PRESS RELEASE
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Colony NorthStar Announces Fourth Quarter and Full Year 2017 Financial Results
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Fourth quarter 2017 net loss attributable to common stockholders of
$(368.1) million , or$(0.69) per share, and full year 2017 net loss attributable to common stockholders of$(333.1) million , or$(0.64) per share, which included a$375 million write-down of goodwill and intangibles related to our retail investment management business -
Fourth quarter 2017 Core FFO of
$95.1 million , or$0.16 per share, and FFO of$(295.5) million , or$(0.51) per share -
Declared and paid a fourth quarter 2017 dividend of
$0.27 per share of Class A and B common stock, for an aggregate post-merger 2017 dividend of$1.05 per share, which was more than covered by our full year Core FFO and taxable income -
The Company’s Board of Directors declared a first quarter 2018 cash
dividend of
$0.11 per share of Class A and Class B common stock targeting an annualized dividend of$0.44 per share to approximate estimated 2018 taxable income and net cash flow, excluding gains -
The Company’s Board of Directors authorized a new
$300 million common stock repurchase program
“2017 was, on balance, a disappointing year for Colony NorthStar,” said
Fourth Quarter and Full Year 2017 Highlights
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During the fourth quarter 2017, the Company completed
$632 million of asset monetizations for an aggregate$4.9 billion of asset monetizations in 2017 furthering its goal to simplify its business and balance sheet -
The Company has exceeded, on a run-rate basis, its original annual
synergies target of
$115 million (which includes stock compensation savings) by approximately$35 million , or 30%, and its original annual cash synergies target of$80 million by approximately$15 million , or 20% -
During the fourth quarter 2017, the Company and its share of
affiliates raised approximately
$280 million of third-party capital from institutional clients and retail investors achieving its annual target of$2.0 billion for the full year 2017 -
During the fourth quarter 2017, the Company and funds managed by the
Company invested and agreed to invest
$379 million comprised of$195 million and$184 million , respectively, and for the full year 2017, the Company and funds managed by the Company invested and agreed to invest$2.8 billion comprised of$1.8 billion and$1.0 billion , respectively -
Subsequent to the fourth quarter 2017:
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Successfully listed
Colony NorthStar Credit Real Estate, Inc. (NYSE:CLNC), a commercial real estate credit REIT, creating a new permanent capital vehicle externally managed by the Company -
The Company, in partnership with
Digital Bridge , held a closing for a new digital real estate infrastructure fund with total callable commitments of$1.4 billion , inclusive of a$117 million capital commitment by subsidiaries of the Company -
The Company has approximately
$1.2 billion of liquidity through cash-on-hand and availability under its revolving credit facility to conduct share repurchases and/or invest in its target verticals and investment management strategies
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Successfully listed
Fourth Quarter 2017 Operating Results and Investment Activity by Segment
As of
During the fourth quarter 2017, this segment’s net loss attributable to
common stockholders was
The following table presents NOI and certain operating metrics by
property types in the Company’s
Consolidated | CLNS OP | Same Store | |||||||||||||||||||||||||||||||||||||
NOI | Share NOI(1) | Consolidated NOI | Occupancy %(2) | TTM Coverage(3) | |||||||||||||||||||||||||||||||||||
($ In millions) | Q4 2017 | Q4 2017 | Q4 2017 | Q3 2017 | Q4 2017 | Q3 2017 | 9/30/17 | 6/30/17 | |||||||||||||||||||||||||||||||
Senior Housing - Operating | $ | 15.8 | $ | 11.2 | $ | 15.8 | $ | 18.7 | 87.4 | % | 87.8 | % | N/A | N/A | |||||||||||||||||||||||||
Medical Office Buildings | 13.3 | 9.4 | 13.4 | 13.7 | 82.9 | % | 83.5 | % | N/A | N/A | |||||||||||||||||||||||||||||
Triple-Net Lease: | |||||||||||||||||||||||||||||||||||||||
Senior Housing | 15.2 | 10.8 | 15.2 | 14.6 | 82.9 | % | 82.3 | % | 1.4x | 1.4x | |||||||||||||||||||||||||||||
Skilled Nursing Facilities | 27.3 | 19.3 | 27.3 | 25.4 | 82.1 | % | 82.2 | % | 1.2x | 1.2x | |||||||||||||||||||||||||||||
Hospitals | 5.2 | 3.7 | 5.2 | 5.3 | 58.4 | % | 61.5 | % | 2.5x | 3.0x | |||||||||||||||||||||||||||||
Healthcare Total/W.A. | $ | 76.8 | $ | 54.4 | $ | 76.9 | $ | 77.7 | 82.8 | % | 82.9 | % | 1.4x | 1.5x | |||||||||||||||||||||||||
(1) | CLNS OP Share NOI represents fourth quarter 2017 Consolidated NOI multiplied by CLNS OP’s ownership interest as of December 31, 2017. | ||
(2) | Occupancy % for Senior Housing - Operating represents average during the presented quarter, MOB’s is as of last day in the quarter and for other types represents average during the prior quarter. | ||
(3) | Represents the ratio of EBITDAR to cash rent on a trailing twelve month basis. | ||
Asset Dispositions and Financing
During the fourth quarter 2017, the consolidated healthcare portfolio
disposed of one non-core skilled nursing facility with 120 beds for
Subsequent to the fourth quarter 2017, the consolidated healthcare
portfolio disposed of three non-core skilled nursing facilities totaling
471 beds for an aggregate
As of
During the fourth quarter 2017, this segment’s net income attributable
to common stockholders was
The following table presents NOI and certain operating metrics in the
Company’s
Consolidated | CLNS OP | Same Store | ||||||||||||||||||||||||||||||
NOI | Share NOI (1) | Consolidated NOI | Leased %(2) | |||||||||||||||||||||||||||||
($ In millions) | Q4 2017 | Q4 2017 | Q4 2017 | Q3 2017 | Q4 2017 | Q3 2017 | ||||||||||||||||||||||||||
Industrial | $ | 46.0 | $ | 19.1 | $ | 40.2 | $ | 39.2 | 95.5 | % | 95.2 | % | ||||||||||||||||||||
(1) | CLNS OP Share NOI represents fourth quarter 2017 Consolidated NOI multiplied by CLNS OP’s ownership interest as of December 31, 2017. | ||
(2) | Leased % represents the last day of the presented quarter. | ||
Asset Acquisitions, Dispositions and Financing
During the fourth quarter 2017, the consolidated industrial portfolio
acquired three industrial buildings totaling approximately 0.5 million
square feet for approximately
Subsequent to the fourth quarter 2017, the consolidated industrial
portfolio acquired four industrial building totaling approximately 0.5
million square feet for approximately
During the fourth quarter 2017, the consolidated industrial portfolio
closed on an aggregate
As of
During the fourth quarter 2017, this segment’s net loss attributable to
common stockholders was
The following table presents EBITDA and certain operating metrics by
brands in the Company’s
Same Store | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | CLNS OP Share | Avg. Daily Rate | RevPAR | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(1) |
EBITDA(2) |
Consolidated EBITDA |
Occupancy %(3) | (In dollars)(3) | (In dollars)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||
($ In millions) | Q4 2017 | Q4 2017 | Q4 2017 | Q4 2016 | Q4 2017 | Q4 2016 | Q4 2017 | Q4 2016 | Q4 2017 | Q4 2016 | |||||||||||||||||||||||||||||||||||||||||||
Marriott | $ | 47.6 | $ | 44.9 | $ | 47.6 | $ | 45.3 | 69.4 | % | 68.5 | % | $ | 126 | $ | 123 | $ | 87 | $ | 84 | |||||||||||||||||||||||||||||||||
Hilton | 9.0 | 8.5 | 9.0 | 9.0 | 74.0 | % | 73.7 | % | 123 | 121 | 91 | 89 | |||||||||||||||||||||||||||||||||||||||||
Other | 3.4 | 3.2 | 3.4 | 3.3 | 75.5 | % | 70.1 | % | 129 | 133 | 97 | 93 | |||||||||||||||||||||||||||||||||||||||||
Total/W.A. | $ | 60.0 | $ | 56.6 | $ | 60.0 | $ | 57.6 | 70.5 | % | 69.4 | % | $ | 126 | $ | 123 | $ | 88 | $ | 85 | |||||||||||||||||||||||||||||||||
(1) | Q4 2017 Consolidated EBITDA excludes FF&E reserve amounts of $8.6 million. | ||
(2) | CLNS OP Share EBITDA represents fourth quarter 2017 Consolidated EBITDA multiplied by CLNS OP’s ownership interest as of December 31, 2017. | ||
(3) | For each metric, data represents average during the presented quarter. | ||
Other Equity and Debt
The Company owns a diversified group of strategic and non-strategic real
estate and real estate-related debt and equity investments. Strategic
investments primarily include our 37% interest in CLNC, 10% interest in
As of
CLNS OP Share | |||||||||||||||||
December 31, 2017 | |||||||||||||||||
Undepreciated Carrying Value | |||||||||||||||||
($ In millions) | Assets | Equity | |||||||||||||||
Strategic: |
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Interest in publicly managed companies (CLNC and NRE)(1) | $ | 1,236 | $ | 1,236 | |||||||||||||
GP co-investments | 453 | 405 | |||||||||||||||
Strategic Subtotal | 1,689 | 1,641 | |||||||||||||||
Non-Strategic: |
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Other Real Estate Equity & Albertsons | 1,979 | 1,050 | |||||||||||||||
Real Estate Debt | 1,174 | 790 | |||||||||||||||
Net Lease Real Estate Equity | 563 | 226 | |||||||||||||||
Real Estate Private Equity Funds and CRE Securities | 337 | 337 | |||||||||||||||
Non-Strategic Subtotal | 4,053 | 2,403 | |||||||||||||||
Total Other Equity and Debt | $ | 5,742 | $ | 4,044 | |||||||||||||
(1) | For CLNC, represents the net carrying value of the assets contributed to CLNC as of December 31, 2017. Assets value equal to net carrying value of equity as the Company’s interest will be accounted for under the equity method. | ||
On
Other Equity and Debt Segment Asset Acquisitions, Dispositions and Financing
During the fourth quarter 2017, the Company invested and agreed to
invest approximately
During the fourth quarter 2017, the Company obtained over
Investment Management
The Company’s Investment Management segment includes the business and
operations of managing capital on behalf of third-party investors
through closed and open-end private funds, non-traded and traded real
estate investment trusts and registered investment companies. As of
Sale of Townsend
During the fourth quarter 2017, the Company closed the sale of Townsend
for
NRE Management Agreement Amendment
During the fourth quarter 2017, the Company agreed to amend and restate
its management contract with NRE effective
During the fourth quarter 2017, the Company agreed to amend and restate
its management agreement with NHI effective
Capital Raising and Investment Activity
During the fourth quarter 2017, the Company and its share of affiliates
raised approximately
During the fourth quarter 2017, institutional funds and retail companies
managed by the Company, excluding the industrial open-end fund, invested
and agreed to invest approximately
Combination of
Subsequent to the fourth quarter 2017, the Company entered into a
definitive agreement with
Digital Real Estate Infrastructure
Subsequent to the fourth quarter 2017, the Company, in partnership with
Assets Under Management (“AUM”)
As of
($ In billions) | Amount |
% of
Grand Total |
|||||||||||||||
Balance Sheet (CLNS OP Share): | |||||||||||||||||
Healthcare | $ | 4.1 | 9.6 | % | |||||||||||||
Industrial | 1.3 | 2.9 | % | ||||||||||||||
Hospitality | 3.9 | 9.3 | % | ||||||||||||||
Other Equity and Debt | 4.6 | 10.7 | % | ||||||||||||||
CLNC: Investments contributed to CLNC(1) | 1.9 | 4.4 | % | ||||||||||||||
Balance Sheet Subtotal | 15.8 | 36.9 | % | ||||||||||||||
Investment Management: | |||||||||||||||||
Institutional Funds | 9.9 | 23.2 | % | ||||||||||||||
Retail Companies | 3.7 | 8.7 | % | ||||||||||||||
Colony NorthStar Credit Real Estate (NYSE:CLNC)(2) | 3.2 | 7.6 | % | ||||||||||||||
NorthStar Realty Europe (NYSE:NRE) | 2.2 | 5.2 | % | ||||||||||||||
Pro Rata Corporate Investments | 7.9 | 18.4 | % | ||||||||||||||
Investment Management Subtotal | 26.9 | 63.1 | % | ||||||||||||||
Grand Total | $ | 42.7 | 100.0 | % | |||||||||||||
(1) | Represents the Company’s 37% ownership share of CLNC’s pro forma September 30, 2017 gross asset value of $5.1 billion. | ||
(2) | Represents 3rd party 63% ownership share of CLNC’s pro forma September 30, 2017 gross asset value of $5.1 billion. | ||
Liquidity and Financing
As of
In
On
Common Stock and Operating Company Units
As of
During the fourth quarter 2017, the Company repurchased approximately
6.1 million shares of its Class A common stock for
On
Common and Preferred Dividends
On
On
Non-GAAP Financial Measures and Definitions
Assets Under Management (“AUM”)
Assets for which the Company and its affiliates provide investment
management services, including assets for which the Company may or may
not charge management fees and/or performance allocations. AUM is
generally based on reported gross undepreciated carrying value of
managed investments as reported by each underlying vehicle at
CLNS OP
The operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. CLNS OP share excludes noncontrolling interests in investment entities.
Fee-Earning Equity Under Management (“FEEUM”)
Equity for which the Company and its affiliates provides investment
management services and derives management fees and/or performance
allocations. FEEUM generally represents a) the basis used to derive
fees, which may be based on invested equity, stockholders’ equity, or
fair value pursuant to the terms of each underlying investment
management agreement and b) for corporate investments in affiliates with
asset and investment management functions, includes the Company’s
pro-rata share of fee bearing equity of each affiliate as presented and
calculated by the affiliate. Affiliates include
Funds From Operations (“FFO”) and Core Funds From Operations (“Core FFO”)
The Company calculates funds from operations ("FFO") in accordance with
standards established by the Board of Governors of the
The Company computes core funds from operations ("Core FFO") by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) gains and losses from sales of depreciable real estate within the Other Equity and Debt segment, net of depreciation, amortization and impairment previously adjusted for FFO; (ii) gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment; (iii) equity-based compensation expense; (iv) effects of straight-line rent revenue and straight-line rent expense on ground leases; (v) amortization of acquired above- and below-market lease values; (vi) amortization of deferred financing costs and debt premiums and discounts; (vii) unrealized fair value gains or losses on derivatives and foreign currency remeasurements; (viii) acquisition-related expenses, merger and integration costs; (ix) amortization and impairment of finite-lived intangibles related to investment management contracts and customer relationships; (x) gain on remeasurement of consolidated investment entities and the effect of amortization thereof; (xi) non-real estate depreciation and amortization; (xii) change in fair value of contingent consideration; and (xiii) tax effect on certain of the foregoing adjustments.
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. FFO and Core FFO should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company’s 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.
The Company uses FFO and Core FFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare its operating performance with that of other REITs. However, because FFO and Core FFO exclude depreciation and amortization and capture neither the changes in the value of the Company’s properties that resulted from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO and Core FFO as measures of the Company’s performance is limited. FFO and Core FFO should be considered only as supplements to GAAP net income as a measure of the Company’s performance.
Net Operating Income (“NOI”) / Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”)
NOI for healthcare and industrial segments represents total property and related income less property operating expenses, adjusted for the effects of (i) straight-line rental income adjustments; (ii) amortization of acquired above- and below-market lease adjustments to rental income; and (iii) other items such as adjustments for the Company’s share of NOI of unconsolidated ventures.
EBITDA for the hospitality real estate segment represents net income from continuing operations of that segment excluding the impact of interest expense, income tax expense or benefit, and depreciation and amortization.
The Company believes that NOI and EBITDA are useful measures of operating performance of its respective real estate portfolios as they are more closely linked to the direct results of operations at the property level. NOI also reflects actual rents received during the period after adjusting for the effects of straight-line rents and amortization of above- and below-market leases; therefore, a comparison of NOI across periods better reflects the trend in occupancy rates and rental rates of the Company’s properties.
NOI and EBITDA exclude historical cost depreciation and amortization, which are based on different useful life estimates depending on the age of the properties, as well as adjust for the effects of real estate impairment and gains or losses on sales of depreciated properties, which eliminate differences arising from investment and disposition decisions. This allows for comparability of operating performance of the Company’s properties period over period and also against the results of other equity REITs in the same sectors. Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of the Company’s properties, NOI and EBITDA provide a measure of operating performance independent of the Company’s capital structure and indebtedness.
However, the exclusion of these items as well as others, such as capital expenditures and leasing costs, which are necessary to maintain the operating performance of the Company’s properties, and transaction costs and administrative costs, may limit the usefulness of NOI and EBITDA. NOI may fail to capture significant trends in these components of U.S. GAAP net income (loss) which further limits its usefulness.
NOI should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, the Company’s methodology for calculating NOI involves subjective judgment and discretion and may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with other companies.
Fourth Quarter 2017 Conference Call
The Company will conduct a conference call to discuss the financial
results on
For those unable to participate during the live call, a replay will be
available starting
Supplemental Financial Report
A Fourth Quarter 2017 Supplemental Financial Report is available on the
Company’s website at www.clns.com.
This information has also been furnished to the
About
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. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve known and unknown risks,
uncertainties, assumptions and contingencies, many of which are beyond
the Company’s control, and may cause the Company’s actual results to
differ significantly from those expressed in any forward-looking
statement. Factors that might cause such a difference include, without
limitation, our failure to achieve anticipated synergies in and benefits
of the completed merger among
COLONY NORTHSTAR, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) |
||||||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 921,822 | $ | 376,005 | ||||||||||||||||
Restricted cash | 471,078 | 111,959 | ||||||||||||||||||
Real estate, net | 14,464,258 | 3,243,631 | ||||||||||||||||||
Loans receivable, net ($45,423 and $0 at fair value, respectively) | 3,223,762 | 3,430,608 | ||||||||||||||||||
Investments in unconsolidated ventures ($363,901 and $0 at fair value, respectively) | 1,655,239 | 1,052,995 | ||||||||||||||||||
Securities, at fair value | 383,942 | 23,446 | ||||||||||||||||||
Goodwill | 1,534,561 | 680,127 | ||||||||||||||||||
Deferred leasing costs and intangible assets, net | 852,872 | 278,741 | ||||||||||||||||||
Assets held for sale ($49,498 and $67,033 at fair value, respectively) | 781,630 | 292,924 | ||||||||||||||||||
Other assets ($10,150 and $36,101 at fair value, respectively) | 444,968 | 260,585 | ||||||||||||||||||
Due from affiliates | 51,518 | 9,971 | ||||||||||||||||||
Total assets | $ | 24,785,650 | $ | 9,760,992 | ||||||||||||||||
Liabilities | ||||||||||||||||||||
Debt, net ($44,542 and $0 at fair value, respectively) | $ | 10,827,810 | $ | 3,715,618 | ||||||||||||||||
Accrued and other liabilities ($212,267 and $5,448 at fair value, respectively) | 898,161 | 286,952 | ||||||||||||||||||
Intangible liabilities, net | 191,109 | 19,977 | ||||||||||||||||||
Liabilities related to assets held for sale | 273,298 | 14,296 | ||||||||||||||||||
Due to affiliates ($20,650 and $41,250 at fair value, respectively) | 23,534 | 41,250 | ||||||||||||||||||
Dividends and distributions payable | 188,202 | 65,972 | ||||||||||||||||||
Total liabilities | 12,402,114 | 4,144,065 | ||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Redeemable noncontrolling interests | 34,144 | — | ||||||||||||||||||
Equity | ||||||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Preferred stock, $0.01 par value per share; $1,636,605 and $625,750 liquidation preference, respectively; 250,000 and 50,000 shares authorized, respectively; 65,464 and 25,030 shares issued and outstanding, respectively | 1,606,966 | 607,200 | ||||||||||||||||||
Common stock, $0.01 par value per share | ||||||||||||||||||||
Class A, 949,000 and 658,369 shares authorized; 542,599 and 166,440 shares issued and outstanding(1) |
5,426 | 1,664 | ||||||||||||||||||
Class B, 1,000 shares authorized; 736 and 770 shares issued and outstanding(1) |
7 | 8 | ||||||||||||||||||
Additional paid-in capital | 7,913,622 | 2,443,100 | ||||||||||||||||||
Distributions in excess of earnings | (1,165,412 | ) | (246,064 | ) | ||||||||||||||||
Accumulated other comprehensive income (loss) | 47,316 | (32,109 | ) | |||||||||||||||||
Total stockholders’ equity | 8,407,925 | 2,773,799 | ||||||||||||||||||
Noncontrolling interests in investment entities | 3,539,072 | 2,453,938 | ||||||||||||||||||
Noncontrolling interests in Operating Company | 402,395 | 389,190 | ||||||||||||||||||
Total equity | 12,349,392 | 5,616,927 | ||||||||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 24,785,650 | $ | 9,760,992 | ||||||||||||||||
(1) | As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio. | ||
COLONY NORTHSTAR, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) |
||||||||||||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Property operating income | $ | 572,787 | $ | 94,355 | $ | 2,113,837 | $ | 371,082 | ||||||||||||||||
Interest income | 83,339 | 91,612 | 416,625 | 385,851 | ||||||||||||||||||||
Fee income | 53,527 | 18,384 | 220,789 | 67,731 | ||||||||||||||||||||
Other income | 10,691 | 4,122 | 45,483 | 14,193 | ||||||||||||||||||||
Total revenues |
720,344 | 208,473 | 2,796,734 | 838,857 | ||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Property operating expense | 311,437 | 28,992 | 1,113,509 | 118,461 | ||||||||||||||||||||
Interest expense | 156,230 | 43,448 | 574,822 | 170,083 | ||||||||||||||||||||
Investment, servicing and commission expense | 23,629 | 6,218 | 67,597 | 23,666 | ||||||||||||||||||||
Transaction costs | 1,443 | 21,967 | 95,859 | 40,605 | ||||||||||||||||||||
Depreciation and amortization | 164,554 | 42,406 | 617,779 | 171,682 | ||||||||||||||||||||
Provision for loan loss | 6,834 | 17,593 | 19,741 | 35,005 | ||||||||||||||||||||
Impairment loss | 375,007 | 6,256 | 420,360 | 11,717 | ||||||||||||||||||||
Compensation expense | 89,286 | 31,149 | 346,885 | 111,838 | ||||||||||||||||||||
Administrative expenses | 30,895 | 12,939 | 113,456 | 51,699 | ||||||||||||||||||||
Total expenses | 1,159,315 | 210,968 | 3,370,008 | 734,756 | ||||||||||||||||||||
Other income | ||||||||||||||||||||||||
Gain on sale of real estate assets | 40,669 | 5,502 | 137,370 | 73,616 | ||||||||||||||||||||
Other gain (loss), net | (18,523 | ) | 146 | (25,814 | ) | 18,416 | ||||||||||||||||||
Earnings from investments in unconsolidated ventures | 31,318 | 27,149 | 285,151 | 99,375 | ||||||||||||||||||||
Income (loss) before income taxes | (385,507 | ) | 30,302 | (176,567 | ) | 295,508 | ||||||||||||||||||
Income tax benefit (expense) | 91,409 | (5,647 | ) | 98,399 | (4,782 | ) | ||||||||||||||||||
Net income (loss) from continuing operations | (294,098 | ) | 24,655 | (78,168 | ) | 290,726 | ||||||||||||||||||
Income (loss) from discontinued operations | (486 | ) | — | 13,555 | — | |||||||||||||||||||
Net income (loss) | (294,584 | ) | 24,655 | (64,613 | ) | 290,726 | ||||||||||||||||||
Net income (loss) attributable to noncontrolling interests: | ||||||||||||||||||||||||
Redeemable noncontrolling interests | 20,528 | — | 23,543 | — | ||||||||||||||||||||
Investment entities | 42,231 | 32,576 | 129,996 | 163,084 | ||||||||||||||||||||
Operating Company | (21,605 | ) | (3,204 | ) | (20,261 | ) | 12,324 | |||||||||||||||||
Net income (loss) attributable to Colony NorthStar, Inc. | (335,738 | ) | (4,717 | ) | (197,891 | ) | 115,318 | |||||||||||||||||
Preferred stock redemption | — | — | 4,530 | — | ||||||||||||||||||||
Preferred stock dividends | 32,344 | 12,093 | 130,672 | 48,159 | ||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | (368,082 | ) | $ | (16,810 | ) | $ | (333,093 | ) | $ | 67,159 | |||||||||||||
Basic earnings (loss) per share(1) |
||||||||||||||||||||||||
Net income (loss) from continuing operations per basic common share | $ | (0.69 | ) | $ | (0.11 | ) | $ | (0.66 | ) | $ | 0.39 | |||||||||||||
Net income (loss) per basic common share | $ | (0.69 | ) | $ | (0.11 | ) | $ | (0.64 | ) | $ | 0.39 | |||||||||||||
Diluted earnings per share(1) |
||||||||||||||||||||||||
Net income (loss) from continuing operations per diluted common share | $ | (0.69 | ) | $ | (0.11 | ) | $ | (0.66 | ) | $ | 0.39 | |||||||||||||
Net income (loss) per diluted common share | $ | (0.69 | ) | $ | (0.11 | ) | $ | (0.64 | ) | $ | 0.39 | |||||||||||||
Weighted average number of shares(1) |
||||||||||||||||||||||||
Basic | 536,583 | 165,017 | 532,600 | 164,570 | ||||||||||||||||||||
Diluted | 536,583 | 165,017 | 532,600 | 164,570 | ||||||||||||||||||||
(1) | As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio. | ||
COLONY NORTHSTAR, INC. FUNDS FROM OPERATIONS AND CORE FUNDS FROM OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||||
Three Months Ended December 31, 2017 |
||||||||||
Net loss attributable to common stockholders | $ | (368,082 | ) | |||||||
Adjustments for FFO attributable to common interests in Operating Company: | ||||||||||
Net loss attributable to noncontrolling common interests in Operating Company | (21,605 | ) | ||||||||
Real estate depreciation and amortization | 150,930 | |||||||||
Impairment write-downs associated with depreciable real estate | 8,994 | |||||||||
Gain from sales of depreciable real estate | (40,333 | ) | ||||||||
Less: Adjustments attributable to noncontrolling interests in investment entities | (25,426 | ) | ||||||||
FFO attributable to common interests in Operating Company and common stockholders | (295,522 | ) | ||||||||
Additional adjustments for Core FFO attributable to common interests in Operating Company and common stockholders: | ||||||||||
Gains and losses from sales of depreciable real estate within the Other Equity and Debt segment, net of depreciation, amortization and impairment previously adjusted for FFO(1) | 5,794 | |||||||||
Gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment | 306,939 | |||||||||
Equity-based compensation expense(2) |
42,917 | |||||||||
Straight-line rent revenue and straight-line rent expense on ground leases | (6,282 | ) | ||||||||
Change in fair value of contingent consideration | (6,260 | ) | ||||||||
Amortization of acquired above- and below-market lease values | (8,364 | ) | ||||||||
Amortization of deferred financing costs and debt premiums and discounts | 24,304 | |||||||||
Unrealized fair value gains and foreign currency remeasurements | (452 | ) | ||||||||
Acquisition and merger-related transaction costs | 1,475 | |||||||||
Merger integration costs(3) |
9,929 | |||||||||
Amortization and impairment of investment management intangibles | 73,504 | |||||||||
Non-real estate depreciation and amortization | 2,764 | |||||||||
Gain on remeasurement of consolidated investment entities and the effect of amortization thereof | 9,406 | |||||||||
Deferred tax benefit, net(4) |
(71,519 | ) | ||||||||
Less: Adjustments attributable to noncontrolling interests in investment entities | 6,436 | |||||||||
Core FFO attributable to common interests in Operating Company and common stockholders | $ | 95,069 | ||||||||
FFO per common share / common OP unit(5) |
$ | (0.51 | ) | |||||||
FFO per common share / common OP unit—diluted(6) |
$ | (0.51 | ) | |||||||
Core FFO per common share / common OP unit(5) |
$ | 0.16 | ||||||||
Core FFO per common share / common OP unit—diluted(6) |
$ | 0.16 | ||||||||
Weighted average number of common OP units outstanding used for FFO and Core FFO per common share and OP unit(5) |
577,166 | |||||||||
Weighted average number of common OP units outstanding used for FFO per common share and OP unit—diluted(5)(6) |
577,930 | |||||||||
Weighted average number of common OP units outstanding used for Core FFO per common share and OP unit—diluted(5)(6) |
579,068 | |||||||||
(1) | Net of $19.1 million of depreciation, amortization and impairment charges previously adjusted to calculate FFO and Core Earnings, a non-GAAP measure used by Colony Capital, Inc. prior to its internalization of the manager. | ||
(2) | Includes $30.3 million of replacement award amortization. | ||
(3) | Merger integration costs represent costs and charges incurred during the integration of Colony, NSAM and NRF. These integration costs are not reflective of the Company’s core operating performance and the Company does not expect to incur these costs subsequent to the completion of the merger integration. The majority of integration costs consist of severance, employee costs of those separated or scheduled for separation, system integration and lease terminations. | ||
(4) | Adjustment represents the non-cash tax benefit from the amortization and impairment of investment management intangibles assumed in business combinations and the non-cash tax benefit of reduced deferred tax liabilities resulting from the Tax Cuts and Jobs Act enacted in 2017, which decreased the federal corporate income tax rate from 35% to 21%. | ||
(5) | Calculated based on weighted average shares outstanding including participating securities and assuming the exchange of all common OP units outstanding for common shares. As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio. | ||
(6) | For the three months ended December 31, 2017, included in the calculation of diluted Core FFO per share is the effect of adding back $0.2 million of interest expense associated with convertible senior notes and 1.1 million weighted average dilutive common share equivalents for the assumed conversion of the convertible senior notes. Such interest expense and weighted average dilutive common share equivalents are excluded for the calculation of diluted FFO as the effect would be antidilutive. | ||
RECONCILIATION OF NET INCOME
(LOSS) TO NOI/EBITDA
The following tables present: (1) a reconciliation of property and other
related revenues less property operating expenses for properties in our
Healthcare, Industrial, and Hospitality segments to NOI or EBITDA and
(2) a reconciliation of such segments' net income (loss) for the three
months ended
NOI and EBITDA were determined as follows:
Three Months Ended December 31, 2017 | ||||||||||||||||||
(In thousands) |
Healthcare | Industrial | Hospitality | |||||||||||||||
Total revenues | $ | 157,267 | $ | 66,595 | $ | 196,609 | ||||||||||||
Straight-line rent revenue and amortization of above- and below-market lease intangibles | (12,332 | ) | (1,841 | ) | (44 | ) | ||||||||||||
Interest income | — | (226 | ) | — | ||||||||||||||
Other income | — | (121 | ) | — | ||||||||||||||
Property operating expenses(1) |
(68,165 | ) | (17,884 | ) | (136,533 | ) | ||||||||||||
Compensation expense(1) |
— | (523 | ) | — | ||||||||||||||
NOI or EBITDA | $ | 76,770 | $ | 46,000 | $ | 60,032 | ||||||||||||
(1) | For healthcare and hospitality, property operating expenses includes property management fees paid to third parties. For industrial, there are direct costs of managing the portfolio which are included in compensation expense. | ||
The following table presents a reconciliation of net income (loss) from continuing operations of the healthcare, industrial and hospitality segments to NOI or EBITDA of the respective segments.
Three Months Ended December 31, 2017 | ||||||||||||||||||
(In thousands) |
Healthcare | Industrial | Hospitality | |||||||||||||||
Net income (loss) from continuing operations | $ | (21,789 | ) | $ | 23,946 | $ | (16,166 | ) | ||||||||||
Adjustments: | ||||||||||||||||||
Straight-line rent revenue and amortization of above- and below-market lease intangibles | (12,332 | ) | (1,841 | ) | (44 | ) | ||||||||||||
Interest income | — | (226 | ) | — | ||||||||||||||
Interest expense | 47,734 | 9,403 | 36,245 | |||||||||||||||
Transaction, investment and servicing costs | 2,889 | 8 | 2,582 | |||||||||||||||
Depreciation and amortization | 48,793 | 29,812 | 35,171 | |||||||||||||||
Impairment loss | 6,125 | — | — | |||||||||||||||
Compensation and administrative expense | 1,709 | 2,629 | 1,607 | |||||||||||||||
Gain on sale of real estate | — | (15,917 | ) | — | ||||||||||||||
Other (gain) loss, net | (374 | ) | — | 67 | ||||||||||||||
Other income | — | (121 | ) | — | ||||||||||||||
Earnings from investments in unconsolidated ventures | — | (1,781 | ) | — | ||||||||||||||
Income tax benefit | 4,015 | 88 | 570 | |||||||||||||||
NOI or EBITDA | $ | 76,770 | $ | 46,000 | $ | 60,032 | ||||||||||||
The following table summarizes Q4 2017 net income (loss) from continuing operations by segment:
(In thousands) |
Net income (Loss) From Continuing Operations |
|||||||||||
Healthcare | $ | (21,789 | ) | |||||||||
Industrial | 23,946 | |||||||||||
Hospitality | (16,166 | ) | ||||||||||
Other Equity and Debt | 57,137 | |||||||||||
Investment Management | (248,807 | ) | ||||||||||
Amounts Not Allocated to Segments | (88,419 | ) | ||||||||||
Total Consolidated | $ | (294,098 | ) | |||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180301005599/en/
Source:
Investor Contacts:
Colony NorthStar, Inc.
Darren J.
Tangen
Executive Vice President and Chief Financial Officer
310-552-7230
or
Addo
Investor Relations
Lasse Glassen
310-829-5400