REAL ESTATE

The following table summarizes the Company's investment in consolidated real estate properties at December 31, 2013 and 2012:



	December 31,
(Dollars in millions)	2013			2012
Land	$	187.8		$	99.5
Buildings	484.1			193.3
Building improvements	12.7			4.0
	684.6			296.8
Less accumulated depreciation	(15.8		)	(7.4		)
Real estate, net	$	668.8		$	289.4

Real 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 estimated lives not to exceed 40 years.

Depreciation expense on buildings and building improvements for the years ended December 31, 2013, 2012 and 2011 was $8.4 million, $2.0 million and $1.4 million.

Consolidated Acquisitions

The purchase price of acquired properties is recorded to land, buildings and building improvements and intangible lease value (value of above-market and below-market leases, acquired in-place lease values, and tenant relationships, if any) based on their respective estimated fair values. The purchase price approximates the fair value of the properties as these acquisition are via a listed transaction with other competitive bidders participating. Acquisition-related costs are expensed as incurred.

During the year ended December 31, 2013, the company acquired the following properties:



(Dollars in millions)
Date acquired	Type	Location	Purchase price		Land		Building		Intangible assets		Mortgage loans		Cash paid
04/29/2013	Multifamily	Western U.S.	$	61.8	$	18.4	$	43.0	$	0.3	$	49.7	$	12.1
06/27/2013	Commercial	Western U.S.	29.7		11.2		18.5		—		18.7		11.0
09/16/2013	Retail	Western U.S.	5.8		1.3		4.2		0.3		4.0		1.8
10/01/2013	Retail	Western U.S.	10.9		2.7		6.7		1.5		7.3		3.6
10/01/2013	Retail	Western U.S.	11.5		3.5		7.4		0.7		8.0		3.5
12/04/2013	Commercial	Ireland	1.2		0.7		0.5		—		—		1.2
12/16/2013	Multifamily	Western U.S.	29.8		3.8		25.8		0.2		22.4		7.4
			$	150.7	$	41.6	$	106.1	$	3.0	$	110.1	$	40.6

During the year ended December 31, 2012, the company acquired the following properties:



(Dollars in millions)
Date acquired	Type	Location	Purchase price		Land		Building		Intangible assets		Mortgage loans		Cash paid
10/30/2012	Multifamily	Western U.S.	$	31.0	$	12.4	$	18.4	$	0.2	$	23.5	$	7.5
11/15/2012	Commercial	Western U.S.	47.4		8.8		31.4		7.2		29.0		18.4
11/20/2012	Multifamily⁽¹⁾	Western U.S.	44.4		2.6		41.4		0.4		26.0		18.4
11/27/2012	Multifamily	Western U.S.	43.5		8.6		34.5		0.3		31.6		11.9
			$	166.3	$	32.4	$	125.7	$	8.1	$	110.1	$	56.2

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⁽¹⁾The fair value of this multifamily property was in excess of the purchase price because this acquisition was an off-market transaction, and therefore we recognized a gain of approximately $2.6 million in the accompanying consolidated statements of operations for the year ended December 31, 2012.

Joint Venture Consolidations

During the year ended December 31, 2013 and December 31, 2012, the Company amended the existing operating agreements governing certain of its investments with its equity partners thereby allowing the Company to gain control of these operating properties. As a result of obtaining control, the Company was required to consolidate the assets and liabilities of these properties at fair value in accordance with Business Combinations guidance. As the fair value of the property was in excess of the carrying value of its ownership interest, an acquisition-related gain was recorded in the accompanying consolidated statement of operations for the years ended December 31, 2013 and December 31, 2012. See Note 7 - Fair Value Measurements for further detail of the methodology used to determine the fair value of the assets and liabilities acquired in these transactions.

During the first quarter of 2013, the Company acquired the interest of some of its existing partners in a 615-unit apartment building in Northern California, increasing its ownership from 15% to 94%. The original 15% interest had a book value of $0 due to prior distributions. Cash consideration of $15.7 million was paid by the Company to increase its ownership in the property to 94% and resulted in the Company obtaining control. The Company recorded an acquisition-related gain as the fair value was in excess of the carrying value of its ownership interest. As this transaction was between willing third party participants, the purchase price was an approximation of fair value.

In addition, by amending the existing operating agreements governing three retail centers in the Western U.S. (third quarter of 2013) and the Ritz Carlton, Lake Tahoe (fourth quarter of 2013) which the Company had previously accounted for using the equity method, the Company gained control of these properties and consolidated the properties at fair value. The following table summarizes the assets and liabilities assumed as a result gaining control of these properties and the acquisition related gains recognized.



(Dollars in millions)
Property	Type	Cash		Real Estate, net		Accounts Receivable and other assets		Accounts payable and accrued expenses		Mortgage loans		Noncontrolling interests		Acquisition related gain
615-unit apartment building	Multifamily	$	1.3	$	120.1	$	2.3	$	3.2	$	93.5	$	1.8	$	9.5
Three retail centers	Retail	1.4		20.4		9.2		0.7		20.1		0.5		2.0
Ritz-Carlton	Residential	4.4		105.1		7.4		8.0		28.0		18.0		45.1
		$	7.1	$	245.6	$	18.9	$	11.9	$	141.6	$	20.3	$	56.6

During 2012, due to a change of control, Kennedy Wilson began to consolidate KW Property Fund II, LP, ("Fund II") a limited partnership that had been previously accounted for using the equity method and to whom the Company had advanced $39.6 million in notes receivable as of November 30, 2012. This entity directly owns two office buildings which are encumbered by mortgage loans and has investments in real estate joint ventures which in aggregate own seven office properties. As a result of obtaining control of this entity, the following assets and liabilities were assumed and an acquisition related gain recognized.



(Dollars in millions)
Property	Type	Cash		Real Estate, net		Investment in joint ventures		Other assets		Accounts payable and accrued expenses		Notes payable		Mortgage loans		Noncontrolling interests		Acquisition related gain
Fund II	Commercial	$	0.6	$	11.1	$	75.4	$	2.7	$	1.6	$	5.8	$	8.9	$	7.6	$	22.8

Pro forma results of operations

The results of operations of the assets acquired have been included in our consolidated financial statements since the date of the acquisitions. The Company’s unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had thes acquisition been consummated at the beginning of the periods presented.

The unaudited pro forma data presented below assumes that the acquisitions during the year ended December 31, 2013 occurred as of January 1, 2012.



	Unaudited
	Year Ended December 31,
(Dollars in millions, except for per share data)	2013			2012
Pro forma revenues	$	178.1		$	111.7
Pro forma equity in joint venture income	1.0			1.4
Pro forma net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders	(13.3		)	(10.0		)
Pro forma net loss per share:
Basic	$	(0.19	)	$	(0.18	)