Sale Represents Key Milestone in Colony
Capital’s Digital Transformation
Colony Generates Significant Strategic and
Financial Benefits on Exit From Hospitality Business
Colony Capital, Inc. (NYSE: CLNY) (“Colony Capital” or the
“Company”) today announced it has entered into a definitive
agreement to sell six of its hospitality portfolios to Highgate, a
premier real estate investment and hospitality management company,
in a transaction valued at $2.8 billion, including $67.5 million of
gross proceeds on a consolidated basis and the assumption of $2.7
billion in consolidated investment-level debt. The six portfolios
consist of 22,676 rooms across 197 hotel properties.
As part of the transaction with Highgate, Colony will transfer
(i) five of the six portfolios held in the Hospitality segment and
(ii) an approximately 55% interest in the THL Portfolio held in the
Other Equity and Debt segment. The sixth portfolio in the
Hospitality segment, the Inland portfolio, is under receivership
and is excluded from the transaction. This transaction will reduce
the Company’s consolidated debt outstanding by $2.7 billion,
including Colony Capital’s $2.3 billion pro-rata share.
The transaction is consistent with Colony’s stated intention of
simplifying its business profile to focus exclusively on digital
infrastructure assets. In addition to the strategic benefits of
exiting the hospitality business, Colony Capital expects to
generate segment and corporate-level G&A savings
post-closing.
“We are thrilled to be delivering on our commitment to dispose
of non-core assets and harvest positive value for our hospitality
business. With its strong track record, unique insights into the
hospitality market and creative approach to hotel management, we
are confident that Highgate is ideally suited to own and operate
these properties,” said Marc Ganzi, CEO of Colony Capital. “The
sale of our legacy hospitality assets is a significant milestone in
Colony’s digital transformation as we pivot to focus exclusively on
our fast-growing digital businesses that generate superior returns
for Colony shareholders.”
“We are excited to continue working with the Colony team in
executing on this unique transaction,” said Mahmood Khimji,
Co-Founder and Managing Principal of Highgate. “Despite the
unprecedented disruption in hospitality over the past six months,
we remain bullish on the long-term secular trends in our industry,
and look forward to partnering with the many employees,
franchisors, lenders, and other important stakeholders across these
portfolios as we work towards a successful recovery.”
The transaction is expected to close in the first quarter of
2021, subject to customary closing conditions and third-party
approvals.
Moelis & Company served as financial advisor to Colony
Capital in connection with the transaction and Willkie Farr &
Gallagher LLP served as legal counsel. Latham & Watkins LLP
served as legal counsel to Highgate.
About Colony Capital
Colony Capital, Inc. (NYSE: CLNY) is a leading global investment
firm with a heritage of identifying and capitalizing on key secular
trends in real estate. The Company manages a $46 billion portfolio
of real assets on behalf of its shareholders and limited partners,
including over $20 billion in digital real estate investments
through Digital Colony, its digital infrastructure platform. Colony
Capital, structured as a REIT, is headquartered in Los Angeles with
key offices in Boca Raton, New York, and London, and has over 350
employees across 20 locations in 11 countries.
About Highgate
Highgate is a leading real estate investment and hospitality
management company with over $10 billion of hospitality assets
under management, Highgate has a longstanding track record of
operating assets for the industry’s largest REITs, private equity
firms, institutional funds and private investors. Highgate is a
dominant hotel player in key gateway markets throughout the United
States and across the Caribbean and Latin America, and operates
more than 160 hotels and approximately 45,000 rooms around the
world.
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. Factors that might cause such a
difference include, without limitation, whether the Company will
complete the sale of its hospitality portfolios within the
timeframe anticipated or at all, including the Company’s ability to
obtain any necessary third-party approvals to consummate the
transaction, whether the Company will realize any of the
anticipated benefits from the transaction, including generating
segment and corporate-level G&A savings post-closing and
simplifying the Company’s business profile to focus exclusively on
digital infrastructure assets, in the time anticipated or at all,
the Company’s ability to divest of non-core assets and the timing
of such divestiture, the pace of growth of the Company’s digital
businesses, the Company’s ability to achieve superior returns from
its digital businesses for the Company’s shareholders and other
risks and uncertainties, including those detailed in Colony
Capital's Annual Report on Form 10-K for the year ended December
31, 2019, Quarterly Report on Form 10-Q for the quarter ended March
31, 2020, Quarterly Report on Form 10-Q for the quarter ended June
30, 2020 and its other reports filed from time to time with the
U.S. Securities and Exchange Commission (“SEC”). All
forward-looking statements reflect the Company’s good faith
beliefs, assumptions and expectations, but they are not guarantees
of future performance. Colony Capital cautions 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 Capital 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 Capital does not intend to do
so.
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version on businesswire.com: https://www.businesswire.com/news/home/20200924005879/en/
Colony Capital
Investors: Severin White Managing Director, Head of Public
Investor Relations (212) 547-2777 swhite@clny.com
Media: Joele Frank, Wilkinson Brimmer Katcher Jon Keehner /
Julie Oakes clny-jf@joelefrank.com (212) 355-4449
Highgate
Michelle Kelly The Zimmerman Agency (727) 510-5939
mkelly@zimmerman.com
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