Colony Capital Announces Third Quarter 2016 Financial Results
Colony Capital, Inc. (NYSE:CLNY) and subsidiaries (collectively, the “Company”) today announced financial results for the third
quarter ended September 30, 2016 and declared a dividend of $0.40 per share of Class A and Class B common stock for the fourth
quarter of 2016.
Third Quarter 2016 Highlights
- Net income attributable to common stockholders of $22.9 million, or $0.20 per basic share.
- Core funds from operations (“Core FFO”) of $70.0 million, or $0.52 per basic share; Funds from
operations (“FFO”) of $47.0 million, or $0.35 per basic share.
- Declared and paid a third quarter dividend of $0.40 per share of Class A and Class B common
stock.
- Held a closing for the Company’s first open-end fund (“CIF”) which invests in the U.S. industrial
market with total callable capital commitments of approximately $258 million on September 30, 2016; CIF concurrently acquired an
investment interest at fair value in the approximate $2 billion Colony Light Industrial Platform (“CLIP”) portfolio.
- The Company and funds managed by the Company invested and agreed to invest approximately $567 million
across the U.S. and Europe through real estate equity and debt investments. The Company invested and agreed to invest $234
million and funds managed by the Company invested and agreed to invest $333 million.
- Subsequent to quarter end, the Company and funds managed by the Company invested and agreed to invest
approximately $146 million across the U.S. through real estate equity and debt investments. The Company invested and agreed to
invest $61 million and funds managed by the Company invested and agreed to invest $85 million.
Third Quarter 2016 Financial Results
For the third quarter of 2016, the Company reported total income of $228.8 million and net income attributable to common
stockholders of $22.9 million, or $0.20 per basic share. Core FFO was $70.0 million, or $0.52 per basic share, and FFO was $47.0
million, or $0.35 per basic share. For more information and a reconciliation of net income attributable to common stockholders to
FFO and Core FFO, please refer to the descriptions and tables at the end of this press release.
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Three Months Ended
September 30, 2016 |
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Three Months Ended
September 30, 2015 |
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(In thousands, except per share data)
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Amount |
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Per Basic Share
or Unit
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Amount |
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Per Basic Share
or Unit
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| Net income attributable to common stockholders |
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$ |
22,878 |
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$ |
0.20 |
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$ |
37,203 |
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$ |
0.33 |
| Core FFO attributable to common interests in Operating Company* |
|
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$ |
69,994 |
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$ |
0.52 |
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$ |
70,064 |
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$ |
0.52 |
| FFO attributable to common interests in Operating Company* |
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$ |
46,992 |
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$ |
0.35 |
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$ |
72,162 |
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$ |
0.54 |
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* Operating Company represents Colony Capital Operating Company, LLC, the Company’s operating partnership, through which all
Company's assets are held and all operations are conducted
“We had another strong quarter that further demonstrates the efficacy of our strategic planning and ability to execute these
past few years,” said Richard Saltzman, the Company’s President and Chief Executive Officer. “A particular highlight is the closing
of Colony’s first open-end fund offering which invests in the U.S. industrial market and is directly related to the success of our
significant platform acquisition in that space almost two years ago. Last but not least, we continue to make excellent progress
towards the closing of the tri-party merger with NorthStar Asset Management and NorthStar Realty Finance. Once complete, which is
expected in January 2017, our vastly increased scale, broader distribution capabilities, and diversity of assets will greatly
enhance our overall capabilities.”
Colony NorthStar, Inc. Transaction
On June 2, 2016, the Company, NorthStar Asset Management Group, Inc. (NYSE:NSAM) and NorthStar Realty Finance Corp. (NYSE:NRF)
entered into a definitive agreement to create a world-class, internally-managed, diversified real estate and investment management
platform. For additional information regarding the proposed merger, please refer to the registration statement on Form S-4 filed by
Colony NorthStar, Inc. with the Securities and Exchange Commission on July 29, 2016, as may be amended from time to time, and the
investor presentation related to the proposed merger, which can be found on Colony Capital’s, NSAM’s and NRF’s respective websites.
The transaction is expected to close in January 2017, subject to customary closing conditions, including shareholder and regulatory
approvals.
Third Quarter 2016 Operating Results and Investment Activity by Segment
The Company holds investment interests in five reportable segments: Colony Light Industrial Platform or CLIP, Single Family
Residential Rentals, Other Real Estate Equity, Real Estate Debt and Investment Management.
Equity: Colony Light Industrial Platform
The Company’s interest in the CLIP portfolio was 62% during the third quarter of 2016. With the closing of
CIF on September 30, 2016, the Company’s interest in the total equity capitalization of CLIP is approximately 50%. The Company
continues to own a 100% interest in the related operating platform. CLIP primarily invests in light industrial properties in infill
locations in major U.S. metropolitan markets targeting multi-tenant buildings of up to 500,000 square feet and single tenant
buildings of up to 250,000 square feet with an office buildout of less than 20%.
As of September 30, 2016, CLIP’s portfolio consisted of 336 primarily light industrial buildings totaling
36.4 million square feet across 15 major U.S. markets and was 95% leased. During the third quarter, CLIP’s same store portfolio
produced recurring revenue growth of 5.7% and net operating income growth of 14.6% over the same period last year and sequential
quarter-over-quarter recurring revenue growth of 1.0% and net operating income growth of 3.1%. CLIP’s same store portfolio is
defined as buildings in operation throughout the full periods presented under the comparison and included 302 and 320 properties in
the year-over-year and quarter-over-quarter comparisons, respectively.
During the third quarter, CLIP acquired twelve light industrial buildings totaling approximately 1.5 million
square feet for $128 million and disposed of four non-core buildings totaling approximately 480,000 square feet for $12 million. As
of September 30, 2016, total consolidated assets and equity in this segment were $2.4 billion and $1.1 billion, respectively, and
the Company’s share of total assets and equity were $1.1 billion and $577 million, respectively. This segment’s net income
attributable to common stockholders for the quarter was $1.2 million and Core FFO was $15.6 million.
Subsequent to quarter end, CLIP acquired six light industrial buildings totaling approximately 710,000 square
feet for $69 million. CLIP also closed three fixed-rate financings totaling $143 million with a weighted average fixed interest
rate and original term of 3.6% and 15 years, respectively. This brings the total balance of fixed rate debt to $598 million with a
weighted average fixed interest rate and original term of 3.8% and 13 years, respectively. Total floating rate debt currently
amounts to $409 million which will continue to be refinanced into longer term fixed rate financing.
Equity: Single-Family Residential Rentals
The Company’s investment in Single Family Residential Rentals includes 15.1 million shares in Colony Starwood
Homes (NYSE:SFR), which represents a 14.0% ownership based on the total common shares and OP units outstanding. Separately, the
Company owns a $58 million share of the net book value in Colony American Finance (“CAF”), which represents a 17.4% ownership.
As of September 30, 2016, SFR owned and managed more than 35,000 homes with total owned home occupancy of
95%. During the third quarter, SFR’s quarterly same store portfolio of more than 26,000 homes achieved a core net operating income
margin of 61.9% and produced total revenue growth of 6.5% and net operating income growth of 6.9% over the same period last year.
SFR’s same store portfolio is defined as homes stabilized for at least fifteen (15) months prior to the start of the current
measurement period, excluding homes that have been disposed of, removed from service or returned to the development period for
significant renovation. For the third quarter of 2016, SFR reported net loss available to common shareholders of $10.9 million, or
$0.11 per SFR share and Core FFO of $46.2 million, or $0.43 per SFR share. SFR’s Core FFO excludes any gains or losses from
property sales and the results associated with its non-performing loan business, which SFR has classified as discontinued
operations and has been substantially divested. Based on year-to-date results, SFR further increased its full year 2016 Core FFO
guidance from $1.60 to $1.65 per share to $1.65 to $1.69 per share.
SFR’s board declared a dividend for the fourth quarter of 2016 of $0.22 per share, which represents an
annualized dividend yield of 3.4% on the Company’s cost basis. As of September 30, 2016, the Company’s interest in SFR had a
carrying value of $321 million. Based on SFR’s closing share price of $29.44 on November 4, 2016, the Company’s interest in SFR was
valued at $445 million. This segment’s net loss attributable to common stockholders for the quarter was $0.4 million, while Core
FFO was $7.8 million.
Equity: Other Real Estate Equity
The Company’s investment in other real estate equity includes triple net lease investments, real estate
acquired in settlement of loans, common equity in real estate or related companies, and preferred equity investments meeting
certain risk and return profiles.
As of September 30, 2016, approximately 61% of the net book value in this segment was composed of
opportunistic real estate investments generally made through joint ventures with funds managed by the Company. This includes the
Company’s $50 million investment in Albertsons/Safeway and $5 million co-investment in the $115 million real estate securities
investment vehicle which owns common stock and preferred stock of publicly traded U.S. real estate investment trusts, including
securities of the Company. The remainder of the net book value in the segment was composed of triple net lease investments located
primarily in Europe with a weighted average remaining lease term in excess of 13 years.
During the third quarter, the Company invested and agreed to invest $99 million in one real estate equity
investment. As of September 30, 2016, total consolidated assets and equity in this segment were $2.1 billion and $1.1 billion,
respectively, and the Company’s share of total assets and equity were $1.3 billion and $628 million, respectively. This segment’s
net income attributable to common stockholders for the quarter was $11.2 million and Core FFO was $21.3 million.
Real Estate Debt
The Company’s investment in real estate debt includes originations and acquisitions of senior loans and
subordinated debt, including preferred equity meeting certain risk and fixed return parameters.
As of September 30, 2016, approximately 78% of the net book value in this segment was composed of originated
loans and approximately 22% was composed of acquired loans. The Company’s share of originated loans totaled $1.5 billion with a
weighted average coupon of 9% and third quarter annualized Core FFO yield on average net book value was 11%. Originated loans
carried a weighted average first dollar loan-to-value of 34% and last dollar loan-to-value of 73% accounting for any senior debt or
investment-level financing. The Company’s share of acquired loans totaled $425 million and third quarter annualized Core FFO yield
on average net book value was 11% excluding loan loss provisions.
During the third quarter, the Company and funds managed by the Company invested and agreed to invest $339
million in five real estate debt investments. The Company invested and agreed to invest $68 million and funds managed by the
Company invested and agreed to invest $271 million. As of September 30, 2016, total consolidated assets and equity in this segment
were $4.4 billion and $3.4 billion, respectively, and the Company’s share of total assets and equity were $2.8 billion and $1.9
billion, respectively. This segment’s net income attributable to common stockholders for the quarter was $44.4 million and Core FFO
was $57.4 million.
Subsequent to quarter end, the Company and funds managed by the Company invested and agreed to invest $69
million in two real estate debt investments. The Company invested and agreed to invest $17 million and funds managed by the Company
invested and agreed to invest $52 million.
Real Estate Investment Management
The Company’s real estate investment management segment includes the business and operations of managing
Company-sponsored funds and other investment vehicles for third-party investors. As of September 30, 2016, the Company had $18.1
billion of AUM and $7.8 billion of FEEUM compared to $18.4 billion of AUM and $7.6 billion of FEEUM as of June 30, 2016. AUM
decreased primarily due to the investment realizations in legacy funds (asset value) being in excess of both new capital
commitments and an increase of the fair value of investments under management. FEEUM increased primarily due to new capital
commitments being in excess of certain investment realizations in legacy funds (equity value). As of September 30, 2016, total
consolidated assets and equity in this segment, which is wholly owned by the Company, were $785 million and $724 million,
respectively. This segment’s net income attributable to common stockholders for the quarter was $7.1 million and Core FFO was $11.8
million.
Common and Preferred Stock Dividends
On November 3, 2016, the Company’s Board of Directors declared (i) a dividend of $0.40 per share of Class A and Class B common
stock for the fourth quarter of 2016, (ii) a cash dividend of $0.53125 per share on the Company’s 8.50% Series A Cumulative
Perpetual Preferred Stock for the quarterly period ending January 15, 2017, (iii) a cash dividend of $0.46875 per share on the
Company’s 7.50% Series B Cumulative Perpetual Preferred Stock for the quarterly period ending January 15, 2017, and (iv) a cash
dividend of $0.4453 per share on the Company’s 7.125% Series C Cumulative Perpetual Preferred Stock for the quarterly period ending
January 15, 2017. All dividends will be paid on January 17, 2017 to respective stockholders of record on December 30, 2016.
On August 3, 2016, the Company’s Board of Directors declared (i) a dividend of $0.40 per share of Class A and Class B common
stock for the third quarter of 2016, (ii) a cash dividend of $0.53125 per share on the Company’s 8.50% Series A Cumulative
Perpetual Preferred Stock for the quarterly period ending October 15, 2016, (iii) a cash dividend of $0.46875 per share on the
Company’s 7.50% Series B Cumulative Perpetual Preferred Stock for the quarterly period ending October 15, 2016, and (iv) a cash
dividend of $0.4453 per share on the Company’s 7.125% Series C Cumulative Perpetual Preferred Stock for the quarterly period ending
October 15, 2016. All dividends were paid on October 14, 2016 to respective stockholders of record on September 30, 2016.
Common Shares and Operating Company Units
As of November 4, 2016, Colony Capital, Inc. had approximately 113.9 million Class A and B common shares outstanding and the
Company’s operating partnership had approximately 134.7 million operating company units (“OP Units”) outstanding.
Non-GAAP Financial Measures
We calculate funds from operations ("FFO") in accordance with standards established by the Board of Governors of the National
Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding
extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs
associated with depreciable real estate, plus real estate-related depreciation and amortization, and after similar adjustments for
unconsolidated partnerships and joint ventures. Included in FFO are gains and losses from sales of assets which are not depreciable
real estate such as loans receivable, investments in unconsolidated joint ventures as well as investments in debt and other equity
securities, as applicable.
We compute core funds from operations ("Core FFO") by adjusting FFO for the following items, including our share of these items
recognized by our unconsolidated partnerships and joint ventures: (i) gains and losses from sales of depreciable real estate, net
of depreciation, amortization and impairment previously adjusted for FFO; (ii) stock compensation expense; (iii) effects of
straight-line rent revenue and straight-line rent expense on ground leases; (iv) amortization of acquired above- and below-market
lease values; (v) amortization of deferred financing costs and debt premiums and discounts; (vi) unrealized fair value gains or
losses on derivative instruments and on foreign currency remeasurements; (vii) acquisition-related expenses, merger and integration
costs; (viii) amortization and impairment of finite-lived intangibles related to investment management contracts and customer
relationships; (ix) gain on remeasurement of consolidated investment entities and the effect of amortization thereof; (x) non-real
estate depreciation and amortization; (xi) change in fair value of contingent consideration; and (xii) deferred tax effect on the
foregoing adjustments. Also, beginning with the first quarter of 2016, our share of Core FFO from our interest in SFR will
represent our percentage interest multiplied by SFR's reported Core FFO, which may differ from our calculation of Core FFO. Refer
to SFR's filings for its definition and calculation of Core FFO.
FFO and Core FFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash
flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs,
including funds available to make distributions. FFO and Core FFO should not be used as supplements to or substitutes for cash flow
from operating activities computed in accordance with GAAP. Our calculations of FFO and Core FFO may differ from methodologies
utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.
The Company uses FFO and Core FFO as supplemental performance measures because, in excluding real estate depreciation and
amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year,
captures trends in occupancy rates, rental rates, and operating costs. The Company also believes that, as widely recognized
measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare its operating performance
with that of other REITs. However, because FFO and Core FFO excludes depreciation and amortization and captures neither the changes
in the value of the Company’s properties that results from use or market conditions nor the level of capital expenditures and
leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and
could materially impact the Company’s results from operations, the utility of FFO and Core FFO as measures of the Company’s
performance is limited. Other equity REITs may not calculate FFO and Core FFO in accordance with the NAREIT definition and,
accordingly, the Company’s FFO and Core FFO may not be comparable to such other REITs’ FFO and Core FFO. Accordingly, FFO and Core
FFO should be considered only as supplements to net income as a measure of the Company’s performance.
Conference Call
Colony Capital, Inc. will conduct a conference call to discuss the results on Monday, November 7, 2016, at 8:00 a.m. PT / 11:00
a.m. ET. To participate in the event by telephone, please dial (877) 407-4018 ten minutes prior to the start time (to allow time
for registration) and use conference ID 13647413. International callers should dial (201) 689-8471 and enter the same conference ID
number. For those unable to participate during the live call, a replay will be available beginning November 7, 2016 at 10:00 a.m.
PT / 1:00 p.m. ET, through November 14, 2016, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.),
and use conference ID 13647413. International callers should dial (412) 317-6671 and enter the same conference ID number. The call
will also be broadcast live over the Internet and can be accessed on the Investor Relations section of the Company’s website at
www.colonyinc.com. A webcast of the call will be available for 90 days on the Company’s website.
About Colony Capital, Inc.
Colony Capital, Inc. (formerly, Colony Financial, Inc.), a New York Stock Exchange publicly traded company (NYSE:CLNY), is a
leading global real estate and investment management firm headquartered in Los Angeles, California with more than 300 employees
across 14 offices in 10 countries. Through our global investment management business, which has operated under the Colony Capital
brand for more than 25 years, we have sponsored $24 billion of equity across a variety of distinct funds and investment vehicles
that collectively invested over $60 billion of total capital. We manage capital on behalf of both Company stockholders and limited
partners in private investment funds under our management where the Company may earn management fees and carried interests. Our
investment portfolio is primarily composed of: (i) real estate equity; (ii) real estate debt; and (iii) investment management of
Company-sponsored private equity funds and vehicles. The Company has elected to be taxed as a real estate investment trust, or
REIT, for U.S. federal income tax purposes. For additional information regarding the Company and its management and business,
please refer to www.colonyinc.com.
Cautionary Statement Regarding Forward-Looking Statements
This communication may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking
statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use
of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond our control, and may cause
actual results to differ significantly from those expressed in any forward-looking statement. Among others, the following
uncertainties and other factors could cause actual results to differ from those set forth in the forward-looking statements: the
failure to receive, on a timely basis or otherwise, the required approvals by NSAM, CLNY and NRF stockholders, governmental or
regulatory agencies and third parties; the risk that a condition to closing of the merger may not be satisfied; each company’s
ability to consummate the merger; operating costs and business disruption may be greater than expected; the ability of each company
to retain its senior executives and maintain relationships with business partners pending consummation of the merger; the ability
to realize substantial efficiencies and synergies as well as anticipated strategic and financial benefits; and the impact of
legislative, regulatory and competitive changes. The foregoing list of factors is not exhaustive. Additional information about
these and other factors can be found in each company’s reports filed from time to time with the Securities and Exchange Commission
(the “SEC”). There can be no assurance that the merger will in fact be consummated.
We caution investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the
date of this communication. None of NSAM, CLNY or NRF is under any duty to update any of these forward-looking statements after the
date of this communication, nor to conform prior statements to actual results or revised expectations, and none of NSAM, CLNY or
NRF intends to do so.
Additional Information and Where to Find It
In connection with the proposed transaction, Colony NorthStar, Inc. (“Colony Northstar”), a Maryland subsidiary of NSAM that
will be the surviving parent company of the combined company, filed with the SEC a registration statement on Form S-4 (File No.:
333-212739) that includes a joint proxy statement of NSAM, Colony and NRF and that also constitutes a prospectus of Colony
NorthStar. The registration statement has not yet become effective. Each of NSAM, Colony, NRF and Colony NorthStar may also file
other documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy
statement/prospectus or registration statement or any other document which NSAM, Colony, NRF or Colony NorthStar may file with the
SEC. INVESTORS AND SECURITY HOLDERS OF NSAM, COLONY AND NRF ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 INITIALLY
FILED BY COLONY NORTHSTAR ON JULY 29, 2016, AS AMENDED FROM TIME TO TIME, THAT INCLUDES A JOINT PROXY STATEMENT/PROSPECTUS FROM
EACH OF NSAM, COLONY AND NRF, THE CURRENT REPORTS ON FORM 8-K FILED BY EACH OF NSAM, COLONY AND NRF ON JUNE 3, 2016, JUNE 7, 2016,
JUNE 8, 2016, JULY 29, 2016 AND OCTOBER 17, 2016 IN CONNECTION WITH THE MERGER AGREEMENT, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
security holders may obtain free copies of the registration statement and the joint proxy statement/prospectus and other documents
filed with the SEC by NSAM, Colony, NRF and Colony NorthStar (when available) through the web site maintained by the SEC at
www.sec.gov or by contacting the investor relations department of NSAM, Colony or NRF at the following:
NorthStar Asset Management Group Inc.
Megan Gavigan / Emily Deissler / Hayley Cook Sard Verbinnen & Co.
(212) 687-8080
Colony Capital, Inc.
Owen Blicksilver
Owen Blicksilver PR, Inc. (516) 742-5950
or
Lasse Glassen
Addo Communications, Inc. (310) 829-5400
lglassen@addoir.com
NorthStar Realty Finance Corp.
Joe Calabrese
Investor Relations
(212) 827-3772
Participants in the Solicitation
Each of NSAM, Colony and NRF and their respective directors and executive officers may be deemed to be participants in the
solicitation of proxies from their respective shareholders in connection with the proposed transaction. Information regarding
NSAM’s directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is
contained in NSAM’s Annual Report on Form 10-K for the year ended December 31, 2015, as amended by its Form 10-K/A filed with the
SEC on April 29, 2016 and Current Reports on Form 8-K filed by NSAM with the SEC on June 3, 2016, June 7, 2016, June 8, 2016, July
29, 2016 and October 17, 2016 in connection with the proposed transaction. Information regarding Colony’s directors and executive
officers, including a description of their direct interests, by security holdings or otherwise, is contained in Colony’s Annual
Report on Form 10-K for the year ended December 31, 2015, its annual proxy statement filed with the SEC on March 31, 2016 and
Current Reports on Form 8-K filed by Colony with the SEC on June 3, 2016, June 7, 2016, June 8, 2016, July 29, 2016 and October 17,
2016 in connection with the proposed transaction. Information regarding NRF’s directors and executive officers, including a
description of their direct interests, by security holdings or otherwise, is contained in NRF’s Annual Report on Form 10-K for the
year ended December 31, 2015, as amended by its Form 10-K/A filed with the SEC on April 28, 2016 and Current Reports on Form 8-K
filed by NRF with the SEC on June 3, 2016, June 7, 2016, June 8, 2016, July 29, 2016 and October 17, 2016 in connection with the
proposed transaction. A more complete description is available in the registration statement on Form S-4 and the joint proxy
statement/prospectus initially filed by Colony NorthStar with the SEC on July 29, 2016, as amended from time to time. You may
obtain free copies of these documents as described in the preceding paragraph.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
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COLONY CAPITAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
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|
|
|
|
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|
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September 30,
2016
|
|
|
December 31,
2015
|
|
|
|
(Unaudited) |
|
|
| ASSETS |
|
|
|
|
|
|
| Cash |
|
|
$ |
440,173 |
|
|
|
$ |
185,854 |
|
| Loans receivable, net |
|
|
|
|
|
|
| Held for investment |
|
|
3,685,654 |
|
|
|
4,048,477 |
|
| Held for sale |
|
|
56,357 |
|
|
|
75,002 |
|
| Real estate assets, net |
|
|
|
|
|
|
| Held for investment |
|
|
3,294,122 |
|
|
|
3,132,218 |
|
| Held for sale |
|
|
195,391 |
|
|
|
297,887 |
|
| Equity method investments |
|
|
906,159 |
|
|
|
824,597 |
|
| Other investments |
|
|
123,618 |
|
|
|
99,868 |
|
| Goodwill |
|
|
680,127 |
|
|
|
678,267 |
|
| Deferred leasing costs and intangible assets, net |
|
|
313,445 |
|
|
|
325,513 |
|
| Due from affiliates |
|
|
13,718 |
|
|
|
11,713 |
|
| Other assets |
|
|
437,877 |
|
|
|
359,914 |
|
| Total assets |
|
|
$ |
10,146,641 |
|
|
|
$ |
10,039,310 |
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
| Accrued and other liabilities |
|
|
$ |
333,754 |
|
|
|
$ |
325,589 |
|
| Due to affiliates—contingent consideration |
|
|
39,350 |
|
|
|
52,990 |
|
| Dividends and distributions payable |
|
|
65,924 |
|
|
|
65,688 |
|
| Debt, net |
|
|
3,472,362 |
|
|
|
3,587,724 |
|
| Convertible senior notes, net |
|
|
592,382 |
|
|
|
591,079 |
|
| Total liabilities |
|
|
4,503,772 |
|
|
|
4,623,070 |
|
| Commitments and contingencies |
|
|
|
|
|
|
| Equity: |
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
| Preferred stock |
|
|
250 |
|
|
|
250 |
|
| Common stock |
|
|
1,139 |
|
|
|
1,123 |
|
| Additional paid-in capital |
|
|
3,039,416 |
|
|
|
2,995,243 |
|
| Distributions in excess of earnings |
|
|
(183,585 |
) |
|
|
(131,278 |
) |
| Accumulated other comprehensive loss |
|
|
(23,897 |
) |
|
|
(18,422 |
) |
| Total stockholders’ equity |
|
|
2,833,323 |
|
|
|
2,846,916 |
|
| Noncontrolling interests in investment entities |
|
|
2,406,753 |
|
|
|
2,138,925 |
|
| Noncontrolling interests in Operating Company |
|
|
402,793 |
|
|
|
430,399 |
|
| Total equity |
|
|
5,642,869 |
|
|
|
5,416,240 |
|
| Total liabilities and equity |
|
|
$ |
10,146,641 |
|
|
|
$ |
10,039,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COLONY CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
| Income |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
$ |
98,275 |
|
|
|
$ |
142,269 |
|
|
|
$ |
291,496 |
|
|
|
$ |
289,676 |
|
| Property operating income |
|
|
92,505 |
|
|
|
86,435 |
|
|
|
279,470 |
|
|
|
213,458 |
|
| Income from equity method investments |
|
|
16,684 |
|
|
|
6,879 |
|
|
|
72,226 |
|
|
|
44,184 |
|
| Fee income |
|
|
17,233 |
|
|
|
23,070 |
|
|
|
49,347 |
|
|
|
45,068 |
|
| Other income |
|
|
4,054 |
|
|
|
4,325 |
|
|
|
10,071 |
|
|
|
8,108 |
|
| Total income |
|
|
228,751 |
|
|
|
262,978 |
|
|
|
702,610 |
|
|
|
600,494 |
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Management fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,062 |
|
| Investment and servicing expenses |
|
|
5,115 |
|
|
|
6,804 |
|
|
|
17,448 |
|
|
|
15,383 |
|
| Transaction costs |
|
|
6,190 |
|
|
|
254 |
|
|
|
18,638 |
|
|
|
18,152 |
|
| Interest expense |
|
|
42,196 |
|
|
|
38,027 |
|
|
|
126,635 |
|
|
|
95,544 |
|
| Property operating expenses |
|
|
28,903 |
|
|
|
35,615 |
|
|
|
89,469 |
|
|
|
85,531 |
|
| Depreciation and amortization |
|
|
43,593 |
|
|
|
42,656 |
|
|
|
129,276 |
|
|
|
101,609 |
|
| Provision for loan losses |
|
|
6,569 |
|
|
|
26,495 |
|
|
|
17,412 |
|
|
|
30,937 |
|
| Impairment loss |
|
|
941 |
|
|
|
317 |
|
|
|
5,461 |
|
|
|
767 |
|
| Compensation expense |
|
|
29,582 |
|
|
|
25,734 |
|
|
|
80,689 |
|
|
|
54,993 |
|
| Administrative expenses |
|
|
12,891 |
|
|
|
11,154 |
|
|
|
38,760 |
|
|
|
26,731 |
|
| Total expenses |
|
|
175,980 |
|
|
|
187,056 |
|
|
|
523,788 |
|
|
|
444,709 |
|
| Gain on sale of real estate assets, net |
|
|
11,151 |
|
|
|
5,732 |
|
|
|
68,114 |
|
|
|
6,472 |
|
| Gain on remeasurement of consolidated investment entities, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,486 |
|
| Other gain (loss), net |
|
|
4,573 |
|
|
|
(6,491 |
) |
|
|
18,270 |
|
|
|
(8,282 |
) |
| Income before income taxes |
|
|
68,495 |
|
|
|
75,163 |
|
|
|
265,206 |
|
|
|
195,461 |
|
| Income tax benefit |
|
|
3,409 |
|
|
|
3,598 |
|
|
|
865 |
|
|
|
2,599 |
|
| Net income |
|
|
71,904 |
|
|
|
78,761 |
|
|
|
266,071 |
|
|
|
198,060 |
|
| Net income attributable to noncontrolling interests: |
|
|
|
|
|
|
|
|
|
|
|
|
| Investment entities |
|
|
32,744 |
|
|
|
22,264 |
|
|
|
130,508 |
|
|
|
62,580 |
|
| Operating Company |
|
|
4,189 |
|
|
|
7,200 |
|
|
|
15,528 |
|
|
|
16,338 |
|
| Net income attributable to Colony Capital, Inc. |
|
|
34,971 |
|
|
|
49,297 |
|
|
|
120,035 |
|
|
|
119,142 |
|
| Preferred dividends |
|
|
12,093 |
|
|
|
12,094 |
|
|
|
36,066 |
|
|
|
30,476 |
|
| Net income attributable to common stockholders |
|
|
$ |
22,878 |
|
|
|
$ |
37,203 |
|
|
|
$ |
83,969 |
|
|
|
$ |
88,666 |
|
| Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
$ |
0.20 |
|
|
|
$ |
0.33 |
|
|
|
$ |
0.73 |
|
|
|
$ |
0.79 |
|
| Diluted |
|
|
$ |
0.20 |
|
|
|
$ |
0.32 |
|
|
|
$ |
0.73 |
|
|
|
$ |
0.79 |
|
| Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
112,423 |
|
|
|
111,443 |
|
|
|
112,133 |
|
|
|
110,758 |
|
| Diluted |
|
|
112,423 |
|
|
|
136,138 |
|
|
|
112,133 |
|
|
|
126,976 |
|
| Dividends declared per common share |
|
|
$ |
0.40 |
|
|
|
$ |
0.38 |
|
|
|
$ |
1.20 |
|
|
|
$ |
1.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COLONY CAPITAL, INC.
FUNDS FROM OPERATIONS AND CORE FUNDS FROM OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2016 |
|
|
2015 |
|
(In thousands, except per share data)
|
|
|
|
|
|
(As Revised)(1) |
| Net income attributable to common stockholders |
|
|
$ |
22,878 |
|
|
|
$ |
37,203 |
|
| Adjustments for FFO attributable to common interests in Operating Company: |
|
|
|
|
|
|
| Net income attributable to noncontrolling common interests in Operating Company |
|
|
4,189 |
|
|
|
7,200 |
|
| Real estate depreciation and amortization |
|
|
46,239 |
|
|
|
43,781 |
|
| Impairment of real estate |
|
|
991 |
|
|
|
459 |
|
| Gain on sales of real estate |
|
|
(14,970 |
) |
|
|
(5,627 |
) |
| Less: Adjustments attributable to noncontrolling interests in investment
entities |
|
|
(12,335 |
) |
|
|
(10,854 |
) |
| FFO attributable to common interests in Operating Company and common
stockholders |
|
|
$ |
46,992 |
|
|
|
$ |
72,162 |
|
| Additional adjustments for Core FFO attributable to common interests in
Operating Company and common stockholders: |
| Gain on sales of real estate, net of depreciation, amortization and impairment
previously adjusted for FFO |
|
|
11,431 |
|
|
|
4,387 |
|
| Noncash equity compensation expense |
|
|
3,598 |
|
|
|
2,511 |
|
| Straight-line rent revenue |
|
|
(2,565 |
) |
|
|
(2,940 |
) |
| Loss on change in fair value of contingent consideration |
|
|
(4,550 |
) |
|
|
(16,900 |
) |
| Amortization of acquired above- and below-market lease intangibles, net |
|
|
83 |
|
|
|
169 |
|
| Amortization of deferred financing costs and debt premiums and discounts |
|
|
7,299 |
|
|
|
8,338 |
|
| Unrealized gain on derivatives |
|
|
(172 |
) |
|
|
1,552 |
|
| Acquisition-related expenses, merger and integration costs |
|
|
7,083 |
|
|
|
825 |
|
| Amortization and impairment of investment management intangibles |
|
|
3,779 |
|
|
|
5,614 |
|
| Non-real estate depreciation and amortization |
|
|
1,200 |
|
|
|
1,044 |
|
| Gain on remeasurement of consolidated investment entities |
|
|
|
|
|
|
| Amortization of gain on remeasurement of consolidated investment entities, net |
|
|
12,709 |
|
|
|
12,715 |
|
| Deferred tax (benefit) expense, net (2) |
|
|
(1,959 |
) |
|
|
(2,904 |
) |
| Net gain on SFR's non-performing loans business (3) |
|
|
(63 |
) |
|
|
— |
|
| Less: Adjustments attributable to noncontrolling interests in investment
entities |
|
|
(14,871 |
) |
|
|
(16,509 |
) |
| Core FFO attributable to common interests in Operating Company and common
stockholders |
|
|
$ |
69,994 |
|
|
|
$ |
70,064 |
|
|
|
|
|
|
|
|
| FFO per common share / common OP Unit (4) |
|
|
$ |
0.35 |
|
|
|
$ |
0.54 |
|
| FFO per common share / common OP Unit—Diluted (4) |
|
|
$ |
0.34 |
|
|
|
$ |
0.50 |
|
| Core FFO per common share / common OP Unit (4) |
|
|
$ |
0.52 |
|
|
|
$ |
0.52 |
|
| Core FFO per common share / common OP Unit—Diluted (4) |
|
|
$ |
0.48 |
|
|
|
$ |
0.48 |
|
| Weighted average number of common Units outstanding used for FFO and Core FFO
per common share and OP Unit (4) |
|
|
134,715 |
|
|
|
134,009 |
|
| Weighted average number of common Units outstanding used for FFO and Core FFO
per common share and OP Unit—Diluted (4) |
|
|
159,664 |
|
|
|
158,704 |
|
|
|
|
|
|
|
|
|
|
| __________ |
| (1) |
Core FFO for the three months ended September 30, 2015 has been revised from
previously reported numbers to reflect as further described in Note (2). |
| (2) |
Adjustment represents the deferred tax effect of noncash equity compensation expense
and amortization and impairment of investment management intangibles. Core FFO for the three months ended September 30, 2015
has been revised to include this adjustment. The Company had previously reported Core FFO of $72,968, Basic Core FFO per share
of $0.54 and Diluted Core FFO per share of $0.50. |
| (3) |
Represents OP's share of SFR's net gain on its legacy SWAY non-performing loans
business, which is classified as discontinued operations for SFR. |
| (4) |
Calculated based on weighted average shares outstanding including participating
securities (nonvested shares) and assuming the exchange of all common OP units outstanding for common shares. |
|
|
COLONY CAPITAL, INC.
DEFINITIONS
(Unaudited)
Fee-Earning Equity Under Management (“FEEUM”) refers to the equity for which the Company provides investment management
services and from which it derives management fees and/or performance allocations. FEEUM is presented as of September 30, 2016, and
includes $0.6 billion of uncalled limited partner capital commitments which will not bear fees until such capital is called at the
Company’s discretion. Additionally, $0.3 billion pertains to FEEUM of our equity-method investment in a German-based asset
management platform. The Company's calculations of FEEUM may differ from the calculations of other asset managers, and as a result
this measure may not be comparable to similar measures presented by other asset managers.
Assets Under Management (“AUM”) refers to the assets for which the Company provides investment management services and
includes assets for which it may or may not charge management fees and/or performance allocations. AUM is presented as of September
30, 2016 and equals the sum of: a) the gross fair value of investments held directly by the Company or managed by the Company on
behalf of its private funds, co-investments, or other investment vehicles; b) leverage, inclusive of debt held by investments and
deferred purchases prices; c) uncalled limited partner capital commitments which the Company is entitled to call from investors
during the given commitment period at its discretion pursuant to the terms of their respective funds; and d) with respect to
majority-owned and substantially controlled investments the Company consolidates gross assets attributable to third-party
investors. The Company's calculations of AUM may differ from the calculations of other asset managers, and as a result this measure
may not be comparable to similar measures presented by other asset managers.
NorthStar Asset Management Group Inc.
Megan Gavigan / Emily Deissler / Hayley Cook Sard Verbinnen & Co.
(212) 687-8080
or
Colony Capital, Inc.
Owen Blicksilver
Owen Blicksilver PR, Inc. (516) 742-5950
or
Lasse Glassen
Addo Communications, Inc. (310) 829-5400
lglassen@addoir.com
or
NorthStar Realty Finance Corp.
Joe Calabrese
Investor Relations
(212) 827-3772
View source version on businesswire.com: http://www.businesswire.com/news/home/20161107005665/en/