Kennedy Wilson Reports Second Quarter 2021 Results

BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Kennedy-Wilson Holdings, Inc. (NYSE: KW) today reported results for 2Q-2021:

	2Q			YTD
(Amounts in millions, except per share data)	2021	2020		2021	2020
GAAP Results
GAAP Net Income (Loss) to Common Shareholders	$215.4	($42.1	)	$209.8	($52.0	)
Per Diluted Share	1.53	(0.30	)	1.50	(0.37	)
Non-GAAP Results
Adjusted EBITDA	$410.2	$72.8		$537.8	$184.8
Adjusted Net Income	264.6	12.0		311.6	56.8

"Continued strong demand for real estate has led to appreciating market values of our properties, as evidenced by our recent dispositions," said William McMorrow, Chairman and CEO of Kennedy Wilson. "We had one of our most active quarters in our history, with $1.7 billion in completed investment transactions that generated significant gains from asset sales and produced a record quarter of financial results. Looking ahead, we will maintain our focus on reinvesting the proceeds from recent asset sales and expanding our existing platforms to drive further growth in our recurring cash flow over the long term."

2Q Highlights

• Adjusted EBITDA to $410 million (vs. $73 million in 2Q-20):
  • KW's share of gains from the sale of real estate, increases in fair values and promotes totaled $365 million in 2Q-21, an increase of $357 million from 2Q-20.
  • KW's share of recurring property NOI, loan income and fees totaled $99 million in 2Q-21, an increase of $5 million from 2Q-20.
• Completed $1.7 billion in Investment Transactions which Grew Estimated Annual NOI and Fee-Bearing Capital:

	Transaction Value ($ in millions)		Est. Annual NOI ($ in millions)			Fee-Bearing Capital ($ in billions)
As of 1Q-21			$	389		$	4.1
Gross acquisitions and loan investments	1,135		27			0.3
Gross dispositions and loan repayments	143		(4		)	(0.1		)
New U.S. Multifamily Platform (at KW Share)	392		(18		)	0.2
Asset Stabilizations	—		6			—
Operations and FX	—		3			—
Total as of 2Q-21	$	1,670	$	403		$	4.5

• Launched New $1.5 billion U.S. Multifamily Platform: The Company launched a new $1.5 billion joint-venture platform with a global institutional investor to acquire and manage core-plus multifamily communities in the Western U.S.:
  • The platform was seeded with an $800 million portfolio, consisting of nine multifamily properties located in the Western U.S. that were previously wholly-owned by Kennedy Wilson.
  • Kennedy Wilson sold a 49% interest in these wholly-owned assets to its partner, which generated a gain on sale of approximately $330 million (due to the deconsolidation of the portfolio) and cash proceeds of $167 million.
  • Kennedy Wilson will continue to have a 51% ownership stake in the new joint venture which will target approximately $700 million in additional core-plus multifamily acquisition opportunities.
• New Investments in 2Q-21 Added $27 million of Estimated Annual NOI, which were primarily driven by:
  • Acquired two office properties in Greater London for $325 million, adding $14 million in Estimated Annual NOI.
  • Expanded Mountain State portfolio through acquiring three multifamily communities in Boise, Idaho and one in Albuquerque, New Mexico totaling 984 Units for $208 million, adding $9 million in Estimated Annual NOI.
• Stabilizations Add $6 million of Estimated Annual NOI: Stabilized Clancy Quay Phase 3, The Clara and Seatac by Vintage in 2Q, which added approximately $6 million in Estimated Annual NOI. The Company currently expects to add another $5 million in Estimated Annual NOI from stabilizations by year-end 2021.
• 10% Growth in Fee-Bearing Capital: Fee-Bearing Capital totaled $4.5 billion as of June 30, 2021, a 10% increase from 1Q-21 and an 15% increase YTD. In addition, the Company has approximately $1.9 billion in additional non-discretionary capital with certain strategic partners that is available for investment. If invested, these amounts will be added to Fee-Bearing Capital.
  • 25% Growth in U.S. Debt Platform: Completed loan investments totaling $265 million in 2Q-21, resulting in 25% growth of our debt platform. The Company has a 10% ownership in its debt platform, which totals $1.2 billion of assets and $1.0 billion of Fee-Bearing Capital as of quarter-end.
  • 16% Growth in European Logistics Platform: Acquired $83 million in logistics assets in 2Q-21, resulting in an additional $25 million in Fee-Bearing Capital. The Company has a 20% ownership in its logistics platform, which totals $573 million of assets and $206 million of Fee-Bearing Capital as of 2Q-21.
• Multifamily and Office Same Property Performance¹:

	2Q - 2021 vs. 2Q - 2020			YTD - 2021 vs. YTD - 2020
	Occupancy	Revenue	NOI	Occupancy	Revenue	NOI
Multifamily - Market Rate	0.8%	1.9%	0.8%	0.6%	(0.1)%	(2.0)%
Multifamily - Affordable	0.7%	2.2%	0.6%	0.3%	2.1%	0.9%
Office	(1.1)%	1.7%	0.5%	(1.0)%	6.0%	6.1%
Total		1.9%	0.6%		2.0%	1.2%
(1) Excludes minority-held investments

2Q-21 Investment Activity

• Capital Investment:
  • In 2Q-21, the Company invested $444 million of cash, allocating 91% to new investments, 8% to capex and development initiatives, and 1% to share repurchases.
  • For the first half of 2021, the Company invested $573 million of cash, allocating 79% to new investments, 18% to capex and development initiatives, and 3% to share repurchases.

Balance Sheet and Capital Markets

• $898 million in Cash and Lines of Credit: As of June 30, 2021, Kennedy Wilson had a total of $687 million⁽¹⁾ in cash and cash equivalents and $211 million of capacity on its $500 million revolving line of credit.
• Unsecured Debt Transactions:
  • As previously disclosed, the Company fully refinanced its $1.15 billion in principal amount of its 5.875% unsecured notes due in April 2024 ("2024 notes") by redeeming all issued and outstanding 2024 notes with proceeds from $1.2 billion of principal amount of unsecured notes issued in 1Q-21 (with maturities split equally between 2029 and 2031), which had a combined effective interest rate of 4.83% per annum. A portion of the repayment of the 2024 notes, totaling $573 million, was made in 2Q-21, which resulted in $12 million of loss on early extinguishment of debt.
  • The Company completed a redemption of $207 million (£150 million) of its 3.95% sterling-denominated Kennedy Wilson Europe unsecured bonds maturing in 2022 ("2022 bonds"), with $303 million remaining outstanding, which resulted in $9 million of loss on early extinguishment of debt. In total, the Company has redeemed $387 million (£280 million) or 56% of the initial $690 million (£500 million) of the 2022 bonds.
• Debt Profile: Kennedy Wilson's share of debt had a weighted average interest rate of 3.5% per annum and a weighted-average maturity of 5.8 years.
• Share Repurchase Program⁽²⁾: In 2Q-21, Kennedy Wilson repurchased 0.3 million shares for $6 million at a weighted-average price of $20.55 per share. As of June 30, 2021, the Company had $238 million remaining available under its $500 million share repurchase plan. Since the launch of the plan in March 2018, the Company has repurchased 14.6 million shares for $262 million at a weighted-average price of $17.96 per share. The Company was in a voluntary or mandatory blackout period for the majority of the quarter and currently expects to resume activity under its share repurchase program during the second half of the year.

Footnotes
^(1)	Represents consolidated cash and includes $33 million of restricted cash, which is included in cash and cash equivalents. The Company's share of cash, including unconsolidated joint-ventures, totals $801 million.
^(2)	Future purchases under the program may be made in the open market, in privately negotiated transactions, through the net settlement of the company's restricted stock grants or otherwise, with the amount and timing of the repurchases dependent on market conditions and subject to the Company's discretion. The program does not obligate the Company to repurchase any specific number of shares and, subject to compliance with applicable laws, may be suspended or terminated at any time without prior notice.

Conference Call and Webcast Details

Kennedy Wilson will hold a live conference call and webcast to discuss results at 7:00 a.m. PT/10:00 a.m. ET on Thursday, August 5. The direct dial-in number for the conference call is [phone] for U.S. callers and [phone] 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 [phone] for U.S. callers and [phone] for international callers. The passcode for the replay is 10154188.

The webcast will be available at: https://services.choruscall.com/links/kw210805JGyEsIZL.html. A replay of the webcast will be available one hour after the original webcast on the Company’s investor relations web site for three months.

About Kennedy Wilson

Kennedy Wilson (NYSE:KW) is a leading global real estate investment company. We own, operate, and invest in real estate both on our own and through our investment management platform. We focus on multifamily and office properties located in the Western U.S., UK, and Ireland. For further information on Kennedy Wilson, please visit www.kennedywilson.com.

Kennedy-Wilson Holdings, Inc. Consolidated Balance Sheets (Unaudited) (Dollars in millions)
	June 30, 2021			December 31, 2020
Assets
Cash and cash equivalents	$	686.5		$	965.1
Accounts receivable	43.7			47.9
Real estate and acquired in place lease values (net of accumulated depreciation and amortization of $786.2 and $815.0)	4,556.7			4,720.5
Unconsolidated investments (including $1,429.5 and $1,136.5 at fair value)	1,577.5			1,289.3
Other assets	188.7			199.1
Loan purchases and originations	134.8			107.1
Total assets	$	7,187.9		$	7,329.0
Liabilities
Accounts payable	$	18.3		$	30.1
Accrued expenses and other liabilities	585.8			531.7
Mortgage debt	2,332.4			2,589.8
KW unsecured debt	1,472.1			1,332.2
KWE unsecured bonds	951.5			1,172.5
Total liabilities	5,360.1			5,656.3
Equity
Cumulative perpetual preferred stock	295.2			295.2
Common stock	—			—
Additional paid-in capital	1,719.5			1,725.2
Retained earnings	165.4			17.7
Accumulated other comprehensive loss	(382.9		)	(393.6		)
Total Kennedy-Wilson Holdings, Inc. shareholders’ equity	1,797.2			1,644.5
Noncontrolling interests	30.6			28.2
Total equity	1,827.8			1,672.7
Total liabilities and equity	$	7,187.9		$	7,329.0

Kennedy-Wilson Holdings, Inc. Consolidated Statements of Operations (Unaudited) (Dollars in millions, except share amounts and per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue
Rental	$	94.7		$	98.9		$	183.6		$	206.6
Hotel	2.2			0.1			3.0			7.3
Investment management and property services fees	9.3			7.9			17.4			16.3
Loans and other	2.2			0.2			3.8			0.2
Total revenue	108.4			107.1			207.8			230.4
Expenses
Rental	32.4			32.0			65.4			68.7
Hotel	2.5			2.2			4.1			8.2
Commission and marketing	0.3			0.9			0.6			1.6
Compensation and related (includes $7.3 and $8.3 and $15.0 and $16.9 of share-based compensation)	48.6			27.4			83.3			58.8
General and administrative	9.0			8.0			15.8			17.5
Depreciation and amortization	41.7			45.3			86.1			90.8
Total expenses	134.5			115.8			255.3			245.6
Income from unconsolidated investments	52.4			19.2			70.8			30.1
Gain on sale of real estate, net	328.5			(0.5		)	402.0			43.7
Transaction-related expenses	(0.4		)	(0.3		)	(0.4		)	(0.5		)
Interest expense	(44.5		)	(50.4		)	(96.1		)	(99.2		)
Loss on early extinguishment of debt	(23.8		)	(1.3		)	(38.6		)	(1.3		)
Other income (loss)	—			(0.3		)	(3.0		)	(0.1		)
Income / (loss) before benefit from (provision for) income taxes	286.1			(42.3		)	287.2			(42.5		)
(Provision for) benefit from income taxes	(64.9		)	3.2			(67.6		)	(2.5		)
Net income (loss)	221.2			(39.1		)	219.6			(45.0		)
Net (income) loss attributable to noncontrolling interests	(1.5		)	1.3			(1.2		)	1.6
Preferred dividends	(4.3		)	(4.3		)	(8.6		)	(8.6		)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	215.4		$	(42.1	)	$	209.8		$	(52.0	)
Basic earnings (loss) per share
Earnings (loss) per share	$	1.55		$	(0.30	)	$	1.51		$	(0.37	)
Weighted average shares outstanding	139,260,408			140,219,177			139,290,576			140,214,960
Diluted earnings (loss) per share
Earnings (loss) per share	$	1.53		$	(0.30	)	$	1.50		$	(0.37	)
Weighted average shares outstanding	140,778,616			140,219,177			140,136,010			140,214,960
Dividends declared per common share	$	0.44		$	0.22		$	0.44		$	0.44
^(1)Includes impact of the Company allocating income and dividends per basic and diluted share to participating securities.

Kennedy-Wilson Holdings, Inc. Adjusted EBITDA (Unaudited) (Dollars in millions)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted EBITDA, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2021		2020			2021		2020
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	215.4	$	(42.1	)	$	209.8	$	(52.0	)
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)^(1):
Interest expense	52.6		58.8			111.4		114.9
Loss on early extinguishment of debt	23.8		1.3			38.6		1.3
Depreciation and amortization	41.9		45.8			86.8		91.9
Provision for (benefit from) income taxes	64.9		(3.6		)	67.6		3.2
Preferred dividends	4.3		4.3			8.6		8.6
Share-based compensation	7.3		8.3			15.0		16.9
Adjusted EBITDA	$	410.2	$	72.8		$	537.8	$	184.8
^(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts.

The table below provides a detailed reconciliation of net income to Adjusted EBITDA.
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Net income (loss)	$	221.2		$	(39.1	)	$	219.6		$	(45.0	)
Non-GAAP adjustments:
Add back:
Interest expense	44.5			50.4			96.1			99.2
Loss on early extinguishment of debt	23.8			1.3			38.6			1.3
Kennedy Wilson's share of interest expense included in unconsolidated investments	8.9			9.1			16.8			17.2
Depreciation and amortization	41.7			45.3			86.1			90.8
Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments	1.4			1.8			3.1			3.5
Provision for (benefit from) income taxes	64.9			(3.2		)	67.6			2.5
Kennedy Wilson's share of taxes included in unconsolidated investments	—			—			—			1.1
Share-based compensation	7.3			8.3			15.0			16.9
EBITDA attributable to noncontrolling interests^(1)	(3.5		)	(1.1		)	(5.1		)	(2.7		)
Adjusted EBITDA	$	410.2		$	72.8		$	537.8		$	184.8

^(1)

EBITDA attributable to noncontrolling interest includes $1.2 million and $1.3 million of depreciation and amortization, $0.8 million and $0.7 million of interest, and $0.0 million and $0.4 million of taxes, for the three months ended June 30, 2021 and 2020, respectively. EBITDA attributable to noncontrolling interest includes $2.4 million and $2.4 million of depreciation and amortization, $1.5 million and $1.5 million of interest, and $0.0 million and $0.4 million of taxes, for the six months ended June 30, 2021 and 2020, respectively.

Kennedy-Wilson Holdings, Inc. Adjusted Net Income (Unaudited) (Dollars in millions, except share data)
The table below reconciles net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders to Adjusted Net Income, using Kennedy Wilson’s pro-rata share amounts for each adjustment item.
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2021		2020			2021		2020
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	215.4	$	(42.1	)	$	209.8	$	(52.0	)
Non-GAAP adjustments:
Add back (Kennedy Wilson's Share)^(1):
Depreciation and amortization	41.9		45.8			86.8		91.9
Share-based compensation	7.3		8.3			15.0		16.9
Adjusted Net Income	$	264.6	$	12.0		$	311.6	$	56.8
Weighted average shares outstanding for diluted	140,778,616		140,219,177			140,136,010		140,214,960
^(1) See Appendix for reconciliation of Kennedy Wilson's Share amounts.

The table below provides a detailed reconciliation of net income to Adjusted Net Income.
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Net income (loss)	$	221.2		$	(39.1	)	$	219.6		$	(45.0	)
Non-GAAP adjustments:
Add back (less):
Depreciation and amortization	41.7			45.3			86.1			90.8
Kennedy Wilson's share of depreciation and amortization included in unconsolidated investments	1.4			1.8			3.1			3.5
Share-based compensation	7.3			8.3			15.0			16.9
Preferred dividends	(4.3		)	(4.3		)	(8.6		)	(8.6		)
Net income attributable to the noncontrolling interests, before depreciation and amortization^(1)	(2.7		)	—			(3.6		)	(0.8		)
Adjusted Net Income	$	264.6		$	12.0		$	311.6		$	56.8
Weighted average shares outstanding for diluted	140,778,616			140,219,177			140,136,010			140,214,960

^(1)	Includes $1.2 million and $1.3 million of depreciation and amortization for the three months ended June 30, 2021 and 2020, respectively, and $2.4 million and $2.4 million of depreciation and amortization for the six months ended June 30, 2021 and 2020, respectively.

Forward-Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are necessarily estimates reflecting the judgment of our senior management based on our current estimates, expectations, forecasts and projections and include comments that express our current opinions about trends and factors that may impact future operating results. Disclosures that use words such as "believe," "anticipate," "estimate," "intend," "may," "could," "plan," "expect," "project" or the negative of these, as well as similar expressions, are intended to identify forward-looking statements. These statements are not guarantees of future performance, rely on a number of assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and uncertainties that could cause our actual results, performance or achievement, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties may include the factors and the risks and uncertainties described elsewhere in this report and other filings with the Securities and Exchange Commission (the "SEC"), including the Item 1A. "Risk Factors" sections of each our Annual Report on Form 10-K for the year ended December 31, 2020, 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 EBITDA adjustments attributable to noncontrolling interests.
  
  Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com. Our management uses Adjusted EBITDA to analyze our business because it adjusts net income for items we believe do not accurately reflect the nature of our business going forward or that relate to non-cash compensation expense or noncontrolling interests. Such items may vary for different companies for reasons unrelated to overall operating performance. Additionally, we believe Adjusted EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations. However, Adjusted EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use Adjusted EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not remove all non-cash items (such as acquisition-related gains) or consider certain cash requirements such as tax and debt service payments. The amount shown for Adjusted EBITDA also differs from the amount calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.
• "Adjusted Fees" refers to Kennedy Wilson’s gross investment management, property services and research fees adjusted to include Kennedy Wilson's share of fees eliminated in consolidation, Kennedy Wilson’s share of fees in unconsolidated service businesses and performance fees included in unconsolidated investments. Our management uses Adjusted fees to analyze our investment management and real estate services business because the measure removes required eliminations under GAAP for properties in which the Company provides services but also has an ownership interest. These eliminations understate the economic value of the investment management, property services and research fees and makes the Company comparable to other real estate companies that provide investment management and real estate services but do not have an ownership interest in the properties they manage. Our management believes that adjusting GAAP fees to reflect these amounts eliminated in consolidation presents a more holistic measure of the scope of our investment management and real estate services business.
• “Adjusted Net Income” represents net income (loss) before depreciation and amortization, our share of depreciation and amortization included in unconsolidated investments, share-based compensation, preferred dividends and net income attributable to noncontrolling interests, before depreciation and amortization. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• “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 the Company’s hotel portfolio, the Company provides a trailing-12 month NOI of $9.1 million, which excludes the period during which the hotel was fully closed due to restrictions related to the COVID-19 pandemic. Additionally, 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 2021, the NOI represents estimated Year 1 NOI from our original underwriting. Estimated year 1 NOI for properties purchased in 2021 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.
• "Internal Rate of Return" (“IRR”) is based on cumulative contributions and distributions to Kennedy Wilson on each investment that has been sold and is the leveraged internal rate of return on equity invested in the investment. The IRR measures the return to Kennedy Wilson on each investment, expressed as a compound rate of interest over the entire investment period. This return does take into account carried interest, if applicable, but excludes management fees, organizational fees, or other similar expenses.
• "Net operating income" or "NOI” is a non-GAAP measure representing the income produced by a property calculated by deducting certain property expenses from property revenues. Our management uses net operating income to assess and compare the performance of our properties and to estimate their fair value. Net operating income does not include the effects of depreciation or amortization or gains or losses from the sale of properties because the effects of those items do not necessarily represent the actual change in the value of our properties resulting from our value-add initiatives or changing market conditions. Our management believes that net operating income reflects the core revenues and costs of operating our properties and is better suited to evaluate trends in occupancy and lease rates. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "Noncontrolling interests" represents the portion of equity ownership in a consolidated subsidiary not attributable to Kennedy Wilson.
• "Pro-Rata" represents Kennedy Wilson's share calculated by using our proportionate economic ownership of each asset in our portfolio. Please also refer to the pro-rata financial data in our supplemental financial information.
• "Property NOI" or "Property-level NOI" is a non-GAAP measure calculated by deducting the Company's Pro-Rata share of rental and hotel property expenses from the Company's Pro-Rata rental and hotel revenues. Please also see the reconciliation to GAAP in the Company’s supplemental financial information included in this release and also available at www.kennedywilson.com.
• "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 properties in which Kennedy Wilson has an ownership interest during the entire span of both periods being compared. The same property information presented throughout this report is shown on a cash basis and excludes non-recurring expenses. This analysis excludes properties that are either under development or undergoing lease up as part of our asset management strategy.

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

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

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