KW Unsecured Debt

3 Months Ended

Mar. 31, 2020

The following table details KW unsecured debt as of March 31, 2020 and December 31, 2019:



(Dollars in millions)	March 31, 2020			December 31, 2019
Credit facility	$	—		$	—
Senior notes⁽¹⁾	1,146.3			1,146.1
KW unsecured debt	1,146.3			1,146.1
Unamortized loan fees	(17.7		)	(14.4		)
Total KW Unsecured Debt	$	1,128.6		$	1,131.7

⁽¹⁾The senior notes balances include unamortized debt discounts. Debt discounts represent the difference between the fair value of debt and the principal value of debt assumed in various acquisitions and are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The unamortized debt discount as of March 31, 2020 and December 31, 2019 was $3.7 million and $3.9 million, respectively.

Borrowings Under Credit Facilities

The Company, through a wholly-owned subsidiary, had a $700 million unsecured revolving credit and loan facility (the "A&R Facility") which included a $500 million revolving line of credit and a $200 million term loan facility. On March 25, 2020, the Company extended the A&R Facility's $500 million revolving line of credit (the "Second A&R Facility"). At the time of extension the revolving line of credit was undrawn and the term loan had been fully paid off. Loans under the revolving line of credit bear interest at a rate equal to LIBOR plus between 1.75% and 2.50%, depending on the consolidated leverage ratio as of the applicable measurement date. The Second A&R Facility has a maturity date of March 25, 2024. Subject to certain conditions precedent and at Kennedy-Wilson, Inc.’s ("the Borrower") option, the maturity date of the Second A&R Facility may be extended by one year.

The Second A&R Facility has certain covenants as defined within its Second Amended and Restated Credit Agreement, dated as of March 25, 2020 (the "Credit Agreement") that, among other things, limit the Company and certain of its subsidiaries’ ability to incur additional indebtedness, repurchase capital stock or debt, sell assets or subsidiary stock, create or permit liens on assets, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers. The Credit Agreement requires the Company to maintain (i) a maximum consolidated leverage ratio (as defined in the Credit Agreement) of not greater than 65%, measured as of the last day of each fiscal quarter, (ii) a minimum fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.70 to 1.00, measured as of the last day of each fiscal quarter for the period of four full fiscal quarters then ended, (iii) a minimum consolidated tangible net worth equal to or greater than the sum of $1,700,000,000 plus an amount equal to fifty percent (50%) of net equity proceeds received by the Company after the date of the most recent financial statements that are available as of the Closing Date, measured as of the last day of each fiscal quarter, (iv) a maximum recourse leverage ratio (as defined in the Credit Agreement) of not greater than an amount equal

to consolidated tangible net worth as of the measurement date multiplied by 1.5, measured as of the last day of each fiscal quarter, (v) a maximum secured recourse leverage ratio (as defined in the Credit Agreement) of not greater than an amount equal to 3.5% of consolidated total asset value (as defined in the Credit Agreement) and $299,000,000, (vi) a maximum adjusted secured leverage ratio (as defined in the Credit Agreement) of not greater than 55%, measured as of the last day of each fiscal quarter, and (vii) liquidity (as defined in the Credit Agreement) of at least $75.0 million. As of March 31, 2020, the Company was in compliance with these covenants.

The maximum amount drawn on the A&R Facility and the Second A&R Facility, as applicable, at any one point during the three months ended March 31, 2020 was $150.0 million. As of March 31, 2020, the Company did not have an outstanding balance on the A&R Facility with $500.0 million available to be drawn under the revolving credit facility.

There were no borrowings under A&R Facility and the Second A&R Facility, as applicable, during the three months ended March 31, 2020.

Senior Notes

Kennedy Wilson, Inc., (the "Issuer") has $1,150.0 million of 5.875% Senior Notes due 2024 (the "Notes"). The indenture governing the Notes contains various restrictive covenants, including, among others, limitations on the Company's ability and the ability of certain of the Company's subsidiaries to incur or guarantee additional indebtedness, make restricted payments, pay dividends or make any other distributions from restricted subsidiaries, redeem or repurchase capital stock, sell assets or subsidiary stocks, engage in transactions with affiliates, create or permit liens on assets, enter into sale/leaseback transactions, and enter into consolidations or mergers. The indenture governing the Notes limits the ability of Kennedy Wilson and its restricted subsidiaries to incur additional indebtedness if, on the date of such incurrence and after giving effect to the new indebtedness, the maximum balance sheet leverage ratio (as defined in the indenture) is greater than 1.50 to 1.00, subject to certain exceptions. As of March 31, 2020, the maximum balance sheet leverage ratio was 0.72 to 1.00. See Note 14 for the guarantor and non-guarantor financial statements.

As of March 31, 2020, the Company was in compliance with all financial covenants.