Colony Credit Real Estate, Inc. (NYSE: CLNC) (“Colony Credit
Real Estate” or the “Company”) today announced its financial
results for the third quarter ended September 30, 2019 and certain
updates.
Kevin P. Traenkle, President and Chief Executive Officer of
Colony Credit Real Estate, commented, “For several reasons, the
third quarter has been a landmark period for the Company. First,
our Core Portfolio and primary business of providing high-quality
commercial real estate loans continues to grow and perform well, as
evidenced by over $480 million of new quarterly originations.
Additionally, we successfully closed an accretive $1 billion CLO
financing in October, opening new sources of capital, de-risking
our balance sheet and increasing our return on equity.”
Mr. Traenkle added, “However, and more importantly, we made
great strides in advancing our strategic plan to bifurcate our
Company’s assets into our Core Portfolio, which we plan to grow,
and a Legacy, Non-Strategic Portfolio, which we plan to monetize
and reinvest into our Core Portfolio. As part of this undertaking
and with the full support of our Board, third party valuation
experts assisted the Company in a robust strategic reassessment of
our entire asset base. During this process we identified and
separated a Legacy, Non-Strategic Portfolio and made meaningful
changes to the original business plans. Going forward, we plan to
report the operations and dispositions from our Core Portfolio and
the Legacy, Non-Strategic Portfolio separately.”
Mr. Traenkle continued to add, “Due to the changes we have made
to the business plans of investments within our Legacy,
Non-Strategic Portfolio, the Company meaningfully reduced its book
value to better reflect the market value of such assets and also
reset its dividend to a level which is now fully covered by
in-place Core Earnings from the Core Portfolio alone. We expect
most of the Legacy, Non-Strategic Portfolio to be monetized in the
short to medium term and the proceeds of such sales will provide
capital to grow our Core Earnings within our Core Portfolio. I
strongly encourage all to review our portfolio bifurcation
presentation and quarterly financial and supplemental materials,
with substantially enhanced details and disclosures. Based on the
results of this analysis, we believe the Company’s current net
asset value and book value are significantly higher than current
trading value.”
Catherine D. Rice, lead independent director for the Company,
commented, “On behalf of the Board, we want to thank Kevin and
management for leading an extensive portfolio review and strategic
assessment process. This resulted in a plan to segment and exit
Legacy, Non-Strategic investments in order to provide shareholders
greater clarity concerning the Company’s long-term business
strategy to grow its Core Portfolio. In addition, the independent
directors of the Board recently received a letter from the
Company’s manager, Colony Capital, regarding possibly internalizing
its credit-focused management team. The Board has established an
independent special committee to review the proposal with
independent financial and legal advisors.”
Third Quarter 2019 Significant
Developments and Subsequent Events
- Third quarter 2019 GAAP net income (loss) attributable to
common stockholders of $(356.0) million, or $(2.77) per share
- Core Portfolio: Third quarter 2019 GAAP net income (loss)
attributable to common stockholders of $(1.5) million, or $(0.01)
per share, and Core Earnings of $44.7 million, or $0.34 per
share
- Legacy, Non-Strategic Portfolio: Third quarter 2019 GAAP net
income (loss) attributable to common stockholders of $(354.5)
million, or $(2.76) per share, and Legacy, Non-Strategic Earnings
(loss) of $(120.3) million, or $(0.91) per share. Legacy,
Non-Strategic Earnings excluding gains and losses of $6.9 million,
or $0.05 per share
- GAAP book value of $2.2 billion, or $16.55 per share and
undepreciated book value of $2.3 billion, or $17.77 per share, as
of September 30, 2019. GAAP book value per share and undepreciated
GAAP book value per share are 17% and 25%, respectively, higher
than the closing trading price on November 5, 2019
- During the third quarter, recorded $127 million of loan loss
provisions at the Company’s ownership share and $258 million of
impairment of real estate and preferred equity at the Company’s
ownership share, resulting from reduced hold periods on certain
investments determined during the quarter
- Declared and paid a monthly cash dividend of $0.145 per share
of Class A common stock for July, August and September 2019.
Subsequent to quarter end, the Company’s Board of Directors
declared a monthly cash dividend of $0.145 per share of common
stock for October
- The Company’s Board of Directors subsequently declared a
monthly cash dividend of $0.10 per share of Class A common stock
for the months of November and December 2019, targeting an
annualized dividend of $1.20 per share to approximate an annual
dividend fully covered by Core Earnings from the Company’s Core
Portfolio
- Current core senior loan portfolio of $2.3 billion is 100%
performing and 93% floating-rate with a weighted average
Loan-to-Value ratio ("LTV") of 70% as of September 30, 2019
- During the third quarter, allocated and initially funded
approximately $486 million and $362 million of capital,
respectively, across ten investments with a weighted average Return
on Equity (“ROE”) of approximately 12% and an underwritten Internal
Rate of Return (“IRR”) of approximately 13%
- During the third quarter, sold a CMBS B-piece at a premium to
March 31, 2019 fair market value, which resulted in approximately
$33 million in net proceeds
- Subsequent to quarter end, closed on a $1 billion managed
Commercial Real Estate Collateralized Loan Obligation (“CLO”). The
CLO accretively financed interests in 21 floating-rate mortgages
with an 83.5% advance rate and weighted average coupon at issuance
of L+1.59%, before transaction costs, with a structure that
features a two-year reinvestment period. CLO proceeds were used
primarily to repay approximately $770 million of debt under master
repurchase facilities
- Subsequent to quarter end, executed a purchase and sale
agreement for the sale of an owned hotel asset with a GAAP book
value of approximately $72 million; Closing is expected during the
fourth quarter 2019 with capital to be recycled into target
investments in the Core Portfolio
- As of November 5, 2019, total corporate liquidity of
approximately $304 million through cash-on-hand and availability
under the corporate revolving credit facility
- Subsequent to quarter end, the Company’s manager, a subsidiary
of Colony Capital, Inc. and the Company revised the terms of the
management agreement in connection with CLNC's portfolio
bifurcation plan and related impairments, which will result in a
reduction to the fee base by accumulated unrealized provisions for
loan losses and real estate impairments to date. Such reduction
will be effective during the fourth quarter 2019 and result in a
$13 million decrease of the annual base management fee paid by the
Company
- On November 6, 2019, the Company’s independent directors
received a letter from Colony Capital, Inc. to explore
internalizing management and transferring Colony Capital’s global
credit management business and employees to the Company
Portfolio Performance
As of September 30, 2019, the Core Portfolio consisted of 55
loans held by the Company, including senior loans, mezzanine loans
and preferred equity interests, and had an average risk rating of
3.1 (average risk); weighted by total loan exposure on a 1 (Very
Low Risk) to 5 (Impaired/Defaulted/Loss Likely) scale. As of
September 30, 2019, no loans in the Core Portfolio were rated 5
(Impaired/Defaulted/Loss Likely).
Common Stock and Operating Partnership
Units
On February 1, 2019, all Class B-3 common stock converted to
Class A common stock (the “common stock”). As of November 6, 2019,
the Company had approximately 128.5 million shares of common stock
outstanding and the Company’s operating partnership had
approximately 3.1 million operating partnership units (“OP units”)
outstanding held by members other than the Company or its
subsidiaries.
Dividend Announcement
The Company’s Board of Directors declared a monthly cash
dividend of $0.145 per share of common stock (the “common stock”)
for: (i) the monthly period ended July 31, 2019, which was paid on
August 9, 2019, to stockholders of record on July 31, 2019, (ii)
the monthly period ended August 31, 2019, which was paid on
September 10, 2019, to stockholders of record on August 31, 2019,
and (iii) the monthly period ended September 30, 2019, which was
paid on October 10, 2019, to stockholders of record on September
30, 2019.
Subsequent to the end of the third quarter, the Company’s Board
of Directors declared a monthly cash dividend of $0.145 per share
of common stock for the monthly period ended October 31, 2019,
which will be paid on November 12, 2019 to stockholders of record
on October 31, 2019.
Further, the Company has elected to modify its dividend policy
in furtherance of its portfolio bifurcation plan, to issue a
monthly dividend that is fully covered by and positioned for growth
based on the Company’s Core Earnings on its Core Portfolio.
Therefore, the Company’s Board of Directors declared a monthly cash
dividend of $0.10 per share of common stock for: (i) the month
ending November 30, 2019, which will be paid on December 10, 2019
to stockholders of record on November 30, 2019, and (ii) the month
ending December 31, 2019, which will be paid on January 10, 2020 to
stockholders of record on December 31, 2019.
Colony Capital, Inc. Internalization
Discussions with the Company
On November 6, 2019, Thomas J. Barrack, Jr., the Executive
Chairman and Chief Executive Officer of Colony Capital, Inc.
(“Colony Capital”), delivered a non-binding letter to the
independent directors of Colony Credit Real Estate seeking to
explore with Colony Credit Real Estate the possible internalization
of the management of Colony Credit Real Estate and a transfer of
Colony Capital’s credit management business to Colony Credit Real
Estate. The letter sets forth the main components of a possible
internalization, which may include one or more of the following:
(i) the internalization of Colony Capital’s credit management
business, which may include key senior management, into Colony
Credit Real Estate via cancellation of Colony Credit Real Estate’s
management agreement and the possible contribution to Colony Credit
Real Estate by Colony Capital of the management contracts of some
or all of Colony Capital’s existing direct credit funds and the
management of related investment and co-investment general partner
vehicles, (ii) entering into a new management agreement pursuant to
which Colony Credit Real Estate would manage certain existing
credit investments that would continue to be held by Colony
Capital, (iii) the continuation of Colony Credit Real Estate’s
non-exclusive right to use the Colony Capital brand for credit
investments for a period of time to be agreed upon by the parties,
and/or (iv) certain changes in Colony Credit Real Estate’s board of
directors and management. The letter provides that an
internalization would be subject to, among other things, the
negotiation of terms and definitive documentation and approval of
the boards of directors of Colony Credit Real Estate and Colony
Capital (or an authorized committee thereof in each case).
There can be no assurance that Colony Credit Real Estate and
Colony Capital will reach an agreement with respect to an
internalization or any of the other matters described in the
letter, that the nature or terms of an internalization or any such
other matters will not differ from the description in the letter,
or that an internalization or any such other matters will be
completed. Colony Credit Real Estate does not undertake any
obligation to provide updates with respect to the letter or any
such other matters or the status thereof.
On November 7, 2019, Colony Capital filed the letter with the
U.S. Securities and Exchange Commission on Schedule 13D.
Non-GAAP Financial Measures and
Definitions
Core Earnings/Legacy, Non-Strategic Earnings
We present Core Earnings/Legacy, Non-Strategic Earnings, which
are non-GAAP supplemental financial measures of our performance. We
believe that Core Earnings/Legacy, Non-Strategic Earnings provides
meaningful information to consider in addition to our net income
and cash flow from operating activities determined in accordance
with accounting principles generally accepted in the United States
(“U.S. GAAP” or “GAAP”). These supplemental financial measures help
us to evaluate our performance excluding the effects of certain
transactions and U.S. GAAP adjustments that we believe are not
necessarily indicative of our current portfolio and operations. For
information on the fees we pay our Manager, see Note 11, “Related
Party Arrangements” to our consolidated financial statements
included in Form 10-Q to be filed with the U.S. Securities and
Exchange Commission (“SEC”). In addition, we believe that our
investors also use Core Earnings/Legacy, Non-Strategic Earnings or
a comparable supplemental performance measure to evaluate and
compare the performance of us and our peers, and as such, we
believe that the disclosure of Core Earnings/Legacy, Non-Strategic
Earnings is useful to our investors.
We define Core Earnings/Legacy, Non-Strategic Earnings as U.S.
GAAP net income (loss) attributable to our common stockholders (or,
without duplication, the owners of the common equity of our direct
subsidiaries, such as our operating partnership or “OP”) and
excluding (i) non-cash equity compensation expense, (ii) the
expenses incurred in connection with our formation, (iii) the
incentive fee, (iv) acquisition costs from successful acquisitions,
(v) gains or losses from sales of real estate property and
impairment write-downs of depreciable real estate, including
unconsolidated joint ventures and preferred equity investments,
(vi) depreciation and amortization, (vii) any unrealized gains or
losses or other similar non-cash items that are included in net
income for the current quarter, regardless of whether such items
are included in other comprehensive income or loss, or in net
income, (viii) one-time events pursuant to changes in U.S. GAAP and
(ix) certain material non-cash income or expense items that in the
judgment of management should not be included in Core
Earnings/Legacy, Non-Strategic Earnings. For clauses (viii) and
(ix), such exclusions shall only be applied after discussions
between our Manager and our independent directors and after
approval by a majority of our independent directors. U.S. GAAP net
income (loss) attributable to our common stockholders and Core
Earnings/Legacy, Non-Strategic Earnings include provisions for loan
losses.
Core Earnings/Legacy, Non-Strategic Earnings does not represent
net income or cash generated from operating activities and should
not be considered as an alternative to U.S. GAAP net income or an
indication of our cash flows from operating activities determined
in accordance with U.S. GAAP, a measure of our liquidity, or an
indication of funds available to fund our cash needs, including our
ability to make cash distributions. In addition, our methodology
for calculating Core Earnings/Legacy, Non-Strategic Earnings may
differ from methodologies employed by other companies to calculate
the same or similar non-GAAP supplemental financial measures, and
accordingly, our reported Core Earnings/Legacy, Non-Strategic
Earnings may not be comparable to the Core Earnings/Legacy,
Non-Strategic Earnings reported by other companies.
The Company calculates Core Earnings/Legacy, Non-Strategic
Earnings per share, which are non-GAAP supplemental financial
measures, based on a weighted average number of common shares and
operating partnership units (held by members other than the Company
or its subsidiaries).
Core Portfolio
We present the Core Portfolio, which consists of four business
and reportable segments including loans and preferred equity, CRE
debt securities, net leased real estate and corporate. Loans and
preferred equity consists of CRE debt investments including senior
mortgage loans, mezzanine loans, and preferred equity interests as
well as participations in such loans. The segment also includes
acquisition, development and construction loan arrangements
accounted for as equity method investments as well as loans and
preferred equity interests held through joint ventures with an
affiliate of our Sponsor (Colony Capital, Inc.) which were
deconsolidated as a result of our formation transaction and
subsequently treated as equity method investments. CRE debt
securities include both investment grade and non-investment grade
rated CMBS bonds (including “B-pieces” of CMBS securitization pools
or “B-Piece” investments). Net leased real estate includes direct
investments in commercial real estate principally composed of
long-term leases to tenants on a net lease basis, where such
tenants are generally responsible for property operating expenses
such as insurance, utilities, maintenance capital expenditures and
real estate taxes. Corporate includes corporate-level asset
management and other fees, related party and general and
administrative expenses to the Core Portfolio only.
Legacy, Non-Strategic Portfolio
We present the Legacy, Non-Strategic Portfolio, which is a
business and reportable segment that consists of direct investments
in operating real estate such as multi-tenant office and
multifamily residential assets, real estate acquired in settlement
of loans, real estate private equity interests and certain retail
and other legacy loans originated prior to the formation of CLNC.
This segment includes corporate-level asset management and other
fees, related party and general and administrative expenses related
to the legacy, non-strategic portfolio.
Loan-to-Value
We present loan-to-value which reflects initial loan amount
divided by the as-is appraised value as of the date the loan was
originated, or by the current principal amount divided by the
appraisal value as of the date of the most recent as-is appraisal.
For construction loans, loan-to-value reflects the total commitment
amount of the loan divided by as completed appraised value, or the
total commitment amount of the loan divided by projected total cost
basis.
Return on Equity
We present Return on Equity (“ROE”), which is a supplemental
financial measure that represents the initial net investment-level
earnings generated by an investment expressed as a percentage of
the net equity capital invested. The Company calculates net
investment-level earnings for investments in loans and CRE debt
securities as the sum of the stated cash coupon income and any
non-cash income (such as payment in-kind income and
amortization/accretion of purchase discounts and origination,
extension and exit fees) less investment-level financing costs. For
investments in net leased real estate, the Company calculates net
investment-level earnings by subtracting investment-level financing
costs from net operating income. Net equity capital invested is
calculated by taking the gross initial invested capital less any
financing. With respect to certain loans and investment level
financing, the Company assumes the one-month USD LIBOR as of
September 30, 2019 when calculating ROE. The Company’s ROE
calculation relies on a number of assumptions and estimates that
are subject to change, some of which are outside the control of the
Company. Actual results may differ materially from the Company’s
expectations. As such, there can be no assurance that the actual
ROE will be equivalent to the estimated ROE. In addition, the
Company’s methodology for calculating ROE may differ from
methodologies employed by other companies to calculate the same or
similar supplemental financial measures, and accordingly, the
presented ROE may not be comparable to the ROE reported by other
companies.
Internal Rate of Return
We present Internal Rate of Return (“IRR”), which is a
supplemental financial measure that represents the rate of return
of an investment over a specific holding period expressed as a
percentage of the net equity capital invested. It is the discount
rate that makes net present value of all cash outflows equal to the
net present value of cash inflows. The weighted average
underwritten IRR reflects the returns underwritten and relies on a
number of assumptions and estimates that are subject to change.
Such assumptions and estimates around hold period, prepayments or
defaults, cost of borrowing, cap rates, rent increases, operating
costs, and exit assumptions, among many others, may be outside of
the control of the Company. With respect to certain loans included
in the weighted average underwritten IRR shown, the calculation
assumes certain estimates with respect to the timing and magnitude
of the initial future fundings for the total loan commitment and
associated loan repayments. In addition, the Company’s methodology
for calculating IRR involves subjective judgement and discretion
and may differ from methodologies used by other companies, when
calculating the same or similar supplemental financial measures and
may not be comparable with other companies. Actual results may
differ materially from the Company’s expectations. As such, there
can be no assurance that the actual weighted average IRRs will be
equivalent to the underwritten weighted average IRRs presented.
Third Quarter 2019 Conference
Call
The Company will conduct a conference call to discuss the
financial results on November 7, 2019 at 2:00 p.m. PT / 5:00 p.m.
ET. To participate in the event by telephone, please dial (877)
407-0784 ten minutes prior to the start time (to allow time for
registration). International callers should dial (201) 689-8560 and
use passcode 13695411. The call will also be broadcast live over
the Internet and can be accessed on the Shareholders section of the
Company’s website at www.clncredit.com. A webcast of the call will
be available for 90 days on the Company’s website.
For those unable to participate during the live call, a replay
will be available starting November 7, 2019, at 5:00 p.m. PT / 8:00
p.m. ET, through November 14, 2019, at 8:59 p.m. PT / 11:59 p.m.
ET. To access the replay, dial (844) 512-2921 (U.S.), and use
passcode 13695411. International callers should dial (412) 317-6671
and enter the same conference ID number.
Supplemental Financial
Report
A Third Quarter 2019 Supplemental Financial Report will be
available on the Company’s website at www.clncredit.com. This
information will be furnished to the SEC in a Current Report on
Form 8-K.
About Colony Credit Real Estate,
Inc.
Colony Credit Real Estate (NYSE: CLNC) is one of the largest
publicly traded commercial real estate (CRE) credit REITs, focused
on originating, acquiring, financing and managing a diversified
portfolio consisting primarily of CRE senior mortgage loans,
mezzanine loans, preferred equity, debt securities and net leased
properties predominantly in the United States. Colony Credit Real
Estate is externally managed by a subsidiary of leading global real
estate and investment management firm, Colony Capital, Inc. Colony
Credit Real Estate is organized as a Maryland corporation that
intends to elect to be taxed as a REIT for U.S. federal income tax
purposes for its taxable year ending December 31, 2018. For
additional information regarding the Company and its management and
business, please refer to www.clncredit.com.
Cautionary Statement Regarding
Forward-Looking Statements
This press release 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 the Company’s 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: operating costs and business disruption may be greater
than expected; the Company's operating results may differ
materially from the information presented in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2018, as
well as in Colony Credit Real Estate’s other filings with the
Securities and Exchange Commission; the fair value of the Company's
investments may be subject to uncertainties; the Company's use of
leverage could hinder its ability to make distributions and may
significantly impact its liquidity position; given the Company's
dependence on its external manager, an affiliate of Colony Capital,
Inc., any adverse changes in the financial health or otherwise of
its manager or Colony Capital, Inc. could hinder the Company's
operating performance and return on stockholder's investment; the
ability to realize substantial efficiencies as well as anticipated
strategic and financial benefits, including, but not limited to
expected returns on equity and/or yields on investments; adverse
impacts on the Company's liquidity, including its ability to
continue to generate liquidity from sales of Legacy, Non-Strategic
assets; the Company’s ability to liquidate its Legacy,
Non-Strategic assets within the projected timeframe or at the
projected values; the timing of and ability to deploy available
capital; the Company’s ability to maintain or grow the dividend at
all in the future; the timing of and ability to complete
repurchases of the Company’s stock; the ability of the Company to
refinance certain mortgage debt on similar terms to those currently
existing or at all; 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 Part I, Item 1A of the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, as well as
in Colony Credit Real Estate’s other filings with the Securities
and Exchange Commission.
We caution investors not to unduly rely on any forward-looking
statements. The forward-looking statements speak only as of the
date of this press release. Colony Credit Real Estate is under no
duty to update any of these forward-looking statements after the
date of this press release, nor to conform prior statements to
actual results or revised expectations, and Colony Credit Real
Estate does not intend to do so.
COLONY CREDIT REAL ESTATE,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
September 30, 2019 (Unaudited) December 31,
2018 Assets Cash and cash equivalents
$
60,332
$
77,317
Restricted cash
139,549
110,146
Loans and preferred equity held for investment, net
2,516,197
2,020,497
Real estate securities, available for sale, at fair value
255,937
228,185
Real estate, net
1,568,682
1,959,690
Investments in unconsolidated ventures ($14,323 and $160,851 at
fair value, respectively)
571,365
903,037
Receivables, net
42,559
48,806
Deferred leasing costs and intangible assets, net
125,072
134,068
Assets held for sale
183,895
-
Other assets
76,266
62,006
Mortgage loans held in securitization trusts, at fair value
1,904,003
3,116,978
Total assets
$
7,443,857
$
8,660,730
Liabilities Securitization bonds payable, net
$
-
$
81,372
Mortgage and other notes payable, net
1,245,721
1,173,019
Credit facilities
1,907,556
1,365,918
Due to related party
14,227
15,019
Accrued and other liabilities
138,024
106,187
Intangible liabilities, net
23,916
15,096
Liabilities related to assets held for sale
5,487
-
Escrow deposits payable
87,349
65,995
Dividends payable
19,087
18,986
Mortgage obligations issued by securitization trusts, at fair value
1,793,435
2,973,936
Total liabilities
5,234,802
5,815,528
Commitments and contingencies
Equity Stockholders’ equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no
shares issued and outstanding as of September 30, 2019 and December
31, 2018, respectively
-
-
Common stock, $0.01 par value per share Class A, 950,000,000 and
905,000,000 shares authorized, 128,538,703 and 83,410,376 shares
issued and outstanding as of September 30, 2019 and December 31,
2018, respectively
1,285
834
Class B-3, no shares authorized, issued and outstanding as of
September 30, 2019 and 45,000,000 shares authorized and 44,399,444
shares issued and outstanding as of December 31, 2018
-
444
Additional paid-in capital
2,905,906
2,899,353
Accumulated deficit
(809,344
)
(193,327
)
Accumulated other comprehensive income (loss)
28,915
(399
)
Total stockholders’ equity
2,126,762
2,706,905
Noncontrolling interests in investment entities
31,410
72,683
Noncontrolling interests in the Operating Partnership
50,883
65,614
Total equity
2,209,055
2,845,202
Total liabilities and equity
$
7,443,857
$
8,660,730
COLONY CREDIT REAL ESTATE,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended September 30,
2019
2018
Net interest income Interest income
$
46,991
$
40,139
Interest expense
(23,167
)
(13,148
)
Interest income on mortgage loans held in securitization trusts
22,586
39,261
Interest expense on mortgage obligations issued by securitization
trusts
(20,299
)
(36,294
)
Net interest income
26,111
29,958
Property and other income Property operating income
63,492
51,684
Other income
820
2,253
Total property and other income
64,312
53,937
Expenses Management fee expense
11,355
11,877
Property operating expense
29,756
21,217
Transaction, investment and servicing expense
1,433
3,631
Interest expense on real estate
14,281
13,341
Depreciation and amortization
25,934
30,538
Provision for loan losses
110,314
35,059
Impairment of operating real estate
272,722
29,378
Administrative expense (including $2,910 and $1,822 of equity-based
compensation expense, respectively)
7,732
6,797
Total expenses
473,527
151,838
Other income (loss) Unrealized loss on mortgage loans
and obligations held in securitization trusts, net
(1,976
)
(939
)
Realized gain (loss) on mortgage loans and obligations held in
securitization trusts, net
2,724
(549
)
Other loss, net
(2,688
)
(15
)
Income (loss) before equity in earnings of unconsolidated
ventures and income taxes
(385,044
)
(69,446
)
Equity in earnings (loss) of unconsolidated ventures
(15,905
)
8,324
Income tax benefit (expense)
(1,046
)
2,456
Net income (loss)
(401,995
)
(58,666
)
Net (income) loss attributable to noncontrolling interests:
Investment entities
37,445
4,688
Operating Partnership
8,519
1,275
Net income (loss) attributable to Colony Credit Real Estate,
Inc. common stockholders
$
(356,031
)
$
(52,703
)
Net income (loss) per common share – basic and
diluted
$
(2.77
)
$
(0.42
)
Weighted average shares of common stock outstanding –
basic and diluted
128,541
127,887
COLONY CREDIT REAL ESTATE,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(In thousands, except per
share data)
(Unaudited)
GAAP Net Loss to
Core Earnings (Loss) / Legacy, Non-Strategic Earnings
(Loss)
Three Months Ended September 30, 2019
Total
Legacy, Non-
Strategic Portfolio
Core Portfolio
Net loss attributable to Colony Credit Real Estate, Inc. common
stockholders
$
(356,031
)
$
(354,517
)
$
(1,514
)
Adjustments: Net loss attributable to noncontrolling interest of
the Operating Partnership
(8,519
)
(8,483
)
(36
)
Non-cash equity compensation expense
2,908
1,454
1,454
Depreciation and amortization
26,232
13,800
12,432
Net unrealized loss: Impairment of operating real estate and
preferred equity(1)
294,677
253,166
41,511
Other unrealized loss
2,458
6
2,452
Adjustments related to noncontrolling interests in investment
entities
(37,338
)
(25,697
)
(11,641
)
Core Earnings (Loss) / Legacy, Non-Strategic Earnings (Loss)
attributable to Colony Credit Real Estate, Inc. common stockholders
and noncontrolling interest of the Operating Partnership
$
(75,613
)
$
(120,271
)
$
44,658
Core Earnings (Loss) / Legacy, Non-Strategic Earnings (Loss) per
share(2)
$
(0.57
)
$
(0.91
)
$
0.34
Weighted average number of common shares and OP units(2)
131,616
131,616
131,616
____________________
(1)
Includes our $22.0 million proportionate
share of impairment losses recorded on equity participations held
in joint ventures. This is recorded in equity in earnings of
unconsolidated ventures on our consolidated statements of
operations
(2)
The Company calculates Core Earnings
(Loss) / Legacy, Non-Strategic Earnings (Loss) per share, which are
non-GAAP financial measures, based on a weighted average number of
common shares and OP units (held by members other than the Company
or its subsidiaries). For the third quarter 2019, the weighted
average number of common shares and OP units was approximately
131.6 million
GAAP Book Value
to Undepreciated Book Value
As of September 30, 2019 Amount Per Diluted
Share(2) GAAP book value (excluding noncontrolling interests in
investment entities)
$
2,177,645
$
16.55
Accumulated depreciation and amortization(1)
161,117
1.22
Undepreciated book value
$
2,338,762
$
17.77
Total common shares and OP units outstanding(2)
131,614
____________________
(1)
Represents at-share net accumulated depreciation and
amortization on real estate investments, including related
intangible assets and liabilities
(2)
The Company calculates GAAP book value (excluding noncontrolling
interests in investment entities) per share and undepreciated book
value per share, a non-GAAP financial measure, based on the total
number of common shares and OP units (held by members other than
the Company or its subsidiaries) outstanding at the end of the
reporting period. As of September 30, 2019, the total number of
common shares and OP units outstanding was approximately 131.6
million
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006054/en/
Investor Relations Colony Credit Real Estate, Inc. Addo
Investor Relations Lasse Glassen 310-829-5400
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