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Unconsolidated Investments
 6 Months Ended
Jun. 30, 2014
Equity Method Investments and Joint Ventures [Abstract]  
Unconsolidated Investments
UNCONSOLIDATED INVESTMENTS

The Company has unconsolidated investments through real estate related joint ventures and loan pool participations. The following table details its investments in joint ventures and loan pool participations as of June 30, 2014 and December 31, 2013:
 
 
June 30,
 
December 31,
(Dollars in millions)
 
2014
 
2013
Investments in joint ventures
 
$
473.3

 
$
751.4

Investments in loan pool participations
 
58.9

 
34.7

Total
 
$
532.2

 
$
786.1


Investments in Joint Ventures
Kennedy Wilson has a number of joint venture interests, generally ranging from 5% to 50%, that were formed to acquire, manage, develop, and/or sell real estate and invest in loan pools and discounted loan portfolios. Kennedy Wilson has significant influence over these entities, but not control, and accordingly, these investments are accounted for under the equity method.
Joint Venture Holdings
As of June 30, 2014 and December 31, 2013, the Company's investment in joint ventures totaled $473.3 million and $751.4 million, respectively.     
The following table details our investments in joint ventures by investment type and geographic location as of June 30, 2014:
(Dollars in millions)
Multifamily
Commercial
Loan
Residential
Other
Total
Western U.S.
$
134.3

$
157.4

$
50.1

$
50.0

$
9.3

$
401.1

United Kingdom
—

44.3

—

—

—

44.3

Spain
—

—

—

—

27.9

27.9

Total
$
134.3

$
201.7

$
50.1

$
50.0

$
37.2

$
473.3

The following table details our investments in joint ventures by investment type and geographic location as of December 31, 2013:
(Dollars in millions)
Multifamily
Commercial
Loan
Residential
Other
Total
Western U.S.
$
133.3

$
160.3

$
50.3

$
48.7

$
8.0

$
400.6

Japan
68.8

—

—

—

—

68.8

United Kingdom
—

104.5

6.3

—

—

110.8

Ireland
48.2

96.1

—

—

—

144.3

Spain
—

—

—

—

26.9

26.9

Total
$
250.3

$
360.9

$
56.6

$
48.7

$
34.9

$
751.4


KW Residential LLC    
On June 30, 2014, the Company and one of its equity partners amended existing operating agreements governing KW Residential, LLC ("KWR") which was accounted for using the equity method. KWR is a joint venture investment in a portfolio of 50 apartment buildings comprised of approximately 2,400 units, located primarily in Tokyo and surrounding areas. Kennedy Wilson owns approximately 41% of KWR, not including any promoted interests. As a result of obtaining control of this investment, KWR was consolidated as of June 30, 2014. The investment is presented as an unconsolidated investment for prior periods. See Note 4.
KWR was the Company's largest joint venture investment as of December 31, 2013 with a balance of $68.8 million. As of June 30, 2014 and December 31, 2013, the Company did not have any other joint venture investments which individually exceeded 10% of the investments in the joint venture balance.
During the three months ended June 30, 2014 and 2013, the Company recognized $0.6 million in gains and $2.0 million in losses, from foreign currency translation adjustments, net of hedges, from its investment in KWR. During the six months ended June 30, 2014 and 2013, the Company recognized $0.4 million and $6.3 million, respectively, in losses from foreign currency translation adjustments, net of hedges, from its investment in KWR.
During the three and six months ended June 30, 2014 and 2013, the Company received the following cash distributions from its investment in KWR for the settlement of hedges, refinancing of property level debt, and operating distributions:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Dollars in millions)
2014
 
2013
 
2014
 
2013
Operating distributions
$
1.3

 
$
0.5

 
$
1.7

 
$
2.5

Refinancing of property level debt
—

 
4.4

 
—

 
5.3

Settlement of hedges
—

 
0.2

 
—

 
10.8

Total
$
1.3

 
$
5.1

 
$
1.7

 
$
18.6


Joint Venture Consolidation
In addition to KWR as discussed above, on March 31, 2014, the Company and one of its equity partners amended existing operating agreements governing investments for six investments in Europe which were accounted for using the equity method. As a result of obtaining control, the joint venture investments were consolidated as of March 31, 2014. The investments are presented as an unconsolidated investment for prior periods. See Note 4.
Contributions to Joint Ventures
During the six months ended June 30, 2014, Kennedy Wilson made $80.9 million in contributions to new and existing joint venture investments.
See the table below for a breakdown of contributions to new joint venture investments for the six months ended June 30, 2014:
 
Multifamily
 
Commercial
 
 
 
(Dollars in millions)
Amount
No. of Properties
 
Amount
No. of Properties
 
Total
No. of Properties
Western U.S.
$
4.0

1

 
$
—

—

 
$
4.0

1

United Kingdom(1)
—

—

 
57.2

14

 
57.2

14

Total contributions - new joint venture investments
$
4.0

1

 
$
57.2

14

 
$
61.2

15

(1)Kennedy Wilson's contribution in a joint venture investment that was subsequently contributed into KWE as part of its initial investment. See note 1.
In addition to the capital contributions above, Kennedy Wilson contributed $19.7 million to existing joint ventures to fund our share of a development project, capital expenditures and for working capital needs.
Distributions from Joint Ventures
During the six months ended June 30, 2014, Kennedy Wilson received $100.3 million in operating and investing distributions from its joint ventures. Investing distributions resulted from the refinancing of property level debt and asset sales. Operating distributions resulted from operating cash flow generated by the joint venture investments.
The following table details cash distributions by investment type and geographic location for the six months ended June 30, 2014:
 
Multifamily
Commercial
Residential and Other
Total
(Dollars in millions)
Operating
Investing
Operating
Investing
Operating
Investing
Operating
Investing
Western U.S.
$
4.8

$
1.5

$
3.0

4.4

3.6

$
3.3

$
11.4

$
9.2

Japan
1.7

—

—

—

—

—

1.7

—

United Kingdom
—

—

5.3

9.8

—

—

5.3

9.8

Ireland
—

—

31.6

30.3

—

—

31.6

30.3

Spain
—

—

—

—

—

1.0

—

1.0

Total
$
6.5

$
1.5

$
39.9

$
44.5

$
3.6

$
4.3

$
50.0

$
50.3


    
Variable Interest Entities
Kennedy Wilson has determined that it has investments in five variable interest entities ("VIEs") as of June 30, 2014 and has concluded that Kennedy Wilson is not the primary beneficiary of any of the investments. As of June 30, 2014, the five VIEs had assets totaling $170.5 million with Kennedy Wilson’s exposure to loss as a result of its interests in these VIEs totaling $72.9 million related to its equity contributions.
The Company determines the appropriate accounting method with respect to all investments that are not VIEs based on the control-based framework (controlled entities are consolidated) provided by the consolidations guidance in FASB ASC Topic 810. The Company's determination considers specific factors cited under FASB ASC Topic 810-20 Control of Partnerships and Similar Entities which presumes that control is held by the general partner (and managing member equivalents in limited liability companies). Limited partners' substantive participation rights may overcome this presumption of control. The Company accounts for joint ventures it is deemed not to control using the equity method of accounting while controlled entities are consolidated.
Capital Commitments
As of June 30, 2014, Kennedy Wilson has unfulfilled capital commitments totaling $11.3 million to four of its joint ventures. We may be called upon to contribute additional capital to joint ventures in satisfaction of Kennedy Wilson capital commitment obligations.
Guarantees
Kennedy Wilson has certain guarantees associated with loans secured by consolidated assets or assets held directly or in various joint ventures. As of June 30, 2014, the maximum potential amount of future payments (undiscounted) Kennedy Wilson could be required to make under the guarantees was approximately $63.8 million which is approximately 2% of investment level debt of the Company. The guarantees expire through 2019, and Kennedy Wilson’s performance under the guarantees would be required to the extent there is a shortfall upon liquidation between the principal amount of the loan and the net sale proceeds from the property. Based upon Kennedy Wilson’s evaluation of guarantees under FASB ASC Subtopic 460-10 Estimated Fair Value of Guarantees, the estimated fair value of guarantees made as of June 30, 2014 and December 31, 2013 was immaterial.
Investments in loan pool participation

As of June 30, 2014 and December 31, 2013, the Company's investment in loan pool participations totaled $58.9 million and $34.7 million, respectively.

The following table represents the demographics of the Company's investment in the loan pools including the initial unpaid principal balance ("UPB") and the UPB as of June 30, 2014.
(Dollars in millions)
 
Kennedy Wilson Ownership
 
Unpaid Principal Balance
 
Kennedy Wilson Initial Equity Invested
 
Investment Balance at June 30, 2014
 
Expected Accretion Over Total Estimated Collection Period
 
 
Acquisition Date
 
Location
 
 
Initial(1)
 
June 30, 2014(1)
 
 
 
 
Accreted to Date
February 2010(2)
 
Western U.S.
 
15.0%
 
$
342.4

 
$
—

 
$
11.2

 
$
0.6

 
$
4.6

 
$
4.6

April 2012
 
Western U.S.
 
75.0%
 
43.4

 
2.8

 
30.9

 
2.4

 
4.3

 
4.0

August 2012
 
Ireland
 
10.0%
 
492.7

 
345.9

 
7.0

 
8.5

 
1.9

 
0.8

December 2012
 
United Kingdom
 
5.0%
 
661.9

 
110.2

 
19.3

 
2.7

 
2.0

 
1.6

April 2013
 
United Kingdom
 
10.0%
 
198.4

 
111.0

 
13.0

 
5.6

 
5.6

 
1.2

August 2013
 
United Kingdom
 
20.0%
 
145.5

 
145.5

 
7.5

 
8.7

 
4.9

 
1.2

May 2014
 
United Kingdom
 
33.3%
 
111.0

 
111.0

 
30.3

 
30.4

 
2.3

 
0.1

Total
 
 
 
 
 
$
1,995.3

 
$
826.4

 
$
119.2

 
$
58.9

 
$
25.6

 
$
13.5

                          
(1) Estimated foreign exchange rate is £0.59 = $1 USD and €0.73 = $1 USD as of June 30, 2014.
(2) Equity invested represents guarantee claims against note holders in loan pool.

The following table presents the income from unconsolidated investments for loan pools and foreign currency gain and (loss) recognized by Kennedy Wilson during the three and six months ended June 30, 2014 and 2013 for the loan pools that were outstanding:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Dollars in millions)
2014
 
2013
 
2014
 
2013
Income from unconsolidated investments
$
2.5

 
$
2.9

 
$
4.6

 
$
5.4

Foreign currency translation gain (loss)
0.2

 
(1.1
)
 
0.4

 
(5.0
)
Total
$
2.7

 
$
1.8

 
$
5.0

 
$
0.4