REAL ESTATE AND IN-PLACE LEASE VALUE

The following table summarizes KW Group's investment in consolidated real estate properties at September 30, 2015 and December 31, 2014, respectively:



	September 30,			December 31,
(Dollars in millions)	2015			2014
Land	$	1,394.1		$	1,046.9
Buildings	3,706.0			2,945.3
Building improvements	173.2			75.1
In-place lease value	408.9			282.6
	5,682.2			4,349.9
Less accumulated depreciation and amortization	(218.7		)	(121.8		)
Real estate and acquired in place lease values, net of accumulated depreciation and amortization	$	5,463.5		$	4,228.1

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 a straight-line method over their estimated lives not to exceed 40 years. Acquired in-place lease values are recorded at their estimated fair value and depreciated over their respective weighted-average lease term which was 7.8 years at September 30, 2015.

Consolidated Acquisitions

The purchase of property is recorded to land, buildings, building improvements, and intangible lease value (including the 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 generally approximates the fair value of the properties as acquisitions are generally transacted with third-party willing sellers.

During the nine months ended September 30, 2015, KW Group acquired the following consolidated properties:



(Dollars in millions)		Preliminary Purchase Price Allocation at Acquisition⁽¹⁾
Location	Description	Land		Building		Acquired in place lease values⁽²⁾		Investment debt		NCI⁽³⁾		KWH Shareholders' Equity
Western U.S.	584k square feet of commercial properties and 1,676 multifamily units⁽⁶⁾	$	141.6	$	358.5	$	20.1	$	313.8	$	6.4	$	200.0
United Kingdom	Portfolio of 176 commercial, retail, and industrial properties⁽⁴⁾	276.1		421.7		76.6		529.3		205.7		39.4
United Kingdom	Portfolio of 9 commercial properties⁽⁴⁾	104.4		178.7		45.4		—		270.4		58.1
Ireland	Three properties that total 149k square feet ⁽⁴⁾⁽⁵⁾	21.6		81.6		12.3		—		93.2		22.3
Spain	Two development projects⁽⁴⁾	—		43.9		—		—		36.8		7.1
Spain	16 supermarkets⁽⁴⁾	23.6		66.0		4.7		—		77.6		16.7
		$	567.3	$	1,150.4	$	159.1	$	843.1	$	690.1	$	343.6

⁽¹⁾Excludes acquisition expenses and net other assets. The purchase price allocations for properties acquired during the nine months ended September 30, 2015 are based on preliminary measurements of fair value that are subject to change. These allocations represent the Company's current best estimates of fair value.

⁽²⁾ Includes above and below market leases in this table. Above and below market leases are part of other assets and accrued expenses and other liabilities.

⁽³⁾ Noncontrolling interest amounts associated with acquisition.

⁽⁴⁾These portfolios of properties were directly acquired and are held by KWE. Kennedy Wilson owns approximately 17.7% of the total issued share capital of KWE as of September 30, 2015.

⁽⁵⁾ KWE recognized an acquisition-related gain of $11.2 million on these transaction as the property was previously a mortgage note that KWE foreclosed on and converted to real estate. As the fair value of the assets was in excess of the basis in the previously held mortgage notes, KWE recognized an acquisition-related gain upon conversion.

⁽⁶⁾At various points during the year-ended September 30, 2015, properties included within this group were accounted for under equity method. KW Group purchased the equity partners' interests and consolidated the properties resulting in acquisition-related gains of $76.0 million.

Gains on real estate

During the nine months ended September 30, 2015, KW Group sold its investment in its Japanese multifamily portfolio, which resulted in a gain of $33.5 million before noncontrolling interest and KWE sold eleven commercial properties and the Company sold a retail pad during the year, which resulted in a gain of $11.3 million before noncontrolling interest. These gains are presented net as a component of non-operating income (expense) as the properties were treated as businesses at acquisition. Acquisition-related gains of $87.2 million were also recognized for acquiring additional equity interests in multifamily and commercial properties in the Western United States and the conversion of three mortgage notes held by KWE into commercial and retail real estate properties in Dublin.

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 their acquisition. KW Group'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 this acquisition been consummated at the beginning of the periods presented.

The pro forma data presented below assumes that the acquisitions during the three and nine months ended September 30, 2015 occurred as of January 1, 2014.



	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions, except for per share data)	2015		2014		2015		2014
Pro forma revenues	$	479.9	$	163.5	$	363.4	$	149.3
Pro forma net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders ⁽¹⁾	45.1		14.6		52.8		0.5
Pro forma net income (loss) per share:
Basic	$	0.13	$	—	$	0.43	$	0.50
Diluted	$	0.13	$	—	$	0.42	$	0.49

⁽¹⁾Excludes the effects of acquisition-related gains.