10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form 10-K
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 001-33824
Kennedy-Wilson Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
26-0508760
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
9701 Wilshire Blvd., Suite 700
Beverly Hills, CA
 
90212
(Address of Principal Executive Offices)
 
(Zip Code)
(310) 887-6400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
______________________________________________________________________
Title of Each Class
 
Name of Each Exchange on which Registered
Common Stock, $.0001 par value
 
NYSE
Securities registered pursuant to Section 12(g) of the Act: None
______________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x    No  o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o    No  x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
 
x
 
 
Accelerated filer
 
o
 
 
 
 
 
Non-accelerated filer
 
o
  (Do not check if a smaller reporting company)
 
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    No  x
Based on the last sale at the close of business on June 30, 2015, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $2,775,789,503.
The number of shares of common stock outstanding as of February 29, 2016 was 114,409,152.

DOCUMENTS INCORPORATED BY REFERENCE
Part III of this report incorporates certain information by reference from the registrant’s proxy statement for the annual meeting of stockholders to be held on or around June 9, 2016, which proxy statement will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2015.

1


EXPLANATORY NOTE

Kennedy-Wilson Holdings, Inc., a Delaware corporation (the “Company”), is filing this Amendment No. 1 (this “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was originally filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2016 (the “Original Report”), to amend Item 15 of the Original Report and include separate financial statements of the following entities, as required pursuant to Rule 3-09 of Regulation S-X under the Securities Exchange Act of 1934, as amended:

Kennedy Wilson Real Estate Fund IV, L.P.
KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC
Egret Limited and its subsidiaries
KWVF Panther Holdco Limited
WH Valle Di Oro 79, LLC
KW Stadium Gateway Partners, LLC
KWF Real Estate Venture VI, L.P


Other than as set forth herein, this Amendment does not affect any other parts of, or exhibits to, the Original Report, and those unaffected parts or exhibits are not included in this Amendment. This Amendment continues to speak as of the date of the Original Report, and the Company has not updated the disclosure contained in this Amendment or the Original Report to reflect events that have occurred since the filing of the Original Report. Accordingly, this Amendment should be read in conjunction with the Company's other filings with the SEC since the filing of the Original Report.



2


PART IV
 


Item 15.
Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this annual report:
(1)
Financial Statements. The consolidated financial statements of the Company, as listed in Item 8 of the Original Report, are included in Item 8 of the Original Report
(2)
Financial Statement Schedules. The financial statement schedules of the Company, as listed in Item 8 of the Original Report, are included in Item 8 of the Original Report.
(3)
Exhibits. See the Exhibit List beginning of page 5 of this Amendment.

(b) Exhibits. The exhibits listed on the Exhibit Index set forth below on page 6 are filed as part of, or are incorporated by reference into, this annual report on Form 10-K.
(c) Financial Statements Required by Rule 3-09 of Regulation S-X. The financial statements required by Rule 3-09 of Regulation S-X under the Securities Exchange Act of 1934, as amended, are filed as schedules to this report and are incorporated by reference into this Item 15.






3


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 25th day of March 2016.
 
 
 
 
KENNEDY-WILSON HOLDINGS, INC.,
a Delaware corporation
 
 
By:
 
/s/    WILLIAM J. MCMORROW        
 
 
William J. McMorrow
 
 
Chief Executive Officer


4


EXHIBIT INDEX

Exhibit
No.
Description
Location
3.1
Amended and Restated Certificate of Incorporation.
Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K (File No.: 001-33824) filed June 19, 2014.
3.2
Amended and Restated Bylaws.
Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K (001-33824) filed December 30, 2014.
4.1
Specimen Common Stock Certificate.
Filed as an Exhibit to the Registrant's Registration Statement on Amendment no. 1 to Form 8-A (File No.: 333-145110) filed on November 16, 2009 and incorporated by reference herein.
4.2
Certificate of Designation of Series B Preferred Stock.
Filed as an Exhibit to the Registrant's Current Report on Form 8-K (File No.: 001-33824) filed August 16, 2010.
4.3
Registration Rights Agreement, dated as of December 6, 2012, among Kennedy-Wilson, Inc., Kennedy-Wilson Holdings, Inc., the subsidiary guarantor parties thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC
Filed as Exhibit 4.14 to Kennedy-Wilson Holding, Inc.'s Current Report on Form 8-K (File No.: 001-33824) filed December 7, 2012.
4.4
Form of Indenture (the “2042 Notes Indenture”), dated as of November 28, 2012, between Kennedy-Wilson, Inc. and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.3 to Kennedy-Wilson Holding, Inc.'s Registration Statement on Form S-3 (File No. 333-184752) filed November 5, 2012.
4.5
Supplemental Indenture No. 1 to the 2042 Notes Indenture, dated as of November 28, 2012, among Kennedy-Wilson, Inc., Kennedy-Wilson Holdings, Inc., the subsidiary guarantor party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.2 to Kennedy-Wilson Holding, Inc.'s Current Report on Form 8-K (File No.: 001-33824) filed November 28, 2012.
4.6
Supplemental Indenture No. 2 to the 2042 Notes Indenture, dated as of February 14, 2013, among Kennedy-Wilson, Inc., the subsidiary guarantor parties thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.25 to Kennedy-Wilson Holdings, Inc.'s Current Report on Form 10-K (File No.: 001-33824) filed on March 12, 2013 and incorporated by reference herein.
4.7
Supplemental Indenture No. 3 to the 2042 Notes Indenture, dated as of May 28, 2013, among Kennedy-Wilson, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33824) filed on May 29, 2013.
4.8
Supplemental Indenture No. 4 to the 2042 Notes Indenture, dated as of July 15, 2013, among Kennedy-Wilson, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.27 to the Registrant’s Registration Statement on Form S-3 (File No. 333-192059) filed November 1, 2013.
4.9
Supplemental Indenture No. 5 to the 2042 Notes Indenture, dated as of September 6, 2013, among Kennedy-Wilson, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.28 to the Registrant’s Registration Statement on Form S-3 (File No. 333-192059) filed November 1, 2013.
4.10
Supplemental Indenture No. 6 to the 2042 Notes Indenture dated as of October 31, 2013, among Kennedy-Wilson, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.29 to the Registrant’s Registration Statement on Form S-3 (File No. 333-192059) filed November 1, 2013.
4.11
Supplemental Indenture No. 7 to the 2042 Notes Indenture dated as of January 6, 2014, among Kennedy-Wilson, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee.
Filed as Exhibit 4.36 to Registrant’s Annual Report on Form 10-K filed March 3, 2014.
4.16
Supplemental Indenture No. 8 to the 2042 Notes Indenture dated January 6, 2014 among Kennedy-Wilson, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.37 to Registrant’s Annual Report on Form 10-K filed March 3, 2014.
4.17
Supplemental Indenture No. 9 to the 2042 Notes Indenture dated March 18, 2014 among Kennedy-Wilson, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.5 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed May 12, 2014.

5


4.18
Supplemental Indenture No. 10 to the 2042 Notes Indenture dated September 5, 2014 among Kennedy-Wilson, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed November 10, 2014.
4.19
Supplemental Indenture No. 11 to the 2042 Notes Indenture dated November 11, 2014 among Kennedy-Wilson, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.6 to Registrant’s Current Report on Form 8-K (001-33824) filed November 18, 2014.
4.12
Base Indenture dated March 25, 2014 between Kennedy-Wilson, Inc. and Wilmington Trust, National Association.
Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed May 12, 2014.
4.13
Supplemental Indenture No. 1 dated March 25, 2014 among Kennedy-Wilson Holdings, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.2 to Registrant’s Current Report on Form 8-K (001-33824) filed March 26, 2014.
4.14
Supplemental Indenture No. 2 dated September 5, 2014 among Kennedy-Wilson Holdings, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed November 10, 2014.
4.15
Supplemental Indenture No. 3 dated November 11, 2014 among Kennedy-Wilson Holdings, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association.
Filed as Exhibit 4.4 to Registrant’s Current Report on Form 8-K (001-33824) filed November 18, 2014.
10.1†
Fifteenth Amendment to Employment Agreement by Kennedy-Wilson, Inc. and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.2†
Employment Agreement dated August 14, 1992 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-8 (File No.: 333-164928) filed on February 16, 2010 and incorporated by reference herein.
10.3†
Amendment to Employment Agreement dated as of January 1, 1993 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.4†
Second Amendment to Employment Agreement dated as of between January 1, 1994 Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.5†
Third Amendment to Employment Agreement dated as of March 31, 1995 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Amendment No. 2 to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on October 23, 2009 and incorporated by reference herein.
10.6†
Fourth Amendment to Employment Agreement dated as of January 1, 1996 Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Amendment No. 2 to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on October 23, 2009 and incorporated by reference herein.
10.7†
Amendment to Employment Agreement dated as of February 28, 1996 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.8†
Fifth Amendment to Employment Agreement dated as of May 19, 1997 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.

6


10.9†
Sixth Amendment to Employment Agreement dated as of August 20, 1998 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.10†
Seventh Amendment to Employment Agreement dated as of August 9, 1999 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.11†
Eighth Amendment to Employment Agreement dated as of January 3, 2000 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.12†
Ninth Amendment to Employment Agreement dated as of October 1, 2000 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.13†
Tenth Amendment to Employment Agreement dated as of April 22, 2002 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.14†
Eleventh Amendment to Employment Agreement dated as of October 1, 2003 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.15†
Twelfth Amendment to Employment Agreement dated as of April 21, 2004 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.16†
Thirteenth Amendment to Employment Agreement dated as of January 1, 2008 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.17†
Fourteenth Amendment to Employment Agreement dated as of February 1, 2009 between Kennedy-Wilson and William J. McMorrow.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.18†
Employment Agreement dated February 1, 2009 between Kennedy-Wilson and Mary L. Ricks.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.19†
First Amendment to Employment Agreement dated June 1, 2009 between Kennedy-Wilson and Mary L. Ricks.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.20†
Second Amendment to Employment Agreement by Kennedy-Wilson, Inc. and Mary L. Ricks.
Filed as an Exhibit to Kennedy-Wilson Holdings, Inc.'s Registration Statement on Form S-4 (File No.: 333-162116) filed on September 24, 2009 and incorporated by reference herein.
10.21†
Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan.
Filed as an Exhibit to the Registrant's Current Report on Form 8-K (File No.: 001-33824) filed January 30, 2012.

7


10.22†
First Amendment to Amended and Restated 2009 Equity Participation Plan.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed June 19, 2014.
10.23†
Form of First Amendment to Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Restricted Stock Award Agreement.
Filed as Exhibit 10.114 to Registrant’s Annual Report on Form 10-K filed March 12, 2013.
10.24†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Employee Restricted Stock Award Agreement
Filed as Exhibit 10.115 to Registrant’s Annual Report on Form 10-K filed March 12, 2013.
10.25†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Consultant Restricted Stock Award Agreement
Filed as Exhibit 10.116 to Registrant’s Annual Report on Form 10-K filed March 12, 2013.
10.26†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Employee Restricted Stock Award Agreement.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed July 18, 2014.
10.27†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Director Restricted Stock Award Agreement
Filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed August 8, 2014.
10.28†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Employee Restricted Stock Award Agreement
Filed as an Exhibit to the Registrant's Current Report on Form 8-K (File No.: 001-33824) filed October 16, 2015.
10.29†
Form of Kennedy-Wilson Holdings, Inc. Amended and Restated 2009 Equity Participation Plan Director Restricted Stock Award Agreement
Filed with the Original Report
10.30
Consulting Agreement, dated as of December 31, 2013, among Kennedy-Wilson, Inc., Barry S. Schlesinger and CV I R.E. Services, LLC.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No.: 001-33824) filed on December 31, 2013.
10.31†
Sixteenth Amendment to Employment Agreement dated August 6, 2014 by and between Kennedy-Wilson, Inc. and William J. McMorrow.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed August 8, 2014.
10.32†
Fourth Amendment to Employment Agreement dated August 6, 2014 by and between Kennedy-Wilson, Inc., and Mary L. Ricks.
Filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K (001-33824) filed August 8, 2014.
10.33†
Employment Agreement dated December 29, 2014 between Kennedy-Wilson, Inc. and Kent Mouton.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed December 30, 2014.
10.34†
Employment Agreement dated December 29, 2014 between Kennedy-Wilson, Inc. and Matt Windisch.
Filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K (001-33824) filed December 30, 2014.
10.35†
Employment Agreement dated December 29, 2014 between Kennedy-Wilson, Inc. and Justin Enbody.
Filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K (001-33824) filed December 30, 2014.
10.36†
Form of Award Letter
Filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 8-K (001-33824) filed August 28, 2015.
10.37†
Form of Restricted Share Unit Agreement.
Filed as Exhibit 10.2 to Registrant’s Quarterly Report on Form 8-K (001-33824) filed August 28, 2015.
10.38
Credit Agreement dated as of December 10, 2015 among Kennedy-Wilson, Inc., Kennedy-Wilson Holdings, Inc., certain subsidiaries of Kennedy-Wilson Holdings, Inc. party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and letter of credit issuer.
Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed December 11, 2015.
21
List of Subsidiaries
Filed with the Original Report
23.1
Consent of Independent Registered Public Accounting Firm for the consolidated financial statements of Kennedy-Wilson Holdings, Inc.
Filed with the Original Report
23.2
Consent of Independent Auditors for the financial statements of Kennedy Wilson Real Estate Fund IV, L.P.
Filed herewith
23.3
Consent of Independent Auditors for the combined financial statements of KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC
Filed herewith

8


23.4
Consent of Independent Auditors for the consolidated financial statements of Egret Limited
Filed herewith
23.5
Consent of Independent Auditors for the consolidated financial statements of KWVF Panther Holdco Limited
Filed herewith
23.6
Consent of Independent Auditors for the consolidated financial statements of WH Valle Di Oro 79, LLC
Filed herewith
23.7
Consent of Independent Auditors for the consolidated financial statements of KW Stadium Gateway Partners, LLC
Filed herewith
23.8
Consent of Independent Auditors for the consolidated financial statements of KWF Real Estate Venture VI, L.P.
Filed herewith
24.1
Power of Attorney.
Filed with the Original Report
31.1
Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of the Principal Executive Officer.
Filed herewith
31.2
Certification Pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934 of the Principal Financial Officer.
Filed herewith
32.1
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer.
Filed herewith
32.2
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer
Filed herewith
101
The following materials from Kennedy-Wilson Holdings, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets (ii) the Consolidated Statements of Operations and Comprehensive (Loss) Income (iii) the Consolidated Statements of Equity (iv) the Consolidated Statements of Cash Flows (v) related notes to those financial statements and (vi) Schedule III - Real Estate and Accumulated Depreciation.
Filed with the Original Report
__________
Management Contract, Compensation Plan or Agreement.


9


3-09 FINANCIAL STATEMENTS
Kennedy-Wilson Holdings, Inc.
Index to 3-09 Financial Statements
 
 
 
Page
3-09 Financial Statements
 
 
 
 
 
 
 
 
 


10




Independent Auditors’ Report



The Partners
Kennedy Wilson Real Estate Fund IV, L.P.

We have audited the accompanying financial statements of Kennedy Wilson Real Estate Fund IV, L.P., which comprise the statements of operations, partners' capital, and cash flows for the year ended December 31, 2013, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Kennedy Wilson Real Estate Fund IV, L.P. for the year ended December 31, 2013, in accordance with U.S. generally accepted accounting principles.
The accompanying statements of financial condition, including the schedules of investments, of Kennedy Wilson Real Estate Fund IV, L.P., as of December 31, 2015 and 2014, and the related statements of operations, partners' capital and cash flows for the years then ended, and the related notes to the financial statements, were not audited by us, and accordingly, we do not express an opinion on them.



/s/ KPMG LLP

Los Angeles, California
March 31, 2014

11


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Statements of Financial Condition (Unaudited)

 
 
December 31,
 
 
2015
 
2014
Assets
 
(unaudited)
 
(unaudited)
Investments at fair value (cost $156,291,501 in 2015 and $207,444,759 in 2014)
 
$
154,191,736

 
$
234,033,108

Total assets
 
$
154,191,736

 
$
234,033,108

Liabilities and partners' capital
 
 
 
 
Liabilities
 
 
 
 
Accounts payable and accrued expenses
 
$

 
$
308

Total liabilities
 

 
308

Partners' capital
 
 
 
 
General partner and special limited partner
 
14,680,764

 
8,085,966

Limited partners
 
139,510,972

 
225,946,834

Total partners’ capital
 
154,191,736

 
234,032,800

Total liabilities and partners’ capital
 
$
154,191,736

 
$
234,033,108


See accompanying notes to financial statements.



12


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments
December 31, 2015 (Unaudited)
Ownership interest
 
Security description
 
Percentage of total investments
 
Cost
 
Fair value
 
 
 
 
 
 
 
 
 
85.02
%
 
Kennedy Wilson REF IV AG, LLC, an entity holding interests in 23 office, retail and multifamily real estate investments located in California, Arizona, Utah, and Hawaii, and two investments in loan pool participations and notes
 
100.00
%
 
$
156,291,501

 
$
154,191,736

 
 
Total investments
 
100.00
%
 
$
156,291,501

 
$
154,191,736


See the following page for the full listing of investments held by Kennedy Wilson REF IV AG, LLC.

















































13


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments - Kennedy Wilson REF IV AG, LLC
December 31, 2015 (unaudited)

 Ownership
interest
 
Security description
 
Percentage
of
total
investments
 

Cost
 

Fair value
 
 
Interests in real estate assets:
 
 
 
 
 
 
100.00
%
 
KW Fund IV-Westview Heights, LLC, a single-purpose entity holding a fee simple interest in a 132-unit multifamily project located in Portland, Oregon. (The property was sold in August 2014, and the entity is in the process of winding down.)
 
0.10
%
 
$

 
$
134,198

100.00

 
KW Fund IV-Westview Heights 66, LLC, a single-purpose entity holding a fee simple interest in a 66-unit multifamily project located in Portland, Oregon. (The property was sold in August 2014, and the entity is in the process of winding down.)
 

 

 
62,847

100.00

 
KW Royal Beverly Glen, LLC, a single-purpose entity holding a fee simple interest in 77,749 square foot office building located in Los Angeles, California
 
9.30

 
14,265,641

 
15,934,065

100.00

 
KW TriCenter, LLC, a single-purpose entity holding a fee simple interest in a 143,256-square foot office building and a four-level parking structure located in Van Nuys, California
 
5.20

 
13,331,248

 
8,812,806

100.00

 
KW Vancouver Partners, LLC, a single-purpose entity holding a fee simple interest in a 388-unit multifamily project located in Vancouver, Washington. (The property was sold in December 2015, and the entity is in the process of winding down.)
 
0.30

 

 
513,022

100.00

 
KW El Cerrito, LLC, a single-purpose entity holding a fee simple interest in a 159-unit multifamily project located in El Cerrito, California
 
14.60

 
18,325,500

 
24,908,889

100.00

 
KW 245 Los Robles, LLC, a single-purpose entity holding a fee simple interest in a 175,792-square foot office project and a four-level parking structure located in Pasadena, California
 
10.40

 
24,941,326

 
17,744,090

96.66

 
KW Aurora Land Partners, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 420 unit multifamily project located in Aurora, Colorado. (The property was sold in December 2015, and the entity is in the process of winding down.)
 
0.30

 

 
585,950

50.00

 
KW Huntington, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 277-unit multifamily project located in Huntington Beach, California. (The property was sold in December 2015 and the entity is in the process of winding down.)
 

 

 
60,573

50.00

 
KW CapTowers, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 409-unit apartment building comprising a fifteen-story tower and 206 garden-style villas located in Sacramento, California
 
6.90

 
10,477,830

 
11,775,849

50.00

 
KW Redwood Shores, LLC, an entity holding an interest in a
single-purpose entity holding a fee simple interest in a 89,455 square foot office building located in Redwood City, California
 
2.50

 
4,425,562

 
4,329,928

50.00

 
KW Stadium Gateway, LLC, an entity holding an interest in a
single purpose entity holding a fee simple interest in a 272,826 square foot office building located in Anaheim, California. (The property was sold in July 2015, and the entity is in the process of winding down.)
 

 

 
9,522

50.00

 
KW 5161 Lankershim, LLC, a single purpose entity holding a fee simple interest in a 182,369 square foot office building located in North Hollywood, California
 
6.30

 
12,929,225

 
10,718,283

48.81

 
KW University Partners, LLC, a single-purpose entity holding a fee simple interest in a 209,329 square foot retail shopping center located in Orem, Utah
 
6.30

 
7,679,672

 
10,691,476

48.45

 
KW Paradise Hills, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a retail shopping center located in Phoenix, Arizona
 
2.90

 
2,445,879

 
4,940,141

45.40

 
KW Mission Blvd, LLC, a single-purpose entity holding a fee simple interest in a 188-unit multifamily community in Hayward, California
 
6.20

 
5,191,498

 
10,619,028

33.33

 
KW Telstar, LLC, a single-purpose entity holding a fee simple interest in a two-story, 246,912-square foot flex building and a four-level parking structure located in El Monte, California
 
1.70

 
5,636,367

 
2,825,000

33.33

 
Kennedy Wilson 145 Fairfax, LLC, a single-purpose entity that held a fee simple interest in a four-story, 55,574-square foot office building and a two-level subterranean parking garage located in Los Angeles, California (The property was sold in September 2013, and the entity is in the process of winding down.)
 

 

 
3,686






14


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments - Kennedy Wilson REF IV AG, LLC (continued)
December 31, 2015 (unaudited)
 Ownership
interest
 
Security description
 
Percentage
of
total
investments
 

Cost
 

Fair value
33.33

 
KW Warner Atrium, LLC, a single-purpose entity that held a fee simple interest in a three-story, 126,436-square foot office building and a three-level parking structure located in Woodland Hills, California. (The property was sold in December 2015, and the entity is in the process of winding down.)
 

 

 
7,725

25.00

 
KW 9301 Partners, LLC, an entity holding an interest in a single-purpose entity that held a fee simple interest in a six-story, 86,529-square foot office building and a three-level subterranean parking garage located in Beverly Hills, California. (The property was sold in July 2014, and the entity is in the process of winding down.)
 

 

 
53,170

15.57

 
KW/CV Sunset, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 251-unit multifamily project located in West Covina, California. (The property was sold in March 2015, and the entity is in the process of winding down.)
 

 

 
14,094

15.00

 
KW Kohanaiki Shores Member, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 450-acre planned community under development for up to 474 residences and a golf course on the Kona Coast of Hawaii
 
26.40

 
44,152,250

 
45,063,560

10.00

 
Guardian/KW Hayward, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 544-unit multifamily project located in Hayward, California
 

 

 
36,230

 
 
Interests in loan pool participations and notes:
 
 
 
 
 
 
50.00

 
Participation interest in KW Residential Capital, an entity holding a participating loan interest in a single-purpose entity owning a project under development consisting of nine single-family residences located in Ventura, California
 
0.50

 
867,500

 
867,500

50.00

 
Participation interest in KW Residential Capital, an entity holding a participating loan interest in a single-purpose entity owning a project under development consisting of seventeen single-family residences located in Los Angeles, California
 
0.10

 
244,000

 
244,000

 
 
 
 
 
 
 
 
 
 
 
Total investments
 
100.00
%
 
$
164,913,498

 
$
170,955,632


See accompanying notes to financial statements.




























15


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments
December 31, 2014 (unaudited)
Ownership interest
 
Security description
 
Percentage of total investments
 
Cost
 
Fair value
 
 
 
 
 
 
 
 
 
85.02
%
 
Kennedy Wilson REF IV AG, LLC, an entity holding interests in twenty-five office, retail and multifamily real estate investments located in California, Oregon, Washington, Arizona, Utah, Colorado and Hawaii, and four investments in loan pool participations and notes
 
100.00
%
 
$
207,444,759

 
$
234,033,108

 
 
Total investments
 
100.00
%
 
$
207,444,759

 
$
234,033,108


See the following page for the full listing of investments held by Kennedy Wilson REF IV AG, LLC.

















































16


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments - Kennedy Wilson REF IV AG, LLC
December 31, 2014 (unaudited)


 Ownership
interest
 
Security description
 
Percentage
of
total
investments
 

Cost
 

Fair value
 
 
Interests in real estate assets:
 
 
 
 
 
 
100.00
%
 
KW Fund IV-Westview Heights, LLC, a single-purpose entity holding a fee simple interest in a 132-unit multifamily project located in Portland, Oregon. (The property was sold in August 2014, and the entity is in the process of winding down.)
 
0.05
%
 
$
137,595

 
$
137,595

100.00

 
KW Fund IV-Westview Heights 66, LLC, a single-purpose entity holding a fee simple interest in a 66-unit multifamily project located in Portland, Oregon. (The property was sold in August 2014, and the entity is in the process of winding down.)
 
0.02

 
62,897

 
62,897

100.00

 
KW Royal Beverly Glen, LLC, a single-purpose entity holding a fee simple interest in 77,749 square foot office building located in Los Angeles, California
 
4.66

 
13,575,821

 
12,223,911

100.00

 
KW TriCenter, LLC, a single-purpose entity holding a fee simple interest in a 143,256-square foot office building and a four-level parking structure located in Van Nuys, California
 
7.06

 
14,388,400

 
18,529,773

100.00

 
KW Vancouver Partners, LLC, a single-purpose entity holding a fee simple interest in a 388-unit multifamily project located in Vancouver, Washington
 
6.63

 
12,229,000

 
17,400,223

100.00

 
KW El Cerrito, LLC, a single-purpose entity holding a fee simple interest in a 159-unit multifamily project located in El Cerrito, California
 
8.22

 
18,147,500

 
21,574,442

100.00

 
KW 245 Los Robles, LLC, a single-purpose entity holding a fee simple interest in a 175,792-square foot office project and a four-level parking structure located in Pasadena, California
 
6.79

 
19,263,045

 
17,836,732

96.66

 
KW Aurora Land Partners, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 420 unit multifamily project located in Aurora, Colorado
 
6.66

 
12,163,335

 
17,497,330

50.00

 
KW Huntington, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 277-unit multifamily project located in Huntington Beach, California
 
4.74

 
12,175,713

 
12,454,855

50.00

 
KW CapTowers, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 409-unit apartment building comprising a fifteen-story tower and 206 garden-style villas located in Sacramento, California
 
3.31

 
9,667,830

 
8,701,808

50.00

 
KW Redwood Shores, LLC, an entity holding an interest in a
single-purpose entity holding a fee simple interest in a 89,455 square foot office building located in Redwood City, California
 
2.43

 
4,170,562

 
6,377,695

50.00

 
KW Stadium Gateway, LLC, an entity holding an interest in a
single purpose entity holding a fee simple interest in a 272,826 square foot office building located in Anaheim, California
 
4.81

 
9,478,025

 
12,641,418

50.00

 
KW Marina View, LLC, a single purpose entity holding a fee simple interest in a six-story, 60,918 square-foot office building with 14,774 square feet of ground floor retail space and a two-level parking deck located in Marina Del Rey, California
 
3.73

 
7,929,603

 
9,784,243

50.00

 
KW 5161 Lankershim, LLC, a single purpose entity holding a fee simple interest in a 182,369 square foot office building located in North Hollywood, California
 
3.75

 
11,007,225

 
9,857,438

48.81

 
KW University Partners, LLC, a single-purpose entity holding a fee simple interest in a 209,329 square foot retail shopping center located in Orem, Utah
 
3.64

 
5,361,370

 
9,548,096

48.45

 
KW Paradise Hills, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a retail shopping center located in Phoenix, Arizona
 
1.89

 
2,245,724

 
4,958,493

45.40

 
KW Mission Blvd, LLC, a single-purpose entity holding a fee simple interest in a 188-unit multifamily community in Hayward, California
 
3.04

 
5,059,838

 
7,970,298

33.33

 
KW Telstar, LLC, a single-purpose entity holding a fee simple interest in a two-story, 246,912-square foot flex building and a four-level parking structure located in El Monte, California
 
1.57

 
5,588,038

 
4,130,938

33.33

 
Kennedy Wilson 145 Fairfax, LLC, a single-purpose entity that held a fee simple interest in a four-story, 55,574-square foot office building and a two-level subterranean parking garage located in Los Angeles, California (The property was sold in September 2013, and the entity is in the process of winding down.)
 

 
17,625

 
5,039




17


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Schedule of Investments - Kennedy Wilson REF IV AG, LLC (continued)
December 31, 2014 (unaudited)
 Ownership
interest
 
Security description
 
Percentage
of
total
investments
 

Cost
 

Fair value
33.33

 
KW Warner Atrium, LLC, a single-purpose entity that held a fee simple interest in a three-story, 126,436-square foot office building and a three-level parking structure located in Woodland Hills, California
 
0.35

 
2,608,068

 
911,417

25.00

 
KW 9301 Partners, LLC, an entity holding an interest in a single-purpose entity that held a fee simple interest in a six-story, 86,529-square foot office building and a three-level subterranean parking garage located in Beverly Hills, California. (The property was sold in July 2014, and the entity is in the process of winding down.)
 
0.02

 
64,532

 
64,532

20.00

 
KW Hilltop Manager, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 1,008-unit multifamily project located in Richmond, California
 
6.65

 
9,444,840

 
17,457,524

15.57

 
KW/CV Sunset, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 251-unit multifamily project located in West Covina, California
 
1.22

 
2,298,910

 
3,195,769

15.00

 
KW Kohanaiki Shores Member, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 450-acre planned community under development for up to 474 residences and a golf course on the Kona Coast of Hawaii
 
14.66

 
38,937,327

 
38,495,056

10.00

 
Guardian/KW Hayward, LLC, an entity holding an interest in a single-purpose entity holding a fee simple interest in a 544-unit multifamily project located in Hayward, California
 
2.35

 
3,074,296

 
6,163,368

 
 
Interests in loan pool participations and notes:
 
 
 
 
 
 
25.00

 
KW Loan Investors VII, LLC, an entity holding a portfolio initially consisting of nine construction and term loans with an outstanding principal balance of approximately $51,000,000, collateralized by seven retail properties located in Arizona, California and Utah. As of December 31, 2014, two loans remain
 
0.30

 
786,728

 
768,728

50.00

 
Participation interest in KW Residential Capital, an entity holding a participating loan interest in a single-purpose entity owning a project under development consisting of nine single-family residences located in Ventura, California
 
0.41

 
1,078,000

 
1,078,000

50.00

 
Participation interest in KW Residential Capital, an entity holding a participating loan interest in a single-purpose entity owning a project under development consisting of seventeen single-family residences located in Los Angeles, California
 
1.04

 
2,712,500

 
2,712,500

 
 
 
 
 
 
 
 
 
 
 
Total investments
 
100.00
%
 
$
223,674,347

 
$
262,558,118


See accompanying notes to financial statements.















18


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Statements of Operations

 
 
Year ended December 31,
 
 
2015
 
2014
 
2013
 
 
(unaudited)
 
(unaudited)
 
 
Investment income:
 
 
 
 
 
 
Dividends
 
$
11,159,769

 
$
7,810,775

 
$
3,628,660

Interest
 
1,084,957

 
1,129,846

 
1,220,900

Total investment income
 
12,244,726

 
8,940,621

 
4,849,560

Expenses:
 
 
 
 
 
 
Management fees
 
2,049,673

 
3,036,444

 
4,767,106

Organization costs
 

 
—    

 
115,294

Interest expense
 

 
229,763

 
378,325

Other professional and administrative costs
 
666,286

 
617,452

 
443,852

Total expenses
 
2,715,959

 
3,883,659

 
5,704,577

Net investment income (loss)
 
9,528,767

 
5,056,962

 
(855,017
)
Realized and unrealized gain on investments:
 
 
 
 
 
 
Net realized gain on investments
 
50,552,734

 
9,988,150

 
1,028,741

Net change in unrealized gains and losses on investments
 
(28,688,114
)
 
14,305,289

 
18,145,836

Net income
 
$
31,393,387

 
$
29,350,401

 
$
18,319,560

See accompanying notes to financial statements.


19


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Statements of Partners' Capital

 
 
General partner and special limited partner
 
Limited partners
 
Total
Partners' capital, December 31, 2012
 
$
1,508,996

 
$
141,432,701

 
$
142,941,697

Capital contributions
 
86,183

 
47,177,507

 
47,263,690

Capital distributions
 
(28,927
)
 
(14,434,417
)
 
(14,463,344
)
Net income
 
1,776,834

 
16,542,726

 
18,319,560

Partners' capital, December 31, 2013
 
3,343,086

 
190,718,517

 
194,061,603

Capital contributions(unaudited)
 
87,792

 
46,545,695

 
46,633,487

Capital distributions (unaudited)
 
(72,025
)
 
(35,940,666
)
 
(36,012,691
)
Net income (unaudited)
 
4,727,113

 
24,623,288

 
29,350,401

Partners' capital, December 31, 2014 (unaudited)
 
8,085,966

 
225,946,834

 
234,032,800

Capital contributions(unaudited)
 
81,190

 
30,727,774

 
30,808,964

Capital distributions (unaudited)
 
(307,539
)
 
(141,735,876
)
 
(142,043,415
)
Net income (unaudited)
 
6,821,147

 
24,572,240

 
31,393,387

Partners' capital, December 31, 2015 (unaudited)
 
$
14,680,764

 
$
139,510,972

 
$
154,191,736


See accompanying notes to financial statements.


20


KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Statement of Cash Flows

 
 
Year ended December 31,
 
 
2015
 
2014
 
2013
 
 
(unaudited)
 
(unaudited)
 
 
Cash flows from operating activities:
 
 
 
 
 
 
Net income
 
$
31,393,387

 
$
29,350,401

 
$
18,319,560

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
Change in accreted interest
 
(1,084,649
)
 
(1,129,846
)
 
(1,219,448
)
Net realized gain on sales of investments
 
(50,552,734
)
 
(9,988,150
)
 
(1,028,741
)
Net change in unrealized gains and losses on investments
 
28,688,114

 
(14,305,289
)
 
(18,145,836
)
Change in operating assets and liabilities:
 
 
 
 
 
 
Purchases of investments
 
(28,093,005
)
 
(42,750,758
)
 
(82,125,268
)
Transfer of cash and cash equivalents
 

 

 
(2,159,975
)
Proceeds from sales of investments
 
130,883,646

 
28,201,916

 
41,292,902

Accounts receivable
 

 

 
52,078

Costs related to investments to be acquired
 

 

 
(46,056
)
Prepaid expenses
 

 

 
(167,276
)
Accounts payable and accrued expenses
 
(308
)
 
(392
)
 
17,800

Net cash provided by (used in) operating activities
 
111,234,451

 
(10,622,118
)
 
(45,210,260
)
Cash flows from financing activities:
 
 
 
 
 
 
Borrowings under line of credit
 

 

 
23,621,580

Payments under line of credit
 

 

 
(12,817,485
)
Capital contributions
 
30,808,964

 
46,633,487

 
47,263,690

Capital distributions
 
(142,043,415
)
 
(36,012,691
)
 
(14,463,344
)
Net cash (used in) provided by financing activities
 
(111,234,451
)
 
10,620,796

 
43,604,441

Net decrease in cash and cash equivalents
 

 
(1,322
)
 
(1,605,819
)
Cash and cash equivalents, beginning of year
 

 
1,322

 
1,607,141

Cash and cash equivalents, end of year
 
$

 
$

 
$
1,322

Supplemental disclosure of cash paid during the year:
 
 
 
 
 
 
Cash paid for interest
 
$

 
$
237,552

 
$
252,451

 
 
 
 
 
 
 
Supplemental disclosure of net assets and liabilities transferred to Kennedy Wilson REF IV AG, LLC:
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$

 
$
2,159,975

Accounts receivable
 

 

 
15,049

Costs related to investments to be acquired
 

 

 
46,056

Prepaid expenses
 

 

 
701,700

Accounts payable
 

 

 
(34,345
)
Notes payable
 

 

 
(13,817,000
)
Total net assets and liabilities transferred to Kennedy Wilson REF IV AG, LLC
 
$

 
$

 
$
(10,928,565
)
See accompanying notes to financial statements.


21

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

NOTE 1ORGANIZATION
Kennedy Wilson Real Estate Fund IV, L.P. (the Partnership), a Delaware limited partnership, was formed on January 28, 2011. The Agreement of Limited Partnership of the Partnership (Partnership Agreement) was executed on May 13, 2011. The general partner of the Partnership is Kennedy Wilson Property Services IV, L.P., a Delaware limited partnership (the General Partner), and the special limited partner is Kennedy Wilson Property Special Equity IV, LLC, a Delaware limited liability company (the Special Limited Partner). The Partnership Agreement was amended and restated on January 1, 2013 to allow for the creation of a parallel fund structure to enable foreign investors to co-invest with the Partnership. On March 20, 2013, Kennedy Wilson Real Estate Fund IV (IP), L.P. (the Investment Partnership) was created and Kennedy Wilson REF IV AG, LLC (the Aggregator) was formed for the purpose of aggregating the investments of the Partnership. On July 16, 2013, the Partnership contributed 100% of its assets to the Aggregator for an 85.0% ownership interest and was equalized by the investors of the Investment Partnership who afterwards owned 15.0% of the Aggregator. The contribution of assets from the Partnership to the Aggregator and the admittance/equalization of the Investment Partnership were done as prescribed in the Partnership’s amended and restated agreement of limited partnership. Per the agreement, any admitted limited partner shall be (a) treated as having been a party to the agreement and any such increased capital commitment shall be treated as having been made, as if they had been invested from day 1 of the Partnership for all purposes, (b) required to bear and contribute its portion of the management fee from day 1 of the Partnership, other Partnership expenses from day 1 and all organizational expenses whenever incurred, and (c) unless otherwise determined by the General Partner, required to pay to the Partnership an additional amount calculated at 10% per annum determined as of the date of such limited partner’s admittance to the Partnership or increase in capital commitment (with respect to the increase in capital commitment), as applicable, on each portion of its capital contribution (including, as applicable, to fund management fees) from the date such portion of such capital contribution would have been made if such partner had been admitted as a Partner for its full capital commitment on day 1. The Partnership’s investment objective has remained unchanged and continues to be to acquire office, multifamily, and other real estate investments, including real estate loans and condominiums through its ownership in the Aggregator. In accordance with this objective, the Aggregator may form joint ventures with appropriate strategic coinvestors or invest in real estate related financings, such as first trust deeds. Partnership investments will generally involve real estate located in the western United States and Hawaii. Under the terms of the Partnership Agreement, the Partnership shall continue until the eighth anniversary of the effective date of May 13, 2011 and may be extended for an additional one‑year period by the General Partner in its discretion, and for an additional one‑year period by the General Partner with the prior consent of the limited partners with a majority of aggregate commitments.
NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION—The Partnership is an investment company and follows specialized accounting and reporting requirements for investment companies established under U.S. generally accepted accounting (U.S. GAAP).
USE OF ESTIMATES—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, and reported amounts of revenue and expenses. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
CASH AND CASH EQUIVALENTS—The Partnership maintains its cash in federally insured banking institutions. The account balances at these institutions periodically exceed the Federal Deposit Insurance Corporation’s (FDIC) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC’s insurance coverage. To mitigate this risk, the Partnership places its cash with quality financial institutions and does not believe there is a significant concentration of credit risk. The Partnership considers its investment in money market accounts to be a cash equivalent. The Partnership did not have any cash equivalents as of December 31, 2015.
FAIR VALUE MEASUREMENT—Fair value is defined as the price that would be received to sell an asset or would be paid to transfer a liability (the exit price) in an orderly transaction between market participants at the measurement date.
A three‑level hierarchy was established for fair value measurements that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The hierarchy level assigned to each investment of the Partnership is based on the

22

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

assessment of the transparency and reliability of the inputs used in the valuation of such investment at the measurement date. The three hierarchy levels are defined as follows:
Level 1 - Valuations based on unadjusted quoted market prices in active markets for identical securities.
Level 2 - Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets and quoted prices in markets that are not active.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment.
The availability of valuation techniques and observable inputs can vary from investment to investment. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the General Partner in determining fair value is greatest for investments classified as Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest-level input that is significant to the fair value measurement.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the General Partner's own assumptions are set to reflect those that market participants would use in valuing the asset or liability at the measurement date. The General Partner uses prices and inputs that it believes are current as of the measurement date.
VALUATION OF INVESTMENTS—The Aggregator's investments in real estate assets are stated at fair value using the income and market approaches. For the Limited Liability Companies (LLC or Joint Venture) in which the Aggregator has a partial ownership interest, the LLC's investments in real estate are also stated at fair value using the income and market approaches. The income approach requires the General Partner to estimate the projected operating cash flows of the real estate on an asset-by-asset basis, apply a capitalization (cap) rate to the reversion year's cash flows and discount the cash flows with a risk-adjusted rate for the respective holding periods. The market approach requires the General Partner to identify transactions for similar assets, if any, and apply asset specific adjustments for items such as location, physical condition, and other pertinent factors which would impact fair value. In some instances in which the Aggregator has a partial ownership interest in an LLC, distributions to owners may be based on formulas that consider minimum return requirements as described in the operating agreements of those LLC's. These distribution terms have been taken into consideration as part of determining the fair value of the Aggregator's investments.
The Aggregator's investments in notes and loan pool participations are stated at fair value based on a comparison of the yield that would be required in a current transaction, taking into consideration the risk of the underlying collateral and the credit risk of the borrower to the current yield of similar fixed-income securities.
The fair values of Level 3 investments cannot be determined with precision, cannot be substantiated by comparison to quoted prices in active markets, and may not be realized in a current sale or immediate settlement of the asset or liability. Additionally, there are inherent uncertainties in any fair value measurement technique, and changes in the underlying assumptions used, including discount rates, cap rates, liquidity risks, and estimates of future cash flows, could significantly affect the fair value measurement amounts.
The Partnership's investments are accounted for on a closing-date basis.
CONCENTRATION OF RISK—Substantially all of the Aggregator's investments are concentrated in real estate related investments in California, Utah, Arizona, and Hawaii. Adverse conditions in the sector or geographic locations would likely result in material declines in the value of the Partnership's investments.
REVENUE RECOGNITION—Dividend income from investments in real estate assets is recorded when a disbursement has been approved and declared from the underlying investments of the Partnership. Interest income on notes is recognized on the accrual basis in the period earned unless deemed doubtful of collection or the related security is in default. Undistributed earnings from investments in real estate assets are considered by the General Partner in estimating the fair value of these investments. The Partnership also records its proportionate share of the Aggregator’s income, expenses, realized and unrealized gains (losses) after July 16, 2013 (date of equalization).

23

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

INCOME TAXES—The Partnership is not subject to federal or state income taxes, and accordingly, no provision for income taxes has been made in the accompanying financial statements. The partners are required to report their proportional share of income, gains, loss, credit, or deduction on their respective tax returns.
The Partnership is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement, which could result in the Partnership recording a tax liability that would reduce net assets. Based on its analysis, the Partnership has determined that there are no tax benefits or obligations subject to uncertain tax positions that would have a material impact on the Partnership's financial position or results of operations. The tax year 2011 (year of inception) is the earliest year that remains open to examination by the taxing jurisdictions to which the Partnership is subject.
NOTE 3FAIR VALUE OF INVESTMENTS
The following table presents the classification of the Partnership's fair value measurements as of December 31, 2015 (unaudited):
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Interests in real estate assets
 
$

 
$

 
$
153,190,187

 
$
153,190,187

Interests in loan pool participations and notes
 

 

 
1,001,549

 
1,001,549

 
 
$

 
$

 
$
154,191,736

 
$
154,191,736

The following table presents changes in Level 3 investments for the year ended December 31, 2015 (unaudited):
 
 
December 31, 2014
 
Purchases
 
Sales
 
Realized gains
 
Accretion on loans
 
Change in unrealized gains and losses, net
 
December 31, 2015
Interests in real estate assets
 
$
229,960,932

 
$
28,093,005

 
$
(126,728,370
)
 
$
50,552,734

 
$

 
$
(28,688,114
)
 
$
153,190,187

Interests in loan pool participations and notes
 
4,072,176

 

 
(4,155,276
)
 

 
1,084,649

 
—    

 
1,001,549

 
 
$
234,033,108

 
$
28,093,005

 
$
(130,883,646
)
 
$
50,552,734

 
$
1,084,649

 
$
(28,688,114
)
 
$
154,191,736

The net change in unrealized gains and losses on investments that use Level 3 inputs still held as of December 31, 2015 was a net loss of $6,997,854 (unaudited).
The following table presents the classification of the Partnership's fair value measurements as of December 31, 2014 (unaudited):
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Interests in real estate assets
 
$

 
$

 
$
229,960,932

 
$
229,960,932

Interests in loan pool participation and notes
 

 

 
4,072,176

 
4,072,176

 
 
$

 
$

 
$
234,033,108

 
$
234,033,108

The following table presents changes in Level 3 investments for the year ended December 31, 2014 (unaudited):
 
 
December 31, 2013
 
Purchases
 
Sales
 
Realized gains
 
Accretion on loans
 
Change in unrealized gains and losses, net
 
December 31, 2014
Interests in real estate assets
 
$
187,501,720

 
$
42,280,778

 
$
(24,115,005
)
 
$
9,988,150

 
$

 
$
14,305,289

 
$
229,960,932

Interests in loan pool participations and notes
 
6,559,261

 
469,980

 
(4,086,911
)
 

 
1,129,846

 

 
4,072,176

 
 
$
194,060,981

 
$
42,750,758

 
$
(28,201,916
)
 
$
9,988,150

 
$
1,129,846

 
$
14,305,289

 
$
234,033,108

The net change in unrealized appreciation on investments that use Level 3 inputs still held as of December 31, 2014 was $18,294,962 (unaudited).

24

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

Since inception, all investments have been classified as Level 3 investments and there have been no transfers between other levels of the hierarchy.
In estimating fair value of investments in real estate assets and notes, the Partnership considers significant inputs such as cap and discount rates. The table below describes the range of inputs used as of December 31, 2015 (unaudited):
 
 
Cap rate
 
Discount rate
 
 
Min
 
Max
 
Min
 
Max
Multifamily
 
5.30
%
 
6.80
%
 
7.80
%
 
9.30
%
Office
 
5.80

 
9.00

 
7.80

 
11.50

Retail
 
6.50

 
7.00

 
8.30

 
9.50

Land and Condo
 
N/A

 
N/A

 
13.00

 
15.00

In estimating fair value of investments in real estate assets, the Partnership considers significant inputs such as capitalization and discount rates. The table below describes the range of inputs used as of December 31, 2014 (unaudited):
 
 
Cap rate
 
Discount rate
 
 
Min
 
Max
 
Min
 
Max
Multifamily
 
5.00
%
 
6.00
%
 
7.00
%
 
9.00
%
Office
 
5.25

 
8.25

 
7.00

 
11.00

Retail
 
6.70

 
7.00

 
8.00

 
8.65

Land and Condo
 
N/A

 
N/A

 
25.00

 
25.00

Several of the LLCs also posses mortgage debt collateralized by the respective real estate assets. For valuation of investment level debt, the Partnership considers significant inputs such as the term of the debt, value of collateral, current loan‑to‑value ratios, market interest rates, and credit quality of investment entities. The market interest rates used by the Partnership for these types of investments range from 2.5% to 4.1% as of December 31, 2015 (unaudited) and 1.70% to 4.59% as of December 31, 2014 (unaudited).
NOTE 4RELATED PARTY TRANSACTIONS
MANAGEMENT FEE—During the period which commenced on May 13, 2011 and expired on May 13, 2014 (the Investment Period), the Partnership paid the General Partner a management fee equal to 1.50% per annum of the invested capital contributed by the non-affiliated limited partners and 1.00% per annum of the difference between the aggregate capital commitments of the non-affiliated limited partners and the invested capital contributed by the non-affiliated limited partners. After the expiration of the Investment Period, the Partnership shall pay the General Partner a management fee equal to 1.50% per annum of the invested capital contributed by the non-affiliated limited partners. The Partnership incurred $2,049,673 (unaudited) in management fees for the year ended December 31, 2015, $3,036,444 (unaudited) for the year ended December 31, 2014 and $2,035,256 for the period from July 16, 2013 (date of equalization) through December 31, 2013.
The management fee shall be reduced, in any calendar quarter, by the non-affiliated limited partners’ percentage of any organizational expenses that the Partnership pays in excess of $1,000,000. In the event that the amount of fee reduction exceeds the management fee for such quarterly period, such excess shall be carried forward to reduce the management fee payable in following quarterly periods. There have been no reductions for the period from March 20, 2013 (inception) through December 31, 2015 (unaudited).
ORGANIZATION EXPENSE—The Partnership shall pay or reimburse the General Partner for up to $1,000,000 of organizational expenses incurred on behalf of the Partnership. Organization expenses in excess of $1,000,000 will reduce the management fee paid to the General Partner. The Partnership incurred no organization costs (unaudited) for the year ended December 31, 2015 and 2014 and $115,294 for year ended December 31, 2013.
RELATED PARTY SALES—During 2015, the Aggregator sold its interests in KW Hilltop Manager, LLC and KW Marina View, LLC to an affiliate of the General Partner for a combined purchase price of $59,507,178 (unaudited) resulting in a combined realized gain of $16,143,769 (unaudited). Each sale was separately negotiated and closed at different dates in 2015. The Aggregator’s Advisory Board reviewed and consented to these transactions.

25

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

LLC MANAGEMENT FEES—It is contemplated that an affiliate of the General Partner may perform property management services and/or construction management services for the LLCs in which the Aggregator holds a financial interest. The compensation and other terms for such services provided shall be at rates and on terms that are no less favorable to the LLCs than the prevailing market rates and terms for such services obtained on an arm's-length basis in the applicable market area. Affiliates of the General Partner may also perform development management services for the LLCs.
NOTE 5PARTNERS' CAPITAL
CONTRIBUTIONS—The total committed capital of the Partnership is $257,368,421 (unaudited) as of December 31, 2015 of which 100.0% (unaudited) has been called, $257,368,421(unaudited) as of December 31, 2014, of which $226,559,457 (unaudited) or 88.03% (unaudited) has been called, and $257,368,421 as of December 31, 2013 of which $179,925,970 or 69.91% had been called.
The General Partner is authorized to call additional capital in its sole discretion when additional capital is required to acquire investments, provide working capital, establish reserves, or pay expenses, costs, losses, or liabilities of the Partnership. However, only non-affiliated limited partners are required to fund management fees or excess organization costs as described above. No limited partner shall be required to make any additional capital contributions in excess of its capital commitment. Any portion of a limited partner’s capital commitment that has not been called by the General Partner within the period ending three years from the effective date of May 13, 2011 may not be drawn to fund new commitments for investments. However, the partners shall remain obligated to make capital contributions throughout the duration of the term of the Partnership in order to fund commitments for new investments in existence at the end of the Investment Period, to pay for management fees and other partnership expenses, to fund requirements of existing investments in an aggregate amount not to exceed 15% of the aggregate commitments, or to pay continuing obligations of the Partnership under any line of credit or permitted indebtedness.
The General Partner may cause the Partnership to return to the partners any portion of a capital contribution that is not invested in an investment or used to pay partnership expenses, that is a contribution for bridge financing that is recouped by the Partnership within twelve months, or is invested in a portion of an investment sold to either an executive fund or related parallel fund. All such returned capital contributions shall be returned to the partners in proportion to the cash contribution made by each partner and shall be treated as not having been called or funded.
DISTRIBUTIONS—Distributions of net cash flow shall initially be made to the partners based on the percentage of their aggregate investment contributions to the aggregate investment contributions made by all partners. The initial amount apportioned to the limited partners shall be distributed to the limited partners and the Special Limited Partner as follows:
(i) First, 100% to limited partners until the limited partners have received cumulative distributions equal to the sum of their ,aggregate contributions for investments and partnership costs,
(ii) Second, 100% to limited partners until the unpaid preferred return of ten percent (10%), compounded annually, due to the limited partners is reduced to zero,
(iii) Third, 50% to the Special Limited Partner and 50% to the limited partners to the extent necessary so that the aggregate distributions to the Special Limited Partner equal 20% of the cumulative amount of distributions made to limited partners pursuant to (ii) and (iv), and
(iv) Thereafter, 20% to the Special Limited Partner and 80% to the limited partners.
Notwithstanding the above, the General Partner shall have authority to make distributions to the Special Limited Partner in an amount equal to the tax liability on its carried interest. Such distributions shall be treated as advances of distributions to the Special Limited Partner and shall reduce future distributions due to the Special Limited Partner.
ALLOCATION OF PARTNERSHIP INCOME AND LOSSES—The allocation of Partnership income and loss will generally follow the allocation of distributions.
NOTE 6—COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Partnership issues contingent loan and completion guarantees to secure financing agreements and/or to obtain preferred terms related to its investments. These guarantees may include obligations under mortgage loans and may cover payments of principal and/or interest. These guarantees generally have fixed termination dates and become liabilities of the Partnership in the event the borrower is unable to meet the obligations specified in the guarantee agreement. As of December 31, 2015 (unaudited) and December 31, 2014 (unaudited), the Partnership has not entered into any of these guarantees.

26

Table of Contents
KENNEDY WILSON REAL ESTATE FUND IV, L.P.
Notes to Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

During the years ended December 31, 2015, the Partnership provided financial support to its investee companies of $28,093,005 (unaudited) and $42,750,758 (unaudited), respectively, which was made in the form of invested capital to provide for growth financing, to support acquisitions or for ongoing operations of investee companies.
For the periods ended December 31, 2015 (unaudited) and December 31, 2014 (unaudited), the Partnership did not have any unfunded obligations to investee companies.
NOTE 7FINANCIAL HIGHLIGHTS
The Internal Rate of Return (IRR) of the non-affiliated limited partners, net of all fees and profit allocations to the Special Limited Partner, is 11.4% (unaudited) and 11.55% (unaudited) at December 31, 2015 and 2014, respectively.
The IRR was computed based on the actual dates of the cash inflows (capital contributions), outflows (cash distributions), and the ending net assets at the end of the period (residual value) of the non-affiilated limited partners' capital accounts as of December 31, 2015 (unaudited) and 2014, respectively.
 
 
2015
 
2014
Ratio to average limited partners’ capital:
 
(unaudited)
 
(unaudited)
Net investment income (loss)
 
4.30
%
 
2.94
%
Total expenses
 
1.30
%
 
2.26
%
Incentive allocation
 
3.30
%
 
2.71
%
Total expenses and incentive allocation
 
4.60
%
 
4.97
%
The net investment income and total expense ratios (including incentive allocation) are calculated for the non-affiliated limited partners taken as a whole. The computation of such ratios, based on the amount of net investment income, expenses, and incentive allocation assessed to an individual investor, may vary from these ratios based on the timing of capital transactions. The above ratios are computed based upon the monthly average non-affiliated limited partners’ capital of the Partnership as measured at the end of each monthly accounting period for the years ended December 31, 2015 and 2014.
NOTE 8SUBSEQUENT EVENTS
Management has evaluated all subsequent events occurring after the date of the statement of financial condition through March 25, 2016, the date that the financial statements were available to be issued, to determine whether any subsequent events necessitated adjustment or disclosure in the financial statements. No such events were identified that necessitated adjustment or disclosure.
 

27



Independent Auditors' Report
The Members
KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC:
We have audited the accompanying combined financial statements of KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC, which comprise the combined statements of operations, members' capital, and cash flows for the year ended December 31, 2013, and the related notes to the combined financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on the combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC for the year ended December 31, 2013, in accordance with U.S. generally accepted accounting principles.
The accompanying combined balance sheets of KW Funds - 303 North Glenoaks, LLC and KW Funds - 6100 Wilshire, LLC, as of December 31, 2015 and 2014 and the related combined statements of operations, members' capital, and cash flows for the years then ended, and the related notes to the combined financial statements, were not audited by us, and accordingly, we do not express an opinion on them.

/s/ KPMG LLP

Los Angeles, California
March 31, 2014


28


KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Combined Balance Sheets (Unaudited)

 
 
December 31,
 
 
2015
 
2014
 
 
(Unaudited)
 
(Unaudited)
Assets
 
 
 
 
Real estate
 
 
 
 
Land
 
$

 
$
10,446,567

Buildings
 

 
46,050,144

Total
 

 
56,496,711

Accumulated depreciation
 

 
(8,709,463
)
Real estate, net
 

 
47,787,248

Cash
 
293

 
758,889

Escrow and deposits
 

 
464,274

Deferred leasing costs, net of accumulated amortization of $0 (unaudited) at December 31, 2015 and $1,166,122 (unaudited) at December 31, 2014
 

 
796,930

Mortgage loan costs, net of accumulated amortization of $0 (unaudited) at December 31, 2015 and $38,408 (unaudited) at December 31, 2014
 

 
261,314

Deferred rent
 

 
839,122

Accounts receivable
 
3,873

 
239,841

Prepaid expenses
 

 
144,278

Total assets
 
$
4,166

 
$
51,291,896

Liabilities and members' capital
 
 
 
 
Liabilities
 
 
 
 
Mortgage loans payable
 
$

 
$
31,662,903

Prepaid rent
 

 
277,910

Tenant deposits
 

 
280,205

Accounts payable and accrued expenses
 

 
456,745

Total liabilities
 

 
32,677,763

Members' capital
 
 
 
 
Members' capital
 
4,166

 
18,614,133

Total liabilities and members’ capital
 
$
4,166

 
$
51,291,896

See accompanying notes to the combined financial statements


29


KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Combined Statements of Operations
(Discontinued Operations)
 
 
December 31,
 
 
2015
 
2014
 
2013
 
 
(Unaudited)
 
(Unaudited)
 
 
Revenue
 
 
 
 
 
 
Rental income
 
$
923,551

 
$
7,220,043

 
$
11,196,136

Operating expense recoveries
 
161,890

 
408,927

 
638,129

Other
 
355,889

 
1,028,111

 
1,098,080

Total revenue
 
1,441,330

 
8,657,081

 
12,932,345

Operating expenses
 
 
 
 
 
 
Property taxes
 
281,784

 
1,072,855

 
1,209,764

Utilities
 
299,772

 
1,127,243

 
1,435,698

Repairs and maintenance
 
214,745

 
1,320,123

 
1,702,296

Salaries and wages
 
238,192

 
913,721

 
1,114,504

General and administrative
 
23,797

 
126,912

 
155,306

Insurance
 
81,605

 
376,960

 
355,998

Depreciation
 
602,465

 
2,859,006

 
3,815,186

Amortization
 
163,588

 
635,728

 
768,940

Interest expense
 
928,804

 
3,041,256

 
5,312,176

Total operating expenses
 
2,834,752

 
11,473,804

 
15,869,868

(Loss) gain on sale of real estate
 
(4,526,850
)
 
4,995,850

 

Net (loss) income
 
$
(5,920,272
)
 
$
2,179,127

 
$
(2,937,523
)
See accompanying notes to the combined financial statements


30


KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Combined Statements of Members' Capital

 
 
 
Balance, December 31, 2012
 
$
37,408,246

Contributions
 
17,011,000

Distributions
 
(1,329,738
)
Net loss
 
(2,937,523
)
Balance, December 31, 2013
 
50,151,985

Contributions from members (unaudited)
 
3,883,907

Distributions to members (unaudited)
 
(37,600,886
)
Net income (unaudited)
 
2,179,127

Balance, December 31, 2014 (unaudited)
 
18,614,133

Contributions from members (unaudited)
 
1,560,000

Distributions to members (unaudited)
 
(14,249,695
)
Net income (unaudited)
 
(5,920,272
)
Balance, December 31, 2015 (unaudited)
 
$
4,166

See accompanying notes to the combined financial statements


31


KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Combined Statements of Cash Flows

 
 
Year ended December 31,
 
 
2015
 
2014
 
2013
 
 
(Unaudited)
 
(Unaudited)
 
 
Cash flows from operating activities:
 
 
 
 
 
 
Net (loss) income
 
$
(5,920,272
)
 
$
2,179,127

 
$
(2,937,523
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation
 
602,465

 
2,859,006

 
3,815,186

Amortization of deferred leasing costs
 
163,588

 
635,728

 
768,940

Amortization of deferred financing fees
 
261,314

 
519,397

 
998,869

(Gain) loss on sale of real estate
 
4,526,850

 
(4,995,850
)
 

Change in assets and liabilities:
 
 
 
 
 
 
Deferred rent
 
839,122

 
1,050,447

 
(483,420
)
Accounts receivable
 
235,968

 
421,313

 
(269,901
)
Prepaid expenses
 
144,278

 
17,097

 
(31,152
)
Tax and insurance escrows
 
64,087

 
477,161

 

Prepaid rent
 
(277,910
)
 
(181,026
)
 
338,403

Tenant deposits
 
(280,205
)
 
(312,742
)
 
35,149

Accounts payable and accrued expenses
 
(456,745
)
 
(2,080,210
)
 
(332,584
)
Net cash (used in) provided by operating activities
 
(97,460
)
 
589,448

 
1,901,967

Cash flows from investing activities:
 
 
 
 
 
 
Additions to real estate
 
(1,241,416
)
 
(520,712
)
 
(1,523,615
)
Deferred leasing costs
 
(66,605
)
 
(467,506
)
 
(732,094
)
Change in capital escrow and deposits
 
400,187

 
(37,162
)
 
698,815

Proceeds from sale of real estate, net of closing costs
 
44,599,296

 
74,986,446

 

Net cash provided by (used in) investing activities
 
43,691,462

 
73,961,066

 
(1,556,894
)
Cash flows from financing activities:
 
 
 
 
 
 
Payments of mortgage loans payable
 

 
(723,960
)
 
(1,198,020
)
Proceeds from mortgage loans
 

 
31,656,400

 

Advances from mortgage loans
 

 
284,591

 
1,279,373

Payoff of first mortgage loans
 
(31,662,903
)
 
(71,428,130
)
 

Payoff of second mortgage
 

 

 
(16,550,000
)
Payments made for mortgage loan costs
 

 
(299,722
)
 

Contributions from members
 
1,560,000

 
3,883,907

 
17,011,000

Distributions to members
 
(14,249,695
)
 
(37,600,886
)
 
(1,329,738
)
Net cash used in financing activities
 
(44,352,598
)
 
(74,227,800
)
 
(787,385
)
Net change in cash
 
(758,596
)
 
322,714

 
(442,312
)
Cash at beginning of period
 
758,889

 
436,175

 
878,487

Cash at end of period
 
$
293

 
$
758,889

 
$
436,175

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
Cash paid for interest
 
$
752,012

 
$
2,700,474

 
$
4,320,698

Supplemental disclosure of non-cash activity:
 
 
 
 
 
 
Accrued capital expenditures
 
$

 
$
23,799

 
$
302,758

        

See accompanying notes to the combined financial statements


32

KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Notes to the Combined Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

NOTE 1ORGANIZATION
KW Funds—303 North Glenoaks, LLC (Glenoaks), a Delaware limited liability company, is 50% owned by KW Property Fund II, L.P. (Fund II) and 50% owned by KW Property Fund III, L.P. (Fund III). Glenoaks was organized in March 2008 to invest in and fully own the property known as 303 North Glenoaks (the Glenoaks Property). This property is an office building totaling approximately 176,000 rentable square feet, located in Burbank, California. In May of 2015, the Glenoaks Property was sold to a third-party buyer (unaudited).
KW Funds—6100 Wilshire, LLC (6100 Wilshire), a Delaware limited liability company, is 85.71% owned by KW Property Fund II, L.P. and 14.29% owned by KW Property Fund III, L.P. 6100 Wilshire was organized in June 2008 to invest in and fully own the property known as 6100 Wilshire (the Wilshire Property). This property is an office building totaling approximately 214,000 rentable square feet, located in Los Angeles, California. In August of 2014, the Wilshire Property was sold to a third-party buyer (unaudited).
The combination of Glenoaks and 6100 Wilshire is collectively referred to as "the Companies". The Companies are presented on a combined basis, as they are held under common ownership by Fund II and Fund III. The Glenoaks Property and the Wilshire Property are collectively referred to as "the Properties".
Available cash is distributed to the members in proportion to their percentage interests at the time of distribution. Profit and loss for each fiscal period shall be allocated among the members in proportion to their percentage interests.
The limited liability companies (LLC's) will continue in existence until dissolved in accordance with the provisions of their operating agreement and are funded through the equity contributions of their members. As LLC's, except as may otherwise be provided under applicable law, no member shall be bound by, or personally liable for, the expenses, liabilities, or obligations of the individual companies. The members are not obligated to restore capital deficits.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION—Rental revenue from tenants is recognized on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset.
Operating expense recoveries related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the applicable expenses are incurred. The reimbursements are recognized and presented gross, since the Companies are generally the primary obligor with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier, and bears the associated credit risk.
Other revenue is primarily comprised of parking income. The total amount of parking income for the year ended December 31, 2015 and 2014 was $167,385 (unaudited) and $924,711 (unaudited), respectively.
USE OF ESTIMATES—The preparation of the accompanying financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, and the reported amounts of income and expenses. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
CASH—Cash includes highly liquid investments purchased with original maturities of three months or less. Periodically, the Companies maintain cash balances in various bank accounts in excess of federally insured limits. To date, no losses have been experienced related to such amounts. The Companies place cash with quality financial institutions and do not believe there is a significant concentration of credit risk.
REAL ESTATE ASSETS—Real estate assets are carried at depreciated cost. Depreciation on buildings and improvements has been provided for in the accompanying financial statements using the straight-line method based on estimated useful lives of 40 years for buildings and the related lease life for tenant improvements. The amortization of intangible assets associated with in-place leases has been provided for in the accompanying financial statements using the straight-line method based on the weighted-average remaining lease lives. Maintenance and repairs are charged to expense as incurred, and costs of renewals or betterments are capitalized and depreciated at the appropriate rates.

33

KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Notes to the Combined Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

IMPAIRMENT OF LONG-LIVED ASSETS—In accordance with accounting guidance for long-lived assets, the properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If indications of impairment exist, the Companies will evaluate the properties by comparing the carrying amount of the properties to the estimated future undiscounted cash flows of the properties. If impairment exists, an impairment loss will be recognized based on the amount by which the carrying amount exceeds the fair value of the properties. For the periods ended December 31, 2015 (unaudited), 2014 (unaudited), and 2013, there were no impairments recorded.
CONCENTRATION OF RISK—The Companies' real estate is located in California. Adverse conditions in the sector or geographic location would likely result in a material decline in the value of the Companies investment.
DEFERRED FINANCING COSTS, NET—Financing costs incurred in obtaining long-term debt are capitalized and amortized over the term of the related debt on a straight-line basis.
INCOME TAXES—As LLC's, the members elected for the Companies to be pass-through entities for income tax purposes; therefore, the Companies' taxable income or loss is allocated to members in accordance with their respective ownership, and no provision or liability for income taxes has been included in the combined financial statements.
Management has evaluated the Companies tax positions and concluded that the Companies have taken no uncertain tax positions that require adjustment to the combined financial statements in order to comply with the provisions of this guidance.
FAIR VALUE MEASUREMENTS—The Companies follow the provisions of FASB ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the combined financial statements on a recurring or nonrecurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or would be paid to transfer a liability (the exit price) in an orderly transaction between market participants at the measurement date.
A three-level hierarchy was established for fair value measurements that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and the reporting entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The three hierarchy levels are defined as follows:
Level 1 - Valuations based on unadjusted quoted market prices in active markets for identical securities.
Level 2 - Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets and quoted prices in markets that are not active.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and
involve management judgment.
For certain financial instruments, including cash, tenant receivables, escrows and deposits, prepaid expenses, accounts payable and accrued expenses, prepaid rent, and tenant deposits, recorded amounts approximate fair value due to the relatively short-term nature of these instruments.
The Companies have no assets or liabilities measured at fair value on a recurring or nonrecurring basis in the financial statements as of December 31, 2015 (unaudited) and 2014 (unaudited).

NOTE 3—REAL ESTATE ACQUISTION AND DISPOSITIONS
The fair value of the Properties was allocated to the acquired tangible assets, consisting primarily of land and buildings, and to the identified acquired intangible assets, which comprise in-place leases, above-market leases and below-market leases, in accordance with Business Combinations ASC Subtopic 805-10. Acquisition related costs were expensed as incurred.
Upon their respective purchases in 2008, the fair value of real estate was determined by valuing the Properties as if they were vacant, which was then allocated to land and buildings and improvements, based on management's determination of the relative fair values of these assets. The value of the acquired in-place leases was determined by calculating the present value of the cash flows provided by the leases, net of related incremental expenses over the estimated lease-up period.  As of December 31, 2015 (unaudited) and 2014 (unaudited), no amount of intangible assets is capitalized and subject to amortization related to leases that were in-place upon acquisition in 2008.
In May of 2015, the Glenoaks Property was sold to a third-party buyer and in August of 2014 the Wilshire Property was sold to a third-party buyer. The Company therefore has written off all real estate amounts related to the Glenoaks Property and the

34

KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Notes to the Combined Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

Wilshire Property and recorded a loss on sale of $4,526,850 for the year ended December 31, 2015 (unaudited) and a gain on sale of $4,995,850 for the year ended December 31, 2014 (unaudited), respectively.
As a result of selling both of the Properties, the results of operations and cash flows in the Companies' accompanying combined financial statements pertain to discontinued operations.

NOTE 4MORTGAGES PAYABLE
The Properties initially had mortgage loans payable to third-party financial institutions, which were secured by the Glenoaks Property and the Wilshire Property. The mortgages bore an interest rate of LIBOR + 4.0% and were due to mature on October 31, 2014.
In August of 2014, in conjunction with the sale of 6100 Wilshire, the mortgage loan payable associated with the Glenoaks Property was amended and restated with the existing lender. The terms of the amended and restated mortgage loan included a maturity date of August 31, 2017 (unaudited) and an interest rate of LIBOR plus 2.85% (unaudited). Upon the sale of the Glenoaks Property, the mortgage loan was fully repaid.
The fair value of the debt as of December 31, 2014 was $31,719,208 (unaudited). The fair value was estimated based on the quoted market prices for the same or similar issues for debt of the same remaining maturities as well as the credit quality of the Companies. Although the Companies have determined that the majority of the inputs used to value the mortgage fall within Level 2 of the fair value hierarchy, the assessment of the Companies' credit quality associated with the valuation utilized Level 3 inputs. However, the Companies assessed the significance of the impact of the Level 3 inputs on the overall valuation of the liability and determined that it is not significant to the overall valuation of the mortgage. As a result, the Companies have determined that its mortgage payable valuation in its entirety be classified in Level 2 of the fair value hierarchy, as defined in note 2. The fair value amount does not necessarily represent the amount that would be required to satisfy the debt obligation.    

NOTE 5 - TENANT CONCENTRATIONS
The top three tenants accounted for approximately $570,000 (unaudited), $116,000 (unaudited) and $102,000 (unaudited), or 61.71% (unaudited), 12.51% (unaudited) or 11.05% (unaudited), respectively, of the Companies' combined rental income for the year ended December 31, 2015. No other tenant comprised more than 10% (unaudited) of the Companies' combined rental income for the year ended December 31, 2015.
The top two tenants accounted for approximately $2.0 million (unaudited) and $831,000 (unaudited), or 27.84% (unaudited) and 11.51% (unaudited), respectively, of the Companies' combined rental income for the year ended December 31, 2014. No other tenant comprised more than 10% (unaudited) of the Companies' combined rental income for the year ended December 31, 2014.

NOTE 6TRANSACTIONS WITH THE AFFILIATES
Affiliates receive leasing commissions, a management fee, a construction management fee, reimbursements for certain billed management and administrative related costs.
Fees earned and reimbursements received by Kennedy-Wilson Holdings, Inc. and its affiliates were as follows:
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
 
 
(unaudited)
 
(unaudited)
 
 
Management fees
 
$
56,064

 
$
316,357

 
$
367,275

Leasing commissions
 
6,132

 
19,501

 
62,917

Construction management
 
3,106

 
9,796

 
60,492

 
 
$
65,302

 
$
345,654

 
$
490,684

As of December 31, 2015 and 2014, there was no outstanding balance due to affiliates (unaudited).

35

KW Funds-303 North Glenoaks, LLC
(A Delaware Limited Liability Company)
and KW Funds-6100 Wilshire, LLC
(A Delaware Limited Liability Company)
Notes to the Combined Financial Statements
December 31, 2015 (unaudited), 2014 (unaudited), and 2013

NOTE 8COMMITMENTS AND CONTINGENCIES
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Currently, the Companies do not have any material commitments or contingencies (unaudited).
NOTE 9—MEMBERS' CAPITAL
The below details the Members Capital accounts related to each of the Companies for the following periods:
 
 
KW Funds-303 North Glenoaks, LLC
 
KW Funds-6100 Wilshire, LLC
 
Total
Balance, December 31, 2012
 
$
14,166,528

 
$
23,241,718

 
$
37,408,246

Contributions
 
4,261,000

 
12,750,000

 
17,011,000

Distributions
 
(560,698
)
 
(769,040
)
 
(1,329,738
)
Net loss
 
(705,671
)
 
(2,231,852
)
 
(2,937,523
)
Balance, December 31, 2013
 
17,161,159

 
32,990,826

 
50,151,985

Contributions from members (unaudited)
 
3,703,463

 
180,444

 
3,883,907

Distributions to members (unaudited)
 
(1,869,505
)
 
(35,731,381
)
 
(37,600,886
)
Net (loss) income (unaudited)
 
(688,970
)
 
2,868,097

 
2,179,127

Balance, December 31, 2014 (unaudited)
 
18,306,147

 
307,986

 
18,614,133

Contributions from members (unaudited)
 
349,000

 
1,211,000

 
1,560,000

Distributions to members (unaudited)
 
(12,827,895
)
 
(1,421,800
)
 
(14,249,695
)
Net (loss) income (unaudited)
 
(5,823,086
)
 
(97,186
)
 
(5,920,272
)
Balance, December 31, 2015 (unaudited)
 
$
4,166

 
$

 
$
4,166

NOTE 10SUBSEQUENT EVENTS
Management has evaluated all subsequent events through March 25, 2016, the date that the financial statements are available for issuance.

36




Independent Auditors' Report
The Members
KW Stadium Gateway Partners, LLC:
We have audited the accompanying consolidated financial statements of KW Stadium Gateway Partners, LLC and subsidiary, which comprise the consolidated statements of operations, members' capital and cash flows for the year ended December 31, 2013, and the related notes to the consolidated financial statements.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of KW Stadium Gateway Partners, LLC and subsidiary for the year ended December 31, 2013, in accordance with U.S. generally accepted accounting principles.
The accompanying consolidated balance sheets of KW Stadium Gateway Partners, LLC and subsidiary as of December 31, 2015 and 2014, and the related consolidated statement of operations, members' capital, and cash flows for the years then ended, and the related notes to the consolidated financial statements, were not audited by us, and accordingly, we do not express an opinion on them.

/s/ KPMG LLP

Los Angeles, California
March 31, 2014



37



KW STADIUM GATEWAY PARTNERS, LLC
(A Delaware Limited Liability Company)
Consolidated Balance Sheets (Unaudited)

 
 
December 31,
 
 
2015
 
2014
Assets
 
(unaudited)
 
(unaudited)
Real estate:
 
 
 
 
Land
 
$

 
$
13,021,688