Andrew E. Witt Appointed Interim Chief
Executive Officer and President
Colony Credit Real Estate, Inc. (NYSE: CLNC) (“Colony Credit
Real Estate” or the “Company”) today announced its financial
results for the fourth quarter and full year ended December 31,
2019. In addition, Andrew E. Witt, Managing Director and Chief
Operating Officer of Global Credit at Colony Capital, Inc. (“Colony
Capital”), has been appointed Interim Chief Executive Officer and
President, effective February 29, 2020. Mr. Witt will succeed Kevin
P. Traenkle, who is stepping down from his position as Chief
Executive Officer and President.
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Kevin P. Traenkle commented, “2019 was a pivotal year for the
Company. In the third quarter, we announced and began executing on
the Portfolio Bifurcation Plan and are encouraged by the early
disposition activity and results. During 2019, we committed
approximately $1.6 billion of capital to Core Portfolio
investments, which were diversified across asset type and
geography, and significantly de-risked the balance sheet with our
successful $1 billion managed CLO execution in the third quarter.
Lastly, we grew our core earnings by 14% from the prior year and
established a go-forward dividend that is 110% covered by Core
Earnings from the Company’s Core Portfolio alone.”
Mr. Traenkle concluded, “Now that the Portfolio Bifurcation Plan
is in-place and the company is well positioned for future growth, I
am going to step down as CEO and President of the Company effective
February 29th. I want to thank my team for the tireless work and
progress made over the last several quarters.”
Fourth Quarter and Full Year 2019
Significant Developments and Subsequent Events
- Fourth quarter 2019 GAAP net income (loss) attributable to
common stockholders of $34.0 million, or $0.26 per share. Fiscal
year 2019 GAAP net income (loss) attributable to common
stockholders of $(414.5) million, or $(3.25) per share
- GAAP net book value of $2.2 billion, or $16.49 per share and
undepreciated book value of $2.3 billion, or $17.81 per share, as
of December 31, 2019. GAAP net book value per share and
undepreciated book value per share represent a premium of 27% and
37% to 30-day VWAP of $12.98 per share, respectively
Core Portfolio
- Fourth quarter 2019 GAAP net income (loss) attributable to
common stockholders of $30.3 million, or $0.23 per share, and Core
Earnings of $43.0 million, or $0.33 per share. Fiscal year 2019
GAAP net income (loss) attributable to common stockholders of $75.4
million, or $0.57 per share, and Core Earnings of $169.0 million,
or $1.29 per share
- GAAP net book value of $1.8 billion, or $13.76 per share and
undepreciated book value of $1.9 billion, or $14.40 per share. GAAP
net book value per share and undepreciated book value per share
represent a 6% and 11% premium to 30-day VWAP of $12.98 per share,
respectively
- During the fourth quarter, closed a $1 billion managed
Commercial Real Estate Collateralized Loan Obligation (“CLO”). At
closing, 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 borrowings
under master repurchase facilities
- During the fourth quarter, allocated and initially funded
approximately $123 million and $77 million of capital,
respectively, across one senior loan and one mezzanine loan with a
weighted average Return on Equity (“ROE”) of approximately 12%
- For the full year 2019, allocated approximately $1.6 billion of
capital across 27 investments with a weighted average ROE of
approximately 12%
- During the fourth quarter, sold largest owned hotel asset from
the Core Portfolio for $74 million, a slight premium to 9/30/19
GAAP net book value
Legacy, Non-Strategic (“LNS”)
Portfolio
- Fourth quarter 2019 GAAP net income (loss) attributable to
common stockholders of $3.7 million, or $0.03 per share, and
Legacy, Non-Strategic Earnings (loss) of $5.3 million, or $0.04 per
share. Fiscal year 2019 GAAP net income (loss) attributable to
common stockholders of $(489.9) million, or $(3.82) per share, and
Legacy, Non-Strategic Earnings (loss) of $(217.2) million, or
$(1.65) per share. Fiscal year 2019 Legacy, Non-Strategic Earnings
(loss) excluding gains and losses of $31.1 million or $0.23 per
share
- GAAP net book value of $0.4 billion, or $2.73 per share
- Cumulative Sales: Subsequent to announcing the Portfolio
Bifurcation Plan in November 2019:
- Seven Sold Assets: Seven LNS assets for a total gross sales
price of $43 million and a net sales price of $42 million after
transaction costs, representing an approximately $10 million gain
and a 29% premium to 9/30/19 GAAP net book value
- Six Assets Under Binding Contract: Six LNS assets for a total
gross sales price of $126 million and a net sales price of $75
million after debt repayment and transaction costs, representing an
anticipated gain of approximately $27 million and a 58% premium to
9/30/19 GAAP net book value
- Twenty-seven Assets Listed For Sale or Expected to Payoff:
Twenty-seven LNS assets are listed for sale or expected to payoff,
which together with assets sold and under contract, represent
approximately 75% of the LNS portfolio that is resolved or in
active phases of resolution based on 9/30/19 GAAP net book
value
Total Company
- Declared and paid a monthly cash dividend of $0.145 per share
of Class A common stock “common stock” for October and $0.10 per
share for November and December 2019. Subsequent to quarter end,
the Company’s Board of Directors declared a monthly cash dividend
of $0.10 per share of common stock for January and February
2020
- During the fourth quarter, the Company’s manager, a subsidiary
of Colony Capital, Inc., and the Company revised the terms of the
management agreement, which resulted in a reduction to the fee base
by accumulated unrealized provisions for loan losses and real
estate impairments to date. Such reduction became effective during
the fourth quarter 2019 and results in an approximately $13 million
decrease of the annual base management fee paid by the Company to
its manager
- As of February 24, 2020, total corporate liquidity of
approximately $378 million through cash-on-hand and availability
under the corporate revolving credit facility. In addition, excess
capacity under the Company’s master repurchase facilities of
approximately $1.5 billion
Portfolio Performance
As of December 31, 2019, the Core Portfolio consisted of 56
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), the same level as of September 30, 2019;
weighted by total loan exposure on a 1 (Very Low Risk) to 5
(Impaired/Defaulted/Loss Likely) scale. As of December 31, 2019, no
loans in the Core Portfolio were rated 5 (Impaired/Defaulted/Loss
Likely).
Common Stock and Operating Partnership
Units
As of February 24, 2020, 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 for the monthly period
ended October 31, 2019, which was paid on November 12, 2019 to
stockholders of record on October 31, 2019.
During the fourth quarter, the Company 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 ended November 30, 2019, which was paid on December 10,
2019 to stockholders of record on November 30, 2019, and (ii) the
month ended December 31, 2019, which was paid on January 10, 2020
to stockholders of record on December 31, 2019.
Subsequent to the end of the fourth quarter, the Company’s Board
of Directors declared a monthly cash dividend of $0.10 per share of
common stock for: (i) the month ending January 31, 2020, which was
paid on February 10, 2020 to stockholders of record on January 31,
2020, and (ii) the month ending February 29, 2020, which will be
paid on March 10, 2020 to stockholders of record on February 29,
2020.
Common Stock Repurchase
Plan
The Company’s Board of Directors have authorized a stock
repurchase program, under which the Company may repurchase up to
$300 million of its outstanding Class A common stock until March
31, 2021 (the “Stock Repurchase Program”), replacing the Company’s
prior stock repurchase program announced in February 2019. Under
the Stock Repurchase Program, the Company may repurchase shares in
open market purchases, in privately negotiated transactions or
otherwise. The Stock Repurchase Program will be utilized at
management's discretion and in accordance with the requirements of
the Securities and Exchange Commission. The timing and actual
number of shares repurchased will depend on a variety of factors
including price, corporate requirements and other conditions.
Special Committee Review
Process
On November 6, 2019, Colony Capital sent a letter to the
Company’s independent directors proposing to explore the possible
internalization of the management of the Company and a transfer of
Colony Capital’s credit management business to us. The letter
provided that an internalization would be subject to, among other
things, the negotiation of terms and definitive documentation and
approval of the Company’s Board of Directors and the board of
directors of Colony Capital (or an authorized committee thereof in
each case). In response, the Board of Directors has formed a
special committee consisting exclusively of independent and
disinterested directors (the “Special Committee”) to explore this
internalization proposal as well as other strategic
alternatives.
On February 27, 2020, Colony Capital publicly reported that it
plans to take action to enter into an agreement with the Company
and/or one or more third parties with respect to a disposition of
Colony Capital’s management agreement with the Company, subject to
the Company’s consent, whether in the form of an internalization of
the Company’s management (including, but not limited to, the
possible internalization set forth in the November 6, 2019 letter),
a sale of Colony Capital’s management agreement with the Company,
or similar transaction the effect of which is to dispose of, in
whole or in part, Colony Capital’s management agreement with the
Company. The scope of any such transaction is focused on Colony
Capital’s management agreement with the Company, and not on Colony
Capital’s private credit investment management platform and
associated private credit assets.
The Special Committee is committed to taking all appropriate
steps to maximize value for the Company and its stockholders, and
has been actively engaged in a robust process to explore a range of
value-enhancing opportunities, including, but not limited to, the
potential transactions proposed by Colony Capital. The Special
Committee has engaged both an independent financial advisor and
legal advisor. We can give no assurance as to whether the Company
and Colony Capital will enter into an agreement with respect to the
management of our investments, the terms or scope of such agreement
and the timing of closing, or whether we may pursue other strategic
alternatives. The Company does not undertake any obligation to
provide updates with respect to the Special Committee’s review
process or any strategic alternatives it may consider.
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.
Our Core Earnings are generated by the Core Portfolio and Legacy,
Non-Strategic Earnings are generated by the Legacy, Non-Strategic
Portfolio. 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-K 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 or other
strategic transactions, (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.
Prior to the third quarter of 2019, Core Earnings reflected
adjustments to U.S. GAAP net income to exclude impairment of real
estate and provision for loan losses. During the third quarter of
2019, we revised our definition of Core Earnings to include the
provision for loan losses while excluding realized losses of sales
of real estate property and impairment write-downs of preferred
equity investments. This was approved by a majority of our
independent directors. Core Earnings/Legacy, Non-Strategic Earnings
for the year ended December 31, 2019 include revisions to the Core
Earnings previously disclosed by us in prior periods.
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 senior and mezzanine loans and
preferred equity, CRE debt securities, net leased real estate and
corporate. Senior and mezzanine 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 Colony Capital 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 related 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 combination that
created the Company. 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 the 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 the as-completed appraised value, or
the total commitment amount of the loan divided by the 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
December 31, 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.
Fourth Quarter 2019 Conference
Call
The Company will conduct a conference call to discuss the
financial results on February 27, 2020 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 13698648. 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 February 27, 2020 at 5:00 p.m. PT / 8:00
p.m. ET, through March 5, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To
access the replay, dial (844) 512-2921 (U.S.), and use passcode
13698648. International callers should dial (412) 317-6671 and
enter the same conference ID number.
Supplemental Financial
Report
A Fourth 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
elected to be taxed as a REIT for U.S. federal income tax purposes
commencing with our initial taxable year ended 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 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:
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, 2019, 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; whether Colony Capital will continue to serve
as our external manager or whether we will pursue another strategic
transaction; 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, 2019, 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)
December 31, 2019
December 31, 2018
Assets Cash and cash equivalents
$
69,619
$
77,317
Restricted cash
126,065
110,146
Loans and preferred equity held for investment, net
2,576,332
2,020,497
Real estate securities, available for sale, at fair value
252,824
228,185
Real estate, net
1,484,796
1,959,690
Investments in unconsolidated ventures ($10,283 and $160,851 at
fair value, respectively)
595,305
903,037
Receivables, net
46,456
48,806
Deferred leasing costs and intangible assets, net
112,762
134,068
Assets held for sale
189,470
-
Other assets
87,707
62,006
Mortgage loans held in securitization trusts, at fair value
1,872,970
3,116,978
Total assets
$
7,414,306
$
8,660,730
Liabilities Securitization bonds payable, net
$
833,153
$
81,372
Mortgage and other notes payable, net
1,256,112
1,173,019
Credit facilities
1,099,233
1,365,918
Due to related party
11,016
15,019
Accrued and other liabilities
140,424
106,187
Intangible liabilities, net
22,149
15,096
Liabilities related to assets held for sale
294
-
Escrow deposits payable
74,497
65,995
Dividends payable
13,164
18,986
Mortgage obligations issued by securitization trusts, at fair value
1,762,914
2,973,936
Total liabilities
5,212,956
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 December 31, 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 December 31, 2019 and December 31,
2018, respectively
1,285
834
Class B-3, no shares authorized, issued and outstanding as of
December 31, 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
2,909,181
2,899,353
Accumulated deficit
(819,738
)
(193,327
)
Accumulated other comprehensive income (loss)
28,294
(399
)
Total stockholders’ equity
2,119,022
2,706,905
Noncontrolling interests in investment entities
31,631
72,683
Noncontrolling interests in the Operating Partnership
50,697
65,614
Total equity
2,201,350
2,845,202
Total liabilities and equity
$
7,414,306
$
8,660,730
COLONY CREDIT REAL ESTATE,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Net interest income Interest income
$
47,696
$
38,580
$
175,169
$
151,653
Interest expense
(24,225
)
(16,808
)
(87,730
)
(47,074
)
Interest income on mortgage loans held in securitization trusts
20,485
38,749
120,203
143,371
Interest expense on mortgage obligations issued by securitization
trusts
(18,274
)
(35,380
)
(109,964
)
(132,411
)
Net interest income
25,682
25,141
97,678
115,539
Property and other income Property operating income
62,562
58,633
253,955
178,339
Other income
902
499
2,333
3,651
Total property and other income
63,464
59,132
256,288
181,990
Expenses Management fee expense
8,320
11,522
42,390
43,190
Property operating expense
26,725
24,430
112,801
73,616
Transaction, investment and servicing expense
4,178
(1,412
)
7,191
36,800
Interest expense on real estate
13,629
13,990
55,415
43,437
Depreciation and amortization
20,367
18,297
103,220
90,986
Provision for loan losses
-
79,369
220,572
113,911
Impairment of operating real estate
(97
)
2,435
282,749
31,813
Administrative expense (including $3,344, $3,208, $10,810 and
$7,113 of equity-based compensation expense, respectively)
9,541
9,725
31,936
26,634
Total expenses
82,663
158,356
856,274
460,387
Other income (loss) Unrealized gain (loss) on
mortgage loans and obligations held in securitization trusts, net
(512
)
1,749
4,090
5,003
Realized gain (loss) on mortgage loans and obligations held in
securitization trusts, net
-
(695
)
2,772
(3,447
)
Other gain (loss), net
12,857
(3,226
)
(972
)
(2,766
)
Income (loss) before equity in earnings of unconsolidated
ventures and income taxes
18,828
(76,255
)
(496,418
)
(164,068
)
Equity in earnings (loss) of unconsolidated ventures
18,980
(15,999
)
36,942
23,774
Income tax expense
(2,628
)
(39,906
)
(3,172
)
(37,059
)
Net income (loss)
35,180
(132,160
)
(462,648
)
(177,353
)
Net (income) loss attributable to noncontrolling interests:
Investment entities
(415
)
1,983
38,208
4,771
Operating Partnership
(813
)
3,088
9,928
4,084
Net income (loss) attributable to Colony Credit Real Estate,
Inc. common stockholders
$
33,952
$
(127,089
)
$
(414,512
)
$
(168,498
)
Net income (loss) per common share – basic and
diluted
$
0.26
$
(1.00
)
$
(3.25
)
$
(1.41
)
Weighted average shares of common stock outstanding –
basic and diluted
128,539
127,887
128,391
120,677
COLONY CREDIT REAL ESTATE,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(In thousands, except per
share data) (Unaudited)
GAAP Net Income
(Loss) to Core Earnings (Loss) / Legacy, Non-Strategic Earnings
(Loss)
Three Months Ended December 31, 2019
Total Legacy, Non-Strategic Portfolio Core
Portfolio Net income attributable to Colony Credit Real Estate,
Inc. common stockholders
$
33,952
$
3,681
$
30,271
Adjustments: Net income attributable to noncontrolling interest of
the Operating Partnership
813
91
722
Non-cash equity compensation expense
3,344
1,672
1,672
Transaction costs
977
489
488
Depreciation and amortization
20,653
8,499
12,154
Net unrealized gain: Impairment of operating real estate and
preferred equity
(97
)
(97
)
-
Other unrealized gain
(1,967
)
(4
)
(1,963
)
Gains on sale of real estate
(8,598
)
(8,487
)
(111
)
Adjustments related to noncontrolling interests in investment
entities
(744
)
(517
)
(227
)
Core Earnings / Legacy, Non-Strategic Earnings attributable to
Colony Credit Real Estate, Inc. common stockholders and
noncontrolling interest of the Operating Partnership
$
48,333
$
5,327
$
43,006
Core Earnings / Legacy, Non-Strategic Earnings per share(1)
$
0.37
$
0.04
$
0.33
Weighted average number of common shares and OP units(1)
131,614
131,614
131,614
____________________________________________________
(1)
The Company calculates Core Earnings /
Legacy, Non Strategic Earnings 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 fourth quarter 2019, the weighted average
number of common shares and OP units was approximately 131.6
million; includes 3.1 million of OP units
Year Ended December 31, 2019
Total Legacy, Non-Strategic Portfolio Core
Portfolio Net income (loss) attributable to Colony Credit Real
Estate, Inc. common stockholders
$
(414,512
)
$
(489,906
)
$
75,394
Adjustments: Net income (loss) attributable to noncontrolling
interest of the Operating Partnership
(9,928
)
(11,715
)
1,787
Non-cash equity compensation expense
10,808
5,404
5,404
Transaction costs
1,651
751
900
Depreciation and amortization
104,020
51,963
52,057
Net unrealized loss: Impairment of operating real estate and
preferred equity(1)
304,704
263,193
41,511
Other unrealized loss
4,554
48
4,506
Gains on sale of real estate
(8,598
)
(8,487
)
(111
)
Adjustments related to noncontrolling interests in investment
entities
(40,858
)
(28,428
)
(12,430
)
Core Earnings (Loss) / Legacy, Non-Strategic Earnings (Loss)
attributable to Colony Credit Real Estate, Inc. common stockholders
and noncontrolling interest of the Operating Partnership
$
(48,159
)
$
(217,177
)
$
169,018
Core Earnings (Loss) / Legacy, Non-Strategic Earnings (Loss) per
share(2)
$
(0.36
)
$
(1.65
)
$
1.29
Weighted average number of common shares and OP units(2)
131,467
131,467
131,467
____________________________________________________
(1)
Includes our $30.8 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 year ended December 31, 2019, the
weighted average number of common shares and OP units was
approximately 131.5 million; includes 3.1 million of OP units
GAAP Net Book
Value to Undepreciated Book Value
As of December 31, 2019
Total
Legacy, Non- Strategic
Portfolio
Core Portfolio
GAAP net book value (excl. noncontrolling interests in investment
entities)
$
2,169,719
$
358,972
$
1,810,747
Accumulated depreciation and amortization(1)
174,382
90,387
83,995
Undepreciated book value
$
2,344,101
$
449,359
$
1,894,742
GAAP net book value per share (excl. noncontrolling
interests in investment entities)
$
16.49
$
2.73
$
13.76
Accumulated depreciation and amortization per share(1)
1.32
0.68
0.64
Undepreciated book value per share
$
17.81
$
3.41
$
14.40
Total common shares and OP units outstanding(2)
131,614
131,614
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 net 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 December 31,
2019, the total number of common shares and OP units outstanding
was approximately 131.6 million
Cumulative Legacy, Non-Strategic
Resolutions Since Announcing Portfolio Bifurcation Plan (November
2019) Number Investment As of
September 30, 2019, GAAP Gross Net ($ in
millions; at CLNC share)
of Assets Count Carrying
Value Net Carrying Value Sales Price Sales
Price (1) Sold
7
7
$32
$32
$43
$42
Under Contract
6
9
97
48
126
75
Expected Loan Payoff
1
1
40
12
n/a
n/a
Listed for Sale
26
32
344
216
n/a
n/a
Preparing for Sale
14
21
331
105
n/a
n/a
Total
54
70
$845
$413
n/a
n/a
____________________________________________________
(1)
Net sales price represents gross sales
price net of any in-place investment-level financing and
transaction costs
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005956/en/
Investor Relations
Colony Credit Real Estate, Inc. Addo Investor Relations Lasse
Glassen 310-829-5400
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