REAL ESTATE AND ACQUIRED IN PLACE LEASE VALUE

12 Months Ended

Dec. 31, 2022

REAL ESTATE AND ACQUIRED IN PLACE LEASE VALUE

The following table summarizes the Company's investment in consolidated real estate properties at December 31, 2022 and 2021:


	December 31,
(Dollars in millions)	2022		2021
Land	$	1,319.2	$	1,277.6
Buildings	3,961.9		3,744.1
Building improvements	494.2		545.6
Acquired in-place lease values	295.0		330.6
	6,070.3		5,897.9
Less accumulated depreciation and amortization	(882.2)		(838.1)
Real estate and acquired in place lease values, net of accumulated depreciation and amortization	$	5,188.1	$	5,059.8

Real property, including land, buildings, and building improvements, are included in real estate and are generally stated at cost. Buildings and building improvements are depreciated on the 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 amortized over their respective weighted-average lease term which was 6.7 years at December 31, 2022.

Depreciation and amortization expense on buildings, building improvements and acquired in-place lease values for the years ended December 31, 2022, 2021 and 2020 was $162.7 million, $151.3 million and $165.7 million, respectively.

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 relative fair values. The purchase price generally approximates the fair value of the properties as acquisitions are transacted with third-party willing sellers after arms-length negotiations.

During the year ended December 31, 2022, Kennedy Wilson acquired the following consolidated properties which were treated as asset acquisitions:


(Dollars in millions)		Purchase Price Allocation at Acquisition(1)
Location	Description	Land		Building		Acquired in-place lease values(2)		Investment debt		KWH Shareholders' Equity
Western U.S.	Four multifamily properties	$	99.2	$	396.6	$	1.4	$	203.4	$	293.8
United Kingdom	Office building	25.5		74.1		6.9		—		106.5
		$	124.7	$	470.7	$	8.3	$	203.4	$	400.3

(1) Excludes net other assets.

(2) Above- and below-market leases are included in other assets and accrued expenses and other liabilities, respectively, on the accompanying consolidated balance sheets.

During the year ended December 31, 2021, Kennedy Wilson acquired the following consolidated properties which were treated as asset acquisitions:


(Dollars in millions)		Purchase Price Allocation at Acquisition(1)
Location	Description	Land		Building		Acquired in-place lease values(2)		Investment debt		KWH Shareholders' Equity
Western U.S.	Ten multifamily properties	$	166.1	$	610.9	$	2.3	$	469.1	$	310.2
United Kingdom	Two commercial properties	95.9		231.3		22.3		—		349.5
		$	262.0	$	842.2	$	24.6	$	469.1	$	659.7

(1) Excludes net other assets.

(2) Above- and below-market leases are included in other assets and accrued expenses and other liabilities, respectively, on the accompanying consolidated balance sheets.

Gains on Sale of Real Estate, Net

During the years ended December 31, 2022, 2021 and 2020, Kennedy Wilson recognized the following net gains on sale of real estate. Included in the net gains for the year ended December 31, 2022 is an impairment loss of $13.3 million on European non-core retail and office assets. Included in the net gains for year ended December 31, 2021 is an impairment loss of $20.9 million on two retail properties in the United Kingdom and an additional impairment on a residential property in the Western United States. Included in the net gains for year ended December 31, 2020 is a $15.6 million impairment loss on five retail properties in the United Kingdom and a residential property in the Western United States.


(Dollars in millions)		Gain on sale of real estate
Year ended December 31,	Description	Consolidated		NCI		Net of NCI
2022	Primarily due to the sale of a 49% equity interest in a multifamily property in Western United States that was previously wholly-owned and controlled by the Company and the sale of a wholly-owned office property in the United Kingdom	$	103.7	$	(1.0)	$	102.7
2021	Primarily due to the sale of a 49% equity interest in nine multifamily properties in Western United States that were previously wholly-owned and controlled by the Company and the sale of 19 office properties in the United Kingdom, one multifamily property in Western United States, three retail properties in Western United States and an office property in Western United States	412.7		(5.4)		407.3
2020	20 industrial properties (including the deconsolidation of previously consolidated real estate as discussed below), 19 retail properties, three office properties, and one multifamily property in United Kingdom, two multifamily properties and two office properties in Ireland, one retail property in Spain, and one multifamily property in the Western United States.	338.0		(0.6)		337.4

Deconsolidation of Previously Consolidated Real Estate

Under ASC Subtopic 610-20, the Company consummated the following transactions that resulted in the deconsolidation of the Company's interests in investments previously consolidated in the Company's financial statements:

During the year ended December 31, 2022, due to the sale and deconsolidation of Montiavo, the Company recognized a $56.7 million gain on sale of real estate, net and generated $30.2 million of cash proceeds for the Company. The gain is due to the sale of the 49% interest to the Company's partner and the recording of the Company's retained 51% interest in unconsolidated investments at the fair value established by the transaction.

During the year ended December 31, 2021, due to the sale and deconsolidation of the assets that make up the MF seed portfolio, the Company recognized a $332.0 million gain on sale of real estate, net and generated $166.4 million of cash proceeds for the Company. The gain is due to the sale of the 49% interest to the Company's partner and the recording of the Company's retained 51% interest in unconsolidated investments at the fair value established by the transaction. The MF seed portfolio and subsequent investments within the separate account are accounted for at fair value as the Company elected to account for this investment under the fair value adoption.

During the year ended December 31, 2020, due to the sale and deconsolidation of the assets that made up the urban logistics properties in the UK ("European Industrial JV") the Company recognized a $126.3 million gain from the sale of real estate, net. The gain is due to the sale of the 80% interest to the Company's partner and the recording of the Company's retained 20% interest in unconsolidated investments at the fair value established by the transaction. The European Industrial JV commenced with investing in an ownership stake in 18 industrial assets located throughout the United Kingdom and subsequent investments within the separate account are accounted for at fair value as the Company elected to account for this investment under the fair value adoption.

The Company leases its operating properties to customers under agreements that are classified as operating leases. The total minimum lease payments provided for under the leases are recognized on a straight-line basis over the lease term. The majority of the Company's rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from the Company's tenants. The Company records amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. The reimbursements are recognized in rental income in the consolidated statements of operations as the Company is the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk.

The following table summarizes the minimum lease payments due from the Company's tenants on leases with lease periods greater than one year at December 31, 2022:


(Dollars in millions)	Minimum
	Rental Revenues(1)
2023	$	144.2
2024	127.9
2025	112.8
2026	95.6
2027	76.6
Thereafter	232.6
Total	$	789.7

(1) These amounts do not reflect future rental revenues from the renewal or replacement of existing leases, rental increases that are not fixed and exclude reimbursements of rental expenses.