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Kennedy Wilson Reports First Quarter 2012 Earnings

Kennedy-Wilson Holdings, Inc. (NYSE: KW) (“Kennedy Wilson,” "we," "us," "our," or the “Company”), an international real estate investment and services company, today reported a first quarter 2012 net loss attributable to common shareholders of $3.4 million (or $0.07 per basic and diluted share) compared to a net loss of $1.0 million (or $0.02 per basic and diluted share) for the same period in 2011. Net loss attributable to common shareholders, adjusted for stock-based compensation expense, was $2.5 million (or $0.05 per basic share) compared to net income of $0.2 million for the same period in 2011.

The Company's earnings before interest, taxes, depreciation and stock-based compensation expense (“Adjusted EBITDA”) for the first quarter 2012 was $19.2 million compared to $15.1 million for the same period in 2011.

“As part of our original business plans, we have begun to realize gains on some assets acquired in 2010 and 2011,” said William McMorrow, chairman and CEO of Kennedy Wilson. “We continue to see many opportunities to grow the recurring cash flow of the company through reinvestment of the return of capital and gains achieved from sales.”

Kennedy Wilson Recent Highlights

Balance Sheet

  • Our investment account (Kennedy Wilson's equity in real estate, joint ventures, loan investments, and marketable securities) decreased by 3% to $566.7 million from $582.8 million at December 31, 2011 due primarily to sales of real estate and marketable securities and resolution of loan investments.
  • The Company received distributions from joint ventures and loan pool participations of $18.5 million during the three months ended March 31, 2012 as compared to $3.4 million for the same period in 2011, an increase of $15.1 million.
  • Our cash position increased to $122.3 million at March 31, 2012 versus $115.9 million as of December 31, 2011.
  • Our corporate debt to book equity as of March 31, 2012 was 0.7 to 1.0.
  • Our deal-level leverage stood at 53% as of March 31, 2012.

Operating metrics

  • During the three months ended March 31, 2012, the Company achieved an adjusted EBITDA of $19.2 million, a 27% increase from $15.1 million for the same period in 2011.
  • During the three months ended March 31, 2012, the investments business achieved an EBITDA of $17.7 million, a 28% increase from $13.8 million for the same period in 2011.
  • During the three months ended March 31, 2012, the services business achieved an EBITDA of $2.8 million, a 56% increase from $1.8 million for the same period in 2011.

Acquisition/disposition program

  • During the three months ended March 31, 2012, the Company and its equity partners closed or are under contract to close approximately $441.0 million of real estate related investments. Since January 1, 2010, acquisitions total approximately $5.6 billion.
  • During the three months ended March 31, 2012, the Company and its equity partners sold a 180-unit apartment building for a total gain of $16.0 million of which our share was $2.2 million.
  • During the three months ended March 31, 2012, the Company sold a portion of its marketable securities for a net gain of $2.9 million.
  • Subsequent to March 31, 2012, the Company and its equity partners sold a 213-unit residential tower and a 440-unit apartment building for combined gains of approximately $15.0 million of which our share was $5.5 million.
  • As of May 4, 2012, the Company and its equity partners’ apartment portfolio, including units sold and deals under contract, totals 13,876 units.

Services business

  • Management and leasing fees increased by 74% to $8.7 million for the three months ended March 31, 2012 from $5.0 million for the same period in 2011, driven primarily by higher asset management fees.
  • Commissions decreased by 38% to $1.6 million for the three months ended March 31, 2012 from $2.6 million for the same period in 2011, driven primarily by higher acquisition fees in 2011.

Debt financing

  • Since January 1, 2011, the Company and its equity partners have completed over $1.7 billion of property financings (including approximately $976.3 million of refinancings) at an average interest rate of 4.1% and a weighted average maturity of 4.1 years.

United Kingdom and Ireland

  • In December 2011, we and our equity partners acquired a loan pool secured by real estate located in the United Kingdom with an unpaid principal balance of $2.1 billion. As of May 4, 2012, the unpaid principal balance was $1.4 billion due to loan resolutions of approximately $688.6 million, representing 33% of the pool.
  • Subsequent to March 31, 2012, we announced a €250 million capital commitment from Fairfax Financial Holdings to acquire real estate and loans secured by real estate in the United Kingdom and Ireland. We are under contract to close our first investment within this platform - the historic 210-unit Gasworks apartment building in Dublin, Ireland located adjacent to Google's European headquarters.

Japan

  • Maintained 95% occupancy in 50 apartment buildings with over 2,400 units.
  • Refinanced approximately $80 million of property level debt for 5 years at an interest rate of 1.6%.
  • Since September 2010, we have distributed a total of $44.7 million of which our share was $20.9 million.

Conference Call and Webcast Details

The Company will hold a live conference call and webcast to discuss results on Tuesday, May 8 at 7:00 a.m. PT/ 10:00 a.m. ET.

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