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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2003

OR

FOR THE TRANSITION PERIOD FROM              TO              .

COMMISSION FILE NUMBER: 0-20418

KENNEDY-WILSON, INC.

(Exact name of registrant as specified in its charter)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 887-6400

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

COMMON STOCK, $.01 PAR VALUE

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  ¨

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.  ¨

Indicate by check mark whether the registrant is an accelerated filer as defined in the Securities and Exchange Act Rule 12b-2.    Yes  x    No  ¨

The aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant, based upon closing sales price of the Common Stock on the NASDAQ Stock Market on June 30, 2003 was approximately $30 million. The number of shares of the registrant’s Common Stock outstanding as of March 1, 2004 was 7,213,327.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant’s proxy statement for its 2003 Annual Meeting of Stockholders, to be held at a future date, are incorporated by reference into Part III of this report.

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KENNEDY-WILSON, INC.

INDEX TO ANNUAL REPORT ON FORM 10-K

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ITEM 1. BUSINESS

OVERVIEW

We are an integrated, national real estate services and investment Company. Founded in 1977, we were later incorporated in Delaware and became a public Company in 1992. We deliver a complementary array of real estate services. Headquartered in Beverly Hills, we have approximately 535 employees in offices in the U.S. We initially gained recognition through our real estate auction services. Over time, we diversified our business so that we now provide:

In addition to these real estate related services, we invest primarily through joint venture investments in commercial and residential real estate and discounted loan portfolios. Our clients include large financial institutions, major corporations, pension funds, real estate developers, insurance companies and governmental entities.

Our previously wholly-owned, consolidated subsidiary, Kennedy-Wilson Japan (“KWJ”), has had a presence in Japan for ten years through which we developed significant relationships with Japanese companies and financial institutions. In 2002, the Company completed an initial public offering, a secondary public offering and a private sale of the shares of KWJ. The public offerings and private sale generated gross cash consideration of approximately $35 million. During 2003, the Company completed the sale of its remaining shares of KWJ for total gross cash consideration of approximately $30.3 million. As a result of the public offerings and the sales of shares, the Company recorded net gains of approximately $16.4 million and $12.9 million for the years ended December 31, 2003 and 2002, respectively.

OUR BUSINESS OPERATIONS

FUND MANAGEMENT

KWI Fund Management Group is a vertically integrated real estate services and fund management firm. This group organizes and manages closed-end commingled real estate investment funds that invest in high-quality office, industrial, retail and multifamily income property located in selected markets in the U.S. We serve as the general partner of the funds and co-invest with our pension fund clients as limited partners. We earn fees for services provided to the fund including fees for acquisition, asset management, property management, leasing, and disposition services.

KWI Fund I is a fund with approximately $145 million in assets (at estimated fair market value) comprised of $64 million in equity, which is 5% owned by the Company, and capitalized with limited partners’ capital and $79 million in debt. Through the end of 2003, KWI Fund I owns 10 office properties totaling approximately 1,070,000 square feet. The properties are located in Los Angeles, Orange County, Houston, Austin and Atlanta.

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Future funds are expected to be in the $100 million equity range with $250 million in assets. The funds are expected to have the following principal investment objectives:

PROPERTY MANAGEMENT AND LEASING

We are a nationwide commercial and residential property management and leasing Company. We provide a full range of services relating to property management, including:

We have managers in six regional offices—Beverly Hills, New York, Austin, San Francisco, Seattle, and Chicago—supervising approximately 500 employees who assist in managing more than 300 office and industrial buildings, and multi-unit residential complexes in 18 different states. We have approximately 40 million gross square feet of real estate under management.

As part of our strategy for providing our property management clients with the best services possible, we apply the same approach in managing our clients’ properties as we do in managing our own, where our primary objective is to maximize the return on investment. To this end, we work with each client to ascertain their goals and expectations and to design strategic plans for leasing and improving each property in a way that increases the client’s returns. We also strive to maximize our clients’ returns by reducing property operating expenses through the discounts and lower prices that we generally obtain for vendor services and supplies.

REAL ESTATE BROKERAGE

Through our offices in Beverly Hills and New York, we provide specialized brokerage services for both commercial and residential real estate. We market and sell on behalf of our clients and ourselves:

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We specialize in marketing institutional properties through privately negotiated and sealed bid sales. We develop and implement cost-effective marketing campaigns ranging from local to nationwide in scope. Each marketing campaign is tailored to the client’s objectives and the property’s characteristics, including time parameters, sensitivity to publicity, and cash flow needs. We also investigate and analyze, among other things, the physical condition of the property, its cash flow and tenant characteristics, market rents and market dynamics within submarkets, and comparable transactions.

We also market properties directly to various investors with whom we maintain ongoing business relationships. We believe that through these efforts, we create a sales environment intended to enable our clients to obtain the highest possible prices for their properties. We obtain our commercial brokerage engagements primarily through our existing relationships with over 100 institutional and corporate owners of real estate primarily located in the U.S. and Japan.

We also design marketing programs to sell single-family home developments and condominium projects using conventional sales and auction-marketing programs. We also design and implement sealed bid marketing programs for exclusive estates and land for residential development. Most of the residential properties that we have brokered are located in California. Our clients include builders, developers, private sellers and financial institutions.

On a national basis, we provide our clients with auction marketing services to sell both commercial and residential real estate. Auctions provide a seller an opportunity to concentrate the marketing efforts and sell its holdings on one established date. By doing so, the seller can increase liquidity and avoid long-term carrying costs and the risk of a drop in market value. For these reasons, we believe that the net proceeds to the seller following an auction sale of multiple units often exceeds what the net proceeds would have been had the units been sold individually through conventional brokerage arrangements.

REAL ESTATE INVESTMENTS

We invest in commercial and residential real estate primarily through joint ventures with institutional joint venture partners, who typically contribute the majority of the capital. The investment platforms typically target specific property types. We have joint venture funds for multiple investments with certain institutional partners. These funds enable us to leverage our capital and diversify the risks associated with owning properties. In addition, we earn fees for services provided to the joint venture, including due diligence, acquisition, construction management, asset management, leasing, property management, and disposition services. Profits from fees earned by the Company from entities in which the Company retains an ownership interest are deferred to the extent of the Company’s ownership percentage in amounts capitalized by the joint venture.

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We purchase properties that are subperforming in a manner which we believe can be rectified with our expertise or financial resources. For example, a developer of a residential real estate project may find it difficult or impossible to finish a project because it has insufficient cash. In such a situation, we can purchase the project at a discounted price then apply our marketing expertise and draw on our financial resources to finish the project and sell it as a whole or to individual buyers for a profit. With regard to commercial properties, we acquire subperforming buildings, make the improvements necessary to attract tenants, lease to new tenants and then sell the buildings.

One of our strengths is our ability to quickly identify and acquire desirable real estate assets in privately negotiated transactions. We do so by capitalizing on the institutional knowledge we have developed through our brokerage, property management, and investment business and by conducting quick and thorough investigations and analyses of the properties, their financial condition and what we believe to be their financial potential. We have extensive experience in identifying and analyzing the factors that impact property values in the regions in which we do business, such as new construction, the marketability of certain neighborhoods, leasing trends and the types of businesses seeking various types of commercial space. Our due diligence is conducted by our experienced in house team.

Most of the real estate in which we and our joint venture investment platform have invested is located in California and Texas. The current cycle of the U.S. real estate market presents value-added investment potential. Our brokerage and property management operations are the source of many of our real estate acquisitions. These operations provide us with unique investment opportunities in the form of close relationships with our institutional clients that have substantial real estate investments. For example, a financial institution client that has acquired a property through a foreclosure may desire to sell it in less time than it would take for a conventional brokerage sale. We are often able to meet the needs of these types of clients by purchasing their properties quickly and discretely for one of our joint venture funds.

NOTES RECEIVABLE INVESTMENTS

In 2001, we began acquiring discounted loan portfolios that were performing and were secured primarily by real estate. These assets are accounted for under the interest method, which provides that the accretable discount be recorded as interest income over the life of the loans.

Through 1999 our note portfolio acquisitions consisted primarily of pools of assets that contained bankruptcy claims, judgments, credit guarantees, and other residual claims arising from defaulted credit transactions. These assets were typically purchased from financial institutions. Our strategy to collect the asset balances consists of negotiating a cash payoff, restructuring the asset to a performing note, or foreclosing and selling any related collateral. Our last acquisition of these types of assets was in 1999. Most of these notes have been settled, with the majority being paid off in less than two years.

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KENNEDY-WILSON JAPAN

The Company had a presence in Japan for over ten years through its formerly wholly-owned subsidiary, Kennedy-Wilson Japan (“KWJ”). The operations in Japan included investment in real estate, the acquisition of pools of discounted Japanese notes and asset management and brokerages services. The notes were typically secured by real estate and personal property. The investment strategy was to acquire the notes on a privately negotiated basis from Japanese financial institutions. KWJ’s investments were typically acquired in joint venture funds with institutional investors who contributed the majority of the capital. Subsequent to the secondary public stock offering of KWJ in September 2002, KWJ became an unconsolidated subsidiary in the Company’s financial statements and was accounted for as an equity method investment. The Company sold its remaining shares of KWJ in 2003.

GOVERNMENT REGULATIONS

Our brokerage and property management operations are subject to various federal, state and local regulations. We must have an officer licensed as a real estate broker or we must associate with a broker licensed by each state within the U.S. in which we provide brokerage or property management services. Each of our employees that performs certain brokerage functions in any particular state must be a licensed real estate salesperson in that state and he or she must work under the supervision of a broker licensed by that state. We are in compliance with all material licensing requirements and regulations in states and countries in which licenses are required and in which we are engaged in brokerage and property management activities.

In various states, governmental entities license individual auctioneers and/or administer various regulations governing their activities and may require that auctioneers post bonds. We are in compliance with all material licensing and bonding requirements in all states in which auctioning licenses and bonds are required and in which we are engaged in material auction activities.

COMPETITION

Because of our unique combination of businesses, we compete with brokerage and property management companies as well as companies that invest in real estate and distressed notes. The brokerage and property management businesses are both highly fragmented and competitive. We compete with real estate brokerage companies on the basis of our relationship with property owners, quality of service, and commissions charged. We compete with property management and leasing firms also on the basis of our relationship with clients, the range and quality of services provided, and fees and commissions charged. Our investment operations compete to varying degrees with real estate investment partnerships and other investment companies. We compete with these other investors on the basis of our relationship with the sellers and the amounts that we pay for the investments acquired.

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EMPLOYEES

We have approximately 535 employees. Our compensation policies are designed to attract, retain and motivate employees that are an integral part of our profitability. Our employees typically receive a base salary and performance based incentives including bonuses based primarily on the cash flow of their operational units. As a result, employees are encouraged to meet individual goals as well as to contribute their expertise and efforts on behalf of their group. In addition to promoting the generation of revenues, our compensation structure also encourages our employees to control costs.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities Exchange Act of 1934 that require the Company to file, most often electronically, reports, proxy and information statements, and other information with the Securities and Exchange Commission (SEC). The public may read and copy the Company’s filings at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public can obtain information on the operation of the Public Reference Room by calling 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

ITEM 2. PROPERTIES

Our executive and administrative offices are leased and located at 9601 Wilshire Boulevard, Suite 220, Beverly Hills, California. We also lease space for our regional and branch offices and sublease space to third parties. These facilities, including our Beverly Hills headquarters, comprise a total of approximately 100,000 square feet of leased space, with an annual aggregate base rental of approximately $2 million. Each of these leases is scheduled to expire within the next seven years. We believe that we will be able to renew any expiring lease or obtain suitable office space to replace such leased facility, as necessary, without any material increase in our rental costs.

As described above, we also buy and sell real estate, primarily through joint venture investments, in the ordinary course of our business.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various legal proceedings generally incidental to our business. These matters are generally covered by insurance. While the ultimate disposition of these proceedings is not known, based upon current available information, we believe that the outcomes will not have a material adverse effect on our financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of our stockholders during the fourth quarter of 2003.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Company’s Common Stock trades on The NASDAQ National Market under the symbol “KWIC”. The following table sets forth the high and low closing prices of our Common Stock as reported on The Nasdaq National Market.

As of March 1, 2004, there were approximately 1,200 holders of our Common Stock.

EQUITY COMPENSATION PLAN TABLE

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial data as of and for each of the five fiscal years ended December 31, 2003. The data set forth below should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements appearing elsewhere herein and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are an integrated real estate services and investment Company with headquarters in Beverly Hills, California. Through our subsidiaries, we provide a complementary array of real estate services, including fund management, property management and leasing, real estate brokerage services including auction marketing, and asset management. We also invest in commercial and residential real estate and discounted loan portfolios. Our investments in real estate are made primarily through joint venture funds.

In 2002, the Company completed two public stock offerings and two private sales of shares of its formerly wholly-owned subsidiary, Kennedy-Wilson Japan (“KWJ”). The sale of stock reduced the Company’s ownership in the Japan subsidiary to 37%. This change in ownership necessitated a change in the accounting treatment for KWJ from a consolidated entity to an equity investment beginning in the fourth quarter of 2002. Instead of including the various components of KWJ’s revenue and expenses in the individual revenue and expense categories on the income statement, the Company’s 37% of the net income of the Japan subsidiary is shown as a single separate line item. Likewise, on the balance sheet the Company’s investment in KWJ is shown as a single separate line item.

Our current real estate investment strategy favors joint venture investments; however, we occasionally continue to acquire and sell residential and commercial real estate on a wholly owned basis. We are no longer involved in single-family residential development and sales but are investing, through joint venture partnerships, in multi-family apartment projects. We also invest in discounted loan portfolios secured primarily by real estate on our own account and through joint venture partnerships. The discounted asset portfolios acquired prior to 2001 consisted primarily of claims, judgements and guarantees.

COMPARISON OF YEARS ENDED DECEMBER 31, 2003 AND 2002

Our revenues in 2003 and 2002 were $27.1 million and $44.7 million, respectively. Total operating expenses in 2003 and 2002 were $34.8 million and $48.6 million, respectively. Operating income includes combined equity in income of joint ventures and Kennedy-Wilson Japan of $2.6 million and $9.0 million, respectively. Our net income for the same periods was $5.4 millio