Company: KW
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001408100-25-000115
Chunk: 236

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 236
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 locally in the United States or in other countries in which we conduct business, could impact the fair value of investments held by the Company. As a result of the rapid development, fluidity and uncertainty surrounding these situations, the Company expects that information with respect to fair value measurement may change, potentially significantly, going forward and may not be indicative of the actual impact on our business, operations, cash flows and financial condition for the three months ended March 31, 2025 and future periods.

    As of March 31, 2025, $1.9 billion or 92% of our investments in our Co-Investment Portfolio (27% of total assets) were held at estimated fair value.  As of March 31, 2025, there were cumulative fair value gains on investments held of $282.0 million, which comprises 15% of the $1.9 billion carrying value of fair value unconsolidated investments that are currently held.  Our investment in VHH accounts for $359.7 million of the $282.0 million cumulative fair value gains.  See discussion of VHH above for more detail.   Fair value changes consist of changes in the underlying value of properties and associated mortgage debt as well as foreign currency fluctuations (net of any direct hedges) for non-dollar denominated investments.  During the three months ended March 31, 2025, we recorded $8.9 million and $8.2 million, respectively, of net non-cash fair value gains and write downs of carried interests on Co-Investment portfolio investments.  

    In determining estimated fair market values, the Company utilizes two approaches to value real estate, a discounted cash flow analysis and direct capitalization approach.

Discounted cash flow models estimate future cash flows from a buyer's perspective (including terminal values) and compute a present value using a market discount rate. The holding period in the analysis is typically ten years. This is consistent with how market participants often estimate values in connection with buying real estate but these holding periods can be shorter depending on the life of the structure an investment is held within. The cash flows include a projection of the net sales proceeds at the end of the holding period, computed using a market reversionary capitalization rate.  For our investment in VHH the Company fair values its general partner ("GP") interests net cash flows utilizing a levered discount rate.

Under the direct capitalization approach, the Company applies a market derived estimated capitalization rate to current and future income streams with