Colony Capital Announces First Quarter 2021 Financial Results

Rhea-AI Summary

Colony Capital (NYSE: CLNY) reported Q1 2021 revenues of $316 million, up from $217 million in Q1 2020. Despite this revenue growth, the company recorded a net loss of $(265) million or $(0.56 per share. Core FFO stood at $4 million ($0.01 per share), significantly improved from a $(12 million) loss in the previous year. The digital portfolio continues to thrive, with Digital AUM rising to $32 billion, making up 70% of total AUM. Governance changes include Nancy Curtin as Chairperson and new board member Sháka Rasheed. The company aims to streamline operations and enhance investor awareness with an upcoming virtual day.

Positive

• Total revenues increased by 45.5% year-over-year to $316 million.
• Core FFO improved to $4 million from a $(12 million) loss in Q1 2020.
• Digital AUM grew to $32 billion, representing 70% of total AUM.
• Digital FRE rose by 54% to $15.5 million.
• Successful completion of hospitality portfolio sales generated $67.5 million, reducing debt by $2.7 billion.

Negative

• Net income attributable to common stockholders reported a loss of $(265) million.
• Despite revenue growth, the company faces challenges maintaining profitability.

Colony Capital, Inc. (NYSE: CLNY) and subsidiaries (collectively, “Colony Capital,” or the “Company”) today announced financial results for the first quarter ended March 31, 2021. The Company reported first quarter 2021 total revenues of $316 million, GAAP net income attributable to common stockholders of $(265) million, or $(0.56) per share and Core FFO of $4.0 million, or $0.01 per share.

“During the first quarter we made significant progress towards our 2021 goals. Our digital portfolio companies continue to grow and generate strong performance and we are busy deploying fresh capital from DCP II, our new flagship equity offering, into exciting new digital platforms,” said Marc Ganzi, President and Chief Executive Officer. "The growth in our digital businesses combined with key legacy dispositions puts us at 70% rotated currently, already past our target for the year. Our business transformation dovetails with profound governance changes, with Nancy Curtin, our lead independent director, recently agreeing to step into the role of Chairperson and the addition of a new digital board member in Shaka Rasheed, earlier this week at our Annual Meeting."

Q1 2021 HIGHLIGHTS

Momentum at Digital Businesses

• Digital AUM rose to $32 billion, 70% of total AUM as of May 6, 2021.
• Capital formation at Digital Colony Partners II (DCP II) drove strong growth in the Digital IM segment, with revenues and FRE both up over 50% YoY.
• Organic growth and a strong contribution from DataBank’s expanded footprint drove higher revenue and EBITDA in the Digital Operating segment, which exceeded 2021 EBITDA guidance on a run-rate basis during the quarter.
• DataBank, supported by the Digital Colony capital markets team, completed a first-of-its-kind enterprise data center financing, raising over $650 million in securitized notes to extend its debt maturities and provide new capital to fund growth, while lowering its overall cost of debt by over 50%.

Generated Positive Core FFO

• Digital FRE increased by 54% to $15.5 million from $10.1 million in the prior year due to significant FEEUM growth of $5.1 billion in the last twelve months.
• Digital Operating EBITDA increased to $14.4 million from $3.2 million in the prior year led by substantial investments in high quality Digital Operating assets, namely Vantage SDC and DataBank's acquisition of zColo.
• Significant G&A savings through legacy asset sales and corporate cost rationalization efforts also contributed to the positive Core FFO outcome.

Financial Summary
($ in millions, except per share data and where noted)
Revenues		Q1 2021				Q1 2020
Property operating income		$	275			$	184
Interest income			3				3
Fee income			34				25
Other income			4				6
Total revenues		$	316			$	217
Adjusted EBITDA		$	56			$	36
Net income to common stockholders		$	(265	)		$	(362	)
Core FFO		$	4			$	(12	)
Core FFO per share		$	0.01			$	(0.02	)
Digital Fee Related Earnings (“FRE”)(1)		$	15			$	10
Digital Operating EBITDA		$	14			$	3
Digital Core FFO(2)		$	16			$	11
Liquidity and Digital AUM		03/31/21				12/31/20
Liquidity (cash & undrawn RCF)		$	667			$	737
Digital AUM (in billions)		$	32.0			$	30.0

Note: Revenues, Net Income, Adjusted EBITDA and Digital FRE are consolidated while Core FFO, Digital Core FFO, Digital Operating EBITDA, Liquidity and AUM are CLNY OP share.
(1)		Reported 1Q21 FRE was $18.2 million, however, the figure above has been adjusted to exclude a $2.7 million benefit from reversing unused portions of the one-time incentive expense recorded in 4Q20.
(2)		Includes Digital Investment Management and Digital Operating, excludes Digital Other.

Harvest Legacy Assets

• Completed the sale of the Company's hospitality portfolios, generating an aggregate $67.5 million of gross proceeds on a consolidated basis. The sale resulted in the reduction of $2.7 billion in consolidated investment-level debt.
• Other Equity & Debt (OED) assets monetized year-to-date generated $131 million of net equity proceeds, including a sale in April of a 74% controlling interest in two high-quality office properties located in Dublin’s city center with $104 million in net equity proceeds to the Company.
• In April 2021, the Company completed the internalization transaction with Colony Credit Real Estate, Inc. (CLNC) and received a termination payment of $102 million, transferred 44 employees to CLNC and executed a transition services agreement to allow for a seamless transition of critical functions.
• In addition to funding future digital investments, these transactions advance the Company’s efforts to streamline the organization and simplify its business profile.

Significant Corporate Governance Advances

• Nancy Curtin, the Company’s lead independent director, was appointed to the position of Chairperson of the Board, effective April 1, 2021. The Company will benefit from Ms. Curtin’s extensive global investment and leadership experience, as well as a deep knowledge of the Company's business.
• On May 4, 2021, Sháka Rasheed was elected to the Company’s Board of Directors. Mr. Rasheed currently serves as an executive of the Microsoft Corporation. As an accomplished leader and advisor currently at the intersection of financial services and technology, Mr. Rasheed brings over 25 years of business development, sales, strategy, and leadership experience to the Board.

Investor Relations

• The Company will host an inaugural Virtual Investor Day on Tuesday, June 22, 2021 as part of its efforts to build greater awareness across the investor community around its strategic plan as it accelerates towards the completion of its digital transformation.
• The Company continues to prioritize simplification as it makes improvements to its financial reporting, most recently condensing its earnings release and supplemental financial reporting packages to reduce complexity and simplify analysis. The Company also expects to issue a new Corporate Overview document in connection with its upcoming investor day.

Common Stock and Operating Company Units

As of May 3, 2021, the Company had 487.2 million shares of Class A and B common stock outstanding and the Company’s operating partnership had 51.1 million operating company units outstanding and held by members other than the Company.

Preferred Dividends

On February 23, 2021, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: with respect to each of the Series G preferred stock: $0.46875 per share; Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share, such dividends were paid on April 15, 2021 to the respective stockholders of record on April 12, 2021.

On May 4, 2021, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: with respect to each of the Series G preferred stock: $0.46875 per share; Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share, such dividends will be paid on July 15, 2021 to the respective stockholders of record on July 9, 2021.

First Quarter 2021 Conference Call

The Company will conduct an earnings presentation and conference call to discuss the financial results on Thursday, May 6, 2021 at 10:00 a.m. ET. The earnings presentation will be broadcast live over the Internet and can be accessed on the Shareholders section of the Company’s website at ir.clny.com/events. A webcast of the presentation and conference call will be available for 90 days on the Company’s website. 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.

For those unable to participate during the live call, a replay will be available starting May 6, 2021, at 1:00 p.m. ET, through May 13, 2021, at 11:59 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.), and use passcode 13718365. International callers should dial (412) 317-6671 and enter the same conference ID number.

Earnings Presentation and Supplemental Financial Report

A First Quarter 2021 Earnings Presentation and Supplemental Financial Report is available in the Events & Presentations and Financial Information sections, respectively, of the Shareholders tab on the Company’s website at www.clny.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 Capital, Inc.

Colony Capital, Inc. (NYSE: CLNY) is a leading global investment firm with a heritage of identifying and capitalizing on key secular trends in real estate. The Company manages a $46 billion portfolio of real assets on behalf of its shareholders and limited partners, including $32 billion in digital real estate investments through Digital Colony, its digital infrastructure platform. Colony Capital, structured as a REIT, is headquartered in Boca Raton with key offices in Los Angeles, New York, London and Singapore. For more information on Colony Capital, visit www.clny.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, the impact of COVID-19 on the global economy, including the Company’s businesses, whether the Company will capitalize on the powerful secular tailwinds supporting the continued growth and investment in digital infrastructure, whether the Company’s wellness infrastructure segment, including contractual rent collections, will continue to perform well despite ongoing impacts of COVID-19, the Company’s ability to continue driving strong growth in its digital business and accelerating its digital transformation, including whether the Company will continue to lower corporate expenses and achieve earnings rotation through divestment of legacy businesses and assets, the impact of the digital transformation on the Company’s earnings profile, the Company’s ability to collaborate with its partner companies and customers to build the next-generation networks connecting enterprises and consumers globally, whether the Company will realize the anticipated benefits of Wafra’s strategic investment in the Company’s digital investment management business, including whether the Wafra investment will become subject to redemption and the amount of commitments Wafra will make to the Company’s digital investment products, the Company’s ability to raise third party capital in its managed funds or co-investment structures and the pace of such fundraising (including as a result of the impact of COVID-19), whether the DCP II fund raising target will be met, in the amounts anticipated or at all, the performance of DataBank, including zColo, the success and performance of the Company’s future investment product offerings, including a digital credit investment vehicle, whether the Company will realize the anticipated benefits of its investment in Vantage SDC, including the performance and stability of its portfolio, the pace of growth in the Company’s digital investment management franchise, the Company’s ability to continue to make investments in digital assets onto the balance sheet and the quality and earnings profile of such investments, the resilience and growth in demand for digital infrastructure, whether the Company will realize the anticipated benefits of its securitization transactions, the Company’s ability to simplify its business and continue to monetize legacy businesses/OED assets, including the timing and amount of proceeds to be received by the Company in those monetizations and its impact on the Company’s liquidity, if any, whether warehoused investments will ultimately be transferred to a managed investment vehicle or at all, the impact of impairments, the level of expenses within the wellness infrastructure segment and the impact on performance for the segment, whether the Company will maintain or produce higher Core FFO per share in the coming quarters, or ever, the Company’s FRE and FEEUM and its ability to continue growth at the current pace or at all, whether the Company will continue to pay dividends on its preferred stock, the impact of changes to the Company’s management or board of directors, employee and organizational structure, the Company’s financial flexibility and liquidity, including borrowing capacity under its revolving credit facility (including as a result of the impact of COVID-19), whether the Company will further extend the term of its revolving credit facility, the use of sales proceeds and available liquidity, the performance of the Company’s investment in CLNC (including as a result of the impact of COVID-19), including the CLNC share price as compared to book value and how the Company evaluates the Company’s investment in CLNC, the impact of management changes at CLNC, the Company’s ability to minimize balance sheet commitments to its managed investment vehicles, customer demand for data centers, the Company's portfolio composition, the Company's expected taxable income and net cash flows, excluding the contribution of gains, the Company’s ability to pay or grow the dividend at all in the future, the impact of any changes to the Company’s management agreements with NorthStar Healthcare Income, Inc. and other managed investment vehicles, whether the Company will be able to maintain its qualification as a REIT for U.S. federal income tax purposes, the timing of and ability to deploy available capital, including whether any redeployment of capital will generate higher total returns, the Company’s ability to maintain inclusion and relative performance on the RMZ, the Company’s leverage, including the Company’s ability to reduce debt and the timing and amount of borrowings under its credit facility, increased interest rates and operating costs, adverse economic or real estate developments in the Company’s markets, the Company’s failure to successfully operate or lease acquired properties, decreased renta

FAQ

What were Colony Capital's Q1 2021 earnings results?

Colony Capital reported revenues of $316 million with a net loss of $(265) million, translating to $(0.56) per share.

What is Colony Capital's guidance for Digital AUM?

As of May 6, 2021, Colony Capital's Digital AUM increased to $32 billion, which is 70% of its total AUM.

What governance changes occurred at Colony Capital recently?

Nancy Curtin was appointed Chairperson of the Board, and Sháka Rasheed joined as a new board member.

When is Colony Capital's Virtual Investor Day scheduled?

Colony Capital's inaugural Virtual Investor Day is set for June 22, 2021.

How did Colony Capital perform in terms of Core FFO in Q1 2021?

Colony Capital achieved Core FFO of $4 million, up from a loss of $(12 million) in Q1 2020.