Unconsolidated Investments

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Kennedy Wilson has a number of joint venture interests including commingled funds and separate accounts, generally ranging from 5% to 50%, that were formed to acquire, manage, develop, service and/or sell real estate. Kennedy Wilson has significant influence over these entities, but not control. Accordingly, these investments are accounted for under the equity method.

Joint Venture and Fund Holdings

The following table details Kennedy Wilson's investments in joint ventures by investment type and geographic location as of June 30, 2023:


(Dollars in millions)	Multifamily		Commercial		Hotel		Funds		Residential and Other		Total
Western U.S.	$	893.0	$	84.0	$	245.6	$	119.1	$	157.9	$	1,499.6
Ireland	397.6		190.2		—		6.3		—		594.1
United Kingdom	—		150.3		—		47.7		29.2		227.2
Total	$	1,290.6	$	424.5	$	245.6	$	173.1	$	187.1	$	2,320.9

The following table details Kennedy Wilson's investments in joint ventures by investment type and geographic location as of December 31, 2022:


(Dollars in millions)	Multifamily		Commercial		Hotel		Funds		Residential and Other		Total
Western U.S.	$	857.6	$	89.2	$	195.9	$	158.3	$	169.1	$	1,470.1
Ireland	378.1		176.7		—		8.0		—		562.8
United Kingdom	—		138.7		—		36.3		30.2		205.2
Total	$	1,235.7	$	404.6	$	195.9	$	202.6	$	199.3	$	2,238.1

During the six months ended June 30, 2023, the change in unconsolidated investments primarily relates to $95.0 million of contributions to new and existing unconsolidated investments primarily for capital calls for development at Kona Village Resort and Cooper's Cross, $81.7 million of distributions from unconsolidated investments, $4.3 million of income from unconsolidated investments (which includes fair value movements), $49.8 million of non-cash contributions to two recapitalized multifamily investments into a separate account platform and one multifamily property into VHH, and a $15.3 million decrease related to other items, which primarily related to foreign exchange movements. Please see below for additional details.

As of June 30, 2023 and December 31, 2022, $2,174.7 million and $2,093.7 million, respectively, of unconsolidated investments were accounted for under fair value. See Note 5 for more detail.

Distributions from Joint Ventures

The following table details cash distributions by investment type and geographic location for the six months ended June 30, 2023:


	Multifamily				Commercial				Funds				Residential and Other				Total
(Dollars in millions)	Operating		Investing		Operating		Investing		Operating		Investing		Operating		Investing		Operating		Investing
Western U.S.	$	17.8	$	28.3	$	4.5	$	—	$	3.9	$	4.1	$	0.7	$	3.0	$	26.9	$	35.4
Ireland	4.2		—		3.7		—		—		11.1		—		—		7.9		11.1
United Kingdom	—		—		—		—		—		—		0.4		—		0.4		—
Total	$	22.0	$	28.3	$	8.2	$	—	$	3.9	$	15.2	$	1.1	$	3.0	$	35.2	$	46.5

Investing distributions resulted primarily from the sale of retail units, one multifamily property in Fund VI and one investment in Europe Fund II as well as resyndications and refinancing proceeds at VHH. Operating distributions resulted from operating cash flow generated by the joint venture investments that have been distributed to the Company.

Income (loss) from Unconsolidated Investments

The following table presents income (loss) from unconsolidated investments recorded by Kennedy Wilson during the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2023		2022		2023		2022
Income from unconsolidated investments - operating performance	$	21.4	$	23.5	$	35.4	$	45.1
(Loss) income from unconsolidated investments - fair value	(15.1)		15.9		(12.7)		72.5
(Loss) income from unconsolidated investments - performance allocations	(7.7)		(8.7)		(18.4)		18.5
	$	(1.4)	$	30.7	$	4.3	$	136.1

During the six months ended June 30, 2023, the Company recorded fair value decreases with respect to: (i) office properties in our commingled funds due to cap rate expansion, which also led to the Company recording a decrease of the accrued performance allocations with respect to such funds as discussed below; (ii) certain market rate multifamily properties in the Western United States and Ireland due to increased interest rates leading to cap rate expansion; (iii) the write off of a $5 million investment in a social impact real estate fund manager and slight decrease in value in the Company's investment in the Zonda business from Meyers Research after our sale of that business in 2018 due to decrease in operations. These fair value decreases were offset by (i) fair value increases with respect to the Company's investment in VHH due to the conversion of the status of one of VHH’s largest properties from development to operating and gains associated with the conversion of the loan secured by such property from a floating rate construction loan to a long-term fixed rate (which was set in 2019) mortgage, the resyndication of a property and the sale of retail units at one of the properties; (ii) recorded fair value increases on certain of our development projects located in Dublin, Ireland as we are near completion on such projects; and (iii) foreign exchange movements, net of any foreign exchange hedges as the euro and pound sterling strengthened against the dollar.

During the six months ended June 30, 2023, the Company recorded an $18.4 million decrease in the accrual for performance allocations primarily related to the fair value decreases that the Company recorded with respect to two of our Western United States commingled funds as described above. The Company also had some reductions in performance allocations on market rate multifamily separate account platforms in the Western United States and Ireland. These decreases were offset by an increase in performance allocations on our European commingled fund due to the increase in value associated with certain investments held by such fund. There is no performance allocation structure with respect to our investment in VHH.

During the six months ended June 30, 2022, the Company recorded a slight reduction in real estate fair values, including the impact of foreign currency exchange rates. Such decreases, however, were offset by the fair value gains that the Company recorded on its fixed rate mortgages that were secured by certain properties that have substantially lower rates than the current market rates.

During the six months ended June 30, 2022, the Company recorded an $18.5 million increase in the accrual for performance allocations relating to its commingled funds and separate account investments. The increase in the accrual is primarily due to fair value gains on Western United States multifamily assets and European industrial assets. This was offset by performance allocation decreases due to fair value decreases on certain office properties in commingled funds.

Vintage Housing Holdings

As of June 30, 2023 and December 31, 2022, the carrying value of the Company's investment in VHH was $290.5 million and $272.3 million, respectively. The increase in the six months ended June 30, 2023 related to resyndications, refinancing distributions and retail parcel sales at one property. Prior period fair value gains primarily relate to resyndications, in which VHH dissolves an existing partnership and recapitalizes into a new partnership with tax exempt bonds and tax credits that are sold to a new tax credit partner and, in many cases, yields cash back to VHH. Upon resyndication, VHH retains a GP interest in the partnership and receives various future streams of cash flows including: development fees, asset management fees, other GP management fees and distributions from operations.

Capital Commitments

As of June 30, 2023, Kennedy Wilson had unfulfilled capital commitments totaling $241.0 million to eight of its unconsolidated joint ventures, including $74.7 million relating to four closed-end funds managed by Kennedy Wilson, under the respective operating agreements. The Company may be called upon to contribute additional capital to joint ventures in satisfaction of such capital commitment obligations.