PRESS RELEASE
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Colony Capital Issues Investor Update Presentation
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Makes Significant Investment in DataBank
Provides Notices of Redemption for Certain Corporate Preferred Equity
“This year, we successfully executed on the commitments our Board of Directors and management team made to create long-term shareholder value, and secured the foundation and liquidity from which the Company will continue to accelerate its transformation into digital real estate,” said
The Company highlights the following accomplishments in 2019:
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Industrial: Completed the sale of the light industrial platform for
$5.7 billion , delivering a 17% IRR to shareholders while utilizing modest leverage -
OED: Recorded
$651 million of OED asset monetizations year-to-date. Achieved$2.1 billion in total OED monetizations since the beginning of 2018 -
NRE: Completed the sale of NRE delivering a 16% IRR to shareholders since inception and generating gross proceeds of
$160 million -
Credit: Closed a
$1.0 billion CRE CLO atColony Credit Real Estate, Inc. (NYSE: CLNC); proposed the internalization of the CLNC management contract to simplify both CLNC and CLNY; and held a closing of the Company’s fifth global real estate credit fund, with total capital commitments of$428 million -
G&A Reduction: Achieved approximately 80% of the expected total
$50 million to $55 million previously announced cost savings on a run rate basis, prior to further reduction from the sale of the light industrial platform -
Healthcare: Refinanced an aggregate
$2.2 billion of debt, including the$1.725 billion US GAHR loan -
Hospitality: Refinanced three portfolios totaling
$1.1 billion of debt on accretive terms that extend maturities 4-7 years -
Digital Colony Partners (“DCP”): Closed on$4.1 billion of commitments forDigital Colony Partners , the largest first-time fund for digital real estate in history -
Digital Bridge :Acquired Digital Bridge Holdings , the investment manager of DCP and six digital portfolio companies, and merged its world-class team of investment professionals with Colony’s -
Zayo : ReceivedZayo shareholder approval for the completion of the largest take-private announced in 2019; expected to be completed in the first half of 2020 -
CEO Succession: Designated
Marc Ganzi asColony Capital's next CEO - Board Additions: Added three new independent directors to the Board in 2019 for a total of 11 independent Directors
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Returning Capital to Shareholders: Returned
$2.6 billion to common and preferred shareholders through dividends, redemptions, and repurchases over the last three years
The presentation, which is available on the Public Shareholders section of the Company's website at www.clny.com, outlines the Colony Digital playbook, developed from a multi-decade formula for success that includes:
- Best-in-class assets across all components of the digital ecosystem driving significant synergies: Mission-critical and hard-to-replicate network infrastructure supporting many of the largest and most-profitable companies in the world and typically with very high renewal rates and pricing
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Disciplined framework and investment principles across four corners of asset selection, including:
- Market dynamics, with a focus on stable markets with catalysts for near-term digital infrastructure investment and downside protection for asset owners
- Asset quality, with a focus on unique, hard-to-replicate assets and seek assets that provide mission critical services to customers with high switching costs
- Contract quality, with a focus on long-term contracts with investment grade customers and build in maximum flexibility to add additional tenants
- Management / platform potential, with an emphasis on buy and build strategies with initial investments used as a platform to drive growth organically and through acquisitions
- Alpha creation: Proven, nine-point underwriting and operational alpha creation strategy through hands-on participation in each of the Company’s businesses, including human capital, direct operating experience, proprietary back-office systems, differentiated M&A program and dynamic balance sheet management
- Operational excellence: Strong organic leasing growth; extensive greenfield development expertise; pioneers in debt securitizations for digital infrastructure; adherence to the highest Environmental, Social & Governance standards
- Proprietary deal flow: Focus on compelling proprietary investment opportunities in brownfield, greenfield and new white sheet business plans that avoid competitive auctions facilitating lower entry multiples
- Products: Our goal is to provide flexible and creative financing solutions across the capital structure to digital real estate and infrastructure companies around the world. Our products will include equity, credit and liquid strategies
- Leading global investment and operational team in digital infrastructure: Established operators, investors and thought leaders with over two decades of experience in towers, data centers, fiber and small cells
In addition, the presentation highlights steps being taken to augment the Company’s 2020 plan, including:
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Balance sheet investment framework: Colony believes a disciplined and methodical approach to investing balance sheet capital with a sharp focus on achieving the highest returns and targeting a reasonable amount of corporate leverage. The Company will regularly evaluate these competing uses of its liquidity:
- GP commitments, direct investing and warehouse transactions in digital assets;
- Reduction of debt and preferred equity;
- Share buybacks; and
- Special dividends.
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Rotation of balance sheet into digital: Colony has signed a definitive agreement to acquire from existing third party investors an ownership interest of 20.4% in DataBank, the leading private owner and manager of Edge Data Centers in the U.S. with a nationwide footprint, for approximately
$185 million . Digital Bridge principals will retain their existing DataBank interests and provide Colony the voting power to appoint a majority of its Board. This transaction represents the Company’s inaugural direct balance sheet investment in digital real estate and first step to gain exposure to the edge/colocation data center sector with significant organic growth and acquisition opportunities1. -
Reduction of corporate preferred equity: The Company has issued 30-day notices to redeem all of its 6,114,205 outstanding shares of 8.25% Series B Cumulative Redeemable Perpetual Preferred Stock (NYSE: CLNYPrB) (“Series B Preferred Shares”) and 10,000,000 outstanding shares of 8.75% Series E Cumulative Redeemable Perpetual Preferred Stock (NYSE: CLNYPrE) (“Series E Preferred Shares”), representing an aggregate of
$403 million of the Company’s redeemable preferred equity with a weighted average dividend rate of 8.6%, which will reduce aggregate annual preferred dividends by$34.5 million , or 32% - Additional uses of proceeds: The Company plans to use the remaining proceeds from the industrial sales and other sources of liquidity for new digital investments, including GP co-investments, permanent balance sheet investments and warehouse investments for future vehicles, as well as capital structure enhancement
Series B and E Preferred Redemption Details
The Company is redeeming all of its outstanding Series B Preferred Shares and Series E Preferred Shares. The cash redemption price for each Series B Preferred Share is
All of the Series B Preferred Shares and Series E Preferred Shares are held in book-entry form through the
The address for the Redemption Agent is as follows:
Attn:
This press release does not constitute a notice of redemption under the Company’s Articles of Amendment and Restatement governing the Series B Preferred Shares and Series E Preferred Shares.
Webcast Details
A replay of the webcast of the Company’s prepared remarks and question and answer session will be available through the Public Shareholders section of the Company’s website following the event at www.clny.com.
About
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, and may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, the timing and manner of the Company’s strategic shift to digital infrastructure and digital real estate sector, including whether such shift will result in any of the anticipated benefits, the availability of digital investment opportunities and the Company’s ability to execute on any such opportunities, the Company’s ability to continue deploying capital in its sponsored Digital Colony fund, whether the Company will enter into a definitive agreement with CLNC to internalize its management and transfer the Company’s credit management business to CLNC, the Company’s ability to complete its acquisition of interests in Databank and whether such investment will result in any of the anticipated benefits, Digital Colony’s ability to complete the
Important Additional Information
The Company, its directors and its executive officers will be participants in the solicitation of proxies from the Company’s stockholders in connection with the matters to be considered at the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”). Information about the Company’s directors and executive officers, including their direct and indirect interests, by security holdings or otherwise, is available in the Company’s definitive proxy statement on Schedule 14A prepared in connection with the Company’s 2019 Annual Meeting of Stockholders, and filed with the
1DataBank is a portfolio company sponsored by Digital Bridge and invested in by its founders and other senior professionals alongside institutional partners. Digital Bridge principals will continue to retain their interests alongside Colony and will provide Colony the ability to appoint a majority of DataBank Board members. Digital Bridge principals, including
View source version on businesswire.com: https://www.businesswire.com/news/home/20191211005919/en/
Source:
Investors:
Lasse Glassen
Addo Investor Relations
310.829.5400
lglassen@addoir.com
Media:
Joele Frank, Wilkinson Brimmer Katcher
Andrew Siegel / Jon Keehner
212.355.4449