Segment Information

9 Months Ended

12 Months Ended

Sep. 30, 2011

Dec. 31, 2010

Segment Information [Abstract]

Segment Information

NOTE 17—SEGMENT INFORMATION

Kennedy-Wilson's business activities currently consist of services and various types of real estate and loan portfolio investments. Kennedy-Wilson's segment disclosure with respect to the determination of segment profit or loss and segment assets is based on these services and its various investments.

SERVICES—Kennedy-Wilson provides a full range of commercial and residential real estate services. These services include property management, leasing, brokerage, asset management, auction and various other specialized commercial and residential real estate services.

INVESTMENTS—With joint venture partners and independently, Kennedy-Wilson invests in commercial and residential real estate where Kennedy-Wilson believes value can be added through company expertise or opportunistic investing. Kennedy-Wilson's current real estate portfolio focuses on commercial buildings and multifamily projects. Kennedy-Wilson also invests in loan portfolios collateralized by various classifications of real estate.

Substantially all of the revenue—related party was generated via inter-segment activity for the three and nine months ended September 30, 2011 and 2010. Generally, this revenue consists of fees earned on investments in which Kennedy-Wilson also has an ownership interest. The amounts representing investments with related parties and non-affiliates are included in the investment segment. No single third party client accounted for 10% or more of Kennedy-Wilson's revenue during any period presented in these financial statements.

There have been no changes in the basis of segmentation or in the basis of measurement of segment profit or loss since the December 31, 2010 financial statements.

The following tables summarize Kennedy-Wilson's income activity by segment for the three and nine months ended September 30, 2011 and 2010 and balance sheet data as of September 30, 2011 and December 31, 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Services
Management fees and commissions	$	6,191,000		$	4,273,000		$	14,499,000		$	10,866,000
Management fees and commissions—related party		4,919,000			5,863,000			11,738,000			13,908,000
Total revenue		11,110,000			10,136,000			26,237,000			24,774,000
Operating expenses		7,950,000			7,145,000			19,743,000			18,423,000
Depreciation and amortization		33,000			332,000			98,000			373,000
Total operating expenses		7,983,000			7,477,000			19,841,000			18,796,000
Total operating income		3,127,000			2,659,000			6,396,000			5,978,000
Income before provision for income taxes	$	3,127,000		$	2,659,000		$	6,396,000		$	5,978,000
Total assets							$	44,540,000		$	38,780,000
Investments
Sale of real estate	$	—		$	—		$	417,000		$	3,937,000
Rental and other revenue		1,666,000			1,637,000			3,359,000			2,934,000
Total revenue		1,666,000			1,637,000			3,776,000			6,871,000
Operating expenses		4,548,000			8,005,000			13,134,000			16,402,000
Depreciation and amortization		830,000			243,000			1,569,000			708,000
Total operating expenses		5,378,000			8,248,000			14,703,000			17,110,000
Equity in joint venture income		(646,000	)		5,191,000			7,229,000			5,162,000
Income from loan pool participations and notes receivable		1,048,000			4,209,000			5,835,000			7,950,000
Total operating income (loss)		(3,310,000	)		2,789,000			2,137,000			2,873,000
Remeasurement gain		—			—			6,348,000			2,108,000
Gain on early extinguishment of debt		—			—			—			16,670,000
Interest expense		(73,000	)		(283,000	)		(225,000	)		(528,000	)
(Loss) income before provision for income taxes	$	(3,383,000	)	$	2,506,000		$	8,260,000		$	21,123,000
Total assets							$	525,712,000		$	400,519,000
Corporate
Operating expenses	$	2,140,000		$	1,881,000		$	6,528,000		$	9,005,000
Depreciation and amortization		68,000			41,000			161,000			116,000
Total operating expenses		2,208,000			1,922,000			6,689,000			9,121,000
Total operating loss		(2,208,000	)		(1,922,000	)		(6,689,000	)		(9,121,000	)
Interest income		74,000			53,000			264,000			168,000
Interest income—related party		561,000			91,000			970,000			477,000
Loss on early extinguishment of corporate debt		—			(4,788,000	)		—			(4,788,000	)
Interest expense		(6,044,000	)		(1,915,000	)		(13,649,000	)		(5,964,000	)
Loss before provision for income taxes		(7,617,000	)		(8,481,000	)		(19,104,000	)		(19,228,000	)
Benefit from (provision) for income taxes		2,997,000			(383,000	)		2,162,000			(4,335,000	)
Net loss	$	(4,620,000	)	$	(8,864,000	)	$	(16,942,000	)	$	(23,563,000	)
Total assets							$	169,757,000		$	48,549,000

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Consolidated
Management fees and commissions	$	6,191,000		$	4,273,000		$	14,499,000		$	10,866,000
Management fees and commissions—related party		4,919,000			5,863,000			11,738,000			13,908,000
Sale of real estate		—			—			417,000			3,937,000
Rental and other revenue		1,666,000			1,637,000			3,359,000			2,934,000
Total revenue		12,776,000			11,773,000			30,013,000			31,645,000
Operating expenses		14,638,000			17,031,000			39,405,000			43,830,000
Depreciation and amortization		931,000			616,000			1,828,000			1,197,000
Total operating expenses		15,569,000			17,647,000			41,233,000			45,027,000
Equity in joint venture income		(646,000	)		5,191,000			7,229,000			5,162,000
Income from loan pool participations and notes receivable		1,048,000			4,209,000			5,835,000			7,950,000
Total operating income (loss)		(2,391,000	)		3,526,000			1,844,000			(270,000	)
Interest income		74,000			53,000			264,000			168,000
Interest income—related party		561,000			91,000			970,000			477,000
Remeasurement gain		—			—			6,348,000			2,108,000
Gain on early extinguishment of debt		—			—			—			16,670,000
Loss on early extinguishment of debt		—			(4,788,000	)		—			(4,788,000	)
Interest expense		(6,117,000	)		(2,198,000	)		(13,874,000	)		(6,492,000	)
(Loss) income before provision for income taxes		(7,873,000	)		(3,316,000	)		(4,448,000	)		7,873,000
Benefit from (provision) for income taxes		2,997,000			(383,000	)		2,162,000			(4,335,000	)
Net (loss) income	$	(4,876,000	)	$	(3,699,000	)	$	(2,286,000	)	$	3,538,000
Total assets							$	740,009,000		$	487,848,000

NOTE 23—SEGMENT INFORMATION

Kennedy-Wilson's business is defined by two core segments: KW Services and KW Investments. KW Services provides a full array of real estate-related services to investors and lenders, with a strong focus on financial institution-based clients. KW Investments invests Kennedy-Wilson capital in multifamily, residential and office properties as well as loans secured by real estate. Kennedy-Wilson's segment disclosure with respect to the determination of segment profit or loss and segment assets is based on these services and investments.

KW SERVICES—Kennedy-Wilson offers a comprehensive line of real estate services for the full life cycle of real estate ownership and investment to clients that include financial institutions, developers, builders and government agencies. Kennedy Wilson provides auction and conventional sales, property management, asset management, leasing, construction management, acquisitions, dispositions and trust services.

KW INVESTMENTS—Kennedy-Wilson, on its own and through joint ventures, is an investor in real estate, including multifamily, residential and office properties as well as loans secured by real estate.

Substantially all of the management fees and commissions – related party revenues were generated via intersegment activity for the years ended December 31, 2010, 2009 and 2008. The amounts representing investments with related parties and non-affiliates are included in the investments segment. No single external customer provided Kennedy-Wilson with 10% or more of its revenues during any period presented in these financial statements.

The following tables summarize the income and expense activity by segment for the year ended December 31, 2010 and total assets as of December 31, 2010.

	Services		Investments			Corporate			Consolidated
Management fees and commissions	$	15,272,000	$	—		$			$	15,272,000
Management fees and commissions—related party		17,792,000		—			—			17,792,000
Sale of real estate		—		3,937,000			—			3,937,000
Sale of real estate—related party		—		9,535,000			—			9,535,000
Rental and other revenue		—		4,000,000			—			4,000,000
Total revenue		33,064,000		17,472,000			—			50,536,000
Operating expenses		23,584,000		26,243,000			18,492,000			68,319,000
Depreciation and amortization		117,000		1,342,000			159,000			1,618,000
Total operating expenses		23,701,000		27,585,000			18,651,000			69,937,000
Equity in joint venture income		—		10,548,000			—			10,548,000
Income from loan pool participations and notes receivable		—		11,855,000			—			11,855,000
Total operating income (loss)		9,363,000		12,290,000			(18,651,000	)		3,002,000
Interest income		—		—			192,000			192,000
Interest income—related party		—		—			662,000			662,000
Remeasurement gain		—		2,108,000			—			2,108,000
Gain on early extinguishment of debt		—		16,670,000			—			16,670,000
Loss on early extinguishment of debt		—					(4,788,000	)		(4,788,000	)
Interest expense		—		(676,000	)		(6,958,000	)		(7,634,000	)
Income (loss) before provision for income taxes	$	9,363,000	$	30,392,000			(29,543,000	)		10,212,000
Provision for income taxes						$	(3,727,000	)		(3,727,000	)
Net income						$	(33,270,000	)	$	6,485,000
Total assets	$	38,780,000	$	400,519,000		$	48,549,000		$	487,848,000
Expenditures for long lived assets			$	23,764,000					$	23,764,000

All of the revenues included in the table above are attributable to the United States, except for $485,000 in rental revenue that is attributable to Japan. This rental revenue was generated from the office building in Japan that had a carrying value of $8,891,000 as of December 31, 2010. The only other activity outside the United States is conducted through Kennedy-Wilson's equity method investment KWR (See Note 7).

The following tables summarize the income and expense activity by segment for the year ended December 31, 2009 and total assets as of December 31, 2009.

	Services		Investments			Corporate			Consolidated
Management fees and commissions	$	13,230,000	$	—		$	—		$	13,230,000
Management fees and commissions—related party		10,865,000		—			—			10,865,000
Sale of real estate		—		52,699,000			—			52,699,000
Sale of real estate—related party		—		6,698,000			—			6,698,000
Rental and other revenue		—		2,717,000			26,000			2,743,000
Total revenue		24,095,000		62,114,000			26,000			86,235,000
Operating expenses		20,499,000		49,458,000			23,793,000			93,750,000
Depreciation and amortization		70,000		919,000			133,000			1,122,000
Total operating expenses		20,569,000		50,377,000			23,926,000			94,872,000
Equity in joint venture income		—		8,019,000			—			8,019,000
Total operating income (loss)		3,526,000		19,756,000			(23,900,000	)		(618,000	)
Interest income		—		—			102,000			102,000
Interest income—related party		—		—			400,000			400,000
Interest expense		—		(5,106,000	)		(8,068,000	)		(13,174,000	)
Other than temporary impairment on available for sale security		—		(328,000	)		—			(328,000	)
Income (loss) before provision for income taxes	$	3,526,000	$	14,322,000			(31,466,000	)		(13,618,000	)
Benefit from income taxes							3,961,000			3,961,000
Net loss						$	(27,505,000	)	$	(9,657,000	)
Total assets	$	30,600,000	$	236,780,000		$	68,877,000		$	336,257,000
Expenditures for long lived assets			$	35,800,000					$	35,800,000

All of the revenues included in the table above are attributable to the United States, except for $483,000 in rental revenue that is attributable to Japan. This rental revenue was generated from the office building in Japan that had a carrying value of $8,145,000 as of December 31, 2009. The only other activity outside the United States is conducted through Kennedy-Wilson's equity method investment KWR (See Note 7).

The following tables summarize the income and expense activity by segment for the year ended December 31, 2008 and total assets as of December 31, 2008.

	Services		Investments			Corporate			Consolidated
Management fees and commissions	$	16,577,000	$	—		$	—		$	16,577,000
Management fees and commissions—related party		12,675,000		—			—			12,675,000
Rental and other revenue		—		2,973,000			—			2,973,000
Total revenue		29,252,000		2,973,000			—			32,225,000
Operating expenses		21,251,000		8,182,000			2,218,000			31,651,000
Depreciation and amortization		83,000		683,000			154,000			920,000
Total operating expenses		21,334,000		8,865,000			2,372,000			32,571,000
Equity in joint venture income		—		10,097,000			—			10,097,000
Total operating income (loss)		7,918,000		4,205,000			(2,372,000	)		9,751,000
Interest income		—		—			221,000			221,000
Interest income—related party		—		—			341,000			341,000
Interest expense		—		(1,974,000	)		(6,622,000	)		(8,596,000	)
Other than temporary impairment on available for sale security		—		—			(445,000	)		(445,000	)
Income (loss) before provision for income taxes	$	7,918,000	$	2,231,000			(8,877,000	)		1,272,000
Provision for income taxes							(605,000	)		(605,000	)
Net loss						$	(9,482,000	)	$	667,000
Total assets	$	39,791,000	$	175,368,000		$	40,724,000		$	255,883,000
Expenditures for long lived assets			$	41,460,000					$	41,460,000

All of the revenues included in the table above are attributable to the United States, except for $198,000 in rental revenue that is attributable to Japan. This rental revenue was generated from the office building in Japan that had a carrying value of $8,428,000 as of December 31, 2008. The only other activity outside the United States is conducted through Kennedy-Wilson's equity method investment KWR (See Note 7).