UNITED 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, 2017
COLONY NORTHSTAR, INC. (Exact Name of Registrant as Specified in Its Charter) | ||
Maryland | 001-37980 | 46-4591526 | ||
(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, California | 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-(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
Emerging growth company ¨ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ | |
Item 2.02 | Results of Operations and Financial Condition. |
On May 9, 2017, Colony NorthStar, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2017 and its financial results for the first quarter ended March 31, 2017. Colony NorthStar was formed through a tri-party merger among Colony Capital, Inc. (“Colony”); NorthStar Asset Management Group Inc. (“NSAM”); and NorthStar Realty Finance Corp. (“NRF”), which closed on January 10, 2017. The financial information presented in the press release represents the pre-merger financial information of Colony, as the accounting acquirer, on a stand-alone basis prior to, and including, January 10, 2017 and following January 10, 2017, results of operations of the Company. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On May 9, 2017, the Company made available a Supplemental Financial Disclosure Presentation for the quarter ended March 31, 2017 on the Company’s website at www.clns.com. A copy of the Supplemental Financial Disclosure Presentation is furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K, which are 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 Exchange Act of 1934, as amended (the “Exchange Act”), 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.
Use of Website to Distribute Material Company Information
The Company’s website address is www.clns.com. The Company uses its website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding the Company, is routinely posted on and accessible on the Public Shareholders subpage of its website, which is accessible by clicking on the tab labeled “Public Shareholders” on the website home page. The Company also uses its website to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission disclosing the same information. Therefore, investors should look to the Public Shareholders subpage of the Company’s website for important and time-critical information. Visitors to the Company’s website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Public Shareholders subpage of the website.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibits are being furnished herewith to this Current Report on Form 8-K.
Exhibit No. | Description | |
99.1 | Press Release dated May 9, 2017 | |
99.2 | Supplemental Financial Disclosure Presentation for the quarter ended March 31, 2017 | |
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, 2017 | COLONY NORTHSTAR, 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, 2017 | |
99.2 | Supplemental Financial Disclosure Presentation for the quarter ended March 31, 2017 | |
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Exhibit 99.1
COLONY NORTHSTAR ANNOUNCES FIRST QUARTER 2017 FINANCIAL RESULTS
Los Angeles, CA and New York, NY, May 9, 2017 - Colony NorthStar, Inc. (NYSE:CLNS) and subsidiaries (collectively, “Colony NorthStar” or the “Company”) today announced its financial results for the first quarter ended March 31, 2017 and declared a cash dividend of $0.27 per share of Class A and Class B common stock for the second quarter of 2017. Colony NorthStar was formed through a tri-party merger among Colony Capital, Inc. (“Colony”); NorthStar Asset Management Group Inc. (“NSAM”); and NorthStar Realty Finance Corp. (“NRF”), which closed on January 10, 2017. Except where stated, the financial information presented in this press release represents the pre-merger financial information of Colony, as the accounting acquirer, on a stand-alone basis prior to, and including, January 10, 2017 and following January 10, 2017, results of operations of Colony NorthStar.
First Quarter 2017 Highlights
• | Net loss attributable to common stockholders of $(5.2) million, or $(0.01) per basic share |
• | Core FFO of $173.1 million, or $0.31 per basic share, and FFO of $91.1 million, or $0.17 per basic share |
• | Merger integration substantially complete and greater than 90% of the originally identified $115 million of annualized synergies and greater than 80% of the estimated $80 million of annualized cash synergies achieved to date with the balance expected to be achieved by year end on a run rate basis |
• | Declared and paid a prorated first quarter dividend of $0.24 per share of Class A and B common stock, based on an effective $0.27 per share full quarter dividend |
◦ | Subsequent to the first quarter 2017, declared second quarter dividend of $0.27 per share of Class A and B common stock |
• | During the first quarter 2017, the Company raised approximately $980 million of third-party capital from institutional clients and retail investors |
• | During the first quarter 2017, completed the following asset monetizations: sale of an 18.7% preferred joint venture interest in the Company’s healthcare portfolio; sale of the entire manufactured housing communities portfolio for $2.0 billion; and sale of 7.6 million shares, or 50% of the Company’s interest, in Colony Starwood Homes (NYSE:SFR) |
• | 2017 year-to-date, repurchased approximately $168 million of stock, or 12.9 million CLNS Class A common shares, of which 10.8 million shares were acquired through market purchases at an average price of $12.81 per share and 2.1 million shares were acquired in connection with the unwind of a legacy NSAM call spread option |
• | Subsequent to the first quarter 2017, the Company executed commitment letters to refinance approximately $1.6 billion of consolidated debt in the Hospitality Real Estate segment, extending the fully extended maturity dates from 2019 to 2022 at a moderately reduced interest rate |
First Quarter 2017 Financial Results
For the first quarter 2017, Colony NorthStar reported net loss attributable to common stockholders of $(5.2) million, or $(0.01) per basic share. Core FFO was $173.1 million, or $0.31 per basic share, and FFO was $91.1 million, or $0.17 per basic share.
For more information and a reconciliation of net income/(loss) to common stockholders to FFO, Core FFO, NOI and EBITDA, please refer to the non-GAAP financial measure definitions and tables at the end of this press release.
“We remain on track to achieve our 2017 full year goals for Core FFO including synergies, new investor client capital formation, and simplification; notwithstanding some seasonal and other timing related performance differences in the first quarter,” said Richard B. Saltzman, President and Chief Executive Officer. “Further, the environment and capital markets backdrop remain conducive to completing the priorities of strategic asset sales and repositioning certain of our businesses for much higher growth.”
First Quarter 2017 Operating Results and Investment Activity by Segment
Colony NorthStar holds investment interests in five reportable segments: Healthcare Real Estate; Industrial Real Estate; Hospitality Real Estate; Other Equity and Debt; and Investment Management.
Healthcare Real Estate
As of March 31, 2017, the consolidated healthcare portfolio consisted of 425 properties: 113 medical office properties, 191 senior housing properties, 107 skilled nursing facilities and 14 hospitals. The Company’s equity interest in the consolidated Healthcare Real Estate segment was approximately 71.3% as of March 31, 2017. The healthcare portfolio earns rental and escalation income from leasing space to various healthcare tenants and operators. The leases are for fixed terms of varying length and generally
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provide for rent and expense reimbursements to be paid in monthly installments. The healthcare portfolio also generates operating income from healthcare properties operated through management agreements with independent third-party operators, predominantly through structures permitted by the REIT Investment Diversification and Empowerment Act of 2007, or RIDEA.
During the first quarter 2017, this segment’s net loss attributable to common stockholders was $(8.4) million and Core FFO was $21.4 million, which reflects 80-days of operations in the quarter because this was a legacy NRF business. Consolidated healthcare NOI was $79.4 million for the full 90-day period in the first quarter. In the first quarter 2017, healthcare same store portfolio experienced sequential quarter-over-quarter revenue growth of 1.4% and net operating income decline of (1.4)%. Over the same period last year, first quarter 2017 same store revenue growth was 1.6% and net operating income declined (2.6)%, of which (1.5)% was related to fluctuation in currency exchanges rates. Healthcare same store portfolio is defined as properties in operation throughout the full periods presented under the comparison and included 425 properties in the sequential quarter-over-quarter and year-over-year comparisons. The healthcare real estate portfolio was under NRF ownership in the prior comparative period.
The following table presents NOI and selected operating metrics by property types in the Company’s Healthcare Real Estate segment:
Consolidated | CLNS OP | Same Store | ||||||||||||||||||||
NOI(1) | Share NOI(1) | Consolidated NOI - | Occupancy %(2) | TTM Coverage(3) | ||||||||||||||||||
($ In millions) | Q1 2017 | Q1 2017 | Q1 2017 | Q4 2016 | Q1 2017 | Q4 2016 | 12/31/2016 | 9/30/2016 | ||||||||||||||
Medical Office Buildings | $ | 13.7 | $ | 9.8 | $ | 13.6 | $ | 14.8 | 85.1 | % | 85.8 | % | N/A | N/A | ||||||||
Senior Housing - Operating | 18.3 | 13.0 | 18.3 | 18.3 | 86.8 | % | 88.1 | % | N/A | N/A | ||||||||||||
Triple-Net Lease: | ||||||||||||||||||||||
Senior Housing | 13.5 | 9.6 | 13.5 | 14.0 | 85.7 | % | 86.6 | % | 1.5x | 1.6x | ||||||||||||
Skilled Nursing Facilities | 28.5 | 20.3 | 28.5 | 28.2 | 84.2 | % | 84.2 | % | 1.4x | 1.4x | ||||||||||||
Hospitals | 5.4 | 3.8 | 5.4 | 5.1 | 60.9 | % | 62.8 | % | 3.7x | 3.3x | ||||||||||||
Healthcare Total/W.A. | $ | 79.4 | $ | 56.6 | $ | 79.3 | $ | 80.4 | 83.6 | % | 84.5 | % | 1.7x | 1.7x | ||||||||
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(1) | Represents net operating income for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated NOI multiplied by the Company’s interest as of March 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
During the first quarter 2017, the Company sold a medical office building for $15 million, at an approximate 5.6% cap rate, which resulted in net proceeds of approximately $3 million. This sale was part of the fourth quarter 2016 overall medical office building portfolio asset monetization.
During the first quarter 2017, the Company sold an 18.7% preferred joint venture interest in its healthcare real estate portfolio, which resulted in net proceeds of approximately $340 million, representing an implied 6.1% cap rate.
Industrial Real Estate
As of March 31, 2017, the consolidated industrial portfolio consisted of 353 primarily light industrial buildings totaling 39.0 million rentable square feet across 15 major U.S. markets and was 96% leased. The Company’s equity interest in the consolidated Industrial Real Estate segment was approximately 43.0% as of March 31, 2017, which decreased from the prior quarter due to increased third-party capital commitments during the first quarter of 2017. Total third-party capital commitments were in excess of $1 billion compared to cumulative balance sheet contributions of $684 million as of March 31, 2017. The Company continues to own a 100% interest in the related operating platform. The Industrial Real Estate segment is comprised of and primarily invests in light industrial properties in infill locations in major U.S. metropolitan markets targeting multi-tenant buildings of up to 500,000 square feet and single tenant buildings of up to 250,000 square feet with an office buildout of less than 20%.
During the full 90-day period in the first quarter 2017, this segment’s net loss attributable to common stockholders was $(0.1) million, Core FFO was $13.4 million and consolidated industrial NOI was $38.2 million. In the first quarter 2017, industrial same store portfolio experienced sequential quarter-over-quarter revenue growth of 3.5% and net operating income was unchanged in part due to higher property taxes. Over the same period last year, first quarter 2017 same store revenue growth was 4.9% and net operating income grew 5.3%. Industrial same store portfolio is defined as buildings in operation throughout the full periods presented
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under the comparison and included 334 and 316 buildings in the sequential quarter-over-quarter and year-over-year comparisons, respectively.
The following table presents NOI and selected operating metrics in the Company’s Industrial Real Estate segment:
Consolidated | CLNS OP | Same Store | |||||||||||||||||
NOI(1) | Share NOI 1) | Consolidated NOI - | Leased %(2) | ||||||||||||||||
($ In millions) | Q1 2017 | Q1 2017 | Q1 2017 | Q1 2016 | Q1 2017 | Q1 2016 | |||||||||||||
Industrial | $ | 38.2 | $ | 16.4 | $ | 35.5 | $ | 35.4 | 95.8 | % | 95.8 | % | |||||||
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(1) | Represents net operating income for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated NOI multiplied by the Company’s interest as of March 31, 2017. |
(2) | Leased % represents average during the presented quarter. |
Asset Acquisitions
During the first quarter 2017, the Company acquired seven industrial buildings totaling approximately 1.4 million square feet for approximately $118 million.
Subsequent to the first quarter 2017, the Company acquired three industrial buildings totaling approximately 0.2 million square feet for approximately $16 million.
Hospitality Real Estate
As of March 31, 2017, the consolidated hospitality portfolio consisted of 167 properties: 97 select service properties, 66 extended stay properties and 4 full service properties. The Company’s equity interest in the consolidated Hospitality Real Estate segment was approximately 94.3% as of March 31, 2017. The hospitality portfolio is geographically diverse, consisting primarily of extended stay hotels and premium branded select service hotels located mostly in major metropolitan markets, of which a majority are affiliated with top hotel brands.
During the first quarter 2017, this segment’s net loss attributable to common stockholders was $(3.0) million and Core FFO was $27.4 million, which reflects 80-days of operations in the quarter because this was a legacy NRF business. Consolidated hospitality EBITDA was $61.2 million for the full 90-day period in the first quarter. Over the same period last year, first quarter 2017 hospitality same store portfolio revenue declined (0.8)% and EBITDA declined (3.4)%, partially due to room displacement from renovations. The Company’s hotels typically experience seasonal variations in occupancy which may cause quarterly fluctuations in revenues and therefore sequential quarter-over-quarter revenue and EBITDA result comparisons are not meaningful. Hospitality same store portfolio is defined as hotels in operation throughout the full periods presented under the comparison and included 167 hotels in the year-over-year comparison. The hospitality real estate portfolio was under NRF ownership in the prior comparative period.
The following table presents EBITDA and selected operating metrics by brands in the Company’s Hospitality Real Estate segment:
Same Store | |||||||||||||||||||||||||||||||||
Consolidated | CLNS OP Share | Avg. Daily Rate | RevPAR | ||||||||||||||||||||||||||||||
EBITDA (1)(2) | EBITDA(1) | Consolidated EBITDA | Occupancy %(3) | (In dollars)(3) | (In dollars)(3) | ||||||||||||||||||||||||||||
($ In millions) | Q1 2017 | Q1 2017 | Q1 2017 | Q1 2016 | Q1 2017 | Q1 2016 | Q1 2017 | Q1 2016 | Q1 2017 | Q1 2016 | |||||||||||||||||||||||
Marriott | $ | 48.2 | $ | 45.5 | $ | 48.2 | $ | 50.6 | 68.8 | % | 69.3 | % | $ | 129 | $ | 128 | $ | 89 | $ | 89 | |||||||||||||
Hilton | 9.7 | 9.1 | 9.7 | 8.9 | 72.8 | % | 70.9 | % | 123 | 120 | 90 | 85 | |||||||||||||||||||||
Other | 3.3 | 3.1 | 3.3 | 3.8 | 72.5 | % | 72.5 | % | 129 | 131 | 93 | 95 | |||||||||||||||||||||
Total/W.A. | $ | 61.2 | $ | 57.7 | $ | 61.2 | $ | 63.3 | 69.7 | % | 69.7 | % | $ | 128 | $ | 127 | $ | 89 | $ | 89 | |||||||||||||
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(1) | Represents EBITDA for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated EBITDA multiplied by the Company’s interest as of March 31, 2017. |
(2) | Q1 2017 Consolidated EBITDA excludes FF&E reserve amounts of $8.5 million. |
(3) | For each metric, data represents average during the presented quarter. |
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Other Equity and Debt
In addition to the Company’s aforementioned real estate equity segments, the Company also holds investments in other real estate equity and debt. These other investments include direct interests and interests held through unconsolidated joint ventures in net lease real estate assets; other real estate equity & debt investments; limited partnership interests in third-party sponsored real estate private equity funds; multiple classes of commercial real estate (“CRE”) securities; and an interest in Colony Starwood Homes (NYSE: SFR). During the first quarter 2017, this segment’s aggregate net income attributable to common stockholders was $143.9 million and Core FFO was $135.6 million, which reflects 80-days of operations in the quarter for legacy NRF investments. The following table presents selected financial data by investment types in the Company’s Other Equity and Debt segment:
CLNS OP Share | |||||||
March 31, 2017 | |||||||
Undepreciated Carrying Value | |||||||
($ In millions) | Assets | Equity | |||||
Net Lease Real Estate Equity | $ | 972 | $ | 422 | |||
Other Real Estate Equity | 980 | 587 | |||||
Real Estate Debt | 3,162 | 2,230 | |||||
Real Estate Private Equity Funds and CRE Securities | 531 | 531 | |||||
Special Situations (SFR, CAF and Albertsons) | 267 | 267 | |||||
Other Equity and Debt Total | $ | 5,912 | $ | 4,037 | |||
Other Equity and Debt Segment Asset Acquisitions and Dispositions
During the first quarter 2017, the Company invested and agreed to invest $560 million in three real estate debt investments, which represented co-investments alongside the Company’s closed-end credit funds and an investment we plan to syndicate to third-party investors.
During the first quarter 2017, the Company sold 7.6 million shares of SFR, or 50% of the Company’s interest in SFR, resulting in net proceeds of $239 million. As of March 31, 2017, the Company’s interest represented approximately 6.3% ownership based on the total common shares and OP units outstanding of SFR.
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 funds, non-traded and traded real estate investment trusts and registered investment companies. As of March 31, 2017, the Company had approximately $41 billion of third-party AUM, which was unchanged from approximately $41 billion as of December 31, 2016. The increase in AUM from new capital raised in the first quarter was offset by sales of investments. During the first quarter 2017, this segment’s aggregate net income attributable to common stockholders was $18.3 million and Core FFO was $31.4 million, which reflects 80-days of operations in the quarter for legacy NRF and NSAM businesses.
Capital Raising and Investment Activity
During the first quarter 2017, the Company raised approximately $980 million of third-party capital, comprised of approximately $940 million from institutional clients and approximately $40 million from retail investors.
During the first quarter 2017, institutional funds and retail companies managed by the Company, excluding the industrial open-end fund, invested and agreed to invest approximately $363 million in real estate equity and debt investments across the U.S. and Europe.
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Assets Under Management (“AUM”)
As of March 31, 2017, the Company had $56 billion of AUM:
($ In billions) | Amount | % of Grand Total | ||||
Balance Sheet (CLNS OP Share): | ||||||
Healthcare | $ | 4.1 | 7.4 | % | ||
Industrial | 1.0 | 1.8 | % | |||
Hospitality | 3.9 | 7.0 | % | |||
Other Equity and Debt | 5.9 | 10.6 | % | |||
Balance Sheet Subtotal | 14.9 | 26.8 | % | |||
Investment Management: | ||||||
Institutional Funds | 10.2 | 18.3 | % | |||
Retail Companies | 7.0 | 12.6 | % | |||
NorthStar Realty Europe (NYSE:NRE) | 2.0 | 3.6 | % | |||
Townsend | 14.5 | 26.1 | % | |||
Pro Rata Corporate Investments | 7.0 | 12.6 | % | |||
Investment Management Subtotal | 40.7 | 73.2 | % | |||
Grand Total | $ | 55.6 | 100.0 | % | ||
Liquidity and Financing
As of May 5, 2017, the Company had a total of approximately $272 million of unrestricted cash, net of minority interests, and $924 million of undrawn capacity under its $1.0 billion revolving credit facility.
In January 2017, the Company amended and restated its revolving credit facility increasing commitments from $850 million to $1.0 billion and renewed the initial term to four years with two 6-month extension options.
Common Stock and Operating Company Units
On February 23, 2017, the Company’s Board of Directors authorized the Company to purchase up to $300 million of its outstanding common stock through February 22, 2018. As of May 5, 2017, the Company had repurchased approximately $168 million of stock, or 12.9 million CLNS Class A common shares, of which 10.8 million shares were acquired through market purchases at an average price of $12.81 per share and 2.1 million shares were acquired in connection with the unwind of a legacy NSAM call spread option.
As of May 5, 2017, the Company had approximately 552.2 million Class A and B common stock and restricted stock units outstanding and the Company’s operating partnership had approximately 32.9 million operating company units outstanding held by members other than the Company or its subsidiaries.
Common and Preferred Dividends
On January 20, 2017, the Company paid (i) a cash dividend of $0.04444 per share of common stock to former Colony stockholders representing a pro rata dividend for the period from January 1, 2017 through January 10, 2017 of the quarterly dividend rate of $0.40 per Colony share and (ii) a cash dividend of $0.04444 per share of common stock to former NRF stockholders representing a pro rata dividend for the period from January 1, 2017 through January 10, 2017 of the quarterly dividend rate of $0.40 per NRF share.
On January 27, 2017, the Company paid a one-time special dividend of $1.16 per share of NSAM common stock to former NSAM stockholders.
On February 23, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.27 per share of Class A and Class B common stock for the first quarter of 2017, which was prorated to $0.24 per share for the period from January 11, 2017 to March 31, 2017 and paid on April 17, 2017 to respective stockholders of record on March 31, 2017.
On May 4, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.27 per share of Class A and Class B common stock for the second quarter of 2017, which will be paid on July 17, 2017 to respective stockholders of record on June 30,
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2017. The Board of Directors also declared a cash dividend with respect to each series of the Company’s cumulative redeemable perpetual preferred stock each in accordance with terms of such series as follows: (i) with respect to each of the Series A, Series B, Series C, Series D and Series E stock, such dividend to be paid on August 15, 2017 to the respective stockholders of record on August 10, 2017 and (ii) with respect to each of the Series F, Series G and Series H stock, such dividend to be paid on July 17, 2017 to the respective stockholders of record on June 30, 2017.
Non-GAAP Financial Measures and Definitions
Assets Under Management (“AUM”)
Refers to assets which the Company and its affiliates provides 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 March 31, 2017, while retail companies and NorthStar Realty Europe are presented as of May 5, 2017. AUM further includes a) uncalled capital commitments and b) for corporate investments in affiliates with asset and investment management functions, includes the Company’s pro-rata share assets of each affiliate as presented and calculated by the affiliate. Affiliates include RXR Realty LLC, SteelWave, LLC, American Healthcare Investors and Hamburg Trust. The Company's calculations of AUM may differ materially 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.
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 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. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, investments in unconsolidated joint ventures as well as investments in debt and other equity securities, as applicable.
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) equity-based 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 and 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) gain on remeasurement of consolidated investment entities and the effect of amortization thereof; (x) non-real estate depreciation and amortization; (xi) change in fair value of contingent consideration; and (xii) deferred tax effect on certain of the foregoing adjustments. Also, beginning with the first quarter of 2016, the Company’s share of Core FFO from its interest in Colony Starwood Homes (NYSE: SFR) represented its percentage interest multiplied by SFR's reported Core FFO, which may differ from the Company’s 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. 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 excludes depreciation and amortization and captures 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 net income as a measure of the Company’s performance.
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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 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 at 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 involved 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.
First Quarter 2017 Conference Call
The Company will conduct a conference call to discuss the financial results on Wednesday, May 10, 2017 at 7:00 a.m. PT / 10:00 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). International callers should dial (201) 689-8471. The call will also be broadcast live over the Internet and can be accessed on the Public Shareholders section of the Company’s website at http://www.clns.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 10, 2017, at 10:00 a.m. PT / 1:00 p.m. ET, through May 17, 2017, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.), and use passcode 13659872. International callers should dial (412) 317-6671 and enter the same conference ID number.
Supplemental Financial Report
A First Quarter 2017 Supplemental Financial Report is available on the Company’s website at www.clns.com. This information has also been furnished to the U.S. Securities and Exchange Commission in a Current Report on Form 8-K.
About Colony NorthStar, Inc.
Colony NorthStar, Inc. (NYSE:CLNS) is a leading global real estate and investment management firm. The Company resulted from the January 2017 merger between Colony Capital, Inc., NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. The Company has significant property holdings in the healthcare, industrial and hospitality sectors, other equity and debt investments and an embedded institutional and retail investment management business. The Company currently has assets under management of $56 billion and manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts and registered investment companies. In addition, the Company owns NorthStar Securities, LLC, a captive broker-dealer platform which raises capital in the retail market. The firm maintains principal offices in Los Angeles and New York, with more than 500 employees in offices located across 17 cities in ten countries. The Company will elect to be taxed as a REIT for U.S. federal income tax purposes. For additional information regarding the Company and its management and business, please refer to www.clns.com.
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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 NorthStar Asset Management Group Inc., Colony Capital, Inc. and NorthStar Realty Finance Corp., Colony NorthStar’s liquidity, including its ability to complete identified monetization transactions and other potential sales of non-core investments, whether Colony NorthStar will be able to maintain its qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes, the timing of and ability to deploy available capital, the timing of and ability to complete repurchases of Colony NorthStar’s stock, Colony NorthStar’s ability maintain inclusion and relative performance on the RMZ, Colony NorthStar’s leverage, including the timing and amount of borrowings under its credit facility, increased interest rates and operating costs, adverse economic or real estate developments in Colony NorthStar’s markets, Colony NorthStar’s failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, the impact of economic conditions on the borrowers of Colony NorthStar’s commercial real estate debt investments and the commercial mortgage loans underlying its commercial mortgage backed securities, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings 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. Additional information about these and other factors can be found in Colony NorthStar’s reports filed from time to time with the SEC.
Colony NorthStar 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 NorthStar 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 NorthStar does not intend to do so.
Source: Colony NorthStar, Inc.
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
(FINANCIAL TABLES FOLLOW)
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COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Revenues | ||||||||
Property operating income | $ | 426,854 | $ | 91,617 | ||||
Interest income | 115,544 | 89,361 | ||||||
Fee income | 53,250 | 16,609 | ||||||
Other income | 11,517 | 3,202 | ||||||
Total revenues | 607,165 | 200,789 | ||||||
Expenses | ||||||||
Property operating expense | 216,349 | 30,786 | ||||||
Interest expense | 126,278 | 41,871 | ||||||
Investment, servicing and commission expense | 11,807 | 6,931 | ||||||
Transaction costs | 87,340 | 4,490 | ||||||
Depreciation and amortization | 137,420 | 46,142 | ||||||
Provision for loan loss | 6,724 | 4,630 | ||||||
Impairment loss | 8,519 | 2,079 | ||||||
Compensation expense | 91,818 | 26,867 | ||||||
Administrative expenses | 25,914 | 12,771 | ||||||
Total expenses | 712,169 | 176,567 | ||||||
Other income | ||||||||
Gain on sale of real estate assets | 8,970 | 51,119 | ||||||
Other gain, net | 25,381 | 14,045 | ||||||
Earnings from investments in unconsolidated ventures | 113,992 | 2,429 | ||||||
Income before income taxes | 43,339 | 91,815 | ||||||
Income tax expense | (3,709 | ) | (784 | ) | ||||
Net income from continuing operations | 39,630 | 91,031 | ||||||
Income from discontinued operations | 12,560 | — | ||||||
Net income | 52,190 | 91,031 | ||||||
Net income (loss) attributable to noncontrolling interests: | ||||||||
Redeemable noncontrolling interests | 617 | — | ||||||
Investment entities | 27,059 | 57,595 | ||||||
Operating Company | (1,083 | ) | 3,421 | |||||
Net income attributable to Colony NorthStar, Inc. | 25,597 | 30,015 | ||||||
Preferred stock dividends | 30,813 | 11,880 | ||||||
Net income (loss) attributable to common stockholders | $ | (5,216 | ) | $ | 18,135 | |||
Basic earnings per share (1) | ||||||||
Net income (loss) from continuing operations per basic common share | $ | (0.03 | ) | $ | 0.11 | |||
Net income (loss) per basic common share | $ | (0.01 | ) | $ | 0.11 | |||
Diluted earnings per share (1) | ||||||||
Net income (loss) from continuing operations per diluted common share | $ | (0.03 | ) | $ | 0.11 | |||
Net income (loss) per diluted common share | $ | (0.01 | ) | $ | 0.11 | |||
Weighted average number of shares (1) | ||||||||
Basic | 506,405 | 163,727 | ||||||
Diluted | 506,405 | 163,727 | ||||||
__________
(1) | As a result of the Merger, each outstanding share of common stock of Colony was exchanged for 1.4663 of newly issued common shares of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio. |
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COLONY NORTHSTAR, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2017 (Unaudited) | December 31, 2016 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 633,210 | $ | 376,005 | ||||
Restricted cash | 316,288 | 111,959 | ||||||
Real estate assets, net | 13,460,872 | 3,243,631 | ||||||
Loans receivable, net | 4,039,995 | 3,430,608 | ||||||
Investments in unconsolidated ventures ($400,984 and $0 at fair value) | 1,561,640 | 1,052,995 | ||||||
Securities, at fair value | 413,570 | 23,446 | ||||||
Goodwill | 1,717,365 | 680,127 | ||||||
Deferred leasing costs and intangible assets, net | 1,019,204 | 278,741 | ||||||
Assets held for sale ($106,959 and $67,058 at fair value) | 1,276,695 | 292,924 | ||||||
Other assets ($32,527 and $36,101 at fair value) | 420,143 | 260,585 | ||||||
Due from affiliates | 50,749 | 9,971 | ||||||
Total assets | $ | 24,909,731 | $ | 9,760,992 | ||||
Liabilities | ||||||||
Debt, net | $ | 10,249,548 | $ | 3,715,618 | ||||
Accrued and other liabilities ($133,034 and $5,448 at fair value) | 964,027 | 286,952 | ||||||
Intangible liabilities, net | 228,623 | 19,977 | ||||||
Liabilities related to assets held for sale | 77,141 | 14,296 | ||||||
Due to affiliates | 39,878 | 41,250 | ||||||
Dividends payable | 175,498 | 65,972 | ||||||
Total liabilities | 11,734,715 | 4,144,065 | ||||||
Commitments and contingencies | ||||||||
Redeemable noncontrolling interests | 79,472 | — | ||||||
Equity | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value per share; $1,612,400 and $625,750 liquidation preference; 250,000 and 50,000 shares authorized; 64,496 and 25,030 shares issued and outstanding | 1,604,651 | 607,200 | ||||||
Common stock, $0.01 par value per share | ||||||||
Class A, 949,000 and 658,369 shares authorized; 557,404 and 166,440 shares issued and outstanding (1) | 5,574 | 1,664 | ||||||
Class B, 1,000 shares authorized; 770 and 770 shares issued and outstanding (1) | 8 | 8 | ||||||
Additional paid-in capital | 7,994,460 | 2,443,100 | ||||||
Distributions in excess of earnings | (401,069 | ) | (246,064 | ) | ||||
Accumulated other comprehensive loss | (23,750 | ) | (32,109 | ) | ||||
Total stockholders’ equity | 9,179,874 | 2,773,799 | ||||||
Noncontrolling interests in investment entities | 3,450,385 | 2,453,938 | ||||||
Noncontrolling interests in Operating Company | 465,285 | 389,190 | ||||||
Total equity | 13,095,544 | 5,616,927 | ||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 24,909,731 | $ | 9,760,992 | ||||
__________
(1) | As a result of the Merger, each outstanding share of common stock of Colony was exchanged for 1.4663 of newly issued common shares of Colony NorthStar. All historical share counts have been adjusted to reflect the exchange ratio. |
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COLONY NORTHSTAR, INC.
FUNDS FROM OPERATIONS AND CORE FUNDS FROM OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2017 | ||||
Net loss attributable to common stockholders | $ | (5,216 | ) | |
Adjustments for FFO attributable to common interests in Operating Company: | ||||
Net loss attributable to noncontrolling common interests in Operating Company | (1,083 | ) | ||
Real estate depreciation and amortization | 128,545 | |||
Impairment of real estate | 8,513 | |||
Gain on sales of real estate | (6,993 | ) | ||
Less: Adjustments attributable to noncontrolling interests in investment entities | (32,695 | ) | ||
FFO attributable to common interests in Operating Company and common stockholders | 91,071 | |||
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 (1) | (51,692 | ) | ||
Noncash equity compensation expense (2) | 32,184 | |||
Straight-line rent revenue | (7,957 | ) | ||
Gain on change in fair value of contingent consideration | (3,400 | ) | ||
Amortization of acquired above- and below-market lease intangibles, net | (757 | ) | ||
Amortization of deferred financing costs and debt premiums and discounts | 19,928 | |||
Unrealized gain on derivatives | (23,333 | ) | ||
Acquisition and merger-related transaction costs | 87,340 | |||
Merger integration costs (3) | 19,455 | |||
Amortization and impairment of investment management intangibles | 12,344 | |||
Non-real estate depreciation and amortization | 1,842 | |||
Amortization of gain on remeasurement of consolidated investment entities, net | 8,649 | |||
Deferred tax benefit, net (4) | (2,636 | ) | ||
Less: Adjustments attributable to noncontrolling interests in investment entities | (9,914 | ) | ||
Core FFO attributable to common interests in Operating Company and common stockholders | $ | 173,124 | ||
FFO per common share / common OP unit (5) | $ | 0.17 | ||
FFO per common share / common OP unit—diluted (5) | $ | 0.17 | ||
Core FFO per common share / common OP unit (5) | $ | 0.31 | ||
Core FFO per common share / common OP unit—diluted (5) | $ | 0.31 | ||
Weighted average number of common OP units outstanding used for FFO and Core FFO per common share and OP unit (5) | 550,106 | |||
Weighted average number of common OP units outstanding used for FFO per common share and OP unit—diluted (5)(6) | 551,318 | |||
Weighted average number of common OP units outstanding used for Core FFO per common share and OP unit—diluted (5)(6) | 588,299 | |||
__________
(1) | Includes $51.1 million of depreciation, amortization and impairment charges previously adjusted to calculate FFO and Core Earnings, a non-GAAP measure used by Colony prior to its internalization of the manager. |
(2) | Includes $26.0 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 deferred tax effect of amortization and impairment of investment management intangibles assumed in business combinations. |
(5) | Calculated based on weighted average shares outstanding including participating securities (unvested shares) 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 was |
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exchanged for 1.4663 of newly issued common shares 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 March 31, 2017, included in the calculation of diluted FFO and Core FFO per share is the effect of adding back $0.2 million and $7.0 million of interest expense, respectively, associated with convertible senior notes and 1.2 million and 38.2 million weighted average dilutive common share equivalents, respectively, for the assumed conversion of the convertible senior notes. |
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COLONY NORTHSTAR, INC.
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 March 31, 2017 to NOI or EBITDA:
NOI and EBITDA were determined as follows:
Three Months Ended March 31, 2017 | ||||||||||||
(In thousands) | Healthcare | Industrial | Hospitality | |||||||||
Total revenues | $ | 138,813 | $ | 57,042 | $ | 175,713 | ||||||
Straight-line rent revenue and amortization of above- and below-market lease intangibles | (6,999 | ) | (1,663 | ) | (14 | ) | ||||||
Property operating expenses (1) | (60,686 | ) | (16,497 | ) | (118,491 | ) | ||||||
Transaction, investment and servicing costs | — | (101 | ) | — | ||||||||
Compensation expense (1) | — | (583 | ) | — | ||||||||
NOI or EBITDA | $ | 71,128 | $ | 38,198 | $ | 57,208 | ||||||
NOI or EBITDA - January 1, 2017 to January 10, 2017 | 8,277 | — | 3,973 | |||||||||
Full Q1 2017 NOI or EBITDA | $ | 79,405 | $ | 38,198 | $ | 61,181 | ||||||
_________
(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 March 31, 2017 | ||||||||||||
(In thousands) | Healthcare | Industrial | Hospitality | |||||||||
Net income (loss) from continuing operations | $ | (9,266 | ) | $ | 519 | $ | (3,616 | ) | ||||
Adjustments: | ||||||||||||
Straight-line rent revenue and amortization of above- and below-market lease intangibles | (6,999 | ) | (1,663 | ) | (14 | ) | ||||||
Interest expense | 41,092 | 12,426 | 27,249 | |||||||||
Transaction, investment and servicing costs | 2,123 | — | 1,737 | |||||||||
Depreciation and amortization | 40,881 | 24,639 | 30,041 | |||||||||
Compensation and administrative expense | 2,519 | 2,875 | 1,697 | |||||||||
Other (gain) loss, net | (1,464 | ) | — | 76 | ||||||||
Income tax (benefit) expense | 2,242 | (598 | ) | 38 | ||||||||
NOI or EBITDA | $ | 71,128 | $ | 38,198 | $ | 57,208 | ||||||
NOI or EBITDA - January 1, 2017 to January 10, 2017 | 8,277 | — | 3,973 | |||||||||
Full Q1 2017 NOI or EBITDA | $ | 79,405 | $ | 38,198 | $ | 61,181 | ||||||
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Q1 2017 Net Income (Loss) from Continuing Operations by Segments
(In thousands) | Net income (Loss) From Continuing Operations | |||||||
Healthcare | $ | (9,266 | ) | |||||
Industrial | 519 | |||||||
Hospitality | (3,616 | ) | ||||||
Other Equity and Debt | 179,908 | |||||||
Investment Management | 19,989 | |||||||
Amounts Not Allocated to Segments | (147,904 | ) | ||||||
Total Consolidated | $ | 39,630 | ||||||
Supplemental Financial Report
First Quarter 2017
May 9, 2017
NYSE:CLNS | A Diversified Equity REIT
Colony NorthStar, Inc. | Supplemental Financial Report
Cautionary Statement Regarding Forward-Looking Statements
This presentation 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 NorthStar Asset Management Group Inc.,
Colony Capital, Inc. and NorthStar Realty Finance Corp., Colony NorthStar’s liquidity, including its ability to complete identified monetization transactions and other potential sales of non-core investments,
whether Colony NorthStar will be able to maintain its qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes, the timing of and ability to deploy available capital, the
timing of and ability to complete repurchases of Colony NorthStar’s stock, Colony NorthStar’s ability maintain inclusion and relative performance on the RMZ, Colony NorthStar’s leverage, including the timing
and amount of borrowings under its credit facility, increased interest rates and operating costs, adverse economic or real estate developments in Colony NorthStar’s markets, Colony NorthStar’s failure to
successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, the impact
of economic conditions on the borrowers of Colony NorthStar’s commercial real estate debt investments and the commercial mortgage loans underlying its commercial mortgage backed securities, adverse
general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings 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.
Additional information about these and other factors can be found in Colony NorthStar’s reports filed from time to time with the SEC.
Statements regarding the following subjects, among others, may constitute forward-looking: the market, economic and environmental conditions in the Company’s real estate investment sectors; the
Company’s business and investment strategy; the Company’s ability to dispose of its real estate investments; the performance of the real estate 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; 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 general
volatility of the securities markets in which the Company participates; changes in the value of the Company’s 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”); and the availability of qualified personnel.
All forward-looking statements reflect the Colony NorthStar’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Additional information about these and
other factors can be found in Colony NorthStar’s reports filed from time to time with the SEC. Colony NorthStar cautions investors not to unduly rely on any forward-looking statements. The forward-looking
statements speak only as of the date of this presentation. Colony NorthStar is under no duty to update any of these forward-looking statements after the date of this presentation, nor to conform prior
statements to actual results or revised expectations, and Colony NorthStar does not intend to do so.
This presentation may contain statistics and other data that has been obtained or compiled from information made available by third-party service providers. Colony NorthStar has not independently verified
such statistics or data.
This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Colony NorthStar. This information is not
intended to be indicative of future results. Actual performance of Colony NorthStar may vary materially.
The appendices herein contain important information that is material to an understanding of this presentation and you should read this presentation only with and in context of the
appendices.
Colony NorthStar, Inc. | Supplemental Financial Report
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; core
funds from operations, or Core FFO; net operating income (“NOI”); earnings before interest, tax, depreciation and amortization (“EBITDA”); and pro rata financial information.
The Company calculates 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. Included in FFO are gains and losses
from sales of assets which are not depreciable real estate such as loans receivable, investments in unconsolidated joint ventures as well as investments in debt and other equity securities, as applicable.
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) equity-
based 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 and 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) gain on remeasurement of consolidated investment entities and the
effect of amortization thereof; (x) non-real estate depreciation and amortization; (xi) change in fair value of contingent consideration; and (xii) deferred tax effect on certain of the foregoing adjustments. Also,
beginning with the first quarter of 2016, the Company’s share of Core FFO from its interest in Colony Starwood Homes (NYSE: SFR) represented its percentage interest multiplied by SFR's reported Core
FFO, which may differ from the Company’s 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. 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 excludes depreciation and amortization and captures
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 net income as a measure of the Company’s performance.
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 at 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 involved 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.
The Company presents pro rata financial information, which is not, and is not intended to be, a presentation in accordance with GAAP. The Company computes pro rata financial information by applying its
economic interest to each financial statement line item on an investment-by-investment basis. Similarly, noncontrolling interests’ share of assets, liabilities, profits and losses was computed by applying
noncontrolling interests’ economic interest to each financial statement line item. The Company provides pro rata financial information because it may assist investors and analysts in estimating the
Company’s economic interest in its investments. However, pro rata financial information as an analytical tool has limitations. Other equity REITs may not calculate their pro rata information in the same
methodology, and accordingly, the Company’s pro rata information may not be comparable to such other REITs' pro rata information. As such, the pro rata financial information should not be considered in
isolation or as a substitute for our financial statements as reported under GAAP, but may be used as a supplement to financial information as reported under GAAP.
Colony NorthStar, Inc. | Supplemental Financial Report
Note Regarding CLNS Reportable Segments / Consolidated
and OP Share of Consolidated Amounts
Colony NorthStar holds investment interests in five reportable segments: Healthcare Real Estate; Industrial Real Estate; Hospitality Real Estate; Other Equity and Debt; and Investment Management.
Healthcare Real Estate
As of March 31, 2017, the consolidated healthcare portfolio consisted of 425 properties: 113 medical office properties, 191 senior housing properties, 107 skilled nursing facilities and 14 hospitals. The
Company’s equity interest in the consolidated Healthcare Real Estate segment was approximately 71.3% as of March 31, 2017. The healthcare portfolio earns rental and escalation income from leasing of
space to various healthcare tenants and operators. The leases are for fixed terms of varying length and generally provide for rent and expense reimbursements to be paid in monthly installments. The
healthcare portfolio also generates operating income from healthcare properties operated through management agreements with independent third-party operators, predominantly through structures
permitted by the REIT Investment Diversification and Empowerment Act of 2007, or RIDEA.
Industrial Real Estate
As of March 31, 2017, the consolidated industrial portfolio consisted of 353 primarily light industrial buildings totaling 39.0 million rentable square feet across 15 major U.S. markets and was 96% leased.
The Company’s equity interest in the consolidated Industrial Real Estate segment was approximately 43.0% as of March 31, 2017, which decreased from the prior quarter due to increased third-party
capital commitments during the first quarter of 2017. Total third-party capital commitments were in excess of $1 billion compared to cumulative balance sheet contributions of $684 million as of March 31,
2017. The Company continues to own a 100% interest in the related operating platform. The Industrial Real Estate segment is comprised of and primarily invests in light industrial properties in infill
locations in major U.S. metropolitan markets targeting multi-tenant buildings of up to 500,000 square feet and single tenant buildings of up to 250,000 square feet with an office buildout of less than 20%.
Hospitality Real Estate
As of March 31, 2017, the consolidated hospitality portfolio consisted of 167 properties: 97 select service properties, 66 extended stay properties and 4 full service properties. The Company’s equity interest
in the consolidated Hospitality Real Estate segment was approximately 94.3% as of March 31, 2017. The hospitality portfolio is geographically diverse, consisting primarily of extended stay hotels and
premium branded select service hotels located mostly in major metropolitan markets, of which a majority are affiliated with top hotel brands.
Other Equity and Debt
In addition to the Company’s aforementioned real estate equity segments, the Company also holds investments in other real estate equity and debt. These other investments include direct interests and
interests held through unconsolidated joint ventures in net lease real estate assets; other real estate equity & debt investments; limited partnership interests in third-party sponsored real estate private
equity funds; multiple classes of commercial real estate (“CRE”) securities; and an interest in Colony Starwood Homes (NYSE: SFR).
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 funds, non-traded and traded
real estate investment trusts and registered investment companies.
Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary Colony Capital Operating Company or the “CLNS OP”) and non-controlling interests.
Figures labeled as CLNS OP share represent the Company’s pro rata share.
Colony NorthStar, Inc. | Supplemental Financial Report 5
Table of Contents
I. Overview
a. Summary Metrics
b. Summary of Segments
II. Financial Results
a. Consolidated Balance Sheet
b. Noncontrolling Interests’ Share Balance Sheet
c. Consolidated Segment Operating Results
d. Noncontrolling Interests’ Share Segment
Operating Results
e. Segment Reconciliation of Net Income to FFO &
Core FFO
III. Capitalization
a. Overview and Liquidity
b. Investment-Level Debt Overview
c. Revolving Credit Facility Overview
d. Corporate Securities Overview
e. Debt Maturity and Amortization Schedules
IV. Healthcare Real Estate
a. Summary Metrics and Operating Results
b. Portfolio Overview
V. Industrial Real Estate
a. Summary Metrics and Operating Results
b. Portfolio Overview
VI. Hospitality Real Estate
a. Summary Metrics and Operating Results
b. Portfolio Overview
VII. Other Equity and Debt
a. Net Lease and Other Real Estate Equity
b. Real Estate Debt
c. Special Situations
d. Real Estate PE Fund Interests
e. CRE Securities
VIII. Investment Management
a. Summary Metrics
b. Assets Under Management
c. Retail Companies
IX. Appendices
a. Definitions
b. Reconciliation of Net Income (Loss) to
NOI/EBITDA
Page
6
7-8
9
10
11
12
13
14
15
16
17
18
19
20-21
22
23
Page
24
25
26
27-29
30
31
32
33
34
35
37
38-39
Colony NorthStar, Inc. | Supplemental Financial Report 6
($ and shares in thousands, except per share data; as of or for the three months ended March 31, 2017, unless otherwise noted)
Financial Data
Net income (loss) attributable to common stockholders(1) (5,216)$
Net income (loss) attributable to common stockholders per basic share(1) (0.01)
FFO(1) 91,071
FFO per basic share(1) 0.17
Core FFO(1) 173,124
Core FFO per basic share(1) 0.31
Q2 2017 dividend per share 0.27
Annualized Q2 2017 dividend per share 1.08
Balance Sheet, Capitalization and Trading Statistics
Total consolidated assets 24,909,731
CLNS OP share of consolidated assets 18,942,399
Total consolidated debt(2) 10,239,832
CLNS OP share of consolidated debt(2) 8,016,958
Shares and OP units outstanding as of May 5, 2017 585,019
Share price as of May 5, 2017 13.15
Market value of common equity & OP units 7,692,993
Liquidation preference of perpetual preferred equity 1,612,390
Insider ownership of shares and OP units 7.1%
AUM 55.6 billion
Ia. Overview - Summary Metrics
Notes:
See Appendix of this presentation for definitions.
(1) Colony NorthStar, Inc. was formed through a tri-party merger among Colony Capital, Inc. (“Colony”); NorthStar Asset Management Group Inc.; and NorthStar Realty Finance Corp., which closed on January 10, 2017. These earnings
metrics represents the pre-merger financial information of Colony, as the accounting acquirer, on a stand-alone basis prior to, and including, January 10, 2017 and following January 10, 2017, results of operations of Colony NorthStar, Inc.
(2) Represents principal balance and excludes debt issuance costs, discounts and premiums. Excludes $336 million principal balance of non-recourse CDO securitization debt.
Colony NorthStar, Inc. | Supplemental Financial Report 7
Ib. Overview - Summary of Segments
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Consolidated
amount
CLNS OP share of
consolidated amount
Healthcare Real Estate (1)
Q1 2017 net operating income(2) 79,405$ 56,600$
Annualized net operating income 317,619 226,402
Investment-level non-recourse financing(3) 3,353,825 2,395,039
Industrial Real Estate
Q1 2017 net operating income(2) 38,197 16,440
Annualized net operating income 152,789 65,760
Investment-level non-recourse financing(3) 674,585 288,004
Hospitality Real Estate
Q1 2017 EBITDA(2) 61,181 57,666
Annualized EBITDA(4) 274,686 258,906
Investment-level non-recourse financing(3) 2,628,432 2,455,088
Notes:
(1) NOI includes $1.4 million of interest earned related to $85 million carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio. This interest income is in the Interest Income line
item on the Company’s financial statements.
(2) Represents NOI/EBITDA for the full 90 day first quarter of 2017. For a reconciliation of net income/(loss) attributable to common stockholders to NOI/EBITDA, please refer to the Appendix of this presentation.
(3) Represents unpaid principal balance.
(4) Annualized EBITDA is calculated using the pro rata percentage of historical Q1 2016 EBITDA relative to historical full year 2016 EBITDA to account for seasonality.
Colony NorthStar, Inc. | Supplemental Financial Report 8
($ in thousands except as noted; as of or for the three months ended March 31, 2017, unless otherwise noted)
Consolidated
amount
CLNS OP share of
consolidated amount
Other Equity and Debt (1)
1) Net lease real estate equity
a) Q1 2017 net operating income(2) 16,376$ 16,358$
b) Investment-level non-recourse financing(3) 550,447 549,798
c) Carrying value - unconsolidated / equity method investments 6,168 6,168
2) Other real estate equity
a) Undepreciated carrying value of real estate assets(4) 1,729,382 744,057
b) Investment-level non-recourse financing(3) 893,194 391,379
c) Carrying value - unconsolidated / equity method investments 332,929 284,917
3) Real estate debt
a) Loans receivable(5) 4,044,713 2,875,767
b) Investment-level non-recourse financing (CLNS OP share includes $7 million of recourse debt)(3) 1,186,715 985,017
c) Carrying value - equity method investments 312,136 135,166
d) Carrying value - real estate assets (REO within debt portfolio) and other(4) 68,907 23,430
4) Special situations (see pg. 30 for details)
a) Carrying value and market value of Colony Starwood Homes position 360,330
5) Real estate PE fund investments
a) Carrying value 400,984
6) CRE securities
a) Net carrying value 175,560
Investment Management
AUM ($ in millions) 40,705
Q1 2017 fee revenue and earnings of investments in unconsolidated ventures(2) 60,385
Net Assets(6)
Cash and cash equivalents, restricted cash and other assets 1,410,291 1,156,927
Accrued and other liabilities and dividends payable 978,812 814,858
Net assets 431,479 342,069
Ib. Overview - Summary of Segments (cont’d)
Notes:
(1) Includes assets classified as held for sale on the Company’s financial statements.
(2) Represents financial data for the full 90 day first quarter of 2017. For a reconciliation of net income/(loss) attributable to common stockholders to NOI/EBITDA, please refer to the Appendix of this presentation.
(3) Represents unpaid principal balance.
(4) Includes all components related to real estate assets, including tangible real estate and lease-related intangibles, and excludes accumulated depreciation.
(5) Excludes $4 million carrying value of real estate debt investments held in a CDO securitization and $85 million carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.
(6) Assets exclude $10 million of deferred financing costs and liabilities excludes $201 million of deferred tax liabilities and other liabilities which are not due in cash.
Colony NorthStar, Inc. | Supplemental Financial Report 9
($ in thousands, except per share data) (Unaudited) As of March 31, 2017
Assets
Cash and cash equivalents 633,210
Restricted cash 316,288
Real estate assets, net 13,460,872
Loans receivable, net 4,039,995
Investments in unconsolidated ventures 1,561,640
Securities available for sale, at fair value 413,570
Goodwill 1,717,365
Deferred leasing costs and intangible assets, net 1,019,204
Assets held for sale 1,276,695
Other assets 420,143
Due from affiliates 50,749
Total assets 24,909,731$
Liabilities
Debt, net 10,249,548
Accrued and other liabilities 964,027
Intangible liabilities, net 228,623
Liabilities related to assets held for sale 77,141
Due to affiliates 39,878
Dividends payable 175,498
Total liabilities 11,734,715
Commitments and contingencies
Redeemable noncontrolling interests 79,472
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $1,612,400 liquidation preference; 250,000 shares authorized;
64,496 shares issued and outstanding 1,604,651
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 557,404 shares issued and outstanding 5,574
Class B, 1,000 shares authorized; 770 shares issued and outstanding 8
Additional paid-in capital 7,994,460
Distributions in excess of earnings (401,069)
Accumulated other comprehensive loss (23,750)
Total stockholders’ equity 9,179,874
Noncontrolling interests in investment entities 3,450,385
Noncontrolling interests in Operating Company 465,285
Total equity 13,095,544
Total liabilities, redeemable non-controlling interests and equity 24,909,731$
IIa. Financial Results - Consolidated Balance Sheet
Colony NorthStar, Inc. | Supplemental Financial Report 10
($ in thousands, except per share data) (Unaudited) As of March 31, 2017
Assets
Cash and cash equivalents 116,731$
Restricted cash 70,050
Real estate assets, net 3,777,337
Loans receivable, net 1,194,502
Investments in unconsolidated ventures 275,363
Securities available for sale, at fair value -
Goodwill 1,530
Deferred leasing costs and intangible assets, net 184,189
Assets held for sale 281,060
Other assets 66,828
Due from affiliates (258)
Total assets 5,967,332$
Liabilities
Debt, net 2,186,178
Accrued and other liabilities 161,433
Intangible liabilities, net 71,390
Liabilities related to assets held for sale 15,953
Due to affiliates 2,521
Dividends payable -
Total liabilities 2,437,475
Commitments and contingencies -
Redeemable noncontrolling interests 79,472
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $1,612,400 liquidation preference; 250,000 shares authorized;
64,496 shares issued and outstanding
-
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 557,404 shares issued and outstanding -
Class B, 1,000 shares authorized; 770 shares issued and outstanding -
Additional paid-in capital -
Distributions in excess of earnings -
Accumulated other comprehensive loss -
Total stockholders’ equity -
Noncontrolling interests in investment entities 3,450,385
Noncontrolling interests in Operating Company -
Total equity 3,529,857
Total liabilities, redeemable non-controlling interests and equity 5,967,332$
IIb. Financial Results - Noncontrolling Interests’ Share Balance
Sheet
Colony NorthStar, Inc. | Supplemental Financial Report 11
($ in thousands) (Unaudited) Healthcare Industrial Hospitality
Other
Equity and
Debt
Investment
Management
Amounts not
allocated to
segments Total
Revenues
Property operating income 137,431$ 56,679$ 175,670$ 57,074$ —$ —$ 426,854$
Interest income 1,231 — — 114,181 — 132 115,544
Fee income — — — 40 53,210 — 53,250
Other income 151 363 43 3,791 6,430 739 11,517
Total revenues 138,813 57,042 175,713 175,086 59,640 871 607,165
Expenses
Property operating expense 60,686 16,497 118,491 20,675 — — 216,349
Interest expense 41,092 12,426 27,249 30,819 — 14,692 126,278
Investment, servicing and commission expense 2,820 101 1,737 4,306 2,247 596 11,807
Transaction costs 35 — — 3,638 — 83,667 87,340
Depreciation and amortization 40,881 24,639 30,041 28,218 12,483 1,158 137,420
Provision for loan loss — — — 6,724 — — 6,724
Impairment loss — — — 8,519 — — 8,519
Compensation expense 1,450 2,237 1,303 3,708 24,142 58,978 91,818
Administrative expenses 337 1,221 394 3,404 3,415 17,143 25,914
Total expenses 147,301 57,121 179,215 110,011 42,287 176,234 712,169
Other income (loss)
Gain on sale of real estate assets — — — 8,970 — — 8,970
Other gain (loss), net 1,464 — (76) (1,641) (450) 26,084 25,381
Earnings of investments in unconsolidated ventures — — — 108,837 5,155 — 113,992
Income (loss) before income taxes (7,024) (79) (3,578) 181,241 22,058 (149,279) 43,339
Income tax benefit (expense) (2,242) 598 (38) (1,333) (2,069) 1,375 (3,709)
Net income (loss) from continuing operations (9,266) 519 (3,616) 179,908 19,989 (147,904) 39,630
Income (loss) from discontinued operations — — — — — 12,560 12,560
Net income (loss) (9,266) 519 (3,616) 179,908 19,989 (135,344) 52,190
Net income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests —$ —$ —$ —$ 617$ —$ 617$
Investment entities (314)$ 585$ (441)$ 27,229$ —$ —$ 27,059$
Operating Company (514)$ (4)$ (182)$ 8,767$ 1,112$ (10,262)$ (1,083)$
Net income (loss) attributable to Colony NorthStar, Inc. (8,438) (62) (2,993) 143,912 18,260 (125,082) 25,597
Preferred stock dividends — — — — — 30,813 30,813
Net income (loss) attributable to common stockholders (8,438)$ (62)$ (2,993)$ 143,912$ 18,260$ (155,895)$ (5,216)$
Three Months Ended March 31, 2017
IIc. Financial Results - Consolidated Segment Operating
Results
Colony NorthStar, Inc. | Supplemental Financial Report 12
($ in thousands) (Unaudited) Healthcare Industrial Hospitality
Other Equity
and Debt
Investment
Management
Amounts not
allocated to
segments Total
Revenues
Property operating income 16,371$ 28,931$ 13,853$ 20,716$ -$ -$ 79,871$
Interest income 182 - - 35,709 - - 35,891
Fee income - - - - 2,036 - 2,036
Other income 22 (357) 2 2,400 109 - 2,176
Total revenues 16,575 28,574 13,855 58,825 2,145 - 119,974
Expenses
Property operating expense 6,740 8,405 9,433 9,683 - - 34,261
Interest expense 5,184 6,302 2,287 7,346 - - 21,119
Investment, servicing and commission expense 274 49 161 2,213 135 - 2,832
Transaction costs - - - 1,109 - - 1,109
Depreciation and amortization 4,806 12,478 2,495 8,740 340 - 28,859
Provision for loan loss - - - 3,289 - - 3,289
Impairment loss - - - 5,683 - - 5,683
Compensation expense (1) 606 (1) 531 870 - 2,005
Administrative expenses 44 454 30 1,756 214 - 2,498
Total expenses 17,047 28,294 14,405 40,350 1,559 - 101,655
Other income (loss)
Gain on sale of real estate assets - - - 5,574 - - 5,574
Other gain (loss), net 217 - (12) (750) (1) - (546)
Earnings of investments in unconsolidated ventures - - - 4,974 42 - 5,016
Income (loss) before income taxes (255) 280 (562) 28,273 627 - 28,363
Income tax benefit (expense) (59) 305 121 (1,044) (10) - (687)
Net income (loss) from continuing operations (314) 585 (441) 27,229 617 - 27,676
Income (loss) from discontinued operations - - - - - - -
Net income (loss) attributable to noncontrolling interests (314)$ 585$ (441)$ 27,229$ 617$ -$ 27,676$
Three Months Ended March 31, 2017
IId. Financial Results - Noncontrolling Interests’ Share
Segment Operating Results
Colony NorthStar, Inc. | Supplemental Financial Report 13
IIe. Financial Results - Segment Reconciliation of Net Income
to FFO & Core FFO
Notes:
(1) Includes $51.1 million of depreciation, amortization and impairment charges previously adjusted to calculate FFO and Core Earnings, a non-GAAP measure used by Colony prior to its internalization of the manager.
(2) Includes $26.0 million of replacement award amortization.
(3) Merger integration costs represent costs and charges incurred during the integration of Colony, NSAM and NRF. These integration costs are not reflective of the Company’s core operating performance and the Company does not expect
to incur these costs subsequent to the completion of the merger integration. The majority of integration costs consist of severance, employee costs of those separated or scheduled for separation, system integration and lease terminations.
(4) Adjustment represents the deferred tax effect of amortization and impairment of investment management intangibles assumed in business combinations.
OP pro rata share by segment
($ in thousands) (Unaudited) Healthcare Industrial Hospitality
Other Equity
and Debt
Investment
Management
Amounts not
allocated to
segments
Total OP pro
rata share
Amounts
attributable to
noncontrolling
interests
CLNS
consolidated
as reported
Net income (loss) attributable to common stockholders (8,438)$ (62)$ (2,993)$ 143,912$ 18,260$ (155,895)$ (5,216)$ -$ (5,216)$
Net income (loss) attributable to noncontrolling common interests in
Operating Company (514) (4) (182) 8,767 1,112 (10,262) (1,083) - (1,083)
Net income (loss) attributable to common interests in Operating
Company and common stockholders (8,952) (66) (3,175) 152,679 19,372 (166,157) (6,299) - (6,299)
Adjustments for FFO:
Real estate depreciation and amortization 31,277 12,124 28,064 24,499 - - 95,964 32,581 128,545
Impairment write-downs associated with depreciable real estate - - - 2,827 - - 2,827 5,686 8,513
(Gain) loss from sales of depreciable real estate - - - (3,529) - 2,108 (1,421) (5,572) (6,993)
Less: Net income (loss) attributable to noncontrolling interests-Operating
Company - - - - - - - (32,695) (32,695)
FFO 22,325$ 12,058$ 24,889$ 176,476$ 19,372$ (164,049)$ 91,071$ -$ 91,071$
Additional adjustments for Core FFO:
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) - - - (51,572) - - (51,572) (120) (51,692)
Equity-based compensation expense(2) 724 384 160 300 1,820 28,796 32,184 - 32,184
Straight-line rent revenue and straight-line rent expense on ground
leases (3,460) (913) (5) (943) - - (5,321) (2,636) (7,957)
Change in fair value of contingent consideration - - - - - (3,400) (3,400) - (3,400)
Amortization of acquired above- and below-market lease values (1,598) 82 (9) 1,134 - - (391) (366) (757)
Amortization of deferred financing costs and debt premiums and
discounts 4,330 1,743 2,059 4,505 (26) 1,619 14,230 5,698 19,928
Unrealized fair value gains or losses and foreign currency
remeasurements (994) - 76 332 (414) (22,153) (23,153) (180) (23,333)
Acquisition and merger-related transaction costs 29 - - 2,529 - 83,666 86,224 1,116 87,340
Merger integration costs(3) - - - - - 19,455 19,455 - 19,455
Amortization and impairment of finite-lived intangibles related to
investment management contracts and customer relationships - - (235) - 12,019 - 11,784 560 12,344
Non-real estate depreciation and amortization - 37 450 - 1,296 - 1,783 59 1,842
Gain on remeasurement of consolidated investment entities and the
effect of amortization thereof - - - 2,867 - - 2,867 5,782 8,649
Deferred tax effect on certain of the foregoing adjustments(4) - - - - (2,637) - (2,637) 1 (2,636)
Less: Adjustments attributable to noncontrolling interests in investment
entities - - - - - - - (9,914) (9,914)
Core FFO 21,356$ 13,391$ 27,385$ 135,628$ 31,430$ (56,066)$ 173,124$ -$ 173,124$
Three Months Ended March 31, 2017
Colony NorthStar, Inc. | Supplemental Financial Report 14
($ in thousands, except per share data; as of March 31, 2017, unless otherwise noted)
Consolidated
amount
CLNS OP share of
consolidated amount
Debt (UPB)
$1,000,000 Revolving credit facility -$ -$
Convertible/exchangeable senior notes 631,860 631,860
Corporate aircraft promissory note 40,656 40,656
Trust Preferred Securities ("TruPS") 280,117 280,117
Investment-level debt:
Healthcare 3,353,825 2,395,039
Industrial 674,585 288,004
Hospitality 2,628,432 2,455,088
Other Equity and Debt(1) 2,630,356 1,926,194
Total investment-level debt 9,287,198 7,064,325
Total debt 10,239,832 8,016,958
Perpetual preferred equity, redemption value
Total perpetual preferred equity 1,612,390
Common equity as of May 5, 2017 Price per share Shares / Units
Class A and B common stock and restricted stock units 13.15$ 552,151 7,260,779
OP units 13.15 32,868 432,214
Total market value of common equity 7,692,993
Total capitalization 17,322,341$
Liquidity as of May 5, 2017
Unrestricted cash 271,872$
Undrawn revolving credit facility 924,000
Total potential liquidity 1,195,872$
IIIa. Capitalization - Overview and Liquidity
Notes:
(1) Excludes $336 million principal balance of non-recourse CDO securitization debt.
Colony NorthStar, Inc. | Supplemental Financial Report 15
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Investment-level debt overview
Consolidated CLNS OP share of consolidated amount
Type
Unpaid principal
balance
Unpaid principal
balance
Wtd. avg. years
remaining to maturity Wtd. avg. interest rate
Healthcare Non-recourse 3,353,825$ 2,395,039$ 3.7 4.8%
Industrial Non-recourse 674,585 288,004 11.0 3.7%
Hospitality Non-recourse 2,628,432 2,455,088 2.6 4.1%
Other Equity and Debt
Net lease real estate equity Non-recourse 550,447 549,798 8.0 4.0%
Other real estate equity Non-recourse 893,194 391,379 3.0 3.3%
Real estate debt(1) Non-recourse(2) 1,186,715 985,017 9.8 3.3%
Total investment-level debt 9,287,198$ 7,064,325$ 4.8 4.2%
IIIb. Capitalization - Investment-Level Debt Overview
Notes:
(1) Excludes $336 million principal balance of non-recourse CDO securitization debt.
(2) $7 million is recourse debt.
Colony NorthStar, Inc. | Supplemental Financial Report 16
($ in thousands, except as noted; as of March 31, 2017)
Revolving credit facility
Maximum principal amount 1,000,000$
Amount outstanding -
Initial maturity January 11, 2021
Fully-extended maturity January 10, 2022
Interest rate LIBOR + 2.25%
Financial covenants as defined in the Credit Agreement: Covenant level
Consolidated Tangible Net Worth Minimum $4,550 million
Consolidated Fixed Charge Coverage Ratio Minimum 1.50 to 1.00
Consolidated Interest Coverage Ratio Minimum 3.00 to 1.00
Consolidated Leverage Ratio Maximum 0.65 to 1.00
Company status: As of March 31, 2017, CLNS is meeting all required covenant threshold levels
IIIc. Capitalization - Revolving Credit Facility Overview
Colony NorthStar, Inc. | Supplemental Financial Report 17
($ in thousands, except per share data; as of March 31, 2017, unless otherwise noted)
Convertible/exchangeable debt
Description
Outstanding
principal Final 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 15, 2023 5.00% fixed 15.76$ 63.4700 12,694 On or after April 22, 2020(1)
3.875% Convertible senior notes 402,500 January 15, 2021 3.875% fixed 16.57 60.3431 24,288 On or after January 22, 2019(1)
7.25% Exchangeable senior notes 12,955 June 15, 2027 7.25% fixed 21.95 45.5548 590 Redeemable
5.375% Exchangeable senior notes 16,405 June 15, 2033 5.375% fixed 12.04 83.0837 1,363 On or after June 15, 2020(1)
Total convertible debt 631,860$
TruPS
Description
Outstanding
principal Final due date Interest rate
Trust I 41,240$ March 30, 2035 3M L + 3.25%
Trust II 25,780 June 30, 2035 3M L + 3.25%
Trust III 41,238 January 30, 2036 3M L + 2.83%
Trust IV 50,100 June 30, 2036 3M L + 2.80%
Trust V 30,100 September 30, 2036 3M L + 2.70%
Trust VI 25,100 December 30, 2036 3M L + 2.90%
Trust VII 31,459 April 30, 2037 3M L + 2.50%
Trust VIII 35,100 July 30, 2037 3M L + 2.70%
Total TruPS 280,117$
Perpetual preferred stock
Description
Liquidation
preference
Shares
outstanding Callable period
Series A 8.75% cumulative redeemable perpetual preferred stock 61,667$ 2,467 Callable
Series B 8.25% cumulative redeemable perpetual preferred stock 349,973 13,999 Callable
Series C 8.875% cumulative redeemable perpetual preferred stock 125,000 5,000 On or after October 11, 2017
Series D 8.5% cumulative redeemable perpetual preferred stock 200,000 8,000 On or after April 10, 2018
Series E 8.75% cumulative redeemable perpetual preferred stock 250,000 10,000 On or after May 15, 2019
Series F 8.5% cumulative redeemable perpetual preferred stock 252,000 10,080 Callable
Series G 7.5% cumulative redeemable perpetual preferred stock 86,250 3,450 On or after June 19, 2019
Series H 7.125% cumulative redeemable perpetual preferred stock 287,500 11,500 On or after April 13, 2020
Total preferred stock 1,612,390$ 64,496
IIId. Capitalization - Corporate Securities Overview
Notes:
(1) Callable at principal amount only if CLNS common stock has traded at least 130% of the conversion price for 20 of 30 consecutive trading days.
Colony NorthStar, Inc. | Supplemental Financial Report 18
($ in thousands; as of March 31, 2017)
Consolidated debt maturity and amortization schedule
Payments due by period(1)
Q2-Q4 2017 2018 2019(2) 2020 2021 and after Total
$1,000,000 Revolving credit facility -$ -$ -$ -$ -$ -$
Convertible/exchangeable senior notes - - - - 631,860 631,860
Corporate aircraft promissory note 1,449 2,029 2,134 2,244 32,800 40,656
TruPS - - - - 280,117 280,117
Investment-level debt:
Healthcare 280,871 10,074 2,236,752 61,550 764,577 3,353,825
Industrial 583 806 78,113 875 594,209 674,585
Hospitality 211,682 - 2,169,000 247,750 - 2,628,432
Other Equity and Debt(3) 441,539 386,035 145,887 70,033 1,586,862 2,630,356
Total debt 936,125$ 398,944$ 4,631,886$ 382,452$ 3,890,425$ 10,239,832$
Pro rata debt maturity and amortization schedule
Payments due by period(1)
Q2-Q4 2017 2018 2019(2) 2020 2021 and after Total
$1,000,000 Revolving credit facility -$ -$ -$ -$ -$ -$
Convertible/exchangeable senior notes - - - - 631,860 631,860
Corporate aircraft promissory note 1,449 2,029 2,134 2,244 32,800 40,656
TruPS - - - - 280,117 280,117
Investment-level debt:
Healthcare 196,041 7,525 1,574,471 46,005 570,997 2,395,039
Industrial 249 344 33,349 373 253,689 288,004
Hospitality 206,390 - 2,000,948 247,750 - 2,455,088
Other Equity and Debt(3) 281,019 142,964 35,716 38,364 1,428,131 1,926,194
Total debt 685,148$ 152,862$ 3,646,618$ 334,737$ 3,197,594$ 8,016,958$
IIIe. Capitalization - Debt Maturity and Amortization Schedules
Notes:
(1) 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.
(2) Subsequent to the first quarter 2017, the Company executed commitment letters to refinance approximately $1.6 billion of consolidated mortgage debt in the Hospitality Real Estate segment, extending the fully extended maturity dates
from 2019 to 2022 at a moderately reduced interest rates.
(3) Excludes $336 million principal balance of non-recourse CDO securitization debt.
Colony NorthStar, Inc. | Supplemental Financial Report 19
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Net operating income
Consolidated
amount(1)
Net operating income(2):
MOB's 13,700$ 9,766$
Senior Housing - Operating 18,333 13,068
Triple-Net Lease:
Senior Housing 13,503 9,625
Skilled Nursing Facilities 28,451 20,280
Hospitals 5,418 3,862
Total net operating income 79,405$ 56,601$
Annualized net operating income 317,620$ 226,404$
Portfolio overview
Total number
of buildings Capacity % Occupied
TTM Lease
Coverage
WA Remaining
Lease Term
MOB's 113 4.0 million sq. ft. 85.1% N/A 5.1
Senior Housing - Operating 109 6,436 units 86.8% N/A N/A
Triple-Net Lease:
Senior Housing 82 4,065 units 85.7% 1.5x 11.5
Skilled Nursing Facilities 107 12,794 beds 84.2% 1.4x 7.6
Hospitals 14 817 beds 60.9% 3.7x 12.0
Total/W.A healthcare 425 83.6% 1.7x 9.5
Same store financial/operating results related to the segment
Q1 2017 Q4 2016 12/31/2016 9/30/2016 Q1 2017 Q4 2016 % Change
MOB's 85.1% 85.8% n/a n/a 13,593$ 14,806$ -8.2%
Senior Housing - Operating 86.8% 88.1% n/a n/a 18,333 18,291 0.2%
Triple-Net Lease:
Senior Housing 85.7% 86.6% 1.5x 1.6x 13,503 14,034 -3.8%
Skilled Nursing Facilities 84.2% 84.2% 1.4x 1.4x 28,451 28,162 1.0%
Hospitals 60.9% 62.8% 3.7x 3.3x 5,418 5,125 5.7%
Total/W.A healthcare 83.6% 84.5% 1.7x 1.7x 79,298$ 80,418$ -1.4%
NOI% Occupied(3) TTM Lease Coverage(4)
CLNS OP share
of consolidated
amount(1)
IVa. Healthcare Real Estate - Summary Metrics and Operating
Results
Notes:
(1) Represents NOI for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated NOI multiplied by the Company’s interest as of March 31, 2017. For a reconciliation of net income/(loss) attributable to common
stockholders to NOI, please refer to the Appendix of this presentation.
(2) Consolidated NOI includes $1.4 million of interest earned related to $85 million of healthcare real estate development loans related to the Company’s healthcare real estate portfolio. This interest income is in the Interest Income line item
on the Company’s financial statements.
(3) Occupancy % for Senior Housing - Operating represents average of the presented quarter, MOB’s is as of last day in the quarter and for Triple-Net Lease represents average of the prior quarter. Occupancy represents real estate
property operator’s patient occupancy for all types except MOB.
(4) Represents the ratio of EBITDAR to cash rent on a trailing twelve month basis.
Colony NorthStar, Inc. | Supplemental Financial Report 20
(As of or for the three months ended March 31, 2017, unless otherwise noted)
Triple-Net Lease Coverage (1)
December 31, 2016 TTM Lease Coverage # of Leases Senior Housing
Skilled Nursing
Facilities &
Hospitals % Total NOI
WA Remaining
Lease Term
Less than 0.99x 3 2% 6% 8% 5 yrs
1.00x - 1.09x 2 1% 2% 3% 11 yrs
1.10x - 1.19x 2 0% 6% 6% 9 yrs
1.20x - 1.29x 2 2% 3% 5% 8 yrs
1.30x - 1.39x 1 0% 5% 5% 12 yrs
1.40x - 1.49x 2 0% 4% 4% 10 yrs
1.50x and greater 6 8% 11% 19% 10 yrs
Total / W.A. 18 13% 37% 50% 9 yrs
Revenue Mix (2)
Private Pay Medicare Medicaid
MOB's 100% 0% 0%
Senior Housing - Operating 85% 4% 11%
Triple-Net Lease:
Senior Housing 64% 0% 36%
Skilled Nursing Facilities 21% 20% 58%
Hospitals 12% 37% 51%
W.A. 56% 11% 33%
December 31, 2016 TTM
% of Total Portfolio December 31, 2016 TTM NOI
IVb. Healthcare Real Estate - Portfolio Overview
Notes:
(1) Represents the ratio of EBITDAR to cash rent on a trailing twelve month basis. Represents leases with EBITDAR coverage in each listed range. Excludes interest income associated with triple-net lease senior housing and hospital
types. Caring Homes (U.K.) lease (EBITDAR) coverage includes additional collateral provided by the operator.
(2) Revenue mix represents percentage of revenues derived from private, Medicare and Medicaid payor sources. The payor source percentages for the hospital category excludes two operating partners, whom do not track or report payor
source data and totals approximately one-third of NOI in the hospital category. Overall percentages are weighted by NOI exposure in each category.
Colony NorthStar, Inc. | Supplemental Financial Report 21
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Top 10 Geographic Locations by NOI
Number of
buildings NOI
Illinois 39 8,777$
UK 43 8,384
Florida 27 7,222
Indiana 55 7,186
Oregon 31 5,016
California 18 4,839
Texas 32 4,834
Ohio 35 4,826
Pennsylvania 11 4,705
Georgia 22 4,657
Total 313 60,446$
Top 10 Operators/Tenants by NOI
Property Type/Primary
Segment
Number of
buildings NOI % Occupied
TTM Lease
Coverage
WA Remaining
Lease Term
Senior Lifestyle Sr. Housing / RIDEA 82 15,273$ 88.5% n/a n/a
Caring Homes (U.K.)(1) Sr. Housing / NNN 43 7,353 90.4% 1.8x 14 yrs
Mid-Atlantic Healthcare SNF / NNN 11 4,721 90.0% 1.3x 12 yrs
Wellington Healthcare SNF / NNN 11 4,354 90.1% 1.1x 10 yrs
Frontier Sr. Housing / RIDEA/NNN 20 3,962 86.0% n/a n/a
Miller SNF / NNN 28 3,776 72.7% 2.1x 0 yrs
Symphony / NuCare SNF / NNN 9 3,426 76.6% 0.8x 5 yrs
Consulate SNF / NNN 10 2,846 94.2% 1.4x 11 yrs
Opis SNF / NNN 11 2,741 90.3% 1.3x 7 yrs
Grace SNF / NNN 9 2,555 84.7% 0.9x 4 yrs
Total 234 51,007$
IVb. Healthcare Real Estate - Portfolio Overview (cont’d)
Notes:
(1) Caring Homes (U.K.) lease (EBITDAR) coverage includes additional collateral provided by the operator.
Colony NorthStar, Inc. | Supplemental Financial Report 22
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Net operating income
Consolidated
amount
Net operating income(1) 38,197$ 16,440$
Annualized net operating income 152,789$ 65,760$
Portfolio Overview
Total number of buildings 353
Rentable square feet 39,029
% leased at end of period 95.9%
Average remaining lease term 4 years
Same store financial/operating results related to the segment
Q1 2017 Q4 2016 % Change
Same store number of buildings 334 334 0.0%
% leased at end of period 95.8% 95.8% 0.1%
Revenues 51,501$ 49,743$ 3.5%
NOI 35,471$ 35,383$ 0.2%
CLNS OP share of
consolidated
amount
Va. Industrial Real Estate - Summary Metrics and Operating
Results
Notes:
(1) Represents NOI for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated NOI multiplied by the Company’s interest as of March 31, 2017. For a reconciliation of net income/(loss) attributable to common
stockholders to NOI, please refer to the Appendix of this presentation.
Colony NorthStar, Inc. | Supplemental Financial Report 23
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Top 10 Geographic Locations by NOI
Number of
buildings
Rentable square
feet (in thousands) NOI
% leased at end
of period
Atlanta 82 8,105 7,616$ 96.4%
Dallas 70 7,191 7,093 98.2%
Chicago 34 3,972 3,534 93.9%
New Jersey, South / Philadelphia 30 3,328 3,108 93.8%
Orlando 18 3,032 2,924 97.0%
Minneapolis 18 2,814 2,883 95.6%
Phoenix 18 1,705 1,964 97.6%
Houston 21 1,713 1,642 90.7%
Kansas City 9 1,664 1,423 97.9%
Salt Lake City 16 1,269 1,369 99.8%
Total / W.A. 316 34,793 33,556$ 96.2%
Top 10 Tenant Base by Industry
Industry
Total Leased Square
Feet (in thousands) % of total
Warehousing & Transportation 14,217 38.0%
Manufacturing 6,340 16.9%
Wholesale Trade 4,486 12.0%
Professional, Scientific, and Technical Services 3,979 10.6%
Health & Science 2,796 7.5%
Construction & Contractors 2,512 6.7%
Retail Trade 1,261 3.4%
Entertainment & Recreation 1,058 2.8%
Media & Information 665 1.8%
Public Administration & Government 113 0.3%
Total 37,427 100.0%
Vb. Industrial Real Estate - Portfolio Overview
Colony NorthStar, Inc. | Supplemental Financial Report 24
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
EBITDA
Consolidated
amount(1)
EBITDA(2):
Select Service 34,219$ 32,253$
Extended Stay 24,146 22,759
Full Service 2,816 2,654
Total EBITDA 61,181$ 57,666$
Annualized EBITDA(3) 274,686$ 258,906$
Portfolio overview by type
Number
of hotels
Number
of rooms
Avg. qtr. %
occupancy
Avg. daily
rate (ADR) RevPAR
Q1 2017
EBITDA(1)(2) EBITDA margin
Select Service 97 13,193 67.6% 123$ 83$ 34,219$ 32.0%
Extended Stay 66 7,936 73.4% 130 96 24,146 35.0%
Full Service 4 962 67.3% 167 112 2,816 18.0%
Total / W.A. 167 22,091 69.7% 128$ 89$ 61,181$ 32.1%
Same store financial/operating results related to the segment by brand
Brand Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 % Change
Marriott 68.8% 69.3% 129$ 128$ 89$ 89$ 48,229$ 50,644$ -4.8%
Hilton 72.8% 70.9% 123 120 90 85 9,679 8,863 9.2%
Other 72.5% 72.5% 129 131 93 95 3,273 3,798 -13.8%
Total / W.A. 69.7% 69.7% 128$ 127$ 89$ 89$ 61,181$ 63,305$ -3.4%
CLNS OP share
of consolidated
amount(1)
Avg. qtr. % occupancy Avg. daily rate (ADR) RevPAR Q1 2017 EBITDA(1)(2)
VIa. Hospitality Real Estate - Summary Metrics and Operating
Results
Notes:
(1) Represents EBITDA for the full 90 day first quarter of 2017. CLNS OP Share represents Consolidated EBITDA multiplied by the Company’s interest as of March 31, 2017. For a reconciliation of net income/(loss) attributable to common
stockholders to EBITDA please refer to the Appendix of this presentation.
(2) Q1 2017 Consolidated EBITDA excludes FF&E reserve amounts of $8.5 million.
(3) Annualized EBITDA is calculated using the pro rata percentage of historical Q1 2016 EBITDA relative to historical full year 2016 EBITDA to account for seasonality.
Colony NorthStar, Inc. | Supplemental Financial Report 25
($ in thousands; as of March 31, 2017, unless otherwise noted)
Top 10 Geographic Locations by EBITDA
Number of
hotels
Number of
rooms
Number of
rooms-select
service
Number of
rooms-extended
stay
Number of
rooms-full
service EBITDA
California 18 2,254 1,243 1,011 - 11,575$
Florida 12 2,060 1,186 291 583 11,623
Texas 28 3,230 1,952 1,278 - 6,645
New Jersey 12 1,884 718 942 224 3,206
New York 8 1,010 710 300 - 1,522
North Carolina 7 981 831 150 - 2,773
Washington 5 664 160 504 - 2,822
Virginia 11 1,473 1,210 263 - 2,461
Michigan 6 809 601 208 - 2,295
Georgia 7 974 694 280 - 2,684
Total / W.A. 114 15,339 9,305 5,227 807 47,606$
VIb. Hospitality Real Estate - Portfolio Overview
Colony NorthStar, Inc. | Supplemental Financial Report 26
($ in thousands; as of March 31, 2017, unless otherwise noted)
Net Lease Real Estate Equity
Consolidated
amount
CLNS OP share of
consolidated amount
Number of
buildings
Rentable
square feet
(thousands) NOI NOI
% leased at
end of period
Weighted average
remaining lease term
U.S.:
Office 8 1,716 6,094$ 6,076$ 94.7% 4.3
Retail 10 468 1,205 1,205 100.0% 6.8
Industrial 3 1,140 587 587 100.0% 12.3
Education 1 82 382 382 100.0% 10.2
Europe:
Office 29 1,478 5,153 5,153 100.0% 12.8
Education 20 304 2,954 2,954 100.0% 17.8
Total / weighted average 71 5,188 16,376$ 16,358$ 98.3% 9.6
Other Real Estate Equity
Consolidated
amount
CLNS OP share of
consolidated amount
Number of
buildings
Rentable
square feet
(thousands)
Undepreciated
carrying value
Undepreciated
carrying value
% leased at
end of period
Weighted average
remaining lease term
U.S.:
Office 14 1,480 262,337$ 228,034$ 78.5% 3.5
Multifamily 1 N/A 59,752 53,822 96.7% N/A
Hotel 5 N/A 29,801 9,805 59.4% N/A
Europe:
Industrial 38 2,795 151,833 68,832 100.0% 7.0
Office 37 973 141,668 65,464 73.0% 10.1
Mixed / Retail 274 8,620 1,083,991 318,101 70.9% 7.4
Total / weighted average 369 13,867 1,729,382$ 744,057$ 77.7% 7.1
Unconsolidated joint ventures (Net Lease & Other RE Equity) 339,097 291,085
VIIa. Other Equity and Debt - Net Lease and Other Real Estate
Equity
Colony NorthStar, Inc. | Supplemental Financial Report 27
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Portfolio Overview (1)
Consolidated
amount
CLNS OP share of
consolidated amount
Non-PCI loans
Loans receivables held for investment, net 3,277,168$ 2,386,913$
Loans receivables held for sale, net 93,270 93,270
Non-recourse investment-level financing (UPB) 970,714 912,574
Carrying value - equity method investments 308,787 131,818
PCI loans
Loans receivables held for investment, net 674,275 395,584
Non-recourse investment-level financing (UPB) 63,807 22,200
Carrying value - equity method investments 3,349 3,349
Other
Carrying value - real estate assets (REO) 68,907 23,430
Warehouse facility (UPB) 27,860 27,860
Subscription line (UPB) 124,334 22,384
Total Portfolio
Loans receivables held for investment, net 3,951,443 2,782,497
Loans receivables held for sale, net 93,270 93,270
Carrying value - equity method investments 312,136 135,166
Carrying value - real estate assets (REO) 68,907 23,430
Non-recourse investment-level financing (UPB) 1,034,521 934,774
Warehouse facility (UPB) 27,860 27,860
Subscription Line (UPB) 124,334 22,384
Total debt (UPB) 1,186,715 985,017
VIIb. Other Equity and Debt - Real Estate Debt
Notes:
(1) Excludes $4 million carrying value of real estate debt investments held in a CDO securitization and $85 million carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.
Colony NorthStar, Inc. | Supplemental Financial Report 28
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Loans receivable held for investment by loan type (1)
Consolidated
amount CLNS OP share of consolidated amount
Net carrying
amount
Net carrying
amount
Weighted average
yield
Weighted average
maturity in years
Non-PCI loans
Fixed rate
First mortgage loans 830,086$ 475,943$ 5.4% 2.2
Securitzed mortgage loans 65,881 65,881 5.8% 13.4
Second mortgage loans / B-notes 282,679 193,837 10.4% 4.6
Mezzanine loans 319,756 158,452 11.3% 2.4
Corporate 60,155 60,155 12.4% 10.0
Total fixed rate non-PCI loans 1,558,555 954,267 7.9% 4.0
Variable rate
First mortgage loans 520,722 421,406 9.0% 0.9
Securitized mortgage loans 706,869 694,812 6.3% 3.1
Second mortgage loans / B-notes 146,855 126,728 6.5% 5.3
Mezzanine loans 347,698 192,688 11.5% 0.4
Total variable rate non-PCI loans 1,722,143 1,435,635 7.8% 2.3
Total non-PCI loans 3,280,698 2,389,903
Allowance for loan losses (3,531) (2,989)
Total non-PCI loans, net of allowance for loan losses 3,277,168 2,386,913
PCI loans
First mortgage loans 730,807 404,688
Securitized mortgage loans 5,739 5,739
Mezzanine loans 3,671 3,671
Total PCI loans 740,217 414,098
Allowance for loan losses (65,943) (18,515)
Total PCI loans, net of allowance for loan losses 674,275 395,584
Total loans receivable, net of allowance for loan losses 3,951,443$ 2,782,497$
VIIb. Other Equity and Debt - Real Estate Debt (cont’d)
Notes:
(1) Excludes $4 million carrying value of real estate debt investments held in a CDO securitization and $85 million carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.
Colony NorthStar, Inc. | Supplemental Financial Report 29
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Loans receivable held for investment by collateral type (1)
Consolidated
amount CLNS OP share of consolidated amount
Net carrying
amount
Net carrying
amount
Weighted average
yield
Weighted average
maturity in years
Non-PCI Loans
Hospitality 989,144$ 618,443$ 9.7% 2.5
Office 713,010 570,335 6.0% 1.1
Retail 553,277 419,505 7.5% 1.3
Multifamily 490,381 452,698 6.2% 7.8
Other 237,814 147,617 8.7% 0.8
Land 169,528 84,764 11.1% 1.6
Residential 60,548 30,274 13.3% 0.6
Corporate 54,058 54,058 11.6% 11.1
Industrial 9,407 9,219 13.6% 0.9
Total non-PCI loans, net of allowance for loan losses 3,277,168 2,386,913 7.8% 3.0
PCI Loans
Retail 145,031 88,114
Multifamily 133,096 48,858
Office 121,291 99,606
Hospitality 90,513 60,636
Industrial 71,332 41,613
Other 48,805 17,313
Land 41,426 30,518
Residential 22,683 8,847
Healthcare 98 80
Total PCI loans, net of allowance for loan losses 674,275 395,584
Total loans receivable, net of allowance for loan losses 3,951,443$ 2,782,497$
VIIb. Other Equity and Debt - Real Estate Debt (cont’d)
Notes:
(1) Excludes $4 million carrying value of real estate debt investments held in a CDO securitization and $85 million carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.
Colony NorthStar, Inc. | Supplemental Financial Report 30
($ in thousands, except as noted; as of March 31, 2017, unless otherwise noted)
Consolidated
amount
CLNS OP share of
consolidated
amount amount
Colony Starwood Homes (NYSE: SFR)
CLNS OP interest in SFR as of May 5, 2017 6.3% 6.3%
SFR shares beneficially owned by OP and common stockholders 7.5 million 7.5 million
SFR share price as of May 5, 2017 33.87$ 33.87$
Total market value of shares 255,243 255,243
Colony American Finance ("CAF")
Carrying value 55,285 55,285
CLNS OP interest in CAF as of May 5, 2017 17.4% 17.4%
Albertsons
Carrying value 99,604 49,802
Number of post-IPO shares in Albertsons pursuant to preliminary prospectus dated October 2, 2015 8.45 million
CLNS OP % ownership interest in post-IPO AB Acquisition LLC based on preliminary prospectus dated October 2, 2015 2.17%
VIIc. Other Equity and Debt - Special Situations
Colony NorthStar, Inc. | Supplemental Financial Report 31
($ in thousands; as of or for the three months ended March 31, 2017, unless otherwise noted)
Operating Results
Q1 2017 income(1) 12,331$
Return of capital 15,785
Total distributions 28,116
Contributions 73
Net 28,043$
Carrying value 400,984$
Weighted average remaining term as of March 31, 2017 1.1 yrs
Portfolio Overview (2)
Number of funds 102
Number of general partners(3) 66
Underlying assets, at cost 22,554,700$
Implied leverage(4) 44%
Expected remaining future capital contributions(5) 3,728$
Investment by Types (2)(6) Investment by Geography (2)(6)
Type % Location %
Office 19% West 20%
Land 16% Northeast 19%
Multifamily 13% Primarily Various U.S. 16%
Cash 12% Cash 12%
Lodging 12% Southeast 9%
Other 8% Midwest 8%
Retail 7% Mid-Atlantic 7%
Residential/Condo 5% Asia 5%
Debt 3% Europe 4%
Financial Services 3%
Healthcare 1%
Industrial 1%
Total 100% Total 100%
VIId. Other Equity and Debt - Real Estate PE Fund Interests
Notes:
(1) Represents income for the full 90 day first quarter of 2017.
(2) Amounts presented exclude an immaterial economic interest retained in a real estate private equity fund portfolio which NRF sold in the fourth quarter 2015.
(3) Includes 12 funds and 16 general partners held across multiple PE Investments.
(4) Represents implied leverage for funds with investment-level financing, calculated as debt divided by assets at fair value.
(5) Represents the estimated amount of expected future capital contributions to funds as of December 31, 2016.
(6) Represents the underlying fund interests in PE Investments by investment type and geographic location based on NAV as of March 31, 2017.
Colony NorthStar, Inc. | Supplemental Financial Report 32
($ in thousands; as of March 31, 2017)
Portfolio Overview
Owned Bonds and Equity of Deconsolidated CDO's Principal amount Carrying Value
Total owned deconsolidated CDO bonds 367,022$ 87,560$
Total owned deconsolidated CDO equity 16,872
Consolidated CDO's Principal amount Carrying Value
Total consolidated CDO investments 715,244 287,287
Total consolidated non-recourse CDO financing 336,119 237,855
Net book value - consolidated CDOs 379,124 49,432
CMBS Principal amount Carrying Value
98,291 21,696
Income
Q1 2017 aggregate income(1) 15,975
VIIe. Other Equity and Debt - CRE Securities
Notes:
(1) Represents income for the full 90 day first quarter of 2017.
Colony NorthStar, Inc. | Supplemental Financial Report 33
($ in thousands, except as noted; as of March 31, 2017)
Overview
Segment
Institutional funds 14,787$
Retail companies(1) 24,506
NorthStar Realty Europe (NYSE:NRE)(1) 3,500
Townsend(1) 11,785
Pro rata corporate investments (earnings of investments in unconsolidated ventures)(1) 5,806
Total fee revenue 60,385
(Less): Pre-merger fee revenue (4,613)
Total Q1 2017 reported fee revenue and earnings of investments in unconsolidated ventures 55,772$
Operating Results
Revenues
Total fee revenue and earnings of investments in unconsolidated ventures 55,772$
Other income and commission income 6,836
Expenses
Investment, servicing and commission expenses 2,112
Depreciation and amortization 12,143
Compensation expense 23,272
Administrative expenses 3,201
Total expenses 40,728
Other loss, net (449)
Income tax expense (2,059)
Net income attributable to common interests in OP and common stockholders 19,372
Equity-based compensation expense 1,820
Unrealized fair value gains or losses and foreign currency remeasurements (414)
Amortization and impairment of finite-lived intangibles related to investment management contracts and customer relationships 12,019
Non-real estate depreciation and amortization 1,296
Amortization of deferred financing costs and debt premiums and discounts (26)
Deferred tax effect on certain of the foregoing adjustments (2,637)
Core FFO 31,430$
Q1 2017 Fee Revenue
- CLNS OP Share
VIIIa. Investment Management - Summary Metrics
Notes:
(1) Represents fee revenue for the full 90 day first quarter of 2017.
Colony NorthStar, Inc. | Supplemental Financial Report 34
($ in millions, except as noted; as of March 31, 2017 unless otherwise noted)
Segment Products Description
AUM CLNS OP
Share
Institutional Funds
● Credit ($3.8 billion)
● Core plus / value-added ($1.8 billion)
● Opportunistic ($1.9 billion)
● Colony Industrial ($1.4 billion)
● Other co-investment vehicles ($1.3 billion)
● 26 years of institutional investment management experience
● Sponsorship of private equity funds and vehicles earning
asset management fees and performance fees
● More than 300 investor relationships
● $10 billion of private equity capital raised since the beginning
of 2008; $25 billion of private equity capital raised since inception
10,201$
Retail Companies
● NorthStar Income I ($1.6 billion)
● NorthStar Healthcare ($3.6 billion)
● NorthStar Income II ($1.8 billion)
● NorthStar/RXR NY Metro Real Estate
● NorthStar Real Estate Capital Income Fund
● NorthStar/Townsend Institutional Real Estate Fund (1)
● Wholly-owned broker-deal subsidiary engaged as dealer-
manager for all retail product offerings
● Over $4 billion of capital raised to date with over $5 billion
of current effective products
● Manage public non-traded vehicles earning asset
management, performance, acquisition and disposition fees
7,018
Public Company ● NorthStar Realty Europe Corp.
● Manage NYSE-listed European equity REIT
● Earns base management fee with potential for incentive fees 1,975
Townsend
● Segregrated Mandates
● Commingled Funds
● Advisory Services
● 84% investment in The Townsend Group
● Manage custom portfolios and fund-of-funds primary invested
in direct real estate funds
● Source co-investments and joint ventures alongside GPs
● Fees comprised of recurring investment management
fees, recurring advisory fees, and performance fees
14,507
Pro Rata
Corporate
Investments
● RXR Realty
● American Healthcare Investors
● Steelwave
● Hamburg Trust
● CLNS recognizes at-share earnings from underlying pro rata
corporate investments
● 27% investment in RXR Realty, a real estate owner, developer
and investment management company with over $12 billion
of AUM
● 43% investment in American Healthcare Investors, a healthcare
investment management firm and sponsor of non-traded vehicles
with $2.5 billion of AUM
7,004
Total 40,705$
VIIIb. Investment Management – Assets Under Management
Notes:
(1) NorthStar/Townsend Institutional Real Estate Fund Inc. filed a registration statement on Form N-2 to the SEC in October 2016, which as of May 5, 2017, is not yet effective.
Colony NorthStar, Inc. | Supplemental Financial Report 35
($ in thousands, except as noted; as of March 31, 2017, unless otherwise noted)
NorthStar
Income
NorthStar
Healthcare
NorthStar
Income II
NorthStar/RXR
NY Metro Real Estate(1)
NorthStar Real Estate
Capital Income Fund Total
Capital Raising Status Completed
July 2013
Completed
January 2016
Completed
November 2016
Active Active
Primary Strategy CRE Debt Healthcare Equity
and Debt
CRE Debt NY Metro Area CRE
Equity and Debt
CRE Debt
Offering Size $1.2 billion(2) $2.1 billion(2) $1.65 billion(2) $2.0 billion(2) $3.2 billion(2) $10.15 billion
Capital Raised
During Q1 2017 $ 9,354 $ 16,701 $ 8,715 $ 5,200 - $ 39,970
Year-to-date through 5-5-17 15,186 27,956 14,580 8,507 2,200 68,429
Inception to 5-5-17 1,262,555 1,897,297 1,154,041 21,916 2,200 4,338,009
Investments(3)
During Q1 2017 33,450 118,865 150,184 - - 302,499
As of 3-31-17 1,603,010 3,414,511 1,839,058 11,030 - 6,867,609
Cash as of 3-31-17 147,594 160,399 61,083 10,200 1,435 380,711
Fees earned during Q1 2017(4)
Asset management fees 4,695 8,267 5,284 15 5 18,267
Acquisition fees 120 3,188 1,446 - - 4,754
Disposition fees 776 - 709 - - 1,485
Total fees $ 5,591 $ 11,456 $ 7,439 $ 15 $ 5 $ 24,506
VIIIc. Investment Management - Retail Companies
Notes:
(1) Fees earned are split 50/50 with partner.
(2) Represents dollar amounts of shares registered to offer pursuant to each company's public offering, distribution reinvestment plan, and follow-on public offering.
(3) Based on cost for real estate equity investments, which includes net purchase price allocation related to intangibles, deferred costs and other assets, if any, committed principal amount for real estate debt and securities and carrying
value plus deferred acquisition prices for limited partnership interests in private equity funds.
(4) Represents fee revenue for the full 90 day first quarter of 2017.
Colony NorthStar, Inc. | Supplemental Financial Report 36
APPENDICES
Colony NorthStar, Inc. | Supplemental Financial Report 37
IXa. Appendices - Definitions
Assets Under Management (“AUM”)
Refers to assets which the Company and its affiliates provides 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 March 31, 2017, while retail companies and NorthStar
Realty Europe are presented as of May 5, 2017. AUM further includes a) uncalled capital commitments and b) for corporate investments in affiliates with asset and investment management functions, includes
the Company’s pro-rata share assets of each affiliate as presented and calculated by the affiliate. Affiliates include RXR Realty LLC, SteelWave, LLC, American Healthcare Investors and Hamburg Trust. The
Company's calculations of AUM may differ materially 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.
NOI: Net Operating Income. 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: Earnings before Interest, Income Taxes, Depreciation and Amortization. EBITDA for the hospitality 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.
ADR: Average Daily Rate
RevPAR: Revenue per Available Room
UPB: Unpaid Principal Balance
PCI: Purchased Credit-Impaired
Colony NorthStar, Inc. | Supplemental Financial Report 38
($ in thousands; for the three months ended March 31, 2017)
NOI and EBITDA Determined as Follows Healthcare Industrial Hospitality
Other Equity and
Debt—Net Lease
Properties
Total revenues 138,813$ 57,042$ 175,713$ 20,001$
Straight-line rent revenue and amortization of above- and below-market lease intangibles (6,999) (1,663) (14) (482)
Property operating expenses(1) (60,686) (16,497) (118,491) (3,143)
Transaction, investment and servicing costs — (101) — —
Compensation expense(1) — (583) — —
NOI or EBITDA 71,128$ 38,198$ 57,208$ 16,376$
Reconciliation of Net Income (Loss) from Continuing Operations to NOI/EBITDA
Healthcare Industrial Hospitality
Net income (loss) from continuing operations (9,266)$ 519$ (3,616)$
Adjustments:
Straight-line rent revenue and amortization of above- and below-market lease intangibles (6,999) (1,663) (14)
Interest expense 41,092 12,426 27,249
Transaction, investment and servicing costs 2,123 — 1,737
Depreciation and amortization 40,881 24,639 30,041
Compensation and administrative expense 2,519 2,875 1,697
Other (gain) loss, net (1,464) — 76
Income tax (benefit) expense 2,242 (598) 38
NOI or EBITDA 71,128$ 38,198$ 57,208$
NOI or EBITDA - January 1, 2017 to January 10, 2017 8,277 — 3,973
Full Q1 2017 NOI or EBITDA 79,405$ 38,198$ 61,181$
IXb. Appendices - Reconciliation of Net Income (Loss) to
NOI/EBITDA
Notes:
(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.
Colony NorthStar, Inc. | Supplemental Financial Report 39
IXb. Appendices - Reconciliation of Net Income (Loss) to
NOI/EBITDA (cont’d)
($ in thousands; for the three months ended March 31, 2017)
Reconciliation of Net Income from Continuing Operations of Other Equity and Debt Segment to NOI of Net Lease Real Estate Equity
Other Equity and
Debt
Net income from continuing operations 179,908$
Adjustments:
Property operating income of other real estate equity (37,073)
Straight-line rent revenue and amortization of above- and below-market lease
intangibles for net lease real estate equity (482)
Interest income (114,181)
Fee and other income (3,831)
Property operating expense of other real estate equity 17,532
Interest expense 30,819
Transaction, investment and servicing costs 7,944
Depreciation and amortization 28,218
Provision for loan loss 6,724
Impairment loss 8,519
Compensation and administrative expense 7,112
Gain on sale of real estate assets (8,970)
Other loss, net 1,641
Earnings of investments in unconsolidated ventures (108,837)
Income tax expense 1,333
NOI of net lease real estate equity 16,376$