Document


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): November 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 November 9, 2017, Colony NorthStar, Inc. (the “Company”) issued a press release announcing its financial position as of September 30, 2017 and its financial results for the third quarter ended September 30, 2017. 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 November 9, 2017, the Company made available a Supplemental Financial Disclosure Presentation for the quarter ended September 30, 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
 
Press Release dated November 9, 2017
 
Supplemental Financial Disclosure Presentation for the quarter ended September 30, 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:
November 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 November 9, 2017
99.2
 
Supplemental Financial Disclosure Presentation for the quarter ended September 30, 2017



Exhibit
                
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Exhibit 99.1

COLONY NORTHSTAR ANNOUNCES THIRD QUARTER 2017 FINANCIAL RESULTS


Los Angeles, CA and New York, NY, November 9, 2017 - Colony NorthStar, Inc. (NYSE:CLNS) and subsidiaries (collectively, “Colony NorthStar”, or the “Company”) today announced its financial results for the third quarter ended September 30, 2017 and declared a cash dividend of $0.27 per share of Class A and Class B common stock for the fourth quarter of 2017.

Third Quarter 2017 Highlights
Net income attributable to common stockholders of $1.7 million, or $0.00 per basic share
Core FFO of $193.4 million, or $0.33 per basic share, and FFO of $48.7 million, or $0.08 per basic share
The Company announced a definitive agreement to create Colony NorthStar Credit Real Estate, Inc., which will become a leading commercial real estate credit REIT, and will be externally managed by Colony NorthStar and is expected to have approximately $5.5 billion in assets and $3.4 billion in equity value upon closing
The Company announced a definitive agreement to sell The Townsend Group for $475 million, from which the Company is expected to receive approximately $379 million in net proceeds for its 84% ownership interest
Declared and paid a third quarter 2017 dividend of $0.27 per share of Class A and B common stock
Subsequent to the third quarter 2017, declared a fourth quarter dividend of $0.27 per share of Class A and B common stock
The Company and its share of affiliates raised approximately $327 million of third-party capital from institutional clients and retail investors for an aggregate $1.7 billion during 2017 through the third quarter
The Company completed $578 million of asset monetizations in the third quarter, which included the sale of a portfolio of net lease properties located in Switzerland and the Company’s interest in Colony American Finance, for an aggregate $4.3 billion of gross asset value monetizations in 2017 year-to-date
The Company and funds managed by the Company invested and agreed to invest $893 million; the Company invested $307 million and funds managed by the Company invested $586 million
The Company has in excess of $1.2 billion of liquidity through cash-on-hand and availability under its revolving credit facility
The Company repurchased approximately 4.4 million shares of its Class A common stock for $57 million in the third quarter and another 3.1 million shares for $39 million subsequent to the third quarter 2017 bringing aggregate year-to-date 2017 repurchases to 20.4 million shares for $264 million
The Company issued 12.6 million shares of 7.125% Series J cumulative redeemable perpetual preferred stock, generating net proceeds of $305 million, and subsequent to the third quarter 2017, the Company redeemed all of the shares of its 8.875% Series C cumulative redeemable perpetual preferred stock and approximately 7.9 million shares, or 56.3%, of its 8.50% Series B cumulative redeemable perpetual preferred stock
Subsequent to the third quarter 2017:
i.
The Company, in partnership with Digital Bridge, committed to its first digital real estate infrastructure investment Andean Tower Partners, which is anticipated to be contributed to a new digital real estate infrastructure third-party capital investment vehicle managed by the Company and Digital Bridge
ii.
The Company agreed to amend and restate its management agreement with NorthStar Realty Europe Corp. (NYSE: NRE) effective January 1, 2018 to better align with NRE stockholders
iii.
David Hamamoto submitted his resignation as a director and vice chairman of the Company effective January 11, 2018, which resignation did not involve a disagreement with the Company or any matter relating to the Company’s operations, policies or practices, and the Board of Directors unanimously approved the appointment of Richard B. Saltzman as a director of the Company concurrently with Mr. Hamamoto’s departure on January 11, 2018










                
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Third Quarter 2017 Financial Results
For the third quarter 2017, Colony NorthStar reported net income attributable to common stockholders of $1.7 million, or $0.00 per basic share. Core FFO was $193.4 million, or $0.33 per basic share, and FFO was $48.7 million, or $0.08 per basic share.

For more information and a reconciliation of net income/(loss) to common stockholders to FFO, Core FFO, NOI and/or EBITDA, please refer to the non-GAAP financial measure definitions and tables at the end of this press release.

“In addition to continuing progress on becoming simpler through further streamlining and non-core asset sales, several strategic accomplishments during the quarter demonstrate future areas of emphasis for Colony NorthStar alongside our rapidly growing U.S. industrial platform,” said Richard B. Saltzman, President and Chief Executive Officer. “These include the creation of Colony NorthStar Credit Real Estate, Inc., which is expected to be the second largest U.S. commercial mortgage REIT by equity market capitalization upon closing; our first commitment to a digital real estate infrastructure investment in partnership with Digital Bridge in anticipation of transferring ownership to a new third-party capital investment vehicle; and completing the modification of the NorthStar Realty Europe ("NRE") management agreement in order to better position that company for growth.”

Third 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 September 30, 2017, the consolidated healthcare portfolio consisted of 417 properties: 109 medical office properties, 191 senior housing properties, 103 skilled nursing facilities and 14 hospitals. The Company’s equity interest in the consolidated Healthcare Real Estate segment was approximately 71% as of September 30, 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 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 third quarter 2017, this segment’s net loss attributable to common stockholders was $(17.2) million, Core FFO was $22.7 million and consolidated NOI was $78.0 million. In the third quarter 2017, healthcare same store portfolio experienced sequential quarter-over-quarter revenue growth of 0.5% and net operating income growth of 0.5%. Over the same period last year, third quarter 2017 same store revenue growth was 2.5% and net operating income declined (0.8)%, primarily attributable to bad debt expense provision taken on an individual tenant in our skilled nursing facilities portfolio and higher wage expense. Healthcare same store portfolio is defined as properties in operation throughout the full periods presented under the comparison and included 417 properties in the sequential quarter-over-quarter and year-over-year comparisons.

The following table presents NOI and certain operating metrics by property types in the Company’s Healthcare Real Estate segment:
 
Consolidated
 
CLNS OP
 
Same Store
 
NOI
 
Share NOI(1)
 
Consolidated NOI
 
Occupancy %(2)
 
TTM Coverage(3)
($ In millions)
Q3 2017
 
Q3 2017
 
Q3 2017
Q2 2017
 
Q3 2017
Q2 2017
 
6/30/17
3/31/17
Medical Office Buildings
$
13.9

 
$
9.8

 
$
13.6

$
14.1

 
83.5
%
83.5
%
 
 N/A
 N/A
Senior Housing - Operating
18.7

 
13.2

 
18.7

19.4

 
87.8
%
86.7
%
 
 N/A
 N/A
Triple-Net Lease:
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing
14.6

 
10.4

 
14.6

14.4

 
82.3
%
83.6
%
 
1.4x
1.5x
Skilled Nursing Facilities
25.5

 
18.1

 
25.6

24.4

 
82.1
%
83.4
%
 
1.2x
1.2x
Hospitals
5.3

 
3.8

 
5.3

5.1

 
61.5
%
63.4
%
 
3.0x
3.3x
Healthcare Total/W.A.
$
78.0

 
$
55.3

 
$
77.8

$
77.4

 
82.9
%
83.6
%
 
1.5x
1.6x
___________________________________________________
(1)
CLNS OP Share NOI represents third quarter 2017 Consolidated NOI multiplied by CLNS OP’s ownership interest as of September 30, 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.





                
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Asset Dispositions
During the third quarter 2017, the consolidated healthcare portfolio disposed of four non-core medical office buildings totaling approximately 0.1 million square feet and four non-core skilled nursing facilities totaling 374 beds for an aggregate $51 million.

Industrial Real Estate
As of September 30, 2017, the consolidated industrial portfolio consisted of 388 primarily light industrial buildings totaling 44.1 million rentable square feet across 17 major U.S. markets and was 95% leased. The Company’s equity interest in the consolidated Industrial Real Estate segment was approximately 41% as of September 30, 2017. On September 30, 2017, the Company invested $50 million alongside $48 million of new third-party capital. Total third-party capital commitments were in excess of $1 billion compared to cumulative balance sheet contributions of $750 million as of September 30, 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 third quarter 2017, this segment’s net income attributable to common stockholders was $1.6 million, Core FFO was $13.4 million and consolidated NOI was $44.3 million. In the third quarter 2017, industrial same store portfolio experienced a sequential quarter-over-quarter revenue growth of 1.0% and net operating income grew 2.3%. Over the same period last year, third quarter 2017 same store revenue grew by 2.0% and net operating income grew 3.5%. Industrial same store portfolio is defined as buildings in operation throughout the full periods presented under the comparison and included 343 and 312 buildings in the sequential quarter-over-quarter and year-over-year comparisons, respectively.

The following table presents NOI and certain operating metrics in the Company’s Industrial Real Estate segment:
 
Consolidated
 
CLNS OP
 
Same Store
 
NOI
 
Share NOI (1)
 
Consolidated NOI
 
Leased %(2)
($ In millions)
Q3 2017
 
Q3 2017
 
Q3 2017
Q2 2017
 
Q3 2017
Q2 2017
Industrial
$
44.3

 
$
18.4

 
$
39.7

$
38.8

 
95.7
%
96.1
%
___________________________________________________
(1)
CLNS OP Share NOI represents third quarter 2017 Consolidated NOI multiplied by CLNS OP’s ownership interest as of September 30, 2017.
(2)
Leased % represents the last day of the presented quarter.

Asset Acquisitions and Dispositions
During the third quarter 2017, the consolidated industrial portfolio acquired 35 industrial buildings totaling approximately 4.9 million square feet for approximately $364 million and disposed on one non-core building totaling approximately 0.1 million square feet for approximately $4 million.

Subsequent to the third quarter 2017, the consolidated industrial portfolio acquired one industrial building totaling approximately 0.1 million square feet for approximately $9 million.

Hospitality Real Estate
As of September 30, 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% as of September 30, 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. The select service hospitality portfolio the Company acquired through consensual transfer during the third quarter 2017 is not included in the Hospitality Real Estate segment.

During the third quarter 2017, this segment’s net income attributable to common stockholders was $3.3 million, Core FFO was $42.1 million and consolidated EBITDA was $78.9 million. Over the same period last year, third quarter 2017 hospitality same store portfolio revenue increased 0.6% and EBITDA declined (1.5)%, primarily due to increases in property taxes and wages in addition to one-time hurricane related expenses incurred during the third quarter 2017. 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.







                
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The following table presents EBITDA and certain operating metrics by brands in the Company’s Hospitality Real Estate segment:
 
 
 
 
 
Same Store
 
Consolidated
 
CLNS OP Share
 
 
 
 
 
Avg. Daily Rate
 
RevPAR
 
EBITDA (1)
 
EBITDA(2)
 
Consolidated EBITDA
 
Occupancy %(3)
 
(In dollars)(3)
 
(In dollars)(3)
($ In millions)
Q3 2017
 
Q3 2017
 
Q3 2017
Q3 2016
 
Q3 2017
Q3 2016
 
Q3 2017
Q3 2016
 
Q3 2017
Q3 2016
Marriott
$
60.8

 
$
57.3

 
$
60.8

$
63.2

 
76.6
%
77.1
%
 
$
129

$
128

 
$
99

$
99

Hilton
13.2

 
12.5

 
13.2

12.5

 
82.6
%
82.6
%
 
131

129

 
108

106

Other
4.9

 
4.6

 
4.9

4.4

 
86.3
%
77.2
%
 
139

143

 
120

111

Total/W.A.
$
78.9

 
$
74.4

 
$
78.9

$
80.1

 
78.1
%
78.0
%
 
$
130

$
129

 
$
102

$
101

___________________________________________________
(1)
Q3 2017 Consolidated EBITDA excludes FF&E reserve amounts of $9.7 million.
(2)
CLNS OP Share EBITDA represents third quarter 2017 Consolidated EBITDA multiplied by CLNS OP’s ownership interest as of September 30, 2017.
(3)
For each metric, data represents average during the presented quarter.

Other Equity and Debt
In addition to the 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; and multiple classes of commercial real estate (“CRE”) securities. During the third quarter 2017, this segment’s aggregate net income attributable to common stockholders was $103.1 million and Core FFO was $133.5 million.
The following table presents undepreciated carrying value by investment type in the Company’s Other Equity and Debt segment:
 
CLNS OP Share
 
September 30, 2017
 
Undepreciated Carrying Value
($ In millions)
Assets
 
Equity
Net Lease Real Estate Equity
$
796

 
$
349

Other Real Estate Equity
1,926

 
1,014

Real Estate Debt
2,722

 
1,955

Real Estate Private Equity Funds and CRE Securities
465

 
465

Special Situations (NRE, Albertsons and Other GP Co-investments)
246

 
246

Other Equity and Debt Total
$
6,155

 
$
4,029


Other Equity and Debt Segment Asset Acquisitions and Dispositions
During the third quarter 2017, the Company invested and agreed to invest approximately $157 million in other real estate equity and debt investments primarily related to an upsize of a strategic multifamily equity investment.

On July 1, 2017, the Company and certain investment vehicles managed by affiliates of the Company acquired ownership of an approximately $1.3 billion select service hospitality portfolio, or the THL Hotel Portfolio, primarily located across the Southwest and Midwest United States. The acquisition involved 148 hotels and took place through a consensual transfer following a maturity default on our approximately $289 million junior mezzanine loan investment. As a result, the Company consolidated the gross assets and liabilities of the portfolio at fair value, which did not result in the Company recognizing a gain or loss. As of September 30, 2017, the Company's equity ownership in the portfolio was approximately 55% and its share of the undepreciated carrying value of assets and equity were $690 million and $214 million, respectively.

Subsequent to the third quarter 2017, the Company obtained over $1.0 billion of consolidated mortgage debt primarily used to refinance all of the approximately $890 million of assumed debt in the THL Hotel Portfolio. The new mortgage debt, which extends maturity from 2018 to 2022, will facilitate the execution of the strategic value-add plan by providing excess proceeds for capital expenditures.




                
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During the third quarter 2017, the Company sold a portfolio of net lease properties located in Switzerland and its entire interest in Colony American Finance resulting in aggregate net proceeds of $184 million and sold or received payoffs of multiple other real estate debt and equity assets for aggregate net proceeds of $73 million.

Colony NorthStar Credit Real Estate, Inc.
On August 28, 2017, the Company announced that certain subsidiaries had entered into a definitive tri-party agreement under which a select portfolio of the Company’s assets and liabilities will combine with NorthStar Real Estate Income Trust, Inc. (“NorthStar I”) and NorthStar Real Estate Income II, Inc. (“NorthStar II”) in an all-stock combination transaction to create a leading commercial real estate credit REIT, which will be externally managed by Colony NorthStar and is expected to have approximately $5.5 billion in assets and $3.4 billion in equity value upon closing.

The transaction is expected to close in the first quarter of 2018, subject to customary closing conditions, including approval by the NorthStar I and NorthStar II stockholders, and is also conditioned upon a successful listing of the Colony NorthStar Credit Real Estate, Inc.’s common stock on a national securities exchange.

Investment Management
The Company’s Investment Management segment includes the business and operations of managing capital on behalf of third-party investors through closed and open-end private funds, non-traded and traded real estate investment trusts and registered investment companies. As of September 30, 2017, the Company had $41.7 billion of third-party AUM, which increased from $40.3 billion as of June 30, 2017. The increase in AUM was driven primarily by new investment activity and syndication of the Southern California Class A office building the Company acquired in the second quarter 2017. During the third quarter 2017, this segment’s aggregate net income attributable to common stockholders was $28.5 million and Core FFO was $56.3 million.

Agreement to Sell Townsend
On September 1, 2017, the Company announced that it entered into a definitive agreement to sell The Townsend Group (“Townsend”) to Aon plc for $475 million, subject to certain purchase price adjustments. Net proceeds to affiliates of Colony NorthStar for its 84% ownership interest after transaction and other expenses is estimated to be approximately $379 million. Subject to certain customary and negotiated closing conditions, the deal is expected to close in the fourth quarter 2017 or first quarter 2018.

Digital Real Estate Infrastructure
In October 2017, the Company, in partnership with Digital Bridge, entered into a definitive agreement to invest approximately $200 million in Andean Tower Partners, for continued digital real estate infrastructure investment in the region. The investment is expected to close in the fourth quarter 2017 and upon closing, will be warehoused for an expected contribution to a new digital real estate infrastructure third-party capital investment vehicle managed by the Company and Digital Bridge.

NRE Management Agreement Amendment
On November 9, 2017, the Company agreed to amend and restate its management agreement with NRE effective January 1, 2018. Key terms of the amendment include, among other terms: 1) the restructuring of the base management fee, which will change from a fixed base fee to a variable fee based on EPRA NAV (as defined); 2) modification of the incentive fee, which will change from being based on CAD (as defined) per share to 20% over the excess of the total stockholder return (defined as dividends and stock price appreciation, and subject to a high water mark established when a prior incentive is realized) over a cumulative 10% annual hurdle rate; and 3) reduction of term from an initial 20 year term to a five year term. Under the terms of the amended and restated management agreement, beginning with NRE's 2018 annual stockholder's meeting, the Company will have the right to nominate one director (who is expected to be one of NRE's current directors employed by the Company) to NRE's Board of Directors. In addition, NRE provided the Company with an ownership waiver under NRE’s charter, which allows the Company to purchase up to 45% of NRE’s common stock. In connection with the waiver, the Company agreed that for all matters submitted to a vote of NRE’s stockholders, to the extent the Company owns more than 25% of NRE’s common stock, the Company will vote the excess shares in the same proportion that the remaining NRE shares not owned by the Company are voted. The amendments to NRE’s management agreement and the ownership waiver were approved by a strategic review committee formed earlier this year by NRE's Board of Directors. Please refer to NRE’s Quarterly Report on Form 10-Q and the exhibits thereto for additional details relating to the terms of the amended and restated management agreement and ownership waiver and for a copy of the amended and restated management agreement.

Capital Raising and Investment Activity
During the third quarter 2017, the Company and its share of affiliates raised approximately $327 million of third-party capital from institutional clients and retail investors, including the successful syndication of approximately 90% of the equity, or $148 million, in the Southern California Class A office building the Company acquired in the second quarter 2017.

During the third quarter 2017, institutional funds and retail companies managed by the Company, excluding the industrial open-end fund, invested and agreed to invest approximately $372 million in real estate equity, debt and CRE securities investments.


                
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Assets Under Management (“AUM”)
As of September 30, 2017, the Company had $57 billion of AUM:
($ In billions)
Amount
 
% of
Grand Total
 
 
 
 
Balance Sheet (CLNS OP Share):
 
 
 
Healthcare
$
4.1

 
7.2
%
Industrial
1.2

 
2.0
%
Hospitality
3.9

 
6.8
%
Other Equity and Debt
6.2

 
10.9
%
Balance Sheet Subtotal
15.4

 
26.9
%
 
 
 
 
Investment Management:
 
 
 
Institutional Funds
10.6

 
18.6
%
Retail Companies
7.0

 
12.3
%
NorthStar Realty Europe (NYSE:NRE)
2.1

 
3.7
%
Townsend (held for sale)
14.8

 
25.9
%
Pro Rata Corporate Investments
7.2

 
12.6
%
Investment Management Subtotal
41.7

 
73.1
%
 
 
 
 
Grand Total
$
57.1

 
100.0
%

Liquidity and Financing
As of November 3, 2017, the Company had in excess of $1.2 billion of liquidity through cash-on-hand and availability under its revolving credit facility.

On September 22, 2017, the Company issued 12.6 million shares of 7.125% Series J cumulative redeemable perpetual preferred stock, generating net proceeds of $305 million, inclusive of 1.6 million shares issued from the over-allotment option exercised by the offering underwriters.

In October 2017, the Company redeemed all of the shares of its 8.875% Series C cumulative redeemable perpetual preferred stock and approximately 7.9 million shares, or 56.3%, of its 8.50% Series B cumulative redeemable perpetual preferred stock.

Common Stock and Operating Company Units
As of November 3, 2017, the Company had approximately 546.3 million shares of Class A and B common stock outstanding and the Company’s operating partnership had approximately 32.3 million operating company units outstanding held by members other than the Company or its subsidiaries.

During the third quarter 2017, the Company repurchased approximately 4.4 million shares of its Class A common stock for $57 million and another approximately 3.1 million shares for $39 million subsequent to the third quarter 2017 resulting in aggregate year-to-date 2017 repurchases of approximately 20.4 million shares for $264 million.

Common and Preferred Dividends
On August 3, 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 third quarter of 2017, which was paid on October 16, 2017 to respective stockholders of record on September 30, 2017. The Board of Directors also declared cash dividends 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 B stock - $0.515625 per share, Series C stock - $0.5546875 per share, Series D stock - $0.53125 per share and Series E stock - $0.546875 per share, such dividends to be paid on November 15, 2017 to the respective stockholders of record on November 10, 2017, except where noted below, and (ii) with respect to each of the Series G stock - $0.46875 per share, Series H stock - $0.4453125 per share and Series I stock - $0.446875 per share, such dividends were paid on October 16, 2017 to the respective stockholders of record on October 10, 2017. In October 2017, the Company redeemed approximately 7.9 million shares, or 56.3%, of the Series B cumulative redeemable perpetual preferred stock and all of the Series C cumulative redeemable perpetual preferred stock and paid all accrued cash dividends, in accordance of the terms of the redemption with respect to such securities. The Company intends to pay a cash


                
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dividend to stockholders of $0.55911 per share of its newly issued Series J cumulative redeemable perpetual preferred stock on January 16, 2018, for the period from the date of issuance through January 16, 2018.

On November 2, 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 fourth quarter of 2017, which will be paid on or about January 15, 2018 to respective stockholders of record on December 29, 2017. The Board of Directors also declared cash dividends 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 B stock - $0.515625 per share, Series D stock - $0.53125 per share and Series E stock - $0.546875 per share, such dividends to be paid on February 15, 2018 to the respective stockholders of record on February 9, 2018 and (ii) with respect to each of the Series G stock - $0.46875 per share, Series H stock - $0.4453125 per share, Series I stock - $0.446875 per share and Series J stock - $0.55911 per share, such dividends to be paid on January 16, 2018 to the respective stockholders of record on December 29, 2017.

Non-GAAP Financial Measures and Definitions

Assets Under Management (“AUM”)
Refers to assets which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. AUM is generally based on reported gross undepreciated carrying value of managed investments as reported by each underlying vehicle at September 30, 2017, while retail companies and NorthStar Realty Europe are presented as of November 3, 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) gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment; (iii) equity-based compensation expense; (iv) effects of straight-line rent revenue and straight-line rent expense on ground leases; (v) amortization of acquired above- and below-market lease values; (vi) amortization of deferred financing costs and debt premiums and discounts; (vii) unrealized fair value gains or losses and foreign currency remeasurements; (viii) acquisition-related expenses, merger and integration costs; (ix) amortization and impairment of finite-lived intangibles related to investment management contracts and customer relationships; (x) gain on remeasurement of consolidated investment entities and the effect of amortization thereof; (xi) non-real estate depreciation and amortization; (xii) change in fair value of contingent consideration; and (xiii) tax effect on certain of the foregoing adjustments.

FFO and Core FFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO and Core FFO should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company’s calculations of FFO and Core FFO may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.

The Company uses FFO and Core FFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare its operating performance with that of other REITs. However, because FFO and Core FFO exclude depreciation and amortization and capture neither the changes in the value of the Company’s properties that resulted from use or market conditions nor the level of capital expenditures and leasing


                
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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.

Net Operating Income (“NOI”) / Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”)
NOI for healthcare and industrial segments represents total property and related income less property operating expenses, adjusted for the effects of (i) straight-line rental income adjustments; (ii) amortization of acquired above- and below-market lease adjustments to rental income; and (iii) other items such as adjustments for the Company’s share of NOI of unconsolidated ventures.

EBITDA for the hospitality real estate segment represents net income from continuing operations of that segment excluding the impact of interest expense, income tax expense or benefit, and depreciation and amortization.

The Company believes that NOI and EBITDA are useful measures of operating performance of its respective real estate portfolios as they are more closely linked to the direct results of operations at the property level. NOI also reflects actual rents received during the period after adjusting for the effects of straight-line rents and amortization of above- and below- market leases; therefore, a comparison of NOI across periods better reflects the trend in occupancy rates and rental rates of the Company’s properties.

NOI and EBITDA exclude historical cost depreciation and amortization, which are based on different useful life estimates depending on the age of the properties, as well as adjust for the effects of real estate impairment and gains or losses on sales of depreciated properties, which eliminate differences arising from investment and disposition decisions. This allows for comparability of operating performance of the Company’s properties period over period and also against the results of other equity REITs in the same sectors. Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of the Company’s properties, NOI and EBITDA provide a measure of operating performance independent of the Company’s capital structure and indebtedness.

However, the exclusion of these items as well as others, such as capital expenditures and leasing costs, which are necessary to maintain the operating performance of the Company’s properties, and transaction costs and administrative costs, may limit the usefulness of NOI and EBITDA. NOI may fail to capture significant trends in these components of U.S. GAAP net income (loss) which further limits its usefulness.

NOI should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, the Company’s methodology for calculating NOI involves subjective judgment and discretion and may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with other companies.

European Public Real Estate Association Net Asset Value ("EPRA NAV")
EPRA NAV is a non-GAAP measure used by other European real estate companies. EPRA NAV should not be considered as an alternative to net assets determined in accordance with U.S. GAAP as a measure of NRE’s asset values. EPRA NAV is derived from NRE’s U.S. GAAP balance sheet with adjustments reflecting NRE’s interpretation of the EPRA guidance. As NRE’s entire portfolio is based in Europe, NRE calculates EPRA NAV to compare its balance sheet to other European real estate companies and believes that disclosing EPRA NAV provides investors with a meaningful measure of NRE’s net asset value. NRE calculates EPRA NAV based on the EPRA best practices recommendations. EPRA NAV makes adjustments to net assets as determined in accordance with U.S. GAAP in order to provide stockholders a measure of fair value of the company’s assets and liabilities with a long-term investment strategy. This performance measure excludes assets and liabilities that are not expected to be realized in normal circumstances. EPRA NAV includes the revaluation of investment properties and excludes the fair value of financial instruments that NRE intends to hold to maturity, deferred tax and goodwill that resulted from deferred tax. All other assets, including real property and investments reported at cost are adjusted to fair value based on periodic appraisals. This measure should not be considered as an alternative to measuring NRE’s net assets in accordance with U.S. GAAP.

Cash Available for Distribution ("CAD")
NRE believes CAD provides investors and management with a meaningful indicator of operating performance. The definition of CAD may be adjusted from time to time for NRE's reporting purposes at NRE's discretion, acting through its audit committee or otherwise. CAD may fluctuate from period to period based upon a variety of factors, including, but not limited to, the timing and amount of investments, repayments and asset sales, capital raised, use of leverage, changes in the expected yield of investments and the overall conditions in commercial real estate and the economy generally. NRE calculates CAD by subtracting from or adding to net income (loss) attributable to common stockholders, non-controlling interests and the following items: depreciation and amortization items including straight-line rental income or expense (excluding amortization of rent free periods), amortization of above/below market leases, amortization of deferred financing costs, amortization of discount on financings and other and equity-based compensation; unrealized gain (loss) on derivatives and other; realized gain (loss) on sales and other


                
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(excluding any realized gain (loss) on foreign currency derivatives); impairment on depreciable property; non-recurring bad debt expense; acquisition gains or losses; transaction costs; foreign currency gains (losses); impairment on goodwill and other intangible assets; and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. These items, if applicable, include any adjustments for unconsolidated ventures.

CAD should not be considered as an alternative to net income (loss) attributable to common stockholders, determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, NRE's methodology for calculating CAD involves subjective judgment and discretion and may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies.

Third Quarter 2017 Conference Call
The Company will conduct a conference call to discuss the financial results on Thursday, November 9, 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 November 9, 2017, at 10:00 a.m. PT / 1:00 p.m. ET, through November 16, 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 13672210. International callers should dial (412) 317-6671 and enter the same conference ID number.

Supplemental Financial Report
A Third 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 $57 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 18 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.

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., the impact of changes to organizational structure and employee composition, the timing and pace of growth of the Company's Industrial platform, the Company's ability to complete the potential combination transaction to create Colony NorthStar Credit Real Estate, Inc. in the time anticipated or at all, and whether such transaction will result in the strategic benefits we expect, whether the Company will realize any anticipated benefits from the Digital Bridge partnership, the impact of the NRE management agreement modification on NRE's growth, the Company's portfolio composition, 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 to maintain inclusion and relative performance on the RMZ, Colony NorthStar’s leverage, including


                
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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 BALANCE SHEETS
(In thousands, except per share data)
 
 
September 30, 2017 (Unaudited)
 
December 31, 2016
Assets
 
 
 
 
     Cash and cash equivalents
 
$
877,928

 
$
376,005

     Restricted cash
 
394,052

 
111,959

     Real estate, net
 
14,354,541

 
3,243,631

     Loans receivable, net
 
3,455,902

 
3,430,608

     Investments in unconsolidated ventures ($314,274 and $0 at fair value, respectively)
 
1,572,592

 
1,052,995

     Securities, at fair value
 
408,663

 
23,446

     Goodwill
 
1,828,816

 
680,127

     Deferred leasing costs and intangible assets, net
 
932,498

 
278,741

Assets held for sale ($70,455 and $67,033 at fair value, respectively)
 
1,603,933

 
292,924

Other assets ($10,829 and $36,101 at fair value, respectively)
 
470,600

 
260,585

     Due from affiliates
 
91,239

 
9,971

Total assets
 
$
25,990,764

 
$
9,760,992

Liabilities
 
 
 
 
Debt, net
 
$
10,791,975

 
$
3,715,618

Accrued and other liabilities ($216,921 and $5,448 at fair value, respectively)
 
1,019,816

 
286,952

Intangible liabilities, net
 
206,484

 
19,977

Liabilities related to assets held for sale
 
328,809

 
14,296

Due to affiliates ($26,910 and $41,250 at fair value, respectively)
 
32,384

 
41,250

Dividends and distributions payable
 
187,145

 
65,972

Preferred stock redemptions payable
 
322,118

 

Total liabilities
 
12,888,731

 
4,144,065

Commitments and contingencies
 
 
 
 
Redeemable noncontrolling interests
 
108,990

 

Equity
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock, $0.01 par value per share; $1,636,605 and $625,750 liquidation preference, respectively; 250,000 and 50,000 shares authorized, respectively; 65,464 and 25,030 shares issued and outstanding, respectively
 
1,606,996

 
607,200

Common stock, $0.01 par value per share
 
 
 
 
Class A, 949,000 and 658,369 shares authorized; 547,844 and 166,440 shares issued and outstanding (1)
 
5,479

 
1,664

Class B, 1,000 shares authorized; 742 and 770 shares issued and outstanding (1)
 
7

 
8

Additional paid-in capital
 
7,947,994

 
2,443,100

Distributions in excess of earnings
 
(650,135
)
 
(246,064
)
Accumulated other comprehensive income (loss)
 
25,831

 
(32,109
)
Total stockholders’ equity
 
8,936,172

 
2,773,799

     Noncontrolling interests in investment entities
 
3,627,353

 
2,453,938

     Noncontrolling interests in Operating Company
 
429,518

 
389,190

Total equity
 
12,993,043

 
5,616,927

Total liabilities, redeemable noncontrolling interests and equity
 
$
25,990,764

 
$
9,760,992


__________
(1)
As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio.




                
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COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended September 30,
 
 
2017
 
2016
Revenues
 
 
 
 
Property operating income
 
$
613,665

 
$
92,505

Interest income
 
106,479

 
98,275

Fee income
 
59,693

 
17,233

Other income
 
10,016

 
4,054

Total revenues
 
789,853

 
212,067

Expenses
 
 
 
 
Property operating expense
 
332,006

 
28,903

Interest expense
 
152,054

 
42,196

Investment, servicing and commission expense
 
18,421

 
5,115

Transaction costs
 
4,636

 
6,190

Depreciation and amortization
 
162,694

 
43,593

Provision for loan loss
 
5,116

 
6,569

Impairment loss
 
24,073

 
941

Compensation expense
 
85,022

 
29,582

Administrative expenses
 
26,502

 
12,891

Total expenses
 
810,524

 
175,980

Other income
 
 
 
 
     Gain on sale of real estate assets
 
72,541

 
11,151

     Other gain (loss), net
 
(8,822
)
 
4,573

     Earnings from investments in unconsolidated ventures
 
17,447

 
16,684

Income before income taxes
 
60,495

 
68,495

     Income tax benefit
 
10,613

 
3,409

Net income from continuing operations
 
71,108

 
71,904

Income from discontinued operations
 
1,481

 

Net income
 
72,589

 
71,904

Net income attributable to noncontrolling interests:
 
 
 
 
     Redeemable noncontrolling interests
 
1,678

 

     Investment entities
 
36,906

 
32,744

     Operating Company
 
97

 
4,189

Net income attributable to Colony NorthStar, Inc.
 
33,908

 
34,971

Preferred stock redemption
 
(918
)
 

Preferred stock dividends
 
33,176

 
12,093

Net income attributable to common stockholders
 
$
1,650

 
$
22,878

Basic earnings per share (1)
 
 
 
 
Net income from continuing operations per basic common share
 
$
0.00

 
$
0.14

Net income per basic common share
 
$
0.00

 
$
0.14

Diluted earnings per share (1)
 
 
 
 
Net income from continuing operations per diluted common share
 
$
0.00

 
$
0.14

Net income per diluted common share
 
$
0.00

 
$
0.14

Weighted average number of shares (1)
 
 
 
 
Basic
 
542,855

 
164,846

Diluted
 
542,855

 
164,846

__________
(1)
As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio.



                
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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 September 30, 2017
Net income attributable to common stockholders
 
$
1,650

Adjustments for FFO attributable to common interests in Operating Company:
 
 
Net income attributable to noncontrolling common interests in Operating Company
 
97

Real estate depreciation and amortization
 
146,026

Impairment write-downs associated with depreciable real estate
 
19,610

(Gain) loss from sales of depreciable real estate
 
(72,541
)
Less: Net income (loss) attributable to noncontrolling interests in investment entities
 
(46,160
)
FFO attributable to common interests in Operating Company and common stockholders
 
48,682

 
 
 
Additional adjustments for Core FFO attributable to common interests in Operating Company and common stockholders:
 
 
Gains and losses from sales of depreciable real estate within the Other Equity and Debt segment, net of depreciation, amortization and impairment previously adjusted for FFO(1)
 
50,884

Gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment
 
9,061

Equity-based compensation expense (2)
 
41,330

Straight-line rent revenue and straight-line rent expense on ground leases

 
(8,526
)
Change in fair value of contingent consideration
 
(6,090
)
Amortization of acquired above- and below-market lease values

 
(1,321
)
Amortization of deferred financing costs and debt premiums and discounts
 
20,673

Unrealized fair value gains or losses and foreign currency remeasurements

 
8,745

Acquisition and merger-related transaction costs
 
7,121

Merger integration costs (3)
 
7,729

Preferred shares redemption gain
 
(918
)
Amortization and impairment of investment management intangibles
 
14,677

Non-real estate depreciation and amortization
 
5,527

Gain on remeasurement of consolidated investment entities and the effect of amortization thereof
 
4,700

Tax (benefit) expense, net (4)
 
(5,877
)
Less: Adjustments attributable to noncontrolling interests in investment entities
 
(3,046
)
Core FFO attributable to common interests in Operating Company and common stockholders
 
$
193,351

 
 
 
FFO per common share / common OP unit (5)
 
$
0.08

FFO per common share / common OP unit—diluted (6)
 
$
0.08

Core FFO per common share / common OP unit (5)
 
$
0.33

Core FFO per common share / common OP unit—diluted (6)
 
$
0.32

Weighted average number of common OP units outstanding used for FFO and Core FFO per common share and OP unit (5)
 
584,057

Weighted average number of common OP units outstanding used for FFO per common share and OP unit—diluted (5)(6)
 
584,057

Weighted average number of common OP units outstanding used for Core FFO per common share and OP unit—diluted (5)(6)
 
622,296

__________
(1)
Net of $21.8 million of depreciation, amortization and impairment charges previously adjusted to calculate FFO and Core Earnings, a non-GAAP measure used by Colony Capital, Inc. prior to its internalization of the manager.
(2)
Includes $30.3 million of replacement award amortization.
(3)
Merger integration costs represent costs and charges incurred during the integration of Colony, NSAM and NRF. These integration costs are not reflective of the Company’s core operating performance and the Company does not expect to incur these costs subsequent to the completion of the merger integration. The majority of integration costs consist of severance, employee costs of those separated or scheduled for separation, system integration and lease terminations.



                
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(4)
Adjustment represents the impact of taxes on amortization and impairment of investment management intangibles assumed in business combinations.
(5)
Calculated based on weighted average shares outstanding including participating securities and assuming the exchange of all common OP units outstanding for common shares. As a result of the Merger, each outstanding share of common stock of Colony Capital, Inc. was exchanged for the right to receive 1.4663 of Class A common stock of Colony NorthStar. All historical share counts and per share amounts have been adjusted to reflect the exchange ratio.
(6)
For the three months ended September 30, 2017, included in the calculation of diluted Core FFO per share is the effect of adding back $7.1 million of interest expense associated with convertible senior notes and 38.2 million weighted average dilutive common share equivalents for the assumed conversion of the convertible senior notes. Such interest expense and weighted average dilutive common share equivalents are excluded for the calculation of diluted FFO as the effect would be antidilutive.

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 September 30, 2017 to NOI or EBITDA:

NOI and EBITDA were determined as follows:
 
 
Three Months Ended September 30, 2017
(In thousands)
 
Healthcare
 
Industrial
 
Hospitality
Total revenues
 
$
157,732

 
$
63,410

 
$
221,987

Straight-line rent revenue and amortization of above- and below-market lease intangibles
 
(6,513
)
 
(2,011
)
 
(3
)
Interest income
 

 
(165
)
 

Property operating expenses (1)
 
(73,217
)
 
(16,620
)
 
(143,042
)
Compensation expense (1)
 

 
(336
)
 

NOI or EBITDA
 
$
78,002

 
$
44,278

 
$
78,942

_________
(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 September 30, 2017
(In thousands)
 
Healthcare
 
Industrial
 
Hospitality
Net income (loss) from continuing operations
 
$
(22,318
)
 
$
5,775

 
$
4,169

Adjustments:
 
 
 
 
 
 
Straight-line rent revenue and amortization of above- and below-market lease intangibles
 
(6,513
)
 
(2,011
)
 
(3
)
Interest income
 

 
(165
)
 

Interest expense
 
48,586

 
8,803

 
35,351

Transaction, investment and servicing costs
 
4,631

 
7

 
1,784

Depreciation and amortization
 
44,646

 
29,010

 
34,549

Provision for loan losses
 
1,588

 

 

Impairment loss
 
8,250

 
44

 

Compensation and administrative expense
 
1,511

 
2,833

 
1,681

Other (gain) loss, net
 
(1,971
)
 

 
149

Earnings from investments in unconsolidated ventures
 

 
(34
)
 

Income tax (benefit) expense
 
(408
)
 
16

 
1,262

NOI or EBITDA
 
$
78,002

 
$
44,278

 
$
78,942





                
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-capturea08.jpg
 
 
                    

The following table summarizes Q3 2017 net income (loss) from continuing operations by segment:
(In thousands)
 
 
 
 
 
Net income (Loss) From Continuing Operations
Healthcare
 
 
 
 
 
$
(22,318
)
Industrial
 
 
 
 
 
5,775

Hospitality
 
 
 
 
 
4,169

Other Equity and Debt
 
 
 
 
 
145,077

Investment Management
 
 
 
 
 
30,723

Amounts Not Allocated to Segments
 
 
 
 
 
(92,318
)
Total Consolidated
 
 
 
 
 
$
71,108




Exhibit
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Supplemental Financial Report
Third Quarter 2017



November 9, 2017

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https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-coverpicture3a01.jpg


Cautionary Statement Regarding Forward-Looking Statements
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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., the impact of changes to organizational structure and employee composition, 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 to 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”).

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; and the availability of qualified personnel.

All forward-looking statements reflect 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
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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) gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment; (iii) equity-based compensation expense; (iv) effects of straight-line rent revenue and straight-line rent expense on ground leases; (v) amortization of acquired above- and below-market lease values; (vi) amortization of deferred financing costs and debt premiums and discounts; (vii) unrealized fair value gains or losses and foreign currency remeasurements; (viii) acquisition-related expenses, merger and integration costs; (ix) amortization and impairment of finite-lived intangibles related to investment management contracts and customer relationships; (x) gain on remeasurement of consolidated investment entities and the effect of amortization thereof; (xi) non-real estate depreciation and amortization; (xii) change in fair value of contingent consideration; and (xiii) tax effect on certain of the foregoing adjustments.
FFO and Core FFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO and Core FFO should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company’s calculations of FFO and Core FFO may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.
The Company uses FFO and Core FFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare its operating performance with that of other REITs. However, because FFO and Core FFO exclude depreciation and amortization and capture neither the changes in the value of the Company’s properties that resulted from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO and Core FFO as measures of the Company’s performance is limited. FFO and Core FFO should be considered only as supplements to 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 of the Company’s properties.
NOI and EBITDA exclude historical cost depreciation and amortization, which are based on different useful life estimates depending on the age of the properties, as well as adjust for the effects of real estate impairment and gains or losses on sales of depreciated properties, which eliminate differences arising from investment and disposition decisions. This allows for comparability of operating performance of the Company’s properties period over period and also against the results of other equity REITs in the same sectors. Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of the Company’s properties, NOI and EBITDA provide a measure of operating performance independent of the Company’s capital structure and indebtedness.
However, the exclusion of these items as well as others, such as capital expenditures and leasing costs, which are necessary to maintain the operating performance of the Company’s properties, and transaction costs and administrative costs, may limit the usefulness of NOI and EBITDA. NOI may fail to capture significant trends in these components of U.S. GAAP net income (loss) which further limits its usefulness.
NOI should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, the Company’s methodology for calculating NOI involves subjective judgment and discretion and may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with other companies.
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

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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 September 30, 2017, the consolidated healthcare portfolio consisted of 417 properties: 109 medical office properties, 191 senior housing properties, 103 skilled nursing facilities and 14 hospitals. The Company’s equity interest in the consolidated Healthcare Real Estate segment was approximately 71% as of September 30, 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 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 September 30, 2017, the consolidated industrial portfolio consisted of 388 primarily light industrial buildings totaling 44.1 million rentable square feet across 17 major U.S. markets and was 95% leased. The Company’s equity interest in the consolidated Industrial Real Estate segment was approximately 41% as of September 30, 2017. On September 30, 2017, the Company invested $50 million alongside $48 million of new third-party capital. Total third-party capital commitments were in excess of $1 billion compared to cumulative balance sheet contributions of $750 million as of September 30, 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 September 30, 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% as of September 30, 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. The select service hospitality portfolio the Company acquired through consensual transfer during the third quarter 2017 is not included in the Hospitality Real Estate segment.

Other Equity and Debt
In addition to the 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; and multiple classes of commercial real estate (“CRE”) securities.

Investment Management
The Company’s Investment Management segment includes the business and operations of managing capital on behalf of third-party investors through closed and open-end private funds, non-traded and traded real estate investment trusts and registered investment companies.

Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary Colony Capital Operating Company or the “CLNS OP”) and noncontrolling interests. Figures labeled as CLNS OP share represent the Company’s pro rata share.


Colony NorthStar, Inc. | Supplemental Financial Report
 
 


Table of Contents
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Page
I.
Overview
 
 
a.
Summary Metrics
6
 
b.
Summary of Segments
7-8
II.
Financial Results
 
 
a.
Consolidated Balance Sheet
9
 
b.
Noncontrolling Interests’ Share Balance Sheet
10
 
c.
Consolidated Segment Operating Results
11
 
d.
Noncontrolling Interests’ Share Segment Operating Results
12
 
e.
Segment Reconciliation of Net Income to FFO & Core FFO
13
III.
Capitalization
 
 
a.
Overview
14
 
b.
Investment-Level Debt Overview
15
 
c.
Revolving Credit Facility Overview
16
 
d.
Corporate Securities Overview
17
 
e.
Debt Maturity and Amortization Schedules
18
IV.
Healthcare Real Estate
 
 
a.
Summary Metrics and Operating Results
19
 
b.
Portfolio Overview
20-21
V.
Industrial Real Estate
 
 
a.
Summary Metrics and Operating Results
22
 
b.
Portfolio Overview
23
 
 
 
 
 
 
 
 
Page
VI.
Hospitality Real Estate
 
 
a.
Summary Metrics and Operating Results
24
 
b.
Portfolio Overview
25
VII.
Other Equity and Debt
 
 
a.
Net Lease and Other Real Estate Equity
26
 
b.
Real Estate Debt
27-29
 
c.
Special Situations
30
 
d.
Real Estate PE Fund Interests
31
 
e.
CRE Securities
32
VIII.
Investment Management
 
 
a.
Summary Metrics
33
 
b.
Assets Under Management
34
 
c.
Retail Companies
35
IX.
Appendices
 
 
a.
Definitions
37
 
b.
Reconciliation of Net Income (Loss) to NOI/EBITDA
38-39
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Colony NorthStar, Inc. | Supplemental Financial Report
5

 




Ia. Overview - Summary Metrics
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($ and shares in thousands, except per share data and as noted; as of or for the three months ended September 30, 2017, unless otherwise noted) (Unaudited)
Financial Data
 
Net income (loss) attributable to common stockholders
$
1,650

Net income (loss) attributable to common stockholders per basic share

FFO
48,682

FFO per basic share
0.08

Core FFO
193,351

Core FFO per basic share
0.33

Q4 2017 dividend per share
0.27

Annualized Q4 2017 dividend per share
1.08

 
 
Balance Sheet, Capitalization and Trading Statistics
 
Total consolidated assets
$
25,990,764

 CLNS OP share of consolidated assets
19,226,637

Total consolidated debt(1)
11,055,599

 CLNS OP share of consolidated debt(1)
8,272,204

Shares and OP units outstanding as of November 3, 2017
578,554

Share price as of November 3, 2017
12.38

Market value of common equity & OP units
7,162,499

Liquidation preference of perpetual preferred equity (excluding $322 million redeemed in the fourth quarter 2017)
1,636,605

Insider ownership of shares and OP units
7.1
%
AUM
$ 57.1 billion











Notes:
In evaluating the information presented throughout this presentation see the appendices to this presentation for definitions and reconciliations of non-GAAP financial measures to GAAP measures.
(1)
Represents principal balance and excludes debt issuance costs, discounts and premiums. Excludes $280 million principal balance of non-recourse CDO securitization debt.

Colony NorthStar, Inc. | Supplemental Financial Report
6

 




Ib. Overview - Summary of Segments
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($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
Consolidated amount
 
CLNS OP share of
consolidated amount
Healthcare Real Estate(1)
 
 
 
Q3 2017 net operating income(2)
$
78,002

 
$
55,304

Annualized net operating income
312,008

 
221,216

Investment-level non-recourse financing(3)
3,318,595

 
2,365,221

 
 
 
 
Industrial Real Estate
 
 
 
Q3 2017 net operating income(2)
44,278

 
18,358

Annualized net operating income
177,112

 
73,432

Investment-level non-recourse financing(3)
871,025

 
361,127

 
 
 
 
Hospitality Real Estate
 
 
 
Q3 2017 EBITDA(2)
78,942

 
74,442

Annualized EBITDA(4)
279,936

 
263,979

Investment-level non-recourse financing(3)
2,604,243

 
2,433,500














Notes:
(1)
NOI includes $1.3 million consolidated or $0.9 million CLNS OP share of interest earned related to $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans. This interest income is in the Interest Income line item on the Company’s Statement of Operations for the three months ended September 30, 2017.
(2)
For a reconciliation of net income/(loss) attributable to common stockholders to NOI/EBITDA, please refer to the appendix to this presentation.
(3)
Represents unpaid principal balance.
(4)
Annualized EBITDA is calculated using the pro rata percentage of historical Q3 2016 EBITDA relative to historical full year 2016 EBITDA to account for seasonality.

Colony NorthStar, Inc. | Supplemental Financial Report
7

 




Ib. Overview - Summary of Segments (cont’d)
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($ in thousands except as noted; as of or for the three months ended September 30, 2017, unless otherwise noted)
Consolidated amount
 
CLNS OP share of consolidated amount
Other Equity and Debt(1)
 
 
 
1) Net lease real estate equity
 
 
 
a) Q3 2017 net operating income(2)
$
12,545

 
$
12,527

b) Investment-level non-recourse financing(3)
448,020

 
447,376

c) Carrying value - unconsolidated / equity method investments

 

2) Other real estate equity
 
 
 
a) Undepreciated carrying value of real estate assets(4)
3,052,662

 
1,429,452

b) Investment-level non-recourse financing(3)
1,908,961

 
911,029

c) Carrying value - unconsolidated / equity method investments
513,290

 
479,156

3) Real estate debt
 
 
 
a) Loans receivable(5)
3,380,030

 
2,351,680

b) Investment-level non-recourse financing(3)
968,522

 
817,718

c) Carrying value - equity method investments
354,587

 
146,144

d) Carrying value - real estate assets (REO within debt portfolio) and other(4)
46,425

 
18,325

4) Special situations (see pg. 30 for details)
 
 
 
a) Carrying value of investments (market value of NRE position)
 
 
207,915

5) Real estate PE fund investments
 
 
 
a) Carrying value
 
 
287,886

6) CRE securities
 
 
 
a) Net carrying value
 
 
176,988

Investment Management
 
 
 
AUM ($ in millions)
 
 
41,724

Q3 2017 fee revenue and earnings of investments in unconsolidated ventures
 
 
61,608

Net Assets(6)
 
 
 
Cash and cash equivalents, restricted cash and other assets
1,822,616

 
1,395,382

Accrued and other liabilities and dividends payable(7)
1,383,111

 
1,183,645

Net assets
439,505

 
211,737

Notes:
(1)
Includes assets classified as held for sale on the Company’s financial statements.
(2)
Excludes approximately $0.1 million of NOI related to an asset sold during the third quarter 2017. For a reconciliation of net income/(loss) attributable to common stockholders to NOI/EBITDA, please refer to the appendix to 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 $3 million consolidated and CLNS OP share carrying value of real estate debt investments held in a CDO securitization and $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans.
(6)
Other assets exclude $11 million consolidated or $10 million CLNS OP share of deferred financing costs and accrued and other liabilities exclude $178 million consolidated and CLNS OP share of deferred tax liabilities and other liabilities which are not due in cash.
(7)
Includes $322 million of preferred stock redemption payable that was redeemed in the fourth quarter 2017.

Colony NorthStar, Inc. | Supplemental Financial Report
8

 




IIa. Financial Results - Consolidated Balance Sheet
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($ in thousands, except per share data) (Unaudited)
 
As of September 30, 2017
Assets
 
 
Cash and cash equivalents
 
$
877,928

Restricted cash
 
394,052

Real estate assets, net
 
14,354,541

Loans receivable, net
 
3,455,902

Investments in unconsolidated ventures
 
1,572,592

Securities available for sale, at fair value
 
408,663

Goodwill
 
1,828,816

Deferred leasing costs and intangible assets, net
 
932,498

Assets held for sale
 
1,603,933

Other assets
 
470,600

Due from affiliates
 
91,239

Total assets
 
$
25,990,764

Liabilities
 
 
Debt, net
 
$
10,791,975

Accrued and other liabilities
 
1,019,816

Intangible liabilities, net
 
206,484

Liabilities related to assets held for sale
 
328,809

Due to affiliates
 
32,384

Dividends and distributions payable
 
187,145

Preferred stock redemptions payable
 
322,118

Total liabilities
 
12,888,731

Commitments and contingencies
 
 
Redeemable noncontrolling interests
 
108,990

Equity
 
 
Stockholders’ equity:
 
 
Preferred stock, $0.01 par value per share; $1,636,605 liquidation preference; 250,000 shares authorized; 65,464 shares issued and outstanding
 
1,606,996

Common stock, $0.01 par value per share
 
 
Class A, 949,000 shares authorized; 547,844 shares issued and outstanding
 
5,479

Class B, 1,000 shares authorized; 742 shares issued and outstanding
 
7

Additional paid-in capital
 
7,947,994

Distributions in excess of earnings
 
(650,135
)
Accumulated other comprehensive income (loss)
 
25,831

Total stockholders’ equity
 
8,936,172

Noncontrolling interests in investment entities
 
3,627,353

Noncontrolling interests in Operating Company
 
429,518

Total equity
 
12,993,043

Total liabilities, redeemable noncontrolling interests and equity
 
$
25,990,764


Colony NorthStar, Inc. | Supplemental Financial Report
9

 




IIb. Financial Results - Noncontrolling Interests’ Share Balance Sheet
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except per share data) (Unaudited)
 
As of September 30, 2017
Assets
 
 
Cash and cash equivalents
 
$
168,669

Restricted cash
 
83,633

Real estate assets, net
 
4,401,232

Loans receivable, net
 
1,050,212

Investments in unconsolidated ventures
 
288,284

Securities available for sale, at fair value
 
21,433

Goodwill
 

Deferred leasing costs and intangible assets, net
 
175,899

Assets held for sale
 
398,205

Other assets
 
98,185

Due from affiliates
 
78,375

Total assets
 
$
6,764,127

Liabilities
 
 
Debt, net
 
$
2,733,309

Accrued and other liabilities
 
199,466

Intangible liabilities, net
 
65,430

Liabilities related to assets held for sale
 
29,579

Due to affiliates
 

Dividends and distributions payable
 

Preferred stock redemptions payable
 

Total liabilities
 
3,027,784

Commitments and contingencies
 

Redeemable noncontrolling interests
 
108,990

Equity
 
 
Stockholders’ equity:
 
 
Preferred stock, $0.01 par value per share; $1,636,605 liquidation preference; 250,000 shares authorized; 65,464 shares issued and outstanding
 

Common stock, $0.01 par value per share
 
 
Class A, 949,000 shares authorized; 547,844 shares issued and outstanding
 

Class B, 1,000 shares authorized; 742 shares issued and outstanding
 

Additional paid-in capital
 

Distributions in excess of earnings
 

Accumulated other comprehensive income (loss)
 

Total stockholders’ equity
 

Noncontrolling interests in investment entities
 
3,627,353

Noncontrolling interests in Operating Company
 

Total equity
 
3,627,353

Total liabilities, redeemable noncontrolling interests and equity
 
$
6,764,127



Colony NorthStar, Inc. | Supplemental Financial Report
10

 




IIc. Financial Results - Consolidated Segment Operating Results
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

 
 
Three Months Ended September 30, 2017
($ in thousands) (Unaudited)
 
Healthcare
 
Industrial
 
Hospitality
 
Other Equity and Debt
 
Investment
Management
 
Amounts not
allocated to
segments
 
Total
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating income
 
$
156,107

 
$
62,711

 
$
221,965

 
$
172,882

 
$

 
$

 
$
613,665

Interest income
 
1,293

 
165

 

 
104,341

 
2

 
678

 
106,479

Fee income
 

 

 

 
44

 
59,649

 

 
59,693

Other income
 
332

 
534

 
22

 
2,685

 
5,267

 
1,176

 
10,016

 Total revenues
 
157,732

 
63,410

 
221,987

 
279,952

 
64,918

 
1,854

 
789,853

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expense
 
73,217

 
16,620

 
143,042

 
99,127

 

 

 
332,006

Interest expense
 
48,586

 
8,803

 
35,351

 
46,333

 

 
12,981

 
152,054

Investment, servicing and commission expense
 
4,631

 
7

 
1,784

 
9,125

 
2,217

 
657

 
18,421

Transaction costs
 

 

 

 
2,460

 

 
2,176

 
4,636

Depreciation and amortization
 
44,646

 
29,010

 
34,549

 
38,579

 
14,457

 
1,453

 
162,694

Provision for loan loss
 
1,588

 

 

 
3,528

 

 

 
5,116

Impairment loss
 
8,250

 
44

 

 
6,718

 
9,061

 

 
24,073

Compensation expense
 
1,380

 
2,017

 
1,311

 
3,250

 
19,825

 
57,239

 
85,022

Administrative expenses
 
131

 
1,152

 
370

 
2,377

 
2,579

 
19,893

 
26,502

 Total expenses
 
182,429

 
57,653

 
216,407

 
211,497

 
48,139

 
94,399

 
810,524

Other income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of real estate assets
 

 

 

 
72,541

 

 

 
72,541

Other gain (loss), net
 
1,971

 

 
(149
)
 
(8,008
)
 
50

 
(2,686
)
 
(8,822
)
Earnings of investments in unconsolidated ventures
 

 
34

 

 
13,071

 
4,342

 

 
17,447

Income (loss) before income taxes
 
(22,726
)
 
5,791

 
5,431

 
146,059

 
21,171

 
(95,231
)
 
60,495

Income tax benefit (expense)
 
408

 
(16
)
 
(1,262
)
 
(982
)
 
9,552

 
2,913

 
10,613

Net income (loss) from continuing operations
 
(22,318
)
 
5,775

 
4,169

 
145,077

 
30,723

 
(92,318
)
 
71,108

Income (loss) from discontinued operations
 

 

 

 
1,481

 

 

 
1,481

Net income (loss)
 
(22,318
)
 
5,775

 
4,169

 
146,558

 
30,723

 
(92,318
)
 
72,589

Net income (loss) attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 

 

 

 
1,077

 
601

 

 
1,678

Investment entities
 
(4,087
)
 
4,043

 
655

 
36,295

 

 

 
36,906

Operating Company
 
(1,012
)
 
96

 
195

 
6,063

 
1,672

 
(6,917
)
 
97

Net income (loss) attributable to Colony NorthStar, Inc.
 
(17,219
)
 
1,636

 
3,319

 
103,123

 
28,450

 
(85,401
)
 
33,908

Preferred stock redemption
 

 

 

 

 

 
(918
)
 
(918
)
Preferred stock dividends
 

 

 

 

 

 
33,176

 
33,176

Net income (loss) attributable to common stockholders
 
$
(17,219
)
 
$
1,636

 
$
3,319

 
$
103,123

 
$
28,450

 
$
(117,659
)
 
$
1,650



Colony NorthStar, Inc. | Supplemental Financial Report
11

 




IId. Financial Results - Noncontrolling Interests’ Share Segment Operating Results

https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

 
 
Three Months Ended September 30, 2017
($ in thousands) (Unaudited)
 
Healthcare
 
Industrial
 
Hospitality
 
Other Equity and Debt
 
Investment
Management
 
Amounts not
allocated to
segments
 
Total
Revenues
 
 
 
 
 
 

 
 
 
 
 
 
 
Property operating income
 
$
36,926

 
$
37,320

 
$
13,975

 
$
73,049

 
$

 
$

 
$
161,270

Interest income
 
338

 
97

 

 
32,502

 

 

 
32,937

Fee income
 

 

 

 
1

 
2,403

 

 
2,404

Other income
 
87

 
(348
)
 
2

 
1,491

 
113

 

 
1,345

 Total revenues
 
37,351

 
37,069

 
13,977

 
107,043

 
2,516

 

 
197,956

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expense
 
16,811

 
10,072

 
8,846

 
45,101

 

 

 
80,830

Interest expense
 
11,780

 
5,195

 
2,173

 
13,664

 

 

 
32,812

Investment, servicing and commission expense
 
387

 
3

 
102

 
3,575

 
138

 

 
4,205

Transaction costs
 

 

 

 
1,103

 

 

 
1,103

Depreciation and amortization
 
10,612

 
17,097

 
2,165

 
13,732

 
379

 

 
43,985

Provision for loan loss
 
415

 

 

 
2,039

 

 

 
2,454

Impairment loss
 
2,064

 
26

 

 
2,380

 
231

 

 
4,701

Compensation expense
 

 
200

 

 
528

 
870

 

 
1,598

Administrative expenses
 
16

 
424

 
23

 
1,128

 
232

 

 
1,823

 Total expenses
 
42,085

 
33,017

 
13,309

 
83,250

 
1,850

 

 
173,511

Other income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of real estate assets
 

 

 

 
3,112

 

 

 
3,112

Other gain (loss), net
 
514

 

 
(13
)
 
3,215

 

 

 
3,716

Earnings of investments in unconsolidated ventures
 

 

 

 
6,853

 
37

 

 
6,890

Income (loss) before income taxes
 
(4,220
)
 
4,052

 
655

 
36,973

 
703

 

 
38,163

Income tax benefit (expense)
 
133

 
(9
)
 

 
(249
)
 
(102
)
 

 
(227
)
Net income (loss) from continuing operations
 
(4,087
)
 
4,043

 
655

 
36,724

 
601

 

 
37,936

Income (loss) from discontinued operations
 

 

 

 
648

 

 

 
648

Net income (loss) attributable to noncontrolling interests
 
$
(4,087
)
 
$
4,043

 
$
655

 
$
37,372

 
$
601

 
$

 
$
38,584



Colony NorthStar, Inc. | Supplemental Financial Report
12

 




IIe. Financial Results - Segment Reconciliation of Net Income to FFO & Core FFO
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

 
 
Three Months Ended September 30, 2017
 
 
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
 
$
(17,219
)
 
$
1,636

 
$
3,319

 
$
103,123

 
$
28,450

 
$
(117,659
)
 
$
1,650

 
$

 
$
1,650

Net income (loss) attributable to noncontrolling common interests in Operating Company
 
(1,012
)
 
96

 
195

 
6,063

 
1,672

 
(6,917
)
 
97

 

 
97

Net income (loss) attributable to common interests in Operating Company and common stockholders
 
(18,231
)
 
1,732

 
3,514

 
109,186

 
30,122

 
(124,576
)
 
1,747

 

 
1,747

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments for FFO:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
31,785

 
11,876

 
30,419

 
27,693

 
268

 

 
102,041

 
43,985

 
146,026

Impairment write-downs associated with depreciable real estate
 
5,792

 
18

 

 
4,338

 
4,598

 

 
14,746

 
4,864

 
19,610

(Gain) loss from sales of depreciable real estate
 

 

 

 
(69,972
)
 
120

 

 
(69,852
)
 
(2,689
)
 
(72,541
)
Less: Net income (loss) attributable to noncontrolling interests in investment entities
 

 

 

 

 

 

 

 
(46,160
)
 
(46,160
)
FFO
 
$
19,346

 
$
13,626

 
$
33,933

 
$
71,245

 
$
35,108

 
$
(124,576
)
 
$
48,682

 
$

 
$
48,682

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
 

 

 

 
55,369

 

 

 
55,369

 
(4,485
)
 
50,884

Gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment
 

 

 

 

 
7,593

 

 
7,593

 
1,468

 
9,061

Equity-based compensation expense(2)
 
3,306

 
417

 
270

 
549

 
2,453

 
34,335

 
41,330

 

 
41,330

Straight-line rent revenue and straight-line rent expense on ground leases
 
(3,499
)
 
(701
)
 
(4
)
 
(2,117
)
 
(41
)
 
1,109

 
(5,253
)
 
(3,273
)
 
(8,526
)
Change in fair value of contingent consideration
 

 

 

 

 

 
(6,090
)
 
(6,090
)
 

 
(6,090
)
Amortization of acquired above- and below-market lease values
 
(1,384
)
 
(133
)
 

 
809

 

 

 
(708
)
 
(613
)
 
(1,321
)
Amortization of deferred financing costs and debt premiums and discounts
 
5,279

 
180

 
5,848

 
3,164

 
56

 
1,567

 
16,094

 
4,579

 
20,673

Unrealized fair value gains or losses and foreign currency remeasurements
 
(1,428
)
 

 
74

 
1,244

 
176

 
8,519

 
8,585

 
160

 
8,745

Acquisition and merger-related transaction costs
 

 

 

 
1,451

 
2,397

 
2,176

 
6,024

 
1,097

 
7,121

Merger integration costs(3)
 

 

 

 

 

 
7,729

 
7,729

 

 
7,729

Preferred share redemption gain
 

 

 

 

 

 
(918
)
 
(918
)
 

 
(918
)
Amortization and impairment of investment management intangibles
 

 

 

 

 
14,310

 

 
14,310

 
367

 
14,677

Non-real estate depreciation and amortization
 
1,125

 
37

 
1,965

 
261

 
210

 
1,453

 
5,051

 
476

 
5,527

Gain on remeasurement of consolidated investment entities and the effect of amortization thereof
 

 

 

 
1,493

 

 

 
1,493

 
3,207

 
4,700

Tax (benefit) expense, net(4)
 

 

 

 

 
(5,940
)
 

 
(5,940
)
 
63

 
(5,877
)
Less: Adjustments attributable to noncontrolling interests in investment entities
 

 

 

 

 

 

 

 
(3,046
)
 
(3,046
)
Core FFO
 
$
22,745

 
$
13,426

 
$
42,086

 
$
133,468

 
$
56,322

 
$
(74,696
)
 
$
193,351

 
$

 
$
193,351

Notes:
(1)
Net of $21.8 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 $30.3 million of replacement award amortization.
(3)
Merger integration costs represent costs and charges incurred during the integration of Colony, NSAM and NRF. These integration costs are not reflective of the Company’s core operating performance and the Company does not expect to incur these costs subsequent to the completion of the merger integration. The majority of integration costs consist of severance, employee costs of those separated or scheduled for separation, system integration and lease terminations.
(4)
Adjustment represents the impact of taxes on amortization and impairment of investment management intangibles assumed in business combinations.

Colony NorthStar, Inc. | Supplemental Financial Report
13

 




IIIa. Capitalization - Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; except per share data; as of September 30, 2017, unless otherwise noted)
 
 
Consolidated amount
 
CLNS OP share of
consolidated amount
 
 
 
 
 
 
Debt (UPB)
 
 
 
 
 
$1,000,000 Revolving credit facility
 
 
$

 
$

Convertible/exchangeable senior notes
 
 
616,405

 
616,405

Corporate aircraft promissory note
 
 
39,711

 
39,711

Trust Preferred Securities ("TruPS")
 
 
280,117

 
280,117

Investment-level debt:
 
 
 
 
 
Healthcare
 
 
3,318,595

 
2,365,221

Industrial
 
 
871,025

 
361,127

Hospitality
 
 
2,604,243

 
2,433,500

Other Equity and Debt(1)
 
 
3,325,503

 
2,176,123

Total investment-level debt(2)
 
 
10,119,366

 
7,335,971

Total debt
 
 
$
11,055,599

 
$
8,272,204

 
 
 
 
 
 
Perpetual preferred equity, redemption value
 
 
 
 
 
Total perpetual preferred equity(3)
 
 
 
 
$
1,636,605

 
 
 
 
 
 
Common equity as of November 3, 2017
Price per share
 
Shares / Units
 
 
Class A and B common stock
$
12.38

 
546,268

 
$
6,762,798

OP units
12.38

 
32,286

 
399,701

Total market value of common equity
 
 
 
 
$
7,162,499

 
 
 
 
 
 
Total capitalization
 
 
 
 
$
17,071,308











Notes:
(1)
Excludes $280 million principal balance of non-recourse CDO securitization debt.
(2) Includes $203 million consolidated or $202 million CLNS OP share principal balance of debt related to assets held for sale.
(3)
Excludes $322 million redeemed in the fourth quarter 2017.

Colony NorthStar, Inc. | Supplemental Financial Report
14

 




IIIb. Capitalization - Investment-Level Debt Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 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
 
$
3,318,595

 
$
2,365,221

 
3.3

 
4.9
%
Industrial
 
Non-recourse
 
871,025

 
361,127

 
11.3

 
3.8
%
Hospitality
 
Non-recourse
 
2,604,243

 
2,433,500

 
3.8

 
4.3
%
Other Equity and Debt
 
 
 
 
 
 
 
 
 
 
Net lease real estate equity
 
Non-recourse
 
448,020


447,376

 
6.8

 
4.2
%
Other real estate equity
 
Non-recourse
 
1,908,961


911,029

 
2.2

 
4.0
%
Real estate debt(1)
 
Non-recourse
 
968,522


817,718

 
7.6

 
3.9
%
Total investment-level debt(2)
 
 
 
$
10,119,366

 
$
7,335,971

 
4.4

 
4.4
%




















Notes:
(1)
Excludes $280 million principal balance of non-recourse CDO securitization debt.
(2)
Includes $203 million consolidated or $202 million CLNS OP share principal balance of debt related to assets held for sale.

Colony NorthStar, Inc. | Supplemental Financial Report
15

 




IIIc. Capitalization - Revolving Credit Facility Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted; as of September 30, 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 September 30, 2017, CLNS is meeting all required covenant threshold levels



Colony NorthStar, Inc. | Supplemental Financial Report
16

 




IIId. Capitalization - Corporate Securities Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except per share data; as of September 30, 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)
5.375% Exchangeable senior notes
 
13,905

 
June 15, 2033
 
5.375% fixed
 
12.04

 
83.0837

 
1,155

 
On or after June 15, 2020(1)
Total convertible debt
 
$
616,405

 
 
 
 
 
 
 
 
 
 
 
 
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(2)
 
Liquidation
preference
 
Shares
outstanding
 
Callable period
Series B 8.25% cumulative redeemable perpetual preferred stock
 
$
152,855

 
6,114

 
Callable
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 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
Series I 7.15% cumulative redeemable perpetual preferred stock
 
345,000

 
13,800

 
On or after June 5, 2022
Series J 7.125% cumulative redeemable perpetual preferred stock
 
315,000

 
12,600

 
On or after September 22, 2022
Total preferred stock
 
$
1,636,605

 
65,464

 
 


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.
(2)
Excludes $322 million redeemed in the fourth quarter 2017.

Colony NorthStar, Inc. | Supplemental Financial Report
17

 




IIIe. Capitalization - Debt Maturity and Amortization Schedules
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of September 30, 2017)
Consolidated debt maturity and amortization schedule
 
Payments due by period(1)
 
Q4 2017
 
2018
 
2019
 
2020
 
2021 and after
 
Total
$1,000,000 Revolving credit facility
$

 
$

 
$

 
$

 
$

 
$

Convertible/exchangeable senior notes

 

 

 

 
616,405

 
616,405

Corporate aircraft promissory note
493

 
2,029

 
2,134

 
2,244

 
32,811

 
39,711

TruPS

 

 

 

 
280,117

 
280,117

Investment-level debt:
 
 
 
 
 
 
 
 
 
 
 
Healthcare
6,951

 
10,125

 
2,476,947

 
61,194

 
763,378

 
3,318,595

Industrial
196

 
806

 
839

 
10,875

 
858,309

 
871,025

Hospitality
214,493

 

 
512,000

 
247,750

 
1,630,000

 
2,604,243

Other Equity and Debt(2)
195,843

 
1,144,554

 
158,714

 
153,384

 
1,673,008

 
3,325,503

Total debt(3)
$
417,976

 
$
1,157,514

 
$
3,150,634

 
$
475,447

 
$
5,854,028

 
$
11,055,599

 
Pro rata debt maturity and amortization schedule
 
Payments due by period(1)
 
Q4 2017
 
2018
 
2019
 
2020
 
2021 and after
 
Total
$1,000,000 Revolving credit facility
$

 
$

 
$

 
$

 
$

 
$

Convertible/exchangeable senior notes

 

 

 

 
616,405

 
616,405

Corporate aircraft promissory note
493

 
2,029

 
2,134

 
2,244

 
32,811

 
39,711

TruPS

 

 

 

 
280,117

 
280,117

Investment-level debt:
 
 
 
 
 
 
 
 
 
 
 
Healthcare
5,154

 
7,702

 
1,731,109

 
48,903

 
572,353

 
2,365,221

Industrial
81

 
334

 
348

 
4,509

 
355,855

 
361,127

Hospitality
209,130

 

 
512,000

 
247,750

 
1,464,620

 
2,433,500

Other Equity and Debt(2)
150,265

 
541,157

 
75,782

 
75,586

 
1,333,333

 
2,176,123

Total debt(3)
$
365,123

 
$
551,222

 
$
2,321,373

 
$
378,992

 
$
4,655,494

 
$
8,272,204






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)
Excludes $280 million principal balance of non-recourse CDO securitization debt.
(3)
Includes $203 million consolidated or $202 million CLNS OP share principal balance of debt related to assets held for sale.

Colony NorthStar, Inc. | Supplemental Financial Report
18

 




IVa. Healthcare Real Estate - Summary Metrics and Operating Results
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
 
 
 
CLNS OP share of consolidated amount(1)
Net operating income
 
Consolidated amount
 
Net operating income:
 
 
 
 
MOB's
 
$
13,843

 
$
9,815

Senior Housing - Operating
 
18,704

 
13,261

Triple-Net Lease:
 
 
 
 
Senior Housing
 
14,638

 
10,378

Skilled Nursing Facilities
 
25,513

 
18,089

Hospitals
 
5,304

 
3,761

Total net operating income(2)
 
$
78,002

 
$
55,304

Annualized net operating income
 
$
312,008

 
$
221,216

Portfolio overview
 
Total number of buildings
 
Capacity
 
% Occupied
 
TTM Lease Coverage
 
WA Remaining
 Lease Term(3)
MOB's
 
109

 
3.9 million sq. ft.
 
83.5
%
 
 N/A
 
4.9

Senior Housing - Operating
 
109

 
6,436 units
 
87.8
%
 
 N/A
 
 N/A

Triple-Net Lease:
 
 
 
 
 
 
 
 
 
 
Senior Housing
 
82

 
4,065 units
 
82.3
%
 
1.4x
 
11.1

Skilled Nursing Facilities
 
103

 
12,420 beds
 
82.1
%
 
1.2x
 
7.2

Hospitals
 
14

 
872 beds
 
61.5
%
 
3.0x
 
11.7

Total / W.A.
 
417

 
 
 
82.9
%
 
1.5x
 
9.0

Same store financial/operating results related to the segment
 
 
 
 
 
 
 
 
% Occupied(4)
 
TTM Lease Coverage(5)
 
NOI
 
 
Q3 2017
 
Q2 2017
 
6/30/2017
 
3/31/2017
 
Q3 2017
 
Q2 2017
 
% Change
MOB's
 
83.5
%
 
83.5
%
 
 n/a
 
 n/a
 
$
13,643

 
$
14,110

 
(3.3
)%
Senior Housing - Operating
 
87.8
%
 
86.7
%
 
 n/a
 
 n/a
 
18,704

 
19,418

 
(3.7
)%
Triple-Net Lease:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing
 
82.3
%
 
83.6
%
 
1.4x
 
1.5x
 
14,638

 
14,408

 
1.6
 %
Skilled Nursing Facilities
 
82.1
%
 
83.4
%
 
1.2x
 
1.2x
 
25,562

 
24,407

 
4.7
 %
Hospitals
 
61.5
%
 
63.4
%
 
3.0x
 
3.3x
 
5,304

 
5,085

 
4.3
 %
Total / W.A.
 
82.9
%
 
83.6
%
 
1.5x
 
1.6x
 
$
77,851

 
$
77,428

 
0.5
 %
Notes:
(1)
CLNS OP Share represents Consolidated NOI multiplied by CLNS OP's interest as of September 30, 2017.
(2)
NOI includes $1.3 million consolidated or $0.9 million CLNS OP share of interest earned related to $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans. This interest income is in the Interest Income line item on the Company’s Statement of Operations for the three months ended September 30, 2017. For a reconciliation of net income/(loss) attributable to common stockholders to NOI, please refer to the appendix to this presentation.
(3)
Total / Weighted Average Remaining Lease Term includes Triple-Net Lease properties only.
(4)
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.
(5)
Represents the ratio of EBITDAR to cash rent on a trailing twelve month basis.

Colony NorthStar, Inc. | Supplemental Financial Report
19

 




IVb. Healthcare Real Estate - Portfolio Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

(As of or for the three months ended September 30, 2017, unless otherwise noted)
Triple-Net Lease Coverage(1)
 
 
 
% of Total Portfolio June 30, 2017 TTM NOI
 
 
June 30, 2017 TTM Lease Coverage
 
# of Leases
 
Senior Housing
 
Skilled Nursing Facilities & Hospitals
 
% Total NOI
 
WA Remaining Lease Term
Less than 0.99x
 
3

 
3
%
 
10
%
 
13
%
 
                    6 yrs

1.00x - 1.09x
 
4

 
%
 
24
%
 
24
%
 
                  8 yrs

1.10x - 1.19x
 
1

 
2
%
 
%
 
2
%
 
                  13 yrs

1.20x - 1.29x
 
3

 
4
%
 
17
%
 
21
%
 
                  10 yrs

1.30x - 1.39x
 
1

 
%
 
2
%
 
2
%
 
                    9 yrs

1.40x - 1.49x
 

 
%
 
%
 
%
 

1.50x and greater
 
5

 
17
%
 
21
%
 
38
%
 
                  10 yrs

Total / W.A.
 
17

 
26
%
 
74
%
 
100
%
 
                    9 yrs

Revenue Mix(2)
 
June 30, 2017 TTM
 
 
Private Pay
 
Medicare
 
Medicaid
MOB's
 
100
%
 

 

Senior Housing - Operating
 
86
%
 
4
%
 
10
%
Triple-Net Lease:
 
 
 
 
 
 
Senior Housing
 
64
%
 

 
36
%
Skilled Nursing Facilities
 
22
%
 
20
%
 
58
%
Hospitals
 
12
%
 
38
%
 
50
%
W.A.
 
56
%
 
11
%
 
33
%










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
20

 




IVb. Healthcare Real Estate - Portfolio Overview (cont’d)
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
Top 10 Geographic Locations by NOI
 
 
Number of
buildings
 
NOI
U.K.
 
43

 
$
9,253

Indiana
 
55

 
7,336

Florida
 
27

 
6,775

Illinois
 
38

 
6,248

Texas
 
32

 
5,572

Oregon
 
31

 
5,083

Pennsylvania
 
11

 
4,805

Ohio
 
35

 
4,676

California
 
15

 
4,564

Georgia
 
22

 
4,562

Total
 
309

 
$
58,874

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

 
$
14,964

 
87.9
%
 
 n/a
 
 n/a
Caring Homes (U.K.)(1)
 
Sr. Housing / NNN
 
43

 
7,973

 
86.5
%
 
                1.6x
 
14 yrs
Sentosa
 
SNF / NNN
 
11

 
4,805

 
89.5
%
 
                1.2x
 
12 yrs
Wellington Healthcare
 
SNF / NNN
 
11

 
4,382

 
88.1
%
 
                1.1x
 
9 yrs
Frontier
 
Sr. Housing / RIDEA / NNN
 
20

 
3,990

 
84.1
%
 
 n/a
 
 n/a
Miller
 
SNF / NNN
 
28

 
3,848

 
71.4
%
 
                1.9x
 
-
Consulate
 
SNF / NNN
 
10

 
2,839

 
79.1
%
 
                1.1x
 
10 yrs
Opis
 
SNF / NNN
 
11

 
2,735

 
90.8
%
 
                1.2x
 
6 yrs
Grace
 
SNF / NNN
 
9

 
2,553

 
84.0
%
 
                1.0x
 
3 yrs
Avanti Hospital Systems
 
Hospital
 
5

 
2,252

 
53.1
%
 
                3.9x
 
16 yrs
Total
 
 
 
230

 
$
50,341

 
 
 
 
 
 








Notes:
(1)
Caring Homes (U.K.) lease (EBITDAR) coverage includes additional collateral provided by the operator.

Colony NorthStar, Inc. | Supplemental Financial Report
21

 




Va. Industrial Real Estate - Summary Metrics and Operating Results
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 





($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
CLNS OP share of consolidated amount(1)
Net operating income
 
Consolidated amount(1)
 
Net operating income
 
$
44,278

 
$
18,358

Annualized net operating income
 
$
177,112

 
$
73,432

Portfolio overview
Total number of buildings
 
388

Rentable square feet (thousands)
 
44,146

% leased at end of period
 
95.2
%
Average remaining lease term
 
3.6 years

Same store financial/operating results related to the segment
 
 
 
 
 
 
Q3 2017
 
Q2 2017
 
% Change
Same store number of buildings
 
343

 
343

 

% leased at end of period
 
95.7
%
 
96.1
%
 
(0.4
)%
Revenues
 
$
54,947

 
$
54,428

 
1.0
 %
NOI
 
$
39,655

 
$
38,750

 
2.3
 %
Recent acquisitions
 
 
 
 
 
 
 
 
Property / portfolio name
 
Acquisition
date
 
Number of
buildings
 
Rentable
square feet (thousands)
 
% leased
 
Purchase
price
Q3 2017 acquisitions:
 
 
 
 
 
 
 
 
 
 
Baltimore / Philadelphia industrial portfolio
 
7/17/2017
 
20

 
2,810

 
94.0
%
 
$
201,000

Houston / Dallas / Jacksonville / Denver / Salt Lake City industrial portfolio
 
8/14/2017
 
10

 
1,530

 
100.0
%
 
126,050

Kansas City industrial portfolio
 
8/21/2017
 
5

 
596

 
87.0
%
 
37,150

Total / W.A.
 
 
 
35

 
4,936

 
95.0
%
 
$
364,200

 
 
 
 
 
 
 
 
 
 
 
Q4 2017 acquisitions:
 
 
 
 
 
 
 
 
 
 
Las Vegas industrial property
 
11/1/2017
 
1

 
103

 
100.0
%
 
$
8,500

Total
 
 
 
1

 
103

 
100.0
%
 
$
8,500




Notes:
(1)
CLNS OP Share represents Consolidated NOI multiplied by CLNS OP's interest as of September 30, 2017. For a reconciliation of net income/(loss) attributable to common stockholders to NOI, please refer to the appendix to this presentation.



Colony NorthStar, Inc. | Supplemental Financial Report
22

 




Vb. Industrial Real Estate - Portfolio Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
 
 
 
 
Top 10 Geographic Locations by NOI
 
Number of buildings
 
Rentable square feet (thousands)
 
NOI
 
% leased at end of period
Atlanta
 
81

 
7,970

 
$
8,112

 
98.5
%
Dallas
 
70

 
7,327

 
7,388

 
97.5
%
New Jersey, South / Philadelphia
 
34

 
3,763

 
4,168

 
95.9
%
Orlando
 
18

 
3,032

 
3,528

 
98.4
%
Phoenix
 
27

 
3,012

 
2,771

 
90.9
%
Minneapolis
 
18

 
2,814

 
3,423

 
95.5
%
Maryland-BWI
 
21

 
2,806

 
2,424

 
93.6
%
Chicago
 
26

 
2,786

 
3,107

 
95.1
%
Kansas City
 
14

 
2,260

 
1,552

 
96.6
%
Houston
 
23

 
2,092

 
2,058

 
88.6
%
    Total / W.A.
 
332

 
37,862

 
$
38,531

 
95.9
%
Top 10 Tenant Base by Industry
 
 
 
 
Industry
 
Total leased square feet (thousands)
 
% of total
Warehousing & Transportation
 
15,836

 
37.7
%
Manufacturing
 
6,918

 
16.5
%
Wholesale Trade
 
3,981

 
9.5
%
Professional, Scientific, and Technical Services
 
4,000

 
9.5
%
Health & Science
 
2,998

 
7.1
%
Construction & Contractors
 
2,619

 
6.2
%
Retail Trade
 
1,260

 
3.0
%
Entertainment & Recreation
 
1,114

 
2.6
%
Media & Information
 
3,199

 
7.6
%
Public Administration & Government
 
113

 
0.3
%
    Total
 
42,038

 
100.0
%



Colony NorthStar, Inc. | Supplemental Financial Report
23

 




VIa. Hospitality Real Estate - Summary Metrics and Operating Results
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 
 

($ in thousands; as of or for the three months ended September 30, 2017, unless otherwise noted)
 
 
 
CLNS OP share of consolidated amount(1)
EBITDA
 
Consolidated amount
 
EBITDA:
 
 
 
 
    Select Service
 
$
40,944

 
$
38,610

    Extended Stay
 
35,337

 
33,323

    Full Service
 
2,661

 
2,509

Total EBITDA(2)
 
$
78,942

 
$
74,442

Annualized EBITDA(3)
 
$
279,936

 
$
263,979

Portfolio overview by type
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of hotels
 
Number of rooms
 
Avg. qtr. % occupancy
 
Avg. daily rate (ADR)
 
RevPAR
 
Q3 2017 EBITDA
 
EBITDA margin
Select service
 
97

 
13,193

 
74.5
%
 
$
123

 
$
92

 
$
40,944

 
33.7
%
Extended stay
 
66

 
7,936

 
84.4
%
 
138

 
117

 
35,337

 
40.6
%
Full service
 
4

 
962

 
74.2
%
 
153

 
114

 
2,661

 
19.9
%
    Total / W.A.
 
167

 
22,091

 
78.1
%
 
$
130

 
$
102

 
$
78,942

 
35.6
%

Same store financial/operating results related to the segment by brand
 
 
 
 
 
 
 
 
 
 
 
 
Avg. qtr. % occupancy
 
Avg. daily rate (ADR)
 
RevPAR
 
EBITDA
Brand
 
Q3 2017
 
Q3 2016
 
Q3 2017
 
Q3 2016
 
Q3 2017
 
Q3 2016
 
Q3 2017
 
Q3 2016
 
% Change
Marriott
 
76.6
%
 
77.1
%
 
$
129

 
$
128

 
$
99

 
$
99

 
$
60,790

 
$
63,208

 
(3.8
)%
Hilton
 
82.6
%
 
82.6
%
 
131

 
129

 
108

 
106

 
13,206

 
12,535

 
5.4
 %
Other
 
86.3
%
 
77.2
%
 
139

 
143

 
120

 
111

 
4,946

 
4,404

 
12.3
 %
Total / W.A.
 
78.1
%
 
78.0
%
 
$
130

 
$
129

 
$
102

 
$
101

 
$
78,942

 
$
80,147

 
(1.5
)%






Notes:
(1)
CLNS OP Share represents Consolidated EBITDA multiplied by CLNS OP's interest as of September 30, 2017.
(2)
Q3 2017 EBITDA excludes FF&E reserve amounts of $9.7 million consolidated or $9.1 million CLNS OP share. For a reconciliation of net income/(loss) attributable to common stockholders to EBITDA please refer to the appendix to this presentation.
(3)
Annualized EBITDA is calculated using the pro rata percentage of historical Q3 2016 EBITDA relative to historical full year 2016 EBITDA to account for seasonality.

Colony NorthStar, Inc. | Supplemental Financial Report
24

 




VIb. Hospitality Real Estate - Portfolio Overview
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of September 30, 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

 

 
$
13,094

Texas
 
28

 
3,230

 
1,952

 
1,278

 

 
7,389

New Jersey
 
12

 
1,884

 
718

 
942

 
224

 
7,314

Washington
 
5

 
664

 
160

 
504

 

 
5,159

Florida
 
12

 
2,060

 
1,186

 
291

 
583

 
4,782

Virginia
 
11

 
1,473

 
1,210

 
263

 

 
4,415

New York
 
8

 
1,010

 
710

 
300

 

 
3,833

Michigan
 
6

 
809

 
601

 
208

 

 
3,539

New Hampshire
 
6

 
662

 
339

 
323

 

 
3,402

Massachusetts
 
4

 
502

 
157

 
345

 

 
3,226

Total / W.A.
 
110

 
14,548

 
8,276

 
5,465

 
807

 
$
56,153



Colony NorthStar, Inc. | Supplemental Financial Report
25

 




VIIa. Other Equity and Debt - Net Lease and Other Real Estate Equity
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of September 30, 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(1)
 
NOI(1)
 
% leased at end of period
 
Weighted average remaining lease term
U.S.:
 
 
 
 
 
 
 
 
 
 
 
 
Office
 
8

 
1,716

 
$
5,638

 
$
5,620

 
94.7
%
 
3.8

Retail
 
10

 
468

 
1,496

 
1,496

 
100.0
%
 
6.3

Industrial(2)
 
3

 
1,140

 
(112
)
 
(112
)
 
100.0
%
 
11.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Europe:
 
 
 
 
 
 
 
 
 
 
 
 
Office
 
29

 
1,478

 
5,523

 
5,523

 
100.0
%
 
12.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Total / W.A.
 
50

 
4,802

 
$
12,545

 
$
12,527

 
98.1
%
 
8.6

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

 
1,479

 
$
265,169

 
$
230,127

 
77.9
%
 
4.3

Multifamily
 
1

 
 N/A

 
50,255

 
45,564

 
94.9
%
 
 N/A

Hotel
 
146

 
N/A

 
1,227,061

 
656,502

 
74.8
%
 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
Europe:
 
 
 
 
 
 
 
 
 
 
 
 
Industrial
 
38

 
2,795

 
167,930

 
75,543

 
100.0
%
 
6.8

Office
 
37

 
973

 
154,201

 
71,123

 
74.1
%
 
10.7

Mixed / Retail
 
264

 
8,483

 
1,188,046

 
350,593

 
70.5
%
 
6.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Total / W.A.
 
500

 
13,730

 
$
3,052,662

 
$
1,429,452

 
77.6
%
 
6.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint ventures (Net Lease & Other RE Equity)
 
513,290

 
479,156

 
 
 
 


Notes:
(1)
Excludes approximately $0.1 million of NOI related to an asset sold during the third quarter 2017.
(2)
All three Industrial buildings sold during the fourth quarter 2017.

Colony NorthStar, Inc. | Supplemental Financial Report
26

 




VIIb. Other Equity and Debt - Real Estate Debt
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted; as of September 30, 2017, unless otherwise noted)
 
 
 
 
Portfolio Overview(1)
 
 
 
 
 
 
Consolidated amount
 
CLNS OP share of
consolidated amount
Non-PCI loans
 
 
 
 
Loans receivables held for investment, net
 
$
2,668,851

 
$
1,862,160

Loans receivables held for sale, net
 

 

Non-recourse investment-level financing (UPB)
 
864,268

 
792,315

Carrying value - equity method investments
 
352,719

 
144,276

 
 
 
 
 
PCI loans
 
 
 
 
Loans receivables held for investment, net
 
711,179

 
489,520

Non-recourse investment-level financing (UPB)
 
42,039

 
13,011

Carrying value - equity method investments
 
1,868

 
1,868

 
 
 
 
 
Other
 
 
 
 
Carrying value - real estate assets (REO)
 
46,425

 
18,325

Subscription line (UPB)
 
62,215

 
12,392

 
 
 
 
 
Total Portfolio
 
 
 
 
Loans receivables held for investment, net
 
3,380,030

 
2,351,680

Loans receivables held for sale, net
 

 

Carrying value - equity method investments
 
354,587

 
146,144

Carrying value - real estate assets (REO)
 
46,425

 
18,325

Non-recourse investment-level financing (UPB)
 
906,307

 
805,326

Subscription Line (UPB)
 
62,215

 
12,392

Total debt (UPB)
 
968,522

 
817,718









Notes:
(1)
Excludes $3 million consolidated and CLNS OP share carrying value of real estate debt investments held in a CDO securitization and $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.

Colony NorthStar, Inc. | Supplemental Financial Report
27

 




VIIb. Other Equity and Debt - Real Estate Debt (cont’d)
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 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
 
$
726,361

 
$
305,254

 
9.1
%
 
3.3

Securitized mortgage loans
 
43,924

 
43,924

 
5.9
%
 
16.1

Second mortgage loans / B-notes
 
227,228

 
132,353

 
9.3
%
 
3.4

Mezzanine loans
 
431,933

 
236,868

 
9.0
%
 
3.1

Corporate
 
46,350

 
46,350

 
11.2
%
 
10.3

Total fixed rate non-PCI loans
 
1,475,796

 
764,749

 
9.0
%
 
4.4

 
 
 
 
 
 
 
 
 
Variable rate
 
 
 
 
 
 
 
 
First mortgage loans
 
497,609

 
437,825

 
7.2
%
 
1.2

Securitized mortgage loans
 
576,877

 
568,562

 
6.8
%
 
3.1

Second mortgage loans / B-notes
 
90,650

 
68,790

 
11.8
%
 
4.0

Mezzanine loans
 
34,258

 
26,930

 
10.1
%
 
1.5

Total variable rate non-PCI loans
 
1,199,394

 
1,102,107

 
7.3
%
 
2.4

 
 
 
 
 
 
 
 
 
Total non-PCI loans
 
2,675,190

 
1,866,856

 
 
 
 
Allowance for loan losses
 
(6,339
)
 
(4,696
)
 
 
 
 
Total non-PCI loans, net of allowance for loan losses

 
2,668,851

 
1,862,160

 
 
 
 
 
 
 
 
 
 
 
 
 
PCI loans
 
 
 
 
 
 
 
 
First mortgage loans
 
748,247

 
495,757

 
 
 
 
Securitized mortgage loans
 
966

 
966

 
 
 
 
Mezzanine loans
 
3,671

 
3,671

 
 
 
 
Total PCI loans
 
752,884

 
500,394

 
 
 
 
Allowance for loan losses
 
(41,705
)
 
(10,874
)
 
 
 
 
Total PCI loans, net of allowance for loan losses
 
711,179

 
489,520

 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans receivable, net of allowance for loan losses
 
$
3,380,030

 
$
2,351,680

 
 
 
 

Notes:
(1)
Excludes $3 million consolidated and CLNS OP share carrying value of real estate debt investments held in a CDO securitization and $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.

Colony NorthStar, Inc. | Supplemental Financial Report
28

 




VIIb. Other Equity and Debt - Real Estate Debt (cont’d)
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of or for the three months ended September 30, 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
 
$
707,790

 
$
416,764

 
8.7
%
 
3.4

Retail
 
565,447

 
421,241

 
6.5
%
 
1.2

Multifamily
 
452,986

 
416,509

 
6.2
%
 
7.1

Office
 
435,974

 
335,859

 
9.0
%
 
1.3

Other
 
239,514

 
115,042

 
9.6
%
 
0.5

Land
 
157,468

 
78,734

 
12.5
%
 
1.0

Residential
 
63,322

 
31,661

 
13.7
%
 
0.3

Corporate
 
46,350

 
46,350

 
11.2
%
 
10.3

Total non-PCI loans, net of allowance for loan losses
 
2,668,851

 
1,862,160

 
8.1
%
 
3.2

 
 
 
 
 
 
 
 
 
PCI Loans
 
 
 
 
 
 
 
 
Office
 
304,717

 
284,434

 
 
 
 
Retail
 
109,854

 
66,914

 
 
 
 
Multifamily
 
107,190

 
36,479

 
 
 
 
Industrial
 
51,332

 
35,139

 
 
 
 
Hospitality
 
47,500

 
13,592

 
 
 
 
Land
 
38,983

 
31,181

 
 
 
 
Other
 
34,265

 
14,761

 
 
 
 
Residential
 
17,338

 
7,020

 
 
 
 
Total PCI loans, net of allowance for loan losses
 
711,179

 
489,520

 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans receivable, net of allowance for loan losses
 
$
3,380,030

 
$
2,351,680

 
 
 
 








Notes:
(1)
Excludes $3 million consolidated and CLNS OP share carrying value of real estate debt investments held in a CDO securitization and $73 million consolidated or $51 million CLNS OP share carrying value of healthcare real estate development loans related to the Company’s healthcare real estate portfolio.

Colony NorthStar, Inc. | Supplemental Financial Report
29

 




VIIc. Other Equity and Debt - Special Situations
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted and per share data; as of September 30, 2017, unless otherwise noted)
 
Consolidated amount
 
CLNS OP share of consolidated amount
NorthStar Realty Europe Corp. (NYSE: NRE)
 
 
 
 
CLNS OP interest in NRE as of November 3, 2017
 
8.9
%
 
8.9
%
NRE shares beneficially owned by OP and common stockholders
 
4.9 million

 
4.9 million

NRE share price as of November 3, 2017
 
$
13.58

 
$
13.58

Total market value of shares
 
67,061

 
67,061

 
 
 
 
 
Albertsons
 
 
 
 
Carrying value
 
89,261

 
44,649

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
%
 
 
 
 
 
Other GP Co-investments(1)
 
 
 
 
Carrying value
 
117,510

 
96,205

 
 
 
 
 






















Notes:
During the third quarter 2017, the Company sold its entire interest in Colony American Finance.
(1)
Other GP co-investments represents: i) seed investments in certain registered investment companies sponsored by the Company, ii) investments in the general partnership of third party real estate operators primarily to seed investment commitments with their limited partners for which the Company will receive its share of earnings and incentive fees, or iii) general partnership capital in a fund or investment. These investments are accounted for as Investments in Unconsolidated Ventures or consolidated Securities Available for Sale.

Colony NorthStar, Inc. | Supplemental Financial Report
30

 




VIId. Other Equity and Debt - Real Estate PE Fund Interests
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted; as of or for the three months ended September 30, 2017, unless otherwise noted)
 
 
Operating Results
 
 
Q3 2017 income (excluding a $11.8 million adjustment to basis in earnings of unconsolidated ventures)
 
$
5,450

Return of capital
 
40,627

Total distributions
 
46,077

Contributions
 
2,059

Net
 
$
44,018

 
 
 
Carrying value
 
$
287,886

Weighted average remaining term as of September 30, 2017
 
1.0 yrs

 
 
 
Portfolio Overview(1)
 
 
Number of funds
 
96

Number of general partners
 
64

Underlying assets, at cost
 
$
19,513,500

Implied leverage(2)
 
41
%
Expected remaining future capital contributions(3)
 
$
143

Investment by Types(1)(4)
 
 
Investment by Geography(1)(4)
Type
 
%
 
 
Location
 
%
Land
 
18
%
 
 
West
 
20
%
Multifamily
 
15
%
 
 
Primarily Various U.S.
 
18
%
Office
 
14
%
 
 
Northeast
 
18
%
Lodging
 
10
%
 
 
Cash
 
10
%
Other
 
10
%
 
 
Southeast
 
9
%
Cash
 
10
%
 
 
Midwest
 
9
%
Retail
 
7
%
 
 
Mid-Atlantic
 
7
%
Debt
 
5
%
 
 
Asia
 
6
%
Residential/Condo
 
5
%
 
 
Europe
 
3
%
Financial Services
 
4
%
 
 
 
 
 
Healthcare
 
1
%
 
 
 
 
 
Industrial
 
1
%
 
 
 
 
 
Total
 
100
%
 
 
Total
 
100
%


Notes:
(1)
Amounts presented exclude an immaterial economic interest retained in a real estate private equity fund portfolio which NRF sold in the fourth quarter 2015.
(2)
Represents implied leverage for funds with investment-level financing, calculated as debt divided by assets at fair value.
(3)
Represents the estimated amount of expected future capital contributions to funds as of September 30, 2017.
(4)
Represents the underlying fund interests in PE Investments by investment type and geographic location based on NAV as of June 30, 2017.

Colony NorthStar, Inc. | Supplemental Financial Report
31

 




VIIe. Other Equity and Debt - CRE Securities
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; as of September 30, 2017)
 
 
 
 
Portfolio Overview
 
 
 
 
Owned Bonds and Equity of Deconsolidated CDO's
 
Principal amount
 
Carrying Value
Total owned deconsolidated CDO bonds
 
$
325,245

 
$
90,105

 
 
 
 
 
Total owned deconsolidated CDO equity
 
 
 
17,160

 
 
 
 
 
Consolidated CDO's
 
Principal amount
 
Carrying Value
Total consolidated CDO investments
 
$
647,653

 
$
237,774

Total consolidated non-recourse CDO financing
 
280,238

 
189,878

Net book value - consolidated CDOs
 
$
367,415

 
$
47,896

 
CMBS
 
Principal amount
 
Carrying Value
 
 
$
96,968

 
$
21,827

 
 
 
 
 
Income
 
 
 
 
Q3 2017 aggregate income (excluding $7.2 million of Other-Than-Temporary-Impairments)
 
 
 
$
10,357
























Colony NorthStar, Inc. | Supplemental Financial Report
32

 




VIIIa. Investment Management - Summary Metrics
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted; as of September 30, 2017)
 
 
Overview
 
 
Segment
 
Q3 2017 Fee Revenue - CLNS OP Share
Institutional funds
 
$
15,922

Retail companies(1)
 
25,179

NorthStar Realty Europe (NYSE:NRE)
 
3,770

Townsend
 
12,432

Pro rata corporate investments (earnings of investments in unconsolidated ventures)
 
4,305

Total Q3 2017 reported fee revenue and earnings of investments in unconsolidated ventures
 
$
61,608

Operating Results
 
 
Revenues
 
 
Total fee revenue and earnings of investments in unconsolidated ventures
 
$
61,608

Other income and commission income
 
5,099

Expenses
 
 
Investment, servicing and commission expenses
 
2,079

Depreciation and amortization
 
14,078

Impairment loss
 
8,830

Compensation expense
 
18,955

Administrative expenses
 
2,347

Total expenses
 
46,289

Other gain, net
 
50

Income tax benefit
 
9,654

Net income attributable to common interests in OP and common stockholders
 
30,122

Real estate depreciation and amortization
 
268

Impairment write-downs associated with depreciable real estate (within earnings of investments in unconsolidated ventures)
 
4,598

(Gain) loss from sales of depreciable real estate
 
120

Gains and losses from sales of businesses within the Investment Management segment and impairment write-downs associated with the Investment Management segment
 
7,593

Equity-based compensation expense
 
2,453

Straight-line rent revenue and straight-line rent expense on ground leases
 
(41
)
Unrealized fair value gains or losses and foreign currency remeasurements
 
176

Acquisition and merger-related transaction costs
 
2,397

Amortization and impairment of investment management intangibles
 
14,310

Non-real estate depreciation and amortization
 
210

Amortization of deferred financing costs and debt premiums and discounts
 
56

Tax (benefit) expense, net
 
(5,940
)
Core FFO
 
$
56,322

Notes:
(1)
Excludes fees from NorthStar Real Estate Capital Income Fund which is consolidated on Colony NorthStar's financial statements and such fees are eliminated in consolidation and represents Colony NorthStar's 50% share of fees from NorthStar/RXR NY Metro Real Estate.

Colony NorthStar, Inc. | Supplemental Financial Report
33

 




VIIIb. Investment Management – Assets Under Management
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($ in millions, except as noted; as of September 30, 2017, unless otherwise noted)
Segment
 
Products
 
Description
 
AUM CLNS OP Share
 
 
 
 
 
 
 
Institutional Funds
 
•    Credit ($4.0 billion)
•    Core plus / value-added ($1.3 billion)
•    Opportunistic ($2.0 billion)
•    Colony Industrial ($1.7 billion)
•    Other co-investment vehicles ($1.6 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(1)
 
$
10,558

Retail Companies
 
•    NorthStar Income I ($1.5 billion)
•    NorthStar Healthcare ($3.6 billion)
•    NorthStar Income II ($1.8 billion)
•    NorthStar/RXR NY Metro Real Estate
•    NorthStar Real Estate Capital Income Funds(2)
•    NorthStar/Townsend Institutional Real Estate Fund(3)
 
•    Wholly-owned broker-dealer subsidiary engaged as dealer-manager and/or wholesale marketing agent for 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/or disposition fees
 
7,012

Public Company
 
•    NorthStar Realty Europe Corp.
 
•    Manage NYSE-listed European equity REIT
•    Earns base management fee with potential for incentive fees
 
2,113

Townsend
 
•    Segregated 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
 
14,784

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 $16 billion of AUM
•    43% investment in American Healthcare Investors, a healthcare investment management firm and sponsor of non-traded vehicles with $2.9 billion of AUM
 
7,257

Total
 
 
 
 
 
$
41,724




Notes:
(1)
Capital raised includes amounts raised by Colony Capital, LLC since its inception in 1991.
(2)
NorthStar Real Estate Capital Income Funds represents a master/feeder structure and pools investor capital raised through three feeder funds.
(3)
NorthStar/Townsend Institutional Real Estate Fund Inc. filed an amended registration statement on Form N-2 to the SEC in May 2017, which as of November 3, 2017, is not yet effective.


Colony NorthStar, Inc. | Supplemental Financial Report
34

 




VIIIc. Investment Management - Retail Companies
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands, except as noted; as of September 30, 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(3)
 
 
 
 
 
 
 
 
 
 
 
 
During Q3 2017
 
$
8,699

 
$
16,917

 
$
8,823

 
$
4,790

 
$
8,639

 
$
47,868

Year-to-date through 11-3-17
 
26,832

 
61,729

 
26,378

 
24,947

 
22,561

 
162,447

Inception to 11-3-17
 
1,310,543

 
1,930,871

 
1,165,841

 
35,458

 
22,794

 
4,465,507

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments(4)
 
 
 
 
 
 
 
 
 
 
 
 
During Q3 2017
 
30,720

 
217,720

 
60,000

 
12,000

 
9,500

 
329,940

As of 9-30-17
 
1,541,466

 
3,622,296

 
1,789,034

 
32,531

 
26,241

 
7,011,568

Cash as of 9-30-17
 
163,087

 
27,395

 
85,724

 
4,487

 
984

 
281,677

 
 
 
 
 
 
 
 
 
 
 
 
 
Fees earned during Q3 2017
 
 
 
 
 
 
 
 
 
 
 
 
Asset management fees
 
4,355

 
8,733

 
5,427

 
71

 
38

 
18,624

Acquisition fees
 

 
4,633

 
600

 

 

 
5,233

Disposition fees
 
567

 

 
828

 

 

 
1,395

Total fees
 
$
4,922

 
$
13,366

 
$
6,855

 
$
71

 
$
38

 
$
25,252








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)
Includes amounts contributed by CLNS.
(4)
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.

Colony NorthStar, Inc. | Supplemental Financial Report
35

 




 
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 









APPENDICES

Colony NorthStar, Inc. | Supplemental Financial Report
36

 




IXa. Appendices - Definitions
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

Assets Under Management (“AUM”)
Refers to assets which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. AUM is generally based on reported gross undepreciated carrying value of managed investments as reported by each underlying vehicle at September 30, 2017, while retail companies and NorthStar Realty Europe are presented as of November 3, 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
37

 




IXb. Appendices - Reconciliation of Net Income (Loss) to NOI/EBITDA
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($ in thousands; for the three months ended September 30, 2017)
 
 
 
 
 
 
 
 
NOI and EBITDA Determined as Follows
 
Healthcare
 
Industrial
 
Hospitality
 
Other Equity and Debt—Net Lease Properties
Total revenues
 
$
157,732

 
$
63,410

 
$
221,987

 
$
16,200

Straight-line rent revenue and amortization of above- and below-market lease intangibles
 
(6,513
)
 
(2,011
)
 
(3
)
 
(272
)
Interest income
 

 
(165
)
 

 

Property operating expenses(1)
 
(73,217
)
 
(16,620
)
 
(143,042
)
 
(3,313
)
Compensation expense(1)
 

 
(336
)
 

 

NOI or EBITDA(2)
 
$
78,002

 
$
44,278

 
$
78,942

 
$
12,615

 
 
 
 
 
 
 
 
 
Reconciliation of Net Income (Loss) from Continuing Operations to NOI/EBITDA
 
 
 
Healthcare
 
Industrial
 
Hospitality
 
 
Net income (loss) from continuing operations
 
$
(22,318
)
 
$
5,775

 
$
4,169

 
 
Adjustments:
 
 
 
 
 
 
 
 
Straight-line rent revenue and amortization of above- and below-market lease intangibles
 
(6,513
)
 
(2,011
)
 
(3
)
 
 
Interest income
 

 
(165
)
 

 
 
Interest expense
 
48,586

 
8,803

 
35,351

 
 
Transaction, investment and servicing costs
 
4,631

 
7

 
1,784

 
 
Depreciation and amortization
 
44,646

 
29,010

 
34,549

 
 
Provision for loan loss
 
1,588

 

 

 
 
Impairment loss
 
8,250

 
44

 

 
 
Compensation and administrative expense
 
1,511

 
2,833

 
1,681

 
 
Other (gain) loss, net
 
(1,971
)
 

 
149

 
 
Earnings from investments in unconsolidated ventures
 

 
(34
)
 

 
 
Income tax (benefit) expense
 
(408
)
 
16

 
1,262

 
 
NOI or EBITDA
 
$
78,002

 
$
44,278

 
$
78,942

 
 






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.
(2)
For other equity and debt - net lease properties, NOI includes approximately $0.1 million related to an asset sold during the third quarter 2017.

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IXb. Appendices - Reconciliation of Net Income (Loss) to NOI/EBITDA (cont’d)
https://cdn.kscope.io/a344e13540cd4d64279361f06c3ee2a9-clnslogoicon4a01.jpg
 

($ in thousands; for the three months ended September 30, 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
 
$
145,077

Adjustments:
 
 
Property operating income of other real estate equity
 
(156,685
)
Straight-line rent revenue and amortization of above- and below-market lease intangibles for net lease real estate equity
 
(218
)
Interest income
 
(104,341
)
Fee and other income
 
(2,726
)
Property operating expense of other real estate equity
 
95,760

Interest expense
 
46,333

Transaction, investment and servicing costs
 
11,585

Depreciation and amortization
 
38,579

Provision for loan loss
 
3,528

Impairment loss
 
6,718

Compensation and administrative expense
 
5,627

Gain on sale of real estate assets
 
(72,541
)
Other loss, net
 
8,008

Earnings of investments in unconsolidated ventures
 
(13,071
)
Income tax expense
 
982

NOI of net lease real estate equity
 
$
12,615

        Less: asset sold during the third quarter 2017
 
(70
)
NOI of net lease real estate equity, excluding assets sold during the third quarter 2017
 
$
12,545



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