Form 8-K Colony Capital, Inc. For: May 09
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K | ||
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2016
COLONY CAPITAL, INC (Exact Name of Registrant as Specified in Its Charter) | ||||
Maryland | 001-34456 | 27-0419483 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
515 S. Flower Street, 44th Floor Los Angeles, CA | 90071 | ||||
(Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (310) 282-8820
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On May 9, 2016, Colony Capital, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2016, and financial results for the first quarter of 2016. A copy of the press release is attached as Exhibit 99.1 to this current report and is incorporated herein by reference.
On May 9, 2016, the Company made available Supplemental Financial Disclosure for the quarter ended March 31, 2016 on the Company’s website at www.colonyinc.com. A copy is furnished herewith as Exhibit 99.2, which is incorporated herein by reference.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2 hereto), shall not be deemed “filed” for the purposes of Section 18 of the Securities Act of 1934 (the “Exchange Act”), as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith to this Current Report on Form 8-K.
99.1 | Press Release dated May 9, 2016 |
99.2 | Supplemental Financial Disclosure for the quarter ended March 31, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 9, 2016
COLONY CAPITAL, INC. | ||
By: | /s/ Darren J. Tangen | |
Darren J. Tangen | ||
Chief Financial Officer and Treasurer | ||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated May 9, 2016 | |
99.2 | Supplemental Financial Disclosure for the quarter ended March 31, 2016 | |
COLONY CAPITAL ANNOUNCES
FIRST QUARTER 2016 FINANCIAL RESULTS
Los Angeles, CA, May 9, 2016 - Colony Capital, Inc. (NYSE: CLNY) and subsidiaries (collectively, the “Company”) today announced financial results for the first quarter ended March 31, 2016 and declared a dividend of $0.40 per share of Class A and Class B common stock for the second quarter of 2016.
First Quarter 2016 Highlights
• | Core funds from operations (“Core FFO”) of $56.0 million, or $0.41 per basic share; Funds from operations (“FFO”) of $36.7 million, or $0.27 per basic share. |
• | Declared and paid a first quarter dividend of $0.40 per share of Class A and Class B common stock. |
• | The Company and funds managed by the Company invested and agreed to invest approximately $193 million across the U.S. and Europe through real estate equity investments, originations and loan acquisitions. The Company invested and agreed to invest $93 million and funds managed by the Company invested and agreed to invest $100 million. |
• | Colony American Homes (“CAH”) and Starwood Waypoint Residential Trust (“SWAY”) completed their merger, forming Colony Starwood Homes (NYSE: SFR) with more than 30,000 homes and total asset value of approximately $7.7 billion. As a result of the merger, the Company received approximately 15.1 million shares, which represents a 14.0% ownership of SFR. The merger transaction excluded CAH’s Colony American Finance (“CAF”) business unit. |
• | The Company amended and restated its revolving credit facility to increase commitments from $800 million to $850 million, decrease the interest rate from LIBOR plus 2.75% to LIBOR plus 2.25% and extend initial maturity to March 2020 with two six-month extension options exercisable at the Company’s election. |
• | The Company formed a new real estate securities investment vehicle with total third party callable capital commitments of approximately $110 million. |
• | Subsequent to quarter end, the Company and funds managed by the Company invested and agreed to invest approximately $83 million across the U.S. and Europe through a real estate equity investment and a loan acquisition. The Company invested and agreed to invest $37 million and funds managed by the Company invested and agreed to invest $46 million. |
First Quarter 2016 Financial Results
For the first quarter of 2016, the Company reported total income of $203.2 million and net income attributable to common stockholders of $18.1 million, or $0.16 per basic share. Core FFO was $56.0 million, or $0.41 per basic share, and FFO was $36.7 million, or $0.27 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.
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | ||||||||||||||
(In thousands, except per share data) | Amount | Per Basic Share or Unit | Amount | Per Basic Share or Unit | |||||||||||
Core FFO attributable to common interests in Operating Company* | $ | 55,951 | $ | 0.41 | $ | 53,561 | $ | 0.49 | |||||||
FFO attributable to common interests in Operating Company | 36,729 | 0.27 | 29,663 | 0.27 | |||||||||||
Net income attributable to common interests in Operating Company | 21,556 | 0.16 | 3,557 | 0.03 | |||||||||||
Net income attributable to common stockholders | 18,135 | 0.16 | 3,557 | 0.03 | |||||||||||
__________
* | 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 |
“First quarter results reflect ongoing improvement in the same store performance of our real estate equity operating platforms, namely Colony Light Industrial and Colony Starwood Homes,” said Richard Saltzman, the Company’s President and Chief Executive Officer. “It does not yet incorporate any of the more meaningful net anticipated portfolio gains activity nor investment management benefits from new fund capital formation that we expect to have in place by year-end in order to meet our financial targets. Simultaneously, our real estate strategies developed over the last several years for both third-party investors and our balance
sheet continue to fit well into the very fragile global macro environment. These strategies target “equity” returns for “debt-like” risk expressed through our global opportunistic credit and property sale-leaseback portfolios, as well as equity investment in those U.S. real estate sectors where the supply/demand fundamentals are the most compelling, including residential rentals and industrial.”
First Quarter 2016 Operating Results and Investment Activity by Segment
The Company holds investment interests in five reportable segments: Colony Light Industrial Platform (“CLIP”), Single Family Residential Rentals, Other Real Estate Equity, Real Estate Debt and Investment Management.
Equity: Colony Light Industrial Platform
The Company’s investment in CLIP represents a 62% interest in a portfolio of light industrial properties and 100% interest in the related operating platform. CLIP primarily invests in light industrial properties in infill locations in major U.S. metropolitan markets targeting superior risk-adjusted returns. Light industrial properties are typically defined as buildings of less than 250,000 square feet and an office buildout of less than 20%.
As of March 31, 2016, CLIP’s portfolio consisted of 325 primarily light industrial buildings totaling 34.8 million square feet across 16 major U.S. markets and was 94% leased. During the first quarter, CLIP’s same store portfolio of 289 buildings produced robust revenue growth of 6.8% and net operating income growth of 12.6% over the same period last year and achieved a net operating income margin of 67.6%.
During the first quarter, CLIP acquired two light industrial buildings totaling approximately 200,000 square feet for $18 million and disposed of two non-core buildings totaling approximately 166,000 square feet for $8.1 million. As of March 31, 2016, the Company’s share of total assets and equity in this segment were $1.2 billion and $468 million, respectively. This segment’s Core FFO for the quarter was $13.8 million.
Subsequent to the end of the quarter, CLIP acquired four light industrial buildings totaling approximately 669,000 square feet for $56 million. CLIP currently has $163 million of uncalled capital commitments of which $61 million is from third-parties and the balance is from the Company. CLIP also has $60 million undrawn on its acquisition credit facility.
Equity: Single-Family Residential Rentals
On January 5, 2016, CAH and SWAY completed their merger, forming Colony Starwood Homes, with total asset value of approximately $7.7 billion. In connection with the merger, the Company received 15.1 million shares of SFR, which represent a 14.0% ownership of SFR. SFR has completed its merger integration and has achieved 85% of the estimated $50 million in annualized run-rate synergies. The merger transaction excluded CAF.
As of March 31, 2016, SFR owned and managed more than 30,000 homes with overall portfolio occupancy of 95%. During the first quarter, SFR’s same store portfolio of over 22,000 homes produced robust revenue growth of 6.1% and net operating income growth of 9.9% over the same period last year and achieved a core net operating income margin of 65.1%. SFR’s same store portfolio is defined as homes stabilized longer than 90 days prior to the beginning of the earliest period presented under the comparison, excluding homes subsequently sold. For the first quarter of 2016, SFR reported Core FFO of $43.3 million, or $0.40 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 intends to exit by end of year or sooner. Based on first quarter results, SFR has reaffirmed its full year 2016 Core FFO guidance of $1.55 to $1.65 per share.
SFR’s board declared a dividend for the second quarter of 2016 of $0.22 per share, which represents an annualized dividend yield of 3.4% on the Company’s cost basis. During the first quarter, SFR repurchased 2.0 million shares, resulting in the Company holding a 14.0% interest in SFR as of March 31, 2016 with a carrying value of $331 million, which does not include the Company’s $57 million share of CAF’s book value. This segment’s Core FFO for the quarter, which includes CAF, was $6.1 million.
Equity: Other Real Estate Equity Investments
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 certain preferred equity investments with profit participation meeting certain risk and return profiles. Since the completion of the combination transaction with Colony Capital, LLC in April 2015, most of the investment activity in this segment is focused on buying assets that will be allocated to various Company-sponsored funds and vehicles.
As of March 31, 2016, approximately 50% 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. Approximately 40% 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 14 years. The balance represents our $50 million investment in Albertsons/Safeway.
During the first quarter, the Company and funds managed by the Company invested and agreed to invest $147 million, including $91 million in a portfolio of 23 industrial properties in Spain. As of March 31, 2016, the Company’s share of total assets and equity in this segment were $1.3 billion and $577 million, respectively. This segment’s Core FFO for the quarter was $20.2 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. Since the completion of the combination transaction with Colony Capital, LLC in April 2015, most of the investment activity in this segment is focused on debt investments that will be allocated to various Company-sponsored funds and vehicles.
As of March 31, 2016, approximately 75% of the net book value in this segment was composed of originated loans and approximately 25% was composed of acquired loans. The Company’s share of originated loans totaled $1.5 billion with a weighted average coupon of 8.1% and first quarter annualized Core FFO yield on average net book value was 11%. Originated loans carried a weighted average first dollar loan-to-value of 36% and last dollar loan-to-value of 74% accounting for any senior debt or investment-level financing. The Company’s share of acquired loans totaled $423 million and first quarter annualized Core FFO yield on average net book value was 9% excluding loan loss provisions.
During the first quarter, the Company invested $29 million in a first mortgage loan origination and, on behalf of the Company and funds managed by the Company, sold a $75 million A-note related to a first mortgage loan acquired at a discount to par in the fourth quarter of 2015. As of March 31, 2016, the Company’s share of total assets and equity in this segment were $3.2 billion and $2.0 billion, respectively. This segment’s Core FFO for the quarter was $48.6 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. During the first quarter, the Company invested $100 million on behalf of funds managed by the Company. As of March 31, 2016, the Company had $18.2 billion of AUM and $7.9 billion of FEEUM compared to $18.8 billion of AUM and $9.3 billion of FEEUM as of December 31, 2015. AUM declined primarily from the sale of a non-fee bearing private equity investment and FEEUM decreased primarily as a result of reductions relating to two 2006 vintage funds. As of March 31, 2016, the Company’s share of total assets and equity in this segment was $791 million and $740 million, respectively. This segment’s Core FFO for the quarter was $8.9 million.
In March 2016, the Company formed a real estate securities investment vehicle with total callable capital commitments of approximately $115 million. The Company’s commitment of $5 million represents an approximate 4.4% interest, with third-party partners holding the balance. The new vehicle targets for investment purposes the common stock and preferred stock of publicly traded U.S. real estate investment trusts, including securities of the Company.
Credit Facility
On March 31, 2016, the Company entered into an amended and restated revolving credit facility, which increased aggregate commitments from $800 million to $850 million, which is fully available to the Company based on current borrowing base availability. The restated terms include improvements including, among other things, lower interest rate of LIBOR plus 2.25% compared to LIBOR plus 2.75%, lower unused commitment fees, increased accordion allowing for a maximum commitment balance of $1.275 billion, increased borrowing base availability and longer term with an initial term of four years with two six-month extension options exercisable at the Company’s election.
Common and Preferred Stock Dividends
On May 5, 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 second 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 July 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 July 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 April 15, 2016. All dividends will be paid on July 15, 2016 to respective stockholders of record on June 30, 2016.
On February 25, 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 first 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 April 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 April 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 April 15, 2016. All dividends were paid on April 15, 2016 to respective stockholders of record on March 31, 2016.
Common Shares and Operating Company Units
As of May 6, 2016, Colony Capital, Inc. had approximately 113.7 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
The Company presents non-GAAP financial measures in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found at the end of this press release.
Conference Call
Colony Capital, Inc. will conduct a conference call to discuss the results on Monday, May 9, 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 13633347. 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 May 9, 2016 at 11:00 a.m. PT / 2:00 p.m. ET, through May 16, 2016, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (877) 870-5176 (U.S.), and use conference ID 13633347. International callers should dial (858) 384-5517 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 shareholders 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.
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. All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (“SEC”) on February 29, 2016, as amended by Amendment No. 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 29, 2016 and other risks described in documents subsequently filed by the Company from time to time in the future with the SEC.
Investor Contact:
Colony Capital, Inc.
Darren Tangen
Executive Director and Chief Financial Officer
310-552-7230
or
Addo Communications, Inc.
Lasse Glassen, 310-829-5400
(FINANCIAL TABLES FOLLOW)
COLONY CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2016 | December 31, 2015 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash | $ | 171,300 | $ | 185,854 | ||||
Loans receivable, net | ||||||||
Held for investment | 4,067,544 | 4,048,477 | ||||||
Held for sale | — | 75,002 | ||||||
Real estate assets, net | ||||||||
Held for investment | 3,256,474 | 3,132,218 | ||||||
Held for sale | 153,416 | 297,887 | ||||||
Investments in unconsolidated joint ventures | 914,715 | 924,465 | ||||||
Goodwill | 680,127 | 678,267 | ||||||
Deferred leasing costs and intangible assets, net | 328,120 | 325,513 | ||||||
Due from affiliates | 7,020 | 11,713 | ||||||
Other assets | 350,440 | 359,914 | ||||||
Total assets | $ | 9,929,156 | $ | 10,039,310 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Accrued and other liabilities | $ | 316,288 | $ | 325,589 | ||||
Due to affiliates—contingent consideration | 43,211 | 52,990 | ||||||
Due to affiliates—other | 2,979 | — | ||||||
Dividends and distributions payable | 66,037 | 65,688 | ||||||
Debt, net | 3,595,723 | 3,587,724 | ||||||
Convertible senior notes, net | 591,508 | 591,079 | ||||||
Total liabilities | 4,615,746 | 4,623,070 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock | 250 | 250 | ||||||
Common stock | 1,131 | 1,123 | ||||||
Additional paid-in capital | 2,998,378 | 2,995,243 | ||||||
Distributions in excess of earnings | (158,387 | ) | (131,278 | ) | ||||
Accumulated other comprehensive loss | (16,579 | ) | (18,422 | ) | ||||
Total stockholders’ equity | 2,824,793 | 2,846,916 | ||||||
Noncontrolling interests in investment entities | 2,065,728 | 2,138,925 | ||||||
Noncontrolling interests in Operating Company | 422,889 | 430,399 | ||||||
Total equity | 5,313,410 | 5,416,240 | ||||||
Total liabilities and equity | $ | 9,929,156 | $ | 10,039,310 | ||||
COLONY CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
(Unaudited) | (Unaudited) | |||||||
Income | ||||||||
Interest income | $ | 89,361 | $ | 46,137 | ||||
Property operating income | 91,617 | 43,793 | ||||||
Equity in income of unconsolidated joint ventures | 2,429 | 26,349 | ||||||
Fee income | 16,609 | — | ||||||
Other income | 3,202 | 333 | ||||||
Total income | 203,218 | 116,612 | ||||||
Expenses | ||||||||
Management fees | — | 14,961 | ||||||
Investment and servicing expenses | 6,931 | 2,253 | ||||||
Transaction costs | 4,490 | 14,190 | ||||||
Interest expense | 41,871 | 26,593 | ||||||
Property operating expenses | 30,786 | 14,011 | ||||||
Depreciation and amortization | 46,142 | 22,308 | ||||||
Provision for loan losses | 4,630 | 364 | ||||||
Impairment loss | 2,079 | 450 | ||||||
Compensation expense | 26,867 | 615 | ||||||
Administrative expenses | 12,771 | 4,166 | ||||||
Total expenses | 176,567 | 99,911 | ||||||
Gain on sale of real estate assets, net | 51,119 | — | ||||||
Other gain (loss), net | 14,045 | 164 | ||||||
Income before income taxes | 91,815 | 16,865 | ||||||
Income tax expense | (784 | ) | (650 | ) | ||||
Net income | 91,031 | 16,215 | ||||||
Net income attributable to noncontrolling interests: | ||||||||
Investment entities | 57,595 | 5,686 | ||||||
Operating Company | 3,421 | — | ||||||
Net income attributable to Colony Capital, Inc. | 30,015 | 10,529 | ||||||
Preferred dividends | 11,880 | 6,972 | ||||||
Net income attributable to common stockholders | $ | 18,135 | $ | 3,557 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.16 | $ | 0.03 | ||||
Diluted | $ | 0.16 | $ | 0.03 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 111,660 | 109,415 | ||||||
Diluted | 111,660 | 109,415 | ||||||
Dividends declared per common share | $ | 0.40 | $ | 0.37 | ||||
COLONY CAPITAL, INC.
RECONCILIATION OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
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.
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) deferred tax benefit related to amortization and impairment of investment management contracts and customer relationships; (x) gain on remeasurement of consolidated investment entities, net of deferred tax liability, and the effect of amortization thereof; (xi) non-real estate depreciation and amortization; and (xii) change in fair value of contingent consideration. 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. 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.
Funds from Operations and Core Funds from Operations
Three Months Ended March 31, | ||||||||
(In thousands, except per share data) | 2016 | 2015 | ||||||
Net income attributable to common stockholders | $ | 18,135 | $ | 3,557 | ||||
Adjustments for FFO attributable to common interests in Operating Company: | ||||||||
Net income attributable to noncontrolling common interests in Operating Company | 3,421 | — | ||||||
Real estate depreciation and amortization | 48,411 | 32,145 | ||||||
Impairment of real estate | 1,753 | 1,544 | ||||||
Gain on sales of real estate | (51,265 | ) | (179 | ) | ||||
Less: Adjustments attributable to noncontrolling interests in investment entities | 16,274 | (7,404 | ) | |||||
FFO attributable to common interests in Operating Company and common stockholders | $ | 36,729 | $ | 29,663 | ||||
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 | 47,734 | — | ||||||
Noncash equity compensation expense | 3,473 | 5,986 | ||||||
Straight-line rent revenue | (3,694 | ) | (3,474 | ) | ||||
Gain on change in fair value of contingent consideration | (9,779 | ) | — | |||||
Amortization of acquired above- and below-market lease intangibles, net | 632 | 565 | ||||||
Amortization of deferred financing costs and debt premiums and discounts | 7,533 | 5,889 | ||||||
Unrealized (gain) loss on derivatives | (3,318 | ) | 565 | |||||
Acquisition-related expenses, merger and integration costs | 7,617 | 14,276 | ||||||
Amortization and impairment of investment management intangibles | 4,065 | — | ||||||
Deferred tax benefit effect on amortization of investment management intangibles | (1,633 | ) | — | |||||
Non-real estate depreciation and amortization | 1,112 | — | ||||||
Amortization of loss on remeasurement of consolidated investment entities, net | 7,649 | — | ||||||
Net loss on SFR's non-performing loans business (1) | 1,458 | — | ||||||
Less: Adjustments attributable to noncontrolling interests in investment entities | (43,627 | ) | 91 | |||||
Core FFO attributable to common interests in Operating Company and common stockholders | $ | 55,951 | $ | 53,561 | ||||
FFO per common share / common OP Unit (2) | $ | 0.27 | $ | 0.27 | ||||
FFO per common share / common OP Unit—Diluted (2)(3) | $ | 0.27 | $ | 0.27 | ||||
Core FFO per common share / common OP Unit (2) | $ | 0.41 | $ | 0.49 | ||||
Core FFO per common share / common OP Unit—Diluted (2)(3) | $ | 0.39 | $ | 0.45 | ||||
Weighted average number of common Units outstanding used for FFO and Core FFO per common share and OP Unit (2) | 134,833 | 109,415 | ||||||
Weighted average number of common Units outstanding used for FFO per common share and OP Unit—Diluted (2)(3) | 151,219 | 125,633 | ||||||
Weighted average number of common Units outstanding used for Core FFO per common share and OP Unit—Diluted (2)(3) | 159,782 | 134,522 | ||||||
__________
(1) | Represents OP's share of SFR's net loss on its legacy SWAY non-performing loans business. Adjustment is consistent with SFR's presentation of Core FFO. |
(2) | 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. |
(3) | For the three months ended March 31, 2016, included in the calculation of diluted FFO and Core FFO per share is the effect of adding back $4.2 million and $6.8 million of interest expense, respectively, associated with convertible senior notes and 16,385,400 and 24,949,000 weighted average dilutive common share equivalents, respectively, for the assumed conversion of the convertible senior notes. |
For the three months ended March 31, 2015, included in the calculation of diluted FFO and Core FFO per share is the effect of adding back $4.2 million and $7.0 million of interest expense, respectively, associated with convertible senior notes and 16,218,400 and 25,107,600 weighted average dilutive common share equivalents, respectively, for the assumed conversion of the convertible senior notes.
The effect of the assumed conversion and repayment for the stated periods was antidilutive to net income per common share but dilutive to FFO and/or Core FFO per common share.
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 March 31, 2016, and includes $0.9 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 March 31, 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.
Forward-Looking Statements |
Some of the statements contained in this presentation constitute 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. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this presentation reflect Colony Capital, Inc.’s (or “the Company”) current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances, many of which are beyond the Company’s control, that may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Statements regarding the following subjects, among others, may be forward-looking: the market, economic and environmental conditions in the industrial real estate, single-family rental, and lodging sectors; any decrease in the Company’s net income and funds from operations as a result of the combination transaction with Colony Capital, LLC; the Company’s ability to manage the combination with Colony Capital, LLC effectively; the Company’s exposure to risks to which it has not historically been exposed, including liabilities with respect to the assets acquired from Colony Capital, LLC and ongoing liabilities and business risks inherent to Colony Capital LLC’s business; the Company’s business and investment strategy, including the Company’s investment in and ability to generate revenue from the single-family homes in which the Company indirectly owns an interest; the Company’s ability to dispose of its real estate investments quickly; the performance of the hotels in which the Company owns an interest; market trends in the Company’s industry, interest rates, real estate values, the debt securities markets or the general economy or the demand for commercial real estate loans; the Company’s projected operating results; actions, initiatives and policies of the U.S. government and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies; the state of the U.S. and global economy generally or in specific geographic regions; the Company’s ability to obtain and maintain financing arrangements, including securitizations; the amount and value of commercial mortgage loans requiring refinancing in future periods; the availability of attractive investment opportunities; the availability and cost of debt financing from traditional lenders; the volume of short-term loan extensions; the demand for new capital to replace maturing loans; the Company’s expected leverage; the general volatility of the securities markets in which the Company participates; changes in the value of the Company’s assets; interest rate mismatches between the Company’s target assets and any borrowings used to fund such assets; changes in interest rates and the market value of the Company’s target assets; changes in prepayment rates on the Company’s target assets; effects of hedging instruments on the Company’s target assets; rates of default or decreased recovery rates on the Company’s target assets; the impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters; the Company’s ability to maintain its qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; the Company’s ability to maintain its exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); the availability of opportunities to acquire commercial mortgage-related, real estate-related and other securities; the availability of qualified personnel; estimates relating to the Company’s ability to make distributions to the Company’s stockholders in the future; and the Company’s understanding of its competition.
While forward-looking statements reflect Colony Capital, Inc.’s good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent filings with the SEC.
This presentation contains statistics and other data that has been obtained from or compiled from information made available by third-party service providers. Colony Capital, Inc. has not independently verified such statistics or data.
Certain of the following slides present information related to the prior performance of Colony Capital, LLC and its affiliates. This information is provided for informational purposes only and is not intended to be indicative of future results. Actual performance of Colony Capital, Inc. may vary materially.
1
Important Note Regarding Non-GAAP Financial Measures |
This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including funds from operations, or FFO, and core funds from operations, or Core FFO. A description of these non-GAAP financial measures and reconciliations to their most directly comparable GAAP measures, as well as a description of other metrics presented, are provided within the Appendix to this supplemental package. FFO is a non-GAAP measure defined by the National Association of Real Estate Investments Trusts, or NAREIT.
2
Table of Contents |
Page | Page | |||||||
I. | Overview | V. | Single Family Residential Rentals | |||||
a. | Summary Metrics | a. | Summary Metrics | |||||
b. | Summary of Segments | VI. | Other Real Estate Equity | |||||
II. | Financial Results | a. | Summary Metrics & Asset Overview | |||||
a. | Consolidated Income Statements | VII. | Real Estate Debt | |||||
b. | Pro Rata Segment Balance Sheets | a. | Summary Metrics & Portfolio Overview | |||||
c. | Pro Rata Segment Operating Results | VIII. | Investment Management | |||||
d. | Pro Rata Segment Reconciliation of Net Income to FFO & Core FFO | a. | Summary Metrics | |||||
III. | Capitalization | IX. | Definitions | |||||
a. | Overview | |||||||
b. | Debt Overview | |||||||
c. | Investment-Level Debt Overview | |||||||
c. | Credit Facility, Convertible Debt & Preferred Equity Overview | |||||||
IV. | Colony Light Industrial Platform | |||||||
a. | Summary Metrics | |||||||
b. | Portfolio & Lease Overview | |||||||
3
I. Overview
Ia. Overview—Summary Metrics |
Summary metrics | |||
($ and shares in thousands, except per share data, unless otherwise noted; as of or for the three months ended March 31, 2016 unless otherwise noted) | |||
Financial data | |||
Core FFO attributable to common interests in OP and common stockholders | $ | 55,951 | |
Core FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.41 | ||
FFO attributable to common interests in OP and common stockholders | 36,729 | ||
FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.27 | ||
Net income attributable to common interests in OP and common stockholders | 21,556 | ||
Net income attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.16 | ||
2Q16 dividend per share | 0.40 | ||
Annualized dividend | 1.60 | ||
AUM | $18.2 billion | ||
FEEUM | $7.9 billion | ||
Balance sheet, capitalization and trading statistics | |||
Total consolidated assets | $ | 9,929,156 | |
CLNY & OP share of consolidated assets | 6,893,863 | ||
Total consolidated debt (1) | 4,244,250 | ||
CLNY & OP share of consolidated debt (1) | 3,319,132 | ||
Shares and OP units outstanding as of 5/6/2016 | 134,686 | ||
Share price as of 5/6/2016 | $ | 17.81 | |
Market value of common equity & OP units | 2,398,758 | ||
Liquidation preference of preferred equity | 625,750 | ||
Insider ownership of shares and OP units | 18.6 | % | |
__________
Note: See appendix for definitions and acronyms.
(1) Represents principal balance and excludes debt issuance costs, discounts and premiums.
5
Ib. Overview—Summary of Segments |
($ in thousands, unless otherwise noted; as of or for the three months ended March 31, 2016) | |||
Light Industrial | |||
1) CLNY & OP share of undepreciated cost basis of real estate assets (1)(2) | $ | 1,218,797 | |
CLNY & OP share of investment-level non-recourse financing (3) | 723,183 | ||
2) Carrying value of CLIP operating platform | 20,000 | ||
Core FFO attributable to common interests in OP and common stockholders | 13,837 | ||
Single Family Residential Rentals | |||
1) CLNY & OP share of investment in unconsolidated joint ventures - Colony Starwood Homes | $ | 331,457 | |
Colony Starwood Homes shares beneficially owned by OP and common stockholders | 15.1 million | ||
CLNY & OP's interest in SFR as of March 31, 2016 | 14.0% | ||
2) CLNY & OP share of investment in unconsolidated joint ventures - Colony American Finance | 56,522 | ||
Core FFO attributable to common interests in OP and common stockholders | 6,069 | ||
Other Real Estate Equity | |||
1) CLNY & OP share of undepreciated cost basis of real estate assets, held for investment (1)(2) | $ | 1,014,953 | |
CLNY & OP share of investment-level non-recourse financing (3) | 616,570 | ||
2) CLNY & OP share of undepreciated cost basis of real estate assets, held for sale (1) | 32,624 | ||
3) CLNY & OP share of investments in unconsolidated joint ventures excluding Albertsons investment | 138,013 | ||
4) CLNY & OP share of investments in unconsolidated joint ventures - Albertsons investment | 49,863 | ||
Core FFO attributable to common interests in OP and common stockholders | 20,163 | ||
Real Estate Debt | |||
1) CLNY & OP share of loans held for investment, net | $ | 2,857,086 | |
CLNY & OP share of investment-level financing (3) | 1,030,749 | ||
2) CLNY & OP share of carrying value of real estate assets (REO within debt portfolio) (1) | 30,969 | ||
3) CLNY & OP share of investments in unconsolidated joint ventures | 120,818 | ||
Core FFO attributable to common interests in OP and common stockholders | 48,560 | ||
Investment Management | |||
AUM | $18.2 billion | ||
FEEUM | $7.9 billion | ||
Credit Funds | $3.7 billion | ||
Core Plus / Value-Add Funds | $1.7 billion | ||
Opportunity Funds | $2.5 billion | ||
Core FFO attributable to common interests in OP and common stockholders | $ | 8,946 | |
__________
(1) Includes all components related to the asset, including real estate and lease-related intangibles.
(2) Excludes accumulated depreciation.
(3) Represents unpaid principal balance.
6
II. Financial Results
IIa. Financial Results—Consolidated Income Statements |
2015 | 2016 | ||||||||||||||||||||
($ in thousands, except per share data) | Q1 (1) | Q2 | Q3 | Q4 | Q1 | ||||||||||||||||
Income | |||||||||||||||||||||
Interest income | $ | 46,137 | $ | 101,270 | $ | 142,269 | $ | 127,629 | $ | 89,361 | |||||||||||
Property operating income | 43,793 | 83,230 | 86,435 | 86,413 | 91,617 | ||||||||||||||||
Equity in income of unconsolidated joint ventures | 26,349 | 10,956 | 6,879 | 3,421 | 2,429 | ||||||||||||||||
Fee income | — | 21,928 | 23,070 | 20,745 | 16,609 | ||||||||||||||||
Other income | 333 | 3,520 | 4,325 | 3,274 | 3,202 | ||||||||||||||||
Total income | 116,612 | 220,904 | 262,978 | 241,482 | 203,218 | ||||||||||||||||
Expenses | |||||||||||||||||||||
Management fees | 14,961 | 101 | — | — | — | ||||||||||||||||
Transaction, investment and servicing expenses | 16,807 | 10,034 | 7,058 | 28,722 | 11,421 | ||||||||||||||||
Interest expense | 26,593 | 30,924 | 38,027 | 37,550 | 41,871 | ||||||||||||||||
Property operating expenses | 14,011 | 35,905 | 35,615 | 32,182 | 30,786 | ||||||||||||||||
Depreciation and amortization | 22,308 | 36,645 | 42,656 | 39,368 | 46,142 | ||||||||||||||||
Provision for loan losses | — | 4,078 | 26,495 | 6,538 | 4,630 | ||||||||||||||||
Impairment loss | — | — | 317 | 10,425 | 2,079 | ||||||||||||||||
Compensation expense | — | 28,644 | 25,734 | 29,513 | 26,867 | ||||||||||||||||
Administrative expenses | 4,781 | 11,411 | 11,154 | 11,507 | 12,771 | ||||||||||||||||
Total expenses | 99,461 | 157,742 | 187,056 | 195,805 | 176,567 | ||||||||||||||||
Gain on sale of real estate assets, net | — | — | — | — | 51,119 | ||||||||||||||||
Gain on remeasurement of consolidated investment entities, net | — | 41,486 | — | — | — | ||||||||||||||||
Other (loss) gain, net | (286 | ) | (1,215 | ) | (759 | ) | 5,602 | 14,045 | |||||||||||||
Income before income taxes | 16,865 | 103,433 | 75,163 | 51,279 | 91,815 | ||||||||||||||||
Income tax (provision) benefit | (650 | ) | (349 | ) | 3,598 | 6,697 | (784 | ) | |||||||||||||
Net income | 16,215 | 103,084 | 78,761 | 57,976 | 91,031 | ||||||||||||||||
Net income attributable to noncontrolling interests—Investment entities | 5,686 | 34,630 | 22,264 | 23,543 | 57,595 | ||||||||||||||||
Net income attributable to noncontrolling interests—Operating Company | — | 9,138 | 7,200 | 3,595 | 3,421 | ||||||||||||||||
Net income attributable to Colony Capital, Inc. | 10,529 | 59,316 | 49,297 | 30,838 | 30,015 | ||||||||||||||||
Preferred dividends | 6,972 | 11,410 | 12,094 | 12,093 | 11,880 | ||||||||||||||||
Net income attributable to common stockholders | $ | 3,557 | $ | 47,906 | $ | 37,203 | $ | 18,745 | $ | 18,135 | |||||||||||
Net income per common share—Basic | $ | 0.03 | $ | 0.43 | $ | 0.33 | $ | 0.17 | $ | 0.16 | |||||||||||
Net income per common share—Diluted | $ | 0.03 | $ | 0.40 | $ | 0.32 | $ | 0.17 | $ | 0.16 | |||||||||||
Weighted average number of common shares outstanding—Basic | 109,415 | 111,394 | 111,443 | 111,444 | 111,660 | ||||||||||||||||
Weighted average number of common shares outstanding—Diluted | 109,415 | 136,434 | 136,138 | 111,444 | 111,660 | ||||||||||||||||
FFO attributable to common interests in OP and common stockholders | $ | 29,663 | $ | 83,159 | $ | 72,162 | $ | 54,272 | $ | 36,729 | |||||||||||
FFO per basic common share / common OP Unit | $ | 0.27 | $ | 0.62 | $ | 0.54 | $ | 0.41 | $ | 0.27 | |||||||||||
Core FFO attributable to common interests in OP and common stockholders | $ | 53,561 | $ | 59,409 | (2) | $ | 70,776 | (2) | $ | 76,698 | $ | 55,951 | |||||||||
Core FFO per basic common share / common OP Unit | $ | 0.49 | $ | 0.45 | (2) | $ | 0.53 | (2) | $ | 0.57 | $ | 0.41 | |||||||||
__________
(1) Prior to the Combination transaction on April 2, 2015, the Company was externally managed and many of the Company's investments were held through unconsolidated joint ventures. Therefore, results of operations for Q1 2015 are not directly comparable to subsequent quarters.
(2) During the quarter ended December 31, 2015, the Company added the deferred tax effect related to amortization and impairment of investment management contracts and customer relationships to the definition of Core FFO. As such, the Company has presented revised Core FFO and Core FFO per basic common share / common OP Unit from prior periods to exclude such deferred tax effects to conform to the current quarter calculation of Core FFO.
8
IIb. Financial Results—Pro Rata Segment Balance Sheets |
OP pro rata share by segment | Amounts attributable to noncontrolling interests | CLNY consolidated as reported | |||||||||||||||||||||||||||||||||
($ in thousands; as of March 31, 2016) | Light Industrial Platform | Single-Family Residential Rentals | Other Real Estate Equity | Real Estate Debt | Investment Management | Amounts not allocated to segments | Total OP pro rata share | ||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||||
Cash | $ | 15,900 | $ | — | $ | 31,761 | $ | 27,517 | $ | 17,968 | $ | 7,486 | $ | 100,632 | $ | 70,668 | $ | 171,300 | |||||||||||||||||
Loans receivable held for investment, net | — | — | — | 2,857,086 | — | — | 2,857,086 | 1,210,458 | 4,067,544 | ||||||||||||||||||||||||||
Real estate assets, net | |||||||||||||||||||||||||||||||||||
Held for investment | 1,104,865 | — | 890,231 | 12,976 | — | — | 2,008,072 | 1,248,402 | 3,256,474 | ||||||||||||||||||||||||||
Held for sale | 2,919 | — | 27,212 | 17,924 | — | — | 48,055 | 105,361 | 153,416 | ||||||||||||||||||||||||||
Investments in unconsolidated joint ventures | — | 387,979 | 187,876 | 120,818 | 9,911 | 10,849 | 717,433 | 197,282 | 914,715 | ||||||||||||||||||||||||||
Goodwill | 20,000 | — | — | — | 660,127 | — | 680,127 | — | 680,127 | ||||||||||||||||||||||||||
Deferred leasing costs and intangible assets, net | 48,745 | — | 93,553 | 69 | 81,740 | — | 224,107 | 104,013 | 328,120 | ||||||||||||||||||||||||||
Due from affiliates and other assets | 23,416 | — | 21,447 | 129,162 | 21,103 | 63,223 | 258,351 | 99,109 | 357,460 | ||||||||||||||||||||||||||
Total assets | $ | 1,215,845 | $ | 387,979 | $ | 1,252,080 | $ | 3,165,552 | $ | 790,849 | $ | 81,558 | $ | 6,893,863 | $ | 3,035,293 | $ | 9,929,156 | |||||||||||||||||
LIABILITIES & EQUITY | |||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||
Accrued and other liabilities | $ | 26,805 | $ | — | $ | 63,990 | $ | 92,698 | $ | 47,998 | $ | 9,786 | $ | 241,277 | $ | 50,614 | $ | 291,891 | |||||||||||||||||
Intangible liabilities, net | 7,248 | — | 4,578 | — | — | — | 11,826 | 12,571 | 24,397 | ||||||||||||||||||||||||||
Due to affiliates—contingent consideration | — | — | — | — | — | 43,211 | 43,211 | — | 43,211 | ||||||||||||||||||||||||||
Due to affiliates—other | — | — | — | — | 2,979 | — | 2,979 | — | 2,979 | ||||||||||||||||||||||||||
Dividends and distributions payable | — | — | — | — | — | 66,037 | 66,037 | — | 66,037 | ||||||||||||||||||||||||||
Debt, net | 713,951 | — | 606,084 | 1,023,178 | — | 346,130 | 2,689,343 | 906,380 | 3,595,723 | ||||||||||||||||||||||||||
Convertible senior notes, net | — | — | — | — | — | 591,508 | 591,508 | — | 591,508 | ||||||||||||||||||||||||||
Total liabilities | 748,004 | — | 674,652 | 1,115,876 | 50,977 | 1,056,672 | 3,646,181 | 969,565 | 4,615,746 | ||||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||||||||||||
Stockholders' equity | 406,922 | 337,459 | 502,240 | 1,782,783 | 643,531 | (848,142 | ) | 2,824,793 | — | 2,824,793 | |||||||||||||||||||||||||
Noncontrolling interests in investment entities | — | — | — | — | — | — | — | 2,065,728 | 2,065,728 | ||||||||||||||||||||||||||
Noncontrolling interests in Operating Company | 60,919 | 50,520 | 75,188 | 266,893 | 96,341 | (126,972 | ) | 422,889 | — | 422,889 | |||||||||||||||||||||||||
Total equity | 467,841 | 387,979 | 577,428 | 2,049,676 | 739,872 | (975,114 | ) | 3,247,682 | 2,065,728 | 5,313,410 | |||||||||||||||||||||||||
Total liabilities and equity | $ | 1,215,845 | $ | 387,979 | $ | 1,252,080 | $ | 3,165,552 | $ | 790,849 | $ | 81,558 | $ | 6,893,863 | $ | 3,035,293 | $ | 9,929,156 | |||||||||||||||||
9
IIc. Financial Results—Pro Rata Segment Operating Results |
OP pro rata share by segment | Amounts attributable to noncontrolling interests | CLNY consolidated as reported | |||||||||||||||||||||||||||||||||
($ in thousands; for the three months ended March 31, 2016) | Light Industrial Platform | Single-Family Residential Rentals | Other Real Estate Equity | Real Estate Debt | Investment Management | Amounts not allocated to segments | Total OP pro rata share | ||||||||||||||||||||||||||||
Income | |||||||||||||||||||||||||||||||||||
Interest income | $ | — | $ | — | $ | 2 | $ | 58,213 | $ | — | $ | 11 | $ | 58,226 | $ | 31,135 | $ | 89,361 | |||||||||||||||||
Property operating income | 28,078 | — | 23,695 | 758 | — | — | 52,531 | 39,086 | 91,617 | ||||||||||||||||||||||||||
Equity in income (loss) of unconsolidated joint ventures | — | (6,637 | ) | 2,720 | 2,718 | (349 | ) | 400 | (1,148 | ) | 3,577 | 2,429 | |||||||||||||||||||||||
Fee income | — | — | — | 32 | 16,609 | — | 16,641 | (32 | ) | 16,609 | |||||||||||||||||||||||||
Other income (loss) | 1,266 | — | (38 | ) | 438 | — | 1,274 | 2,940 | 262 | 3,202 | |||||||||||||||||||||||||
Total income | 29,344 | (6,637 | ) | 26,379 | 62,159 | 16,260 | 1,685 | 129,190 | 74,028 | 203,218 | |||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||
Transaction, investment and servicing expenses | 168 | — | 1,923 | 1,339 | 45 | 2,268 | 5,743 | 5,678 | 11,421 | ||||||||||||||||||||||||||
Interest expense | 5,874 | — | 5,956 | 9,056 | — | 11,488 | 32,374 | 9,497 | 41,871 | ||||||||||||||||||||||||||
Property operating expenses | 8,529 | — | 5,847 | 820 | — | — | 15,196 | 15,590 | 30,786 | ||||||||||||||||||||||||||
Depreciation and amortization | 13,316 | — | 9,504 | 107 | 3,745 | 1,112 | 27,784 | 18,358 | 46,142 | ||||||||||||||||||||||||||
Provision for loan losses | — | — | — | 3,420 | — | — | 3,420 | 1,210 | 4,630 | ||||||||||||||||||||||||||
Impairment loss | — | — | — | 249 | 320 | — | 569 | 1,510 | 2,079 | ||||||||||||||||||||||||||
Compensation expense | 1,388 | — | 680 | 2,457 | 9,287 | 11,722 | 25,534 | 1,333 | 26,867 | ||||||||||||||||||||||||||
Administrative expenses | 369 | — | 885 | 995 | 774 | 9,119 | 12,142 | 629 | 12,771 | ||||||||||||||||||||||||||
Total expenses | 29,644 | — | 24,795 | 18,443 | 14,171 | 35,709 | 122,762 | 53,805 | 176,567 | ||||||||||||||||||||||||||
Gain on sale of real estate assets, net | 487 | — | 14,186 | 220 | — | — | 14,893 | 36,226 | 51,119 | ||||||||||||||||||||||||||
Other gain (loss), net | 20 | — | 426 | 244 | (38 | ) | 9,847 | 10,499 | 3,546 | 14,045 | |||||||||||||||||||||||||
Income before income taxes | 207 | (6,637 | ) | 16,196 | 44,180 | 2,051 | (24,177 | ) | 31,820 | 59,995 | 91,815 | ||||||||||||||||||||||||
Income tax benefit (expense) | (40 | ) | — | (1,401 | ) | (252 | ) | 3,426 | (117 | ) | 1,616 | (2,400 | ) | (784 | ) | ||||||||||||||||||||
Net income (loss) | 167 | (6,637 | ) | 14,795 | 43,928 | 5,477 | (24,294 | ) | 33,436 | 57,595 | 91,031 | ||||||||||||||||||||||||
Net income attributable to noncontrolling interests: | |||||||||||||||||||||||||||||||||||
Investment entities | — | — | — | — | — | — | — | 57,595 | 57,595 | ||||||||||||||||||||||||||
Operating Company | — | — | — | — | — | — | — | 3,421 | 3,421 | ||||||||||||||||||||||||||
Net income (loss) attributable to Colony Capital, Inc. | 167 | (6,637 | ) | 14,795 | 43,928 | 5,477 | (24,294 | ) | 33,436 | (3,421 | ) | 30,015 | |||||||||||||||||||||||
Preferred dividends | — | — | — | — | — | 11,880 | 11,880 | — | 11,880 | ||||||||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 167 | $ | (6,637 | ) | $ | 14,795 | $ | 43,928 | $ | 5,477 | $ | (36,174 | ) | $ | 21,556 | $ | (3,421 | ) | $ | 18,135 | ||||||||||||||
10
IId. Financial Results—Pro Rata Segment Reconciliation of Net Income to FFO & Core FFO |
OP pro rata share by segment | Amounts attributable to noncontrolling interests | CLNY consolidated as reported | |||||||||||||||||||||||||||||||||
($ in thousands; for the three months ended March 31, 2016) | Light Industrial Platform | Single-Family Residential Rentals | Other Real Estate Equity | Real Estate Debt | Investment Management | Amounts not allocated to segments | Total OP pro rata share | ||||||||||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 140 | $ | (5,583 | ) | $ | 12,447 | $ | 36,955 | $ | 4,608 | $ | (30,432 | ) | $ | 18,135 | $ | — | $ | 18,135 | |||||||||||||||
Adjustments for FFO attributable to common interests in Operating Company: | — | — | |||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling common interests in Operating Company | 27 | (1,054 | ) | 2,348 | 6,973 | 869 | (5,742 | ) | 3,421 | — | 3,421 | ||||||||||||||||||||||||
Real estate depreciation and amortization | 13,315 | 6,036 | 10,492 | 117 | — | — | 29,960 | 18,451 | 48,411 | ||||||||||||||||||||||||||
Impairment of real estate | — | 4 | — | 249 | — | — | 253 | 1,500 | 1,753 | ||||||||||||||||||||||||||
Gain on sales of real estate | (487 | ) | (192 | ) | (14,186 | ) | (175 | ) | — | — | (15,040 | ) | (36,225 | ) | (51,265 | ) | |||||||||||||||||||
Less: Adjustments attributable to noncontrolling interests in investment entities | — | — | — | — | — | — | — | 16,274 | 16,274 | ||||||||||||||||||||||||||
FFO attributable to common interests in Operating Company and common stockholders | $ | 12,995 | $ | (789 | ) | $ | 11,101 | $ | 44,119 | $ | 5,477 | $ | (36,174 | ) | $ | 36,729 | $ | — | $ | 36,729 | |||||||||||||||
Additional adjustments for Core FFO attributable to common interests in Operating Company and common stockholders: | |||||||||||||||||||||||||||||||||||
Gain on sale of real estate, net of depreciation and amortization previously adjusted for FFO | 458 | — | 11,707 | 127 | — | — | 12,292 | 35,442 | 47,734 | ||||||||||||||||||||||||||
Noncash equity compensation expense | 107 | 54 | 70 | 203 | 999 | 2,040 | 3,473 | — | 3,473 | ||||||||||||||||||||||||||
Straight-line rent revenue | (1,100 | ) | — | (1,113 | ) | — | — | — | (2,213 | ) | (1,481 | ) | (3,694 | ) | |||||||||||||||||||||
Gain on change in fair value of contingent consideration | — | — | — | — | — | (9,779 | ) | (9,779 | ) | — | (9,779 | ) | |||||||||||||||||||||||
Amortization of acquired above-and below-market lease intangibles, net | 440 | — | (334 | ) | — | — | — | 106 | 526 | 632 | |||||||||||||||||||||||||
Amortization of deferred financing costs and debt premium and discounts | 772 | 1,450 | 773 | 1,764 | — | 1,177 | 5,936 | 1,597 | 7,533 | ||||||||||||||||||||||||||
Unrealized gain on derivatives | — | 769 | 19 | — | 38 | — | 826 | (4,144 | ) | (3,318 | ) | ||||||||||||||||||||||||
Acquisition-related expenses | 165 | 3,127 | 1,812 | — | — | — | 5,104 | 2,513 | 7,617 | ||||||||||||||||||||||||||
Amortization and impairment of investment management intangibles | — | — | — | — | 4,065 | — | 4,065 | — | 4,065 | ||||||||||||||||||||||||||
Deferred tax benefit effect on amortization of investment management intangibles | — | — | — | — | (1,633 | ) | — | (1,633 | ) | — | (1,633 | ) | |||||||||||||||||||||||
Non-real estate depreciation and amortization | — | — | — | — | — | 1,112 | 1,112 | — | 1,112 | ||||||||||||||||||||||||||
Amortization of gain on remeasurement of consolidated investment entities, net | — | — | (3,872 | ) | 2,347 | — | — | (1,525 | ) | 9,174 | 7,649 | ||||||||||||||||||||||||
Net loss on SFR's non-performing loans business | — | 1,458 | — | — | — | — | 1,458 | — | 1,458 | ||||||||||||||||||||||||||
Less: Adjustments attributable to noncontrolling interests in investment entities | (43,627 | ) | (43,627 | ) | |||||||||||||||||||||||||||||||
Core FFO attributable to common interests in Operating Company and common stockholders | $ | 13,837 | $ | 6,069 | $ | 20,163 | $ | 48,560 | $ | 8,946 | $ | (41,624 | ) | $ | 55,951 | $ | — | 55,951 | |||||||||||||||||
11
III. Capitalization
IIIa. Capitalization—Overview |
($ in thousands, except share and per share data; as of March 31, 2016, unless otherwise noted) | ||||||||||
Debt (UPB) | ||||||||||
$850,000 Revolving credit facility | $ | 303,600 | ||||||||
5.0% Convertible senior notes due 2023 | 200,000 | |||||||||
3.875% Convertible senior notes due 2021 | 402,500 | |||||||||
Corporate aircraft promissory note | 42,530 | |||||||||
CLNY & OP share of investment-level debt | 2,370,502 | |||||||||
Total CLNY & OP share of debt | 3,319,132 | |||||||||
Preferred equity | ||||||||||
Series A 8.5% cumulative redeemable perpetual preferred stock, redemption value | 252,000 | |||||||||
Series B 7.5% cumulative redeemable perpetual preferred stock, redemption value | 86,250 | |||||||||
Series C 7.125% cumulative redeemable perpetual preferred stock, redemption value | 287,500 | |||||||||
Total redemption value of preferred equity | 625,750 | |||||||||
Common equity (as of May 6, 2016) | Price per share | Shares / Units | ||||||||
Class A common stock | $ | 17.81 | 113,206 | 2,016,199 | ||||||
Class B common stock | 17.81 | 527 | 9,386 | |||||||
OP units | 17.81 | 20,953 | 373,173 | |||||||
Total market value of common equity | 2,398,758 | |||||||||
Total capitalization | $ | 6,343,640 | ||||||||
13
IIIb. Capitalization—Debt Overview |
Debt overview | |||||||||||||||||||||
($ in thousands; as of March 31, 2016) | Type | Weighted-average years remaining to maturity | Weighted-average interest rate | CLNY & OP pro rata share of unpaid principal balance | Deferred financing costs and discount / premium | CLNY & OP pro rata share of carrying value | |||||||||||||||
Investment-level debt by segment | |||||||||||||||||||||
Light Industrial Platform | Non recourse | 4.4 | 2.96 | % | $ | 723,183 | $ | (9,232 | ) | $ | 713,951 | ||||||||||
Other Real Estate Equity | Non recourse | 8.0 | 3.70 | % | 616,570 | (10,486 | ) | 606,084 | |||||||||||||
Real Estate Debt | Partial recourse (1) | 14.7 | 2.74 | % | 1,030,749 | (7,571 | ) | 1,023,178 | |||||||||||||
Total investment-level debt | 9.8 | 3.05 | % | 2,370,502 | (27,289 | ) | 2,343,213 | ||||||||||||||
Corporate debt | |||||||||||||||||||||
Line of credit | Recourse | 5.0 | 2.74 | % | 303,600 | — | 303,600 | ||||||||||||||
5.0% Convertible senior notes | Recourse | 7.0 | 5.00 | % | 200,000 | (4,792.0 | ) | 195,208 | |||||||||||||
3.875% Convertible senior notes | Recourse | 4.8 | 3.88 | % | 402,500 | (6,200 | ) | 396,300 | |||||||||||||
Corporate aircraft promissory note | Recourse | 9.7 | 5.02 | % | 42,530 | — | 42,530 | ||||||||||||||
Total corporate debt | 5.6 | 3.80 | % | 948,630 | (10,992 | ) | 937,638 | ||||||||||||||
Total debt outstanding | 8.6 | 3.27 | % | $ | 3,319,132 | $ | (38,281 | ) | $ | 3,280,851 | |||||||||||
Debt maturity and amortization schedule(2) | |||||||||||||||||||||||||||
Payments due by period | |||||||||||||||||||||||||||
($ in thousands; as of March 31, 2016) | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 and after | Total | ||||||||||||||||||||
Line of credit | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 303,600 | $ | 303,600 | |||||||||||||
Convertible senior notes | — | — | — | — | — | 602,500 | 602,500 | ||||||||||||||||||||
Warehouse facilities | — | 48,198 | 131,328 | — | — | — | 179,526 | ||||||||||||||||||||
Corporate aircraft promissory note | 1,382 | 1,930 | 2,029 | 2,134 | 2,244 | 32,811 | 42,530 | ||||||||||||||||||||
CMBS securitization debt | — | — | — | — | — | 771,355 | 771,355 | ||||||||||||||||||||
Scheduled amortization payments on investment-level debt | 4,154 | 6,057 | 6,163 | 5,750 | 5,812 | 39,679 | 67,615 | ||||||||||||||||||||
Balloon payments on investment-level debt | 15,776 | 74,768 | 670,764 | 29,429 | 6,821 | 554,448 | 1,352,006 | ||||||||||||||||||||
Total | $ | 21,312 | $ | 130,953 | $ | 810,284 | $ | 37,313 | $ | 14,877 | $ | 2,304,393 | $ | 3,319,132 | |||||||||||||
__________
(1) $81 million is recourse debt.
(2) Based on initial maturity dates or extended maturity dates to the extent criteria are met and the extension option is at the borrower's discretion.
14
IIIc. Capitalization—Investment Level Debt Overview |
($ and € in thousands; as of March 31, 2016) | ||||||||||||||||||
Light Industrial Platform | ||||||||||||||||||
Initial / current maturity date | Fully extended maturity date | Interest rate | Maximum principal amount | CLNY & OP pro rata share | ||||||||||||||
CLIP acquisition financing | Dec-2016 | Dec-2019 | L + 2.25% | (1) | N/A | $ | 560,740 | |||||||||||
CLIP fixed rate mortgage | Aug-2025 | Aug-2025 | 3.80 | % | N/A | 103,877 | ||||||||||||
CLIP credit facility | Jul-2016 | Jul-2016 | L + 2.25% | 100,000 | — | |||||||||||||
CLIP fixed rate mortgage | Apr-2028 | Apr-2028 | 4.04 | % | N/A | 58,566 | ||||||||||||
Total UPB of debt related to Light Industrial Platform | 723,183 | |||||||||||||||||
Debt issuance costs | (9,232 | ) | ||||||||||||||||
Total carrying value of debt related to Light Industrial Platform segment | $ | 713,951 | ||||||||||||||||
Other Real Estate Equity | ||||||||||||||||||
Initial / current maturity date | Fully extended maturity date | Interest rate | Maximum principal amount | CLNY & OP pro rata share | ||||||||||||||
NNN investments | ||||||||||||||||||
Office - Norway | Jun-2025 | Jun-2025 | 3.91 | % | N/A | $ | 193,440 | |||||||||||
Education - Switzerland | Dec-2029 | Dec-2029 | 2.72 | % | N/A | 125,085 | ||||||||||||
Office - Minnesota | Jan-2024 | Jan-2024 | 4.84 | % | N/A | 87,122 | ||||||||||||
Office - France | Nov-2022 | Nov-2022 | 1.89 | % | N/A | 17,867 | ||||||||||||
Total UPB of debt related to NNN investments | 423,514 | |||||||||||||||||
Other real estate assets | ||||||||||||||||||
Mixed use - UK | Dec-2018 | Dec-2020 | 3M GBP L + 3.28% | N/A | 45,883 | |||||||||||||
Office portfolio - UK | Aug-2018 | Aug-2020 | 3M GBP L + 2.50% | N/A | 42,948 | |||||||||||||
Hotel portfolio - Various U.S. | Jan-2019 | Jan-2021 | L + 4.65% | N/A | 30,356 | |||||||||||||
Mixed use - Italy | Nov-2018 | Nov-2018 | 4.02 | % | N/A | 25,120 | (2) | |||||||||||
Industrial - Spain | Jan-2021 | Jan-2021 | 3M EUR + 3.00% | N/A | 22,994 | |||||||||||||
Industrial - Spain | Jun-2022 | Jun-2022 | 3M EUR + 2.80% | N/A | 12,184 | |||||||||||||
Office - UK | Feb-2020 | Feb-2020 | 3M GBP L + 2.35% | N/A | 6,821 | |||||||||||||
Office - Arizona | Jul-2018 | Jul-2020 | L + 2.65% | N/A | 6,750 | |||||||||||||
Total UPB of debt related to other real estate assets | 193,056 | |||||||||||||||||
Total UPB of debt related to Other Real Estate Equity segment | 616,570 | |||||||||||||||||
Total debt issuance costs and discount | (10,486 | ) | ||||||||||||||||
Total carrying value of debt related to Other Real Estate Equity segment | $ | 606,084 | ||||||||||||||||
__________
(1) Interest rate increases to 1-month LIBOR plus 2.5% after December 2018.
(2) Seller provided zero-interest financing on acquired portfolio of properties, requiring principal payments of €15,750, €35,438 and €27,562 in Nov 2016, Nov 2017 and Nov 2018, respectively, of which CLNY and OP share is 28%. A discount was established at inception with an imputed interest rate of 4.02% and the discount is being accreted based on required payment schedule.
15
IIIc. Capitalization—Investment Level Debt Overview (cont'd) |
($ in thousands; as of March 31, 2016) | ||||||||||||||||||||
Real Estate Debt | ||||||||||||||||||||
Initial / current maturity date | Fully-extended maturity date | Interest rate | Maximum principal amount | CLNY & OP pro rata share | ||||||||||||||||
Non-PCI | ||||||||||||||||||||
CLO bonds - CMC 2015 | Sept-2032 | Sept-2032 | L + 2.36% | N/A | $ | 340,350 | ||||||||||||||
CLO bonds - CMC 2014-2 | Nov-2031 | Nov-2031 | L + 2.01% | N/A | 196,646 | |||||||||||||||
Colony 2014-MF1 securitization | Apr-2050 | Apr-2050 | 2.54 | % | N/A | 133,497 | ||||||||||||||
April 2015 warehouse facility | Apr-2018 | Apr-2019 | L + 2.50% - L+2.75% | $ | 250,000 | 131,327 | ||||||||||||||
CLO bonds - CMC 2014-1 | Apr-2031 | Apr-2031 | L + 1.78% | N/A | 101,809 | |||||||||||||||
February 2014 warehouse facility | Feb-2017 | Feb-2017 | L + 2.50% | 150,000 | 47,253 | |||||||||||||||
Freddie Mac portfolio | Dec-2017 | Dec-2019 | L + 2.85% | N/A | 45,594 | |||||||||||||||
CDCF IV subscription line | Sept-2016 | Sept-2016 | L + 1.60% | N/A | 5,836 | |||||||||||||||
Florida multifamily property loan | Jun-2016 | Sept-2016 | 4.28 | % | (1) | N/A | 4,916 | |||||||||||||
Total UPB of debt related to Non-PCI loans | $ | 1,007,228 | ||||||||||||||||||
PCI | ||||||||||||||||||||
Project London loan portfolio | Apr-2017 | Apr-2019 | L + 3.75% | N/A | $ | 11,274 | ||||||||||||||
Metro loan portfolio | Apr-2017 | Apr-2018 | L + 3.75% | N/A | 5,001 | |||||||||||||||
California first mortgage portfolio I | Aug-2016 | Aug-2018 | L + 3.75% | N/A | 3,723 | |||||||||||||||
California first mortgage portfolio II | Sept-2016 | Sept-2018 | L + 3.25% | N/A | 1,928 | |||||||||||||||
Midwest loan portfolio | Jun-2016 | Jun-2017 | L + 4.00% | N/A | 1,595 | |||||||||||||||
Total UPB of debt related to PCI loans | $ | 23,521 | ||||||||||||||||||
Total UPB of debt related to Real Estate Debt segment | $ | 1,030,749 | ||||||||||||||||||
Total debt issuance costs | (7,571 | ) | ||||||||||||||||||
Total carrying value of debt related to Real Estate Debt segment | $ | 1,023,178 | ||||||||||||||||||
__________
(1) The variable interest rate on the loan was fixed at 4.28% through an interest rate swap.
16
IIId. Capitalization—Credit Facility, Convertible Debt & Preferred Stock Overview |
($ and shares in thousands; as of or for the three months ended March 31, 2016) | |||||||||||||||||||||||||
Credit facility | |||||||||||||||||||||||||
Revolving credit facility | |||||||||||||||||||||||||
Maximum principal amount | $ | 850,000 | |||||||||||||||||||||||
Amount outstanding | 303,600 | ||||||||||||||||||||||||
Initial maturity | March 31, 2020 | ||||||||||||||||||||||||
Fully-extended maturity | March 31, 2021 | ||||||||||||||||||||||||
Interest rate | LIBOR + 2.25% | ||||||||||||||||||||||||
Covenant level | Actual level at March 31, 2016 | ||||||||||||||||||||||||
Financial covenants as defined in the Credit Agreement: | |||||||||||||||||||||||||
Consolidated Tangible Net Worth | Minimum $1,915 million | $2,549 million | |||||||||||||||||||||||
Consolidated Fixed Charge Coverage Ratio | Minimum 1.50 to 1.00 | 2.44 to 1.00 | |||||||||||||||||||||||
Consolidated Interest Coverage Ratio | Minimum 3.00 to 1.00 | 15.87 to 1.00 | |||||||||||||||||||||||
Consolidated Leverage Ratio | Maximum 0.65 to 1.00 | 0.41 to 1.00 | |||||||||||||||||||||||
Convertible debt | |||||||||||||||||||||||||
Description | Outstanding principal | Issuance date | Due date | Interest rate | Conversion price (per share of common stock) | Conversion ratio | Conversion shares | Redemption date | |||||||||||||||||
5.0% Convertible senior notes | $ | 200,000 | April 2013 | April 15, 2023 | 5.00% fixed | $ | 23.35 | 42.8183 | 8,564 | On or after April 22, 2020 | |||||||||||||||
3.875% Convertible senior notes | 402,500 | January and June 2014 | January 15, 2021 | 3.875% fixed | $ | 24.56 | 40.7089 | 16,385 | On or after January 22, 2019 | ||||||||||||||||
$ | 602,500 | ||||||||||||||||||||||||
Preferred stock | |||||||||||||||||||||||||
Description | Liquidation preference | Issuance date | Dividend rate | Shares outstanding | Redemption period | ||||||||||||||||||||
Series A 8.5% cumulative redeemable perpetual | $ | 252,000 | March 2012 | 8.50% | 10,080 | On or after March 27, 2017 | |||||||||||||||||||
Series B 7.5% cumulative redeemable perpetual | 86,250 | June 2014 | 7.50% | 3,450 | On or after June 19, 2019 | ||||||||||||||||||||
Series C 7.125% cumulative redeemable perpetual | 287,500 | April 2015 | 7.125% | 11,500 | On or after April 13, 2020 | ||||||||||||||||||||
$ | 625,750 | 25,030 | |||||||||||||||||||||||
17
IV. Colony Light Industrial Platform
IVa. CLIP—Summary Metrics |
($ in thousands, except per share; as of or for the three months ended March 31, 2016) | |||||||||||||||||||
Financial results related to the segment | |||||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders | $ | 13,837 | |||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.10 | ||||||||||||||||||
FFO attributable to common interests in OP and common stockholders | 12,995 | ||||||||||||||||||
FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.10 | ||||||||||||||||||
Portfolio overview | |||||||||||||||||||
Number of buildings | 325 | ||||||||||||||||||
Rentable square feet | 34,773 | ||||||||||||||||||
% leased at end of period | 94 | % | |||||||||||||||||
CLNY & OP share of undepreciated cost basis of real estate assets (1) | $ | 1,218,797 | |||||||||||||||||
CLNY & OP share of debt (UPB) | 723,183 | ||||||||||||||||||
CLNY & OP share of debt / undepreciated cost basis | 59.3 | % | |||||||||||||||||
Total goodwill associated with management platform (CLNY & OP own 100%) | $ | 20,000 | |||||||||||||||||
Uncalled third party capital commitments | 61,334 | ||||||||||||||||||
Recent acquisitions | |||||||||||||||||||
Property / portfolio name | Acquisition date | Number of buildings | Rentable square feet | % leased | Purchase price | ||||||||||||||
Q1 2016 acquisitions | |||||||||||||||||||
Baltimore light industrial portfolio | Feb-2016 | 2 | 200,560 | 100 | % | $ | 17,625 | ||||||||||||
Total | 2 | 200,560 | 100 | % | 17,625 | ||||||||||||||
Q2 2016 acquisitions | |||||||||||||||||||
Orlando light industrial portfolio | Apr-2016 | 4 | 669,010 | 95 | % | 55,650 | |||||||||||||
Total | 4 | 669,010 | 95 | % | $ | 55,650 | |||||||||||||
__________
(1) Includes all components related to the asset, including real estate and lease-related intangibles. Excludes accumulated depreciation.
19
IVb. CLIP—Portfolio and Lease Overview |
Location | Property type | Number of buildings | Rentable square feet (in thousands) | Annualized base rent (in thousands) | Percentage leased | Number of leases | Lease expiration | Year acquired | ||||||||||||||
United States | ||||||||||||||||||||||
Atlanta | Industrial | 84 | 8,286 | $ | 32,050 | 95 | % | 233 | 4/2016 to 4/2030 | 2014-2015 | ||||||||||||
Austin | Industrial | 4 | 236 | 1,472 | 94 | % | 14 | 6/2016 to 8/2025 | 2014 | |||||||||||||
Chicago | Industrial | 34 | 3,972 | 16,665 | 94 | % | 56 | 5/2016 to 12/2026 | 2014 | |||||||||||||
Dallas | Industrial | 58 | 6,142 | 22,065 | 93 | % | 147 | 5/2016 to 4/2040 | 2014-2015 | |||||||||||||
Denver | Industrial | 8 | 1,128 | 4,501 | 100 | % | 26 | 5/2016 to 3/2023 | 2014 | |||||||||||||
Houston | Industrial | 21 | 1,713 | 9,240 | 97 | % | 52 | 4/2016 to 8/2016 | 2014 | |||||||||||||
Kansas City | Industrial | 9 | 1,664 | 5,741 | 98 | % | 24 | 7/2016 to 11/2024 | 2014 | |||||||||||||
Maryland | Industrial | 5 | 431 | 2,223 | 100 | % | 13 | 7/2016 to 12/2023 | 2015-2016 | |||||||||||||
Memphis | Industrial | 3 | 383 | 752 | 85 | % | 5 | 2/2017 to 9/2024 | 2014 | |||||||||||||
Minneapolis | Industrial | 15 | 1,993 | 8,728 | 90 | % | 56 | 5/2016 to 10/2025 | 2014-2015 | |||||||||||||
New Jersey South / Philadelphia | Industrial | 30 | 3,328 | 13,787 | 94 | % | 71 | 6/2016 to 4/2027 | 2014-2015 | |||||||||||||
Orlando | Industrial | 3 | 555 | 2,317 | 92 | % | 6 | 9/2016 to 4/2019 | 2014 | |||||||||||||
Phoenix | Industrial | 18 | 1,701 | 7,400 | 86 | % | 46 | 5/2016 to 8/2024 | 2014-2015 | |||||||||||||
Salt Lake City | Industrial | 16 | 1,269 | 5,199 | 93 | % | 32 | 6/2016 to 11/2023 | 2014 | |||||||||||||
St. Louis | Industrial | 8 | 1,355 | 4,581 | 87 | % | 18 | 5/2016 to 7/2024 | 2014 | |||||||||||||
Tampa | Industrial | 9 | 617 | 3,036 | 92 | % | 32 | 8/2016 to 1/2024 | 2014 | |||||||||||||
Total / Weighted average | 325 | 34,773 | $ | 139,757 | 94 | % | 831 | |||||||||||||||
20
V. Single Family Residential Rentals
Va. Single Family Residential Rentals—Summary Metrics |
($ in thousands, except per share and per home, unless otherwise noted; as of or for the three months ended March 31, 2016) | ||||||||||||||||
Financial results related to the segment | ||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders | $ | 6,069 | ||||||||||||||
Core FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.05 | |||||||||||||||
FFO attributable to common interests in OP and common stockholders | (789 | ) | ||||||||||||||
FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | (0.01 | ) | ||||||||||||||
Balance sheet | ||||||||||||||||
Investments in unconsolidated joint ventures - Colony Starwood Homes | $ | 331,457 | ||||||||||||||
Investments in unconsolidated joint ventures - Colony American Finance | 56,522 | |||||||||||||||
Ownership in SFR | ||||||||||||||||
Colony Starwood Homes shares beneficially owned by OP and common stockholders | 15.1 million | |||||||||||||||
CLNY & OP's interest in SFR as of March 31, 2016 | 14.0% | |||||||||||||||
__________
Note: Refer to SFR filing for additional information.
22
VI. Other Real Estate Equity
VIa. Other Real Estate Equity—Summary Metrics & Asset Overview |
($ and € in thousands, except per share data; as of or for the three months ended March 31, 2016) | ||||||||||||||||
Financial results related to the segment | ||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders | $ | 20,163 | ||||||||||||||
Core FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.15 | |||||||||||||||
FFO attributable to common interests in OP and common stockholders | 11,101 | |||||||||||||||
FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.08 | |||||||||||||||
Portfolio overview | ||||||||||||||||
CLNY & OP share of consolidated real estate assets (carrying value) | ||||||||||||||||
NNN assets held for investment (1)(2) | $ | 666,963 | ||||||||||||||
Other real estate assets held for investment (1) | 307,428 | |||||||||||||||
Real estate assets held for sale (1) | 32,027 | |||||||||||||||
Total CLNY & OP share of consolidated real estate assets | 1,006,418 | |||||||||||||||
CLNY & OP share of investment-level non-recourse financing (UPB) | ||||||||||||||||
NNN investments held for investment | $ | 423,514 | ||||||||||||||
Other real estate assets held for investment | 193,056 | |||||||||||||||
Total CLNY & OP share of investment-level non-recourse financing | 616,570 | |||||||||||||||
Unconsolidated assets | ||||||||||||||||
CLNY & OP share of investments in unconsolidated joint ventures excluding Albertsons investment | $ | 138,013 | ||||||||||||||
CLNY & OP share of investments in unconsolidated joint ventures - Albertsons investment | 49,863 | |||||||||||||||
Number of post-IPO shares in Albertsons pursuant to preliminary prospectus dated October 2, 2015 | 8.45 million | |||||||||||||||
CLNY & OP % ownership interest in post-IPO AB Acquisition LLC based on preliminary prospectus dated October 2, 2015 | 2.17 | % | ||||||||||||||
Summary of real estate | ||||||||||||||||||||||||||||||
CLNY & OP pro rata share | ||||||||||||||||||||||||||||||
Location | Property type | Number of buildings | Rentable square feet (thousands) | Real estate assets & intangibles, net (1) | Cost basis of real estate assets (1)(3) | Investment-level non-recourse debt | Percentage leased (end of period) | Number of leases | Lease expiration | Year acquired or foreclosed | ||||||||||||||||||||
NNN investments | ||||||||||||||||||||||||||||||
Norway | Office | 26 | 1,291 | $ | 327,177 | $ | 334,418 | $ | 193,440 | 100 | % | 1 | 6/2030 | 2015 | ||||||||||||||||
Switzerland | Education | 20 | 304 | 177,126 | 183,001 | 125,085 | 100 | % | 2 | 1/2035 | 2015 | |||||||||||||||||||
Minnesota | Office | 2 | 502 | 110,338 | 121,829 | 87,122 | 100 | % | 1 | 9/2020 | 2013 | |||||||||||||||||||
France | Office | 3 | 187 | 37,689 | 38,082 | 17,867 | 100 | % | 1 | 11/2027 | 2015 | |||||||||||||||||||
Arizona | Education | 2 | 82 | 14,633 | 15,676 | — | 100 | % | 1 | 6/2027 | 2014 | |||||||||||||||||||
Total NNN investments | 53 | 2,224 | 666,963 | 693,006 | 423,514 | |||||||||||||||||||||||||
Other real estate assets | ||||||||||||||||||||||||||||||
UK | Office | 35 | 999 | 74,092 | 78,550 | 49,769 | 91 | % | 104 | 6/2017 to 12/2042 | 2014, 2015 | |||||||||||||||||||
Arizona | Office | 1 | 440 | 21,128 | 22,561 | 6,750 | 59 | % | 19 | 12/2016 to 5/2022 | 2013 | |||||||||||||||||||
UK | Mixed Use | 52 | 2,860 | 77,860 | 79,829 | 45,883 | 90 | % | 244 | 2/2018 to 3/2040 | 2015 | |||||||||||||||||||
Spain | Industrial | 37 | 2,680 | 68,976 | 70,138 | 35,178 | 97 | % | 36 | 10/2016 to12/2029 | 2014, 2016 | |||||||||||||||||||
Various U.S. | Hotel | 23 | NA | 24,651 | 29,314 | 30,356 | (5) | NA | NA | NA | 2012 | |||||||||||||||||||
Italy (4) | Mixed Use | 80 | 578 | 40,721 | 41,555 | 25,120 | 34 | % | 43 | 5/2017 to 3/2021 | 2014 | |||||||||||||||||||
Total other real estate assets | 228 | 5,595 | 307,428 | 321,947 | 193,056 | |||||||||||||||||||||||||
Total other real estate assets held for investment | 281 | 7,819 | $ | 974,391 | $ | 1,014,953 | $ | 616,570 | ||||||||||||||||||||||
Total other real estate assets held for sale | 58 | 1,869 | 32,027 | 32,624 | — | |||||||||||||||||||||||||
_________
(1) | Includes all components related to the asset, including real estate and lease-related intangibles. |
(2) | CLNY & OP share of Q1 NOI was $10.5 million. |
(3) | Excludes accumulated depreciation. |
(4) | Excludes one building with 218,000 rentable square feet that is subject to development. |
(5) | $8.2 million of real estate assets & intangibles, net, is included in the held for sale line below. |
24
VII. Real Estate Debt
VIIa. Real Estate Debt—Summary Metrics & Portfolio Overview |
($ in thousands, except per share data; as of or for the three months ended March 31, 2016) | |||||||||||||||||||||
Financial results related to the segment | |||||||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders | $ | 48,560 | |||||||||||||||||||
Core FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.36 | ||||||||||||||||||||
FFO attributable to common interests in OP and common stockholders | 44,119 | ||||||||||||||||||||
FFO attributable to common interests in OP and common stockholders per basic common share / common OP unit | 0.33 | ||||||||||||||||||||
Portfolio overview | |||||||||||||||||||||
Non-PCI loans | |||||||||||||||||||||
CLNY & OP share of loans receivables held for investment, net | $ | 2,634,389 | |||||||||||||||||||
CLNY & OP share of investment-level financing (UPB) | 1,007,228 | ||||||||||||||||||||
CLNY & OP share of investments in unconsolidated joint ventures | 116,472 | ||||||||||||||||||||
PCI loans | |||||||||||||||||||||
CLNY & OP share of loans receivables held for investment, net | 222,697 | ||||||||||||||||||||
CLNY & OP share of non-recourse investment-level financing (UPB) | 23,521 | ||||||||||||||||||||
CLNY & OP share of investments in unconsolidated joint ventures | 4,346 | ||||||||||||||||||||
Real estate assets (REO within debt portfolio) | |||||||||||||||||||||
CLNY & OP share of carrying value of real estate (1) | 30,969 | ||||||||||||||||||||
Loans receivable detail | |||||||||||||||||||||
CLNY & OP pro rata share | |||||||||||||||||||||
Non-PCI loans | Unpaid principal balance | Gross carrying amount | Weighted average coupon | Weighted average maturity in years | |||||||||||||||||
Fixed rate | |||||||||||||||||||||
First mortgage loans | $ | 280,692 | $ | 271,459 | 8.2 | % | 4.6 | ||||||||||||||
Securitized mortgage loans | 131,782 | 134,579 | 6.4 | % | 16.6 | ||||||||||||||||
Second mortgage loans / B-notes | 263,260 | 265,748 | 9.7 | % | 3.0 | ||||||||||||||||
Mezzanine loans | 206,327 | 206,866 | 11.7 | % | 3.3 | ||||||||||||||||
Total fixed rate non-PCI loans | 882,061 | 878,652 | 9.2 | % | 5.6 | ||||||||||||||||
Variable rate | |||||||||||||||||||||
First mortgage loans | 552,965 | 548,164 | 7.1 | % | 1.5 | ||||||||||||||||
Securitized mortgage loans | 1,016,361 | 1,013,858 | 5.7 | % | 3.1 | ||||||||||||||||
Second mortgage loans / B-notes | 4,604 | 4,371 | 9.5 | % | 2.2 | ||||||||||||||||
Mezzanine loans | 192,912 | 192,581 | 10.9 | % | 0.6 | ||||||||||||||||
Total variable rate non-PCI loans | 1,766,842 | 1,758,974 | 6.7 | % | 2.3 | ||||||||||||||||
Total Non-PCI loans | 2,648,903 | 2,637,626 | |||||||||||||||||||
Allowance for loan losses | — | (3,237 | ) | ||||||||||||||||||
Total Non-PCI loans, net of allowance for loan losses | 2,648,903 | 2,634,389 | |||||||||||||||||||
PCI loans | |||||||||||||||||||||
Mortgage loans | 320,072 | 224,697 | |||||||||||||||||||
Securitized mortgage loans | 8,816 | 7,436 | |||||||||||||||||||
Total PCI loans | 328,888 | 232,133 | |||||||||||||||||||
Allowance for loan losses | — | (9,436 | ) | ||||||||||||||||||
Total PCI loans receivable, net of allowance | $ | 328,888 | $ | 222,697 | |||||||||||||||||
Total loans receivable, net of allowance | $ | 2,977,791 | $ | 2,857,086 | |||||||||||||||||
__________
(1) Includes all components related to the asset, including real estate and lease-related intangibles.
26
VIII. Investment Management
VIIIa. Investment Management—Summary Metrics |
($ in thousands unless otherwise noted; as of or for three months ended March 31, 2016) | ||||
AUM | $18.2 billion | |||
FEEUM | $7.9 billion | |||
Credit Funds | $3.7 billion | |||
Core Plus / Value-Add Funds | $1.7 billion | |||
Opportunity Funds | $2.5 billion | |||
Income: | ||||
Total income | $ | 16,260 | ||
Expenses: | ||||
Transaction, investment and servicing expenses | 45 | |||
Amortization | 3,745 | |||
Compensation expense | 9,287 | |||
Impairment loss | 320 | |||
Administrative expenses | 774 | |||
Total expenses | 14,171 | |||
Other loss, net | (38 | ) | ||
Income tax benefit | 3,426 | |||
Net income | 5,477 | |||
Add: Noncash equity compensation expense | 999 | |||
Add: Unrealized gain on derivatives | 38 | |||
Add: Amortization of investment management intangibles | 4,065 | |||
Deduct: Deferred tax benefit effect on amortization and impairment of investment management intangibles | (1,633 | ) | ||
Core FFO | $ | 8,946 | ||
28
IX. Definitions
IX. Definitions |
a) | 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 March 31, 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. |
b) | Colony Capital, Inc. ("CLNY") |
c) | Colony Light Industrial Platform ("CLIP") |
d) | Core Funds from Operations ("Core FFO") is calculated by adjusting Funds from Operations ("FFO") for the following items, including the Company’s share of these items recognized by the Company’s 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) deferred tax benefit related to amortization and impairment of investment management contracts and customer relationships; (x) gain on remeasurement of consolidated investment entities, net of deferred tax liability, and the effect of amortization thereof; (xi) non-real estate depreciation and amortization; and (xii) change in fair value of contingent consideration. 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. |
e) | 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 March 31, 2016. FEEUM includes $0.9 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. |
f) | Funds from Operations ("FFO") is calculated in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), 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. |
g) | Net Operating Income ("NOI") is property operating income less property operating expenses adjusted for non-cash items, including straight line rents and above/below market lease amortization. |
h) | Operating Company ("OP") refers to Colony Capital Operating Company, LLC, an operating subsidiary of the Company. The Company is structured as an umbrella partnership real estate investment trust, or UPREIT, in which its wholly-controlled subsidiary, Colony Capital Operating Company, LLC (the “OP”), directly or indirectly holds substantially all of the Company’s assets and directly or indirectly conducts substantially all of the Company’s business. |
i) | Purchased Credit-Impaired ("PCI") loans are loans that were acquired at a discount with evidence of underlying credit deterioration and for which it is probable that all contractually required payments will not be collected. |
j) | Unpaid Principal Balance ("UPB") |
30
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