REAL ESTATE AND IN-PLACE LEASE VALUE

The following table summarizes the Company's investment in consolidated real estate properties at March 31, 2014 and December 31, 2013:



	March 31,			December 31,
(Dollars in millions)	2014			2013
Land	$	424.5		$	187.8
Buildings	1,264.5			484.1
Building improvements	18.6			12.7
In-place lease value	204.1			29.8
	1,911.7			714.4

Less accumulated depreciation and amortization	(32.8		)	(26.3		)
Real estate, net	$	1,878.9		$	688.1

Real property, including land, buildings, and building improvement, are included in real estate and are generally stated at cost. Buildings and building improvements are depreciated on a straight-line method over their estimated lives not to exceed 40 years. Acquired in-place lease values are recorded at their estimated fair value and depreciated over their respective weighted-average lease term.

Consolidated Acquisitions

The purchase of property is recorded to land, buildings, building improvements, and intangible lease value (including the value of above-market and below-market leases, acquired in-place lease values, and tenant relationships, if any) based on their respective estimated fair values. The purchase price approximates the fair value of the properties as these acquisitions were transacted with third-party willing sellers. Acquisition-related costs are expensed as incurred.

During the quarter ended March 31, 2014, the Company acquired the following properties:



(Dollars in millions)
Date acquired	Type	Description	Location	Land		Building		Intangible assets		Mortgage loans
1/20/2014	Commercial ⁽¹⁾	Portfolio of 14 commercial, retail, and industrial properties	United Kingdom	$	29.7	$	47.5	$	40.2	$	—
2/20/2014	Hotel	193 room hotel	Western U.S.	1.3		8.3		—		—
2/28/2014	Multifamily	24 apartment units, 2 penthouse units, and 1,000 square feet of retail	Ireland	0.6		15.1		0.4		9.6
3/28/2014	Commercial⁽²⁾	26 commercial properties throughout England and Scotland	United Kingdom	54.0		132.0		54.0		—
3/31/2014	Multifamily⁽³⁾	281 completed apartments and a partially completed residential block, 725k square feet of commercial space, and 7.4 acres of commercial development land	Ireland	32.7		80.9		1.2		78.9
				$	118.3	$	283.8	$	95.8	$	88.5

⁽¹⁾On February 28, 2014, the Company contributed its 50% interest in this portfolio to KWE as part of the Company's investment in KWE's initial public offering.

⁽²⁾This portfolio of properties was acquired by KWE.

⁽³⁾ Company entered into a purchase agreement with KWE subsequent to March 31, 2014. See Note 17.

Consolidation of previously unconsolidated investments

On March 31, 2014, the Company and one of its equity partners amended existing operating agreements governing six separate joint ventures that hold real estate-related investments located in the U.K. and Ireland. The Company has an approximate 50% ownership interest in these investments. These joint ventures were previously accounted for by the Company on an equity method basis. The amendments to the operating agreements provided control to the Company of these investments. As a result of gaining control, the Company was required to consolidate the assets and liabilities of these properties at fair value in accordance with FASB Accounting Standards Codification 805 - Business Combinations. As the fair value of our interests in these properties were in excess of their carrying value of their ownership interest, we recorded acquisition-related gains in the accompanying consolidated statement of operations for the quarter ended March 31, 2014 as further detailed below. See Note 6 - Fair Value Measurements for further detail of the methodology used to determine the fair value of the assets and liabilities acquired in these transactions.

The following table summarizes the assets and liabilities assumed as a result of gaining control of these properties and the acquisition related gains recognized:



(Dollars in millions)
Property	Type	Location	Cash		Real estate and acquired in-place lease values, net		Accounts receivable and other assets		Accounts payable, accrued expenses, and other liabilities		Mortgage loans		Noncontrolling interests		Acquisition related gain
Three multifamily properties	Multifamily	Ireland	$	3.6	$	248.5	$	0.9	$	5.4	$	114.3	$	66.6	$	37.8
Two office properties	Commercial	Ireland	4.3		223.9		7.6		4.9		75.2		77.9		32.2
Two commercial properties and loans secured by real estate	Commercial & Loans	U.K.	9.6		195.0		5.6		8.1		100.8		62.0		10.5
			$	17.5	$	667.4	$	14.1	$	18.4	$	290.3	$	206.5	$	80.5

In addition, during the quarter ended March 31, 2014, the Company foreclosed on a 133,000 square foot retail center and an adjacent 2.4 acre vacant lot in Van Nuys, CA. As a result of the foreclosure, the Company was required to consolidate the assets and liabilities of the retail center at fair value under ASC 805 - Business Combinations and recorded the vacant lot at fair market value. As the fair value of the assets was in excess of the basis in the previously held mortgage notes, the Company recognized a $3.7 million acquisition related gain.

Pro forma results of operations

The results of operations of the assets acquired have been included in our consolidated financial statements since the date of their acquisition. The Company’s unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had this acquisition been consummated at the beginning of the periods presented.

The unaudited pro forma data presented below assumes that the acquisitions during the quarter ended March 31, 2014 occurred as of January 1, 2013.



	Unaudited
	Three Months Ended March 31,
(Dollars in millions, except for per share data)	2014			2013
Pro forma revenues	$	72.7		$	34.9
Pro forma (loss) income from unconsolidated investments	(0.7		)	0.7
Pro forma net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders	8.6			(4.3		)
Pro forma net income (loss) per share:
Basic	$	0.10		$	(0.07	)
Diluted	$	0.10		$	(0.07	)