NorthStar Realty Finance Announces Third Quarter 2016 Results
Third Quarter 2016 Highlights
U.S. GAAP net (loss) to common stockholders of($100.4) million , or ($0.56 ) per diluted share and cash available for distribution ("CAD") of$83.5 million , or$0.46 per share.- Third quarter 2016 cash dividend of
$0.40 per common share. - To date total of
$6.6 billion of asset monetizations completed or under contract, generating$2.5 billion of liquidity$2.8 billion of completed asset monetizations which generated$1.4 billion of liquidity, including$667 million of assets sold and$416 million of liquidity generated in the third quarter 2016$3.8 billion of additional asset sales under contract expected to generate$1.1 billion of liquidity, including:- Entered into an agreement to sell an approximate
$1.0 billion joint venture interest, at a valuation of$6.1 billion , inNorthStar Realty's entire healthcare real estate portfolio toTaikang Insurance Group . This transaction will generate approximately$340 million of liquidity and represents an approximate 6.1% cap rate; and - Entered into an agreement to sell
$838 million ofNorthStar Realty's medical office healthcare portfolio at an approximate 5.6% cap rate. This transaction is expected to generate approximately$115 million of liquidity.
- Entered into an agreement to sell an approximate
Third Quarter 2016 Results
For more information and a reconciliation of CAD to net income (loss) to common stockholders, please refer to the tables on the following pages.
Proposed Merger -
On
Portfolio Results and Performance Metrics
Below are portfolio results and performance metrics for the third quarter 2016. Same-store results are presented for direct real estate properties that
- For the third quarter 2016, combined healthcare portfolio NOI was
$91.6 million . - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, combined healthcare portfolio NOI was$91.6 million for the third quarter 2016 and excluding foreign currency exchange rate fluctuations related to properties located in theUnited Kingdom , NOI would have been$93.0 million , compared to combined healthcare portfolio NOI of$90.1 million for the third quarter 2015.
Medical Office Buildings
- For the third quarter 2016, NOI was
$25.8 million , remaining lease term was 6.6 years and occupancy was 89.4%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, NOI was$25.8 million , remaining lease term was 6.6 years and occupancy was 89.4% for the third quarter 2016, compared to NOI of$25.6 million , remaining lease term of 6.7 years and occupancy of 91.0% for the third quarter 2015.
- For the third quarter 2016, NOI was
$18.0 million and occupancy was 88.4%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016 and adjusted to include NOI from a portfolio which transitioned from triple net lease to operating during 2015, NOI was$18.0 million and occupancy was 88.4% for the third quarter 2016, compared to NOI of$16.9 million and occupancy of 88.7% for the third quarter 2015.
- For the third quarter 2016, NOI was
$14.1 million , remaining lease term was 11.9 years and lease (EBITDAR) coverage was 1.7x. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016 and adjusted to exclude NOI from a portfolio which transitioned from triple net lease to operating during 2015, NOI was$14.1 million and excluding foreign currency exchange rate fluctuations related to properties located in the United Kingdom NOI, would have been$15.5 million , remaining lease term was 11.9 years and lease (EBITDAR) coverage was 1.7x for the third quarter 2016, compared to NOI of$14.9 million , remaining lease term of 11.4 years and lease (EBITDAR) coverage was 1.5x for the third quarter 2015.
Skilled Nursing Facilities
- For the third quarter 2016, NOI was
$28.7 million , remaining lease term was 8.0 years and lease (EBITDAR) coverage was 1.5x. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, NOI was$28.7 million , remaining lease term was 8.0 years and lease (EBITDAR) coverage was 1.5x for the third quarter 2016, compared to NOI of$27.8 million , remaining lease term of 9.0 years and lease (EBITDAR) coverage was 1.4x for the third quarter 2015.
Hospitals
- For the third quarter 2016, NOI was
$5.0 million , remaining lease term was 12.2 years and lease (EBITDAR) coverage was 3.5x, compared to NOI of$4.9 million , remaining lease term of 13.2 years and lease (EBITDAR) coverage was 2.6x for the third quarter 2015.
Hotels
- For the third quarter 2016, EBITDA was
$80.1 million , RevPAR was$100.7 , WA occupancy was 78.0% and EBITDA margin was 36.3%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, EBITDA was$78.4 million , RevPAR was$101.1 , WA occupancy was 77.7% and EBITDA margin was 37.0% for the third quarter 2016, compared to EBITDA of$82.7 million , RevPAR of$102.7 , WA occupancy of 79.7% and EBITDA margin of 38.0% for the third quarter 2015. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016 and excluding hotels which were under renovation during the third quarter 2016, EBITDA was$69.6 million , RevPAR was$102.4 , WA occupancy was 78.8% and EBITDA margin was 37.2% for the third quarter 2016, compared to EBITDA of$71.5 million , RevPAR of$102.2 , WA occupancy of 79.6% and EBITDA margin of 38.1% for the third quarter 2015.
Manufactured Housing Communities
- For the third quarter 2016, NOI was
$32.5 million , WA monthly rent was$500.3 and economic occupancy was 85.2%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, NOI was$30.1 million , WA monthly rent was$507.0 and economic occupancy was 85.7% for third quarter 2016, compared to NOI of$25.6 million , WA monthly rent of$488.4 and economic occupancy of 85.3% for the third quarter 2015.
- For the third quarter 2016, NOI was
$11.2 million , remaining lease term was 5.2 years and occupancy was 93.0%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, NOI was$5.7 million , remaining lease term was 5.2 years and occupancy was 93.0% for the third quarter 2016, compared to NOI of$6.1 million , remaining lease term of 4.7 years and occupancy of 96.4% for the third quarter 2015. - Excluding rent concessions provided to two tenants that renewed their leases during 2016, third quarter 2016 NOI would have been
$6.4 million for portfolios owned during the full quarters endedSeptember 30, 2015 and 2016.
- For the third quarter 2016, NOI was
$4.4 million , occupancy was 94.3%, WA monthly rent was$830.5 and NOI margin was 52.7%. - For portfolios owned during the full quarters ended
September 30, 2015 and 2016, NOI was$4.4 million , occupancy was 94.5%, WA monthly rent was$826.0 and NOI margin was 53.0% for the third quarter 2016, compared to NOI of$4.1 million , occupancy of 92.0%, WA monthly rent of$792.2 and NOI margin of 50.8% for the third quarter 2015. - Excluding the 5 multifamily properties
NorthStar Realty has definitive agreements to sell as ofSeptember 30, 2016 , NOI was$1.6 million for the third quarter 2016.
- For the third quarter 2016, NOI was
$2.9 million , remaining lease term was 2.4 years, occupancy was 85.1% and NOI margin was 55.0%, compared to NOI of$2.8 million , remaining lease term of 3.1 years, occupancy of 88.9% and NOI margin of 54.2% for the third quarter 2015.
Interest in Private Equity Funds
- For the third quarter 2016, aggregate gross distributions were
$53.7 million , of which$18.0 million was income earned and aggregate contributions totaled$1.4 million . As ofSeptember 30, 2016 , aggregate portfolio net carrying value was$481.7 million with a yield of 12.3%. For the second quarter 2016, aggregate gross distributions were$50.7 million , of which$23.7 million was income earned and aggregate contributions totaled$1.6 million . As ofJune 30, 2016 , aggregate portfolio net carrying value was$512.9 million with a yield of 14.2%.
Balance Sheet Loans
- For the third quarter 2016, aggregate portfolio income was
$4.9 million . During the third quarter 2016, asset sales and repayments totaled$2.8 million . As ofSeptember 30, 2016 , aggregate portfolio carrying value was$199.3 million with a yield on equity of 9.4%. For the second quarter 2016, aggregate portfolio income was$11.3 million . During the second quarter 2016, asset sales and repayments totaled$116.0 million net of$25.2 million of financing. As ofJune 30, 2016 , aggregate portfolio carrying value was$205.2 million with a yield on equity of 9.8%.
- For the third quarter 2016, aggregate portfolio income earned was
$15.6 million , which includes$3.5 million related to repurchased CDO bonds that are eliminated in consolidation. As ofSeptember 30, 2016 , the principal amount of the portfolio, excluding repurchased CDO bonds that are eliminated in consolidation, was$430.1 million with an amortized cost of$221.0 million and a yield of 20.7%. As ofSeptember 30, 2016 , the principal amount of repurchased CDO bonds that are eliminated in consolidation was$139.8 million . For the second quarter 2016, aggregate portfolio income earned was$16.9 million , which includes$5.9 million related to repurchased CDO bonds that are eliminated in consolidation. As ofJune 30, 2016 , the principal amount of the portfolio, excluding repurchased CDO bonds that are eliminated in consolidation, was$434.5 million with an amortized cost of$213.9 million and a yield of 20.7%. As ofJune 30, 2016 , the principal amount of repurchased CDO bonds that are eliminated in consolidation was$139.7 million .
CDO Equity and Other Income
- For the third quarter 2016, aggregate CDO equity distributions and other income was
$16.8 million . For the second quarter 2016, aggregate CDO equity distributions and other income was$13.9 million .
Asset Divestitures
Commercial Real Estate
Completed third quarter 2016 and fourth quarter to date 2016
- During the third quarter 2016,
NorthStar Realty sold its interests in a$405 million net lease industrial real estate portfolio which resulted inNorthStar Realty receiving net proceeds of approximately$170 million .NorthStar Realty generated an IRR of approximately 13.8% on its invested equity. - During the third quarter 2016,
NorthStar Realty sold one multifamily property for$23 million which resulted inNorthStar Realty receiving net proceeds of approximately$8 million .NorthStar Realty generated an IRR of approximately 21.4% on its invested equity. - Subsequent to the third quarter 2016,
NorthStar Realty sold five multifamily properties for$158 million which resulted inNorthStar Realty receiving net proceeds of approximately$43 million .NorthStar Realty generated an IRR of approximately 14.3% on its invested equity.
Under Contract
NorthStar Realty has entered into a definitive agreement to sell its manufactured housing communities for$2.0 billion which will result in net proceeds of approximately$615 million .NorthStar Realty expects to generate an IRR of approximately 20.3% on its invested equity. We expect this transaction to close in the first quarter 2017; however, there is no assurance this transaction will close on the terms anticipated, if at all.NorthStar Realty has entered into a definitive agreement to sell a subset of its MOB portfolio for$838 million , at an approximate 5.6% cap rate, which will result in net proceeds of approximately$115 million . We expect this transaction to close in the fourth quarter 2016; however, there is no assurance this transaction will close on the terms anticipated, if at all.NorthStar Realty has entered into a definitive agreement, subject to certain regulatory and financing approvals, to sell a joint venture interest in its healthcare real estate portfolio for approximately$1.0 billion , at a total valuation of$6.1 billion and representing an approximate 6.1% cap rate, which will result in net proceeds of approximately$340 million . We expect this transaction to close in the first quarter 2017; however, there is no assurance this transaction will close on the terms anticipated, if at all.
Real Estate Private Equity
- During the third quarter 2016,
NorthStar Realty sold its interests in 41 real estate private equity funds for$239 million of net proceeds, of whichNorthStar Realty has received$34 million and will receive the remaining net proceeds in the fourth quarter 2016. The sale relievedNorthStar Realty of$45 million in future funding obligations.
NorthStar Realty Total Assets
- Assets as of
September 30, 2016 totaled approximately$18.9 billion or pro forma for asset monetization initiatives as ofNovember 4, 2016 , assets are approximately$16.1 billion . - Approximately 90% of the
$16.1 billion of total assets are comprised of direct and indirect ownership interests in real estate.
Supplemental Disclosure
- Please refer to the supplemental presentation that was posted on
NorthStar Realty's website, www.nrfc.com, which provides substantial additional details regardingNorthStar Realty's investments.
Liquidity, Financing and Capital Markets Highlights
Liquidity as of |
||
$ in millions |
||
Unrestricted cash(1) |
$ 1,067 |
|
Undrawn corporate revolving credit facility |
250 |
|
Expected asset monetizations (in-contract)(2) |
1,070 |
|
Expected liquidity |
$ 2,387 |
|
(1) Includes |
||
PE fund interests sold in the third quarter 2016. |
||
(2) Includes expected asset monetization net proceeds: |
||
the sale of healthcare MOB assets and |
||
Common shares, LTIPs and RSUs not subject to performance hurdles, outstanding |
||
Amounts in millions |
||
Weighted average for Q3'16 |
183.2 |
|
Total outstanding as of |
183.2 |
|
Potential Additional Shares |
||
Common shares underlying remaining exchangeable notes |
1.2 |
|
Grand total |
184.4 |
Earnings Conference Call
The call will be webcast live over the
A replay of the call will be available two hours after the call through
About
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Consolidated Statements of Operations |
|||||
($ in thousands, except per share and dividends data) |
|||||
(Unaudited) |
|||||
Three Months Ended |
|||||
2016(1) |
2015(1) |
||||
Property and other revenues |
|||||
Rental and escalation income |
$ 165,060 |
$ 194,518 |
|||
Hotel related income |
220,578 |
219,427 |
|||
Resident fee income |
72,988 |
70,257 |
|||
Other revenue |
5,038 |
2,501 |
|||
Total property and other revenues |
463,664 |
486,703 |
|||
Net interest income |
|||||
Interest income |
34,669 |
60,840 |
|||
Interest expense on debt and securities |
1,614 |
1,289 |
|||
Net interest income on debt and securities |
33,055 |
59,551 |
|||
Expenses |
|||||
Management fee, related party |
46,771 |
51,285 |
|||
Interest expense—mortgage and corporate borrowings |
114,296 |
127,111 |
|||
Real estate properties – operating expenses |
236,992 |
248,983 |
|||
Other expenses |
6,472 |
7,495 |
|||
Transaction costs |
3,599 |
2,633 |
|||
Impairment losses |
70,433 |
- |
|||
Provision for (reversal of) loan losses, net |
1,892 |
53 |
|||
General and administrative expenses |
|||||
Compensation expense (2) |
7,528 |
7,794 |
|||
Other general and administrative expenses |
3,585 |
4,885 |
|||
Total general and administrative expenses |
11,113 |
12,679 |
|||
Depreciation and amortization |
84,726 |
118,826 |
|||
Total expenses |
576,294 |
569,065 |
|||
Other income (loss) |
|||||
Unrealized gain (loss) on investments and other |
(26,648) |
(132,251) |
|||
Realized gain (loss) on investments and other |
939 |
614 |
|||
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax benefit |
(105,284) |
(154,448) |
|||
Equity in earnings (losses) of unconsolidated ventures |
26,054 |
60,359 |
|||
Income tax benefit (expense) |
(3,567) |
2,142 |
|||
Income (loss) from continuing operations |
(82,797) |
(91,947) |
|||
Income (loss) from discontinued operations |
- |
(16,581) |
|||
Net income (loss) |
(82,797) |
(108,528) |
|||
Net (income) loss attributable to non-controlling interests |
3,506 |
3,477 |
|||
Preferred stock dividends |
(21,060) |
(21,060) |
|||
Net income (loss) attributable to |
$ (100,351) |
$ (126,111) |
|||
Earnings (loss) per share:(3) |
|||||
Income (loss) per share from continuing operations |
$ (0.56) |
$ (0.60) |
|||
Income (loss) per share from discontinued operations |
- |
(0.09) |
|||
Basic |
$ (0.56) |
$ (0.69) |
|||
Diluted |
$ (0.56) |
$ (0.69) |
|||
Weighted average number of shares:(3) |
|||||
Basic |
179,890,187 |
182,343,301 |
|||
Diluted |
181,746,499 |
184,187,524 |
|||
Dividends per share of common stock(3) |
$ 0.40 |
$ 0.75 |
|||
(1) |
The consolidated financial statements for the three months ended |
(2) |
The three months ended |
(3) |
Adjusted for the one-for-two reverse stock split completed on |
|
||||
Consolidated Balance Sheets |
||||
($ in thousands, except per share data) |
||||
|
|
|||
2016 (Unaudited) |
2015 |
|||
Assets |
||||
Cash and cash equivalents |
$ 725,360 |
$ 224,101 |
||
Restricted cash |
180,068 |
299,288 |
||
Operating real estate, net |
7,371,996 |
8,702,259 |
||
Real estate debt investments, net |
348,539 |
501,474 |
||
Real estate debt investments, held for sale |
- |
224,677 |
||
Investments in private equity funds, at fair value |
484,876 |
1,101,650 |
||
Investments in unconsolidated ventures |
161,744 |
155,737 |
||
Real estate securities, available for sale |
526,966 |
702,110 |
||
Receivables, net |
264,961 |
66,197 |
||
Receivables, related parties |
1,888 |
2,850 |
||
Intangible assets, net |
343,717 |
527,277 |
||
Assets of properties held for sale |
2,653,959 |
2,742,635 |
||
Other assets |
300,815 |
154,146 |
||
Total assets |
$ 13,364,889 |
$ 15,404,401 |
||
Liabilities |
||||
Mortgage and other notes payable |
$ 6,922,027 |
$ 7,164,576 |
||
Credit facilities and term borrowings |
420,409 |
654,060 |
||
CDO bonds payable, at fair value |
257,877 |
307,601 |
||
Exchangeable senior notes |
27,356 |
29,038 |
||
Junior subordinated notes, at fair value |
191,175 |
183,893 |
||
Accounts payable and accrued expenses |
132,016 |
170,120 |
||
Due to related party |
46,939 |
50,903 |
||
Derivative liabilities, at fair value |
302,316 |
103,293 |
||
Intangible liabilities, net |
113,967 |
149,642 |
||
Liabilities of properties held for sale |
1,502,659 |
2,209,689 |
||
Other liabilities |
73,126 |
165,856 |
||
Total liabilities |
9,989,867 |
11,188,671 |
||
Commitments and contingencies |
||||
Equity |
||||
|
||||
Preferred stock, |
939,118 |
939,118 |
||
Common stock, |
||||
shares issued and outstanding as of |
1,807 |
1,832 |
||
Additional paid-in capital |
5,116,100 |
5,149,349 |
||
Retained earnings (accumulated deficit) |
(2,891,153) |
(2,309,564) |
||
Accumulated other comprehensive income (loss) |
(63,709) |
18,485 |
||
|
3,102,163 |
3,799,220 |
||
Non-controlling interests |
272,859 |
416,510 |
||
Total equity |
3,375,022 |
4,215,730 |
||
Total liabilities and equity |
$ 13,364,889 |
$ 15,404,401 |
Non-GAAP Financial Measures
We use CAD and NOI, each a non-GAAP measure, to evaluate our profitability.
Cash Available for Distribution
We believe that CAD provides investors and management with a meaningful indicator of operating performance. We also believe that CAD is useful because it adjusts for a variety of items that are consistent with presenting a measure of operating performance (such as transaction costs, N-Star CDO equity interests, depreciation and amortization, equity-based compensation, realized gain (loss) on investments, provision for loan losses, asset impairment, non-recurring bad debt expense and certain interest income and expense items). We adjust for transaction costs because these costs are not a meaningful indicator of our operating performance. For instance, these transaction costs include costs such as professional fees associated with new investments or restructuring of investments, which are expenses related to specific transactions. We adjust for N-Star CDO equity interests to represent the net economic interest generated from the N-Star CDO equity interests. This adjustment is a component of our ongoing return on such investments, and therefore, is adjusted in CAD as it provides investors and management with a meaningful indicator of our operating performance. Furthermore, CAD adjusts N-Star CDO bond discounts to record such investments on an effective yield basis over the expected weighted average life of the investment. N-Star CDO bond discounts relates to repurchased CDO bonds of consolidated CDO financing transactions at a discount to par. These CDO bonds typically have a low interest rate and the majority of the return is generated from repurchasing the CDO bonds at a discount to expected recovery value. Because the return generated through the accretion of the discount is a meaningful contributor to our operating performance, such accretion is adjusted in CAD. The computation for the accretion of the discount under
We calculate CAD by subtracting from or adding to net income (loss) attributable to common stockholders, non-controlling interests and the following items: depreciation and amortization items including straight-line rental income or expense, amortization of above/below market leases, amortization of deferred financing costs, amortization of discount on financings and other and equity-based compensation; net economic interest generated from N-Star CDO equity interests; accretion of consolidated N-Star CDO bond discounts; net interest income in consolidated N-Star CDOs; unrealized gain (loss) from the change in fair value; realized gain (loss) on investments and other, excluding accelerated amortization related to sales of CDO bonds or other investments; provision for loan losses, net; impairment on depreciable property; non-recurring bad debt expense; acquisition gains or losses; distributions and adjustments related to joint venture partners; transaction costs; foreign currency gains (losses); impairment on goodwill and other intangible assets; and one-time events pursuant to changes in
CAD should not be considered as an alternative to net income (loss) attributable to common stockholders, determined in accordance with
The following table presents a reconciliation of CAD to net income (loss) attributable to common stockholders for the three months ended
Reconciliation of Cash Available for Distribution |
||
(Amount in thousands except per share data) |
||
Three Months Ended |
||
|
||
Net income (loss) attributable to common stockholders |
$ (100,351) |
|
Non-controlling interests |
(3,506) |
|
Adjustments: |
||
Depreciation and amortization items (1) |
97,904 |
|
N-Star CDO bond discounts (2) |
3,516 |
|
Net interest income in consolidated N-Star CDOs |
(9,644) |
|
Unrealized (gain) loss from fair value adjustments / Provision for |
26,549 |
|
Realized (gain) loss on investments (3) |
2,170 |
|
Distributions / adjustments to joint venture partners |
(9,714) |
|
Transaction costs and other (4) |
76,569 |
|
CAD |
$ 83,493 |
|
CAD per share(5) |
$ 0.46 |
(1) |
Represents an adjustment to exclude depreciation and amortization of |
(2) |
For CAD, discounts expected to be realized on N-Star CDO bonds for consolidated CDOs are accreted on an effective yield basis based on expected maturity. For deconsolidated N-Star CDOs, N-Star CDO bond accretion is already included in net income attributable to common stockholders. |
(3) |
Represents an adjustment to exclude a |
(4) |
Represents an adjustment to exclude |
(5) |
CAD per share does not take into account any potential dilution from our outstanding exchangeable notes or restricted stock units subject to performance metrics not currently achieved. |
Net Operating Income (NOI)
We believe NOI is a useful metric of the operating performance of our real estate portfolio in the aggregate. Portfolio results and performance metrics represent 100% for all consolidated investments and represent our ownership percentage for unconsolidated joint ventures. Net operating income represents total property and related revenues, adjusted for: (i) amortization of above/below market rent; (ii) straight line rent; (iii) other items such as adjustments related to joint ventures and non-recurring bad debt expense; and (iv) less property operating expenses. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, transaction costs, depreciation and amortization expense, realized gains (losses) from the sale of properties and other items under
NOI should not be considered as an alternative to net income (loss), determined in accordance with
The following table presents a reconciliation of NOI to property and other related revenues less property operating expenses for our property types in our real estate segment for the three months ended
Total |
Healthcare (6)(7) |
Hotel |
Manufactured |
Net Lease |
Multifamily (7) |
Multi-tenant |
|||||||
Property and Other Revenues: |
|||||||||||||
Rental and escalation income |
$ 165,060 |
$ 88,996 |
$ 22 |
$ 49,424 |
$ 14,433 |
$ 6,961 |
$ 5,224 |
||||||
Hotel related income |
220,578 |
- |
220,578 |
- |
- |
- |
- |
||||||
Resident fee income |
72,988 |
72,988 |
- |
- |
- |
- |
- |
||||||
Other revenue (1) |
2,929 |
585 |
83 |
1,408 |
332 |
368 |
153 |
||||||
Total property and other revenues |
461,555 |
162,569 |
220,683 |
50,832 |
14,765 |
7,329 |
5,377 |
||||||
Real estate properties - operating expenses |
236,992 |
68,056 |
140,513 |
19,882 |
2,584 |
3,621 |
2,336 |
||||||
Adjustments: |
|||||||||||||
Interest income (2) |
3,033 |
1,470 |
11 |
1,548 |
4 |
- |
- |
||||||
Equity in earnings (3) |
145 |
- |
- |
- |
(166) |
311 |
- |
||||||
Amortization and other items (4) |
(5,013) |
(4,377) |
(34) |
- |
(782) |
359 |
(179) |
||||||
NOI(5)(8) |
$ 222,728 |
$ 91,606 |
$ 80,147 |
$ 32,498 |
$ 11,237 |
$ 4,378 |
$ 2,862 |
(1) |
Certain other revenue earned is not included as part of NOI, including collateral management fees for administrative services in our N-Star CDOs, that are not part of our real estate segment. |
|||||||||||
(2) |
Primarily represents interest income earned from notes receivable on manufactured homes and loans in our healthcare portfolio. |
|||||||||||
(3) |
Includes an adjustment related to our interest in an unconsolidated joint venture in a net lease and multifamily property. |
|||||||||||
(4) |
Primarily includes amortization of straight-line rental income, amortization of above/below market leases and non-recurring bad debt. |
|||||||||||
(5) |
We consider NOI for hotels to be a proxy for earnings before interest, tax, depreciation and amortization (EBITDA). |
|||||||||||
(6) |
The following table presents NOI by asset class within our healthcare property type for the three months ended |
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Total |
Medical Office |
|
|
Skilled Nursing |
Hospitals |
|||||||
Property and Other Revenues: |
||||||||||||
Rental and escalation income |
$ 88,996 |
$ 39,435 |
$ - |
$ 13,930 |
$ 29,710 |
$ 5,921 |
||||||
Resident fee income |
72,988 |
- |
67,486 |
- |
5,502 |
- |
||||||
Other revenue |
585 |
583 |
- |
- |
- |
2 |
||||||
Total property and other revenues |
162,569 |
40,018 |
67,486 |
13,930 |
35,212 |
5,923 |
||||||
Real estate properties - operating expenses |
68,056 |
12,450 |
49,670 |
219 |
5,310 |
407 |
||||||
Adjustments: |
||||||||||||
Interest income |
1,470 |
1 |
1 |
1,114 |
57 |
297 |
||||||
Amortization and other items |
(4,377) |
(1,810) |
224 |
(730) |
(1,279) |
(782) |
||||||
NOI |
$ 91,606 |
$ 25,759 |
$ 18,041 |
$ 14,095 |
$ 28,680 |
$ 5,031 |
||||||
(7) |
During 2016, we entered into definitive agreements to sell certain of our real estate portfolios, including ten multifamily properties of which five properties were sold as of |
|||||||||||
(8) |
The following table presents a reconciliation of NOI of our real estate segment to net income (loss) for the three months ended |
|||||||||||
NOI |
$ 222,728 |
||||||
Adjustments: |
|||||||
Straight-line rental revenue and amortization of |
|||||||
above/below-market leases |
6,185 |
||||||
Interest expense - mortgage and corporate borrowings |
(104,510) |
||||||
Other expenses |
(6,267) |
||||||
Depreciation and amortization |
(84,536) |
||||||
Unrealized gain (loss) on investments and other |
(1,956) |
||||||
Realized gain (loss) on investments and other |
6,378 |
||||||
Equity in earnings (losses) of unconsolidated ventures |
25,887 |
||||||
Impairment Losses |
(70,433) |
||||||
Income tax benefit (expense) |
(3,408) |
||||||
Other items |
(1,069) |
||||||
Net income (loss) - Real estate segment |
$ (11,001) |
||||||
Remaining segments (i) |
(71,796) |
||||||
Net income (loss) |
$ (82,797) |
||||||
(i) Represents the net income (loss) of our remaining segments to reconcile to total net income (loss). |
Safe Harbor Statement
This press release contains certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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: the failure to receive, on a timely basis or otherwise, the required approvals by NSAM, Colony and NRF stockholders, governmental or regulatory agencies and third parties for the merger; the risk that a condition to closing of the merger may not be satisfied; each company's ability to consummate the merger; operating costs and business disruption may be greater than expected; the ability of each company to retain its senior executives and maintain relationships with business partners pending consummation of the merger; the ability to realize substantial efficiencies and merger synergies as well as anticipated strategic and financial benefits, including the creation of an internally managed world-class real estate and investment management platform; the impact of legislative, regulatory and competitive changes; the impact of integration efforts; whether our monetization initiatives under contract or any additional monetization initiatives will be consummated, at highly attractive valuations or otherwise, and the incremental liquidity received from any such initiative; our ability to consummate the sale of a subset of our medical office buildings portfolio and enter into, and complete, a joint venture in our overall healthcare real estate portfolio on the terms anticipated or at all; whether our monetization initiatives will achieve the substantial anticipated benefits in full or at all, including anticipated IRRs, financial flexibility, opportunity and earnings power, additional liquidity, reduced leverage and an attractive financial profile, either before or after the merger; the impact such monetization initiatives will have on our earnings; the durability and long-term growth prospects of our business; our ability to execute our business strategy; the resulting effects of becoming an externally managed company, including the payment of substantial fees to our manager, an affiliate of NSAM, the allocation of investments by our manager among us and NSAM's other managed companies, and various conflicts of interest in our relationship with NSAM, including in transactions between us and other companies managed by NSAM; the performance of our real estate portfolio generally, including the ability to maintain consistent or strong operating performance; the underperformance of our hotel business and whether it will improve, if at all; the timing and completion of hotel renovations and the impact on hotel operating performance; our ability to maintain dividend payments, at current levels, or at all; the diversification of our portfolio, including the equity and debt mix; volatility, disruption or uncertainty in the financial markets; our liquidity and financial flexibility, including the timing and amount of deployments of capital we retain from our dividend policy and net proceeds we receive from asset sales; the timing and amount of borrowings under our revolving credit facility and facility agreement; our ability to comply with the required affirmative and negative covenants, including the financial covenants; whether we will continue to diligently execute our business strategies in a disciplined manner; the impact of changes to our cost of capital, including our ability to make accretive investments; NSAM's ability to source and consummate attractive investment opportunities on our behalf, both domestically and internationally; whether we will realize any potential upside in our limited partnership interests in real estate private equity funds or any appreciation above our original cost basis of our real estate portfolio; our ability to accelerate repayments of loans originated by us; the NOI and overall performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash generated from these investments and available for distribution; our ability to generate attractive risk-adjusted total returns; whether we will produce higher cash available for distribution (CAD) per share in the coming quarters, or ever; the impact of economic conditions on the borrowers of the commercial real estate debt we originate and the commercial mortgage loans underlying the commercial mortgage backed securities in which we invest, as well as on the tenants/operators of our real property that we own; our ability to realize the value of the bonds we have purchased and retained in our CDO financing transactions and other securitized financing transactions and our ability to complete securitized financing transactions on terms that are acceptable to us, or at all; our ability to meet various coverage tests with respect to our CDOs; the size and timing of offerings or capital raises; the ability to opportunistically participate in commercial real estate refinancings; any failure in our due diligence to identify all relevant facts in our underwriting process or otherwise; seasonality in our portfolio; credit rating downgrades; tenant/operator or borrower defaults or bankruptcy; adverse economic conditions and the impact on the commercial real estate industry; our use of leverage; our ability to obtain mortgage financing on our real estate portfolio; the effect of economic conditions on the valuations of our investments; illiquidity of properties in our portfolio; our ability to manage our costs in line with our expectations and the impact on our CAD; environmental compliance costs and liabilities; effect of regulatory actions, litigation and contractual claims against us and our affiliates, including the potential settlement and litigation of such claims; competition for investment opportunities; our ability to comply with domestic and international laws or regulations governing various aspects of our business; regulatory requirements with respect to our business and the related cost of compliance; changes in laws or regulations governing various aspects of our business; changes in our board and management composition; competition for qualified personnel, including our ability to retain key personnel; the loss of our exemption from the definition of "investment company" under the Investment Company Act of 1940, as amended; failure to maintain effective internal controls; compliance with the rules governing real estate investment trusts; and the factors described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended
The foregoing list of factors is not exhaustive. Additional information about these and other factors can be found in each of the Company's, NSAM's and Colony's reports filed from time to time with the
Additional Information and Where to Find It
In connection with the proposed transaction,
(212) 687-8080
Colony Capital, Inc.
(516) 742-5950
or
(310) 829-5400
[email protected]
(212) 827-3772
Participants in the Solicitation
Each of NSAM, Colony and NRF and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from their respective shareholders in connection with the proposed transaction. Information regarding NSAM's directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is contained in NSAM's Annual Report on Form 10-K for the year ended
No Offer or Solicitation
This press release is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/northstar-realty-finance-announces-third-quarter-2016-results-300359034.html
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