determina(cid:2462)on o(cid:61) service speci(cid:67)ca(cid:2462)ons. Leasing (cid:61)ees that are payable upon tenant occupancy, payment o(cid:61) rent or other events beyond Kennedy Wilson(cid:317)s control are recogni(cid:140)ed upon the occurrence o(cid:61) such events. 90 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 91 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Interest income (cid:61)rom investments in per(cid:61)orming loans which Kennedy Wilson originates or acquires are recogni(cid:140)ed at the stated interest rate plus any amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) premiums(cid:326)discounts or (cid:61)ees earned on the loans. Interest income (cid:61)rom investments in loans acquired at a discount are recogni(cid:140)ed using the e(cid:64)ec(cid:2462)ve interest method. When a loan or loans are acquired with deteriorated credit quality primarily (cid:61)or the rewards o(cid:61) collateral ownership, such loans are accounted (cid:61)or as loans un(cid:2462)l Kennedy Wilson is in possession o(cid:61) the collateral. However, accrual o(cid:61) income is not recorded during the conversion period under (cid:3)S(cid:7) Subtopic 310-30-2(cid:404), Re(cid:49)e(cid:98)va(cid:48)les(cid:330)Loans and De(cid:48)t (cid:34)e(cid:49)(cid:134)(cid:117)(cid:98)(cid:2236)es (cid:3)(cid:49)(cid:116)(cid:134)(cid:98)(cid:117)ed (cid:137)(cid:98)t(cid:95) Dete(cid:117)(cid:98)o(cid:117)ated (cid:7)(cid:117)ed(cid:98)t (cid:32)(cid:134)al(cid:98)t(cid:139). Income is recogni(cid:140)ed to the e(cid:138)tent that cash is received (cid:61)rom the loan. Sales o(cid:61) real estate are recogni(cid:140)ed when (cid:2462)tle to the real property passes to the buyer and there is no con(cid:2462)nuing involvement in the real property. Under (cid:3)S(cid:7) Subtopic (cid:1141)10-20, (cid:27)t(cid:95)e(cid:117) (cid:17)n(cid:49)ome(cid:330)(cid:14)a(cid:98)ns and Losses (cid:61)(cid:117)om t(cid:95)e De(cid:117)e(cid:49)o(cid:93)n(cid:98)(cid:2236)on o(cid:61) (cid:25)on(cid:67)nan(cid:49)(cid:98)al (cid:3)ssets(cid:310) the (cid:7)ompany recogni(cid:140)es the en(cid:2462)re gain a(cid:130)ributed to contribu(cid:2462)ons o(cid:61) real estate proper(cid:2462)es to unconsolidated en(cid:2462)(cid:2462)es. (cid:33)(cid:11)(cid:3)L (cid:11)S(cid:36)(cid:3)(cid:36)(cid:11) (cid:3)(cid:7)(cid:32)UISI(cid:36)IO(cid:25)S—(cid:36)he purchase price o(cid:61) acquired proper(cid:2462)es is recorded to land, buildings and building improvements and intangible lease value (cid:336)value o(cid:61) above-market and below- market leases, acquired in-place lease values, and tenant rela(cid:2462)onships, i(cid:61) any(cid:337). (cid:36)he ownership o(cid:61) the other interest holders in consolidated subsidiaries is re(cid:89)ected as noncontrolling interests (cid:336)(cid:318)(cid:25)(cid:7)I(cid:319)(cid:337). (cid:33)eal estate is recorded based on cumula(cid:2462)ve costs incurred and allocated based on rela(cid:2462)ve (cid:61)air value. (cid:3)cquisi(cid:2462)on (cid:61)ees and e(cid:138)penses associated with the acquisi(cid:2462)on o(cid:61) proper(cid:2462)es determined to be business combina(cid:2462)ons are e(cid:138)pensed as incurred. (cid:3)cquisi(cid:2462)on (cid:61)ees and e(cid:138)penses associated with transac(cid:2462)ons determined to be asset acquisi(cid:2462)ons are capitali(cid:140)ed as part o(cid:61) the real estate acquired. (cid:36)he valua(cid:2462)ons o(cid:61) real estate are based on management es(cid:2462)mates o(cid:61) the real estate assets using income and market approaches. (cid:36)he indebtedness securing the real estate is valued, in part, based on third party valua(cid:2462)ons and management es(cid:2462)mates also using an income approach. (cid:36)he (cid:7)ompany is involved in all stages o(cid:61) real estate ownership, including development. Once a project is in development, consistent with (cid:3)S(cid:7) 3(cid:1141)0 (cid:30)(cid:117)ope(cid:117)t(cid:139) (cid:30)lant(cid:310) and (cid:11)(cid:116)(cid:134)(cid:98)pment costs including interest and real estate ta(cid:138)es and associated costs directly related to the project under development, are capitali(cid:140)ed. During the predevelopment period o(cid:61) a probable project and the period in which a project is under construc(cid:2462)on, the (cid:7)ompany capitali(cid:140)es all direct and indirect costs associated with planning, developing, and construc(cid:2462)ng the project. Once a project is constructed and deemed substan(cid:2462)ally complete and ready (cid:61)or occupancy, carrying costs, such as real estate ta(cid:138)es, interest and associated costs, are e(cid:138)pensed as incurred. U(cid:25)(cid:7)O(cid:25)SOLID(cid:3)(cid:36)(cid:11)D I(cid:25)(cid:40)(cid:11)S(cid:36)(cid:24)(cid:11)(cid:25)(cid:36)S—Kennedy Wilson has a number o(cid:61) joint venture interests that were (cid:61)ormed to acquire, manage, and(cid:326)or sell real estate. Investments in unconsolidated investments are accounted (cid:61)or under the equity method o(cid:61) accoun(cid:2462)ng as Kennedy Wilson can e(cid:138)ercise signi(cid:67)cant in(cid:89)uence, but does not have the ability to control the unconsolidated investment. (cid:3)n investment in an unconsolidated investment is recorded at its ini(cid:2462)al investment and is increased or decreased by Kennedy Wilson(cid:317)s share o(cid:61) income or loss, plus addi(cid:2462)onal contribu(cid:2462)ons and less distribu(cid:2462)ons. (cid:3) decline in the value o(cid:61) an unconsolidated investment that is other than temporary is recogni(cid:140)ed when evidence indicates that such a decline has occurred in accordance with (cid:3)S(cid:7) (cid:36)opic 323, (cid:17)nvestments(cid:330)(cid:11)(cid:116)(cid:134)(cid:98)t(cid:139) (cid:24)et(cid:95)od and (cid:19)o(cid:98)nt (cid:40)ent(cid:134)(cid:117)es(cid:312) Kennedy Wilson elected the (cid:61)air value op(cid:2462)on (cid:61)or (cid:1141)(cid:405) investments in unconsolidated investment en(cid:2462)(cid:2462)es (cid:336)(cid:318)F(cid:40) Op(cid:2462)on(cid:319) investments(cid:337). Due to the nature o(cid:61) these investments, Kennedy Wilson elected to record these investments at (cid:61)air value in order to report the change in value in the underlying investments in the results o(cid:61) its current opera(cid:2462)ons. (cid:3)ddi(cid:2462)onally, Kennedy Wilson records its investments in certain commingled (cid:61)unds it manages and sponsors (cid:336)the (cid:318)Funds(cid:319)(cid:337) that are investment companies under the (cid:3)S(cid:7) (cid:36)opic (cid:406)(cid:403)(cid:1141), (cid:13)(cid:98)nan(cid:49)(cid:98)al (cid:34)e(cid:117)v(cid:98)(cid:49)es(cid:330) (cid:17)nvestment (cid:7)ompan(cid:98)es, based upon the net assets that would be allocated to its interests in the Funds assuming the Funds were to liquidate their investments at (cid:61)air value as o(cid:61) the repor(cid:2462)ng date. (cid:36)hus, the Funds re(cid:89)ect their investments at (cid:61)air value, with unreali(cid:140)ed gains and losses resul(cid:2462)ng (cid:61)rom changes in (cid:61)air value re(cid:89)ected in their earnings. (cid:30)er(cid:61)ormance alloca(cid:2462)ons or carried interest are allocated to the general partner, special limited partner or asset manager o(cid:61) Kennedy Wilson(cid:317)s real estate (cid:61)unds based on the cumula(cid:2462)ve per(cid:61)ormance o(cid:61) the (cid:61)und and are subject to pre(cid:61)erred return thresholds o(cid:61) the limited partners. (cid:3)t the end o(cid:61) each repor(cid:2462)ng period, Kennedy Wilson calculates the per(cid:61)ormance alloca(cid:2462)on that would be due as i(cid:61) the (cid:61)air value o(cid:61) the underlying investments were reali(cid:140)ed as o(cid:61) such date, irrespec(cid:2462)ve o(cid:61) whether such amounts have been reali(cid:140)ed. (cid:3)s the (cid:61)air value o(cid:61) underlying investments varies between repor(cid:2462)ng periods, it is necessary to make adjustments to amounts recorded as per(cid:61)ormance alloca(cid:2462)on to re(cid:89)ect either (cid:336)a(cid:337) posi(cid:2462)ve per(cid:61)ormance resul(cid:2462)ng in an increase in the per(cid:61)ormance alloca(cid:2462)on to the general partner or asset manager or (cid:336)b(cid:337) nega(cid:2462)ve per(cid:61)ormance that would cause the amount due to Kennedy Wilson to be less than the amount previously recogni(cid:140)ed as income (cid:61)rom unconsolidated investments, resul(cid:2462)ng in a nega(cid:2462)ve adjustment to per(cid:61)ormance alloca(cid:2462)ons to the general partner or asset manager. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany has (cid:362)1(cid:403)1.(cid:1141) million o(cid:61) accrued per(cid:61)ormance alloca(cid:2462)ons recorded to unconsolidated investments that are subject to (cid:61)uture adjustments based on the underlying per(cid:61)ormance o(cid:61) investments. During the year ended December 31, 2022 and 2021 the (cid:7)ompany collected (cid:362)(cid:1141).(cid:1142) million and (cid:362)(cid:406).(cid:1141) million o(cid:61) per(cid:61)ormance alloca(cid:2462)ons. (cid:36)here were no collec(cid:2462)ons o(cid:61) per(cid:61)ormance alloca(cid:2462)ons during the year ended December 31, 2020. (cid:36)he (cid:7)ompany has concluded that per(cid:61)ormance alloca(cid:2462)ons to the (cid:7)ompany, based on cumula(cid:2462)ve per(cid:61)ormance to-date, represent carried interests. For equity method investments, these alloca(cid:2462)ons are included as a component o(cid:61) the income reported (cid:61)rom the underlying equity method investee and (cid:61)or equity method investments where the (cid:61)air value op(cid:2462)on has been elected, these alloca(cid:2462)ons are included in the determina(cid:2462)on o(cid:61) (cid:61)air value under (cid:3)S(cid:7) (cid:36)opic (cid:1142)20, (cid:13)a(cid:98)(cid:117) (cid:40)al(cid:134)e (cid:24)eas(cid:134)(cid:117)ement(cid:312) (cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on is recogni(cid:140)ed in the same period that the related per(cid:61)ormance alloca(cid:2462)ons are recogni(cid:140)ed and can be reversed during periods when there is a reversal o(cid:61) per(cid:61)ormance alloca(cid:2462)ons that were previously recogni(cid:140)ed. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany has (cid:362)3(cid:405).1 million o(cid:61) accrued per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on recorded to accrued e(cid:138)penses and other liabili(cid:2462)es that are subject to (cid:61)uture adjustments based on the underlying per(cid:61)ormance o(cid:61) investments. During the year ended December 31, 2022, the (cid:7)ompany paid (cid:362)1.2 million o(cid:61) per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on to employees (cid:61)or per(cid:61)ormance alloca(cid:2462)ons that were reali(cid:140)ed during the period. F(cid:3)I(cid:33) (cid:40)(cid:3)LU(cid:11) (cid:24)(cid:11)(cid:3)SU(cid:33)(cid:11)(cid:24)(cid:11)(cid:25)(cid:36)S—Kennedy Wilson accounts (cid:61)or (cid:61)air value measurements o(cid:61) (cid:67)nancial assets and (cid:67)nancial liabili(cid:2462)es and (cid:61)or (cid:61)air value measurements o(cid:61) non-(cid:67)nancial items that are recogni(cid:140)ed or disclosed at (cid:61)air value in the (cid:67)nancial statements on a recurring basis under the 92 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 93 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) provisions o(cid:61) (cid:3)S(cid:7) (cid:36)opic (cid:1142)20. (cid:3)S(cid:7) (cid:36)opic (cid:1142)20 de(cid:67)nes (cid:61)air value as the price that would be received to sell an asset or paid to trans(cid:61)er a liability in an orderly transac(cid:2462)on between market par(cid:2462)cipants at the measurement date. When es(cid:2462)ma(cid:2462)ng (cid:61)air value in the absence o(cid:61) an orderly transac(cid:2462)on between market par(cid:2462)cipants, valua(cid:2462)ons o(cid:61) real estate are based on management es(cid:2462)mates o(cid:61) the real estate assets using income and market approaches. (cid:36)he indebtedness securing the real estate and the investments in debt securi(cid:2462)es are valued, in part, based on third party valua(cid:2462)ons and management es(cid:2462)mates also using an income approach. (cid:36)he use o(cid:61) di(cid:64)erent market assump(cid:2462)ons or es(cid:2462)ma(cid:2462)on methodologies may have a material impact on the es(cid:2462)mated (cid:61)air value amounts. F(cid:3)I(cid:33) (cid:40)(cid:3)LU(cid:11) OF FI(cid:25)(cid:3)(cid:25)(cid:7)I(cid:3)L I(cid:25)S(cid:36)(cid:33)U(cid:24)(cid:11)(cid:25)(cid:36)S—(cid:36)he es(cid:2462)mated (cid:61)air value o(cid:61) (cid:67)nancial instruments is determined using available market in(cid:61)orma(cid:2462)on and appropriate valua(cid:2462)on methodologies. (cid:7)onsiderable judgment, is necessary, however, to interpret market data and develop the related es(cid:2462)mates o(cid:61) (cid:61)air value. (cid:3)ccordingly, the es(cid:2462)mates presented herein are not necessarily indica(cid:2462)ve o(cid:61) the amounts that could be reali(cid:140)ed upon disposi(cid:2462)on o(cid:61) the (cid:67)nancial instruments. (cid:36)he use o(cid:61) di(cid:64)erent market assump(cid:2462)ons or es(cid:2462)ma(cid:2462)on methodologies may have a material impact on the es(cid:2462)mated (cid:61)air value amounts. DIS(cid:36)(cid:33)IBU(cid:36)IO(cid:25)S F(cid:33)O(cid:24) U(cid:25)(cid:7)O(cid:25)SOLID(cid:3)(cid:36)(cid:11)D I(cid:25)(cid:40)(cid:11)S(cid:36)(cid:24)(cid:11)(cid:25)(cid:36)S—(cid:36)he (cid:7)ompany u(cid:2462)li(cid:140)es the nature o(cid:61) distribu(cid:2462)ons approach and distribu(cid:2462)ons are reported under opera(cid:2462)ng cash (cid:89)ow unless the (cid:61)acts and circumstances o(cid:61) a speci(cid:67)c distribu(cid:2462)on clearly indicate that it is a return o(cid:61) capital (cid:336)e.g., a liquida(cid:2462)ng dividend or distribu(cid:2462)on o(cid:61) the proceeds (cid:61)rom unconsolidated investments(cid:317) sale o(cid:61) assets(cid:337), in which case it is reported as an inves(cid:2462)ng ac(cid:2462)vity. (cid:36)his enables Kennedy Wilson to look to the nature and source o(cid:61) the distribu(cid:2462)on received and classi(cid:61)y it appropriately between opera(cid:2462)ng and inves(cid:2462)ng ac(cid:2462)vi(cid:2462)es on the statement o(cid:61) cash (cid:89)ows based upon the source. FO(cid:33)(cid:11)I(cid:14)(cid:25) (cid:7)U(cid:33)(cid:33)(cid:11)(cid:25)(cid:7)I(cid:11)S—(cid:36)he (cid:67)nancial statements o(cid:61) Kennedy Wilson(cid:317)s subsidiaries located outside the United States are measured using the local currency as this is their (cid:61)unc(cid:2462)onal currency. (cid:36)he assets and liabili(cid:2462)es o(cid:61) these subsidiaries are translated at the rates o(cid:61) e(cid:138)change at the balance sheet date, and income and e(cid:138)penses are translated at the average monthly rate. (cid:36)he (cid:61)oreign currencies include the euro and the Bri(cid:2462)sh pound sterling. (cid:7)umula(cid:2462)ve transla(cid:2462)on adjustments, to the e(cid:138)tent not included in cumula(cid:2462)ve net income, are included in the consolidated statement o(cid:61) equity as a component o(cid:61) accumulated other comprehensive income. Investment level debt is generally incurred in local currencies. Fluctua(cid:2462)ons in (cid:61)oreign e(cid:138)changes rates may have a signi(cid:67)cant impact on the results o(cid:61) the (cid:7)ompany(cid:317)s opera(cid:2462)ons. In order to manage the e(cid:64)ect o(cid:61) these (cid:89)uctua(cid:2462)ons, the (cid:7)ompany enters into hedging transac(cid:2462)ons, in the (cid:61)orm o(cid:61) currency deriva(cid:2462)ve contracts, that are designed to reduce its book equity e(cid:138)posure to (cid:61)oreign currencies. KW(cid:11) has also entered into currency deriva(cid:2462)ve contracts to manage its e(cid:138)posure to euro to Bri(cid:2462)sh pound currency (cid:89)uctua(cid:2462)ons. See (cid:25)ote (cid:404) (cid:61)or a complete discussion on currency deriva(cid:2462)ve contracts. D(cid:11)(cid:33)I(cid:40)(cid:3)(cid:36)I(cid:40)(cid:11) I(cid:25)S(cid:36)(cid:33)U(cid:24)(cid:11)(cid:25)(cid:36)S (cid:3)(cid:25)D H(cid:11)D(cid:14)I(cid:25)(cid:14) (cid:3)(cid:7)(cid:36)I(cid:40)I(cid:36)I(cid:11)S—Kennedy Wilson has deriva(cid:2462)ves to reduce its e(cid:138)posure to (cid:61)oreign currencies. (cid:3)ll deriva(cid:2462)ve instruments are recogni(cid:140)ed as either assets or liabili(cid:2462)es in the balance sheet at their respec(cid:2462)ve (cid:61)air values. For deriva(cid:2462)ves designated in hedging rela(cid:2462)onships, changes in (cid:61)air value o(cid:61) cash (cid:89)ow hedges or net investment hedges are recogni(cid:140)ed in accumulated other comprehensive income, to the e(cid:138)tent the deriva(cid:2462)ve is e(cid:64)ec(cid:2462)ve at o(cid:64)se(cid:2478)ng the changes in the item being hedged un(cid:2462)l the hedged item a(cid:64)ects earnings. Fluctua(cid:2462)ons in (cid:61)oreign e(cid:138)changes rates may have a signi(cid:67)cant impact on the (cid:7)ompany(cid:317)s results o(cid:61) opera(cid:2462)ons. In order to manage the poten(cid:2462)al e(cid:138)posure (cid:61)rom adverse changes in (cid:61)oreign e(cid:138)change rates arising (cid:61)rom the (cid:7)ompany(cid:317)s net investments in (cid:61)oreign opera(cid:2462)ons, the (cid:7)ompany may enter into currency deriva(cid:2462)ve contracts to hedge all or por(cid:2462)ons o(cid:61) the net investments in the (cid:7)ompany(cid:317)s non- U.S. dollar denominated (cid:61)oreign opera(cid:2462)ons. (cid:14)OODWILL—(cid:14)oodwill results (cid:61)rom the di(cid:64)erence between the purchase price and the (cid:61)air value o(cid:61) net assets acquired based upon the purchase method o(cid:61) accoun(cid:2462)ng (cid:61)or business combina(cid:2462)ons. In accordance with (cid:3)S(cid:7) Subtopic 3(cid:404)0-20, (cid:3)(cid:49)(cid:49)o(cid:134)n(cid:2236)n(cid:93) (cid:61)o(cid:117) (cid:17)ntan(cid:93)(cid:98)(cid:48)les(cid:330)(cid:14)ood(cid:137)(cid:98)ll and (cid:27)t(cid:95)e(cid:117), goodwill is reviewed (cid:61)or impairment on an annual basis. (cid:36)he (cid:7)ompany per(cid:61)orms its annual review o(cid:61) impairment at year end and when a triggering event occurs between annual year end reviews. (cid:3)s a result o(cid:61) the evalua(cid:2462)on per(cid:61)ormed as described above, Kennedy Wilson has determined that there was no impairment o(cid:61) goodwill as o(cid:61) December 31, 2022, 2021 and 2020. (cid:7)(cid:3)SH (cid:3)(cid:25)D (cid:7)(cid:3)SH (cid:11)(cid:32)UI(cid:40)(cid:3)L(cid:11)(cid:25)(cid:36)S—(cid:7)ash and cash equivalents consist o(cid:61) cash and all highly liquid investments purchased with maturi(cid:2462)es o(cid:61) three months or less. (cid:7)ash and cash equivalents are invested in ins(cid:2462)tu(cid:2462)ons insured by government agencies. (cid:7)ertain accounts contain balances in e(cid:138)cess o(cid:61) the insured limits. Kennedy Wilson(cid:317)s opera(cid:2462)ons and (cid:67)nancial posi(cid:2462)on are a(cid:64)ected by (cid:89)uctua(cid:2462)ons in currency e(cid:138)change rates between the euro and Bri(cid:2462)sh pound sterling against the U.S. Dollar. (cid:3)s o(cid:61) December 31, 2022, 2021, and 2020 we have (cid:362)21.(cid:403) million, (cid:362)2(cid:403).2 million, and (cid:362)101.(cid:405) million, respec(cid:2462)vely, o(cid:61) restricted cash, which is included in cash and cash equivalents, that primarily relates to lender reserves associated with consolidated mortgages that we hold on proper(cid:2462)es as well as escrow deposits associated with acquisi(cid:2462)ons and disposi(cid:2462)ons. (cid:36)hese reserves typically relate to interest, ta(cid:138), insurance and (cid:61)uture capital e(cid:138)penditures at the proper(cid:2462)es. LO(cid:25)(cid:14)-LI(cid:40)(cid:11)D (cid:3)SS(cid:11)(cid:36)S—Kennedy Wilson reviews its long-lived assets (cid:336)e(cid:138)cluding goodwill(cid:337) whenever events or changes in circumstances indicate that the carrying amount o(cid:61) an asset may not be recoverable in accordance with (cid:3)S(cid:7) Subtopic 3(cid:1141)0-10, (cid:30)(cid:117)ope(cid:117)t(cid:139)(cid:310) (cid:30)lant and (cid:11)(cid:116)(cid:134)(cid:98)pment. (cid:33)ecoverability o(cid:61) assets to be held and used is measured by a comparison o(cid:61) the carrying amount o(cid:61) an asset to es(cid:2462)mated undiscounted (cid:61)uture cash (cid:89)ows e(cid:138)pected to be generated by the asset. I(cid:61) the carrying amount o(cid:61) an asset e(cid:138)ceeds its es(cid:2462)mated undiscounted (cid:61)uture cash (cid:89)ows, an impairment charge is recogni(cid:140)ed in gain on sale o(cid:61) real estate, net in the amount by which the carrying amount o(cid:61) the asset e(cid:138)ceeds the (cid:61)air value o(cid:61) the asset. (cid:3)ssets to be disposed o(cid:61) are presented separately in the balance sheet and reported at the lower o(cid:61) the carrying amount or (cid:61)air value less costs to sell, and are no longer depreciated. (cid:36)he assets and liabili(cid:2462)es o(cid:61) the assets to be disposed o(cid:61) are classi(cid:67)ed as held (cid:61)or sale and would be presented separately in the appropriate asset and liability sec(cid:2462)ons o(cid:61) the consolidated balance sheets. (cid:3)(cid:7)(cid:7)OU(cid:25)(cid:36)S (cid:33)(cid:11)(cid:7)(cid:11)I(cid:40)(cid:3)BL(cid:11)—(cid:3)ccounts receivable are recorded at the contractual amount as determined by the underlying agreements and do not bear interest. (cid:36)he (cid:7)ompany recogni(cid:140)es revenue to the e(cid:138)tent that amounts are probable that substan(cid:2462)ally all rental income will be collected. (cid:7)O(cid:25)(cid:7)(cid:11)(cid:25)(cid:36)(cid:33)(cid:3)(cid:36)IO(cid:25) OF (cid:7)(cid:33)(cid:11)DI(cid:36) (cid:33)ISK—Financial instruments that subject Kennedy Wilson to credit risk consist primarily o(cid:61) accounts and notes receivable, cash equivalents and deriva(cid:2462)ve instruments. (cid:7)redit risk is generally diversi(cid:67)ed due to the large number o(cid:61) en(cid:2462)(cid:2462)es composing Kennedy Wilson(cid:317)s customer base and their geographic dispersion throughout the United States, 94 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 95 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) the United Kingdom, Ireland, Spain and Italy. Kennedy Wilson per(cid:61)orms ongoing credit evalua(cid:2462)ons o(cid:61) its customers and debtors. (cid:11)(cid:3)(cid:33)(cid:25)I(cid:25)(cid:14)S (cid:30)(cid:11)(cid:33) SH(cid:3)(cid:33)(cid:11)—Basic earnings per share is computed based upon the weighted average number o(cid:61) shares o(cid:61) common stock outstanding during the periods presented. Diluted earnings per share is computed based upon the weighted average number o(cid:61) shares o(cid:61) common stock and poten(cid:2462)ally dilu(cid:2462)ve securi(cid:2462)es outstanding during the periods presented. (cid:36)he dilu(cid:2462)ve impact o(cid:61) poten(cid:2462)ally dilu(cid:2462)ve securi(cid:2462)es including conver(cid:2462)ble securi(cid:2462)es, and unvested stock which were outstanding during the period. Unvested stock are calculated by the (cid:318)treasury stock(cid:319) method and the conver(cid:2462)ble securi(cid:2462)es under the (cid:318)i(cid:61) converted(cid:319) method. (cid:7)O(cid:24)(cid:30)(cid:33)(cid:11)H(cid:11)(cid:25)SI(cid:40)(cid:11) I(cid:25)(cid:7)O(cid:24)(cid:11) (cid:336)LOSS(cid:337)—(cid:7)omprehensive income (cid:336)loss(cid:337) consists o(cid:61) net income (cid:336)loss(cid:337) and other comprehensive income (cid:336)loss(cid:337). In the accompanying consolidated balance sheets, accumulated other comprehensive income consists o(cid:61) (cid:61)oreign currency transla(cid:2462)on adjustments and unreali(cid:140)ed gains (cid:336)losses(cid:337) on deriva(cid:2462)ve instruments. (cid:33)(cid:11)(cid:30)U(cid:33)(cid:7)H(cid:3)S(cid:11) OF (cid:11)(cid:32)UI(cid:36)(cid:43) I(cid:25)S(cid:36)(cid:33)U(cid:24)(cid:11)(cid:25)(cid:36)S—Upon the decision to re(cid:2462)re repurchased equity instruments, Kennedy Wilson records the re(cid:2462)rement as a reduc(cid:2462)on to addi(cid:2462)onal paid in capital (cid:61)or the amount that shares were ini(cid:2462)ally issued at with the e(cid:138)cess paid recorded to retained earnings. SH(cid:3)(cid:33)(cid:11)-B(cid:3)S(cid:11)D (cid:30)(cid:3)(cid:43)(cid:24)(cid:11)(cid:25)(cid:36) (cid:3)(cid:33)(cid:33)(cid:3)(cid:25)(cid:14)(cid:11)(cid:24)(cid:11)(cid:25)(cid:36)S—Kennedy Wilson accounts (cid:61)or its share-based payment arrangements under the provisions o(cid:61) (cid:3)S(cid:7) Subtopic (cid:405)1(cid:1142)-10, (cid:7)ompensa(cid:2236)on(cid:330)(cid:34)to(cid:49)(cid:104) (cid:7)ompensa(cid:2236)on. (cid:7)ompensa(cid:2462)on cost (cid:61)or employee service received in e(cid:138)change (cid:61)or an award o(cid:61) equity instruments is based on the grant-date (cid:61)air value o(cid:61) the share-based award that is ul(cid:2462)mately se(cid:130)led in equity o(cid:61) Kennedy Wilson. (cid:36)he cost o(cid:61) employee services is recogni(cid:140)ed over the period during which an employee provides service in e(cid:138)change (cid:61)or the share-based payment award. Share-based payment arrangements with only services condi(cid:2462)ons that vest ratably over the requisite service period are recogni(cid:140)ed on the straight-line basis and per(cid:61)ormance awards that vest ratably are recogni(cid:140)ed on a tranche by tranche basis over the per(cid:61)ormance period. I(cid:25)(cid:7)O(cid:24)(cid:11) (cid:36)(cid:3)(cid:42)(cid:11)S—Income ta(cid:138)es are accounted (cid:61)or under the asset and liability method. De(cid:61)erred ta(cid:138) assets and liabili(cid:2462)es are recogni(cid:140)ed (cid:61)or the (cid:61)uture ta(cid:138) consequences a(cid:130)ributable to di(cid:64)erences between the (cid:67)nancial statement carrying amounts o(cid:61) e(cid:138)is(cid:2462)ng assets and liabili(cid:2462)es and their respec(cid:2462)ve ta(cid:138) basis and opera(cid:2462)ng loss and ta(cid:138) credit carry(cid:61)orwards. De(cid:61)erred ta(cid:138) assets and liabili(cid:2462)es are measured using enacted ta(cid:138) rates e(cid:138)pected to apply to ta(cid:138)able income in the years in which those temporary di(cid:64)erences are e(cid:138)pected to be recovered or se(cid:130)led. (cid:36)he e(cid:64)ect on de(cid:61)erred ta(cid:138) assets and liabili(cid:2462)es o(cid:61) a change in ta(cid:138) rates is recogni(cid:140)ed in income in the period that includes the enactment date. In accordance with accoun(cid:2462)ng (cid:61)or uncertainty in (cid:3)S(cid:7) Subtopic (cid:405)(cid:403)0-10, (cid:17)n(cid:49)ome (cid:36)a(cid:138)es, Kennedy Wilson recogni(cid:140)es the e(cid:64)ect o(cid:61) income ta(cid:138) posi(cid:2462)ons only i(cid:61) those posi(cid:2462)ons are more likely than not o(cid:61) being sustained. (cid:33)ecogni(cid:140)ed income ta(cid:138) posi(cid:2462)ons are measured at the largest amount that is greater than (cid:404)0(cid:1143) likely o(cid:61) being reali(cid:140)ed. (cid:7)hanges in recogni(cid:2462)on or measurement are re(cid:89)ected in the period in which the change in judgment occurs. Kennedy Wilson records interest related to unrecogni(cid:140)ed ta(cid:138) bene(cid:67)ts in interest e(cid:138)pense and penal(cid:2462)es in general and administra(cid:2462)ve e(cid:138)penses on the consolidated statements o(cid:61) income. (cid:25)O(cid:25)(cid:7)O(cid:25)(cid:36)(cid:33)OLLI(cid:25)(cid:14) I(cid:25)(cid:36)(cid:11)(cid:33)(cid:11)S(cid:36)S—(cid:25)oncontrolling interests are reported within equity as a separate component o(cid:61) Kennedy Wilson(cid:317)s equity in accordance with (cid:3)S(cid:7) Subtopic (cid:1142)10-10. (cid:33)evenues, e(cid:138)penses, gains, losses, net income or loss, and other comprehensive income are reported in the consolidated statements o(cid:61) income at the consolidated amounts and net income and comprehensive income a(cid:130)ributable to noncontrolling interests are separately stated. (cid:33)(cid:11)(cid:7)(cid:11)(cid:25)(cid:36) (cid:3)(cid:7)(cid:7)OU(cid:25)(cid:36)I(cid:25)(cid:14) (cid:30)(cid:33)O(cid:25)OU(cid:25)(cid:7)(cid:11)(cid:24)(cid:11)(cid:25)(cid:36)S In (cid:3)ugust 2020, the F(cid:3)SB issued (cid:3)ccoun(cid:2462)ng Standards Update (cid:336)(cid:318)(cid:3)SU(cid:319)(cid:337) 2020-0(cid:1141), De(cid:48)t(cid:330)De(cid:48)t (cid:137)(cid:98)t(cid:95) (cid:7)onve(cid:117)s(cid:98)on and (cid:27)t(cid:95)e(cid:117) (cid:27)p(cid:2236)ons (cid:334)(cid:34)(cid:134)(cid:48)top(cid:98)(cid:49) (cid:401)(cid:403)(cid:397)(cid:328)(cid:399)(cid:397)(cid:335) and De(cid:117)(cid:98)va(cid:2236)ves and (cid:15)ed(cid:93)(cid:98)n(cid:93)(cid:330)(cid:7)ont(cid:117)a(cid:49)ts (cid:98)n (cid:11)n(cid:2236)t(cid:139)(cid:315)s (cid:27)(cid:137)n (cid:11)(cid:116)(cid:134)(cid:98)t(cid:139) (cid:334)(cid:34)(cid:134)(cid:48)top(cid:98)(cid:49) (cid:1140)(cid:398)(cid:402)(cid:328)(cid:401)(cid:397)(cid:335) to simpli(cid:61)y accoun(cid:2462)ng (cid:61)or certain (cid:67)nancial instruments. (cid:3)SU 2020-0(cid:1141) eliminates the current models that require separa(cid:2462)on o(cid:61) bene(cid:67)cial conversion and cash conversion (cid:61)eatures (cid:61)rom conver(cid:2462)ble instruments and simpli(cid:67)es the deriva(cid:2462)ve scope e(cid:138)cep(cid:2462)on guidance pertaining to equity classi(cid:67)ca(cid:2462)on o(cid:61) contracts in an en(cid:2462)ty(cid:317)s own equity. (cid:36)he new standard also introduces addi(cid:2462)onal disclosures (cid:61)or conver(cid:2462)ble debt and (cid:61)reestanding instruments that are inde(cid:138)ed to and se(cid:130)led in an en(cid:2462)ty(cid:317)s own equity. (cid:3)SU 2020-0(cid:1141) amends the diluted earnings per share guidance, including the requirement to use the i(cid:61)-converted method (cid:61)or all conver(cid:2462)ble instruments. (cid:36)he (cid:7)ompany adopted (cid:3)SU 2020-0(cid:1141) and the e(cid:64)ect o(cid:61) the adop(cid:2462)on o(cid:61) the (cid:3)SU did not impact the (cid:7)ompany(cid:317)s (cid:67)nancial statements. In June 201(cid:1141), the F(cid:3)SB updated (cid:3)S(cid:7) (cid:36)opic 32(cid:1141), (cid:13)(cid:98)nan(cid:49)(cid:98)al (cid:17)nst(cid:117)(cid:134)ments(cid:330)(cid:7)(cid:117)ed(cid:98)t Losses with (cid:3)SU 201(cid:1141)-13, (cid:24)eas(cid:134)(cid:117)ement o(cid:61) (cid:7)(cid:117)ed(cid:98)t Losses on (cid:13)(cid:98)nan(cid:49)(cid:98)al (cid:17)nst(cid:117)(cid:134)ments. (cid:3)SU 201(cid:1141)-13 enhances the methodology o(cid:61) measuring e(cid:138)pected credit losses to include the use o(cid:61) (cid:61)orward-looking in(cid:61)orma(cid:2462)on to be(cid:130)er in(cid:61)orm credit loss es(cid:2462)mates. (cid:36)his (cid:3)SU is e(cid:64)ec(cid:2462)ve (cid:61)or all en(cid:2462)(cid:2462)es (cid:61)or annual and interim periods in (cid:67)scal years beginning a(cid:91)er December 1(cid:404), 201(cid:406). In addi(cid:2462)on, in (cid:25)ovember 201(cid:1142) the F(cid:3)SB issued (cid:3)SU 201(cid:1142)-1(cid:406), which clari(cid:67)es that receivables arising (cid:61)rom opera(cid:2462)ng leases are not within the scope o(cid:61) the credit losses standard, but rather, should be accounted (cid:61)or in accordance with (cid:3)S(cid:7) (cid:36)opic (cid:1142)(cid:403)2. (cid:36)he (cid:7)ompany adopted this standard on January 1, 2020 and the adop(cid:2462)on o(cid:61) this standard did not have a material impact on Kennedy Wilson(cid:317)s consolidated (cid:67)nancial statements. During the course o(cid:61) 2020 the (cid:7)ompany has launched a debt pla(cid:127)orm origina(cid:2462)ng and acquiring per(cid:61)orming loans. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany has (cid:362)1(cid:403)(cid:406).(cid:403) million o(cid:61) investments in loan origina(cid:2462)ons and acquisi(cid:2462)ons. (cid:36)he (cid:7)ompany(cid:317)s current loans are per(cid:61)orming and backed by credit worthy borrowers and although the (cid:7)ompany does not e(cid:138)pect signi(cid:67)cant credit losses, it will monitor and evaluate loans in accordance with (cid:3)SU 201(cid:1141)-13. In (cid:24)arch 2020, the F(cid:3)SB issued (cid:3)SU (cid:25)o. 2020-0(cid:403), Re(cid:61)e(cid:117)en(cid:49)e Rate Re(cid:61)o(cid:117)m (cid:334)(cid:36)op(cid:98)(cid:49) (cid:1140)(cid:401)(cid:1140)(cid:335)(cid:310) which provides op(cid:2462)onal e(cid:138)pedients and e(cid:138)cep(cid:2462)ons (cid:61)or applying (cid:14)(cid:3)(cid:3)(cid:30) to contracts, hedging rela(cid:2462)onships, and other transac(cid:2462)ons a(cid:64)ected by re(cid:61)erence rate re(cid:61)orm i(cid:61) certain criteria are met. (cid:36)he amendments apply only to contracts, hedging rela(cid:2462)onships, and other transac(cid:2462)ons that re(cid:61)erence LIBO(cid:33) or another re(cid:61)erence rate e(cid:138)pected to be discon(cid:2462)nued because o(cid:61) re(cid:61)erence rate re(cid:61)orm. (cid:36)he (cid:3)SU was e(cid:64)ec(cid:2462)ve upon issuance on a prospec(cid:2462)ve basis beginning January 1, 2020 and may be elected over (cid:2462)me as re(cid:61)erence rate re(cid:61)orm ac(cid:2462)vi(cid:2462)es occur. (cid:36)he (cid:7)ompany adopted this standard on January 1, 2020 and the adop(cid:2462)on o(cid:61) this standard did not have a material impact on the (cid:7)ompany(cid:317)s consolidated (cid:67)nancial statements. (cid:36)he (cid:7)ompany is in the process o(cid:61) conver(cid:2462)ng applicable transac(cid:2462)on documents (cid:61)rom LIBO(cid:33) to other re(cid:61)erence rates and does not e(cid:138)pect any issues with the conversion. 96 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 97 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:36)he F(cid:3)SB did not issue any other (cid:3)SUs during the year ended December 31, 2022 that the (cid:7)ompany e(cid:138)pects to be applicable and have a material impact on the (cid:7)ompany(cid:317)s (cid:67)nancial statements. During the year ended December 31, 2021, Kennedy Wilson acquired the (cid:61)ollowing consolidated proper(cid:2462)es which were treated as asset acquisi(cid:2462)ons(cid:313) NOTE 3—REAL ESTATE AND ACQUIRED IN PLACE LEASE VALUE (cid:36)he (cid:61)ollowing table summari(cid:140)es the (cid:7)ompany(cid:317)s investment in consolidated real estate proper(cid:2462)es at December 31, 2022 and 2021(cid:313) (Dollars in millions) Land Buildings Building improvements (cid:3)cquired in-place lease values Less accumulated deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:33)eal estate and acquired in place lease values, net o(cid:61) accumulated deprecia(cid:2462)on (cid:1354)and amor(cid:2462)(cid:140)a(cid:2462)on (cid:362) (cid:362) 2022 1,31(cid:406).2 3,(cid:406)(cid:1141)1.(cid:406) (cid:403)(cid:406)(cid:403).2 2(cid:406)(cid:404).0 (cid:1141),0(cid:405)0.3 (cid:336)(cid:1142)(cid:1142)2.2(cid:337) December 31, 2021 1,2(cid:405)(cid:405).(cid:1141) 3,(cid:405)(cid:403)(cid:403).1 (cid:404)(cid:403)(cid:404).(cid:1141) 330.(cid:1141) (cid:404),(cid:1142)(cid:406)(cid:405).(cid:406) (cid:336)(cid:1142)3(cid:1142).1(cid:337) (cid:362) (cid:404),1(cid:1142)(cid:1142).1 (cid:362) (cid:404),0(cid:404)(cid:406).(cid:1142) (cid:33)eal property, including land, buildings, and building improvements, are included in real estate and are generally stated at cost. Buildings and building improvements are depreciated on the straight- line method over their es(cid:2462)mated lives not to e(cid:138)ceed (cid:403)0 years. (cid:3)cquired in-place lease values are recorded at their es(cid:2462)mated (cid:61)air value and amor(cid:2462)(cid:140)ed over their respec(cid:2462)ve weighted-average lease term which was (cid:1141).(cid:405) years at December 31, 2022. Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on e(cid:138)pense on buildings, building improvements and acquired in-place lease values (cid:61)or the years ended December 31, 2022, 2021 and 2020 was (cid:362)1(cid:1141)2.(cid:405) million, (cid:362)1(cid:404)1.3 million and (cid:362)1(cid:1141)(cid:404).(cid:405) million, respec(cid:2462)vely. Consolidated Ac(cid:116)uisi(cid:2236)ons (cid:36)he purchase o(cid:61) property is recorded to land, buildings, building improvements, and intangible lease value (cid:336)including the value o(cid:61) above-market and below-market leases, acquired in-place lease values, and tenant rela(cid:2462)onships, i(cid:61) any(cid:337) based on their respec(cid:2462)ve es(cid:2462)mated rela(cid:2462)ve (cid:61)air values. (cid:36)he purchase price generally appro(cid:138)imates the (cid:61)air value o(cid:61) the proper(cid:2462)es as acquisi(cid:2462)ons are transacted with third- party willing sellers a(cid:91)er arms-length nego(cid:2462)a(cid:2462)ons. During the year ended December 31, 2022, Kennedy Wilson acquired the (cid:61)ollowing consolidated proper(cid:2462)es which were treated as asset acquisi(cid:2462)ons(cid:313) (Dollars in millions) Loca(cid:2462)on Western U.S. United Kingdom Descrip(cid:2462)on Four mul(cid:2462)(cid:61)amily proper(cid:2462)es O(cid:76)ce building Land (cid:406)(cid:406).2 (cid:362) 2(cid:404).(cid:404) Building 3(cid:406)(cid:1141).(cid:1141) (cid:362) (cid:405)(cid:403).1 12(cid:403).(cid:405) (cid:362) (cid:403)(cid:405)0.(cid:405) (cid:362) (cid:362) (cid:362) (1)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:314) (cid:30)urchase (cid:30)rice (cid:3)lloca(cid:2462)on at (cid:3)cquisi(cid:2462)on(cid:336)1(cid:337) (cid:3)cquired in-place lease values(cid:336)2(cid:337) Investment debt 203.(cid:403) (cid:362) — KWH Shareholders(cid:317) (cid:11)quity 2(cid:406)3.(cid:1142) 10(cid:1141).(cid:404) 1.(cid:403) (cid:362) (cid:1141).(cid:406) (cid:1142).3 (cid:362) 203.(cid:403) (cid:362) (cid:403)00.3 (2)(cid:2)(cid:2)(cid:3)(cid:48)(cid:111)(cid:136)(cid:59)(cid:330)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:48)(cid:59)(cid:1140)(cid:111)(cid:137)(cid:330)(cid:108)(cid:45)(cid:117)(cid:104)(cid:59)(cid:124)(cid:2) (cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2) (cid:45)(cid:117)(cid:59)(cid:2) (cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2) (cid:98)(cid:109)(cid:2) (cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2) (cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:45)(cid:49)(cid:49)(cid:117)(cid:134)(cid:59)(cid:55)(cid:2) (cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2) (cid:1140)(cid:98)(cid:45)(cid:48)(cid:98)(cid:1140)(cid:98)(cid:2462)(cid:59)(cid:118)(cid:311)(cid:2) (cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:311)(cid:2) (cid:111)(cid:109)(cid:2) (cid:124)(cid:95)(cid:59)(cid:2) (cid:45)(cid:49)(cid:49)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:2)(cid:118)(cid:95)(cid:59)(cid:59)(cid:124)(cid:118)(cid:314) (Dollars in millions) Loca(cid:2462)on Western U.S. United Kingdom Descrip(cid:2462)on (cid:36)en mul(cid:2462)(cid:61)amily proper(cid:2462)es (cid:36)wo commercial proper(cid:2462)es Land 1(cid:1141)(cid:1141).1 (cid:362) (cid:406)(cid:404).(cid:406) 2(cid:1141)2.0 (cid:362) Building (cid:1141)10.(cid:406) (cid:362) 231.3 (cid:1142)(cid:403)2.2 (cid:362) (cid:362) (cid:362) (1)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2)(cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:314) (cid:30)urchase (cid:30)rice (cid:3)lloca(cid:2462)on at (cid:3)cquisi(cid:2462)on(cid:336)1(cid:337) (cid:3)cquired in-place lease values(cid:336)2(cid:337) Investment debt (cid:403)(cid:1141)(cid:406).1 (cid:362) — (cid:403)(cid:1141)(cid:406).1 (cid:362) 2.3 (cid:362) 22.3 2(cid:403).(cid:1141) (cid:362) KWH Shareholders(cid:317) (cid:11)quity 310.2 3(cid:403)(cid:406).(cid:404) (cid:1141)(cid:404)(cid:406).(cid:405) (2)(cid:2)(cid:2)(cid:3)(cid:48)(cid:111)(cid:136)(cid:59)(cid:330)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:48)(cid:59)(cid:1140)(cid:111)(cid:137)(cid:330)(cid:108)(cid:45)(cid:117)(cid:104)(cid:59)(cid:124)(cid:2) (cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2) (cid:45)(cid:117)(cid:59)(cid:2) (cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:55)(cid:2) (cid:98)(cid:109)(cid:2) (cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2) (cid:45)(cid:118)(cid:118)(cid:59)(cid:124)(cid:118)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:45)(cid:49)(cid:49)(cid:117)(cid:134)(cid:59)(cid:55)(cid:2) (cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:2) (cid:45)(cid:109)(cid:55)(cid:2) (cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2) (cid:1140)(cid:98)(cid:45)(cid:48)(cid:98)(cid:1140)(cid:98)(cid:2462)(cid:59)(cid:118)(cid:311)(cid:2) (cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:311)(cid:2) (cid:111)(cid:109)(cid:2) (cid:124)(cid:95)(cid:59)(cid:2) (cid:45)(cid:49)(cid:49)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:98)(cid:109)(cid:93)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:2)(cid:118)(cid:95)(cid:59)(cid:59)(cid:124)(cid:118)(cid:314) Gains on Sale of Real (cid:11)state(cid:310) (cid:25)et During the years ended December 31, 2022, 2021 and 2020, Kennedy Wilson recogni(cid:140)ed the (cid:61)ollowing net gains on sale o(cid:61) real estate. Included in the net gains (cid:61)or the year ended December 31, 2022 is an impairment loss o(cid:61) (cid:362)13.3 million on (cid:11)uropean non-core retail and o(cid:76)ce assets. Included in the net gains (cid:61)or year ended December 31, 2021 is an impairment loss o(cid:61) (cid:362)20.(cid:406) million on two retail proper(cid:2462)es in the United Kingdom and an addi(cid:2462)onal impairment on a residen(cid:2462)al property in the Western United States. Included in the net gains (cid:61)or year ended December 31, 2020 is a (cid:362)1(cid:404).(cid:1141) million impairment loss on (cid:67)ve retail proper(cid:2462)es in the United Kingdom and a residen(cid:2462)al property in the Western United States. (Dollars in millions) (cid:43)ear ended December 31, 2022 2021 2020 Descrip(cid:2462)on (cid:7)onsolidated (cid:25)(cid:7)I (cid:25)et o(cid:61) (cid:25)(cid:7)I (cid:14)ain on sale o(cid:61) real estate (cid:30)rimarily due to the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) equity interest in a mul(cid:2462)(cid:61)amily property in Western United States that was previously wholly-owned and controlled by the (cid:7)ompany and the sale o(cid:61) a wholly-owned o(cid:76)ce property in the United Kingdom (cid:30)rimarily due to the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) equity interest in nine mul(cid:2462)(cid:61)amily proper(cid:2462)es in Western United States that were previously wholly-owned and controlled by the (cid:7)ompany and the sale o(cid:61) 1(cid:406) o(cid:76)ce proper(cid:2462)es in the United Kingdom, one mul(cid:2462)(cid:61)amily property in Western United States, three retail proper(cid:2462)es in Western United States and an o(cid:76)ce property in Western United States 20 industrial proper(cid:2462)es (cid:336)including the deconsolida(cid:2462)on o(cid:61) previously consolidated real estate as discussed below(cid:337), 1(cid:406) retail proper(cid:2462)es, three o(cid:76)ce proper(cid:2462)es, and one mul(cid:2462)(cid:61)amily property in United Kingdom, two mul(cid:2462)(cid:61)amily proper(cid:2462)es and two o(cid:76)ce proper(cid:2462)es in Ireland, one retail property in Spain, and one mul(cid:2462)(cid:61)amily property in the Western United States. (cid:362) 103.(cid:405) (cid:362) (cid:336)1.0(cid:337) (cid:362) 102.(cid:405) (cid:403)12.(cid:405) (cid:336)(cid:404).(cid:403)(cid:337) (cid:403)0(cid:405).3 33(cid:1142).0 (cid:336)0.(cid:1141)(cid:337) 33(cid:405).(cid:403) 98 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 99 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Deconsolida(cid:2236)on of (cid:30)reviousl(cid:139) Consolidated Real (cid:11)state Under (cid:3)S(cid:7) Subtopic (cid:1141)10-20, the (cid:7)ompany consummated the (cid:61)ollowing transac(cid:2462)ons that resulted in the deconsolida(cid:2462)on o(cid:61) the (cid:7)ompany(cid:317)s interests in investments previously consolidated in the (cid:7)ompany(cid:317)s (cid:67)nancial statements(cid:313) During the year ended December 31, 2022, due to the sale and deconsolida(cid:2462)on o(cid:61) (cid:24)on(cid:2462)avo, the (cid:7)ompany recogni(cid:140)ed a (cid:362)(cid:404)(cid:1141).(cid:405) million gain on sale o(cid:61) real estate, net and generated (cid:362)30.2 million o(cid:61) cash proceeds (cid:61)or the (cid:7)ompany. (cid:36)he gain is due to the sale o(cid:61) the (cid:403)(cid:406)(cid:1143) interest to the (cid:7)ompany(cid:317)s partner and the recording o(cid:61) the (cid:7)ompany(cid:317)s retained (cid:404)1(cid:1143) interest in unconsolidated investments at the (cid:61)air value established by the transac(cid:2462)on. During the year ended December 31, 2021, due to the sale and deconsolida(cid:2462)on o(cid:61) the assets that make up the (cid:24)F seed por(cid:127)olio, the (cid:7)ompany recogni(cid:140)ed a (cid:362)332.0 million gain on sale o(cid:61) real estate, net and generated (cid:362)1(cid:1141)(cid:1141).(cid:403) million o(cid:61) cash proceeds (cid:61)or the (cid:7)ompany. (cid:36)he gain is due to the sale o(cid:61) the (cid:403)(cid:406)(cid:1143) interest to the (cid:7)ompany(cid:317)s partner and the recording o(cid:61) the (cid:7)ompany(cid:317)s retained (cid:404)1(cid:1143) interest in unconsolidated investments at the (cid:61)air value established by the transac(cid:2462)on. (cid:36)he (cid:24)F seed por(cid:127)olio and subsequent investments within the separate account are accounted (cid:61)or at (cid:61)air value as the (cid:7)ompany elected to account (cid:61)or this investment under the (cid:61)air value adop(cid:2462)on. During the year ended December 31, 2020, due to the sale and deconsolida(cid:2462)on o(cid:61) the assets that made up the urban logis(cid:2462)cs proper(cid:2462)es in the UK (cid:336)(cid:318)(cid:11)uropean Industrial J(cid:40)(cid:319)(cid:337) the (cid:7)ompany recogni(cid:140)ed a (cid:362)12(cid:1141).3 million gain (cid:61)rom the sale o(cid:61) real estate, net. (cid:36)he gain is due to the sale o(cid:61) the (cid:1142)0(cid:1143) interest to the (cid:7)ompany(cid:317)s partner and the recording o(cid:61) the (cid:7)ompany(cid:317)s retained 20(cid:1143) interest in unconsolidated investments at the (cid:61)air value established by the transac(cid:2462)on. (cid:36)he (cid:11)uropean Industrial J(cid:40) commenced with inves(cid:2462)ng in an ownership stake in 1(cid:1142) industrial assets located throughout the United Kingdom and subsequent investments within the separate account are accounted (cid:61)or at (cid:61)air value as the (cid:7)ompany elected to account (cid:61)or this investment under the (cid:61)air value adop(cid:2462)on. (cid:36)he (cid:7)ompany leases its opera(cid:2462)ng proper(cid:2462)es to customers under agreements that are classi(cid:67)ed as opera(cid:2462)ng leases. (cid:36)he total minimum lease payments provided (cid:61)or under the leases are recogni(cid:140)ed on a straight-line basis over the lease term. (cid:36)he majority o(cid:61) the (cid:7)ompany(cid:317)s rental e(cid:138)penses, including common area maintenance, real estate ta(cid:138)es and insurance, are recovered (cid:61)rom the (cid:7)ompany(cid:317)s tenants. (cid:36)he (cid:7)ompany records amounts reimbursed by customers in the period that the applicable e(cid:138)penses are incurred, which is generally ratably throughout the term o(cid:61) the lease. (cid:36)he reimbursements are recogni(cid:140)ed in rental income in the consolidated statements o(cid:61) opera(cid:2462)ons as the (cid:7)ompany is the primary obligor with respect to purchasing and selec(cid:2462)ng goods and services (cid:61)rom third-party vendors and bearing the associated credit risk. (cid:36)he (cid:61)ollowing table summari(cid:140)es the minimum lease payments due (cid:61)rom the (cid:7)ompany(cid:317)s tenants on leases with lease periods greater than one year at December 31, 2022(cid:313) (Dollars in millions) 2023 202(cid:403) 202(cid:404) 202(cid:1141) 202(cid:405) (cid:36)herea(cid:91)er (cid:36)otal (cid:24)inimum (cid:33)ental (cid:33)evenues(cid:336)1(cid:337) 1(cid:403)(cid:403).2 12(cid:405).(cid:406) 112.(cid:1142) (cid:406)(cid:404).(cid:1141) (cid:405)(cid:1141).(cid:1141) 232.(cid:1141) (cid:405)(cid:1142)(cid:406).(cid:405) (cid:362) (cid:362) (1)(cid:2)(cid:2)(cid:36)(cid:95)(cid:59)(cid:118)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:2)(cid:55)(cid:111)(cid:2)(cid:109)(cid:111)(cid:124)(cid:2)(cid:117)(cid:59)(cid:89)(cid:59)(cid:49)(cid:124)(cid:2)(cid:61)(cid:134)(cid:124)(cid:134)(cid:117)(cid:59)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:117)(cid:59)(cid:136)(cid:59)(cid:109)(cid:134)(cid:59)(cid:118)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:109)(cid:59)(cid:137)(cid:45)(cid:1140)(cid:2)(cid:111)(cid:117)(cid:2)(cid:117)(cid:59)(cid:114)(cid:1140)(cid:45)(cid:49)(cid:59)(cid:108)(cid:59)(cid:109)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:59)(cid:138)(cid:98)(cid:118)(cid:2462)(cid:109)(cid:93)(cid:2)(cid:1140)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:311)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:98)(cid:109)(cid:49)(cid:117)(cid:59)(cid:45)(cid:118)(cid:59)(cid:118)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2) (cid:109)(cid:111)(cid:124)(cid:2)(cid:67)(cid:138)(cid:59)(cid:55)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:59)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:117)(cid:59)(cid:98)(cid:108)(cid:48)(cid:134)(cid:117)(cid:118)(cid:59)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:117)(cid:59)(cid:109)(cid:124)(cid:45)(cid:1140)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:118)(cid:314) NOTE 4—UNCONSOLIDATED INVESTMENTS Kennedy Wilson has a number o(cid:61) joint venture interests including commingled (cid:61)unds and separate accounts, generally ranging (cid:61)rom (cid:404)(cid:1143) to (cid:404)0(cid:1143), that were (cid:61)ormed to acquire, manage, develop, service and(cid:326)or sell real estate. Kennedy Wilson has signi(cid:67)cant in(cid:89)uence over these en(cid:2462)(cid:2462)es, but not control. (cid:3)ccordingly, these investments are accounted (cid:61)or under the equity method. Joint Venture and Fund Holdings (cid:36)he (cid:61)ollowing table details Kennedy Wilson(cid:317)s investments in joint ventures by investment type and geographic loca(cid:2462)on as o(cid:61) December 31, 2022(cid:313) (Dollars in millions) Western U.S. Ireland United Kingdom (cid:36)otal (cid:24)ul(cid:2462)(cid:61)amily (cid:7)ommercial (cid:362) (cid:1142)(cid:406).2 (cid:362) (cid:1142)(cid:404)(cid:405).(cid:1141) (cid:362) 3(cid:405)(cid:1142).1 — 1(cid:405)(cid:1141).(cid:405) 13(cid:1142).(cid:405) Hotel 1(cid:406)(cid:404).(cid:406) (cid:362) — — Funds 1(cid:404)(cid:1142).3 (cid:362) (cid:1142).0 3(cid:1141).3 (cid:33)esiden(cid:2462)al and Other 1(cid:1141)(cid:406).1 (cid:362) — 30.2 (cid:36)otal 1,(cid:403)(cid:405)0.1 (cid:404)(cid:1141)2.(cid:1142) 20(cid:404).2 (cid:362) 1,23(cid:404).(cid:405) (cid:362) (cid:403)0(cid:403).(cid:1141) (cid:362) 1(cid:406)(cid:404).(cid:406) (cid:362) 202.(cid:1141) (cid:362) 1(cid:406)(cid:406).3 (cid:362) 2,23(cid:1142).1 (cid:36)he (cid:61)ollowing table details the Kennedy Wilson(cid:317)s investments in joint ventures by investment type and geographic loca(cid:2462)on as o(cid:61) December 31, 2021(cid:313) (Dollars in millions) Western U.S. Ireland United Kingdom (cid:36)otal (cid:24)ul(cid:2462)(cid:61)amily (cid:7)ommercial (cid:362) (cid:1142)1.0 (cid:362) (cid:404)(cid:406)2.1 (cid:362) 3(cid:1142)(cid:406).(cid:404) — 1(cid:403)1.1 1(cid:1141)(cid:406).3 Hotel 131.0 (cid:362) — — Funds 1(cid:1142)(cid:406).2 (cid:362) 3.1 (cid:403)2.(cid:406) (cid:33)esiden(cid:2462)al and Other 1(cid:405)(cid:406).(cid:1141) (cid:362) — 2(cid:1142).(cid:1142) (cid:36)otal 1,1(cid:405)2.(cid:406) (cid:404)33.(cid:405) 2(cid:403)1.0 (cid:362) (cid:406)(cid:1142)1.(cid:1141) (cid:362) 3(cid:406)1.(cid:403) (cid:362) 131.0 (cid:362) 23(cid:404).2 (cid:362) 20(cid:1142).(cid:403) (cid:362) 1,(cid:406)(cid:403)(cid:405).(cid:1141) During the year ended December 31, 2022, the change in unconsolidated investments primarily relates to (cid:362)3(cid:1141)1.3 million o(cid:61) cash contribu(cid:2462)ons to unconsolidated investments, (cid:362)23(cid:404).2 million o(cid:61) distribu(cid:2462)ons (cid:61)rom unconsolidated investments, (cid:362)31.(cid:406) million associated with the deconsolida(cid:2462)on o(cid:61) (cid:24)on(cid:2462)avo as discussed in (cid:25)ote 3, (cid:362)1(cid:405)(cid:1142).(cid:403) million o(cid:61) income (cid:61)rom unconsolidated investments (cid:336)including (cid:362)11(cid:403).(cid:1141) million o(cid:61) (cid:61)air value gains(cid:337), and a (cid:362)(cid:403)1.(cid:1142) million decrease related to other items, which primarily related to (cid:61)oreign e(cid:138)change movements. (cid:3)s o(cid:61) December 31, 2022 and December 31, 2021, (cid:362)2,0(cid:406)3.(cid:405) million and (cid:362)1,(cid:405)(cid:406)(cid:403).(cid:1142) million, respec(cid:2462)vely, o(cid:61) unconsolidated investments were accounted (cid:61)or at (cid:61)air value. See (cid:25)ote (cid:404) (cid:61)or more detail. 100 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 101 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Contri(cid:48)u(cid:2236)ons to Joint Ventures During the year ended December 31, 2022, Kennedy Wilson contributed (cid:362)3(cid:1141)1.3 million to joint ventures, primarily to (cid:61)und new acquisi(cid:2462)ons in the (cid:7)ompany(cid:317)s (cid:11)uropean Industrial J(cid:40) and mul(cid:2462)(cid:61)amily proper(cid:2462)es in Western United States with separate account partners and capital calls with respect to the Kona (cid:40)illage hotel development. Distri(cid:48)u(cid:2236)ons from Joint Ventures (cid:36)he (cid:61)ollowing table details cash distribu(cid:2462)ons by investment type and geographic loca(cid:2462)on (cid:61)or the year ended December 31, 2022(cid:313) (cid:24)ul(cid:2462)(cid:61)amily (cid:7)ommercial Funds (cid:33)esiden(cid:2462)al and Other (cid:36)otal (Dollars in millions) Opera(cid:2462)ng Inves(cid:2462)ng Opera(cid:2462)ng Inves(cid:2462)ng Opera(cid:2462)ng Inves(cid:2462)ng Opera(cid:2462)ng Inves(cid:2462)ng Opera(cid:2462)ng Inves(cid:2462)ng Western U.S. Ireland United Kingdom (cid:362) 3(cid:1142).(cid:1142) (cid:362) (cid:1142).0 — (cid:1141)(cid:1141).(cid:1141) (cid:362) 3(cid:1142).(cid:1141) — 11.2 (cid:362) (cid:405).3 1.(cid:405) 0.2 (cid:362) — 1.3 10.2 (cid:362) — — 10.(cid:405) (cid:362) (cid:403).(cid:406) — 0.2 (cid:362) — 0.(cid:405) 23.(cid:404) (cid:362) — 11.3 (cid:1141)0.(cid:403) (cid:362) 1(cid:404).3 2.(cid:403) 101.0 (cid:403)3.(cid:404) 12.(cid:1141) (cid:36)otal (cid:362) (cid:403)(cid:1141).(cid:1142) (cid:362) 10(cid:404).2 (cid:362) 20.2 (cid:362) 1.(cid:404) (cid:362) 10.2 (cid:362) 1(cid:404).(cid:1141) (cid:362) 0.(cid:406) (cid:362) 3(cid:403).(cid:1142) (cid:362) (cid:405)(cid:1142).1 (cid:362) 1(cid:404)(cid:405).1 Inves(cid:2462)ng distribu(cid:2462)ons resulted primarily (cid:61)rom the sales o(cid:61) three mul(cid:2462)(cid:61)amily proper(cid:2462)es and one o(cid:76)ce property in Fund (cid:40)I, re(cid:67)nancing and buyouts (cid:61)rom limited partners in the (cid:40)HH por(cid:127)olio, and distribu(cid:2462)ons (cid:61)rom mortgage re(cid:67)nancing on mul(cid:2462)(cid:61)amily proper(cid:2462)es in the Western United States and Ireland. Opera(cid:2462)ng distribu(cid:2462)ons resulted (cid:61)rom opera(cid:2462)ng cash (cid:89)ow generated by the joint venture investments that have been distributed to the (cid:7)ompany. Income from Unconsolidated Investments (cid:36)he (cid:61)ollowing table presents income (cid:61)rom unconsolidated investments recogni(cid:140)ed by Kennedy Wilson during the years ended December 31, 2022, 2021 and 2020(cid:313) (Dollars in millions) Income (cid:61)rom unconsolidated investments—opera(cid:2462)ng (cid:1354)per(cid:61)ormance Income (cid:61)rom unconsolidated investments—reali(cid:140)ed gains (cid:61)rom (cid:1354)cost basis investments Income (cid:61)rom unconsolidated investments—unreali(cid:140)ed and (cid:1354)reali(cid:140)ed (cid:61)air value gains Income (cid:61)rom unconsolidated investments—reali(cid:140)ed losses and (cid:1354)impairment (cid:30)rincipal co-investments (cid:336)Loss(cid:337) income (cid:61)rom unconsolidated investments—per(cid:61)ormance (cid:1354)alloca(cid:2462)on Year Ended December 31, 2022 2021 2020 (cid:362) (cid:1142)0.2 (cid:362) (cid:1141)0.(cid:405) (cid:362) (cid:403)3.(cid:403) (cid:403).(cid:405) 11(cid:403).(cid:1141) — 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) — 213.(cid:404) (cid:336)3.1(cid:337) 2(cid:405)1.1 11(cid:405).(cid:406) (cid:362) 1(cid:405)(cid:1142).(cid:403) (cid:362) 3(cid:1142)(cid:406).0 (cid:362) — (cid:403)(cid:405).2 (cid:336)12.3(cid:337) (cid:405)(cid:1142).3 2.(cid:405) (cid:1142)1.0 Opera(cid:2462)ng per(cid:61)ormance is related to underlying per(cid:61)ormance (cid:61)rom unconsolidated investments. (cid:33)eali(cid:140)ed gains during the year ended December 31, 2022, relates to the sale o(cid:61) a legacy mul(cid:2462)(cid:61)amily property accounted (cid:61)or at historical cost in the Western United States at a sales price greater than its carrying value. (cid:36)he decrease in income (cid:61)rom unconsolidated investments is due to lower (cid:61)air value gains and decreases in per(cid:61)ormance alloca(cid:2462)ons on Western United States mul(cid:2462)(cid:61)amily assets and commingled (cid:61)und assets. (cid:36)he (cid:7)ompany had a net (cid:61)air value gain (cid:61)or the year ended December 31, 2022 as (cid:61)air value losses on real estate and (cid:61)oreign e(cid:138)change movements were more than o(cid:64)set by (cid:61)air value gains on mortgages and interest rate deriva(cid:2462)ves as detailed below. (cid:40)alua(cid:2462)ons o(cid:61) global market rate mul(cid:2462)(cid:61)amily assets in the (cid:7)ompany(cid:317)s Western United States and Dublin markets and industrial assets in the United Kingdom were at historic levels at the end o(cid:61) 2021 and into the (cid:67)rst quarter o(cid:61) 2022 and the (cid:7)ompany has started to see this pull back slightly with cap rate e(cid:138)pansion, which led to (cid:61)air value losses on real estate during the year ended December 31, 2022. (cid:36)he (cid:7)ompany also had (cid:61)air value (cid:61)oreign e(cid:138)change losses, net o(cid:61) any hedges on our (cid:61)oreign (cid:61)air value investments as the (cid:14)B(cid:30) and (cid:11)uro were at historically low levels in rela(cid:2462)on to the U.S. Dollar during the same period. Fair value losses on real estate were also o(cid:64)set by (cid:61)air value gains on (cid:67)(cid:138)ed rate mortgages that are secured by certain proper(cid:2462)es, primarily related to having long term (cid:67)(cid:138)ed rate debt that is at substan(cid:2462)ally lower interest rates than the current market interest rates as a result o(cid:61) higher base rates and spreads in today(cid:317)s (cid:67)nancing market driven by recent rate increases implemented by the Federal (cid:33)eserve and the (cid:11)uropean (cid:7)entral Bank (cid:336)(cid:318)(cid:11)(cid:7)B(cid:319)(cid:337). (cid:36)here were also (cid:61)air value gains associated with interest rate deriva(cid:2462)ves held by proper(cid:2462)es on variable rate mortgages which have increased in value with rising interest rates. (cid:40)HH has had signi(cid:67)cant (cid:61)air value gains in the current year due to gains on its (cid:67)(cid:138)ed rate property loans and increases in (cid:25)OI at the proper(cid:2462)es driven by rental increases and the stabili(cid:140)a(cid:2462)on o(cid:61) proper(cid:2462)es that have recently completed development. However, (cid:40)HH does not have a per(cid:61)ormance alloca(cid:2462)on structure associated with the investment, which drove per(cid:61)ormance alloca(cid:2462)ons being lower in rela(cid:2462)on to (cid:61)air value gains. During the year ended December 31, 2022, the (cid:7)ompany recorded a (cid:362)21.1 million decrease in the accrual (cid:61)or per(cid:61)ormance alloca(cid:2462)ons rela(cid:2462)ng to its commingled (cid:61)unds and separate account investments as the (cid:61)air value o(cid:61) assets within these (cid:61)unds decreased. During the year ended December 31, 2022, the (cid:7)ompany collected (cid:362)(cid:1141).(cid:1142) million o(cid:61) per(cid:61)ormance alloca(cid:2462)ons. (cid:36)he (cid:7)ompany evaluates on a quarterly basis the carrying value o(cid:61) its historical cost based investments and to the e(cid:138)tent the carrying value is in e(cid:138)cess o(cid:61) its (cid:61)air value, an impairment loss is recorded. (cid:33)eali(cid:140)ed losses and impairment are related to asset sales on non-core retail assets in the United Kingdom during the year ended December 31, 2021 and 2020. Vintage Housing Holdings (“VHH”) (cid:3)s o(cid:61) December 31, 2022 and 2021, the carrying value o(cid:61) the (cid:7)ompany(cid:317)s investment in (cid:40)HH was (cid:362)2(cid:405)2.3 million and (cid:362)1(cid:404)(cid:405).(cid:406) million, respec(cid:2462)vely. (cid:36)he total equity income recogni(cid:140)ed (cid:61)rom the (cid:7)ompany(cid:317)s investment in (cid:40)HH was (cid:362)11(cid:406).(cid:1142) million, (cid:362)(cid:403)1.(cid:403) million and (cid:362)22.(cid:1142) million (cid:61)or the years ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely. Distribu(cid:2462)ons in the current period primarily relate to the re(cid:61)und o(cid:61) advances on two development projects in which (cid:40)HH provides cash (cid:61)or the construc(cid:2462)on costs in advance, and other partners subsequently pay their share o(cid:61) the costs back to (cid:40)HH, a resyndica(cid:2462)on and inves(cid:2462)ng distribu(cid:2462)ons (cid:61)rom re(cid:67)nancing proceeds. Fair value gains in the current period primarily relate to having long term (cid:67)(cid:138)ed rate debt that is at substan(cid:2462)ally lower 102 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 103 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) interest rates than the current market interest rates. (cid:36)here were also (cid:61)air value gains associated with increases in rents as area median income (cid:336)(cid:318)(cid:3)(cid:24)I(cid:319)(cid:337) in the relevant market increased by an average rate o(cid:61) 10(cid:1143) and addi(cid:2462)onal (cid:25)OI (cid:61)rom the stabili(cid:140)a(cid:2462)on o(cid:61) proper(cid:2462)es that have recently completed development. (cid:30)rior period (cid:61)air value gains primarily relate to resyndica(cid:2462)ons in which (cid:40)HH dissolves an e(cid:138)is(cid:2462)ng partnership and recapitali(cid:140)es into a new partnership with ta(cid:138) e(cid:138)empt bonds and ta(cid:138) credits that are sold to a new ta(cid:138) credit partner and, in many cases, yields cash back to (cid:40)HH. Upon resyndica(cid:2462)on, (cid:40)HH retains a (cid:14)(cid:30) interest in the partnership and receives various (cid:61)uture streams o(cid:61) cash (cid:89)ows including(cid:313) development (cid:61)ees, asset management (cid:61)ees, other (cid:14)(cid:30) management (cid:61)ees and distribu(cid:2462)ons (cid:61)rom opera(cid:2462)ons. Capital Commitments (cid:3)s o(cid:61) December 31, 2022, Kennedy Wilson had un(cid:61)ul(cid:67)lled capital commitments totaling (cid:362)2(cid:403)(cid:1141).(cid:1141) million to nine o(cid:61) its unconsolidated joint ventures, including (cid:362)(cid:405)(cid:1141).(cid:1142) million rela(cid:2462)ng to (cid:61)our closed- end (cid:61)unds managed by Kennedy Wilson, under the respec(cid:2462)ve opera(cid:2462)ng agreements. In addi(cid:2462)on to the un(cid:61)unded capital commitments, the (cid:7)ompany has (cid:362)(cid:1142)(cid:405).(cid:403) million o(cid:61) equity commitments on various development projects. (cid:36)he (cid:7)ompany may be called upon to contribute addi(cid:2462)onal capital to joint ventures in sa(cid:2462)s(cid:61)ac(cid:2462)on o(cid:61) such capital commitment obliga(cid:2462)ons. Summari(cid:140)ed Financial Data VHH (cid:36)he income (cid:61)rom (cid:40)HH was a signi(cid:67)cant component o(cid:61) the (cid:7)ompany(cid:317)s opera(cid:2462)ons (cid:61)or the year ended December 31, 2022 when it had (cid:362)11(cid:406).(cid:1142) million o(cid:61) income (cid:61)rom unconsolidated investments, which consisted o(cid:61) (cid:362)10(cid:1142).(cid:403) million o(cid:61) (cid:61)air value gains and (cid:362)11.(cid:403) million rela(cid:2462)ng to the (cid:7)ompany(cid:317)s ownership in the underlying opera(cid:2462)ons and as such (cid:40)HH is considered a signi(cid:67)cant subsidiary (cid:61)or the year ended December 31, 2022. Financial in(cid:61)orma(cid:2462)on is provided (cid:61)or December 31, 2021 (cid:61)or compara(cid:2462)ve purposes. MF Seed (cid:30)or(cid:127)olio (cid:36)he income (cid:61)rom the (cid:24)F seed por(cid:127)olio was a signi(cid:67)cant component o(cid:61) the (cid:7)ompany(cid:317)s opera(cid:2462)ons (cid:61)or the year ended December 31, 2021 when it had (cid:362)(cid:406)2.1 million o(cid:61) income (cid:61)rom unconsolidated investments, which consisted o(cid:61) (cid:362)(cid:405)3.3 million o(cid:61) (cid:61)air value gains, (cid:362)1(cid:404).(cid:405) million o(cid:61) per(cid:61)ormance alloca(cid:2462)ons and (cid:362)3.2 million rela(cid:2462)ng to the (cid:7)ompany(cid:317)s ownership in the underlying opera(cid:2462)ons and as such the (cid:24)F seed por(cid:127)olio is considered a signi(cid:67)cant subsidiary (cid:61)or the year ended December 31, 2021. Financial in(cid:61)orma(cid:2462)on is provided (cid:61)or December 31, 2022 (cid:61)or compara(cid:2462)ve purposes. (cid:36)he (cid:24)F seed por(cid:127)olio had (cid:362)(cid:403)3.(cid:1142) million o(cid:61) income (cid:61)rom unconsolidated investments, which consisted o(cid:61) (cid:362)2(cid:1142).(cid:1141) million o(cid:61) (cid:61)air value gains, (cid:362)(cid:404).2 million o(cid:61) per(cid:61)ormance alloca(cid:2462)ons and (cid:362)(cid:406).(cid:406) million rela(cid:2462)ng to the (cid:7)ompany(cid:317)s ownership in the underlying opera(cid:2462)ons o(cid:61) the proper(cid:2462)es in the por(cid:127)olio (cid:61)or the year ended December 31, 2022. Summari(cid:140)ed (cid:67)nancial in(cid:61)orma(cid:2462)on is provided below(cid:313) (Dollars in millions) (cid:7)ash and cash equivalents (cid:3)ccounts receivable (cid:33)eal estate Other (cid:36)otal assets Liabili(cid:2462)es (cid:3)ccounts payable and accrued e(cid:138)penses (cid:24)ortgage debt (cid:36)otal liabili(cid:2462)es (cid:11)quity Kennedy Wilson—investment in unconsolidated investment (cid:30)artners (cid:36)otal equity (cid:40)HH (cid:24)F Seed (cid:30)or(cid:127)olio December 31, December 31, (cid:362) 2022 3(cid:405).0 (cid:403).(cid:403) 1,(cid:1142)02.(cid:405) 2.0 (cid:362) 2021 31.(cid:406) (cid:403).(cid:406) 1,(cid:404)(cid:404)3.3 — (cid:362) 1,(cid:1142)(cid:403)(cid:1141).1 (cid:362) 1,(cid:404)(cid:406)0.1 (cid:362) 1(cid:405).(cid:1141) 1,1(cid:1142)0.(cid:1141) 11(cid:406)(cid:1142).2 (cid:362) 1(cid:406).(cid:406) 1,1(cid:1142)(cid:1142).(cid:1141) 1,20(cid:1142).(cid:404) 2(cid:405)1.(cid:1142) 3(cid:405)(cid:1141).1 (cid:1141)(cid:403)(cid:405).(cid:406) 1(cid:404)(cid:405).(cid:406) 223.(cid:405) 3(cid:1142)1.(cid:1141) (cid:362) (cid:362) (cid:362) (cid:362) (cid:362) (cid:362) 2022 12.(cid:403) 2.0 (cid:406)(cid:405)0.(cid:404) 1.1 (cid:406)(cid:1142)(cid:1141).0 (cid:404).(cid:403) (cid:403)(cid:403)(cid:1142).(cid:405) (cid:403)(cid:404)(cid:403).1 2(cid:406)1.(cid:406) 2(cid:403)0.0 (cid:404)31.(cid:406) 2021 10.(cid:406) 2.(cid:403) (cid:406)(cid:403)3.(cid:404) 1.(cid:404) (cid:406)(cid:404)(cid:1142).3 (cid:404).2 (cid:403)(cid:404)(cid:405).0 (cid:403)(cid:1141)2.2 2(cid:1141)(cid:1142).(cid:1141) 22(cid:405).(cid:404) (cid:403)(cid:406)(cid:1141).1 (cid:36)otal liabili(cid:2462)es and equity (cid:362) 1,(cid:1142)(cid:403)(cid:1141).1 (cid:362) 1,(cid:404)(cid:406)0.1 (cid:362) (cid:406)(cid:1142)(cid:1141).0 (cid:362) (cid:406)(cid:404)(cid:1142).3 (cid:40)HH (cid:24)F Seed (cid:30)or(cid:127)olio (cid:43)ear (cid:11)nded December 31, (cid:43)ear (cid:11)nded December 31, (Dollars in millions) (cid:33)ental income Unreali(cid:140)ed (cid:61)air value gains (cid:33)ental e(cid:138)penses Interest e(cid:138)pense Other e(cid:138)pense (cid:25)et income Income a(cid:130)ributable to partner (cid:362) 2022 131.0 (cid:362) 2(cid:405)0.(cid:405) (cid:336)(cid:403)1.0(cid:337) (cid:336)(cid:403)(cid:404).(cid:1141)(cid:337) — 31(cid:404).1 (cid:336)1(cid:406)(cid:404).3(cid:337) (cid:362) (cid:362) 2021 11(cid:403).(cid:405) (cid:405)(cid:405).(cid:403) (cid:336)3(cid:403).(cid:1142)(cid:337) (cid:336)3(cid:405).(cid:404)(cid:337) (cid:336)0.1(cid:337) 11(cid:406).(cid:405) (cid:336)(cid:405)(cid:1142).3(cid:337) 2020 102.1 31.3 (cid:336)31.(cid:403)(cid:337) (cid:336)31.(cid:1142)(cid:337) (cid:336)0.(cid:406)(cid:337) (cid:1141)(cid:406).3 (cid:336)(cid:403)(cid:1141).(cid:404)(cid:337) (cid:362) 2022 (cid:1141)(cid:403).(cid:1142) (cid:404)(cid:1141).1 (cid:336)21.1(cid:337) (cid:336)1(cid:405).(cid:1141)(cid:337) (cid:336)(cid:403).1(cid:337) (cid:405)(cid:1142).1 (cid:336)33.0(cid:337) Income (cid:61)rom unconsolidated investment (cid:362) 11(cid:406).(cid:1142) (cid:362) (cid:403)1.(cid:403) (cid:362) 22.(cid:1142) (cid:362) (cid:403)(cid:404).1 (cid:362) 2021 31.(cid:1141) 1(cid:403)0.(cid:1141) (cid:336)(cid:1142).(cid:404)(cid:337) (cid:336)(cid:1142).2(cid:337) (cid:336)11.(cid:1142)(cid:337) 1(cid:403)3.(cid:405) (cid:336)(cid:404)(cid:403).(cid:1142)(cid:337) (cid:1142)(cid:1142).(cid:406) NOTE 5—FAIR VALUE MEASUREMENTS AND THE FAIR VALUE OPTION (cid:36)he (cid:61)ollowing table presents (cid:61)air value measurements (cid:336)including items that are required to be measured at (cid:61)air value and items (cid:61)or which the (cid:61)air value op(cid:2462)on has been elected(cid:337) as o(cid:61) December 31, 2022(cid:313) (Dollars in millions) Unconsolidated investments (cid:25)et currency deriva(cid:2462)ve contracts (cid:36)otal Level 1 Level 2 — — — (cid:362) (cid:362) — (cid:405).0 (cid:405).0 (cid:362) (cid:362) Level 3 2,0(cid:406)3.(cid:405) — 2,0(cid:406)3.(cid:405) (cid:362) (cid:362) (cid:36)otal 2,0(cid:406)3.(cid:405) (cid:405).0 2,100.(cid:405) (cid:362) (cid:362) (cid:36)he (cid:61)ollowing table presents (cid:61)air value measurements (cid:336)including items that are required to be measured at (cid:61)air value and items (cid:61)or which the (cid:61)air value op(cid:2462)on has been elected(cid:337) as o(cid:61) December 31, 2021(cid:313) (Dollars in millions) Unconsolidated investments (cid:25)et currency deriva(cid:2462)ve contracts (cid:36)otal Level 1 Level 2 — — — (cid:362) (cid:362) — (cid:1142).(cid:404) (cid:1142).(cid:404) (cid:362) (cid:362) Level 3 1,(cid:405)(cid:406)(cid:403).(cid:1142) — 1,(cid:405)(cid:406)(cid:403).(cid:1142) (cid:362) (cid:362) (cid:36)otal 1,(cid:405)(cid:406)(cid:403).(cid:1142) (cid:1142).(cid:404) 1,(cid:1142)03.3 (cid:362) (cid:362) 104 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 105 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Unconsolidated Investments Kennedy Wilson elected to use the F(cid:40) Op(cid:2462)on (cid:61)or (cid:1141)(cid:405) unconsolidated investments to more accurately re(cid:89)ect the (cid:2462)ming o(cid:61) the value created in the underlying investments and report those changes in current opera(cid:2462)ons. Kennedy Wilson(cid:317)s investment balance in the F(cid:40) Op(cid:2462)on investments was (cid:362)1,(cid:1142)(cid:406)1.1 million and (cid:362)1,(cid:404)(cid:1141)(cid:1142).(cid:404) million at December 31, 2022 and 2021, respec(cid:2462)vely, which are included in unconsolidated investments in the accompanying balance sheets. (cid:3)ddi(cid:2462)onally, Kennedy Wilson records its investments in its managed commingled (cid:61)unds (cid:336)the (cid:318)Funds(cid:319)(cid:337) based upon the net assets that would be allocated to its interests in the Funds, assuming the Funds were to liquidate their investments at (cid:61)air value as o(cid:61) the repor(cid:2462)ng date. (cid:36)he (cid:7)ompany(cid:317)s investment balance in the Funds was (cid:362)202.(cid:1141) million and (cid:362)22(cid:1141).3 million at December 31, 2022 and 2021, respec(cid:2462)vely, which is included in unconsolidated investments in the accompanying consolidated balance sheets. In es(cid:2462)ma(cid:2462)ng (cid:61)air value o(cid:61) real estate held by the Funds and the (cid:1141)(cid:405) F(cid:40) Op(cid:2462)on investments, the (cid:7)ompany considers signi(cid:67)cant unobservable inputs to be the capitali(cid:140)a(cid:2462)on and discount rates. (cid:36)he (cid:61)ollowing table summari(cid:140)es the (cid:7)ompany(cid:317)s investments in unconsolidated investments held at (cid:61)air value by type(cid:313) (Dollars in millions) F(cid:40) Op(cid:2462)on Funds Total December 31, 2022 December 31, 2021 (cid:362) (cid:362) 1,(cid:1142)(cid:406)1.1 (cid:362) 202.(cid:1141) 2,0(cid:406)3.(cid:405) (cid:362) 1,(cid:404)(cid:1141)(cid:1142).(cid:404) 22(cid:1141).3 1,(cid:405)(cid:406)(cid:403).(cid:1142) (cid:36)he (cid:61)ollowing table presents changes in Level 3 investments, investments in investment companies and investments in joint ventures that elected the (cid:61)air value op(cid:2462)on, (cid:61)or the years ended December 31(cid:313) (Dollars in millions) Beginning balance (cid:1354)Unreali(cid:140)ed and reali(cid:140)ed gains, including per(cid:61)ormance alloca(cid:2462)ons (cid:1354)Unreali(cid:140)ed and reali(cid:140)ed losses (cid:1354)(cid:7)ontribu(cid:2462)ons (cid:1354)Distribu(cid:2462)ons (cid:1354)Foreign e(cid:138)change (cid:1354)Other Endin(cid:93) (cid:48)alance (cid:362) (cid:362) (cid:362) 2022 1,(cid:405)(cid:406)(cid:403).(cid:1142) 2(cid:405)(cid:403).(cid:403) (cid:336)11(cid:403).1(cid:337) 3(cid:403)(cid:1142).1 (cid:336)1(cid:1142)(cid:1142).(cid:406)(cid:337) (cid:336)(cid:404)(cid:404).(cid:1142)(cid:337) 3(cid:404).2 2021 1,13(cid:1141).(cid:404) 3(cid:406)0.0 (cid:336)(cid:404).0(cid:337) 2(cid:405)3.(cid:1142) (cid:336)1(cid:403)(cid:403).3(cid:337) (cid:336)2(cid:1142).(cid:403)(cid:337) 1(cid:405)2.2 2020 1,0(cid:406)(cid:406).3 10(cid:406).(cid:1142) (cid:336)13.(cid:404)(cid:337) 10(cid:406).2 (cid:336)1(cid:1142)(cid:406).(cid:405)(cid:337) 2(cid:403).(cid:404) (cid:336)3.1(cid:337) (cid:362) 2,0(cid:406)3.(cid:405) (cid:362) 1,(cid:405)(cid:406)(cid:403).(cid:1142) (cid:362) 1,13(cid:1141).(cid:404) (cid:36)he Other balance (cid:61)or the year ended December 31, 2022 includes (cid:362)31.(cid:406) million related to the sale o(cid:61) a (cid:403)(cid:406)(cid:1143) ownership interest in the (cid:24)on(cid:2462)avo. (cid:36)he Other balance (cid:61)or the year ended December 31, 2021 above includes (cid:362)1(cid:405)(cid:1142).(cid:1142) million related to the deconsolida(cid:2462)on o(cid:61) nine mul(cid:2462)(cid:61)amily assets in the (cid:24)F seed por(cid:127)olio during the period. (cid:3)s the increase in unconsolidated investments was due to a non-cash movement the amounts are re(cid:89)ected in Other above. See notes to cash (cid:89)ow statement and (cid:25)ote 3 (cid:61)or (cid:61)urther discussion regarding the sale. (cid:36)he change in unreali(cid:140)ed gains and losses on Level 3 investments during 2022 and 2021 (cid:61)or investments s(cid:2462)ll held as o(cid:61) December 31, 2022 and 2021 were gains o(cid:61) (cid:362)120.(cid:1142) million and (cid:362)1(cid:406)(cid:404).3 million, respec(cid:2462)vely. (cid:36)he change in unreali(cid:140)ed and reali(cid:140)ed gains and losses are included in principal co-investments within income (cid:61)rom unconsolidated investments in the accompanying consolidated statements o(cid:61) income. Uno(cid:48)serva(cid:48)le Inputs for Real (cid:11)state In determining es(cid:2462)mated (cid:61)air market values, the (cid:7)ompany u(cid:2462)li(cid:140)es two approaches to value real estate, a discounted cash (cid:89)ow analysis and direct capitali(cid:140)a(cid:2462)on approach. Discounted cash (cid:89)ow models es(cid:2462)mate (cid:61)uture cash (cid:89)ows (cid:61)rom a buyer(cid:317)s perspec(cid:2462)ve (cid:336)including terminal values(cid:337) and compute a present value using a market discount rate. (cid:36)he holding period in the analysis is typically ten years. (cid:36)his is consistent with how market par(cid:2462)cipants o(cid:91)en es(cid:2462)mate values in connec(cid:2462)on with buying real estate but these holding periods can be shorter depending on the li(cid:61)e o(cid:61) the structure an investment is held within. (cid:36)he cash (cid:89)ows include a projec(cid:2462)on o(cid:61) the net sales proceeds at the end o(cid:61) the holding period, computed using a market reversionary capitali(cid:140)a(cid:2462)on rate. Under the direct capitali(cid:140)a(cid:2462)on approach, the (cid:7)ompany applies a market derived capitali(cid:140)a(cid:2462)on rate to current and (cid:61)uture income streams with appropriate adjustments (cid:61)or tenant vacancies or rent-(cid:61)ree periods. (cid:36)hese capitali(cid:140)a(cid:2462)on rates and (cid:61)uture income streams are derived (cid:61)rom comparable property and leasing transac(cid:2462)ons and are considered to be key inputs in the valua(cid:2462)on. Other (cid:61)actors that are taken into considera(cid:2462)on include tenancy details, planning, building and environmental (cid:61)actors that might a(cid:64)ect the property. (cid:36)he (cid:7)ompany also u(cid:2462)li(cid:140)es valua(cid:2462)ons (cid:61)rom independent real estate appraisal (cid:67)rms on some o(cid:61) its investments (cid:336)(cid:318)appraised valua(cid:2462)ons(cid:319)(cid:337), with certain investment structures requiring appraised valua(cid:2462)ons periodically (cid:336)typically annually(cid:337). (cid:3)ll appraised valua(cid:2462)ons are reviewed and approved by the (cid:7)ompany. (cid:36)he accuracy o(cid:61) es(cid:2462)ma(cid:2462)ng (cid:61)air value (cid:61)or investments cannot be determined with precision and cannot be substan(cid:2462)ated by comparison to quoted prices in ac(cid:2462)ve markets and may not be reali(cid:140)ed in a current sale or immediate se(cid:130)lement o(cid:61) the asset or liability. (cid:3)ddi(cid:2462)onally, there are inherent uncertain(cid:2462)es in any (cid:61)air value measurement technique, and changes in the underlying assump(cid:2462)ons used, including capitali(cid:140)a(cid:2462)on rates, discount rates, liquidity risks, and es(cid:2462)mates o(cid:61) (cid:61)uture cash (cid:89)ows could signi(cid:67)cantly a(cid:64)ect the (cid:61)air value measurement amounts. (cid:3)ll valua(cid:2462)ons o(cid:61) real estate involve subjec(cid:2462)ve judgments, and the actual market price o(cid:61) real estate can only be determined by nego(cid:2462)a(cid:2462)on between independent par(cid:2462)es in a sales transac(cid:2462)on. (cid:36)he table below describes the range o(cid:61) inputs used as o(cid:61) December 31, 2022 (cid:61)or real estate assets(cid:313) (cid:24)ul(cid:2462)(cid:61)amily O(cid:76)ce Industrial (cid:33)etail Hotel Income approach—discounted cash (cid:89)ow Income approach—direct capitali(cid:140)a(cid:2462)on Income approach—discounted cash (cid:89)ow Income approach—direct capitali(cid:140)a(cid:2462)on Income approach—discounted cash (cid:89)ow Income approach—direct capitali(cid:140)a(cid:2462)on Income approach—discounted cash (cid:89)ow Income approach—discounted cash (cid:89)ow Estimated Rates Used For (cid:7)apitali(cid:140)a(cid:2462)on (cid:33)ates Discount (cid:33)ates (cid:404).(cid:1142)0(cid:1143) — (cid:405).(cid:404)0(cid:1143) 3.(cid:1142)0(cid:1143) — (cid:404).(cid:405)0(cid:1143) (cid:404).20(cid:1143) — (cid:405).(cid:404)0(cid:1143) (cid:403).20(cid:1143) — (cid:1142).(cid:405)0(cid:1143) (cid:404).00(cid:1143) —(cid:1141).30(cid:1143) 3.(cid:1142)0(cid:1143) — (cid:1142).30(cid:1143) (cid:1141).(cid:404)0(cid:1143) (cid:1141).00(cid:1143) (cid:1142).00(cid:1143) — (cid:406).(cid:1142)0(cid:1143) (cid:25)(cid:326)(cid:3) (cid:405).(cid:404)0(cid:1143) — (cid:406).30(cid:1143) (cid:25)(cid:326)(cid:3) (cid:1141).30(cid:1143) — (cid:405).(cid:1142)0(cid:1143) (cid:25)(cid:326)(cid:3) (cid:1142).30(cid:1143) (cid:1142).30(cid:1143) In valuing indebtedness, Kennedy Wilson considers signi(cid:67)cant inputs to be the term o(cid:61) the debt, value o(cid:61) collateral, market loan-to-value ra(cid:2462)os, market interest rates and spreads, and credit quality o(cid:61) investment en(cid:2462)(cid:2462)es. (cid:36)he credit spreads used by Kennedy Wilson (cid:61)or these types o(cid:61) investments range (cid:61)rom 1.22(cid:1143) to (cid:405).2(cid:404)(cid:1143). 106 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 107 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:36)here is no ac(cid:2462)ve secondary market (cid:61)or the (cid:7)ompany(cid:317)s development projects and no readily available market value given the uncertainty o(cid:61) the amount and (cid:2462)ming o(cid:61) (cid:61)uture cash (cid:89)ows. (cid:3)ccordingly, determina(cid:2462)on o(cid:61) (cid:61)air value o(cid:61) its development projects requires judgment and e(cid:138)tensive use o(cid:61) es(cid:2462)mates. (cid:36)here(cid:61)ore, the (cid:7)ompany typically uses investment cost as the es(cid:2462)mated (cid:61)air value un(cid:2462)l (cid:61)uture cash (cid:89)ows become more predictable. (cid:3)ddi(cid:2462)onally, the (cid:61)air value o(cid:61) its development projects may di(cid:64)er signi(cid:67)cantly (cid:61)rom the values that would have been used had a ready market e(cid:138)isted (cid:61)or such investments and may di(cid:64)er materially (cid:61)rom the values that the (cid:7)ompany may ul(cid:2462)mately reali(cid:140)e. I(cid:61) the (cid:7)ompany were required to liquidate an investment in a (cid:61)orced or liquida(cid:2462)on sale, it could reali(cid:140)e signi(cid:67)cantly less than the value at which the (cid:7)ompany has recorded it. In addi(cid:2462)on, changes in the market environment and other events that may occur over the li(cid:61)e o(cid:61) the investments may cause the gains or losses ul(cid:2462)mately reali(cid:140)ed on these investments to be di(cid:64)erent than the unreali(cid:140)ed gains or losses re(cid:89)ected in the currently assigned valua(cid:2462)ons. Ongoing macroeconomic condi(cid:2462)ons such as, but not limited to, high in(cid:89)a(cid:2462)on, central banks raising interest rates to curtail high in(cid:89)a(cid:2462)on, currency (cid:89)uctua(cid:2462)ons, the (cid:7)O(cid:40)ID-1(cid:406) pandemic and the ongoing military con(cid:89)ict between (cid:33)ussia and Ukraine and interna(cid:2462)onal sanc(cid:2462)ons against (cid:33)ussia, con(cid:2462)nue to (cid:61)uel recessionary (cid:61)ears and create vola(cid:2462)lity in our business results and opera(cid:2462)ons. (cid:3)ny prolonged downturn in the (cid:67)nancial markets or a recession, either globally or locally in the United States or in other countries in which we conduct business, could impact the (cid:61)air value o(cid:61) investments held by the (cid:7)ompany. (cid:3)s a result o(cid:61) the rapid development, (cid:89)uidity and uncertainty surrounding these situa(cid:2462)ons, the (cid:7)ompany e(cid:138)pects that in(cid:61)orma(cid:2462)on with respect to (cid:61)air value measurement may change, poten(cid:2462)ally signi(cid:67)cantly, going (cid:61)orward and may not be indica(cid:2462)ve o(cid:61) the actual impact on its business, opera(cid:2462)ons, cash (cid:89)ows and (cid:67)nancial condi(cid:2462)on (cid:61)or the year ended December 31, 2022 and (cid:61)uture periods. Currenc(cid:139) Deriva(cid:2236)ve Contracts Kennedy Wilson uses (cid:61)oreign currency deriva(cid:2462)ve contracts such as (cid:61)orward contracts and op(cid:2462)ons to manage its (cid:61)oreign currency risk e(cid:138)posure against a por(cid:2462)on o(cid:61) certain non-U.S. dollar denominated currency net investments. Foreign currency op(cid:2462)ons are valued using a variant o(cid:61) the Black-Scholes model tailored (cid:61)or currency deriva(cid:2462)ves and the (cid:61)oreign currency (cid:61)orward contracts are valued based on the di(cid:64)erence between the contract rate and the (cid:61)orward rate at maturity o(cid:61) the underlying currency applied to the no(cid:2462)onal value in the underlying currency discounted at a market rate (cid:61)or similar risks. (cid:3)lthough the (cid:7)ompany has determined that the majority o(cid:61) the inputs used to value its currency deriva(cid:2462)ve contracts (cid:61)all within Level 2 o(cid:61) the (cid:61)air value hierarchy, the counterparty risk adjustments associated with the currency deriva(cid:2462)ve contracts u(cid:2462)li(cid:140)e Level 3 inputs. However, as o(cid:61) December 31, 2022 and 2021, Kennedy Wilson assessed the signi(cid:67)cance o(cid:61) the impact o(cid:61) the counterparty valua(cid:2462)on adjustments on the overall valua(cid:2462)on o(cid:61) its deriva(cid:2462)ve posi(cid:2462)ons and determined that the counterparty valua(cid:2462)on adjustments are not signi(cid:67)cant to the overall valua(cid:2462)on o(cid:61) its deriva(cid:2462)ve. (cid:3)s a result, the (cid:7)ompany has determined that our deriva(cid:2462)ve valua(cid:2462)on in its en(cid:2462)rety be classi(cid:67)ed in Level 2 o(cid:61) the (cid:61)air value hierarchy. (cid:7)hanges in (cid:61)air value are recorded in other comprehensive income (cid:336)loss(cid:337) in the accompanying consolidated statements o(cid:61) comprehensive income as the por(cid:2462)on o(cid:61) the currency (cid:61)orward and op(cid:2462)on contracts used to hedge currency e(cid:138)posure o(cid:61) its certain consolidated subsidiaries quali(cid:67)es as a net investment hedge under (cid:3)S(cid:7) (cid:36)opic (cid:1142)1(cid:404), Deriva(cid:2236)ves and Hedging. (cid:7)hanges in (cid:61)air value on hedges associated with investments that are held at (cid:61)air value are recorded through principal co-investments within income (cid:61)rom unconsolidated investments. (cid:36)he (cid:7)ompany has elected to amor(cid:2462)(cid:140)e the spot to (cid:61)orward di(cid:64)erence (cid:336)(cid:318)(cid:61)orward points(cid:319)(cid:337) to interest e(cid:138)pense over the contractual li(cid:61)e o(cid:61) the hedges. On hedges associated with (cid:61)air value investments the (cid:61)orward point amor(cid:2462)(cid:140)a(cid:2462)on to interest e(cid:138)pense is recorded as a component o(cid:61) principal co-investments. (cid:36)he (cid:61)air value o(cid:61) the currency deriva(cid:2462)ve contracts held as o(cid:61) December 31, 2022 and 2021 are reported in other assets (cid:61)or hedge assets and included in accrued e(cid:138)penses and other liabili(cid:2462)es (cid:61)or hedge liabili(cid:2462)es on the accompanying balance sheet. See (cid:25)ote 1(cid:403) (cid:61)or a complete discussion on other comprehensive income including currency (cid:61)orward and op(cid:2462)on contracts and (cid:61)oreign currency transla(cid:2462)ons. (cid:36)he table below details the currency (cid:61)orward contracts and currency op(cid:2462)on contracts Kennedy Wilson had as o(cid:61) December 31, 2022(cid:313) (Dollars in millions) December 31, 2022 Year Ended December 31, 2022 Underlying (cid:7)urrency (cid:25)o(cid:2462)onal Hedge (cid:3)sset Hedge Liability (cid:7)hange in Unreali(cid:140)ed (cid:14)ains (cid:33)eali(cid:140)ed (cid:14)ains Interest (cid:11)(cid:138)pense (cid:7)ash (cid:30)aid (cid:7)urrency Hedged Outstanding (cid:11)U(cid:33) (cid:11)U(cid:33)(cid:336)1(cid:337) (cid:11)U(cid:33)(cid:336)1(cid:337)(cid:336)2(cid:337) (cid:14)B(cid:30) Total Outstanding Settled (cid:11)U(cid:33) (cid:14)B(cid:30) (cid:14)B(cid:30) USD Total Settled Total USD (cid:14)B(cid:30) (cid:14)B(cid:30) USD (cid:360) (cid:360) (cid:364) 2(cid:1142)(cid:405).(cid:404) (cid:362) (cid:403)0.0 (cid:404)(cid:403)(cid:404).0 (cid:362) (cid:404).2 0.(cid:1142) — 2(cid:1142).3 3(cid:403).3 — — — (cid:362) (cid:362) 12.(cid:405) — — 1(cid:403).(cid:1141) 2(cid:405).3 — — — (cid:336)0.(cid:1141)(cid:337) 0.(cid:1142) (cid:336)2(cid:1142).3(cid:337) 10.(cid:1142) (cid:336)1(cid:405).3(cid:337) 1.1 (cid:404)(cid:404).(cid:405) (cid:404)(cid:1141).(cid:1142) (cid:362) (cid:336)(cid:1142).(cid:405)(cid:337) — — 2.2 (cid:336)(cid:1141).(cid:404)(cid:337) 2(cid:403).(cid:403) — 2(cid:403).(cid:403) (cid:362) 3(cid:403).3 (cid:362) 2(cid:405).3 (cid:362) 3(cid:406).(cid:404) (cid:336)3(cid:337) (cid:362) 1(cid:405).(cid:406) (cid:362) 1.(cid:1142) — — 1.(cid:1142) 3.(cid:1141) 2.(cid:405) 1.(cid:1142) (cid:403).(cid:404) (cid:1142).1 (cid:362) (cid:362) — — — — — 31.(cid:406) (cid:1141)3.(cid:403) (cid:406)(cid:404).3 (cid:406)(cid:404).3 (1)(cid:2)(cid:15)(cid:59)(cid:55)(cid:93)(cid:59)(cid:2)(cid:98)(cid:118)(cid:2)(cid:95)(cid:59)(cid:1140)(cid:55)(cid:2)(cid:48)(cid:139)(cid:2)(cid:20)(cid:41)(cid:11)(cid:2)(cid:111)(cid:109)(cid:2)(cid:98)(cid:124)(cid:118)(cid:2)(cid:137)(cid:95)(cid:111)(cid:1140)(cid:1140)(cid:139)(cid:330)(cid:111)(cid:137)(cid:109)(cid:59)(cid:55)(cid:2)(cid:118)(cid:134)(cid:48)(cid:118)(cid:98)(cid:55)(cid:98)(cid:45)(cid:117)(cid:98)(cid:59)(cid:118)(cid:314) (2)(cid:2)(cid:33)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:20)(cid:41)(cid:11)(cid:317)(cid:118)(cid:2)(cid:11)(cid:134)(cid:117)(cid:111)(cid:2)(cid:24)(cid:59)(cid:55)(cid:98)(cid:134)(cid:108)(cid:2)(cid:36)(cid:59)(cid:117)(cid:108)(cid:2)(cid:25)(cid:111)(cid:124)(cid:59)(cid:314)(cid:2)(cid:34)(cid:59)(cid:59)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:134)(cid:118)(cid:118)(cid:98)(cid:111)(cid:109)(cid:2)(cid:98)(cid:109)(cid:2)(cid:25)(cid:111)(cid:124)(cid:59)(cid:2)(cid:406)(cid:314) (cid:336)(cid:402)(cid:337)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:55)(cid:59)(cid:61)(cid:59)(cid:117)(cid:117)(cid:59)(cid:55)(cid:2)(cid:124)(cid:45)(cid:138)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:362)(cid:400)(cid:1141)(cid:314)(cid:400)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:314) (cid:36)he gains and (cid:336)losses(cid:337) recogni(cid:140)ed through other comprehensive income (cid:336)loss(cid:337) will remain in accumulated other comprehensive income (cid:336)loss(cid:337) un(cid:2462)l the underlying investments they were hedging are substan(cid:2462)ally liquidated by Kennedy Wilson. (cid:36)he currency deriva(cid:2462)ve contracts discussed above are o(cid:64)set by (cid:61)oreign currency transla(cid:2462)on o(cid:61) the (cid:7)ompany(cid:317)s (cid:61)oreign net assets. For the year ended December 31, 2022, Kennedy Wilson had a gross (cid:61)oreign currency transla(cid:2462)on loss on its net assets o(cid:61) (cid:362)(cid:405)3.(cid:406) million. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany has hedged (cid:406)1(cid:1143) o(cid:61) the net asset carrying value o(cid:61) its euro denominated investments and (cid:406)2(cid:1143) o(cid:61) the net asset carrying value o(cid:61) its (cid:14)B(cid:30) denominated investments. See (cid:25)ote 1(cid:403) (cid:61)or a complete discussion on other comprehensive income including currency deriva(cid:2462)ve contracts and (cid:61)oreign currency transla(cid:2462)ons. Interest Rate Deriva(cid:2236)ves (cid:36)he (cid:7)ompany has interest rate swaps and caps to hedge its e(cid:138)posure to rising interest rates. (cid:7)hanges in the value o(cid:61) interest rate swaps that are designated to speci(cid:67)c investments have (cid:61)air value movements recorded to other comprehensive income (cid:336)loss(cid:337) and had (cid:61)air value gains o(cid:61) (cid:362)(cid:405).(cid:403) million and a loss o(cid:61) (cid:362)(cid:403).2 million (cid:61)or the years ended December 31, 2022 and 2021. (cid:7)hanges in the value o(cid:61) interest rate swaps and caps that are undesignated are recorded to other income and 108 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 109 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) had (cid:61)air value gains o(cid:61) (cid:362)(cid:403)2.(cid:403) million and (cid:362)0.(cid:1142) million (cid:61)or the years ended December 31, 2022 and 2021. Some o(cid:61) the (cid:7)ompany(cid:317)s unconsolidated investments have interest rate caps which resulted in a (cid:362)1(cid:1141).(cid:406) million gain recorded in principal co-investments (cid:61)or the year ended December 31, 2022. During the year end December 31, 2022 the (cid:7)ompany re(cid:67)nanced a mortgages with interest rate swaps. Due to the re(cid:67)nancing, the (cid:7)ompany recogni(cid:140)ed (cid:362)1.1 million to other income (cid:61)or amounts that had previously been recogni(cid:140)ed to other comprehensive income. Fair Value of Financial Instruments (cid:36)he carrying amounts o(cid:61) cash and cash equivalents, accounts receivable including related party receivables, accounts payable, accrued e(cid:138)penses and other liabili(cid:2462)es appro(cid:138)imate (cid:61)air value due to their short-term maturi(cid:2462)es. (cid:36)he carrying value o(cid:61) loans (cid:336)e(cid:138)cluding related party loans as they are presumed not to be an arm(cid:317)s length transac(cid:2462)on(cid:337) appro(cid:138)imates (cid:61)air value as the terms are similar to loans with similar characteris(cid:2462)cs available in the market. Debt liabili(cid:2462)es are accounted (cid:61)or at (cid:61)ace value plus net unamor(cid:2462)(cid:140)ed debt premiums. Debt assumed in an asset acquisi(cid:2462)on, or business combina(cid:2462)on, is recorded at (cid:61)air value on the date o(cid:61) acquisi(cid:2462)on. (cid:36)he (cid:61)air value as o(cid:61) December 31, 2022 and 2021 (cid:61)or mortgages, KW unsecured debt, and KW(cid:11) unsecured bonds were es(cid:2462)mated to be appro(cid:138)imately (cid:362)(cid:404).0 billion and (cid:362)(cid:404).(cid:404) billion, respec(cid:2462)vely, based on a comparison o(cid:61) the yield that would be required in a current transac(cid:2462)on, taking into considera(cid:2462)on the risk o(cid:61) the underlying collateral and the (cid:7)ompany(cid:317)s credit risk to the current yield o(cid:61) a similar security, compared to their carrying value o(cid:61) (cid:362)(cid:404).(cid:1141) billion and (cid:362)(cid:404).1 billion as o(cid:61) December 31, 2022 and 2021, respec(cid:2462)vely. (cid:36)he inputs used to value mortgages, KW unsecured debt, and KW(cid:11) unsecured bonds are based on observable inputs (cid:61)or similar assets and quoted prices in markets that are not ac(cid:2462)ve and are there(cid:61)ore determined to be level 2 inputs. NOTE 6—OTHER ASSETS Other assets consist o(cid:61) the (cid:61)ollowing(cid:313) (Dollars in millions) Straight line rent receivable Interest rate caps and swaps Hedge assets (cid:14)oodwill Other Furniture and equipment net o(cid:61) accumulated deprecia(cid:2462)on o(cid:61) (cid:362)2(cid:406).(cid:403) and (cid:362)2(cid:405).(cid:403) at (cid:1354)December 31, 2022 and 2021, respec(cid:2462)vely (cid:30)repaid e(cid:138)penses (cid:33)ight o(cid:61) use asset, net Leasing commissions, net o(cid:61) accumulated amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) (cid:362)11.1 and (cid:362)(cid:406).(cid:405) at (cid:1354)December 31, 2022 and 2021, respec(cid:2462)vely De(cid:61)erred ta(cid:138)es, net (cid:3)bove-market leases, net o(cid:61) accumulated amor(cid:2462)(cid:140)a(cid:2462)on o(cid:61) (cid:362)(cid:404)3.0 and (cid:362)(cid:1141)0.(cid:403) at (cid:1354)December 31, 2022 and 2021, respec(cid:2462)vely (cid:362) December 31, 2022 2021 (cid:362) (cid:403)2.2 (cid:403)1.0 3(cid:403).3 23.(cid:406) 13.(cid:405) 13.(cid:403) 12.(cid:405) 12.2 (cid:406).(cid:403) (cid:406).(cid:403) 3.(cid:406) (cid:403)(cid:403).3 2.3 2(cid:403).(cid:404) 23.(cid:406) 13.0 1(cid:405).(cid:1141) 13.3 10.0 (cid:1142).0 12.(cid:1141) (cid:1142).(cid:403) Other Assets (cid:362) 21(cid:1141).1 (cid:362) 1(cid:405)(cid:405).(cid:406) Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on e(cid:138)pense related to the above depreciable assets were (cid:362)10.2 million, (cid:362)1(cid:403).(cid:404) million, and (cid:362)13.(cid:1141) million (cid:61)or the years ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely. Right of use asset(cid:310) net (cid:36)he (cid:7)ompany, as a lessee, has three o(cid:76)ce leases and three ground leases, which quali(cid:61)y as opera(cid:2462)ng leases, with remaining lease terms o(cid:61) three to 23(cid:1141) years. (cid:36)he payments associated with o(cid:76)ce space leases have been discounted using the (cid:7)ompany(cid:317)s incremental borrowing rate which is based on collaterali(cid:140)ed interest rates in the market and risk pro(cid:67)le o(cid:61) the associated lease. For ground leases the rate implicit in the lease was used to determine the right o(cid:61) use asset. (cid:36)he (cid:61)ollowing table summari(cid:140)es the (cid:67)(cid:138)ed, (cid:61)uture minimum rental payments, e(cid:138)cluding variable costs, which are discounted to calculate the right o(cid:61) use asset and related lease liability (cid:61)or its opera(cid:2462)ng leases in which we are the lessee(cid:313) (Dollars in millions) 2023 202(cid:403) 202(cid:404) 202(cid:1141) 202(cid:405) (cid:36)herea(cid:91)er (cid:36)otal undiscounted rental payments Less imputed interest Total lease lia(cid:48)ili(cid:2462)es (cid:24)inimum (cid:33)ental (cid:30)ayments (cid:362) (cid:362) 1.1 1.0 1.(cid:403) 1.3 1.3 33.(cid:1142) 3(cid:406).(cid:406) (cid:336)2(cid:405).(cid:405)(cid:337) 12.2 (cid:33)ental e(cid:138)pense was (cid:362)0.(cid:1141) million, (cid:362)0.(cid:405) million, and (cid:362)1.0 million (cid:61)or the years ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely, and is included in general and administra(cid:2462)ve e(cid:138)pense in the accompanying consolidated statements o(cid:61) income. NOTE 7—MORTGAGE DEBT (cid:36)he (cid:61)ollowing table details mortgage debt secured by Kennedy Wilson(cid:317)s consolidated proper(cid:2462)es as o(cid:61) December 31, 2022 and 2021(cid:313) (Dollars in millions) (cid:24)ortgage Debt by (cid:30)roduct (cid:36)ype (cid:24)ul(cid:2462)(cid:61)amily(cid:336)1(cid:337) (cid:7)ommercial(cid:336)1(cid:337) (cid:7)ommercial (cid:7)ommercial(cid:336)1(cid:337) Hotel (cid:7)ommercial (cid:24)ortgage debt (cid:336)e(cid:138)cluding loan (cid:61)ees(cid:337)(cid:336)1(cid:337) Unamor(cid:2462)(cid:140)ed loan (cid:61)ees Total (cid:24)ort(cid:93)a(cid:93)e De(cid:48)t (cid:33)egion Western U.S. United Kingdom Western U.S. Ireland Ireland Spain Carrying amount of mortgage debt as of December 31,(1) (cid:362) (cid:362) 2022 1,(cid:1141)(cid:406)2.(cid:406) (cid:1141)3(cid:405).(cid:403) 2(cid:406)(cid:1141).(cid:1141) 3(cid:405)0.(cid:405) — 3(cid:1141).(cid:406) 3,03(cid:403).(cid:404) (cid:336)1(cid:1141).(cid:404)(cid:337) (cid:362) 3,01(cid:1142).0 (cid:362) 2021 1,(cid:403)(cid:406)3.1 (cid:1141)(cid:1142)3.(cid:1142) 3(cid:404)1.0 32(cid:405).3 (cid:1142)2.0 (cid:403)0.(cid:403) 2,(cid:406)(cid:405)(cid:405).(cid:1141) (cid:336)1(cid:405).(cid:1142)(cid:337) 2,(cid:406)(cid:404)(cid:406).(cid:1142) (1)(cid:2)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:108)(cid:111)(cid:117)(cid:124)(cid:93)(cid:45)(cid:93)(cid:59)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:45)(cid:139)(cid:45)(cid:48)(cid:1140)(cid:59)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:118)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:111)(cid:117)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:118)(cid:314)(cid:2)(cid:9)(cid:59)(cid:48)(cid:124)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:111)(cid:117)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:118)(cid:2)(cid:117)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2) (cid:55)(cid:98)(cid:64)(cid:59)(cid:117)(cid:59)(cid:109)(cid:49)(cid:59)(cid:2)(cid:48)(cid:59)(cid:124)(cid:137)(cid:59)(cid:59)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:45)(cid:98)(cid:117)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:114)(cid:117)(cid:98)(cid:109)(cid:49)(cid:98)(cid:114)(cid:45)(cid:1140)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:118)(cid:118)(cid:134)(cid:108)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:136)(cid:45)(cid:117)(cid:98)(cid:111)(cid:134)(cid:118)(cid:2)(cid:45)(cid:49)(cid:116)(cid:134)(cid:98)(cid:118)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:124)(cid:111)(cid:2) (cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:2)(cid:111)(cid:136)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:59)(cid:117)(cid:108)(cid:2)(cid:111)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:98)(cid:109)(cid:2)(cid:45)(cid:2)(cid:108)(cid:45)(cid:109)(cid:109)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:45)(cid:114)(cid:114)(cid:117)(cid:111)(cid:138)(cid:98)(cid:108)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:59)(cid:64)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:108)(cid:59)(cid:124)(cid:95)(cid:111)(cid:55)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2) (cid:109)(cid:59)(cid:124)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:1140)(cid:111)(cid:45)(cid:109)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:2)(cid:137)(cid:45)(cid:118)(cid:2)(cid:362)(cid:399)(cid:314)(cid:1141)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2) (cid:401)(cid:399)(cid:401)(cid:400)(cid:2)(cid:137)(cid:45)(cid:118)(cid:2)(cid:362)(cid:401)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:314) 110 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 111 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:36)he mortgage debt had a weighted average interest rate o(cid:61) (cid:403).12(cid:1143) and 3.11(cid:1143) per annum as o(cid:61) December 31, 2022 and 2021, respec(cid:2462)vely. (cid:3)s o(cid:61) December 31, 2022, (cid:1141)(cid:404)(cid:1143) o(cid:61) Kennedy Wilson(cid:317)s property level debt was (cid:67)(cid:138)ed rate, 2(cid:405)(cid:1143) was (cid:89)oa(cid:2462)ng rate with interest caps and (cid:1142)(cid:1143) was (cid:89)oa(cid:2462)ng rate without interest caps, compared to (cid:405)(cid:1142)(cid:1143) (cid:67)(cid:138)ed rate, 13(cid:1143) (cid:89)oa(cid:2462)ng rate with interest caps and (cid:406)(cid:1143) (cid:89)oa(cid:2462)ng rate without interest caps, as o(cid:61) December 31, 2021. Mortgage De(cid:48)t Transac(cid:2236)ons and Maturi(cid:2236)es During the year ended December 31, 2022, (cid:61)our acquisi(cid:2462)ons were par(cid:2462)ally (cid:67)nanced with mortgages, (cid:67)ve e(cid:138)is(cid:2462)ng mortgages were re(cid:67)nanced, one loan was deconsolidated and one e(cid:138)is(cid:2462)ng investments that closed with all equity were subsequently par(cid:2462)ally (cid:67)nanced with mortgage loans. (cid:36)he (cid:7)ompany also (cid:61)ully repaid the mortgage that was secured by the Shelbourne Hotel, so that the asset is now unencumbered. (cid:36)he (cid:7)ompany and its partner also repaid a mortgage secured by a retail property in the United Kingdom at a discount and recogni(cid:140)ed a gain on e(cid:138)(cid:2462)nguishment o(cid:61) debt o(cid:61) (cid:362)1(cid:1141).1 million. See (cid:25)ote (cid:403) (cid:61)or more detail on the acquisi(cid:2462)ons and the investment debt associated with them. (cid:36)he aggregate maturi(cid:2462)es o(cid:61) mortgage loans subsequent to December 31, 2022 are as (cid:61)ollows(cid:313) (Dollars in millions) 2023(cid:336)1(cid:337) 202(cid:403) 202(cid:404) 202(cid:1141) 202(cid:405) (cid:36)herea(cid:91)er Unamor(cid:2462)(cid:140)ed debt discount Unamor(cid:2462)(cid:140)ed loan (cid:61)ees Total (cid:24)ort(cid:93)a(cid:93)e De(cid:48)t (cid:362) (cid:3)ggregate (cid:24)aturi(cid:2462)es 2(cid:403)(cid:405).(cid:406) 1(cid:1142)(cid:1141).2 3(cid:404)(cid:406).(cid:406) (cid:404)(cid:405)3.(cid:403) 3(cid:405)(cid:1142).1 1,2(cid:1142)(cid:406).(cid:1141) 3,03(cid:404).1 (cid:336)0.(cid:1141)(cid:337) (cid:336)1(cid:1141).(cid:404)(cid:337) (cid:362) 3,01(cid:1142).0 (1)(cid:2)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:49)(cid:124)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:117)(cid:59)(cid:114)(cid:45)(cid:139)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:2)(cid:108)(cid:45)(cid:124)(cid:134)(cid:117)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:109)(cid:59)(cid:138)(cid:124)(cid:2)(cid:124)(cid:137)(cid:59)(cid:1140)(cid:136)(cid:59)(cid:2)(cid:108)(cid:111)(cid:109)(cid:124)(cid:95)(cid:118)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:2)(cid:109)(cid:59)(cid:137)(cid:2)(cid:108)(cid:111)(cid:117)(cid:124)(cid:93)(cid:45)(cid:93)(cid:59)(cid:2)(cid:1140)(cid:111)(cid:45)(cid:109)(cid:118)(cid:311)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:2)(cid:93)(cid:59)(cid:109)(cid:59)(cid:117)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2) (cid:111)(cid:114)(cid:59)(cid:117)(cid:45)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:311)(cid:2)(cid:59)(cid:138)(cid:98)(cid:118)(cid:2462)(cid:109)(cid:93)(cid:2)(cid:49)(cid:45)(cid:118)(cid:95)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:118)(cid:311)(cid:2)(cid:114)(cid:117)(cid:111)(cid:49)(cid:59)(cid:59)(cid:55)(cid:118)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:55)(cid:98)(cid:118)(cid:114)(cid:111)(cid:118)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:117)(cid:59)(cid:45)(cid:1140)(cid:2)(cid:59)(cid:118)(cid:124)(cid:45)(cid:124)(cid:59)(cid:2)(cid:98)(cid:109)(cid:136)(cid:59)(cid:118)(cid:124)(cid:108)(cid:59)(cid:109)(cid:124)(cid:118)(cid:311)(cid:2)(cid:111)(cid:117)(cid:2)(cid:45)(cid:118)(cid:2)(cid:109)(cid:59)(cid:49)(cid:59)(cid:118)(cid:118)(cid:45)(cid:117)(cid:139)(cid:311)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:2)(cid:48)(cid:111)(cid:117)(cid:117)(cid:111)(cid:137)(cid:98)(cid:109)(cid:93)(cid:118)(cid:2)(cid:111)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2) (cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:317)(cid:118)(cid:2)(cid:34)(cid:59)(cid:49)(cid:111)(cid:109)(cid:55)(cid:2)(cid:3)(cid:351)(cid:33)(cid:2)(cid:13)(cid:45)(cid:49)(cid:98)(cid:1140)(cid:98)(cid:124)(cid:139)(cid:314) Subsequent to the year-ended December 31, 2022, the (cid:7)ompany resolved a breach o(cid:61) a loan-to-value covenant in a non-recourse loan agreement secured by retail and commercial assets in the United Kingdom. (cid:36)he (cid:7)ompany promptly resolved such breach by paying down the mortgage by (cid:362)(cid:406).1 million, (cid:362)(cid:405).(cid:1141) million o(cid:61) which was held at the proper(cid:2462)es that serves as the collateral (cid:61)or the subject mortgage. (cid:36)he loan totals (cid:362)1(cid:1141)(cid:404).(cid:1142) million or (cid:404).(cid:404)(cid:1143) o(cid:61) our consolidated mortgage balance at December 31, 2022. (cid:3)s o(cid:61) December 31, 2022, , the (cid:7)ompany was in compliance with all property-level mortgages (cid:336)other than discussed immediately above(cid:337) and was current on all payments (cid:336)principal and interest(cid:337) with respect to the same. NOTE 8—KW UNSECURED DEBT (cid:36)he (cid:61)ollowing table details KW unsecured debt as o(cid:61) December 31, 2022 and 2021(cid:313) (Dollars in millions) (cid:7)redit Facility Senior (cid:25)otes(cid:336)1(cid:337) KW Unsecured Debt Unamor(cid:2462)(cid:140)ed loan (cid:61)ees Total (cid:20)(cid:41) (cid:38)nsecured De(cid:48)t December 31, 2022 (cid:362) 2(cid:1142)2.0 (cid:362) 1,(cid:1142)03.(cid:404) 2,0(cid:1142)(cid:404).(cid:404) (cid:336)22.(cid:406)(cid:337) 2021 (cid:405)(cid:404).0 1,(cid:1142)03.(cid:406) 1,(cid:1142)(cid:405)(cid:1142).(cid:406) (cid:336)2(cid:1141).(cid:1141)(cid:337) (cid:362) 2,0(cid:1141)2.(cid:1141) (cid:362) 1,(cid:1142)(cid:404)2.3 (1)(cid:2)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:118)(cid:59)(cid:109)(cid:98)(cid:111)(cid:117)(cid:2)(cid:109)(cid:111)(cid:124)(cid:59)(cid:118)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:118)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:118)(cid:2)(cid:336)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:337)(cid:314)(cid:2)(cid:9)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:118)(cid:2)(cid:336)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:337)(cid:2)(cid:117)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:55)(cid:98)(cid:64)(cid:59)(cid:117)(cid:59)(cid:109)(cid:49)(cid:59)(cid:2) (cid:48)(cid:59)(cid:124)(cid:137)(cid:59)(cid:59)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:61)(cid:45)(cid:98)(cid:117)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:114)(cid:117)(cid:98)(cid:109)(cid:49)(cid:98)(cid:114)(cid:45)(cid:1140)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:118)(cid:118)(cid:134)(cid:108)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:2)(cid:136)(cid:45)(cid:117)(cid:98)(cid:111)(cid:134)(cid:118)(cid:2)(cid:45)(cid:49)(cid:116)(cid:134)(cid:98)(cid:118)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:124)(cid:111)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2) (cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:2)(cid:111)(cid:136)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:59)(cid:117)(cid:108)(cid:2)(cid:111)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:98)(cid:109)(cid:2)(cid:45)(cid:2)(cid:108)(cid:45)(cid:109)(cid:109)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:45)(cid:114)(cid:114)(cid:117)(cid:111)(cid:138)(cid:98)(cid:108)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:59)(cid:64)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:108)(cid:59)(cid:124)(cid:95)(cid:111)(cid:55)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2) (cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:114)(cid:117)(cid:59)(cid:108)(cid:98)(cid:134)(cid:108)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:400)(cid:2)(cid:137)(cid:45)(cid:118)(cid:2)(cid:362)(cid:402)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:402)(cid:314)(cid:406)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:314) (cid:6)orrowings Under Credit Facili(cid:2236)es (cid:36)he (cid:7)ompany, through its wholly-owned subsidiary, Kennedy-Wilson, Inc. (cid:336)the (cid:318)Borrower(cid:319)(cid:337), has a (cid:362)(cid:404)00 million unsecured revolving credit (cid:61)acility (cid:336)the (cid:318)Second (cid:3)(cid:351)(cid:33) Facility(cid:319)(cid:337). Loans under the Second (cid:3)(cid:351)(cid:33) Facility bear interest at a rate equal to London Interbank Borrowing (cid:33)ate (cid:336)(cid:318)LIBO(cid:33)(cid:319)(cid:337) plus between 1.(cid:405)(cid:404)(cid:1143) and 2.(cid:404)0(cid:1143), depending on the consolidated leverage ra(cid:2462)o as o(cid:61) the applicable measurement date. (cid:36)he Second (cid:3)(cid:351)(cid:33) Facility has a maturity date o(cid:61) (cid:24)arch 2(cid:404), 202(cid:403). Subject to certain condi(cid:2462)ons precedent and at the Borrower(cid:317)s op(cid:2462)on, the maturity date o(cid:61) the Second (cid:3)(cid:351)(cid:33) Facility may be e(cid:138)tended by one year. (cid:36)he Second (cid:3)(cid:351)(cid:33) Facility has certain covenants as set (cid:61)orth in that certain Second (cid:3)mended and (cid:33)estated (cid:7)redit (cid:3)greement, dated as o(cid:61) (cid:24)arch 2(cid:404), 2020 (cid:336)the (cid:318)(cid:7)redit (cid:3)greement(cid:319)(cid:337) that, among other things, limit the (cid:7)ompany and certain o(cid:61) its subsidiaries(cid:317) ability to incur addi(cid:2462)onal indebtedness, pay dividends or make distribu(cid:2462)ons to stockholders, repurchase capital stock or debt, make investments, sell assets or subsidiary stock, create or permit liens, engage in transac(cid:2462)ons with a(cid:76)liates, enter into sale(cid:326)leaseback transac(cid:2462)ons, issue subsidiary equity and enter into consolida(cid:2462)ons or mergers. (cid:36)he (cid:7)redit (cid:3)greement requires the (cid:7)ompany to maintain (cid:336)i(cid:337) a ma(cid:138)imum consolidated leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than (cid:1141)(cid:404)(cid:1143), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)ii(cid:337) a minimum (cid:67)(cid:138)ed charge coverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not less than 1.(cid:405)0 to 1.00, measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter (cid:61)or the period o(cid:61) (cid:61)our (cid:61)ull (cid:67)scal quarters then ended, (cid:336)iii(cid:337) a minimum consolidated tangible net worth equal to or greater than the sum o(cid:61) (cid:362)1,(cid:405)00,000,000 plus an amount equal to (cid:67)(cid:91)y percent (cid:336)(cid:404)0(cid:1143)(cid:337) o(cid:61) net equity proceeds received by the (cid:7)ompany a(cid:91)er the date o(cid:61) the most recent (cid:67)nancial statements that are available as o(cid:61) (cid:24)arch 2(cid:404), 2020, measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)iv(cid:337) a ma(cid:138)imum recourse leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than an amount equal to consolidated tangible net worth as o(cid:61) the measurement date mul(cid:2462)plied by 1.(cid:404), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, (cid:336)v(cid:337) a ma(cid:138)imum secured recourse leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than an amount equal to 3.(cid:404)(cid:1143) o(cid:61) consolidated total asset value (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) and (cid:362)2(cid:406)(cid:406),000,000, (cid:336)vi(cid:337) a ma(cid:138)imum adjusted secured leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) not greater than (cid:404)(cid:404)(cid:1143), measured as o(cid:61) the last day o(cid:61) each (cid:67)scal quarter, and (cid:336)vii(cid:337) liquidity (cid:336)as de(cid:67)ned in the (cid:7)redit (cid:3)greement(cid:337) o(cid:61) at least (cid:362)(cid:405)(cid:404).0 million. 112 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 113 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany was in compliance with all (cid:67)nancial covenant calcula(cid:2462)ons. (cid:36)he obliga(cid:2462)ons o(cid:61) the Borrower pursuant to the (cid:7)redit (cid:3)greement are guaranteed by the (cid:7)ompany and certain wholly-owned subsidiaries o(cid:61) the (cid:7)ompany. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany had (cid:362)2(cid:1142)2.0 million outstanding on the Second (cid:3)(cid:351)(cid:33) Facility with (cid:362)21(cid:1142).0 million available to be drawn. (cid:36)he average outstanding borrowings under credit (cid:61)acili(cid:2462)es was (cid:362)20(cid:1142).0 million during the year ended December 31, 2022. Senior Notes On February 11, 2021, Kennedy-Wilson, Inc., as issuer, issued (cid:362)(cid:404)00.0 million aggregate principal amount o(cid:61) (cid:403).(cid:405)(cid:404)0(cid:1143) senior notes due 202(cid:406) (cid:336)the (cid:318)202(cid:406) notes(cid:319)(cid:337) and (cid:362)(cid:404)00.0 million aggregate principal amount o(cid:61) (cid:404).000(cid:1143) senior notes due 2031 (cid:336)the (cid:318)2031 notes(cid:319) and, together with the 202(cid:406) notes, the (cid:318)ini(cid:2462)al notes(cid:319)(cid:337). On (cid:24)arch 1(cid:404), 2021, Kennedy-Wilson, Inc. issued an addi(cid:2462)onal (cid:362)100 million aggregate principal o(cid:61) the 202(cid:406) notes and an addi(cid:2462)onal (cid:362)100 million o(cid:61) the 2031 notes. (cid:36)hese addi(cid:2462)onal notes were issued as (cid:318)addi(cid:2462)onal notes(cid:319) under the indentures pursuant to which Kennedy Wilson previously issued 202(cid:406) notes and the 2031 notes. On (cid:3)ugust 23, 2021, Kennedy-Wilson, Inc. issued (cid:362)(cid:1141)00.0 million aggregate principal amount o(cid:61) (cid:403).(cid:405)(cid:404)0(cid:1143) senior notes due 2030 (cid:336)the (cid:318)2030 notes(cid:319) and, together with the 202(cid:406) notes and the 2031 notes, the (cid:318)notes(cid:319)(cid:337). (cid:36)he notes are senior, unsecured obliga(cid:2462)ons o(cid:61) Kennedy Wilson and are guaranteed by Kennedy-Wilson Holdings, Inc. and certain subsidiaries o(cid:61) Kennedy Wilson. (cid:36)he notes accrue interest at a rate o(cid:61) (cid:403).(cid:405)(cid:404)0(cid:1143) (cid:336)in the case o(cid:61) the 202(cid:406) notes(cid:337), (cid:403).(cid:405)(cid:404)0(cid:1143) (cid:336)in the case o(cid:61) the 2030 notes(cid:337) and (cid:404).000(cid:1143) (cid:336)in the case o(cid:61) the 2031 notes(cid:337) per annum, payable semi-annually in arrears on (cid:24)arch 1 and September 1 o(cid:61) each year, beginning on September 1, 2021 (cid:61)or the 202(cid:406) notes and 2031 notes and (cid:24)arch 1, 2022 (cid:61)or the 2030 notes. (cid:36)he notes will mature on (cid:24)arch 1, 202(cid:406) (cid:336)in the case o(cid:61) the 202(cid:406) notes(cid:337), February 1, 2030 (cid:336)in case o(cid:61) 2030 notes(cid:337) and (cid:24)arch 1, 2031 (cid:336)in the case o(cid:61) the 2031 notes(cid:337), in each case unless earlier repurchased or redeemed. (cid:3)t any (cid:2462)me prior to (cid:24)arch 1, 202(cid:403) (cid:336)in the case o(cid:61) the 202(cid:406) notes(cid:337), September 1, 202(cid:403) (cid:336)in the case o(cid:61) the 2030 notes(cid:337) or (cid:24)arch 1, 202(cid:1141) (cid:336)in the case o(cid:61) the 2031 notes(cid:337), Kennedy Wilson may redeem the notes o(cid:61) the applicable series, in whole or in part, at a redemp(cid:2462)on price equal to 100(cid:1143) o(cid:61) their principal amount, plus an applicable (cid:318)make-whole(cid:319) premium and accrued and unpaid interest, i(cid:61) any, to the redemp(cid:2462)on date. (cid:3)t any (cid:2462)me and (cid:61)rom (cid:2462)me to (cid:2462)me on or a(cid:91)er (cid:24)arch 1, 202(cid:403) (cid:336)in the case o(cid:61) the 202(cid:406) notes(cid:337), September 1, 202(cid:403) (cid:336)in the case o(cid:61) the 2030 notes(cid:337) or (cid:24)arch 1, 202(cid:1141) (cid:336)in the case o(cid:61) the 2031 notes(cid:337), Kennedy Wilson may redeem the notes o(cid:61) the applicable series, in whole or in part, at speci(cid:67)ed redemp(cid:2462)on prices set (cid:61)orth in the indenture governing the notes o(cid:61) the applicable series, plus accrued and unpaid interest, i(cid:61) any, to the redemp(cid:2462)on date. In addi(cid:2462)on, prior to (cid:24)arch 1, 202(cid:403) (cid:336)(cid:61)or 202(cid:406) notes and 2031 notes(cid:337) and September 1, 202(cid:403) (cid:336)(cid:61)or 2030 notes(cid:337), Kennedy Wilson may redeem up to (cid:403)0(cid:1143) o(cid:61) the notes o(cid:61) either series (cid:61)rom the proceeds o(cid:61) certain equity o(cid:64)erings. (cid:25)o sinking (cid:61)und will be provided (cid:61)or the notes. Upon the occurrence o(cid:61) certain change o(cid:61) control or termina(cid:2462)on o(cid:61) trading events, holders o(cid:61) the notes may require Kennedy Wilson to repurchase their notes (cid:61)or cash equal to 101(cid:1143) o(cid:61) the principal amount o(cid:61) the notes to be repurchased, plus accrued and unpaid interest, i(cid:61) any, to, but e(cid:138)cluding, the applicable repurchase date. (cid:3)s o(cid:61) December 31, 2020, Kennedy Wilson, Inc. had (cid:362)1.2 billion o(cid:61) (cid:404).(cid:1142)(cid:405)(cid:404)(cid:1143) Senior (cid:25)otes due 202(cid:403) (cid:336)the (cid:318)202(cid:403) notes(cid:319)(cid:337). On January 2(cid:405), 2021 the (cid:7)ompany announced a tender o(cid:64)er (cid:61)or up to (cid:362)1.0 billion aggregate principal amount o(cid:61) outstanding 202(cid:403) notes. On February (cid:406), 2021, (cid:362)(cid:404)(cid:405)(cid:1141).(cid:406) million aggregate principal amount o(cid:61) the 202(cid:403) notes were tendered. (cid:3)s a result o(cid:61) the tender o(cid:64)er the (cid:7)ompany recogni(cid:140)ed (cid:362)1(cid:403).(cid:1142) million o(cid:61) loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt due to the tender premium and the propor(cid:2462)onate write o(cid:64) o(cid:61) capitali(cid:140)ed loan (cid:61)ees and debt discount associated with the bonds re(cid:2462)red as part o(cid:61) the tender o(cid:64)er. On (cid:3)pril 1, 2021 the (cid:7)ompany redeemed the remaining (cid:362)(cid:404)(cid:405)3.1 million o(cid:61) the 202(cid:403) notes using cash on hand (cid:61)rom the proceeds o(cid:61) the 202(cid:406) notes and 2031 notes. (cid:3)s a result o(cid:61) the redemp(cid:2462)on the (cid:7)ompany recogni(cid:140)ed an addi(cid:2462)onal (cid:362)11.(cid:405) million o(cid:61) loss on early e(cid:138)(cid:2462)nguishment o(cid:61) debt during the year ended December 31, 2021. (cid:36)he indentures governing the notes contain various restric(cid:2462)ve covenants, including, among others, limita(cid:2462)ons on the (cid:7)ompany(cid:317)s ability and the ability o(cid:61) certain o(cid:61) the (cid:7)ompany(cid:317)s subsidiaries to incur or guarantee addi(cid:2462)onal indebtedness, make restricted payments, pay dividends or make any other distribu(cid:2462)ons (cid:61)rom restricted subsidiaries, redeem or repurchase capital stock, sell assets or subsidiary stocks, engage in transac(cid:2462)ons with a(cid:76)liates, create or permit liens, enter into sale(cid:326)leaseback transac(cid:2462)ons, and enter into consolida(cid:2462)ons or mergers. (cid:36)he indentures governing the notes limit the ability o(cid:61) Kennedy Wilson and its restricted subsidiaries to incur addi(cid:2462)onal indebtedness i(cid:61), on the date o(cid:61) such incurrence and a(cid:91)er giving e(cid:64)ect to the new indebtedness, the ma(cid:138)imum balance sheet leverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the indenture(cid:337) is greater than 1.(cid:404)0 to 1.00, subject to certain e(cid:138)cep(cid:2462)ons. (cid:3)s o(cid:61) December 31, 2022, the ma(cid:138)imum balance sheet leverage ra(cid:2462)o was 1.1(cid:404) to 1.00. See (cid:25)ote 1(cid:405) (cid:61)or the guarantor and non-guarantor (cid:67)nancial statements. (cid:3)s o(cid:61) December 31, 2022, the (cid:7)ompany was in compliance with all (cid:67)nancial covenants. NOTE 9—KWE UNSECURED BONDS (cid:36)he (cid:61)ollowing table details the KW(cid:11) unsecured bonds as o(cid:61) December 31, 2022 and 2021(cid:313) (Dollars in millions) KW(cid:11) (cid:11)uro (cid:24)edium (cid:36)erm (cid:25)ote (cid:30)rogramme Unamor(cid:2462)(cid:140)ed loan (cid:61)ees Total (cid:20)(cid:41)E (cid:38)nsecured Bonds December 31, 2022 (cid:404)0(cid:405).1 (cid:336)0.(cid:405)(cid:337) 2021 (cid:1141)2(cid:403).1 (cid:336)1.3(cid:337) (cid:362) (cid:404)0(cid:1141).(cid:403) (cid:362) (cid:1141)22.(cid:1142) (1)(cid:2)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:20)(cid:41)(cid:11)(cid:2)(cid:134)(cid:109)(cid:118)(cid:59)(cid:49)(cid:134)(cid:117)(cid:59)(cid:55)(cid:2)(cid:48)(cid:111)(cid:109)(cid:55)(cid:118)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:118)(cid:2)(cid:98)(cid:109)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:314)(cid:2)(cid:9)(cid:59)(cid:48)(cid:124)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:118)(cid:2)(cid:117)(cid:59)(cid:114)(cid:117)(cid:59)(cid:118)(cid:59)(cid:109)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:55)(cid:98)(cid:64)(cid:59)(cid:117)(cid:59)(cid:109)(cid:49)(cid:59)(cid:2)(cid:48)(cid:59)(cid:124)(cid:137)(cid:59)(cid:59)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2) (cid:61)(cid:45)(cid:98)(cid:117)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:124)(cid:2)(cid:98)(cid:118)(cid:118)(cid:134)(cid:45)(cid:109)(cid:49)(cid:59)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:114)(cid:117)(cid:98)(cid:109)(cid:49)(cid:98)(cid:114)(cid:45)(cid:1140)(cid:2)(cid:136)(cid:45)(cid:1140)(cid:134)(cid:59)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:45)(cid:117)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:98)(cid:109)(cid:124)(cid:111)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:59)(cid:138)(cid:114)(cid:59)(cid:109)(cid:118)(cid:59)(cid:2)(cid:111)(cid:136)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:108)(cid:45)(cid:98)(cid:109)(cid:98)(cid:109)(cid:93)(cid:2)(cid:124)(cid:59)(cid:117)(cid:108)(cid:2)(cid:111)(cid:61)(cid:2) (cid:124)(cid:95)(cid:59)(cid:2)(cid:117)(cid:59)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:55)(cid:59)(cid:48)(cid:124)(cid:2)(cid:98)(cid:109)(cid:2)(cid:45)(cid:2)(cid:108)(cid:45)(cid:109)(cid:109)(cid:59)(cid:117)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:45)(cid:114)(cid:114)(cid:117)(cid:111)(cid:138)(cid:98)(cid:108)(cid:45)(cid:124)(cid:59)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:59)(cid:64)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2)(cid:108)(cid:59)(cid:124)(cid:95)(cid:111)(cid:55)(cid:314)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:109)(cid:59)(cid:124)(cid:2)(cid:134)(cid:109)(cid:45)(cid:108)(cid:111)(cid:117)(cid:2462)(cid:140)(cid:59)(cid:55)(cid:2)(cid:1140)(cid:111)(cid:45)(cid:109)(cid:2)(cid:55)(cid:98)(cid:118)(cid:49)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:45)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:9)(cid:59)(cid:49)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2) (cid:402)(cid:400)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:401)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:401)(cid:399)(cid:401)(cid:400)(cid:2)(cid:137)(cid:45)(cid:118)(cid:2)(cid:362)(cid:400)(cid:314)(cid:404)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:362)(cid:401)(cid:314)(cid:400)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:311)(cid:2)(cid:117)(cid:59)(cid:118)(cid:114)(cid:59)(cid:49)(cid:2462)(cid:136)(cid:59)(cid:1140)(cid:139)(cid:314) KW(cid:11) issued senior unsecured notes (cid:61)or an aggregate principal amount o(cid:61) (cid:336)(cid:360)(cid:404)(cid:404)0 million(cid:337) (cid:336)the (cid:318)KW(cid:11) (cid:25)otes(cid:319)(cid:337). (cid:36)he KW(cid:11) (cid:25)otes were issued at a discount with an annual (cid:67)(cid:138)ed coupon o(cid:61) 3.2(cid:404)(cid:1143), and mature in 202(cid:404). KW(cid:11) invested proceeds (cid:61)rom the KW(cid:11) (cid:25)otes to (cid:61)und equity investments in euro denominated assets and has designated the KW(cid:11) (cid:25)otes as a net investment hedge under (cid:3)S(cid:7) (cid:36)opic (cid:1142)1(cid:404). Subsequent (cid:89)uctua(cid:2462)ons in (cid:61)oreign currency rates that impact the carrying value o(cid:61) the KW(cid:11) (cid:25)otes are recorded to accumulated other comprehensive income. During the year ended December 31, 2022, Kennedy Wilson recogni(cid:140)ed a loss o(cid:61) (cid:362)2(cid:1142).3 million in accumulated other comprehensive income due to the weakening o(cid:61) the euro against the (cid:14)B(cid:30) during the period. During the year ended December 31, 2022, KW(cid:11) launched a cash tender o(cid:64)er (cid:61)or up to (cid:360)1(cid:404)0.0 million in aggregate 114 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 115 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) nominal amount o(cid:61) the KW(cid:11) (cid:25)otes and accepted all o(cid:61) the (cid:360)(cid:405)(cid:404).0 million (cid:336)appro(cid:138)imately (cid:362)(cid:1142)0.3 million, based on December 31, 2022 rates(cid:337) in aggregate nominal amount o(cid:61) KW(cid:11) (cid:25)otes validly tendered pursuant to the tender o(cid:64)er (cid:61)or a purchase price equal to (cid:1142)2(cid:1143) o(cid:61) the nominal amount o(cid:61) the KW(cid:11) (cid:25)otes, which resulted in a gain on e(cid:138)(cid:2462)nguishment o(cid:61) debt o(cid:61) (cid:362)13.(cid:406) million. (cid:36)he trust deed that governs the bonds contain various restric(cid:2462)ve covenants (cid:61)or KW(cid:11), including, among others, limita(cid:2462)ons on KW(cid:11)(cid:317)s and its material subsidiaries(cid:317) ability to provide certain nega(cid:2462)ve pledges. (cid:36)he trust deed limits the ability o(cid:61) KW(cid:11) and its subsidiaries to incur addi(cid:2462)onal indebtedness i(cid:61), on the date o(cid:61) such incurrence and a(cid:91)er giving e(cid:64)ect to the incurrence o(cid:61) the new indebtedness, (cid:336)1(cid:337) KW(cid:11)(cid:317)s consolidated net indebtedness (cid:336)as de(cid:67)ned in the trust deed(cid:337) would e(cid:138)ceed (cid:1141)0(cid:1143) o(cid:61) KW(cid:11)(cid:317)s total assets (cid:336)as calculated pursuant to the terms o(cid:61) the trust deed(cid:337)(cid:312) and (cid:336)2(cid:337) KW(cid:11)(cid:317)s consolidated secured indebtedness (cid:336)as de(cid:67)ned in the trust deed(cid:337) would e(cid:138)ceed (cid:404)0(cid:1143) o(cid:61) KW(cid:11)(cid:317)s total assets (cid:336)as calculated pursuant to the terms o(cid:61) the trust deed(cid:337). (cid:36)he trust deed also requires KW(cid:11), as o(cid:61) each repor(cid:2462)ng date, to maintain an interest coverage ra(cid:2462)o (cid:336)as de(cid:67)ned in the trust deed(cid:337) o(cid:61) at least 1.(cid:404)0 to 1.00 and have unencumbered assets o(cid:61) no less than 12(cid:404)(cid:1143) o(cid:61) its unsecured indebtedness (cid:336)as de(cid:67)ned in the trust deed(cid:337). (cid:3)s o(cid:61) December 31, 2022, KW(cid:11) was in compliance with these (cid:67)nancial covenants. NOTE 10—RELATED PARTY TRANSACTIONS (cid:33)elated party revenue is (cid:61)ees and other income received (cid:61)rom investments in which the (cid:7)ompany has an ownership interest, e(cid:138)cluding amounts eliminated in consolida(cid:2462)on discussed below. Kennedy Wilson earned related party (cid:61)ees o(cid:61) (cid:362)(cid:403)(cid:404).2 million, (cid:362)3(cid:404).3 million and (cid:362)22.(cid:1142) million (cid:61)or the periods ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely. (cid:36)he (cid:7)ompany provides investment and property management and other property related services on proper(cid:2462)es in which it also has an ownership interest. Fees earned on consolidated proper(cid:2462)es are eliminated in consolida(cid:2462)on and (cid:61)ees on unconsolidated investments are eliminated (cid:61)or the por(cid:2462)on that relate to the (cid:7)ompany(cid:317)s ownership interest. During the years ended December 31, 2022, 2021 and 2020 (cid:61)ees o(cid:61) (cid:362)0.(cid:403) million, (cid:362)0.(cid:1142) million and (cid:362)1.1 million, respec(cid:2462)vely, were eliminated in consolida(cid:2462)on. On October 2, 2020, the (cid:7)ompany completed the sale o(cid:61) Kennedy-Wilson (cid:30)roper(cid:2462)es, Ltd. (cid:336)(cid:318)KW(cid:30)(cid:319)(cid:337), a wholly-owned subsidiary o(cid:61) the (cid:7)ompany opera(cid:2462)ng in the third-party real estate services industry, including, property management, commercial brokerage (cid:336)leasing and sale(cid:337), (cid:61)acili(cid:2462)es management and lease administra(cid:2462)on, to an en(cid:2462)ty controlled by certain members o(cid:61) KW(cid:30) management (cid:336)the (cid:318)(cid:30)urchaser(cid:319)(cid:337). (cid:3)s part o(cid:61) the transac(cid:2462)on and in e(cid:138)change (cid:61)or an annual (cid:61)ee, the (cid:7)ompany will provide certain services to KW(cid:30), including the use o(cid:61) certain o(cid:76)ce space and in(cid:61)orma(cid:2462)on technology related services, in addi(cid:2462)on to a license to use its trademark in connec(cid:2462)on with the opera(cid:2462)on o(cid:61) its business (cid:61)or a period o(cid:61) two years, with a two-year e(cid:138)tension op(cid:2462)on e(cid:138)ercisable by the (cid:30)urchaser subject to certain condi(cid:2462)ons being met. (cid:36)he (cid:30)urchaser e(cid:138)ercised their op(cid:2462)on to e(cid:138)tend the license to use the (cid:7)ompany(cid:317)s trademark in 2022. (cid:36)he (cid:7)ompany also provided (cid:67)nancing to the (cid:30)urchaser in connec(cid:2462)on with its purchase o(cid:61) KW(cid:30) as well as a three-year line o(cid:61) credit. (cid:3)s o(cid:61) the closing date, the (cid:30)urchaser will employ the appro(cid:138)imately 110 employees and 2(cid:404) independent contractors previously employed by KW(cid:30). NOTE 11—INCOME TAXES (cid:36)he table below represents a geographical breakdown o(cid:61) book income (cid:336)loss(cid:337) be(cid:61)ore the provision (cid:61)or income ta(cid:138)es(cid:313) (Dollars in millions) (cid:1354)Domes(cid:2462)c (cid:1354)Foreign Total Year ended December 31, 2022 2021 (cid:1142)(cid:1142).(cid:404) (cid:362) (cid:403)(cid:406).(cid:1141) (cid:403)(cid:403)(cid:405).(cid:1141) (cid:362) 1(cid:403).(cid:406) 2020 (cid:336)3(cid:405).0(cid:337) 1(cid:1142)(cid:1142).(cid:403) 13(cid:1142).1 (cid:362) (cid:403)(cid:1141)2.(cid:404) (cid:362) 1(cid:404)1.(cid:403) (cid:362) (cid:362) (cid:36)he U.S. and (cid:61)oreign components o(cid:61) provision (cid:61)or income ta(cid:138)es consisted o(cid:61) the (cid:61)ollowing components. However, it is not re(cid:89)ec(cid:2462)ve o(cid:61) the cash ta(cid:138) results o(cid:61) the (cid:7)ompany. (Dollars in millions) Federal (cid:1354)(cid:1354)(cid:7)urrent (cid:1354)(cid:1354)De(cid:61)erred State (cid:1354)(cid:1354)(cid:7)urrent (cid:1354)(cid:1354)De(cid:61)erred Foreign (cid:1354)(cid:1354)(cid:7)urrent (cid:1354)(cid:1354)De(cid:61)erred Total Year ended December 31, 2022 2021 2020 (cid:362) — (cid:362) — (cid:362) 3.(cid:1141) 3.(cid:1141) 0.3 11.3 11.(cid:1141) 1(cid:405).(cid:1141) 3.(cid:403) 21.0 (cid:406)(cid:403).(cid:403) (cid:406)(cid:403).(cid:403) (cid:336)0.2(cid:337) (cid:406).1 (cid:1142).(cid:406) 1(cid:403).2 (cid:1142).(cid:405) 22.(cid:406) (cid:362) 3(cid:1141).2 (cid:362) 12(cid:1141).2 (cid:362) — 23.3 23.3 1.(cid:404) 0.(cid:403) 1.(cid:406) 1(cid:403).(cid:406) 3.(cid:404) 1(cid:1142).(cid:403) (cid:403)3.(cid:1141) (cid:3) reconcilia(cid:2462)on o(cid:61) the statutory (cid:61)ederal income ta(cid:138) rate o(cid:61) 21(cid:1143) with Kennedy Wilson(cid:317)s e(cid:64)ec(cid:2462)ve income ta(cid:138) rate is as (cid:61)ollows(cid:313) Year ended December 31, (Dollars in millions) (cid:36)a(cid:138) computed at the statutory rate (cid:36)a(cid:138) deduc(cid:2462)on in e(cid:138)cess o(cid:61) book compensa(cid:2462)on (cid:61)rom restricted stock ves(cid:2462)ng Domes(cid:2462)c permanent di(cid:64)erences, primarily disallowed e(cid:138)ecu(cid:2462)ve compensa(cid:2462)on Foreign permanent di(cid:64)erences, primarily non-deduc(cid:2462)ble deprecia(cid:2462)on, (cid:1354)amor(cid:2462)(cid:140)a(cid:2462)on and interest e(cid:138)penses in the United Kingdom (cid:11)(cid:64)ect o(cid:61) (cid:61)oreign opera(cid:2462)ons, net o(cid:61) (cid:61)oreign ta(cid:138) credit (cid:25)oncontrolling interests State income ta(cid:138)es, net o(cid:61) (cid:61)ederal bene(cid:67)t Other 2022 2021 (cid:362) 2(cid:406).0 (cid:362) — (cid:405).(cid:1142) (cid:406)(cid:405).1 (cid:362) — (cid:1142).1 1.(cid:405) (cid:336)(cid:1142).(cid:1142)(cid:337) (cid:336)1.1(cid:337) 2.(cid:1142) (cid:403).(cid:1142) (cid:1142).2 (cid:405).(cid:403) (cid:336)2.(cid:1141)(cid:337) (cid:405).0 1.0 2020 31.(cid:1142) 0.1 (cid:405).2 2.0 (cid:336)3.(cid:405)(cid:337) (cid:336)0.(cid:406)(cid:337) 2.(cid:406) (cid:403).2 (cid:30)rovision for income taxes (cid:362) 3(cid:1141).2 (cid:362) 12(cid:1141).2 (cid:362) (cid:403)3.(cid:1141) 116 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 117 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:7)umula(cid:2462)ve ta(cid:138) e(cid:64)ects o(cid:61) temporary di(cid:64)erences are shown below at December 31, 2022 and 2021(cid:313) (Dollars in millions) De(cid:61)erred ta(cid:138) assets(cid:313) (cid:1354)(cid:1354)Foreign currency transla(cid:2462)on (cid:1354)(cid:1354)(cid:25)et opera(cid:2462)ng loss carry(cid:61)orward and credits (cid:1354)(cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)Investment basis di(cid:64)erence (cid:1354)(cid:1354)Stock op(cid:2462)on e(cid:138)pense (cid:1354)(cid:1354)Hedging transac(cid:2462)ons (cid:1354)(cid:1354)Lease liability (cid:1354)(cid:1354)(cid:3)ccrued reserves (cid:36)otal de(cid:61)erred ta(cid:138) assets (cid:40)alua(cid:2462)on allowance (cid:25)et de(cid:61)erred ta(cid:138) assets De(cid:61)erred ta(cid:138) liabili(cid:2462)es(cid:313) (cid:1354)(cid:1354)Investment basis and reserve di(cid:64)erences (cid:1354)(cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)(cid:1354)(cid:33)ight o(cid:61) use asset (cid:1354)(cid:1354)(cid:30)repaid e(cid:138)penses and other (cid:1354)(cid:1354)(cid:7)apitali(cid:140)ed interest (cid:36)otal de(cid:61)erred ta(cid:138) liabili(cid:2462)es Deferred tax lia(cid:48)ilit(cid:139), net Year ended December 31, 2022 2021 (cid:362) (cid:404).0 (cid:362) 1(cid:404)2.0 (cid:404)1.(cid:404) (cid:406)0.(cid:405) 2.0 10.0 0.1 (cid:406).(cid:404) 320.(cid:1142) (cid:336)2(cid:1141)(cid:404).(cid:406)(cid:337) (cid:404)(cid:403).(cid:406) 3(cid:403)(cid:403).(cid:406) — 0.1 3.(cid:405) 1.0 3(cid:403)(cid:406).(cid:405) 2.(cid:405) 1(cid:405)2.(cid:403) — (cid:406)(cid:1141).(cid:1142) 2.2 (cid:405).(cid:1142) 0.1 11.1 2(cid:406)3.1 (cid:336)2(cid:404)(cid:405).1(cid:337) 3(cid:1141).0 2(cid:1142)(cid:404).(cid:403) 3.(cid:406) 0.1 2.2 1.3 2(cid:406)2.(cid:406) (cid:362) (cid:336)2(cid:406)(cid:403).(cid:1142)(cid:337) (cid:362) (cid:336)2(cid:404)(cid:1141).(cid:406)(cid:337) During 201(cid:406), the United Kingdom enacted a Finance (cid:3)ct, which introduced a new capital gain ta(cid:138) (cid:61)or non-UK resident investors who dispose o(cid:61) UK real estate. (cid:36)he new capital gain ta(cid:138) law became e(cid:64)ec(cid:2462)ve on (cid:3)pril (cid:1141), 201(cid:406). Beginning on this date, non-UK resident investors are subject to UK ta(cid:138) on gains arising (cid:61)rom the direct and indirect disposi(cid:2462)ons o(cid:61) UK real estate held (cid:61)or investment purposes. (cid:36)ransi(cid:2462)onal provisions allowed (cid:61)or rebasing o(cid:61) UK real estate values to (cid:61)air market value as o(cid:61) (cid:3)pril (cid:404), 201(cid:406) (cid:336)(cid:318)UK Basis Step-Up(cid:319)(cid:337). (cid:3)ccordingly, only gains arising (cid:61)rom property value increases a(cid:91)er (cid:3)pril (cid:404), 201(cid:406) are subject to ta(cid:138). (cid:36)he step-up led to a higher ta(cid:138) basis rela(cid:2462)ve to the carrying value o(cid:61) the UK real estate, thus resul(cid:2462)ng in a UK de(cid:61)erred ta(cid:138) asset o(cid:61) (cid:362)10(cid:405).0 million. (cid:36)he reali(cid:140)ability o(cid:61) this de(cid:61)erred ta(cid:138) asset is dependent on (cid:61)uture disposi(cid:2462)on o(cid:61) real estate at a (cid:61)air market value in e(cid:138)cess o(cid:61) appraised value as o(cid:61) (cid:3)pril (cid:404), 201(cid:406). (cid:14)iven uncertain(cid:2462)es surrounding Bre(cid:138)it and its poten(cid:2462)al impact on (cid:61)uture real estate values, the (cid:7)ompany concluded that the U.K. de(cid:61)erred ta(cid:138) asset did not meet the more likely than not threshold o(cid:61) being reali(cid:140)able. (cid:36)here(cid:61)ore, a (cid:61)ull valua(cid:2462)on allowance was recorded against the UK de(cid:61)erred ta(cid:138) asset. During (cid:67)scal year 2022, the valua(cid:2462)on allowance on the UK Basis Step-Up increased to (cid:362)1(cid:403)3.1 million, primarily due to current year deprecia(cid:2462)on e(cid:138)pense. During (cid:24)arch 201(cid:1142), Kennedy Wilson elected to treat KW(cid:11) as a partnership (cid:61)or U.S. ta(cid:138) purposes retroac(cid:2462)ve to December 2(cid:406), 201(cid:405). Due to unreali(cid:140)ed (cid:61)oreign e(cid:138)change losses not yet deduc(cid:2462)ble (cid:61)or ta(cid:138) purposes and the considera(cid:2462)on paid to acquire the non-controlling interests in KW(cid:11) e(cid:138)ceeding the book carrying value o(cid:61) the non-controlling interests in KW(cid:11), the (cid:7)ompany(cid:317)s ta(cid:138) basis in KW(cid:11) e(cid:138)ceeded its book carrying value at December 2(cid:406), 201(cid:405), and every period therea(cid:91)er. (cid:30)rior to the elec(cid:2462)on to treat KW(cid:11) as a partnership, KW(cid:11) was ta(cid:138)ed as a controlled (cid:61)oreign corpora(cid:2462)on. (cid:3)s a controlled (cid:61)oreign corpora(cid:2462)on, the (cid:7)ompany was precluded (cid:61)rom recogni(cid:140)ing a de(cid:61)erred ta(cid:138) asset (cid:61)or its ta(cid:138) basis in e(cid:138)cess o(cid:61) book carrying value (cid:61)or its investment in KW(cid:11) as the e(cid:138)cess ta(cid:138) basis (cid:61)rom the investment was not e(cid:138)pected to reverse in the (cid:61)oreseeable (cid:61)uture. However, as a result o(cid:61) the conversion o(cid:61) KW(cid:11) to a partnership (cid:61)or U.S. ta(cid:138) purposes, the (cid:7)ompany was required to record a de(cid:61)erred ta(cid:138) asset (cid:61)or its investment in KW(cid:11). (cid:3)s o(cid:61) December 31, 201(cid:1142), the (cid:7)ompany recorded a (cid:362)(cid:406)(cid:1142).3 million de(cid:61)erred ta(cid:138) asset related to its e(cid:138)cess ta(cid:138) basis over book carrying value (cid:61)or its investment in KW(cid:11). (cid:3)s a signi(cid:67)cant por(cid:2462)on o(cid:61) the e(cid:138)cess ta(cid:138) basis would only reverse upon a strengthening o(cid:61) (cid:61)oreign currencies or upon a disposi(cid:2462)on o(cid:61) KW(cid:11), the (cid:7)ompany determined that a valua(cid:2462)on allowance o(cid:61) (cid:362)(cid:406)(cid:1142).3 million was required (cid:61)or the ta(cid:138) basis that was in e(cid:138)cess o(cid:61) the (cid:7)ompany(cid:317)s carrying value (cid:61)or its investment in KW(cid:11) as it did not meet the more likely than not recogni(cid:2462)on threshold. During the years ended December 31, 2021, 2020 and 201(cid:406), a por(cid:2462)on o(cid:61) the e(cid:138)cess ta(cid:138) basis over book basis in KW(cid:11) reversed as a result o(cid:61) lower ta(cid:138) gains on sales o(cid:61) real estate. During the year ended December 31, 2022, our e(cid:138)cess ta(cid:138) basis over book basis in KW(cid:11) increased due to unreali(cid:140)ed (cid:61)oreign currency losses that are not currently deduc(cid:2462)ble (cid:61)or ta(cid:138). (cid:3)s o(cid:61) December 31, 2022, Kennedy Wilson(cid:317)s e(cid:138)cess ta(cid:138) basis in KW(cid:11) and the related valua(cid:2462)on allowance were (cid:362)(cid:405)(cid:1141).0 million and (cid:362)(cid:405)(cid:404).(cid:403) million, respec(cid:2462)vely. (cid:3)s o(cid:61) December 31, 2022, Kennedy Wilson had (cid:61)ederal, (cid:7)ali(cid:61)ornia and other state net opera(cid:2462)ng losses o(cid:61) (cid:362)3.(cid:403) million, (cid:362)(cid:406)0.(cid:406) million, and (cid:362)11.2 million, respec(cid:2462)vely. (cid:36)he en(cid:2462)rety o(cid:61) the (cid:362)3.(cid:403) million (cid:61)ederal net opera(cid:2462)ng loss carry(cid:61)orwards were generated a(cid:91)er December 31, 201(cid:405) and do not e(cid:138)pire. However, such losses are only eligible to o(cid:64)set (cid:1142)0(cid:1143) o(cid:61) ta(cid:138)able income in a given year. (cid:7)ali(cid:61)ornia net opera(cid:2462)ng losses begin to e(cid:138)pire in 203(cid:403). (cid:3)s o(cid:61) December 31, 2022, Kennedy Wilson had (cid:362)1(cid:405)(cid:404).(cid:404) million o(cid:61) (cid:61)oreign net opera(cid:2462)ng loss carry(cid:61)orwards, which have no e(cid:138)pira(cid:2462)on date. (cid:36)he (cid:7)ompany has (cid:61)oreign ta(cid:138) credit carry(cid:61)orwards o(cid:61) (cid:362)(cid:406)2.0 million, o(cid:61) which (cid:362)0.(cid:404) million begin to e(cid:138)pire in December 2023. (cid:36)he (cid:7)ompany(cid:317)s valua(cid:2462)on allowance on de(cid:61)erred ta(cid:138) assets increased by (cid:362)(cid:1142).(cid:1142) million in 2022 and increased by (cid:362)(cid:404)2.(cid:405) million in 2021. (cid:36)he increase in the valua(cid:2462)on allowance during 2022 primarily relates to addi(cid:2462)onal valua(cid:2462)on allowance recorded on the (cid:7)ompany(cid:317)s UK Basis Step-Up de(cid:61)erred ta(cid:138) asset as a result o(cid:61) deprecia(cid:2462)on. (cid:36)he increase in the 2021 valua(cid:2462)on allowance principally relates to remeasuring the UK Basis Step Up de(cid:61)erred ta(cid:138) asset (cid:61)rom 1(cid:406)(cid:1143) to 2(cid:404)(cid:1143). In June 2021, the (cid:7)ompany received a no(cid:2462)(cid:67)ca(cid:2462)on o(cid:61) a general ta(cid:138) inquiry being conducted by the Spanish ta(cid:138) authori(cid:2462)es (cid:61)or several o(cid:61) its Spanish en(cid:2462)(cid:2462)es (cid:61)or ta(cid:138) years 201(cid:1141) and 201(cid:405). (cid:3)s a result o(cid:61) the Spanish ta(cid:138) inquiry, management has reassessed the (cid:7)ompany(cid:317)s prior Spanish ta(cid:138) (cid:67)ling posi(cid:2462)ons and the need to accrue addi(cid:2462)onal ta(cid:138)es. Based on this reassessment, the (cid:7)ompany believes that no addi(cid:2462)onal Spanish ta(cid:138) accruals are required. Kennedy Wilson(cid:317)s (cid:61)ederal and state income ta(cid:138) returns remain open to e(cid:138)amina(cid:2462)on (cid:61)or the years 201(cid:406) through 2021 and 201(cid:405) through 2021, respec(cid:2462)vely. However, due to the e(cid:138)istence o(cid:61) prior year loss carryovers, the I(cid:33)S may e(cid:138)amine any ta(cid:138) years (cid:61)or which the carryovers are used to o(cid:64)set (cid:61)uture ta(cid:138)able income. Our (cid:61)oreign subsidiaries(cid:317) ta(cid:138) returns remain open to e(cid:138)amina(cid:2462)on (cid:61)or the years 201(cid:1142) through 2021. (cid:36)he Spanish loss carryovers may be subject to ta(cid:138) e(cid:138)amina(cid:2462)on (cid:61)or a period o(cid:61) 10 years (cid:61)rom the period in which such losses were generated. NOTE 12—COMMITMENTS AND CONTINGENCIES (cid:7)(cid:3)(cid:30)I(cid:36)(cid:3)L (cid:7)O(cid:24)(cid:24)I(cid:36)(cid:24)(cid:11)(cid:25)(cid:36)S—(cid:3)s o(cid:61) December 31, 2022 and 2021, the (cid:7)ompany has un(cid:61)unded capital commitments o(cid:61) (cid:362)2(cid:403)(cid:1141).(cid:1141) million and (cid:362)113.(cid:405) million to its joint ventures under the respec(cid:2462)ve opera(cid:2462)ng agreements. It also has commitments o(cid:61) (cid:362)1(cid:405).(cid:405) million and (cid:362)21.(cid:1141) million as o(cid:61) December 31, 2022 and 2021 to its loan pla(cid:127)orm. In addi(cid:2462)on to the un(cid:61)unded capital commitments on its joint venture 118 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 119 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) investments, the (cid:7)ompany has (cid:362)(cid:1142)(cid:405).(cid:403) million o(cid:61) equity commitments rela(cid:2462)ng on consolidated and unconsolidated development projects as o(cid:61) December 31, 2022. (cid:36)he (cid:7)ompany may be called upon to contribute addi(cid:2462)onal capital to joint ventures in sa(cid:2462)s(cid:61)ac(cid:2462)on o(cid:61) the (cid:7)ompany(cid:317)s capital commitment obliga(cid:2462)ons. LI(cid:36)I(cid:14)(cid:3)(cid:36)IO(cid:25)—Kennedy Wilson is currently a de(cid:61)endant in certain rou(cid:2462)ne li(cid:2462)ga(cid:2462)on arising in the ordinary course o(cid:61) business. It is the opinion o(cid:61) management and legal counsel that the outcome o(cid:61) these ac(cid:2462)ons will not have a material e(cid:64)ect on the (cid:67)nancial statements taken as a whole. NOTE 13—STOCK COMPENSATION AND OTHER RELATED PLANS (cid:36)he (cid:7)ompany maintains a shareholder-approved equity par(cid:2462)cipa(cid:2462)on plan (cid:336)the (cid:318)Second (cid:3)mended and (cid:33)estated (cid:30)lan(cid:319)(cid:337) under which shares o(cid:61) common stock are reserved (cid:61)or issuance pursuant to grants o(cid:61) restricted stock and other awards to o(cid:76)cers, employees, non-employee directors and consultants. (cid:36)he Second (cid:3)mended and (cid:33)estated (cid:30)lan also allows (cid:61)or share recycling on net se(cid:130)led restricted stock awards, restricted stock unit awards, per(cid:61)ormance unit awards and per(cid:61)ormance share awards. (cid:25)amed (cid:11)(cid:138)ecu(cid:2462)ve O(cid:76)cers (cid:336)(cid:318)(cid:25)(cid:11)O(cid:319)(cid:337) par(cid:2462)cipate in the Second (cid:3)mended and (cid:33)estated (cid:30)lan. During the years ended December 31, 2022, 2021 and 2020, the compensa(cid:2462)on commi(cid:130)ee o(cid:61) the board o(cid:61) directors approved the total grant o(cid:61) 2.(cid:1142) million shares o(cid:61) per(cid:61)ormance-based restricted stock units, 2.(cid:403) million shares o(cid:61) per(cid:61)ormance-based restricted stock units and 0.1 million shares o(cid:61) per(cid:61)ormance-based restricted shares o(cid:61) (cid:7)ompany common stock and 2.0 million o(cid:61) per(cid:61)ormance-based restricted shares o(cid:61) (cid:7)ompany common stock or per(cid:61)ormance-based restricted stock units covering (cid:7)ompany common stock, respec(cid:2462)vely, subject to ves(cid:2462)ng based on the (cid:7)ompany(cid:317)s total shareholder return (cid:336)the (cid:318)(cid:36)S(cid:33) restricted awards(cid:319)(cid:337), per(cid:61)ormance-based restricted shares o(cid:61) (cid:7)ompany common stock or per(cid:61)ormance-based restricted stock units covering (cid:7)ompany common stock subject to ves(cid:2462)ng based on the (cid:7)ompany(cid:317)s return on equity (cid:336)the (cid:318)(cid:33)O(cid:11) awards(cid:319)(cid:337), and (cid:2462)me-based restricted shares o(cid:61) (cid:7)ompany common stock or (cid:2462)me-based restricted stock units covering (cid:7)ompany common stock (cid:336)the (cid:318)(cid:2462)me-based awards(cid:319)(cid:337) (cid:336)collec(cid:2462)vely, the (cid:318)awards(cid:319)(cid:337), under the Second (cid:3)mended and (cid:33)estated (cid:30)lan. Up to 100(cid:1143) o(cid:61) the (cid:36)S(cid:33) awards will be eligible to vest based on the (cid:7)ompany(cid:317)s total shareholder return rela(cid:2462)ve to the (cid:24)S(cid:7)I World (cid:33)eal (cid:11)state Inde(cid:138) during a three-year per(cid:61)ormance period (cid:336)subject to con(cid:2462)nued employment through the ves(cid:2462)ng date(cid:337), with the actual number o(cid:61) shares subject to such (cid:36)S(cid:33) awards that vest and cease to be subject to restric(cid:2462)ons with respect to the per(cid:61)ormance period determined by mul(cid:2462)plying (cid:336)i(cid:337) the total number o(cid:61) shares subject to the (cid:36)S(cid:33) award by (cid:336)ii(cid:337) the applicable ves(cid:2462)ng percentage (cid:336)which is determined based on the level o(cid:61) the (cid:7)ompany(cid:317)s rela(cid:2462)ve total shareholder return a(cid:130)ained during the per(cid:61)ormance period(cid:337). Up to one-third o(cid:61) the (cid:33)O(cid:11) awards will be eligible to vest with respect to each (cid:7)ompany (cid:67)scal year o(cid:61) the per(cid:61)ormance period (cid:336)each, a (cid:318)per(cid:61)ormance year(cid:319)(cid:337) to the e(cid:138)tent that the (cid:7)ompany sa(cid:2462)s(cid:67)es the return on equity goals (cid:61)or such per(cid:61)ormance year (cid:336)subject to con(cid:2462)nued employment through the ves(cid:2462)ng date(cid:337). One-third o(cid:61) the (cid:2462)me-based awards will vest on each o(cid:61) the (cid:67)rst three anniversaries o(cid:61) the grant date, subject to con(cid:2462)nued employment through the ves(cid:2462)ng date. Stock-based compensa(cid:2462)on e(cid:138)pense is based on the (cid:61)air values on the date o(cid:61) grant (cid:61)or the (cid:33)O(cid:11) awards and (cid:2462)me-based awards. (cid:7)ertain (cid:33)O(cid:11) awards and (cid:2462)me-based awards were granted with a three-year sale restric(cid:2462)on period upon ves(cid:2462)ng. Due to the lack o(cid:61) marketability o(cid:61) these shares with the three- year sale restric(cid:2462)on period upon ves(cid:2462)ng, a 12.(cid:404)(cid:1143) discount was applied to the grant price o(cid:61) these shares when compu(cid:2462)ng stock compensa(cid:2462)on e(cid:138)pense. (cid:36)he (cid:61)air value o(cid:61) the (cid:36)S(cid:33) awards are es(cid:2462)mated using a (cid:24)onte (cid:7)arlo simula(cid:2462)on. (cid:3)s o(cid:61) December 31, 2022, there was (cid:362)32.(cid:403) million o(cid:61) unrecogni(cid:140)ed compensa(cid:2462)on cost (cid:61)or the Second (cid:3)mended and (cid:33)estated (cid:30)lan related to unvested shares which will vest over the ne(cid:138)t three years. Upon ves(cid:2462)ng, the restricted stock granted to employees discussed directly above is net share-se(cid:130)led to cover the withholding ta(cid:138). Shares that vested during the years ended December 31, 2022, 2021 and 2020 were net-share se(cid:130)led such that the (cid:7)ompany withheld shares with values equivalent to the employees(cid:317) minimum statutory obliga(cid:2462)ons (cid:61)or the applicable income and other employment ta(cid:138)es, and remi(cid:130)ed the cash to the appropriate ta(cid:138)ing authori(cid:2462)es. (cid:36)he total shares withheld during the years ended December 31, 2022, 2021 and 2020 were (cid:1142)3(cid:403),(cid:406)11 shares, (cid:406)(cid:1141)(cid:405),(cid:404)3(cid:1141) shares, and (cid:404)(cid:405)1,(cid:406)(cid:1142)3 shares respec(cid:2462)vely, and were valued based on the (cid:7)ompany(cid:317)s closing stock price on the respec(cid:2462)ve ves(cid:2462)ng dates. During the years ended December 31, 2022, 2021 and 2020, total payments (cid:61)or the employees(cid:317) ta(cid:138) obliga(cid:2462)ons to the ta(cid:138)ing authori(cid:2462)es were (cid:362)1(cid:1142).(cid:1141) million, (cid:362)20.(cid:404) million, and (cid:362)11.(cid:1141) million respec(cid:2462)vely. (cid:36)hese (cid:67)gures are re(cid:89)ected as a (cid:67)nancing ac(cid:2462)vity on the accompanying consolidated statements o(cid:61) cash (cid:89)ows. During the years ended December 31, 2022, 2021 and 2020, Kennedy Wilson recogni(cid:140)ed (cid:362)2(cid:406).0 million, (cid:362)2(cid:1142).(cid:405) million, and (cid:362)32.3 million, respec(cid:2462)vely, o(cid:61) compensa(cid:2462)on e(cid:138)pense related to the ves(cid:2462)ng o(cid:61) restricted common stock and is included in compensa(cid:2462)on and related e(cid:138)pense in the accompanying consolidated statements o(cid:61) income. (cid:36)he (cid:61)ollowing table sets (cid:61)orth ac(cid:2462)vity under the (cid:3)mended and (cid:33)estated (cid:30)lan, the First (cid:3)mended and (cid:33)estated (cid:30)lan, and the Second (cid:3)mended and (cid:33)estated (cid:30)lan (cid:61)or the (cid:7)ompany(cid:317)s (cid:67)scal years ending December 31, 2022, 2021 and 2020(cid:313) (cid:25)onvested at December 31, 2020 (cid:14)ranted (cid:40)ested For(cid:61)eited (cid:25)onvested at December 31, 2021 (cid:14)ranted (cid:40)ested For(cid:61)eited (cid:25)onvested at December 31, 2022 Shares 3,(cid:403)(cid:404)3,(cid:405)(cid:1141)(cid:1142) (cid:1141)1(cid:406),(cid:406)(cid:403)(cid:404) (cid:336)2,(cid:404)22,01(cid:406)(cid:337) (cid:336)23(cid:405),(cid:404)(cid:1142)(cid:1142)(cid:337) 1,31(cid:403),10(cid:1141) 1,221,3(cid:1141)2 (cid:336)(cid:1142)3(cid:403),(cid:406)10(cid:337) — 1,(cid:405)00,(cid:404)(cid:404)(cid:1142) Non(cid:328)N(cid:11)(cid:27) Deferred Compensa(cid:2236)on (cid:30)rogram and (cid:30)erformance Alloca(cid:2236)on Sharing (cid:30)rogram (cid:36)he (cid:7)ompany maintains a de(cid:61)erred compensa(cid:2462)on program (cid:61)or certain employees o(cid:61) the (cid:7)ompany (cid:336)the (cid:318)De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram(cid:319)(cid:337). (cid:36)he named e(cid:138)ecu(cid:2462)ve o(cid:76)cers o(cid:61) the (cid:7)ompany are not par(cid:2462)cipants o(cid:61) the De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram. (cid:36)he compensa(cid:2462)on commi(cid:130)ee o(cid:61) the (cid:7)ompany(cid:317)s board o(cid:61) directors approves an amount annually to be allocated to certain employees o(cid:61) the (cid:7)ompany in the United States and in (cid:11)urope. (cid:36)he amount allocated to each employee vests ratably over a three-year ves(cid:2462)ng period, subject to con(cid:2462)nued employment with the (cid:7)ompany. (cid:30)rior to 2022, hal(cid:61) o(cid:61) the allocated amount was (cid:2462)ed speci(cid:67)cally to the per(cid:61)ormance and value o(cid:61) the (cid:7)ompany(cid:317)s common stock at the (cid:2462)me o(cid:61) each ves(cid:2462)ng (cid:336)(cid:318)Bonus Units(cid:319)(cid:337). Beginning in 2022, the en(cid:2462)re amount allocated to each employee consisted o(cid:61) Bonus Units. Under the De(cid:61)erred (cid:7)ompensa(cid:2462)on (cid:30)rogram, at the (cid:2462)me o(cid:61) each ves(cid:2462)ng, the employees receive an amount equal to either the dividend yield o(cid:61) the (cid:7)ompany(cid:317)s common stock or the actual amount o(cid:61) dividends paid on the (cid:7)ompany 120 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 121 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) common stock (cid:336)in the case o(cid:61) Bonus Units(cid:337) during the immediately preceding year on the amount that is subject to such ves(cid:2462)ng. During the years ended December 31, 2022, 2021 and 2020 the (cid:7)ompany recogni(cid:140)ed compensa(cid:2462)on e(cid:138)pense o(cid:61) (cid:362)(cid:406).2 million, (cid:362)11.(cid:1142) million and (cid:362)(cid:1141).(cid:403) million, respec(cid:2462)vely, under the De(cid:61)erred (cid:7)ash Bonus (cid:30)rogram. (cid:36)he (cid:7)ompany also maintains a per(cid:61)ormance alloca(cid:2462)on sharing program (cid:61)or certain employees o(cid:61) the (cid:7)ompany (cid:336)the (cid:318)(cid:30)er(cid:61)ormance (cid:3)lloca(cid:2462)on Sharing (cid:30)rogram(cid:319)(cid:337). (cid:36)he named e(cid:138)ecu(cid:2462)ve o(cid:76)cers o(cid:61) the (cid:7)ompany are not par(cid:2462)cipants o(cid:61) the (cid:30)er(cid:61)ormance (cid:3)lloca(cid:2462)on Sharing (cid:30)rogram. (cid:36)he compensa(cid:2462)on commi(cid:130)ee o(cid:61) the (cid:7)ompany(cid:317)s board o(cid:61) directors approved, reserved and authori(cid:140)ed e(cid:138)ecu(cid:2462)ve management to issue up to thirty-(cid:67)ve percent (cid:336)3(cid:404)(cid:1143)(cid:337) o(cid:61) any per(cid:61)ormance alloca(cid:2462)on earned by certain commingled (cid:61)unds and separate account investments to be allocated to certain non-(cid:25)(cid:11)O employees o(cid:61) the (cid:7)ompany, si(cid:138)ty percent o(cid:61) the award to each employee vests ratably over (cid:61)our years and the remaining (cid:61)orty percent vests upon the consumma(cid:2462)on o(cid:61) a liquidity event o(cid:61) the investment whereby the (cid:7)ompany actually receives cash per(cid:61)ormance alloca(cid:2462)ons (cid:61)rom its partner. (cid:36)he (cid:61)ull per(cid:61)ormance alloca(cid:2462)on earned by the (cid:7)ompany will be recorded to income (cid:61)rom unconsolidated investments and the amount allocated to employees is recorded as per(cid:61)ormance alloca(cid:2462)on e(cid:138)pense. During the years ended December 31, 2022, 2021 and 2020 the (cid:7)ompany recogni(cid:140)ed (cid:362)(cid:336)(cid:403).3(cid:337) million, (cid:362)(cid:403)2.0 million and (cid:362)0.2 million, respec(cid:2462)vely, o(cid:61) per(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on to employees. NOTE 14—EQUITY Preferred Stock In October 201(cid:406), the (cid:7)ompany announced the issuance o(cid:61) a (cid:362)300 million perpetual pre(cid:61)erred equity investment in Kennedy Wilson by a(cid:76)liates o(cid:61) (cid:11)ldridge Industries (cid:336)collec(cid:2462)vely, (cid:318)(cid:11)ldridge(cid:319)(cid:337). Under the terms o(cid:61) the agreement, (cid:11)ldridge purchased (cid:362)300 million in cumula(cid:2462)ve perpetual conver(cid:2462)ble pre(cid:61)erred stock carrying a (cid:404).(cid:405)(cid:404)(cid:1143) annual dividend rate, with an ini(cid:2462)al conversion price o(cid:61) (cid:362)2(cid:404).00 per share. (cid:36)he pre(cid:61)erred stock is callable by Kennedy Wilson on and a(cid:91)er October 1(cid:404), 202(cid:404). On (cid:24)arch (cid:1142), 2022, the (cid:7)ompany announced the issuance o(cid:61) its (cid:362)300 million cumula(cid:2462)ve perpetual pre(cid:61)erred stock, in addi(cid:2462)on to appro(cid:138)imately 13 million o(cid:61) its warrants to a(cid:76)liates o(cid:61) Fair(cid:61)a(cid:138) Financial Holdings Limited (cid:336)collec(cid:2462)vely, (cid:318)Fair(cid:61)a(cid:138)(cid:319)(cid:337). Under the terms o(cid:61) the agreements, Fair(cid:61)a(cid:138) purchased (cid:362)300 million in cumula(cid:2462)ve perpetual pre(cid:61)erred stock carrying a (cid:403).(cid:405)(cid:404)(cid:1143) annual dividend rate and appro(cid:138)imately 13 million (cid:405)-year warrants, which are ini(cid:2462)ally conver(cid:2462)ble to the same number o(cid:61) common shares with and an ini(cid:2462)al e(cid:138)ercise price o(cid:61) (cid:362)23.00 per share. Both perpetual pre(cid:61)erred stock issuances are treated as permanent equity. At(cid:328)the(cid:328)Market (cid:11)(cid:116)uit(cid:139) (cid:27)(cid:64)ering Program In (cid:24)ay 2022, the (cid:7)ompany established an at-the-market equity o(cid:64)ering program (cid:336)the (cid:318)(cid:3)(cid:36)(cid:24) (cid:30)rogram(cid:319)(cid:337) pursuant to which it may issue and sell shares o(cid:61) the (cid:7)ompany(cid:317)s common stock having an aggregate gross sales price o(cid:61) up to (cid:362)200.0 million in amounts as the (cid:7)ompany may determine (cid:61)rom (cid:2462)me to (cid:2462)me. During the year ended December 31, 2022, the (cid:7)ompany did not issue any shares under its (cid:3)(cid:36)(cid:24) (cid:30)rogram. (cid:36)he (cid:7)ompany has no obliga(cid:2462)on to sell any o(cid:61) such shares under its (cid:3)(cid:36)(cid:24) (cid:30)rogram. (cid:3)ctual sales will depend on a variety o(cid:61) (cid:61)actors to be determined by the (cid:7)ompany (cid:61)rom (cid:2462)me to (cid:2462)me, including, among others, market condi(cid:2462)ons, the trading price o(cid:61) its common stock, the (cid:7)ompany(cid:317)s determina(cid:2462)on o(cid:61) the appropriate sources o(cid:61) (cid:61)unding (cid:61)or the (cid:7)ompany, and poten(cid:2462)al uses o(cid:61) (cid:61)unding available. Common Stock Repurchase Program On (cid:24)arch 20, 201(cid:1142), the (cid:7)ompany announced that its board o(cid:61) directors authori(cid:140)ed a (cid:362)2(cid:404)0.0 million stock repurchase program. (cid:33)epurchases under the program may be made in the open market, in privately nego(cid:2462)ated transac(cid:2462)ons, through the net se(cid:130)lement o(cid:61) the (cid:7)ompany(cid:317)s restricted stock grants or otherwise, with the amount and (cid:2462)ming o(cid:61) repurchases dependent on market condi(cid:2462)ons and subject to the (cid:7)ompany(cid:317)s discre(cid:2462)on. On (cid:25)ovember (cid:403), 2020, the (cid:7)ompany(cid:317)s board o(cid:61) directors authori(cid:140)ed an e(cid:138)pansion o(cid:61) its e(cid:138)is(cid:2462)ng (cid:362)2(cid:404)0 million share repurchase plan to (cid:362)(cid:404)00 million. During the year ended December 31, 2022, Kennedy Wilson repurchased and re(cid:2462)red (cid:404)(cid:404)1,1(cid:1141)2 shares (cid:61)or (cid:362)12.(cid:1141) million. During the year ended December 31, 2021, Kennedy Wilson repurchased and re(cid:2462)red 2,(cid:1142)2(cid:403),(cid:1141)(cid:1141)(cid:404) shares (cid:61)or (cid:362)(cid:1141)2.(cid:405) million under the previous stock repurchase program. (cid:14)enerally, upon ves(cid:2462)ng, the restricted stock granted to employees is net share-se(cid:130)led such that the (cid:7)ompany will withhold shares with value equivalent to the employees(cid:317) minimum statutory obliga(cid:2462)on (cid:61)or the applicable income and other employment ta(cid:138)es, and remit the cash to the appropriate ta(cid:138)ing authori(cid:2462)es. See (cid:25)ote 1(cid:403) (cid:61)or more detail. Dividend Distri(cid:48)u(cid:2236)ons Kennedy Wilson declared and paid the (cid:61)ollowing cash dividends on its common stock(cid:313) (Dollars in millions) (cid:30)referred (cid:34)toc(cid:104) Common (cid:34)toc(cid:104)(1) Year Ended December 31, 2022 Year Ended December 31, 2021 Declared (cid:362) 2(cid:1142).(cid:406) 132.3 (cid:30)aid Declared (cid:30)aid (cid:362) 2(cid:404).(cid:406) 13(cid:403).(cid:1141) (cid:362) 1(cid:405).2 12(cid:404).(cid:1142) (cid:362) 1(cid:405).2 123.(cid:404) (1)(cid:2)(cid:36)(cid:95)(cid:59)(cid:2)(cid:55)(cid:98)(cid:64)(cid:59)(cid:117)(cid:59)(cid:109)(cid:49)(cid:59)(cid:2)(cid:48)(cid:59)(cid:124)(cid:137)(cid:59)(cid:59)(cid:109)(cid:2)(cid:55)(cid:59)(cid:49)(cid:1140)(cid:45)(cid:117)(cid:59)(cid:55)(cid:2)(cid:45)(cid:109)(cid:55)(cid:2)(cid:114)(cid:45)(cid:98)(cid:55)(cid:2)(cid:98)(cid:118)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:45)(cid:108)(cid:111)(cid:134)(cid:109)(cid:124)(cid:2)(cid:45)(cid:49)(cid:49)(cid:117)(cid:134)(cid:59)(cid:55)(cid:2)(cid:111)(cid:109)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:49)(cid:111)(cid:109)(cid:118)(cid:111)(cid:1140)(cid:98)(cid:55)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:48)(cid:45)(cid:1140)(cid:45)(cid:109)(cid:49)(cid:59)(cid:2)(cid:118)(cid:95)(cid:59)(cid:59)(cid:124)(cid:118)(cid:314) Ta(cid:138)a(cid:48)ilit(cid:139) of Dividends (cid:11)arnings and pro(cid:67)ts, which determine the ta(cid:138)ability o(cid:61) distribu(cid:2462)ons to stockholders, may di(cid:64)er (cid:61)rom income reported (cid:61)or (cid:67)nancial repor(cid:2462)ng purposes due to the di(cid:64)erences (cid:61)or (cid:61)ederal income ta(cid:138) purposes in the treatment o(cid:61) revenue recogni(cid:2462)on, compensa(cid:2462)on e(cid:138)pense, deriva(cid:2462)ve investments and the basis o(cid:61) depreciable assets and es(cid:2462)mated use(cid:61)ul lives used to compute deprecia(cid:2462)on. (cid:36)he (cid:7)ompany(cid:317)s dividends related to its common stock will be classi(cid:67)ed (cid:61)or U.S. (cid:61)ederal income ta(cid:138) purposes as (cid:61)ollows(cid:313) (cid:33)ecord Date 12(cid:326)31(cid:326)2021 3(cid:326)31(cid:326)2022 (cid:1141)(cid:326)30(cid:326)2022 (cid:406)(cid:326)30(cid:326)2022 (cid:30)ayment Date 1(cid:326)(cid:1141)(cid:326)2022 (cid:403)(cid:326)(cid:405)(cid:326)2022 (cid:405)(cid:326)(cid:405)(cid:326)2022 10(cid:326)(cid:1141)(cid:326)2022 (cid:36)otals Distribu(cid:2462)ons (cid:30)er Share (cid:362) 0.2(cid:403)00 0.2(cid:403)00 0.2(cid:403)00 0.2(cid:403)00 Ordinary Dividends (cid:362) 0.0(cid:406)0(cid:1142) 0.0(cid:406)0(cid:1142) 0.0(cid:406)0(cid:1142) 0.0(cid:406)0(cid:1142) (cid:33)eturn o(cid:61) (cid:7)apital (cid:362) 0.1(cid:403)(cid:406)2 0.1(cid:403)(cid:406)2 0.1(cid:403)(cid:406)2 0.1(cid:403)(cid:406)2 (cid:362) 0.(cid:406)(cid:1141)00 (cid:362) 0.3(cid:1141)32 (cid:362) 0.(cid:404)(cid:406)(cid:1141)(cid:1142) 122 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 123 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Accumulated (cid:27)ther Comprehensive Income ((cid:21)oss) (cid:36)he (cid:61)ollowing table summari(cid:140)es the changes in each component o(cid:61) accumulated other comprehensive loss (cid:336)(cid:318)(cid:3)O(cid:7)I(cid:319)(cid:337), net o(cid:61) ta(cid:138)es(cid:313) (Dollars in millions) Balance at December 31, 2021 (cid:1354) Unreali(cid:140)ed (cid:336)losses(cid:337) gains, arising during (cid:1354)the period (cid:1354) (cid:36)a(cid:138)es on unreali(cid:140)ed losses (cid:336)gains(cid:337), arising (cid:1354)during the period (cid:1354) (cid:3)mounts reclassi(cid:67)ed out o(cid:61) (cid:3)O(cid:7)I during the (cid:1354)period, gross (cid:1354) (cid:3)mounts reclassi(cid:67)ed out o(cid:61) (cid:3)O(cid:7)I during the (cid:1354)period, ta(cid:138)es (cid:1354)(cid:25)oncontrolling interest Foreign (cid:7)urrency (cid:36)ransla(cid:2462)on (cid:362) (cid:336)(cid:1142)(cid:1142).2(cid:337) (cid:336)(cid:405)3.(cid:406)(cid:337) 2.2 — — 3.0 Foreign (cid:7)urrency Deriva(cid:2462)ve (cid:7)ontracts (cid:362) (cid:404)(cid:1142).(cid:1141) 3(cid:406).(cid:404) (cid:336)1(cid:1141).1(cid:337) — — — (cid:36)otal (cid:3)ccumulated Other (cid:7)omprehensive Loss(cid:336)1(cid:337) Interest (cid:33)ate Swaps (cid:362) (cid:336)1.(cid:1141)(cid:337) (cid:362) (cid:336)31.2(cid:337) (cid:405).(cid:403) (cid:336)1.(cid:1142)(cid:337) (cid:336)1.1(cid:337) 0.3 — (cid:336)2(cid:405).0(cid:337) (cid:336)1(cid:404).(cid:405)(cid:337) (cid:336)1.1(cid:337) 0.3 3.0 Balance at Decem(cid:48)er (cid:402)1, 2(cid:399)22 (cid:362) (cid:336)1(cid:404)(cid:1141).(cid:406)(cid:337) (cid:362) (cid:1142)2.0 (cid:362) 3.2 (cid:362) (cid:336)(cid:405)1.(cid:405)(cid:337) (1)(cid:2)(cid:2)(cid:11)(cid:138)(cid:49)(cid:1140)(cid:134)(cid:55)(cid:59)(cid:118)(cid:2)(cid:362)(cid:402)(cid:404)(cid:1142)(cid:314)(cid:403)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:98)(cid:109)(cid:49)(cid:59)(cid:114)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:124)(cid:111)(cid:2)(cid:55)(cid:45)(cid:124)(cid:59)(cid:2)(cid:45)(cid:49)(cid:49)(cid:134)(cid:108)(cid:134)(cid:1140)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:111)(cid:124)(cid:95)(cid:59)(cid:117)(cid:2)(cid:49)(cid:111)(cid:108)(cid:114)(cid:117)(cid:59)(cid:95)(cid:59)(cid:109)(cid:118)(cid:98)(cid:136)(cid:59)(cid:2)(cid:1140)(cid:111)(cid:118)(cid:118)(cid:59)(cid:118)(cid:2)(cid:45)(cid:118)(cid:118)(cid:111)(cid:49)(cid:98)(cid:45)(cid:124)(cid:59)(cid:55)(cid:2)(cid:137)(cid:98)(cid:124)(cid:95)(cid:2)(cid:109)(cid:111)(cid:109)(cid:49)(cid:111)(cid:109)(cid:124)(cid:117)(cid:111)(cid:1140)(cid:1140)(cid:98)(cid:109)(cid:93)(cid:2)(cid:98)(cid:109)(cid:124)(cid:59)(cid:117)(cid:59)(cid:118)(cid:124)(cid:2) (cid:95)(cid:111)(cid:1140)(cid:55)(cid:59)(cid:117)(cid:118)(cid:2)(cid:111)(cid:61)(cid:2)(cid:20)(cid:41)(cid:11)(cid:2)(cid:124)(cid:95)(cid:45)(cid:124)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:7)(cid:111)(cid:108)(cid:114)(cid:45)(cid:109)(cid:139)(cid:2)(cid:137)(cid:45)(cid:118)(cid:2)(cid:117)(cid:59)(cid:116)(cid:134)(cid:98)(cid:117)(cid:59)(cid:55)(cid:2)(cid:124)(cid:111)(cid:2)(cid:117)(cid:59)(cid:49)(cid:111)(cid:117)(cid:55)(cid:2)(cid:45)(cid:118)(cid:2)(cid:114)(cid:45)(cid:117)(cid:124)(cid:2)(cid:111)(cid:61)(cid:2)(cid:124)(cid:95)(cid:59)(cid:2)(cid:20)(cid:41)(cid:11)(cid:2)(cid:36)(cid:117)(cid:45)(cid:109)(cid:118)(cid:45)(cid:49)(cid:2462)(cid:111)(cid:109)(cid:2)(cid:98)(cid:109)(cid:2)(cid:27)(cid:49)(cid:124)(cid:111)(cid:48)(cid:59)(cid:117)(cid:2)(cid:401)(cid:399)(cid:400)(cid:405)(cid:314) (cid:36)he local currencies (cid:61)or the (cid:7)ompany(cid:317)s interests in (cid:61)oreign opera(cid:2462)ons include the euro and the Bri(cid:2462)sh pound sterling. (cid:36)he related amounts on our balance sheets are translated into U.S. dollars at the e(cid:138)change rates at the respec(cid:2462)ve (cid:67)nancial statement date, while amounts on our statements o(cid:61) income are translated at the average e(cid:138)change rates during the respec(cid:2462)ve period. Unreali(cid:140)ed losses on (cid:61)oreign currency transla(cid:2462)on is a result o(cid:61) the weakening o(cid:61) the euro and Bri(cid:2462)sh pound sterling against the U.S. dollar during the year ended December 31, 2022. In order to manage currency (cid:89)uctua(cid:2462)ons, Kennedy Wilson entered into currency deriva(cid:2462)ve contracts to manage its e(cid:138)posure to currency (cid:89)uctua(cid:2462)ons between its (cid:61)unc(cid:2462)onal currency (cid:336)U.S. dollar(cid:337) and the (cid:61)unc(cid:2462)onal currency (cid:336)(cid:11)uro and (cid:14)B(cid:30)(cid:337) o(cid:61) certain o(cid:61) its wholly-owned and consolidated subsidiaries. See (cid:25)ote (cid:404) (cid:61)or a more detailed discussion o(cid:61) Kennedy Wilson(cid:317)s currency deriva(cid:2462)ve contracts. NOTE 15—EARNINGS PER SHARE Basic earnings per share is computed by dividing net income (cid:336)loss(cid:337) a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. common stockholders by the weighted average number o(cid:61) common shares outstanding. Diluted earnings per share is computed a(cid:91)er adjus(cid:2462)ng the numerator and denominator o(cid:61) the basic earnings per share computa(cid:2462)on (cid:61)or the e(cid:64)ects o(cid:61) all poten(cid:2462)ally dilu(cid:2462)ve common shares. (cid:36)he dilu(cid:2462)ve e(cid:64)ect o(cid:61) non-vested stock issued under share-based compensa(cid:2462)on plans is computed using the treasury stock method. (cid:36)he dilu(cid:2462)ve e(cid:64)ect o(cid:61) the cumula(cid:2462)ve pre(cid:61)erred stock is computed using the i(cid:61)-converted method. (cid:36)he (cid:61)ollowing is a summary o(cid:61) the elements used in calcula(cid:2462)ng basic and diluted income per share (cid:61)or the years ended December 31, 2022, 2021 and 2020(cid:313) (Dollars in millions, except share amounts and per share data) (cid:25)et income a(cid:130)ributable to Kennedy-Wilson Holdings, Inc. (cid:1354)common shareholders Weighted-average shares outstanding (cid:61)or basic Income per share(cid:331)basic Weighted average shares outstanding (cid:61)or diluted Income per share(cid:331)diluted 2022 (cid:1141)(cid:403).(cid:1142) 13(cid:1141),(cid:406)00,(cid:1142)(cid:405)(cid:404) 0.(cid:403)(cid:405) 13(cid:1142),(cid:404)(cid:1141)(cid:405),(cid:404)3(cid:403) 0.(cid:403)(cid:405) (cid:362) (cid:362) (cid:362) Year ended December 31, 2021 313.2 13(cid:1142),(cid:404)(cid:404)2,0(cid:404)(cid:1142) 2.2(cid:1141) 1(cid:403)0,132,(cid:403)3(cid:404) 2.2(cid:403) (cid:362) (cid:362) (cid:362) (cid:362) (cid:362) (cid:362) 2020 (cid:406)2.(cid:406) 13(cid:406),(cid:405)(cid:403)1,(cid:403)11 0.(cid:1141)(cid:1141) 1(cid:403)0,3(cid:403)(cid:405),3(cid:1141)(cid:404) 0.(cid:1141)(cid:1141) (cid:36)here was a total o(cid:61) 2(cid:1141),(cid:406)(cid:404)(cid:1142),(cid:404)11, 13,(cid:404)(cid:405)2,(cid:404)(cid:406)0 and 13,23(cid:1141),(cid:1142)(cid:406)(cid:1141) during the years ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely, poten(cid:2462)ally dilu(cid:2462)ve securi(cid:2462)es were not included in the diluted weighted average shares as they were an(cid:2462)-dilu(cid:2462)ve. (cid:30)oten(cid:2462)ally an(cid:2462)-dilu(cid:2462)ve securi(cid:2462)es include pre(cid:61)erred stock and unvested restricted stock grants. NOTE 16—SEGMENT INFORMATION Segments (cid:36)he (cid:7)ompany(cid:317)s opera(cid:2462)ons are de(cid:67)ned by two business segments(cid:313) its (cid:7)onsolidated investment por(cid:127)olio (cid:336)the (cid:318)(cid:7)onsolidated (cid:30)or(cid:127)olio(cid:319)(cid:337) and its (cid:7)o-Investment (cid:30)or(cid:127)olio(cid:313) • (cid:7)onsolidated (cid:30)or(cid:127)olio consists o(cid:61) the investments that the (cid:7)ompany has made in real estate and real estate-related assets and consolidates on its balance sheet. (cid:36)he (cid:7)ompany typically wholly-owns the assets in its (cid:7)onsolidated (cid:30)or(cid:127)olio. • (cid:7)o-Investment (cid:30)or(cid:127)olio consists o(cid:61) (cid:336)i(cid:337) the co-investments that the (cid:7)ompany has made in real estate and real estate-related assets, including loans secured by real estate, through the commingled (cid:61)unds and joint ventures that it manages(cid:312) and (cid:336)ii(cid:337) the (cid:61)ees (cid:336)including, without limita(cid:2462)on, asset management (cid:61)ees and construc(cid:2462)on management (cid:61)ees(cid:337)(cid:312) and (cid:336)iii(cid:337) per(cid:61)ormance alloca(cid:2462)ons that it earns on its (cid:61)ee-bearing capital. (cid:36)he (cid:7)ompany typically owns a (cid:404)(cid:1143) to (cid:404)0(cid:1143) ownership interest in the assets in its (cid:7)o-Investment (cid:30)or(cid:127)olio. In addi(cid:2462)on to the (cid:7)ompany(cid:317)s two primary business segments the (cid:7)ompany(cid:317)s (cid:7)orporate segment includes, among other things, corporate overhead and (cid:30)roperty Services (cid:61)or all periods prior to its sale in the (cid:61)ourth quarter 2020. Consolidated Portfolio (cid:7)onsolidated (cid:30)or(cid:127)olio is a permanent capital vehicle (cid:61)ocused on ma(cid:138)imi(cid:140)ing property cash (cid:89)ow. (cid:36)hese assets are primarily wholly-owned and tend to have longer hold periods and the (cid:7)ompany targets investments with accre(cid:2462)ve asset management opportuni(cid:2462)es. (cid:36)he (cid:7)ompany typically (cid:61)ocuses on o(cid:76)ce and mul(cid:2462)(cid:61)amily assets in the Western United States and commercial assets in the United Kingdom and Ireland within this segment. 124 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 125 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Co-Investment Portfolio (cid:7)o-Investment (cid:30)or(cid:127)olio segment consists o(cid:61) investments the (cid:7)ompany makes with partners in which it receives (cid:336)i(cid:337) the (cid:61)ees (cid:336)including, without limita(cid:2462)on, asset management (cid:61)ees and construc(cid:2462)on management (cid:61)ees(cid:337)(cid:312) (cid:336)ii(cid:337) per(cid:61)ormance alloca(cid:2462)ons that it earns on its (cid:61)ee-bearing capital(cid:312) and (cid:336)iii(cid:337) and its ownership interest in the underlying opera(cid:2462)ons o(cid:61) its co-investments. (cid:36)he (cid:7)ompany u(cid:2462)li(cid:140)es di(cid:64)erent pla(cid:127)orms in the (cid:7)o-Investment (cid:30)or(cid:127)olio segment depending on the asset and risk return pro(cid:67)les. (cid:25)o single third-party client accounted (cid:61)or 10(cid:1143) or more o(cid:61) Kennedy Wilson(cid:317)s revenue during any period presented in these (cid:67)nancial statements. (cid:36)he (cid:61)ollowing tables summari(cid:140)e the income and e(cid:138)pense ac(cid:2462)vity by segment (cid:61)or the years ended December 31, 2022, 2021 and 2020 and total assets as o(cid:61) December 31, 2022 and 2021. (Dollars in millions) Revenue (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)Investment management (cid:61)ees (cid:1354)(cid:30)roperty services (cid:61)ees (cid:1354)Loans and other (cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)Income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)(cid:14)ain on early e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)Other income (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es Net income (loss) (cid:1354)(cid:25)et income a(cid:130)ributable to noncontrolling interests (cid:1354)(cid:30)re(cid:61)erred dividends Net income (loss) a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:1354)(cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (cid:7)onsolidated (cid:7)o-Investments (cid:7)orporate (cid:36)otal Year Ended December 31, 2022 (cid:362) (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) — — — (cid:403)(cid:1142)1.(cid:1142) — — — 103.(cid:405) 1(cid:404)1.2 2(cid:406).(cid:404) (cid:403)1.(cid:404) — — 1(cid:403).(cid:405) 1(cid:405)2.(cid:406) (cid:403)0(cid:406).(cid:1142) (cid:336)12(cid:1142).2(cid:337) 2(cid:405).(cid:404) 20.(cid:1142) (cid:336)21.0(cid:337) (cid:405)(cid:403).(cid:1142) (cid:336)(cid:1142).2(cid:337) — (cid:362) — — (cid:403)(cid:403).(cid:1142) — 11.(cid:405) (cid:404)(cid:1141).(cid:404) 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) 1(cid:405)(cid:1142).(cid:403) — — — (cid:403)(cid:403).(cid:1141) — (cid:336)(cid:403).3(cid:337) 1(cid:403).(cid:1142) — (cid:404)(cid:404).1 — — — — 1(cid:405)(cid:406).(cid:1142) — — (cid:362) — — — 1.(cid:405) — 1.(cid:405) — — — — — — 2(cid:404).2 2(cid:406).0 — (cid:405).(cid:405) — (cid:1141)1.(cid:406) (cid:336)(cid:406)2.(cid:1141)(cid:337) — 1(cid:404).3 (cid:336)1(cid:404).2(cid:337) (cid:336)1(cid:404)2.(cid:405)(cid:337) — (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:362) (cid:403)3(cid:403).(cid:406) (cid:403)(cid:1141).(cid:406) (cid:403)(cid:403).(cid:1142) 1.(cid:405) 11.(cid:405) (cid:404)(cid:403)0.0 1(cid:406)(cid:406).(cid:404) (cid:336)21.1(cid:337) 1(cid:405)(cid:1142).(cid:403) 103.(cid:405) 1(cid:404)1.2 2(cid:406).(cid:404) 111.3 2(cid:406).0 (cid:336)(cid:403).3(cid:337) 3(cid:405).2 1(cid:405)2.(cid:406) (cid:404)2(cid:1141).(cid:1142) (cid:336)220.(cid:1142)(cid:337) 2(cid:405).(cid:404) 3(cid:1141).1 (cid:336)3(cid:1141).2(cid:337) 101.(cid:406) (cid:336)(cid:1142).2(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:362) (cid:1141)(cid:1141).(cid:1141) (cid:362) 1(cid:405)(cid:406).(cid:1142) (cid:362) (cid:336)1(cid:1142)1.(cid:1141)(cid:337) (cid:362) (cid:1141)(cid:403).(cid:1142) (Dollars in millions) Revenue (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)Investment management (cid:61)ees (cid:1354)(cid:30)roperty services (cid:61)ees (cid:1354)Loans and other (cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)Income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)Loss on e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)Other loss (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es Net income (loss) (cid:1354)(cid:25)et income a(cid:130)ributable to noncontrolling interests (cid:1354)(cid:30)re(cid:61)erred dividends Net income (loss) a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:1354)(cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (cid:7)onsolidated (cid:7)o-Investments (cid:7)orporate (cid:36)otal Year Ended December 31, 2021 (cid:362) 3(cid:406)0.(cid:404) 1(cid:405).1 — — — (cid:403)0(cid:405).(cid:1141) (cid:362) — — 3(cid:404).3 — (cid:1142).(cid:1141) (cid:362) — — — 2.1 — (cid:362) 3(cid:406)0.(cid:404) 1(cid:405).1 3(cid:404).3 2.1 (cid:1142).(cid:1141) (cid:403)3.(cid:406) 2.1 (cid:403)(cid:404)3.(cid:1141) — — — (cid:403)12.(cid:405) 132.(cid:405) 12.(cid:405) (cid:1141)0.(cid:403) — — 1(cid:1142).(cid:404) 1(cid:1141)(cid:1141).3 3(cid:406)0.(cid:1141) (cid:336)11(cid:406).1(cid:337) (cid:336)1(cid:406).2(cid:337) (cid:336)(cid:403).(cid:405)(cid:337) (cid:336)23.0(cid:337) 2(cid:1141)3.(cid:405) (cid:336)(cid:1141).0(cid:337) — 2(cid:405)1.1 11(cid:405).(cid:406) 3(cid:1142)(cid:406).0 — — — (cid:403)0.(cid:403) — (cid:403)2.0 (cid:1142).(cid:404) — (cid:406)0.(cid:406) — — — — 3(cid:403)2.0 — — — — — — — — 33.1 2(cid:1142).(cid:405) — (cid:1141).3 — (cid:1141)(cid:1142).1 (cid:336)(cid:405)3.3(cid:337) (cid:336)2(cid:1141).(cid:404)(cid:337) (cid:336)0.3(cid:337) (cid:336)103.2(cid:337) (cid:336)2(cid:1141)(cid:406).3(cid:337) — (cid:336)1(cid:405).2(cid:337) 2(cid:405)1.1 11(cid:405).(cid:406) 3(cid:1142)(cid:406).0 (cid:403)12.(cid:405) 132.(cid:405) 12.(cid:405) 133.(cid:406) 2(cid:1142).(cid:405) (cid:403)2.0 33.3 1(cid:1141)(cid:1141).3 (cid:404)(cid:403)(cid:406).(cid:1141) (cid:336)1(cid:406)2.(cid:403)(cid:337) (cid:336)(cid:403)(cid:404).(cid:405)(cid:337) (cid:336)(cid:404).0(cid:337) (cid:336)12(cid:1141).2(cid:337) 33(cid:1141).(cid:403) (cid:336)(cid:1141).0(cid:337) (cid:336)1(cid:405).2(cid:337) (cid:362) 2(cid:404)(cid:405).(cid:405) (cid:362) 3(cid:403)2.0 (cid:362) (cid:336)2(cid:1142)(cid:1141).(cid:404)(cid:337) (cid:362) 313.2 126 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 127 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (Dollars in millions) Revenue (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)Investment management (cid:61)ees (cid:1354)(cid:30)roperty services (cid:61)ees (cid:1354)Loans and other (cid:1354)Total revenue Income from unconsolidated investments (cid:1354)(cid:30)rincipal co-investments (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)ons (cid:1354)Income from unconsolidated investments Gain on sale of real estate, net Expenses (cid:1354)(cid:33)ental (cid:1354)Hotel (cid:1354)(cid:7)ompensa(cid:2462)on and related (cid:1354)Share-based compensa(cid:2462)on (cid:1354)(cid:30)er(cid:61)ormance alloca(cid:2462)on compensa(cid:2462)on (cid:1354)(cid:14)eneral and administra(cid:2462)ve (cid:1354)Deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on (cid:1354)Total expenses (cid:1354)Interest e(cid:138)pense (cid:1354)Loss on e(cid:138)(cid:2462)nguishment o(cid:61) debt (cid:1354)Other loss (cid:1354)(cid:30)rovision (cid:61)or income ta(cid:138)es Net income (loss) (cid:1354)(cid:25)et loss a(cid:130)ributable to noncontrolling interests (cid:1354)(cid:30)re(cid:61)erred dividends Net income (loss) a(cid:130)ri(cid:48)uta(cid:48)le to (cid:20)enned(cid:139)(cid:330)(cid:41)ilson (cid:1354)(cid:15)oldin(cid:93)s, Inc(cid:314) common shareholders (Dollars in millions) Assets (cid:7)onsolidated (cid:7)o-investment (cid:7)orporate Total assets (Dollars in millions) (cid:11)(cid:138)penditures (cid:61)or long lived assets Investments (cid:7)onsolidated (cid:7)o-Investments (cid:7)orporate (cid:36)otal Year Ended December 31, 2020 (cid:362) (cid:403)03.(cid:406) 13.(cid:406) — — — (cid:403)1(cid:405).(cid:1142) — — — 33(cid:1142).0 13(cid:404).(cid:405) 13.(cid:1142) (cid:404)(cid:406).(cid:405) — — 20.(cid:1141) 1(cid:405)(cid:406).(cid:1141) (cid:403)0(cid:406).(cid:403) (cid:336)132.(cid:403)(cid:337) (cid:336)(cid:406).3(cid:337) (cid:336)1.(cid:403)(cid:337) (cid:336)1(cid:1142).(cid:403)(cid:337) 1(cid:1142)(cid:403).(cid:406) 2.3 — (cid:362) — — 22.(cid:404) — 3.1 (cid:362) — — — 10.(cid:1141) — (cid:362) (cid:403)03.(cid:406) 13.(cid:406) 22.(cid:404) 10.(cid:1141) 3.1 2(cid:404).(cid:1141) (cid:405)(cid:1142).3 2.(cid:405) (cid:1142)1.0 — — — 20.(cid:1142) — 0.2 (cid:404).(cid:406) — 2(cid:1141).(cid:406) — — — — (cid:405)(cid:406).(cid:405) — — 10.(cid:1141) (cid:403)(cid:404)(cid:403).0 — — — — — — 31.(cid:403) 32.3 — (cid:1142).1 — (cid:405)1.(cid:1142) (cid:336)(cid:1141)(cid:406).(cid:404)(cid:337) — (cid:336)0.(cid:406)(cid:337) (cid:336)2(cid:404).2(cid:337) (cid:336)1(cid:404)(cid:1141).(cid:1142)(cid:337) — (cid:336)1(cid:405).2(cid:337) (cid:405)(cid:1142).3 2.(cid:405) (cid:1142)1.0 33(cid:1142).0 13(cid:404).(cid:405) 13.(cid:1142) 111.(cid:406) 32.3 0.2 3(cid:403).(cid:1141) 1(cid:405)(cid:406).(cid:1141) (cid:404)0(cid:1142).1 (cid:336)201.(cid:406)(cid:337) (cid:336)(cid:406).3(cid:337) (cid:336)2.3(cid:337) (cid:336)(cid:403)3.(cid:1141)(cid:337) 10(cid:405).(cid:1142) 2.3 (cid:336)1(cid:405).2(cid:337) (cid:362) 1(cid:1142)(cid:405).2 (cid:362) (cid:405)(cid:406).(cid:405) (cid:362) (cid:336)1(cid:405)(cid:403).0(cid:337) (cid:362) (cid:406)2.(cid:406) December 31, 2022 2021 (cid:362) (cid:404),(cid:1141)(cid:1142)(cid:403).1 2,3(cid:1142)(cid:405).(cid:404) 200.2 (cid:362) (cid:404),(cid:403)(cid:405)3.(cid:406) 2,0(cid:405)(cid:405).(cid:406) 32(cid:403).(cid:405) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 2022 2021 2020 December 31, (cid:362) (cid:336)(cid:404)(cid:1141)(cid:406).1(cid:337) (cid:362) (cid:336)1,2(cid:405)1.0(cid:337) (cid:362) (cid:336)2(cid:1141)(cid:403).2(cid:337) Geographic Information (cid:36)he revenue shown in the table below is allocated based upon the region in which services are per(cid:61)ormed. (Dollars in millions) United States (cid:11)urope Total revenue Year Ended December 31, 2022 31(cid:405).(cid:404) 222.(cid:404) (cid:404)(cid:403)0.0 (cid:362) (cid:362) 2021 2(cid:405)(cid:1142).1 1(cid:405)(cid:404).(cid:404) (cid:403)(cid:404)3.(cid:1141) (cid:362) (cid:362) 2020 2(cid:405)(cid:405).3 1(cid:405)(cid:1141).(cid:405) (cid:403)(cid:404)(cid:403).0 (cid:362) (cid:362) NOTE 17—GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (cid:36)he (cid:61)ollowing consolida(cid:2462)ng (cid:67)nancial in(cid:61)orma(cid:2462)on and condensed consolida(cid:2462)ng (cid:67)nancial in(cid:61)orma(cid:2462)on includes(cid:313) (cid:336)1(cid:337) (cid:7)ondensed consolida(cid:2462)ng balance sheets as o(cid:61) December 31, 2022 and 2021, respec(cid:2462)vely(cid:312) consolida(cid:2462)ng statements o(cid:61) income (cid:61)or the years ended December 31, 2022, 2021 and 2020, respec(cid:2462)vely(cid:312) o(cid:61) (cid:336)a(cid:337) Kennedy-Wilson Holdings, Inc. on an unconsolidated basis as the parent (cid:336)and guarantor(cid:337), (cid:336)b(cid:337) Kennedy-Wilson, Inc., as the subsidiary issuer, (cid:336)c(cid:337) the guarantor subsidiaries, (cid:336)d(cid:337) the non-guarantor subsidiaries and (cid:336)e(cid:337) Kennedy-Wilson Holdings, Inc. on a consolidated basis(cid:312) and (cid:336)2(cid:337) (cid:11)limina(cid:2462)on entries necessary to consolidate Kennedy-Wilson Holdings, Inc., as the parent guarantor, with Kennedy-Wilson, Inc. and its guarantor and non-guarantor subsidiaries Kennedy Wilson owns 100(cid:1143) o(cid:61) all o(cid:61) the guarantor subsidiaries, and, as a result, in accordance with (cid:33)ule 3-10(cid:336)d(cid:337) o(cid:61) (cid:33)egula(cid:2462)on S-(cid:42) promulgated by the S(cid:11)(cid:7), no separate (cid:67)nancial statements are required (cid:61)or these subsidiaries as o(cid:61) December 31, 2022 or 2021 and (cid:61)or the years ended December 31, 2022, 2021 or 2020. (cid:30)arent Kennedy- Wilson, Inc. (cid:14)uarantor Subsidiaries Condensed Consolidating Balance Sheet As of December 31, 2022 (cid:7)onsolidated (cid:36)otal (cid:11)limina(cid:2462)on (cid:25)on-guarantor Subsidiaries Total assets (cid:362) 2,00(cid:406).0 (cid:362) (cid:403),(cid:403)(cid:1142)(cid:1142).3 (cid:362) (cid:404),(cid:403)(cid:403)(cid:404).3 (cid:362) (cid:404),(cid:403)(cid:405)(cid:405).(cid:404) (cid:362) (cid:336)(cid:406),1(cid:403)(cid:1142).3(cid:337) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) (Dollars in millions) Assets (cid:1354)(cid:7)ash and cash equivalents (cid:1354)(cid:3)ccounts receivable (cid:1354) (cid:33)eal estate and acquired in place (cid:1354) lease values, net o(cid:61) accumulated (cid:362) deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on, net (cid:1354)Unconsolidated investments (cid:1354) Investments in and advances to (cid:1354)consolidated subsidiaries (cid:1354)Other assets (cid:1354)Loan purchases and origina(cid:2462)ons — — — — 2,00(cid:406).0 — — (cid:21)ia(cid:48)ili(cid:2462)es (cid:1354)(cid:3)ccounts payable (cid:1354) (cid:3)ccrued e(cid:138)penses and other (cid:1354)liabili(cid:2462)es (cid:1354)(cid:24)ortgage debt (cid:1354)KW unsecured debt (cid:1354)KW(cid:11) unsecured bonds Total lia(cid:48)ili(cid:2462)es E(cid:116)uit(cid:139) (cid:1354) Kennedy-Wilson Holdings, Inc. (cid:1354)shareholders(cid:317) equity (cid:1354)(cid:25)oncontrolling interests Total e(cid:116)uit(cid:139) — (cid:403)(cid:404).0 — — — (cid:403)(cid:404).0 1,(cid:406)(cid:1141)(cid:403).0 — 1,(cid:406)(cid:1141)(cid:403).0 (cid:362) (cid:362) (cid:406)1.(cid:404) 0.1 (cid:362) (cid:404)(cid:406).(cid:1141) 1(cid:1142).2 (cid:362) 2(cid:1142)(cid:1142).2 22.(cid:404) — 1(cid:404).(cid:406) (cid:403),2(cid:1142)(cid:406).3 (cid:1142)(cid:404).(cid:405) (cid:404).(cid:1142) 1,(cid:1141)(cid:404)(cid:1141).(cid:1142) (cid:1141)(cid:406)(cid:1142).(cid:1141) 2,(cid:1142)(cid:404)0.0 (cid:404)0.(cid:404) 111.(cid:1141) 3,(cid:404)31.3 1,(cid:404)23.(cid:1141) — (cid:405)(cid:406).(cid:406) 32.0 (cid:336)(cid:406),1(cid:403)(cid:1142).3(cid:337) — — 0.(cid:404) (cid:403).0 11.(cid:405) (cid:403)1(cid:1141).2 — 2,0(cid:1141)2.(cid:1141) — 2,(cid:403)(cid:405)(cid:406).3 2,00(cid:406).0 — 2,00(cid:406).0 (cid:405)(cid:1141).(cid:404) 1,0(cid:405)(cid:404).(cid:404) — — 1,1(cid:404)(cid:1141).0 (cid:403),2(cid:1142)(cid:406).3 — (cid:403),2(cid:1142)(cid:406).3 120.(cid:404) 1,(cid:406)(cid:403)2.(cid:404) — (cid:404)0(cid:1141).(cid:403) 2,(cid:404)(cid:1142)1.1 2,(cid:1142)(cid:404)0.0 (cid:403)(cid:1141).(cid:403) (cid:336)(cid:406),1(cid:403)(cid:1142).3(cid:337) — 2,(cid:1142)(cid:406)(cid:1141).(cid:403) (cid:336)(cid:406),1(cid:403)(cid:1142).3(cid:337) — — — — — — — — — — (cid:362) (cid:403)3(cid:406).3 (cid:403)0.(cid:1142) (cid:404),1(cid:1142)(cid:1142).1 2,23(cid:1142).1 — 21(cid:1141).1 1(cid:403)(cid:406).(cid:403) 1(cid:1141).2 (cid:1141)(cid:404)(cid:1142).2 3,01(cid:1142).0 2,0(cid:1141)2.(cid:1141) (cid:404)0(cid:1141).(cid:403) (cid:1141),2(cid:1141)1.(cid:403) 1,(cid:406)(cid:1141)(cid:403).0 (cid:403)(cid:1141).(cid:403) 2,010.(cid:403) Total lia(cid:48)ili(cid:2462)es and e(cid:116)uit(cid:139) (cid:362) 2,00(cid:406).0 (cid:362) (cid:403),(cid:403)(cid:1142)(cid:1142).3 (cid:362) (cid:404),(cid:403)(cid:403)(cid:404).3 (cid:362) (cid:404),(cid:403)(cid:405)(cid:405).(cid:404) (cid:362) (cid:336)(cid:406),1(cid:403)(cid:1142).3(cid:337) (cid:362) (cid:1142),2(cid:405)1.(cid:1142) 128 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 129 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) (cid:30)arent Kennedy- Wilson, Inc. (cid:14)uarantor Subsidiaries Condensed Consolidating Balance Sheet As of December 31, 2021 (cid:25)on- guarantor Subsidiaries (cid:11)limina(cid:2462)on (cid:7)onsolidated (cid:36)otal (cid:362) — (cid:362) — (cid:362) 11(cid:1141).(cid:403) — (cid:1141)(cid:406).1 1(cid:1141).0 (cid:362) 33(cid:406).3 (cid:362) 20.1 — (cid:362) — (cid:404)2(cid:403).(cid:1142) 3(cid:1141).1 (Dollars in millions) (cid:3)ssets (cid:1354)(cid:7)ash and cash equivalents (cid:1354)(cid:3)ccounts receivable (cid:1354)(cid:33)eal estate and acquired in place (cid:1354)(cid:1354)lease values, net o(cid:61) accumulated (cid:1354)(cid:1354)deprecia(cid:2462)on and amor(cid:2462)(cid:140)a(cid:2462)on, net (cid:1354)Unconsolidated investments (cid:1354)Investments in and advances to (cid:1354)(cid:1354)consolidated subsidiaries (cid:1354)Other assets (cid:1354)Loan purchases and origina(cid:2462)ons — — 1,(cid:1142)21.(cid:406) — — — 1(cid:403).(cid:1142) 3,(cid:1142)(cid:404)(cid:406).2 (cid:1141)(cid:404).(cid:406) (cid:1141).1 (cid:36)otal assets (cid:362) 1,(cid:1142)21.(cid:406) (cid:362) (cid:403),0(cid:1141)2.(cid:403) Liabili(cid:2462)es (cid:1354)(cid:3)ccounts payable (cid:1354)(cid:3)ccrued e(cid:138)penses and other (cid:1354)(cid:1354)liabili(cid:2462)es (cid:1354)(cid:24)ortgage debt (cid:1354)KW unsecured debt (cid:1354)KW(cid:11) unsecured bonds (cid:36)otal liabili(cid:2462)es (cid:11)quity (cid:1354)Kennedy-Wilson Holdings, Inc. (cid:1354)(cid:1354)shareholders(cid:317) equity (cid:1354)(cid:25)oncontrolling interests (cid:36)otal equity (cid:362) — (cid:362) 1.0 (cid:403)(cid:403).3 — — — (cid:403)(cid:403).3 1,(cid:405)(cid:405)(cid:405).(cid:1141) — 1,(cid:405)(cid:405)(cid:405).(cid:1141) 3(cid:1142)(cid:405).2 — 1,(cid:1142)(cid:404)2.3 — 2,2(cid:403)0.(cid:404) 1,(cid:1142)21.(cid:406) — 1,(cid:1142)21.(cid:406) (cid:362) (cid:362) 1,(cid:405)2(cid:406).1 (cid:1141)1(cid:1142).0 2,(cid:403)(cid:1142)(cid:1142).1 (cid:404)1.(cid:1141) (cid:1141)1.(cid:404) (cid:404),033.(cid:403) (cid:403).0 (cid:405)(cid:1142).0 1,0(cid:406)2.2 — — 1,1(cid:405)(cid:403).2 3,(cid:1142)(cid:404)(cid:406).2 — 3,(cid:1142)(cid:404)(cid:406).2 3,330.(cid:405) 1,31(cid:403).(cid:1142) — — (cid:404),0(cid:404)(cid:406).(cid:1142) 1,(cid:406)(cid:403)(cid:405).(cid:1141) — (cid:1141)0.(cid:403) (cid:1141)2.(cid:405) (cid:336)(cid:1142),1(cid:1141)(cid:406).2(cid:337) — — — 1(cid:405)(cid:405).(cid:406) 130.3 (cid:404),12(cid:1142).0 (cid:362) (cid:336)(cid:1142),1(cid:1141)(cid:406).2(cid:337) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) 13.(cid:1141) (cid:362) — (cid:362) 1(cid:1142).(cid:1141) (cid:362) (cid:362) 10(cid:406).(cid:1141) 1,(cid:1142)(cid:1141)(cid:405).(cid:1141) — (cid:1141)22.(cid:1142) 2,(cid:1141)13.(cid:1141) — — — — 2,(cid:403)(cid:1142)(cid:1142).1 2(cid:1141).3 2,(cid:404)1(cid:403).(cid:403) (cid:336)(cid:1142),1(cid:1141)(cid:406).2(cid:337) — (cid:336)(cid:1142),1(cid:1141)(cid:406).2(cid:337) (cid:1141)1(cid:406).1 2,(cid:406)(cid:404)(cid:406).(cid:1142) 1,(cid:1142)(cid:404)2.3 (cid:1141)22.(cid:1142) (cid:1141),0(cid:405)2.(cid:1141) 1,(cid:405)(cid:405)(cid:405).(cid:1141) 2(cid:1141).3 1,(cid:1142)03.(cid:406) (cid:36)otal liabili(cid:2462)es and equity (cid:362) 1,(cid:1142)21.(cid:406) (cid:362) (cid:403),0(cid:1141)2.(cid:403) (cid:362) (cid:404),033.(cid:403) (cid:362) (cid:404),12(cid:1142).0 (cid:362) (cid:336)(cid:1142),1(cid:1141)(cid:406).2(cid:337) (cid:362) (cid:405),(cid:1142)(cid:405)(cid:1141).(cid:404) Condensed Consolidating Statement of Income for the Year Ended December 31, 2022 Kennedy- Wilson, Inc. (cid:14)uarantor Subsidiaries 22(cid:404).1 0.2 (cid:362) (cid:362) 31(cid:403).(cid:405) (cid:362) — (cid:362) (cid:25)on- guarantor Subsidiaries (cid:11)limina(cid:2462)on (cid:7)onsolidated (cid:36)otal (cid:404)(cid:403)0.0 1.1 — (cid:406)2.(cid:405) 31(cid:403).(cid:403) (cid:336)(cid:406)2.(cid:1141)(cid:337) — 1(cid:404).(cid:1141) 1(cid:403)(cid:1141).0 (cid:336)1(cid:404).2(cid:337) 130.(cid:1142) — — 12.0 (cid:1141)(cid:1142).1 1(cid:405)2.(cid:404) 230.(cid:405) (cid:336)(cid:403)1.(cid:1142)(cid:337) (cid:336)1.(cid:1141)(cid:337) (cid:336)1.3(cid:337) 31(cid:1142).(cid:405) (cid:336)(cid:403).3(cid:337) 31(cid:403).(cid:403) — — 1(cid:1141)(cid:404).3 3(cid:404).(cid:1141) 232.(cid:1141) — (cid:336)(cid:1142)(cid:1141).(cid:403)(cid:337) 2(cid:406).1 21.(cid:405) 2(cid:403)(cid:405).(cid:403) (cid:336)1(cid:1141).(cid:405)(cid:337) 230.(cid:405) (cid:336)(cid:1142).2(cid:337) — — — — (cid:336)(cid:1141)(cid:405)(cid:404).(cid:406)(cid:337) — — — (cid:336)(cid:1141)(cid:405)(cid:404).(cid:406)(cid:337) — (cid:336)(cid:1141)(cid:405)(cid:404).(cid:406)(cid:337) — — 1(cid:405)(cid:1142).(cid:403) 103.(cid:405) (cid:404)2(cid:1141).(cid:1142) — (cid:336)220.(cid:1142)(cid:337) 2(cid:405).(cid:404) 3(cid:1141).1 13(cid:1142).1 (cid:336)3(cid:1141).2(cid:337) 101.(cid:406) (cid:336)(cid:1142).2(cid:337) (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:30)arent (cid:362) — (cid:362) — — 2(cid:406).0 130.(cid:1142) — — 0.1 101.(cid:406) — 101.(cid:406) — (cid:336)2(cid:1142).(cid:406)(cid:337) (cid:362) (cid:405)3.0 (cid:362) 130.(cid:1142) (cid:362) 31(cid:403).(cid:403) (cid:362) 222.(cid:404) (cid:362) (cid:336)(cid:1141)(cid:405)(cid:404).(cid:406)(cid:337) (cid:362) (cid:1141)(cid:403).(cid:1142) (Dollars in millions) (cid:36)otal revenue (cid:36)otal income (cid:61)rom (cid:1354)unconsolidated investments (cid:14)ain on sale o(cid:61) real estate, net (cid:36)otal e(cid:138)penses Income (cid:61)rom consolidated (cid:1354)subsidiaries Interest e(cid:138)pense (cid:14)ain on early e(cid:138)(cid:2462)nguishment o(cid:61) (cid:1354)debt Other income (cid:336)loss(cid:337) (cid:1354)Income be(cid:61)ore provision (cid:1354)(cid:1354)(cid:61)rom income ta(cid:138)es (cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:25)et income (cid:25)et income a(cid:130)ributable to the (cid:1354)noncontrolling interests (cid:30)re(cid:61)erred dividends (cid:1354) (cid:25)et income a(cid:130)ributable to (cid:1354)Kennedy-Wilson (cid:1354)Holdings, Inc. common (cid:1354)shareholders 130 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 131 Kennedy-Wilson Holdings, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2022, 2021 and 2020 (continued) Condensed Consolidating Statement of Income for the Year Ended December 31, 2021 Condensed Consolidating Statement of Income for the Year Ended December 31, 2020 (Dollars in millions) (cid:36)otal revenues Income (cid:61)rom unconsolidated (cid:1354)investments (cid:14)ain on sale o(cid:61) real estate, net (cid:1354)(cid:36)otal e(cid:138)penses Income (cid:61)rom consolidated (cid:1354)subsidiaries Interest e(cid:138)pense Loss on early e(cid:138)(cid:2462)nguishment (cid:1354)o(cid:61) debt Other income (cid:336)loss(cid:337) (cid:1354)Income be(cid:61)ore provision (cid:1354)(cid:1354)(cid:61)or income ta(cid:138)es (cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:25)et income (cid:25)et income a(cid:130)ributable to the (cid:1354)noncontrolling interests (cid:30)re(cid:61)erred dividends (cid:1354) (cid:25)et income a(cid:130)ributable to (cid:1354) Kennedy-Wilson Holdings, Inc. common shareholders (cid:30)arent Kennedy- Wilson, Inc. (cid:14)uarantor Subsidiaries (cid:25)on- guarantor Subsidiaries (cid:11)limina(cid:2462)on (cid:362) — (cid:362) 0.3 (cid:362) 20(cid:1142).(cid:1142) (cid:362) 2(cid:403)(cid:403).(cid:404) (cid:362) — (cid:362) (cid:7)onsolidated (cid:36)otal (cid:403)(cid:404)3.(cid:1141) — — 31.(cid:1142) 3(cid:1141)(cid:1142).2 — — — 33(cid:1141).(cid:403) — 33(cid:1141).(cid:403) — (cid:336)1(cid:405).2(cid:337) 3.2 (cid:336)1.(cid:405)(cid:337) 10(cid:1142).1 (cid:1141)(cid:405)(cid:1141).(cid:1142) (cid:336)(cid:405)3.3(cid:337) (cid:336)2(cid:1141).(cid:404)(cid:337) 0.(cid:405) (cid:403)(cid:405)1.(cid:403) (cid:336)103.2(cid:337) 3(cid:1141)(cid:1142).2 — — (cid:406)(cid:406).0 12(cid:406).(cid:1141) 21(cid:403).(cid:1142) (cid:404)0(cid:1142).(cid:405) (cid:336)(cid:403)3.3(cid:337) (cid:336)0.(cid:1141)(cid:337) (cid:336)1.2(cid:337) (cid:1141)(cid:1142)(cid:1141).2 (cid:336)(cid:406).(cid:403)(cid:337) (cid:1141)(cid:405)(cid:1141).(cid:1142) — — 2(cid:1142)(cid:1141).(cid:1142) 2(cid:1142)(cid:403).(cid:1142) 1(cid:406)(cid:403).(cid:406) — (cid:336)(cid:405)(cid:404).(cid:1142)(cid:337) (cid:336)1(cid:1142).(cid:1141)(cid:337) (cid:336)(cid:403).(cid:404)(cid:337) (cid:404)22.3 (cid:336)13.(cid:1141)(cid:337) (cid:404)0(cid:1142).(cid:405) (cid:336)(cid:1141).0(cid:337) — — — — (cid:336)1,(cid:404)(cid:404)3.(cid:405)(cid:337) — (cid:336)1,(cid:404)(cid:404)3.(cid:405)(cid:337) — (cid:336)1,(cid:404)(cid:404)3.(cid:405)(cid:337) — — 3(cid:1142)(cid:406).0 (cid:403)12.(cid:405) (cid:404)(cid:403)(cid:406).(cid:1141) — (cid:336)1(cid:406)2.(cid:403)(cid:337) (cid:336)(cid:403)(cid:404).(cid:405)(cid:337) (cid:336)(cid:404).0(cid:337) (cid:403)(cid:1141)2.(cid:1141) (cid:336)12(cid:1141).2(cid:337) 33(cid:1141).(cid:403) (cid:336)(cid:1141).0(cid:337) (cid:336)1(cid:405).2(cid:337) (cid:362) 31(cid:406).2 (cid:362) 3(cid:1141)(cid:1142).2 (cid:362) (cid:1141)(cid:405)(cid:1141).(cid:1142) (cid:362) (cid:404)02.(cid:405) (cid:362) (cid:336)1,(cid:404)(cid:404)3.(cid:405)(cid:337) (cid:362) 313.2 (Dollars in millions) (cid:36)otal revenue Income (cid:61)rom unconsolidated (cid:1354)investments (cid:14)ain on sale o(cid:61) real estate, net (cid:1354)(cid:1354)(cid:36)otal e(cid:138)penses Income (cid:61)rom consolidated (cid:1354)subsidiaries Interest e(cid:138)pense Loss on early e(cid:138)(cid:2462)nguishment (cid:1354)o(cid:61) debt Other income (cid:336)loss(cid:337) (cid:1354)(cid:1354)Income be(cid:61)ore provision (cid:1354)(cid:1354)(cid:1354)(cid:61)or income ta(cid:138)es (cid:30)rovision (cid:61)or income ta(cid:138)es (cid:1354)(cid:1354)(cid:25)et income (cid:25)et loss a(cid:130)ributable to the (cid:1354)noncontrolling interests (cid:30)re(cid:61)erred dividends (cid:1354)(cid:1354) (cid:25)et income a(cid:130)ributable to (cid:1354) Kennedy-Wilson Holdings, Inc. common shareholders (cid:30)arent Kennedy- Wilson, Inc. (cid:14)uarantor Subsidiaries(cid:336)1(cid:337) (cid:25)on- guarantor Subsidiaries (cid:11)limina(cid:2462)on (cid:362) — (cid:362) — (cid:362) 21(cid:1142).(cid:1141) (cid:362) 23(cid:404).(cid:403) (cid:362) — (cid:362) (cid:7)onsolidated (cid:36)otal (cid:403)(cid:404)(cid:403).0 — — 33.(cid:404) 1(cid:403)1.3 — — 10(cid:405).(cid:1142) — 10(cid:405).(cid:1142) — (cid:336)1(cid:405).2(cid:337) 0.(cid:1141) — (cid:1142)(cid:1141).(cid:405) 320.1 (cid:336)(cid:1141)(cid:406).(cid:404)(cid:337) — 2.0 1(cid:1141)(cid:1141).(cid:404) (cid:336)2(cid:404).2(cid:337) 1(cid:403)1.3 — — (cid:336)0.(cid:1141)(cid:337) (cid:1141)(cid:404).(cid:406) 201.0 2(cid:406)(cid:403).0 (cid:336)(cid:403)(cid:1142).(cid:1141)(cid:337) (cid:336)3.(cid:405)(cid:337) (cid:336)3.(cid:1142)(cid:337) 320.(cid:1142) (cid:336)0.(cid:405)(cid:337) 320.1 — — (cid:1142)1.0 2(cid:405)2.1 1(cid:1142)(cid:1141).(cid:406) — (cid:336)(cid:1142)3.(cid:1142)(cid:337) (cid:336)(cid:404).(cid:1141)(cid:337) (cid:336)0.(cid:404)(cid:337) 311.(cid:405) (cid:336)1(cid:405).(cid:405)(cid:337) 2(cid:406)(cid:403).0 2.3 — — — — (cid:336)(cid:405)(cid:404)(cid:404).(cid:403)(cid:337) — — — (cid:336)(cid:405)(cid:404)(cid:404).(cid:403)(cid:337) — (cid:336)(cid:405)(cid:404)(cid:404).(cid:403)(cid:337) — — (cid:1142)1.0 33(cid:1142).0 (cid:404)0(cid:1142).1 — (cid:336)201.(cid:406)(cid:337) (cid:336)(cid:406).3(cid:337) (cid:336)2.3(cid:337) 1(cid:404)1.(cid:403) (cid:336)(cid:403)3.(cid:1141)(cid:337) 10(cid:405).(cid:1142) 2.3 (cid:336)1(cid:405).2(cid:337) (cid:362) (cid:406)0.(cid:1141) (cid:362) 1(cid:403)1.3 (cid:362) 320.1 (cid:362) 2(cid:406)(cid:1141).3 (cid:362) (cid:336)(cid:405)(cid:404)(cid:404).(cid:403)(cid:337) (cid:362) (cid:406)2.(cid:406) 132 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 133 e t a D (cid:61) o e t a D l e b a i c e r p e D l d e t a u m u c c (cid:3) & g n d i l i u B & g n d i l i u B (cid:337) (cid:336) 1 2 2 0 2 , 1 3 r e b m e c e D l t a e c n a a B s s o r (cid:14) n o (cid:2462) i s i u q c (cid:3) t s o (cid:7) l a (cid:2462) n I i s t s o (cid:7) d e (cid:140) i l a t i p a (cid:7) o t t n e u q e s b u S ) s n o i l l i m n i s r a l l o D ( (cid:337) (cid:336) 3 d e r i u q c (cid:3) n o (cid:2462) c u r t s n o (cid:7) s r a e (cid:43) n i e (cid:61) i L n o (cid:2462) a i c e r p e D (cid:337) 2 (cid:336) l a t o (cid:36) s t n e m e v o r p m I d n a L s t n e m e v o r p m I s t n e m e v o r p m I d n a L s e c n a r b m u c n (cid:11) i n o g e (cid:33) n o (cid:2462) p i r c s e D 3 1 0 2 3 1 0 2 3 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:403) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:1141) 1 0 2 (cid:1141) 1 0 2 (cid:1141) 1 0 2 (cid:1141) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:406) 1 0 2 1 2 0 2 1 2 0 2 2 2 0 2 (cid:404) 1 0 2 2 1 0 2 (cid:404) 1 0 2 (cid:404) 1 0 2 (cid:1141) 1 0 2 (cid:404) (cid:1142) (cid:406) 1 3 0 0 2 s u o i r a (cid:40) s u o i r a (cid:40) 1 (cid:1142) (cid:406) 1 3 (cid:1142) (cid:406) 1 (cid:326) 0 (cid:1142) (cid:406) 1 (cid:404) 0 0 2 (cid:326) (cid:1141) (cid:1141) (cid:406) 1 0 (cid:1142) (cid:406) 1 3 0 0 2 0 1 0 2 2 (cid:1142) (cid:406) 1 (cid:1142) (cid:1141) (cid:406) 1 2 (cid:1142) (cid:406) 1 s u o i r a (cid:40) s u o i r a (cid:40) (cid:404) (cid:406) (cid:406) 1 s u o i r a (cid:40) 1 (cid:1141) (cid:406) 1 (cid:405) 0 0 2 (cid:406) 0 0 2 s u o i r a (cid:40) 1 (cid:403) (cid:1142) 1 1 0 0 2 (cid:326) (cid:406) (cid:406) (cid:406) 1 0 0 0 2 (cid:326) 0 (cid:403) (cid:1142) 1 0 0 0 2 (cid:406) 1 0 2 (cid:403) 0 0 2 s u o i r a (cid:40) (cid:405) 0 0 2 (cid:326) 1 0 0 2 0 0 0 2 (cid:1142) (cid:1142) (cid:406) 1 (cid:1142) (cid:1142) (cid:406) 1 (cid:406) (cid:406) (cid:406) 1 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 (cid:337) (cid:403) 0 . (cid:336) (cid:337) (cid:404) 1 . (cid:336) (cid:337) (cid:406) (cid:403) . (cid:336) (cid:337) 3 3 . (cid:336) (cid:337) . (cid:406) (cid:1141) (cid:403) (cid:336) (cid:337) . 1 (cid:405) 1 (cid:336) (cid:337) . (cid:1142) (cid:404) 1 (cid:336) (cid:337) . (cid:406) (cid:403) 1 (cid:336) (cid:337) . 0 (cid:404) (cid:404) (cid:336) (cid:337) . 0 (cid:406) 1 (cid:336) (cid:337) . (cid:404) (cid:1142) 1 (cid:336) (cid:337) . 3 0 1 (cid:336) (cid:337) . 0 2 1 (cid:336) (cid:337) . (cid:404) 1 2 (cid:336) (cid:337) (cid:1141) (cid:404) . (cid:336) (cid:337) (cid:1142) (cid:406) . (cid:336) (cid:337) (cid:1142) 1 . (cid:336) (cid:337) 0 2 . (cid:336) (cid:337) . (cid:403) (cid:404) 1 (cid:336) (cid:337) . 3 1 1 (cid:336) (cid:337) . 2 0 1 (cid:336) (cid:337) . (cid:403) (cid:404) 1 (cid:336) (cid:337) (cid:405) 2 . (cid:336) (cid:337) 1 1 . (cid:336) (cid:337) (cid:1142) (cid:403) . (cid:336) (cid:337) (cid:1142) (cid:404) . (cid:336) (cid:337) 3 1 . (cid:336) (cid:337) (cid:405) 1 . (cid:336) (cid:337) (cid:1141) 0 . (cid:336) (cid:337) . (cid:406) 0 2 (cid:336) (cid:337) . 2 (cid:1141) (cid:403) (cid:336) (cid:337) . (cid:406) (cid:403) 1 (cid:336) (cid:337) 3 (cid:404) . (cid:336) 2 2 . (cid:404) (cid:406) . . (cid:406) (cid:1141) 3 . (cid:405) (cid:1141) 1 . 1 (cid:405) (cid:1142) . 1 1 1 2 . (cid:404) (cid:406) (cid:405) . (cid:1141) (cid:404) 3 1 . 1 (cid:1142) (cid:405) 2 . (cid:405) 1 (cid:406) . (cid:403) (cid:403) 1 1 . (cid:403) 3 (cid:404) . (cid:1141) (cid:403) (cid:405) . (cid:403) 1 (cid:1141) . (cid:404) (cid:406) (cid:1142) . 3 (cid:405) (cid:1141) 1 . 3 (cid:1141) 1 1 . (cid:1142) (cid:404) 1 . (cid:1141) 3 1 . (cid:403) 1 (cid:406) . (cid:403) (cid:404) (cid:1141) (cid:405) 1 . (cid:406) (cid:1141) . . (cid:1142) (cid:405) 2 . (cid:404) (cid:404) 1 . (cid:405) 0 (cid:1142) . (cid:405) (cid:1142) (cid:1142) . (cid:403) 3 (cid:1141) . (cid:1141) 2 (cid:1142) 1 . 0 (cid:403) 0 2 . 2 (cid:405) (cid:1142) . (cid:1141) 2 (cid:1142) . (cid:1142) 1 (cid:403) . (cid:406) 3 (cid:404) . (cid:1141) (cid:1142) 0 1 . (cid:403) 1 (cid:403) . 1 1 (cid:1141) . 2 (cid:1141) (cid:1142) . (cid:1142) 3 1 . (cid:405) 1 1 . (cid:1141) (cid:403) (cid:1141) . (cid:404) 1 (cid:1141) . 2 (cid:406) 2 . (cid:405) 2 (cid:1141) . 1 (cid:1141) (cid:1142) . (cid:1142) (cid:403) 2 . (cid:1141) 2 (cid:404) . (cid:1141) 2 (cid:1141) . 2 0 (cid:403) 1 . (cid:1141) (cid:406) 0 1 . 0 (cid:405) 1 2 . 0 (cid:404) (cid:404) 1 . 1 2 (cid:405) . (cid:403) 0 (cid:406) . (cid:405) (cid:406) (cid:404) . 2 (cid:406) (cid:404) . (cid:405) (cid:406) 3 2 . 3 3 (cid:405) . (cid:405) 3 2 . (cid:403) (cid:406) (cid:403) . (cid:403) (cid:405) (cid:1141) . 2 (cid:406) (cid:404) . 1 0 (cid:404) . (cid:403) (cid:405) (cid:405) 1 . 1 0 (cid:1141) . (cid:1142) 1 2 (cid:404) 0 . (cid:1141) 2 . 1 (cid:406) . 2 1 . (cid:403) (cid:1141) . . (cid:404) (cid:1142) 2 . (cid:406) (cid:1141) (cid:403) . 1 (cid:1141) 1 . 1 (cid:403) (cid:405) (cid:404) (cid:403) . . (cid:1142) 1 3 . (cid:1141) 1 1 . (cid:405) 0 2 . (cid:405) (cid:1142) (cid:404) . 0 0 2 . (cid:403) (cid:1142) 2 . 1 0 3 0 2 . (cid:406) 1 . (cid:406) 3 . . (cid:1142) (cid:1141) 2 . (cid:1141) 0 3 (cid:403) (cid:403) . . 1 0 1 . (cid:404) 3 2 . 0 2 (cid:1141) . (cid:405) 2 2 . 0 3 2 (cid:404) 0 . 1 (cid:406) . . 3 2 (cid:1141) . 2 3 1 (cid:406) 1 . . (cid:403) 0 . 2 1 (cid:1141) (cid:404) . . (cid:1142) 3 1 . (cid:406) 0 1 — (cid:403) (cid:404) . . 3 (cid:403) 2 . (cid:1141) (cid:1141) 2 3 (cid:405) . 3 (cid:404) . . 1 2 2 . 1 (cid:1141) 2 (cid:1142) (cid:405) . . (cid:1141) (cid:405) 1 . (cid:405) 2 1 (cid:1141) 0 . 3 (cid:403) . 2 0 . (cid:406) (cid:404) . 0 2 . . (cid:1141) 3 0 (cid:1142) . 0 2 . 3 (cid:404) . — (cid:404) 0 . (cid:1142) 0 . . (cid:406) (cid:406) (cid:403) . (cid:1142) 3 1 . (cid:406) (cid:403) 2 1 (cid:405) . 2 (cid:403) . 2 (cid:1142) (cid:406) 1 (cid:326) 1 (cid:1142) (cid:406) 1 (cid:326) (cid:404) (cid:404) (cid:406) 1 s r a e y (cid:406) 3 (cid:337) . 3 0 1 (cid:336) (cid:362) . (cid:1142) (cid:404) (cid:1141) (cid:362) . 3 (cid:403) (cid:404) (cid:362) . (cid:404) 1 1 (cid:362) . (cid:1142) (cid:403) 3 (cid:362) . 2 1 (cid:1141) (cid:404) . . (cid:404) (cid:1142) 1 . (cid:406) 3 . 0 (cid:403) 1 . 0 (cid:406) (cid:403) 2 . (cid:1141) 2 0 1 . 1 3 (cid:1142) . (cid:1142) 3 (cid:405) . 0 2 3 2 . (cid:404) (cid:406) 0 1 . (cid:1141) 0 (cid:1141) . (cid:404) (cid:1141) 3 . (cid:406) (cid:405) (cid:403) . (cid:405) (cid:406) (cid:404) 1 . 2 1 (cid:403) . 2 (cid:1141) (cid:403) . (cid:1142) (cid:403) (cid:405) (cid:404) (cid:406) . . (cid:406) 1 1 . (cid:403) 0 (cid:405) . 0 (cid:403) (cid:1141) — . (cid:404) (cid:1142) 1 . 0 (cid:1141) 0 1 . 3 (cid:405) (cid:404) . (cid:406) (cid:405) (cid:405) 1 . (cid:1142) (cid:403) (cid:404) . 1 (cid:403) (cid:405) (cid:403) 3 . . 3 (cid:1141) 3 . (cid:404) 2 (cid:404) 1 . 0 3 (cid:404) . (cid:1141) (cid:405) 1 (cid:362) . 2 1 1 (cid:362) . 0 (cid:404) 3 (cid:362) i a n r o (cid:61) i l a (cid:7) n r e h t u o S e c (cid:76) O l a i c r e m m o (cid:7) . (cid:404) 0 (cid:1141) 2 . 1 (cid:406) . . (cid:1141) (cid:1141) 1 . (cid:406) (cid:405) (cid:403) 2 (cid:1142) . . (cid:1142) (cid:406) (cid:404) . (cid:403) 0 2 . 3 (cid:404) (cid:1142) 2 (cid:1141) . . (cid:1142) 1 3 . (cid:1141) 1 1 . (cid:405) 0 2 . (cid:405) (cid:1141) (cid:1142) . 0 (cid:406) 1 . 1 (cid:405) 2 . 3 (cid:1141) 2 0 2 . 0 2 . 2 (cid:403) . . 1 2 3 (cid:406) (cid:403) . . (cid:1141) 0 3 . 0 1 1 . (cid:404) 3 2 . 2 1 (cid:405) . 3 (cid:404) 2 . (cid:404) (cid:404) 2 (cid:404) 0 . 1 (cid:406) . . 3 2 (cid:1141) . 2 3 1 0 2 . 1 1 . . (cid:404) 3 — . 0 (cid:405) 2 . 2 0 3 . (cid:1141) 1 (cid:405) . (cid:1142) 0 (cid:1142) . (cid:1141) 1 (cid:1141) — . (cid:403) 2 2 . (cid:1142) (cid:1142) 2 . 0 (cid:404) 3 . (cid:1141) 3 (cid:405) 1 — . (cid:406) (cid:1141) 3 . (cid:1142) (cid:404) (cid:1141) 1 — — 0 (cid:1141) . . (cid:403) 1 (cid:1141) . (cid:404) (cid:405) 3 . 0 (cid:405) (cid:405) . (cid:406) (cid:404) 1 . 0 2 (cid:404) . (cid:405) 0 (cid:1141) . (cid:404) (cid:1142) 3 . (cid:1142) (cid:406) (cid:403) . (cid:403) 1 (cid:404) . 1 (cid:1142) 1 1 . (cid:403) 0 (cid:404) . 0 (cid:404) (cid:405) 1 . (cid:405) (cid:1141) (cid:403) . 3 (cid:403) 1 . c n I i a n r o (cid:61) i l a (cid:7) n r e h t u o S i m o d g n K d e t i n U i m o d g n K d e t i n U i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) d n a e r I l d n a e r I l d n a e r I l i a n r o (cid:61) i l a (cid:7) n r e h t u o S i a n r o (cid:61) i l a (cid:7) n r e h t u o S i a n r o (cid:61) i l a (cid:7) n r e h t u o S i m o d g n K d e t i n U i m o d g n K d e t i n U i m o d g n K d e t i n U i m o d g n K d e t i n U i n a p S l y a t I i t s e W n a t n u o (cid:24) d n a e r I l i m o d g n K d e t i n U d n a e r I l t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) d n a e r I l d n a e r I l i a n r o (cid:61) i l a (cid:7) n r e h t r o (cid:25) i m o d g n K d e t i n U i m o d g n K d e t i n U i m o d g n K d e t i n U d n a e r I l i a n r o (cid:61) i l a (cid:7) n r e h t r o (cid:25) i a n r o (cid:61) i l a (cid:7) n r e h t u o S i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) o i l o (cid:127) r o p o i l o (cid:127) r o p o i l o (cid:127) r o p l a i c r e m m o (cid:7) l a i c r e m m o (cid:7) l i a t e (cid:33) l i a t e (cid:33) l i a t e (cid:33) e c (cid:76) O l i a t e (cid:33) e c (cid:76) O e c (cid:76) O l i a t e (cid:33) e c (cid:76) O e c (cid:76) O e c (cid:76) O l a i c r e m m o (cid:7) o i l o (cid:127) r o p e c (cid:76) O l i a t e (cid:33) o i l o (cid:127) r o p e c (cid:76) O o i l o (cid:127) r o p e c (cid:76) O t e s s a t i n u - (cid:1142) 0 0 1 , t e s s a t i n u - (cid:1141) (cid:1141) 3 t e s s a t i n u - 0 (cid:1141) (cid:403) t e s s a t i n u - (cid:403) 0 2 (cid:139) l i m a f (cid:2462) u (cid:24) l e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O e c (cid:76) O g n d i l i u b e c (cid:76) O l i a t e (cid:33) i , s g n d l o H n o s l i W - y d e n n e K i n o i t a c e r p e D d e t a l u m u c c A d n a e t a t s E l a e R — I I I e l u d e h c S ) d e u n i t n o c ( 2 2 0 2 , 1 3 r e b m e c e D n o i t a i c e r p e D d e t a l u m u c c A d n a e t a t s E l a e R — I I I e l u d e h c S 2 2 0 2 , 1 3 r e b m e c e D . c n I i , s g n d l o H n o s l i W - y d e n n e K (cid:1141) 1 0 2 (cid:1141) 1 0 2 (cid:1141) 1 0 2 (cid:1142) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:1142) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:405) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:1142) 1 0 2 (cid:406) 1 0 2 (cid:406) 1 0 2 (cid:406) 1 0 2 0 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 1 2 0 2 2 2 0 2 2 2 0 2 2 (cid:406) (cid:406) 1 (cid:1141) 0 0 2 2 0 0 2 (cid:3) (cid:326) (cid:25) (cid:404) (cid:406) (cid:406) 1 (cid:405) 0 0 2 2 1 0 2 (cid:3) (cid:326) (cid:25) (cid:405) (cid:406) (cid:406) 1 (cid:1141) 1 0 2 3 1 0 2 (cid:1142) (cid:1142) (cid:406) 1 (cid:404) (cid:1142) (cid:406) 1 1 2 0 2 (cid:3) (cid:326) (cid:25) (cid:404) (cid:406) (cid:406) 1 (cid:404) (cid:1142) (cid:406) 1 1 2 0 2 1 2 0 2 1 2 0 2 (cid:404) 1 0 2 (cid:403) 1 0 2 (cid:406) 1 0 2 (cid:3) (cid:326) (cid:25) (cid:404) (cid:1142) (cid:406) 1 (cid:3) (cid:326) (cid:25) 0 2 0 2 (cid:3) (cid:326) (cid:25) (cid:404) (cid:1142) (cid:406) 1 (cid:1141) (cid:406) (cid:406) 1 2 0 0 2 (cid:1142) (cid:406) (cid:406) 1 (cid:326) 0 (cid:406) (cid:406) 1 0 2 0 2 (cid:1142) 0 0 2 (cid:326) 2 0 0 2 0 (cid:406) (cid:406) 1 (cid:326) (cid:406) (cid:1142) (cid:406) 1 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 s r a e y (cid:406) 3 (cid:337) 3 (cid:403) . (cid:336) (cid:337) . 1 (cid:403) 1 (cid:336) (cid:337) . 0 (cid:1142) 1 (cid:336) — (cid:337) (cid:404) (cid:1141) . (cid:336) (cid:337) (cid:406) (cid:1141) . (cid:336) (cid:337) 0 (cid:403) . (cid:336) — (cid:337) 1 (cid:1142) . (cid:336) (cid:337) . (cid:403) (cid:403) 1 (cid:336) (cid:337) (cid:1142) (cid:1141) . (cid:336) (cid:337) 2 2 . (cid:336) (cid:337) . 3 1 1 (cid:336) (cid:337) (cid:404) 0 . (cid:336) (cid:337) 2 0 . (cid:336) (cid:337) (cid:1142) 3 . (cid:336) (cid:337) (cid:405) (cid:403) . (cid:336) (cid:337) 2 2 . (cid:336) (cid:337) (cid:1142) 3 . (cid:336) (cid:337) 1 0 . (cid:336) (cid:337) (cid:403) (cid:404) . (cid:336) (cid:337) (cid:403) 3 . (cid:336) (cid:337) 3 2 . (cid:336) — (cid:337) 3 2 . (cid:336) — (cid:337) (cid:1142) 1 . (cid:336) (cid:337) (cid:405) 0 . (cid:336) (cid:337) (cid:1141) 3 . (cid:336) (cid:337) 1 (cid:404) . (cid:336) (cid:337) (cid:406) 1 . (cid:336) (cid:337) (cid:403) 3 . (cid:336) — (cid:337) 3 2 . (cid:336) (cid:337) 0 2 . (cid:336) . (cid:1142) (cid:1142) 1 . (cid:405) (cid:404) (cid:1142) . (cid:1142) 0 (cid:406) . (cid:406) (cid:405) 2 . (cid:1141) 0 (cid:403) . (cid:406) (cid:1142) (cid:404) . (cid:404) (cid:1142) 2 . 3 (cid:403) 3 . 1 (cid:405) (cid:404) . 3 (cid:404) 3 1 . 3 1 (cid:1141) . (cid:1142) (cid:403) 1 . 0 (cid:405) (cid:1142) (cid:406) (cid:406) . . 0 3 2 . 1 (cid:405) 3 . (cid:403) 2 3 . 0 0 (cid:403) . 0 (cid:1142) (cid:404) 3 2 . . 0 (cid:403) (cid:1142) . 0 0 (cid:405) . (cid:405) (cid:1141) (cid:1141) 0 1 . . 1 (cid:406) (cid:1141) . (cid:403) (cid:1141) 3 . (cid:406) (cid:1141) (cid:404) . (cid:1142) 2 2 . (cid:405) (cid:404) 3 1 . 3 (cid:403) (cid:406) 1 . 1 (cid:403) (cid:405) . (cid:403) 2 2 . (cid:403) (cid:1142) (cid:404) 1 . (cid:405) (cid:1141) (cid:1141) 1 . 3 (cid:1142) (cid:403) 1 . 0 (cid:405) 1 . (cid:406) 2 (cid:405) . (cid:1142) 0 (cid:406) — . (cid:1142) (cid:404) 3 . (cid:406) (cid:405) (cid:403) . 1 (cid:405) 2 — . (cid:405) 0 (cid:404) . (cid:404) (cid:1142) 0 1 . (cid:403) (cid:406) (cid:403) . 2 2 1 . 1 1 (cid:405) 2 (cid:406) . . 0 1 2 . (cid:406) (cid:406) 2 . (cid:404) (cid:405) 2 . 1 (cid:1142) 3 . 3 (cid:404) (cid:404) 3 2 . . (cid:1141) (cid:405) (cid:1141) . (cid:1141) (cid:1141) (cid:404) . (cid:403) 3 (cid:404) — . 1 (cid:1141) (cid:404) — . (cid:1142) (cid:404) (cid:403) . 3 (cid:1142) 1 . 0 (cid:406) 0 1 . 1 (cid:1141) (cid:404) 1 . 3 (cid:406) (cid:404) . 3 (cid:405) 2 1 — . (cid:404) 3 3 1 . (cid:405) (cid:1142) 1 1 — (cid:1142) 1 . . (cid:1142) 2 1 (cid:1142) (cid:403) . . (cid:406) (cid:405) 2 . 0 1 1 . (cid:403) 1 (cid:403) (cid:1141) . . 3 (cid:403) 3 . (cid:1142) (cid:1141) 2 . (cid:406) 1 1 (cid:1141) 2 . . (cid:406) (cid:404) 1 . (cid:405) 0 . 0 2 2 (cid:405) . (cid:406) (cid:403) . (cid:406) 1 . (cid:405) 2 . — . (cid:403) (cid:1141) 1 . (cid:403) 3 1 . 3 3 1 0 1 . . 0 3 1 . (cid:403) (cid:1141) 3 . 1 1 1 (cid:404) (cid:403) . . (cid:405) (cid:1141) 2 . 2 (cid:1142) 3 . (cid:1142) (cid:403) 1 . 1 1 3 . (cid:403) 2 2 . 2 3 3 . (cid:1141) (cid:406) 2 0 (cid:403) . (cid:404) (cid:404) . (cid:403) (cid:406) . — (cid:1141) (cid:1141) . 2 1 . . 2 1 — (cid:1142) (cid:404) . . 1 1 (cid:406) 1 . (cid:1142) 1 . (cid:406) (cid:405) . — — . 1 1 (cid:406) (cid:405) . . (cid:403) 0 (cid:406) (cid:1141) . — (cid:406) 1 . (cid:406) 2 . 2 0 . — 0 (cid:403) . — . 0 1 3 0 . 2 2 . 0 3 . 1 0 . . (cid:406) 2 — (cid:406) 0 . . (cid:403) 0 . 1 3 1 . (cid:403) (cid:405) (cid:1141) . (cid:403) 1 (cid:1142) — . 2 (cid:406) 2 . (cid:405) (cid:1141) (cid:403) . (cid:406) (cid:404) 2 — . (cid:406) (cid:403) (cid:403) . (cid:403) (cid:405) 0 1 . (cid:403) (cid:405) (cid:403) . (cid:403) 0 1 . 2 3 (cid:1141) — — . (cid:1142) (cid:1142) 2 . (cid:405) (cid:406) 1 — — — . (cid:405) (cid:404) (cid:1141) . (cid:1141) 3 (cid:404) . 2 3 (cid:404) — . 1 2 (cid:404) — . 3 (cid:403) (cid:403) . (cid:406) (cid:405) 1 . (cid:406) (cid:1141) 0 1 . 0 3 (cid:404) 1 . 2 (cid:406) (cid:404) . (cid:403) (cid:403) 2 1 — . (cid:1141) 2 3 1 . 3 (cid:1142) 1 1 e t a D (cid:61) o e t a D l e b a i c e r p e D l d e t a u m u c c (cid:3) & g n d i l i u B & g n d i l i u B (cid:337) (cid:336) 3 d e r i u q c (cid:3) n o (cid:2462) c u r t s n o (cid:7) s r a e (cid:43) n i e (cid:61) i L n o (cid:2462) a i c e r p e D (cid:337) 2 (cid:336) l a t o (cid:36) s t n e m e v o r p m I d n a L s t n e m e v o r p m I s t n e m e v o r p m I (cid:337) (cid:336) 1 2 2 0 2 , 1 3 r e b m e c e D l t a e c n a a B s s o r (cid:14) n o (cid:2462) i s i u q c (cid:3) o t t s o (cid:7) l a (cid:2462) n I i s t s o (cid:7) d e (cid:140) i l a t i p a (cid:7) t n e u q e s b u S d n a L (cid:1142) 1 . . (cid:1142) 2 1 — . (cid:1141) 0 (cid:1142) (cid:403) . (cid:403) 1 . 2 0 . (cid:403) (cid:1141) . . 0 1 1 . (cid:1142) (cid:1141) 2 . (cid:406) 1 1 (cid:1141) 2 . . (cid:1142) (cid:404) 1 (cid:1142) 0 . 1 2 . 2 (cid:405) . (cid:406) (cid:403) . (cid:405) (cid:404) . . 0 (cid:403) — . (cid:403) (cid:1141) 1 . (cid:403) 3 1 . 3 3 1 — . 0 3 1 (cid:1141) (cid:403) . . 1 1 1 (cid:404) (cid:403) . . (cid:405) (cid:1141) 2 . 3 (cid:1142) 3 . (cid:1142) (cid:403) 1 . 1 1 3 . 0 (cid:1142) . 2 3 3 . (cid:1141) (cid:406) 2 s e c n a r b m u c n (cid:11) i n o g e (cid:33) . (cid:406) 0 1 . 0 1 (cid:1141) . 0 (cid:1141) (cid:1141) — . 0 (cid:406) 3 . (cid:404) (cid:403) (cid:403) . (cid:1141) 0 2 — . 2 (cid:403) 2 . 0 (cid:403) (cid:1142) . 2 3 3 (cid:1141) (cid:1142) . 0 (cid:1142) . . 1 (cid:406) (cid:404) . 2 0 1 . (cid:406) (cid:406) 1 . (cid:404) 3 1 . 3 2 3 . 2 2 (cid:1141) — . 0 0 (cid:405) . (cid:403) (cid:406) 3 . (cid:1141) (cid:406) 3 — . 2 (cid:406) 3 . (cid:1141) (cid:1141) 1 . 1 (cid:404) (cid:403) . (cid:406) 3 1 . 2 (cid:1141) (cid:405) . 0 3 (cid:403) . 0 (cid:404) 1 1 . 0 2 0 1 (cid:1142) (cid:405) . . (cid:406) (cid:403) (cid:1141) . (cid:1141) 1 (cid:1141) i a n r o (cid:61) i l a (cid:7) n r e h t u o S i a n r o (cid:61) i l a (cid:7) n r e h t u o S t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) t s e w h t r o (cid:25) c (cid:67) i c a (cid:30) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) t e s s a t i n u - (cid:1142) (cid:1141) 1 t e s s a t i n u - 0 3 (cid:403) t e s s a t i n u - (cid:1141) (cid:1142) 3 n o (cid:2462) p i r c s e D d n a L t e s s a t i n u - 0 0 3 t e s s a t i n u - 0 1 2 t e s s a t i n u - 0 0 2 t e s s a t i n u - 2 (cid:405) 1 t e s s a t i n u - (cid:403) (cid:1141) 2 t e s s a t i n u - 3 (cid:403) 3 t e s s a t i n u - (cid:406) (cid:405) 1 t e s s a t i n u - 2 (cid:406) (cid:403) t e s s a t i n u - (cid:1142) (cid:1142) t e s s a t i n u - (cid:1141) (cid:1141) t e s s a t i n u - (cid:406) (cid:1142) t e s s a t i n u - 3 (cid:406) 2 t e s s a t i n u - (cid:1142) (cid:1142) 1 t e s s a t i n u - 0 2 1 t e s s a t i n u - (cid:405) (cid:405) 2 t e s s a t i n u - 0 (cid:1141) 3 t e s s a t i n u - 0 (cid:1141) 2 t e s s a t i n u - 0 (cid:1142) 2 t e s s a t i n u - 0 1 t e s s a t i n u - (cid:403) (cid:403) 3 d n a L t e s s a t i n u - 0 (cid:403) 2 t e s s a t i n u - 0 (cid:1141) 1 t e s s a t i n u - 2 3 3 t e s s a t i n u - 3 (cid:1142) 3 t e s s a t i n u - (cid:403) (cid:1141) 1 t e s s a t i n u - (cid:1142) 2 (cid:404) t e s s a t i n u - 0 (cid:404) 3 t e s s a t i n u - (cid:403) 0 (cid:403) d n a L d n a L ) s n o i l l i m n i s r a l l o D ( 134 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 135 2 2 0 2 2 2 0 2 3 1 0 2 (cid:1142) 0 0 2 (cid:326) (cid:404) (cid:406) (cid:406) 1 s r a e y (cid:406) 3 s r a e y (cid:406) 3 (cid:337) (cid:404) 1 . (cid:336) (cid:337) (cid:1141) 0 . (cid:336) . (cid:1141) (cid:1142) (cid:405) . (cid:406) (cid:403) 0 1 . 1 (cid:403) (cid:1142) . (cid:406) 2 (cid:1141) . (cid:1142) 0 2 . (cid:405) (cid:404) 1 0 1 . 3 0 . . 1 3 (cid:1142) . (cid:1141) 2 (cid:1141) (cid:403) 1 0 2 (cid:404) 0 0 2 (cid:326) (cid:403) 2 (cid:1142) 1 s r a e y (cid:406) 3 (cid:337) . (cid:405) 0 (cid:403) (cid:336) . 3 (cid:403) (cid:405) 1 . (cid:1142) (cid:406) 2 1 . (cid:404) (cid:403) (cid:403) . (cid:403) 3 3 . 3 (cid:403) 1 1 (cid:404) 1 0 2 (cid:405) 1 0 2 (cid:1142) 1 0 2 0 2 0 2 (cid:404) 1 0 2 2 2 0 2 0 1 0 2 0 2 0 2 (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) 0 (cid:1142) (cid:406) 1 2 1 (cid:406) 1 (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) (cid:3) (cid:326) (cid:25) s r a e y (cid:406) 3 — — — — — (cid:337) 1 0 . (cid:336) (cid:337) (cid:403) 2 . (cid:336) — . (cid:403) (cid:1142) (cid:403) . 2 3 1 . 0 (cid:403) . 1 2 . 0 0 1 (cid:1141) (cid:406) . . (cid:1141) 2 3 . (cid:404) (cid:1141) 1 . (cid:403) (cid:1142) (cid:403) . 2 3 1 (cid:403) 0 . (cid:406) 0 . . 0 (cid:403) (cid:1141) (cid:406) . (cid:403) (cid:403) . — — — . (cid:1141) 3 . 2 1 0 (cid:1141) . — . 2 (cid:1142) 2 . (cid:404) (cid:1141) 1 — 1 0 . (cid:406) 0 . 0 (cid:403) . — (cid:405) 0 . — . 3 (cid:1141) 1 . (cid:405) (cid:403) 3 . (cid:1142) 3 1 — . (cid:406) 0 — (cid:1141) (cid:406) . (cid:405) 3 . — . (cid:1142) 0 2 . (cid:405) (cid:404) 1 . 0 (cid:403) (cid:404) — — . 2 (cid:403) 2 1 . . 0 (cid:1141) — . (cid:405) 1 3 . (cid:404) (cid:1141) 1 . 0 1 (cid:403) . 0 (cid:403) 3 — — — — — — — — e t a D (cid:61) o e t a D l e b a i c e r p e D l d e t a u m u c c (cid:3) & g n d i l i u B & g n d i l i u B (cid:337) (cid:336) 3 d e r i u q c (cid:3) n o (cid:2462) c u r t s n o (cid:7) s r a e (cid:43) n i e (cid:61) i L n o (cid:2462) a i c e r p e D (cid:337) 2 (cid:336) l a t o (cid:36) s t n e m e v o r p m I d n a L s t n e m e v o r p m I s t n e m e v o r p m I d n a L s e c n a r b m u c n (cid:11) (cid:337) (cid:336) 1 2 2 0 2 , 1 3 r e b m e c e D l t a e c n a a B s s o r (cid:14) n o (cid:2462) i s i u q c (cid:3) t s o (cid:7) l a (cid:2462) n I i s t s o (cid:7) d e (cid:140) i l a t i p a (cid:7) o t t n e u q e s b u S (cid:337) . (cid:1141) (cid:406) 1 (cid:1141) (cid:336) (cid:362) . 3 (cid:404) (cid:405) (cid:405) (cid:404) , (cid:362) . 1 (cid:1141) (cid:404) (cid:403) (cid:403) , (cid:362) . 2 (cid:406) 1 3 1 , (cid:362) . 2 (cid:403) (cid:406) (cid:403) (cid:362) . (cid:405) (cid:1141) (cid:404) 1 (cid:403) , (cid:362) . 3 (cid:406) 3 3 1 , (cid:362) . (cid:404) (cid:403) 3 0 3 , (cid:362) i t s e W n a t n u o (cid:24) i t s e W n a t n u o (cid:24) i n o g e (cid:33) d n a e r I l i n a p S i n a p S i a n r o (cid:61) i l a (cid:7) n r e h t u o S i m o d g n K d e t i n U d n a e r I l d n a e r I l i i a w a H i i a w a H ) s n o i l l i m n i s r a l l o D ( t e s s a t i n u - (cid:1141) (cid:404) 3 t e s s a t i n u - 0 (cid:1141) 2 n o (cid:2462) p i r c s e D t n e m p o e v e D l l e t o (cid:15) l e t o H l i a t e (cid:33) l i a t e (cid:33) d n a L e c (cid:76) O y l i m a (cid:61) (cid:2462) u (cid:24) l s e r c a 0 0 (cid:405) 2 e c (cid:76) O s t o L 3 l a t o T d n a r G Kennedy-Wilson Holdings, Inc. Schedule III—Real Estate and Accumulated Depreciation December 31, 2022 (continued) (cid:7)hanges in real estate (cid:61)or the years ended December 31, 2022, 2021 and 2020 were as (cid:61)ollows(cid:313) (Dollars in millions) Balance at the beginning o(cid:61) period (cid:3)ddi(cid:2462)ons during the period(cid:313) (cid:1354)Other acquisi(cid:2462)ons (cid:1354)Improvements (cid:1354)Foreign currency Deduc(cid:2462)ons during the period(cid:313) (cid:1354)(cid:7)ost o(cid:61) real estate sold Balance at close o(cid:61) period For the year ended December 31, 2022 2021 2020 (cid:362) (cid:404),(cid:404)(cid:1141)(cid:405).3 (cid:362) (cid:404),20(cid:405).(cid:405) (cid:362) (cid:404),(cid:403)30.(cid:404) 1(cid:1141)(cid:405).(cid:1141) (cid:1141)0(cid:403).2 (cid:336)22(cid:1141).0(cid:337) 13(cid:405).3 1,110.(cid:403) (cid:336)(cid:406)1.(cid:1142)(cid:337) 1(cid:1142)3.0 10(cid:1142).(cid:403) 12(cid:406).(cid:406) (cid:336)33(cid:405).(cid:1142)(cid:337) (cid:336)(cid:405)(cid:406)(cid:1141).3(cid:337) (cid:336)(cid:1141)(cid:403)(cid:403).1(cid:337) (cid:362) (cid:404),(cid:405)(cid:405)(cid:404).3 (cid:362) (cid:404),(cid:404)(cid:1141)(cid:405).3 (cid:362) (cid:404),20(cid:405).(cid:405) (cid:7)hanges in accumulated deprecia(cid:2462)on (cid:61)or the years ended December 31, 2022, 2021 and 2020 were as (cid:61)ollows(cid:313) (Dollars in millions) Balance at the beginning o(cid:61) period (cid:3)ddi(cid:2462)ons during the period(cid:313) (cid:1354)Deprecia(cid:2462)on e(cid:138)pense Deduc(cid:2462)ons during the period(cid:313) (cid:1354)Disposi(cid:2462)ons (cid:1354)Foreign currency Balance at close o(cid:61) period For the year ended December 31, 2022 2021 (cid:362) (cid:404)(cid:1141)(cid:403).0 (cid:362) (cid:404)(cid:404)1.(cid:1142) (cid:362) 2020 (cid:403)(cid:1141)(cid:1141).(cid:1142) 133.(cid:1142) 30.(cid:406) 121.(cid:404) (cid:336)(cid:404)0.(cid:1142)(cid:337) (cid:336)2(cid:405).(cid:403)(cid:337) (cid:336)11.1(cid:337) (cid:336)(cid:405).(cid:1141)(cid:337) (cid:336)(cid:404)(cid:403).(cid:404)(cid:337) 1(cid:1142).0 (cid:362) (cid:1141)1(cid:406).(cid:1141) (cid:362) (cid:404)(cid:1141)(cid:403).0 (cid:362) (cid:404)(cid:404)1.(cid:1142) See accompanying report o(cid:61) independent registered public accoun(cid:2462)ng (cid:67)rm. (cid:314) (cid:109) (cid:111) (cid:118) (cid:1140) (cid:98) (cid:41) (cid:2) (cid:139) (cid:55) (cid:59) (cid:109) (cid:109) (cid:59) (cid:20) (cid:2) (cid:139) (cid:48) (cid:55) (cid:59) (cid:117) (cid:98) (cid:134) (cid:116) (cid:49) (cid:45) (cid:2) (cid:139) (cid:2) (cid:1140) (cid:1140) (cid:45) (cid:2462) (cid:109) (cid:98) (cid:98) (cid:2) (cid:109) (cid:59) (cid:95) (cid:137) (cid:2) (cid:124) (cid:111) (cid:109) (cid:2) (cid:59) (cid:124) (cid:45) (cid:124) (cid:118) (cid:59) (cid:2) (cid:1140) (cid:45) (cid:59) (cid:117) (cid:2) (cid:118) (cid:45) (cid:2) (cid:55) (cid:59) (cid:124) (cid:109) (cid:59) (cid:118) (cid:59) (cid:117) (cid:114) (cid:2) (cid:118) (cid:45) (cid:137) (cid:2) (cid:124) (cid:59) (cid:118) (cid:118) (cid:45) (cid:2) (cid:59) (cid:95) (cid:124) (cid:2) (cid:109) (cid:59) (cid:95) (cid:137) (cid:2) (cid:118) (cid:124) (cid:109) (cid:59) (cid:118) (cid:59) (cid:117) (cid:114) (cid:59) (cid:117) (cid:2) (cid:55) (cid:59) (cid:117) (cid:98) (cid:134) (cid:116) (cid:49) (cid:45) (cid:2) (cid:59) (cid:124) (cid:45) (cid:55) (cid:2) (cid:59) (cid:95) (cid:124) (cid:2) (cid:55) (cid:59) (cid:124) (cid:45) (cid:55) (cid:98) (cid:1140) (cid:111) (cid:118) (cid:109) (cid:111) (cid:49) (cid:2) (cid:59) (cid:117) (cid:59) (cid:137) (cid:2) (cid:124) (cid:45) (cid:95) (cid:124) (cid:2) (cid:118) (cid:124) (cid:59) (cid:118) (cid:118) (cid:45) (cid:2) (cid:117) (cid:111) (cid:2)(cid:13) (cid:2) (cid:337) (cid:402) (cid:314) (cid:109) (cid:111) (cid:98) (cid:1140) (cid:1140) (cid:98) (cid:311) (cid:1140) (cid:314) (cid:2) (cid:2) (cid:108) (cid:404) (cid:403) (cid:403) (cid:1142) (cid:403) (cid:362) (cid:55) (cid:59) (cid:45) (cid:124) (cid:111) (cid:124) (cid:2) (cid:59) (cid:124) (cid:45) (cid:93) (cid:59) (cid:117) (cid:93) (cid:93) (cid:45) (cid:2) (cid:109) (cid:98) (cid:2) (cid:118) (cid:59) (cid:2462) (cid:117) (cid:59) (cid:114) (cid:111) (cid:117) (cid:114) (cid:2) (cid:59) (cid:95) (cid:124) (cid:2) (cid:1140) (cid:1140) (cid:45) (cid:2) (cid:61) (cid:111) (cid:2) (cid:118) (cid:98) (cid:118) (cid:45) (cid:48) (cid:2) (cid:138) (cid:45) (cid:124) (cid:2) (cid:59) (cid:95) (cid:36) (cid:2) ) 1 (cid:1140) (cid:314) (cid:118) (cid:59) (cid:134) (cid:45) (cid:136) (cid:2) (cid:59) (cid:118) (cid:45) (cid:59) (cid:1140) (cid:2) (cid:59) (cid:49) (cid:45) (cid:114) (cid:109) (cid:2) (cid:1140) (cid:98) (cid:2) (cid:55) (cid:59) (cid:117) (cid:98) (cid:134) (cid:116) (cid:49) (cid:45) (cid:2) (cid:118) (cid:59) (cid:55) (cid:134) (cid:49) (cid:138) (cid:11) (cid:1140) (cid:2) ) 2 ( ( (cid:336) i n o i t a c e r p e D d e t a l u m u c c A d n a e t a t s E l a e R — I I I e l u d e h c S ) d e u n i t n o c ( 2 2 0 2 , 1 3 r e b m e c e D . c n I i , s g n d l o H n o s l i W - y d e n n e K 136 / KENNEDY WILSON Performance Graph (cid:36)he graph below compares the cumula(cid:2462)ve total return o(cid:61) our common stock (cid:61)rom December 31, 201(cid:405) through December 31, 2022, with the comparable cumula(cid:2462)ve return o(cid:61) companies comprising the S&(cid:30) (cid:404)00 Inde(cid:138) and the (cid:24)S(cid:7)I World (cid:33)eal (cid:11)state Inde(cid:138). (cid:36)he graph plots the growth in value o(cid:61) an ini(cid:2462)al investment o(cid:61) (cid:362)100 in each o(cid:61) our common stock, the S&(cid:30) (cid:404)00 Inde(cid:138), and the (cid:24)S(cid:7)I World (cid:33)eal (cid:11)state Inde(cid:138) (cid:61)or the (cid:67)ve-year period ended December 31, 2022, and assumes reinvestment o(cid:61) all dividends, i(cid:61) any, paid on the securi(cid:2462)es. (cid:36)he stock price per(cid:61)ormance shown on the graph is not necessarily indica(cid:2462)ve o(cid:61) (cid:61)uture price per(cid:61)ormance. $200.00 $150.00 $100.00 $50.00 $- KW S&P 500 MSCI World Real Estate Index 8 1 / 2 / 1 8 1 / 2 / 3 8 1 / 2 / 5 8 1 / 2 / 7 8 1 / 2 / 9 8 1 / 2 / 1 1 9 1 / 2 / 1 9 1 / 2 / 3 9 1 / 2 / 5 9 1 / 2 / 7 9 1 / 2 / 9 9 1 / 2 / 1 1 0 2 / 2 / 1 0 2 / 2 / 3 0 2 / 2 / 5 0 2 / 2 / 7 0 2 / 2 / 9 0 2 / 2 / 1 1 1 2 / 2 / 1 1 2 / 2 / 3 1 2 / 2 / 5 1 2 / 2 / 7 1 2 / 2 / 9 2 2 / 2 / 1 2 2 / 2 / 3 2 2 / 2 / 5 2 2 / 2 / 7 2 2 / 2 / 9 1 2 / 2 / 1 1 2 2 / 2 / 1 1 Kennedy Wilson uses the (cid:24)S(cid:7)I World (cid:33)eal (cid:11)state Inde(cid:138), which includes interna(cid:2462)onal real estate companies as a comparable benchmark. (cid:36)he in(cid:61)orma(cid:2462)on under this cap(cid:2462)on, (cid:318)(cid:30)er(cid:61)ormance (cid:14)raph,(cid:319) is deemed not to be incorporated by re(cid:61)erence into any (cid:67)lings under the Securi(cid:2462)es (cid:3)ct o(cid:61) 1(cid:406)33, as amended, or the Securi(cid:2462)es (cid:11)(cid:138)change (cid:3)ct o(cid:61) 1(cid:406)3(cid:403), as amended, e(cid:138)cept to the e(cid:138)tent that such (cid:67)ling speci(cid:67)cally states otherwise. ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 137 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Price Information Our common stock trades on the (cid:25)(cid:43)S(cid:11) under the symbol (cid:318)KW.(cid:319) Holders (cid:3)s o(cid:61) February 21, 2023, we had appro(cid:138)imately (cid:1142)2 holders o(cid:61) record o(cid:61) our common stock. Dividends We declared and paid quarterly dividends o(cid:61) (cid:362)0.2(cid:403) per share each quarter o(cid:61) 2022. We declared and paid quarterly dividends o(cid:61) (cid:362)0.22 per share (cid:61)or the (cid:67)rst three quarters o(cid:61) 2021 and (cid:362)0.2(cid:403) per share (cid:61)or the (cid:61)ourth quarter o(cid:61) 2021. Recent Sales of Unregistered Securities (cid:25)one. Equity Compensation Plan Information See Item 12—(cid:318)Security Ownership o(cid:61) (cid:7)ertain Bene(cid:67)cial Owners and (cid:24)anagement and (cid:33)elated Stockholder (cid:24)a(cid:130)ers.(cid:319) Purchases of Equity Securities by the Company (cid:24)onths October 1(cid:331)October 31, 2022 (cid:25)ovember 1(cid:331)(cid:25)ovember 30, 2022 December 1(cid:331)December 31, 2022 (cid:36)otal (cid:36)otal (cid:25)umber o(cid:61) Shares (cid:30)urchased — (cid:362) — — — (cid:362) (cid:3)verage (cid:30)rice (cid:30)aid per Share — — — (cid:36)otal (cid:25)umber o(cid:61) Shares (cid:30)urchased as (cid:30)art o(cid:61) (cid:30)ublicly (cid:3)nnounced (cid:30)lan(cid:336)1(cid:337) 23,3(cid:1142)(cid:1142),0(cid:405)3 (cid:362) 23,3(cid:1142)(cid:1142),0(cid:405)3 23,3(cid:1142)(cid:1142),0(cid:405)3 (cid:24)a(cid:138)imum (cid:3)mount that (cid:24)ay (cid:43)et be (cid:30)urchased Under the (cid:30)lan(cid:336)1(cid:337) 1(cid:403)(cid:403),(cid:405)(cid:404)(cid:403),2(cid:1142)(cid:404) 1(cid:403)(cid:403),(cid:405)(cid:404)(cid:403),2(cid:1142)(cid:404) 1(cid:403)(cid:403),(cid:405)(cid:404)(cid:403),2(cid:1142)(cid:404) — 23,3(cid:1142)(cid:1142),0(cid:405)3 (cid:362) 1(cid:403)(cid:403),(cid:405)(cid:404)(cid:403),2(cid:1142)(cid:404) (1)(cid:2)(cid:2)(cid:27)(cid:109)(cid:2)(cid:24)(cid:45)(cid:117)(cid:49)(cid:95)(cid:2)(cid:401)(cid:399)(cid:311)(cid:2)(cid:401)(cid:399)(cid:400)(cid:1142)(cid:311)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:48)(cid:111)(cid:45)(cid:117)(cid:55)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:98)(cid:117)(cid:59)(cid:49)(cid:124)(cid:111)(cid:117)(cid:118)(cid:2)(cid:45)(cid:134)(cid:124)(cid:95)(cid:111)(cid:117)(cid:98)(cid:140)(cid:59)(cid:55)(cid:2)(cid:134)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:117)(cid:59)(cid:114)(cid:134)(cid:117)(cid:49)(cid:95)(cid:45)(cid:118)(cid:59)(cid:2)(cid:134)(cid:114)(cid:2)(cid:124)(cid:111)(cid:2)(cid:362)(cid:401)(cid:404)(cid:399)(cid:2)(cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:49)(cid:111)(cid:108)(cid:108)(cid:111)(cid:109)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:118)(cid:311)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:2462)(cid:108)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2) (cid:2462)(cid:108)(cid:59)(cid:311)(cid:2)(cid:118)(cid:134)(cid:48)(cid:102)(cid:59)(cid:49)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:108)(cid:45)(cid:117)(cid:104)(cid:59)(cid:124)(cid:2)(cid:49)(cid:111)(cid:109)(cid:55)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:314)(cid:2)(cid:27)(cid:109)(cid:2)(cid:25)(cid:111)(cid:136)(cid:59)(cid:108)(cid:48)(cid:59)(cid:117)(cid:2)(cid:403)(cid:311)(cid:2)(cid:401)(cid:399)(cid:401)(cid:399)(cid:311)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:48)(cid:111)(cid:45)(cid:117)(cid:55)(cid:2)(cid:111)(cid:61)(cid:2)(cid:55)(cid:98)(cid:117)(cid:59)(cid:49)(cid:124)(cid:111)(cid:117)(cid:118)(cid:2)(cid:45)(cid:134)(cid:124)(cid:95)(cid:111)(cid:117)(cid:98)(cid:140)(cid:59)(cid:55)(cid:2)(cid:134)(cid:118)(cid:2)(cid:124)(cid:111)(cid:2)(cid:117)(cid:59)(cid:114)(cid:134)(cid:117)(cid:49)(cid:95)(cid:45)(cid:118)(cid:59)(cid:2)(cid:45)(cid:109)(cid:2)(cid:45)(cid:55)(cid:55)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:45)(cid:1140)(cid:2)(cid:362)(cid:401)(cid:404)(cid:399)(cid:2) (cid:108)(cid:98)(cid:1140)(cid:1140)(cid:98)(cid:111)(cid:109)(cid:2)(cid:111)(cid:61)(cid:2)(cid:111)(cid:134)(cid:117)(cid:2)(cid:49)(cid:111)(cid:108)(cid:108)(cid:111)(cid:109)(cid:2)(cid:118)(cid:95)(cid:45)(cid:117)(cid:59)(cid:118)(cid:311)(cid:2)(cid:61)(cid:117)(cid:111)(cid:108)(cid:2)(cid:2462)(cid:108)(cid:59)(cid:2)(cid:124)(cid:111)(cid:2)(cid:2462)(cid:108)(cid:59)(cid:311)(cid:2)(cid:118)(cid:134)(cid:48)(cid:102)(cid:59)(cid:49)(cid:124)(cid:2)(cid:124)(cid:111)(cid:2)(cid:108)(cid:45)(cid:117)(cid:104)(cid:59)(cid:124)(cid:2)(cid:49)(cid:111)(cid:109)(cid:55)(cid:98)(cid:2462)(cid:111)(cid:109)(cid:118)(cid:314) During the year ended December 31, 2022, the (cid:7)ompany repurchased and re(cid:2462)red a total o(cid:61) 0.(cid:1141) million shares o(cid:61) its common stock at a weighted average price o(cid:61) (cid:362)22.(cid:406)(cid:404). During the year ended December 31, 2021, the (cid:7)ompany repurchased and re(cid:2462)red a total o(cid:61) 2.(cid:1142) million shares o(cid:61) its common stock at a weighted average price o(cid:61) (cid:362)22.20. In addi(cid:2462)on to the repurchases o(cid:61) the (cid:7)ompany(cid:317)s common stock made above, the (cid:7)ompany also withheld shares with respect to the ves(cid:2462)ng o(cid:61) restricted stock that the (cid:7)ompany made to its employees. Shares that vested during the year ended December 31, 2022 and 2021 were net-share se(cid:130)led such that the (cid:7)ompany withheld shares with value equivalent to the employees(cid:317) minimum statutory obliga(cid:2462)on (cid:61)or the applicable income and other employment ta(cid:138)es and remi(cid:130)ed the cash to the appropriate ta(cid:138)ing authori(cid:2462)es. During the year ended December 31, 2022 and 2021, total payments (cid:61)or the employees(cid:317) ta(cid:138) obliga(cid:2462)ons to the ta(cid:138)ing authori(cid:2462)es were (cid:362)1(cid:1142).(cid:1141) million (cid:336)(cid:1142)3(cid:403),(cid:406)11 shares withheld(cid:337) and (cid:362)20.(cid:404) million (cid:336)(cid:406)(cid:1141)(cid:405),(cid:404)3(cid:1141) shares withheld(cid:337), respec(cid:2462)vely. 138 / KENNEDY WILSON ANNUAL REPORT 2022 KENNEDY WILSON ANNUAL REPORT 2022 / 139 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities FORWARD-LOOKING STATEMENTS Real Estate Assets Under Management (AUM) (cid:3)U(cid:24) generally re(cid:61)ers to the proper(cid:2462)es and other assets with respect to which we provide (cid:336)or par(cid:2462)cipate in(cid:337) oversight, investment management services and other advice, and which generally consist o(cid:61) real estate proper(cid:2462)es or loans, and investments in joint ventures. Our (cid:3)U(cid:24) is principally intended to re(cid:89)ect the e(cid:138)tent o(cid:61) our presence in the real estate market, not the basis (cid:61)or determining our management (cid:61)ees. Our (cid:3)U(cid:24) consists o(cid:61) the total es(cid:2462)mated (cid:61)air value o(cid:61) the real estate proper(cid:2462)es and other real estate related assets either owned by third par(cid:2462)es, wholly-owned by us or held by joint ventures and other en(cid:2462)(cid:2462)es in which our sponsored (cid:61)unds or investment vehicles and client accounts have invested. (cid:7)ommi(cid:130)ed (cid:336)but un(cid:61)unded(cid:337) capital (cid:61)rom investors in our sponsored (cid:61)unds is not included in our (cid:3)U(cid:24). (cid:36)he es(cid:2462)mated value o(cid:61) development proper(cid:2462)es is included at es(cid:2462)mated comple(cid:2462)on cost. (cid:36)he table below details the changes in the (cid:7)ompany(cid:317)s (cid:3)U(cid:24) (cid:61)or the twelve months ended December 31, 2022(cid:313) (in millions) (cid:3)U(cid:24) December 31, 2021 Increases Decreases December 31, 2022 (cid:362) 21,(cid:404)(cid:1141)(cid:406).2 (cid:362) (cid:403),210.(cid:1142) (cid:362) 2,(cid:405)(cid:404)1.(cid:1141) (cid:362) 23,02(cid:1142).(cid:403) (cid:3)U(cid:24) increased (cid:405)(cid:1143) to appro(cid:138)imately (cid:362)23.0 billion as o(cid:61) December 31, 2022. (cid:36)he increase is primarily due new acquisi(cid:2462)ons (cid:61)or consolidated mul(cid:2462)(cid:61)amily proper(cid:2462)es in the Western United Sates, industrial proper(cid:2462)es in our (cid:11)uropean industrial separate account and loan origina(cid:2462)ons in our debt pla(cid:127)orm. (cid:36)hese were o(cid:64)set by (cid:61)oreign e(cid:138)change losses on (cid:11)uropean assets and sales o(cid:61) non-core retail and o(cid:76)ce assets in the Western United States and United Kingdom. Foreign currency and currency derivative instruments (cid:30)lease re(cid:61)er to Item (cid:405). (cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)on (cid:61)or a discussion regarding (cid:61)oreign currency and currency deriva(cid:2462)ve instruments. Statements made by us in this report and in other reports and statements released by us that are not historical (cid:61)acts cons(cid:2462)tute (cid:318)(cid:61)orward-looking statements(cid:319) within the meaning o(cid:61) Sec(cid:2462)on 2(cid:405)(cid:3) o(cid:61) the Securi(cid:2462)es (cid:3)ct o(cid:61) 1(cid:406)33, as amended (cid:336)the (cid:318)Securi(cid:2462)es (cid:3)ct(cid:319)(cid:337) and Sec(cid:2462)on 21(cid:11) o(cid:61) the Securi(cid:2462)es (cid:11)(cid:138)change (cid:3)ct o(cid:61) 1(cid:406)3(cid:403), as amended (cid:336)the (cid:318)(cid:11)(cid:138)change (cid:3)ct(cid:319)(cid:337). (cid:36)hese (cid:61)orward-looking statements are necessarily es(cid:2462)mates re(cid:89)ec(cid:2462)ng the judgment o(cid:61) our senior management based on our current es(cid:2462)mates, e(cid:138)pecta(cid:2462)ons, (cid:61)orecasts and projec(cid:2462)ons and include comments that e(cid:138)press our current opinions about trends and (cid:61)actors that may impact (cid:61)uture results. Disclosures that use words such as (cid:318)believe,(cid:319) (cid:318)may,(cid:319) (cid:318)an(cid:2462)cipate,(cid:319) (cid:318)es(cid:2462)mate,(cid:319) (cid:318)intend,(cid:319) (cid:318)could,(cid:319) (cid:318)plan,(cid:319) (cid:318)e(cid:138)pect,(cid:319) (cid:318)project(cid:319) or the nega(cid:2462)ve o(cid:61) these, as well as similar e(cid:138)pressions, are intended to iden(cid:2462)(cid:61)y (cid:61)orward-looking statements. Forward-looking statements are not guarantees o(cid:61) (cid:61)uture per(cid:61)ormance, rely on a number o(cid:61) assump(cid:2462)ons concerning (cid:61)uture events, many o(cid:61) which are outside o(cid:61) our control, and involve known and unknown risks and uncertain(cid:2462)es that could cause our actual results, per(cid:61)ormance or achievement, or industry results, to di(cid:64)er materially (cid:61)rom any (cid:61)uture results, per(cid:61)ormance or achievements, e(cid:138)pressed or implied by such (cid:61)orward-looking statements. (cid:3)lthough we believe that our plans, inten(cid:2462)ons, e(cid:138)pecta(cid:2462)ons, strategies and prospects as re(cid:89)ected in or suggested by those (cid:61)orward-looking statements are reasonable, we do not guarantee that the transac(cid:2462)ons and events described will happen as described (cid:336)or that they will happen at all(cid:337). In addi(cid:2462)on, this report contains in(cid:61)orma(cid:2462)on and sta(cid:2462)s(cid:2462)cs regarding, among other things, the industry, markets, submarkets and sectors in which we operate. We obtained this in(cid:61)orma(cid:2462)on and these sta(cid:2462)s(cid:2462)cs (cid:61)rom various third-party sources and our own internal es(cid:2462)mates. We believe that these sources and es(cid:2462)mates are reliable but have not independently veri(cid:67)ed them and cannot guarantee their accuracy or completeness. (cid:3)ny such (cid:61)orward-looking statements, whether made in this report or elsewhere, should be considered in the conte(cid:138)t o(cid:61) the various disclosures made by us about our businesses including, without limita(cid:2462)on, the risk (cid:61)actors discussed in (cid:30)art I, Item I(cid:3) o(cid:61) this (cid:33)eport. (cid:11)(cid:138)cept as required under the (cid:61)ederal securi(cid:2462)es laws and the rules and regula(cid:2462)ons o(cid:61) the U.S. Securi(cid:2462)es and (cid:11)(cid:138)change (cid:7)ommission (cid:336)the (cid:318)S(cid:11)(cid:7)(cid:319)(cid:337), we do not have any inten(cid:2462)on or obliga(cid:2462)on to update publicly any (cid:61)orward- looking statements, whether as a result o(cid:61) new in(cid:61)orma(cid:2462)on, (cid:61)uture events, changes in assump(cid:2462)ons, or otherwise. (cid:30)lease re(cid:61)er to (cid:318)(cid:25)on-(cid:14)(cid:3)(cid:3)(cid:30) (cid:24)easures and (cid:7)ertain De(cid:67)ni(cid:2462)ons(cid:319) in Item (cid:405). (cid:24)anagement(cid:317)s Discussion and (cid:3)nalysis o(cid:61) Financial (cid:7)ondi(cid:2462)on and (cid:33)esults o(cid:61) Opera(cid:2462)ons (cid:61)or de(cid:67)ni(cid:2462)ons o(cid:61) certain terms used throughout this report. Corporate Information Board Of Directors Executive Ofﬁcers William J. McMorrow Chairman and Chief Executive Ofﬁcer Todd Boehly Co-Founder, Chairman, Chief Executive Ofﬁcer and Controlling Member Eldridge Industries, LLC Richard Boucher Former Group CEO Bank of Ireland Cathy Hendrickson Retired President and Chief Executive Ofﬁcer Bay Cities National Bank (Now Opus Bank) David A. Minella Managing Member Minella Capital Management LLC Kent Y. Mouton Executive Vice President and General Counsel Trevor Bowen Former Director Principle Management Limited Mary L. Ricks President Wade Burton President and Chief Investment Ofﬁcer of Hamblin Watsa Investment Counsel Ltd. Sanaz Zaimi Former Head of Global FICC Sales Bank of America Merrill Lynch Norman Creighton Retired President and Chief Executive Ofﬁcer Imperial Bank (Now Comerica) Stanley Zax Retired Chairman Zenith National Insurance Corporation William J. McMorrow Chairman and Chief Executive Ofﬁcer Justin Enbody Chief Financial Ofﬁcer Mary L. Ricks President Matt Windisch Executive Vice President Kent Y. Mouton Executive Vice President and General Counsel In Ku Lee Senior Vice President and Deputy General Counsel Corporate Headquarters Independent Auditors For more information For more information on Kennedy Wilson, please visit our website at www.kennedywilson.com KPMG LLP Legal Counsel Latham & Watkins LLP Investor Information A copy of our Annual Report on Form 10-K, as ﬁled with the SEC, will be furnished to shareholders and interested investors free of charge upon written request to us at 151 South El Camino Drive, Beverly Hills, CA 90212, Attention: Investor Relations 151 South El Camino Drive Beverly Hills, CA 90212 +1 (310) 887-6400 Annual Meeting Beverly Wilshire 9500 Wilshire Blvd. Beverly Hills, CA 90212 9 a.m., Thursday, June 8, 2023 Stock Listing New York Stock Exchange Symbol “KW” Transfer Agent Continental Stock Transfer 1 State Street - SC-1 New York, NY 10004 +1 (212) 509-4000 Certain of the matters discussed herein are discussed more fully in our ﬁlings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. We ﬁled our Annual Report on Form 10-K for the year ended December 31, 2022, with the SEC on February 22, 2023, which, in the section titled “Risk Factors,” contains a detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from any forward-looking statements contained herein. t e n . t o v i p g b w w w / . i s r e n t r a P t o v i P i g B y b n g i s e D t r o p e R l a u n n A Our Locations U.S. Bellevue 30(cid:404)(cid:404) 112th (cid:3)ve. (cid:25)(cid:11), Suite 12(cid:404) Bellevue, W(cid:3) (cid:406)(cid:1142)00(cid:403) (cid:30)ortland 22(cid:405)0 (cid:25)W Savier St. (cid:30)ortland, O(cid:33) (cid:406)(cid:405)210 Salt Lake (cid:7)ity 1(cid:403)(cid:406)(cid:1141) Spring Lane Holladay, U(cid:36) (cid:1142)(cid:403)11(cid:405) San Francisco (cid:403)00 (cid:7)ali(cid:61)ornia Street San Francisco, (cid:7)(cid:3) (cid:406)(cid:403)10(cid:403) Beverly Hills (cid:336)(cid:14)lobal (cid:7)orporate Headquarters(cid:337) 1(cid:404)1. S. (cid:11)l (cid:7)amino Drive Beverly Hills, (cid:7)(cid:3) (cid:406)0212 Boise 3(cid:1141)(cid:404) (cid:25). Whitewater (cid:30)ark Blvd. Boise, ID (cid:1142)3(cid:405)02 Denver (cid:1142)101 (cid:11). (cid:30)ren(cid:2462)ce (cid:3)ve., Suite 2(cid:405)(cid:404) (cid:14)reenwood (cid:40)illage, (cid:7)O (cid:1142)00111 Europe Dublin (cid:406)(cid:403) St Stephen(cid:317)s (cid:14)reen Dublin 2 Ireland London (cid:404)0 (cid:14)rosvenor Hill London, W1K 3(cid:32)(cid:36) United Kingdom Lu(cid:138)embourg 21, rue (cid:30)hilippe II Lu(cid:138)embourg L-23(cid:403)0 Bellevue (cid:30)ortland Boise San Francisco Salt Lake (cid:7)ity Denver Beverly Hills Corporate Headquarters Madrid (cid:7)(cid:326) Fernando (cid:11)l Santo 1(cid:405) 3(cid:142) I(cid:140)q. 2(cid:1142)010 Madrid, Spain St. Helier 2(cid:406) Broad Street St. Helier, Jersey J(cid:11)2 3(cid:33)(cid:33) (cid:7)hannel Islands London Dublin St. Helier Lu(cid:138)embourg Madrid 151 South El Camino Drive Beverly Hills, CA 90212 Tel: +1 (310) 887-6400 www.kennedywilson.com

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