Company: KW
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001408100-25-000115
Chunk: 16

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 2
Chunk 16
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 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 appropriate adjustments for tenant vacancies or rent-free periods. These estimated capitalization rates and future income streams are derived from comparable property and leasing transactions and are considered to be key inputs in the valuation.

Other factors that we take into account under both approaches may include transaction structuring efficiencies, tenancy details, planning, building and environmental factors that might affect the property.

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The Company also utilizes valuations from independent real estate appraisal firms on some of its investments ("appraised valuations"), with certain investment structures periodically (typically annually) requiring appraised valuations. All appraised valuations are reviewed and approved by the Company.

The Company's investment in Zonda is accounted for at fair value and is valued using a multiple on trailing twelve month EBITDA.

The methodology to determine the value of the Company’s investment in VHH is described above under "Multifamily-Affordable Housing." 

The table below describes the range of inputs used as of March 31, 2025 for real estate assets:

Estimated Rates Used forCapitalization RatesDiscount RatesMultifamily - AffordableIncome approach - discounted cash flow6.30% —7.00%8.30% — 9