Company: KW
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001408100-25-000084
Chunk: 19

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1
Chunk 19
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 capital, borrowing cost, rent levels, and asset values. Our strategy has resulted in a strong track record of creating both asset and entity value for the benefit of our shareholders and partners over these various real estate cycles.

Industry Overview 

Key Investment Markets

Western United States

In 2024, the Federal Reserve (the "Fed") began to shift its interest rate policy and reducing interest rates for the first time in four years.  Beginning in September 2024, the Fed reduced its target federal funds rate by 1%, ending the year with a range of 4.25% to 4.50%. These adjustments aimed to balance economic growth with inflation control. The U.S. economy demonstrated resilience, with real gross domestic product ("GDP") increasing at an annual rate of 2.8% in the third quarter, driven by robust consumer spending, which rose by 3.7%. The reduction in rates helped support an improvement in liquidity and a recovery in commercial real estate transaction volumes.

The U.S. multifamily sector demonstrated resiliency in 2024. The combination of high mortgage rates and a high cost of living continued to make homeownership difficult, creating sustained fundamental demand for rental housing. Despite record deliveries, occupancy has remained healthy as the United States is still facing a significant housing shortage of approximately 3.9 million units. The delivery of newly developed rental housing is expected to slow significantly in the coming years as a result of lower construction starts, which is expected to continue to sustain healthy demand for multifamily assets.

The Industrial sector experienced a recalibration after a period of rapid expansion. Following three years of exceptional rental growth and absorption, the sector faced an inflection point in 2024.  Market rents declined slightly due to  lower-than-expected absorption amid significant deliveries. While corrections were market wide, coastal markets felt the brunt of the impact due to significantly higher deliveries in recent years. Despite short term adjustments, the long-term outlook for industrial remains favorable driven by sustained e-commerce activity, supply chain optimization efforts and onshoring.

The lending environment in 2024 remained slow from banks and Federal Deposit Insurance Corporation ("FDIC") insured institutions. The total volume of outstanding acquisition, development, and construction loans made by FDIC-insured institutions fell for the third consecutive quarter during the third quarter of 2024 to a volume of $490.7 billion, down from $495.8 billion in the second quarter. The decline reflects tighter lending conditions. Residential construction and land development loans from such traditional banking