UNCONSOLIDATED INVESTMENTS

KW Group 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 September 30, 2015 and December 31, 2014:



	September 30,		December 31,
(Dollars in millions)	2015		2014
Investments in joint ventures	$	498.3	$	435.8
Investments in loan pool participations	1.3		56.4
Total	$	499.6	$	492.2

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, service 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 September 30, 2015 and December 31, 2014, Kennedy Wilson's investment in joint ventures totaled $498.3 million and $435.8 million, respectively.

The following table details our investments in joint ventures by investment type and geographic location as of September 30, 2015:



(Dollars in millions)	Multifamily		Commercial		Loan		Residential		Other		Total
Western U.S.	$	169.4	$	60.5	$	12.5	$	182.6	$	12.3	$	437.3
Japan	6.2		—		—		—		—		6.2
United Kingdom	—		25.4		—		—		—		25.4
Spain	—		—		—		—		29.4		29.4
Total	$	175.6	$	85.9	$	12.5	$	182.6	$	41.7	$	498.3

The following table details our investments in joint ventures by investment type and geographic location as of December 31, 2014:



(Dollars in millions)	Multifamily		Commercial		Loan		Residential		Other		Total
Western U.S.	$	134.5	$	110.3	$	50.3	$	71.0	$	9.3	$	375.4
United Kingdom	—		31.5		—		—		—		31.5
Spain	—		—		—		—		28.9		28.9
Total	$	134.5	$	141.8	$	50.3	$	71.0	$	38.2	$	435.8

Vintage Housing Holdings ("VHH")

During the second quarter of 2015, the Company purchased a 61% noncontrolling interest for $78.7 million in VHH, an existing venture that holds controlling interests in 30 syndicated limited partnerships ("LPs") that own multifamily properties via a traditional low-income tax credit structure in the Western United States. The remaining 39% is held by one non-affiliated entity who is appointed as the manager. Neither party controls VHH, and, accordingly, the Company accounts for its investment under the equity method.

The LPs generate cash flow through their controlling interests in entities owning multifamily housing that is predominantly structured with low income housing credits to benefit the LPs. The Company has elected the fair value option on its unconsolidated investment in VHH. During the year, the Company recognized a $12.9 million fair value gain through income from unconsolidated investments due to various factors including a long period between the execution of binding agreements between the parties and the closing of the transaction. Since the investment is accounted for under fair value, operating distributions are recorded as equity income. The Company has recognized $5.2 million in equity income related to operating distributions during the year.

VHH is KW Group's largest joint venture investment; there were no other investments that represented more than 10% of the joint venture balance as of September 30, 2015 or December 31, 2014.

Contributions to Joint Ventures

During the nine months ended September 30, 2015, Kennedy Wilson contributed $88.2 million to new joint ventures as an initial investment, including the initial $78.7 million in contributions for the VHH investment discussed above. In addition, Kennedy Wilson contributed $67.0 million to existing joint ventures to fund our share of a development project, to pay off external debt and for capital expenditures and working capital needs.

Distributions from Joint Ventures and Investments in Loan Pools

During the nine months ended September 30, 2015, Kennedy Wilson received $142.8 million in operating and investing distributions from its joint ventures and loan pools. 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 nine months ended September 30, 2015:



	Multifamily				Commercial				Loan Pools				Residential and Other				Total
(Dollars in millions)	Operating		Investing		Operating		Investing		Operating		Investing		Operating		Investing		Operating		Investing
Western U.S.	$	22.7	$	5.2	$	10.0	$	32.0			$	2.3	$	7.5	$	3.0	$	40.2	$	42.5
Japan	0.1		—		—		—						—		—		0.1		—
United Kingdom	—		—		1.2		1.8		6.4		41.5		—		—		7.6		43.3
Ireland	—		—		—		—		1.8		6.2		—		—		1.8		6.2
Spain	—		—		—		—						1.1				1.1		—
Total	$	22.8	$	5.2	$	11.2	$	33.8	$	8.2	$	50.0	$	8.6	$	3.0	$	50.8	$	92.0

Consolidation Considerations

We determine 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. Kennedy Wilson'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. We account for joint ventures where it is deemed that we do not have control through the equity method of accounting while entities we control are consolidated in KW Group's financial statements.

Capital Commitments

As of September 30, 2015, Kennedy Wilson has unfulfilled capital commitments totaling $38.9 million to four of its joint ventures. We may be called upon to contribute additional capital to joint ventures in satisfaction of such 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 September 30, 2015, the maximum potential amount of future payments (undiscounted) Kennedy Wilson could be required to make under the guarantees was approximately $59.9 million which is approximately 1% of investment level debt of Kennedy Wilson and its equity partners. The guarantees expire through 2025, 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 on our evaluation of guarantees under FASB ASC Subtopic 460-10 Estimated Fair Value of Guarantees, the estimated fair value of guarantees made as of September 30, 2015 and December 31, 2014 was immaterial.

Investments in loan pool participation

As of September 30, 2015 and December 31, 2014, KW Group's investment in loan pool participations totaled $1.3 million and $56.4 million, respectively.

The following table presents the income from unconsolidated investments for loan pools and foreign currency gain and (loss) recognized by KW Group during the three and nine months ended September 30, 2015 and 2014 for the loan pools that were outstanding:



	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in millions)	2015			2014			2015			2014
Income from unconsolidated investments - loan pools	$	(1.8	)	$	2.3		$	4.3		$	7.0
Foreign currency translation loss⁽¹⁾	(0.7		)	(2.9		)	(1.0		)	(2.5		)
Total	$	(2.5	)	$	(0.6	)	$	3.3		$	4.5

⁽¹⁾Excludes impact of currency derivative contracts. These amounts are recognized through the Statement of Comprehensive Income (Loss).