COVID-19 and Liquidity Management Updates
Colony Credit Real Estate, Inc. (NYSE: CLNC) (“Colony Credit
Real Estate” or the “Company”) announced today that effective April
1, 2020, Michael J. Mazzei will be appointed Chief Executive
Officer and President of the Company, exclusively committed to the
Company’s business and operations. Effective April 1, 2020, Andrew
E. Witt will transition to Chief Operating Officer of the Company,
previously serving as Interim Chief Executive Officer and
President.
Mr. Mazzei commented, “I look forward to joining Colony Credit
Real Estate and the team to immediately engage with our borrower,
partner and client relationships as well as re-engage with banking
and financial institutions and their teams, with whom I’ve built
close professional relationships over the years. It has been a
privilege to be associated with Ladder Capital for these past 8
years. I thank their employees and directors for greatly
contributing to my experience and wish them continued success.”
Thomas J. Barrack, Jr., Executive Chairman of Colony Capital,
Inc., the Company’s external manager, stated, “We are delighted to
have Mike join Colony and utilize his 35+ years of experience,
knowledge of navigating through cycles, and strong executive
leadership in the commercial real estate finance and mortgage REIT
business at Colony Credit Real Estate.” Mr. Barrack continued, “On
behalf of Colony Capital and the Company, our thoughts are with
everyone affected by COVID-19 and we express our deepest gratitude
to healthcare workers and others supporting the fight against this
global pandemic. In light of current events and uncertainty in the
global markets, we want to highlight that management’s priorities
right now are focused on our customer relationships and
stockholders, as well as daily efforts to preserve financial
flexibility, take precautionary measures to support the balance
sheet and business, and support our government and regulators as
they navigate solutions to support the American economy through
this delicate period.”
With respect to historical portfolio management efforts:
- In November 2019, the Company completed a substantial
reassessment and bifurcated its assets between a Core Portfolio and
Legacy, Non-Strategic Portfolio.
- The Company promptly began and continues asset resolutions from
the Legacy, Non-Strategic Portfolio, providing an embedded capital
source for the Company.
- In the fourth quarter of 2019, the Company closed a $1 billion
CRE CLO, selling $840 million of investment grade notes, which
refinanced approximately $770 million of previously partial
recourse repurchase facility indebtedness to non-recourse financing
through the CLO issuance.
- As of December 31, 2019, the total borrowing under our senior
loan repurchase indebtedness was $780 million.
Given recent events relating to COVID-19, the Company notes the
following:
- As a result of these efforts and drawing capital under the
corporate line of credit as an additional precautionary measure,
the Company today has approximately $325 million of available
liquidity between cash on hand and the Company’s corporate
revolving credit facility.
- As of December 31, 2019, the Company’s exposure to CRE CMBS
securities was approximately 6.5% of the Company’s total book value
and 8% of the book value of the Company’s Core Portfolio. The
market value of our CMBS securities has been negatively impacted by
current events and recent illiquidity. As of March 26, 2020, the
approximately $201 million of repurchase financing on such CMBS
Securities is collateralized by both investment grade-rated bonds
($158 million obligation) and non-investment grade-rated bonds ($43
million obligation), in addition to approximately $56 million of
cash collateral.
- With respect to the Company’s repurchase financing on both CMBS
securities and senior loan collateral, the Company is actively
reviewing its portfolio with its relevant banking counterparties
and has received and timely paid margin calls.
- Investment and portfolio management team members together are
maintaining frequent communications with our borrowers, tenants and
client relationships.
For further explanation regarding the Company’s business,
portfolio and earnings, see the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2019, as well as the
Company’s other filings with the Securities and Exchange
Commission.
About Michael J. Mazzei
Michael J. Mazzei will serve as our Chief Executive Officer and
President. Mr. Mazzei will lead and oversee Colony Credit Real
Estate operations, including investment and credit risk, capital
raising and relationship management activities among stockholders,
clients, partners, financing counterparties, research analysts and
rating agencies.
Mr. Mazzei has served as a member of the board of directors of
Ladder Capital Corp since June 2017. Previously, Mr. Mazzei served
as President of Ladder Capital from June 2012 through June 2017.
From September 2009 to June 2012, Mr. Mazzei served as Global Head
of the CMBS and Bank Loan Syndication Group at Bank of America
Merrill Lynch. Prior to that, Mr. Mazzei served as Co-Head of CMBS
and Commercial Real Estate Debt Markets at Barclays Capital from
March 2004 to June 2009. Prior to Barclays Capital, Mr. Mazzei
spent 20 years at Lehman Brothers, including 18 years in commercial
real estate finance-related functions. Having started in commercial
mortgage trading in 1984, Mr. Mazzei became the head of CMBS in
1991 and served as the Co-Head of Global Real Estate Investment
Banking from March 2002 to February 2004.
Mr. Mazzei received a B.S. from Baruch College and a J.D. from
St. John’s University School of Law, and is a graduate of the New
York University Real Estate Institute.
About Colony Credit Real Estate,
Inc.
Colony Credit Real Estate (NYSE: CLNC) is one of the largest
publicly traded commercial real estate (CRE) credit REITs, focused
on originating, acquiring, financing and managing a diversified
portfolio consisting primarily of CRE senior mortgage loans,
mezzanine loans, preferred equity, debt securities and net leased
properties predominantly in the United States. Colony Credit Real
Estate is externally managed by a subsidiary of leading global real
estate and investment management firm, Colony Capital, Inc. Colony
Credit Real Estate is organized as a Maryland corporation that
elected to be taxed as a REIT for U.S. federal income tax purposes
commencing with our initial taxable year ended December 31, 2018.
For additional information regarding the Company and its management
and business, please refer to www.clncredit.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. Forward-looking statements involve
known and unknown risks, uncertainties, assumptions and
contingencies, many of which are beyond our control, and may cause
actual results to differ significantly from those expressed in any
forward-looking statement. Among others, the following
uncertainties and other factors could cause actual results to
differ from those set forth in the forward-looking statements:
operating costs and business disruption may be greater than
expected; uncertainties regarding the ongoing impact of the novel
coronavirus (COVID-19) and its adverse impact on the real estate
market, the economy and our investments; the Company's operating
results may differ materially from the information presented in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, as well as in Colony Credit Real Estate’s other
filings with the Securities and Exchange Commission; the fair value
of the Company's investments may be subject to uncertainties; the
Company's use of leverage could hinder its ability to make
distributions and may significantly impact its liquidity position;
given the Company's dependence on its external manager, an
affiliate of Colony Capital, Inc., any adverse changes in the
financial health or otherwise of its manager or Colony Capital,
Inc. could hinder the Company's operating performance and return on
stockholder's investment; the ability to realize substantial
efficiencies as well as anticipated strategic and financial
benefits, including, but not limited to expected returns on equity
and/or yields on investments; adverse impacts on the Company's
liquidity, including its ability to continue to generate liquidity
from sales of Legacy, Non-Strategic assets; the Company’s ability
to liquidate its Legacy, Non-Strategic assets within the projected
timeframe or at the projected values; the timing of and ability to
deploy available capital; the Company’s ability to maintain or grow
the dividend at all in the future; the timing of and ability to
complete repurchases of the Company’s stock; the ability of the
Company to refinance certain mortgage debt on similar terms to
those currently existing or at all; whether Colony Capital will
continue to serve as our external manager or whether we will pursue
another strategic transaction; and the impact of legislative,
regulatory and competitive changes. The foregoing list of factors
is not exhaustive. Additional information about these and other
factors can be found in Part I, Item 1A of the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2019, as
well as in Colony Credit Real Estate’s other filings with the
Securities and Exchange Commission.
We caution 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 Credit Real Estate 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 Credit Real
Estate does not intend to do so.
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Investor Relations Colony Credit Real Estate, Inc.
Addo Investor Relations Lasse Glassen 310-829-5400
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