Real Estate and In-Place Lease Value

3 Months Ended

Mar. 31, 2020

The following table summarizes Kennedy Wilson's investment in consolidated real estate properties at March 31, 2020 and December 31, 2019:



	March 31,			December 31,
(Dollars in millions)	2020			2019
Land	$	1,261.2		$	1,330.6
Buildings	3,372.9			3,630.4
Building improvements	459.8			469.5
In-place lease values	328.2			352.9
	5,422.1			5,783.4
Less accumulated depreciation and amortization	(706.3		)	(703.2		)
Real estate and acquired in place lease values, net of accumulated depreciation and amortization	$	4,715.8		$	5,080.2

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 6.6 years at March 31, 2020.

Consolidated Acquisitions

The purchase of property is recorded to land, buildings, building improvements, and intangible lease values (including the value of above-market and below-market leases, acquired in-place lease values) based on their respective estimated fair values. The purchase price approximates the fair value of the properties as acquisitions are transacted with third-party willing sellers. There were no consolidated acquisitions during the three months ended March 31, 2020.

Gains on Sale of Real Estate, Net

During the three months ended March 31, 2020, Kennedy Wilson recognized gains on sale of real estate, net of $44.2 million. The net gains include the sale of properties in the United Kingdom: one multifamily property, eleven retail properties, one industrial property and one office property and a loan receivable secured by a multifamily property located in Dublin, Ireland. During the three months ended March 31, 2019 , Kennedy Wilson recognized gains on sale of real estate, net of $34.9 million of which $11.4 million was allocated to non-controlling interest. The net gains include the sale of 4 commercial properties in the United Kingdom, three retail properties in the Western United States, and the Ritz-Carlton, Lake Tahoe hotel.

Leases

The Company leases its operating properties to customers under agreements that are classified as operating leases. The total minimum lease payments provided for under the leases are recognized on a straight-line basis over the lease term. The majority of the Company's rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from the Company's tenants. The Company records amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. The reimbursements are recognized in rental income in the consolidated statements of operations as the Company is the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk.

The following table summarizes the minimum lease payments due from the Company's tenants on leases with lease periods greater than one year at March 31, 2020:



(Dollars in millions)	Minimum
	Rental Revenues⁽¹⁾
2020 (remainder)	$	131.4
2021	178.9
2022	166.7
2023	135.6
2024	110.1
Thereafter	500.3
Total	$	1,223.0

⁽¹⁾These amounts do not reflect future rental revenues from the renewal or replacement of existing leases, rental increase that are not fixed and exclude reimbursements of rental expenses.