Company: KW
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001408100-25-000147
Chunk: 221

Company: Kennedy-Wilson Holdings, Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 221
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 Risk

    Our primary market risk exposure relates to: changes in interest rates in connection with our short-term borrowings and fluctuations in foreign currency exchange rates in connection with our foreign operations. 

Interest Rate Risk

We have established an interest rate management policy, which attempts to minimize our overall cost of debt while taking into consideration the earnings implications associated with the volatility of short-term interest rates. As part of this policy, we have elected to maintain a combination of variable and fixed rate debt. As of June 30, 2025, 81% of our consolidated level debt is fixed rate, 18% is floating rate with interest caps and 1% is floating rate without interest caps.  As such, fluctuations in interest 

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rates may impact our floating rate debt (and floating rate debt with interest caps to a lesser extent) and cause our consolidated interest expense and income from unconsolidated investments to fluctuate.  Typically, these fluctuations do not give rise to a significant long-term interest rate risk because they have generally short maturities.

    We hold variable rate debt on some of our consolidated and unconsolidated properties that are subject to interest rate fluctuations. These variable rates generally are based on the lender’s base rate, prime rate, EURIBOR, GBP LIBOR, SOFR, SONIA plus an applicable borrowing margin.  Additionally, in order to mitigate some of the risk associated with increasing interest rates we have purchased interest rate caps and swaps.  Our interest rate caps and swaps are typically undesignated as they are bought at the corporate level and changes in value are recorded to other income/loss.  However we view the fair value movements associated with these interest rate derivatives in conjunction with our interest expense in order to limit the amount of financial statement impact that interest expense can increase with rate increases.  However, even though we hold interest rate swaps and caps we are subject to increased interest expense until rates hit the level of caps that have been purchased. If there was a 100-basis point increase or decrease, we would have a $5.1 million increase in interest expense or $12.5 million of interest expense savings during 2025 on our current share of indebtedness.  The weighted average strike price on caps and maturity of Kennedy Wilson’s variable rate mortgages is 3.16% and approximately 0.8 years, respectively, as of June 30, 2025.

The table below represents contractual balances of our consolidated financial instruments at the expected maturity dates