LOS ANGELES--(BUSINESS WIRE)--Colony Financial, Inc. (NYSE: CLNY) (the “Company”) today announced financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Highlights
- First quarter 2011 net income of $0.42 per basic share and $0.41 per diluted share and Core Earnings of $0.43 per basic share and $0.41 per diluted share.
-
Announced three transactions during the first quarter totaling
investments and commitments of approximately $43.1 million which fully
deployed the proceeds from our December 2010 private placement of
common stock:
- Participated in the Company’s fifth FDIC loan portfolio acquisition, bringing the Company’s total funded investments in its five FDIC related transactions to $53 million. This acquisition involved the purchase of approximately 1,505 loans at a discounted purchase price of 24% of the unpaid principal balance of approximately $817 million. The company’s funded participation was $5 million.
- Participated in the acquisition, at a discount, of an existing $60 million first mortgage loan secured by fee simple condominium interests within two Manhattan landmark buildings. Simultaneously upon closing, the loan was restructured to reflect a $39.1 million face amount with a five-year term. The Company’s pro rata share of the restructured loan is approximately $29.1 million. The restructured loan will bear interest at a fixed annual rate of 11%, of which 2% may be paid-in-kind for the first two years at the borrower’s option. Inclusive of fees, the yield-to-maturity on the loan is projected to be approximately 13%. The restructured loan is expected to have a debt service coverage ratio in excess of 3:1 and a loan-to-value of approximately 65%.
- Announced the Company’s participation in the commitment to originate an $18 million senior secured term loan secured by substantially all the assets of Grubb & Ellis Company (“G&E”) and its affiliates. The Company’s pro rata share of the commitment is $9 million. In April, G&E made its first draw of approximately $9 million, of which the Company funded its pro rata share of approximately $4.4 million, net of an upfront 1% origination fee, and has a commitment to fund up to an additional $4.5 million. The loan has an eleven-month term, bears interest at an average fixed annual rate of 11.6%, all of which can be paid-in-kind at the borrower’s option, and includes certain prepayment fees. The Company also received warrants to purchase up to 3.4 million shares of Grubb & Ellis common stock, representing approximately 4.8% of G&E’s common shares outstanding.
- Declared and paid a first quarter dividend of $0.32 per share of common stock, an increase of 7% from the fourth quarter 2010 regular dividend.
- In April, the Company raised net proceeds of $271.8 million from the follow-on offering of 15.35 million shares of the Company’s common stock at a price of $18.50 per share.
First Quarter Operating Results
For the first quarter of 2011, equity in income of unconsolidated joint ventures and interest and other operating income contributed $8.5 million and $2.7 million, respectively, to total income of $11.2 million. Total expenses for the quarter were $4.0 million. Administrative expenses accounted for $1.5 million, of which administrative expenses reimbursed to the Company’s external manager were $0.4 million. As a result, during the first quarter of 2011, the Company reported net income attributable to common stockholders of $7.4 million, or $0.42 per basic share and $0.41 per diluted share.
“We continued to deliver on our strategy of deploying capital into investments with a higher current yield component while opportunistically participating in the acquisition of our fifth FDIC loan portfolio,” said Richard Saltzman, the Company’s President and Chief Executive Officer. “The recent completion of our follow-on equity offering provides us with meaningful liquidity to pursue a robust pipeline of potential transactions in active negotiations.”
Follow-On Offering
Subsequent to the end of the quarter, the Company closed the sale of 15,350,000 shares of its common stock, including the exercise of the underwriters’ overallotment option, and selling stockholders sold 750,000 shares at $18.50 per share. Total net proceeds to the Company were $271.8 million, net of underwriting discounts and commissions and offering expenses. As a result of the Company's public offering, the Company issued to certain investors an aggregate of 175,000 shares of common stock (the "Anti-Dilution Shares") and paid an aggregate of $162,500 of cash to such investors.
Book Value
The Company’s stockholders’ equity at March 31, 2011 was $570.7 million, which includes $235.0 million of common stock subscribed in our follow-on offering, but does not include the proceeds from the exercise of the underwriters’ overallotment option. Because the shares related to the common stock subscribed were not issued until subsequent to March 31, 2011, the GAAP book value per share at March 31, 2011 calculated using the 17,384,000 shares of common stock outstanding at March 31, 2011 is higher than it would have been had the shares issuable for the common stock subscribed been outstanding as of March 31, 2011. As a result, the Company believes that presenting pro forma stockholders’ equity and book value per share giving full effect to the 15,525,000 shares of common stock the Company issued on April 6 and 12, 2011 and offering costs is more useful to investors. The pro forma stockholders’ equity and book value per common share were $607.2 million and $18.45, respectively, at March 31, 2011 on this basis. Subsequent to the completion of the Company’s follow-on equity offering, exercise of the underwriters’ overallotment option and issuance of Anti-Dilution Shares, the Company had 32,909,000 shares of its common stock issued and outstanding.
Fair Value
If the Company accounted for its financial assets using the fair value method, the net fair value of the Company’s financial assets and liabilities at March 31, 2011 would have been $42.3 million in excess of the net carrying value of the Company’s financial assets and liabilities as of the same date.
Core Earnings
Colony Financial’s Core Earnings, a non-GAAP financial measure, was $7.4 million, or $0.43 per basic share and $0.41 per diluted share, for the first quarter of 2011. Core Earnings is used to compute incentive fees payable to the Company’s manager and the Company believes it is a useful measure for investors to better understand the Company’s recurring earnings from its core business. For these purposes, “Core Earnings” means the net income (loss), computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the expenses incurred in connection with the formation of the Company and the Initial Public Offering, including the initial and additional underwriting discounts and commissions, (iii) the incentive fee, (iv) real estate depreciation and amortization, (v) any unrealized gains or losses from mark to market valuation changes (other than permanent impairment) that are included in net income, (vi) one-time events pursuant to changes in GAAP and (vii) non-cash items which in the judgment of management should not be included in Core Earnings. For clauses (vi) and (vii), such exclusions shall only be applied after discussions between the Manager and the Independent Directors and approval by a majority of the Independent Directors.
Dividend
The Company’s Board of Directors declared a dividend of $0.32 per share of common stock for the quarter ended March 31, 2011. The dividend was paid April 14, 2011, to shareholders of record on March 28, 2011. The Company’s dividend policy is set by its Board of Directors and will be evaluated on a quarterly basis based upon the deployment of the Company’s capital and its taxable earnings and cash flow.
Conference Call
Colony Financial will host a conference call at 7 a.m. PT / 10 a.m. ET on Tuesday, May 3, 2011, to discuss results for the quarter ended March 31, 2011. To participate in the event by telephone, please dial (877) 941-2068 five to ten minutes prior to the start time (to allow time for registration) and use conference ID 4431700. International callers should dial 480-629-9712. A digital replay will be available beginning May 3, 2011, at 10 a.m. PT / 1 p.m. ET, through May 17, 2011, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial 877-870-5176 (U.S.), and use passcode 4431700. International callers should dial 858-384-5517 and enter the same conference ID number. The call will also be broadcast live over the Internet and can be accessed under Events in the Investor Relations section of the Company’s Web site at www.colonyfinancial.com. To listen to the live webcast, please visit the site at least 15 minutes prior to the start of the call in order to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the Web site.
About Colony Financial, Inc.
Colony Financial, Inc. is a real estate finance and investment company that is focused primarily on acquiring and originating commercial real estate loans and real estate-related debt at attractive risk-adjusted returns. Secondary debt purchases may include performing, sub-performing or non-performing loans (including loan-to-own strategies). Colony Financial, Inc. has elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes. Colony Financial is a component of the Russell 2000® and the Russell 3000® indices. For more information, visit www.colonyfinancial.com.
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. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company's control, that may cause actual results to differ significantly from those expressed in any forward-looking statement. Statements regarding the following subjects, among others, may be forward-looking: business and investment strategy; investment portfolio; projected operating results; ability to obtain financing arrangements; financing and advance rates for the Company's target assets; general volatility of the markets in which the Company invests; expected investments; expected co-investment allocations and related requirements; interest rate mismatches between the Company's target assets and its borrowings used to fund such investments; changes in interest rates and the market value of the Company's target assets; changes in prepayment rates on the Company's target assets; effects of hedging instruments on the Company's target assets; rates of default or decreased recovery rates on the Company's target assets; the degree to which the Company's hedging strategies may or may not protect the Company from interest and foreign exchange rate volatility; impact of changes in governmental regulations, tax law and rates, and similar matters; the Company's ability to maintain its qualification as a REIT for U.S. federal income tax purposes; the Company's ability to maintain its exemption from registration under the 1940 Act; availability of investment opportunities in mortgage-related and real estate-related investments and other securities; availability of qualified personnel; the Company's understanding of its competition; and market trends in the Company's industry, interest rates, real estate values, the debt securities markets or the general economy. All forward-looking statements reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the Company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on March 7, 2011, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission.
| COLONY FINANCIAL, INC. | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands, except share and per share data) | ||||||
| March 31, |
|
|||||
| 2011 |
December 31, |
|||||
| (Unaudited) |
2010 |
|||||
| ASSETS | ||||||
| Investments in unconsolidated joint ventures | $ | 259,111 | $ | 248,750 | ||
| Cash and cash equivalents | 8,467 | 66,245 | ||||
| Loans receivable, net | 108,863 | 69,929 | ||||
| Subscriptions receivable, net | 235,014 | - | ||||
| Other assets | 7,938 | 5,533 | ||||
| Total assets | $ | 619,393 | $ | 390,457 | ||
|
LIABILITIES AND EQUITY |
||||||
| Liabilities: | ||||||
| Line of credit | $ | - | $ | 20,000 | ||
| Secured financing | 13,967 | 14,000 | ||||
| Accrued and other liabilities | 5,555 | 3,380 | ||||
| Due to affiliate | 1,898 | 2,214 | ||||
| Dividends payable | 5,563 | 6,084 | ||||
| Deferred underwriting discounts and commissions payable to underwriters | 5,750 | 5,750 | ||||
| Deferred underwriting discounts and commissions reimbursable to Manager | 5,750 | 5,750 | ||||
| Total liabilities | 38,483 | 57,178 | ||||
| Commitments and contingencies | ||||||
| Equity: | ||||||
| Stockholders’ equity: | ||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding | - | - | ||||
|
Common stock, $0.01 par value, 450,000,000 shares authorized, 17,384,000 shares issued and outstanding |
174 | 174 | ||||
| Additional paid-in capital | 330,807 | 330,777 | ||||
| Common stock subscribed | 235,014 | - | ||||
| Retained earnings | 2,952 | 1,152 | ||||
| Accumulated other comprehensive income | 1,715 | 936 | ||||
| Total stockholders’ equity | 570,662 | 333,039 | ||||
| Noncontrolling interest | 10,248 | 240 | ||||
| Total equity | 580,910 | 333,279 | ||||
| Total liabilities and equity | $ | 619,393 | $ | 390,457 | ||
| COLONY FINANCIAL, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
|
(In thousands, except share and per share data) |
||||||||
|
(Unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| Income | ||||||||
| Equity in income of unconsolidated joint ventures | $ | 8,484 | $ | 3,915 | ||||
| Interest income | 2,165 | 170 | ||||||
| Other operating income | 561 | - | ||||||
| Total income | 11,210 | 4,085 | ||||||
| Expenses | ||||||||
| Base management fees | 1,296 | 660 | ||||||
| Investment expenses | 369 | 99 | ||||||
| Investment expenses reimbursed to affiliate | 318 | - | ||||||
| Interest expense | 510 | - | ||||||
| Administrative expenses | 1,125 | 900 | ||||||
| Administrative expenses reimbursed to affiliate | 390 | 271 | ||||||
| Total expenses | 4,008 | 1,930 | ||||||
| Foreign exchange loss, net of gain on foreign currency hedge of $9 and $5, respectively | (54 | ) | (28 | ) | ||||
| Income before income taxes | 7,148 | 2,127 | ||||||
| Income tax benefit (provision) | 228 | (29 | ) | |||||
| Net income | 7,376 | 2,098 | ||||||
| Net income attributable to noncontrolling interest | 13 | 2 | ||||||
| Net income attributable to common stockholders | $ | 7,363 | $ | 2,096 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.42 | $ | 0.14 | ||||
| Diluted | $ | 0.41 | $ | 0.14 | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 17,378,000 | 14,625,000 | ||||||
| Diluted | 17,840,500 | 14,912,500 | ||||||
| Dividends declared per common share | $ | 0.32 | $ | 0.16 | ||||
| COLONY FINANCIAL, INC. | ||||||
| CORE EARNINGS (Unaudited) | ||||||
| (In thousands, except share and per share data) | ||||||
| Three Months Ended March 31, | ||||||
| 2011 | 2010 | |||||
| GAAP Net income attributable to common stockholders | $ | 7,363 | $ | 2,096 | ||
| Adjustment to GAAP net income to reconcile to Core Earnings: | ||||||
| Non-cash equity compensation expense | 30 | 15 | ||||
| Core Earnings | $ | 7,393 | $ | 2,111 | ||
| Basic Core Earnings per share of common stock | $ | 0.43 | $ | 0.14 | ||
| Diluted Core Earnings per share of common stock | $ | 0.41 | $ | 0.14 | ||
| Basic weighted average common shares outstanding | 17,378,000 | 14,625,000 | ||||
| Diluted weighted average common shares outstanding | 17,840,500 | 14,912,500 | ||||
| COLONY FINANCIAL, INC. | |||||||||
| PRO FORMA CONSOLIDATED BALANCE SHEET | |||||||||
| (In thousands, except share and per share data) | |||||||||
| (Unaudited) | |||||||||
| As Reported | Pro Forma | ||||||||
| Adjusted | |||||||||
| March 31, | March 31, | ||||||||
| 2011 | Adjustments | 2011 | |||||||
| ASSETS | |||||||||
| Investments in unconsolidated joint ventures | $ | 259,111 | $ | $ | 259,111 | ||||
| Cash and cash equivalents | 8,467 | 272,099 |
(1) |
280,566 | |||||
| Loans receivable, net | 108,863 | 108,863 | |||||||
| Subscriptions receivable, net | 235,014 | (235,014 | ) |
(1) |
- | ||||
| Other assets | 7,938 | (304 | ) |
(2) |
7,634 | ||||
| Total assets | $ | 619,393 | $ | 36,781 | $ | 656,174 | |||
| LIABILITIES AND EQUITY | |||||||||
| Liabilities: | |||||||||
| Line of credit | $ | - | $ | - | $ | - | |||
| Secured financing | 13,967 | 13,967 | |||||||
| Accrued and other liabilities | 5,555 | 196 |
(2) |
5,751 | |||||
| Due to affiliates | 1,898 | 1,898 | |||||||
| Dividends payable | 5,563 | 5,563 | |||||||
| Deferred underwriting discounts and commissions payable to underwriters | 5,750 | 5,750 | |||||||
| Deferred underwriting discounts and commissions reimbursable to Manager | 5,750 | 5,750 | |||||||
| Total liabilities | 38,483 | 196 | 38,679 | ||||||
| Commitments and contingencies | |||||||||
| Equity: | |||||||||
| Stockholders’ equity: | |||||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized, none outstanding | - | - | - | ||||||
|
Common stock, $0.01 par value, 450,000,000 shares authorized, 17,384,000 shares issued and outstanding, historical; 32,909,000(1) shares issued and outstanding, adjusted |
174 | 155 |
(1) |
329 | |||||
| Additional paid-in capital | 330,807 | 271,444 |
(1)(2) |
602,251 | |||||
| Common stock subscribed | 235,014 | (235,014 | ) |
(1) |
- | ||||
| Retained earnings | 2,952 | 2,952 | |||||||
| Accumulated other comprehensive income | 1,715 | 1,715 | |||||||
| Total stockholders’ equity | 570,662 | 36,585 | 607,247 | ||||||
| Noncontrolling interest | 10,248 | 10,248 | |||||||
| Total equity | 580,910 | 36,585 | 617,495 | ||||||
| Total liabilities and equity | $ | 619,393 | $ | 36,781 | $ | 656,174 | |||
| Shares outstanding | 17,384,000 | 15,525,000 | 32,909,000 | ||||||
| Book Value per Share | $ | 32.83 | $ | 18.45 | |||||
|
(1) Reflects the issuance of 13,250,000 shares in our Follow-On Offering and 175,000 Anti-Dilution Shares and payment of $162,500 to certain investors on April 6, 2011 and 2,100,000 shares issued upon the underwriters' exercise of the overallotment option on April 12, 2011. |
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(2) Reflects the reduction of deferred offering costs accrued at March 31, 2011 and estimated additional offering costs incurred in connection with the Follow-On Offering. |
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