Company: KW
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001408100-25-000179
Chunk: 13

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 2
Chunk 13
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, VHH continues to receive a 

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majority of the cash flow generated from these assets through deferred developer fees and other fee arrangements and profit splits agreed to between VHH and the tax credit LPs (a commonly used structure by peer companies with similar businesses). This structure results in VHH maintaining on average 75% of the economic ownership interests in the assets across the portfolio.

Our VHH platform also has a development component where we find suitable sites and develop properties from the ground up and then lease up the property upon the completion of construction. VHH is paid developer fees for its work as development manager and receive a conversion fee when the property is placed into operation. 

Further, on properties where tax credits are sold, VHH typically utilizes tax-exempt bond financing to help finance its partnership investments. Typical financing includes a bridge to permanent financing solution, where a floating rate option is utilized during the construction and lease-up period and a permanent loan with a fixed rate locked at the time of closing becomes effective upon conversion/stabilization. The typical term for these loan facilities is 17 years.

During the nine months ended September 30, 2025, we received $8.4 million of proceeds from VHH from recurring monthly distributions. On a trailing 12-month basis, we have received $11.9 million of proceeds from VHH, including $10.2 million from recurring monthly distributions and $1.7 million from paid developer fees at conversion and resyndications. 

We acquired our ownership interest in VHH in 2015 for approximately $80.0 million. As of September 30, 2025 we have contributed an additional $191.1 million into VHH and have received $393.2 million in cash distributions. VHH is an unconsolidated investment that we account for using the fair value option which had a carrying value of $362.8 million as of September 30, 2025. Since our acquisition in 2015, we have recorded $384.3 million worth of fair value gains on our investment in VHH, including $27.9 million during the nine months ended September 30, 2025. 

The fair value of the real estate investments held through VHH is determined through a discounted cash flow analysis on a partnership-by-partnership basis. This methodology assumes ordinary distributions during the ownership period and the future sale of the underlying properties after the tax credit period has expired. Our methodology of estimating the fair value of such real estate investments assumes certain