Colony Financial Announces First Quarter 2013 Financial Results

  Colony Financial Announces First Quarter 2013 Financial Results

Business Wire

LOS ANGELES -- May 06, 2013

Colony Financial, Inc. (NYSE: CLNY) (the “Company”) today announced financial
results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights

  *Core Earnings, a non-GAAP financial measure, of $17.0 million, or $0.27
    per basic and diluted share and net income attributable to common
    stockholders of $14.1 million, or $0.22 per basic and diluted share
  *During the quarter, the Company invested and committed approximately $526
    million, composed of an additional $295 million commitment (for an
    aggregate commitment of $550 million) into CAH Operating Partnership, L.P.
    (“CAH OP”), the single family home rental platform known as Colony
    American Homes, $208 million into five originations with a blended
    interest rate of approximately 10% and $23 million into one performing
    loan acquisition at a price of 78% of par
  *Raised net proceeds of $232 million through the sale of 11.5 million
    shares of common stock to underwriters at a net price of $20.20 per share
  *Declared and paid a first quarter dividend of $0.35 per share of common
    stock, consistent with the fourth quarter of 2012
  *Subsequent to quarter end: (i) the Company invested and agreed to invest
    approximately $202 million, composed of $27 million into a commercial bank
    loan portfolio acquisition at a purchase price of 75% of par and
    approximately $175 million into a mezzanine loan origination with an
    interest rate greater than 11%; (ii) Colony American Homes, Inc., the
    majority interest holder of CAH OP, announced that it has filed a
    registration statement on Form S-11 with the U.S. Securities and Exchange
    Commission for a proposed initial public offering of its shares of common
    stock; and (iii) the Company issued $200 million of 5.00% Convertible
    Senior Notes due in April 2023; the notes were sold to the underwriters at
    a discount of 3%, resulting in net proceeds of $194 million to the Company

First Quarter Operating Results

For the first quarter of 2013, equity in income of unconsolidated joint
ventures and interest income and other income from affiliates contributed
$21.8 million and $11.8 million, respectively, to total income of $33.6
million. Total expenses for the quarter were $11.2 million including
administrative expenses of $1.8 million. During the first quarter of 2013, the
Company reported net income attributable to common stockholders of $14.1
million, or $0.22 per basic and diluted share. Colony Financial’s Core
Earnings were $17.0 million, or $0.27 per basic and diluted share, for the
first quarter of 2013.

“The outlook for Colony Financial in 2013 remains outstanding as reflected in
our year-to-date accomplishments and results,” said Richard Saltzman, Colony
Financial’s President and Chief Executive Officer. “Of course, the quarter
itself incorporates a significant increase to our share count from both
December and January common equity issuances. Nonetheless, new investments are
closing at a record pace and we expect our Core Earnings to support our
annualized current dividend level despite the continuing acquisition and
occupancy ramp and corresponding near term earnings drag from our substantial
investment in U.S. single family homes for rent through Colony American
Homes.”

First Quarter Activity

  *The Company increased its commitment and funded investment in CAH OP to
    $550 million and $375 million, respectively, from $255 million committed
    and invested as of December 31, 2012. As of March 31, 2013, Colony
    American Homes owned 8,236 homes in eight states and the current occupancy
    of homes owned for 180 days or longer was 86% while the overall portfolio
    occupancy was 55%. As of April 21, 2013, Colony American Homes owned over
    9,500 homes in eight states.
  *The Company participated in a recently originated $375 million first
    mortgage loan secured by 11 upscale athletic clubs located in California.
    The loan bears an 8.0% fixed interest rate with a 25 year amortization
    schedule and has a five year term. The loan may be increased to $400
    million based on the achievement of certain performance metrics by the
    borrower. The Company’s share of the fully funded loan will be $132
    million, of which $123 million is currently funded.
  *The Company invested in a joint venture with a minority unaffiliated
    investor that funded $41 million of participating preferred equity in a
    newly formed entity that acquired a multifamily portfolio composed of
    approximately 2,200 units in the Atlanta and Dallas/Fort Worth
    metropolitan areas. The preferred equity provides a 12% preferred return,
    1% issuance fee and a 30% profit participation after the joint venture and
    the sponsor have each attained a 12% internal rate of return. The joint
    venture may fund an additional $34 million to fund moderate renovations
    and future acquisitions, which we would approve at our sole discretion.
    The Company’s share of this participating preferred equity investment is
    83%, or $34 million.
  *The Company invested in a joint venture with investment funds managed by
    an affiliate of the Company’s manager (“Co-Investment Fund(s)”) that
    acquired a performing $59 million senior mortgage loan secured by a retail
    asset in Florida. The loan was acquired for $46 million, or 78% of the
    unpaid principal balance. The loan bears a 6.0% fixed interest rate with a
    30-year amortization schedule and matures in May 2021. The current yield
    is approximately 9% based on purchase price. The Company’s share of this
    investment is 50%, or $23 million.
  *The Company invested in a joint venture with a Co-Investment Fund and a
    strategic partner that funded a $41 million first mortgage loan secured by
    a 7 acre multifamily development parcel located in Florida. The loan bears
    an interest rate of 12%, of which 3.5% may be paid-in-kind, and is subject
    to a 1.5% origination fee and a 1% exit fee. The term of the loan is three
    years. The Company’s share of the investment was 49.5%, or $20 million.
  *The Company invested in a joint venture with a Co-Investment Fund that
    originated a $26.8 million loan for the land acquisition and
    predevelopment costs for a mixed use development in San Rafael, CA. The
    Company and the Co-Investment Fund funded $20 million at closing for the
    acquisition and will fund the remaining $6.8 million upon completion of
    various items. The loan bears an interest rate of 15%, of which 5% may be
    paid-in-kind, with a 1% origination fee. The term of the loan is five
    years. The Company’s share of this investment is 50%, or $10 million (with
    a future funding obligation of $3.4 million).
  *The Company invested in a joint venture with a Co-Investment Fund that
    originated a $22 million first mortgage loan secured by a waterfront
    development parcel located in Florida. The loan bears an interest rate of
    14%, of which 4.5% may be paid-in-kind, with a 1% origination fee and a 1%
    exit fee. Additionally, upon certain performance metrics being achieved,
    we have the unilateral option to convert our position into subordinated
    development financing. The initial term of the loan is two years, plus two
    6-month extensions. The Company’s share of the investment was 50%, or $10
    million.
  *The Company completed a sale of 11.5 million shares of its common stock in
    January at a net price of $20.20 per share. The net offering proceeds,
    after deducting underwriting discounts and commissions and offering costs
    payable by the Company, were approximately $232 million.

Activities Subsequent to First Quarter 2013

  *The Company funded an additional $68 million (for aggregate fundings to
    date of $443 million and remaining uncalled capital commitment of $107
    million) into CAH OP. Inclusive of the Company’s aggregate commitment, CAH
    OP has received aggregate commitments of approximately $2.2 billion, of
    which an aggregate $1.9 billion has been called to date. As of April 21,
    2013, Colony American Homes owned over 9,500 homes in eight states.
  *On May 2, 2013, Colony American Homes, Inc., the majority interest holder
    of CAH OP, announced that it has filed a registration statement on Form
    S-11 with the U.S. Securities and Exchange Commission for a proposed
    initial public offering of its shares of common stock.
  *The Company invested in a joint venture with Co-Investment Funds that
    acquired a portfolio of loans secured by commercial real estate. The
    portfolio included 52 loans, of which 83% were performing at acquisition,
    with an aggregate UPB of approximately $72 million. The purchase price for
    the portfolio was approximately $54 million, or 75% of the portfolio’s
    UPB. Our share of this investment is 50%, or $27 million.
  *The Company committed to originate a $175 million mezzanine loan on a
    large portfolio of select-service, extended-stay and full-service hotels
    in the United States. The mezzanine loan will bear an interest rate of
    greater than 11% and a yield-to-maturity of approximately 13%.
  *In April, the Company issued $200 million of 5.00% Convertible Senior
    Notes due in April 2023. The notes were sold to the underwriters at a
    discount of 3%, resulting in net proceeds of $194 million to the Company.

Book Value

The Company’s GAAP book value per common share was $18.58 on March 31, 2013,
compared to GAAP book value of $18.30 per common share on December 31, 2012.
As of March 31, 2013 and May 6, 2013, the Company had 64,598,460 shares of
common stock outstanding.

Fair Value

If the Company accounted for all of its financial assets and liabilities at
fair value, the net fair value of the Company’s financial assets and
liabilities at March 31, 2013 would have been $71 million in excess of the net
carrying value of the Company’s financial assets and liabilities as of the
same date.

Common and Preferred Stock Dividends

The Company's Board of Directors declared a regular way quarterly dividend of
$0.35 per common share for the first quarter of 2013. The dividend was paid on
April 15, 2013, to stockholders of record on March 28, 2013.

In addition, the Company's Board of Directors declared a cash dividend of
$0.53125 per share on the Company's 8.50% Series A Cumulative Perpetual
Preferred Stock with liquidation preference of $25 per share for the quarterly
period ending April 15, 2013. The dividend was paid on April 15, 2013, to
stockholders of record on March 28, 2013.

Core Earnings

Core Earnings, a non-GAAP financial measure, 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” mean 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.

Conference Call

Colony Financial, Inc. will conduct a conference call to discuss the results
on Tuesday, May 7, 2013, at 7:00 a.m. PT / 10:00 a.m. ET. To participate in
the event by telephone, please dial (877) 407-0784 ten minutes prior to the
start time (to allow time for registration) and use conference ID 412524.
International callers should dial (201) 689-8560 and enter the same conference
ID number. For those unable to participate during the live broadcast, a replay
will be available beginning May 7, 2013 at 10:00 a.m. PT / 1:00 p.m. ET,
through May 21, 2013, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay,
dial (877) 870-5176 (U.S.), and use passcode 412524. 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 on the
Investor Relations section of the Company’s Web site at
www.colonyfinancial.com. A replay of the call will also be available for 90
days on the Company’s Web site.

About Colony Financial, Inc.

Colony Financial, Inc. is a real estate finance and investment company that is
focused on acquiring, originating and managing a diversified portfolio of real
estate-related debt and equity investments, including single family homes to
be rented to tenants, at attractive risk-adjusted returns. Our investment
portfolio and target assets are primarily composed of interests in: (i)
secondary loans acquired at a discount to par; (ii) new originations; and
(iii) equity in single family homes to be held for investment and rented to
tenants. Secondary debt purchases may include performing, sub-performing or
non-performing loans (including loan-to-own strategies). The Company has
elected to be taxed as a real estate investment trust, or REIT, for U.S.
federal income tax purposes.

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, and may cause
actual results to differ significantly from those expressed in any
forward-looking statement. 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, 2012 filed with the Securities and Exchange Commission on March
11, 2013, as amended by Amendment No. 1 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2012 filed with the Securities and
Exchange Commission on March 12, 2013, and other risks described in documents
subsequently filed by the Company from time to time with the SEC.

COLONY FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)
                                                              
                                                March 31, 2013   December 31,
                                                (Unaudited)      2012
ASSETS
Cash                                            $  82,074        $ 170,199
Investments in unconsolidated joint ventures    1,076,921        877,081
Loans held for investment, net                  419,630          333,569
Loan held for sale                              33,000           —
Beneficial interests in debt securities,        31,959           32,055
available-for-sale, at fair value
Other assets                                    25,602          22,663      
Total assets                                    $  1,669,186    $ 1,435,567 
LIABILITIES AND EQUITY
Liabilities:
Secured financing                               $  103,216       $ 108,167
Accrued and other liabilities                   13,524           12,944
Due to affiliates                               5,842            4,984
Dividends payable                               27,965          26,442      
Total liabilities                               150,547         152,537     
Commitments and contingencies
Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value, 8.5% Series
A Cumulative Redeemable Perpetual,
liquidation preference of $25 per share,        101              101
50,000,000 shares authorized, 10,080,000
shares issued and outstanding
Common stock, $0.01 par value, 450,000,000
shares authorized, 64,598,460 and 53,091,623    646              531
shares issued and outstanding, respectively
Additional paid-in capital                      1,455,774        1,222,682
Distributions in excess of retained earnings    (13,725      )   (5,167      )
Accumulated other comprehensive income          9,241           5,184       
Total stockholders’ equity                      1,452,037        1,223,331
Noncontrolling interests                        66,602          59,699      
Total equity                                    1,518,639       1,283,030   
Total liabilities and equity                    $  1,669,186    $ 1,435,567 
                                                                             

COLONY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)
                                                
                                                  Three Months Ended March 31,
                                                  2013           2012
Income
Equity in income of unconsolidated joint          $   21,802      $  15,441
ventures
Interest income                                   11,412          5,826
Other income from affiliates                      371            550        
Total income                                      33,585         21,817     
Expenses
Management fees                                   6,370           4,520
Investment expenses                               608             680
Interest expense                                  2,355           1,494
Administrative expenses                           1,843          1,754      
Total expenses                                    11,176         8,448      
Other loss, net                                   (63         )   (228       )
Income before income taxes                        22,346          13,141
Income tax provision                              352            364        
Net income                                        21,994          12,777
Net income attributable to noncontrolling         2,587          309        
interests
Net income attributable to Colony Financial,      19,407          12,468
Inc.
Preferred dividends                               5,355          376        
Net income attributable to common stockholders    $   14,052     $  12,092  
Net income per common share:
Basic                                             $   0.22       $  0.37    
Diluted                                           $   0.22       $  0.37    
Weighted average number of common shares
outstanding:
Basic                                             62,027,300     32,646,700 
Diluted                                           62,027,300     32,655,800 
                                                                             

COLONY FINANCIAL, INC.

CORE EARNINGS

(In thousands, except share and per share data)

(Unaudited)
                                                
                                                  Three Months Ended March 31,
                                                  2013             2012
GAAP net income attributable to common            $    14,052       $  12,092
stockholders
Adjustments to GAAP net income to reconcile to
Core Earnings:
Noncash equity compensation expense               1,187             1,916
Incentive fee                                     —                 413
Depreciation expense                              1,835             850
Net unrealized (gain) loss on derivatives         (27          )    180
Core Earnings                                     $    17,047      $  15,451
Basic                                             $    0.27        $  0.47
Diluted                                           $    0.27        $  0.47
Basic weighted average number of common shares    62,027,300       32,646,700
outstanding
Diluted weighted average number of common         62,027,300       32,655,800
shares outstanding
                                                                    

Contact:

Investor Contact:
Colony Financial, Inc.
Darren Tangen
Chief Operating Officer and Chief Financial Officer
(310) 552-7230
or
Addo Communications, Inc.
Lasse Glassen, (310) 829-5400
lasseg@addocommunications.com
or
Media Contact:
Owen Blicksilver P.R., Inc.
Caroline Luz, (203) 656-2829
caroline@blicksilverpr.com
 
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