SEGMENT INFORMATION

Kennedy Wilson is a global real estate investment company. The Company owns, operates, and invests in real estate both on its own and through our investment management platform. To complement its investment business, the Company also provides real estate services primarily to financial services clients.

Kennedy Wilson’s segment disclosure with respect to the determination of segment profit or loss and segment assets is based on these two core segments: KW Investments and KW Investment Management and Real Estate Services (IMRES). KW Investments invests in multifamily, office, retail, industrial and residential properties as well as loans secured by real estate. IMRES provides a full array of real estate-related services to investors and lenders, with a strong focus on financial institution-based clients. 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.

Substantially all of the revenue—related party was generated via inter-segment activity for the years ended December 31, 2017, 2016 and 2015. Generally, this revenue consists of fees earned on investments in which Kennedy Wilson also has an ownership interest. The amounts representing investments with related parties and non-affiliates are included in the investment segment. The fees earned from related parties are included in the IMRES segment.

KW Investments

We invest our capital in real estate assets and loans secured by real estate either on our own or through our investment management platform. When we have partners, we are typically the general partner in the arrangement with a promoted interest in the profits of our investments beyond our ownership percentage. The Company has an average ownership interest across all investments of approximately 62% as of December 31, 2017. Our equity partners include public shareholders, financial institutions, foundations, endowments, high net worth individuals and other institutional investors. See the "Business Segments" section in Item 1 for a more detailed discussion of the different components of the KW Investments segment.

KW Investment Management and Real Estate Services (IMRES)

IMRES encompasses the Company fee generating businesses which includes both the Company's investment management platform as well as the Company's third-party services business. The Company's clients include financial institutions, institutional investors, insurance companies, developers, builders, government agencies and prior to the KWE Transaction shareholders of KWE. IMRES has five main lines of business: investment management, property services, research, brokerage, and auction and conventional sales. These five business lines generate revenue for us through fees and commissions. See the "Business Segments" section in Item 1 for a more detailed discussion of the different components of the IMRES segment.

The Company manages approximately 53.1 million square feet of properties for the Company and its investment partners (including KWE) in the United States, Europe, and Asia, which includes assets we have ownership interests in and third party owned assets. With 25 offices throughout the United States, the United Kingdom, Ireland, Jersey, Spain 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 IMRES have an extensive track record in their respective lines of business and in the real estate community as a whole. Their knowledge and relationships are an excellent driver of businesses through the services business as well as on the investment front.

Additionally, IMRES plays a critical role in supporting our 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.

No single third-party client accounted for 10% or more of Kennedy Wilson's revenue during any period presented in these financial statements.

The following tables summarize the income and expense activity by segment for the years ended December 31, 2017, 2016 and 2015 and total assets as of December 31, 2017 and 2016.



	Year Ended December 31,
(Dollars in millions)	2017			2016			2015
Investments
Rental	$	504.7		$	485.9		$	404.8
Hotel	127.5			116.2			106.4
Sale of real estate	111.5			29.3			3.7
Loans and other income	15.2			12.6			19.5
Total revenue	758.9			644.0			534.4
Depreciation and amortization	(212.2		)	(198.2		)	(166.3		)
Operating Expenses	(433.8		)	(345.2		)	(283.3		)
Income from unconsolidated investments	66.4			122.8			93.6
Operating Income	179.3			223.4			178.4
Gain on sale of real estate	226.7			130.7			72.4
Acquisition-related gains	—			16.2			108.1
Acquisition-related expenses	(4.4		)	(9.5		)	(37.3		)
Interest expense	(145.6		)	(137.4		)	(108.8		)
Other	(5.1		)	(1.2		)	(2.5		)
Income before benefit from income taxes	250.9			222.2			210.3
(Provision for) benefit from income taxes	(4.8		)	5.0			(23.4		)
Net income	246.1			227.2			186.9
Net (income) loss attributable to the non-controlling interests	(37.5		)	(70.9		)	15.3
Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	208.6		$	156.3		$	202.2



	Year Ended December 31,
(Dollars in millions)	2017			2016			2015
Investment Management and Real Estate Services
Investment management, property services, and research fees (includes $20.8, $28.9, and $37.8 million of related party fees, respectively)	$	51.7		$	59.4		$	69.3
Total revenue	51.7			59.4			69.3
Depreciation and amortization	(0.3		)	—			—
Operating expenses	(54.3		)	(54.9		)	(69.7		)
Income from unconsolidated investments	2.6			3.8			3.8
Net Income	(0.3		)	8.3			3.4
Net loss attributable to the noncontrolling interests	—			—			0.4
Net income attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	(0.3	)	$	8.3		$	3.8



	Year Ended December 31,
(Dollars in millions)	2017			2016			2015
Corporate
Operating expenses	$	(70.2	)	$	(93.6	)	$	(53.4	)
Operating loss	(70.2		)	(93.6		)	(53.4		)
Interest expense	(72.1		)	(54.2		)	(47.9		)
Other	13.4			7.8			—
Loss before benefit from (provision for) income taxes	(128.9		)	(140.0		)	(101.3		)
Benefit from (provision for) income taxes	21.1			(19.0		)	(30.0		)
Net loss	(107.8		)	(159.0		)	(131.3		)
Preferred dividends and accretion of preferred stock issuance costs	—			(2.8		)	(3.6		)
Net loss attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	(107.8	)	$	(161.8	)	$	(134.9	)



	Year Ended December 31,
(Dollars in millions)	2017			2016			2015
Consolidated
Rental	$	504.7		$	485.9		$	404.8
Hotel	127.5			116.2			106.4
Sale of real estate	111.5			29.3			3.7
Investment management, property services, and research fees (includes $20.8, $28.9, and $37.8 million of related party fees, respectively)	51.7			59.4			69.3
Loans purchases, loan originations, and other	15.2			12.6			19.5
Total revenue	810.6			703.4			603.7
Operating expenses	558.3			493.7			406.4
Depreciation and amortization	212.5			198.2			166.3
Total operating expenses	770.8			691.9			572.7
Income from unconsolidated investments	69.0			126.6			97.4
Operating income	108.8			138.1			128.4
Gain on sale of real estate	226.7			130.7			72.4
Acquisition-related gains	—			16.2			108.1
Acquisition-related expenses	(4.4		)	(9.5		)	(37.3		)
Interest expense	(217.7		)	(191.6		)	(156.7		)
Other	8.3			6.6			(2.5		)
Income before benefit from (provision for) income taxes	121.7			90.5			112.4
Benefit from (provision for) income taxes	16.3			(14.0		)	(53.4		)
Net income	138.0			76.5			59.0
Net (income) loss attributable to the noncontrolling interests	(37.5		)	(70.9		)	15.7
Preferred dividends and accretion of preferred stock issuance costs	—			(2.8		)	(3.6		)
Net income (loss) attributable to Kennedy-Wilson Holdings, Inc. common shareholders	$	100.5		$	2.8		$	71.1



	December 31,
(Dollars in millions)	2017		2016
Assets
Investments	$	7,563.7	$	7,375.5
Services	70.5		78.1
Corporate	90.6		203.0
Total assets	$	7,724.8	$	7,656.6



	December 31,
(Dollars in millions)	2017			2016			2015
Expenditures for long lived assets
Investments	$	(814.3	)	$	(949.6	)	$	(1,927.6	)

Geographic Information:

The revenue shown in the table below is allocated based upon the country in which services are performed.



	Year Ended December 31,
(Dollars in millions)	2017		2016		2015
United States	$	316.3	$	304.1	$	229.3
Europe	493.3		397.2		361.1
Japan	1.0		2.1		13.3
Total revenue	$	810.6	$	703.4	$	603.7