Kennedy Wilson Reports Third Quarter 2022 Results

Rhea-AI Summary

Kennedy Wilson Holdings (NYSE: KW) reported Q3 2022 results, revealing a GAAP net income of $16.4 million, down from $65.9 million in Q3 2021. Adjusted EBITDA fell to $165.9 million from $202.7 million year-over-year. Despite a 15% annual increase in estimated NOI to $473 million, fair value losses impacted performance. The firm completed $1.4 billion in investment transactions and experienced a 17% growth in fee-bearing capital, totaling $5.6 billion. Overall, while demand for multifamily properties remains strong, inflation and monetary policy uncertainties pose challenges ahead.

Positive

• Estimated Annual NOI increased by 15% to $473 million compared to Q3-2021.
• Completed $1.4 billion in gross investment transactions, expanding portfolio.
• 17% growth in fee-bearing capital to $5.6 billion from Q3-2021.

Negative

• GAAP net income dropped significantly from $65.9 million in Q3-2021 to $16.4 million.
• Adjusted EBITDA decreased from $202.7 million in Q3-2021 to $165.9 million.
• Fair value changes resulted in a net loss of $10 million, down $132 million from prior year.

BEVERLY HILLS, Calif.--(BUSINESS WIRE)-- Kennedy-Wilson Holdings, Inc. (NYSE: KW), a leading global real estate investment company with $22 billion in AUM that owns, operates, and invests in real estate both on its own and through its investment management platform, today reported results for Q3-2022:

“Our Q3 results demonstrated the strength of our business, led by continued strong demand for our high-quality multifamily portfolio and continued expansion of our investment management business,” said William McMorrow, Chairman and CEO of Kennedy Wilson. “As we look ahead, while the near-term continues to be driven by uncertainty surrounding inflation and monetary policy, we remain confident around the long-term growth prospects of KW.”

Financial Results

	Q3					YTD
(Amounts in millions, except per share data)	2022		2021			2022		2021
GAAP Results
GAAP Net Income to Common Shareholders	$16.4		$65.9			$42.2		$275.7
Per Diluted Share	0.12		0.47			0.31		1.96
Non-GAAP Results
Adjusted EBITDA	$165.9		$202.7			$444.4		$740.5
Adjusted Net Income	68.7		111.9			195.5		423.5

• Adjusted EBITDA of $166 million (vs. $203 million in Q3-21) Driven by Higher Levels of Recurring NOI and Fees Offset by Decreases in Fair Value:
  • KW's share of recurring property NOI, loan income and fees totaled $130 million in Q3-22, an increase of $18 million from Q3-21.
  • KW's share of gains from the sale of real estate, changes in fair values and performance allocation totaled $39 million in Q3-22, a decrease of $98 million from Q3-21:
    • Realized gains from asset sales and realized performance allocation totaled $49 million, an increase of $34 million from Q3-21.
    • Changes in fair value and accrued performance allocation decreased by $132 million from Q3-21 to a net loss of $10 million in Q3-22.
  • Other income totaled $37 million in Q3-22 (vs $0.3 million in Q3-21), primarily related to the change in the value of the Company's interest rate hedging derivative contracts. See discussion below on the Company's interest rate and foreign currency hedging strategy.

• Estimated Annual NOI Totals $473 million, an Increase of 15% from Q3-21 and 9% YTD:

	Est. Annual NOI To KW ($ in millions)			Fee-Bearing Capital ($ in billions)
As of Q3-21	$413			$4.8
As of Q4-21	$434			$5.0
As of Q2-22	$479			$5.3
Gross acquisitions and loan investments	9			0.4
Gross dispositions and loan repayments	(11	)		(0.1	)
Assets stabilized / (unstabilized)	2			—
Operations	5			—
FX and other(1)	(11	)		—
Total as of Q3-22	$473			$5.6

^{(1) See further discussion of foreign currency hedging strategy below}

• Same Property Performance⁽¹⁾ Driven by Strong Multifamily Rental Growth:

	Q3 - 2022 vs. Q3- 2021								YTD - 2022 vs. YTD - 2021
	Occupancy			Revenue			NOI		Occupancy			Revenue			NOI
Multifamily - Market Rate	(1.0	)%		8.5	%		7.1	%	(0.9	)%		10.5	%		12.0	%
Multifamily - Affordable	0.9	%		6.1	%		4.6	%	—	%		5.6	%		4.8	%
Office	1.6	%		2.8	%		1.7	%	(0.5	)%		0.2	%		(1.3	)%
Total				6.6	%		5.0	%				6.9	%		6.5	%

^{(1) Excludes minority-held investments}

• Further Progress on Development and Lease-Up Portfolio in Q3:
  • Stabilized Kildare in Ireland, River Pointe Premier in Idaho, and Vintage at Sanctuary in Nevada, which added approximately $5 million to Estimated Annual NOI in Q3-22. In 2022, the Company has stabilized five recently developed assets adding $10 million of Estimated Annual NOI to KW.
  • The Company's development and lease-up portfolio totals approximately $3 billion, in which KW's average ownership is 59% and includes 4,669 multifamily units, 2.7 million commercial square feet, and one hotel.
  • The development and lease-up portfolio is expected to add $92 million of Estimated Annual NOI, of which the Company expects to stabilize 83% of by YE-24.

Investment Activity

• Completed $1.4 billion in Gross Investment Transactions in Q3:

• $675 million in Gross New Investments ($161 million at Share):
  • Consolidated Portfolio Expands In Mountain West: Acquired Cantata at the Trails, a value-add wholly-owned 260-unit multifamily property in Albuquerque, New Mexico, which added $4 million to Estimated Annual NOI. As part of the acquisition, the Company assumed mortgage debt with a fixed interest rate of 3.64% and 7 years of remaining term.
  • Co-Investment Portfolio: Completed $320 million in loan originations and acquired $234 million of European and Western U.S. industrial assets, and $49 million of Western U.S. multifamily assets. The Company's weighted-average ownership in these investments was 12%, which added $5 million in Estimated Annual NOI and $400 million in Fee-Bearing Capital.
• $713 million in Gross Dispositions and Loan Repayments ($240 million at Share):
  • Consolidated Portfolio Completes $159 million in Sales: Sold one urban multifamily asset in Oakland, California, two non-core retail assets in the Mountain West and two non-core UK office assets for $159 million. These sales resulted in $37 million of gains on sale and $90 million of cash to KW.
  • Co-Investment Portfolio: Sold $525 million in multifamily, residential, and industrial assets, and separately realized $30 million in loan repayments in our debt platform. The Company had a weighted-average ownership of 15% in these investments.

Investment Management

• 17% Growth in Fee-Bearing Capital to $5.6 billion from Q3-21; 12% Growth YTD: Fee-Bearing Capital totaled $5.6 billion as of Q3-22, with approximately $3.8 billion in additional non-discretionary capital with certain strategic partners that is currently available for investment.
  • Debt Platform Grows to $2.5 billion:
    • Completed $320 million in new loan originations and realized $30 million in loan repayments.
    • Platform totals $2.5 billion of outstanding loans (including $311 million of future funding commitments) and $2.0 billion of Fee-Bearing Capital at quarter-end. The Company has a 7% ownership in this platform.
  • EU Logistics Platform Totals $1.3 billion:
    • Completed $36 million in new investments in Q3, bringing the EU logistics platform to $1.3 billion in assets, representing $526 million in Fee-Bearing Capital. Kennedy Wilson has a 20% ownership interest in this platform.
    • Including investments made through its commingled fund, Kennedy Wilson's European logistics portfolio totals $1.6 billion across 9.7 million commercial square feet.

Balance Sheet and Liquidity

• $720 million in Cash and Line of Credit Availability: As of September 30, 2022, Kennedy Wilson had a total of $420 million⁽¹⁾ in cash and cash equivalents and $300 million of capacity on its $500 million revolving line of credit, after paying down its line by $50 million during Q3. Post-quarter end, the Company paid down its line of credit by $25 million.
• Debt Profile: Kennedy Wilson's share of debt had a weighted average effective interest rate of 4.0% per annum and a weighted-average maturity of 5.9 years as of September 30, 2022. Approximately 97% of the Company's debt is either fixed or hedged with interest rate hedges.
• Interest Rate Hedging Strategy: The Company hedges its floating rate exposure through the usage of interest rate caps and swaps. As a result of interest rate increases during Q3-22, the Company recognized $38 million in Other Income related to the change in the value of its interest rate hedging instruments. The Company's interest rate hedges have a weighted-average maturity of 2 years.
• Foreign Currency Hedging Strategy: Kennedy Wilson hedges its exposure to foreign currency fluctuations by borrowing in the currency in which it invests and using foreign currency hedging instruments. During Q3-22, the Company restructured certain hedging contracts, generating $73 million of cash to KW. As of September 30, 2022, the Company has hedged approximately 87% of the carrying value of its foreign currency investments, using local currency debt and hedging instruments with a weighted-average term of 3 years.

________________________________________________________________________________________

Footnotes

(1)

Represents consolidated cash and includes $22 million of restricted cash, which is included in cash and cash equivalents and primarily relates to lender reserves associated with consolidated mortgages that we hold on properties. These reserves typically relate to interest, tax, insurance and future capital expenditures at the properties. Additionally, we are subject to withholding taxes to the extent we repatriate cash from certain of our foreign subsidiaries. Under the KWE Notes covenants we have to maintain certain interest coverage and leverage ratios to remain in compliance (see "Indebtedness and Related Covenants" for more detail on KWE Notes in the Company's quarterly report). Due to these covenants, we evaluate the tax and covenant implications before we distribute cash, which could impact the availability of funds at the corporate level. The Company's share of cash, including unconsolidated joint-ventures, totals $523 million.

Conference Call and Webcast Details

Kennedy Wilson will hold a live conference call and webcast to discuss results at 9:00 a.m. PT/ 12:00 p.m. ET on Thursday, November 3. The direct dial-in number for the conference call is (844) 340-4761 for U.S. callers and (412) 717-9616 for international callers. A replay of the call will be available for one week beginning one hour after the live call and can be accessed by (877) 344-7529 for U.S. callers and (412) 317-0088 for international callers. The passcode for the replay is 3347300.

The webcast will be available at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Aw6zcKs1. A replay of the webcast will be available one hour after the original webcast on the Company’s investor relations web site for three months.

About Kennedy Wilson

Kennedy Wilson (NYSE:KW) is a leading global real estate investment company. The company owns, operates, and invests in real estate through the balance sheet and through an investment management platform across the Western United States, United Kingdom, and Ireland. Kennedy Wilson primarily focuses on multifamily and office properties as well as industrial and debt investments in the investment management business. For more information on Kennedy Wilson, please visit: www.kennedywilson.com.

Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets (Unaudited) (Dollars in millions)
		September 30, 2022				December 31, 2021
Assets
Cash and cash equivalents		$	420.3			$	524.8
Accounts receivable			38.1				36.1
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of $823.5 and $838.1)			5,076.7				5,059.8
Unconsolidated investments (including $1,981.3 and $1,794.8 at fair value)			2,130.3				1,947.6
Other assets			275.4				177.9
Loan purchases and originations			143.7				130.3
Total assets		$	8,084.5			$	7,876.5
Liabilities
Accounts payable		$	10.9			$	18.6
Accrued expenses and other liabilities			603.0				619.1
Mortgage debt			3,011.2				2,959.8
KW unsecured debt			1,979.8				1,852.3
KWE unsecured bonds			536.4				622.8
Total liabilities			6,141.3				6,072.6
Equity
Cumulative perpetual preferred stock			592.5				295.2
Common stock			—				—
Additional paid-in capital			1,672.3				1,679.6
Retained earnings			132.5				192.4
Accumulated other comprehensive loss			(470.9	)			(389.6	)
Total Kennedy-Wilson Holdings, Inc. shareholders’ equity			1,926.4				1,777.6
Noncontrolling interests			16.8				26.3
Total equity			1,943.2				1,803.9
Total liabilities and equity		$	8,084.5			$	7,876.5

Kennedy-Wilson Holdings, Inc. Consolidated Statements of Operations (Unaudited) (Dollars in millions, except share amounts and per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Revenue
Rental		$	110.9			$	96.1			$	324.4			$	279.7
Hotel			14.0				6.2				33.2				9.2
Investment management fees			11.2				9.2				33.5				25.4
Property services fees			0.5				0.5				1.3				1.7
Loans and other			3.0				2.4				8.0				6.2
Total revenue			139.6				114.4				400.4				322.2
Income (loss) from unconsolidated investments
Principal co-investments			30.3				96.8				147.9				151.9
Performance allocations			(18.0	)			46.3				0.5				62.0
Total income from unconsolidated investments			12.3				143.1				148.4				213.9
Gain on sale of real estate, net			37.0				15.0				50.8				417.0
Expenses
Rental			38.6				32.4				110.7				97.8
Hotel			8.6				3.7				20.5				7.8
Compensation and related			26.5				30.4				82.0				98.4
Share-based compensation			7.3				6.9				21.7				21.9
Performance allocation compensation			(6.6	)			2.9				3.2				3.2
General and administrative			9.2				8.9				26.5				24.7
Depreciation and amortization			46.1				39.2				132.7				125.3
Total expenses			129.7				124.4				397.3				379.1
Interest expense			(57.1	)			(45.3	)			(160.8	)			(141.4	)
Loss on early extinguishment of debt			(1.3	)			—				(2.4	)			(38.6	)
Other income (loss)			36.7				0.3				46.1				(3.7	)
Income before provision for income taxes			37.5				103.1				85.2				390.3
Provision for income taxes			(13.9	)			(30.6	)			(22.5	)			(98.2	)
Net income			23.6				72.5				62.7				292.1
Net loss (income) attributable to noncontrolling interests			0.7				(2.3	)			0.5				(3.5	)
Preferred dividends			(7.9	)			(4.3	)			(21.0	)			(12.9	)
Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	16.4			$	65.9			$	42.2			$	275.7
Basic earnings per share
Earnings per share		$	0.12			$	0.48			$	0.31			$	1.98
Weighted average shares outstanding			136,840,874				138,934,754				136,832,102				138,989,733
Diluted earnings per share
Earnings per share		$	0.12			$	0.47			$	0.31			$	1.96
Weighted average shares outstanding			137,078,495				139,437,126				137,136,352				140,565,582
Dividends declared per common share		$	0.24			$	0.22			$	0.72			$	0.66

Kennedy-Wilson Holdings, Inc. Adjusted EBITDA (Unaudited) (Dollars in millions)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted EBITDA, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2022			2021			2022			2021
Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	16.4		$	65.9		$	42.2		$	275.7
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Interest expense			72.9			55.9			201.8			167.3
Loss on early extinguishment of debt			1.3			—			2.4			38.6
Depreciation and amortization			45.0			39.1			131.6			125.9
Provision for income taxes			15.1			30.6			23.7			98.2
Preferred dividends			7.9			4.3			21.0			12.9
Share-based compensation			7.3			6.9			21.7			21.9
Adjusted EBITDA		$	165.9		$	202.7		$	444.4		$	740.5

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

Adjusted Net Income (Unaudited) (Dollars in millions, except share data)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted Net Income, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2022			2021			2022			2021
Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders		$	16.4		$	65.9		$	42.2		$	275.7
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)(1):
Depreciation and amortization			45.0			39.1			131.6			125.9
Share-based compensation			7.3			6.9			21.7			21.9
Adjusted Net Income		$	68.7		$	111.9		$	195.5		$	423.5
Weighted average shares outstanding for diluted			137,078,495			139,437,126			137,136,352			140,565,582

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

Forward-Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as "believe," "anticipate," "estimate," "intend," "may," "could," "plan," "expect," "project" or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties may include the factors and the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the "SEC"), including the Item 1A. "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2021, as amended by our subsequent filings with the SEC. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in the context of the various disclosures made by us about our businesses including, without limitation, the risk factors discussed in our filings with the SEC. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise.

Common Definitions

· “KWH,” "KW," “Kennedy Wilson,” the "Company," "we," "our," or "us" refers to Kennedy-Wilson Holdings, Inc. and its wholly-owned subsidiaries.

· “Adjusted EBITDA” represents net income before interest expense, loss on early extinguishment of debt, our share of interest expense included in unconsolidated investments, depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, provision for (benefit from) income taxes, our share of taxes included in unconsolidated investments, share-based compensation, and excludes EBITDA attributable to noncontrolling interests.

Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com. Our management uses Adjusted EBITDA to analyze our business because it adjusts net income for items we believe do not accurately reflect the nature of our business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not remove all non-cash items (such as acquisition-related gains) or consider certain cash requirements such as tax and debt service payments. The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

· "Adjusted Fees" refers to Kennedy Wilson’s gross investment management and property services fees adjusted to include Kennedy Wilson's share of fees eliminated in consolidation, Kennedy Wilson’s share of fees in unconsolidated service businesses and performance fees included in unconsolidated investments. Our management uses Adjusted fees to analyze our investment management and real estate services business because the measure removes required eliminations under GAAP for properties in which the Company provides services but also has an ownership interest. These eliminations understate the economic value of the investment management and property services fees and makes the Company comparable to other real estate companies that provide investment management and real estate services but do not have an ownership interest in the properties they manage. Our management believes that adjusting GAAP fees to reflect these amounts eliminated in consolidation presents a more holistic measure of the scope of our investment management and real estate services business.

· “Adjusted Net Income” represents net income (loss) before depreciation and amortization, Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments, share-based compensation, and excluding net income attributable to noncontrolling interests, before depreciation and amortization and preferred dividends. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.

· “Annual Return on Loans” is a metric that applies to our real estate debt business that represents the sum of annual interest income, transaction fees and the payback of principal for discounted loan purchases, amortized over the life of the loans and divided by the principal balances of the loans.

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

· "Equity partners" refers to non-wholly-owned subsidiaries that we consolidate in our financial statements under U.S. GAAP and third-party equity providers.

· "Estimated Annual NOI" is a property-level non-GAAP measure representing the estimated annual net operating income from each property as of the date shown, inclusive of rent abatements (if applicable). The calculation excludes depreciation and amortization expense, and does not capture the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements, and leasing commissions necessary to maintain the operating performance of our properties. For assets wholly-owned and fully occupied by KW, the Company provides an estimated NOI for valuation purposes of $4.1 million, which includes an assumption for applicable market rents. Any of the enumerated items above could have a material effect on the performance of our properties. Also, where specifically noted, for properties purchased in 2022, the NOI represents estimated Year 1 NOI from our original underwriting. Estimated year 1 NOI for properties purchased in 2022 may not be indicative of the actual results for those properties. Estimated annual NOI is not an indicator of the actual annual net operating income that the Company will or expects to realize in any period. Please also see the definition of "Net operating income" below. The Company does not provide a reconciliation for Estimated Annual NOI to its most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimation of each of the component reconciling items, and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact estimated annual NOI, including, for example, the sale of real estate that have not yet occurred and other items and are out of the Company’s control. For the same reasons, the Company is unable to meaningfully address the probable significance of the unavailable information and believes that providing a reconciliation for estimated annual NOI would imply a degree of precision as to its forward-looking net operating income that would be confusing or misleading to investors.

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

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

· "Net operating income" or "NOI” is a non-GAAP measure representing the income produced by a property calculated by deducting certain property expenses from property revenues. Our management uses net operating income to assess and compare the performance of our properties and to estimate their fair value. Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of our properties resulting from our value-add initiatives or changing market conditions. Our management believes that net operating income reflects the core revenues and costs of operating our properties and is better suited to evaluate trends in occupancy and lease rates. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.

· "Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.

· "Performance allocations” relates to allocations to the general partner, special limited partner or asset manager of Kennedy Wilson's co-investments it manages based on the cumulative performance of the fund and are subject to preferred return thresholds of the limited partners.

· "Performance allocation compensation” - the compensation committee of the Company’s board of directors approved and reserved between twenty percent (20%) and thirty-five percent (35%) of any performance allocation earned by certain commingled funds and separate account investments to be allocated to certain non-NEO employees of the Company.

· "Principal co-investments” consists of the Company’s share of income or loss earned on investments in which the Company can exercise significant influence but does not have control. Income from unconsolidated investments includes income from ordinary course operations of the underlying investment, gains on sale, fair value gains and losses.

· "Pro-Rata" represents Kennedy Wilson's share calculated by using our proportionate economic ownership of each asset in our portfolio. Please also refer to the pro-rata financial data in our supplemental financial information.

· "Property NOI" or "Property-level NOI" is a non-GAAP measure calculated by deducting the Company's Pro-Rata share of rental and hotel property expenses from the Company's Pro-Rata rental, hotel and loans and other revenues. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.

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

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

· “Same property” refers to multifamily and office properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared. The same property information presented throughout this report excludes non-recurring expenses. This analysis excludes properties that are either under development or undergoing lease up as part of our asset management strategy as well as minority-held investments.

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

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

KW-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005981/en/

Daven Bhavsar, CFA

Vice President of Investor Relations

(310) 887-3431

dbhavsar@kennedywilson.com

www.kennedywilson.com

Source: Kennedy-Wilson Holdings, Inc.

FAQ

What were the Q3 2022 financial results for Kennedy Wilson (KW)?

Kennedy Wilson reported a GAAP net income of $16.4 million for Q3 2022, compared to $65.9 million in Q3 2021.

How much did Kennedy Wilson's estimated Annual NOI grow in Q3 2022?

Kennedy Wilson's estimated Annual NOI increased by 15% to $473 million in Q3 2022.

What is the growth in fee-bearing capital for Kennedy Wilson (KW) in Q3 2022?

Kennedy Wilson experienced a 17% increase in fee-bearing capital, totaling $5.6 billion as of Q3 2022.

What challenges does Kennedy Wilson (KW) face looking ahead?

The company faces uncertainties related to inflation and monetary policy as it looks to the future.

What was the adjusted EBITDA for Kennedy Wilson (KW) in Q3 2022?

Kennedy Wilson's adjusted EBITDA was $165.9 million for Q3 2022, down from $202.7 million in Q3 2021.