kw-2024123100014081002024FYfalseiso4217:USDxbrli:shares00014081002024-01-012024-12-3100014081002024-06-3000014081002025-02-20
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No.1
to
Form 10-K/A
(Mark One)
| | | | | |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2024
OR
| | | | | |
☐ | 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.) |
151 S El Camino Drive
Beverly Hills, CA 90212
(Address of principal executive offices)
(310) 887-6400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
______________________________________________________________________
| | | | | | | | |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered |
Common Stock, $.0001 par value | KW | 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 ☒ No ☐
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 ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
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 | | ☒ | | Accelerated Filer | | ☐ |
| | | |
Non-accelerated Filer | | ☐ | | Smaller Reporting Company | | ☐ |
| | | | | | |
Emerging Growth Company | | ☐ | | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Based on the last sale at the close of business on June 30, 2024, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $1,089,943,238.
The number of shares of common stock outstanding as of February 20, 2025 was 138,007,902.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this report incorporates certain information by reference from the registrant’s definitive proxy statement for the annual meeting of stockholders to be held on or around June 5, 2025, which proxy statement will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2024.
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, 2024, which was originally filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025 (the “Original Report”), to amend Item 15 of the Original Report and include separate financial statements of Vintage Housing Holdings, LLC as required pursuant to Rule 3-09 of Regulation S-X under the Securities Exchange Act of 1934.
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.
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.
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 31st day of March 2025.
KENNEDY -WILSON HOLDINGS, INC.,
a Delaware corporation
| | | | | | | | | | | | | | |
By: | /s/ WILLIAM J. MCMORROW |
| William J. McMorrow |
| Chief Executive Officer |
EXHIBIT INDEX
| | | | | | | | |
Exhibit No. | Description | Location |
3.1 | | Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K (File No.: 001-33824) filed June 19, 2014. |
3.2 | | Filed as Exhibit 3.1 to Registrant’s Current Report on Form 8-K (001-33824) filed February 21, 2023. |
3.3 | | Filed as Exhibit 3.3 to Registrant's Registration Statement on Form S-3 (File No. 333-235472) filed December 12, 2019 |
3.4 | | Filed as Exhibit 4.1 of Registrant's Current Report on Form 8-K (File No. 001-33824) filed February 23, 2022 |
3.5 | | Filed as Exhibit 3.1 of Registrant’s Current Report on Form 8-K (File No. 001-33824) filed June 16, 2023 |
4.1 | | 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 |
| Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed May 12, 2014 |
4.3 |
| Filed as Exhibit 4.2 to Registrant’s Current Report on Form 8-K (001-33824) filed March 26, 2014. |
4.4 |
| Filed as Exhibit 4.2 to Registrant's Current Report on Form 8-K (001-33824) filed February 11, 2021
|
4.5 |
| Filed as Exhibit 4.3 to Registrant's Current Report on Form 8-K (001-33824) filed February 11, 2021
|
4.6 |
| Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed November 4, 2021. |
4.7 |
| Filed as Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q (001-33824) filed November 4, 2021. |
4.8 |
| Filed as Exhibit 4.2 to Registrant’s Current Report on Form 8-K (001-33824) filed August 23, 2021. |
4.9 | | Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed August 5, 2022. |
4.10 | | Filed as Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed August 5, 2022. |
| | | | | | | | |
4.11 | | Filed as Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed August 5, 2022. |
4.12 | | Filed as Exhibit 4.12 to Registrant’s Annual Report on Form 10-K filed February 22, 2024. |
4.13 | | Filed as Exhibit 4.13 to Registrant’s Annual Report on Form 10-K filed February 22, 2024. |
4.14 | | Filed as Exhibit 4.14 to Registrant’s Annual Report on Form 10-K filed February 22, 2024. |
4.15 | | Filed as Exhibit 4.15 to Registrant’s Registration Statement on Form S-3 (File No. 333-282531) filed on October 7, 2024. |
4.16 | | Filed as Exhibit 4.16 to Registrant’s Registration Statement on Form S-3 (File No. 333-282531) filed on October 7, 2024. |
4.17 | | Filed as Exhibit 4.17 to Registrant’s Registration Statement on Form S-3 (File No. 333-282531) filed on October 7, 2024. |
4.18 | | Filed as Exhibit 4.2 to Registrants Registration Statement on Form S-3 (File No. 333-235472) filed December 12, 2019. |
4.19 | | Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed May 5, 2022. |
4.20 | | Filed as Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed May 5, 2022. |
4.21 | | Filed as Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed August 4, 2023 |
4.22 | | Filed as Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-33824) filed August 4, 2023 |
4.23 | | Filed as Exhibit 4.20 to Registrant’s Annual Report on Form 10-K filed February 22, 2024. |
10.1† | | Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K (File No. 001-33824) filed September 29, 2023 |
10.2† | | Filed as Exhibit to the Registrant's Current Report on Form 8-K (File No.: 001-33824) filed January 30, 2012. |
10.3† |
| Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (001-33824) filed June 16, 2017. |
10.4† | | Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No. 001-33824) filed June 10, 2022. |
10.5† |
| Filed as Exhibit 10.116 to Registrant’s Annual Report on Form 10-K filed March 12, 2013. |
10.6† | | Filed as Exhibit 10.30 to Registrant's Annual Report on Form 10-K (001-33824) filed February 27, 2018 |
| | | | | | | | |
10.7† | | Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K (File No. 001-33824) filed on January 31, 2025. |
10.8† |
| Filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K (001-33824) filed September 29, 2023. |
10.9† |
| Filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K (001-33824) filed September 29, 2023 |
10.10† |
| Filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q (File No. 001-33824) filed May 9, 2024 |
10.11† | | Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K (001-33824) filed January 24, 2019 |
10.12† | | Filed as Exhibit 10.2 to Registrant's Current Report on Form 8-K (001-33824) filed January 24, 2019 |
10.13† | | Filed as Exhibit 10.3 to Registrant's Current Report on Form 8-K (001-33824) filed January 24, 2019 |
10.14† | | Filed as Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q (File No 001-33824) filed May 9, 2024 |
10.15† | | Filed as Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q (File No 001-33824) filed May 9, 2024 |
10.16† | | Filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K (File No 001-33824) filed February 16, 2024. |
10.17 | | Filed as Exhibit 10.1 to Registrants Current Report on Form 8-K (File No 001-33824) filed October 18, 2019. |
10.18 | | Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No 001-33824) filed February 23, 2022 |
10.19 | | Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No 001-33824) filed December 6, 2023 |
10.20 | | Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No 001-33824) filed June 5, 2023 |
10.21 | | Filed as Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q (File No 001-33824) filed August 4, 2023 |
10.22 | | Filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K (File No 001-33824) filed December 6, 2023 |
10.23 | Third Amended and Restated Credit Agreement, dated September 12, 2024, among Kennedy-Wilson, Inc., as borrower, Kennedy-Wilson Holdings, Inc. and certain subsidiaries of Kennedy-Wilson Holdings, Inc. from time to time party thereto as guarantors, the lenders from time to time party thereto, Bank of America, N.A., administrative agent and Bank of America, N.A. and JP Morgan Chase Bank, N.A., as letter of credit issuers. | Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K (001-33824) filed September 13, 2024. |
10.24 | Distribution Agreement, dated as of May 6, 2022, by and among Kennedy-Wilson Holdings, Inc., and J.P. Morgan Securities LLC, BofA Securities, Inc., Deutsche Bank Securities Inc. and Evercore Group L.L.C., as agents and/or principals and (except in the case of Evercore Group L.L.C.) forward sellers, and JPMorgan Chase Bank, National Association, Bank of America, N.A. and Deutsche Bank AG, London Branch, as forward purchasers. | Filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33824) filed May 6, 2022. |
10.25 | | Filed as Exhibit 10.4 to Registrants Quarterly Report on Form 10-Q (File No. 001-33824) filed August 5, 2022. |
19.1 | | Filed with Original Report |
21 | | Filed with Original Report |
| | | | | | | | |
23.1 | | Filed with Original Report |
23.2 | | Filed herewith. |
24.1 | | Filed with Original Report |
31.1 | | Filed herewith. |
31.2 | | Filed herewith. |
32.1 | | Filed herewith. |
32.2 | | Filed herewith. |
97 | | Filed as Exhibit 97 to Registrant’s Annual Report on Form 10-K filed February 22, 2024. |
101 | The following materials from Kennedy-Wilson Holdings, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2024 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, (vi) Schedule III - Real Estate and Accumulated Depreciation and (v) Schedule IV - Loans | Filed with Original Report |
__________
† Management Contract, Compensation Plan or Agreement.
(c) Financial Statement Schedules. Reference is made to Item 15(a)(2) above.
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Table of Contents
| | | | | | | | |
| | Page |
Independent Auditor's Report - CohnReznick LLP | | |
Consolidated Financial Statements: | | |
Consolidated Balance Sheets | | |
Consolidated Statements of Operations | | |
Consolidated Statements of Changes in Members' Deficit | | |
Consolidated Statements of Cash Flows | | |
Notes to Consolidated Financial Statements | | |
Financial Statements Schedule | | |
Schedule III - Real Estate and Accumulated Depreciation | | |
Independent Auditor's Report
To Management
Vintage Housing Holdings, LLC and Subsidiaries
Opinion
We have audited the consolidated financial statements of Vintage Housing Holdings, LLC and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in members' deficit, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements and financial statements schedule III - real estate and accumulated depreciation, (collectively, the consolidated financial statements).
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Vintage Housing Holdings, LLC and Subsidiaries as of December 31, 2024 and 2023, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2024 in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Vintage Housing Holdings, LLC and Subsidiaries and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Vintage Housing Holdings, LLC and Subsidiaries' ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit 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 Vintage Housing Holdings, LLC and Subsidiaries' internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Vintage Housing Holdings, LLC and Subsidiaries' ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control–related matters that we identified during the audits.
/s/ CohnReznick LLP
Atlanta, Georgia
March 31, 2025
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Consolidated Balance Sheets
December 31, 2024 and 2023
| | | | | | | | | | | |
| December 31, |
| 2024 | | 2023 |
Assets | | | |
Cash and cash equivalents | $ | 5,297,266 | | | $ | 7,093,404 | |
Restricted cash | 3,041,105 | | | 10,117,049 | |
Accounts receivable, net | 5,793,376 | | | 7,555,849 | |
Notes receivable | 66,178,241 | | | 62,392,481 | |
Equity method investments | 9,038,130 | | | 4,952,703 | |
Real estate, net of depreciation and amortization | 98,398,487 | | | 104,229,575 | |
Other assets, net | 21,274,705 | | | 22,482,441 | |
Total assets | $ | 209,021,310 | | | $ | 218,823,502 | |
| | | |
Liabilities and Members' Deficit | | | |
Accounts payable | $ | 474,463 | | | $ | 164,923 | |
Due to affiliates | 11,380,644 | | | 12,627,305 | |
Accrued expenses | 23,079,335 | | | 23,740,875 | |
Deferred revenue | 54,690,635 | | | 56,386,998 | |
Mortgage and note payable | 157,143,861 | | | 165,239,304 | |
Total liabilities | 246,768,938 | | | 258,159,405 | |
Retained earnings | 198,909,894 | | | 200,647,956 | |
Members' deficit | (236,657,522) | | | (239,983,859) | |
Total members' deficit | (37,747,628) | | | (39,335,903) | |
Total liabilities and members' deficit | $ | 209,021,310 | | | $ | 218,823,502 | |
See accompanying notes to consolidated financial statements.
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Consolidated Statements of Operations
For the Years Ended December 31, 2024, 2023 and 2022
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
Revenue | | | | | |
Rent | $ | 27,098,044 | | | $ | 34,247,634 | | | $ | 29,382,364 | |
Fees | 4,290,699 | | | 4,351,831 | | | 3,801,153 | |
Interest income | 2,768,852 | | | 1,188,760 | | | 1,131,624 | |
Total revenue | 34,157,595 | | | 39,788,225 | | | 34,315,141 | |
| | | | | |
Expenses | | | | | |
Asset management fees | 4,309,745 | | | 3,948,416 | | | 3,424,488 | |
Repairs and maintenance | 3,276,096 | | | 3,631,437 | | | 2,739,681 | |
Salaries | 3,101,649 | | | 3,633,645 | | | 2,816,812 | |
Utilities | 2,620,363 | | | 3,239,857 | | | 2,791,882 | |
Property management fees | 1,388,976 | | | 1,669,833 | | | 1,463,500 | |
Insurance | 770,686 | | | 1,023,662 | | | 694,788 | |
Depreciation and amortization | 4,232,598 | | | 5,774,691 | | | 5,788,704 | |
General and administrative expense | 4,058,336 | | | 2,924,194 | | | 1,712,206 | |
Total expenses | 23,758,449 | | | 25,845,735 | | | 21,432,061 | |
| | | | | |
Equity (loss) income from joint venture investments | (1,460,514) | | | (3,918,500) | | | 610,093 | |
Interest expense | (8,682,484) | | | (12,764,897) | | | (9,247,686) | |
Gain on sale of real estate | 1,675,553 | | | 81,959,529 | | | 1,762,204 | |
Loss on deconsolidation of a subsidiary | (9,757,051) | | | — | | | — | |
Other (expense) income | (203,626) | | | 60,632 | | | (277,167) | |
Net (loss) income | $ | (8,028,976) | | | $ | 79,279,254 | | | $ | 5,730,524 | |
See accompanying notes to consolidated financial statements
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Consolidated Statements of Changes in Members' Deficit
For the Years Ended December 31, 2024, 2023 and 2022
| | | | | | | | | | | |
| KW-VHH Member, LLC | Sierra VHH Holdings, LLC | Total |
Balance, December 31, 2021 | $ | (21,467,209) | | $ | (26,756,852) | | $ | (48,224,061) | |
Distributions | (7,918,808) | | (6,146,657) | | (14,065,465) | |
Net income | 3,438,314 | | 2,292,210 | | 5,730,524 | |
Balance, December 31, 2022 | (25,947,703) | | (30,611,299) | | (56,559,002) | |
Distributions | (44,584,329) | | (17,471,826) | | (62,056,155) | |
Net income | 47,567,552 | | 31,711,702 | | 79,279,254 | |
Balance, December 31, 2023 | (22,964,480) | | (16,371,423) | | (39,335,903) | |
Contributions | 3,270,000 | | 5,406,998 | | 8,676,998 | |
Distributions | (4,785,862) | | (4,030,936) | | (8,816,798) | |
Deconsolidation of a subsidiary | 5,854,231 | | 3,902,820 | | 9,757,051 | |
Net loss | (4,817,386) | | (3,211,590) | | (8,028,976) | |
Balance, December 31, 2024 | $ | (23,443,497) | | $ | (14,304,131) | | $ | (37,747,628) | |
See accompanying notes to consolidated financial statements.
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Consolidated Statements of Cash flows
For the Years Ended December 31, 2024, 2023 and 2022
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
| | | | | |
Cash flows from operating activities: | | | | | |
Net (loss) income | $ | (8,028,976) | | | $ | 79,279,254 | | | $ | 5,730,524 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | 4,232,598 | | | 5,774,691 | | | 5,788,704 | |
Amortization of debt issuance costs | 266,934 | | | 805,815 | | | 941,951 | |
Gain on sale of real estate | (1,675,553) | | | (81,959,529) | | | (1,762,204) | |
Loss on deconsolidation of a subsidiary | 9,757,051 | | | — | | | — | |
Loss (income) from equity method investments | 1,460,514 | | | 3,918,500 | | | (610,093) | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | (894,197) | | | (1,861,619) | | | (1,462,585) | |
Other assets | 1,127,065 | | | (1,313,001) | | | (8,202) | |
Operating distributions from equity method investments | 3,055,022 | | | 130,769 | | | 3,729,222 | |
Accounts payable and accrued expenses | (372,810) | | | (469,702) | | | 481,021 | |
Net cash provided by operating activities | 8,927,648 | | | 4,305,178 | | | 12,828,338 | |
Cash flows from investing activities: | | | | | |
Acquisitions and improvements to real estate | (1,820,839) | | | (9,202,094) | | | (16,808,127) | |
Proceeds from sale of real estate | — | | | 134,312,002 | | | — | |
Collection of notes receivable | 2,370,910 | | | 1,012,493 | | | 1,620,788 | |
Acquisition and contributions to equity method investments | (4,754,320) | | | (4,299,802) | | | (3,603,062) | |
Investing distributions from equity method investments | — | | | 6,758,517 | | | 4,500,000 | |
Net cash (used in) provided by investing activities | (4,204,249) | | | 128,581,116 | | | (14,290,401) | |
Cash flows from financing activities: | | | | | |
Advances from (repayments to) affiliates | (1,246,661) | | | (10,488,781) | | | 18,836,474 | |
Contributions from Members | 4,830,355 | | | — | | | — | |
Distributions to Members | (8,816,798) | | | (62,056,155) | | | (14,065,465) | |
Principal payments on mortgage loans | (20,037,481) | | | (78,490,434) | | | (12,091,234) | |
Payment of loan fees | (24,896) | | | (1,200,196) | | | (237,414) | |
Proceeds from mortgage loans | 11,700,000 | | | 29,980,542 | | | 12,547,503 | |
Net cash (used in) provided by financing activities | (13,595,481) | | | (122,255,024) | | | 4,989,864 | |
Net change in cash and cash equivalents and restricted cash | (8,872,082) | | | 10,631,270 | | | 3,527,801 | |
Cash and cash equivalents and restricted cash, beginning of year | 17,210,453 | | | 6,579,183 | | | 3,051,382 | |
Cash and cash equivalents and restricted cash, end of year | $ | 8,338,371 | | | $ | 17,210,453 | | | $ | 6,579,183 | |
| | | | | |
Supplemental disclosure of cash flow information: | | | | | |
Cash paid for interest | $ | 8,394,533 | | | $ | 11,783,911 | | | $ | 8,305,735 | |
See accompanying notes to consolidated financial statements.
Supplemental disclosure of non-cash investing and financing activities:
During the year ended December 31, 2024 the Company issued a $3,500,000 seller back note receivable relating to the sale of Vintage at Folsom with a corresponding decrease to the real estate balance.
Sierra contributed its interest in South Peak by Vintage, LP that it had previously held outside of the Company which had a value of $3,846,643 which was treated as a non-cash contribution from Members and non-cash increase in equity method investments.
VINTAGE HOUSING HOLDINGS, LLC
(A California Limited Liability Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2024, 2023 and 2022
(1) Organization
Vintage Housing Holdings, LLC (the “Company”) is a California limited liability company between KW-VHH Member, LLC (“KW”) and Sierra VHH Holdings, LLC (“Sierra”). The Company was formed for the purpose of acquiring, developing, owning, and operating affordable multifamily real estate assets located in the Western United States. The Company typically utilizes tax-exempt bond financing and the sale of federal tax credits to help finance its investments. The term of the Company shall be perpetual unless the Company is dissolved, wound up and cancelled based on provisions in the operating agreement between KW and Sierra. KW and Sierra are obligated to commit additional capital only to the extent that both members agree to pursue additional investments.
As of December 31, 2024 the Company consolidates ten properties listed below:
| | | | | | | | |
Property | Location | Total Units |
Vintage at Spokane | Spokane, WA | 287 |
Forest Creek | Spokane, WA | 252 |
Silver Creek | Pasco, WA | 242 |
Vintage at Silverdale | Silverdale, WA | 240 |
Vintage at Mount Vernon | Mount Vernon, WA | 154 |
Vintage at Richland | Richland, WA | 150 |
Vintage at Chehalis | Chehalis, WA | 150 |
Vintage at Sequim | Sequim, WA | 118 |
Vintage at Burien | Burien, WA | 101 |
Elk Creek Apartments, LLC | Sequim, WA | 138 |
The Company also has an investment that the real estate was previously consolidated and subsequently been sold but still has remaining non-real estate assets and liabilities that are consolidated. In addition the Company has a retail investment that is consolidated as a wholly owned entity.
The Company deconsolidated two previously consolidated entities during the year ended December 31, 2024 that real estate had been sold in prior periods but the entity still had remaining non-real estate assets and liabilities. This lead to a $9,757,051 loss on the deconsolidation of subsidiary during the year ended December 31, 2024. The Company no longer has any remaining consolidated balances associated with these subsidiaries.
In addition to the consolidated properties above, the Company has ownership interests in 40 other properties but does not control and; therefore, treats its investment on the equity method of accounting.
(2) Summary of Significant Accounting Policies
The accompanying financial statements have been prepared on an accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The following is a summary of the significant accounting policies of the Company:
(a) Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
(b) Cash and Cash Equivalents and Restricted Cash
The Company maintains its cash in federally insured banking institutions. The balances at these institutions, at times, exceed the federally insured limits and as a result there is a concentration of credit risk related to the amounts in excess of the federally insured limits. No losses have been experienced related to these excess balances. The Company
considers all highly liquid, short‑term investments with an original maturity of three months or less when purchased to be cash equivalents.
Restricted cash consists of reserves and holdbacks held by the lenders for the mortgage loans secured by the underlying properties and reserves associated with potential guarantees associated with operating deficits at properties.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows as of December 31, 2024 and 2023:
| | | | | | | | |
| December 31, |
| 2024 | 2023 |
| | |
Cash and cash equivalents | $ | 5,297,266 | | $ | 7,093,404 | |
Restricted cash | 3,041,105 | | 10,117,049 | |
Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 8,338,371 | | $ | 17,210,453 | |
(c) Concentration of Risk
The Company’s investments are concentrated in affordable multifamily properties located in the Western United States with the majority located in the state of Washington. Adverse conditions in the sector or geographic location would likely result in a material decline in the value of the Company’s investment.
(d) 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 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. The most significant estimates relate to allowance for depreciation and useful lives, deferred revenue, and contingencies.
(e) Accounts Receivable
Accounts receivable are recorded at the contractual amount as determined by the underlying agreements and do not bear interest. The Company recognizes revenue to the extent that amounts are probable that substantially all rental income will be collected. Tenant receivables are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management. U.S. GAAP requires that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method.
(f) Real Estate
Depreciation is provided for in amounts sufficient to relate the cost of the depreciable assets to operations over their estimated service lives using the straight-line method. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Estimated service lives are as follows:
•Building and improvements 40 years
•Land improvements 15 years
•Furniture, fixtures and equipment 5 years
Amortization includes tax credit monitoring fees that are amortized on a straight-line basis over the 15 year compliance period.
Depreciation and amortization expense for the years end December 31, 2024, 2023 and 2022 was $4,232,598, $5,774,691 and $5,788,704, respectively.
(g) Impairment of long-lived assets
In accordance with ASC Subtopic 360-10, Property, Plant and Equipment for long-lived assets, the Company's 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 Company will evaluate the properties by comparing the carrying amount of the properties to the estimated future undiscounted cash flows of the property. If impairment exists, an impairment loss will be recognized based on the amount by which the carrying amount exceeds the fair value of the asset. For the years ended December 31, 2024, 2023 and 2022, there were no impairments recorded.
(h) Distributions from joint venture investments
The Company utilizes the nature of distributions approach and distributions are reported under operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating dividend or distribution of the proceeds from unconsolidated investments' sale of assets), in which case it is reported as an investing activity. This enables the Company to look to the nature and source of the distribution received and classify it appropriately between operating and investing activities on the statement of cash flows based upon the source.
(i) Note receivable
In accordance with Accounting Standard Codification Topic 835 of the ASC ("ASC 835"), the interest income generating activities of the Company are related to Secured Loans. The Company uses the effective interest method to recognize interest income on its secured loans transactions. The Company maintains a security interest in 17 loans and records interest income over the terms of the secured loan receivable. Recognition of interest income is suspended, and the loan is placed on non-accrual status when management determines that collection of future interest income is not probable. The interest income accrual is resumed, and previously suspended interest income is recognized, when the loan becomes contractually current and/or collection doubts are resolved. Cash receipts on impaired loans are recorded first against the principal and then to any unrecognized interest income.
(j) Debt issuance costs
Debt issuance costs, net of accumulated amortization, are reported as a direct deduction from the face amount of the mortgage loan payable to which such costs relate. Amortization of debt issuance costs is reported as a component of interest expense and computed using an imputed interest rate on the related loan.
(k) Income Taxes
The Company has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Company's federal tax status as a pass-through entity is based on its legal status as a limited partnership. Accordingly, the Company is not required to take any tax positions in order to qualify as a pass-through entity. The Company is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Company has no other tax positions which must be considered for disclosure. Income tax returns filed by the Company are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2021 remain open.
(l) Revenue Recognition
Revenues from tenants are recorded when due from tenants and are recognized monthly as they are earned, which generally approximates a straight-line basis. Apartment units are rented under short-term leases (generally, lease terms of nine to twelve months). Rent includes base rent and operating expense reimbursements. Rental payments received in advance are deferred until earned. All leases of the properties are operating leases.
The Company also earns asset management fees on equity method investments that are recognized as the fees are earned.
Interest income from notes receivable is recognized based on effective interest rate of loans.
(m) Expenses
Expenses include all costs incurred by the Company in connection with the management, operation, maintenance, and repair of the real estate projects and are expensed as incurred.
(n) Leases
The Company has operating leases for certain properties. The Company records a right of use asset, included in other assets, net on the consolidated balance sheets, and a corresponding lease liability, included in accrued expenses on the consolidated balance sheets, representing the present value of future minimum lease payments in accordance with FASB ASC 842, Leases (Topic 842). Rent expense is recognized on a straight-line basis over the term of the lease.
(3) Real Estate and Improvements
The following table summarizes the Company's investment in consolidated real estate properties at December 31, 2024 and 2023: | | | | | | | | | | | | | | |
| | December 31, |
| | 2024 | | 2023 |
| | | | |
Land | | $ | 11,579,684 | | | $ | 14,487,903 | |
Land improvements | | 14,297,732 | | | 14,159,693 | |
Buildings and improvements | | 155,073,883 | | | 154,737,119 | |
Furniture, fixtures and equipment | | 10,408,329 | | | 9,921,333 | |
| | 191,359,628 | | | 193,306,048 | |
Less accumulated depreciation and amortization | | (92,961,141) | | | (89,076,473) | |
Real estate, net of accumulated depreciation and amortization | | $ | 98,398,487 | | | $ | 104,229,575 | |
The Company generally sells interests of consolidated properties to tax credit investors. When a property is sold the Company issues a seller financed note to the buyer and records an offsetting liability resulting in the gain on sale being deferred. When the Company receives principal payments on the note receivables it recognizes a proportionate portion of the deferred gain. During the years ended December 31, 2024, 2023 and 2022, the Company recognized gain on sale of $1,675,553, $1,071,126 and $1,762,204, respectively.
The Company also sold three properties and a retail investment that were previously consolidated in excess of seller financed notes that resulted in gain on sale of real estate of $80,888,403 for the year ended December 31, 2023.
(4) Equity Method Investments
The Company has ownership interests in properties where they do not control but still has significant influence that it accounts for as equity method investments. The combined summarized balance sheets and statement of operations of the operating entities in which the Company holds an interest as of December 31, 2024 and 2023 are as follows:
| | | | | | | | | | | |
| December 31, |
| 2024 | | 2023 |
| | | |
Cash and cash equivalents | $ | 17,702,536 | | | $ | 12,229,653 | |
Restricted cash | 87,640,852 | | | 31,569,428 | |
Real estate, net of depreciation and amortization | 1,859,184,771 | | | 1,711,876,804 | |
Other assets, net | 18,980,838 | | | 21,030,560 | |
Total assets | $ | 1,983,508,997 | | | $ | 1,776,706,445 | |
| | | |
Accounts payable and accrued expenses | $ | 52,773,656 | | | $ | 45,209,408 | |
Development fee | 102,608,119 | | | 96,580,784 | |
Mortgage and note payables | 1,467,306,167 | | | 1,307,757,652 | |
Total liabilities | 1,622,687,942 | | | 1,449,547,844 | |
| | | |
Total equity | 360,821,055 | | | 327,158,601 | |
| | | |
Total liabilities and equity | $ | 1,983,508,997 | | | $ | 1,776,706,445 | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
| | | | | |
Revenues | $ | 155,386,088 | | | $ | 122,214,694 | | | $ | 101,628,125 | |
Operating expenses | (66,415,952) | | | (50,785,192) | | | (37,042,046) | |
Depreciation and amortization | (78,025,787) | | | (69,694,042) | | | (56,538,400) | |
Interest expense | (56,355,722) | | | (46,479,368) | | | (35,648,279) | |
Other expense | (9,930,793) | | | (10,511,320) | | | (8,121,489) | |
Net loss | $ | (55,342,166) | | | $ | (55,255,228) | | | $ | (35,722,089) | |
The following investments and ownership interests were held by the Company as of December 31, 2024:
| | | | | | | | | | | |
Investment | Ownership Interest | Investment | Ownership Interest |
Vintage at Bouquet Canyon | 0.009 | % | The Meadows by Vintage | 0.009 | % |
Agave Apartments | 0.009 | % | The Timbers by Vintage | 0.009 | % |
Gateway by Vintage | 0.009 | % | The View by Vintage | 0.009 | % |
Highland by Vintage | 0.009 | % | Vintage at Arlington | 0.009 | % |
Pointe by Vintage | 0.009 | % | Vintage at Bellingham | 0.009 | % |
Quilceda Creek | 0.009 | % | Vintage at Bremerton | 0.009 | % |
Quinn by Vintage | 9.999 | % | Vintage at Holly Village | 0.009 | % |
Ridgeview by Vintage Apartments | 0.01 | % | Vintage at Lakewood | 0.009 | % |
Sky Mountain by Vintage | 0.01 | % | Vintage at Mill Creek | 0.009 | % |
South Hill by Vintage | 0.009 | % | Vintage at Napa | 0.009 | % |
Latitude 112 by Vintage | 0.009 | % | Heights by Vintage | 0.009 | % |
Springview by Vintage | 0.01 | % | Vintage at Seven Hills | 0.01 | % |
Station by Vintage | 0.009 | % | Vintage at Bennet Valley | 0.009 | % |
Steamboat by Vintage | 0.01 | % | Vintage at Tacoma | 0.009 | % |
The Farm by Vintage | 0.009 | % | Vintage at The Crossings | 0.01 | % |
Vine by Vintage | 0.009 | % | Vintage at The Sanctuary | 0.01 | % |
Vintage at Vancouver | 0.009 | % | Urban Center Apartments | 0.009 | % |
Vintage at Citi Vista, LP | 0.010 | % | Vintage at Lockwood, LP | 0.009 | % |
Vintage at Redfield, LP | — | % | Falls Creek by Vintage, LP | — | % |
Village at 47th, LP | 0.005 | % | South Peak by Vintage, LP | 0.010 | % |
(5) Notes receivable
The Company holds seller back note receivables on properties that the Company has sold to tax credit equity partners. When loans are issued they are non-cash with an offsetting amount to deferred revenue. Upon sale of the property with a seller loan, a portion of the gain is deferred. When the Company receives principal payments on notes receivable balances, it recognizes gain on sale of real estate. The notes receivable balance below includes principal balances of the notes as well as an accrued and unpaid interest and consists of the following as of December 31, 2024 and 2023:
| | | | | | | | | | | |
| | December 31, |
Property | Interest Rate | 2024 | 2023 |
| | | |
Vintage at Bend 2, LP | 2.43 | % | $ | 411,454 | | $ | 682,370 | |
Ridgeview by Vintage Apartments | 5.00 | % | 10,770,753 | | 10,257,860 | |
Vintage at Bouquet Canyon | 8.00 | % | — | | 446 | |
Vintage at Arlington | 5.00 | % | — | | 47,428 | |
Vintage at Bellingham | 5.00 | % | 690,831 | | 659,430 | |
The Meadows by Vintage | 3.00 | % | 1,827,543 | | 2,205,703 | |
Vintage at Holly Village | 6.00 | % | 504,704 | | 1,209,644 | |
Vintage at Bennet Valley | 2.18 | % | 28,914 | | 997,934 | |
Vintage at Bremerton | 5.00 | % | 2,511,675 | | 2,392,071 | |
Vintage at Napa | 3.50 | % | 1,389,649 | | 1,342,656 | |
Vintage at Vancouver | 3.50 | % | 2,168,846 | | 2,095,525 | |
Vintage at Seven Hills | 2.50 | % | 5,370,215 | | 5,239,507 | |
Agave Apartments | 3.75 | % | 1,601,971 | | 1,544,068 | |
Village at 47th(1) | 4.34 | % | 2,600,000 | | 2,600,000 | |
Vintage at Lockwood | 3.72 | % | 1,057,496 | | 1,019,568 | |
Vintage at Everett | 5.00 | % | 15,393,875 | | 14,662,000 | |
Vizcaya by Vintage | 7.35 | % | 7,729,087 | | 7,211,592 | |
Falls Creek by Vintage | 4.02 | % | 8,555,311 | | 8,224,679 | |
Vintage at Folsom | 4.52 | % | 3,565,917 | | — | |
Total | | $ | 66,178,241 | | $ | 62,392,481 | |
(1)Loan is not seller backed note relates to the development of this apartment building.
(6) Mortgage and Notes Payable
As of December 31, 2024, mortgage and notes payable on the accompanying consolidated balance sheets consist of the following :
| | | | | | | | | | | |
Property | Total | Interest Rate | Maturity Date |
| | | |
Vintage at Mount Vernon | $ | 12,197,356 | | 5.25 | % | 8/1/2029 |
Vintage at Burien | 11,700,000 | | 5.50 | % | 8/1/2031 |
Forest Creek | 24,712,141 | | 5.44 | % | 7/1/2033 |
Silver Creek | 24,424,704 | | SOFR+2.75% | 7/1/2026 |
Vintage at Chehalis | 10,538,280 | | 2.63 | % | 2/1/2028 |
Vintage at Richland | 15,162,000 | | 6.21 | % | 12/1/2033 |
Vintage at Sequim | 4,975,355 | | SIFMA+1.84% | 3/31/2038 |
Vintage at Silverdale | 29,400,000 | | 5.99 | % | 12/1/2030 |
Vintage at Spokane | 19,167,994 | | 2.61 | % | 2/1/2028 |
Elk Creek Apartments, LLC | 6,471,036 | | 6.24 | % | 7/1/2040 |
Debt (excluding loan fees) | $ | 158,748,866 | | | |
Unamortized loan fees | (1,605,005) | | | |
Total Debt | $ | 157,143,861 | | | |
As of December 31, 2023, mortgage and notes payable on the accompanying consolidated balance sheets consist of the following:
| | | | | | | | | | | |
Property | Total | Interest Rate | Maturity Date |
| | | |
Vintage at Mount Vernon | $ | 12,376,166 | | 5.25 | % | 8/1/2029 |
Vintage at Burien | 10,750,000 | | 3.77 | % | 8/1/2024 |
Forest Creek | 25,038,963 | | 5.44 | % | 7/1/2033 |
Silver Creek | 24,835,482 | | SOFR+2.75% | 7/1/2026 |
Vintage at Chehalis | 10,809,226 | | 2.63 | % | 2/1/2028 |
Vintage at Richland | 15,162,000 | | 6.21 | % | 12/1/2033 |
Vintage at Sequim | 5,124,501 | | SIFMA+1.84% | 3/31/2038 |
Vintage at Silverdale | 29,400,000 | | 5.99 | % | 12/1/2030 |
Vintage at Spokane | 19,662,407 | | 2.61 | % | 2/1/2028 |
Elk Creek Apartments, LLC | 6,572,086 | | 6.24 | % | 7/1/2040 |
Falls Creek by Vintage | 7,355,516 | | 5.62 | % | 5/1/2056 |
Debt (excluding loan fees) | $ | 167,086,347 | | | |
Unamortized loan fees | (1,847,043) | | | |
Total Debt | $ | 165,239,304 | | | |
Principal payments on the mortgage payable and notes payable are as follows as of December 31, 2024:
| | | | | |
| Total |
| |
2025 | $ | 1,482,061 | |
2026 | 25,060,297 | |
2027 | 1,113,458 | |
2028 | 27,576,096 | |
2029 | 12,512,693 | |
Thereafter | 91,004,261 | |
Total | $ | 158,748,866 | |
The Company has no loans maturing in 2025 and any principal payments are contractual amortization on existing loans that the Company plans to pay from underlying property operations.
As of December 31, 2024 and 2023, the Company had accrued interest payable on mortgage and note payables of $723,085 and $702,068.
(7) Leasing Activities
The Company has entered into various lease agreements. Total rent expense related to these third-party operating leases were $1,364,317, $1,209,446, and $471,348 for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in general and administrative expense on the consolidated statements of operations. The average remaining lease term as of December 31, 2024 and 2023 is 27.1 years and 26.8 years respectively and the weighted average discount rate as of December 31, 2024 and 2023 is 3.23% and 3.23%, respectively. Cash paid for amounts included in the measurement of operating lease liabilities during the years ended December 31, 2024 was and 2023 was $1,364,317 and $1,209,446, respectively. The lease liabilities are included in accrued expenses on the consolidated balance sheets. As the Company’s leases do not provide an implicit rate, the risk-free rate was based on the information available at the commencement date and considering the term of the lease to determine the present value of the lease payments.
The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted to calculate the right of use asset and related lease liability for its operating leases in which the Company is the lessee:
| | | | | |
| Minimum Rental Payments |
| |
2025 | $ | 1,392,234 | |
2026 | 1,392,234 | |
2027 | 1,392,234 | |
2028 | 1,392,234 | |
2029 | 1,382,634 | |
Thereafter | 21,735,068 | |
Total undiscounted rental payments | 28,686,638 | |
Less imputed interest | (8,349,006) | |
Total | $ | 20,337,632 | |
(8) Related Party Transactions
Fee revenues
The Company in its capacity as general partner or managing member receives fees from tax credit investors in joint venture investments it has an interest in. The Company received fees of $4,290,699, $4,351,831 and $3,801,153 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024 and 2023, the Company had a receivable of $2,865,067 and $2,867,085 included within the accounts receivable balance on the consolidated balance sheets relating to fee revenue.
Interest income
The Company earns interest income associated with the seller notes that it receives from tax credit partners on the sale of consolidated real estate. See note 5 for more detail. During the years ended December 31, 2024, 2023 and 2022, the Company earned $2,735,745, $1,188,760 and $1,131,624.
Asset management fee
The partnership agreement for equity method investments provides for the payment of a cumulative asset management fee to an affiliate of the investor limited partner commencing in the year of the closing date, as defined.
The asset management fee, payable to Vintage Housing Asset Management, an affiliate, is comprised of regular asset management fee that is based off of a base fee of $1.4 million annual fee that is increased or decreased by $250/unit for every unit acquired or sold by the Company. In addition, KW receives an oversight fee that consists of $700,000 original fee that is increased or decreased by $125/unit for every unit acquired or sold by the Company.
During the years ended December 31, 2024, 2023 and 2022, the Company had asset management fees of $4,309,745, $3,948,416, and $3,424,488, respectively.
Due to and from affiliates
As of December 31, 2024 and 2023 the Company owes KW $7,038,796 and $5,243,067 and owes Sierra and its affiliates $4,341,848 and $7,384,238 as of December 31, 2024 and 2023, respectively. The amounts due to affiliates are due on demand and are non-interest bearing.
As of December 31, 2024 and 2023 the Company had a receivable of $2,469,205 and $4,006,135, respectively from affiliates.
(9) Commitments and Contingencies
Tax credits
The Company's low-income housing tax credits will be contingent on its ability to maintain compliance with applicable sections of Section 42. Failure to maintain compliance with occupant eligibility, and/or unit gross rent or to correct noncompliance within a specified time period could result in recapture of previously taken tax credits plus interest. In addition, such potential noncompliance may require an adjustment to the contributed capital by the investor limited partner.
Operating deficit guaranty
The guarantees made by the Company represent a concentration of credit risk. If performance on the guarantee becomes probable and the liability can be reasonably estimated, the Company would accrue a liability based on the facts and circumstances at that time. All of the guarantees made are with related party entities.
As of December 31, 2024, the Company has provided guarantees related to operating deficits ranging from $415,000 - $4.7 million (median $1.6 million) and are offset by reserves ranging from $203,000 - $1.7 million (median of $572k) and could expire anywhere from one year (if certain conditions are met) through the compliance period.
(10) Subsequent Events
In preparing these consolidated financial statements, the Companies have evaluated subsequent events and transactions for potential recognition or disclosure through March 31, 2025, the date these consolidated financial statements were available to be issued. The Company has exercised extension options on some of its mortgage and note payable balances subsequent to year end. Dates and maturities have in Note 6 have been updated to reflect these elections. No other events were identified requiring disclosure to the financial statements.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Initial Cost | Gross Balance at December 31, 2024 | | | | |
Property | Location | Encumbrances | Land | Building & Improvements | Land | Buildings & Improvements | Total | Accumulated Depreciation | Depreciable life (years) | Date of Construction | Date Acquired |
| | | | | | | | | | | |
Vintage at Mount Vernon | WA | $ | 12,197,356 | | $ | 1,157,164 | | $ | 11,656,399 | | $ | 2,613,898 | | $ | 12,673,925 | | $ | 15,287,823 | | $ | (8,255,775) | | 40 years | 2003 | 2018 |
Vintage at Burien | WA | 11,700,000 | | — | | 9,887,575 | | 574,722 | | 10,526,601 | | 11,101,323 | | (5,793,387) | | 40 years | 2006 | 2019 |
Forest Creek | WA | 24,712,141 | | 684,298 | | 19,698,291 | | 3,115,891 | | 20,942,806 | | 24,058,697 | | (11,858,883) | | 40 years | 2008 | 2018 |
Silver Creek | WA | 24,424,704 | | 1,824,564 | | 19,495,360 | | 2,734,532 | | 20,660,089 | | 23,394,621 | | (11,377,262) | | 40 years | 2005 | 2018 |
Vintage at Chehalis | WA | 10,538,280 | | 1,050,000 | | 11,792,956 | | 2,557,686 | | 12,744,362 | | 15,302,048 | | (7,389,255) | | 40 years | 2008 | 2021 |
Vintage at Richland | WA | 15,162,000 | | 1,037,760 | | 11,529,496 | | 1,740,498 | | 12,338,377 | | 14,078,875 | | (6,977,377) | | 40 years | 2005 | 2021 |
Vintage at Sequim | WA | 4,975,355 | | 1,908,658 | | 10,016,847 | | 2,591,404 | | 10,768,285 | | 13,359,689 | | (6,055,649) | | 40 years | 2006 | 2018 |
Vintage at Silverdale | WA | 29,400,000 | | 1,400,000 | | 25,334,916 | | 4,414,575 | | 27,308,541 | | 31,723,116 | | (15,273,298) | | 40 years | 2007 | 2019 |
Vintage at Spokane | WA | 19,167,994 | | 1,510,000 | | 23,105,062 | | 3,050,290 | | 24,763,562 | | 27,813,852 | | (12,962,528) | | 40 years | 2008 | 2021 |
Elk Creek Apartments, LLC | WA | 6,471,036 | | — | | — | | 2,481,646 | | 12,755,664 | | 15,237,310 | | (7,017,727) | | 40 years | 2008 | 2023 |
Total | | $ | 158,748,866 | | $ | 10,572,444 | | $ | 142,516,902 | | $ | 25,875,142 | | $ | 165,482,212 | | $ | 191,357,354 | | $ | (92,961,141) | | | | |