Drive Shack Inc. (NYSE:DS; the “Company”) today reported the following information for the second quarter ended June 30, 2018.

BUSINESS HIGHLIGHTS

  • Drive Shack – The Company opened its first venue in Orlando, Florida, in April 2018.
    • The Company has announced five additional venues to date, which are in various stages of development, and are expected to open throughout 2019 and early 2020.
  • American Golf – As of June 30, 2018, the Company owned, leased or managed 74 golf properties across 12 states. These courses are located predominately in high-volume, top-tier cities across the U.S.
    • The Company is monetizing its 26 owned properties. As of the date of this release, 1 property was sold and 15 properties were under contract or had a letter of intent for purchase. The remaining properties are being actively marketed and the Company aims to achieve all sales by early 2019.
    • The Company entered the year aiming to terminate or restructure 14 of its lease agreements. During the first six months of the year, 2 properties have been terminated or converted to management agreements. The Company continues to pursue the remaining 12 agreements.

SECOND QUARTER 2018 FINANCIAL RESULTS

  • GAAP Loss of $6 million, or $0.09 per share, for the three months ended June 30, 2018, compared to a loss of $6 million, or $0.09 per share, in the prior year corresponding period.
  • GAAP Loss of $24 million, or $0.36 per share, for the six months ended June 30, 2018, compared to a loss of $20 million, or $0.31 per share, in the prior year corresponding period.
    • Year-over-year decrease is primarily due to lower interest income because of the repayment of the resorts-related loan and sale of agency securities, partially offset by stronger year-over-year performance in the traditional golf business.
      Three Months Ended June 30, Six Months Ended June 30, 2018   2017 2018   2017 GAAP Loss $ (6) million $ (6) million $ (24) million $ (20) million GAAP Loss per WA Basic Share $ (0.09) $ (0.09) $ (0.36) $ (0.31)   WA: Weighted Average  

THIRD QUARTER 2018 PREFERRED STOCK DIVIDENDS

Drive Shack Inc.’s Board of Directors declared dividends on the Company's preferred stock for the period beginning August 1, 2018 and ending October 31, 2018. The dividends are payable on October 31, 2018 to holders of record of preferred stock on October 1, 2018. The Company will pay dividends of $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of the Company’s website, http://ir.driveshack.com. For consolidated information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, http://ir.driveshack.com.

EARNINGS CONFERENCE CALL

The Company’s management will host a conference call on Friday, August 3, 2018 at 9:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of Drive Shack Inc.’s website, http://ir.driveshack.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-866-913-6930 (from within the U.S.) or 1-409-983-9881 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference conference ID “7369948.”

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at http://ir.driveshack.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:30 P.M. Eastern Time on Friday, August 17, 2018 by dialing 1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference conference ID “7369948.”

 

Consolidated Statements of Operations (Unaudited)

($ in thousands, except share data)

    Three Months Ended June 30,   Six Months Ended June 30, 2018   2017 2018   2017 Revenues Golf operations $ 69,150 $ 60,639 $ 122,704 $ 106,935 Sales of food and beverages   21,854   20,721   34,960   33,566 Total revenues   91,004   81,360   157,664   140,501 Operating costs Operating expenses 67,042 62,028 124,421 112,537 Cost of sales - food and beverages 6,193 6,009 10,233 10,041 General and administrative expense 10,268 7,058 19,462 14,545 Management fee to affiliate — 2,677 — 5,354 Depreciation and amortization 4,315 5,972 9,863 11,765 Pre-opening costs 247 50 1,803 50 Impairment — 32 1,473 32 Realized and unrealized (gain) loss on investments   (89)   3,287   (331)   6,676 Total operating costs   87,976   87,113   166,924   161,000 Operating income (loss) 3,028 (5,753) (9,260) (20,499) Other income (expenses) Interest and investment income 469 6,395 915 14,283 Interest expense, net (4,601) (5,131) (8,650) (10,565) Other (loss) income, net   (3,699)   293   (4,105)   170 Total other income (expenses)   (7,831)   1,557   (11,840)   3,888 Loss before income tax (4,803) (4,196) (21,100) (16,611) Income tax expense   —   510   —   1,049 Net Loss (4,803) (4,706) (21,100) (17,660) Preferred dividends   (1,395)   (1,395)   (2,790)   (2,790) Loss Applicable to Common Stockholders $ (6,198) $ (6,101) $ (23,890) $ (20,450)   Loss Applicable to Common Stock, per share Basic $ (0.09) $ (0.09) $ (0.36) $ (0.31) Diluted $ (0.09) $ (0.09) $ (0.36) $ (0.31) Weighted Average Number of Shares of Common Stock Outstanding Basic   66,977,104   66,874,155   66,977,104   66,858,155 Diluted   66,977,104   66,874,155   66,977,104   66,858,155    

Consolidated Balance Sheets

($ in thousands, except share data)

    June 30, 2018   (Unaudited) December 31, 2017 Assets Current Assets Cash and cash equivalents $ 125,659 $ 167,692 Restricted cash 3,859 5,178 Accounts receivable, net 9,877 8,780 Real estate assets, held-for-sale 165,261 2,000 Real estate securities, available-for-sale 2,425 2,294 Other current assets   25,171   21,568 Total Current Assets 332,252 207,512 Restricted cash, noncurrent 777 818 Property and equipment, net of accumulated depreciation 93,592 241,258 Intangibles, net of accumulated amortization 53,716 57,276 Other investments 21,901 21,135 Other assets   9,041   8,649 Total Assets $ 511,279 $ 536,648   Liabilities and Equity Current Liabilities Obligations under capital leases $ 5,158 $ 4,652 Membership deposit liabilities 8,972 8,733 Accounts payable and accrued expenses 44,506 36,797 Deferred revenue 10,614 31,207 Real estate liabilities, held-for-sale 9,651 — Other current liabilities   15,145   22,596 Total Current Liabilities 94,046 103,985 Credit facilities and obligations under capital leases 112,268 112,105 Junior subordinated notes payable 51,204 51,208 Membership deposit liabilities, noncurrent 87,832 86,523 Deferred revenue, noncurrent 7,608 6,930 Other liabilities   5,480   4,846 Total Liabilities $ 358,438 $ 365,597   Commitments and contingencies   Equity

Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares of9.75% Series B Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05%Series C Cumulative Redeemable Preferred Stock, and 620,000 shares of 8.375%Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 pershare, issued and outstanding as of June 30, 2018 and December 31, 2017

$ 61,583 $ 61,583

Common stock, $0.01 par value, 1,000,000,000 shares authorized, 66,977,104 and66,977,104 shares issued and outstanding at June 30, 2018 and December 31, 2017,respectively

670 670 Additional paid-in capital 3,174,089 3,173,281 Accumulated deficit (3,084,934) (3,065,853) Accumulated other comprehensive income   1,433   1,370 Total Equity $ 152,841 $ 171,051   Total Liabilities and Equity $ 511,279 $ 536,648  

ABOUT DRIVE SHACK INC.

Drive Shack Inc. is a leading owner and operator of golf-related leisure and entertainment businesses.

FORWARD-LOOKING STATEMENTS

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the timing and frequency of opening new Drive Shack venues, the Company’s ability to consummate the sales of its owned golf courses and the Company’s ability to terminate or restructure its lease agreements. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond Drive Shack’s control. The Company can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Drive Shack Inc.Investor Relations516-268-7460

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