Company: KW
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001408100-25-000179
Chunk: 356

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 8
Chunk 356
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 receivables, excluding $1.7 million of unamortized discount and $21.2 million of loan loss reserves.

Currency Risk - Foreign Currencies 

    A significant portion of our business is located outside the United States. As such, we have foreign currency fluctuation risk with respect to those investments and business units. In certain instances, we utilize foreign currency hedging derivatives to mitigate the impact of this risk on our equity.  

    The financial statements of Kennedy Wilson's subsidiaries located outside the United States are measured using the local currency as this is their functional currency. The assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date, and income and expenses are translated at the average monthly rate. The foreign currencies primarily include the euro and GBP. Cumulative translation adjustments, to the extent not included in cumulative net income, are included in the consolidated statement of equity as a component of accumulated other comprehensive income. Currency translation gains and losses and currency derivative gains and losses will remain in other comprehensive income unless and until the Company substantially liquidates the underlying investments. 

85

    Approximately 38% of our investment account is invested through our foreign platforms in their local currencies.   Investment level debt is generally incurred in local currencies and therefore we consider our equity investment as the appropriate exposure to evaluate for hedging purposes.  In order to manage the effect of these fluctuations, we generally hedge our book equity exposure to foreign currencies through currency forward contracts and options.  As of September 30, 2025, we have hedged 117% of the net asset carrying value of our euro denominated investments and 85% of the net asset carrying value of our GBP denominated investments.  The Company entered into some euro denominated hedges at the end of the third quarter 2025 in anticipation of the repayment of the KWE Notes, which were accounted for as a hedging instrument against euro denominated assets, on October 3, 2025.  After the repayment of the KWE Notes the Company was 97% hedged on euro denominated assets.      

    Our investment management businesses typically do not require much capital so foreign currency translation and derivative activity primarily relates to the investments segment as that has greater balance sheet exposure to foreign currency fluctuations.  

    We typically have not hedged the impact foreign currency fluctuations may have on our future operations or cash flows. The costs to operate these businesses, such as compensation, overhead and interest expense are incurred in local currencies