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 Value
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
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Investor RelationsColony Credit Real Estate, Inc.Addo
Investor RelationsLasse Glassen310-829-5400
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