XML 77 R23.htm IDEA: XBRL DOCUMENT v2.4.0.8
Segment Information
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
SEGMENT INFORMATION
SEGMENT INFORMATION
Kennedy Wilson's business is defined by two core segments: KW Investments and KW Services. KW Investments invests in multifamily, commercial, residential and hotel properties as well as loans secured by real estate. KW Services provides a full array of real estate-related services to investors and lenders, with a strong focus on financial institution-based clients and publicly traded companies. Kennedy Wilson’s segment disclosure with respect to the determination of segment profit or loss and segment assets is based on these services and investments.
There have been no changes in the basis of segmentation or in the basis of measurement of segment profit or loss since the December 31, 2013 financial statements.
KW INVESTMENTS—Kennedy Wilson invests its capital in real estate assets and loans secured by real estate either on its own or with equity partners through joint ventures, separate accounts, and commingled funds. For investments with equity partners we are typically the general partner or investment manager in these investments with a promoted interest in the profits of our investments beyond our ownership percentage. Kennedy Wilson has an average ownership interest across all investments of approximately 45%. Our equity partners include publicly traded companies, financial institutions, foundations, endowments, high net worth individuals and other institutional investors.
KW SERVICES—KW Services offers a comprehensive line of real estate services for the full lifecycle of real estate ownership to clients that include publicly traded companies, financial institutions, institutional investors, insurance companies, developers, builders and government agencies. KW Services has four main lines of business: investment management, property services, research and auction and conventional sales. These four business lines generate revenue for us through fees and commissions. Related party fee revenue primarily consists of fees earned on investments in which entities in the KW Group also have an ownership interest.
We manage over 70.2 million square feet of properties for institutional clients and individual investors in the United States, Europe, and Japan, which includes assets we have ownership in and third party assets. With 25 offices throughout the United States, the United Kingdom, Ireland, Spain, Jersey and Japan, we have the capabilities and resources to provide property services to real estate owners as well as the experience, as a real estate investor, to understand client concerns. The managers of KW Services have an extensive track record in their respective lines of business and the real estate community as a whole. Their knowledge and relationships is an excellent driver of business through the services business as well as on the investment front.
Additionally, KW Services plays a critical role in supporting the company's investment strategy by providing local market intelligence and real-time data for evaluating investments, generating proprietary transaction flow and creating value through efficient implementation of asset management or repositioning strategies.
The following tables summarize income activity by segment and corporate for the three and nine months ended September 30, 2014 and 2013 and balance sheet data as of September 30, 2014 and December 31, 2013:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in millions)
 
2014
 
2013
 
2014
 
2013
Investments
 
 
 
 
 
 
 
 
Rental and hotel
 
$
93.5

 
$
10.5

 
$
161.3

 
27.3

Sale of real estate
 
1.6

 
1.6

 
19.0

 
10.1

Loan and other
 
5.7

 
0.5

 
11.7

 
1.4

     Total revenue
 
100.8

 
12.6

 
192.0

 
38.8

Depreciation and amortization
 
(34.7
)
 
(4.5
)
 
(67.3
)
 
(12.0
)
Operating expenses
 
(55.2
)
 
(13.7
)
 
(130.2
)
 
(45.0
)
Income from unconsolidated investments
 
11.4

 
13.2

 
43.1

 
30.1

     Operating income
 
22.3

 
7.6

 
37.6

 
11.9

Acquisition-related gains
 
28.9

 
1.6

 
199.2

 
11.1

Acquisition-related expenses
 
(5.3
)
 
—

 
(16.9
)
 
(0.5
)
Interest expense - investment
 
(13.8
)
 
(2.8
)
 
(30.2
)
 
(7.4
)
Other
 
(2.1
)
 
1.0

 
0.8

 
0.3

Net income
 
30.0

 
7.4

 
190.5

 
15.4

Net (income) loss attributable to the noncontrolling interests
 
0.1

 
0.7

 
(62.6
)
 
2.6

Net income attributable to Kennedy-Wilson Holdings, Inc common shareholders
 
$
30.1

 
$
8.1

 
$
127.9

 
$
18.0

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in millions)
 
2014
 
2013
 
2014
 
2013
Services
 
 
 
 
 
 
 
 
Investment management, property services and research fees (includes $8.3, $15.7, $48.9, and $37.8 of related party fees)
 
$
12.9

 
$
20.9

 
$
65.0

 
$
54.0

     Total revenue
 
12.9

 
20.9

 
65.0

 
54.0

Operating expenses
 
(14.5
)
 
(13.3
)
 
(40.4
)
 
(31.5
)
Income from unconsolidated investments
 
0.7

 
—

 
2.8

 
—

Operating (loss) income
 
(0.9
)
 
7.6

 
27.4

 
22.5

Net loss attributable to the noncontrolling interests
 
2.7

 
—

 
2.7

 
—

Net income attributable to Kennedy-Wilson Holdings, Inc common shareholders
 
$
1.8

 
$
7.6

 
$
30.1

 
$
22.5

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in millions)
 
2014
 
2013
 
2014
 
2013
Corporate
 
 
 
 
 
 
 
 
Operating expenses
 
$
(9.7
)
 
$
(5.8
)
 
$
(25.6
)
 
$
(16.5
)
     Operating loss
 
(9.7
)
 
(5.8
)
 
(25.6
)
 
(16.5
)
Interest expense-corporate
 
(15.9
)
 
(10.3
)
 
(41.1
)
 
(29.7
)
Other
 
—

 
0.1

 
—

 
0.2

Loss before (provision for) benefit from income taxes
 
(25.6
)
 
(16.0
)
 
(66.7
)
 
(46.0
)
(Provision for) benefit from income taxes
 
(6.6
)
 
(0.8
)
 
(40.8
)
 
1.4

Net loss
 
(32.2
)
 
(16.8
)
 
(107.5
)
 
(44.6
)
Preferred dividends and accretion of preferred stock issuance costs
 
(2.0
)
 
(2.0
)
 
(6.1
)
 
(6.1
)
Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders
 
$
(34.2
)
 
$
(18.8
)
 
$
(113.6
)
 
$
(50.7
)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in millions)
 
2014
 
2013
 
2014
 
2013
Consolidated
 
 
 
 
 
 
 
 
Investment management, property services and research fees (includes $8.3, $15.7, $48.9, and $37.8 of related party fees)
 
$
12.9

 
$
20.9

 
$
65.0

 
54.0

Rental and hotel
 
93.5

 
10.5

 
161.3

 
27.3

Sale of real estate
 
1.6

 
1.6

 
19.0

 
10.1

Loans and other
 
5.7

 
0.5

 
11.7

 
1.4

     Total revenue
 
113.7

 
33.5

 
257.0

 
92.8

Operating expenses
 
(79.5
)
 
(32.8
)
 
(196.2
)
 
(93.0
)
Depreciation and amortization
 
(34.7
)
 
(4.5
)
 
(67.3
)
 
(12.0
)
     Total operating expenses
 
(114.2
)
 
(37.3
)
 
(263.5
)
 
(105.0
)
Income from unconsolidated investments
 
12.1

 
13.2

 
45.9

 
30.1

     Operating income
 
11.6

 
9.4

 
39.4

 
17.9

Acquisition-related gain
 
28.9

 
1.6

 
199.2

 
11.1

Acquisition-related expenses
 
(5.3
)
 
—

 
(16.9
)
 
(0.5
)
Interest expense - investment
 
(13.8
)
 
(2.8
)
 
(30.2
)
 
(7.4
)
Interest expense - corporate
 
(15.9
)
 
(10.3
)
 
(41.1
)
 
(29.7
)
Other
 
(1.9
)
 
0.1

 
1.0

 
0.5

Income (loss) before benefit from income taxes
 
3.6

 
(2.0
)
 
151.4

 
(8.1
)
(Provision for) benefit from income taxes
 
(6.6
)
 
(0.8
)
 
(40.8
)
 
1.4

Net income (loss)
 
(3.0
)
 
(2.8
)
 
110.6

 
(6.7
)
Net (income) loss attributable to the noncontrolling interests
 
2.8

 
0.7

 
(59.9
)
 
2.6

Preferred dividends and accretion of preferred stock issuance costs
 
(2.0
)
 
(2.0
)
 
(6.1
)
 
(6.1
)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders
 
$
(2.2
)
 
$
(4.1
)
 
$
44.6

 
$
(10.2
)
(Dollars in millions)
 
September 30, 2014
 
December 31, 2013
Total Assets
 
 
 
 
Investments
 
$
5,381.7

 
$
1,607.5

Services
 
49.4

 
49.3

Corporate
 
282.2

 
142.0

Total assets
 
$
5,713.3

 
$
1,798.8