LOS ANGELES–(BUSINESS WIRE)–Colony Credit Real Estate, Inc. (NYSE: CLNC) (“Colony Credit Real
Estate” or the “Company”) today announced its financial results for the
first quarter ended March 31, 2019.
Kevin P. Traenkle, President and Chief Executive Officer of Colony
Credit Real Estate, commented, “2019 is off to a good start for Colony
Credit Real Estate. Our operating performance is on budget and we have
successfully executed the first of our planned strategic transactions —
the disposal of approximately 89% of our interests in real estate
private equity funds. The aggregate sales price of approximately $142
million is in line with the Company’s carrying value on such interests.
Furthermore, the Company has already received $63 million in proceeds,
with the substantial portion of the remaining $79 million of proceeds
anticipated in the second quarter of 2019.”
Mr. Traenkle added, “As these private equity interests did not
meaningfully contribute to the Company’s 2018 core earnings, we expect
the reinvestment of these proceeds into targeted assets to be highly
accretive.”
First Quarter 2019 Significant Developments and
Subsequent Events
-
First quarter 2019 GAAP net income attributable to common stockholders
of $14.9 million, or $0.11 per common share, and core earnings of
$11.8 million, or $0.09 per diluted share. Excluding: (i) $35.5
million of realized losses related to completed foreclosure
proceedings under a mezzanine loan; and (ii) $2.0 million of realized
losses and transactions costs associated with the sale of real estate
private equity interests: core earnings of $49.3 million, or $0.38 per
diluted share. The Company already recorded a $35.5 million loan loss
provision in the fourth quarter 2018 in connection with this
anticipated foreclosure -
GAAP book value of $2.7 billion, or $20.86 per diluted share, as of
March 31, 2019 -
Undepreciated book value of $2.9 billion, or $21.68 per diluted share,
as of March 31, 2019 -
Declared and paid a monthly cash dividend of $0.145 per share of Class
A common stock for January, February, and March 2019. The dividend
represents an annualized dividend of $1.74 per share of common stock,
equating to an 11.0% annualized dividend yield based on the $15.85
closing price on May 6, 2019 -
Subsequent to quarter end, the Company’s Board of Directors declared a
monthly cash dividend of $0.145 per share of common stock for April
and May 2019 -
During the first quarter, consummated or executed binding purchase and
sale agreements for the sale of 89% of the Company’s $161 million
interests in real estate private equity funds for a sales price of
approximately $142 million. Since December 2018, the Company has
received approximately $63 million in cash proceeds, with the
substantial portion of the remaining $79 million in proceeds
anticipated in the second quarter of 2019 -
During the first quarter, allocated and initially funded $278 million
and $225 million of capital, respectively, across eight investments -
During the first quarter, completed a $35 million upsize under the
accordion feature of the corporate revolving credit facility,
increasing total commitments from $525 million to $560 million -
Subsequent to quarter end, amended two master repurchase facilities to
allow for European investments concurrent with $200 million aggregate
upsize; total master repurchase capacity now at approximately $2.3
billion, with approximately $1.2 billion of current excess capacity -
Subsequent to quarter end, allocated and initially funded an
additional $206 million and $184 million of capital, respectively,
across three investments -
As of May 6, 2019, total corporate liquidity of approximately $346
million through cash-on-hand and availability under the corporate
revolving credit facility
Common Stock and Operating Partnership Units
On February 1, 2019, all Class B-3 common stock converted to Class A
common stock (the “common stock”). As of May 6, 2019, the Company had
approximately 128.5 million shares of common stock outstanding and the
Company’s operating partnership had approximately 3.1 million operating
partnership units (“OP units”) outstanding held by members other than
the Company or its subsidiaries.
Dividend Announcement
The Company’s Board of Directors declared a monthly cash dividend of
$0.145 per share of common stock (the “common stock”) (i) for the
monthly period ended January 31, 2019, which was paid on February 11,
2019, to stockholders of record on January 31, 2019, (ii) for the
monthly period ended February 28, 2019, which was paid on March 11,
2019, to stockholders of record on February 28, 2019, and (iii) for the
monthly period ended March 31, 2019, which was paid on April 10, 2019,
to stockholders of record on March 31, 2019.
Subsequent to the end of the first quarter, the Company’s Board of
Directors declared a monthly cash dividend of $0.145 per share of common
stock (i) for the monthly period ended April 30, 2019, which will be
paid on May 10, 2019, to stockholders of record on April 30, 2019 and
(ii) for the monthly period ending May 31, 2019, which will be paid on
June 10, 2019, to stockholders of record on May 31, 2019.
Non-GAAP Financial Measures and Definitions
Core Earnings
We present Core Earnings, which is a non-GAAP supplemental financial
measure of our performance. We believe that Core Earnings provides
meaningful information to consider in addition to our net income and
cash flow from operating activities determined in accordance with
accounting principles generally accepted in the United States (“U.S.
GAAP” or “GAAP”). This supplemental financial measure helps us to
evaluate our performance excluding the effects of certain transactions
and U.S. GAAP adjustments that we believe are not necessarily indicative
of our current portfolio and operations. We also use Core Earnings to
determine the incentive fees we pay to our Manager. For information on
the fees we pay our Manager, see Note 11, “Related Party Arrangements”
to our consolidated financial statements included in Form 10-Q to be
filed with the U.S. Securities and Exchange Commission (“SEC”). In
addition, we believe that our investors also use Core Earnings or a
comparable supplemental performance measure to evaluate and compare the
performance of us and our peers, and as such, we believe that the
disclosure of Core Earnings is useful to our investors.
We define Core Earnings as U.S. GAAP net income (loss) attributable to
our common stockholders (or, without duplication, the owners of the
common equity of our direct subsidiaries, such as our OP) and excluding
(i) non-cash equity compensation expense, (ii) the expenses incurred in
connection with our formation, (iii) the incentive fee, (iv) acquisition
costs from successful acquisitions, (v) depreciation and amortization,
(vi) any unrealized gains or losses or other similar non-cash items that
are included in net income for the current quarter, regardless of
whether such items are included in other comprehensive income or loss,
or in net income, (vii) one-time events pursuant to changes in U.S. GAAP
and (viii) certain material non-cash income or expense items that in the
judgment of management should not be included in Core Earnings. For
clauses (vii) and (viii), such exclusions shall only be applied after
discussions between our Manager and our independent directors and after
approval by a majority of our independent directors. Core Earnings
reflects adjustments to U.S. GAAP net income to exclude impairment of
real estate and provision for loan losses. Such impairment and losses
may ultimately be realized, in part or full, upon a sale or monetization
of the related investments and such realized losses would be reflected
in Core Earnings.
Core Earnings does not represent net income or cash generated from
operating activities and should not be considered as an alternative to
U.S. GAAP net income or an indication of our cash flows from operating
activities determined in accordance with U.S. GAAP, a measure of our
liquidity, or an indication of funds available to fund our cash needs,
including our ability to make cash distributions. In addition, our
methodology for calculating Core Earnings may differ from methodologies
employed by other companies to calculate the same or similar non-GAAP
supplemental financial measures, and accordingly, our reported Core
Earnings may not be comparable to the Core Earnings reported by other
companies.
The Company calculates Core Earnings per share, a non-GAAP financial
measure, based on a weighted average number of common shares and
operating partnership units (held by members other than the Company or
its subsidiaries).
First Quarter 2019 Conference Call
The Company will conduct a conference call to discuss the financial
results on May 8, 2019 at 2:00 p.m. PT / 5:00 p.m. ET. To participate in
the event by telephone, please dial (877) 407-0784 ten minutes prior to
the start time (to allow time for registration). International callers
should dial (201) 689-8560 and use passcode 13689689. The call will also
be broadcast live over the Internet and can be accessed on the
Shareholders section of the Company’s website at www.clncredit.com.
A webcast of the call will be available for 90 days on the Company’s
website.
For those unable to participate during the live call, a replay will be
available starting May 8, 2019, at 5:00 p.m. PT / 8:00 p.m. ET, through
May 15, 2019, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay,
dial (844) 512-2921 (U.S.), and use passcode 13689689. International
callers should dial (412) 317-6671 and enter the same conference ID
number.
Supplemental Financial Report
A First Quarter 2019 Supplemental Financial Report will be available on
the Company’s website at www.clncredit.com.
This information will be furnished to the SEC in a Current Report on
Form 8-K.
About Colony Credit Real Estate, Inc.
Colony Credit Real Estate (NYSE: CLNC) is one of the largest publicly
traded commercial real estate (CRE) credit REITs, focused on
originating, acquiring, financing and managing a diversified portfolio
consisting primarily of CRE senior mortgage loans, mezzanine loans,
preferred equity, debt securities and net leased properties
predominantly in the United States. Colony Credit Real Estate is
externally managed by a subsidiary of leading global real estate and
investment management firm, Colony Capital, Inc. Colony Credit Real
Estate is organized as a Maryland corporation that intends to elect to
be taxed as a REIT for U.S. federal income tax purposes for its taxable
year ending December 31, 2019. For additional information regarding the
Company and its management and business, please refer to www.clncredit.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release may contain forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends and similar expressions
concerning matters that are not historical facts. In some cases, you can
identify forward-looking statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,” or
“potential” or the negative of these words and phrases or similar words
or phrases which are predictions of or indicate future events or trends
and which do not relate solely to historical matters. Forward-looking
statements involve known and unknown risks, uncertainties, assumptions
and contingencies, many of which are beyond our control, and may cause
actual results to differ significantly from those expressed in any
forward-looking statement. Among others, the following uncertainties and
other factors could cause actual results to differ from those set forth
in the forward-looking statements: operating costs and business
disruption may be greater than expected; the Company’s operating results
may differ materially from the information presented in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018;
the fair value of the Company’s investments may be subject to
uncertainties; the Company’s use of leverage could hinder its ability to
make distributions and may significantly impact its liquidity position;
given the Company’s dependence on its external manager, an affiliate of
Colony Capital, Inc., any adverse changes in the financial health or
otherwise of its manager or Colony Capital, Inc. could hinder the
Company’s operating performance and return on stockholder’s investment;
the ability to realize substantial efficiencies as well as anticipated
strategic and financial benefits, including, but not limited to expected
returns on equity and/or yields on investments; the Company’s liquidity,
including its ability to continue to generate liquidity by more
accelerated sales of certain lower yielding and non-core assets; the
timing of and ability to deploy available capital; the Company’s ability
to maintain or grow the dividend at all in the future; the timing of and
ability to complete repurchases of the Company’s stock; the ability of
the Company to refinance certain mortgage debt on similar terms to those
currently existing or at all; and the impact of legislative, regulatory
and competitive changes. The foregoing list of factors is not
exhaustive. Additional information about these and other factors can be
found in Part I, Item 1A of the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2018, as well as in Colony Credit
Real Estate’s other filings with the Securities and Exchange Commission.
We caution investors not to unduly rely on any forward-looking
statements. The forward-looking statements speak only as of the date of
this press release. Colony Credit Real Estate is under no duty to update
any of these forward-looking statements after the date of this press
release, nor to conform prior statements to actual results or revised
expectations, and Colony Credit Real Estate does not intend to do so.
Colony Credit Real Estate was formed on January 31, 2018, through the
combination of a select commercial real estate debt and credit real
estate portfolio of Colony Capital, Inc. (“Colony Capital Investment
Entities”) with substantially all of the assets and liabilities of
NorthStar Real Estate Income Trust, Inc. and all of the assets and
liabilities of NorthStar Real Estate Income II, Inc. As a result, the
statements of operations for the three month period ending March 31,
2018, represents only the results of operations for the Colony Capital
Investment Entities, the Company’s accounting predecessor, on a
stand-alone basis from January 1, 2018 through January 31, 2018, and the
results of Colony Credit Real Estate following January 31, 2018. As a
result, comparisons of the Company’s period to period accompanying
consolidated financial information may not be meaningful.
| COLONY CREDIT REAL ESTATE, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share data) | ||||||||
| March 31, 2019 | ||||||||
| (Unaudited) | December 31, 2018 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 89,916 | $ | 77,317 | ||||
| Restricted cash | 107,441 | 110,146 | ||||||
| Loans and preferred equity held for investment, net | 1,998,493 | 2,020,497 | ||||||
| Real estate securities, available for sale, at fair value | 239,559 | 228,185 | ||||||
| Real estate, net | 2,049,009 | 1,959,690 | ||||||
|
Investments in unconsolidated ventures ($101,923 and $160,851 at fair value, respectively) |
795,341 | 903,037 | ||||||
| Receivables, net | 55,948 | 48,806 | ||||||
| Deferred leasing costs and intangible assets, net | 150,868 | 134,068 | ||||||
| Other assets | 75,765 | 62,006 | ||||||
| Mortgage loans held in securitization trusts, at fair value | 3,142,448 | 3,116,978 | ||||||
| Total assets | $ | 8,704,788 | $ | 8,660,730 | ||||
| Liabilities | ||||||||
| Securitization bonds payable, net | $ | 53,663 | $ | 81,372 | ||||
| Mortgage and other notes payable, net | 1,193,918 | 1,173,019 | ||||||
| Credit facilities | 1,385,273 | 1,365,918 | ||||||
| Due to related party | 15,347 | 15,019 | ||||||
| Accrued and other liabilities | 125,169 | 106,187 | ||||||
| Intangible liabilities, net | 33,422 | 15,096 | ||||||
| Escrow deposits payable | 63,672 | 65,995 | ||||||
| Dividends payable | 19,083 | 18,986 | ||||||
| Mortgage obligations issued by securitization trusts, at fair value | 2,998,329 | 2,973,936 | ||||||
| Total liabilities | 5,887,876 | 5,815,528 | ||||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Stockholders’ equity | ||||||||
|
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
– | – | ||||||
| Common stock, $0.01 par value per share | ||||||||
|
Class A, 950,000,000 and 905,000,000 shares authorized, 128,513,280 and 83,410,376 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
1,285 | 834 | ||||||
|
Class B-3, no shares authorized, issued and outstanding as of March 31, 2019 and 45,000,000 shares authorized and 44,399,444 shares issued and outstanding as of December 31, 2018 |
– | 444 | ||||||
| Additional paid-in capital | 2,899,669 | 2,899,353 | ||||||
| Accumulated deficit | (234,145 | ) | (193,327 | ) | ||||
| Accumulated other comprehensive income (loss) | 13,120 | (399 | ) | |||||
| Total stockholders’ equity | 2,679,929 | 2,706,905 | ||||||
| Noncontrolling interests in investment entities | 72,015 | 72,683 | ||||||
| Noncontrolling interests in the Operating Partnership | 64,968 | 65,614 | ||||||
| Total equity | 2,816,912 | 2,845,202 | ||||||
| Total liabilities and equity | $ | 8,704,788 | $ | 8,660,730 | ||||
| COLONY CREDIT REAL ESTATE, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net interest income | ||||||||
| Interest income | $ | 38,409 | $ | 36,139 | ||||
| Interest expense | (19,292 | ) | (7,415 | ) | ||||
| Interest income on mortgage loans held in securitization trusts | 38,476 | 25,865 | ||||||
|
Interest expense on mortgage obligations issued by securitization trusts |
(35,635 | ) | (24,278 | ) | ||||
| Net interest income | 21,958 | 30,311 | ||||||
| Property and other income | ||||||||
| Property operating income | 63,134 | 28,545 | ||||||
| Other income | 177 | 517 | ||||||
| Total property and other income | 63,311 | 29,062 | ||||||
| Expenses | ||||||||
| Management fee expense | 11,358 | 8,000 | ||||||
| Property operating expense | 28,180 | 11,719 | ||||||
| Transaction, investment and servicing expense | 529 | 30,941 | ||||||
| Interest expense on real estate | 13,607 | 6,393 | ||||||
| Depreciation and amortization | 27,662 | 18,792 | ||||||
|
Administrative expense (including $1,843 and $285 of equity-based compensation expense, respectively) |
6,653 | 3,228 | ||||||
| Total expenses | 87,989 | 79,073 | ||||||
| Other income (loss) | ||||||||
|
Unrealized gain on mortgage loans and obligations held in securitization trusts, net |
1,029 | 497 | ||||||
|
Realized gain on mortgage loans and obligations held in securitization trusts, net |
48 | – | ||||||
| Other gain (loss), net | (5,079 | ) | 465 | |||||
|
Loss before equity in earnings of unconsolidated ventures and income taxes |
(6,722 | ) | (18,738 | ) | ||||
| Equity in earnings of unconsolidated ventures | 21,310 | 15,788 | ||||||
| Income tax benefit | 369 | 549 | ||||||
| Net income (loss) | 14,957 | (2,401 | ) | |||||
| Net (income) loss attributable to noncontrolling interests: | ||||||||
| Investment entities | 298 | (2,370 | ) | |||||
| Operating Partnership | (347 | ) | 57 | |||||
|
Net income (loss) attributable to Colony Credit Real Estate, Inc. common stockholders |
$ | 14,908 | $ | (4,714 | ) | |||
| Net income (loss) per common share – basic and diluted | $ | 0.11 | $ | (0.05 | ) | |||
|
Weighted average shares of common stock outstanding – basic and diluted |
127,943 | 98,662 | ||||||
| COLONY CREDIT REAL ESTATE, INC. | ||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION | ||||
| (In thousands, except per share data) | ||||
| (Unaudited) | ||||
|
GAAP Net Income to Core Earnings |
||||
|
Three Months Ended March 31, 2019 |
||||
|
Net income attributable to Colony Credit Real Estate, Inc. common stockholders |
$ | 14,908 | ||
| Adjustments: | ||||
|
Net income attributable to noncontrolling interest of the Operating Partnership |
347 | |||
| Non-cash equity compensation expense | 1,843 | |||
| Transaction costs | 196 | |||
| Depreciation and amortization | 28,017 | |||
| Net unrealized loss on investments | 3,180 | |||
|
Provision for loan losses previously adjusted for Core Earnings on loans foreclosed |
(35,509 | ) | ||
|
Adjustments related to noncontrolling interests in investment entities |
(1,178 | ) | ||
|
Core earnings attributable to Colony Credit Real Estate, Inc. common stockholders and noncontrolling interest of the Operating Partnership(1) |
$ | 11,804 | ||
| Core earnings per share(2) | $ | 0.09 | ||
| Weighted average number of common shares and OP units(2) | 131,018 | |||
|
_______________ |
||
| (1) |
Core earnings reflects adjustments to U.S. GAAP net income to exclude impairment of real estate and provision for loan losses. Upon realization of the related investments, such impairment and losses, to the extent realized, would be reflected in core earnings |
|
| (2) |
The Company calculates core earnings per share, a non-GAAP financial measure, based on a weighted average number of common shares and OP units (held by members other than the Company or its subsidiaries). For the first quarter 2019, the weighted average number of common shares and OP units was approximately 131.0 million |
|
|
GAAP Book Value to Undepreciated Book |
||||||
| As of March 31, 2019 | ||||||
| Amount | Per Diluted Share(2) | |||||
|
GAAP book value (excluding noncontrolling interests in investment entities) |
$ | 2,744,897 | $ | 20.86 | ||
| Accumulated depreciation and amortization(1) | 108,208 | 0.82 | ||||
| Undepreciated book value | $ | 2,853,105 | $ | 21.68 | ||
| Total common shares and OP units outstanding(2) | 131,589 | |||||
|
_______________ |
||
| (1) |
Represents net accumulated depreciation and amortization on real estate investments, including related intangible assets and liabilities |
|
| (2) |
The Company calculates GAAP book value (excluding noncontrolling interests in investment entities) per share and undepreciated book value per share, a non-GAAP financial measure, based on the total number of common shares and OP units (held by members other than the Company or its subsidiaries) outstanding at the end of the reporting period. As of March 31, 2019, the total number of common shares and OP units outstanding was approximately 131.6 million |
|
Contacts
Investor Relations
Colony Credit Real Estate, Inc.
Addo
Investor Relations
Lasse Glassen
310-829-5400
