Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM 10-Q
ý
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172021
OR
or
¨

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-37980
DigitalBridge Group, Inc.
COLONY NORTHSTAR, INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland46-4591526
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
515 South Flower Street, 44th Floor750 Park of Commerce Drive, Suite 210
Los Angeles, California 90071Boca Raton, Florida 33487
(Address of Principal Executive Offices, Including Zip Code)
(310) 282-8820(561) 570-4644
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par valueDBRGNew York Stock Exchange
Preferred Stock, 7.125% Series H Cumulative Redeemable, $0.01 par valueDBRG.PRHNew York Stock Exchange
Preferred Stock, 7.15% Series I Cumulative Redeemable, $0.01 par valueDBRG.PRINew York Stock Exchange
Preferred Stock, 7.125% Series J Cumulative Redeemable, $0.01 par valueDBRG.PRJNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒  No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý☒No ¨☐




Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filerý☒Accelerated Filer¨☐
Non-Accelerated Filer¨☐(Do not check if a smaller reporting company)Smaller Reporting Company¨☐
Emerging Growth Company¨☐
If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. Yes ¨☐    No  ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐No ý☒
As of November 3, 2017, 545,526,3932, 2021, 513,483,510 shares of the Registrant's class A common stock and 741,874665,978 shares of class B common stock were outstanding.

EXPLANATORY NOTE
Colony NorthStar, Inc. ("Colony NorthStar" or the “Company”) was formed through a tri-party merger (the "Merger") among:
▪NorthStar Asset Management Group Inc. ("NSAM"), a real estate focused asset management firm which commenced operations in July 2014 upon the spin-off by NorthStar Realty Finance Corp. ("NRF") of its asset management business;
▪Colony Capital, Inc. ("Colony"), an internally managed REIT with investment management capabilities, established in June 2009; and
▪NRF, a diversified REIT with investments in multiple classes of commercial real estate, established in October 2004, which was externally managed by NSAM subsequent to the spin-off,
which closed on January 10, 2017 (the "Closing Date").
The transaction is accounted for as a reverse acquisition, with NSAM as the legal acquirer for certain legal and regulatory matters, and Colony as the accounting acquirer for purposes of financial reporting. The financial information for Colony NorthStar as set forth herein represents a continuation of the financial information of Colony as the accounting acquirer. Consequently, the historical financial information included herein as of any date, or for any periods on or prior to January 10, 2017, represents the pre-merger financial information of Colony. The results of operations of NSAM and NRF are incorporated into Colony NorthStar effective January 11, 2017.
As used throughout this document, the terms "Colony NorthStar," the "Company," "we," "our" and "us" mean:
Colony NorthStar, Inc. beginning January 11, 2017, following the closing of the Merger; and
Colony for all periods on or prior to the closing of the Merger on January 10, 2017.
Accordingly, comparisons of the period to period financial information of Colony NorthStar as set forth herein may not be meaningful.
In addition to the financial statements included herein, you should read and consider the audited financial statements and notes thereto of NSAM for the year ended December 31, 2016 included in our Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2017 and the audited financial statements and notes thereto of Colony and NRF for the year ended December 31, 2016 included as Exhibits 99.11 and 99.12, respectively, to our Form 10-K filed with the SEC on February 28, 2017.






COLONY NORTHSTAR, INC.
TABLE OF CONTENTS

Table of Contents

DigitalBridge Group, Inc.
Form 10-Q
Table of Contents
PART I. FINANCIAL INFORMATIONPage
Item 1.
4
4
65
76
87
1011
1213
1213
1315
3019
3721
4022
42
7. Securities
44
8. Goodwill, Deferred Leasing Costs and Other Intangibles
4623
48
10.7. Restricted Cash, Other Assets and Other Liabilities
4925
5026
5430
33
34
36
5737
6144
63
16. Noncontrolling Interests
67
17. Discontinued Operations
68
18. Earnings per Share
6946
7047
7047
7350
52
7554
7655
7955
Item 2.
8258
Item 3.
10979
Item 4.
11081
PART II. OTHER INFORMATION
Item 1.
11282
Item 1A.
11282
Item 2.
11382
Item 3.
11482
Item 4.
11482
Item 5.
11482
Item 6.
11582
84



3
Table of Contents

PART I—I—FINANCIAL INFORMATION
ITEMItem 1. Financial Statements.
COLONY NORTHSTAR, INC.DigitalBridge Group, Inc.
CONSOLIDATED BALANCE SHEETSConsolidated Balance Sheets
(In thousands, except per share data)
September 30, 2021 (Unaudited)December 31, 2020
Assets
     Cash and cash equivalents$1,277,733 $703,544 
     Restricted cash87,551 67,772 
     Real estate, net4,914,813 4,451,864 
     Loans receivable (at fair value)112,252 36,798 
     Equity investments ($180,112 and $247,025 at fair value)793,065 792,996 
     Goodwill761,368 761,368 
     Deferred leasing costs and intangible assets, net1,241,042 1,340,760 
Assets held for disposition5,470,027 11,237,319 
Other assets ($1,179 and $99 at fair value)739,603 784,912 
     Due from affiliates45,527 23,227 
Total assets$15,442,981 $20,200,560 
Liabilities
Debt, net$4,571,210 $3,930,989 
Accrued and other liabilities ($0 and $128,057 at fair value)951,882 1,034,282 
Intangible liabilities, net34,759 39,788 
Liabilities related to assets held for disposition3,831,563 7,886,516 
Due to affiliates228 601 
Dividends and distributions payable16,899 18,516 
Total liabilities9,406,541 12,910,692 
Commitments and contingencies (Note 20)00
Redeemable noncontrolling interests348,170 305,278 
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $947,500 and $1,033,750 liquidation preference; 250,000 shares authorized; 37,900 and 41,350 shares issued and outstanding916,105 999,490 
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 493,456 and 483,406 shares issued and outstanding4,934 4,834 
Class B, 1,000 shares authorized; 666 and 734 shares issued and outstanding7 7 
Additional paid-in capital7,625,552 7,570,473 
Accumulated deficit(6,557,621)(6,195,456)
Accumulated other comprehensive income66,880 122,123 
Total stockholders’ equity2,055,857 2,501,471 
     Noncontrolling interests in investment entities3,515,888 4,327,372 
     Noncontrolling interests in Operating Company116,525 155,747 
Total equity5,688,270 6,984,590 
Total liabilities, redeemable noncontrolling interests and equity$15,442,981 $20,200,560 
  
September 30, 2017
(Unaudited)
 December 31, 2016
Assets    
     Cash and cash equivalents $877,928
 $376,005
     Restricted cash 394,052
 111,959
     Real estate, net 14,354,541
 3,243,631
     Loans receivable, net 3,455,902
 3,430,608
     Investments in unconsolidated ventures ($314,274 and $0 at fair value, respectively) 1,572,592
 1,052,995
     Securities, at fair value 408,663
 23,446
     Goodwill 1,828,816
 680,127
     Deferred leasing costs and intangible assets, net 932,498
 278,741
Assets held for sale ($70,455 and $67,033 at fair value, respectively) 1,603,933
 292,924
Other assets ($10,829 and $36,101 at fair value, respectively) 470,600
 260,585
     Due from affiliates 91,239
 9,971
Total assets $25,990,764
 $9,760,992
Liabilities    
Debt, net $10,791,975
 $3,715,618
Accrued and other liabilities ($216,921 and $5,448 at fair value, respectively) 1,019,816
 286,952
Intangible liabilities, net 206,484
 19,977
Liabilities related to assets held for sale 328,809
 14,296
Due to affiliates ($26,910 and $41,250 at fair value, respectively) 32,384
 41,250
Dividends and distributions payable 187,145
 65,972
Preferred stock redemptions payable 322,118
 —
Total liabilities 12,888,731
 4,144,065
Commitments and contingencies (Note 22) 
 
Redeemable noncontrolling interests 108,990
 —
Equity    
Stockholders’ equity:    
Preferred stock, $0.01 par value per share; $1,636,605 and $625,750 liquidation preference, respectively; 250,000 and 50,000 shares authorized, respectively; 65,464 and 25,030 shares issued and outstanding, respectively 1,606,996
 607,200
Common stock, $0.01 par value per share    
Class A, 949,000 and 658,369 shares authorized, respectively; 547,844 and 166,440 shares issued and outstanding, respectively 5,479
 1,664
Class B, 1,000 shares authorized; 742 and 770 shares issued and outstanding, respectively 7
 8
Additional paid-in capital 7,947,994
 2,443,100
Distributions in excess of earnings (650,135) (246,064)
Accumulated other comprehensive income (loss) 25,831
 (32,109)
Total stockholders’ equity 8,936,172
 2,773,799
     Noncontrolling interests in investment entities 3,627,353
 2,453,938
     Noncontrolling interests in Operating Company 429,518
 389,190
Total equity 12,993,043
 5,616,927
Total liabilities, redeemable noncontrolling interests and equity $25,990,764
 $9,760,992


The accompanying notes are an integral part of the consolidated financial statements.

4
COLONY NORTHSTAR, INC.
Table of Contents
CONSOLIDATED BALANCE SHEETS
DigitalBridge Group, Inc.
Consolidated Statements of Operations
(In thousands)thousands, except per share data)

(Unaudited)
The following table presents the assets and liabilities of securitization vehicles and an investment fund consolidated as variable interest entities for which the Company is determined to be the primary beneficiary:
  September 30, 2017
(Unaudited)		 December 31, 2016
Assets    
Cash $28,792
 $4,320
Loans receivable, net 623,375
 885,374
Securities 258,948
 —
Real estate, net 8,139
 8,873
Other assets 71,966
 66,306
Total assets $991,220
 $964,873
Liabilities    
Debt, net $443,872
 $494,495
Other liabilities 35,532
 63,381
Total liabilities $479,404
 $557,876

 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenues
Property operating income$194,854 $98,522 $572,841 $185,688 
Interest income3,086 1,258 5,259 5,164 
Fee income (from affiliates)50,226 19,914 124,826 59,165 
Other income ($3,124, $2,485, $4,551 and $8,538 from affiliates)4,008 3,323 7,016 11,023 
Total revenues252,174 123,017 709,942 261,040 
Expenses
Property operating expense80,226 37,544 237,228 72,505 
Interest expense39,895 29,999 117,613 69,935 
Investment expense7,263 4,489 20,027 9,228 
Transaction-related costs936 3,311 2,618 3,992 
Depreciation and amortization129,186 80,564 406,840 155,387 
Impairment loss— 3,832 — 16,129 
Compensation expense—cash and equity-based55,933 36,400 182,918 119,084 
Compensation expense—incentive fee and carried interest31,736 912 39,969 912 
Administrative expenses28,933 16,551 75,234 57,129 
Settlement loss— — — 5,090 
Total expenses374,108 213,602 1,082,447 509,391 
Other income (loss)
     Other gain (loss), net4,657 1,339 (31,734)(632)
     Equity method earnings (losses)6,987 17,289 42,051 (309,575)
     Equity method earnings—carried interest58,382 6,082 69,329 6,082 
Loss from continuing operations before income taxes(51,908)(65,875)(292,859)(552,476)
     Income tax benefit10,973 13,226 109,408 28,360 
Loss from continuing operations(40,935)(52,649)(183,451)(524,116)
Loss from discontinued operations(10,429)(308,581)(590,595)(2,960,164)
Net loss(51,364)(361,230)(774,046)(3,484,280)
Net income (loss) attributable to noncontrolling interests:
     Redeemable noncontrolling interests7,269 (2,158)15,743 (2,316)
     Investment entities(124,301)(149,154)(443,547)(640,955)
     Operating Company4,311 (22,651)(38,565)(287,308)
Net income (loss) attributable to DigitalBridge Group, Inc.61,357 (187,267)(307,677)(2,553,701)
Preferred stock redemption (Note 9)2,865 — 2,865 — 
Preferred stock dividends17,456 18,517 54,488 56,507 
Net income (loss) attributable to common stockholders$41,036 $(205,784)$(365,030)$(2,610,208)
Income (loss) per share—basic
Loss from continuing operations per common share—basic$(0.06)$(0.08)$(0.30)$(0.99)
Net income (loss) attributable to common stockholders per common share—basic$0.08 $(0.44)$(0.76)$(5.51)
Income (loss) per share—diluted
Loss from continuing operations per common share—diluted$(0.06)$(0.08)$(0.30)$(0.99)
Net income (loss) attributable to common stockholders per common share—diluted$0.08 $(0.44)$(0.76)$(5.51)
Weighted average number of shares
Basic485,833 471,739 480,165 474,081 
Diluted485,833 471,739 480,165 474,081 
Dividends declared per common share$— $— $— $0.11 
The accompanying notes are an integral part of the consolidated financial statements.

5

Table of Contents
COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONSDigitalBridge Group, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands, except per share data)thousands)
(Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Revenues        
Property operating income $613,665
 $92,505
 $1,541,050
 $279,470
Interest income 106,479
 98,275
 333,286
 291,496
Fee income 59,693
 17,233
 167,262
 49,347
Other income ($5,966, $1,441, $19,642 and $3,502 from affiliates, respectively) 10,016
 4,054
 34,792
 10,071
Total revenues 789,853
 212,067
 2,076,390
 630,384
Expenses        
Property operating expense 332,006
 28,903
 802,072
 89,469
Interest expense 152,054
 42,196
 418,592
 126,635
Investment, servicing and commission expense 18,421
 5,115
 43,968
 17,448
Transaction costs 4,636
 6,190
 94,416
 18,638
Depreciation and amortization 162,694
 43,593
 453,225
 129,276
Provision for loan loss 5,116
 6,569
 12,907
 17,412
Impairment loss 24,073
 941
 45,353
 5,461
Compensation expense (including $38,184, $3,484, $107,173 and $10,326 of equity-based compensation, respectively) 85,022
 29,582
 257,599
 80,689
Administrative expenses 26,502
 12,891
 82,561
 38,760
Total expenses 810,524
 175,980
 2,210,693
 523,788
Other income        
     Gain on sale of real estate 72,541
 11,151
 96,701
 68,114
     Other gain (loss), net (8,822) 4,573
 (7,291) 18,270
     Earnings from investments in unconsolidated ventures 17,447
 16,684
 253,833
 72,226
Income before income taxes 60,495
 68,495
 208,940
 265,206
     Income tax benefit 10,613
 3,409
 6,990
 865
Net income from continuing operations 71,108
 71,904
 215,930
 266,071
Income from discontinued operations 1,481
 —
 14,041
 —
Net income 72,589
 71,904
 229,971
 266,071
Net income attributable to noncontrolling interests:        
     Redeemable noncontrolling interests 1,678
 —
 3,015
 —
     Investment entities 36,906
 32,744
 87,765
 130,508
     Operating Company 97
 4,189
 1,344
 15,528
Net income attributable to Colony NorthStar, Inc. 33,908
 34,971
 137,847
 120,035
Preferred stock redemption (Note 15) (918) —
 4,530
 —
Preferred stock dividends 33,176
 12,093
 98,328
 36,066
Net income attributable to common stockholders $1,650
 $22,878
 $34,989
 $83,969
Basic earnings per share        
Net income from continuing operations per basic common share $0.00
 $0.14
 $0.03
 $0.50
Net income per basic common share $0.00
 $0.14
 $0.05
 $0.50
Diluted earnings per share        
Net income from continuing operations per diluted common share $0.00
 $0.14
 $0.03
 $0.50
Net income per diluted common share $0.00
 $0.14
 $0.05
 $0.50
Weighted average number of shares        
Basic 542,855
 164,846
 531,251
 164,420
Diluted 542,855
 164,846
 531,251
 164,420
Dividends declared per common share (Note 15) $0.27
 $0.27
 $0.81
 $0.81
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net loss$(51,364)$(361,230)$(774,046)$(3,484,280)
Changes in accumulated other comprehensive income (loss) related to:
Equity method investments(4,391)4,385 (6,578)3,397 
Available-for-sale debt securities1,615 (2,446)(331)(3,535)
Cash flow hedges— (14)1,285 (15)
Foreign currency translation(35,739)89,030 (112,626)58,821 
Net investment hedges— (414)— 21,001 
Other comprehensive income (loss)(38,515)90,541 (118,250)79,669 
Comprehensive loss(89,879)(270,689)(892,296)(3,404,611)
Comprehensive income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests7,269 (2,158)15,743 (2,316)
Investment entities(144,222)(94,401)(500,702)(593,452)
Operating Company2,539 (19,102)(44,395)(284,101)
Comprehensive income (loss) attributable to stockholders$44,535 $(155,028)$(362,942)$(2,524,742)

The accompanying notes are an integral part of the consolidated financial statements.

6
COLONY NORTHSTAR, INC.
Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
DigitalBridge Group, Inc.
Consolidated Statements of Equity
(In thousands)thousands, except per share data)
(Unaudited)
 Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Stockholders’ EquityNoncontrolling Interests in Investment EntitiesNoncontrolling Interests in Operating CompanyTotal Equity
 
Balance at December 31, 2019$999,490 $4,878 $7,553,599 $(3,389,592)$47,668 $5,216,043 $3,254,188 $456,184 $8,926,415 
Cumulative effect of adoption of new accounting pronouncement (Note 2)— — — (3,187)— (3,187)(1,577)(349)(5,113)
Net loss— — — (342,159)— (342,159)(21,749)(39,601)(403,509)
Other comprehensive loss— — — — (31,414)(31,414)(28,859)(3,440)(63,713)
Common stock repurchases— (127)(24,622)— — (24,749)— — (24,749)
Equity awards issued, net of forfeitures— 76 12,114 — — 12,190 — 584 12,774 
Shares canceled for tax withholdings on vested equity awards— (18)(5,051)— — (5,069)— — (5,069)
Contributions from noncontrolling interests— — — — — — 87,736 — 87,736 
Distributions to noncontrolling interests— — — — — — (55,829)(5,857)(61,686)
Preferred stock dividends— — — (18,516)— (18,516)— — (18,516)
Common stock dividends declared ($0.11 per share)— — — (52,854)— (52,854)— — (52,854)
Reallocation of equity (Notes 2 and 10)— — (3,827)— (32)(3,859)— 3,859 — 
Balance at March 31, 2020999,490 4,809 7,532,213 (3,806,308)16,222 4,746,426 3,233,910 411,380 8,391,716 
Net loss— — — (2,024,274)— (2,024,274)(470,052)(225,057)(2,719,383)
Other comprehensive income— — — — 28,133 28,133 21,609 3,099 52,841 
Redemption of OP Units for class A common stock— 2 1,421 — — 1,423 — (1,423)— 
Equity awards issued, net of forfeitures— 16 8,946 — — 8,962 296 584 9,842 
Shares canceled for tax withholdings on vested equity awards— (6)(1,151)— — (1,157)— — (1,157)
Contributions from noncontrolling interests— — — — — — 112,721 — 112,721 
Distributions to noncontrolling interests— — — — — — (123,495)— (123,495)
Preferred stock dividends— — — (18,516)— (18,516)— — (18,516)
Reallocation of equity (Notes 2 and 10)— — (1,232)— 12 (1,220)1,615 (395)— 
Balance at June 30, 2020999,490 4,821 7,540,197 (5,849,098)44,367 2,739,777 2,776,604 188,188 5,704,569 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net income $72,589
 $71,904
 $229,971
 $266,071
Other comprehensive income (loss), net of tax:        
Other comprehensive income from investments in unconsolidated ventures, net 3,283
 287
 3,888
 393
Net change in fair value of available-for-sale securities (4,357) —
 (699) —
Net change in fair value of cash flow hedges —
 (114) —
 (227)
Foreign currency translation adjustments:        
Foreign currency translation gain (loss) 61,306
 4,827
 196,379
 (13,107)
Change in fair value of net investment hedges (19,822) (4,795) (64,916) 2,248
Net foreign currency translation adjustments 41,484
 32
 131,463
 (10,859)
Other comprehensive income (loss) 40,410
 205
 134,652
 (10,693)
Comprehensive income 112,999
 72,109
 364,623
 255,378
Comprehensive income attributable to noncontrolling interests:        
Redeemable noncontrolling interests 1,678
 —
 3,015
 —
Investment entities 57,286
 35,331
 165,827
 126,283
Operating Company 1,014
 3,820
 4,555
 14,535
Comprehensive income attributable to stockholders $53,021
 $32,958
 $191,226
 $114,560


The accompanying notes are an integral part of the consolidated financial statements.


COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF EQUITY


7
Table of Contents

DigitalBridge Group, Inc.
Consolidated Statements of Equity (Continued)
(In thousands)thousands, except per share data)
(Unaudited)
 Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Stockholders’ EquityNoncontrolling Interests in Investment EntitiesNoncontrolling Interests in Operating CompanyTotal Equity
 
Balance at June 30, 2020$999,490 $4,821 $7,540,197 $(5,849,098)$44,367 $2,739,777 $2,776,604 $188,188 $5,704,569 
Net loss— — — (187,267)— (187,267)(149,154)(22,651)(359,072)
Other comprehensive income— — — — 32,239 32,239 54,753 3,549 90,541 
Fair value of noncontrolling interest assumed in asset acquisition— — — — — — 366,136 — 366,136 
Equity awards issued, net of forfeitures— 5 6,566 — — 6,571 148 668 7,387 
Shares canceled for tax withholdings on vested stock awards— (2)(510)— — (512)— — (512)
Warrant issuance (Note 10)
— — 20,240 — — 20,240 — — 20,240 
Costs of noncontrolling interests— — (6,287)— — (6,287)— — (6,287)
Contributions from noncontrolling interests— — — — — — 1,101,099 — 1,101,099 
Distributions to noncontrolling interests— — — — — — (63,511)— (63,511)
Preferred stock dividends— — — (18,516)— (18,516)— — (18,516)
Reallocation of equity (Notes 2 and 10)— — (655)— 4 (651)(336)987 — 
Balance at September 30, 2020$999,490 $4,824 $7,559,551 $(6,054,881)$76,610 $2,585,594 $4,085,739 $170,741 $6,842,074 
  Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Noncontrolling Interests in Investment Entities Noncontrolling Interests in Operating Company Total Equity
    
Balance at December 31, 2015 $607,200
 $1,646
 $2,387,770
 $(131,278) $(18,422) $2,846,916
 $2,138,925
 $430,399
 $5,416,240
Net income —
 —
 —
 120,035
 —
 120,035
 130,508
 15,528
 266,071
Other comprehensive loss —
 —
 —
 —
 (5,475) (5,475) (4,225) (993) (10,693)
Repurchase of preferred stock (19,998) —
 —
 —
 —
 (19,998) —
 —
 (19,998)
Contribution of preferred stock to an affiliate 19,998
 —
 —
 —
 —
 19,998
 —
 —
 19,998
Equity-based compensation —
 15
 10,311
 —
 —
 10,326
 —
 —
 10,326
Redemption of units in Operating Company for cash Class A common stock —
 12
 16,122
 —
 —
 16,134
 —
 (18,691) (2,557)
Shares canceled for tax withholding on vested stock awards —
 (3) (2,859) —
 —
 (2,862) —
 —
 (2,862)
Contributions from noncontrolling interests —
 —
 —
 —
 —
 —
 596,427
 —
 596,427
Distributions to noncontrolling interests —
 —
 —
 —
 —
 —
 (428,394) (25,384) (453,778)
Acquisition of noncontrolling interests —
 —
 725
 —
 —
 725
 (4,688) —
 (3,963)
Preferred stock dividends —
 —
 —
 (36,066) —
 (36,066) —
 —
 (36,066)
Common stock dividends declared ($0.81 per share) —
 —
 —
 (136,276) —
 (136,276) —
 —
 (136,276)
Reallocation of equity (Note 2 and 16) —
 —
 19,866
 —
 —
 19,866
 (21,800) 1,934
 —
Balance at September 30, 2016 $607,200
 $1,670
 $2,431,935
 $(183,585) $(23,897) $2,833,323
 $2,406,753
 $402,793
 $5,642,869
                   


The accompanying notes are an integral part of the consolidated financial statements.














COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF EQUITY










8
Table of Contents

DigitalBridge Group, Inc.
Consolidated Statements of Equity (Continued)
(In thousands)thousands, except per share data)
(Unaudited)
 Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNoncontrolling Interests in Investment EntitiesNoncontrolling Interests in Operating CompanyTotal Equity
 
Balance at December 31, 2020$999,490 $4,841 $7,570,473 $(6,195,456)$122,123 $2,501,471 $4,327,372 $155,747 $6,984,590 
Net loss— — — (246,290)— (246,290)(355,862)(27,896)(630,048)
Other comprehensive loss— — — — (21,143)(21,143)(36,656)(2,433)(60,232)
Deconsolidation of investment entities (Note 21)— — — — — — (22,413)— (22,413)
Redemption of OP Units for class A common stock— — 16 — — 16 — (16)— 
Equity awards issued, net of forfeitures— 48 16,536 — — 16,584 308 1,308 18,200 
Shares canceled for tax withholdings on vested equity awards— (11)(7,707)— — (7,718)— — (7,718)
Contributions from noncontrolling interests— — — — — — 113,213 — 113,213 
Distributions to noncontrolling interests— — — — — — (26,739)— (26,739)
Preferred stock dividends— — — (18,516)— (18,516)— — (18,516)
Reallocation of equity (Notes 2 and 10)— — (2,445)— 76 (2,369)4,682 (2,313)— 
Balance at March 31, 2021999,490 4,878 7,576,873 (6,460,262)101,056 2,222,035 4,003,905 124,397 6,350,337 
Net income (loss)— — — (122,744)— (122,744)36,616 (14,980)(101,108)
Other comprehensive income (loss)— — — — (15,818)(15,818)7,805 (1,625)(9,638)
Shares issued pursuant to settlement liability (Note 13)— 60 46,982 — — 47,042 — — 47,042 
Deconsolidation of investment entities (Note 21)— — 2,028 — (1,482)546 (202,887)— (202,341)
Redemption of OP Units for class A common stock— — 1 — — 1 — (1)— 
Equity awards issued, net of forfeitures— 2 10,194 — — 10,196 308 1,067 11,571 
Shares canceled for tax withholdings on vested equity awards— (13)(9,166)— — (9,179)— — (9,179)
Contributions from noncontrolling interests— — — — — — 24,540 — 24,540 
Distributions to noncontrolling interests— — — — — — (33,678)— (33,678)
Preferred stock dividends— — — (18,516)— (18,516)— — (18,516)
Reallocation of equity (Notes 2 and 10)— — (4,530)— (81)(4,611)— 4,611 — 
Balance at June 30, 2021999,490 4,927 7,622,382 (6,601,522)83,675 2,108,952 3,836,609 113,469 6,059,030 
  Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Noncontrolling Interests in Investment Entities Noncontrolling Interests in Operating Company Total Equity
    
Balance at December 31, 2016 $607,200
 $1,672
 $2,443,100
 $(246,064) $(32,109) $2,773,799
 $2,453,938
 $389,190
 $5,616,927
Net income —
 —
 —
 137,847
 —
 137,847
 87,765
 1,344
 226,956
Other comprehensive income —
 —
 —
 —
 53,379
 53,379
 78,062
 3,211
 134,652
Merger consideration (Note 3) 1,010,320
 3,891
 5,706,243
 —
 —
 6,720,454
 —
 —
 6,720,454
Payment of accrued dividends on preferred stock assumed in Merger (12,869) —
 —
 —
 —
 (12,869) —
 —
 (12,869)
Fair value of noncontrolling interests assumed in Merger —
 —
 —
 —
 —
 —
 505,685
 8,162
 513,847
Issuance of Cumulative Redeemable Perpetual Preferred Stock (Note 15) 660,000
 —
 —
 —
 —
 660,000
 —
 —
 660,000
Offering costs (21,870) —
 —
 —
 —
 (21,870) —
 —
 (21,870)
Redemption of preferred stock (Note 15) (635,785) —
 —
 —
 —
 (635,785) —
 —
 (635,785)
Common stock repurchases —
 (173) (224,439) —
 —
 (224,612) —
 —
 (224,612)
Redemption of units in Operating Company for cash and Class A common stock —
 17
 22,771
 —
 —
 22,788
 —
 (27,873) (5,085)
Exchange of notes for Class A common stock —
 2
 2,966
 —
 —
 2,968
 —
 —
 2,968
Equity-based compensation —
 81
 74,655
 —
 —
 74,736
 —
 37,045
 111,781
Shares canceled for tax withholding on vested stock awards —
 (4) (5,664) —
 —
 (5,668) —
 —
 (5,668)
Deconsolidation of investment entity —
 —
 —
 —
 —
 —
 (4,000) —
 (4,000)
Settlement of call spread option —
 —
 6,900
 —
 —
 6,900
 —
 —
 6,900
Costs of noncontrolling equity —
 —
 (9,209) —
 —
 (9,209) —
 —
 (9,209)
Contributions from noncontrolling interests —
 —
 —
 —
 —
 —
 1,087,717
 —
 1,087,717
Distributions to noncontrolling interests —
 —
 —
 —
 —
 —
 (601,476) (26,667) (628,143)
Preferred stock dividends —
 —
 —
 (105,375) —
 (105,375) —
 —
 (105,375)
Common stock dividends declared ($0.81 per share; Note 15) —
 —
 —
 (436,543) —
 (436,543) —
 —
 (436,543)
Reallocation of equity (Notes 2 and 16) —
 —
 (69,329) —
 4,561
 (64,768) 19,662
 45,106
 —
Balance at September 30, 2017 $1,606,996
 $5,486
 $7,947,994
 $(650,135) $25,831
 $8,936,172
 $3,627,353
 $429,518
 $12,993,043


The accompanying notes are an integral part of the consolidated financial statements.


COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
9
Table of Contents

  Nine Months Ended September 30,
  2017 2016
Cash Flows from Operating Activities    
Net income $229,971
 $266,071
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization of discount and net origination fees on purchased and originated loans (50,542) (19,081)
Accretion in excess of cash receipts on purchased credit impaired loan —
 (8,515)
Paid-in-kind interest added to loan principal (26,492) (34,889)
Straight-line rents (25,633) (9,665)
Amortization of above- and below-market lease values, net (6,976) 1,693
Amortization of deferred financing costs and debt discount and premium 59,774
 19,306
Earnings from investments in unconsolidated ventures (253,833) (72,226)
Distributions of income from equity method investments 50,523
 62,761
Provision for loan losses 12,907
 17,412
Impairment loss 45,353
 5,461
Depreciation and amortization 453,225
 129,276
Equity-based compensation 111,304
 10,326
Change in fair value of contingent consideration—Internalization (14,340) (13,640)
Gain on sales of real estate, net (94,593) (68,114)
Other loss, net 21,631
 —
Payment on cash collateral on derivative (5,415) —
Changes in operating assets and liabilities:    
(Increase) decrease in restricted cash related to operating activities (23,971) —
(Increase) decrease in due from affiliates (24,719) (4,268)
(Increase) decrease in other assets (39,078) 7,236
Increase (decrease) in accrued and other liabilities (44,350) 16,171
Increase (decrease) in due to affiliates 5,474
 —
Other adjustments, net 5,273
 (4,596)
Net cash provided by operating activities 385,493
 300,719
Cash Flows from Investing Activities    
Contributions to investments in unconsolidated ventures (364,820) (150,168)
Distributions from investments in unconsolidated ventures 166,173
 79,028
Acquisition of loans receivable (538,136) (101,606)
Payment of Merger-related liabilities, net of cash acquired (Note 3) (44,437) —
Net disbursements on originated loans (283,696) (328,835)
Repayments of loans receivable 520,253
 461,335
Proceeds from sales of loans receivable 114,836
 188,551
Cash receipts in excess of accretion on purchased credit impaired loans 150,877
 81,414
Acquisition of real estate, related intangibles and leasing commission, and improvements of real estate (1,194,244) (373,005)
Proceeds from sales of real estate, net of debt assumed by buyers 1,340,059
 344,271
Acquisition of securities (21,199) (23,324)
Proceeds from sales of securities 26,737
 —
Proceeds from paydown and maturity of securities 91,780
 —
Proceeds from sale of investments in unconsolidated venture 553,327
 —
Proceeds from syndication of investment, net of cash deconsolidated (Note 4) 138,420
 —
Cash assumed from consolidation of sponsored fund (Note 14) 6,685
 —
Acquisition of CPI, net of cash acquired (Note 3) (35,711) —
Acquisition of THL Hotel Portfolio, net of cash acquired (Note 3) (27,455) —
Investment deposits (2,934) —
Increase in restricted cash related to investing activities 18,617
 —
Net payments on settlement of derivative instruments (3,065) 7,840
Other investing activities, net (4,357) (2,023)
Net cash provided by investing activities 607,710
 183,478
DigitalBridge Group, Inc.

COLONY NORTHSTAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSConsolidated Statements of Equity (Continued)
(In thousands)thousands, except per share data)
(Unaudited)
 Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNoncontrolling Interests in Investment EntitiesNoncontrolling Interests in Operating CompanyTotal Equity
 
Balance at June 30, 2021$999,490 $4,927 $7,622,382 $(6,601,522)$83,675 $2,108,952 $3,836,609 $113,469 $6,059,030 
Net income (loss)— — — 61,357 — 61,357 (124,301)4,311 (58,633)
Other comprehensive loss— — — — (16,822)(16,822)(19,921)(1,772)(38,515)
Redemption of preferred stock (Note 9)
(83,385)— (2,865)— — (86,250)— — (86,250)
Deconsolidation of investment entities (Note 21)— — — — — — (149,515)— (149,515)
Redemption of OP Units for cash and class A common stock— 5 1,085 — — 1,090 — (1,090)— 
Equity awards issued, net of forfeitures— 12 7,351 — — 7,363 308 903 8,574 
Shares canceled for tax withholdings on vested stock awards— (3)(1,670)— — (1,673)— — (1,673)
Contributions from noncontrolling interests— — — — — — 24,292 — 24,292 
Distributions to noncontrolling interests— — — — — — (51,584)— (51,584)
Preferred stock dividends— — — (17,456)— (17,456)— — (17,456)
Reallocation of equity (Notes 2 and 10)— — (731)— 27 (704)— 704 — 
Balance at September 30, 2021$916,105 $4,941 $7,625,552 $(6,557,621)$66,880 $2,055,857 $3,515,888 $116,525 $5,688,270 
  Nine Months Ended September 30,
  2017 2016
Cash Flows from Financing Activities    
Proceeds from issuance of preferred stock, net $638,130
 $—
Dividends paid to preferred stockholders (99,954) (36,279)
Dividends paid to common stockholders (333,896) (135,656)
Repurchase of common stock (224,612) —
Borrowings from corporate credit facility 780,000
 505,000
Repayment of borrowings from corporate credit facility (1,202,600) (459,900)
Borrowings from secured debt 3,196,554
 735,280
Repayments of secured debt (3,301,110) (895,067)
Increase in escrow deposits related to financing arrangements 16,216
 12,724
Settlement of call spread option 6,900
 —
Payment of deferred financing costs (64,439) (17,346)
Contributions from noncontrolling interests 1,087,119
 517,927
Distributions to noncontrolling interests (629,876) (447,599)
Redemption of preferred stock (313,667) (19,998)
Reissuance of preferred stock to an equity method investee —
 19,998
Redemption of units in Operating Company (5,085) —
Acquisition of noncontrolling interests —
 (3,963)
Repurchase of exchangeable senior notes (15,455) —
Other financing activities, net (12,602) (5,417)
Net cash used in financing activities (478,377) (230,296)
Effect of exchange rates on cash and cash equivalents 10,447
 418
Net increase in cash and cash equivalents 525,273
 254,319
Total cash and cash equivalents, beginning of period 376,005
 185,854
Cash and cash equivalents included in assets held for sale (23,350) —
Cash and cash equivalents, end of period $877,928
 $440,173
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Cash paid for interest $334,749
 $99,562
Cash paid for income taxes $36,747
 $4,451
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:    
Dividends and distributions payable $187,145
 $65,924
Assets acquired in Merger (Note 3) $17,214,515
 $—
Liabilities assumed in Merger (Note 3) $11,299,855
 $—
Noncontrolling interests assumed in Merger (Note 3) $592,690
 $—
Common stock issued for acquisition of NSAM and NRF (Note 3) $5,710,134
 $—
Preferred stock issued for acquisition of NRF (Note 3) $1,010,320
 $—
Debt assumed by buyer of real estate reported as discontinued operations $1,258,558
 $—
Net assets acquired in CPI restructuring (Note 3) $232,181
 $—
Net assets acquired in THL Hotel Portfolio (Note 3) $361,346
 $—
Preferred stock redemption payable $322,118
 $—
Investment deposits applied to acquisition of loans receivable, real estate and CPI Group $66,020
 $—
Share repurchase payable (Note 10) $6,588
 $—
Loan payoff and real estate sale proceeds held in escrow (Note 10) $21,263
 $11,550
Net settlement of redemption and investment in equity method investee $—
 $117,241
Redemption of OP Units for common stock $22,788
 $—
Proceeds from secured financing in other assets $22,856
 $—
Foreclosure of collateral assets underlying loans receivable $14,576
 $121,694
Amounts payable relating to improvements in operating real estate $5,033
 $—
Contributions receivable from noncontrolling interests $4,734
 $78,500
Exchange of note for class A common shares $2,968
 $—
Net assets of investment entity deconsolidated (Note 4) $156,491
 $—
Net assets of sponsored fund consolidated, net of cash assumed (Note 14) $13,370
 $—

The accompanying notes are an integral part of the consolidated financial statements.

10
COLONY NORTHSTAR, INC.
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017DigitalBridge Group, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Nine Months Ended September 30,
 20212020
Cash Flows from Operating Activities
Net loss$(774,046)$(3,484,280)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of discount and net origination fees on loans receivable and debt securities— (5,090)
Paid-in-kind interest added to loan principal, net of interest received8,492 (36,856)
Straight-line rent income9,339 (13,916)
Amortization of above- and below-market lease values, net5,151 (5,503)
Amortization of deferred financing costs and debt discount and premium, net56,494 31,061 
Equity method losses78,444 334,648 
Distributions of income from equity method investments3,072 92,445 
Allowance for doubtful accounts3,640 8,655 
Impairment of real estate and related intangibles and right-of-use asset359,996 1,946,786 
Goodwill impairment— 594,000 
Depreciation and amortization498,513 439,463 
Equity-based compensation40,001 26,415 
Unrealized settlement loss— 3,890 
Gain on sales of real estate, net(49,232)(15,261)
Payment of cash collateral on derivative— (771)
Deferred income tax benefit(99,268)(10,602)
Other loss, net102,908 195,805 
(Increase) decrease in other assets and due from affiliates(92,223)10,344 
Increase (decrease) in accrued and other liabilities and due to affiliates35,026 (16,764)
Other adjustments, net(4,895)(4,583)
Net cash provided by operating activities181,412 89,886 
Cash Flows from Investing Activities
Contributions to and acquisition of equity investments(411,593)(289,091)
Return of capital from equity method investments41,779 123,952 
Acquisition of loans receivable and debt securities(68,453)— 
Net disbursements on originated loans(33,272)(180,756)
Repayments of loans receivable492,022 131,368 
Acquisition of and additions to real estate, related intangibles and leasing commissions(608,155)(1,278,957)
Proceeds from sales of real estate363,436 258,440 
Proceeds from paydown and maturity of debt securities544 4,479 
Cash and restricted cash assumed by buyer upon sale of hotel portfolio in receivership(35,098)— 
Proceeds from sale of equity investments313,595 254,921 
Investment deposits(343)(8,150)
Proceeds from sale of corporate fixed assets14,946 — 
Net receipts on settlement of derivatives17,123 27,097 
Acquisition of DBH, net of cash acquired, and payment of deferred purchase price— (32,500)
Other investing activities, net(833)7,274 
Net cash provided by (used in) investing activities85,698 (981,923)









11
Table of Contents

DigitalBridge Group, Inc.
Consolidated Statements of Cash Flows (Continued)
(In thousands)
(Unaudited)
 Nine Months Ended September 30,
 20212020
Cash Flows from Financing Activities
Dividends paid to preferred stockholders$(56,105)$(60,817)
Dividends paid to common stockholders— (106,510)
Repurchase of common stock— (24,749)
Payment of offering costs— (2,962)
Proceeds from issuance of exchangeable senior notes— 291,000 
Repayment of senior notes(31,502)(370,998)
Borrowings from corporate credit facility and securitized financing facility345,000 600,000 
Repayment of borrowings from corporate credit facility(45,000)(600,000)
Borrowings from secured debt1,150,909 33,407 
Repayments of secured debt(1,103,172)(323,150)
Payment of deferred financing costs(30,358)(8,530)
Contributions from noncontrolling interests203,059 1,353,866 
Distributions to and redemptions by noncontrolling interests(129,790)(261,314)
Contribution from Wafra (Note 10)— 253,575 
Redemption of preferred stock(86,250)(402,855)
Shares canceled for tax withholdings on vested equity awards(18,570)(6,738)
Net cash provided by financing activities198,221 363,225 
Effect of exchange rates on cash, cash equivalents and restricted cash590 3,500 
Net increase (decrease) in cash, cash equivalents and restricted cash465,921 (525,312)
Cash, cash equivalents and restricted cash, beginning of period963,008 1,424,698 
Cash, cash equivalents and restricted cash, end of period$1,428,929 $899,386 
Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets
Nine Months Ended September 30,
20212020
Beginning of the period
Cash and cash equivalents$703,544 $1,205,190 
Restricted cash67,772 674 
Restricted cash included in assets held for disposition191,692 218,834 
Total cash, cash equivalents and restricted cash, beginning of period$963,008 $1,424,698 
End of the period
Cash and cash equivalents$1,277,733 $658,446 
Restricted cash87,551 66,944 
Restricted cash included in assets held for disposition63,645 173,996 
Total cash, cash equivalents and restricted cash, end of period$1,428,929 $899,386 
The accompanying notes are an integral part of the consolidated financial statements.
12
Table of Contents

DigitalBridge Group, Inc.
Notes to Consolidated Financial Statements
September 30, 2021
(Unaudited)
1. Business and Organization
Colony NorthStarDigitalBridge Group, Inc. or DBRG (together with its consolidated subsidiaries, the "Company") is a leading global investment firm with a focus on identifying and capitalizing on key secular trends in digital infrastructure. The Company is currently the only global real estate investment trust ("REIT") that owns, manages, and/or operates across all major infrastructure components of the digital ecosystem including data centers, cell towers, fiber networks and small cells.
Effective June 22, 2021, the Company changed its name to DigitalBridge Group, Inc. (formerly Colony Capital, Inc.) and trades under the ticker symbol, DBRG, signifying the Company's transformation to digital infrastructure.
At September 30, 2021, the Company has $49 billion of total assets under management, including both third party capital and the Company's balance sheet, of which $38 billion is dedicated to digital real estate and investment management firm. The Company has significant property holdings in the healthcare, industrial and hospitality sectors, other equity and debt investments, as well as an embedded institutional and retail investment management business. The Company manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts ("REITs") and registered investment companies. The Company also owns NorthStar Securities, LLC ("NorthStar Securities"), a captive broker-dealer platform which raises capital in the retail market.infrastructure.
The Company was organized in May 2016 as a Maryland corporation, and intends to elect to be taxed as a REIT under the Internal Revenue Code, for U.S. federal income tax purposes beginning with its taxable year ending December 31, 2017.Organization
The Company conducts all of its activities and holds substantially all of its assets and liabilities through its operating subsidiary, Colony CapitalDigitalBridge Operating Company, LLC (the "Operating Company" or the “OP”"OP"), which was previously the operating subsidiary of Colony and survived the Merger. At September 30, 2017,2021, the Company owned approximately 94.4%90.5% of the OP, as its sole managing member. The remaining 5.6%9.5% is owned primarily by certain current and former employees of the Company as noncontrolling interests.
Merger
The Merger among Colony, NSAMCompany elected to be taxed as a REIT under the Internal Revenue Code for U.S. federal income tax purposes.
Digital Transformation
Significant healthcare and NRF was completedeconomic challenges arising from the coronavirus disease 2019 pandemic, or COVID-19, reinforced the critical role and the resilience of the digital infrastructure sector in an all-stock exchangea global economy that is increasingly reliant on January 10, 2017.telecommunications and data transmission. Accordingly, in the second quarter of 2020, the Company determined to accelerate its previously announced shift to a digitally-focused strategy in order to better position the Company for growth. This digital transformation requires a rotation of the Company's traditional non-digital assets into digital-focused investments.
Following the successful exit of its hotel business in March 2021, the Company is now in the final stages of monetizing the remainder of its non-digital business to complete its digital transformation. This encompasses the Company's Wellness Infrastructure segment, and a substantial majority of the Company's other equity and debt ("OED") investments and its non-digital investment management ("Other IM") business, both of which previously resided in the Other segment.
The MergerCompany's completed disposition of its hotel business, and pending disposition of its OED investments, Other IM business and Wellness Infrastructure segment each represents a strategic shift in the Company's business that has or is accounted forexpected to have a significant effect on the Company’s operations and financial results, and accordingly, each has met the criteria as a reverse acquisition, with NSAM asdiscontinued operations. For all current and prior periods presented, the legal acquirer for certain legalrelated assets and regulatory matters, and Colony as the accounting acquirer for purposes of financial reporting. Consequently, the historical financial information included herein as of any date or for any periods on or priorliabilities, to the Closing Date representsextent they have not been disposed at the pre-Merger financial information of Colony. Accordingly, comparisons ofrespective balance sheet dates, are presented as assets and liabilities held for disposition on the period to period financial information of Colony NorthStar as set forth herein may not be meaningful.
Details of the Merger are described more fully in Note 3consolidated balance sheets (Note 11) and the accounting treatment thereof in Note 2.related operating results are presented as discontinued operations on the consolidated statements of operations (Note 12).
Commercial Real Estate Credit REITAccelerating the Monetization of Wellness Infrastructure and Other Segments
On August 25, 2017, certain subsidiaries ofIn September 2021 and June 2021, the Company entered into separate definitive agreements with third parties to sell (a) its Wellness Infrastructure business, that, along with other non-core assets, are held by the Company's subsidiary, NRF Holdco, LLC ("NRF Holdco"); and (b) a combination agreementsubstantial majority of its OED investments and Other IM business.
In assessing the recovery of assets classified as held for disposition and discontinued operations, in particular considering the sales price for the Wellness Infrastructure assets, and for the OED investments and Other IM business, the Company wrote down the carrying value of these assets by $645.6 million in aggregate, of which $294.2 million was attributable to the OP. This was recorded within impairment loss, equity method loss and other loss in discontinued operations, as discussed further in Note 11.     


13
Table of Contents

Consummation of these dispositions is subject to customary closing conditions, including third party consents and additionally, regulatory approvals in relation to OED and Other IM, with no financing conditions attached to both dispositions. There can be no assurance that these dispositions will close in the timeframe contemplated or on the terms anticipated, if at all.
Wellness Infrastructure
The Wellness Infrastructure business is composed of senior housing, skilled nursing facilities, medical office buildings, and hospitals. Other assets and obligations held by NRF Holdco include primarily: (i) the Company's equity interest in and management of its sponsored non-traded REIT, NorthStar Real EstateHealthcare Income, Trust, Inc. (“("NorthStar Income I”Healthcare"), NorthStar Real Estate Income II, Inc. (“NorthStar Income II”), publicly registered non-tradeddebt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, limited partner interests in private equity real estate funds; and (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt, all of which were issued by NRF Holdco and its subsidiaries.
The sales price for 100% of the equity of NRF Holdco is $281.0 million, composed of $190.7 million in cash and $90.3 million unsecured promissory note (the "Seller Note"). The sale includes the acquirer's assumption of $2.6 billion of consolidated investment trusts sponsoredlevel debt, for which we own between 69.6% and managed by81.3% of the various healthcare portfolios, and $293.7 million of debt at NRF Holdco. The sales price will be adjusted for certain amounts contributed to, or distributed from, NRF Holdco prior to closing of the sale, with any adjustment to be applied pro rata to the cash portion and the Seller Note. The Seller Note matures five years from closing of the sale, accruing interest at a subsidiaryper annum rate of 6.5% in the period prior to two years from the closing date and 8.5% thereafter.
OED and Other IM
The OED investments and Other IM business that are under contract for sale are composed of the Company's interests in various non-digital real estate, real estate-related equity and debt investments, and the Company's general partner interests and management rights with respect to these assets. The aggregate sales price is approximately $535 million, subject to customary adjustments, including adjustments if consents with respect to certain assets cannot be obtained.
Internalization of BrightSpire Capital, Inc. (NYSE: BRSP)
In early April 2021, the Company and certain other subsidiaries of the foregoing. Pursuant to the combination agreement, certain subsidiaries of the Company will contribute their ownership interests ranging from 38% to 100% in certain investment entities (which interests represent the “CLNS Contributed Portfolio”) toBRSP (formerly Colony NorthStar Credit Real Estate, Inc. ("Colony NorthStar Credit")or CLNC) agreed to terminate the BRSP management agreement for a one-time termination payment of $102.3 million in cash. The transaction closed on April 30, 2021, resulting in the internalization of BRSP's management and its operating company, and NorthStar Income I and NorthStar Income II will merge in all-stock mergers into Colony NorthStar Credit (collectively, the “Combination”functions (the "BRSP Internalization"). The closing, with certain of the Combination is conditioned upon a listingCompany's employees previously dedicated wholly or substantially to BRSP becoming employees of Colony NorthStar Credit's class A common stock on a national securities exchange (through an initial public offering or otherwise), which may be effected up to nine months followingBRSP. In connection with the later of the approval of the transaction by the stockholders of NorthStar Income I and NorthStar Income II.
The CLNS Contributed Portfolio comprises the Company's interests in certain of its commercial real estate loans, net lease properties and limited partnership interests in third party sponsored funds, which represent a select portfolio of U.S. investments within the Company’s Other Equity and Debt segment that are transferable assets consistent with Colony NorthStar Credit's strategy.
Certain subsidiaries of the Company will receive a fixed number of shares of Colony NorthStar Credit's class A common stock (or, in the event of a listing without an initial public offering of Colony NorthStar Credit’s class A common stock, the Company will receive shares of Colony NorthStar Credit’s class B common stock) and membership units in Colony NorthStar Credit's operating company in exchange for their contribution of the CLNS Contributed Portfolio. The subsidiaries of the Company that receive common stock of Colony NorthStar Credit in the Combination or upon redemption of membership units in Colony NorthStar Credit's operating company on a one-for-one basis will be subject to limitations on their ability to sell their shares of common stock of Colony NorthStar Credit for a one year period from the closing date of the Combination. NorthStar Income I stockholders and NorthStar Income II stockholders will receive

shares of Colony NorthStar Credit's class B common stock based on pre-determined exchange ratios, and such shares of class B common stock will convert to Colony NorthStar Credit's class A common stock on a one-for-one basis over a one-year period from the closing date of the Combination. Upon completion of the Combination, the Company and its affiliates, NorthStar Income I stockholders and NorthStar Income II stockholders will each own approximately 37%, 32% and 31%, respectively, of Colony NorthStar Credit on a fully diluted basis, subject to certain adjustments as set forth in the combination agreement.
The Combination has been approved by theBRSP Internalization, BRSP's board of directors ceased to include Company-affiliated directors upon the expiration of such directors' terms in May 2021. The Company also entered into a stockholders agreement with BRSP, pursuant to which the Company agreed, for so long as the Company owns at least 10% of BRSP's outstanding common shares, to vote in BRSP director elections as recommended by BRSP’s board of directors at any stockholders' meeting that occurs prior to BRSP's 2023 annual stockholders' meeting. In addition, the Company is subject to customary standstill restrictions, including an obligation not to initiate or make stockholder proposals, nominate directors or participate in proxy solicitations, until the beginning of the advance notice window for BRSP's 2023 annual meeting. Except as aforementioned, the Company as well asmay vote its shares in its sole discretion in any votes of BRSP’s stockholders. The Company is prohibited from acquiring additional BRSP shares and currently holds a 29% equity ownership in BRSP following the special committeessale of a portion of its BRSP shares in August 2021.
Exit of the Hotel Business
In March 2021, the Company completed the sale of its hotel business. Pursuant to an agreement entered into with a third party in September 2020 (as amended in October 2020, February 2021 and boardsMarch 2021), the Company sold 100% of directorsthe equity in its hotel subsidiaries which held five of NorthStar Income I and NorthStar Income II.
The Combination is expected to closethe six hotel portfolios in the first quarterHospitality segment and its 55.6% equity interest in a portfolio of 2018, conditioned upon, among other things, approvallimited service hotels in the Other segment that was previously acquired through a consensual foreclosure (the "THL Hotel Portfolio"), composed of 197 hotel properties in aggregate. Two of the hotel portfolios that were sold in the Hospitality segment were held through joint ventures in which the Company held a 90% and a 97.5% interest, respectively. The aggregate selling price of $67.5 million represented a transaction value of approximately $2.8 billion, with the acquirer's assumption of $2.7 billion of consolidated investment-level debt. In September 2021, the remaining interests in the THL Hotel Portfolio held by NorthStar Income I and NorthStar Income II stockholders, and an initial public offeringinvestment vehicles managed by the Company were sold to the same buyer. Also in September 2021, the remaining portfolio in the Hospitality segment that was in receivership was sold by the lender for no proceeds to the Company.
14
Table of Colony NorthStar Credit's class A common stock or a listing without an initial public offering of Colony NorthStar Credit's class A common stock on a national securities exchange.Contents

2. Summary of Significant Accounting Policies
The significant accounting policies of the Company are described below. The accounting policies of the Company's unconsolidated ventures are substantially similar to those of the Company.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2017,2021, or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements of NSAM, Colony and NRF and notes thereto included in, or presented as exhibits to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2020.
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. The portions of the equity, net income and other comprehensive income of consolidated subsidiaries that are not attributable to the parent are presented separately as amounts attributable to noncontrolling interests in the consolidated financial statements. A substantial portion of noncontrolling interests represents interests held by private investment funds or other investment vehicles managed by the Company and which invest alongside the Company, and membership interests in OP primarily held by certain employees of the Company.
To the extent the Company consolidates a subsidiary that is subject to industry-specific guidance, the Company retains the industry-specific guidance applied by that subsidiary in its consolidated financial statements.
Merger
The Merger is accounted for under the acquisition method for a business combination as a reverse acquisition. NSAM is the legal acquirer in the Merger for certain legal and regulatory matters, however, Colony was determined to be the accounting acquirer in the Merger for financial reporting purposes. While NSAM is the legal entity which initiated the transaction and issued its shares to consummate the Merger, the fact that the senior management of Colony NorthStar primarily consists of Colony senior executives, along with other qualitative considerations, resulted in Colony being designated the accounting acquirer.
The financial statements of Colony NorthStar, as set forth herein, represent a continuation of the financial information of Colony as the accounting acquirer, except that the equity structure of Colony NorthStar is adjusted to reflect the equity structure of the legal acquirer, including for comparative periods, by applying the Colony share exchange ratio of 1.4663. The historical financial information included herein as of any date or for any periods on or prior to the Closing Date represents the pre-Merger financial information of Colony. The assets and liabilities of Colony are reflected by Colony NorthStar at their pre-Merger carrying values while the assets and liabilities of NSAM and NRF are accounted for at their acquisition date fair value. The results of operations of NSAM and NRF are incorporated into Colony NorthStar effective from January 11, 2017. Accordingly, comparison of period to period results of operations and financial positions may not be meaningful.

Principles of Consolidation
The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity ("VIE") for which the Company is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.
Variable Interest Entities—A VIE is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. The Company also considers interests held by its related parties, including de facto agents. The Company assesses whether it is a member of a related party group that collectively meets the power and benefits criteria and, if so, whether the Company is most closely associated with the VIE. In performing this analysis, the Company considers both qualitative and quantitative factors, including, but not limited to: the amount and characteristics of its investment relative to the related party; the Company’s and the related party's ability to control or significantly influence key decisions of the VIE including consideration of involvement by de facto agents; the obligation or likelihood for the Company or the related party to fund operating losses of the VIE; and the similarity and significance of the VIE’s business activities to those of the Company and the related party. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, including the determination of which activities most significantly affect the entities’ performance, and estimates about the current and future fair values and performance of assets held by the VIE.
Voting Interest Entities—Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights. The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities' voting interests or through other arrangements.
At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a change in the Company's consolidation assessment. Changes in consolidation status are applied prospectively. An entity may be consolidated as a result of this reassessment, in which case, the assets, liabilities and noncontrolling interest in the entity are recorded at fair value upon initial consolidation. Any existing equity interest held by the Company in the entity prior to the Company obtaining control will be remeasured at fair value, which may result in a gain or loss recognized upon initial consolidation. However, if the consolidation represents an asset acquisition of a voting interest entity, the Company's existing interest in the acquired assets, if any, is not remeasured to fair value but continues to be carried at historical cost. The Company may also deconsolidate a subsidiary as a result of this reassessment, which may result in a gain or loss recognized upon deconsolidation depending on the carrying values of deconsolidated assets and liabilities compared to the fair value of any interests retained.
Noncontrolling Interests
Redeemable Noncontrolling Interests—This represents noncontrolling interests in (i) an investment management subsidiary, Townsend Holdings, LLC ("Townsend"); and (ii) a consolidated open-end fund sponsored by the Company.
The Townsend noncontrolling interests have the ability to require the Company to redeem a certain percentage of their interests through December 31, 2020 or upon the occurrence of certain triggering events. Redemptions by the Townsend noncontrolling interests may be settled in cash, the Company’s common stock, or a combination thereof, at the Company's option, subject to certain conditions, and payable by the end of the fiscal quarter following the exercise of the redemption.
The limited partners in the consolidated open-end fund who represent noncontrolling interests generally have the ability to withdraw all or a portion of their interests in cash with 30 days' notice.
Redeemable noncontrolling interests is presented outside of permanent equity. Allocation of net income or loss to redeemable noncontrolling interests is based upon their ownership percentage during the period. The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period, but no less than its initial carrying value, with such adjustments recognized in additional paid-in capital.
Noncontrolling Interests in Investment Entities—This represents interests in consolidated investment entities held by private investment funds or retail companies managed by the Company or held by third party joint venture partners. Allocation of net income or loss is generally based upon relative ownership interests held by equity owners in each investment entity, or based upon contractual arrangements that may provide for disproportionate allocation of economic

returns among equity interests, including using a hypothetical liquidation at book value basis, where applicable and substantive.
Noncontrolling Interests in Operating Company—This represents membership interests in OP held primarily by certain employees of the Company. Noncontrolling interests in OP are allocated a share of net income or loss in OP based on their weighted average ownership interest in OP during the period. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s membership units in OP ("OP Units") for cash based on the market value of an equivalent number of shares of class A common stock at the time of redemption, or at the Company's election as managing member of OP, through issuance of shares of class A common stock (registered or unregistered) on a one-for-one basis. At the end of each reporting period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP, as applicable.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Foreign CurrencyPrinciples of Consolidation
Assets and liabilities denominatedThe Company consolidates entities in which it has a foreign currencycontrolling financial interest by first considering if an entity meets the definition of a variable interest entity ("VIE") for which the functional currencyCompany is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.
Variable Interest Entities—A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties; (ii) whose equity holders lack the characteristics of a controlling financial interest; and/or (iii) is established with non-substantive voting rights. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. The Company also considers interests held by its related parties, including de facto agents. The Company assesses whether it is a foreign currency are translated using the exchange rate in effect at balance sheet date and the corresponding results of operations for such entities are translated using the average exchange rate in effect during the period. The resulting foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss in stockholders’ equity. Upon sale, complete or substantially complete liquidationmember of a foreign subsidiary, or upon partial sale of a foreign equity method investment,related party group that collectively meets the translation adjustmentpower and benefits criteria and, if so, whether the Company is most closely associated with the VIE. In performing the related party analysis, the Company considers both qualitative and quantitative factors, including, but not limited to: the amount and characteristics of its investment relative to the related party; the Company’s and the related party's ability to control or significantly influence key decisions of the VIE including consideration of involvement by de facto agents; the obligation or likelihood for the Company or the related party to fund operating losses of the VIE; and the similarity and significance of the VIE’s business activities to those of the Company and the related party. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, including the determination of which activities most significantly affect the entities’ performance, and estimates about the current and future fair values and performance of assets held by the VIE.
Voting Interest Entities—Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights. The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities' voting interests or through other arrangements.
15
Table of Contents

At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a proportionate share relatedchange in the Company's consolidation assessment. Changes in consolidation status are applied prospectively. An entity may be consolidated as a result of this reassessment, in which case, the assets, liabilities and noncontrolling interest in the entity are recorded at fair value upon initial consolidation. Any existing equity interest held by the Company in the entity prior to the portion of equity method investment sold,is reclassified from accumulated other comprehensive incomeCompany obtaining control will be remeasured at fair value, which may result in a gain or loss into earnings.
Assetsrecognized upon initial consolidation. However, if the consolidation represents an asset acquisition of a voting interest entity, the Company's existing interest in the acquired assets, if any, is not remeasured to fair value but continues to be carried at historical cost. The Company may also deconsolidate a subsidiary as a result of this reassessment, which may result in a gain or loss recognized upon deconsolidation depending on the carrying values of deconsolidated assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the exchange rate in effect at balance sheet date and the corresponding results of operations for such entities are remeasured using the average exchange rate in effect during the period. The resulting foreign currency remeasurement adjustments are recorded in other gain (loss) on the statements of operations.
Disclosures of non-US dollar amounts to be recorded in the future are translated using exchange rates in effect at the balance sheet date.
Fair Value Measurement
Fair value is based on an exit price, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Where appropriate, the Company makes adjustments to estimated fair values to appropriately reflect counterparty credit risk as well as the Company's own credit-worthiness.
The estimated fair value of financial assets and financial liabilities are categorized into a three-tier hierarchy, prioritized based on the level of transparency in inputs used in the valuation techniques, as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable and it is significantcompared to the fair value measurement, requiring significantof any interests retained.
Noncontrolling Interests
Redeemable Noncontrolling Interests—This represents noncontrolling interests in the Company's digital investment management judgment or estimate.
Wherebusiness and in consolidated open-end funds sponsored by the inputs used to measure the fair value of a financial instrument falls into different levels of the fair value hierarchy, the financial instrument is categorized within the hierarchy based on the lowest level of inputCompany. The noncontrolling interests either have redemption rights that is significant to its fair value measurement.
Fair Value Option
The fair value option provides an option to elect fair value as an alternative measurement for selected financial instruments. The fair value option maywill be elected onlytriggered upon the occurrence of certain specified events including(Note 10) or have the ability to withdraw all or a portion of their interests from the consolidated open-end funds in cash with advance notice.
Redeemable noncontrolling interests is presented outside of permanent equity. Allocation of net income or loss to redeemable noncontrolling interests is based upon their ownership percentage during the period. The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period to an amount not less than its initial carrying value, except for amounts contingently redeemable which will be adjusted to redemption value only when redemption is probable. Such adjustments will be recognized in additional paid-in capital.
Noncontrolling Interests in Investment Entities—This represents predominantly interests in consolidated investment entities held by private investment funds managed by the Company enters into an eligible firm commitment,or held by third party joint venture partners. Allocation of net income or loss is generally based upon relative ownership interests held by equity owners in each investment entity, or based upon contractual arrangements that may provide for disproportionate allocation of economic returns among equity interests, including using a hypothetical liquidation at initial recognitionbook value basis, where applicable and substantive.
Noncontrolling Interests in Operating Company—This represents membership interests in OP held primarily by certain employees of the financial instrument,Company. Noncontrolling interests in OP are allocated a share of net income or loss in OP based on their weighted average ownership interest in OP during the period. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s membership units in OP ("OP Units") for cash based on the market value of an equivalent number of shares of class A common stock at the time of redemption, or at the Company's election as wellmanaging member of OP, through issuance of shares of class A common stock (registered or unregistered) on a 1-for-one basis. At the end of each reporting period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP, as upon aapplicable.

Business Combinations
business combination or consolidationDefinition of a subsidiary. The election is irrevocable unless a new election event occurs. The Company has elected to account for certain cost method investments, specifically limited partnership interests in third party sponsored funds, at fair value.
Business Combinations
—The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of a business. If substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business. If not, for an acquisition to be considered a business, it would have to include an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., there is a continuation of revenue before and after the transaction). A substantive process is not ancillary or minor, cannot be replaced without significant cost,costs, effort or delay or is otherwise considered unique or scarce. To qualify as a business without outputs, the acquired assets would require an organized workforce with the necessary skills, knowledge and experience that performsto perform a substantive process.
PriorAsset Acquisitions—For acquisitions that are not deemed to be businesses, the assets acquired are recognized based on their cost to the Company's adoptionCompany as the acquirer and no gain or loss is recognized. The cost of assets acquired in a group is allocated to individual assets within the group based on their relative fair values and does not give rise to goodwill. Transaction costs related to acquisition of assets are included in the cost basis of the new definition of a business effective October 1, 2016, the concentration of acquired fair values in a single or group of similar identifiable assets did not preclude the acquisition of such assets from meeting the definition of a business. As a result, acquisition of real estate assets with existing in place leases, other than sale leaseback transactions, were generally recognized as business combinations.acquired.
Net cash paid to acquire a business or assets is classified as investing activities on the accompanying statements of cash flows.
Business Combinations—The Company accounts for acquisitions that qualify as business combinations by applying the acquisition method. Transaction costs related to acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred. The identifiable assets acquired, liabilities assumed and noncontrolling interests in an acquired entity are recognized and measured at their estimated fair values. The excess of the fair value of
16
Table of Contents

consideration transferred over the fair values of identifiable assets acquired, liabilities assumed and noncontrolling interests in an acquired entity, net of fair value of any previously held interest in the acquired entity, is recorded as goodwill. Such valuations require management to make significant estimates and assumptions.
For acquisitions that are not deemed to be businesses, the assets acquired are recognized based on their cost to the Company as the acquirer and no gain or loss is recognized unless the fair value of non-cash assets given as consideration differs from the carrying amount of the assets acquired. The cost of assets acquired in a group is allocated to individual assets within the group based on their relative fair values and does not give rise to goodwill. Transaction costs related to acquisition of assets are included in the cost basis of the assets acquired.
Contingent Consideration—Contingent consideration is classified as a liability or equity, as applicable. Contingent consideration in connection with the acquisition of a business or a VIE is measured at fair value on acquisition date, and unless classified as equity, is remeasured at fair value each reporting period thereafter until the consideration is settled, with changes in fair value included in net income. For contingentContingent consideration in connection with the acquisition of assets subsequent changes to(and that is not a VIE) is generally recognized when the recorded amount are adjusted against the costliability is considered both probable and reasonably estimable, as part of the acquisition.basis of the acquired assets.
Discontinued Operations
If the disposition of a component, being an operating or reportable segment, business unit, subsidiary or asset group, represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, the operating profits or losses of the component when classified as held for sale, and the gain or loss upon disposition of the component, are presented as discontinued operations in the statements of operations.
A business or asset group acquired in connection with a purchase business combination that meets the criteria to be accounted for as held for sale at the date of acquisition areis reported as discontinued operations, regardless of whether it meets the strategic shift criteria. criterion.
CashThe pending dispositions of the Wellness Infrastructure segment and Cash Equivalents
Short-term, highly liquida substantial majority of the OED investments with original maturitiesand Other IM business in the Other segment; disposition of three monthsthe hotel business, composed of the Hospitality segment and the THL Hotel Portfolio in the Other segment in March 2021; and disposition of the bulk industrial portfolio in December 2020, all represent strategic shifts that have or less are consideredexpected to be cash equivalents. The Company's cash and cash equivalents are held withhave major financial institutions and may at times exceed federally insured limits.
Restricted Cash
Restricted cash consists primarily of amounts related to operating real estate and loans receivable as well as cash held byeffects on the Company’s foreign subsidiaries due to certain regulatory capital requirements.

Real Estate Assets
Real Estate Acquisitions—Real estate acquisitions arerecorded atoperations and financial results, and have met the fair valuescriteria as discontinued operations as of June 2021, March 2021, September 2020, and June 2019, respectively. Accordingly, for all prior periods presented, the acquired components at the time of acquisition, allocated among land, building, improvements, equipment, lease-related tangible and identifiable intangiblerelated assets and liabilities suchare presented as tenant improvements, deferred leasing costs, in-place lease values, above-assets and below-market lease values. The estimated fair value of acquired land is derived from recent comparable sales of land and listings within the same local region based on available market data. The estimated fair value of acquired buildings and building improvements is derived from comparable sales, discounted cash flow analysis using market-based assumptions, or replacement cost, as appropriate.The fair value of site and tenant improvements is estimated based upon current market replacement costs and other relevant market rate information.
Real Estate Held for Investment
Real estateliabilities held for investment are carried at cost less accumulated depreciation.
Costs Capitalized or Expensed—Expenditures for ordinary repairs and maintenance are expensed as incurred, while expenditures for significant renovations that improve or extenddisposition on the useful life of the asset are capitalized and depreciated over their estimated useful lives.
Depreciation—Real estate held for investment, other than land, are depreciated on a straight-line basis over the estimated useful lives of the assets, as follows:
Real Estate AssetsTerm
Building (fee interest)15 to 40 years
Building leasehold interestsLesser of remaining term of the lease or remaining life of the building
Building improvementsLesser of useful life or remaining life of the building
Land improvements10 to 30 years
Tenant improvementsLesser of useful life or remaining term of the lease
Furniture, fixtures and equipment5 to 15 years
Impairment—The Company evaluates its real estate held for investment for impairment periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company evaluates cash flows and determines impairments on an individual property basis. In making this determination, the Company reviews, among other things, current and estimated future cash flows associated with each property, market information for each sub-market, including, where applicable, competition levels, foreclosure levels, leasing trends, occupancy trends, lease or room rates,consolidated balance sheets (Note 11) and the market pricesrelated operating results are presented as income (loss) from discontinued operations on the consolidated statements of similar properties recently sold or currently being offered for sale, and other quantitative and qualitative factors. If an impairment indicator exists, the Company evaluates whether the expected future undiscounted cash flows is less than the carrying amount of the asset, and if the Company determines that the carrying value is not recoverable, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset.
Real Estate Held for Sale
Classification as Held for Sale—Real estate is classified as held for saleoperations (Note 12). Discontinued operations in prior periods include investments in the respective segments that have been disposed or otherwise resolved in those periods.
Reclassifications
Reclassifications were made related to discontinued operations as discussed in "—Discontinued Operations" above and to prior period when (i) management approves a plansegment reporting presentation as discussed in Note 19. Additionally, costs related to sell the asset, (ii) the asset is available for immediate sale in its present condition, subject only to usual and customary terms, (iii) a program is initiated to locate a buyer and actively market the asset for sale at a reasonable price, and (iv) completion of the sale is probable within one year. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal cost, with any write-down to fair value less disposal cost recorded as an impairment loss. For any increase in fair value less disposal cost subsequent to classification as held for sale, the impairment loss may be reversed, but only up to the amount of cumulative loss previously recognized. Depreciation is not recorded on assets classified as held for sale.
If circumstances ariseunconsummated transactions that were previously considered unlikelyincluded within investment and servicing expense in prior periods have been reclassified into transaction-related costs on the consolidated statement of operations to conform to current period presentation. These reclassifications did not affect the Company's financial position, results of operations or cash flows.
Adjustment to Accumulated Deficit
On January 1, 2020, upon adoption of Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—
Credit Losses, the Company recorded a $5.1 million increase to accumulated deficit, composed of: (i) an $8.4 million increase to accumulated deficit, representing the Company's share of the cumulative effect adjustment of adopting the lifetime current expected credit loss model by its equity method investee, BRSP; partially offset by (ii) a $3.3 million decrease to accumulated deficit, reflecting the cumulative effect adjustment of the Company's election of the fair value option for all of its then outstanding loans receivable.
Accounting Standards Pending Adoption
Amendment to Lessor Accounting
In July 2021, the FASB issued ASU No. 2021-5, Lessors—Certain Leases with Variable Lease Payments,which amends existing lease classification guidance for lessors to better reflect the economics of certain lease arrangements. The ASU requires a lease with variable lease payments that are not based upon a rate or index to be classified as an operating lease if classification as a result, the Company decides not to sell the real estate asset previously classified as held for sale, the real estate asset is reclassified as held for investment. Upon reclassification, the real estate asset is measured at the lower of (i) its carrying amount prior to classification as held for sale, adjusted for depreciation expense thatdirect financing lease or sales-type lease would have been recognized had the real estate been continuously classified as held for investment, or (ii) its estimated fair value at the time the Company decides not to sell.
Real Estate Sales—The Company evaluates if real estate sale transactions qualify for recognition under the full accrual method, considering whether, among other criteria, the buyer’s initial and continuing investments are adequate to demonstrateresulted in a commitment to pay, any receivable dueloss to the Companylessor at lease commencement. A loss could have otherwise arisen even if the lease is not subjectexpected to future subordination, the Company has transferred to the buyer the usual risks and rewards of ownership and the Company does not have a

substantial continuing involvement with the sold real estate. At the time the sale is consummated, a gain or loss is recognizedbe profitable as the difference betweenexclusion of these variable lease payments result in the sale price less disposal cost and the carrying value of the real estate.
Foreclosed Properties
The Company receives foreclosed properties in full or partial settlement of loans receivable by taking legal title or physical possession of the properties. Foreclosed properties are recognized, generally, at the time the real estate is received at foreclosure sale or upon executionrecognition of a deedlower net investment in lieu of foreclosure. Foreclosed properties are initially measured at fair value. Deficiencies compareda lease relative to the carrying value of the loan, after reversing any previously recognized loss provision onunderlying asset that is derecognized at the loan, are recorded as impairment loss. The Company periodically evaluates foreclosed properties for subsequent decrease in fair value which is recorded as additional impairment loss. Fair value of foreclosed properties is generally based on third party appraisals, broker price opinions, comparable sales or a combination thereof.
Loans Receivable
The Company originates and purchases loans receivable. The accounting framework for loans receivable depends on the Company's strategy whether to hold or sell the loan, whether the loan was credit-impaired at time of acquisition, or if the lending arrangement is an acquisition, development and construction loan.
Loans Held for Investment (other than Purchased Credit-Impaired Loans)
Loans that the Company has the intent and ability to hold for the foreseeable future are classified as held-for-investment. Originated loans are recorded at amortized cost, or outstanding unpaid principal balance less net deferred loan fees. Net deferred loan fees include unamortized origination and other fees charged to the borrower less direct incremental loan origination costs incurred by the Company. Purchased loans are recorded at amortized cost, or unpaid principal balance plus purchase premium or less unamortized discount. Costs to purchase loans are expensed as incurred.
Interest Income—Interest income is recognized based upon contractual interest rate and unpaid principal balance of the loans. Net deferred loan fees on originated loans are deferred and amortized as adjustments to interest income over the expected life of the loans using the effective yield method. Premium or discount on purchased loans are amortized as adjustments to interest income over the expected life of the loans using the effective yield method. For revolving loans, net deferred loan fees, premium or discount are amortized to interest income using the straight-line method. When a loan is prepaid, prepayment fees and any excess of proceeds over the carrying amount of the loan are recognized as additional interest income.
Nonaccrual—Accrual of interest income is suspended on nonaccrual loans. Loans that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual. Interest receivable is reversed against interest income when loans are placed on nonaccrual status. Interest collection on nonaccruing loans for which ultimate collectability of principal is uncertain is recognized using a cost recovery method by applying interest collected as a reduction to loan principal; otherwise, interest collected is recognized on a cash basis by crediting to income when received. Loans may be restored to accrual status when all principal and interest is current and full repayment of the remaining contractual principal and interest is reasonably assured.
Impairment and Allowance for Loan Losses—On a periodic basis, the Company analyzes the extent and effect of any credit migration from underwriting and the initial investment review associated with the performancecommencement of a loan and/direct financing or value of its underlying collateral, financial andsales-type lease. Under the amended guidance, this uneconomic outcome is avoided because the classification as an operating capability of the borrower or sponsor, as well as amount and status of any senior loan, where applicable. Specifically, operating results of collateral properties and any cash reserves are analyzed and used to assess whether cash from operations are sufficient to cover debt service requirements currently and into the future, ability of the borrower to refinance the loan, liquidation value of collateral properties, financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the collateral properties. Such analysis is performed at least quarterly, or more often as needed when impairment indicators are present. The Companylease does not utilize a statistical credit rating system to monitor and assess the credit risk and investment quality of its acquired or originated loans. Given the diversity of the Company's portfolio, management believes there is no consistent method of assigning a numerical rating to a particular loan that captures all of the various credit metrics and their relative importance. Therefore, the Company evaluates impairment and allowance for loan losses on an individual loan basis.
Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due in accordance with contractual terms of the loans, including consideration of underlying collateral value. Allowance for loan losses represents the estimated probable credit losses inherent in loans held for investment at balance sheet date. Changes in allowance for loan losses are recorded in the provision for loan losses on the statement of operations.

Allowance for loan losses generally exclude interest receivable as accrued interest receivable is reversed when a loan is placed on nonaccrual status. Allowance for loan losses is generally measured as the difference between the carrying value of the loan and either the present value of cash flows expected to be collected, discounted at the original effective interest rate of the loan or an observable market price for the loan. Subsequent changes in impairment are recorded as adjustments to the provision for loan losses. Loans are charged off against allowance for loan losses when all or a portion of the principal amount is determined to be uncollectible. A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided solely by the underlying collateral. Impaired collateral-dependent loans are written down to the fair value of the collateral less disposal cost, first through a charge-off against allowance for loan losses, if any, then recorded as impairment loss.
Troubled Debt Restructuring ("TDR")— A loan with contractual terms modified in a manner that grants concession to the borrower who is experiencing financial difficulty is classified as a TDR. Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company's collection on the loan. As a TDR is generally considered to be an impaired loan, it is measured for impairment based on the Company's allowance for loan losses methodology.
Loans Held for Sale
Loans that the Company intends to sell or liquidate in the foreseeable future are classified as held-for-sale. Loans held for sale are carried at the lower of amortized cost or fair value less disposal cost, with valuation changes recognized as impairment loss. Loans held for sale are not subject to allowance for loan losses. Net deferred loan origination fees and loan purchase premiums or discounts are deferred and capitalized as part of the carrying value of the held-for-sale loan until the loan is sold, therefore included in the periodic valuation adjustments based on lower of cost or fair value less disposal cost.
Purchased Credit-Impaired ("PCI") Loans
PCI loans are acquired loans with evidence of credit quality deterioration for which it is probable at acquisition that the Company will collect less than the contractually required payments. PCI loans are recorded at the initial investment in the loans and accreted to the estimated cash flows expected to be collected as measured at acquisition date. The excess of cash flows expected to be collected, measured as of acquisition date, over the estimated fair value represents the accretable yield and is recognized in interest income over the remaining life of the loan using the effective interest method. The difference between contractually required payments as of the acquisition date and the cash flows expected to be collected ("nonaccretable difference") is not recognized as an adjustment of yield, loss accrual or valuation allowance.
The Company evaluates estimated future cash flows expected to be collected on a quarterly basis, starting with the first full quarter after acquisition, or earlier if conditions indicating impairment are present. If the cash flows expected to be collected cannot be reasonably estimated, either at acquisition or in subsequent evaluation, the Company may consider placing such PCI loans on nonaccrual, with interest income recognized using the cost recovery method or on a cash basis. Subsequent decreases in cash flows expected to be collected are evaluated to determine whether a provision for loan loss should be established. If decreases in expected cash flows result in a decrease in the estimated fair valuederecognition of the loan below its amortized cost,underlying asset by the Company records a provision for loan losses calculated as the difference between the loan’s amortized costlessor, and the revised cash flows, discounted at the loan’s effective yield. Subsequent increases in cash flows expected to be collected are first applied to reverse any previously recorded allowance for loan losses, with any remaining increases recognized prospectively through an adjustment to yield over its remaining life.recognition of variable lease payments earned and
Factors that most significantly affect estimates
17
Table of cash flows expected to be collected, and accordingly the accretable yield, include: (i) estimate of the remaining life of acquired loans which may change the amount of future interest income; (ii) changes to prepayment assumptions; (iii) changes to collateral value assumptions for loans expected to foreclose; and (iv) changes in interest rates on variable rate loans.Contents
PCI loans may be aggregated into pools based upon common risk characteristics, such as loan performance, collateral type and/or geographic location of the collateral. A pool is accounted for as a single asset with a single composite yield and an aggregate expectation of estimated future cash flows. A PCI loan modified within a pool remains in the pool, with the effect of the modification incorporated into the expected future cash flows. A loan resolution within a loan pool, which may involve the sale of the loan or foreclosure
depreciation expense on the underlying collateral, resultsasset will partially offset in earnings over time. The ASU is effective January 1, 2022 and can be applied either retrospectively to leases that commenced or were modified upon adoption of Topic 842, Leases, or prospectively to new or modified leases. The Company, as lessor, does not currently have any leases that would be subject to this amendment.
Accounting Standards Adopted in 2021
Income Tax Accounting
In December 2019, the removalFASB issued ASU No. 2019-12, Simplifying Accounting for Income Taxes. The ASU simplifies accounting for income taxes by eliminating certain exceptions to the general approach in ASC 740, Income Taxes, and clarifies certain aspects of the guidance for more consistent application. The simplifications relate to intraperiod tax allocations when there is a loss in continuing operations and a gain outside of continuing operations, accounting for tax law or tax rate changes and year-to-date losses in interim periods, recognition of deferred tax liability for outside basis difference when investment ownership changes, and accounting for franchise taxes that are partially based on income. The ASU also provides new guidance that clarifies the accounting for transactions resulting in a step-up in tax basis of goodwill, among other changes. Transition is generally prospective, other than the provision related to outside basis difference which is on a modified retrospective basis with cumulative effect adjusted to retained earnings at the beginning of the period adopted, and franchise tax provision which is on either full or modified retrospective. The Company adopted the new guidance on January 1, 2021, with no resulting effect upon adoption.
Accounting for Certain Equity Investments
In January 2020, the FASB issued ASU No. 2020-01, Clarifying the Interactions between Topic 321 Investments—Equity Securities, Topic 323—Investments Equity Method and Joint Ventures, and Topic 815—Derivatives and Hedging. The ASU clarifies that if as a result of an allocated carrying amount, includingobservable transaction, an allocable portion of any existing allowance.
Acquisition, Development and Construction ("ADC") Loan Arrangements
The Company provides loans to third party developers forequity investment under the acquisition, development and construction of real estate. Under an ADC arrangement, the Company participates in the expected residual profits of the project through the

sale, refinancing or other use of the property. The Company evaluates the characteristics of each ADC arrangement, including its risks and rewards, to determine whether they are more similar to those associated with a loan or an investment in real estate. ADC arrangements with characteristics implying loan classification are presented as loans receivable and result in the recognition of interest income. ADC arrangements with characteristics implying real estate joint ventures are presented as investments in unconsolidated joint ventures and are accounted for using the equity method. The classification of each ADC arrangement as either loan receivable or real estate joint venture involves significant judgment and relies on various factors, including market conditions, amount and timing of expected residual profits, credit enhancements in the form of guaranties, estimated fair value of the collateral, significance of borrower equity in the project, among others. The classification of ADC arrangementsmeasurement alternative is performed at inception, and periodically reassessed when significant changes occur in the circumstances or conditions described above.
Investments in Unconsolidated Ventures
A noncontrolling, unconsolidated ownership interest in an entity may be accounted for using thetransitioned into equity method cost method or under the fair value option, if elected.
The Company accounts for investments under the equity method of accounting if it has the ability to exercise significant influence over the operating and financial policies ofvice versa, an entity, but does not have a controlling financial interest. The equity method investment is initially recorded at costtransitioned into measurement alternative, the investment is to be remeasured immediately before and adjusted each periodafter the transaction, respectively. The ASU also clarifies that certain forward contracts or purchased options to acquire equity securities that are not deemed to be derivatives or in-substance common stock will generally be measured using the fair value principles of ASC 321 before settlement or exercise, and that an entity should not be considering how it will account for capital contributions, distributionsthe resulting investments upon eventual settlement or exercise. ASU No. 2020-01 is to be applied prospectively. The Company adopted the new guidance on January 1, 2021, with no resulting effect upon adoption.
Accounting for Convertible Instruments and Contracts on Entity's Own Equity
In August 2020, the Company's share of the entity’s net income or loss as well as other comprehensive income or loss. The Company's share of net income or loss may differ from the stated ownership percentage interestFASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an entity ifEntity’s Own Equity. The ASU (1) simplifies an issuer’s accounting for convertible instruments as a single unit of account; (2) allows more contracts on an entity’s own equity to qualify for equity classification and more embedded derivatives meeting the governing documents prescribederivative scope exception; and (3) simplifies diluted earnings per share ("EPS") computation.
•The guidance eliminates the requirement to separate embedded conversion features in convertible instruments, except for (1) a substantive non-pro rata earnings allocation formulaconvertible instrument that contains features requiring bifurcation as a derivative under ASC 815 or (2) a preferred return to certain investors. The Company's share of net income or loss from its interests in funds, which are accountedconvertible debt instrument that was issued at a substantial premium. Separate accounting for embedded conversion features as an equity component under the cash conversion and beneficial conversion models has been eliminated.
•Under the new guidance, certain conditions under Subtopic ASC 815-40 that may result in contracts being settled in cash rather than shares and therefore preclude (1) equity method, reflects fair value changesclassification for contracts on an entity’s own equity; and (2) embedded derivatives from qualifying for the derivative scope exception, have been removed; for example, the requirement that equity contracts permit settlement in the underlying investments of the fund, whichunregistered shares unless such contracts explicitly require settlement in cash if registered shares are reported at fair value in accordance with investment company guidelines. For certainunavailable. The guidancealso clarifies that freestanding contracts on an entity’s own equity method investments, the Company records its proportionate share of income on a one to three month lag. Distributions of operating profits from equity method investments are reported as operating activities, while distributions in excess of operating profits or those related to capital transactions, such as a financing transactions or sales, are reported as investing activities in the statement of cash flows.
Investments that do not qualify for equity method accounting are accounted forclassification under the cost method. Dividends from costindexation criteria (ASC 815-40-15) or settlement criteria (ASC 815-40-25) are to be measured at fair value through earnings, even if they do not meet the definition of a derivative under ASC 815.
•The ASU also amends certain guidance on computation of diluted EPS for convertible instruments and contracts on an entity’s own equity that results in a more dilutive EPS, including (1) requiring the if converted method investments, when received, are recorded as dividend income to be applied for all convertible instruments (the treasury stock method is no longer available), and (2) removing the
18
Table of Contents

ability to rebut the extent theypresumption of share settlement for contracts that may be settled in cash or stock and that are not considered a returnliability classified share based payments.
•Expanded disclosures are required, including but not limited to, (1) terms and features of capital; otherwise such amounts are recorded as a reductionconvertible instruments and contracts on entity’s own equity; and (2) information about events, conditions, and circumstances that could affect amount or timing of future cash flows related to these instruments or contracts; and in the period of adoption (3) nature of and reason for the change in accounting principle; and (4) effects of the cost of investment.change on EPS.
The Company electedUpon adoption, a one-time election may be made to apply the fair value option for certain cost method and equity method investments.any liability-classified convertible securities.
Adoption of the new standard may be made either on a full retrospective approach or a modified retrospective approach, with cumulative effect adjustment recorded to beginning retained earnings. The Company recordsearly adopted the changenew guidance on January 1, 2021 using a modified retrospective approach, with no resulting effect upon adoption.
3. Acquisitions
Asset Acquisitions
Vantage SDC Hyperscale Data Centers
In July 2020 and following an additional investment in fair value of such investments in earnings from investments in unconsolidated ventures in the consolidated statements of operations.
Impairment—If indicators of impairment exist,October 2020, the Company, performsalongside fee bearing third party capital, invested $1.36 billion for an evaluationapproximately 90% equity interest in entities that hold Vantage Data Centers Holdings, LLC's ("Vantage") portfolio of its12 stabilized hyperscale data centers in North America and $2.0 billion of secured indebtedness (“Vantage SDC”). The remaining equity methodinterest in Vantage SDC is held by the existing investors of Vantage, and cost method investments to assess whethertogether with the fair value of itsthird party capital raised by the Company, represent noncontrolling interests. The Company's balance sheet investment is less thanapproximately $200 million or a 13% equity interest in Vantage SDC. Vantage SDC is a carve-out from Vantage's data center business. The acquisition excluded Vantage's remaining portfolio of development-stage data centers and its carrying value. To the extent the decrease in value is consideredemployees, all of whom were retained by Vantage. The day-to-day operations of Vantage SDC continue to be other-than-temporarymanaged by Vantage's existing management company in exchange for management fees, and an impairment has occurred,subject to certain approval rights held by the investment is written downCompany and the co-investors in connection with material actions.
The Company and its co-investors have also committed to its estimated fair value, recorded as an impairment loss.
Securities
Debt securities and marketable equity securities are recorded asacquire the future build-out of expansion capacity, along with lease-up of the trade date. Securities designated as available-for-sale (“AFS”) are carried at fair valueexpanded capacity and existing inventory, including those associated with unrealized gains or losses included as a componentan add-on acquisition to the Vantage SDC portfolio described below, the costs of other comprehensive income. Upon dispositionwhich will be borne by the previous owners of AFS securities, the cumulative gains or losses in other comprehensive income (loss)Vantage SDC, for estimated payments of approximately $350 million. It is anticipated that are realized are recognized in other gain (loss), net, on the statement of operations based on specific identification.
Dividend income—Dividend income from marketable equity securities is recognized on the ex-dividend date.
Interest Income—Interest income from debt securities, including stated coupon interest payments and amortization of purchase premiums or discounts, is recognized using the effective interest method over the expected livesmost, if not all, of the debt securities.
For beneficial interestspayments will be funded by Vantage SDC from borrowings under its credit facilities and/or cash from operations. Pursuant to this arrangement, Vantage SDC entered into 2 tenant leases in debt securities that are not of high credit quality (generally credit rating below AA) or that can be contractually settled such that the Company would not recover substantially all of its recorded investment, interest income is recognized as the accretable yield over the life2021 related to a portion of the securities using the effective yield method. The accretable yield is the excessexpansion capacity which triggered aggregate payments of current expected cash flows to be collected over the net investment in the security, including the yield accreted to date. The Company evaluates estimated future cash flows expected to be collected on a quarterly basis, starting with the first full quarter after acquisition, or earlier if conditions indicating impairment are present. If the cash flows expected to be collected cannot be reasonably estimated, either at acquisition or in subsequent evaluation, the

Company may consider placing the securities on nonaccrual, with interest income recognized using the cost recovery method.
Impairment—The Company performs an assessment, at least quarterly, to determine whether a decline in fair value below amortized cost of AFS debt securities is other than temporary. Other-than-temporary impairment ("OTTI") exists when either (i) the holder has the intent to sell the impaired security, (ii) it is more likely than not the holder will be required to sell the security, or (iii) the holder does not expect to recover the entire amortized cost$73.6 million. As part of the security. For beneficial interests in debt securities that are not of high credit quality or that can be contractually settled such that the Company would not recover substantially all of its recorded investment, OTTI also exists when there has been an adverse change in cash flows expected to be collected from the last measurement date.
If the Company intends to sell the impaired security or more likely than not will be required to sell the impaired security before recovery of its amortized cost, the entire impairment amount is recognized in earnings. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost, the Company further evaluates the security for impairment due to credit losses. In determining whether a credit loss exists, an assessment is made of the cash flows expected to be collected from the security. The credit component of OTTI is recognized in earnings, while the remaining non-credit component is recognized in other comprehensive income. The amortized cost basis of the security is written down by the amount of impairment recognized in earnings and will not be adjusted for subsequent recoveries in fair value. The difference between the new amortized cost basis and the cash flows expected to be collected will be accreted as interest income.
In assessing OTTI and estimating future expected cash flows, factors considered include, but are not limited to, credit rating of the security, financial condition of the issuer, defaults for similar securities, performance and value of assets underlying an asset-backed security.
PCI Debt Securities—Debt securities acquired that are deemed to be credit impaired at acquisition date are recorded at their initial investment and accreted to the estimated cash flows expected to be collected as measured at acquisition date. The excess of cash flows expected to be collected, measured at acquisition date, over the estimated fair value represents the accretable yield and is recognized in interest income over the remaining life of the security using the effective yield method. The difference between contractually required payments at the acquisition date and the cash flows expected to be collected ("nonaccretable difference"), which reflects estimated future credit losses expected to be incurred over the life of the security, is not accreted to interest income nor recorded on the balance sheet. Subsequent decreases in undiscounted expected cash flows attributable to further credit deterioration as well as changes in expected timing of future cash flows can result in recognition of OTTI. Subsequent increases in expected cash flows, other than due to interest rate changes on variable rate securities, are recognized prospectively over the remaining life of the security as an adjustment to accretable yield.
Identifiable Intangibles
In a business combination or assetJuly 2020 acquisition, the Company may recognize identifiable intangibles that meet either or bothhad an option to purchase an additional data center in Santa Clara, California. In September 2021, the contractual-legal criterion orCompany exercised the separability criterion. Indefinite-lived intangiblesoption and purchased the data center for $404.5 million in cash, funded through borrowings by Vantage SDC, and a deferred amount of $56.9 million to be paid upon future lease-up. All of these payments were made to the previous owners of Vantage SDC and are not subject to amortization until suchtreated as asset acquisitions.
zColo Colocation Data Centers
In December 2020, the Company's DataBank subsidiary acquired zColo, the colocation business of Zayo Group Holdings, Inc. ("Zayo"), composed of 39 data centers in the U.S. and the U.K., for approximately $1.2 billion through a combination of debt and equity financing, including $0.5 billion of third party co-invest capital raised by the Company. The Company's balance sheet investment is $145 million ($188 million at the time that its useful lifeof closing), which maintained the Company's 20% equity interest in DataBank.
Acquisition of zColo's remaining 5 data centers in France for $33.0 million closed in February 2021. Zayo is determined to no longer be indefinite, at which point, it will be assessed for impairmentan anchor tenant within the zColo facilities and is a significant customer of DataBank.
Acquisitions by DataBank
In the third quarter of 2021, DataBank and its adjusted carrying amount amortized over its remaining useful life. Finite-lived intangibles are amortized over their useful lifezColo portfolio each acquired a building in the U.S. for a manner that reflectscombined $38.5 million, to be redeveloped into data centers.
19
Table of Contents

Allocation of Consideration Transferred
The following table summarizes the patternconsideration and allocation to assets acquired, liabilities assumed and noncontrolling interests at acquisition. Consideration for asset acquisitions incorporates capitalized transaction costs, which may include incentive payments to employees for successful closing of the acquisitions.
Asset Acquisitions
20212020
(In thousands)Vantage SDC Expansion Capacity and Add-On AcquisitionAcquisitions by DataBank / zColo USzColo FranceVantage SDCzColo US and UK
Assets acquired and liabilities assumed
Cash$— $— $— $— $266 
Real estate453,304 38,500 26,083 2,720,870 882,327 
Intangible assets81,728 — 8,702 765,137 303,119 
Lease right-of-use ("ROU") and other assets— — 9,536 181,260 415,038 
Debt— — — (2,060,307)— 
Intangible, lease and other liabilities(56,889)— (11,303)(82,350)(419,262)
Fair value of net assets acquired$478,143 $38,500 $33,018 $1,524,610 $1,181,488 
•Real estate was valued based upon (i) current replacement cost for buildings in whichan as-vacant state and improvements, estimated using construction cost guidelines; (ii) current replacement cost for data center infrastructure by applying an estimated cost per kilowatt based upon current capacity of each location and also considering the intangible is being consumed if readily determinable,associated indirect costs such as based upon expected cash flows; otherwise they are amortized on a straight line basis. The useful lifedesign, engineering, construction and installation; (iii) recent comparable sales or current listings for land; and (iv) contracted price net of all identifiedestimated selling costs for real estate held for sale. Useful lives of real estate acquired range from 30 to 50 years for buildings and improvements, 7 to 21 years for site improvements, 12 to 20 years for data center infrastructure, and 1 to 5 years for furniture, fixtures and equipment.
•Lease-related intangibles will be periodically reassessed and if useful life changes, the carrying amountfor real estate acquisitions were composed of the intangible will be amortized prospectively overfollowing:
•In-place leases reflect the revised useful life. Finite-lived intangibles are periodically reviewed for impairment and an impairment loss is recognizedvalue of rental income forgone if the carrying amount ofproperties had been acquired vacant, and the intangible is not recoverableleasing commissions, legal and exceeds its fair value. An impairment establishes a new basis for the identifiable intangibles and any impairment loss recognized is not subject to subsequent reversal.
Identifiable intangibles recognized in acquisitions of operating real estate properties generally include in-place leases, above- or below-market leases and deferred leasing costs. In-place leases generate value over and above the tangible real estate because a propertymarketing costs that is occupied with leased space is typically worth more than a vacant building without an operating lease contract in place. The estimated fair value of acquired in-place leases is derived based on management's assessment of costs avoided from having tenants in place, including lost rental income, rent concessions and tenant allowances or reimbursements, that hypothetically would behave been incurred to lease a vacant building to its actual existing occupancy level onup the valuation date. The net amount recordedproperties, with remaining lease terms ranging between 3 and 15 years.
•Above- and below-market leases represent the rent differential for acquired in-place leases is included in intangible assets and amortized on a straight-line basis as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If an in-place lease is terminated, the unamortized portion is charged to depreciation and amortization expense.

The estimated fair value of the above- or below-market component of acquired leases represents the present value of the differenceterm between contractual rents of acquired leases and market rents at the time of the acquisition, for thediscounted at rates between 6% and 7.5%, with remaining lease term, discounted for tenant credit risks. Above- or below-market operatingterms ranging between 2 and 15 years.
•Tenant relationships represent the estimated net cash flows attributable to the likelihood of lease values are amortized on a straight-line basis as a decrease or increase to rental income, respectively, over the applicable lease terms. This includes fixed rate renewal options in acquired leases that are below-market, which is amortized to decrease rental income over the renewal period. Above- or below-market ground lease obligations are amortized on a straight-line basis as a decrease or increase to rent expense, respectively, over the applicable lease terms. If the above- or below-market operating lease values or above- or below-market ground lease obligations are terminated, the unamortized portion of the lease intangibles are recorded in rental income or rent expense, respectively.
Deferred leasing costs represent management's estimation of the avoided leasing commissions and legal fees associated withby an existing in-place lease. The net amount is included intenant relative to the cost of obtaining a new lease, taking into consideration the estimated time it would require to execute a new lease or backfill a vacant space, discounted at rates between 5.5% and 11.5%, with estimated useful lives between 5 and 15 years.
•Other intangible assets and amortized onacquired were as follows:
•Customer service contracts were valued based upon estimated net cash flows generated from the zColo customer service contracts that would have been forgone if such contracts were not in place, taking into consideration the time it would require to execute a straight-line basis as an increase to depreciation and amortization expense over thenew contract, with remaining term of the applicable lease.contracts ranging between 3 and 15 years.
Goodwill
Goodwill is an unidentifiable intangible asset and is recognized as a residual, generally measured•Customer relationships were valued as the excess of consideration transferred in a business combination over the identifiable assets acquired, liabilities assumed and noncontrolling interests in the acquiree. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination.
Goodwill is tested for impairment at the reporting units to which it is assigned at least on an annual basis in the fourth quarter of each year, or more frequently if events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The assessment of goodwill for impairment may initially be performed based on qualitative factors to determine if it is more likely than not that the fair value of the reporting unit to which the goodwill is assigned is less than its carrying value. If so, a two-step quantitative assessment is performed to determine if an impairment has occurred and measure the impairment loss. In the first step, if the fair value of the reporting unit is less than its carrying value (including goodwill), then the goodwill is considered to be impaired. In the second step, the implied fair value of the goodwill is determined by comparing the fair value of the reporting unit (in step one)incremental net cash flows to the fair value of the net assets of the reporting unit as if the reporting unit is being acquired in azColo business combination. If the carrying value of goodwill exceeds the resulting implied fair value of goodwill, then an impairment charge is recognized for the excess. An impairment establishes a new basis for the goodwill and any impairment loss recognized is not subject to subsequent reversal. Goodwill impairment tests require judgment, including identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit.
Accounts Receivable and Related Allowance
Property Operating Income Receivables—The Company periodically evaluates aged receivables as well as considers the collectability of unbilled receivables for each tenant, operator, resident or guest, individually. The Company establishes an allowance when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due under existing contractual terms, and the amount can be reasonably estimated.
Cost Reimbursements and Recoverable Expenses—The Company is entitled to reimbursements and/or recovers certain costs paid on behalf of the retail companies and private funds managed by the Company, which include: (i) organization and offering costs associated with the formation and offering of the retail companies not to exceed a certain percentage of the proceeds expected to be raised from the offering and excluding shares being offered pursuant to distribution reinvestment plans; (ii) direct and indirect operating costs associated with managing the operations of the retail companies; and (iii) costs incurred in performing investment due diligence. Indirect operating costs are recorded as expenses of the Company when incurred and amounts allocated and reimbursable are recorded as other income in the consolidated statements of operations. The Company facilitates the payments of organization and offering costs, due diligence costsattributable to the extent the related investments are consummated and direct operating costs, all of which are recorded as due from affiliates on the consolidated balance sheets, until such amounts are repaid. Due diligence costs related to unconsummated investments are borne by the Company and expensed as investment, servicing and commission expense in the consolidated statement of operations. The Company assesses the collectability of such receivables considering the offering period, historical and forecasted sales of shares and capital reinvestment of the proceeds from the sale of shares under the respective offerings of the retail companies, and establishes an allowance for any balances considered not collectible.

Fixed Assets
Fixed assets of the Company are presented within other assets and carriedin-place customer relationships, discounted at cost less accumulated depreciation and amortization. Ordinary repairs and maintenance are expensed as incurred. Major replacements and betterments which improve or extend the life of assets are capitalized and depreciated over their useful life. Depreciation and amortization is recognized on a straight-line basis over the10%, with estimated useful life of 12 years.
•Trade name of zColo was valued based upon estimated savings from avoided royalty at a rate of 1%, discounted at 10.0%, with useful life of 1 year.
•Assembled workforce was valued based upon the estimated cost of recruiting and training new data center employees for zColo, with a 3 year useful life.
•Other assets which range between 3 to 5 years for furniture, fixtures, equipmentacquired and capitalized software, 15 years for aircraftliabilities assumed include primarily lease ROU assets associated with leasehold data centers and overcorresponding lease liabilities. Lease liabilities were measured based upon the shorterpresent value of future lease payments over the lease term, or useful lifediscounted at the incremental borrowing rate of the respective acquirees.
•Assumed debt was valued based upon market rates and spreads that prevailed at the time of acquisition for leasehold improvements.debt with similar terms and remaining maturities.
Transfers
20
Table of Financial AssetsContents
Sale accounting
Other Real Estate Asset Acquisitions
Other real estate acquisitions include the following. Some of the acquired assets have been disposed, and all other remaining assets and associated liabilities were classified as held for transfersdisposition in 2021.
•Hotel properties in France that are under receivership, for which the Company's bid was accepted by the French courts in 2019. The acquisitions closed throughout 2020 and 2021 for total purchase price of financial assets is limited$37.9 million and $38.8 million, respectively, including $2.2 million and $3.4 million of assumed debt, respectively. This includes the acquisition of hotel operations pursuant to operating leases on hotels owned by third parties.
•Office properties in the transferU.K. and Ireland in 2020, valued at approximately $33.0 million, including the assumption of approximately $125.0 million of debt. The Company had acquired a controlling equity interest in a borrower upon the borrower's default of an entire financial asset, a group of financial assets in their entirety, or a component of a financial assetacquisition, development and construction ("ADC") loan, which meets the definition of a participating interest by having characteristics that are similar to the original financial asset.
Transfers of financial assets arewas previously accounted for as sales when control over the assets has been surrendered. If the Company has any continuing involvement, rights or obligations with the transferred financial asset (outside of standard representations and warranties), sale accounting would require that the transfer meets the following conditions: (1) the transferred asset has been legally isolated; (2) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred asset; and (3) the Company does not maintain effective control over the transferred asset through an agreement that provides for (a) both an entitlement and an obligation by the Company to repurchase or redeem the asset before its maturity, (b) the unilateral ability by the Company to reclaim the asset and a more than trivial benefit attributable to that ability, or (c) the transferee requiring the Company to repurchase the asset at a price so favorable to the transferee that it is probable the repurchase will occur.
If the criteria for sale accounting are met, the transferred financial asset is removed from the balance sheet and a net gain or loss is recognized upon sale, taking into account any retained interests. Transfers of financial assets that do not meet the criteria for sale are accounted for as financing transactions.
Derivative Instruments and Hedging Activities
The Company uses derivative instruments to manage its foreign currency risk and interest rate risk. The Company does not use derivative instruments for speculative or trading purposes. All derivative instruments are recorded at fair value and included in other assets or other liabilities on a gross basis on the balance sheet. The accounting for changes in fair value of derivatives depends upon whether or not the Company has elected to designate the derivative in a hedging relationship and the derivative qualifies for hedge accounting. The Company has economic hedges that have not been designated for hedge accounting.
Changes in fair value of derivatives not designated as accounting hedges are recorded in the statement of operations in other gain (loss).
For designated accounting hedges, the relationships between hedging instruments and hedged items, risk management objectives and strategies for undertaking the accounting hedges as well as the methods to assess the effectiveness of the derivative prospectively and retrospectively, are formally documented at inception. Hedge effectiveness relates to the amount by which the gain or loss on the designated derivative instrument exactly offsets the change in the hedged item attributable to the hedged risk. If it is determined that a derivative is not expected to be or has ceased to be highly effective at hedging the designated exposure, hedge accounting is discontinued.
Cash Flow Hedges—The Company uses interest rate caps and swaps to hedge its exposure to interest rate fluctuations in forecasted interest payments on floating rate debt. The effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive income, while hedge ineffectiveness is recorded in earnings. If the derivative in a cash flow hedge is terminated or the hedge designation is removed, related amounts in accumulated other comprehensive income (loss) are reclassified into earnings.
Net Investment Hedges—The Company uses foreign currency hedges to protect the value of its net investments in foreign subsidiaries or equity method investees whose functional currencies are not U.S. dollars. Changes in the fair value of derivatives used as hedges of net investment in foreign operations, to the extent effective, are recorded in the cumulative translation adjustment account within accumulated other comprehensive income (loss).
At the end of each quarter, the Company reassesses the effectiveness of its net investment hedges and as appropriate, dedesignates the portion of the derivative notional that is in excess of the beginning balance of its net investments as nondesignated hedges.

Release of accumulated other comprehensive income related to net investment hedges occurs upon losing a controlling financial interest in an investment or obtaining control over an equity method investment. Upon sale, complete or substantially complete liquidation of an investmentThis resulted in a foreign subsidiary, or partial sale of an equity method investment, the gain or loss on the related net investment hedge is reclassified from accumulated other comprehensive income to earnings.
Financing Costs
Debt discounts and premiums as well as debt issuance costs (except for revolving credit arrangements) are presented net against the associated debt on the balance sheet and amortized into interest expense using the effective interest method over the contractual termCompany's acquisition of the debt or expected life of the debt instrument. Costs incurred in connection with revolving credit arrangements are recorded as deferred financing costs in otherborrower's real estate assets and amortized on a straight-line basis overassumption of its underlying mortgage debt, some of which is in default.
4. Real Estate
The following table summarizes the expected termCompany's real estate held for investment. Real estate held for disposition is presented in Note 11.
(In thousands)September 30, 2021December 31, 2020
Land$206,296 $168,145 
Buildings and improvements1,221,810 966,839 
Data center infrastructure3,727,791 3,396,854 
Construction in progress76,683 38,210 
5,232,580 4,570,048 
Less: Accumulated depreciation(317,767)(118,184)
Real estate assets, net$4,914,813 $4,451,864 
Real Estate Depreciation
Depreciation of real estate held for investment was $69.7 million and $36.6 million for the credit facility.three months ended September 30, 2021 and 2020, respectively, and $211.3 million and $65.9 million for the nine months ended September 30, 2021 and 2020, respectively.
Property Operating Income
PropertyComponents of property operating income includesare as follows, excluding amounts related to discontinued operations (Note 12).
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Lease income:
Fixed lease income$153,173 $71,885 $454,560 $130,088 
Variable lease income22,065 15,075 68,152 20,871 
175,238 86,960 522,712 150,959 
Data center service revenue19,616 11,562 50,129 34,729 
$194,854 $98,522 $572,841 $185,688 
For the following.
Rental Income—Rental income is recognized on a straight-line basis over the noncancelable term of the related lease which includes the effects of minimum rent increases and rent abatements under the lease. Rents received in advance are deferred.
When it is determined that the Company is the owner of tenant improvements, the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants, is capitalized. For Company-owned tenant improvements, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as additional rental income over the term of the related lease. Rental income recognition commences when the leased space is substantially ready for its intended use and the tenant takes possession of the leased space.
When it is determined that the tenant is the owner of tenant improvements, the Company's contribution towards those improvements is recorded as a lease incentive, included in deferred leasing costs and intangible assets on the balance sheet, and amortized as a reduction to rental income on a straight-line basis over the term of the lease. Rental income recognition commences when the tenant takes possession of the lease space.
Tenant Reimbursements—In net lease arrangements, the tenant is generally responsible for operating expenses relating to the property, including real estate taxes, property insurance, maintenance, repairs and improvements. Costs reimbursable from tenants and other recoverable costs are recognized as revenue in the period the recoverable costs are incurred. When the Company is the primary obligor with respect to purchasing goods and services for property operations and has discretion in selecting the supplier and retains credit risk, tenant reimbursement revenue andnine months ended September 30, 2021, property operating expenses are presented onincome from a gross basis in the statements of operations. For certain triple net leases where the lessee self-manages the property, hires its own service providers and retains credit risksingle tenant accounted for routine maintenance contracts, no reimbursement revenue and expense are recognized.
Resident Fee Income—Resident fee income is recorded when services are rendered and includes resident room and care charges, community fees and other resident charges.
Hotel Operating Income—Hotel operating income includes room revenue, food and beverage sales and other ancillary services. Revenue is recognized upon occupancy of rooms, consummation of sales and provision of services.
Fee Income
Fee income consists of the following:
Base Management Fees—The Company earns base management fees for the day-to-day operations and administration of its managed private funds, traded and non-traded REITs and investment companies. Base management fees are recognized over the period in which the related services are performed in accordance with contractual terms of the underlying management agreements.
Asset Management Fees (including fees related to acquisition and disposition of investments)—The Company receives a one-time asset management fee upon closing of each investment made by certain managed private funds. In accordance with contractual terms of the underlying management and advisory agreements, a portion of asset management fees is recognized upon completion of initial underwriting, with remaining fees deferred and recognized over the holding period of each investment in which the related services are performed for each investment.

The Company also earns fees related to acquisition and disposition of investments by certain managed non-traded REITs, which are recognized upon closing of the respective acquisition or disposition of underlying investments.
Incentive Fees—The Company may earn incentive fees from its managed private funds, traded and non-traded REITs and investment companies. Incentive fees are determined based on the performance of the investment vehicles subject to the achievement of minimum return levels in accordance with the terms set out in the respective governing agreements. Incentive fees are recognized when fixed or determinable and related contingencies have been resolved, which is generally at the end of the measurement period of the respective investment vehicles. Any incentive fees received prior to that date are recorded as deferred income.
Advisory Fees—The Company earns advisory fees from its clients at a fixed annual retainer. Advisory fees are recognized over the period in which the related services are performed in accordance with contractual terms of the underlying advisory agreements.
Selling Commission and Dealer Manager Fees—These fees are earned by the Company for selling equity in the non-traded REITs and investment companies, and are recognized on trade date.
Other Income
Other income includes the following:
Expense Recoveries from Borrowers—Expenses, primarily legal costs incurred in administering non-performing loans and foreclosed properties held by investment entities, may be subsequently recovered through payments received when these investments are resolved. The Company recognizes income when the cost recoveries are determinable and repayment is assured.
Collateral Management Fees—These fees are earned in the Company's capacity as collateral manager or collateral manager delegate of collateralized debt obligation vehicles ("CDOs") sponsored by the Company or by third parties. Collateral management fees are recognized over the period in which the related services are performed in accordance with contractual terms of the underlying agreements. If amounts distributable on any payment date are insufficient to pay the collateral management fees according to the priority of payments, any shortfall is deferred and payable on subsequent payment dates. Collateral management fees earned from consolidated CDOs are eliminated in consolidation.
Cost Reimbursements from Affiliates—For various services provided to certain affiliates, including managed investment vehicles, the Company is entitled to receive reimbursements of expenses incurred, generally based on expenses that are directly attributable to providing those services and/or a portion of overhead costs. The Company acts in the capacity of a principal under these arrangements. Accordingly, the Company records the expenses and corresponding reimbursement income on a gross basis in the period the services are rendered and costs are incurred.
Compensation
Compensation comprises salaries, bonus including discretionary awards and contractual amounts for certain senior executives, benefits, severance payments and equity-based compensation. Bonus is accrued over the employment period to which it relates.
Equity-Based Compensation
Equity-classified stock awards granted to employees that have a service condition only are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. Stock awards granted to non-employees that have a service condition only are remeasured at fair value at the end of each reporting period until the award is fully vested. Fair value is determined based on the closing priceapproximately 16.2% of the Company's class A common stock at date of granttotal revenues from continuing operations, or date of remeasurement. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the awards, with the amount of compensation expense recognized at the end of a reporting period at least equal to the fair value of the portion of the award that has vested through that date. Compensation expense is adjusted for actual forfeituresapproximately 7.8% based upon occurrence.
Income Taxes
A REIT is generally not subject to corporate-level federal and state income tax on net income it distributes to its stockholders. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of its REIT taxable income to its stockholders. If the Company fails to qualify as a REIT in any taxable year and if the statutory relief provisions were not to apply, the Company would be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies as a REIT, it

and its subsidiaries may be subject to certain U.S federal, state and local as well as foreign taxes on its income and property and to U.S federal income and excise taxes on its undistributed taxable income.
The Company has elected or may elect to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (each a “TRS”). In general, a TRS may perform non-customary services for tenants of the REIT, hold assets that the REIT cannot or does not intend to hold directly and, subject to certain exceptions related to hotels and healthcare properties, may engage in any real estate or non-real estate related business. The Company uses TRS entities to conduct certain activities that cannot be conducted directly by a REIT, such as investment management, property management including hotel operations as well as loan servicing and workout activities. A TRS is treated as a regular, taxable corporation for U.S income tax purposes and therefore, is subject to U.S federal corporate tax on its income and property.
Deferred Income Taxes—The provision for income taxes includes current and deferred portions. The current income tax provision differs from the amount of income tax currently payable because of temporary differences in the recognition of certain income and expense items between financial reporting and income tax reporting. The Company uses the asset and liability method to provide for income taxes, which requires that the Company's income tax expense reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for financial reporting versus income tax purposes. Accordingly, a deferred tax asset or liability for each temporary difference is determined based on enacted tax rates that the Company expects to be in effect when the underlying items of income and expense are realized and the differences reverse. A deferred tax asset is also recognized for net operating loss carryforwards and the income tax effect of accumulated other comprehensive income items of the TRS entities. A valuation allowance for deferred tax assets is established if the Company believes it is more likely than not that all or some portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent on the Company's TRS entities generating sufficient taxable income in future periods or employing certain tax planning strategies to realize such deferred tax assets.
Uncertain Tax Positions—Income tax benefits are recognized for uncertain tax positions that are more likely than not to be sustained based solely on their technical merits. Such uncertain tax positions are measured as the largest amount of benefit that is more-likely-than-not to be realized upon settlement. The difference between the benefit recognized and the tax benefit claimed on a tax return results in an unrecognized tax benefit. The Company periodically evaluates whether it is more likely than not that its uncertain tax positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations.
Earnings Per Share
The Company calculates basic earnings per share using the two-class method which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines earnings per share for each share of common stock and participating securities accordingtotal revenues from continuing operations, net of amounts attributable to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. Earnings per common share is calculated by dividing earnings allocated to common shareholders by the weighted-average number of common shares outstanding during the period.
Diluted earnings per common share is based on the weighted-average number of common shares and the effect of potentially dilutive common share equivalents outstanding during the period. Potentially dilutive common share equivalents include shares to be issued upon the assumed conversion of the Company's outstanding convertible notes, which are included under the if-converted method when dilutive. The earnings allocated to common shareholders is adjusted to add back the after-tax amount of interest expense associated with the convertible notes, except when doing so would be antidilutive.
Reclassifications
Certain prior period amounts on the balance sheet and statement of cash flows have been reclassified to conform to current period presentation for the combined company. Significant reclassifications include presentation of all assets held for sale and related liabilities separately on the consolidated balance sheet as well as the presentation of preferred stock at carrying value, which was previously presented at par. Additionally, $2.4 million was reclassified from allowance for bad debts, which was netted against other assets, to allowance for loan losses, which is netted against loans receivable. Such reclassifications did not have a material effect on the Company's financial position, results of operations or its cash flows.

Accounting Standards Adopted in 2017
Equity-Based Compensation—In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2016-09, Improvements to Share-Based Payment Accounting, which amends certain aspects of accounting for share-based payments to employees. This includes accounting for income tax effects in the income statement, increasing the fair value of shares applied for income tax withholding without triggering liability accounting, allowing forfeitures related to service condition to be recognized upon occurrence, as well as changes in cash flow classifications. This guidance may be adopted prospectively or on a modified retrospective transition basis depending on the requirements of each provision. ASU No. 2016-09 is effective for fiscal years and interim periods beginning after December 15, 2016. The Company adopted this new guidance prospectively on January 1, 2017. The Company has made a policy election to account for forfeitures upon occurrence. The adoption of this standard did not have a material impact on the Company's financial condition, results of operations or cash flows.
Modification of Equity-Based Awards—In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718),Scope of Modification Accounting, which limits the scope of modification accounting for equity-based awards. Modification accounting would not be applied if the fair value, vesting conditions and classification of the award as an equity or liability instrument are the same immediately before and after the modification. In assessing the fair value criterion, if the modification does not affect any of the inputs to the valuation technique used to value the award, then an actual estimate of fair value before and after the modification is not required. Disclosure of significant changes to the terms and conditions of a modified equity award continues to be required even if modification accounting is not applied. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, to be applied prospectively to awards modified on or after the adoption date. Early adoption is permitted in any interim period for which financial statements have not yet been issued. The adoption of this guidance would limit instances of incremental compensation cost being recognized when a non-substantive change is made to an equity award, which under modification accounting, would have otherwise resulted in a remeasurement of the award at a higher fair value on modification date. The Company adopted this guidance prospectively on April 1, 2017. There were no award modifications subsequent to adoption.
Future Application of Accounting Standards
Revenue Recognition—In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends existing revenue recognition standards by establishing principles for a single comprehensive model for revenue measurement and recognition, along with enhanced disclosure requirements. Key provisions include, but are not limited to, determining which goods or services are capable of being distinct in a contract to be accounted for separately as a performance obligation and recognizing variable consideration only to the extent that it is probable a significant revenue reversal would not occur. The new revenue standard may be applied retrospectively to each prior period presented (full retrospective) or retrospectively to contracts not completed as of date of initial application with the cumulative effect recognized in retained earnings (modified retrospective). ASU No. 2014-09 is effective for fiscal years and interim periods beginning after December 15, 2017. The FASB has subsequently issued several amendments to the standard, including clarifying the guidance on assessing principal versus agent based on the notion of control, which affects recognition of revenue on a gross or net basis. These amendments have the same effective date and transition requirements as the new standard.
The Company plans to adopt the standard on its required effective date of January 1, 2018 using the modified retrospective approach, to be applied to contracts not yet completed as of date of adoption. The standard excludes from its scope the areas of accounting that most significantly affect revenue recognition for the core activities of the Company, including accounting for financial instruments and leases. However, non-lease service components within a gross lease such as common area maintenance reimbursed by tenants as well as resident service charges embedded within resident fee income and other separate resident charges will be considered individual performance obligations and be subject to the new revenue recognition standard, with such revenue recognized over the period in which the related services are performed. The Company expects to apply the new revenue guidance to non-lease components within gross tenant leases upon adoption of the lease standard effective January 1, 2019. Evaluation of the impact of this guidance to the Company is on-going.
Financial Instruments—In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which affects accounting for investments in equity securities, financial liabilities under the fair value option, as well as presentation and disclosures, but does not affect accounting for investments in debt securities and loans. Investments in equity securities, other than equity method investments, will be measured at fair value through earnings, except for equity securities without readily determinable fair values which may be measured at cost less impairment and adjusted for observable price changes. This provision eliminates cost method accounting and recognition of unrealized holding gains or losses on equity investments in other comprehensive income. For financial liabilities under fair value option, changes in fair value due to instrument specific credit risk will be recorded separately in

other comprehensive income. Fair value disclosures of financial instruments measured at amortized cost will be based on exit price and corresponding disclosures of valuation methodology and significant inputs will no longer be required. ASU No. 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is limited to specific provisions. ASU 2016-01 is to be applied retrospectively with cumulative effect as of the beginning of the first reporting period adopted recognized in retained earnings, except for provisions related to equity investments without readily determinable fair values and exit price fair value disclosures for financial instruments measured at amortized cost, which are to be applied prospectively.
The Company plans to adopt the new guidance on its required effective date of January 1, 2018. Upon adoption, unrealized holding gains or losses on the Company's investment in equity securities, classified as available for sale, will no longer be recorded in other comprehensive income but in earnings. As it relates to cost method investments, the Company has elected the fair value option to account for its limited partnershipnoncontrolling interests in private funds while its interests in non-traded REITs in aggregate are not material. The Company does not have any other cost method investments as of September 30, 2017 that would have readily determinable fair values and would be affected by this new guidance. The Company continues to evaluate the impact of this new guidance but does not expect the adoption of this standard to have a material effect on its financial condition or results of operations.
Leases—In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends existing lease accounting standards, primarily requiring lessees to recognize most leases on balance sheet, as well as making targeted changes to lessor accounting. ASU No. 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The new leases standard requires adoption using a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, and provides for certain practical expedients. Full retrospective application is prohibited. Transition will require application of the new guidance at the beginning of the earliest comparative period presented.
As lessor, gross leases will be subject to allocation between lease and non-lease service components, with the latter accounted for under the new revenue recognition standard. The Company expects to apply the new revenue guidance to non-lease components within grossinvestment entities. There was no similar tenant leases upon adoption of the lease standard effective January 1, 2019. As the new lease standard requires congruous accounting treatment between lessor and lessee in a sale-leaseback transaction, if the seller/lessee does not achieve sale accounting, it would be considered a financing transaction to the Company, as the buyer/lessor. As lessee, the Company will recognize a right-of-use asset and corresponding liability for future obligations under its leasing arrangements, such as ground leases and office leases, which as of September 30, 2017, have future contractual payments of $186.2 million and $76.0 million, respectively. Additionally, under the new lease standard, only incremental initial direct costs incurred in the execution of a lease can be capitalized by the lessor and lessee. The Company continues to evaluate the impact of this guidance on its financial statements.
Credit Losses—In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses, which amends the credit impairment model for financial instruments. The existing incurred loss model will be replaced with a lifetime current expected credit loss ("CECL") model for financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans, loan commitments, held-to-maturity ("HTM") debt securities, financial guarantees, net investment in leases, reinsurance and trade receivables, which will generally result in earlier recognition of allowance for losses. For AFS debt securities, unrealized credit losses will be recognized as allowances rather than reductions in amortized cost basis and elimination of the OTTI concept will result in more frequent estimation of credit losses. The accounting model for purchased credit impaired loans and debt securities will be simplified, including elimination of some of the asymmetrical treatment between credit losses and credit recoveries, to be consistent with the CECL model for originated and purchased non-credit impaired assets. The existing model for beneficial interests that are not of high credit quality will be amended to conform to the new impairment models for HTM and AFS debt securities. Expanded disclosures on credit risk include credit quality indicators by vintage for financing receivables and net investment in leases. Transition will generally be on a modified retrospective basis, with prospective application for other-than-temporarily impaired debt securities and purchased credit impaired assets. ASU No. 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company expects that recognition of credit losses will generally be accelerated under the CECL model. Evaluation of the impact of this new guidance is on-going.
Cash Flow Classifications—In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in certain classifications on the statement of cash flows. This guidance addresses eight types of cash flows, which includes clarifying how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows, as well as requiring an accounting policy election for classification of distributions received from equity method investees using either the cumulative earnings or nature of distributions approach, among others. Transition will generally be on a retrospective basis. ASU No. 2016-15 is effective for fiscal years and interim

periods beginning after December 15, 2017. Early adoption is permitted, provided that all amendments within the guidance are adopted in the same period. The Company anticipates making an accounting policy election for classification of distributions from its equity method investees using the cumulative earnings approach. The Company does not expect the adoption of this standard to have a material effect on presentation in its statement of cash flows.
Restricted Cash—In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, which requires that cash and cash equivalent balances in the statement of cash flows include restricted cash and restricted cash equivalent amounts, and therefore, changes in restricted cash and restricted cash equivalents be presented in the statement of cash flows. This will eliminate the presentation of transfers between cash and cash equivalents with restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, this ASU requires disclosure of a reconciliation between the totals in the statement of cash flows and the related captions in the balance sheet. The new guidance also requires disclosure of the nature of restricted cash and restricted cash equivalents, similar to existing requirements under Regulation S-X; however, it does not define restricted cash and restricted cash equivalents. ASU No. 2016-18 is effective for fiscal years and interim periods beginning after December 15, 2017, to be applied retrospectively, with early adoption permitted. If early adopted in an interim period, adjustments are to be reflected as of the beginning of the fiscal year of adoption. The Company does not expect the adoption of this standard to have a material effect on presentation in its statement of cash flows.
Goodwill Impairment—In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Goodwill impairment is now measured as the excess in carrying value over fair value of the reporting unit, with the loss recognized not to exceed the amount of goodwill assigned to that reporting unit. The one-step impairment test will also be applied to goodwill at reporting units that have zero or negative carrying values, with a disclosure of the amount of goodwill at these reporting units. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, to be applied prospectively. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. The Company will early adopt this new guidance for its annual goodwill impairment assessment in 2017.
Derecognition and Partial Sales of Nonfinancial Assets—In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition and Accounting for Partial Sales of Nonfinancial Assets, which clarifies the scope and application of Accounting Standards Codification ("ASC") 610-20, Other Income—Gains and Losses from Derecognition of Nonfinancial Assets, and defines in substance nonfinancial assets. ASC 610-20 applies to derecognition of all nonfinancial assets which are not contracts with customers or revenue transactions under ASC 606, Revenue from Contracts with Customers. Derecognition of a business is governed by ASC 810, Consolidation, while derecognition of financial assets, including equity method investments, even if the investee holds predominantly nonfinancial assets, is governed by ASC 860, Transfers and Servicing. The ASU also aligns the accounting for partial sales of nonfinancial assets to be more consistent with accounting for sale of a business. Specifically, in a partial sale to a noncustomer, when a noncontrolling interest is received or retained, the latter is considered a noncash consideration and measured at fair value in accordance with ASC 606, which would result in full gain or loss recognized upon sale. This ASU removes guidance on partial exchanges of nonfinancial assets in ASC 845, Nonmonetary Transactions, and eliminates the real estate sales guidance in ASC 360-20, Property, Plant and Equipment—Real Estate Sales. ASU 2017-05 has the same effective date as the new revenue guidance, which is January 1, 2018, with early adoption permitted beginning January 1, 2017. Both ASC 606 and ASC 610-20 must be adopted concurrently. While the transition method is similar to the new revenue guidance, either full retrospective or modified retrospective, the transition approach applied need not be aligned between both standards.
The Company plans to adopt this standard on January 1, 2018, consistent with its adoption of the new revenue standard, using the modified retrospective approach. Under the new standard, if the Company sells a partial interest in its real estate assets to noncustomers or contributes real estate assets to unconsolidated ventures, and the Company retains a noncontrolling interest in the asset, such transactions could result in a larger gain on sale. The adoption of this standard could have a material impact to the Company's results of operations in a period if the Company sells a significant partial interest in a real estate asset. There were no such salesconcentration in the nine months ended September 30, 2017.2020.
Hedge Accounting—In August 2017,
21
Table of Contents

5. Equity Investments
The Company's equity investments, excluding investments held for disposition (Note 11), are represented by the FASB issued ASU No. 2017-12, Targeted Improvements to Accountingfollowing:
(In thousands)September 30, 2021December 31, 2020
Equity method investments
BRSP (1)
$269,444 $356,772 
Other investment ventures13,220 16,160 
Company-sponsored private funds (2)
314,773 173,039 
Investments under fair value option— 28,540 
597,437 574,511 
Other equity investments
Marketable securities180,112 218,485 
Other15,516 — 
$793,065 $792,996 
__________
(1)    Excludes approximately 461,000 shares and 3.1 million units in BRSP held by NRF Holdco that are included in assets held for Hedging Activitiesdisposition (Note 11), which simplifies and expands the application of hedge accounting. This standard amends hedge accounting recognition and presentation, including eliminating the requirement to separately measure and present hedge ineffectiveness as well as presenting the entire fair value change of a hedging instrument in the same income statement line as the hedged item. The new guidance also provides alternatives for applying hedge accounting to additional hedging strategies, and easing requirements for effectiveness testing and hedging documentation, although the "highly effective" threshold for a qualifying hedging relationship has not changed. Revised disclosures include tabular disclosures that focus

on the effect of hedge accounting by income statement line item. Transition will generally be on a modified retrospective basis applied to existing hedging relationships as of date of adoption, with prospective application for income statement presentation and disclosure, and specific transition elections are available to modify existing hedge documentation. ASU 2017-12 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted, with adjustments to be reflected as of the beginningCompany's aggregate holdings of the fiscal year of adoption if early adopted38.5 million shares and units in an interim period.
The Company plans to adopt the standard on its effective date. Upon adoption, as it relates to the Company’s cash flow and net investment hedges, the Company will record the entire change in fair value of the hedging instrument (other than amounts excluded from assessment of hedge effectiveness for net investment hedges) in other comprehensive income and there will be no hedge ineffectiveness recorded in earnings. Additionally, subsequent to initial quantitative hedge assessment, the Company may elect to perform effectiveness testing qualitatively so long as the Company can reasonably support an expectation that the hedge is highly effective now and in subsequent periods. As the standard allows more flexibility in hedging interest rate risk in cash flow hedges beyond a specified benchmark rate, the Company may be able to designate in the future other contractually specified variable interest rate as the hedged risk, which if effective, could decrease fluctuations in earnings. The Company continues to evaluate the impact of this new guidance but at this time, does not expect the adoption of this standard to have a material effect on its financial condition or results of operations.
3. Business Combinations
Merger with NSAM and NRF
On the Closing Date, the Merger of NSAM, Colony and NRF was completed in an all-stock exchange to create Colony NorthStar.
The Merger was accomplished through a series of transactions. On the Closing Date, NSAM merged with and into Colony NorthStar in order to redomesticate NSAM as a Maryland corporation, followed by a series of internal reorganization transactions with subsidiaries of NRF resulting in NRF becoming a subsidiary of Colony NorthStar, and the merger of Colony into Colony NorthStar, with Colony NorthStar surviving as the combined company.
Upon the closing of the Merger, NSAM outstanding common stock was converted into Colony NorthStar common stock, and the outstanding common stock and preferred stock of NRF and Colony were converted into the right to receive shares of common stock and preferred stock of Colony NorthStar at pre-determined exchange ratios.
The specific exchanges of common stock and preferred stock as a result of the Merger were as follows:
Each share of NSAM common stock and performance common stock issued and outstanding immediately prior to the effective time of the Merger was canceled and converted into one share of Colony NorthStar class A common stock and performance common stock, respectively;
Each share of class A and class B common stock of Colony issued and outstanding immediately prior to the effective time of the Merger was canceled and converted into the right to receive 1.4663 shares of Colony NorthStar class A and class B common stock for each share of Colony's class A and class B common stock;
Each share of common stock of NRF issued and outstanding prior to the effective time of the Merger was canceled and converted into the right to receive 1.0996 shares of Colony NorthStar class A common stock for each share of NRF common stock;
Each share of each series of the preferred stock of Colony and of NRF issued and outstanding immediately prior to the effective time of the Merger was canceled and converted into the right to receive one share of a corresponding series of Colony NorthStar preferred stock with substantially identical preferences, conversion and other rights, voting powers, restrictions, limitations as to dividend, qualification and terms and conditions of redemption; and
Concurrently, the OP issued OP Units to equal the number of OP membership units outstanding on the day prior to the closing of the Merger multiplied by the exchange ratio of 1.4663.
Upon consummation of the Merger, the former stockholders of Colony, NSAM and NRF owned, or had the right to own, approximately 33.25%, 32.85% and 33.90%, respectively, of Colony NorthStar, on a fully diluted basis, excluding the effect of certain equity-based awards issued in 2017 in connection with the Merger.
The Merger is accounted for as a reverse acquisition, with NSAM as the legal acquirer for certain legal and regulatory matters and Colony as the accounting acquirer for purposes of the financial information set forth herein. See Note 2 for further discussion on the accounting treatment of the Merger.

Merger Consideration
As the Merger is accounted for as a reverse acquisition, the fair value of the consideration transferred in common stock was measured based upon the number of shares of common stock that Colony, as the accounting acquirer, would theoretically have issued to the shareholders of NSAM and NRF to achieve the same ratio of ownership in Colony NorthStar upon completion of the Merger, multiplied by the closing price of Colony class A common stock of $21.52 on the Closing Date. As a result, the implied shares of Colony common stock issued in consideration was computed as the number of outstanding shares of NSAM and NRF common stock prior to the Closing Date divided by the exchange ratios of 1.4663 and 1.3335, respectively.
Substantially all NSAM and NRF equity awards outstanding on the Closing Date vested upon consummation of the Merger. As Colony NorthStar issued its common stock upon consummation of the Merger and settlement of these equity awards relate to pre-Merger services, these equity awards were included in the outstanding shares of NSAM and NRF common stock used to determine the merger consideration.
NSAM and NRF equity awards outstanding on the Closing Date that did not vest upon consummation of the Merger were assumed by Colony NorthStar through the conversion of such equity awards into comparable Colony NorthStar equity awards with substantially the same vesting terms pre-Merger. The portion of the replacement awards attributable to pre-Merger services forms part of the merger consideration, while the portion attributable to post-Merger services is recognized prospectively as compensation expense of Colony NorthStar in the post-Merger period.
The Colony NorthStar preferred stock issued as merger consideration upon the closing of the Merger to the holders of NRF preferred stock was on a one-for-one basis.
The Company assumed certain liabilities of NSAM and NRF which arose as a result of the Merger and were settled shortly after the Closing Date. These amounts included approximately $226.1 million which was paid to former NSAM stockholders, representing a one-time special dividend, and approximately $78.9 million in payroll taxes representing shares that were canceled and remitted to taxing authorities on behalf of employees whose equity-based compensation was accelerated and fully vested on the Closing Date. These amounts, net of $260.6 million of cash assumed, are presented as investing cash outflows in the consolidated statement of cash flows.
Fair value of the merger consideration was determined as follows:
(In thousands, except price per share) NSAM NRF Total
Outstanding shares of common stock prior to closing of the Merger 190,202
 183,147
  
Replacement equity-based awards attributable to pre-combination services(i)
 300
 150
  
  190,502
 183,297
  
Exchange ratio(ii)
 1.4663
 1.3335
  
Implied shares of Colony common stock issued in consideration 129,920
 137,456
 267,376
Price per share of Colony class A common stock $21.52
 $21.52
 $21.52
Fair value of implied shares of Colony common stock issued in consideration $2,795,890
 $2,958,039
 $5,753,929
Fair value of Colony NorthStar preferred stock issued(iii)
 —
 1,010,320
 1,010,320
Fair value of NRF stock owned by NSAM (iv)
 (43,795) —
 (43,795)
Total merger consideration $2,752,095
 $3,968,359
 $6,720,454
__________
(i)Represents the portion of non-employee restricted stock unit awards that did not vest upon consummation of the Merger and pertains to services rendered prior to the Merger.
(ii)Represents (a) the pre-determined exchange ratio of one share of Colony common stock for 1.4663 shares of Colony NorthStar common stock; and (b) the derived exchange ratio of one share of Colony common stock for 1.3335 shares of NRF common stock based on the pre-determined exchange ratio of one NRF share of common stock for 1.0996 shares of Colony NorthStar common stock.
(iii)Fair value of Colony NorthStar preferred stock issued was measured based on the shares of NRF preferred stock outstanding at the Closing Date and the closing traded price of the respective series of NRF preferred stock on the Closing Date, including accrued dividends, as follows:

(In thousands, except price per share) Number of Shares Outstanding Price Per Share Fair Value
NRF preferred stock      
Series A 8.75% 2,467
 $25.61
 $63,182
Series B 8.25% 13,999
 25.15
 352,004
Series C 8.875% 5,000
 25.80
 128,995
Series D 8.50% 8,000
 25.82
 206,597
Series E 8.75% 10,000
 25.95
 259,542
Fair value of Colony NorthStar preferred stock issued 39,466
   $1,010,320

(iv)Represents 2.7 million shares of NRF common stock owned by NSAM prior to the Merger and canceled upon consummation of the Merger, valued at the closing price of NRF common stock of $16.13 on the Closing Date.
The following table presents a preliminary allocation of the merger consideration to assets acquired, liabilities assumed and noncontrolling interests of NSAM and NRF based on their respective estimated fair values as of the Closing Date. The resulting goodwill represents the value expected from the economies of scale and synergies created through combining the operations of the merged entities, and is assigned to the investment management segment.
The estimated fair values and allocation of the merger consideration presented below are preliminary and based on information available as of the Closing Date as the Company continues to evaluate the underlying inputs and assumptions. Accordingly, these preliminary estimates are subject to adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the Closing Date. During the third quarter of 2017, adjustments were made to the valuation and underlying assumptions pertaining to certain NRF real estate and related assets and liabilities, NRF equity method investment, and the off-market component of the management agreement, including the corresponding effect of these adjustments on noncontrolling interests in investment entities, as applicable.

  As Reported at June 30, 2017 Measurement Period Adjustments As Reported at September 30, 2017
(In thousands) NSAM NRF Total NSAM NRF Total
Assets            
Cash and cash equivalents $152,858
 $107,751
 $260,609
 $—
 $—
 $260,609
Restricted cash 18,052
 158,762
 176,814
 —
 —
 176,814
Real estate —
 9,895,252
 9,895,252
 —
 (20,340) 9,874,912
Loans receivable 28,485
 331,056
 359,541
 —
 —
 359,541
Investments in unconsolidated ventures 76,671
 588,368
 665,039
 —
 (900) 664,139
Securities 3,065
 433,850
 436,915
 —
 —
 436,915
Identifiable intangible assets 661,556
 354,643
 1,016,199
 —
 (2,907) 1,013,292
Management agreement between NSAM and NRF 1,576,253
 —
 1,576,253
 (20,423) —
 1,555,830
Assets held for sale —
 2,096,671
 2,096,671
 —
 —
 2,096,671
Other assets 93,455
 682,389
 775,844
 —
 (52) 775,792
Total assets 2,610,395
 14,648,742
 17,259,137
 (20,423) (24,199) 17,214,515
Liabilities            
Debt —
 6,723,222
 6,723,222
 —
 —
 6,723,222
Intangible liabilities —
 215,821
 215,821
 —
 (2,603) 213,218
Management agreement between NSAM and NRF —
 1,576,253
 1,576,253
 —
 (20,423) 1,555,830
Liabilities related to assets held for sale —
 1,281,406
 1,281,406
 —
 —
 1,281,406
Tax liabilities 169,387
 69,373
 238,760
 —
 —
 238,760
Accrued and other liabilities 979,969
 307,855
 1,287,824
 —
 (405) 1,287,419
Total liabilities 1,149,356
 10,173,930
 11,323,286
 —
 (23,431) 11,299,855
Redeemable noncontrolling interests 78,843
 —
 78,843
 —
 —
 78,843
Noncontrolling interests—investment entities —
 506,453
 506,453
 —
 (768) 505,685
Noncontrolling interests—Operating Company 8,162
 —
 8,162
 —
 —
 8,162
Fair value of net assets acquired $1,374,034
 $3,968,359
 $5,342,393
 $(20,423) $—
 $5,321,970
             
Merger consideration 2,752,095
 3,968,359
 6,720,454
 —
 —
 6,720,454
Goodwill $1,378,061
 $—
 $1,378,061
 $20,423
 $—
 $1,398,484
The Merger effectively resulted in the settlement of the pre-merger management agreement between NSAM and NRF. The terms of the management agreement were determined to be off-market when compared to the terms of similar management agreements of other externally managed mortgage and equity REITs. The off-market component was valued at $1.6 billion based on a discounted cash flow analysis using a discount rate of 10%, and recorded as an intangible asset attributed to NSAM and a corresponding intangible liability attributed to NRF, in each case as of the Closing Date. Upon settlement of the management agreement, the intangible asset and the corresponding intangible liability were eliminated. No net gain or loss was recognized by Colony NorthStar from the settlement.
Certain deferred tax liabilities were recognized in connection with the Merger, related primarily to NSAM's investment management contract intangible assets and basis differences in NRF's real estate assets in the United Kingdom arising from recording those assets at fair value on the Closing Date.
Fair value of other assets acquired, liabilities assumed and noncontrolling interests were estimated as follows:
Real Estate and Related Intangibles—Fair value is based on the income approach which includes a direct capitalization method, applying overall capitalization rates ranging between 4.4% and 12.5%. For real estate held for sale, fair value was determined based on contracted sale price or a sales comparison approach, adjusted for estimated selling costs. Real estate fair value was allocated to tangible assets such as land, building and leaseholds, tenant and land improvements as well as identified intangible assets and liabilities such as above- and below-market leases, below market ground lease obligations and in-place lease value. Useful lives of the intangibles acquired range from 6 to 90 years for ground lease obligations and 1 to 17 years for all other real estate related intangibles.
Loans Receivable—Fair value is determined by comparing the current yield to the estimated yield for newly originated loans with similar credit risk or the market yield at which a third party might expect to purchase such investment; or based on discounted cash flow projections of principal and interest expected to be collected, which

include consideration of borrower or sponsor credit, as well as operating results of the underlying collateral. For certain loans receivable considered to be impaired, their carrying value approximated fair value.
Investments in Unconsolidated Ventures—Fair value is based on timing and amount of expected future cash flows for income as well as realization events of the underlying assets of the investees, and for certain investments in funds, a proportionate share of its most recent net asset value.
Securities—Fair value is based on quotations from brokers or financial institutions that act as underwriters of the debt securities, third-party pricing service or discounted cash flows depending on the type of debt securities. Fair value of NorthStar Realty Europe Corp ("NRE") common stock is based on the closing stock price on the Closing Date.
Investment Management Related Intangible Assets—These consist primarily of management contracts, customer relationships, trade names and the broker-dealer license, including those related to an 84% interest acquired by NSAM in January 2016 in Townsend, which provides real estate investment management and advisory services. The fair value of management contracts represents the discounted excess earnings attributable to the future management fee income from in-place management contracts, with discount rates ranging between 8% and 10%. The management contracts have useful lives ranging from 2 years to 18 years.The fair value of customer relationships represents the potential fee income from repeat customers through future sponsored investment vehicles, with the useful lives of such vehicles ranging from 20 to 30 years. The trade names of NSAM and Townsend were valued as the discounted savings of royalty fees by applying a royalty rate of 1.5% and 2%, respectively, against expected fee income, and have useful lives of 20 years and 30 years, respectively. The fair value of NSAM's broker-dealer license represents the estimated cost of obtaining a license.
Debt—Fair value of exchangeable notes was determined based on unadjusted quoted prices in a non-active market. Fair value of mortgage and other notes payable was estimated by reviewing rates currently available with similar terms and remaining maturities. Fair value of securitization bonds payable was based on quotations from brokers or financial institutions that act as underwriters of the securitized bonds. Fair value of junior subordinated debt was based on unadjusted quotations from a third party valuation firm, with such quotes derived using a combination of internal valuation models, comparable trades in non-active markets and other market data.
Noncontrolling Interests—Fair value of noncontrolling interests in investment entities was estimated as their share of fair values of the net assets of the underlying investment entities, including any incentive distributions. The fair value of noncontrolling interests in Operating Company was determined based upon the closing price of Colony class A common stock multiplied by the number of OP Units assumed in the Merger, after applying the exchange ratio.
Merger-Related Costs
Merger-related costs include transactions costs consisting primarily of professional fees for legal, financial advisory, accounting and consulting services, and fees incurred on a bridge facility commitment that was terminated on the Closing Date. Merger-related costs also include costs incurred to transition and integrate the operations of the combined entity, including compensation costs and various administrative costs, such as system integration, lease termination and professional fees paid to third party advisors and consultants. Merger-related costs are expensed as incurred. Costs expensed by NSAM and NRF prior to the Closing Date are excluded from the Company's results of operations.
(In thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Merger-related costs:    
Transaction costs    
Fees to investment bankers contingent upon consummation of the Merger $—
 $66,800
Other fees 204
 18,502
  204
 85,302
Compensation expense    
Equity-based compensation for replacement awards to NSAM executives 30,336
 86,390
Severance and other employee transition 2,869
 23,803
  33,205
 110,193
Administrative expense 4,861
 11,080
  $38,270
 $206,575

Results of NSAM and NRF
The combined results of operations included contributions from the legacy business of NSAM and NRF as follows:
(In thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Total revenues $468,433
 $1,329,282
Net loss attributable to Colony NorthStar, Inc. (17,970) (43,947)
Pro Forma Financial Information (Unaudited)
The following table presents pro forma financial information of the Company as if the Merger had been consummated on January 1, 2016. The pro forma financial information includes the pro forma impact of purchase accounting adjustments primarily related to fair value adjustments and depreciation and amortization, and excludes Merger-related transaction costs of $0.2 million and $85.3 million for the three and nine months ended September 30, 2017, respectively. The pro forma financial information also gives effect to certain sales initiatives by NRF, cessation of the management agreement between NSAM and NRF, as well as a pay down of NSAM and NRF corporate borrowings. The pro forma financial information, however, does not reflect any potential benefits that may result from realization of future cost savings from operating efficiencies, or other incremental synergies expected to result from the Merger.
The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of the Company had the Merger been completed on January 1, 2016, nor indicative of future results of operations of the Company.
  Nine months ended September 30,
(In thousands, except per share data) 2017 2016
Pro forma:    
Total revenues $2,103,134
 $1,971,733
Net income (loss) attributable to Colony NorthStar, Inc. 270,322
 (192,288)
Net income (loss) attributable to common stockholders 165,124
 (291,532)
Earnings (loss) per common share:    
Basic $0.31
 $(0.53)
Diluted $0.31
 $(0.53)
Restructuring of Real Estate Loans into Equity Ownership
In the normal course of business, the Company may foreclose on the underlying asset in settlement of its loan receivable or otherwise undertake various restructuring measures in connection with its investments.
CPI Group
On January 25, 2017, the Company and its joint venture partners, through a consolidated investment venture of the Company, acquired a controlling equity interest in a defaulted borrower, a real estate investment group in Europe ("CPI") in connection with a restructuring of the CPI group. Certain entities within the CPI group were in receivership proceedings at the time of the restructuring. The Company acquired CPI's real estate portfolio, consisting of hotels, offices and mixed-use properties, and assumed the underlying mortgage debt, some of which were in payment default, including maturity default. Certain CPI employees responsible for asset and property management became employees of the Company. As a result of the acquisition, the Company's outstanding loans receivable to CPI were deemed to be effectively settled at their carrying value and formed part of the consideration transferred.
The following table summarizes the consideration and preliminary allocation to assets acquired and liabilities assumed. The estimated fair values and preliminary purchase price allocation were based on information available at the time of acquisition and the Company continues to evaluate the underlying inputs and assumptions. Accordingly, these preliminary estimates are subject to retrospective adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of acquisition. During the third quarter of 2017, adjustments were made to the valuation and underlying assumptions pertaining to real estate and related assets, debt and estimation of tax liabilities.

(In thousands) 
As Reported
At June 30, 2017
 Measurement Period Adjustments 
As Reported
At September 30, 2017
Consideration      
Carrying value of loans receivable outstanding at the time of restructuring $182,644
 $—
 $182,644
Cash 49,537
 —
 49,537
Total consideration $232,181
 $—
 $232,181
Identifiable assets acquired and liabilities assumed      
Cash $303
 $—
 $303
Real estate 539,350
 5,057
 544,407
Real estate held for sale 26,263
 (4,658) 21,605
Lease intangibles and other assets 39,967
 —
 39,967
Debt (274,387) (3,203) (277,590)
Tax liabilities (36,079) 3,141
 (32,938)
Lease intangibles and other liabilities (60,448) (337) (60,785)
Liabilities related to assets held for sale (2,788) —
 (2,788)
Fair value of net assets acquired $232,181
 $—
 $232,181
Fair value of assets acquired and liabilities assumed were estimated as follows:
Real Estate and Related Intangibles—Fair value of real estate is based upon a discounted cash flow analysis with a weighted average discount rate of 6.6% or direct capitalization analysis with weighted average capitalization rate of 13.5%. For real estate held for sale, fair value was determined based upon a sales comparison approach, adjusted for estimated selling costs. Real estate fair value was allocated to tangible assets of land, building and tenant and site improvements and identified intangibles, such as above- and below-market leases and in-place lease values.
Debt—Fair value of debt is estimated by discounting expected future cash outlays at interest rates currently available for instruments with similar terms and remaining maturities, applying discount rates ranging between 1.25% and 3.6%, with such debt fair values not exceeding the fair value of their underlying collateral, or estimated based upon expected payoff amounts.
Results of operations of CPI as included in the Company's consolidated statement of operations were as follows:
(In thousands) Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Total revenues $11,723
 $32,151
Net loss attributable to Colony NorthStar, Inc. (561) (3,138)
THL Hotel Portfolio
In May 2013, the Company and certain investment vehicles managed by the Company participated in the refinancing of a limited service hospitality portfolio, primarily located across the Southwest and Midwest U.S. (the "THL Hotel Portfolio"), through the origination of a junior and senior mezzanine loan. On July 1, 2017, the Company and certain investment vehicles managed by the Company took control of the THL Hotel Portfolio of 148 limited service hotels through a consensual foreclosure following a maturity default by the borrower on the Company's outstanding junior mezzanine loan. Through the consensual foreclosure, the Company assumed the borrower's in-place hotel management contracts with third party operators, which were determined to be at market, the borrower's in-place franchise obligations, primarily with Marriott, as well as the borrower's outstanding senior mortgage debt and senior mezzanine debt.
The consideration for the consensual foreclosure consisted of the following:
Carrying value of the Company’s junior mezzanine loan to the borrower which is considered to be effectively settled upon the consensual foreclosure;
Cash to pay down principal and accrued interest on the borrower’s senior mortgage and senior mezzanine debt to achieve a compliant debt yield, and payment of an extension fee to exercise an extension option on the senior mortgage debt; and
In consideration of the former preferred equity holder of the borrower providing certain releases, waivers and covenants to and in favor of the Company and certain investment vehicles managed by the Company in executing the consensual foreclosure, the former preferred equity holder is entitled to an amount up to $13.0

million based on the performance of the THL Hotel Portfolio, subject to meeting certain repayment and return thresholds to the Company (and certain investment vehicles managed by the Company).
The following table summarizes the consideration and preliminary allocation to assets acquired and liabilities assumed. The estimated fair values and preliminary purchase price allocation were based on information available at the time of acquisition and the Company continues to evaluate the underlying inputs and assumptions. Accordingly, these preliminary estimates are subject to retrospective adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of acquisition.
(In thousands) July 1, 2017
Consideration  
Carrying value of the Company's junior mezzanine loan receivable at the time of foreclosure $310,932
Cash 43,643
Contingent consideration (Note 13) 6,771
Total consideration $361,346
Identifiable assets acquired and liabilities assumed  
Cash $16,188
Real estate 1,190,613
Real estate held for sale 69,099
Intangible and other assets 37,031
Debt (907,867)
Other liabilities (43,718)
Fair value of net assets acquired $361,346
Fair value of assets acquired and liabilities assumed were estimated as follows:
Real Estate and Related Intangibles—Fair value of real estate was based on a combination of the cost, income and market approaches which applies capitalization rates between 7.0% and 11.5% (weighted average rate of 11.1%) as well as discount rates between 8.3% and 13.0% (weighted average rate of 9.5%), and also considers future capital expenditure needs of the hotels. For real estate held for sale, fair value was determined based on a sales comparison approach, adjusted for estimated selling costs. Real estate fair value was allocated to tangible assets of land, building, site improvements and furniture, fixtures and equipment as well as identified intangibles for below-market ground lease obligations.
Debt—The assumed senior mortgage and senior mezzanine debt had carrying values that approximated fair values based on current market rates and recent rates on the Company's refinancing of its other hotel portfolios.
Results of operations of the THL Hotel Portfolio as included in the Company's consolidated statement of operations and in other equity and debt segment for segment reporting were as follows:
(In thousands) Three and Nine Months Ended September 30, 2017
Total revenues $105,065
Net income attributable to Colony NorthStar, Inc. 2,690
4. Real Estate
The Company's real estate, including foreclosed properties, were as follows:
(In thousands) September 30, 2017 December 31, 2016
Land and improvements $2,297,586
 $764,365
Buildings, building leaseholds and improvements 11,938,562
 2,559,682
Tenant improvements 128,998
 87,643
Furniture, fixtures and equipment 360,279
 7
Construction in progress 86,747
 8,856
  14,812,172
 3,420,553
Less: Accumulated depreciation (457,631) (176,922)
Real estate assets, net $14,354,541
 $3,243,631

Real Estate Sales
Results from sales of real estate were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Proceeds from sales of real estate $366,456
 $119,294
 $1,340,059
 $344,271
Gain on sale of real estate 72,541
 11,151
 96,701
 68,114
Real estate sold through the nine months ended September 30, 2017 and 2016 did not constitute discontinued operations, other than the sale of a manufactured housing portfolio acquired through the Merger and certain properties in the THL Hotel Portfolio which qualified as held for sale upon acquisition, as discussed in Note 17.
Real estate held for saleBRSP at September 30, 2017 is presented in Note 9.2021 (47.9 million at December 31, 2020).
Real Estate Acquisitions
The following table summarizes the Company's real estate acquisitions, excluding real estate acquired as part(2)    Includes unrealized carried interest of business combinations discussed in Note 3.
($ in thousands)     Purchase Price Allocation
 Acquisition Date Property Type and Location Number of Buildings 
Purchase
Price (1)
 Land and Improvements Building and Improvements Lease Intangible Assets Lease Intangible Liabilities
Nine Months Ended September 30, 2017 (2)
          
Asset Acquisitions            
 January Industrial—Spain 2 $10,374
 $3,855
 $5,564
 $955
 $—
 June 
Office—California, U.S.(3)
 1 455,699
 93,577
 314,590
 50,518
 (2,986)
 Various Light industrial—Various in U.S. 52 603,591
 129,093
 449,021
 29,745
 (4,268)
     
 $1,069,664
 $226,525
 $769,175
 $81,218
 $(7,254)
Year Ended December 31, 2016          
Business Combinations (4)
            
 January Industrial—Spain 23 $94,403
 $33,265
 $56,585
 $5,318
 $(765)
 April 
Industrial—Massachusetts, U.S. (5)
 1 34,900
 5,235
 27,731
 1,934
 —
 May Office—France 1 18,203
 14,150
 3,815
 388
 (150)
 Various Light industrial—Various in U.S. 18 201,635
 36,974
 151,689
 16,063
 (3,091)
Asset Acquisitions            
 Various Light industrial—Various in U.S. 12 113,200
 20,749
 84,724
 8,398
 (671)
     
 $462,341
 $110,373
 $324,544
 $32,101
 $(4,677)
__________
(1)
Dollar amounts of purchase price and allocation to assets acquired and liabilities assumed are translated based on foreign exchange rates as of respective dates of acquisition, where applicable. Transaction costs are included in purchase price for asset acquisitions and excluded for business combinations.
(2)
Useful life of real estate acquired in 2017 ranges from 26 to 39 years for buildings, 3 to 11 years for improvements and 2 to 14 years for other lease intangibles.
(3)
In September 2017, 90% of equity in the property holding entity was syndicated to third party investors. The new equity partners were granted certain participation rights in the business, resulting in a deconsolidation of the investment. The Company's remaining interest is reflected as an equity method investment.
(4)
Prior to the adoption of the new definition of a business effective October 1, 2016, real estate acquisitions with existing leases generally met the definition of a business combination.
(5)
Real estate was sold in August 2016.

Depreciation and Impairment
Depreciation expense and impairment loss recognized on real estate were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Depreciation on real estate $121,886
 $27,005
 $328,756
 $81,373
Impairment loss on real estate held for investment 1,756
 —
 11,507
 —
Impairment loss on real estate held for sale 13,256
 941
 24,786
 5,141
Property Operating Income
The components of property operating income were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Rental income $172,846
 $69,120
 $491,459
 $206,173
Tenant reimbursements 36,764
 17,637
 102,533
 48,467
Resident fee income (1)
 75,882
 —
 216,414
 —
Hotel operating income 328,173
 5,748
 730,644
 24,830
  $613,665
 $92,505
 $1,541,050
 $279,470
__________
(1)
Healthcare properties that operate through management agreements with independent third-party operators through structures permitted by the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) permits us, through a TRS, to have direct exposure to resident fee income and incur customary related operating expenses.
Future Minimum Rents
The Company has operating leases with tenants that expireapproximately $82.0 million at various dates through 2070. Future contractual minimum rental payments to be received under noncancelable operating leases for real estate held for investment as of September 30, 2017 are as follows:
Year Ending December 31, (In thousands)
Remaining 2017 $136,149
2018 512,293
2019 467,725
2020 424,354
2021 359,927
2022 and after 1,431,535
Total (1)
 $3,331,983
__________
(1)
Excludes hotel operating income, as well as resident fee income from healthcare properties and rental income from multifamily properties, both of which are subject to short-term leases.
Commitments2021 and Contractual Obligations
Purchase Commitments—At September 30, 2017, the Company had$12.7 million at December 31, 2020, a depositportion of $0.2 million and a remaining unfunded purchase commitment of $8.3 million for the acquisition of one building in Las Vegas in the Industrial segment.
Guarantee Agreements—In connectionwhich is shared with certain hotel properties acquired through the Merger, the Company entered into guarantee agreements with various hotel franchisors, pursuant to which the Company guaranteed the payment of its obligations as a franchisee, including payments of franchise fees and marketing fees for the term of the agreements, which expire between 2025 and 2030. At September 30, 2017, the Company did not have any obligations under these guarantees.employees.
Ground Lease Obligation—In connection with real estate acquisitions, the Company assumed certain noncancelable operating ground leases as lessee or sublessee with expiration dates between 2019 and 2252. Rents on certain ground leases are paid directly by the tenants or operators. Ground rent expense, including contingent rent, was $2.3 million and $0.1 million for the three months ended September 30, 2017 and 2016, respectively, and $4.5 million and $0.3 million for the nine months ended September 30, 2017 and 2016, respectively.

At September 30, 2017, future minimum rental payments on noncancellable ground leases, excluding any contingent rent payments, on real estate held for investment were as follows.
Year Ending December 31, (In thousands)
Remaining 2017 $1,592
2018 6,493
2019 6,427
2020 6,466
2021 6,545
2022 and after 158,705
Total (1)
 $186,228
__________
(1)
Includes automatically-renewed ground leases related to the Company's hotel properties.
Impact of Hurricanes
A small number of the Company's properties were affected by Hurricanes Harvey and Irma in the third quarter of 2017, as follows:
Healthcare—Certain medical office buildings and net lease properties in Texas and Florida suffered some physical damage, resulting in the closure of one hospital in Texas, which is expected to re-open in December 2017. The Company's senior housing operating facilities, however, experienced only minor damage.
Industrial—The impact to properties in the Industrial segment was immaterial.
Hospitality—In our core hotel portfolio, there was only minor damage and business interruption to a small number of our hotels. Business interruption losses were fully offset by incremental revenue from hurricane-related demand.
Other Equity and Debt—Twenty-five non-core hotels in the THL Hotel Portfolio in Texas, Florida and Georgia suffered varying degrees of damage, with certain hotels experiencing business interruption. One hotel in Florida was forced to close and is expected to re-open in January 2018.
The Company has insurance policies that provide coverage for property damage and business interruption, subject to deductibles. Based upon claims filed and management's estimates as of September 30, 2017, the Company recognized $1.4 million of impairment loss in aggregate for damage on its properties, after taking into consideration $8.2 million of anticipated insurance recoveries for property damage. As of September 30, 2017, the Company is still assessing the estimated business interruption losses affecting certain hotels in its THL Hotel Portfolio. While the Company believes that, through its insurance policies, losses above and beyond its deductible will be recoverable, there can be no assurance that such insurance will be sufficient to compensate the Company for all lost revenue and expenses incurred.
5. Loans Receivable
The following table provides a summary of the Company’s loans held for investment:
  September 30, 2017 December 31, 2016
(Dollars in thousands) Unpaid Principal Balance 
Carrying
Value
 
Weighted
Average
Coupon
 Weighted Average Maturity in Years Unpaid Principal Balance 
Carrying
Value
 
Weighted
Average
Coupon
 Weighted Average Maturity in Years
Non-PCI Loans                
Fixed rate                
Mortgage loans $1,029,753
 $1,027,935
 9.0% 3.1 $894,232
 $881,755
 9.0% 3.5
Securitized loans (1)
 42,686
 43,924
 6.1% 16.1 105,586
 107,609
 6.4% 15.4
Mezzanine loans 435,095
 431,933
 11.9% 2.6 372,247
 369,207
 12.3% 2.8
Corporate loans 47,343
 47,039
 9.9% 10.2 —
 —
 —% —
  1,554,877
 1,550,831
     1,372,065
 1,358,571
    
Variable rate                
Mortgage loans 581,254
 588,259
 7.2% 1.4 494,797
 487,651
 8.2% 0.8
Securitized loans (1)
 576,153
 576,877
 6.3% 3.1 775,963
 776,156
 5.7% 2.7
Mezzanine loans 34,391
 34,258
 9.6% 1.5 348,035
 347,469
 11.2% 0.6
  1,191,798
 1,199,394
     1,618,795
 1,611,276
    
  2,746,675
 2,750,225
     2,990,860
 2,969,847
    
PCI Loans                
Mortgage loans 1,939,757
 748,247
     748,930
 521,905
    
Securitized mortgage loans 23,313
 3,390
     8,146
 6,836
    
Mezzanine loans 7,425
 3,671
     —
 —
    
  1,970,495
 755,308
     757,076
 528,741
    
Allowance for loan losses 

 (49,631)     

 (67,980)    
Loans receivable, net $4,717,170
 $3,455,902
     $3,747,936
 $3,430,608
    
__________
(1)
Represents loans transferred into securitization trusts that are consolidated by the Company (Note 14).
Nonaccrual and Past Due Loans
Non-PCI loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. The following table provides an aging summary of non-PCI loans held for investment at carrying values before allowance for loan losses.
 (In thousands) Current or Less Than 30 Days Past Due  30-59 Days Past Due  60-89 Days Past Due  90 Days or More Past Due and Nonaccrual  Total Non-PCI Loans
September 30, 2017$2,558,938
 $990
 $—
 $190,297
 $2,750,225
December 31, 20162,912,023
 7,379
 1,172
 49,273
 2,969,847
Troubled Debt Restructuring
The following table provides a summary of non-PCI loan modifications classified as TDRs, in which the Company provided the borrowers, who are experiencing financial difficulties, with various concessions in interest rates, payment terms or default waivers. There were no loans modified as TDRs in the nine months ended September 30, 2017.
(Dollars in thousands) Nine Months Ended September 30, 2016
Loans modified as TDRs during the period:  
Number of loans 1
Carrying value of loans before allowance for loan losses $37,611
Loss incurred $1,687
At September 30, 2017 and December 31, 2016, carrying value of TDR loans before allowance for loan losses was $66.3 million and $66.2 million, respectively. These TDR loans were not in default post-modification. As of September 30, 2017, the Company has no additional commitments to lend to borrowers with TDR loans.

Non-PCI Impaired Loans
Non-PCI loans are identified as impaired when it is no longer probable that interest or principal will be collected according to the contractual terms of the original loan agreement. Non-PCI impaired loans include predominantly loans under nonaccrual, performing and nonperforming TDRs. The following table summarizes non-PCI impaired loans:
  Unpaid Principal Balance Gross Carrying Value Allowance for Loan Losses
(In thousands)  With Allowance for Loan Losses Without Allowance for Loan Losses Total 
September 30, 2017 $293,319
 $124,288
 $171,641
 $295,929
 $7,926
December 31, 2016 116,881
 56,650
 60,025
 116,675
 6,287
The average carrying value and interest income recognized on non-PCI impaired loans were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Average carrying value before allowance for loan losses $201,600
 $104,000
 $156,450
 $83,891
Total interest income recognized 2,546
 —
 4,343
 —
Purchased Credit-Impaired Loans
PCI loans are acquired loans with evidence of credit quality deterioration for which it is probable at acquisition that the Company will collect less than the contractually required payments.
In January 2017, the Company acquired additional PCI loans through the Merger as well as part of a loan portfolio secured by commercial properties in Ireland. Information about these PCI loans at the time of their acquisition is presented below:
(In thousands) January 2017
Contractually required payments including interest $1,154,596
Less: Nonaccretable difference (878,257)
    Cash flows expected to be collected 276,339
Less: Accretable yield (23,594)
    Fair value of loans acquired $252,745
Changes in accretable yield of PCI loans were as follows:
  Nine Months Ended September 30,
(In thousands) 2017 2016
Beginning accretable yield $52,572
 $66,639
Additions 23,594
 6,595
Changes in accretable yield 26,008
 21,228
Accretion recognized in earnings (46,426) (50,012)
Effect of changes in foreign exchange rates 2,217
 105
Ending accretable yield $57,965
 $44,555
At September 30, 2017 and December 31, 2016, the Company applied either the cash basis or cost recovery method for recognition of interest income on PCI loans with carrying value before allowance for loan losses of $195.5 million and $32.0 million, respectively, as the Company did not have reasonable expectations of the timing and amount of future cash receipts on these loans.
Allowance for Loan Losses
The allowance for loan losses and related carrying values of loans held for investment were as follows:
  September 30, 2017 December 31, 2016
(In thousands) Allowance for Loan Losses Carrying Value Allowance for Loan Losses Carrying Value
Non-PCI loans $7,926
 $124,288
 $6,287
 $56,650
PCI loans 41,705
 217,055
 61,693
 243,155
  $49,631
 $341,343
 $67,980
 $299,805

Changes in allowance for loan losses is presented below:
  Nine Months Ended September 30,
(In thousands) 2017 2016
Allowance for loan losses at January 1 $67,980
 $35,187
Provision for loan losses 12,907
 17,271
Charge-off (31,256) (1,066)
Allowance for loan losses at September 30 $49,631
 $51,392
Included in provision for loan losses in the nine months ended September 30, 2017 was a recovery of $4.4 million of provision previously recorded on PCI loans. There was no such reversal in the nine months ended September 30, 2016.
Lending Commitments
The Company has lending commitments to borrowers pursuant to certain loan agreements in which the borrower may submit a request for funding contingent on achieving certain criteria, which must be approved by the Company as lender, such as leasing, performance of capital expenditures and construction in progress with an approved budget. At September 30, 2017, assuming the terms to qualify for future fundings, if any, have been met, total unfunded lending commitments was $137.6 million, of which the Company's share was $71.0 million, net of amounts attributable to noncontrolling interests.
6. Investments in Unconsolidated Ventures
The Company'sequity investments in unconsolidated ventures represent noncontrolling equity interests in various entities, as follows:
(In thousands) September 30, 2017 December 31, 2016
Equity method investments    
Investment ventures $1,118,537
 $933,262
Private funds and retail companies 23,638
 19,997
  1,142,175
 953,259
Cost method investments    
Investment venture 89,261
 99,736
Private fund and retail companies 26,882
 —
  116,143
 99,736
Investments under fair value option    
Private funds 287,886
 —
Investment ventures 26,388
 —
  314,274
 —
  $1,572,592
 $1,052,995
Investments in unconsolidated ventures acquiredprimarily BRSP, interests in the Merger were recorded at fair value atCompany's sponsored digital investment vehicles, and marketable securities held largely by private open-end digital funds sponsored and consolidated by the Closing Date. Any difference between the Company's carrying value of an equity method investment and the Company's proportionate share of historical carrying value of the underlying net assets of the equity method investee represents a basis difference. Any basis difference not attributed to goodwill is amortized over the remaining weighted average useful life of the underlying identifiable assets of each acquired equity method investment, recorded in earnings from investments in unconsolidated ventures.Company.
Equity Method Investments
CertainFor equity method investments, are structured as joint ventures with one or more private funds or other investment vehicles managed by the Company, or with third party joint venture partners. These investment ventures are generally capitalized through equity contributions from the members and/or leveraged through various financing arrangements.
The assetsliabilities of the equity method investment entities may only be used to settlesettled using the liabilitiesassets of these entities and there is no recourse to the general credit of the Company nor the other investors for the obligations of these investment entities. Neither theThe Company nor the other investors areis not required to provide financial or other support in excess of theirits capital commitments, except for the Company's distribution support obligations to retail companies, as discussed below.

The Company’swhere applicable, and its exposure to the investment entities is limited to its investment balance.
The Company evaluates its equity method investment balanceinvestments for other-than-temporary impairment ("OTTI") at each reporting period. Other than BRSP, OTTI was recorded only on equity method investments held for disposition, as ofdiscussed in Note 11.
BRSP
The Company owns a 29% interest in BRSP at September 30, 2017 and2021 (36.4% at December 31, 2016, respectively.
The Company’s investments2020), accounted for under the equity method are summarized below:as it exercises significant influence over BRSP's operating and financial policies through its substantial ownership interest. The following discussion encompasses all of the Company's interest in BRSP, including such interest held by NRF Holdco that is presented as held for disposition and discontinued operations.
(Dollars in thousands)   
Ownership Interest (1)
 Carrying Value
Investments Description September 30, 2017 September 30, 2017 December 31, 2016
Starwood Waypoint Homes Common equity in operating company of single family residential REIT —% $—
 $316,113
Colony American Finance Common equity in specialty finance company that lends to owners of single family homes for rent —% —
 57,754
NorthStar Realty Europe Corp Common equity in publicly traded REIT managed by the Company(2)8.9% 63,075
 —
RXR Realty Common equity in investment venture with a real estate owner, developer and investment manager(2)27.2% 103,510
 —
Preferred equity Preferred equity investments with underlying real estate(3)Various 432,937
 188,255
ADC investments Investments in acquisition, development and construction loans in which the Company participates in residual profits from the projects, and the risk and rewards of the arrangements are more similar to those associated with investments in joint ventures(4)Various 330,160
 271,649
Private funds and retail companies GP interests in Company sponsored private funds, LP interest in third-party sponsored private fund, as well as seed capital in investment companies(5)Various 23,638
 19,997
Other investment ventures Interests in 16 investments, each with less than $62 million carrying value at September 30, 2017 Various 188,855
 99,491
      $1,142,175
 $953,259
__________
(1)The Company's ownership interest represents capital contributed to date and may not be reflective of the Company's economic interest in the entity because of provisions in operating agreements governing various matters, such as classes of partner or member interests, allocations of profits and losses, preferential returns and guaranty of debt. Each equity method investment has been determined to be either a VIE for which the Company was not deemed to be the primary beneficiary or a voting interest entity in which the Company does not have the power to control through a majority of voting interest or through other arrangements.
(2)The Company has significant influence over the investees through its voting rights and/or representation on the investees' board of directors or equivalent committee.
(3)For one investment where the Company has 75% ownership at September 30, 2017, the minority member has control over day-to-day operations of the investment venture, therefore, the Company does not control but has significant influence over the investment venture through its majority interest. Some preferred equity investments may not have stated ownership interest.
(4)Ownership interests generally range between 34% to 50%. Certain ADC investments have residual profit participation without a stated ownership interest.
(5)Consists of (i) immaterial general partner ("GP") interests in private funds between 0.1% to 2.1%, (ii) 15% limited partner ("LP") interest in a private fund in which the Company has an equity method investment in the sponsor and (iii) seed capital for a 50% interest in investment companies.
Starwood Waypoint Homes (formerly known as Colony Starwood Homes; NYSE: SFR)Disposition—In connection withAugust 2021, the Company sold 9,487,500 BRSP shares through a secondary offering of common shares in March 2017 by SFR, the Company sold approximately 7.6 million sharesBRSP for net proceeds of $239.1 million. In June 2017,approximately $81.8 million, after underwriting discounts. A net gain was recognized in equity method earnings within continuing operations of $7.6 million (including a proportion of basis difference associated with the Company sold its remaining 7.5 millionBRSP shares for net proceeds of $261.4 million. The Company recognized total gains of $191.2 million from the sales, which is included in earnings from investments in unconsolidated ventures.disposed, as discussed below).
Colony American FinanceOTTI—The Company solddetermined there was no OTTI on its entire 17.4% ownership interestinvestment in July 2017, with immaterial income statement impact resulting from the sale transaction.
NorthStar Realty Europe Corp—BRSP in 2021. At September 30, 2017,2021, the Company owned 4.9 million shares of NRE common stock or an 8.9% ownership interest, with approximately 4.7 millionfair value of the shares acquiredCompany's investment in BRSP, based upon its closing stock price of $9.39 per share, was in excess of its carrying value. In the second quarter of 2017. Prior to May 2017,2020, the Company accountedhad determined that its investment in BRSP was other-than-temporarily impaired and recorded an impairment charge, included in equity method losses, of $274.7 million, measured as the excess of carrying value of its investment in BRSP over market value of $336.5 million based upon BRSP's closing stock price of $7.02 per share on June 30, 2020.
Basis Difference—The impairment charges recorded by the Company on its investment in BRSP in 2020 and 2019 resulted in a basis difference between the Company's carrying value of its investment in BRSP (based upon BRSP's share price at the time of impairment) and the Company's proportionate share of BRSP's book value of equity at the time of impairment. The impairment charges were applied to the Company's investment in BRSP as a whole and were not determined based upon an impairment assessment of individual assets held by BRSP. Therefore, the impairment charges were generally allocated on a relative fair value basis across BRSP's various investments. Accordingly, for its previously immaterial interest in NREany subsequent resolutions or write-downs taken by BRSP on these investments, the Company's share thereof is not recorded as an investment in marketable equity securities.
Cost Method Investments
Investments that do not qualify for equity method accounting and for which fair value optionloss but is not elected are accounted for under the cost method, as follows:

Investment Ventures—The Company funded $50 million to an investor consortium, alongside $50 million from a passive co-investment partner, in common stock of a supermarket chain. Dividends of $10.3 million were received in June 2017 as a return of capital and applied to reduce the costbasis difference until such time the basis difference in
22
Table of investment.Contents
Retail Companies—
connection with the respective investments has been fully eliminated. Upon resolution of these investments by BRSP or upon the Company's disposition of its shares in BRSP, the basis difference related to resolved investments or the proportion of basis difference associated with the BRSP shares disposed is applied to calculate the Company's share of net gain or loss resulting from such resolution or disposition. The Company has immaterial interests in its sponsored non-traded REITs, NorthStar Income I, NorthStar Income II, NorthStar Healthcare Income, Inc. ("NorthStar Healthcare") and NorthStar/RXR New York Metro Real Estate, Inc. ("NorthStar/RXR NY Metro").
Private Funds—This represents immaterial limited partnership interests in a private real estate fund sponsored by an equity method investee of the Company.
Investments under Fair Value Option
The Company elected the fair value option to account for its limited partnership interests, which range from 0.1% to 22.2%, in third-party sponsored funds acquired through the Merger, as well as equity method investments in certain investment ventures. The Company records earnings from these investments based on a change in fair value ofincreased its share of projected future cash flows. Unrealized gainsnet earnings or reduced its share of net losses on changes in fair value of these investments is presented in Note 13.
Investmentfrom BRSP by $41.4 million and Other Commitments
Investment Ventures—Pursuant to$21.9 million for the operating agreements of certain unconsolidated ventures, the venture partners may be required to fund additional amounts for future investments, unfunded lending commitments, ordinary operating costs, guaranties or commitments of the venture entities. The Company also has lending commitments under ADC arrangements which are accounted for as equity method investments. Atthree months ended September 30, 2017, the Company’s share of these commitments was $45.0 million.
Private Funds—At September 30, 2017, the Company had unfunded commitments of $121.82021 and 2020, respectively, and $100.5 million and $17.5$49.8 million to Company-sponsored funds that are not consolidated and third party-sponsored funds, respectively, including a private real estate fund sponsored by an equity method investee offor the Company.
Retail Companies—The Company has committed to purchase up to $10.0 million in shares of common stock of its retail companies, which consist of non-traded REITs and investment companies, during the period from when each offering was declared effective through the end of their respective offering period, in the event that distributions to their stockholders, on a quarterly basis, exceed certain measures of operating performance. In addition, the Company committed up to $10.0 million to provide as distribution support in future sponsored retail companies, up to a total of five new companies per year. At September 30, 2017, the Company's remaining unfunded commitments to certain of the retail companies totaled $15.8 million.
7. Securities
The following table summarizes the Company's investment in debt securities classified as available for sale and equity securities held by a consolidated fund that are accounted for at fair value through earnings.
    Gross Cumulative Unrealized  
(in thousands) Amortized Cost Gains Losses Fair Value
September 30, 2017        
Available for sale debt securities:        
CRE securities of consolidated N-Star CDOs:(1)
        
CMBS $174,164
 $3,518
 $(8,619) $169,063
Other securities (2)
 59,379
 6,132
 (71) 65,440
N-Star CDO bonds (3)
 112,578
 4,814
 (10,127) 107,265
CMBS and other securities (4)
 39,796
 3,046
 (392) 42,450
  385,917
 17,510
 (19,209) 384,218
Equity securities of consolidated fund       24,445
  








$408,663
December 31, 2016        
Available for sale debt securities:        
CMBS $24,103
 $—
 $(657) $23,446

__________
(1) As of September 30, 2017, the carrying value of CDO bonds payable in consolidated N-Star CDOs is $189.9 million.
(2) Represents primarily agency debentures, and to a lesser extent, unsecured REIT debt and trust preferred securities.
(3)
Excludes $140.2 million principal amount of N-Star CDO bonds held by the Company in its consolidated CDOs that are eliminated upon consolidation.
(4)
Includes $20.6 million of CMBS held by a sponsored investment company, which as of September 30, 2017, is consolidated by the Company through its seed capital. Other securities include a trust preferred security and certain investments in other third party CDO bonds.
N-Star CDOs—The Company acquired, upon the Merger, NRF's legacy CDOs. NRF had sponsored CDOs, collateralized primarily by commercial real estate ("CRE") debt and CRE securities, of which two of the sponsored CRE securities CDOs are consolidated. Additionally, NRF had acquired the equity interests of CRE debt focused CDOs sponsored by third parties. These CDOs are collectively referred to as the N-Star CDOs.
At the time of issuance of the sponsored CDOs, NRF retained investment-grade subordinate bonds. NRF also retained equity interests in the form of preferred shares in all of its sponsored CDOs. Additionally, NRF repurchased CDO bonds originally issued to third parties at discounts to par. These repurchased CDO bonds and retained investment-grade subordinate bonds are collectively referred to as N-Star CDO bonds. All N-Star CDOs are past their reinvestment period and are amortizing over time as the underlying assets pay down or are sold.
CMBS and Other Securities—These securities are predominantly commercial mortgage-backed securities (“CMBS”), including investments in mezzanine positions.
At September 30, 2017, contractual maturities of CRE securities ranged from ten months to 35 years, with a weighted average expected maturity of 3.9 years.
Equity securities of consolidated fund—These are publicly traded equity securities held by a consolidated open-end fund. At September 30, 2017, these equity securities comprise listed stock predominantly in the U.S. and to a lesser extent, in the United Kingdom, and primarily in the financial, real estate and consumer sectors.
Disposition of Securities
Realized gains (losses) from sale of securities are recorded in other gain (loss), net, as follows:
(In thousands) Three Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2017
Available for sale debt securities:    
Proceeds from sale $—
 $24,788
Gross realized gain —
 567
     
Equity securities of consolidated fund:    
Realized loss, net (86) (86)
Impairment of AFS Securities
The following table presents AFS securities in a gross unrealized loss position:
  Less Than 12 Months
  September 30, 2017 December 31, 2016
(In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss
CRE securities of consolidated N-Star CDOs:        
CMBS $76,108
 $(8,619) $—
 $—
Other securities 17
 (71) —
 —
N-Star CDO bonds 70,061
 (10,127) —
 —
CMBS and other securities 19,512
 (392) 23,446
 (657)
There were no AFS securities in a gross unrealized loss position for more than 12 months. Any unrealized losses on securities acquired through the Merger were reset on the Closing Date.
For the three and nine months ended September 30, 2017,2021 and 2020, respectively, representing the Company recorded $7.2 millionbasis difference allocated to investments that were resolved or impaired by BRSP during these periods and $7.9 million, respectively, of OTTI lossthe basis difference proportionate to the Company's ownership in other gain (loss)BRSP that was disposed in the consolidated statements of operations due to an adverse change in expected cash flows, primarily on CMBS held by consolidated N-Star CDOs. With the exception of these securities, the Company does not intend to sell any of the AFS securities in a loss position and it is not likely that the Company will be

required to sell these securities prior to recovery of their amortized cost, which may be at maturity.August 2021. The Company believes that the remaining AFS securities with unrealized loss in accumulated other comprehensive income are not other than temporarily impairedbasis difference at September 30, 2017.2021 was $177.0 million.
Purchased Credit-Impaired Debt SecuritiesInvestment and Lending Commitments
Certain debt securities acquired bySponsored Funds—At September 30, 2021, the Company throughhas unfunded commitments of $116.7 million to the Merger were consideredCompany's sponsored funds in its flagship digital opportunistic strategy, Digital Colony Partners, LP ("DCP I") and Digital Colony Partners II, LP ("DCP II").
Loan Receivable—The Company's DataBank subsidiary has a lending commitment to be credit impaired at timea borrower, the funding of acquisition, withwhich is contingent on the following outstanding balance atborrower meeting certain criteria such as agreed upon benchmarks, financial and operating metrics and approved budgets. At September 30, 2017:2021, the unfunded lending commitment was $25.0 million, of which the Company's share was $5.0 million, net of amounts attributable to noncontrolling interests in investment entities.

(In thousands) September 30, 2017
Outstanding principal $440,602
Amortized cost 37,179
Carrying value 37,025
Information about these PCI debt securities upon acquisition is presented below:
(In thousands) January 2017
Contractually required payments including interest $565,755
Less: Nonaccretable difference (433,321)
    Cash flows expected to be collected 132,434
Less: Accretable yield (74,848)
    Fair value of PCI debt securities acquired $57,586
The table below presents changes in accretable yield related to these PCI debt securities:
(In thousands) Nine Months Ended September 30, 2017
Beginning accretable yield $—
Assumed through the Merger 74,848
Accretion recognized in earnings (2,321)
Reduction due to payoffs or disposals (8,784)
Net reclassifications from (to) nonaccretable difference (17,503)
Ending accretable yield $46,240

8.6. Goodwill, Deferred Leasing Costs and Other Intangibles
Goodwill
Goodwill associated with each of the Company's business combinationsbalance by reportable segment is attributed to the following reportable segments. Goodwill of $1.4 billion in the investment management segment arose from the Merger (Note 3), of which $0.2 billion is excluded below as it relates to the Townsend investment management business that is held for salefollows at September 30, 2017 (Note 9). The total goodwill amount below2021 and December 31, 2020.
(In thousands)
Balance by reportable segment:
Digital Investment Management (1)
$298,248 
Digital Operating463,120 
$761,368 
__________
(1)    Goodwill of $140.5 million is not expected to be deductible for income tax purposes.
(In thousands)September 30, 2017 December 31, 2016
Industrial$20,000
 $20,000
Investment management1,808,816
 660,127
 $1,828,816
 $680,127
No impairment was recognized on goodwill in connection with the industrial and investment management segments above during the nine months ended September 30, 2017 and 2016. However, impairment was recorded on the Townsend goodwill in the three months ended September 30, 2017, as discussed in Note 9.

Deferred Leasing Costs, Other Intangible Assets and Intangible Liabilities
The Company's deferredDeferred leasing costs otherand identifiable intangible assets and liabilities, excluding those related to assets held for disposition, are as follows.
September 30, 2021December 31, 2020
(In thousands)
Carrying Amount (Net of Impairment)(1)
Accumulated Amortization(1)
Net Carrying Amount(1)
Carrying Amount (Net of Impairment)(1)
Accumulated Amortization(1)
Net Carrying Amount(1)
Deferred Leasing Costs and Intangible Assets
Deferred leasing costs and lease-related intangible assets (2)
$1,144,710 $(215,224)$929,486 $1,046,095 $(81,547)$964,548 
Investment management intangibles (3)
164,188 (55,690)108,498 164,188 (35,405)128,783 
Customer relationships and service contracts (4)
218,080 (36,998)181,082 217,808 (13,546)204,262 
Trade names26,400 (9,621)16,779 41,900 (4,713)37,187 
Other (5)
6,818 (1,621)5,197 6,200 (220)5,980 
Total deferred leasing costs and intangible assets$1,560,196 $(319,154)$1,241,042 $1,476,191 $(135,431)$1,340,760 
Intangible Liabilities
Lease intangible liabilities (2)
$44,080 $(9,321)$34,759 $44,224 $(4,436)$39,788 
__________
(1)    For intangible assets and intangible liabilities recognized in connection with business combinations, purchase price allocations may be subject to adjustments during the measurement period, not to exceed 12 months from date of acquisition, based upon new information obtained about facts and circumstances that existed at time of acquisition. Amounts are as follows:presented net of impairments and write-offs.
23
Table of Contents

 September 30, 2017 December 31, 2016
(In thousands)
Carrying Amount (Net of Impairment)(1)
 Accumulated Amortization Net Carrying Amount 
Carrying Amount (Net of Impairment)(1)
 Accumulated Amortization Net Carrying Amount
Deferred Leasing Costs and Intangible Assets           
In-place lease values$240,520
 $(79,648) $160,872
 $149,301
 $(52,489) $96,812
Above-market lease values165,705
 (29,564) 136,141
 27,731
 (13,705) 14,026
Below-market ground lease obligations32,979
 (345) 32,634
 34,241
 (411) 33,830
Deferred leasing costs114,281
 (33,846) 80,435
 88,879
 (25,502) 63,377
Trade name (2)
79,700
 (2,327) 77,373
 15,500
 NA
 15,500
Investment management contracts397,980
 (57,763) 340,217
 39,646
 (25,400) 14,246
Customer relationships59,400
 (9,271) 50,129
 46,800
 (5,850) 40,950
Other (3)
56,162
 (1,465) 54,697
 —
 —
 —
Total deferred leasing costs and intangible assets$1,146,727
 $(214,229) $932,498
 $402,098
 $(123,357) $278,741
Intangible Liabilities           
Below-market lease values$224,834
 $(31,234) $193,600
 $30,507
 $(10,690) $19,817
Above-market ground lease obligations13,417
 (533) 12,884
 172
 (12) 160
Total intangible liabilities$238,251
 $(31,767) $206,484
 $30,679
 $(10,702) $19,977
(2)    Lease intangible assets are composed of in-place leases, above-market leases and tenant relationships. Lease-intangible liabilities are composed of below-market leases.
__________(3)    Composed of investment management contracts and investor relationships.
(1)
(4)    In connection with data center services provided in the colocation data center business.
(5)    Represents primarily the value of an acquired domain name and assembled workforce in an asset acquisition.
Impairment of Identifiable Intangible Assets
During the year ended December 31, 2020, an investment management contract was impaired by $3.8 million to a fair value of $4.0 million at the time of impairment. Fair value was based upon the revised future net cash flows over the remaining life of the contract, and represents fair value using Level 3 inputs. In 2021, impairment was recorded only on identifiable intangible assets held for disposition, as discussed in Note 11.
Amortization of Intangible Assets and Liabilities
For intangible assets and intangible liabilities recognized in connection with business combinations, purchase price allocations may be subject to adjustments during the measurement period, not to exceed one year from date of acquisition, based upon new information obtained about facts and circumstances that existed at time of acquisition.
(2)
The NSAM trade name is amortized over its useful life of 20 years, while Colony trade name is determined to have an indefinite useful life and not currently subject to amortization.
(3)
Represents primarily the value of certificates of need associated with certain healthcare portfolios which are not amortized, franchise agreements associated with certain hotel properties which are amortized over 10 to 15 years and the NorthStar Securities broker dealer license which is not amortized.
The following table summarizes the amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities:liabilities, excluding amounts related to discontinued operations (Note 12):
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Net decrease to rental income (1)
$(726)$(791)$(2,169)$(1,016)
Amortization expense
Deferred leasing costs and lease-related intangibles$40,251 $32,532 $126,418 $52,629 
Investment management intangibles8,056 6,185 20,284 19,049 
Customer relationships and service contracts7,671 2,919 23,421 9,912 
Trade name1,645 1,098 20,408 3,294 
Other477 22 1,405 66 
$58,100 $42,756 $191,936 $84,950 
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Above-market lease values $(6,060) $(2,145) $(17,875) $(6,734)
Below-market lease values 7,539
 1,874
 24,734
 5,407
Net increase (decrease) to rental income $1,479
 $(271) $6,859
 $(1,327)
         
Above-market ground lease obligations $(209) $(4) $(573) $(7)
Below-market ground lease obligations 300
 113
 894
 373
Net increase to ground rent expense $91
 $109
 $321
 $366
         
In-place lease values $18,520
 $8,072
 $58,714
 $23,117
Deferred leasing costs 5,076
 3,515
 13,899
 10,270
Trade name 945
 —
 2,738
 —
Investment management contracts 10,013
 2,966
 29,227
 8,598
Customer relationships 3,192
 836
 9,323
 2,507
Other 1,609
 —
 6,223
 —
Amortization expense $39,355
 $15,389
 $120,124
 $44,492
__________

(1)    Represents the net effect of amortizing above- and below-market leases.
The following table presents the future amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities, excluding those related to assets held for sale:
(In thousands)             
Year Ending December 31,Remaining 2017 2018 2019 2020 2021 2022 and after Total
Above-market lease values$(4,821) $(19,409) $(17,591) $(16,674) $(15,929) $(61,717) $(136,141)
Below-market lease values7,338
 26,981
 24,693
 22,700
 20,584
 91,304
 193,600
Increase to rental income$2,517
 $7,572
 $7,102
 $6,026
 $4,655
 $29,587
 $57,459
   

 

 

 

 

 

Above-market ground lease obligations$(194) $(773) $(773) $(773) $(773) $(9,598) $(12,884)
Below-market ground lease obligations205
 741
 741
 741
 744
 29,462
 32,634
Increase to rent expense$11
 $(32) $(32) $(32) $(29) $19,864
 $19,750
   

 

 

 

 

 

In-place lease values$9,240
 $27,707
 $22,861
 $16,807
 $12,237
 $72,020
 $160,872
Deferred leasing costs4,627
 16,239
 13,515
 10,714
 8,031
 27,309
 80,435
Trade name803
 3,210
 3,210
 3,210
 3,210
 48,230
 61,873
Investment management contracts9,583
 34,990
 33,478
 32,545
 31,903
 197,718
 340,217
Customer relationships1,151
 4,572
 4,572
 4,572
 4,572
 30,690
 50,129
Other919
 2,150
 2,027
 2,027
 2,027
 16,066
 25,216
Amortization expense$26,323
 $88,868
 $79,663
 $69,875
 $61,980
 $392,033
 $718,742

9. Assets and Related Liabilities Held For Sale
The Company's assets and related liabilities held for sale at September 30, 2017 are summarized below:disposition.
Year Ending December 31,
(In thousands)Remaining 202120222023202420252026 and ThereafterTotal
Net decrease to rental income$(893)$(1,401)$(645)$(522)$(1,031)$(62)$(4,554)
Amortization expense59,690 159,737 142,691 115,032 103,467 621,112 1,201,729 
24
(In thousands) September 30, 2017 December 31, 2016
Assets 
  
Cash $23,350
 $—
Real estate 1,004,993
 223,954
Loans receivable —
 29,353
Investments in unconsolidated ventures (1)
 22,773
 —
Goodwill (2)
 240,734
 —
Intangible assets, net 280,915
 21,239
Other assets 31,168
 18,378
Total assets held for sale $1,603,933
 $292,924
     
Liabilities    
Secured debt (3)
 $203,129
 $—
Lease intangibles and other liabilities 125,680
 14,296
Total liabilities related to assets held for sale $328,809
 $14,296
Table of Contents
__________
(1)
Represents interests in Townsend-sponsored funds.
In connection with the acquisition of approximately 1% GP interests in the Townsend funds, the Company assumed an obligation to the sellers of Townsend under which the sellers are entitled to approximately 84% of the value of these funds at the closing date of the Townsend acquisition, along with any income related to capital contributed prior to closing of the Townsend acquisition by NSAM in January 2016. The Company is obligated to fund all future contributions and is entitled to any income on such contributions. The Company's liability to the Townsend sellers of approximately $12.5 million at September 30, 2017 is included within other liabilities above. Distributions received from these Townsend funds of $4.2 million was applied against the assumed liability to the Townsend sellers in the third quarter of 2017.
(2)
Associated with Townsend investment management business. Impairment of $9.1 million was recorded in the three months ended September 30, 2017 based on the net asset value of the Townsend business in relation to its contracted selling price. As of September 30, 2017, $147.2 million of the Townsend goodwill is deductible for income tax purposes.
(3)
Represents only debt that is expected to be assumed by the buyer upon sale of the related asset.
Assets held for sale at September 30, 2017 did not constitute discontinued operations, other than those acquired through business combinations which qualified as held for sale upon acquisition, as discussed in Note 17.

10.7. Restricted Cash, Other Assets and Other Liabilities
Restricted Cash
The following table summarizesRestricted cash represents principally cash reserve accounts that are maintained pursuant to requirements under the Company's restricted cash balance:respective agreements governing the various securitized debt of the Company and its subsidiaries.
(In thousands) September 30, 2017 December 31, 2016
Capital expenditures reserves (1)
 $109,515
 $1,502
Real estate escrow reserves (2)
 55,018
 13,116
Borrower escrow deposits 54,281
 61,744
Working capital and other reserves (3)
 22,795
 27,768
Tenant lock boxes (4)
 16,360
 —
Cash of consolidated N-Star CDOs (5)
 13,247
 —
Other 122,836
 7,829
  $394,052
 $111,959
__________
(1)
Represents primarily capital improvements, furniture, fixtures and equipment, tenant improvements, lease renewal and replacement reserves related to real estate assets.
(2)
Represents primarily insurance, real estate tax, repair and maintenance, tenant security deposits and other escrows related to real estate assets.
(3)
Represents reserves for working capital and property development expenditures, as well as in connection with letter of credit provisions, as required in joint venture arrangements with the Federal Deposit Insurance Corporation.
(4)
Represents tenant rents held in lock boxes controlled by the lender. The Company receives the monies after application of rent receipts to service its debt.
(5)
Represents proceeds from repayments and/or sales of debt securities which are pending distribution in consolidated N-Star CDOs.
Other Assets
The following table summarizes the Company's other assets:
(In thousands) September 30, 2017 December 31, 2016
Interest receivable $24,662
 $42,296
Straight-line rents and unbilled rent receivable (1)
 41,682
 39,955
Hotel operating income receivable (1)
 28,027
 —
Resident fee income receivable (1)
 10,506
 —
Hotel-related reserves (2)
 30,929
 —
Investment deposits and pending deal costs 3,964
 66,310
Deferred financing costs, net (3)
 11,204
 10,533
Contingent consideration escrow account (4)
 14,157
 10,836
Derivative assets (Note 12) 10,829
 36,101
Prepaid taxes and deferred tax assets 64,654
 —
Receivables from resolution of investments (5)
 26,948
 —
Prepaid expenses 39,924
 6,725
Accounts receivable and other assets 115,679
 2,374
Fixed assets, net 47,435
 45,455
  $470,600
 $260,585
(In thousands)September 30, 2021December 31, 2020
Straight-line rents$22,315 $8,991 
Investment deposits and pending deal costs736 33,802 
Prefunded capital expenditures for Vantage SDC28,468 48,881 
Deferred financing costs, net (1)
1,516 1,186 
Derivative assets1,179 99 
Prepaid taxes and deferred tax assets, net51,293 49,729 
Operating lease right-of-use asset, net (2)
365,846 363,829 
Finance lease right-of-use asset, net134,449 143,182 
Accounts receivable, net (3)
67,157 50,808 
Prepaid expenses24,108 19,897 
Other assets24,284 43,262 
Fixed assets, net18,252 21,246 
Total other assets$739,603 $784,912 
__________
(1)
Presented net of allowance for bad debt of $13.3 million at September 30, 2017 and $4.1 million at December 31, 2016.
(2)
Represents reserves held by the Company's third party managers at certain of the Company's hotel properties to fund furniture, fixtures and equipment expenditures. Funding is made periodically based on a percentage of hotel operating income.
(3)
Deferred financing costs relate to revolving credit arrangements.
(4)
Contingent consideration account holds certificates of deposit and cash for dividends paid on OP units held in escrow for the contingent consideration that may be earned by certain executives in connection with the Company's acquisition of the investment management business of its former manager (Notes 13 and 15). Upon settlement of the contingent consideration in connection with the Internalization at the end of the earnout period on June 30, 2018, dividends that were paid on OP units earned will be paid to the executives.
(5)
Represents primarily proceeds from loan payoffs held in escrow at September 30, 2017.

(1)    Deferred financing costs relate to revolving credit arrangements.
(2)    Net of impairment of $9.4 million at December 31, 2020 for corporate office leases as the Company determined there is a reduced need for office space based upon the Company's current operations and has abandoned certain leased spaces.
(3)    Includes primarily receivables from tenants and is presented net of immaterial allowance for doubtful accounts, where applicable.
Accrued and Other Liabilities
The following table summarizes the Company's accrued and other liabilities:
(In thousands) September 30, 2017 December 31, 2016
Tenant security deposits $30,343
 $12,105
Borrower escrow deposits 60,229
 64,118
Deferred income 41,419
 27,575
Interest payable 34,866
 19,399
Derivative liabilities (Note 12) 210,150
 5,448
Contingent consideration—THL Hotel Portfolio (Note 3) 6,771
 —
Share repurchase payable (1)
 6,588
 —
Current and deferred income tax liability 263,594
 41,462
Accrued compensation 61,650
 39,697
Accrued real estate and other taxes 110,815
 23,310
Other accrued expenses 88,558
 43,975
Accounts payable and other liabilities 104,833
 9,863
  $1,019,816
 $286,952
(In thousands)September 30, 2021December 31, 2020
Deferred income (1)
$24,601 $23,870 
Interest payable21,902 13,653 
Derivative liabilities— 103,772 
Current and deferred income tax liability5,879 99,470 
Operating lease liability353,352 341,561 
Finance lease liability143,573 148,974 
Accrued compensation45,501 75,666 
Accrued carried interest and incentive fee compensation32,620 1,907 
Accrued real estate and other taxes15,808 6,658 
Payable for Vantage SDC expansion capacity (Note 3)115,713 — 
Accounts payable and accrued expenses129,172 120,683 
Other liabilities63,761 98,068 
Accrued and other liabilities$951,882 $1,034,282 
__________
(1)
Represents settlement payable for 520,422 shares of common stock repurchased by the Company in September 2017 that were settled in October 2017 (Note 15).
(1)    Represents primarily prepaid rental income and deferred management fees from digital investment vehicles. Deferred management fees of $4.3 million at September 30, 2021 and $6.1 million at December 31, 2020 is expected to be recognized as fee income over a weighted average period of 4.2 years and 1.9 years, respectively.
11.
25
Table of Contents

Deferred Income Tax
In the second quarter of 2021, the Company's DataBank subsidiary completed a restructuring of its operations to qualify as a REIT and anticipates electing REIT status for U.S. federal income tax purposes for the 2021 taxable year. As a REIT, DataBank would generally not be subject to U.S. federal income taxes on its taxable income to the extent that it annually distributes such taxable income to its stockholders and maintains certain asset and income requirements. However, DataBank would continue to be subject to U.S. federal income taxes on income earned by any of its taxable subsidiaries. DataBank recorded a net deferred tax benefit of $66.8 million in the second quarter of 2021, reflecting principally the write-off of its deferred tax liabilities.
8. Debt
The Company's debt balance is made upcomposed of the following components:components, excluding debt related to assets held for disposition that is expected to be assumed by the counterparty upon disposition, which is included in liabilities related to assets held for disposition (Note 11).
(In thousands)Securitized Financing FacilityConvertible and Exchangeable Senior NotesSecured DebtTotal Debt
September 30, 2021
Debt at amortized cost
Principal$300,000 $500,000 $3,821,240 $4,621,240 
Premium (discount), net— (7,099)19,358 12,259 
Deferred financing costs(9,061)(2,046)(51,182)(62,289)
$290,939 $490,855 $3,789,416 $4,571,210 
December 31, 2020
Debt at amortized cost
Principal$— $531,502 $3,424,130 $3,955,632 
Premium (discount), net— (8,310)24,544 16,234 
Deferred financing costs— (2,670)(38,207)(40,877)
$— $520,522 $3,410,467 $3,930,989 

26
(In thousands) 
Corporate Credit Facility (1)
 Convertible and Exchangeable Senior Notes 
Secured and Unsecured Debt
(2)
 Securitization Bonds Payable Junior Subordinated Notes Total Debt
September 30, 2017            
Principal $—
 $616,405
 $9,701,250
 $534,937
 $280,117
 $11,132,709
Premium (discount), net NA
 3,260
 (91,206) (90,360) (83,339) (261,645)
Deferred financing costs NA
 (9,453) (68,931) (705) —
 (79,089)
  $—
 $610,212
 $9,541,113
 $443,872
 $196,778
 $10,791,975
December 31, 2016            
Principal $422,600
 $602,500
 $2,235,022
 $497,525
 $—
 $3,757,647
Premium (discount), net NA
 1,385
 (3,560) —
 —
 (2,175)
Deferred financing costs NA
 (11,059) (25,765) (3,030) —
 (39,854)
  $422,600
 $592,826
 $2,205,697
 $494,495
 $—
 $3,715,618
Table of Contents
__________
(1)
Deferred financing costs related to the corporate credit facility is recorded in other assets.
(2)
At September 30, 2017 and December 31, 2016, debt with carrying value of $304.1 million and $108.8 million, respectively, was related to financing on assets held for sale. Debt that will be assumed by a buyer upon the sale of an asset is presented in Note 9.
The following table summarizes certain information aboutkey terms of the different components of debt:Company's debt.
 Fixed Rate Variable Rate Total
($ in thousands)Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity
September 30, 2017                 
Recourse                 
Corporate credit facility$—
 —% —
 $—
 —% —
 $—
 —% —
Convertible and exchangeable senior notes616,405
 4.27% 4.3
 —
 —% —
 616,405
 4.27% 4.3
Junior subordinated debt—
 —% —
 280,117
 4.20% 18.7
 280,117
 4.20% 18.7
Secured debt (1)
39,711
 5.02% 8.2
 —
 —% —
 39,711
 5.02% 8.2
 656,116
     280,117
     936,233
    

 Fixed Rate Variable Rate Total
($ in thousands)Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity
Non-recourse                 
Securitization bonds payable38,131
 3.28% 30.6
 496,806
 2.93% 25.7
 534,937
 2.95% 26.0
Secured and unsecured
debt (2)
                 
Healthcare2,168,946
 4.64% 3.2
 1,146,627
 5.43% 1.9
 3,315,573
 4.91% 2.7
Industrial861,025
 3.82% 11.3
 10,000
 2.93% 2.6
 871,025
 3.81% 11.2
Hospitality—
 —% —
 2,604,243
 4.34% 1.1
 2,604,243
 4.34% 1.1
Other Real Estate Equity (3)
407,399
 4.47% 5.7
 1,749,475
 3.86% 1.7
 2,156,874
 3.97% 2.5
Real Estate Debt—
 —% —
 713,824
 3.87% 2.8
 713,824
 3.87% 2.8
 3,475,501
     6,720,975
     10,196,476
    
Total debt$4,131,617
     $7,001,092
     $11,132,709
    
                  
December 31, 2016                 
Recourse                 
Corporate credit facility$—
 —% —
 $422,600
 3.02% 3.2
 $422,600
 3.02% 3.2
Convertible senior notes602,500
 4.25% 4.8
 —
 —% —
 602,500
 4.25% 4.8
Secured debt (1)
41,148
 5.02% 8.9
 45,458
 3.36% 0.9
 86,606
 4.15% 4.7
 643,648
     468,058
     1,111,706
    
Non-recourse                 
Securitization bonds payable94,408
 2.54% 33.2
 403,117
 2.92% 15.2
 497,525
 2.85% 18.6
Secured debt (2)
                 
Industrial597,502
 3.77% 16.7
 413,012
 3.02% 2.9
 1,010,514
 3.46% 11.0
Other Real Estate Equity487,320
 3.74% 8.1
 421,177
 3.47% 2.4
 908,497
 3.62% 5.5
Real Estate Debt—
 —% —
 229,405
 3.27% 1.7
 229,405
 3.27% 1.7
 1,179,230
     1,466,711
     2,645,941
    
Total debt$1,822,878
     $1,934,769
     $3,757,647
    
Fixed RateVariable RateTotal
($ in thousands)Outstanding Principal
Weighted Average Interest Rate (Per Annum)(1)
Weighted Average Years Remaining to Maturity(2)
Outstanding Principal
Weighted Average Interest Rate (Per Annum)(1)
Weighted Average Years Remaining to Maturity(2)
Outstanding Principal
Weighted Average Interest Rate (Per Annum)(1)
Weighted Average Years Remaining to Maturity(2)
September 30, 2021
Recourse
Secured Fund Fee Revenue Notes (3)
$300,000 3.93 %5.0$— N/A— $300,000 3.93 %5.0
Convertible and exchangeable senior notes (4)
500,000 5.45 %2.9— N/AN/A500,000 5.45 %2.9
800,000 — 800,000 
Non-recourse
Secured Debt
Digital Operating2,786,223 2.49 %4.11,031,017 4.06 %2.73,817,240 2.91 %3.7
Corporate and Other— N/AN/A4,000 1.23 %1.84,000 1.23 %1.8
2,786,223 1,035,017 3,821,240 
$3,586,223 $1,035,017 $4,621,240 
December 31, 2020
Recourse
Convertible and exchangeable senior notes (4)
$531,502 5.36 %3.4$— N/AN/A$531,502 5.36 %3.4
Secured debt (5)
32,815 5.02 %— — N/AN/A32,815 5.02 %— 
564,317 — 564,317 
Non-recourse
Secured Debt
Digital Operating2,132,852 2.54 %4.81,093,991 5.92 %4.43,226,843 3.69 %4.7
Corporate and Other— N/AN/A164,472 3.85 %0.1164,472 3.85 %0.1
2,132,852 1,258,463 3,391,315 
$2,697,169 $1,258,463 $3,955,632 
__________
(1)
(1)    Calculated based upon outstanding debt principal at balance sheet date. For variable rate debt, weighted average interest rate is calculated based upon the applicable index plus spread at balance sheet date.
(2)    Calculated based upon anticipated repayment dates for notes issued under securitization financing; otherwise based upon initial maturity dates, or extended maturity dates if extension criteria are met and extension is available at the Company's option.
(3)    Represent obligations of special-purpose subsidiaries of the OP as co-issuers and certain other special-purpose subsidiaries of DBRG, as further described below.
(4)    Excludes the 5.375% exchangeable senior notes issued by NRF Holdco as they are classified as held for disposition (Note 11).
(5)    The fixed rate recourse debt was secured by the Company's aircraft and was repaid in January 2021 upon sale of the aircraft.
The fixed rate recourse debt represents two promissory notes secured by the Company's aircraft, while the variable rate recourse debt at December 31, 2016 represents outstanding amounts from warehouse facilities, which were terminated upon full payoff in 2017.
(2)
At September 30, 2017, mortgage debt with aggregate outstanding principal of $611.6 million, primarily in the healthcare and hospitality segments, was either in payment default, including maturity default, or was not in compliance with certain covenants. At December 31, 2016, outstanding principal of $83.0 million on seller-provided financing on a portfolio of properties in the other real estate equity segment was in payment default. The Company is negotiating with the various lenders and seller to restructure the respective financing arrangements, as applicable.
(3)
Includes $2.7 million of outstanding principal of non-recourse unsecured fixed rate debt assumed through the acquisition of CPI.
Corporate Credit Facility
On January 10, 2017,In July 2021, the OP entered into an amendedCompany repaid the outstanding balance and restated credit agreement (the “JPM Credit Agreement”) with several lenders and JPMorgan Chase Bank, N.A. as administrative agent, and Bank of America, N.A. as syndication agent. The JPM Credit Agreement provides a secured revolvingterminated its corporate credit facility, inwhich was replaced with the maximum principal amount of $1.0 billion, with an optionCompany's new securitized financing facility, as discussed below.
Prior to increase up to $1.5 billion, subject to agreement of existing or substitute lenders to providetermination, the additional loan commitment and satisfaction of customary closing conditions. The credit facility maturesprovided revolving commitments of $300 million based upon terms amended in JanuaryMay 2021 ($450 million at December 31, 2020), with two 6-month extension options, each subject to a fee of 0.10% of the commitment amount upon exercise.
The maximum amount available at any time isto be drawn limited by a borrowing base of certain investment assets, with the valuation of such investment assets generally determined according tovalued based upon a percentage of adjusted net book value or a multiple of base management fee EBITDA (as defined in the JPM Credit Agreement)credit agreement). At September 30, 2017, the borrowing base was sufficient to permit borrowings up to the full $1.0 billion commitment.
Advances under the JPM Credit Agreement accruecredit facility accrued interest at a per annum rate equal to, at the sumCompany’s election, either the 1-month London Interbank Offered Rate ("LIBOR") plus a margin of one-month LIBOR plus 2.25%2.75%, or a base rate determined according to a prime rate or federal funds rate plus a margin of 1.25%1.75%. At September 30, 2017,Unused commitments under the Company had no outstanding borrowings. The Company payscredit facility were subject to a commitment fee of 0.25% or 0.35% per annumannum.
27
Table of Contents

Securitized Financing Facility
In July 2021, special-purpose subsidiaries of the unused amount (0.35% at September 30, 2017), depending upon theOP (the "Co-Issuers") issued $500 million aggregate principal amount of facility utilization.Series 2021-1 Secured Fund Fee Revenue Notes, composed of: (i) $300 million aggregate principal amount of 3.933% Secured Fund Fee Revenue Notes, Series 2021-1, Class A-2 (the “Class A-2 Notes”); and (ii) up to $200 million Secured Fund Fee Revenue Variable Funding Notes, Series 2021-1, Class A-1 (the “VFN Notes” and, together with the Class A-2 Notes, the “Series 2021-1 Notes”). The VFN Notes allow the Co-Issuers to borrow on a revolving basis. The Series 2021-1 Notes were issued under an Indenture that allows the Co-Issuers to issue additional series of notes in the future, subject to certain conditions.

SomeThe Series 2021-1 Notes represent obligations of the Company’sCo-Issuers and certain other special-purpose subsidiaries guaranteeof DBRG, and neither DBRG, the OP nor any of its other subsidiaries are liable for the obligations of the Company under the JPM Credit Agreement. As security for the advances under the JPM Credit Agreement, the Company and someCo-Issuers. The Series 2021-1 Notes are secured by investment management fees earned by subsidiaries of its affiliates pledged theirDBRG, equity interests in certain digital portfolio companies and limited partnership interests in certain digital funds managed by subsidiaries through whichof DBRG, as collateral.
The Class A-2 Notes bear interest at a rate of 3.933% per annum, payable quarterly. The VFN Notes bear interest generally based upon 3-month LIBOR (or an alternate benchmark as set forth in the Company directlypurchase agreement of the VFN Notes) plus 3%. Unused amounts under the VFN Notes facility is subject to a commitment fee of 0.5% per annum. The final maturity date of the Class A-2 Notes is in September 2051, with an anticipated repayment date in September 2026. The anticipated repayment date of the VFN Notes is in September 2024, subject to 2 one-year extensions at the option of the Co-Issuers. If the Series 2021-1 Notes are not repaid or indirectly owns substantially all of its assets.refinanced prior to their anticipated repayment date, or such date is not extended for the VFN Notes, interest will accrue at a higher rate and the Series 2021-1 Notes will begin to amortize quarterly.
The JPM Credit AgreementSeries 2021-1 Notes may be optionally prepaid, in whole or in part, prior to their anticipated repayment dates. There is no prepayment penalty on the VFN Notes. However, prepayment of the Class A-2 Notes will be subject to additional consideration based upon the difference between the present value of future payments of principal and interest and the outstanding principal of such Class A-2 Note that is being prepaid; or 1% of the outstanding principal of such Class A-2 Note that is being prepaid in connection with a disposition of collateral.
The Indenture of the Series 2021-1 Notes contains various affirmative and negative covenants, including financial covenants that require the Company to maintainmaintenance of minimum tangible net worth, liquidity levelsthresholds for debt service coverage ratio and financial ratios,maximum loan-to-value ratio, as defined indefined. As of the JPM Credit Agreement. At September 30, 2017,date of this filing, the Company wasCo-Issuers are in compliance with all of the financial covenants.
The JPM Credit Agreement also includes customary events of default, in certain cases subject to reasonable and customary periods to cure. The occurrence of an event of default may result in the terminationIssuance of the credit facility, accelerateClass A-2 Notes generated proceeds of $285.1 million, net of offering expenses and $5.4 million of interest reserve deposits. The Series 2021-1 Notes will provide funding for acquisition of digital infrastructure investments, satisfying commitments to sponsored funds, redemption or repayment of the Company’s repayment obligations, in certain cases limitCompany's other higher cost corporate securities, and/or general corporate utilization. As of the Company’s ability to make distributions, and allowdate of this filing, the lenders to exercise all rights and remediesfull $200 million under the VFN Notes is available to them with respect to the collateral. There have been no eventsbe drawn.

28
Table of default since the inception of the credit facility.Contents

Convertible and Exchangeable Senior Notes
Convertible and exchangeable senior notes (collectively, the senior notes) are composed of the following, each representing senior unsecured obligations of DigitalBridge Group, Inc. or a subsidiary as the Company and are guaranteed by the Company on a senior unsecured basis.
Upon closingrespective issuers of the Merger,senior notes:
DescriptionIssuance DateDue DateInterest Rate (per annum)Conversion or Exchange Price (per share of common stock)
Conversion or Exchange Ratio
(in shares)(1)
Conversion or Exchange Shares (in thousands)Earliest Redemption DateOutstanding Principal
September 30, 2021December 31, 2020
Issued by DigitalBridge Group, Inc.
5.00% Convertible Senior NotesApril 2013April 15, 20235.00 % $15.76 63.4700 12,694 April 22, 2020$200,000 $200,000 
3.875% Convertible Senior NotesJanuary and June 2014January 15, 20213.875 % 16.57 60.3431 1,901 January 22, 2019— 31,502 
Issued by DigitalBridge Operating Company, LLC
5.75% Exchangeable Senior NotesJuly 2020July 15, 20255.750 % 2.30 434.7826 130,435 July 21, 2023300,000 300,000 
$500,000 $531,502 
__________
(1)    The conversion or exchange rate for the Company assumed NRF's 7.25% exchangeable notes and 5.375% exchangeable notes at their respective fair values.
Convertible and exchangeable senior notes issued byis subject to periodic adjustments to reflect certain carried-forward adjustments relating to common stock splits, reverse stock splits, common stock adjustments in connection with spin-offs and cumulative cash dividends paid on the Company and outstandingCompany's common stock since the issuances of the respective senior notes. The conversion or exchange ratios are as follows:presented in shares of common stock per $1,000 principal of each senior note.
        Conversion or Exchange Price (per share of common stock) 
Conversion or Exchange Ratio (2)
(In Shares)
 Conversion or Exchange Shares (in thousands) Earliest Redemption Date 
Outstanding Principal
(in thousands)
Description Issuance Date Due Date Interest Rate     September 30, 2017 December 31, 2016
5.00% Convertible Notes April 2013 April 15, 2023 5.00 $15.76
 63.4700
 12,694
 April 22, 2020 $200,000
 $200,000
3.875% Convertible Notes January and June 2014 January 15, 2021 3.875 16.57
 60.3431
 24,288
 January 22, 2019 402,500
 402,500
5.375% Exchangeable Notes 
June 2013 (1)
 June 15, 2033 5.375 12.04
 83.0837
 1,155
 June 15, 2023 13,905
 —
                $616,405
 $602,500
__________
(1)
Represents the initial date of issuance of exchangeable senior notes by NRF prior to the Merger.
(2)
The conversion or exchange rate for convertible and exchangeable senior notes is subject to periodic adjustments to reflect the carried-forward adjustments relating to common stock splits, reverse stock splits, common stock adjustments in connection with spin-offs and cumulative cash dividends paid on the Company's common stock since the issuance of the convertible and exchangeable senior notes. The conversion or exchange ratios are presented in shares of common stock per $1,000 principal of each convertible or exchangeable note.
The convertible and exchangeable senior notes mature on their respective due dates, unless earlier redeemed, repurchased, converted or exchanged, prior to such date in accordance with the terms of their respective governing documents.as applicable. The convertible and exchangeableoutstanding senior notes are convertible or exchangeable at any time by holders of such notes into shares of the Company’s common stock at the applicable conversion or exchange rate, which is subject to adjustment upon occurrence of certain events.
To the extent certain trading conditions of the Company’s common stock are met, the senior notes are redeemable by the applicable issuer thereof in whole or in part for cash at any time on or after their respective earliest redemption dates at a redemption price equal to 100% of theirthe principal amount of such senior notes being redeemed, plus accrued and unpaid interest (if any) up to, but excluding, the redemption date.
The Company may redeemIn the convertible notes for cash at its option at any time on or after their respective redemption dates if the last reported sale priceevent of the Company's common stock has been at least 130% of the conversion price of the convertible notes thencertain change in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.
The exchangeable notes may be exchanged for cash, common stock or a combination thereof, at the Company's election, upon the occurrence of specified events, and at any time on or after their respective redemption dates, and on the second business day immediately preceding their maturity dates. Thecontrol transactions, holders of the exchangeablesenior notes have the right at their option, to require the Companyapplicable issuer to repurchase the exchangeablepurchase all or part of such holder's senior notes for cash on certain specific dates in accordance with the terms of theirthe governing documents of the respective governing documents.senior notes.
Repurchase and Repayment of Senior Notes
The 3.875% convertible senior notes were fully extinguished following a $31.5 million repayment upon maturity in January 2021 and a $371.0 million repurchase in the third quarter of 2020, primarily funded by net proceeds from the July 2020 issuance of the 5.75% exchangeable senior notes by the OP.
Exchange of Senior Notes into Common Shares
In June 2017October 2021, DBRG and July 2017,the OP entered into a privately negotiated exchange agreement (the "Early Exchange Agreement") with certain noteholders of the 5.75% exchangeable notes. The parties to the Early Exchange Agreement agreed to an exchange transaction for which the original exchange ratio of 434.7826 shares per $1,000 of principal amount of notes was adjusted to account for savings on avoided future interest payments otherwise due to the noteholders. Pursuant to the Early Exchange Agreement, in October 2021, the Company repurchased all $13.0exchanged approximately $44.0 million of the outstanding principal of the 7.25% exchangeable notes for $13.4 million in aggregate, equal to the sum of outstanding principal and accrued interest, upon exercise of the repurchase option by note holders.

In August 2017, the Company exchanged $2.5 million of the outstanding principal of the 5.375%5.75% exchangeable notes into 207,73920,040,072 shares of the Company's class A common stock. The excess of fair value of the class A common stock issued over carrying value of the corresponding notes on the exchange date resulted in an immaterial charge to earnings.and paid approximately $0.7 million for accrued but unpaid interest.
Secured and Unsecured Debt
These are primarily investment level financing, which are generally subjectnon-recourse to customary non-recourse carve-outs,the Company, and secured by underlying commercial real estate and mortgageor loans receivable.
Securitization Bonds PayableDigital Operating—In March 2021 and October 2020, DataBank and Vantage SDC, the Company's subsidiaries in the Digital Operating segment, raised $657.9 million and $1.3 billion of securitized notes at blended fixed rates of 2.32% and 1.81% per annum, with 5-year and 6-year maturities, respectively. In both instances, the proceeds were applied principally to refinance outstanding debt, which meaningfully reduced the overall cost of debt and extended debt maturities at DataBank and Vantage SDC.
Securitization bonds
29
Table of Contents

In October 2021 and November 2021, DataBank and Vantage SDC each issued additional 5-year securitized notes of $332 million and $530 million at blended fixed rates of 2.43% and 2.17% per annum, respectively. Proceeds will be used by DataBank to repay borrowings on its credit facility and finance future acquisitions, and by Vantage SDC to replace its current bridge financing and fund capital expenditures on its September 2021 add-on acquisition as well as to fund payments for future build-out and lease-up of expansion capacity.
Other—In the third quarter of 2021, the Company entered into a $50.0 million credit facility to fund the acquisition of loans that are warehoused for a future securitization vehicle.
9. Stockholders’ Equity
The table below summarizes the share activities of the Company's preferred and common stock.
Number of Shares
(In thousands)Preferred Stock
Class A
Common Stock
Class B
Common Stock
Shares outstanding at December 31, 201941,350 487,044 734 
Shares issued upon redemption of OP Units— 184 — 
Repurchase of common stock, net (1)
— (12,733)— 
Equity awards issued, net of forfeitures— 9,721 — 
Shares canceled for tax withholding on vested equity awards— (2,554)— 
Shares outstanding at September 30, 202041,350 481,662 734 
Shares outstanding at December 31, 202041,350 483,406 734 
Redemption of preferred stock(3,450)— — 
Shares issued upon redemption of OP Units— 505 — 
Conversion of class B to class A common stock— 68 (68)
Shares issued pursuant to settlement liability (1)
— 5,954 — 
Equity awards issued, net of forfeitures— 6,198 — 
Shares canceled for tax withholding on vested equity awards— (2,675)— 
Shares outstanding at September 30, 202137,900 493,456 666 
__________
(1)    Shares repurchased in 2020 are presented net of reissuance of 964,160 shares of class A common stock in connection with a settlement liability. In 2021, the liability was settled through the reissuance of some of the repurchased shares that were held in a subsidiary (Note 13). Shares repurchased and not reissued were cancelled.
Preferred Stock
In the event of a liquidation or dissolution of the Company, preferred stockholders have priority over common stockholders for payment of dividends and distribution of net assets.
The table below summarizes the preferred stock issued and outstanding at September 30, 2021:
DescriptionDividend Rate Per AnnumInitial Issuance Date
Shares Outstanding
(in thousands)
Par Value
(in thousands)
Liquidation Preference
(in thousands)
Earliest Redemption Date
Series H7.125 %April 201511,500 115 $287,500 Currently redeemable
Series I7.15 %June 201713,800 138 345,000 June 5, 2022
Series J7.125 %September 201712,600 126 315,000 September 22, 2022
37,900 $379 $947,500 
All series of preferred stock are at parity with respect to dividends and distributions, including distributions upon liquidation, dissolution or winding up of the Company. Dividends on Series H, I and J of preferred stock are payable represent debtquarterly in arrears in January, April, July and October.
Each series of preferred stock is redeemable on or after the earliest redemption date for that series at $25.00 per share plus accrued and unpaid dividends (whether or not declared) exclusively at the Company’s option. The redemption period for each series of preferred stock is subject to the Company’s right under limited circumstances to redeem the preferred stock earlier in order to preserve its qualification as a REIT or upon the occurrence of a change of control (as defined in the articles supplementary relating to each series of preferred stock).
Preferred stock generally does not have any voting rights, except if the Company fails to pay the preferred dividends for six or more quarterly periods (whether or not consecutive). Under such circumstances, the preferred stock will be
30
Table of Contents

entitled to vote, together as a single class with any other series of parity stock upon which like voting rights have been conferred and are exercisable, to elect 2 additional directors to the Company’s board of directors, until all unpaid dividends have been paid or declared and set aside for payment. In addition, certain changes to the terms of any series of preferred stock cannot be made without the affirmative vote of holders of at least two-thirds of the outstanding shares of each such series of preferred stock voting separately as a class for each series of preferred stock.
Redemption of Preferred Stock
In August 2021, the Company redeemed all of its outstanding 7.5% Series G preferred stock for $86.8 million using proceeds from its securitized financing facility. In October 2021, the Company issued notices of redemption for 2,560,000 shares of its 7.125% Series H preferred stock with redemption to be settled in November 2021 for approximately $64.4 million.
In January 2020, the Company settled the December 2019 redemption of its outstanding Series B and Series E preferred stock for $402.9 million.
All preferred stock redemptions are at $25.00 per share liquidation preference plus accrued and unpaid dividends prorated to their redemption dates. The excess or deficit of the $25.00 per share liquidation preference over the carrying value of the preferred stock redeemed results in an increase or decrease to net loss attributable to common stockholders, respectively.
Common Stock
Except with respect to voting rights, class A common stock and class B common stock have the same rights and privileges and rank equally, share ratably in dividends and distributions, and are identical in all respects as to all matters. Class A common stock has 1 vote per share and class B common stock has thirty-six and one-half votes per share. This gives the holders of class B common stock a right to vote that reflects the aggregate outstanding non-voting economic interest in the Company (in the form of OP Units) attributable to class B common stock holders and therefore, does not provide any disproportionate voting rights. Class B common stock was issued as consideration in the Company's acquisition in April 2015 of the investment management business and operations of its former manager, which was previously controlled by securitization vehiclesthe Company's former Executive Chairman. Each share of class B common stock shall convert automatically into 1 share of class A common stock if the former Executive Chairman or his beneficiaries directly or indirectly transfer beneficial ownership of class B common stock or OP Units held by them, other than to certain qualified transferees, which generally includes affiliates and employees. In addition, each holder of class B common stock has the right, at the holder’s option, to convert all or a portion of such holder’s class B common stock into an equal number of shares of class A common stock.
The Company suspended dividends on its class A common stock beginning with the second quarter of 2020. Payment of common dividends was previously subject to certain restrictions under the terms of the corporate credit facility, which was terminated in July 2021. The Company continues to monitor its financial performance and liquidity position, and will reevaluate its dividend policy as conditions improve.
Common Stock Repurchases
During the first quarter of 2020, the Company repurchased 12,733,204 shares of its class A common stock at an aggregate cost of $24.6 million, or a weighted average price of $1.93 per share, pursuant to a $300 million share repurchase program that expired in May 2020.
Dividend Reinvestment and Direct Stock Purchase Plan
The Company's Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) provides existing common stockholders and other investors the opportunity to purchase shares (or additional shares, as applicable) of the Company's class A common stock by reinvesting some or all of the cash dividends received on their shares of the Company's class A common stock or making optional cash purchases within specified parameters. The DRIP Plan involves the acquisition of the Company's class A common stock either in the open market, directly from the Company as newly issued common stock, or in privately negotiated transactions with third parties. There were no shares of class A common stock acquired under the DRIP Plan in the form of new issuances in 2021 and 2020.
Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in each component of AOCI attributable to stockholders and noncontrolling interests in investment entities, net of immaterial tax effect. AOCI attributable to noncontrolling interests in Operating Company is immaterial.
31
Table of Contents

Changes in Components of AOCI—Stockholders
(In thousands)Company's Share in AOCI of Equity Method InvestmentsUnrealized Gain (Loss) on AFS Debt SecuritiesUnrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
AOCI at December 31, 2019$9,281 $7,823 $(226)$139 $30,651 $47,668 
Other comprehensive income (loss) before reclassifications3,053 395 (3)13,961 15,821 33,227 
Amounts reclassified from AOCI— (3,585)— 225 (925)(4,285)
AOCI at September 30, 2020$12,334 $4,633 $(229)$14,325 $45,547 $76,610 
AOCI at December 31, 2020$17,718 $6,072 $(233)$52,832 $45,734 $122,123 
Other comprehensive income (loss) before reclassifications(2,948)(297)— (28,950)1,313 (30,882)
Amounts reclassified from AOCI(2,998)— 233 (20,221)(1,375)(24,361)
AOCI at September 30, 2021$11,772 $5,775 $— $3,661 $45,672 $66,880 
Changes in Components of AOCI—Noncontrolling Interests in Investment Entities
(In thousands)Unrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
AOCI at December 31, 2019$(1,005)$(17,913)$10,659 $(8,259)
Other comprehensive income (loss) before reclassifications(12)43,170 5,313 48,471 
Amounts reclassified from AOCI— (95)(873)(968)
AOCI at September 30, 2020$(1,017)$25,162 $15,099 $39,244 
AOCI at December 31, 2020$(1,030)$83,845 $15,099 $97,914 
Other comprehensive loss before reclassifications— (58,995)— (58,995)
 Amounts reclassified from AOCI1,030 810 — 1,840 
AOCI at September 30, 2021$— $25,660 $15,099 $40,759 
Reclassifications out of AOCI—Stockholders
Information about amounts reclassified out of AOCI attributable to stockholders by component is presented below. Such amounts are included in other gain (loss) in both continuing and discontinued operations on the statements of operations, as applicable, except for amounts related to equity method investments, which are included in equity method losses in discontinued operations.
(In thousands)Three Months Ended September 30,Nine Months Ended September 30,
Component of AOCI reclassified into earnings2021202020212020
Relief of basis of AFS debt securities$— $41 $— $3,585 
Release of foreign currency cumulative translation adjustments— 21 20,221 (225)
Unrealized gain on dedesignated net investment hedges— — — 552 
Realized gain on net investment hedges— 373 1,375 373 
Realized loss on cash flow hedges— — (233)— 
Release of equity in AOCI of equity method investments2,998 — 2,998 — 
32
Table of Contents

10. Noncontrolling Interests
Redeemable Noncontrolling Interests
The following table presents the activity in redeemable noncontrolling interests in the Company's digital investment management business, as discussed below, and in open-end funds sponsored and consolidated by the Company.
Nine Months Ended September 30,
(In thousands)20212020
Redeemable noncontrolling interests
Beginning balance$305,278 $6,107 
Contributions41,014 286,215 
Distributions and redemptions(13,865)(2,775)
Net income (loss)15,743 (2,316)
Ending balance$348,170 $287,231 
Strategic Partnership in the Company's Digital Investment Management Business
In July 2020, the Company (Note 14)formed a strategic partnership with affiliates of Wafra, Inc. (collectively, "Wafra"), a private investment firm and a global partner for alternative asset managers, in which Wafra made a minority investment in substantially all of the Company's digital investment management business (as defined for purposes of this transaction, the "Digital IM Business"). This includes CMBS debt as well as collateralized loan obligation debt, which were bonds issuedThe investment entitles Wafra to participate in approximately 31.5% of the net management fees and carried interest generated by the consolidated N-Star CDODigital IM Business.
Pursuant to this strategic partnership, Wafra has assumed directly and also indirectly through a participation interest $124.9 million of the Company's commitments to DCP I, and CDO IXhas a $125.0 million commitment to DCP II that were assumed byhas been partially funded to-date. Wafra has also agreed to make commitments to the Company's future digital funds and investment vehicles on a pro rata basis with the Company at fair value uponbased on Wafra's percentage interest in the Merger.Digital IM Business, subject to certain caps.
Senior notesIn addition, the Company issued by these securitization trusts were generally soldWafra 5 warrants to third parties and subordinated notes retained by the Company. Payments from underlying collateral loans or securities must be appliedpurchase up to repay the notes until fully paid off, irrespectivean aggregate of 5% of the contractual maturities of the notes.
Junior Subordinated Debt
The junior subordinated debt was assumed by the Company through the Merger at fair value. Prior to the Merger, subsidiaries of NRF, which were formed as statutory trusts, NRF Realty Trust Financial LLC I through VIII (the “Trusts”), issued trust preferred securities ("TruPS") in private placement offerings. The sole assets of the Trusts consist of a like amount of junior subordinated notes issued by NRFCompany’s class A common stock (5% at the time of the offerings (the "Junior Notes")transaction, on a fully-diluted, post-transaction basis). Each warrant entitles Wafra to purchase up to 5,352,000 shares of the Company's class A common stock, with staggered strike prices between $2.43 and $6.00 for each warrant, exercisable until July 17, 2026. No warrants have been exercised to-date.
Wafra paid cash consideration of $253.6 million at closing in exchange for its investment in the Digital IM Business and for the warrants. As previously agreed, Wafra paid additional consideration of $29.9 million in the Digital IM Business in April 2021 based upon the Digital IM Business having achieved a minimum run-rate of earnings before interest, tax, depreciation and amortization (as defined for the purpose of this computation) of $72.0 million as of December 31, 2020. The Compensation Committee of the Board of Directors has approved an allocation of 50% of the contingent consideration received from Wafra as additional bonus compensation to management, to be paid on behalf of certain employees to fund a portion of their share of capital contributions to the DCP funds as capital calls are made for these funds. Compensation expense is recognized over time based upon an estimated timeline for deployment of capital by the funds, which will correspond to the timing of capital calls to be funded by the Company on behalf of management.
Under certain circumstances following such time as the Digital IM Business comprises 90% or more of the Company's assets, the Company has agreed to use commercially reasonable efforts to facilitate the conversion of Wafra's interest into shares of the Company's class A common stock. There can be no assurances that such conversion would occur or on what terms and conditions such conversion would occur, including whether such conversion, if it did occur in the future, would have any adverse impact on the Company, the Company’s stock price, governance and other matters.
Wafra has customary minority rights and certain other structural protections designed to protect its interests, including redemption rights with respect to its investment in the Digital IM Business and its funded commitments in certain digital funds. Wafra's redemption rights will be triggered upon the occurrence of certain events, including key person or cause events under the governing documents of certain digital funds and for a limited period, upon Marc Ganzi, the Company's Chief Executive Officer, and Ben Jenkins, Chief Investment Officer of the Company's digital real estate and infrastructure platform, ceasing to fulfill certain time and attention commitments to the Digital IM business.
To further enhance the alignment of interests, the Company entered into an amended and restated restrictive covenant agreement with each of Mr. Ganzi and Mr. Jenkins, pursuant to which they agreed to certain enhanced non-solicitation provisions and extension of the term of existing non-competition agreements.
33
Table of Contents

Wafra’s investment provides the Company with permanent capital to pursue strategic digital infrastructure investments and further grow the Digital IM Business.
Noncontrolling Interests in Operating Company
Certain current and former employees of the Company directly or indirectly own interests in OP, presented as noncontrolling interests in the Operating Company. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s OP Units for cash based on the market value of an equivalent number of shares of class A common stock at the time of redemption, or at the Company's election as managing member of OP, through issuance of shares of class A common stock (registered or unregistered) on a 1-for-one basis. At the end of each period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP.
Redemption of OP Units—The Company redeemed 505,367 OP Units during the nine months ended September 30, 2021 and 2,184,395 OP Units during the year ended December 31, 2020, with the issuance of an equal number of shares of class A common stock on a 1-for-one basis.
11. Assets and Related Liabilities Held for Disposition
Total assets and related liabilities held for disposition are summarized below, all of which relate to discontinued operations (Note 12). These assets and liabilities are composed of: (i) those held by NRF Holdco, predominantly related to Wellness Infrastructure assets and obligations; (ii) OED investments and intangible assets of the Other IM business, both of which previously resided in the Other segment; and (iii) prior to its disposition in March 2021, the Company's hotel business, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.
(In thousands)September 30, 2021December 31, 2020
Assets
Restricted cash$63,645 $191,692 
Real estate, net3,814,809 8,179,025 
Loans receivable387,664 1,258,539 
Equity and debt investments791,418 944,483 
Goodwill, deferred leasing costs and other intangible assets, net144,048 275,954 
Other assets250,132 327,309 
Due from affiliates18,311 60,317 
Total assets held for disposition$5,470,027 $11,237,319 
Liabilities
Debt, net (1)
$3,443,376 $7,352,828 
Lease intangibles and other liabilities388,187 533,688 
Total liabilities related to assets held for disposition$3,831,563 $7,886,516 
__________
(1)    Represents debt related to assets held for disposition if the debt is expected to be assumed by the acquirer upon sale or if the debt is expected to be extinguished through lender's assumption of underlying collateral, and includes debt that is in receivership, in payment default or not in compliance with certain debt covenants. Includes the 5.375% exchangeable senior notes and junior subordinated debt (as described in Note 14) which are obligations of NRF Holdco as the issuer.
Impairment of Assets Classified as Held for Disposition and Discontinued Operations
Real Estate and Related Intangible Assets—Real estate classified as held for disposition and discontinued operations that has been written down and carried at fair value totaled $3.7 billion at September 30, 2021 and $4.7 billion at December 31, 2020, generally representing fair value using Level 3 inputs. Impairment of real estate and related intangibles held for disposition was a reversal of $8.2 million and a charge of $143.4 million for the three months ended September 30, 2021 and 2020, respectively, and charges of $354.1 million and $1.93 billion for the nine months ended September 30, 2021 and 2020, respectively, reflected in discontinued operations (Note 12).
Properties that were written down to estimated fair value at the time they were classified as held for disposition in both years were valued using either estimated recoverable value, sales price, broker opinions of value, or third-party appraisals, and in certain cases, adjusted as deemed appropriate by management to account for the inherent risk associated with specific properties. The impairment assessment in 2020 also factored in the economic effects of
34
Table of Contents

COVID-19 on real estate values. Fair value of these properties was generally reduced for estimated selling costs, ranging from 1% to 3% of fair value.
For properties that were impaired prior to being classified as held for sale and discontinued operations, largely in 2020, impairment was attributed primarily to shortened hold period assumptions, particularly in the hotel and wellness infrastructure portfolios, driven by the Company's accelerated digital transformation in the second quarter of 2020, and/or to a lesser extent, decline in property operating performance, in part from the economic effects of COVID-19. Fair value of these properties was estimated based upon: (i) third party appraisals, (ii) broker opinions of value with discounts applied based upon management judgment, (iii) income capitalization approach, using net operating income for each property and applying capitalization rates between 10.0% and 12.0%; or (iv) discounted cash flow analyses with terminal values determined using terminal capitalization rates between 7.3% and 11.3%, and discount rates between 8.5% and 9.5%. The Company considered the risk characteristics of the properties and adjusted the capitalization rates and/or discount rates as applicable.
Goodwill—Upon termination of the BRSP management contract on April 30, 2021, the Other IM goodwill balance of $81.6 million was fully written off as the remaining value of the Other IM reporting unit represented principally the BRSP management contract. The receipt of a one-time termination payment of $102.3 million at closing consequently resulted in a net gain of $20.7 million, recognized within other gain (loss) in discontinued operations (Note 12).
The Company may redeemhad previously recognized impairment loss on its Other IM goodwill of $79.0 million in the Junior Notesfirst quarter of 2020 and $515.0 million in the second quarter of 2020. In light of the economic effects of COVID-19 and the Company's acceleration of its digital transformation in the second quarter of 2020, both of which represented indicators of impairment, the Company's quantitative tests indicated that the carrying value of the Other IM reporting unit, including goodwill, was in excess of its estimated fair value at par,March 31, 2020 and at June 30, 2020. The remaining fair value of the Other IM reporting unit was determined to be principally in whole the BRSP management contract, as no value was ascribed to (a) the future capital raising potential of the non-digital credit and opportunity fund management business as it is no longer part of the Company's long-term strategy; and (b) the hypothetical contract of internally managing the Company's non-digital balance sheet assets following significant decreases in asset values in 2020.
Other Intangible Assets—In the first quarter of 2021, investor relationship intangible asset in Other IM was impaired by $4.0 million (Note 12) to a fair value of $5.5 million at the time of impairment based upon estimated recoverable value in a potential monetization of the Company's Other IM business. During the year ended December 31, 2020, management contracts were impaired by $4.3 million to an aggregate fair value of $8.4 million at the time of impairment. Fair value was based upon the revised future net cash flows over the remaining life of the contracts, generally discounted at 10%, and represent fair value using Level 3 inputs.
Equity Method Investments—Impairment on equity method investments classified as held for disposition and discontinued operations was $125.3 million and $26.0 million in the three months ended September 30, 2021 and 2020, respectively, and $182.9 million and $49.1 million in the nine months ended September 30, 2021 and 2020, respectively, reflected within equity method losses in discontinued operations (Note 12). Equity method investments that were impaired and written down to fair value during the nine months ended September 30, 2021 and year ended December 31, 2020 totaled $496.0 million and $701.8 million, respectively, at the time of impairment, representing fair value using Level 3 inputs. Impairment recorded in 2021 was based upon estimated recoverable values, including ADC loans accounted for as equity method investments. Significant impairment was also recorded on these ADC loans in the fourth quarter of 2020, previously driven by reduced future cash flow streams expected from these investments, primarily taking into consideration a combination of lower land values, delayed leasing, and/or offer prices in part,the current market, generally discounted at rates between 10% to 20%. Other impairment charges during 2020 were generally determined using estimated recoverable values for investments resolved or sold, investment values based upon projected exit strategies, or fair values based upon discounted expected future cash after five years. Toflows from the extentinvestments.
Assets Carried at Fair Value—These assets are composed of equity investments valued based upon NAV, and equity method investments and loans receivable for which the fair value option was elected. During the nine months ended September 30, 2021 when these assets were classified as held for disposition and discontinued operations, unrealized fair value losses were recognized in other loss of $3.1 million for equity investments and $94.3 million for loans receivable, and in equity method losses of $24.3 million for equity method investments (Note 12). Additional information is included in Note 13 under "—Level 3 Recurring Fair Values."
35
Table of Contents

12. Discontinued Operations
Discontinued operations represent the following:
•Wellness Infrastructure—operations of the Wellness Infrastructure business, along with other non-core assets held by NRF Holdco, primarily: (i) the Company's equity interest in and management of NorthStar Healthcare, debt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, limited partnership interests in private equity real estate funds; as well as (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt, all of which were issued by NRF Holdco who acts as guarantor.
•Other—operations of substantially all of the OED investments and Other IM business that were previously in the Other segment, composed of various non-digital real estate, real estate-related equity and debt investments, general partner interests and management rights with respect to these assets, management of BRSP prior to termination of its contract, and underlying compensation and administrative costs for managing these assets.
•Hotel—operations of the Company's Hospitality segment and the THL Hotel Portfolio that was previously in the Other segment. In March 2021, the Company redeemssold the Junior Notes, the Trusts are required to redeem a corresponding amount of TruPS. The abilityequity in its hotel subsidiaries holding 5 of the Trusts6 portfolios in the Hospitality segment, and the Company's 55.6% interest in the THL Hotel Portfolio which was deconsolidated upon sale. The remaining hotel portfolio that was in receivership was sold by the lender in September 2021.
•Industrial—operations of the bulk industrial portfolio prior to pay dividends dependsthe sale of the Company's 50% interest and deconsolidation in December 2020.
Income (loss) from discontinued operations is presented below.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Revenues
Property operating income$196,302 $297,594 $607,172 $939,962 
Interest income4,469 13,578 17,703 64,975 
Fee income12,248 24,006 46,348 71,800 
Other income5,437 8,523 23,963 19,194 
Revenues from discontinued operations218,456 343,701 695,186 1,095,931 
Expenses
Property operating expense114,593 192,429 391,418 617,609 
Interest expense50,376 78,126 216,812 272,500 
Transaction-related costs and investment expense11,800 36,614 29,856 55,517 
Depreciation and amortization8,909 85,787 91,673 284,076 
(Reversal of) impairment loss(8,210)148,130 358,137 2,524,658 
Compensation and administrative expense21,901 25,646 74,617 62,626 
Expenses from discontinued operations199,369 566,732 1,162,513 3,816,986 
Other income (loss)
Gain on sale of real estate514 12,248 49,232 15,261 
Other gain (loss), net98,286 (14,428)40,262 (188,956)
Equity method losses(125,565)(80,289)(189,824)(31,155)
Loss from discontinued operations before income taxes(7,678)(305,500)(567,657)(2,925,905)
Income tax expense(2,751)(3,081)(22,938)(34,259)
Loss from discontinued operations(10,429)(308,581)(590,595)(2,960,164)
Income (loss) from discontinued operations attributable to:
Noncontrolling interests in investment entities(85,741)(120,299)(346,205)(581,204)
Noncontrolling interests in Operating Company7,177 (18,680)(23,354)(235,917)
Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.$68,135 $(169,602)$(221,036)$(2,143,043)
36
Table of Contents

13. Fair Value
Recurring Fair Values
The table below presents a summary of financial assets and financial liabilities carried at fair value on a recurring basis, including financial instruments for which the receiptfair value option was elected, but excluding financial assets under the NAV practical expedient, categorized into the three tier fair value hierarchy that is prioritized based upon the level of interest payments ontransparency in inputs used in the Junior Notes.valuation techniques, as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable and it is significant to the fair value measurement, requiring significant management judgment or estimate.
Fair Value Measurement Hierarchy
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Assets
Marketable equity securities$180,112 $— $— $180,112 
AFS debt securities held for disposition— — 37,108 37,108 
Other assets—derivative assets— 1,179 — 1,179 
Fair Value Option:
Loans held for investment— — 112,252 112,252 
Loans held for disposition— — 387,664 387,664 
Equity method investments held for disposition— — 115,753 115,753 
December 31, 2020
Assets
Marketable equity securities$218,485 $— $— $218,485 
AFS debt securities held for disposition— — 28,576 28,576 
Other assets—derivative assets— 99 — 99 
Fair Value Option:
Loans held for investment— — 36,797 36,797 
Loans held for disposition— — 1,258,539 1,258,539 
Equity method investments— — 28,540 28,540 
Equity method investments held for disposition— — 153,259 153,259 
Liabilities
Other liabilities—derivative liabilities
— 103,772 — 103,772 
Other liabilities—settlement liability— — 24,285 24,285 
Marketable Equity Securities
Marketable equity securities consist of publicly traded equity securities held largely by private open-end funds sponsored and consolidated by the Company, and prior to January 2021, equity investment in a third party mutual fund. The Company hasequity securities of the right, pursuantconsolidated funds comprise listed stocks primarily in the U.S. and to certain qualificationsa lesser extent, in Europe, and covenants, to defer paymentspredominantly in the digital real estate and telecommunication sectors. These marketable equity securities are valued based upon listed prices in active markets and classified as Level 1 of interest on the Junior Notes for up to six consecutive quarters. If paymentfair value hierarchy.
Debt Securities
The Company's investment in debt securities is composed of interest on the Junior Notes is deferred, the Trust will defer the quarterly distributions on the TruPS foravailable-for-sale ("AFS") N-Star CDO bonds, which are subordinate bonds retained by NRF Holdco from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF Holdco that it subsequently repurchased at a corresponding period. Additional interest accrues on deferred payments at the annual rate payable on the Junior Notes, compounded quarterly.discount. These CDOs are collateralized primarily by commercial real estate debt and securities.
Future Minimum Principal Payments
37
Table of Contents

The following table summarizes future scheduled minimum principal payments attables summarize the balance of the N-Star CDO bonds.
Amortized Cost without Allowance for Credit LossAllowance for Credit LossGross Cumulative Unrealized
(in thousands)GainsLossesFair Value
September 30, 2021$55,618 $(24,882)$6,372 $— $37,108 
December 31, 202046,561 (24,688)6,703 — 28,576 
The N-Star CDO bonds are included in the pending sale of NRF Holdco. There were no sales of N-Star CDO bonds during the nine months ended September 30, 20172021 and year ended December 31, 2020.
These CDOs have long-dated stated maturities through 2037 and 2041, however, the Company expects the N-Star CDO bonds to have remaining future cash flows up to 2.3 years from September 30, 2021.
Fair value of N-Star CDO bonds, classified as Level 3, are determined using an internal price interpolated based on current contractual maturity, except for financing on certain loan portfolios, which are based onupon third party prices of the senior N-Star CDO bonds of the respective CDOs, and applying the Company's expectationknowledge of the underlying collateral and recent trades, if any within the securitizations.
Impairment of AFS Debt Securities
AFS debt securities are considered to be impaired if their fair value is less than their amortized cost basis. If the Company intends to sell or is more likely than not required to sell the debt security before recovery of its amortized cost, the entire impairment amount is recognized in earnings within other gain (loss) as a write-off of the amortized cost basis of the debt security. If the Company does not intend to sell or is not more likely than not required to sell the debt security before recovery of its amortized cost, the credit component of the loss is recognized in earnings within other gain (loss) as an allowance for credit loss, which may be subject to reversal for subsequent recoveries in fair value. The non-credit loss component is recognized in other comprehensive income or loss ("OCI"). The allowance is charged off against the amortized cost basis of the security if in a subsequent period, the Company intends to or is more likely than not required to sell the security, or if the Company deems the security to be uncollectible.
Changes in allowance for credit losses for AFS debt securities are presented below:
Nine Months Ended September 30,
(In thousands)20212020
Allowance for credit losses
Beginning balance$24,688 $— 
Provision for credit losses194 23,973 
Ending balance$24,882 $23,973 
Credit losses were determined based upon an analysis of the present value of contractual cash flows expected to be collected from the underlying loan collateral as principal repayments oncompared to the loan financing depend upon net cash flows from collateral assets and ratio of outstanding principal to collateral.
(In thousands) Convertible and Exchangeable Senior Notes Secured and Unsecured Debt 
Securitization Bonds Payable
(2)
 Junior Subordinated Notes Total
Year Ending December 31,     
Remaining 2017 (1)
 $—
 $891,120
 $—
 $—
 $891,120
2018 —
 2,002,741
 —
 —
 2,002,741
2019 —
 3,905,040
 —
 —
 3,905,040
2020 —
 142,221
 —
 —
 142,221
2021 402,500
 873,160
 —
 —
 1,275,660
2022 and after 213,905
 1,886,968
 534,937
 280,117
 2,915,927
Total $616,405
 $9,701,250
 $534,937
 $280,117
 $11,132,709
__________
(1)
At September 30, 2017, $635.6 million in outstanding principal of secured and unsecured debt maturing in 2017 have met their respective qualifying conditions for extension of maturity.
(2)
For securitization bonds payable, principal may be repaid earlier if proceeds from underlying loans and securities are repaid by borrowers. Future estimated principal payments on securitization bonds payable at September 30, 2017, if based on reasonable expectations of cash flows from underlying loans and securities, would be as follows:

(In thousands) Securitization Bonds Payable
Year Ending December 31, 
Remaining 2017 $140,378
2018 245,641
2019 100,000
2020 48,918
Total $534,937

12. Derivatives
The Company uses derivative instruments to manage the risk of changes in interest rates and foreign exchange rates, arising from both its business operations and economic conditions. Specifically, the Company enters into derivative instruments to manage differences in the amount, timing, and durationamortized cost basis of the Company’s known or expected cash receipts and cash payments, the values of which are driven by interest rates, principally relating to the Company’s investments and borrowings. Additionally, the Company’s foreign operations expose the Company to fluctuations in foreign interest rates and exchange rates. The Company enters into derivative instruments to protect the value or fix certain of these foreign denominated amounts in terms of its functional currency, the U.S. dollar. Derivative instruments used in the Company’s risk management activities may be designated as qualifying hedge accounting relationships (“designated hedges”) or otherwise used for economic hedging purposes (“non-designated hedges”).
In connection with the Merger, the Company assumed $6.1 billion notional of interest rate contracts, including those held by consolidated N-Star CDOs, all of which are non-designated. This includes a $2.0 billion notional forward starting swap with a 3.39% strike and a maturity date in December 2029, with mandatory settlement at fair value by December 2019. The interest rate swap was intended to hedge the interest rate risk on future refinancing of certain mortgage debt assumed in the Merger.security. At September 30, 2017, the interest rate swap was out of the money2021 and recorded as a derivative liability of $161.7 million, which was a $14.3 million unfavorable changeDecember 31, 2020, there were no AFS debt securities in fair value from the Closing Date.unrealized loss position without allowance for credit loss.
Gross fair value of derivative assets and derivative liabilities were as follows:
Derivatives
  September 30, 2017 December 31, 2016
(In thousands) Designated Hedges Non-Designated Hedges Total Designated Hedges Non-Designated Hedges Total
Derivative Assets            
Foreign exchange contracts $9,466
 $939
 $10,405
 $34,715
 $1,103
 $35,818
Interest rate contracts —
 424
 424
 —
 283
 283
Included in other assets $9,466
 $1,363
 $10,829
 $34,715
 $1,386
 $36,101
Derivative Liabilities            
Foreign exchange contracts $(43,028) $(5,368) $(48,396) $(5,011) $(437) $(5,448)
Interest rate contracts —
 (161,754) (161,754) —
 —
 —
Included in accrued and other liabilities $(43,028) $(167,122) $(210,150) $(5,011) $(437) $(5,448)
Certain counterparties to theThe Company's derivative instruments require the Company to deposit cash or other eligible collateral. The Company had $8.8 million of cash collateral on deposit in connection with the notional forward starting swap and certaingenerally consist of: (i) foreign currency put options, forward contracts that were out of the money at September 30, 2017, and none at December 31, 2016.
Foreign Exchange Contracts
The following table summarizes the aggregate notional amounts of designated and non-designated foreign exchange contracts in place at September 30, 2017, along with certain key terms:

Hedged Currency Instrument Type Notional Amount
(in thousands)		 
 Range of Expiration Dates
  Designated Non-Designated FX Rates
($ per unit of foreign currency)		 
EUR FX Collar €117,963
 €—
 Min $1.06 / Max $1.53 December 2018 to January 2021
GBP FX Collar £53,528
 £2,472
 Min $1.45 / Max $1.82 December 2018 to December 2019
EUR FX Forward €331,429
 €4,530
 Range from $1.06 to $1.27 October 2017 to January 2022
GBP FX Forward £101,921
 £45,229
 Range from $1.23 to $1.35 June 2018 to December 2020
NOK FX Forward NOK802,816
 NOK120,184
 $0.12 November 2017
Designated Net Investment Hedges
The Company’s foreign denominated net investments in subsidiaries or joint ventures were €498.2 million, £237.7 million, CHF0.2 million and NOK802.4 million, or a total of $1,008.1 million at September 30, 2017, and €394.4 million, £106.2 million, CHF54.5 million and NOK842.1 million, or a total of $697.4 million at December 31, 2016.
The Company entered into foreign exchange contractscostless collars to hedge the foreign currency exposure of certain investments in foreign subsidiaries or equity method joint ventures designated as net investment hedges, as follows:
    forward contracts whereby the Company agrees to sell an amount of foreign currency for an agreed upon amount of U.S. dollars;(in EUR and
    foreign exchange collars (caps and floors) without upfront premium costs, which consist of a combination of currency options with single date expirations, whereby the Company gains protection against foreign currency weakening below a specified level and pays for that protection by giving up gains from foreign currency appreciation above a specified level.
These foreign exchange contracts are used to protect certain of the Company’s foreign denominated investments and receivables from adverse foreign currency fluctuations, in GBP), with notional amounts and termination dates based upon the anticipated return of capital from the investments.
Release of accumulated other comprehensive income related to net investment hedges occurs upon losing a controlling financial interest in an investment or obtaining control over an equity method investment. Upon sale, complete or substantially complete liquidation of an investment in a foreign subsidiary, or partial sale of an equity method investment, the gain or loss on the related net investment hedge is reclassified from accumulated other comprehensive income to earnings.
Following the liquidation of underlying investments of foreign subsidiaries, net realized losses on net investment hedges were transferred out of accumulated other comprehensive income into earnings, recorded in other gain (loss), amounting to $5.2 million for the three months ended September 30, 2017, $3.9 million for the nine months ended September 30, 2017these investments; and $0.1 million for the nine months ended September 30, 2016. There were no such transfers in the three months ended September 30, 2016.
Non-Designated Hedges
At the end of each quarter, the Company reassesses the effectiveness of its net investment hedges and as appropriate, dedesignates the portion of the derivative notional that is in excess of the beginning balance of its net investments as non-designated hedges. Any unrealized gain or loss on the dedesignated portion of net investment hedges is transferred into earnings, recorded in other gain (loss), which were unrealized losses of $1.9 million and $24,000 for the three months ended September 30, 2017 and 2016, respectively, and an unrealized loss of $4.0 million and an unrealized gain of $28,000 for the nine months ended September 30, 2017 and 2016, respectively.
Interest Rate Contracts
The Company uses various(ii) interest rate contracts, some of which may be designated as cash flows hedges,caps to limit itsthe exposure to changes in interest rates on various floating rate debt obligations.
obligations (indexed primarily to LIBOR and to a lesser extent, EURIBOR and GBP LIBOR). These derivative contracts may be designated as qualifying hedge accounting relationships, specifically as net investment hedges and cash flow hedges, respectively. At September 30, 2017,2021 and December 31, 2020, notional amounts aggregated to the Company heldequivalent of $184.9 million and $350.5 million, respectively, for foreign exchange contracts, and the followingequivalent of $2.8 billion and $4.6 billion, respectively, for interest rate contracts:

  
Notional Amount
(in thousands)
   Strike Rate / Forward Rate  
Instrument Type Non-Designated Index  Expiration
Interest rate swaps $2,000,000
 3-Month LIBOR 3.39% December 2029
Interest rate swaps $3,254
 1-Month LIBOR 4.17% - 5.12% July 2018 to July 2023
Interest rate caps $6,537,135
 1-Month LIBOR 2.50% - 5.63% October 2017 to November 2020
Interest rate caps $336,828
 3-Month LIBOR 2.50% - 3.50% December 2017 to March 2019
Interest rate caps €405,759
 3-Month EURIBOR 0.75% - 1.50% October 2018 to June 2022
Interest rate caps £431,278
 3-Month GBP LIBOR 2.00% - 2.50% December 2017 to February 2020
Basis swap $10,000
 
(1) 
 
(1) 
 January 2019
Deliverable swap futures $7,000
 
(2) 
 
(2) 
 December 2017
__________
(1)
Basis swap is held by a consolidated N-Star CDO, paying 3-month LIBOR plus 1.95% and receiving 1-month LIBOR plus 1.88%, used to economically hedge the timing of payments between certain underlying securities and corresponding bonds issued by the consolidated N-Star CDO.
(2)
A consolidated sponsored investment company sold a 10-year USD deliverable swap futures contract to economically hedge the interest rate exposure on its long dated fixed rate securities.
Amounts recorded in other gain (loss)contracts, all of which were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Unrealized gain (loss):        
Cash flow hedge ineffectiveness $—
 $114
 $—
 $215
Non-designated interest rate contracts $(8,790) $(191) $(15,513) $(1,565)
Offsetting Assets and Liabilities
composed predominantly of non-designated economic hedges. The Company enters into agreementsderivative instruments are subject to enforceable master netting arrangements with its derivative counterparties that allow the Company to offset the settlement of derivative assets and liabilities in the same currency by derivative instrument type or, in the event of default by the counterparty, to offset all derivative assets and liabilities with the same counterparty. The Company has elected not to net derivative asset and liability positions, notwithstandingNotwithstanding the conditions for right of offset may have been met. Themet, the Company presents derivative assets and liabilities with the same counterparty on a gross basis on the consolidated balance sheets.

Realized and unrealized gains and losses on derivative instruments are recorded in other gain (loss) on the consolidated statement of operations, other than interest expense, as follows:
38
Table of Contents

Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Foreign currency contracts:
Realized gain transferred from AOCI to earnings$— $414 $1,520 $414 
Unrealized gain transferred from AOCI to earnings (1)
— — — 1,485 
Unrealized gain (loss) in earnings on non-designated contracts1,457 (840)1,129 (1,616)
Interest rate contracts:
Interest expense on designated contracts (2)
— 6 (20)12 
Unrealized loss in earnings on non-designated contracts(13)(197)(248)(123)
Realized loss transferred from AOCI to earnings— — (1,328)— 
__________
(1)The following table sets forthportion of derivative positions wherenotional that is in excess of the beginning balance of the foreign denominated net investment is dedesignated upon a reassessment of the effectiveness of net investment hedges at period end.
(2)    Represents amortization of the cost of designated interest rate caps to interest expense based upon expected hedged interest payments on variable
rate debt.
Prior to January 2021, the Company hashad entered into a rightseries of offset under netting arrangementsforward contracts on its shares in a third party real estate mutual fund in an aggregate notional amount of $119 million and a series of swap contracts with the same counterparty.
  Gross Amounts of Assets (Liabilities) Included on Consolidated Balance Sheets Gross Amounts Not Offset on Consolidated Balance Sheets Net Amounts of Assets (Liabilities)
(In thousands)  (Assets) Liabilities Cash Collateral Received (Pledged) 
September 30, 2017        
Derivative Assets        
Foreign exchange contracts $10,405
 $(9,661) $—
 $744
Interest rate contracts 424
 (4) —
 420
  $10,829
 $(9,665) $—
 $1,164
Derivative Liabilities        
Foreign exchange contracts $(48,396) $9,661
 $3,420
 $(35,315)
Interest rate contracts (161,754) 4
 5,415
 (156,335)
  $(210,150) $9,665
 $8,835
 $(191,650)
         
December 31, 2016        
Derivative Assets        
Foreign exchange contracts $35,818
 $(180) $—
 $35,638
Interest rate contracts 283
 —
 —
 283
  $36,101
 $(180) $—
 $35,921
Derivative Liabilities        
Foreign exchange contracts $(5,448) $180
 $—
 $(5,268)
Interest rate contracts —
 —
 —
 —
  $(5,448) $180
 $—
 $(5,268)
13. Fair Value
Recurring Fair Values
Assetscounterparty to pay the return of the Dow Jones U.S. Select REIT Total Return Index. The forward and liabilities carried at recurring fair values include financial instruments for whichswap contracts were settled upon expiration in January 2021 through delivery of all of the Company elected to account for underCompany's shares in the mutual fund, realizing an immaterial net loss upon settlement. The forwards and swaps were not designated accounting hedges. At December 31, 2020, the forwards and swaps were in a liability position of $102.7 million and $0.1 million, respectively. During the three and nine months ended September 30, 2020, the forwards and swaps had realized and unrealized fair value option.
Investmentslosses totaling $0.2 million and gains totaling $27.0 million, respectively, which were partially offset by an increase in Unconsolidated VenturesNAV of $2.3 million and a decrease in NAV of $20.0 million, respectively, in the Company's investment in the mutual fund, both of which were recorded in other income on the consolidated statement of operations.
The Company elected the fair value option to account for certain investments in unconsolidated ventures, including investments in private funds acquired in connection with the Merger. The Company determined that recording such investments based on the change in fair value of projected future cash flows better represents the underlying economics of the respective investments in the earnings of the Company.
Fair value of investments in unconsolidated ventures is determined using discounted cash flow models based on expected future cash flows for incomeCompany's foreign currency and realization events of the underlying assets, classified as Level 3 of the fair value hierarchy, with changes in fair value recorded in earnings from investments in unconsolidated ventures. The Company has not elected the practical expedient to measure the fair value of its investments in private funds using the net asset value of the underlying funds.
Securities
N-Star CDO bonds—Fair value of N-Star CDO bonds is based on quotations from financial institutions that generally acted as underwriters of the CDO transactions. These quotations are not adjusted and are generally based on a valuation model using unobservable inputs such as interest rates, expected future cash flows, discount rates, estimated prepayments and projected losses. Fair value of subordinate N-Star CDO bonds is determined using an internal price interpolated based on third-party prices of the senior N-Star CDO bonds of the respective CDOs. All N-Star CDO bonds are classified as Level 3 of the fair value hierarchy.
CMBS and other securities—Fair value is determined based on broker quotes, third party pricing services or an internal price, all of which are generally derived from unobservable inputs, and therefore classified as Level 3 of the fair value hierarchy. Management determines the prices are representative of fair value through a review of available data, including recent transactions as well as its knowledge of and experience in the market.

The Company relies on the third-party pricing exception with respect to the requirement to provide quantitative disclosures about significant Level 3 inputs being used to determine fair value measurements related to CRE securities (including N-Star CDO bonds). The Company believes such pricing service or broker quotation for such items may be based on a market transaction of comparable securities, inputs including forecasted market rates, contractual terms, observable discount rates for similar securities and credit such as credit support and delinquency rates.
Equity securities of consolidated fund—Fair value of equity securities held by a consolidated open-end fund is based on listed prices in active markets and classified as Level 1 of the fair value hierarchy.
Derivatives
Derivative instruments consist of interest rate contracts and foreign exchange contracts that are generally traded over-the-counter, and are valued using a third-party service provider, except for exchange traded futures contracts which are Level 1 fair values.provider. Quotations on over-the-counter derivatives are not adjusted and are generally valued using observable inputs such as contractual cash flows, yield curve, foreign currency rates and credit spreads, and are classified as Level 2 of the fair value hierarchy. If a significantAlthough credit valuation adjustment is applied to a derivative instrument to account foradjustments, such as the risk of non-performance, suchdefault, rely on Level 3 inputs, these inputs are not significant to the overall valuation of the derivatives. As a result, derivative valuations in their entirety are classified as Level 2 of the fair value measurement ishierarchy.
Settlement Liability
In March 2020, the Company entered into a cooperation agreement with Blackwells Capital LLC ("Blackwells"), a stockholder of the Company. Pursuant to the cooperation agreement, Blackwells agreed to a standstill in its proxy contest with the Company, and to abide by certain voting commitments, including a standstill with respect to the Company until the expiration of the agreement in March 2030 and voting in favor of the Board of Directors' recommendations until the third anniversary of the agreement.
Contemporaneously, the Company and Blackwells entered into a joint venture arrangement for the purpose of acquiring, holding and disposing of the Company's class A common stock. Pursuant to the arrangement, the Company contributed its class A common stock, valued at $14.7 million by the venture, and Blackwells contributed $1.47 million of cash that was then distributed to the Company, resulting in a net capital contribution of $13.23 million by the Company in the venture. All of the class A common stock held in the venture was repurchased by the Company in March 2020 (Note 9). Distributions from the joint venture arrangement upon dissolution effectively represent a settlement of the proxy contest with Blackwells. The initial fair value of the arrangement was recorded as a settlement loss on the statement of operations in March 2020, with a corresponding liability on the balance sheet, subject to remeasurement at each period end. The settlement liability represents the fair value of the disproportionate allocation of profits distribution to Blackwells pursuant to the joint venture arrangement. The profits are derived from dividend payments and appreciation in value of the Company's class A common stock, allocated between the Company and Blackwells based upon specified return hurdles.
In June 2021, Blackwells terminated the arrangement and the joint venture was dissolved. The profits distribution allocated to Blackwells was valued at $47.0 million and paid in the form of 5.95 million shares of the Company's class A common stock, with $22.8 million recognized in 2021 through termination as other loss on the consolidated statement of operations.
Prior to dissolution of the arrangement, the settlement liability, classified as a Level 3 fair value, was measured using a Monte Carlo simulation under a risk-neutral premise, assuming that the final distribution would occur at the end of the
39
Table of Contents

third year in March 2023. At December 31, 2020, the settlement liability was valued at $24.3 million, applying the following assumptions: (a) expected volatility of the Company's class A common stock of 67.2% based upon a combination of historical and implied volatility of the Company's class A common stock; (b) zero expected dividend yield given the Company's suspension of its common stock dividend beginning the second quarter of 2020; and (c) risk free rate of 0.14% per annum based upon a compounded zero-coupon U.S. Treasury yield. During 2020, the settlement liability increased approximately $20.4 million from inception in March 2020, recorded as other loss on the consolidated statement of operations.
Fair Value Option
Equity Method Investments
Equity method investments for which the fair value option was elected are carried at fair value on a recurring basis. Fair values are determined using either indicative sales price, NAV of the underlying funds, or discounted future cash flows based upon expected income and realization events of the underlying assets. Fair value of equity method investments are classified as Level 3 of the fair value hierarchy. For derivatives heldChanges in non-recourse CDO financing structures where, by design, the derivative contracts are senior to all the CDO bonds payable, there is no material impact of a credit valuation adjustment.
Due To Affiliates—Contingent Consideration for Internalization
In connection with the Company's acquisition of the investment management business and operations of its former manager in April 2015 (the "Internalization"), contingent consideration is payable to certain senior executives of the Company. Contingent consideration for the Internalization is to be paid in a combination of up to approximately 1.29 million shares of class A common stock, 115,226 shares of class B common stock and approximately 4.40 million OP Units (after giving effect to the Colony exchange ratio of 1.4663), subject to multi-year performance targets for achievement of a contractually-defined funds from operations ("Benchmark FFO") per share target and capital-raising thresholds from the funds management business, adjusted for certain targets that have not been met and that have expired. If the minimum performance target for either of these metrics is not met or exceeded, a portion of the contingent consideration paid in respect of the other metric would not be paid out in full. The contingent consideration is remeasured at fair value each reporting period using a third party valuation service provider and classified as Level 3 of equity method investments under the fair value hierarchy, with changes in fair valueoption are recorded in other gain (loss) in the consolidated statementequity method earnings (losses).
Loans Receivable
Loans receivable consist of operations. Fair value of the contingent consideration is measured using a Monte Carlo probability simulation model for the Benchmark FFO componentmortgage loans, mezzanine loans and a discounted payout analysis based on probabilities of achieving prescribed targets for the capital raising component. The Company's class A common stock price and related equity volatilities are applied to convert the contingent consideration payout into shares.
Other Liabilities—Contingent Consideration for THL Hotel Portfolio
In connection with a consensual foreclosure of the THL Hotel Portfolio, contingent consideration is payable to a preferred equity holder of the borrower in an amount up to $13.0 million (Note 3). Fair value of the contingent consideration is measured using a discounted cash flow based on the probability of the former preferred equity holder receiving such payment.

The table below presents a summary of assets and liabilitiesnon-mortgage loans carried at fair value on a recurring basis, including financial instruments for whichunder the fair value option was elected.
  Fair Value Measurements
(In thousands) Level 1 Level 2 Level 3 Total
September 30, 2017        
Assets        
Investments in unconsolidated ventures $—
 $—
 $314,274
 $314,274
Debt securities available for sale        
CRE securities of consolidated N-Star CDOs:        
CMBS —
 —
 169,063
 169,063
Other securities —
 —
 65,440
 65,440
N-Star CDO bonds —
 —
 107,265
 107,265
CMBS and other securities —
 20,625
 21,825
 42,450
Equity securities of consolidated fund 24,445
 —
 —
 24,445
Other assets—derivative assets 76
 10,753
 —
 10,829
Liabilities        
Other liabilities—derivative liabilities
 —
 210,150
 —
 210,150
Other liabilities—contingent consideration for THL Hotel Portfolio —
 —
 6,771
 6,771
Due to affiliates—contingent consideration for Internalization —
 —
 26,910
 26,910
         
December 31, 2016        
Assets        
Securities—CMBS $—
 $23,446
 $—
 $23,446
Other assets—derivative assets
 —
 36,101
 —
 36,101
Liabilities        
Other liabilities—derivative liabilities —
 5,448
 —
 5,448
Due to affiliates—contingent consideration for Internalization —
 —
 41,250
 41,250
Level 3 Fair Value Measurements
Quantitative information about recurring level 3 fair value measurements are as follows:
    Valuation Technique Key Unobservable Inputs Input Value 
Effect on Fair Value from Increase in Input Value (1)
Financial Instrument 
 
Fair Value
(In thousands)
   
Weighted Average
(Range)
 
September 30, 2017          
Investments in unconsolidated ventures—private funds $287,886
 Discounted cash flows Discount rate 14.2% (11.1% - 20.0%) Decrease
Investments in unconsolidated ventures—others 26,388
 Discounted cash flows Discount rate 18.6%
(12.5% - 20.1%)		 Decrease
Due to affiliates—contingent consideration for Internalization
 26,910
 Monte Carlo simulation Benchmark FFO volatility 16.1% Increase
      Equity volatility 22.0% Increase
      
Correlation (2) 
 80.0% Increase
Other liabilities—contingent consideration for THL Hotel Portfolio
 6,771
 Discounted cash flows Discount rate 20.0% Decrease
December 31, 2016          
Due to affiliates—contingent consideration for Internalization

 $41,250
 Monte Carlo simulation Benchmark FFO volatility 16.1% Increase
      Equity volatility 32.5% Increase
      
Correlation (2)
 80.0% Increase
__________
(1)
Represents the directional change in fair value that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the reverse effect. Significant increases or decreases in these inputs in isolation could result in significantly higher or lower fair value measures.
(2)
Represents assumed correlation between Benchmark FFO and the Company's class A common stock price.

The following table presents changes in recurring Level 3 fair value measurements, including realized and unrealized gains (losses) included in earnings and accumulated other comprehensive income. Any transfers in or out of Level 3 are assumed to occur at the beginning of the year.
  Level 3 Assets Level 3 Liabilities
(In thousands) Investments in Unconsolidated Ventures Securities 
Due To Affiliates—Contingent Consideration for Internalization
 Other Liabilities—Contingent Consideration for THL Hotel Portfolio
Fair value at December 31, 2016 $—
 $—
 $(41,250) $—
Acquired through the Merger 405,626
 433,850
 —
 —
Consideration for business combination —
 —
 —
 6,771
Purchases / borrowings / amortization / contributions 29,053
 35,878
 —
 —
Paydowns or distributions (125,680) (92,266) —
 —
Realized gains (losses) in earnings —
 (12,349) —
 —
Unrealized gains (losses):        
In earnings 5,275
 —
 14,340
 —
In other comprehensive income —
 (1,520) —
 —
Fair value at September 30, 2017 $314,274
 $363,593
 $(26,910) $6,771
Unrealized gains (losses) related to balance at September 30, 2017:        
In earnings $5,275
 $—
 $14,340
 $—
In other comprehensive income $—
 $(1,520) $—
 $—
         
Fair value at December 31, 2015 $—
 $—
 $(52,990) $—
Unrealized gain in earnings —
 —
 13,640
 —
Fair value at September 30, 2016 $—
 $—
 $(39,350) $—
Unrealized gain related to balance at September 30, 2016 recorded in earnings $—
 $—
 $13,640
 $—
Nonrecurring Fair Values
The Company holds certain assets carried at fair value on a nonrecurring basis, which comprise real estateoption. Loans held for sale carrieddisposition are measured at the lowertheir selling price. Fair value of carrying value and fair value less estimated costs to sell, as follows.
(In thousands) September 30, 2017 December 31, 2016
Real estate held for sale $70,455
 $67,033
Real estateloans held for sale written down to fair value at September 30, 2017 was estimated based on broker price opinions, bid price or discounted cash flows with a discount rate of 10%, and net of selling costs between 2% to 8% of fair value, classified as level 3 fair value.

Fair Value Information on Financial Instruments Reported at Cost
Carrying amounts and estimated fair values of financial instruments reported at amortized cost are presented below:
  Fair Value Measurements Carrying Value
(In thousands) Level 1 Level 2 Level 3 Total 
September 30, 2017          
Assets          
Loans receivable, net $—
 $—
 $3,495,661
 $3,495,661
 $3,455,902
Liabilities          
Convertible and exchangeable senior notes 614,033
 14,966
 —
 628,999
 610,212
Secured and unsecured debt —
 —
 9,584,988
 9,584,988
 9,541,113
Securitization bonds payable —
 444,577
 —
 444,577
 443,872
Junior subordinated debt —
 —
 213,735
 213,735
 196,778
December 31, 2016          
Assets          
Loans receivable, net $—
 $—
 $3,471,797
 $3,471,797
 $3,430,608
Liabilities          
Corporate credit facility —
 422,600
 —
 422,600
 422,600
Convertible senior notes 606,698
 —
 —
 606,698
 592,826
Secured and unsecured debt —
 —
 2,163,094
 2,163,094
 2,205,697
Securitization bonds payable —
 492,481
 —
 492,481
 494,495
Loans Receivable—Loans receivable consist of first mortgages, subordinated mortgages and corporate loans, including such loans held by securitization trusts consolidated by the Company. Fair values wereinvestment is determined by comparing the current yield to the estimated yield of newly originated loans with similar credit risk or the market yield at which a third party might expect to purchase such investment;investment, or based onupon discounted cash flow projections of principal and interest expected to be collected, which includesinclude, but are not limited to, consideration of the financial standing of the borrower or sponsor as well as operating results and/or value of the underlying collateral. Carrying
Loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status, all of which are held for disposition as presented in the table below. Such loans include distressed loan portfolios that are held for disposition, previously acquired by the Company at a discount (classified as purchased credit-impaired loans prior to the election of fair value option).
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnpaid Principal BalanceFair Value less Unpaid Principal BalanceFair ValueUnpaid Principal BalanceFair Value less Unpaid Principal Balance
90 days or more past due or nonaccrual
Loans held for disposition$224,274 $1,173,066 $(948,792)$873,205 $2,159,538 $(1,286,333)
40
Table of Contents

Level 3 Recurring Fair Values
Quantitative information about recurring Level 3 fair value assets are as follows.
Valuation TechniqueKey Unobservable InputsInput Value
Effect on Fair Value from Increase in Input Value (2)
Financial Instrument
Fair Value
(In thousands)
Weighted Average(1)
(Range)
September 30, 2021
AFS debt securities held for disposition$37,108 Discounted cash flowsDiscount rate23.4%
(5.8% - 57.8%)		Decrease
Fair Value Option:
Loans held for investment112,252 Discounted cash flowsDiscount rate8.0%
(4.7% - 11.3%)		Decrease
Loans held for disposition387,664 
Transaction price (4)
N/AN/AN/A
Equity method investments held for disposition1,553 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition114,200 
Transaction price (4)
N/AN/AN/A
December 31, 2020
AFS debt securities held for disposition$28,576 Discounted cash flowsDiscount rate
28.9%
(18.3% - 57.8%)
Decrease
Fair Value Option:
Loans held for investment36,797 Discounted cash flowsDiscount rate
8.7%
(7.2% - 8.9%)
Decrease
Loans held for disposition1,258,539 Discounted cash flowsDiscount rate13.3%
(6.9% - 25.7%)		Decrease
Equity method investments28,540 Discounted cash flowsDiscount rate30%Decrease
Equity method investments held for disposition2,472 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition8,383 Discounted cash flowsDiscount rate
19.3%
(19.0% - 20.0%)
Decrease
Equity method investments held for disposition142,404 
Transaction price (4)
N/AN/AN/A
__________
(1)    Weighted average discount rates are calculated based upon undiscounted cash flows.
(2)    Represents the directional change in fair value that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the reverse effect. Significant increases or decreases in these inputs in isolation could result in significantly higher or lower fair value measures.
(3)    Fair value was estimated based upon underlying NAV of the respective funds on a quarter lag, adjusted as deemed appropriate by management, considering the cash flows provided by the general partners of the funds and the implied yields of the funds.
(4)    Based upon actual or indicative transaction values of the respective loans, investments or underlying assets of the investee. At December 31, 2020, acquisition price was deemed to approximate fair value for investee engaged in real estate development during the development stage.
41
Table of Contents

The following table presents changes in recurring Level 3 fair value assets. Loans receivable and equity method investments under the fair value option are predominantly held for investmentdisposition. Realized and unrealized gains (losses) are presented netincluded in AOCI for AFS debt securities and in other gain (loss) on the consolidated statement of allowanceoperations for loan losses, where applicable.other assets carried at fair value.
Debt—
Fair Value Option
(In thousands)AFS Debt SecuritiesLoans Held for Investment and Held for DispositionEquity Method Investments (including Held for Disposition)
Fair value at December 31, 2019$54,859 $— $222,875 
Election of fair value option on January 1, 2020— 1,556,131 — 
Reclassification of accrued interest on January 1, 2020— 13,504 — 
Purchases, drawdowns, contributions and accretion2,979 156,179 4,614 
Paydowns, distributions and sales(4,542)(131,365)(900)
Change in accrued interest and capitalization of paid-in-kind interest— 32,544 — 
Transfer to held for disposition— (42,985)— 
Allowance for credit losses(23,973)— — 
Realized and unrealized losses in earnings, net— (289,283)(66,418)
Other comprehensive income (loss) (1)
(1,425)30,419 5,599 
Fair value at September 30, 2020$27,898 $1,325,144 $165,770 
Net unrealized losses on instruments held at September 30, 2020
In earnings$— $(280,822)$(66,418)
In other comprehensive loss$(1,425)N/AN/A
 
Fair value at December 31, 2020$28,576 $1,295,337 $181,799 
Purchases, drawdowns, contributions and accretion11,120 92,967 8 
Paydowns, distributions and sales(2,063)(436,502)(18,128)
Change in accrued interest and capitalization of paid-in-kind interest— 11,630 0
Change in accounting method for equity interest— — (27,626)
Deconsolidation of investment entities (Note 21)
— (341,577)— 
Allowance for credit losses(194)— — 
Realized and unrealized losses in earnings, net— (91,981)(13,846)
Other— 4,834 — 
Other comprehensive loss (1)
(331)(34,792)(6,454)
Fair value at September 30, 2021$37,108 $499,916 $115,753 
Net unrealized losses on instruments held at September 30, 2021
In earnings$— $(42,148)$(23,031)
In other comprehensive loss$(331)N/AN/A
__________
(1)    Amounts recorded in OCI for loans receivable and equity method investments represent foreign currency translation differences on the Company's foreign subsidiaries that hold the respective foreign currency denominated investments.
42
Table of Contents

Investments Carried at Fair Value Using Net Asset Value
Investments in Company-sponsored private fund and non-traded REIT, and limited partnership interest in a third party real estate private fund, all of which are held for disposition (Note 11), are valued using NAV of the respective vehicles.
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnfunded CommitmentsFair ValueUnfunded Commitments
Private fund—real estate$12,064 $7,117 $15,680 $8,026 
Non-traded REIT—real estate26,041 — 18,272 — 
Private fund—emerging market private equity2,172 — 2,224 — 
The Company's interests in the private funds are not subject to redemption, with distributions to be received through liquidation of underlying investments of the funds. The private funds each have eight and ten year lives, respectively, at inception, both of which may be extended in one year increments up to two years.
No secondary market currently exists for shares of the non-traded REIT and the Company does not currently expect to seek liquidity of its shares of the non-traded REIT. Subject to then-existing market conditions, the board of directors of the non-traded REIT, along with the Company, as sponsor, are expected to consider alternatives for providing liquidity to the non-traded REIT shares beginning 2021, five years from completion of the offering stage, but with no definitive date by which it must do so. In addition, the Company has agreed that any right to have its shares redeemed is subordinated to third party stockholders for so long as its advisory agreement is in effect. 
Nonrecurring Fair Values
The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the credit facility approximated carryingassets may not be recoverable. Adjustments to fair value as its prevailing interest rategenerally result from the application of lower of amortized cost or fair value accounting for assets held for disposition or otherwise, write-down of asset values due to impairment. Impairment is discussed in Note 11 for real estate, Notes 5 and applicable terms were renegotiated within the last 12 months. 11for equity method investments, and Notes 6and 11for intangible assets, including goodwill.
Fair Value Information on Financial Instruments Reported at Cost
Carrying amounts and estimated fair value of convertiblefinancial instruments reported at amortized cost are presented below.
 Fair Value MeasurementsCarrying Value
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Liabilities
Debt at amortized cost
Secured fund fee revenue notes$— $— $290,939 $290,939 $290,939 
Convertible and exchangeable senior notes1,055,861 — — 1,055,861 490,855 
Secured debt— — 3,789,416 3,789,416 3,789,416 
Debt related to assets held for disposition— — 3,443,376 3,443,376 3,443,376 
December 31, 2020
Liabilities
Debt at amortized cost
Convertible and exchangeable senior notes$898,231 $— $— $898,231 $520,522 
Secured debt— — 3,407,175 3,407,175 3,410,467 
Debt related to assets held for disposition— 13,095 7,055,237 7,068,332 7,352,828 
Debt—Senior notes was determinedwere valued using the last trade price in active markets.markets or unadjusted quoted price in non-active market for the senior note that is held for disposition. Fair value of exchangeablethe secured fund fee revenue notes was determined based on unadjusted quoted prices in a non-active market. Fair value ofand secured and unsecured debt, wereincluding amounts held for disposition, was estimated by discounting expected future cash outlays at interest rates currently available to the Company for instruments with similar terms and remaining maturities; and such fair values approximated carrying value for floating rate debt with credit spreads that approximate market rates. Fair value of securitization bonds payable was based on quotations from brokers or financial institutions that act as underwriters of the securitized bonds. Fair value of juniorinstruments. Junior subordinated debt that is held for disposition was valued based onupon unadjusted quotations from a third party valuation firm, with such quotes derived using a combination of internal valuation models, comparable trades in non-active markets and other market data.
Other—The carrying values of cash, interest receivable, accounts receivable, due from and to affiliates, interest payable and accounts payable approximate fair value due to their short term nature and credit risk, if any, are negligible.
43
Table of Contents

14. Variable Interest Entities
ConsolidatedA VIE is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. The following discusses the Company's involvement with VIEs where the Company is the primary beneficiary and consolidates the VIEs or where the Company is not the primary beneficiary and does not consolidate the VIEs.
Operating SubsidiaryCommon Stock Repurchases
During the first quarter of 2020, the Company repurchased 12,733,204 shares of its class A common stock at an aggregate cost of $24.6 million, or a weighted average price of $1.93 per share, pursuant to a $300 million share repurchase program that expired in May 2020.
Dividend Reinvestment and Direct Stock Purchase Plan
The Company's operating subsidiary, OP,Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) provides existing common stockholders and other investors the opportunity to purchase shares (or additional shares, as applicable) of the Company's class A common stock by reinvesting some or all of the cash dividends received on their shares of the Company's class A common stock or making optional cash purchases within specified parameters. The DRIP Plan involves the acquisition of the Company's class A common stock either in the open market, directly from the Company as newly issued common stock, or in privately negotiated transactions with third parties. There were no shares of class A common stock acquired under the DRIP Plan in the form of new issuances in 2021 and 2020.
Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in each component of AOCI attributable to stockholders and noncontrolling interests in investment entities, net of immaterial tax effect. AOCI attributable to noncontrolling interests in Operating Company is immaterial.
31
Table of Contents

Changes in Components of AOCI—Stockholders
(In thousands)Company's Share in AOCI of Equity Method InvestmentsUnrealized Gain (Loss) on AFS Debt SecuritiesUnrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
AOCI at December 31, 2019$9,281 $7,823 $(226)$139 $30,651 $47,668 
Other comprehensive income (loss) before reclassifications3,053 395 (3)13,961 15,821 33,227 
Amounts reclassified from AOCI— (3,585)— 225 (925)(4,285)
AOCI at September 30, 2020$12,334 $4,633 $(229)$14,325 $45,547 $76,610 
AOCI at December 31, 2020$17,718 $6,072 $(233)$52,832 $45,734 $122,123 
Other comprehensive income (loss) before reclassifications(2,948)(297)— (28,950)1,313 (30,882)
Amounts reclassified from AOCI(2,998)— 233 (20,221)(1,375)(24,361)
AOCI at September 30, 2021$11,772 $5,775 $— $3,661 $45,672 $66,880 
Changes in Components of AOCI—Noncontrolling Interests in Investment Entities
(In thousands)Unrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
AOCI at December 31, 2019$(1,005)$(17,913)$10,659 $(8,259)
Other comprehensive income (loss) before reclassifications(12)43,170 5,313 48,471 
Amounts reclassified from AOCI— (95)(873)(968)
AOCI at September 30, 2020$(1,017)$25,162 $15,099 $39,244 
AOCI at December 31, 2020$(1,030)$83,845 $15,099 $97,914 
Other comprehensive loss before reclassifications— (58,995)— (58,995)
 Amounts reclassified from AOCI1,030 810 — 1,840 
AOCI at September 30, 2021$— $25,660 $15,099 $40,759 
Reclassifications out of AOCI—Stockholders
Information about amounts reclassified out of AOCI attributable to stockholders by component is presented below. Such amounts are included in other gain (loss) in both continuing and discontinued operations on the statements of operations, as applicable, except for amounts related to equity method investments, which are included in equity method losses in discontinued operations.
(In thousands)Three Months Ended September 30,Nine Months Ended September 30,
Component of AOCI reclassified into earnings2021202020212020
Relief of basis of AFS debt securities$— $41 $— $3,585 
Release of foreign currency cumulative translation adjustments— 21 20,221 (225)
Unrealized gain on dedesignated net investment hedges— — — 552 
Realized gain on net investment hedges— 373 1,375 373 
Realized loss on cash flow hedges— — (233)— 
Release of equity in AOCI of equity method investments2,998 — 2,998 — 
32
Table of Contents

10. Noncontrolling Interests
Redeemable Noncontrolling Interests
The following table presents the activity in redeemable noncontrolling interests in the Company's digital investment management business, as discussed below, and in open-end funds sponsored and consolidated by the Company.
Nine Months Ended September 30,
(In thousands)20212020
Redeemable noncontrolling interests
Beginning balance$305,278 $6,107 
Contributions41,014 286,215 
Distributions and redemptions(13,865)(2,775)
Net income (loss)15,743 (2,316)
Ending balance$348,170 $287,231 
Strategic Partnership in the Company's Digital Investment Management Business
In July 2020, the Company formed a strategic partnership with affiliates of Wafra, Inc. (collectively, "Wafra"), a private investment firm and a global partner for alternative asset managers, in which Wafra made a minority investment in substantially all of the Company's digital investment management business (as defined for purposes of this transaction, the "Digital IM Business"). The investment entitles Wafra to participate in approximately 31.5% of the net management fees and carried interest generated by the Digital IM Business.
Pursuant to this strategic partnership, Wafra has assumed directly and also indirectly through a participation interest $124.9 million of the Company's commitments to DCP I, and has a $125.0 million commitment to DCP II that has been partially funded to-date. Wafra has also agreed to make commitments to the Company's future digital funds and investment vehicles on a pro rata basis with the Company based on Wafra's percentage interest in the Digital IM Business, subject to certain caps.
In addition, the Company issued Wafra 5 warrants to purchase up to an aggregate of 5% of the Company’s class A common stock (5% at the time of the transaction, on a fully-diluted, post-transaction basis). Each warrant entitles Wafra to purchase up to 5,352,000 shares of the Company's class A common stock, with staggered strike prices between $2.43 and $6.00 for each warrant, exercisable until July 17, 2026. No warrants have been exercised to-date.
Wafra paid cash consideration of $253.6 million at closing in exchange for its investment in the Digital IM Business and for the warrants. As previously agreed, Wafra paid additional consideration of $29.9 million in the Digital IM Business in April 2021 based upon the Digital IM Business having achieved a minimum run-rate of earnings before interest, tax, depreciation and amortization (as defined for the purpose of this computation) of $72.0 million as of December 31, 2020. The Compensation Committee of the Board of Directors has approved an allocation of 50% of the contingent consideration received from Wafra as additional bonus compensation to management, to be paid on behalf of certain employees to fund a portion of their share of capital contributions to the DCP funds as capital calls are made for these funds. Compensation expense is recognized over time based upon an estimated timeline for deployment of capital by the funds, which will correspond to the timing of capital calls to be funded by the Company on behalf of management.
Under certain circumstances following such time as the Digital IM Business comprises 90% or more of the Company's assets, the Company has agreed to use commercially reasonable efforts to facilitate the conversion of Wafra's interest into shares of the Company's class A common stock. There can be no assurances that such conversion would occur or on what terms and conditions such conversion would occur, including whether such conversion, if it did occur in the future, would have any adverse impact on the Company, the Company’s stock price, governance and other matters.
Wafra has customary minority rights and certain other structural protections designed to protect its interests, including redemption rights with respect to its investment in the Digital IM Business and its funded commitments in certain digital funds. Wafra's redemption rights will be triggered upon the occurrence of certain events, including key person or cause events under the governing documents of certain digital funds and for a limited liability company that has governingperiod, upon Marc Ganzi, the Company's Chief Executive Officer, and Ben Jenkins, Chief Investment Officer of the Company's digital real estate and infrastructure platform, ceasing to fulfill certain time and attention commitments to the Digital IM business.
To further enhance the alignment of interests, the Company entered into an amended and restated restrictive covenant agreement with each of Mr. Ganzi and Mr. Jenkins, pursuant to which they agreed to certain enhanced non-solicitation provisions that areand extension of the functional equivalentterm of a limited partnership. Theexisting non-competition agreements.
33
Table of Contents

Wafra’s investment provides the Company holdswith permanent capital to pursue strategic digital infrastructure investments and further grow the majorityDigital IM Business.
Noncontrolling Interests in Operating Company
Certain current and former employees of membership interestthe Company directly or indirectly own interests in OP, actspresented as noncontrolling interests in the Operating Company. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s OP Units for cash based on the market value of an equivalent number of shares of class A common stock at the time of redemption, or at the Company's election as managing member of OP, and exercises full responsibility, discretion and control overthrough issuance of shares of class A common stock (registered or unregistered) on a 1-for-one basis. At the day-to-day managementend of OP. Theeach period, noncontrolling interests in OP do not have either substantive liquidation rights, or substantive kick-out rights without cause, or substantive participating rights that could be exercised byis adjusted to reflect their ownership percentage in OP at the end of the period, through a simple majorityreallocation between controlling and noncontrolling interests in OP.
Redemption of noncontrolling interest members (including by such a member unilaterally). The absence of such rights, which represent voting rights in a limited partnership equivalent structure, would render OP to be a VIE. Units—The Company as managing member, hasredeemed 505,367 OP Units during the powernine months ended September 30, 2021 and 2,184,395 OP Units during the year ended December 31, 2020, with the issuance of an equal number of shares of class A common stock on a 1-for-one basis.
11. Assets and Related Liabilities Held for Disposition
Total assets and related liabilities held for disposition are summarized below, all of which relate to direct the core activities of OP that most significantly affect OP's performance, and through its majority interest in OP, has

both the right to receive benefits from and the obligation to absorb losses of OP. Accordingly, the Company is the primary beneficiary of OP and consolidates OP. As the Company conducts its business and holds itsdiscontinued operations (Note 12). These assets and liabilities through OP, the totalare composed of: (i) those held by NRF Holdco, predominantly related to Wellness Infrastructure assets and liabilities of OP comprise substantially allobligations; (ii) OED investments and intangible assets of the total consolidatedOther IM business, both of which previously resided in the Other segment; and (iii) prior to its disposition in March 2021, the Company's hotel business, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.
(In thousands)September 30, 2021December 31, 2020
Assets
Restricted cash$63,645 $191,692 
Real estate, net3,814,809 8,179,025 
Loans receivable387,664 1,258,539 
Equity and debt investments791,418 944,483 
Goodwill, deferred leasing costs and other intangible assets, net144,048 275,954 
Other assets250,132 327,309 
Due from affiliates18,311 60,317 
Total assets held for disposition$5,470,027 $11,237,319 
Liabilities
Debt, net (1)
$3,443,376 $7,352,828 
Lease intangibles and other liabilities388,187 533,688 
Total liabilities related to assets held for disposition$3,831,563 $7,886,516 
__________
(1)    Represents debt related to assets held for disposition if the debt is expected to be assumed by the acquirer upon sale or if the debt is expected to be extinguished through lender's assumption of underlying collateral, and liabilitiesincludes debt that is in receivership, in payment default or not in compliance with certain debt covenants. Includes the 5.375% exchangeable senior notes and junior subordinated debt (as described in Note 14) which are obligations of NRF Holdco as the issuer.
Impairment of Assets Classified as Held for Disposition and Discontinued Operations
Real Estate and Related Intangible Assets—Real estate classified as held for disposition and discontinued operations that has been written down and carried at fair value totaled $3.7 billion at September 30, 2021 and $4.7 billion at December 31, 2020, generally representing fair value using Level 3 inputs. Impairment of real estate and related intangibles held for disposition was a reversal of $8.2 million and a charge of $143.4 million for the three months ended September 30, 2021 and 2020, respectively, and charges of $354.1 million and $1.93 billion for the nine months ended September 30, 2021 and 2020, respectively, reflected in discontinued operations (Note 12).
Properties that were written down to estimated fair value at the time they were classified as held for disposition in both years were valued using either estimated recoverable value, sales price, broker opinions of value, or third-party appraisals, and in certain cases, adjusted as deemed appropriate by management to account for the inherent risk associated with specific properties. The impairment assessment in 2020 also factored in the economic effects of
34
Table of Contents

COVID-19 on real estate values. Fair value of these properties was generally reduced for estimated selling costs, ranging from 1% to 3% of fair value.
For properties that were impaired prior to being classified as held for sale and discontinued operations, largely in 2020, impairment was attributed primarily to shortened hold period assumptions, particularly in the hotel and wellness infrastructure portfolios, driven by the Company's accelerated digital transformation in the second quarter of 2020, and/or to a lesser extent, decline in property operating performance, in part from the economic effects of COVID-19. Fair value of these properties was estimated based upon: (i) third party appraisals, (ii) broker opinions of value with discounts applied based upon management judgment, (iii) income capitalization approach, using net operating income for each property and applying capitalization rates between 10.0% and 12.0%; or (iv) discounted cash flow analyses with terminal values determined using terminal capitalization rates between 7.3% and 11.3%, and discount rates between 8.5% and 9.5%. The Company considered the risk characteristics of the Company.properties and adjusted the capitalization rates and/or discount rates as applicable.
SecuritizationsGoodwill—Upon termination of the BRSP management contract on April 30, 2021, the Other IM goodwill balance of $81.6 million was fully written off as the remaining value of the Other IM reporting unit represented principally the BRSP management contract. The receipt of a one-time termination payment of $102.3 million at closing consequently resulted in a net gain of $20.7 million, recognized within other gain (loss) in discontinued operations (Note 12).
The Company securitizes loans receivablehad previously recognized impairment loss on its Other IM goodwill of $79.0 million in the first quarter of 2020 and CRE debt securities using VIEs. The securitization vehicles are structured as pass-through entities that receive principal and interest on$515.0 million in the underlying mortgage loans and debt securities and distribute those payments to the holderssecond quarter of 2020. In light of the notes, certificates or bonds issued byeconomic effects of COVID-19 and the securitization vehicles. The loans and debt securities are transferred into securitization vehicles suchCompany's acceleration of its digital transformation in the second quarter of 2020, both of which represented indicators of impairment, the Company's quantitative tests indicated that these assets are restricted and legally isolated from the creditorscarrying value of the Company,Other IM reporting unit, including goodwill, was in excess of its estimated fair value at March 31, 2020 and therefore are not availableat June 30, 2020. The remaining fair value of the Other IM reporting unit was determined to satisfybe principally in the BRSP management contract, as no value was ascribed to (a) the future capital raising potential of the non-digital credit and opportunity fund management business as it is no longer part of the Company's obligations but onlylong-term strategy; and (b) the obligationshypothetical contract of internally managing the Company's non-digital balance sheet assets following significant decreases in asset values in 2020.
Other Intangible Assets—In the first quarter of 2021, investor relationship intangible asset in Other IM was impaired by $4.0 million (Note 12) to a fair value of $5.5 million at the time of impairment based upon estimated recoverable value in a potential monetization of the securitization vehicles. The obligationsCompany's Other IM business. During the year ended December 31, 2020, management contracts were impaired by $4.3 million to an aggregate fair value of $8.4 million at the time of impairment. Fair value was based upon the revised future net cash flows over the remaining life of the securitization vehicles do not have any recourse to the general credit of any other consolidated entities, nor to the Company.contracts, generally discounted at 10%, and represent fair value using Level 3 inputs.
The Company retains beneficial interests in the securitization vehicles, usuallyEquity Method Investments—Impairment on equity tranches or subordinate securities. Affiliates of the Company or appointed third parties actmethod investments classified as special servicer of the underlying collateral mortgage loansheld for disposition and the Company acts as collateral manager of two N-Star CDOs. The special servicer has the power to direct activities during the loan workout process on defaulteddiscontinued operations was $125.3 million and delinquent loans as permitted by the underlying contractual agreements, which is subject to the consent of the Company, as the controlling class representative or directing holder who, under certain circumstances, has the right to unilaterally remove the special servicer. The Company, as collateral manager of the two N-Star CDOs, has the power to invest in additional or replacement collateral during the investment period and subsequent to the investment period, has the power to identify an asset as distressed or credit risk and sell certain distressed collateral. As the Company’s rights as the directing holder and controlling class representative or as the collateral manager of the CDOs provide the Company the ability to direct activities that most significantly impact the economic performance of the securitization vehicles, the Company maintains effective control over the loans and debt securities transferred into the securitization vehicles. Considering the interests retained by the Company in the securitization vehicles together with its role as controlling class representative or directing holder or collateral manager of the two N-Star CDOs, the Company is deemed to be the primary beneficiary and consolidates these securitization vehicles. Accordingly, these securitizations did not qualify as sale transactions and are accounted for as secured financing with the underlying mortgage loans and debt securities pledged as collateral.
All of the underlying assets, liabilities, equity, revenues and expenses of the securitization vehicles are consolidated within the Company's consolidated financial statements. The Company’s exposure to the obligations of the securitization vehicles is generally limited to its investment in these entities, which was $511.8$26.0 million at September 30, 2017 and $407.0 million at December 31, 2016. The Company is not obligated to provide any financial support to these securitization vehicles, although it may, in its sole discretion, provide support such as protective and other advances as it deems appropriate. The Company did not provide any such financial support in the three months ended September 30, 20172021 and 2016.2020, respectively, and $182.9 million and $49.1 million in the nine months ended September 30, 2021 and 2020, respectively, reflected within equity method losses in discontinued operations (Note 12). Equity method investments that were impaired and written down to fair value during the nine months ended September 30, 2021 and year ended December 31, 2020 totaled $496.0 million and $701.8 million, respectively, at the time of impairment, representing fair value using Level 3 inputs. Impairment recorded in 2021 was based upon estimated recoverable values, including ADC loans accounted for as equity method investments. Significant impairment was also recorded on these ADC loans in the fourth quarter of 2020, previously driven by reduced future cash flow streams expected from these investments, primarily taking into consideration a combination of lower land values, delayed leasing, and/or offer prices in the current market, generally discounted at rates between 10% to 20%. Other impairment charges during 2020 were generally determined using estimated recoverable values for investments resolved or sold, investment values based upon projected exit strategies, or fair values based upon discounted expected future cash flows from the investments.
Company-Sponsored FundAssets Carried at Fair Value—These assets are composed of equity investments valued based upon NAV, and equity method investments and loans receivable for which the fair value option was elected. During the nine months ended September 30, 2021 when these assets were classified as held for disposition and discontinued operations, unrealized fair value losses were recognized in other loss of $3.1 million for equity investments and $94.3 million for loans receivable, and in equity method losses of $24.3 million for equity method investments (Note 12). Additional information is included in Note 13 under "—Level 3 Recurring Fair Values."
35
Table of Contents

12. Discontinued Operations
Discontinued operations represent the following:
•Wellness Infrastructure—operations of the Wellness Infrastructure business, along with other non-core assets held by NRF Holdco, primarily: (i) the Company's equity interest in and management of NorthStar Healthcare, debt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, limited partnership interests in private equity real estate funds; as well as (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt, all of which were issued by NRF Holdco who acts as guarantor.
•Other—operations of substantially all of the OED investments and Other IM business that were previously in the Other segment, composed of various non-digital real estate, real estate-related equity and debt investments, general partner interests and management rights with respect to these assets, management of BRSP prior to termination of its contract, and underlying compensation and administrative costs for managing these assets.
•Hotel—operations of the Company's Hospitality segment and the THL Hotel Portfolio that was previously in the Other segment. In March 2021, the Company sold the equity in its hotel subsidiaries holding 5 of the 6 portfolios in the Hospitality segment, and the Company's 55.6% interest in the THL Hotel Portfolio which was deconsolidated upon sale. The remaining hotel portfolio that was in receivership was sold by the lender in September 2021.
•Industrial—operations of the bulk industrial portfolio prior to the sale of the Company's 50% interest and deconsolidation in December 2020.
Income (loss) from discontinued operations is presented below.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Revenues
Property operating income$196,302 $297,594 $607,172 $939,962 
Interest income4,469 13,578 17,703 64,975 
Fee income12,248 24,006 46,348 71,800 
Other income5,437 8,523 23,963 19,194 
Revenues from discontinued operations218,456 343,701 695,186 1,095,931 
Expenses
Property operating expense114,593 192,429 391,418 617,609 
Interest expense50,376 78,126 216,812 272,500 
Transaction-related costs and investment expense11,800 36,614 29,856 55,517 
Depreciation and amortization8,909 85,787 91,673 284,076 
(Reversal of) impairment loss(8,210)148,130 358,137 2,524,658 
Compensation and administrative expense21,901 25,646 74,617 62,626 
Expenses from discontinued operations199,369 566,732 1,162,513 3,816,986 
Other income (loss)
Gain on sale of real estate514 12,248 49,232 15,261 
Other gain (loss), net98,286 (14,428)40,262 (188,956)
Equity method losses(125,565)(80,289)(189,824)(31,155)
Loss from discontinued operations before income taxes(7,678)(305,500)(567,657)(2,925,905)
Income tax expense(2,751)(3,081)(22,938)(34,259)
Loss from discontinued operations(10,429)(308,581)(590,595)(2,960,164)
Income (loss) from discontinued operations attributable to:
Noncontrolling interests in investment entities(85,741)(120,299)(346,205)(581,204)
Noncontrolling interests in Operating Company7,177 (18,680)(23,354)(235,917)
Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.$68,135 $(169,602)$(221,036)$(2,143,043)
36
Table of Contents

13. Fair Value
Recurring Fair Values
The table below presents a summary of financial assets and financial liabilities carried at fair value on a recurring basis, including financial instruments for which the fair value option was elected, but excluding financial assets under the NAV practical expedient, categorized into the three tier fair value hierarchy that is prioritized based upon the level of transparency in inputs used in the valuation techniques, as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable and it is significant to the fair value measurement, requiring significant management judgment or estimate.
Fair Value Measurement Hierarchy
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Assets
Marketable equity securities$180,112 $— $— $180,112 
AFS debt securities held for disposition— — 37,108 37,108 
Other assets—derivative assets— 1,179 — 1,179 
Fair Value Option:
Loans held for investment— — 112,252 112,252 
Loans held for disposition— — 387,664 387,664 
Equity method investments held for disposition— — 115,753 115,753 
December 31, 2020
Assets
Marketable equity securities$218,485 $— $— $218,485 
AFS debt securities held for disposition— — 28,576 28,576 
Other assets—derivative assets— 99 — 99 
Fair Value Option:
Loans held for investment— — 36,797 36,797 
Loans held for disposition— — 1,258,539 1,258,539 
Equity method investments— — 28,540 28,540 
Equity method investments held for disposition— — 153,259 153,259 
Liabilities
Other liabilities—derivative liabilities
— 103,772 — 103,772 
Other liabilities—settlement liability— — 24,285 24,285 
Marketable Equity Securities
Marketable equity securities consist of publicly traded equity securities held largely by private open-end funds sponsored and consolidated by the Company, sponsorsand prior to January 2021, equity investment in a third party mutual fund. The equity securities of the consolidated funds comprise listed stocks primarily in the U.S. and to a lesser extent, in Europe, and predominantly in the digital real estate and telecommunication sectors. These marketable equity securities are valued based upon listed prices in active markets and classified as Level 1 of the fair value hierarchy.
Debt Securities
The Company's investment in debt securities is composed of available-for-sale ("AFS") N-Star CDO bonds, which are subordinate bonds retained by NRF Holdco from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF Holdco that it subsequently repurchased at a discount. These CDOs are collateralized primarily by commercial real estate debt and securities.
37
Table of Contents

The following tables summarize the balance of the N-Star CDO bonds.
Amortized Cost without Allowance for Credit LossAllowance for Credit LossGross Cumulative Unrealized
(in thousands)GainsLossesFair Value
September 30, 2021$55,618 $(24,882)$6,372 $— $37,108 
December 31, 202046,561 (24,688)6,703 — 28,576 
The N-Star CDO bonds are included in the pending sale of NRF Holdco. There were no sales of N-Star CDO bonds during the nine months ended September 30, 2021 and year ended December 31, 2020.
These CDOs have long-dated stated maturities through 2037 and 2041, however, the Company expects the N-Star CDO bonds to have remaining future cash flows up to 2.3 years from September 30, 2021.
Fair value of N-Star CDO bonds, classified as Level 3, are determined using an internal price interpolated based upon third party prices of the senior N-Star CDO bonds of the respective CDOs, and applying the Company's knowledge of the underlying collateral and recent trades, if any within the securitizations.
Impairment of AFS Debt Securities
AFS debt securities are considered to be impaired if their fair value is less than their amortized cost basis. If the Company intends to sell or is more likely than not required to sell the debt security before recovery of its amortized cost, the entire impairment amount is recognized in earnings within other gain (loss) as a write-off of the amortized cost basis of the debt security. If the Company does not intend to sell or is not more likely than not required to sell the debt security before recovery of its amortized cost, the credit component of the loss is recognized in earnings within other gain (loss) as an allowance for credit loss, which may be subject to reversal for subsequent recoveries in fair value. The non-credit loss component is recognized in other comprehensive income or loss ("OCI"). The allowance is charged off against the amortized cost basis of the security if in a subsequent period, the Company intends to or is more likely than not required to sell the security, or if the Company deems the security to be uncollectible.
Changes in allowance for credit losses for AFS debt securities are presented below:
Nine Months Ended September 30,
(In thousands)20212020
Allowance for credit losses
Beginning balance$24,688 $— 
Provision for credit losses194 23,973 
Ending balance$24,882 $23,973 
Credit losses were determined based upon an analysis of the present value of contractual cash flows expected to be collected from the underlying collateral as compared to the amortized cost basis of the security. At September 30, 2021 and December 31, 2020, there were no AFS debt securities in unrealized loss position without allowance for credit loss.
Derivatives
The Company's derivative instruments generally consist of: (i) foreign currency put options, forward contracts and costless collars to hedge the foreign currency exposure of certain fundsinvestments in foreign subsidiaries or equity method joint ventures (in EUR and in GBP), with notional amounts and termination dates based upon the anticipated return of capital from these investments; and (ii) interest rate caps to limit the exposure to changes in interest rates on various floating rate debt obligations (indexed primarily to LIBOR and to a lesser extent, EURIBOR and GBP LIBOR). These derivative contracts may be designated as qualifying hedge accounting relationships, specifically as net investment hedges and cash flow hedges, respectively. At September 30, 2021 and December 31, 2020, notional amounts aggregated to the equivalent of $184.9 million and $350.5 million, respectively, for foreign exchange contracts, and the equivalent of $2.8 billion and $4.6 billion, respectively, for interest rate contracts, all of which were composed predominantly of non-designated economic hedges. The derivative instruments are subject to master netting arrangements with counterparties that allow the Company to offset the settlement of derivative assets and liabilities in the same currency by instrument type or, in the event of default by the counterparty, to offset all derivative assets and liabilities with the same counterparty. Notwithstanding the conditions for right of offset may have been met, the Company presents derivative assets and liabilities with the same counterparty on a gross basis on the consolidated balance sheets.
Realized and unrealized gains and losses on derivative instruments are recorded in other gain (loss) on the consolidated statement of operations, other than interest expense, as follows:
38
Table of Contents

Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Foreign currency contracts:
Realized gain transferred from AOCI to earnings$— $414 $1,520 $414 
Unrealized gain transferred from AOCI to earnings (1)
— — — 1,485 
Unrealized gain (loss) in earnings on non-designated contracts1,457 (840)1,129 (1,616)
Interest rate contracts:
Interest expense on designated contracts (2)
— 6 (20)12 
Unrealized loss in earnings on non-designated contracts(13)(197)(248)(123)
Realized loss transferred from AOCI to earnings— — (1,328)— 
__________
(1)    The portion of derivative notional that is in excess of the beginning balance of the foreign denominated net investment vehiclesis dedesignated upon a reassessment of the effectiveness of net investment hedges at period end.
(2)    Represents amortization of the cost of designated interest rate caps to interest expense based upon expected hedged interest payments on variable
rate debt.
Prior to January 2021, the Company had entered into a series of forward contracts on its shares in a third party real estate mutual fund in an aggregate notional amount of $119 million and a series of swap contracts with the same counterparty to pay the return of the Dow Jones U.S. Select REIT Total Return Index. The forward and swap contracts were settled upon expiration in January 2021 through delivery of all of the Company's shares in the mutual fund, realizing an immaterial net loss upon settlement. The forwards and swaps were not designated accounting hedges. At December 31, 2020, the forwards and swaps were in a liability position of $102.7 million and $0.1 million, respectively. During the three and nine months ended September 30, 2020, the forwards and swaps had realized and unrealized fair value losses totaling $0.2 million and gains totaling $27.0 million, respectively, which were partially offset by an increase in NAV of $2.3 million and a decrease in NAV of $20.0 million, respectively, in the Company's investment in the mutual fund, both of which were recorded in other income on the consolidated statement of operations.
The Company's foreign currency and interest rate contracts are generally traded over-the-counter, and are valued using a third-party service provider. Quotations on over-the-counter derivatives are not adjusted and are generally valued using observable inputs such as general partnercontractual cash flows, yield curve, foreign currency rates and credit spreads, and are classified as Level 2 of the fair value hierarchy. Although credit valuation adjustments, such as the risk of default, rely on Level 3 inputs, these inputs are not significant to the overall valuation of the derivatives. As a result, derivative valuations in their entirety are classified as Level 2 of the fair value hierarchy.
Settlement Liability
In March 2020, the Company entered into a cooperation agreement with Blackwells Capital LLC ("Blackwells"), a stockholder of the Company. Pursuant to the cooperation agreement, Blackwells agreed to a standstill in its proxy contest with the Company, and to abide by certain voting commitments, including a standstill with respect to the Company until the expiration of the agreement in March 2030 and voting in favor of the Board of Directors' recommendations until the third anniversary of the agreement.
Contemporaneously, the Company and Blackwells entered into a joint venture arrangement for the purpose of providingacquiring, holding and disposing of the Company's class A common stock. Pursuant to the arrangement, the Company contributed its class A common stock, valued at $14.7 million by the venture, and Blackwells contributed $1.47 million of cash that was then distributed to the Company, resulting in a net capital contribution of $13.23 million by the Company in the venture. All of the class A common stock held in the venture was repurchased by the Company in March 2020 (Note 9). Distributions from the joint venture arrangement upon dissolution effectively represent a settlement of the proxy contest with Blackwells. The initial fair value of the arrangement was recorded as a settlement loss on the statement of operations in March 2020, with a corresponding liability on the balance sheet, subject to remeasurement at each period end. The settlement liability represents the fair value of the disproportionate allocation of profits distribution to Blackwells pursuant to the joint venture arrangement. The profits are derived from dividend payments and appreciation in value of the Company's class A common stock, allocated between the Company and Blackwells based upon specified return hurdles.
In June 2021, Blackwells terminated the arrangement and the joint venture was dissolved. The profits distribution allocated to Blackwells was valued at $47.0 million and paid in the form of 5.95 million shares of the Company's class A common stock, with $22.8 million recognized in 2021 through termination as other loss on the consolidated statement of operations.
Prior to dissolution of the arrangement, the settlement liability, classified as a Level 3 fair value, was measured using a Monte Carlo simulation under a risk-neutral premise, assuming that the final distribution would occur at the end of the
39
Table of Contents

third year in March 2023. At December 31, 2020, the settlement liability was valued at $24.3 million, applying the following assumptions: (a) expected volatility of the Company's class A common stock of 67.2% based upon a combination of historical and implied volatility of the Company's class A common stock; (b) zero expected dividend yield given the Company's suspension of its common stock dividend beginning the second quarter of 2020; and (c) risk free rate of 0.14% per annum based upon a compounded zero-coupon U.S. Treasury yield. During 2020, the settlement liability increased approximately $20.4 million from inception in March 2020, recorded as other loss on the consolidated statement of operations.
Fair Value Option
Equity Method Investments
Equity method investments for which the fair value option was elected are carried at fair value on a recurring basis. Fair values are determined using either indicative sales price, NAV of the underlying funds, or discounted future cash flows based upon expected income and realization events of the underlying assets. Fair value of equity method investments are classified as Level 3 of the fair value hierarchy. Changes in fair value of equity method investments under the fair value option are recorded in equity method earnings (losses).
Loans Receivable
Loans receivable consist of mortgage loans, mezzanine loans and non-mortgage loans carried at fair value under the fair value option. Loans held for disposition are measured at their selling price. Fair value of loans held for investment is determined by comparing the current yield to the estimated yield of newly originated loans with similar credit risk or the market yield at which a third party might expect to purchase such investment, or based upon discounted cash flow projections of principal and interest expected to be collected, which include, but are not limited to, consideration of the financial standing of the borrower or sponsor as well as operating results and/or value of the underlying collateral.
Loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status, all of which are held for disposition as presented in the table below. Such loans include distressed loan portfolios that are held for disposition, previously acquired by the Company at a discount (classified as purchased credit-impaired loans prior to the election of fair value option).
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnpaid Principal BalanceFair Value less Unpaid Principal BalanceFair ValueUnpaid Principal BalanceFair Value less Unpaid Principal Balance
90 days or more past due or nonaccrual
Loans held for disposition$224,274 $1,173,066 $(948,792)$873,205 $2,159,538 $(1,286,333)
40
Table of Contents

Level 3 Recurring Fair Values
Quantitative information about recurring Level 3 fair value assets are as follows.
Valuation TechniqueKey Unobservable InputsInput Value
Effect on Fair Value from Increase in Input Value (2)
Financial Instrument
Fair Value
(In thousands)
Weighted Average(1)
(Range)
September 30, 2021
AFS debt securities held for disposition$37,108 Discounted cash flowsDiscount rate23.4%
(5.8% - 57.8%)		Decrease
Fair Value Option:
Loans held for investment112,252 Discounted cash flowsDiscount rate8.0%
(4.7% - 11.3%)		Decrease
Loans held for disposition387,664 
Transaction price (4)
N/AN/AN/A
Equity method investments held for disposition1,553 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition114,200 
Transaction price (4)
N/AN/AN/A
December 31, 2020
AFS debt securities held for disposition$28,576 Discounted cash flowsDiscount rate
28.9%
(18.3% - 57.8%)
Decrease
Fair Value Option:
Loans held for investment36,797 Discounted cash flowsDiscount rate
8.7%
(7.2% - 8.9%)
Decrease
Loans held for disposition1,258,539 Discounted cash flowsDiscount rate13.3%
(6.9% - 25.7%)		Decrease
Equity method investments28,540 Discounted cash flowsDiscount rate30%Decrease
Equity method investments held for disposition2,472 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition8,383 Discounted cash flowsDiscount rate
19.3%
(19.0% - 20.0%)
Decrease
Equity method investments held for disposition142,404 
Transaction price (4)
N/AN/AN/A
__________
(1)    Weighted average discount rates are calculated based upon undiscounted cash flows.
(2)    Represents the directional change in fair value that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the reverse effect. Significant increases or decreases in these inputs in isolation could result in significantly higher or lower fair value measures.
(3)    Fair value was estimated based upon underlying NAV of the respective funds on a quarter lag, adjusted as deemed appropriate by management, services in exchange for management fees and performance-based fees. These funds are established as limited partnerships or equivalent structures. For certain sponsored private funds, limitedconsidering the cash flows provided by the general partners of the funds do not have either substantive liquidation rights,and the implied yields of the funds.
(4)    Based upon actual or substantive kick-out rights without cause,indicative transaction values of the respective loans, investments or substantive participating rightsunderlying assets of the investee. At December 31, 2020, acquisition price was deemed to approximate fair value for investee engaged in real estate development during the development stage.
41
Table of Contents

The following table presents changes in recurring Level 3 fair value assets. Loans receivable and equity method investments under the fair value option are predominantly held for disposition. Realized and unrealized gains (losses) are included in AOCI for AFS debt securities and in other gain (loss) on the consolidated statement of operations for other assets carried at fair value.
Fair Value Option
(In thousands)AFS Debt SecuritiesLoans Held for Investment and Held for DispositionEquity Method Investments (including Held for Disposition)
Fair value at December 31, 2019$54,859 $— $222,875 
Election of fair value option on January 1, 2020— 1,556,131 — 
Reclassification of accrued interest on January 1, 2020— 13,504 — 
Purchases, drawdowns, contributions and accretion2,979 156,179 4,614 
Paydowns, distributions and sales(4,542)(131,365)(900)
Change in accrued interest and capitalization of paid-in-kind interest— 32,544 — 
Transfer to held for disposition— (42,985)— 
Allowance for credit losses(23,973)— — 
Realized and unrealized losses in earnings, net— (289,283)(66,418)
Other comprehensive income (loss) (1)
(1,425)30,419 5,599 
Fair value at September 30, 2020$27,898 $1,325,144 $165,770 
Net unrealized losses on instruments held at September 30, 2020
In earnings$— $(280,822)$(66,418)
In other comprehensive loss$(1,425)N/AN/A
 
Fair value at December 31, 2020$28,576 $1,295,337 $181,799 
Purchases, drawdowns, contributions and accretion11,120 92,967 8 
Paydowns, distributions and sales(2,063)(436,502)(18,128)
Change in accrued interest and capitalization of paid-in-kind interest— 11,630 0
Change in accounting method for equity interest— — (27,626)
Deconsolidation of investment entities (Note 21)
— (341,577)— 
Allowance for credit losses(194)— — 
Realized and unrealized losses in earnings, net— (91,981)(13,846)
Other— 4,834 — 
Other comprehensive loss (1)
(331)(34,792)(6,454)
Fair value at September 30, 2021$37,108 $499,916 $115,753 
Net unrealized losses on instruments held at September 30, 2021
In earnings$— $(42,148)$(23,031)
In other comprehensive loss$(331)N/AN/A
__________
(1)    Amounts recorded in OCI for loans receivable and equity method investments represent foreign currency translation differences on the Company's foreign subsidiaries that could be exercised byhold the respective foreign currency denominated investments.
42
Table of Contents

Investments Carried at Fair Value Using Net Asset Value
Investments in Company-sponsored private fund and non-traded REIT, and limited partnership interest in a simple majoritythird party real estate private fund, all of limited partners or by a single limited partner. Accordingly,which are held for disposition (Note 11), are valued using NAV of the absence of such rightsrespective vehicles.
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnfunded CommitmentsFair ValueUnfunded Commitments
Private fund—real estate$12,064 $7,117 $15,680 $8,026 
Non-traded REIT—real estate26,041 — 18,272 — 
Private fund—emerging market private equity2,172 — 2,224 — 
The Company's interests in certain sponsoredthe private funds are not subject to redemption, with distributions to be received through liquidation of underlying investments of the funds. The private funds each have eight and ten year lives, respectively, at inception, both of which represent voting rightsmay be extended in one year increments up to two years.
No secondary market currently exists for shares of the non-traded REIT and the Company does not currently expect to seek liquidity of its shares of the non-traded REIT. Subject to then-existing market conditions, the board of directors of the non-traded REIT, along with the Company, as sponsor, are expected to consider alternatives for providing liquidity to the non-traded REIT shares beginning 2021, five years from completion of the offering stage, but with no definitive date by which it must do so. In addition, the Company has agreed that any right to have its shares redeemed is subordinated to third party stockholders for so long as its advisory agreement is in effect. 
Nonrecurring Fair Values
The Company measures fair value of certain assets on a limited partnership, resultsnonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for disposition or otherwise, write-down of asset values due to impairment. Impairment is discussed in Note 11 for real estate, Notes 5 and 11for equity method investments, and Notes 6and 11for intangible assets, including goodwill.
Fair Value Information on Financial Instruments Reported at Cost
Carrying amounts and estimated fair value of financial instruments reported at amortized cost are presented below.
 Fair Value MeasurementsCarrying Value
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Liabilities
Debt at amortized cost
Secured fund fee revenue notes$— $— $290,939 $290,939 $290,939 
Convertible and exchangeable senior notes1,055,861 — — 1,055,861 490,855 
Secured debt— — 3,789,416 3,789,416 3,789,416 
Debt related to assets held for disposition— — 3,443,376 3,443,376 3,443,376 
December 31, 2020
Liabilities
Debt at amortized cost
Convertible and exchangeable senior notes$898,231 $— $— $898,231 $520,522 
Secured debt— — 3,407,175 3,407,175 3,410,467 
Debt related to assets held for disposition— 13,095 7,055,237 7,068,332 7,352,828 
Debt—Senior notes were valued using the last trade price in active markets or unadjusted quoted price in non-active market for the senior note that is held for disposition. Fair value of the secured fund fee revenue notes and secured debt, including amounts held for disposition, was estimated by discounting expected future cash outlays at interest rates available to the Company for similar instruments. Junior subordinated debt that is held for disposition was valued based upon unadjusted quotations from a third party valuation firm, with such funds being considered VIEs. quotes derived using a combination of internal valuation models, comparable trades in non-active markets and other market data.
Other—The carrying values of cash, accounts receivable, due from and to affiliates, interest payable and accounts payable approximate fair value due to their short term nature and credit risk, if any, are negligible.
43
Table of Contents

14. Variable Interest Entities
A VIE is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. The following discusses the Company's involvement with its sponsored funds comprise fee arrangements and equity interests. The fee arrangements are commensurate with the level of management services provided by the Company, and contain terms and conditions that are customary to similar at-market fee arrangements.
The Company's equity interest in one of its sponsored open-end private funds is deemed to absorb more than insignificant variability during the early stages of the fund while additional third party capital is being raised. As of September 30, 2017, the Company is considered to be acting in the capacity of a principal of the fund, thereforeVIEs where the Company is the primary beneficiary and currently consolidates the fund. The Company’s exposure to the obligation of its consolidated fund is limited to the value of its outstanding investment in the fund of $5.2 million at September 30, 2017. The Company, as general partner, is not obligated to provide any financial support to its consolidated fund.

Unconsolidated VIEs
Securitizations
Prior to the Merger, NRF delegated the collateral management rights for certain sponsored CDOs and two third party-sponsored CDOs to a third-party collateral manager or collateral manager delegate who is entitled to a percentage of the senior and subordinate collateral management fees. The Company continues to receive fees as named collateral manager or collateral manager delegate and retained administrative responsibilities. The Company determined that the fees paid to the third-party collateral manager or collateral manager delegate represents a variable interest in the CDOs and that the third party is acting as a principal. The Company concluded that it does not have the power to direct the activities that most significantly impact the economic performance of these CDOs, which includes but is not limited to the ability to sell distressed collateral, and therefore is no longer the primary beneficiary of such CDOs. As a result, the Company does not consolidate the assets and liabilities of the CDOs for which the Company does not retain the collateral management function. The Company’s exposure to loss is limited to its investment in these CDOs, comprising CDO equity and CDO bonds, which aggregate to $149.7 million at September 30, 2017.
Trusts
The Company, through the Merger, acquired the Trusts, which are wholly-owned subsidiaries of NRF formed as statutory trusts. The Trusts issued preferred securities in private placement offerings, and used the proceeds to purchase junior subordinated notes to evidence loans made to NRF (Note 11). The Company owns all of the common stock of the Trusts, however, the Company's interests in the Trusts do not represent variable interests. The Company determined that the holders of the preferred securities issued by the Trusts are the primary beneficiaries of the Trusts, therefore, the Company does not consolidate the Trusts. The Company accounts for its interest in the Trusts under the equity method and its maximum exposure to loss is limited to its investment carrying value of $3.7 million at September 30, 2017, recorded in investments in unconsolidated ventures on the consolidated balance sheet (Note 6). The junior subordinated notes are recorded as debt on the Company's consolidated balance sheet.
Company-Sponsored Funds
The Company may invest alongside certain of its sponsored funds through joint ventures between the Company and its sponsored funds. These co-investment joint ventures are consolidated by the Company. As general partner, the Company has capital commitments directly to these sponsored funds. The Company may also have capital commitments satisfied directly through the co-investment joint ventures as an affiliate of the general partner. The Company's equity interests in these sponsored funds absorb insignificant variability. As the Company is considered to be acting in the capacity of an agent of these sponsored funds,where the Company is not the primary beneficiary and does not consolidate these sponsored funds. The Company accounts for its equity interests in these sponsored funds under the equity method. The Company's maximum exposure to loss is limited to the carrying value of its investment in these sponsored funds, totaling $5.1 million at September 30, 2017 and $1.7 million at December 31, 2016, included within investments in unconsolidated ventures on the consolidated balance sheet.VIEs.
15. Stockholders’ Equity
The table below summarizes the share activities of the Company's preferred and common stock.
As a result of the Merger, each outstanding share of Colony's class A and class B common stock was converted into the right to receive 1.4663 shares of Colony NorthStar's class A and class B common stock, respectively. Accordingly, the Company's common shares outstanding for all prior periods presented have been adjusted to reflect the Colony exchange ratio of 1.4663.
  Number of Shares
(In thousands) Preferred Stock Class A Common Stock Class B Common Stock
Shares outstanding at December 31, 2015 25,030
 163,777
 801
Repurchase of preferred stock (1)
 (964) —
 —
Contribution of preferred stock to an affiliate (1)
 964
 —
 —
Shares issued upon redemption of OP units —
 1,186
 —
Conversion of Class B to Class A common stock —
 28
 (28)
Equity-based compensation, net of forfeitures —
 1,504
 —
Shares canceled for tax withholding on vested stock awards —
 (216) —
Shares outstanding at September 30, 2016 25,030
 166,279
 773
       
Shares outstanding at December 31, 2016 25,030
 166,440
 770
Consideration for the Merger (2)
 39,466
 392,120
 —
Issuance of preferred stock 26,400
 —
 —
Redemption of preferred stock (3)
 (25,432) —
 —
Shares canceled (4)
 —
 (2,984) —
Shares issued upon redemption of OP Units —
 1,680
 —
Conversion of Class B to Class A common stock —
 28
 (28)
Repurchase of common stock (5)
 —
 (17,296) —
Exchange of notes for Class A common stock —
 208
 —
Equity-based compensation, net of forfeitures —
 8,075
 —
Shares canceled for tax withholding on vested stock awards —
 (427) —
Shares outstanding at September 30, 2017 65,464
 547,844
 742
__________
(1)
In January 2016, the Company repurchased 963,718 shares in aggregate of its preferred stock for approximately $20.0 million. In March 2016, the Company contributed the preferred stock at its purchase price to an investment vehicle (the "REIT Securities Venture"), which is a joint venture with a private fund managed by the Company. The Company holds an approximate 4.4% interest in the REIT Securities Venture, accounted for under the equity method. The REIT Securities Venture invests in equity of publicly traded U.S. REITs, including securities of the Company.
(2)
Shares were legally issued by Colony NorthStar, as the surviving combined company, as consideration for the Merger. However, as the Merger is accounted for as a reverse acquisition, the consideration transferred was measured based upon the number of shares of common stock and preferred stock that Colony, as the accounting acquirer, would theoretically have to issue to the shareholders of NSAM and NRF to achieve the same ratio of ownership in Colony NorthStar upon completion of the Merger (Note 3).
(3)
Includes 12,884,700 shares of preferred stock for which redemption requests were made in September 2017 and settled in October 2017.
(4)
Represents NRF shares held by NSAM that were canceled upon consummation of the Merger, after giving effect to the exchange ratio.
(5)
Includes 520,422 shares of common stock repurchased by the Company in September 2017 and settled in October 2017
Preferred Stock
In the event of a liquidation or dissolution of the Company, preferred stockholders have priority over common stockholders for payment of dividends and distribution of net assets.

The table below summarizes the preferred stock issued and outstanding at September 30, 2017:
Description Dividend Rate Per Annum Initial Issuance Date 
Shares Outstanding
(in thousands)
 
Par Value
(in thousands)
 
Liquidation Preference
(in thousands)
 Earliest Redemption Date
Series B 8.25% 
February 2007(1)
 6,114
 $61
 $152,855
 Currently redeemable
Series D 8.5% 
April 2013(1)
 8,000
 80
 200,000
 April 10, 2018
Series E 8.75% 
May 2014(1)
 10,000
 100
 250,000
 May 15, 2019
Series G 7.5% 
June 2014(1)
 3,450
 35
 86,250
 June 19, 2019
Series H 7.125% 
April 2015(1)
 11,500
 115
 287,500
 April 13, 2020
Series I 7.15% June 2017 13,800
 138
 345,000
 June 5, 2022
Series J 7.125% September 2017 12,600
 126
 315,000
 September 22, 2022
      65,464
 $655
 $1,636,605
  
__________
(1)
Represents initial issuance date pre-Merger by NRF or Colony, as applicable.
All series of preferred stock are at parity with respect to dividends and distributions, including distributions upon liquidation, dissolution or winding up of the Company. Dividends on each series of preferred stock of Colony NorthStar are payable quarterly in arrears, in the case of the Series B, D and E preferred stock, in February, May, August and November, and in the case of Series G, H, I and J preferred stock, in January, April, July and October.
Each series of preferred stock is redeemable on or after the earliest redemption date for that series at $25.00 per share plus accrued and unpaid dividends (whether or not declared) exclusively at the Company’s option. The redemption period for each series of preferred stock is subject to the Company’s right under limited circumstances to redeem the preferred stock earlier in order to preserve its qualification as a REIT or upon the occurrence of a change of control (as defined in the articles supplementary relating to each series of preferred stock).
Preferred stock generally does not have any voting rights, except if the Company fails to pay the preferred dividends for six or more quarterly periods (whether or not consecutive). Under such circumstances, the preferred stock will be entitled to vote, together as a single class with any other series of parity stock upon which like voting rights have been conferred and are exercisable, to elect two additional directors to the Company’s board of directors, until all unpaid dividends have been paid or declared and set aside for payment. In addition, certain changes to the terms of any series of preferred stock cannot be made without the affirmative vote of holders of at least two-thirds of the outstanding shares of each such series of preferred stock voting separately as a class for each series of preferred stock.
Effect of the Merger
Upon consummation of the Merger, each share of Series A, B, C, D and E preferred stock of NRF and each share of Series A, B and C preferred stock of Colony that was issued and outstanding immediately prior to the effective time of the Merger was canceled and converted into the right to receive one share of Series A, B, C, D, E, F, G and H preferred stock of Colony NorthStar, respectively, with substantially identical terms.
The Colony NorthStar preferred stock issued in exchange for NRF preferred stock formed part of the merger consideration and was recorded at fair value upon issuance based on the closing price of the respective series of NRF preferred stock at the Closing Date. While the Colony preferred stock was legally canceled and converted into Colony NorthStar preferred stock upon closing of the Merger, the event was treated, for accounting purposes, as a modification with carryover of existing carrying value, not an extinguishment and reissuance of preferred stock, as the underlying terms of the preferred stock were substantially identical pre and post Merger.
Issuance and Redemption of Preferred Stock
The Company issued 13.8 million shares of Series I preferred stock in June 2017 and 12.6 million shares of Series J preferred stock in September 2017 with dividend rates of 7.15% and 7.125% per annum, respectively. Proceeds received for Series I and Series J preferred stock totaled $637.9 million, net of underwriting discounts and offering costs payable by the Company. The Company applied the proceeds from the offerings, combined with available cash, to redeem all of the outstanding shares of Series A, Series F and Series C preferred stock and a portion of the outstanding shares of Series B preferred stock for $644.9 million in aggregate, based on a redemption price of $25.00 per share liquidation preference plus accrued and unpaid dividends prorated to the respective redemption dates. The excess or deficit of the $25.00 per share liquidation preference over the carrying value of the preferred stock redeemed results in a decrease or increase to net income attributable to common stockholders, respectively. For the three and nine months ended September 30, 2017, a $0.9 million increase and a $4.5 million decrease to net income available to common stockholders, respectively, was recorded as a result of the redemptions of Series A and Series F preferred stock in June 2017 and Series C and Series B

preferred stock in September 2017. The redemption notices for Series B and Series C preferred stock were issued in September 2017 and settled in October 2017. At September 30, 2017, settlement of the redemptions was pending and presented as preferred stock redemptions payable of $322.1 million on the consolidated balance sheet.
Common Stock
Except with respect to voting rights, class A common stock and class B common stock have the same rights and privileges and rank equally, share ratably in dividends and distributions, and are identical in all respects as to all matters. class A common stock has one vote per share.
Class B common stock has thirty-six and one-half votes per share. This gives the holders of class B common stock a right to vote that reflects the aggregate outstanding non-voting economic interest in the Company (in the form of OP Units) attributable to class B common stock holders and therefore, does not provide any disproportionate voting rights. Each share of class B common stock shall convert automatically into one share of class A common stock if the Executive Chairman or his beneficiaries directly or indirectly transfer beneficial ownership of class B common stock or OP Units held by them, other than to certain qualified transferees, which generally includes affiliates and employees. In addition, each holder of class B common stock has the right, at the holder’s option, to convert all or a portion of such holder’s class B common stock into an equal number of shares of class A common stock.
As the Merger was accounted for as a reverse acquisition, the shares of common stock issued in connection with the Merger represents the number of shares Colony, as the accounting acquirer, would theoretically have to issue to the shareholders of NSAM and NRF to achieve the same ratio of ownership in Colony NorthStar upon completion of the Merger.
In connection with the consummation of the Merger, on January 20, 2017, the Company paid a dividend of $0.04444 per share of each Colony and NRF common stock to stockholders of record on January 9, 2017, representing a pro rata dividend for the period from January 1, 2017 through January 10, 2017 on a pre-exchange basis (or $0.03 after giving effect to the Colony exchange ratio of 1.4663). Additionally, the Company declared a dividend of $0.24 per share for the period from January 11, 2017 through March 31, 2017. Accordingly, dividends declared for the first quarter of 2017 per common share is equivalent to $0.27 per share after giving effect to the exchange ratio.
On January 27, 2017, the Company paid a one-time special dividend of $1.16 per share of common stock to former NSAM stockholders of record on January 3, 2017.
Common Stock Repurchases
On February 23, 2017, the Company's board of directors authorized a common stock repurchase program pursuant to which the Company may repurchase up to $300 million of its outstanding shares of class A common stock over a one-year period, either in the open market or through privately negotiated transactions. During the nine months ended September 30, 2017,first quarter of 2020, the Company repurchased 17,295,91412,733,204 shares of its class A common stock at an aggregate cost of approximately $224.6$24.6 million, including commissions, or a weighted-averageweighted average price of $12.99$1.93 per share. This included 2,150,120 shares of class A common stock repurchased for $29.8share, pursuant to a $300 million concurrent with the termination of the Call Spread, as discussed below.
At-The-Market Stock Offering Program ("ATM Program")
Inshare repurchase program that expired in May 2015, the Company entered into separate “at-the-market” equity distribution agreements with certain sales agents to offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $300 million. Sales of the shares may be made in negotiated transactions and/or transactions that are deemed to be "at the market" offerings, including sales made by means of ordinary brokers' transactions, including directly on the NYSE, or sales made to or through a market maker other than on an exchange. The Company pays each sales agent a commission not to exceed 2% of the gross sales proceeds for any common stock sold through such agent. There were no shares offered through the ATM Program in 2017 prior to the Merger and the ATM Program was terminated upon closing of the Merger.2020.
Dividend Reinvestment and Direct Stock Purchase Plan
Colony’sThe Company's Dividend Reinvestment and Direct Stock Purchase Plan in effect prior to the Merger (the “Colony DRIP“DRIP Plan”) provided Colony'sprovides existing common stockholders and other investors the opportunity to purchase shares (or additional shares, as applicable) of Colony’sthe Company's class A common stock by reinvesting some or all of the cash dividends received on their shares of Colony’sthe Company's class A common stock or making optional cash purchases within specified parameters. The Colony DRIP Plan involvedinvolves the acquisition of Colony'sthe Company's class A common stock either in the open market, directly from Colonythe Company as newly issued common stock, or in privately negotiated transactions with third parties. There were

no shares of Colony's class A common stock acquired under the Colony DRIP Plan in 2017 prior to the Merger and the Colony DRIP Plan was terminated upon closing of the Merger. Concurrent with the closing of the Merger, the Company established a Dividend Reinvestment and Direct Stock Purchase Plan (the "Colony NorthStar DRIP Plan") with substantially the same terms and conditions as the Colony DRIP Plan. There were no shares of class A common stock acquired under the Colony NorthStar DRIP Plan forin the period from January 10, 2017 through,form of new issuances in 2021 and including, September 30, 2017.
Call Spread
In September 2015, NSAM entered into a call spread transaction (the “Call Spread”) with a third-party counterparty related to its share repurchase program. In connection with the Call Spread, certain subsidiaries of NSAM had purchased and sold a call option on NSAM’s common stock with a notional amount of $100.0 million with various expiration dates beginning in December 2018 and a final maturity date in February 2019. At maturity, NSAM can, at its election, exercise the purchased call option on a cash basis, share basis or a net share basis. In the event there is an early unwind of one or more components of the Call Spread, the amount of cash to be received by NSAM will depend upon the market price of its common stock and the remaining term of the Call Spread.
Subsequent to the Merger, the obligation to the counterparty under the sold call option is guaranteed by the Company. In March 2017, the Company terminated the Call Spread and received $21.9 million in settlement, including the release of $15.0 million of cash pledged as collateral. The net settlement was accounted for as a capital transaction.2020.
Accumulated Other Comprehensive Income (Loss) ("AOCI")
The following tables present the changes in each component of AOCI attributable to stockholders and noncontrolling interests in investment entities, net of immaterial tax effect. AOCI attributable to noncontrolling interests in Operating Company is immaterial.
31
Table of Contents

Changes in Components of AOCI—Stockholders
(In thousands)(In thousands)Company's Share in AOCI of Equity Method InvestmentsUnrealized Gain (Loss) on AFS Debt SecuritiesUnrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
(In thousands) Company's Share in AOCI of Equity Method Investments Unrealized Gain (Loss) on Securities Unrealized Gain (Loss) on Cash Flow Hedges Foreign Currency Translation Gain (Loss) Unrealized Gain (Loss) on Net Investment Hedges Total
AOCI at December 31, 2015 $—
 $—
 $(245) $(42,125) $23,948
 $(18,422)
AOCI at December 31, 2019AOCI at December 31, 2019$9,281 $7,823 $(226)$139 $30,651 $47,668 
Other comprehensive income (loss) before reclassifications 234
 21
 7
 130
 (5,654) (5,262)Other comprehensive income (loss) before reclassifications3,053 395 (3)13,961 15,821 33,227 
Amounts reclassified from AOCI (8) 

 (162) (67) 24
 (213)Amounts reclassified from AOCI— (3,585)— 225 (925)(4,285)
AOCI at September 30, 2016 $226
 $21
 $(400) $(42,062) $18,318
 $(23,897)
AOCI at September 30, 2020AOCI at September 30, 2020$12,334 $4,633 $(229)$14,325 $45,547 $76,610 
            
AOCI at December 31, 2016 $85
 $(112) $(41) $(76,426) $44,385
 $(32,109)
AOCI at December 31, 2020AOCI at December 31, 2020$17,718 $6,072 $(233)$52,832 $45,734 $122,123 
Other comprehensive income (loss) before reclassifications 3,711
 (1,065) 41
 116,545
 (64,752) 54,480
Other comprehensive income (loss) before reclassifications(2,948)(297)— (28,950)1,313 (30,882)
Amounts reclassified from AOCI (29) (106) —
 (2,232) 5,827
 3,460
Amounts reclassified from AOCI(2,998)— 233 (20,221)(1,375)(24,361)
AOCI at September 30, 2017 $3,767
 $(1,283) $—
 $37,887
 $(14,540) $25,831
AOCI at September 30, 2021AOCI at September 30, 2021$11,772 $5,775 $— $3,661 $45,672 $66,880 
Changes in Components of AOCI—Noncontrolling Interests in Investment Entities
(In thousands)(In thousands)Unrealized Gain (Loss) on Cash Flow HedgesForeign Currency Translation Gain (Loss)Unrealized Gain (Loss) on Net Investment HedgesTotal
(In thousands) Unrealized Gain (Loss) on Securities Unrealized Gain (Loss) on Cash Flow Hedges Foreign Currency Translation Gain (Loss) Unrealized Gain (Loss) on Net Investment Hedges Total
AOCI at December 31, 2015 $—
 $(149) $51
 $(1) $(99)
AOCI at December 31, 2019AOCI at December 31, 2019$(1,005)$(17,913)$10,659 $(8,259)
Other comprehensive income (loss) before reclassifications 100
 —
 (12,520) 9,143
 (3,277)Other comprehensive income (loss) before reclassifications(12)43,170 5,313 48,471 
Amounts reclassified from AOCI —
 (43) (785) (120) (948)Amounts reclassified from AOCI— (95)(873)(968)
AOCI at September 30, 2016 $100
 $(192) $(13,254) $9,022
 $(4,324)
AOCI at September 30, 2020AOCI at September 30, 2020$(1,017)$25,162 $15,099 $39,244 
          
AOCI at December 31, 2016 $(527) $—
 $(57,213) $11,798
 $(45,942)
Other comprehensive income (loss) before reclassifications 981
 —
 86,501
 (9,018) 78,464
AOCI at December 31, 2020AOCI at December 31, 2020$(1,030)$83,845 $15,099 $97,914 
Other comprehensive loss before reclassificationsOther comprehensive loss before reclassifications— (58,995)— (58,995)
Amounts reclassified from AOCI (454) —
 (1,678) 1,730
 (402) Amounts reclassified from AOCI1,030 810 — 1,840 
AOCI at September 30, 2017 $—
 $—
 $27,610
 $4,510
 $32,120
AOCI at September 30, 2021AOCI at September 30, 2021$— $25,660 $15,099 $40,759 
Reclassifications out of AOCI—Stockholders
Information about amounts reclassified out of AOCI attributable to stockholders by component is presented below:below. Such amounts are included in other gain (loss) in both continuing and discontinued operations on the statements of operations, as applicable, except for amounts related to equity method investments, which are included in equity method losses in discontinued operations.
(In thousands)Three Months Ended September 30,Nine Months Ended September 30,
Component of AOCI reclassified into earnings2021202020212020
Relief of basis of AFS debt securities$— $41 $— $3,585 
Release of foreign currency cumulative translation adjustments— 21 20,221 (225)
Unrealized gain on dedesignated net investment hedges— — — 552 
Realized gain on net investment hedges— 373 1,375 373 
Realized loss on cash flow hedges— — (233)— 
Release of equity in AOCI of equity method investments2,998 — 2,998 — 
32
(In thousands) Three months ended September 30, Nine months ended September 30, Affected Line Item in the
Consolidated Statements of Operations
Component of AOCI reclassified into earnings2017 2016 2017 2016 
Equity in realized gain on sale of marketable securities of unconsolidated ventures $—
 $—
 $106
 $—
 Earnings (losses) from investments in unconsolidated ventures
Unrealized gain on ineffective cash flow hedge —
 60
 —
 162
 Other gain (loss), net
Release of cumulative translation adjustments 3,166
 —
 2,232
 67
 Other gain (loss), net
Unrealized gain (loss) on dedesignated net investment hedges (1,365) (122) (2,109) (76) Other gain (loss), net
Realization of gain (loss) on net investment hedges (4,678) —
 (3,718) 52
 Other gain (loss), net
Release of equity in AOCI of unconsolidated ventures 49
 8
 29
 8
 Other gain (loss), net
Table of Contents

16.10. Noncontrolling Interests
Redeemable Noncontrolling Interests
Certain members of Townsend management ownThe following table presents the activity in redeemable noncontrolling interests in the form of class B units in Townsend (which is anCompany's digital investment management subsidiarybusiness, as discussed below, and in open-end funds sponsored and consolidated by the Company.
Nine Months Ended September 30,
(In thousands)20212020
Redeemable noncontrolling interests
Beginning balance$305,278 $6,107 
Contributions41,014 286,215 
Distributions and redemptions(13,865)(2,775)
Net income (loss)15,743 (2,316)
Ending balance$348,170 $287,231 
Strategic Partnership in the Company's Digital Investment Management Business
In July 2020, the Company formed a strategic partnership with affiliates of Wafra, Inc. (collectively, "Wafra"), a private investment firm and a global partner for alternative asset managers, in which Wafra made a minority investment in substantially all of the Company's digital investment management business (as defined for purposes of this transaction, the "Digital IM Business"). The investment entitles Wafra to participate in approximately 31.5% of the net management fees and carried interest generated by the Digital IM Business.
Pursuant to this strategic partnership, Wafra has assumed directly and also indirectly through a participation interest $124.9 million of the Company's commitments to DCP I, and has a $125.0 million commitment to DCP II that has been partially funded to-date. Wafra has also agreed to make commitments to the Company's future digital funds and investment vehicles on a pro rata basis with the Company that is heldbased on Wafra's percentage interest in the Digital IM Business, subject to certain caps.
In addition, the Company issued Wafra 5 warrants to purchase up to an aggregate of 5% of the Company’s class A common stock (5% at the time of the transaction, on a fully-diluted, post-transaction basis). Each warrant entitles Wafra to purchase up to 5,352,000 shares of the Company's class A common stock, with staggered strike prices between $2.43 and $6.00 for saleeach warrant, exercisable until July 17, 2026. No warrants have been exercised to-date.
Wafra paid cash consideration of $253.6 million at September 30, 2017) where they haveclosing in exchange for its investment in the abilityDigital IM Business and for the warrants. As previously agreed, Wafra paid additional consideration of $29.9 million in the Digital IM Business in April 2021 based upon the Digital IM Business having achieved a minimum run-rate of earnings before interest, tax, depreciation and amortization (as defined for the purpose of this computation) of $72.0 million as of December 31, 2020. The Compensation Committee of the Board of Directors has approved an allocation of 50% of the contingent consideration received from Wafra as additional bonus compensation to redeemmanagement, to be paid on behalf of certain employees to fund a certain percentageportion of their share of capital contributions to the DCP funds as capital calls are made for these funds. Compensation expense is recognized over time based upon an estimated timeline for deployment of capital by the funds, which will correspond to the timing of capital calls to be funded by the Company on behalf of management.
Under certain circumstances following such time as the Digital IM Business comprises 90% or more of the Company's assets, the Company has agreed to use commercially reasonable efforts to facilitate the conversion of Wafra's interest into shares of the Company's class A common stock. There can be no assurances that such conversion would occur or on what terms and conditions such conversion would occur, including whether such conversion, if it did occur in the future, would have any adverse impact on the Company, the Company’s stock price, governance and other matters.
Wafra has customary minority rights and certain other structural protections designed to protect its interests, through December 31, 2020 orincluding redemption rights with respect to its investment in the Digital IM Business and its funded commitments in certain digital funds. Wafra's redemption rights will be triggered upon the occurrence of certain triggering events. Redemptions may be settled in cash,events, including key person or cause events under the Company’s common stock, orgoverning documents of certain digital funds and for a combination thereof, atlimited period, upon Marc Ganzi, the Company's option, subject to certain conditions,Chief Executive Officer, and payable by the end of the fiscal quarter following the exercise of the redemption.
In connection with an open-end fund sponsored and consolidated by the Company, limited partners of the fund have the right to withdraw a portion or all of their interests in the fund for cash.
The following table presents a summary of changes in redeemable noncontrolling interests:
(In thousands)  
Balance at December 31, 2016 $—
Assumed through the Merger 78,843
Assumed through consolidation of sponsored fund 24,763
Contributions 4,200
Distributions (1,731)
Net income 3,015
Currency translation adjustment and other (100)
Balance at September 30, 2017 $108,990
Noncontrolling Interests inBen Jenkins, Chief Investment Entities
These are interests in consolidated investment entities held by private investment funds managed by the Company, or by third party joint venture parties.
In January 2017, the Company sold an 18.7% noncontrolling interest in its healthcare real estate portfolio through a newly formed joint venture pursuant to a purchase and sale agreement executed in November 2016 based upon terms negotiated prior to the Merger. The net excess of the carrying value of the noncontrolling interest sold over the consideration received resulted in a $41.4 million decrease to additional paid-in capital, including $9.2 million of cost of new capital. Together with existing noncontrolling interests with a 16.4% interest in the healthcare real estate portfolio, noncontrolling interests own approximately 28.7%Officer of the Company's healthcare portfolio.digital real estate and infrastructure platform, ceasing to fulfill certain time and attention commitments to the Digital IM business.
ForTo further enhance the nine months ended September 30, 2017, contributions from new limited partners reducedalignment of interests, the Company's ownership interest in its industrial joint venture. The new limited partners were admitted at net asset valueCompany entered into an amended and restated restrictive covenant agreement with each of Mr. Ganzi and Mr. Jenkins, pursuant to which they agreed to certain enhanced non-solicitation provisions and extension of the joint venture, based upon valuations determined by independent third parties, atterm of existing non-competition agreements.
33
Table of Contents

Wafra’s investment provides the time of contributions. The difference between contributions receivedCompany with permanent capital to pursue strategic digital infrastructure investments and further grow the noncontrolling interests' share of the joint venture resulted in an increase to additional paid-in capital of $21.9 million.Digital IM Business.

Noncontrolling Interests in Operating Company
Certain current and former employees of the Company directly or indirectly own interests in OP, presented as noncontrolling interests in the Operating Company. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s OP Units for cash based on the market value of an equivalent number of shares of class A common stock at the time of redemption, or at the Company's election as managing member of OP, through issuance of shares of class A common stock (registered or unregistered) on a one-for-one1-for-one basis. At the end of each period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP.
Redemption of OP as applicable.
ForUnits—The Company redeemed 505,367 OP Units during the nine months ended September 30, 2017, the Company redeemed 2,072,9572021 and 2,184,395 OP Units of which 1,680,913 of OP Units were redeemed throughduring the year ended December 31, 2020, with the issuance of an equal number of shares of class A common stock on a one-for-one basis,1-for-one basis.
11. Assets and 392,044 OP unitsRelated Liabilities Held for Disposition
Total assets and related liabilities held for disposition are summarized below, all of which relate to discontinued operations (Note 12). These assets and liabilities are composed of: (i) those held by NRF Holdco, predominantly related to Wellness Infrastructure assets and obligations; (ii) OED investments and intangible assets of the Other IM business, both of which previously resided in the Other segment; and (iii) prior to its disposition in March 2021, the Company's hotel business, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.
(In thousands)September 30, 2021December 31, 2020
Assets
Restricted cash$63,645 $191,692 
Real estate, net3,814,809 8,179,025 
Loans receivable387,664 1,258,539 
Equity and debt investments791,418 944,483 
Goodwill, deferred leasing costs and other intangible assets, net144,048 275,954 
Other assets250,132 327,309 
Due from affiliates18,311 60,317 
Total assets held for disposition$5,470,027 $11,237,319 
Liabilities
Debt, net (1)
$3,443,376 $7,352,828 
Lease intangibles and other liabilities388,187 533,688 
Total liabilities related to assets held for disposition$3,831,563 $7,886,516 
__________
(1)    Represents debt related to assets held for disposition if the debt is expected to be assumed by the acquirer upon sale or if the debt is expected to be extinguished through lender's assumption of underlying collateral, and includes debt that is in receivership, in payment default or not in compliance with certain debt covenants. Includes the 5.375% exchangeable senior notes and junior subordinated debt (as described in Note 14) which are obligations of NRF Holdco as the issuer.
Impairment of Assets Classified as Held for Disposition and Discontinued Operations
Real Estate and Related Intangible Assets—Real estate classified as held for disposition and discontinued operations that has been written down and carried at fair value totaled $3.7 billion at September 30, 2021 and $4.7 billion at December 31, 2020, generally representing fair value using Level 3 inputs. Impairment of real estate and related intangibles held for disposition was a reversal of $8.2 million and a charge of $143.4 million for the three months ended September 30, 2021 and 2020, respectively, and charges of $354.1 million and $1.93 billion for the nine months ended September 30, 2021 and 2020, respectively, reflected in discontinued operations (Note 12).
Properties that were redeemedwritten down to estimated fair value at the time they were classified as held for cashdisposition in both years were valued using either estimated recoverable value, sales price, broker opinions of approximately $5.1 millionvalue, or third-party appraisals, and in certain cases, adjusted as deemed appropriate by management to satisfy tax obligations.account for the inherent risk associated with specific properties. The impairment assessment in 2020 also factored in the economic effects of
34
Table of Contents

COVID-19 on real estate values. Fair value of these properties was generally reduced for estimated selling costs, ranging from 1% to 3% of fair value.
For properties that were impaired prior to being classified as held for sale and discontinued operations, largely in 2020, impairment was attributed primarily to shortened hold period assumptions, particularly in the hotel and wellness infrastructure portfolios, driven by the Company's accelerated digital transformation in the second quarter of 2020, and/or to a lesser extent, decline in property operating performance, in part from the economic effects of COVID-19. Fair value of these properties was estimated based upon: (i) third party appraisals, (ii) broker opinions of value with discounts applied based upon management judgment, (iii) income capitalization approach, using net operating income for each property and applying capitalization rates between 10.0% and 12.0%; or (iv) discounted cash flow analyses with terminal values determined using terminal capitalization rates between 7.3% and 11.3%, and discount rates between 8.5% and 9.5%. The Company considered the risk characteristics of the properties and adjusted the capitalization rates and/or discount rates as applicable.
Goodwill—Upon termination of the BRSP management contract on April 30, 2021, the Other IM goodwill balance of $81.6 million was fully written off as the remaining value of the Other IM reporting unit represented principally the BRSP management contract. The receipt of a one-time termination payment of $102.3 million at closing consequently resulted in a net gain of $20.7 million, recognized within other gain (loss) in discontinued operations (Note 12).
The Company had previously recognized impairment loss on its Other IM goodwill of $79.0 million in the first quarter of 2020 and $515.0 million in the second quarter of 2020. In light of the economic effects of COVID-19 and the Company's acceleration of its digital transformation in the second quarter of 2020, both of which represented indicators of impairment, the Company's quantitative tests indicated that the carrying value of the Other IM reporting unit, including goodwill, was in excess of its estimated fair value at March 31, 2020 and at June 30, 2020. The remaining fair value of the Other IM reporting unit was determined to be principally in the BRSP management contract, as no value was ascribed to (a) the future capital raising potential of the non-digital credit and opportunity fund management business as it is no longer part of the Company's long-term strategy; and (b) the hypothetical contract of internally managing the Company's non-digital balance sheet assets following significant decreases in asset values in 2020.
Other Intangible Assets—In the first quarter of 2021, investor relationship intangible asset in Other IM was impaired by $4.0 million (Note 12) to a fair value of $5.5 million at the time of impairment based upon estimated recoverable value in a potential monetization of the Company's Other IM business. During the year ended December 31, 2016, the Company redeemed 1,594,475 OP Units through the issuance of 1,369,911 shares of class A common stock (adjusted for the Merger exchange ratio) on a one-for-one basis and cash settlement of approximately $2.62020, management contracts were impaired by $4.3 million to satisfy tax obligations.an aggregate fair value of $8.4 million at the time of impairment. Fair value was based upon the revised future net cash flows over the remaining life of the contracts, generally discounted at 10%, and represent fair value using Level 3 inputs.
17. Discontinued Operations
Asset groups acquiredEquity Method Investments—Impairment on equity method investments classified as held for disposition and discontinued operations was $125.3 million and $26.0 million in connection with purchase business combinationsthe three months ended September 30, 2021 and 2020, respectively, and $182.9 million and $49.1 million in the nine months ended September 30, 2021 and 2020, respectively, reflected within equity method losses in discontinued operations (Note 12). Equity method investments that meetwere impaired and written down to fair value during the criteria to benine months ended September 30, 2021 and year ended December 31, 2020 totaled $496.0 million and $701.8 million, respectively, at the time of impairment, representing fair value using Level 3 inputs. Impairment recorded in 2021 was based upon estimated recoverable values, including ADC loans accounted for as equity method investments. Significant impairment was also recorded on these ADC loans in the fourth quarter of 2020, previously driven by reduced future cash flow streams expected from these investments, primarily taking into consideration a combination of lower land values, delayed leasing, and/or offer prices in the current market, generally discounted at rates between 10% to 20%. Other impairment charges during 2020 were generally determined using estimated recoverable values for investments resolved or sold, investment values based upon projected exit strategies, or fair values based upon discounted expected future cash flows from the investments.
Assets Carried at Fair Value—These assets are composed of equity investments valued based upon NAV, and equity method investments and loans receivable for which the fair value option was elected. During the nine months ended September 30, 2021 when these assets were classified as held for sale at the datedisposition and discontinued operations, unrealized fair value losses were recognized in other loss of acquisition are reported as discontinued operations.$3.1 million for equity investments and $94.3 million for loans receivable, and in equity method losses of $24.3 million for equity method investments (Note 12). Additional information is included in Note 13 under "—Level 3 Recurring Fair Values."
35
Table of Contents

12. Discontinued Operations
Discontinued operations consisted primarilyrepresent the following:
•Wellness Infrastructure—operations of a manufactured housingthe Wellness Infrastructure business, along with other non-core assets held by NRF Holdco, primarily: (i) the Company's equity interest in and management of NorthStar Healthcare, debt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, acquired throughlimited partnership interests in private equity real estate funds; as well as (ii) the Merger5.375% exchangeable senior notes, trust preferred securities and certain properties acquired through consensual foreclosurecorresponding junior subordinated debt, all of which were issued by NRF Holdco who acts as guarantor.
•Other—operations of substantially all of the OED investments and Other IM business that were previously in the Other segment, composed of various non-digital real estate, real estate-related equity and debt investments, general partner interests and management rights with respect to these assets, management of BRSP prior to termination of its contract, and underlying compensation and administrative costs for managing these assets.
•Hotel—operations of the Company's Hospitality segment and the THL Hotel Portfolio.
The manufactured housing portfolioPortfolio that was valued atpreviously in the Other segment. In March 2021, the Company sold the equity in its contracted sale price of $2.0 billion upon closinghotel subsidiaries holding 5 of the Merger, with $1.3 billion of related mortgage financing assumed6 portfolios in the Hospitality segment, and the Company's 55.6% interest in the THL Hotel Portfolio which was deconsolidated upon sale. The remaining hotel portfolio that was in receivership was sold by the buyer. Thelender in September 2021.
•Industrial—operations of the bulk industrial portfolio prior to the sale of the manufactured housing portfolio closedCompany's 50% interest and deconsolidation in March 2017,December 2020.
Income (loss) from discontinued operations is presented below.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Revenues
Property operating income$196,302 $297,594 $607,172 $939,962 
Interest income4,469 13,578 17,703 64,975 
Fee income12,248 24,006 46,348 71,800 
Other income5,437 8,523 23,963 19,194 
Revenues from discontinued operations218,456 343,701 695,186 1,095,931 
Expenses
Property operating expense114,593 192,429 391,418 617,609 
Interest expense50,376 78,126 216,812 272,500 
Transaction-related costs and investment expense11,800 36,614 29,856 55,517 
Depreciation and amortization8,909 85,787 91,673 284,076 
(Reversal of) impairment loss(8,210)148,130 358,137 2,524,658 
Compensation and administrative expense21,901 25,646 74,617 62,626 
Expenses from discontinued operations199,369 566,732 1,162,513 3,816,986 
Other income (loss)
Gain on sale of real estate514 12,248 49,232 15,261 
Other gain (loss), net98,286 (14,428)40,262 (188,956)
Equity method losses(125,565)(80,289)(189,824)(31,155)
Loss from discontinued operations before income taxes(7,678)(305,500)(567,657)(2,925,905)
Income tax expense(2,751)(3,081)(22,938)(34,259)
Loss from discontinued operations(10,429)(308,581)(590,595)(2,960,164)
Income (loss) from discontinued operations attributable to:
Noncontrolling interests in investment entities(85,741)(120,299)(346,205)(581,204)
Noncontrolling interests in Operating Company7,177 (18,680)(23,354)(235,917)
Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.$68,135 $(169,602)$(221,036)$(2,143,043)
36
Table of Contents

13. Fair Value
Recurring Fair Values
The table below presents a summary of financial assets and financial liabilities carried at fair value on a recurring basis, including financial instruments for which the fair value option was elected, but excluding financial assets under the NAV practical expedient, categorized into the three tier fair value hierarchy that is prioritized based upon the level of transparency in inputs used in the valuation techniques, as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable and it is significant to the fair value measurement, requiring significant management judgment or estimate.
Fair Value Measurement Hierarchy
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Assets
Marketable equity securities$180,112 $— $— $180,112 
AFS debt securities held for disposition— — 37,108 37,108 
Other assets—derivative assets— 1,179 — 1,179 
Fair Value Option:
Loans held for investment— — 112,252 112,252 
Loans held for disposition— — 387,664 387,664 
Equity method investments held for disposition— — 115,753 115,753 
December 31, 2020
Assets
Marketable equity securities$218,485 $— $— $218,485 
AFS debt securities held for disposition— — 28,576 28,576 
Other assets—derivative assets— 99 — 99 
Fair Value Option:
Loans held for investment— — 36,797 36,797 
Loans held for disposition— — 1,258,539 1,258,539 
Equity method investments— — 28,540 28,540 
Equity method investments held for disposition— — 153,259 153,259 
Liabilities
Other liabilities—derivative liabilities
— 103,772 — 103,772 
Other liabilities—settlement liability— — 24,285 24,285 
Marketable Equity Securities
Marketable equity securities consist of publicly traded equity securities held largely by private open-end funds sponsored and consolidated by the Company, and prior to January 2021, equity investment in a third party mutual fund. The equity securities of the consolidated funds comprise listed stocks primarily in the U.S. and to a lesser extent, in Europe, and predominantly in the digital real estate and telecommunication sectors. These marketable equity securities are valued based upon listed prices in active markets and classified as Level 1 of the fair value hierarchy.
Debt Securities
The Company's investment in debt securities is composed of available-for-sale ("AFS") N-Star CDO bonds, which are subordinate bonds retained by NRF Holdco from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF Holdco that it subsequently repurchased at a discount. These CDOs are collateralized primarily by commercial real estate debt and securities.
37
Table of Contents

The following tables summarize the balance of the N-Star CDO bonds.
Amortized Cost without Allowance for Credit LossAllowance for Credit LossGross Cumulative Unrealized
(in thousands)GainsLossesFair Value
September 30, 2021$55,618 $(24,882)$6,372 $— $37,108 
December 31, 202046,561 (24,688)6,703 — 28,576 
The N-Star CDO bonds are included in the pending sale of NRF Holdco. There were no sales of N-Star CDO bonds during the nine months ended September 30, 2021 and year ended December 31, 2020.
These CDOs have long-dated stated maturities through 2037 and 2041, however, the Company expects the N-Star CDO bonds to have remaining future cash flows up to 2.3 years from September 30, 2021.
Fair value of N-Star CDO bonds, classified as Level 3, are determined using an internal price interpolated based upon third party prices of the senior N-Star CDO bonds of the respective CDOs, and applying the Company's knowledge of the underlying collateral and recent trades, if any within the securitizations.
Impairment of AFS Debt Securities
AFS debt securities are considered to be impaired if their fair value is less than their amortized cost basis. If the Company intends to sell or is more likely than not required to sell the debt security before recovery of its amortized cost, the entire impairment amount is recognized in earnings within other gain (loss) as a write-off of the amortized cost basis of the debt security. If the Company does not intend to sell or is not more likely than not required to sell the debt security before recovery of its amortized cost, the credit component of the loss is recognized in earnings within other gain (loss) as an allowance for credit loss, which may be subject to reversal for subsequent recoveries in fair value. The non-credit loss component is recognized in other comprehensive income or loss ("OCI"). The allowance is charged off against the amortized cost basis of the security if in a subsequent period, the Company intends to or is more likely than not required to sell the security, or if the Company deems the security to be uncollectible.
Changes in allowance for credit losses for AFS debt securities are presented below:
Nine Months Ended September 30,
(In thousands)20212020
Allowance for credit losses
Beginning balance$24,688 $— 
Provision for credit losses194 23,973 
Ending balance$24,882 $23,973 
Credit losses were determined based upon an analysis of the present value of contractual cash flows expected to be collected from the underlying collateral as compared to the amortized cost basis of the security. At September 30, 2021 and December 31, 2020, there were no AFS debt securities in unrealized loss position without allowance for credit loss.
Derivatives
The Company's derivative instruments generally consist of: (i) foreign currency put options, forward contracts and costless collars to hedge the foreign currency exposure of certain investments in foreign subsidiaries or equity method joint ventures (in EUR and in GBP), with notional amounts and termination dates based upon the anticipated return of capital from these investments; and (ii) interest rate caps to limit the exposure to changes in interest rates on various floating rate debt obligations (indexed primarily to LIBOR and to a lesser extent, EURIBOR and GBP LIBOR). These derivative contracts may be designated as qualifying hedge accounting relationships, specifically as net investment hedges and cash flow hedges, respectively. At September 30, 2021 and December 31, 2020, notional amounts aggregated to the equivalent of $184.9 million and $350.5 million, respectively, for foreign exchange contracts, and the equivalent of $2.8 billion and $4.6 billion, respectively, for interest rate contracts, all of which were composed predominantly of non-designated economic hedges. The derivative instruments are subject to master netting arrangements with counterparties that allow the Company to offset the settlement of derivative assets and liabilities in the same currency by instrument type or, in the event of default by the counterparty, to offset all derivative assets and liabilities with the same counterparty. Notwithstanding the conditions for right of offset may have been met, the Company having received approximately $664.4presents derivative assets and liabilities with the same counterparty on a gross basis on the consolidated balance sheets.
Realized and unrealized gains and losses on derivative instruments are recorded in other gain (loss) on the consolidated statement of operations, other than interest expense, as follows:
38
Table of Contents

Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Foreign currency contracts:
Realized gain transferred from AOCI to earnings$— $414 $1,520 $414 
Unrealized gain transferred from AOCI to earnings (1)
— — — 1,485 
Unrealized gain (loss) in earnings on non-designated contracts1,457 (840)1,129 (1,616)
Interest rate contracts:
Interest expense on designated contracts (2)
— 6 (20)12 
Unrealized loss in earnings on non-designated contracts(13)(197)(248)(123)
Realized loss transferred from AOCI to earnings— — (1,328)— 
__________
(1)    The portion of derivative notional that is in excess of the beginning balance of the foreign denominated net investment is dedesignated upon a reassessment of the effectiveness of net investment hedges at period end.
(2)    Represents amortization of the cost of designated interest rate caps to interest expense based upon expected hedged interest payments on variable
rate debt.
Prior to January 2021, the Company had entered into a series of forward contracts on its shares in a third party real estate mutual fund in an aggregate notional amount of $119 million and a series of swap contracts with the same counterparty to pay the return of the Dow Jones U.S. Select REIT Total Return Index. The forward and swap contracts were settled upon expiration in net proceeds, as adjusted for prorations and other reimbursements, for its interestJanuary 2021 through delivery of all of the Company's shares in the portfolio.
Net income generated from operationsmutual fund, realizing an immaterial net loss upon settlement. The forwards and swaps were not designated accounting hedges. At December 31, 2020, the forwards and swaps were in a liability position of these held for sale asset groups for$102.7 million and $0.1 million, respectively. During the three and nine months ended September 30, 2017 (or through2020, the forwards and swaps had realized and unrealized fair value losses totaling $0.2 million and gains totaling $27.0 million, respectively, which were partially offset by an increase in NAV of $2.3 million and a decrease in NAV of $20.0 million, respectively, in the Company's investment in the mutual fund, both of which were recorded in other income on the consolidated statement of operations.
The Company's foreign currency and interest rate contracts are generally traded over-the-counter, and are valued using a third-party service provider. Quotations on over-the-counter derivatives are not adjusted and are generally valued using observable inputs such as contractual cash flows, yield curve, foreign currency rates and credit spreads, and are classified as Level 2 of the fair value hierarchy. Although credit valuation adjustments, such as the risk of default, rely on Level 3 inputs, these inputs are not significant to the overall valuation of the derivatives. As a result, derivative valuations in their disposition dates, if earlier) is presented below. There were no discontinuedentirety are classified as Level 2 of the fair value hierarchy.
Settlement Liability
In March 2020, the Company entered into a cooperation agreement with Blackwells Capital LLC ("Blackwells"), a stockholder of the Company. Pursuant to the cooperation agreement, Blackwells agreed to a standstill in its proxy contest with the Company, and to abide by certain voting commitments, including a standstill with respect to the Company until the expiration of the agreement in March 2030 and voting in favor of the Board of Directors' recommendations until the third anniversary of the agreement.
Contemporaneously, the Company and Blackwells entered into a joint venture arrangement for the purpose of acquiring, holding and disposing of the Company's class A common stock. Pursuant to the arrangement, the Company contributed its class A common stock, valued at $14.7 million by the venture, and Blackwells contributed $1.47 million of cash that was then distributed to the Company, resulting in a net capital contribution of $13.23 million by the Company in the venture. All of the class A common stock held in the venture was repurchased by the Company in March 2020 (Note 9). Distributions from the joint venture arrangement upon dissolution effectively represent a settlement of the proxy contest with Blackwells. The initial fair value of the arrangement was recorded as a settlement loss on the statement of operations in March 2020, with a corresponding liability on the threebalance sheet, subject to remeasurement at each period end. The settlement liability represents the fair value of the disproportionate allocation of profits distribution to Blackwells pursuant to the joint venture arrangement. The profits are derived from dividend payments and nine months endedappreciation in value of the Company's class A common stock, allocated between the Company and Blackwells based upon specified return hurdles.
In June 2021, Blackwells terminated the arrangement and the joint venture was dissolved. The profits distribution allocated to Blackwells was valued at $47.0 million and paid in the form of 5.95 million shares of the Company's class A common stock, with $22.8 million recognized in 2021 through termination as other loss on the consolidated statement of operations.
Prior to dissolution of the arrangement, the settlement liability, classified as a Level 3 fair value, was measured using a Monte Carlo simulation under a risk-neutral premise, assuming that the final distribution would occur at the end of the
39
Table of Contents

third year in March 2023. At December 31, 2020, the settlement liability was valued at $24.3 million, applying the following assumptions: (a) expected volatility of the Company's class A common stock of 67.2% based upon a combination of historical and implied volatility of the Company's class A common stock; (b) zero expected dividend yield given the Company's suspension of its common stock dividend beginning the second quarter of 2020; and (c) risk free rate of 0.14% per annum based upon a compounded zero-coupon U.S. Treasury yield. During 2020, the settlement liability increased approximately $20.4 million from inception in March 2020, recorded as other loss on the consolidated statement of operations.
Fair Value Option
Equity Method Investments
Equity method investments for which the fair value option was elected are carried at fair value on a recurring basis. Fair values are determined using either indicative sales price, NAV of the underlying funds, or discounted future cash flows based upon expected income and realization events of the underlying assets. Fair value of equity method investments are classified as Level 3 of the fair value hierarchy. Changes in fair value of equity method investments under the fair value option are recorded in equity method earnings (losses).
Loans Receivable
Loans receivable consist of mortgage loans, mezzanine loans and non-mortgage loans carried at fair value under the fair value option. Loans held for disposition are measured at their selling price. Fair value of loans held for investment is determined by comparing the current yield to the estimated yield of newly originated loans with similar credit risk or the market yield at which a third party might expect to purchase such investment, or based upon discounted cash flow projections of principal and interest expected to be collected, which include, but are not limited to, consideration of the financial standing of the borrower or sponsor as well as operating results and/or value of the underlying collateral.
Loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status, all of which are held for disposition as presented in the table below. Such loans include distressed loan portfolios that are held for disposition, previously acquired by the Company at a discount (classified as purchased credit-impaired loans prior to the election of fair value option).
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnpaid Principal BalanceFair Value less Unpaid Principal BalanceFair ValueUnpaid Principal BalanceFair Value less Unpaid Principal Balance
90 days or more past due or nonaccrual
Loans held for disposition$224,274 $1,173,066 $(948,792)$873,205 $2,159,538 $(1,286,333)
40
Table of Contents

Level 3 Recurring Fair Values
Quantitative information about recurring Level 3 fair value assets are as follows.
Valuation TechniqueKey Unobservable InputsInput Value
Effect on Fair Value from Increase in Input Value (2)
Financial Instrument
Fair Value
(In thousands)
Weighted Average(1)
(Range)
September 30, 2021
AFS debt securities held for disposition$37,108 Discounted cash flowsDiscount rate23.4%
(5.8% - 57.8%)		Decrease
Fair Value Option:
Loans held for investment112,252 Discounted cash flowsDiscount rate8.0%
(4.7% - 11.3%)		Decrease
Loans held for disposition387,664 
Transaction price (4)
N/AN/AN/A
Equity method investments held for disposition1,553 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition114,200 
Transaction price (4)
N/AN/AN/A
December 31, 2020
AFS debt securities held for disposition$28,576 Discounted cash flowsDiscount rate
28.9%
(18.3% - 57.8%)
Decrease
Fair Value Option:
Loans held for investment36,797 Discounted cash flowsDiscount rate
8.7%
(7.2% - 8.9%)
Decrease
Loans held for disposition1,258,539 Discounted cash flowsDiscount rate13.3%
(6.9% - 25.7%)		Decrease
Equity method investments28,540 Discounted cash flowsDiscount rate30%Decrease
Equity method investments held for disposition2,472 
NAV (3)
N/AN/AN/A
Equity method investments held for disposition8,383 Discounted cash flowsDiscount rate
19.3%
(19.0% - 20.0%)
Decrease
Equity method investments held for disposition142,404 
Transaction price (4)
N/AN/AN/A
__________
(1)    Weighted average discount rates are calculated based upon undiscounted cash flows.
(2)    Represents the directional change in fair value that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the reverse effect. Significant increases or decreases in these inputs in isolation could result in significantly higher or lower fair value measures.
(3)    Fair value was estimated based upon underlying NAV of the respective funds on a quarter lag, adjusted as deemed appropriate by management, considering the cash flows provided by the general partners of the funds and the implied yields of the funds.
(4)    Based upon actual or indicative transaction values of the respective loans, investments or underlying assets of the investee. At December 31, 2020, acquisition price was deemed to approximate fair value for investee engaged in real estate development during the development stage.
41
Table of Contents

The following table presents changes in recurring Level 3 fair value assets. Loans receivable and equity method investments under the fair value option are predominantly held for disposition. Realized and unrealized gains (losses) are included in AOCI for AFS debt securities and in other gain (loss) on the consolidated statement of operations for other assets carried at fair value.
Fair Value Option
(In thousands)AFS Debt SecuritiesLoans Held for Investment and Held for DispositionEquity Method Investments (including Held for Disposition)
Fair value at December 31, 2019$54,859 $— $222,875 
Election of fair value option on January 1, 2020— 1,556,131 — 
Reclassification of accrued interest on January 1, 2020— 13,504 — 
Purchases, drawdowns, contributions and accretion2,979 156,179 4,614 
Paydowns, distributions and sales(4,542)(131,365)(900)
Change in accrued interest and capitalization of paid-in-kind interest— 32,544 — 
Transfer to held for disposition— (42,985)— 
Allowance for credit losses(23,973)— — 
Realized and unrealized losses in earnings, net— (289,283)(66,418)
Other comprehensive income (loss) (1)
(1,425)30,419 5,599 
Fair value at September 30, 2020$27,898 $1,325,144 $165,770 
Net unrealized losses on instruments held at September 30, 2020
In earnings$— $(280,822)$(66,418)
In other comprehensive loss$(1,425)N/AN/A
 
Fair value at December 31, 2020$28,576 $1,295,337 $181,799 
Purchases, drawdowns, contributions and accretion11,120 92,967 8 
Paydowns, distributions and sales(2,063)(436,502)(18,128)
Change in accrued interest and capitalization of paid-in-kind interest— 11,630 0
Change in accounting method for equity interest— — (27,626)
Deconsolidation of investment entities (Note 21)
— (341,577)— 
Allowance for credit losses(194)— — 
Realized and unrealized losses in earnings, net— (91,981)(13,846)
Other— 4,834 — 
Other comprehensive loss (1)
(331)(34,792)(6,454)
Fair value at September 30, 2021$37,108 $499,916 $115,753 
Net unrealized losses on instruments held at September 30, 2021
In earnings$— $(42,148)$(23,031)
In other comprehensive loss$(331)N/AN/A
__________
(1)    Amounts recorded in OCI for loans receivable and equity method investments represent foreign currency translation differences on the Company's foreign subsidiaries that hold the respective foreign currency denominated investments.
42
Table of Contents

Investments Carried at Fair Value Using Net Asset Value
Investments in Company-sponsored private fund and non-traded REIT, and limited partnership interest in a third party real estate private fund, all of which are held for disposition (Note 11), are valued using NAV of the respective vehicles.
September 30, 2021December 31, 2020
(In thousands)Fair ValueUnfunded CommitmentsFair ValueUnfunded Commitments
Private fund—real estate$12,064 $7,117 $15,680 $8,026 
Non-traded REIT—real estate26,041 — 18,272 — 
Private fund—emerging market private equity2,172 — 2,224 — 
The Company's interests in the private funds are not subject to redemption, with distributions to be received through liquidation of underlying investments of the funds. The private funds each have eight and ten year lives, respectively, at inception, both of which may be extended in one year increments up to two years.
No secondary market currently exists for shares of the non-traded REIT and the Company does not currently expect to seek liquidity of its shares of the non-traded REIT. Subject to then-existing market conditions, the board of directors of the non-traded REIT, along with the Company, as sponsor, are expected to consider alternatives for providing liquidity to the non-traded REIT shares beginning 2021, five years from completion of the offering stage, but with no definitive date by which it must do so. In addition, the Company has agreed that any right to have its shares redeemed is subordinated to third party stockholders for so long as its advisory agreement is in effect. 
Nonrecurring Fair Values
The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for disposition or otherwise, write-down of asset values due to impairment. Impairment is discussed in Note 11 for real estate, Notes 5 and 11for equity method investments, and Notes 6and 11for intangible assets, including goodwill.
Fair Value Information on Financial Instruments Reported at Cost
Carrying amounts and estimated fair value of financial instruments reported at amortized cost are presented below.
 Fair Value MeasurementsCarrying Value
(In thousands)Level 1Level 2Level 3Total
September 30, 2021
Liabilities
Debt at amortized cost
Secured fund fee revenue notes$— $— $290,939 $290,939 $290,939 
Convertible and exchangeable senior notes1,055,861 — — 1,055,861 490,855 
Secured debt— — 3,789,416 3,789,416 3,789,416 
Debt related to assets held for disposition— — 3,443,376 3,443,376 3,443,376 
December 31, 2020
Liabilities
Debt at amortized cost
Convertible and exchangeable senior notes$898,231 $— $— $898,231 $520,522 
Secured debt— — 3,407,175 3,407,175 3,410,467 
Debt related to assets held for disposition— 13,095 7,055,237 7,068,332 7,352,828 
Debt—Senior notes were valued using the last trade price in active markets or unadjusted quoted price in non-active market for the senior note that is held for disposition. Fair value of the secured fund fee revenue notes and secured debt, including amounts held for disposition, was estimated by discounting expected future cash outlays at interest rates available to the Company for similar instruments. Junior subordinated debt that is held for disposition was valued based upon unadjusted quotations from a third party valuation firm, with such quotes derived using a combination of internal valuation models, comparable trades in non-active markets and other market data.
Other—The carrying values of cash, accounts receivable, due from and to affiliates, interest payable and accounts payable approximate fair value due to their short term nature and credit risk, if any, are negligible.
43
Table of Contents

14. Variable Interest Entities
A VIE is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. The following discusses the Company's involvement with VIEs where the Company is the primary beneficiary and consolidates the VIEs or where the Company is not the primary beneficiary and does not consolidate the VIEs.
Operating Subsidiary
The Company's operating subsidiary, OP, is a limited liability company that has governing provisions that are the functional equivalent of a limited partnership. The Company holds the majority of membership interest in OP, acts as the managing member of OP and exercises full responsibility, discretion and control over the day-to-day management of OP. The noncontrolling interests in OP do not have substantive liquidation rights, substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest members (including by such a member unilaterally). The absence of such rights, which represent voting rights in a limited partnership equivalent structure, would render OP to be a VIE. The Company, as managing member, has the power to direct the core activities of OP that most significantly affect OP's performance, and through its majority interest in OP, has both the right to receive benefits from and the obligation to absorb losses of OP. Accordingly, the Company is the primary beneficiary of OP and consolidates OP. As the Company conducts its business and holds its assets and liabilities through OP, the total assets and liabilities of OP represent substantially all of the total consolidated assets and liabilities of the Company.
Company-Sponsored Private Funds
The Company sponsors private funds and other investment vehicles as general partner for the purpose of providing investment management services in exchange for management fees and performance-based fees. These private funds are established as limited partnerships or equivalent structures. Limited partners of the private funds do not have either substantive liquidation rights, or substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of limited partners or by a single limited partner. Accordingly, the absence of such rights, which represent voting rights in a limited partnership, results in the private funds being considered VIEs. The nature of the Company's involvement with its sponsored funds comprise fee arrangements and equity interests. The fee arrangements are commensurate with the level of management services provided by the Company, and contain terms and conditions that are customary to similar at-market fee arrangements.
Consolidated Company-Sponsored Private Funds—The Company currently consolidates sponsored private funds in which it has more than an insignificant equity interest in the fund as general partner. As a result, the Company is considered to be acting in the capacity of a principal of the sponsored private fund and is therefore the primary beneficiary of the fund. The Company’s exposure is limited to the value of its outstanding investment in the consolidated private funds of $50.5 million at September 30, 2016.2021 and $46.5 million at December 31, 2020. The Company, as general partner, is not obligated to provide any financial support to the consolidated private funds. At September 30, 2021 and December 31, 2020, the consolidated private funds had total assets of $215.3 million and $172.2 million, respectively, and total liabilities of $59.7 million and $41.8 million, respectively, made up primarily of cash, marketable equity securities and unsettled trades.
Unconsolidated Company-Sponsored Private Funds—The Company does not consolidate its sponsored private funds where it has insignificant direct equity interests or capital commitments to these funds as general partner. The Company may invest alongside certain of its sponsored private funds through joint ventures between the Company and these funds, or the Company may have capital commitments to its sponsored private funds that are satisfied directly through the co-investment joint ventures as an affiliate of the general partner. In these instances, the co-investment joint ventures are consolidated by the Company. As the Company's direct equity interests in its sponsored private funds as general partner absorb insignificant variability, the Company is considered to be acting in the capacity of an agent of these funds and is therefore not the primary beneficiary of these funds. The Company accounts for its equity interests in unconsolidated sponsored private funds under the equity method. The Company's maximum exposure to loss is limited to the carrying value of its investment in the unconsolidated sponsored private funds, totaling $362.4 million at September 30, 2021 and $214.4 million at December 31, 2020, included within equity and debt investments.
Securitizations
The Company previously securitized loans receivable and CRE debt securities using VIEs. Upon securitization, the Company had retained beneficial interests in the securitization vehicles, usually in the form of equity tranches or subordinate securities. The Company also acquired securities issued by securitization trusts that are VIEs. The securitization vehicles were structured as pass-through entities that receive principal and interest on the underlying mortgage loans and debt securities and distribute those payments to the holders of the notes, certificates or bonds issued
44
Table of Contents

(In thousands) Three Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2017
Revenues    
Property operating income $6,446
 $40,303
Other income 95
 2,352
Expenses    
Property operating expenses (5,056) (17,451)
Interest expense —
 (9,028)
Loss on sale of real estate assets —
 (2,108)
Other expenses (4) (27)
Net income from discontinued operations 1,481
 14,041
Net income from discontinued operations attributable to:    
Noncontrolling interests—investments

 (648) (648)
Noncontrolling interests—Operating Company

 (46) (46)
Net income from discontinued operations attributable to Colony NorthStar, Inc. $787
 $13,347
by the securitization vehicles. The loans and debt securities were transferred into securitization vehicles such that these assets are restricted and legally isolated from the creditors of the Company, and therefore are not available to satisfy the Company's obligations but only the obligations of the securitization vehicles. The obligations of the securitization vehicles did not have any recourse to the general credit of the Company and its other subsidiaries.

Unconsolidated Securitizations—The Company does not consolidate the assets and liabilities of CDOs in which the Company has an interest but does not retain the collateral management function. NRF Holdco had previously delegated the collateral management rights for certain sponsored N-Star CDOs and third party-sponsored CDOs to a third party collateral manager or collateral manager delegate who is entitled to a percentage of the senior and subordinate collateral management fees. The Company continues to receive fees as named collateral manager or collateral manager delegate and retained administrative responsibilities. The Company determined that the fees paid to the third party collateral manager or collateral manager delegate represent a variable interest in the CDOs and that the third party is acting as a principal. The Company concluded that it does not have the power to direct the activities that most significantly impact the economic performance of these CDOs, which include but are not limited to, the ability to sell distressed collateral, and therefore the Company is not the primary beneficiary of such CDOs and does not consolidate these CDOs. The Company’s exposure to loss is limited to its investment in these unconsolidated CDOs, comprising CDO bonds, which aggregate to $30.7 million at September 30, 2021 and $21.9 million at December 31, 2020, as described further in Note 13. These CDOs are included within assets held for disposition on the consolidated balance sheet (Note 11).
18.Trusts
Wholly-owned subsidiaries of NRF Holdco that were formed as statutory trusts, NorthStar Realty Finance Trust I through VIII (the “Trusts”), previously issued trust preferred securities ("TruPS") in private placement offerings and used the proceeds to purchase junior subordinated notes to evidence loans made to NRF Holdco. The sole assets of the Trusts consist of a like amount of junior subordinated notes issued by the Issuer at the time of the offerings (the "Junior Notes"). Neither the Company nor the OP is an obligor or guarantor on the Junior Notes or the TruPS. NRF Holdco may redeem the Junior Notes at par, in whole or in part, for cash, after five years. To the extent NRF Holdco redeems the Junior Notes, the Trusts are required to redeem a corresponding amount of TruPS. 
The Company owns all of the common stock of the Trusts but does not consolidate the Trusts as the holders of the preferred securities issued by the Trusts are the primary beneficiaries of the Trusts. The Company accounts for its interest in the Trusts under the equity method and its maximum exposure to loss is limited to its investment carrying value of $3.7 million at September 30, 2021 and December 31, 2020. The Trusts are recorded as equity investments and the junior subordinated notes as debt, both classified as held for disposition on the consolidated balance sheet (Note 11).
45
Table of Contents

15. Earnings per Share
The following table provides the basic and diluted earnings per common share computations:
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except per share data) 2017 2016 2017 2016
Net income allocated to common stockholders        
Net income from continuing operations $71,108
 $71,904
 $215,930
 $266,071
Income from discontinued operations 1,481
 —
 14,041
 —
Net income 72,589
 71,904
 229,971
 266,071
Net income attributable to noncontrolling interests:        
Redeemable noncontrolling interests (1,678) —
 (3,015) —
Investment entities (36,906) (32,744) (87,765) (130,508)
Operating Company (97) (4,189) (1,344) (15,528)
Net income attributable to Colony NorthStar, Inc. 33,908
 34,971
 137,847
 120,035
Preferred stock redemption 918
 —
 (4,530) —
Preferred dividends (33,176) (12,093) (98,328) (36,066)
Net income attributable to common stockholders 1,650
 22,878
 34,989
 83,969
Net income allocated to participating securities (2,677) (577) (7,461) (1,723)
Net income allocated to common stockholders—basic (1,027) 22,301
 27,528
 82,246
Interest expense attributable to convertible notes (1)
 —
 —
 —
 —
Net income allocated to common stockholders—diluted $(1,027) $22,301
 $27,528
 $82,246
Weighted average common shares outstanding (2)
        
Weighted average number of common shares outstanding—basic 542,855
 164,846
 531,251
 164,420
Weighted average effect of dilutive shares (3)
 —
 —
 —
 —
Weighted average number of common shares outstanding—diluted 542,855
 164,846
 531,251
 164,420
         
Basic earnings per share        
Net income from continuing operations $0.00

$0.14
 $0.03
 $0.50
Income from discontinued operations 0.00
 0.00
 0.02
 0.00
Net income per basic common share $0.00
 $0.14
 $0.05
 $0.50
         
Diluted earnings per share        
Net income from continuing operations $0.00
 $0.14
 $0.03
 $0.50
Income from discontinued operations 0.00
 0.00
 0.02
 0.00
Net income per diluted common share $0.00
 $0.14
 $0.05
 $0.50
 Three Months Ended September 30,Nine Months Ended September 30,
(In thousands, except per share data)2021202020212020
Net loss allocated to common stockholders
Loss from continuing operations$(40,935)$(52,649)$(183,451)$(524,116)
Loss from continuing operations attributable to noncontrolling interests34,157 34,984 96,810 113,458 
Loss from continuing operations attributable to DigitalBridge Group, Inc.$(6,778)$(17,665)$(86,641)$(410,658)
Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.68,135 (169,602)(221,036)(2,143,043)
Preferred stock redemption(2,865)— (2,865)— 
Preferred dividends(17,456)(18,517)(54,488)(56,507)
Net income (loss) attributable to common stockholders41,036 (205,784)(365,030)(2,610,208)
Net income allocated to participating securities(736)— — (1,250)
Net income (loss) allocated to common stockholders—basic40,300 (205,784)(365,030)(2,611,458)
Interest expense attributable to convertible and exchangeable notes (1)
— — — — 
Net income (loss) allocated to common stockholders—diluted$40,300 $(205,784)$(365,030)$(2,611,458)
Weighted average common shares outstanding
Weighted average number of common shares outstanding—basic485,833 471,739 480,165 474,081 
Weighted average effect of dilutive shares (1)(2)(3)
— — — — 
Weighted average number of common shares outstanding—diluted485,833 471,739 480,165 474,081 
Income (Loss) per share—basic
Loss from continuing operations$(0.06)$(0.08)$(0.30)$(0.99)
Income (Loss) from discontinued operations0.14 (0.36)(0.46)(4.52)
Net income (loss) attributable to common stockholders per common share—basic$0.08 $(0.44)$(0.76)$(5.51)
Income (Loss) per share—diluted
Loss from continuing operations$(0.06)$(0.08)$(0.30)$(0.99)
Income (Loss) from discontinued operations0.14 (0.36)(0.46)(4.52)
Net income (loss) attributable to common stockholders per common share—diluted$0.08 $(0.44)$(0.76)$(5.51)
__________
(1)
For the three months ended September 30, 2017 and 2016,
(1)    With respect to the assumed conversion or exchange of the Company's outstanding senior notes, the following are excluded from the calculation of diluted earnings per share as their inclusion would be antidilutive: (a) for the three months ended September 30, 2021 and 2020, the effect of adding back $7.6 million and $8.2 million of interest expense, respectively, and 144,259,100 and 126,454,900 of diluted earnings per share is the effect of adding back $7.1 million and $6.8 million of interest expense and 38,246,500 and 36,582,700 weighted average dilutive common share equivalents, respectively; and (b) for the nine months ended September 30, 2021 and 2020, the effect of adding back $23.3 million and $22.4 million of interest expense, respectively, and 144,363,600 and 67,774,600 of weighted average dilutive common share equivalents, respectively.
(2)    The calculation of diluted earnings per share excludes the effect of the following as their inclusion would be antidilutive: (a) class A common shares that are contingently issuable in relation to performance stock units (Note 17) with weighted average shares of 9,891,200 and 5,183,400 for the three months ended September 30, 2021 and 2020, respectively, and 11,170,700 and 4,250,400 for the nine months ended September 30, 2021 and 2020, respectively; and (b) class A common shares that are issuable to net settle the exercise of warrants (Note 10) with weighted average shares of 10,903,700 and 10,111,300 for the three and nine months ended September 30, 2021, respectively.
(3)    OP Units may be redeemed for registered or unregistered class A common stock on a 1-for-one basis and are not dilutive. At September 30, 2021 and 2020, 51,955,100 and 53,076,700 of OP Units, respectively, for the assumed conversion or the exchange of the Company's outstanding convertible and exchangeable notes, as applicable, as their inclusion would be antidilutive. For the nine months ended September 30, 2017 and 2016, excluded from the calculation of diluted earnings per share is the effect of adding back $21.8 million and $20.5 million of interest expense, respectively, and 38,599,200 and 36,582,700 weighted average dilutive common share equivalents, respectively, for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as applicable, as their inclusion would be antidilutive.
(2)
As a result of the Merger, each outstanding share of common stock of Colony was exchanged for 1.4663 of newly issued common shares of Colony NorthStar. Accordingly, the historical data related to quarterly earnings per share for the periods ended before September 30, 2017 have been adjusted by the exchange ratio of 1.4663.
(3)
OP Units, subject to lock-up agreements, may be redeemed for registered or unregistered class A common shares on a one-for-one basis. At September 30, 2017 and 2016, there were 32,285,700 and 30,480,500 redeemable OP Units, respectively. These OP Units would not be dilutive and were not included in the computation of diluted earnings per share for all periods presented.
Additionally, the computation of diluted earnings per share excluded sharesfor all periods presented.
46
Table of the Company's class A common stock that are contingently issuable pursuant to the contingent consideration arrangement (Note 13) as the pre-defined performance thresholds would not have been met had the measurement period ended at September 30, 2017.Contents


19.16. Fee Income
The Company's digital real estate investment management platform manages capital on behalf of largely institutional and retail investors in private funds non-traded and traded REITs andother investment companies,vehicles for which the Company earns fee income. For investment vehicles in which
The following table presents the Company co-sponsors with a third party or for which the Company engages a third party sub-advisor, suchCompany's fee income is shared with the respective co-sponsor or sub-advisor. The Company also owns NorthStar Securities, a captive broker-dealer platform which raises capital in the retail market.by type, excluding amounts classified as discontinued operations (Note 12):
Fee income earned by the Company consists of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Management fees$47,719 $18,826 $115,185 $55,371 
Incentive fees1,313 — 6,396 — 
Other fee income1,194 1,088 3,245 3,794 
Total fee income—affiliates$50,226 $19,914 $124,826 $59,165 
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Base management fees ($42,786, $16,450, $123,959 and $47,873 from affiliates, respectively) $47,633
 $16,450
 $137,036
 $47,873
Asset management fees—from affiliates 7,440
 783
 16,931
 1,474
Incentive fees ($69, $0, $93 and $0 from affiliates, respectively) 414
 —
 684
 —
Other fee income 4,206
 —
 12,611
 —
Total fee income ($50,294, $17,233, $140,983 and $49,347 from affiliates, respectively) $59,693
 $17,233
 $167,262
 $49,347
Base Management Fees—The Company earns base management fees for the day-to-day operations and administration of its managedsponsored digital private funds non-traded REITs,and other digital investment companies, NRE and Townsend private funds, calculated as follows:
Private Funds—vehicles, generally 1% per annum of the limited partners' net funded capital;
Non-Traded REITs—1% to 2% per annum of gross assets or equity;
Investment Companies—1.25% per annum of average net assets;
NRE—a fixed fee of $14.2 million per annum, subject to increase byat an amount equalannual rate ranging from 0.3% to 1.5% per annum of certain provisions in accordance with terms set out in its governing agreement; and
Townsend private funds—at a fixed percentage of assets under management, net asset value, total assets,investors' committed capital during commitment or investment period, and thereafter, of contributed or invested capital.
Asset ManagementIncentive Fees—The Company also earns asset management fees, including fees related to acquisition and disposition of investments, as follows:
Private Funds—a one-time fee upon closing of each investment, calculated as a fixed percentage, generally 0.5% of the limited partners' net funded capital on each investment; and
Non-Traded REITs (except NorthStar/RXR NY Metro)—1% to 2.25% of the amount funded or allocated by the non-traded REITs to originate or acquire an investment, and 1% to 2% of the contractual sales price for disposition of an investment.
Incentive Fees—The Company may earn incentive fees from its sponsored private funds, traded and non-traded REITs, certain investment companies and Townsend private funds. Incentive fees are determinedvarious managed accounts based onupon the performance of the investment vehiclesrespective accounts, subject to the achievement of minimumspecified return levels, with such thresholds varying across investment vehicles in accordance with the terms set out in their respective governing agreements.
Other Fee Income—Other fees include advisory fees from Townsend clients at a fixed annual retainer, advisory fee in connection with real estate acquisitions by a third party client, as well as selling commission and dealer manager fees. The Company, through NorthStar Securities, earns fees for selling equity in certain classes of shares in the retail companies, calculated as a percentage A portion of the gross offering proceeds raised, up to 7% for selling commissions and up to 3% for dealer managerincentive fees depending on the share classes of the retail companies. All or a portion of selling commission and dealer manager fees may be reallowed to participating broker-dealers.
20. Equity-Based Compensation
Upon consummation of the Merger, each outstanding Colony employee award granted under the 2014 Equity Incentive Plan (the “Colony Equity Incentive Plan”) that did not vest and was not forfeited was assumedearned by the Company is allocable to senior management, investment professionals, and was converted into an equivalent Colony NorthStar equity award, as set forth in the merger agreement. Outstanding

equity awards granted under Colony's 2009 Non-Executive Director Stock Plan (the “Colony Director Stock Plan”) fully vested upon consummation of the Merger, as discussed further below.
Substantially all of the outstanding NSAM and NRF equity awards prior to the Merger, except for certain awards as described below, vested upon consummation of the Merger. The vested equity awards were settled in NSAM and NRF shares respectively and converted into Colony NorthStar class A common stock based on the exchange ratios of one share of Colony NorthStar class A common stock for each share of NSAM common stock and 1.0996 shares of Colony NorthStar class A common stock for each share of NRF common stock, rounded down to the nearest whole share. All of the vested NSAM and NRF equity awards relate to pre-combination services and are part of the merger consideration.
Colony Director Stock Plan
Upon consummation of the Merger, all outstanding restricted share awards granted under the Colony Director Stock Plan vested and were settled through the issuance of 44,464 shares of Colony NorthStar class A common stock based on the exchange ratio of 1.4663 shares of Colony NorthStar class A common stock for each share of Colony class A common stock, rounded down to the nearest whole share. The Colony Director Stock Plan was assumed by Colony NorthStar upon closing of the Merger.
Colony Equity Incentive Plan
As of January 2, 2017, all shares reserved under the Colony Equity Incentive Plan had been issued. Upon consummation of the Merger, the Colony Equity Incentive Plan was assumed by Colony NorthStar. Each outstanding restricted stock award granted under the Colony Equity Incentive Plan that did not vest by its terms in connection with the consummation of the Merger (and was not forfeited) was assumed by Colony NorthStar and was converted into the right to receive an award in the same form for that number of shares of Colony NorthStar restricted common stock (rounded down to the nearest whole share) equal to the product of: (i) the number of shares of the Company's class A common stock subject to such unvested equity award multiplied by (ii) 1.4663. While the Colony Equity Incentive Plan continues to exist following the Merger, no new awards will be granted under this plan.
NSAM 2014 Stock Plan
Upon consummation of the Merger, the Company assumed the following outstanding awards previously issued under NSAM's 2014 Omnibus Stock Incentive Plan ("NSAM 2014 Stock Plan"). Subsequent to the Merger, the Company adopted the NSAM 2014 Stock Plan, as further described below.
Townsend
In connection with NSAM's acquisition of Townsend's investment management business in January 2016, certain members of Townsend’s management team, who areother employees of the Company, were granted restricted stock awards. These equity awards did not vest by their termsincluded in connection with the Merger. Upon consummation of the Merger, the outstanding restricted stock awards were converted intocarried interest and incentive fee compensation expense.
Other Fee Income—Other fees include primarily service fees for information technology, facilities and operational support provided to portfolio companies.
17. Equity-Based Compensation
The Colony NorthStar restricted stock awards on a one-for-one basis. These awards have a service condition only and are subject to graded vesting through December 31, 2020.
American Healthcare Investors Joint Venture
In December 2014, NSAM acquired a 43% interest in American Healthcare Investors, LLC (“AHI") and AHI Newco, LLC (“AHI Venture”), a direct wholly owned subsidiary of AHI. NSAM’s investment in AHI Venture was structured as a joint venture between NSAM and the principals of AHI, a healthcare-focused real estate investment management firm, and James F. Flaherty III, former Chief Executive Officer of HCP,Capital, Inc., that is accounted for as an equity method investment.
In connection with this arrangement, NSAM was obligated to issue $2.0 million in equity awards over a two year period to certain AHI employees. As the award is for a fixed dollar amount with a variable number of shares, it is classified as a liability award. Equity-based compensation is recorded in earnings from investments in unconsolidated ventures on the consolidated statement of operations as it is a non-employee award granted to an equity method investee, with a corresponding liability on the consolidated balance sheet. At the time of consummation of the Merger, equity awards issued to certain AHI employees for $1.0 million in shares of NSAM's common stock were outstanding and did not accelerate in the Merger. In March 2017, in full satisfaction of this obligation, $1.0 million in shares of the Company's class A common stock were issued in settlement of the equity award to certain AHI employees, equivalent to 70,261 shares of class A common stock issued, and the corresponding $1.0 million outstanding liability was relieved.
Pursuant to a separate contractual arrangement entered into in connection with the investment in AHI Venture, the AHI principals, subject to certain annual performance targets being met, are also entitled to incremental grants of the Company's common stock, which will vest immediately upon issuance. As of September 30, 2017, no incremental awards have been granted.

NRF Incentive Plan
Upon consummation of the Merger, the Company assumed the following outstanding non-employee stock awards that were previously issued under NRF’s Third Amended and Restated 2004 Omnibus Stock Incentive Plan (the "NRF Incentive Plan"), and which continue to be governed by the terms of the NRF Incentive Plan subsequent to the Merger.
Healthcare Strategic Partnership
In January 2014, NRF entered into a strategic partnership with James F. Flaherty, III, focused on expanding the Company’s healthcare business (“Healthcare Strategic Partnership”). In connection with this arrangement, Mr. Flaherty was granted NRF restricted stock units ("RSUs"), which upon the spin-off of NSAM from NRF in July 2014, were adjusted to also relate to an equal number of units of NSAM RSUs, and continue to be governed by the NRF Incentive Plan. These RSUs will cliff vest in five years in January 2019, subject to a service condition, unless certain conditions are met. This RSU award did not vest by its terms in connection with the consummation of the Merger and was converted into the right to receive an award in the same form for that number of units of Colony NorthStar RSU (rounded down to the nearest whole unit) equal to the product of: (i) the number of units of RSUs subject to such unvested equity award multiplied by (ii) (a) 1.0 for NSAM RSUs and (b) 1.0996 for NRF RSUs.
As a non-employee award, the RSUs are remeasured each period end based on the closing price of the Company's class A common stock as of such period end, with related equity-based compensation cost recorded in investment, servicing and commission expense on the consolidated statement of operations and in equity on the consolidated balance sheet.
In September 2017, the RSU award became fully vested upon the occurrence of a vesting event under the terms of the applicable governing agreement.
CLNS Equity Incentive Plan
Following the Merger, the Company adopted the NSAM 2014 Stock Plan as the Company's successor equity incentive plan and renamed such plan the Colony NorthStar 2014 Omnibus Stock Incentive Plan (the "CLNS Equity"Equity Incentive Plan"). The CLNS Equity Incentive Plan provides for the grant of restricted stock, performance stock units ("PSUs"), Long Term Incentive Plan ("LTIP") units, RSUs,restricted stock units ("RSUs"), deferred stock units ("DSUs"), options, warrants or rights to purchase shares of the Company's common stock, cash incentives and other equity-based awards.
LTIP units are designated as profits interests for federal income tax purposes. Each LTIP unit is convertible, atawards to the electionCompany's officers, directors (including non-employee directors), employees, co-employees, consultants or advisors of the holder, into one common OP Unit and upon conversion, subjectCompany or of any parent or subsidiary who provides services to the redemption terms of OP Units (Note 16). Equity-based compensation cost related to LTIP units represents an allocation to noncontrolling interest in the Operating Company.
RSUs may be entitled to dividend equivalents prior to vesting and may be settled either in shares of the Company's class A common stock or in cash at the option of the Company.
Certain non-employee directors may elect to defer the receipt of annual base fees and/or awards of restricted stock, and in lieu of such fees or awards, receive awards of DSUs. DSUs are not shares of the Company’s stock and do not entitle the holders to the rights of a shareholder of common stock. However, a holder of a DSU is entitled to a dividend equivalent, which is the right to receive an additional number of DSUs based on dividends declared and paid on common stock, and any such additional DSUs will also be credited with additional DSUs as cash dividends are subsequently paid, subject to the same restrictions and conditions as the original DSUs with respect to which it was credited, including vesting conditions, if any. DSUs awarded in lieu of annual base director fees are fully vested upon their grant date, while DSUs awarded in lieu of awards of restricted stock vest on the first anniversary of their grant date. Upon separation of service from the Company, DSUs are to be settled in shares of the Company’s class A common stock or cash, at the option of the Company.
Other than awards issued as equity incentives to employees and non-employee directors in the normal course of business in 2017, the Company issued certain awards, which have a service condition only, in connection with the Merger. This included replacement equity awards issued in January 2017 to certain executives of NSAM, consisting of an aggregate of 4,669,518 shares of restricted common stock and 3,506,387 LTIP units. The number of shares and units issued for the replacement awards were generally determined based on the volume-weighted average price of the Company's class A common stock over the first five trading days following the Closing Date, subject to a floor of $15.00 per share, and where applicable, actual number of shares and units issued were determined based on the per share floor of $15.00. The replacement equity awards will vest on the one-year anniversary of the Closing Date. Additional shares of restricted class A common stock were also granted to certain employees as retention awards, which are subject to graded vesting through January 2020. The restricted stock and LTIP units issued for the replacement and retention awards were valued based on the price of the Company's class A common stock on the date of grant.

At September 30, 2017, an aggregate of 20,208,270 shares of the Company’s class A common stock wereShares reserved for the issuance of awards under the CLNS Equity Incentive Plan are subject to equitable adjustment upon the occurrence of certain corporate events, provided that this number automatically increases each January 1st by 2% of the outstanding number of shares of the Company’s class A common stock on the immediately preceding December 31st. At September 30, 2021, an aggregate 73.8 million shares of the Company's class A common stock were reserved for the issuance of awards under the Equity Incentive Plan.
Restricted Stock—Restricted stock awards in the Company's class A common stock are granted to senior executives, directors and certain employees, generally subject to a service condition only, with annual time-based vesting in equal tranches over a three-year period. Restricted stock is entitled to dividends declared and paid on the Company's class A common stock and such dividends are not forfeitable prior to vesting of the award. Restricted stock awards are valued based on the Company's class A common stock price on grant date and equity-based compensation expense is recognized on a straight-line basis over the requisite service period.
Restricted Stock Units—RSUs in the Company's class A common stock are subject to a performance condition. Vesting of performance-based RSUs occur upon achievement of certain Company-specific metrics over a performance measurement period. Only vested RSUs are entitled to accrued dividends declared and paid on the Company's class A common stock during the time period the RSUs are outstanding. Fair value of RSUs are based on the Company's class A common stock price on grant date. Equity-based compensation expense was includedis recognized when it becomes probable that the performance condition will be met.
Performance Stock Units—PSUs are granted to senior executives and certain employees, and are subject to both a service condition and a market condition. Following the end of the measurement period, the recipients of PSUs who remain employed will vest in, and be issued a number of shares of the following line items inCompany's class A common stock, generally ranging from 0% to 200% of the consolidated statementsnumber of operations:PSUs granted and determined based upon the performance of the Company's class A common stock relative to that of a specified peer group over a three-year measurement period (such
47
Table of Contents

  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Compensation expense $38,184
 $3,484
 $107,173
 $10,326
Earnings from investments in unconsolidated ventures —
 —
 61
 —
Investment, servicing and commission expense 3,022
 —
 4,070
 —
  $41,206
 $3,484
 $111,304
 $10,326
Changesmeasurement metric the "total shareholder return"). In addition, recipients of PSUs whose employment is terminated after the first anniversary of their PSU grant are eligible to vest in a portion of the Company’s unvested equity awardsPSU award following the end of the measurement period based upon achievement of the total shareholder return metric applicable to the award. PSUs also contain dividend equivalent rights which entitle the recipients to a payment equal to the amount of dividends that would have been paid on the shares that are summarized below:
ultimately issued at the end of the measurement period.
  Restricted Stock RSUs LTIP Units DSUs Total Weighted Average Grant Date Fair Value
Unvested shares at December 31, 2016 (1)
 2,089,007
 —
 —
 —
 2,089,007
 $14.44
Awards assumed in the Merger 592,504
 774,900
 —
 —
 1,367,404
 14.68
Granted 8,210,647
 —
 3,506,387
 100,548
 11,817,582
 14.38
Vested (1,124,421) (774,900) —
 (23,940) (1,923,261) 14.87
Forfeited (135,692) —
 —
 —
 (135,692) 14.71
Unvested shares at September 30, 2017 9,632,045
 —
 3,506,387
 76,608
 13,215,040
 14.54
__________
(1)
The number of unvested shares at December 31, 2016 and weighted average grant date fair value have been adjusted to give effect to the Colony exchange ratio of 1.4663 at the individual award level.
Fair value of equity awards that vested duringPSUs, including dividend equivalent rights, was determined using a Monte Carlo simulation under a risk-neutral premise, with the three months ended September 30, 2017following assumptions:
2021 PSU Grants2020 PSU Grants2019 PSU Grants
Expected volatility of the Company's class A common stock (1)
35.4%34.1%26.2%
Expected annual dividend yield (2)
0.0%9.3%8.5% - 8.7%
Risk-free rate (per annum) (3)
0.3%0.4%2.2% - 2.4%
__________
(1)    Based upon the historical volatility of the Company's stock and 2016 was $11.1 million and $22,000, respectively. those of a specified peer group.
(2)    Based upon the Company's expected annualized dividends. Expected dividend yield is zero for the 2021 PSU award as the Company suspended common dividends beginning with the second quarter of 2020.
(3)    Based upon the continuously compounded zero-coupon U.S. Treasury yield for the term coinciding with the remaining measurement period of the award as of valuation date.
Fair value of equityPSU awards, that vested duringexcluding dividend equivalent rights, is recognized on a straight-line basis over their measurement period as compensation expense, and is not subject to reversal even if the nine months ended September 30, 2017 and 2016 was $27.4 million and $9.9 million, respectively. Fairmarket condition is not achieved. The dividend equivalent right is accounted for as a liability-classified award. The fair value of the dividend equivalent right is recognized as compensation expense on a straight-line basis over the measurement period, and is subject to adjustment to fair value at each reporting period.
LTIP Units—LTIP units are units in the Operating Company that are designated as profits interests for federal income tax purposes. Unvested LTIP units that are subject to market conditions do not accrue distributions. Each vested awardsLTIP unit is determinedconvertible, at the election of the holder (subject to capital account limitation), into 1 common OP Unit and upon conversion, subject to the redemption terms of OP Units (Note 9).
LTIP units issued have either (1) a service condition only, valued based upon the Company's class A common stock price on grant date; or (2) both a service condition and a market condition based upon the Company's class A common stock achieving target prices over predetermined measurement periods, subject to continuous employment to the time of vesting, and valued using a Monte Carlo simulation.
The following assumptions were applied in the Monte Carlo model under a risk-neutral premise:
2020 LTIP Grant
2019 LTIP Grant (1)
Expected volatility of the Company's class A common stock (2)
43.1%28.3%
Expected dividend yield (3)
0.0%8.1%
Risk-free rate (per annum) (4)
0.2%1.8%
__________
(1)    Represents 10 million LTIP units granted to Marc Ganzi in connection with the Company's acquisition of Digital Bridge Holdings, LLC in July 2019, with vesting based upon achievement of the Company's class A common stock price closing at or above $10 over any 90 consecutive trading days prior to the fifth anniversary of the grant date.
(2)    Based upon historical volatility of the Company's stock and those of a specified peer group.
(3)    Based upon the Company's most recently issued dividend prior to grant date and closing price of the Company's class A common stock on grant date. Expected dividend yield is zero for the 2020 LTIP award as the Company suspended common dividends beginning with the second quarter of 2020.
(4)    Based upon the continuously compounded zero-coupon US Treasury yield for the term coinciding with the measurement period of the award as of valuation date.
Equity-based compensation cost on LTIP units is recognized on a straight-line basis either over (1) the service period for awards with a service condition only; or (2) the derived service period for awards with both a service condition and a market condition, irrespective of whether the market condition is satisfied. The derived service period is a service period that is inferred from the application of the simulation technique used in the valuation of the award, and represents the median of the terms in the simulation in which the market condition is satisfied.
Deferred Stock Units—Certain non-employee directors may elect to defer the receipt of annual base fees and/or restricted stock awards, and in lieu, receive awards of DSUs. DSUs awarded in lieu of annual base fees are fully vested on their grant date, while DSUs awarded in lieu of restricted stock awards vest one year from their grant date. DSUs are
48
Table of Contents

entitled to a dividend equivalent, in the form of additional DSUs based on dividends declared and paid on the Company's class A common stock, subject to the same restrictions and vesting conditions, where applicable. Upon separation of service from the Company, vested DSUs will be settled in shares of the Company’s class A common stock. Fair value of DSUs are determined based on the price of the Company's class A common stock on grant date and recognized immediately if fully vested upon grant, or dateon a straight-line basis over the vesting period as equity based compensation expense and equity.
Equity-based compensation expense, excluding amounts related to businesses presented as discontinued operations (Note 12), is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Compensation expense (including $50, $358, $1,164 and $1,221 related to dividend equivalent rights)$6,914 $4,997 $30,593 $16,439 
Changes in the Company’s unvested equity awards are summarized below:
Weighted Average
Grant Date Fair Value
Restricted Stock
LTIP Units (1)
DSUs
RSUs (2)
PSUs (3)
TotalPSUsAll Other Awards
Unvested shares and units at December 31, 202010,728,712 11,845,018 324,877 9,589,564 9,935,891 42,424,062 $2.78 $2.10 
Granted4,980,210 — 152,395 — 2,611,989 7,744,594 8.18 6.78 
Vested(6,424,981)(1,383,762)(350,087)— (1,175,333)(9,334,163)5.09 3.26 
Forfeited(166,553)— — — (871,467)(1,038,020)4.88 3.21 
Unvested shares and units at September 30, 20219,117,388 10,461,256 127,185 9,589,564 10,501,080 39,796,473 3.69 2.59 
__________
(1)    Represents the number of remeasurementLTIP units granted subject to vesting upon achievement of market condition. LTIP units that do not meet the market condition within the measurement period will be forfeited.
(2)    Represents the number of RSUs granted subject to vesting upon achievement of performance condition. RSUs that do not meet the performance condition at the end of the measurement period will be forfeited.
(3)    Number of PSUs granted does not reflect potential increases or decreases that could result from the final outcome of the total shareholder return measured at the end of the performance period. PSUs for employeewhich the total shareholder return was not met at the end of the performance period are forfeited.
Fair value of equity awards andthat vested, determined based upon their respective fair values at vesting date, was $7.5 million and $1.4 million for non-employee awards. For awards granted duringthe three months ended September 30, 2021 and 2020, respectively, and $61.1 million and $14.8 million for the nine months ended September 30, 20172021 and 2016, the weighted average grant-date fair value per share was $14.38 and $13.14,2020, respectively.
At September 30, 2017,2021, aggregate unrecognized compensation cost for all unvested equity awards was $86.7$72.8 million, which is expected to be recognized over a weighted-averageweighted average period of 1.22.3 years.
Awards Granted by Managed Companies
21.Prior to the termination of the Company’s management agreement with BRSP on April 30, 2021, BRSP granted restricted stock to the Company and certain of the Company's employees ("managed company awards") that typically vest over a three-year period, subject to a service condition. Generally, the Company granted the managed company awards that it received in its capacity as manager to its employees with substantially the same terms and service requirements. Such grants were made at the discretion of the Company, and the Company may consult with the board of directors or compensation committee of BRSP as to final allocation of awards to its employees.
Managed company awards granted to the Company, pending grant by the Company to its employees, are recognized based upon their fair value at grant date as other assets and other liabilities on the consolidated balance sheet. The deferred revenue liability is amortized into other income as the awards vest to the Company.
Managed company awards granted to employees, either directly or through the Company, are recorded as other asset and other liability, and amortized on a straight-line basis as equity-based compensation expense and as other income, respectively, as the awards vest to the employees. The other asset and other liability associated with managed company awards granted to employees are subject to adjustment to fair value at each reporting period, with changes reflected in equity-based compensation and other income, respectively.
49
Table of Contents

Equity-based compensation related to BRSP awards granted by the Company to its employees was accelerated in 2021 as the awards fully vested upon termination of the BRSP management contract in April 2021. Equity-based compensation was an expense of $5.3 million and expense reversal of $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, with corresponding amounts recognized in other income. The expense reversal occurred due to a decrease in BRSP's stock price in 2020. Amounts recorded in both years are reflected within discontinued operations (Note 12).
18. Transactions with Affiliates
Affiliates include (i) private funds traded and non-traded REITs andother investment companies in whichvehicles that the Company manages or sponsors, and hasin which the Company may have an equity interest in or co-invests with; (ii) the Company's investments in unconsolidated ventures; as well asand (iii) directors, senior executives and employees of the Company (collectively, "employees").

Amounts due from and due to affiliates consist of the following:
following, excluding amounts related to discontinued operations that are presented as assets held for sale (Note 11):
(In thousands) September 30, 2017 December 31, 2016
Due from affiliates    
Investment vehicles and unconsolidated ventures    
Fee income $26,011
 $9,074
Cost reimbursements and recoverable expenses 37,013
 606
Advances 26,332
 —
N-Star CDOs 1,508
 —
Employees and other affiliates 375
 291
  $91,239
 $9,971
Due to affiliates    
Investment vehicles and unconsolidated ventures $5,474
 $—
Employees—contingent consideration for Internalization
 26,910
 41,250
  $32,384
 $41,250
(In thousands)September 30, 2021December 31, 2020
Due from Affiliates
Investment vehicles, portfolio companies and unconsolidated ventures
Fee income$37,360 $17,141 
Cost reimbursements and recoverable expenses7,919 5,545 
Employees and other affiliates248 541 
$45,527 $23,227 
Due to Affiliates
Employees and other affiliates$228 $601 
TransactionsSignificant transactions with affiliates include the following:
Fee Income—Income—Fee income earned from investment vehicles in whichthat the Company manages and/or sponsors, and hasmay have an equity interest in or co-invests with,co-investment, are presented in Note 19.16, except for amounts included within discontinued operations (Note 12) and assets held for sale (Note 11).
Cost Reimbursements—The Company receivedreceives reimbursements related largely to costs incurred in performing investment due diligence for funds and other investment vehicles managed by the Company.
Such cost reimbursements, related primarily toincluded in other income, totaled $3.1 million and $2.5 million for the following arrangements:three months ended September 30, 2021 and 2020, respectively, and $4.6 million and $8.5 million for the nine months ended September 30, 2021 and 2020, respectively.
Reimbursements of direct and indirect operating costs, including but not limited to compensation, overhead and other administrative costs for managing the operations of the non-traded REITs, with reimbursements limitedBRSP prior to the greater of 2% of average invested assets or 25% of net income (net of 1% to 1.25% of asset management fees);
directApril 30, 2021 and indirect operating costs, including but not limited to compensation, professional service costs, overhead and other administrative costs, for managing the operations of the investment companies;
allocation of indirect costs to NRE related to employees, occupancy and other administrative costs, which shall not exceed 20% of the combined total of the general and administrative costs of NRE and of the Company (excluding NRE), as adjusted;
certain expenses incurred on behalf of the clients of Townsend such as legal, due diligence and investment advisory team travel expenses;
services provided to the Company's unconsolidated investment ventures for servicing and managing their loan portfolios, including foreclosed properties;
administrative services provided to an equity method investee (only through July 2017); and
administrative services provided to certain senior executives of the Company.
Cost reimbursements, includedNorthStar Healthcare are reflected in other income werewithin discontinued operations (Note 12) and related receivables are reflected as follows:
amounts due from affiliates within assets held for sale (Note 11).
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Retail Companies $4,324
 $—
 $14,994
 $—
Townsend 693
 —
 1,752
 —
Other 949
 1,441
 2,896
 3,502
  $5,966
 $1,441
 $19,642
 $3,502
Recoverable Expenses—In the normal course of business, theThe Company pays certain expenses on behalforganization and offering costs associated with the formation and capital raising of investment vehicles sponsored by the retail companies and certain private funds that it manages,Company, for which the Company recovers from these investment vehicles such as:up to specified thresholds, as applicable.
cost incurred in performing investment due diligence;
costs incurredNorthStar Healthcare Credit Facility—The Company provided NorthStar Healthcare with an unsecured revolving credit facility at market terms with a maximum principal amount of $35.0 million. In June 2021, the credit facility was extended from December 2022 to June 2023, with a six-month extension option. Advances under the credit facility accrue interest at LIBOR plus 3.5%, with no commitment fee for the administrationunused portion. The credit facility was fully drawn in April 2020, reflected as amounts due from affiliates within assets held for sale at December 31, 2020 (Note 11), and was fully repaid in July 2021.
Digital Real Estate Acquisitions—In connection with acquisition of certain investment companies;Vantage SDC in July 2020 (Note 3), the Company entered into a series of agreements with Messrs. Ganzi and
•
organization and offering costs associated with formation and offering of the retail companies, with reimbursement amounts of up to 1% of the proceeds expected Jenkins, and their respective affiliates, pursuant to which Messrs. Ganzi and Jenkins invested $8.7 million and $2.1 million, respectively, in Vantage SDC alongside the Company and the co-investors on the same economic terms. Such amounts invested represented 40% of carried interest payments received by each of Messrs. Ganzi and Jenkins in connection with the Vantage SDC acquisition as a result of their respective personal investments in Vantage made prior to the Company’s acquisition of DBH. Payments to be raised from the offering(excluding shares offered pursuant to distribution reinvestment plans).

Advances—The balance at September 30, 2017 includes protective advances made by the Company on behalfand its co-investors to the previous owners of noncontrolling interests, to certain senior lenders in order to meetVantage SDC for future build-out of expansion capacity within the debt covenant ratios of its investment venture, and bridge financing to an equity method investee.
N-Star CDOs—The Company earns collateral management fees as the collateral manager or collateral manager delegateportfolio, including lease-up of the N-Star CDOs. Such fees are includedexpanded capacity and existing inventory, will trigger additional carried interest payments to Messrs. Ganzi and Jenkins.
50
Table of Contents

Separately, DataBank acquired all of zColo's colocation business in December 2020 and February 2021 from Zayo, which is a portfolio company of DCP I and other incomeco-invest vehicles sponsored and are immaterial formanaged by the nine months ended September 30, 2017. TheCompany.
In the aforementioned transactions, the Company holds N-Star CDO bonds that it repurchased from the market as well as retained equity interests took a series of steps to mitigate conflicts in the N-Star CDOs. Amountstransactions, including receiving fairness opinions on the purchase price from a nationally recognized third party valuation firm. Additionally, the transactions, specifically the related party aspects of the transactions, were subject to the two consolidated N-Star CDOs, including interest, have been eliminated upon consolidation.approval of either the Company's board of directors or the audit committee of the board of directors.
Healthcare Strategic Partnership—The Healthcare Strategic Partnership was formed to expand the Company’s healthcare business (Note 20). In connection with this arrangement, the Healthcare Strategic Partnership is entitled to incentive fees ranging from 20% to 25% of distributions above certain hurdles for new and existing healthcare real estate investments held by the Company and a portion of incentive fees earned from NorthStar Healthcare. For the nine months ended September 30, 2017, there were no incentive fees earned by the Healthcare Strategic Partnership.
American Healthcare Investors Joint Venture—The Company has an equity method investment in AHI Ventures, jointly held with the principals of AHI and Mr. Flaherty (Note 20). AHI provides certain healthcare-focused real estate investment management and related services to the Company and NorthStar Healthcare in order to assist the Company in managing current and future healthcare assets (excluding certain joint venture assets) acquired by the Company and, subject to certain conditions, other managed companies. For the three and nine months ended September 30, 2017, the Company incurred property management fees and sub-advisory fees totaling $1.3 million and $3.5 million, respectively.
Distribution Support—The Company committed up to $10.0 million to invest as distribution support in future sponsored retail companies, as discussed in Note 6.
Arrangements with Company-Sponsored Private Fund—Funds—The Company co-invests alongside a Companyits sponsored private fundfunds through joint ventures between the Company and the sponsored private fund. These co-investment joint ventures are consolidated by the Company. The Company has capital commitments, as general partner, directly into the private fundfunds and as an affiliate of the general partner, capital commitments satisfied through co-investment joint ventures. In connection with the Company's commitments as an affiliate of the general partner, the Company is allocated a proportionate share of the costs of the private fundfunds such as financing and administrative costs. Such costs expensed duringin the nine months ended September 30, 2017 and 2016periods presented were immaterial and they relate primarily to the Company's share of the funds' operating costs and deferred financing costs on borrowings of the fund.funds.
Contingent ConsiderationEquity Awards of BRSP—As discussed in Note 17, prior to termination of the Company’s management agreement with BRSP in April 2021, BRSP granted equity awards to the Company and certain of the Company's employees, either directly or indirectly through the Company, are recognized as a gross-up of equity-based compensation expense over the vesting period with a corresponding amount in other income, reflected in discontinued operations.
Carried Interest Allocation from Sponsored Investment Vehicles—With respect to investment vehicles sponsored by the Company for Internalization—Contingent consideration for Internalization is payable to certain senior executiveswhich Messrs. Ganzi and Jenkins are invested in their capacity as former owners of DBH, and not in their capacity as employees of the Company, in connection with Colony's acquisition of the real estate investment management businessany carried interest allocation attributed to such investments by Messrs. Ganzi and operations of its former manager in April 2015,Jenkins as discussed in Note 13.
Selling Commissions—Certain NorthStar Securities employees earn selling commissions relatedgeneral partner do not represent compensatory arrangements to the saleCompany. Such carried interest allocation to Messrs. Ganzi and Jenkins that are unrealized and/or unpaid are included in noncontrolling interests on the balance sheet of equity$22.2 million at September 30, 2021 and $3.2 million at December 31, 2020. Carried interest allocated during the period are recorded as net income attributable to noncontrolling interests in the retail companies. Forincome statement totaling $18.3 million and $19.0 million for the three and nine months ended September 30, 2017, commissions paid or payable2021, respectively. There were no amounts allocated in the corresponding periods in 2020.
Investment in Managed Investment Vehicles—Subject to thesethe Company's related party policies and procedures, senior management, investment professionals and certain other employees were immaterial.
Advances to Employees—Certain employees are permitted to participatemay invest on a discretionary basis in co-investmentinvestment vehicles which generally invest in private funds managedsponsored by the Company. Additionally, the Company, grants loans to certain employeeseither directly in the formvehicle or indirectly through the general partner entity. These investments are generally not subject to management fees, but otherwise bear their proportionate share of promissory notes bearing interest atother operating expenses of the prime rate with varying terms and repayment conditions. Outstanding advances were immaterial atinvestment vehicles. At September 30, 20172021 and December 31, 2016.
Corporate Aircraft—The Company's corporate aircraft may occasionally be used for business purposes by affiliated2020, such investments in consolidated investment vehicles and general partner entities or for personal use by certain senior executives of the Company. Affiliated entitiestotaled $19.0 million and senior executives reimburse the Company for their usage based$10.2 million, respectively, reflected in redeemable noncontrolling interests and noncontrolling interests on the incremental cost to the Companybalance sheet. Their share of making the aircraft available for such use, and includes direct and indirect variable costs of operating the flights. These reimbursements amounted tonet income was $0.6 million and $0.2$0.1 million for the three months ended September 30, 20172021 and 2016,2020, respectively, and $1.5$1.1 million and $0.4$0.1 million for the nine months ended September 30, 20172021 and 2016,2020, respectively.
22. CommitmentsAircraft—Pursuant to Mr. Ganzi’s employment agreement, as amended, the Company has agreed to reimburse Mr. Ganzi for certain variable operational costs of business travel on a chartered or private jet (including any aircraft that Mr. Ganzi may partially or fully own), provided that the Company will not reimburse the allocable share (based on the number of passengers) of variable operational costs for any passenger on such flight who is not traveling on Company business. Additionally, the Company has also agreed to reimburse Mr. Ganzi for certain defined fixed costs of any aircraft owned by Mr. Ganzi. The fixed cost reimbursements will be made based on an allocable portion of an aircraft’s annual budgeted fixed cash operating costs, based on the number of hours the aircraft will be used for business purposes. At least once a year, the Company will reconcile the budgeted fixed operating costs with the actual fixed operating costs of the aircraft, and Contingencies
Lease Commitments
Office Leases—the Company or Mr. Ganzi, as applicable, will make a payment for any difference. The Company leases office space under noncancellable operating leasesreimbursed Mr. Ganzi $0.5 million for each of the three months ended September 30, 2021 and 2020, and $2.6 million and $0.9 million for the nine months ended September 30, 2021 and 2020, respectively.
Separately, prior to the sale of the Company's aircraft in January 2021, Thomas J. Barrack, Jr., the Company's former Executive Chairman, was provided use of the Company’s aircraft for personal travel. Pursuant to an agreement with expiration dates through 2028. The lease agreements require minimum rent paymentsa subsidiary of the Company, Mr. Barrack paid the Company for personal usage based upon the incremental cost to the Company, including direct and indirect variable costs, but in no case more than the maximum reimbursement of operating expenses incurred

permitted by the landlord,Federal Aviation Regulations under the agreement. Mr. Barrack reimbursed the Company $0.2 million and $0.6 million for the three and nine months ended September 30, 2020, respectively.
Investment Venture—Pursuant to an investment agreement entered into between a subsidiary of the Company and Mr. Barrack effective April 1, 2021, the Company invested $26.0 million in Mr. Barrack's newly formed investment entity
51
Table of Contents

(the “Venture”), which entitles the Company to a portion of carried interest payable to Mr. Barrack from the Venture. Following recent events which significantly reduce the likelihood that fundraising by the Venture will sufficiently support its value, the Company determined that its investment would likely not be recoverable and wrote off its investment as of June 30, 2021.
19. Segment Reporting
The Company conducts its business through 2 reportable segments as follows:
•Digital Investment Management ("Digital IM")—This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate. The Company's flagship opportunistic strategy is conducted through Digital Colony Partners ("DCP") and separately capitalized vehicles, while other strategies, including digital credit and public equities, are conducted through other investment vehicles. The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and has the potential to earn carried interest based upon the performance of such investment vehicles, subject to escalation clauses. Rentachievement of minimum return hurdles. Earnings from our Digital IM segment are generally attributed 31.5% to Wafra, a significant investor in our Digital IM business effective July 2020.
•Digital Operating—This business is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earn rental income from providing use of digital asset space and/or capacity through leases, services and other agreements. The Company currently owns interests in two companies: DataBank, including zColo, an edge colocation data center business (20% DBRG ownership); and Vantage SDC, a stabilized hyperscale data center business (13% DBRG ownership). Both DataBank and Vantage are also portfolio companies managed under Digital IM for the equity interests owned by third party capital.
The Company's remaining investment activities and corporate level activities are presented as Corporate and Other.
•Other investment activities are composed of the Company's equity interests in: (i) digital investment vehicles, the largest of which is in the DCP flagship funds, and seed investments in various strategies such as digital liquid and digital credit; and (ii) remaining non-digital investments, primarily in BRSP. Outside of its general partner interests, the Company's other equity interests in its sponsored and/or managed digital investment vehicles are considered to be incidental to its digital investment management business. The primary economics to the Company are represented by fee income and carried interest as general partner and/or manager, rather than economics from its equity interest in the investment vehicles as a limited partner or equivalent. With respect to seed investments, these are not intended to be a long-term deployment of capital by the Company and are expected to be warehoused temporarily on the Company's balance sheet until sufficient third party capital has been raised. At this time, the remaining non-digital investments are not substantially available for immediate sale and are expected to be monetized over an extended period beyond the near term. These other investment activities generate largely equity method earnings or losses and to a lesser extent, revenues in the form of interest income or dividend income from warehoused investments and consolidated investment vehicles. Effective the third quarter of 2021, these activities are no longer presented separately as the Digital Other and Other segments, which is consistent with and reflects management's focus on its core digital operations and overall simplification of the Company's business.
•Corporate activities include corporate level cash and corresponding interest income, corporate level financing and related interest expense, on office leases, includedcorporate level transaction costs, costs in connection with unconsummated investments, income and expense related to cost reimbursement arrangements with affiliates, fixed assets for administrative expenses, was $3.9use, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs, and adjustments to eliminate intercompany fees. Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic allocation, have been allocated to each of the reportable segments. Elimination adjustment pertains to fee income earned by the Digital Investment Management segment from third party capital in investment vehicles managed by the Company and consolidated within the Digital Operating segment and in Corporate and Other. Such adjustments amount to $1.6 million and $1.4$0.4 million for the three months ended September 30, 20172021 and 2016,2020, respectively, and $9.9$4.9 million and $4.2$0.6 million for the nine months ended September 30, 20172021 and 2016,2020, respectively. Future contractual minimum rental paymentsEffective the second quarter of 2021, segment results are presented before elimination of intercompany fees. Fee income in Digital IM and fee expense in Digital Operating and in Corporate and Other were previously eliminated within the respective segments.
All changes in segment presentation are reflected for office leases at September 30, 2017 are as follows: all prior periods presented.
52
Table of Contents

Year Ending December 31, (In thousands)
Remaining 2017 $2,493
2018 6,978
2019 7,983
2020 7,659
2021 7,287
2022 and after 43,572
Total (1)
 $75,972
__________
(1)
Excludes contractual minimum rental payments on Townsend office leases.
Contingent ConsiderationSegment Results of Operations
The consideration forfollowing table summarizes results of operations of the Company's acquisitionreportable segments, including selected income and expense items, reconciled to the consolidated statement of substantially alloperations.
(In thousands)Digital Investment ManagementDigital OperatingCorporate and OtherTotal
Three Months Ended September 30, 2021
Total revenues$53,796 $194,966 $3,412 $252,174 
Property operating expense— 80,226 — 80,226 
Interest expense2,250 29,839 7,806 39,895 
Depreciation and amortization8,242 120,458 486 129,186 
Equity method earnings, including carried interest59,196 — 6,173 65,369 
Income tax benefit (expense)(3,089)(1,922)15,984 10,973 
Income (loss) from continuing operations39,272 (71,822)(8,385)(40,935)
Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.16,870 (12,142)(11,506)(6,778)
Net income from discontinued operations attributable to DigitalBridge Group, Inc.68,135 
Net income attributable to DigitalBridge Group, Inc.$61,357 
Three Months Ended September 30, 2020
Total revenues$20,397 $98,549 $4,071 $123,017 
Property operating expense— 37,544 — 37,544 
Interest expense— 18,589 11,410 29,999 
Depreciation and amortization6,427 73,032 1,105 80,564 
Impairment loss3,832 — — 3,832 
Equity method earnings, including carried interest6,134 — 17,237 23,371 
Income tax benefit (expense)(144)6,091 7,279 13,226 
Income (loss) from continuing operations3,799 (38,795)(17,653)(52,649)
Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.1,964 (5,082)(14,547)(17,665)
Net loss from discontinued operations attributable to DigitalBridge Group, Inc.(169,602)
Net loss attributable to DigitalBridge Group, Inc.$(187,267)
53
Table of Contents

(In thousands)Digital Investment ManagementDigital OperatingCorporate and OtherTotal
Nine Months Ended September 30, 2021
Total revenues$131,789 $573,261 $4,892 $709,942 
Property operating expense— 237,228 — 237,228 
Interest expense2,250 90,243 25,120 117,613 
Depreciation and amortization20,808 368,906 17,126 406,840 
Equity method earnings, including carried interest70,203 — 41,177 111,380 
Income tax benefit (expense)(7,970)77,134 40,244 109,408 
Income (loss) from continuing operations62,721 (146,932)(99,240)(183,451)
Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.35,849 (22,592)(99,898)(86,641)
Net loss from discontinued operations attributable to DigitalBridge Group, Inc.(221,036)
Net loss attributable to DigitalBridge Group, Inc.$(307,677)
Nine Months Ended September 30, 2020
Total revenues$60,545 $185,737 $14,758 $261,040 
Property operating expense— 72,505 — 72,505 
Interest expense— 36,161 33,774 69,935 
Depreciation and amortization19,635 131,634 4,118 155,387 
Impairment loss3,832 — 12,297 16,129 
Equity method earnings (losses), including carried interest6,295 — (309,788)(303,493)
Income tax benefit (expense)(817)14,494 14,683 28,360 
Income (loss) from continuing operations8,453 (78,472)(454,097)(524,116)
Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.6,047 (12,885)(403,820)(410,658)
Net loss from discontinued operations attributable to DigitalBridge Group, Inc.(2,143,043)
Net loss attributable to DigitalBridge Group, Inc.$(2,553,701)
Total assets and equity method investments of the real estate investment management businessreportable segments are summarized as follows:
September 30, 2021December 31, 2020
(In thousands)Total AssetsEquity Method InvestmentsTotal AssetsEquity Method Investments
Digital Investment Management$600,362 $100,468 $490,632 $19,167 
Digital Operating7,382,098 — 6,926,634 — 
Corporate and Other1,990,494 496,969 1,545,975 555,344 
9,972,954 597,437 8,963,241 574,511 
Assets held for disposition related to discontinued operations5,470,027 714,033 11,237,319 879,729 
$15,442,981 $1,311,470 $20,200,560 $1,454,240 
20. Commitments and operations of its former manager in April 2015 included a contingent portion payable in shares of class A and class B common stock as well as OP Units, subject to multi-year performance targets, as discussed in Note 13.
In connection with a consensual foreclosure of the THL Hotel Portfolio, contingent consideration is payable to a preferred equity holder of the borrower in an amount up to $13.0 million, as discussed in Notes 3 and 13.Contingencies
Litigation and Claims
The Company may be involved in litigation and claims in the ordinary course of business. As of September 30, 2017,2021, the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.
54
23. Segment Reporting
Table of Contents

21. Supplemental Disclosure of Cash Flow Information
Nine Months Ended September 30,
(In thousands)20212020
Supplemental Disclosure of Cash Flow Information
Cash paid for interest, net of amounts capitalized of $1,025 and $655$332,703 $258,508 
Cash received for income tax, net7,913 36,098 
Operating lease payments51,088 21,022 
Finance lease payments11,481 — 
Supplemental Disclosure of Cash Flows from Discontinued Operations
Net cash provided by operating activities of discontinued operations$165,178 $109,597 
Net cash provided by investing activities of discontinued operations676,579 65,735 
Net cash used in financing activities of discontinued operations(528,035)(293,805)
Supplemental Disclosure of Noncash Investing and Financing Activities
Dividends and distributions payable$16,899 $18,516 
Improvements in operating real estate in accrued and other liabilities29,324 19,806 
Receivable from loan repayments and asset sales held in escrow53,948 3,049 
Operating lease right-of-use assets and lease liabilities established23,366 14,683 
Finance lease payments accrued5,401 — 
Redemption of OP Units for common stock1,107 1,423 
Assets and liabilities of investment entities liquidated or conveyed to lender (1)
— 172,927 
Assets from real estate acquisitions, net of cash and restricted cash— 3,597,271 
Liabilities assumed in real estate acquisitions— 2,142,657 
Noncontrolling interests assumed in real estate acquisitions— 366,136 
Debt assumed by buyer in sale of real estate44,148 — 
Assets disposed in sale of equity of investment entities or sale by receiver (Note 12)3,572,825 — 
Liabilities disposed in sale of equity of investment entities or sale by receiver (Note 12)3,644,226 — 
Assets of investment entities deconsolidated (2)
351,022 — 
Noncontrolling interests of investment entities deconsolidated (2)
374,815 — 
__________
(1)    The Company conductsindirectly conveyed the equity of certain of its business through the following five reportable segments:
Healthcare—The Company's healthcare segment is composed of a diverse portfolio of medical office buildings, senior housing, skilled nursing and other healthcare properties. The Company earns rental income from medical office buildings and properties structured under net leaseswellness infrastructure borrower subsidiaries to healthcare operators, and resident fee income from senior housing operating facilities that operate through management agreements with independent third-party operators.
Industrial—The Company's industrial segment is composed primarily of light industrial assets in infill locations throughout the U.S. that are vital for e-commerce and other tenants that require increasingly quick delivery times.
Hospitality—The Company's hotel portfolio is geographically diverse and is composed of primarily extended stay hotels and premium branded select service hotels primarily located in major metropolitan markets with the majority affiliated with top hotel brands.
Other Equity and Debt—The Company's other equity and debt includes our portfolios of net lease, multifamily and multi-tenant office properties, the THL Hotel Portfolio, our interest in a portfolio of CRE loans and securities, limited partnership interests in real estate private equity funds and various other equity investments.
Investment Management—The Company generates fee income through investment management services, sponsoring numerous investment products across a diverse set of institutional and retail investors.
Following the Merger, the acquired real estate portfolios in healthcare and hotel formed the Company's new healthcare and hospitality segments, respectively, while the acquired investment management business is included within the Company's existing investment management segment. All non-core real estate equity and real estate debt investmentsan affiliate of the combined organization is aggregated into the other equity and debt segment.
In the second quarter of 2017,lender, which released the Company determined thatfrom all non-core investments in unconsolidated ventures, previously included in the investment management segment or otherwise not allocated to a business segment, would form part of the other equityrights and debt segment. This included the Company's nominal interest as sponsor of its various investment vehicles, except that the Company's interest in its industrial fund is attributedobligations with respect to the industrial segment.assets and previously defaulted debt of these subsidiaries.

Remaining investments in unconsolidated ventures in the investment management segment represent the Company's(2)    Represents (a) deconsolidation of noncontrolling interests in third party asset managers. The reclassification of investments in unconsolidated ventures and corresponding earnings of investments in unconsolidated ventures was applied retrospectively to all prior periods presented, as applicable, and the amounts reclassified in each period were not material.
Amounts not allocated to specific segments include corporate level cash and corresponding interest income, fixed assets, corporate level financing and related interest expense, income and expense related to cost reimbursement arrangements with affiliates, costs in connection with unconsummated investments, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs as well as Merger-related transaction and integration costs.
The chief operating decision maker assesses the performance of the business based on net income (loss) of each of the reportable segments. The various reportable segments generate distinct revenue streams, consisting of property operating income, interest income and fee income. Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic allocation, have been allocated to each of the reportable segments.
Selected Segment Results of Operations
The following table presents selected results of operationsupon sale of the Company's reportable segments:
(In thousands) Healthcare Industrial Hospitality Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total
Three Months Ended September 30, 2017              
Total revenues $157,732
 $63,410
 $221,987
 $279,952
 $64,918
 $1,854
 $789,853
Property operating expenses 73,217
 16,620
 143,042
 99,127
 —
 —
 332,006
Interest expense 48,586
 8,803
 35,351
 46,333
 —
 12,981
 152,054
Depreciation and amortization 44,646
 29,010
 34,549
 38,579
 14,457
 1,453
 162,694
Provision for loan loss 1,588
 —
 —
 3,528
 —
 —
 5,116
Impairment loss 8,250
 44
 —
 6,718
 9,061
 —
 24,073
Gain on sale of real estate —
 —
 —
 72,541
 —
 —
 72,541
Earnings from investments in unconsolidated ventures —
 34
 —
 13,071
 4,342
 —
 17,447
Income tax benefit (expense) 408
 (16) (1,262) (982) 9,552
 2,913
 10,613
Net income (loss) from continuing operations (22,318) 5,775
 4,169
 145,077
 30,723
 (92,318) 71,108
Income from discontinued operations —
 —
 —
 1,481
 —
 —
 1,481
Net income (loss) (22,318) 5,775
 4,169
 146,558
 30,723
 (92,318) 72,589
Net income (loss) attributable to Colony NorthStar, Inc. (17,219) 1,636
 3,319
 103,123
 28,450
 (85,401) 33,908
               
Three Months Ended September 30, 2016              
Total revenues $—
 $49,494
 $—
 $143,874
 $17,233
 $1,466
 $212,067
Property operating expenses —
 13,921
 —
 14,982
 —
 —
 28,903
Interest expense —
 11,532
 —
 19,475
 —
 11,189
 42,196
Depreciation and amortization —
 22,295
 —
 16,332
 3,779
 1,187
 43,593
Provision for loan loss —
 —
 —
 6,569
 —
 —
 6,569
Impairment loss —
 —
 —
 941
 —
 —
 941
Gain on sale of real estate —
 1,949
 —
 9,202
 —
 —
 11,151
Earnings (losses) from investments in unconsolidated ventures —
 —
 —
 12,805
 3,879
 —
 16,684
Income tax benefit (expense) —
 (31) —
 1,507
 1,711
 222
 3,409
Net income (loss) —
 439
 —
 100,321
 8,433
 (37,289) 71,904
Net income (loss) attributable to Colony NorthStar, Inc. —
 1,169
 —
 56,326
 7,128
 (29,652) 34,971





(In thousands) Healthcare Industrial Hospitality Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total
Nine Months Ended September 30, 2017              
Total revenues $455,902
 $176,577
 $619,222
 $635,011
 $185,089
 $4,589
 $2,076,390
Property operating expenses 206,363
 49,312
 401,351
 145,046
 —
 —
 802,072
Interest expense 137,522
 29,163
 98,484
 112,782
 —
 40,641
 418,592
Depreciation and amortization 135,104
 79,453
 98,098
 93,691
 42,534
 4,345
 453,225
Provision for loan losses 1,588
 —
 —
 11,319
 —
 —
 12,907
Impairment loss 8,250
 44
 —
 27,998
 9,061
 —
 45,353
Gain on sale of real estate —
 8,695
 —
 88,006
 —
 —
 96,701
Earnings (losses) from investments in unconsolidated ventures —
 62
 —
 241,462
 12,309
 —
 253,833
Income tax benefit (expense) (1,624) (2,164) (2,209) (3,020) 13,762
 2,245
 6,990
Net income (loss) from continuing operations (42,978) 15,394
 6,303
 510,615
 76,796
 (350,200) 215,930
Income from discontinued operations —
 —
 —
 1,481
 —
 12,560
 14,041
Net income (loss) (42,978) 15,394
 6,303
 512,096
 76,796
 (337,640) 229,971
Net income (loss) attributable to Colony NorthStar, Inc. (33,728) 4,877
 5,122
 403,046
 70,672
 (312,142) 137,847
               
Nine Months Ended September 30, 2016              
Total revenues $—
 $143,956
 $—
 $433,646
 $49,347
 $3,435
 $630,384
Property operating expenses —
 41,636
 —
 47,833
 —
 —
 89,469
Interest expense —
 30,906
 —
 62,103
 —
 33,626
 126,635
Depreciation and amortization —
 65,461
 —
 49,333
 11,083
 3,399
 129,276
Provision for loan losses —
 —
 —
 17,412
 —
 —
 17,412
Impairment loss —
 137
 —
 5,004
 320
 —
 5,461
Gain on sale of real estate —
 2,749
 —
 65,365
 —
 —
 68,114
Earnings (losses) from investments in unconsolidated ventures —
 —
 —
 69,189
 3,037
 —
 72,226
Income tax benefit (expense) —
 (37) —
 (4,400) 5,364
 (62) 865
Net income (loss) —
 652
 —
 349,928
 17,040
 (101,549) 266,071
Net income (loss) attributable to Colony NorthStar, Inc. —
 4,304
 —
 181,712
 14,375
 (80,356) 120,035
Total assetsequity interests in investment entities (Note 12); and (b) deconsolidation of investment holding entities for which the Company is no longer the primary beneficiary as a result of reconsideration events in 2021, following which the Company accounts for its interests in these entities under the equity method investments of the reportable segments are summarized(presented as follows:held for disposition in Note 11).

(In thousands) Healthcare Industrial Hospitality Other Equity and Debt��Investment Management Amounts Not Allocated to Segments Total
September 30, 2017              
Total assets $5,839,055
 $2,676,964
 $4,131,809
 $9,676,262
 $3,163,848
 $502,826
 $25,990,764
Equity method investments —
 1,073
 —
 946,382
 190,978
 3,742
 1,142,175
December 31, 2016              
Total assets $—
 $2,268,699
 $—
 $6,640,377
 $781,852
 $70,064
 $9,760,992
Equity method investments —
 1,027
 —
 939,045
 13,187
 —
 953,259
Geography
Geographic information about the Company's total income and long-lived assets are as follows. Geography is generally presented as the location in which the income producing assets reside or the location in which income generating services are performed.

  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Total income by geography:        
United States $714,518
 $177,898
 $2,072,950
 $550,488
Europe 85,909
 47,622
 234,922
 143,764
Other 907
 1,790
 2,709
 4,856
Total (1)
 $801,334
 $227,310
 $2,310,581
 $699,108
(In thousands) September 30, 2017 December 31, 2016
Long-lived assets by geography:    
United States $14,990,692
 $2,951,290
Europe 1,782,251
 1,242,272
Total (2)
 $16,772,943
 $4,193,562
__________
(1)
Total income includes earnings from investments in unconsolidated ventures and excludes cost reimbursement income from affiliates.
(2)
Long-lived assets comprise real estate, intangible assets other than investment management contracts and customer relationships, goodwill and fixed assets; and exclude financial instruments and assets held for sale.
24.22. Subsequent Events
Common Stock Repurchases
Between October 1, 2017 and November 8, 2017, the Company repurchased 3,498,278 shares of its class A common stock at an aggregate cost of $43.8 million including commissions, or a weighted average price of $12.53 per share. As of November 8, 2017, $31.6 million of the previously authorized $300.0 million was remaining in its stock repurchase program.
Exchangeable Senior Notes
On November 2, 2017, the Company exchanged $0.3 million of the outstanding principal of the 5.375% exchangeable notes into 24,930 shares of the Company's class A common stock.
NRE Management Agreement
On November 9, 2017, the Company agreed to amend and restate its management agreement with NRE effective January 1, 2018. Key terms of the amendment include, among other terms: 1) the restructuring of the base management fee, which will change from a fixed base fee to a variable fee based on the European Public Real Estate Association Net Asset Value ("EPRA NAV"Other than as defineddisclosed elsewhere, no subsequent events have occurred that would require recognition in the agreement); 2) modification of the incentive fee, which will change from being based on Cash Available for Distribution ("CAD" as definedconsolidated financial statements or disclosure in the agreement) per share to 20% over the excessaccompanying notes.

55
Table of the total stockholder return (defined as dividends and stock price appreciation, and subject to a high water mark established when a prior incentive is realized) over a cumulative 10% annual hurdle rate; and 3) reduction of term from an initial twenty year term to a five year term. Under the terms of the amended and restated management agreement, beginning with NRE's 2018 annual stockholders' meeting, the Company will have the right to nominate one director (who is expected to be one of NRE's current directors employed by the Company) to NRE's Board of Directors. In addition, NRE provided the Company with an ownership waiver under NRE’s charter, which allows the Company to purchase up to 45% of NRE’s common stock. In connection with the waiver, the Company agreed that for all matters submitted to a vote of NRE’s stockholders, to the extent the Company owns more than 25% of NRE’s common stock, the Company will vote the excess shares in the same proportion that the remaining NRE shares not owned by the Company are voted. The amendments to NRE’s management agreement and the ownership waiver were approved by a strategic review committee formed earlier this year by NRE's Board of Directors.Contents



FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”"Quarterly Report") constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. 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.
The forward-looking statements contained in this Quarterly Report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the healthcare,digital and communications technology, wellness infrastructure and hospitality and industrial real estate, other commercial real estate equity and debt, and investment management sectors;
any decrease in•the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments, as well as the increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company;
•whether we will successfully execute our net incomestrategic transformation to become a digital infrastructure and funds from operations as a resultreal estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Merger, or our other acquisition activity;Company's legacy portfolios and assets, including whether such transformation will be consistent with the Company’s REIT status;
•our ability to manageobtain and integrate following maintain financing arrangements, including securitizations, on favorable or comparable terms or at all;
•the MergerCompany's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all, and the impact of the completion of such sales;
•the impact of completed or anticipated initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other acquisitions effectivelyinvestment management platforms, on our company's growth and earnings profile;
•whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments;
•our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively;
•the ability to realize anticipated strategic and realizefinancial benefits from terminating the management agreement with Brightspire Capital, Inc. (NYSE:BRSP; formerly, Colony Credit Real Estate, Inc. or CLNC);
•the impact to our business operations and financial condition of realized or anticipated benefitscompensation and administrative savings through cost reduction programs;
•our ability to redeploy any proceeds received from the sale of our non-digital or other legacy assets within the acquisitions;timeframe and manner contemplated or at all;
our exposure to risks to which we have not historically been exposed, including liabilities with respect to the assets acquired through the Merger and our other acquisitions;
•our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies;
•BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP, including whether the Company will recognize further other-than-temporary impairment on its investment in BRSP;
•performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution;
56
Table of Contents

•our ability to grow our business by raising capital for the companies that we manage;
•our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments;
•the impact of adverse conditions affecting a specific asset class in which we have investments;
•the availability of, and competition for, attractive investment opportunities;
•our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products;
•our ability to satisfy and manage our capital requirements;
•our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets;
•the general volatility of the securities markets in which we participate;
•stability of the capital structure of our ability to obtainwellness infrastructure portfolio and maintain financing arrangements, including securitizations;OED portfolio;
•changes in interest rates and the market value of our assets;
•interest rate mismatches between our assets and any borrowings used to fund such assets;
•effects of hedging instruments on our assets;
•the impact of economic conditions on third parties on which we rely;
•any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims;
•our levels of leverage;
•adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors;
our ability to realize substantial efficiencies and synergies as well as anticipated strategic and financial benefits, and •the impact of legislative, regulatory and competitive changes;
•actions, initiatives and policies of the U.S. and non-U.S. governments and changes to U.S. or non-U.S. government policies and the execution and impact of these actions, initiatives and policies;

ourpolicies, including regulations permitting or requiring forbearance of rent obligations and inhibiting the ability to pursue evictions and obtain late fees from non-paying tenants;
•whether we will maintain our qualification as a real estate investment trust for U.S. federal income tax purposes;purposes and our ability to do so;
•our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”);
•changes in our board of directors or management team, and availability of qualified personnel;
•our ability to make or maintain distributions to our stockholders; and
•our understanding of our competition.
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, we disclaim 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. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. We caution investors not to place undue reliance on these forward-looking statements and urge you to carefully review the disclosures we make concerning risks in sections entitled “Risk Factors”Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Operations” in this Quarterly Report. Readers of this Quarterly Report should also read our other periodic filings made with the Securities and Exchange Commission (the "SEC") and other publicly filed documents for further discussion regarding such factors.

57
ITEM
Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes thereto, which are included in Item 1 of this Quarterly Report, as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2016,2020, which is accessible on the SEC's website at www.sec.gov.
OverviewOur Organization
We are a leading global real estateinvestment firm with a focus on identifying and investment management firm, principally locatedcapitalizing on key secular trends in digital infrastructure. We are headquartered in Boca Raton, Florida, with key offices in New York, Los Angeles, CaliforniaLondon and New York, New York, with more than 500 employees in offices across 18 cities in ten countries. Singapore, and have approximately 300 employees.
Effective June 22, 2021, we changed our name to DigitalBridge Group, Inc. (formerly Colony Capital, Inc.) and trade under the ticker symbol, DBRG, signifying our transformation to digital infrastructure.
We have significant property holdings in the healthcare, industrial and hospitality sectors, other equity and debt investments, as well as an embedded institutional and retail investment management business. We currently have assets under management, including both our balance sheet investments and third party managed investments, of $57 billion, and manage capital on behalf of our stockholders, as well as institutional and retail investors in private funds, non-traded and traded REITs and registered investment companies. We also own NorthStar Securities, LLC, a captive broker-dealer platform that raises capital in the retail market.
We were organized on May 31, 2016 as a Maryland corporation, and intend to electelected to be taxed as a REITreal estate investment trust ("REIT") for U.S. federal income tax purposes commencing with our initial taxable year ending December 31, 2017. . We conduct our operations as a REIT, and generally are not subject to U.S. federal income taxes on our taxable income to the extent that we annually distribute all of our taxable income to stockholders and maintain qualification as a REIT, although we are subject to U.S. federal income tax on income earned through our taxable subsidiaries. In light of our digital transformation, we will continue to evaluate whether we will maintain REIT status for 2021 or future years. We also operate our business in a manner that will permit us to maintain our exemption from registration as an investment company under the 1940 Act.
We conduct substantially all of our activities and hold substantially all of our assets and liabilities through our operating subsidiary, DigitalBridge Operating Company, LLC (the "Operating Company" or the OP, the Company's operating subsidiary. As of"OP"). At September 30, 2017, certain of our employees2021, we owned a 5.6% noncontrolling interest in the OP.
Merger
On January 10, 2017, the Merger among NSAM, Colony and NRF to form Colony NorthStar was completed in an all-stock exchange.
The Merger created a significantly larger, more scalable and diversified, internally-managed equity REIT that includes an established institutional and retail investment management platform.
The senior executives of Colony make up predominantly the senior management of Colony NorthStar with Thomas J. Barrack, Jr. as the Executive Chairman and Richard B. Saltzman as the Chief Executive Officer. David Hamamoto, previously the Executive Chairman of NSAM, serves as Vice Chairman of Colony NorthStar. The board of directors of Colony NorthStar consists of ten members, eight of whom are independent.
Refer to Note 3 to the Consolidated Financial Statements for further details. Additional information about the Merger and the merger agreement are set forth in Colony's Current Reports on Form 8-K filed with the SEC on June 8, 2016 and October 17, 2016, the joint proxy statement/prospectus on Form S-4 initially filed by Colony NorthStar with the SEC on July 29, 2016, as amended from time to time and the Current Report on Form 8-K12B filed by Colony NorthStar on January 10, 2017.
Commercial Real Estate Credit REIT
On August 25, 2017, certain subsidiaries90% of the Company entered into a combination agreement with NorthStar Income I, NorthStar Income II and certain other subsidiaries of the foregoing. Pursuant to the combination agreement, certain subsidiaries of the Company will contribute the CLNS Contributed Portfolio to Colony NorthStar Credit and its operating company, and NorthStar Income I and NorthStar Income II will merge in all-stock mergers into Colony NorthStar Credit. The closing of the Combination is conditioned upon a listing of Colony NorthStar Credit's class A common stock on a national securities exchange (through an initial public offering or otherwise), which may be effected up to nine months following the later of the approval of the transaction by the stockholders of NorthStar Income I and NorthStar Income II.
The CLNS Contributed Portfolio comprises the Company's interests in certain of its commercial real estate loans, net lease properties and limited partnership interests in third party sponsored funds, which represent a select portfolio of U.S. investments within the Company’s Other Equity and Debt segment that are transferable assets consistent with Colony NorthStar Credit's strategy.
The contribution of the CLNS Contributed Portfolio is intended to be tax-free to the Company and the mergers of NorthStar Income I and NorthStar Income II are intended to qualify as tax-free reorganizations.

Upon closing of the Combination, the Company and its affiliates, NorthStar Income I stockholders and NorthStar Income II stockholders will each own approximately 37%, 32% and 31%, respectively, of Colony NorthStar Credit in the Combination on a fully diluted basis, subject to certain adjustments as set forth in the combination agreement.
The Combination will create a prominent publicly-listed commercial real estate credit REIT. It is expected that Kevin Traenkle, the Company’s Chief Investment Officer, and Sujan Patel, the Company's Co-Head of U.S. Investment Management, will be Chief Executive Officer and Chief Financial Officer, respectively, of Colony NorthStar Credit. The board of directors of Colony NorthStar Credit will be comprised of seven directors, four of whom will be independent.
The Combination has been approved by the board of directors of theOperating Company, as well as the special committees and boards of directors of NorthStar Income I and NorthStar Income II.its sole managing member.
The Combination is expected to close in the first quarter of 2018, conditioned upon, among other things, approval by NorthStar Income I and NorthStar Income II stockholders, and an initial public offering of Colony NorthStar Credit's class A common stock or a listing without an initial public offering of Colony NorthStar Credit's class A common stock on a national securities exchange.
Refer to Note 1 to the Consolidated Financial Statements for further information related to the Combination. Additional details about the Combination is set forth in the Company's Current Report on Form 8-K filed with the SEC on August 28, 2017.
Our Business
Our vision is to establish Colony NorthStarthe Company as a leading owner, operator and investment manager of digital infrastructure. We are currently the leadingonly global equity REIT with a uniquethat owns, manages, and/or operates across all major infrastructure components of the digital ecosystem including data centers, cell towers, fiber networks and powerful embedded investmentsmall cells.
At September 30, 2021, the Company has $49 billion of assets under management platform, resulting in multiple avenues("AUM"), including both third party capital and the Company's balance sheet, of which $38 billion is dedicated to drive growth and create value for stockholders. We believe our deep understanding of commercialdigital real estate provides usand infrastructure.
The Company conducts its business through two reportable segments, as follows:
•Digital Investment Management ("Digital IM")—This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate. The Company's flagship opportunistic strategy is conducted through Digital Colony Partners ("DCP") and separately capitalized vehicles, while other strategies, including digital credit and public equities, are conducted through other investment vehicles. The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and has the potential to earn carried interest based upon the performance of such investment vehicles, subject to achievement of minimum return hurdles. Earnings from our Digital IM segment are generally attributed 31.5% to Wafra, a significant advantageinvestor in identifying relative value throughout real estate cycles. Through our prudent sector or subsector capital allocation and operational capabilities, we aim to generate outsized total returns to stockholders. In addition, we have third-party investor participation in sponsored investment vehicles that serve as a potential enhancement to stockholder returns through fee income and as an additional source of liquidity and growth. We expect our embedded investment management platform to allow us to scale our core segments while providing revenue diversification.Digital IM business effective July 2020.
We conduct our•Digital Operating—This business through the following five segments:
Healthcare—Our healthcare segment is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earn rental income from providing use of digital asset space and/or capacity through leases, services and other agreements. The Company currently owns interests in two companies: DataBank, including zColo, an edge colocation data center business (20% DBRG ownership); and Vantage SDC, a diversestabilized hyperscale data center business (13% DBRG ownership). Both DataBank and Vantage are also portfolio companies managed under Digital IM for the equity interests owned by third party capital.
Digital Transformation
Following the successful exit of medical office buildings,its hotel business in March 2021, the Company is now in the final stages of monetizing the remainder of its non-digital business to complete its digital transformation. This encompasses the Company's Wellness Infrastructure segment, and a substantial majority of the Company's other equity and debt ("OED") investments and its non-digital investment management ("Other IM") business, both of which previously resided in the Other segment.
58
Table of Contents

The Company's completed disposition of its hotel business, and pending disposition of its OED investments, Other IM business and Wellness Infrastructure segment each represents a strategic shift in the Company's business that has or is expected to have a significant effect on the Company’s operations and financial results, and accordingly, each has met the criteria as discontinued operations. For all current and prior periods presented, the related assets and liabilities, to the extent they have not been disposed at the respective balance sheet dates, are presented as assets and liabilities held for disposition on the consolidated balance sheets and the related operating results are presented as discontinued operations on the consolidated statements of operations (refer to Item 1. "Financial Statements"of this Quarterly Report).
Accelerating the Monetization of Wellness Infrastructure, OED and Other IM
In September 2021 and June 2021, the Company entered into separate definitive agreements with third parties to sell (a) its Wellness Infrastructure business, that, along with other non-core assets, are held by the Company's subsidiary, NRF Holdco, LLC ("NRF Holdco"); and (b) a substantial majority of its OED investments and Other IM business.
In assessing the recovery of assets classified as held for disposition and discontinued operations, in particular considering the sales price for the Wellness Infrastructure assets, and for the OED investments and Other IM business, the Company wrote down the carrying value of these assets by $646 million in aggregate, of which $294 million was attributable to the OP, recorded within impairment loss, equity method loss and other loss in discontinued operations (Note 11to the consolidated financial statements).
Wellness Infrastructure
The Wellness Infrastructure business is composed of senior housing, skilled nursing and other healthcare properties. We earn rental income fromfacilities, medical office buildings, and properties structured under net leaseshospitals. Other assets and obligations held by NRF Holdco include primarily: (i) the Company's equity interest in and management of its sponsored non-traded REIT, NorthStar Healthcare Income, Inc. ("NorthStar Healthcare"), debt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, limited partner interests in private equity real estate funds; and (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt, all of which were issued by NRF Holdco and its subsidiaries.
The sales price for 100% of the equity of NRF Holdco is $281.0 million, composed of $190.7 million in cash and $90.3 million unsecured promissory note (the "Seller Note"). The sale includes the acquirer's assumption of $2.6 billion of consolidated investment level debt, for which we own between 69.6% and 81.3% of the various healthcare portfolios, and $293.7 million of debt at NRF Holdco. The sales price will be adjusted for certain amounts contributed to, healthcare operators,or distributed from, NRF Holdco prior to closing of the sale, with any adjustment to be applied pro rata to the cash portion and resident fee incomethe Seller Note. The Seller Note matures five years from senior housing operating facilitiesclosing of the sale, accruing interest at a per annum rate of 6.5% in the period prior to two years from the closing date and 8.5% thereafter.
Consummation of the sale is subject to customary closing conditions, with no financing conditions, and is expected to close in the first half of 2022. There can be no assurance that operate through management agreements with independent third-party operators.
the sale will close in the timeframe contemplated or on the terms anticipated, if at all.
OED and Other IM
Industrial—Our industrial segment is composed primarily of light industrial assets in infill locations throughout the U.S.The OED investments and Other IM business that are vitalunder contract for e-commerce and other tenants that require increasingly quick delivery times.
Hospitality—Our hotel portfolio is geographically diverse and issale are composed of primarily extended stay hotels and premium branded select service hotels primarily locatedthe Company's interests in major metropolitan markets with the majority affiliated with top hotel brands.
Other Equity and Debt—Our othervarious non-digital real estate, real estate-related equity and debt investments, and the Company's general partner interests and management rights with respect to these assets. The aggregate sales price is approximately $535 million, subject to customary adjustments, including adjustments if consents with respect to certain assets cannot be obtained.
Consummation of the sale is subject to customary closing conditions, including third party consents and regulatory approvals, with no financing conditions. In October 2021, a joint venture partner applied in Ireland for an injunction to delay the closing and a temporary injunction was granted pending a hearing in November 2021. The outcome of the hearing may delay the closing and/orimpact the Company's ability to close the sale.There can be no assurance that the sale will close in the timeframe contemplated or on the terms anticipated, if at all.
Internalization of BrightSpire Capital, Inc. (NYSE: BRSP)
In early April 2021, the Company and BRSP (formerly Colony Credit Real Estate, Inc. or CLNC) agreed to terminate the BRSP management agreement for a one-time termination payment of $102.3 million in cash. The transaction closed on April 30, 2021, resulting in the internalization of BRSP's management and operating functions (the "BRSP Internalization"), with certain of the Company's employees previously dedicated wholly or substantially to BRSP becoming employees of BRSP. In connection with the BRSP Internalization, BRSP's board of directors ceased to include Company-affiliated directors upon the expiration of such directors' terms in May 2021. The Company also entered into a stockholders agreement with BRSP, pursuant to which the Company agreed, for so long as the Company owns at least
59
Table of Contents

10% of BRSP's outstanding common shares, to vote in BRSP director elections as recommended by BRSP’s board of directors at any stockholders' meeting that occurs prior to BRSP's 2023 annual stockholders' meeting. In addition, the Company is subject to customary standstill restrictions, including an obligation not to initiate or make stockholder proposals, nominate directors or participate in proxy solicitations, until the beginning of the advance notice window for BRSP's 2023 annual meeting. Except as aforementioned, the Company may vote its shares in its sole discretion in any votes of BRSP’s stockholders. The Company is prohibited from acquiring additional BRSP shares and currently holds a 29% equity ownership in BRSP following the sale of a portion of its BRSP shares in August 2021.
Exit of the Hotel Business
In March 2021, the Company completed the sale of its hotel business. Pursuant to an agreement entered into with a third party in September 2020 (as amended in October 2020, February 2021 and March 2021), the Company sold 100% of the equity in its hotel subsidiaries which held five of the six hotel portfolios in the Hospitality segment includes our portfolios of net lease, multifamily and multi-tenant office properties, the THL Hotel Portfolio, ourits 55.6% equity interest in a portfolio of CRE loanslimited service hotels in the Other segment that was previously acquired through a consensual foreclosure (the "THL Hotel Portfolio"), composed of 197 hotel properties in aggregate. Two of the hotel portfolios that were sold in the Hospitality segment were held through joint ventures in which the Company held a 90% and securities, limited partnershipa 97.5% interest, respectively. The aggregate selling price of $67.5 million represented a transaction value of approximately $2.8 billion, with the acquirer's assumption of $2.7 billion of consolidated investment-level debt. In September 2021, the remaining interests in real estate private equity funds and various other equity investments.
the THL Hotel Portfolio held by investment vehicles managed by the Company were sold to the same buyer. Also in September 2021, the remaining portfolio in the Hospitality segment that was in receivership was sold by the lender for no proceeds to the Company.
Investment Management—We generate fee income through investment management services, sponsoring numerous investment products across a diverse set of institutional and retail investors.
Highlights
Significant Developments
Through the date of this filing, significant developments in 2021 affecting our business and results of operations included the following.
Financing
•Securitized Financing Facility—In July 2021, our corporate credit facility was terminated and replaced with $500 million aggregate principal amount of Series 2021-1 Secured Fund Fee Revenue Notes issued by subsidiaries of the OP (the "Co-Issuers"), composed of: (i) $300 million aggregate principal amount of 3.933% Secured Fund Fee Revenue Notes, Series 2021-1, Class A-2 (the “Class A-2 Notes”); and (ii) up to $200 million Secured Fund Fee Revenue Variable Funding Notes, Series 2021-1, Class A-1 (the “VFN Notes” and, together with the Class A-2 Notes, the “Series 2021-1 Notes”). The VFN Notes allow the Co-Issuers to borrow on a revolving basis. Proceeds from issuance of the Class A-2 Notes of $285 million, net of offering costs and $5.4 million of interest reserve deposit, will be used for acquisition of digital infrastructure investments, funding of commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or general corporate purposes.
The issuance of the Series 2021-1 Notes represents a key milestone for the Company on a number of fronts:
▪Longer-duration financing—We effectively refinanced our corporate credit facility and extended the maturity of our revolving credit from 2022 to 2026.
▪First-of-its-kind securitization backed by investment management fees.
▪Lower cost of capital—Successful rotation from “diversified to digital” has positioned us to issue securitized notes with a high-quality digital collateral base, which lowers our effective cost of capital.
▪Greater flexibility—This new financing structure, which we intend to continue to utilize as it grows, creates greater flexibility around capital allocation and corporate liability management, including our ability to retire higher cost debt or securities and eventually pay regular dividends on our common stock.
•Preferred Stock—We redeemed all of our outstanding 7.5% Series G preferred stock in August 2021 for $86.8 million using proceeds from our securitized financing facility, which lowered our cost of corporate debt by approximately 350 basis points. Additionally, we issued notices of redemption in October 2021 for 2.6 million shares or 22% of our 7.125% Series H preferred stock with redemption to be settled in November 2021 for $64.4 million. Redemption amounts include accrued and unpaid dividends through the redemption date.
•Senior Notes—In October 2021, we exchanged approximately $44 million of the outstanding principal of the 5.75% exchangeable notes into approximately 20 million shares of class A common stock, which will result in future interest savings.
60
Table of Contents

Digital Business
Digital IM
•In February 2021, we announced the first closing of DCP II, our second flagship digital infrastructure fund. As of November 4, 2021, DCP II has total commitments of $8.1 billion (inclusive of $120 million of our commitments as limited partner and general partner).
Digital Operating
•Our DataBank subsidiarycompleted its restructuring in the second quarter of 2021 and expects to elect REIT status for the 2021 taxable year, resulting in a write-off of $67 million of net deferred tax liabilities.
•In February 2021, we completed the add-on acquisition of zColo's remaining five data centers in France for $33 million.
•We acquired an additional data center and build-out of expansion capacity within the Vantage SDC portfolio, including lease-up of the expanded capacity and existing inventory, for aggregate payments of $478 million, funded primarily through borrowings by Vantage SDC.
•In March 2021 and October 2021, DataBank raised $658 million and $332 million of 5-year securitized notes at blended fixed rates of 2.32% and 2.43% per annum, respectively. Proceeds from the March securitization were applied principally to refinance $514 million of outstanding debt, which meaningfully reduced DataBank's overall cost of debt and extended its debt maturities, while the October proceeds will be used to repay borrowings on its credit facility and finance future acquisitions.
•In November 2021, Vantage SDC issued $530 million of 5-year securitized notes at a blended per annum fixed rate of 2.17%. Proceeds will be applied to replace its current bridge financing and fund capital expenditures on the September 2021 add-on acquisition as well as to fund payments for future build-out and lease-up of expansion capacity.
Other
◦DCP II, together with other third party co-invest capital, acquired a digital communications infrastructure business in October 2021. No capital was drawn from DBRG's balance sheet to bridge the financing for this acquisition and DBRG's previous commitment to a preferred equity investment has been cancelled.
Non-Digital Assets
•In the first half of 2021, we determined we would accelerate the monetization of our remaining non-digital assets in Wellness Infrastructure, OED and Other IM.
•In September 2021 and June 2021, we entered into separate definitive agreements to sell (i) NRF Holdco, which holds our Wellness Infrastructure business, for $281 million; and (ii) a substantial majority of our OED investments and Other IM business for approximately $535 million.
•Based upon recoverable values, in particular, the sales price for the Wellness Infrastructure assets, OED investments and Other IM business, the carrying values of these assets were written down in for an aggregate $646 million, of which $294 million was attributable to the OP, included in discontinued operations.
•On April 30, 2021, we terminated the BRSP management contract, which resided in the Other IM business, for a one-time termination payment of $102.3 million at closing. Consequently, the Other IM goodwill balance of $81.6 million was fully written off as the remaining value of the Other IM reporting unit represented principally the BRSP management contract. This resulted in a net gain of $20.7 million, recognized within other gain (loss) in discontinued operations.
•In March 2021, we sold five of the six hotel portfolios in our Hospitality segment and our 55.6% interest in the THL Hotel Portfolio in the Other segment, generating net proceeds of $45.6 million. The transaction was valued at $2.8 billion, including aggregate selling price of $67.5 million and the buyer's assumption of $2.7 billion of consolidated investment-level debt. The remaining one hotel portfolio that was in receivership was sold by the lender in September 2021 for no proceeds to us.
•In August 2021, we sold 9.5 million BRSP shares for net proceeds of approximately $82 million.
61
Table of Contents

•In April 2021, we received proceeds from the sale of the two largest assets securing our Irish loan portfolio, which were applied to repay $305 million of our outstanding loan receivable and extinguish the full $155 million of debt financing the portfolio. This removed all encumbrances on the remaining assets in the portfolio. Our share of excess net proceeds was $103.5 million. The Irish loan portfolio is composed of distressed loans that were previously acquired at a discount.
•For all current and prior periods presented, all non-digital assets that have been disposed or subject to planned disposition and associated liabilities (excluding our interest in BRSP other than BRSP shares and units held by NRF Holdco) are presented as held for disposition, and the related operating results are presented as discontinued operations (Notes 11 and 12 to the consolidated financial statements).
Assets Under Management and Fee Earning Equity Under Management ("FEEUM")
Below is a summary of our AUM and FEEUM.
AUM (1) (In billions)
FEEUM (2) (In billions)
TypeProductsDescriptionSeptember 30, 2021December 31, 2020September 30, 2021December 31, 2020
Digital
Third Party Managed Capital
Institutional FundsDigital Colony Partners opportunistic strategyEarns management fees and potential for carried interest or incentive fees$14.2$9.3$10.2$7.0
Liquid securities strategy0.60.50.50.4
Other Investment VehiclesDigital co-invest vehiclesEarns management fees, business service fees from portfolio companies, and potential for carried interest11.49.93.22.6
Digital real estate and infrastructure held by portfolio companies10.18.92.62.8
36.328.616.512.8
Balance Sheet Capital (3)
Digital Operating1.21.1NANA
Other0.30.3NANA
Total Digital37.830.016.512.8
Non-Digital (4)
Third Party Managed Capital8.213.44.47.2
Balance Sheet Capital (3)
3.48.6NANA
Total Company$49.4$52.0$20.9$20.0
__________
(1)    AUM is composed of (a) third party managed capital, which are assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations; and (b) assets invested using the Company's own balance sheet capital and managed on behalf of the Company's shareholders. Third party AUM is based upon the cost basis of managed investments as reported by each underlying vehicle as of the reporting date and may include uncalled capital commitments. Balance sheet AUM is based upon the undepreciated carrying value of the Company's balance sheet investments as of the reporting date. The Company's calculation of AUM may differ from other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.
(2)    FEEUM is equity for which the Company and its affiliates provide investment management services and derive management fees and/or incentives. FEEUM generally represents the basis used to derive fees, which may be based upon invested equity, stockholders’ equity, or fair value, pursuant to the terms of each underlying investment management agreement. The Company's calculation of FEEUM may differ from other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.
(3)    Represents the Company's investment interests on its balance sheet, excluding the portion held by noncontrolling interests in investment entities, that is managed by the Company on behalf of its stockholders, therefore is not fee-bearing. Balance sheet AUM reflects generally the OP's share of net book value of the respective segments, determined based upon undepreciated carrying value of assets, and where applicable, after impairment charges that create a new basis for the affected assets, in all instances, net of liabilities.
(4)    Represents predominantly assets held for disposition and discontinued operations.
62
Table of Contents

Total FEEUM increased $0.9 billion from December 31, 2020 to $20.9 billion at September 30, 2021.
•Digital FEEUM increased $3.7 billion to $16.5 billion, attributable primarily to the successful fundraising for DCP II and to a lesser extent, additional capital from co-investment vehicles, both of which were partially offset by a lower DCP I FEEUM as the fee base of DCP I changed from committed capital to net capital contributions following the closing of DCP II. In the nine months ended September 30, 2017 include:2021, DCP II has raised $2.7 billion of capital, with an additional $1.3 billion through November 4, 2021.
Consummated•Non-digital FEEUM decreased $2.8 billion, driven by the Mergertermination of our management agreement with NSAMBRSP in April 2021, for which we received a one-time termination fee of $102.3 million. Sales and fair value decreases in investments held by our distressed credit funds further contributed to a lower non-digital FEEUM. Our management contract with these funds and with NorthStar Healthcare will be sold in conjunction with the disposition of our Other IM business and of NRF on January 10, 2017 in an all stock transaction valued at $6.7Holdco, respectively.
Total AUM decreased $2.6 billion from December 31, 2020 to $49.4 billion at closing;September 30, 2021.
Entered into•This was driven by a definitive agreementsignificant decrease in August 2017 with NorthStar Income I and Northstar Income II to create Colony NorthStar Credit, a publicly traded commercial real estate credit REIT to be externally managed by us, with the proposed transaction subjectour non-digital balance sheet capital in 2021, attributed to the approval of NorthStar Income I and Northstar Income II stockholders;

Increased the borrowing capacity of our credit facility from $850 million to $1 billion and extended its maturity to January 2021, with two six-month extension options, at our election;
Closed on two strategic asset sales initiated by NRF pre-Merger: (i) sale of an 18.7% minority interest in our healthcare platform for $350 million (including $20 million of pre-funded capital items); and (ii) sale of our manufactured housing portfolio for $2.0 billionhospitality business, along with proceedssales and fair value decreases in OED investments. Upon completing the pending disposition of $664 million net of financing assumed by the buyer;
Acquired a controlling interest in CPI, a real estate investment group in Europe, through a restructuringsubstantial majority of our loan receivable, resultingOED investments and of NRF Holdco, we expect our balance sheet capital to be fully rotated to digital by mid-2022.
•In 2021, we have made significant progress in the assumption of $566 million of real estate with underlying debt of $278 million;
Sold alldigital rotation of our interestinvestment management business. As of September 30, 2021, Digital AUM at $36.3 billion, following a $7.8 billion increase in SFR, generating net proceeds of $501 million and a gain of $191 million;
Acquired an additional 4.7 million shares of NRE common stock, increasing our ownership interest in NRE to approximately 9%;
Acquired the THL Hotel Portfolio consisting of 148 limited service hotels across the Southwest and Midwest U.S. in July 2017 through a consensual foreclosure2021, represents 77% of our loan receivable, resulting in the assumptiontotal AUM, up from 58% at December 31, 2020.
63
Table of $1.3 billion of real estate with underlying debt of $908 million;Contents
Sold two net lease properties in Switzerland that were acquired in January 2015 for a gain of $68 million;
Entered into a definitive agreement to sell the Townsend business for $475 million (subject to certain purchase price adjustments), with net proceeds for our 84% interest after transaction and other expenses estimated to be approximately $379 million. The sale is expected to close in the fourth quarter of 2017 or first quarter of 2018;
Repurchased approximately 17.3 million shares of our class A common stock at an aggregate cost of $225 million under our stock repurchase program;
Refinanced debt with outstanding principal of $1.6 billion in our hotel portfolio at a moderately reduced interest rate and extended their maturity dates;
Repurchased all $13 million of outstanding principal of our 7.25% exchangeable notes and exchanged $2.5 million of outstanding principal of our 5.375% exchangeable notes into 0.2 million shares of our class A common stock;
Issued 13.8 million shares of our new Series I preferred stock and 12.6 million shares of our new Series J preferred stock with dividend rates of 7.15% and 7.125% per annum, respectively, for total net proceeds of $637.9 million. A portion of the proceeds was used to redeem all of the outstanding shares of our Series A, Series F and Series C preferred stock and some of the outstanding shares of our Series B preferred stock for $645 million in aggregate; and
Closed on approximately $1.7 billion of additional third party institutional and retail capital commitments, including our pro rata share from equity method investments in third party asset managers.
Results of Operations
As a result of the Merger, comparisons of the period to period financial information of Colony NorthStar as set forth herein may not be meaningful. The historical financial information included herein as of any date, or for any periods, on or prior to January 10, 2017, represents the pre-merger financial information of Colony on a stand-alone basis. The results of operations of NSAM and NRF are incorporated into Colony NorthStar effective from January 11, 2017.
The following table summarizes our consolidated results offrom continuing operations by segment:
reportable segments.
(in thousands) Total Revenue Net Income (Loss) Net Income (Loss) Attributable to Colony NorthStar, Inc.
Three Months Ended September 30, 2017 2016 2017 2016 2017 2016
Healthcare $157,732
 $—
 $(22,318) $—
 $(17,219) $—
Industrial 63,410
 49,494
 5,775
 439
 1,636
 1,169
Hospitality 221,987
 —
 4,169
 —
 3,319
 —
Other Equity and Debt 279,952
 143,874
 146,558
 100,321
 103,123
 56,326
Investment Management 64,918
 17,233
 30,723
 8,433
 28,450
 7,128
Amounts not allocated to segments 1,854
 1,466
 (92,318) (37,289) (85,401) (29,652)
  $789,853
 $212,067
 $72,589
 $71,904
 $33,908
 $34,971
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Continuing Operations
Total revenues
Digital Investment Management$53,796 $20,397 $33,399 $131,789 $60,545 $71,244 
Digital Operating194,966 98,549 96,417 573,261 185,737 387,524 
Corporate and Other(1)
3,412 4,071 (659)4,892 14,758 (9,866)
$252,174 $123,017 129,157 $709,942 $261,040 448,902 
Income (loss) from continuing operations
Digital Investment Management$39,272 $3,799 $35,473 $62,721 $8,453 $54,268 
Digital Operating(71,822)(38,795)(33,027)(146,932)(78,472)(68,460)
Corporate and Other(8,385)(17,653)9,268 (99,240)(454,097)354,857 
$(40,935)$(52,649)11,714 $(183,451)$(524,116)340,665 
Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.
Digital Investment Management$16,870 $1,964 $14,906 $35,849 $6,047 $29,802 
Digital Operating(12,142)(5,082)(7,060)(22,592)(12,885)(9,707)
Corporate and Other(11,506)(14,547)3,041 (99,898)(403,820)303,922 
$(6,778)$(17,665)10,887 $(86,641)$(410,658)324,017 
__________
(in thousands) Total Revenue Net Income (Loss) Net Income (Loss) Attributable to Colony NorthStar, Inc.
Nine Months Ended September 30, 2017 2016 2017 2016 2017 2016
Healthcare $455,902
 $—
 $(42,978) $—
 $(33,728) $—
Industrial 176,577
 143,956
 15,394
 652
 4,877
 4,304
Hospitality 619,222
 —
 6,303
 —
 5,122
 —
Other Equity and Debt 635,011
 433,646
 512,096
 349,928
 403,046
 181,712
Investment Management 185,089
 49,347
 76,796
 17,040
 70,672
 14,375
Amounts not allocated to segments 4,589
 3,435
 (337,640) (101,549) (312,142) (80,356)
  $2,076,390
 $630,384
 $229,971
 $266,071
 $137,847
 $120,035
(1)    Includes elimination of fee income earned by Digital Investment Management from managed investment vehicles consolidated within Digital Operating and Corporate and Other.
Selected Balance Sheet DataRevenues
Total revenues increased $129.2 million quarter-to-date and $448.9 million year-to-date, or over 100%.
(in thousands) Healthcare Industrial Hospitality Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total
September 30, 2017              
Real estate, net $5,162,548
 $2,439,209
 $3,892,081
 $2,860,703
 $—
 $—
 $14,354,541
Loans receivable, net 72,763
 —
 —
 3,383,139
 —
 —
 3,455,902
Investments in unconsolidated ventures —
 1,073
 —
 1,376,799
 190,978
 3,742
 1,572,592
Securities, at fair value —
 —
 —
 408,663
 —
 —
 408,663
Debt, net 3,263,901
 860,413
 2,551,882
 3,269,078
 —
 846,701
 10,791,975
December 31, 2016              
Real estate, net $—
 $1,969,247
 $—
 $1,274,384
 $—
 $—
 $3,243,631
Loans receivable, net —
 —
 —
 3,430,608
 —
 —
 3,430,608
Investments in unconsolidated ventures —
 1,027
 —
 1,038,781
 13,187
 —
 1,052,995
Securities, at fair value —
 —
 —
 23,446
 —
 —
 23,446
Debt, net —
 999,560
 —
 1,659,484
 —
 1,056,574
 3,715,618
•Digital Investment Management—Revenues from our investment management business grew164% to $53.8 million quarter-to-date and 118% to $131.8 millionyear-to-dateas a result of significant growth in our Digital IM FEEUM from $8.5 billion at September 30, 2020 to $16.5 billion at September 30, 2021 following successful fundraising for DCP II and co-invest vehicles, including capital raised alongside our balance sheet for new acquisitions in Digital Operating. The third quarter of 2021 also included a catch-up of DCP II inception-to-date fee income for significant commitments that closed during the period.

•Digital Operating—2021 includes revenues from acquisition of Vantage SDC's 12 hyperscale data centers (13% DBRG ownership) in July 2020 and zColo's 44 colocation data centers (through our subsidiary, DataBank, 20% DBRG ownership) in December 2020 and February 2021.
Consolidated ResultsIncome (loss) from continuing operations
•Digital Investment Management—In addition to higher fee income in 2021, the third quarter of Operations2021 also recorded significant unrealized carried interest income, of which generally 65% is allocated to management, investment professionals and certain other employees.
•Digital Operating—Our consolidated resultsDigital Operating segment generally records a net loss, reflecting the effects of operationsreal estate depreciation. In year-to-date 2021, net loss in Digital Operating was reduced by a $66.8 million net deferred tax benefit at our DataBank subsidiary, driven by the write-off of deferred tax liabilities as DataBank completed its restructuring to qualify as a REIT in the second quarter and expects to elect REIT status for the three2021 taxable year. We present our supplemental operating results measure of earnings before interest, tax, depreciation and nine months endedamortization for real estate ("EBITDAre") for Digital Operating under "—Non-GAAP Measures".
•Corporate and Other—Net losses generally reflect corporate level costs that have not been allocated to our reportable segments. In the year-to-date period, however, the large net losses were driven by impairment of our various other equity investments, primarily BRSP in which we recorded a $254.5 million charge in June 2020.
64
Table of Contents

Key components of revenue and income (loss) from continuing operations are discussed in more detail below.
Comparison of Three and Nine Months September 30, 20172021 to Three and 2016 were as follows:
  Three Months Ended September 30,   Nine Months Ended September 30,  
(In thousands) 2017 2016 Change 2017 2016 Change
Revenues            
Property operating income $613,665
 $92,505
 $521,160
 $1,541,050
 $279,470
 $1,261,580
Interest income 106,479
 98,275
 8,204
 333,286
 291,496
 41,790
Fee income 59,693
 17,233
 42,460
 167,262
 49,347
 117,915
Other income 10,016
 4,054
 5,962
 34,792
 10,071
 24,721
Total revenues 789,853
 212,067
 577,786
 2,076,390
 630,384
 1,446,006
Expenses            
Property operating expense 332,006
 28,903
 303,103
 802,072
 89,469
 712,603
Interest expense 152,054
 42,196
 109,858
 418,592
 126,635
 291,957
Investment, servicing and commission expense 18,421
 5,115
 13,306
 43,968
 17,448
 26,520
Transaction costs 4,636
 6,190
 (1,554) 94,416
 18,638
 75,778
Depreciation and amortization 162,694
 43,593
 119,101
 453,225
 129,276
 323,949
Provision for loan loss 5,116
 6,569
 (1,453) 12,907
 17,412
 (4,505)
Impairment loss 24,073
 941
 23,132
 45,353
 5,461
 39,892
Compensation expense 85,022
 29,582
 55,440
 257,599
 80,689
 176,910
Administrative expenses 26,502
 12,891
 13,611
 82,561
 38,760
 43,801
Total expenses 810,524
 175,980
 634,544
 2,210,693
 523,788
 1,686,905
Other income            
     Gain on sale of real estate 72,541
 11,151
 61,390
 96,701
 68,114
 28,587
     Other gain (loss), net (8,822) 4,573
 (13,395) (7,291) 18,270
 (25,561)
     Earnings from investments in
     unconsolidated ventures
 17,447
 16,684
 763
 253,833
 72,226
 181,607
Income before income taxes 60,495
 68,495
 (8,000) 208,940
 265,206
 (56,266)
     Income tax benefit (expense) 10,613
 3,409
 7,204
 6,990
 865
 6,125
Net income from continuing operations 71,108
 71,904
 (796) 215,930
 266,071
 (50,141)
Income from discontinued operations 1,481
 —
 1,481
 14,041
 —
 14,041
Net income 72,589
 71,904
 685
 229,971
 266,071
 (36,100)
Net income attributable to noncontrolling interests:            
     Redeemable noncontrolling interests 1,678
 —
 1,678
 3,015
 —
 3,015
     Investment entities 36,906
 32,744
 4,162
 87,765
 130,508
 (42,743)
     Operating Company 97
 4,189
 (4,092) 1,344
 15,528
 (14,184)
Net income (loss) attributable to Colony NorthStar, Inc. 33,908
 34,971
 (1,063) 137,847
 120,035
 17,812
Preferred stock redemption (918) —
 (918) 4,530
 —
 4,530
Preferred stock dividends 33,176
 12,093
 21,083
 98,328
 36,066
 62,262
Net income attributable to common stockholders $1,650
 $22,878
 $(21,228) $34,989
 $83,969
 $(48,980)

ThreeNine Months Ended September 30, 2017 and 20162020
 Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Revenues
Property operating income$194,854 $98,522 $96,332 $572,841 $185,688 $387,153 
Interest income3,086 1,258 1,828 5,259 5,164 95 
Fee income50,226 19,914 30,312 124,826 59,165 65,661 
Other income4,008 3,323 685 7,016 11,023 (4,007)
Total revenues252,174 123,017 129,157 709,942 261,040 448,902 
Expenses
Property operating expense80,226 37,544 42,682 237,228 72,505 164,723 
Interest expense39,895 29,999 9,896 117,613 69,935 47,678 
Investment expense7,263 4,489 2,774 20,027 9,228 10,799 
Transaction-related costs936 3,311 (2,375)2,618 3,992 (1,374)
Depreciation and amortization129,186 80,564 48,622 406,840 155,387 251,453 
Impairment loss— 3,832 (3,832)— 16,129 (16,129)
Compensation expense, including carried interest87,669 37,312 50,357 222,887 119,996 102,891 
Administrative expenses28,933 16,551 12,382 75,234 57,129 18,105 
Settlement loss— — — — 5,090 (5,090)
Total expenses374,108 213,602 160,506 1,082,447 509,391 573,056 
Other income (loss)
    Other gain (loss), net4,657 1,339 3,318 (31,734)(632)(31,102)
Equity method earnings (losses), including carried interest65,369 23,371 41,998 111,380 (303,493)414,873 
Loss before income taxes(51,908)(65,875)13,967 (292,859)(552,476)259,617 
     Income tax benefit10,973 13,226 (2,253)109,408 28,360 81,048 
Loss from continuing operations(40,935)(52,649)11,714 (183,451)(524,116)340,665 
Loss from discontinued operations(10,429)(308,581)298,152 (590,595)(2,960,164)2,369,569 
Net loss(51,364)(361,230)309,866 (774,046)(3,484,280)2,710,234 
Net income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests7,269 (2,158)9,427 15,743 (2,316)18,059 
 Investment entities(124,301)(149,154)24,853 (443,547)(640,955)197,408 
 Operating Company4,311 (22,651)26,962 (38,565)(287,308)248,743 
Net income (loss) attributable to DigitalBridge Group, Inc.61,357 (187,267)248,624 (307,677)(2,553,701)2,246,024 
Preferred stock redemption2,865 — 2,865 2,865 — 2,865 
Preferred stock dividends17,456 18,517 (1,061)54,488 56,507 (2,019)
Net income (loss) attributable to common stockholders$41,036 $(205,784)246,820 $(365,030)$(2,610,208)2,245,178 


65
Table of Contents

Property Operating Income and Expense
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Digital Operating
Property operating income
Lease income$175,238 $86,960 $88,278 $522,712 $150,959 $371,753 
Data center service revenue19,616 11,562 8,054 50,129 34,729 15,400 
$194,854 $98,522 96,332 $572,841 $185,688 387,153 
Property operating expense$80,226 $37,544 42,682 $237,228 $72,505 164,723 
Property Operating Expenses
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Property operating income:      
Healthcare $156,107
 $—
 $156,107
Industrial 62,711
 49,256
 13,455
Hospitality 221,965
 —
 221,965
Other Equity and Debt 172,882
 43,249
 129,633
  $613,665
 $92,505
 521,160
Property operating expenses:      
Healthcare $73,217
 $—
 $73,217
Industrial 16,620
 13,921
 2,699
Hospitality 143,042
 —
 143,042
Other Equity and Debt 99,127
 14,982
 84,145
  $332,006
 $28,903
 303,103
Subsequent to the Merger, we earn resident feeoperating income and rental income from our healthcare portfolio as well as hotelexpense amounts are higher in 2021, which includes the operating income from our hotel portfolioresults of zColo's 44 colocation data centers, acquired from NRF,in December 2020 and incur corresponding operating expenses. We alsoFebruary 2021, Vantage SDC's 12 hyperscale data centers, acquired other properties through the Merger, mainly net lease, multifamilyin July 2020, and multi-tenant offices, includedadditional lease-up of expanded capacity and existing inventory in Vantage in 2021.
Total real estate carrying value in our other equityDigital Operating segment stood at $4.91 billion at September 30, 2021 compared to $4.45 billion at December 31, 2020.
Our portfolio includes 68 data centers in the U.S., three in Canada, one in the U.K., and debt segment. These acquired assets,five in aggregate, generated property operating income of $392.6 million and incurred property operating expenses of $222.1 millionFrance.
September 30, 2021December 31, 2020
Number of data centers
Owned2625
Leasehold5146
7771
(In thousands, except %)
Max Critical I.T. Square Feet or Total Rentable Square Feet (1)
1,8201,720
Leased Square Feet (1)
1,4671,386
% Utilization Rate (% Leased) (1)
80.6%80.6%
__________
(1)    Excludes data centers that are not held for the three monthsentire period during the most recent quarter; in this case, one data center that was acquired during the quarter ended September 30, 2017.2021.
Industrial—Increases in totalOn a same store basis, property operating income and expenses in our industrial portfolio reflect continued growth of the portfolio through acquisitionsexpense also increased quarter-to-date and year-to-date, reflecting an increase in base rents. As of September 30, 2017 and 2016,rentable square footage. Additionally, in the industrial portfolio consisted of 388 and 336 buildings, respectively,year-to-date period, higher power costs were incurred in connection with a net addition of 52 buildings between September 30, 2016 and September 30, 2017.
Comparing our industrial portfolio on a same store basis forinclement weather conditions, with the three months ended September 30, 2017 and 2016, property operating income increased as a result of higher rental rates on new and renewal leases as well as contractual rental rate increases within existing leases. Property operating expenses decreased marginally due to lower repair and maintenance costs.
  Three Months Ended September 30,  
($ in thousands) 2017 2016 % change
Industrial: (1)
      
Same store property operating income $48,335
 $47,050
 2.7 %
Same store property operating expenses 13,251
 13,449
 (1.5)%
__________
(1)
Our same store portfolio consisted of 312 buildings, which consisted of the same buildings that were owned during the three months ended September 30, 2017 and 2016.
Other Equity and Debt—Excluding properties acquired through the Merger, property operating income and property operating expenses relatedincremental cost billed to our remaining other equity and debt portfolio increased $115.1 million and $78.3 million, respectively, for the three months ended September 30, 2017 compared to the same period in 2016. The increases were driven by $105.0 million of property operating income and $70.9 million of property operating expenses from the THL Hotel Portfolio which we acquired through a consensual foreclosure in July 2017.colocation tenants.
Interest Income
The increaseInterest income was $1.8 million higher quarter-to-date and largely consistent in interest income in 2017 can be attributed to interest earning assets acquired from NRF and NSAM, specifically $19.2 million and $6.7 million of interest income from CRE securities and loans receivable, respectively, for the three months ended September 30, 2017. Excludingyear-to-date period. In 2021, there was additional interest earning assets from the Merger, remaining interest income decreased $17.7 million between the third quarter of 2017 and 2016 due to loan repayments, pay-offs, sales as well as foreclosures, which more than offset income from new loans and additional drawsoriginated or acquired that are being warehoused for future investment vehicles in our digital credit strategy. However, for the year-to-date period, this increase was largely offset by lower interest income on existing loans.

available cash in 2021 as proceeds from the sale of our light industrial business in December 2019 have since been redeployed.
Fee Income
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Digital Investment Management
Management fees$47,719 $18,826 $28,893 $115,185 $55,371 $59,814 
Incentive fees1,313 — 1,313 6,396 — 6,396 
Other fee income1,194 1,088 106 3,245 3,794 (549)
$50,226 $19,914 30,312 $124,826 $59,165 65,661 
66
Table of Contents

Fee income was higher by $30.3 million quarter-to-date and $65.7 million year-to-date. The increase was driven by: (i) fundraising for DCP II beginning November 2020, partially offset by lower fees from DCP I in 2021 with a change in its fee base from committed capital to net contributed capital following the closing of DCP II; and (ii) incentive fees earned frombased upon the following sources:
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Institutional funds $16,001
 $17,233
 $(1,232)
Retail Companies 25,142
 —
 25,142
Public company—NRE
 3,770
 —
 3,770
Broker dealer, Townsend funds and other clients 14,780
 —
 14,780
  $59,693
 $17,233
 42,460
performance of managed third party accounts in our digital liquid strategy. In the third quarterparticular, there was a larger contribution of 2017, we earned $43.7 million of additional fee income following the Merger, primarily management fees from the retail companies and NRE, as well as management fees and advisory fees from Townsend private funds and clients.
Fee income from Colony private funds decreased $1.2 millionDCP II in the third quarter of 2017 compared to2021 following the third quarterclosing of 2016 as $2.4 million$1.0 billion of additionalcommitments during this period and a catch-up of inception-to-date fee income from private funds that we sponsor was offset by fee concessions andfor the continued liquidation of investments by various legacy private funds that we manage.new investors.
Other Income
The majority ofThere was a marginal increase in other income forquarter-to-date. In the three months ended September 30, 2017 consisted of $6.0 million of cost reimbursements, of which $4.3 million was from managing the operations of the retail companies. For the sameyear-to-date period, in 2016, other income was made up of $1.4decreased $4.0 million, of cost reimbursements, with the remainderwhich can be attributed primarily to expense recoverieslower cost reimbursements from borrowers and other recoveries from resolution of our loan investments.investment holding entities.
Interest Expense
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Digital Investment Management$2,250 $— $2,250 $2,250 $— $2,250 
Digital Operating29,839 18,589 11,250 90,243 36,161 54,082 
Other investment-level debt268 — 268 268 — 268 
Corporate-level debt7,538 11,410 (3,872)24,852 33,774 (8,922)
$39,895 $29,999 9,896 $117,613 $69,935 47,678 
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Investment-level financing:      
Healthcare $48,586
 $—
 $48,586
Industrial 8,803
 11,532
 (2,729)
Hospitality 35,351
 —
 35,351
Other Equity and Debt 46,333
 19,475
 26,858
Corporate-level debt 12,981
 11,189
 1,792
  $152,054
 $42,196
 109,858
Net increase inDigital Investment Management—This represents interest expense betweenfrom our securitized financing facility beginning in July 2021 as the $300 million term loan is attributed largely to the Digital IM segment.
Digital Operating—The increase of $11.3 million quarter-to-date and $54.1 million year-to-date is attributed to interest expense incurred on debt financing the zColo portfolio, acquired in December 2020, and an additional acquisition by DataBank in the third quarter of 2017 compared2021, interest expense from our securitized financing facility which is partially allocated to the sameDigital Operating segment, and for the year-to-date period, debt financing the Vantage SDC portfolio, acquired in 2016 resulted from the following:
$93.1 million ofJuly 2020. This increase was partially offset by lower interest expense on $6.5the DataBank portfolio following its March 2021 securitization transaction which meaningfully reduced its cost of debt. DataBank's weighted average interest rate was 6.1% per annum as of December 31, 2020 and 2.4% per annum as of March 2021 post-securitization.
Overall, at September 30, 2021, our data center portfolio was financed by an aggregate $3.82 billion of investment leveloutstanding debt assumed in the Merger, financing NRF assets in the healthcare, hospitality as well as other equity and debt segments;principal ($3.23 billion at December 31, 2020), bearing a combined weighted average interest rate of 2.91% per annum (3.69% per annum at December 31, 2020).
$2.7 million of lowerOther Investment-level Debt—This represents primarily interest expense from our securitized financing facility that is partially allocated to our digital credit and digital liquid investments on the balance sheet.
Corporate-level Debt—Interest expense was $3.9 million lower quarter-to-date and $8.9 million lower year-to-date. This can be attributed to a higher average outstanding balance in 2020 on our industrial portfolio as (i)corporate credit facility which was terminated in July 2021, and additionally, for the three months ended September 30, 2016 included approximately $1.0 millionyear-to-date period, a proportional write-off of accelerated deferred financing costs and (ii) lower average debt balancein June 2020 to reflect a previous reduction in the three months ended September 30, 2017 compared to the same period in 2016 as we paid off the remaining balance on our variable rate acquisition debt in 2017;
$17.7 millioncorporate credit facility amount. This decrease was partially offset by a net increase in interest expense on legacy Colony debt inour senior notes, with a higher interest rate on the other equity and debt segment from new investment level financing as well as debt assumed from acquisitions of CPI and THL Hotel Portfolio. These increases were partially offset by the paydown of debt, primarily from sales of our loan and real estate investments, particularly in our non-core portfolio of limited service hotels; and
$1.8 million net increase in interest expense on corporate level debt driven by (i) $3.4 million of interest expense on NRF exchangeable notes and junior subordinated debt assumedissued in the Merger, largely offset by (ii) $1.9 million decrease in interest expense on our corporate credit facility due to lower utilization of our credit line as we applied some of the net proceeds from sale of our manufactured housing portfolio for working capital purposes.
Investment, Servicing and Commission Expense
This includes on-going costs incurred by the Company for servicing and managing loan portfolios and foreclosed properties, fees paid to third parties for management of our real estate portfolios, and unconsummated deal costs. The

$13.3 million increase between the three months ended September 30, 2017 comparedJuly 2020 (5.75% per annum) relative to the same period in 2016 can be attributed largely to $9.5 million of expenses incurred in relation to assets and service arrangements acquired from NSAM and NRF, and $1.6 million in connection with special servicing and hotel management fees on the THL Hotel Portfolio.
Transaction Costs
The higher transaction costsconvertible notes that were substantially repurchased in the third quarter of 20162020 and fully repaid in January 2021 (3.875% per annum).
Investment Expense
Investment expense was due$2.8 million higher quarter-to-date and $10.8 million higher year-to-date. The increase was related primarily to $4.9 million relatedmanagement fees paid to Vantage for the Merger. Inday-to-day operations of Vantage SDC beginning the same periodend of July 2020, fees paid in 2017, the majority of transaction costs were incurred2021 for transitional services in connection with the foreclosurezColo portfolio, and reimbursable due diligence costs incurred in our investment management business.
Transaction-Related Costs
Transaction-related costs were generally in connection with unconsummated investments and corporate restructuring transactions.
67
Table of the THL Hotel Portfolio and the potential Combination transaction to create a new publicly traded commercial real estate credit REIT.Contents

Depreciation and Amortization
DepreciationIncrease in depreciation and amortization was significantly higher for the three months ended September 30, 2017 as a result of the real estate andexpense is primarily related intangible assets as well as the investment management intangible assets acquired from NRF and NSAM, respectively, which contributed $97.7 million in aggregate. Depreciation and amortization on Colonyto real estate and intangible assets increased $21.4 million, attributable largely to thefrom acquisition of the THL Hotel PortfolioVantage SDC in July 2020, including additional lease-up of expanded capacity and continued growth of our industrial portfolio, partially offset by decreases due to sales or classification of real estate as held for sale, mainlyexisting inventory in our non-core hotel2021, and European portfolios.
Provision for Loan Losses
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Non-PCI loans $3,965
 $36
 $3,929
PCI loans 1,151
 6,533
 (5,382)
Total provision for loan losses $5,116
 $6,569
 (1,453)
While provision for loan losseszColo in both periods reflected largely a decrease in expected cash flows on PCI loans, the three months ended September 30, 2017 also included a $1.8 million reversal of provision following higher recoveries upon the bulk sale of a portfolio of PCI loans, as well as provision on non-PCI loans, specifically $1.8 million on a development loan based on revised cash flow projections and $1.6 million on a loan in the healthcare segment due to a decline in collateral value.
For the three months ended September 30, 2017 and 2016, $2.5 million and $5.4 million of provision for loan losses, respectively, were attributed to noncontrolling interests in investment entities.December 2020.
Impairment Loss
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Healthcare $8,250
 $—
 $8,250
Industrial 44
 —
 44
Other Equity and Debt 6,718
 941
 5,777
Investment Management 9,061
 —
 9,061
  $24,073
 $941
 23,132
Healthcare—Impairment loss in 2020 reflects: (i) reduced cash flows from the original Vantage management contract, which was replaced by a new fee stream from third party capital that was raised in our acquisition of $7.6 million was recordedVantage SDC from its existing owners; and (ii) write down to recoverable value on three net lease properties in Illinois which were classified as held forthe corporate aircraft prior to its sale in September 2017. The remaining $0.6January 2021.
Compensation Expense
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Cash compensation and benefits$49,019 $31,403 $17,616 $152,325 $102,645 $49,680 
Equity-based compensation6,914 4,997 1,917 30,593 16,439 14,154 
Incentive and carried interest compensation31,736 912 30,824 39,969 912 39,057 
$87,669 $37,312 50,357 $222,887 $119,996 102,891 
Total compensation expense was $50.4 million higher quarter-to-date and $102.9 million higher year-to-date, driven primarily by:
•significant severance payments, including acceleration of impairment, net of expected insurance recoveries, was taken on four senior housing operating facilitiesequity-based compensation in Texas as a result of Hurricane Harvey.
Other Equity and Debt—Impairment in both periods pertained largely to properties that were sold or held for sale. The higher impairment in the three months ended September 30, 2017 can be attributed primarily to $3.2 million on three net lease warehouses in Ohio based on their contracted selling price, $1.2 million from the sale of our remaining two non-core limited service hotels, and a $0.8 million increase in impairment on our European properties. Additionally, twenty-five hotels in our THL Hotel Portfolio located in Texas, Florida and Georgia suffered varying degrees of physical damage from Hurricanes Harvey and Irma in the third quarter of 2017, resulting in estimated impairment loss of approximately $0.8 million, net of insurance recoveries.
Investment Management—The $9.1 million impairment represents a write-down of goodwill allocated to the Townsend operating segment based on the net asset value of the Townsend business compared to its contracted sale price. The sale is expected to close in the fourth quarter of 2017 or the first quarter of 2018.2021; and

•incentive and carried interest compensation accrued in 2021, representing a portion of incentive fees earned and unrealized carried interest from our managed accounts and sponsored investment vehicles that are shared with management and certain employees.
Impairment lossUnlike incentive fees and related compensation which have been earned, unrealized carried interest and corresponding compensation amounts are subject to adjustments each period, including reversals, until such time they are realized, based upon the cumulative performance of $4.7 million and $0.8 million in the three months ended September 30, 2017 and 2016, respectively, were attributed to noncontrolling interests in investment entities.
Compensation Expense
The following table providesunderlying investments of the components of compensation expense. In addition to a significantly larger workforce following the Merger, the three months ended September 30, 2017 also included Merger-related compensation expense.
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Cash compensation and benefits $43,969
 $26,098
 $17,871
Equity-based compensation 7,848
 3,484
 4,364
  51,817
 29,582
 22,235
Merger-related compensation expense 

 

 

Equity-based compensation for replacement awards to NSAM executives subject to one year vesting 

 30,336
 —
 30,336
Severance and other employee transition 2,869
 —
 2,869
  33,205
 —
 33,205
  $85,022
 $29,582
 55,440
respective vehicles that are carried at fair value.
Administrative ExpenseExpenses
In additionAdministrative expense increased $12.4 million quarter-to-date and $18.1 million year-to-date, attributable largely to operating a much larger organization following the Merger, the three months ended September 30, 2017 also included $4.9 million of administrative costs associated with our new zColo portfolio, growth in our Digital Operating business, placement fees incurred in fundraising for DCP II, higher professional fees, and costs incurred in connection with integratingour 2021 investor conference.
Settlement Loss
Settlement loss recognized in 2020 represents the operations of the combined entities, including but not limited to system integration, legal fees and other professional fees paid to third party advisors and consultants. Such costs are not expected to recur and do not represent the on-going costs of a fully integrated combined organization.
Gain on Sale of Real Estate
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Industrial $—
 $1,949
 $(1,949)
Other Equity and Debt 72,541
 9,202
 63,339
  $72,541
 $11,151
 61,390
Industrial—In the third quarter of 2017, there was no gain resulting from the sale of one industrial property in Atlanta, while the gain in the third quarter of 2016 arose largely from the sale of our industrial properties in Memphis.
Other Equity and Debt—The significantly higher gain in the third quarter of 2017 was driven by a $68.1 million gain from the sale of two net lease properties in Switzerland which we acquired in January 2015. In the same period last year, we recorded gains primarily from the sale of our non-core limited service hotels and a net lease property.
Gain on sale of $3.1 million and $4.4 million in the three months ended September 30, 2017 and 2016, respectively, were attributed to noncontrolling interests in investment entities.
Other Gain (Loss), Net
Net loss of $8.8 million in the third quarter of 2017 can be attributed primarily to the combined effect of the following:
$8.5 million unrealized loss on an undesignated out-of-money interest rate swap assumed through the Merger. The swap was intended to economically hedge future refinancing risk on certain NRF mortgage debt; and
$10.4 million loss due to OTTI and write off of basis, primarily on CMBS securities held by consolidated N-Star CDOs, as the underlying securitization tranches continue to wind up.
These losses were offset by:
$6.1 million gain due to a decrease ininitial fair value of the contingent consideration liability fromsettlement arrangement with Blackwells and the Internalization transactionreimbursement of legal costs incurred by Blackwells. Refer to additional discussion in 2015;Note 13 to the consolidated financial statements.
$2.0 million gain on remeasurementOther Gain (Loss)
The large year-to-date loss in 2021 can be attributed to a write-off of a foreign currency loan receivable in our healthcare segment; and

approximately $2.0 million gain resulting from the syndication of 90% of thean equity in a California office building in September 2017. The new equity partners were granted certain participation rightsinvestment in the business, resulting in a deconsolidationsecond quarter of the investment. The deconsolidation resulted in a gain, which represents the excess of proceeds from the syndication over the carrying value of our equity2021 that was sold.
In contrast, in the third quarter of 2016,determined to be unrecoverable. Additionally, we recorded a net gain of $4.6 million due to the decreaselosses from increase in fair value of the contingent considerationBlackwells settlement liability fromin all periods prior to its settlement in June 2021 based upon an increase in the Internalization. The estimatedDBRG stock price, which was more pronounced in 2021 (refer to Note 13 to the consolidated financial statements).
During 2021, however, there were also fair value ofincreases in our marketable equity securities, held primarily by our consolidated digital liquid securities funds. Unlike the contingent consideration from the Internalization is affectedyear-to-date period, these gains were not offset by various factors, including projected performance targets and probabilities of achieving those targets, and as the contingent consideration is payable in shares of the Company, our class A common stock price.
Earnings from Investments in Unconsolidated Ventures
  Three Months Ended September 30,  
(In thousands) 2017 2016 Change
Industrial $34
 $—
 $34
Other Equity and Debt 13,071
 12,805
 266
Investment Management 4,342
 3,879
 463
  $17,447
 $16,684
 763
Through the Merger, we acquired approximately $0.7 billion of investments in unconsolidated ventures, which include interests in a healthcare investment manager, real estate investment managers, various real estate joint ventures and limited partnership interests in third party sponsored private equity funds. These investments contributed $6.3 million in netother losses in the third quarter of 2017, driven by decreases2021.
68
Table of Contents

Equity Method Earnings (Losses)
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Digital Investment Management$59,196 $6,134 $53,062 $70,203 $6,295 $63,908 
Other6,173 17,237 (11,064)41,177 (309,788)350,965 
$65,369 $23,371 41,998 $111,380 $(303,493)414,873 
Digital Investment Management—These amounts represent earnings, predominantly unrealized carried interest income, from our general partner interests in expected future cash flowssponsored investment vehicles. Carried interest income is subject to adjustments each period, including reversals, based upon the cumulative performance of certainthe underlying investments in private funds accounted for under theof these vehicles that are measured at fair value, option.until such time the carried interest is realized.
Other—These amounts are driven primarily by our investment in BRSP. The legacy Colony investments contributed $23.7large equity method loss year-to-date 2020 can be attributed to $254.5 million of impairment charge on our equity investment in BRSP in June 2020 (excluding amounts associated with BRSP shares and units held by NRF Holdco that is presented as discontinued operations). Additionally, our share of BRSP's net losses was higher overall in 2020 as a result of the economic effects of COVID-19. We also recorded net losses from BRSP in 2021, attributable largely to investment write-downs and BRSP's restructuring costs, including the BRSP management contract termination fee that was paid to us. These net losses from BRSP, however, were reduced by a higher basis difference in 2021 year-to-date of $95.5 million compared to $38.1 million in 2020 year-to-date. The basis difference were allocated to investments that were resolved or written-down by BRSP during these periods and also, in proportion to the Company's ownership in BRSP that was disposed in August 2021 (Note 5to consolidated financial statements).
Additionally, 2021 included a gain from partial realization of another equity investment that had unrealized losses in 2020; and higher contribution of earnings, primarily from our limited partner interests in the three months ended September 30, 2017, a $7.1 million increase from the same period in 2016, resulting from new investments since the third quarter of 2016DCP I and additional preferred equity investments in July 2017.DCP II funds, which include unrealized fair value changes on their underlying investments.
Income Tax Benefit
A net incomeIncome tax benefit of $10.6decreased $2.3 million was recorded in the three months ended September 30, 2017quarter-to-date as 2020 included a deferred tax benefit at our DataBank subsidiary compared to a $3.4 million net income tax benefit in the same period in 2016. The higher income tax benefit can be attributed in part to a net loss in the Townsend investment management business as a result of an impairment charge takenexpense in the third quarter of 2017.2021, and additionally, a higher tax expense in 2021 from an increase in fee income. These income tax expense items in 2021, however, were partially offset by additional deferred tax benefit in relation to higher compensation expense in 2021.
The large income tax benefit year-to-date in 2021 arose primarily from a $66.8 million net deferred tax benefit at our DataBank subsidiary, driven by the write-off of deferred tax liabilities as DataBank completed its restructuring to qualify as a REIT in the second quarter and expects to elect REIT status for the 2021 taxable year. Additionally, higher deferred tax benefit was also recorded in relation to an increase in compensation expense, primarily significant severance costs incurred in the first quarter of 2021.
69
Table of Contents

Income (loss) from Discontinued Operations
Income from discontinued
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Revenues$218,456 $343,701 $(125,245)$695,186 $1,095,931 $(400,745)
Expenses(199,369)(566,732)367,363 (1,162,513)(3,816,986)2,654,473 
Other loss(26,765)(82,469)55,704 (100,330)(204,850)104,520 
Income tax expense(2,751)(3,081)330 (22,938)(34,259)11,321 
Loss from discontinued operations(10,429)(308,581)298,152 (590,595)(2,960,164)2,369,569 
Income (loss) from discontinued operations attributable to noncontrolling interests:
Investment entities(85,741)(120,299)34,558 (346,205)(581,204)234,999 
Operating Company7,177 (18,680)25,857 (23,354)(235,917)212,563 
Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.$68,135 $(169,602)237,737 $(221,036)$(2,143,043)1,922,007 
Discontinued operations represents net income generated from businesses that we acquired through the business combinations which were classified as held for sale at the time of acquisition. In the three months ended September 30, 2017, net income from discontinued operations of $1.5 million relates to hotels held for sale in our THL Hotel Portfolio acquired in July 2017.
Preferred Stock Redemption
In the three months ended September 30, 2017, $0.9 million was recorded to increase net income available to common stockholders, representing the excess in aggregate carrying value of the legacy NRF Series B and Series C preferred stock, for which redemption notices were delivered in September 2017, over their redemption price of $25.00 per share. This was because the Series C preferred stock carrying value included a premium that was recognized based on its trading price at the closing of the Merger.

Nine Months Ended September 30, 2017 and 2016
Property Operating Income and Property Operating Expenses
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Property operating income:      
Healthcare $451,099
 $—
 $451,099
Industrial 175,064
 142,693
 32,371
Hospitality 619,027
 —
 619,027
Other Equity and Debt 295,860
 136,777
 159,083
  $1,541,050
 $279,470
 1,261,580
Property operating expenses:      
Healthcare $206,363
 $—
 $206,363
Industrial 49,312
 41,636
 7,676
Hospitality 401,351
 —
 401,351
Other Equity and Debt 145,046
 47,833
 97,213
  $802,072
 $89,469
 712,603
Subsequent to the Merger, we earn resident fee income and rental income from our healthcare portfolio as well as hotel operating income from our hotel portfolio acquired from NRF, and incur corresponding operating expenses. We also acquired other properties through the Merger, mainly net lease, multifamily and multi-tenant offices, included in our other equity and debt segment. These acquired assets, in aggregate, generated property operating income of $1,110.6 million and incurred property operating expenses of $623.5 million for the nine months ended September 30, 2017.
Industrial—Increases in total property operating income and expenses in our industrial portfolio reflect continued growth of the portfolio through acquisitions and increase in base rents. As of September 30, 2017 and 2016, the industrial portfolio consisted of 388 and 336 buildings, respectively, with a net addition of 52 buildings between September 30, 2016 and September 30, 2017.
Comparing our industrial portfolio on a same store basis for the nine months ended September 30, 2017 and 2016, the increase in property operating income reflects an increase in average occupancy from 93.6% to 94.6%, and generally, higher rental rates on new and renewal leases as well as contractual rental rate increases within existing leases. Same store property operating expenses also increased during this period due to higher real estate taxes, bad debt expense and property management fees, partially offset by lower repair and maintenance costs.
  Nine Months Ended September 30,  
($ in thousands) 2017 2016 % change
Industrial: (1)
      
Same store property operating income $139,413
 $134,778
 3.4%
Same store property operating expenses 39,693
 38,838
 2.2%
__________
(1)
Our same store portfolio consisted of 306 buildings, which consisted of the same buildings that were owned during the nine months ended September 30, 2017 and 2016.
Other Equity and Debt—Excluding properties acquired through the Merger, property operating income and property operating expenses related to our remaining other equity and debt portfolio increased $118.6 million and $81.4 million, respectively, for the nine months ended September 30, 2017 compared to the same period in 2016. The increases were driven by $105.0 million of property operating income and $70.9 million of property operating expenses from the THL Hotel Portfolio which we acquired through a consensual foreclosure in July 2017.
Interest Income
The increase in interest income in 2017 can be attributed to interest earning assets acquired from NRF and NSAM, specifically $56.4 million and $20.4 million of interest income from CRE securities and loans receivable, respectively. Excluding interest earning assets from the Merger, remaining interest income from the Colony portfolio of loans receivable decreased $35.0 million between the nine months ended September 30, 2017 and 2016 due to loan repayments, pay-offs, sales as well as foreclosures, which more than offset income from new loans and additional draws on existing loans.

Fee Income
Fee income was earned from the following sources:
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Institutional funds $46,287
 $49,347
 $(3,060)
Retail Companies 67,674
 —
 67,674
Public company—NRE
 10,495
 —
 10,495
Broker dealer, Townsend funds and other clients 42,806
 —
 42,806
  $167,262
 $49,347
 117,915
For the period following the Merger through September 30, 2017, we earned $121.0 million of additional fee income,represent primarily management fees from the retail companies and NRE, as well as management fees, incentive income and advisory fees from Townsend private funds and clients.
Fee income from Colony private funds decreased $3.1 million in the year-to-date 2017 compared to the same period in 2016. While the private funds that we sponsor contributed a $5.8 million increase in fee income, predominantly from our distressed credit and industrial funds, this was more than offset by fee concessions and continued realization of investments by various legacy private funds that we manage.
Other Income
The majority of other income for the nine months ended September 30, 2017 consisted of $19.6 million of cost reimbursements, of which $15.0 million was from managing the operations of the retail companies, as well as approximately $6.4 million of expense recoveries from borrowers and other recoveries from loan resolutions. For the same period in 2016, other income was made up of $3.5 million of cost reimbursements, with the remainder attributed primarily to recoveries related to our loan investments.
Interest Expense
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Investment-level financing:      
Healthcare $137,522
 $—
 $137,522
Industrial 29,163
 30,906
 (1,743)
Hospitality 98,484
 —
 98,484
Other Equity and Debt 112,782
 62,103
 50,679
Corporate-level debt 40,641
 33,626
 7,015
  $418,592
 $126,635
 291,957
The significant net increase in interest expense between the nine months ended September 30, 2017 and 2016 was a result of the following:
$261.9 million of interest expense on $6.5 billion of investment level debt assumed in the Merger, financing NRF assets in the healthcare, hospitality as well as other equity and debt segments;
$1.7 million decrease in interest expensefollowing businesses: (1) Wellness Infrastructure; (2) opportunistic investments in our industrial segment due to a lower average debt balance in 2017 as we paid off the remaining balance on our variable rate acquisition debt in 2017;
$24.8 million net increase in interest expense on legacy Colony debt in the other equity and debt segment from additional investment level financing as well as debt assumed from acquisition of CPI and THL Hotel Portfolio. These increases were partially offset by decreases in interest expense due debt paydowns, primarily from sales of our loans and real estate investments, particularly in our non-core hotelOED portfolio; and
$7.0 million net increase in interest expense on corporate level debt driven by (i) $10.5 million of interest expense on NRF exchangeable notes and junior subordinated debt assumed in the Merger, partially offset by (iii) $3.6 million decrease in interest expense on our corporate(3) credit facility with lower utilization of our credit line as we applied some of the net proceeds from sale of our manufactured housing portfolio for working capital purposes.
Investment, Servicing and Commission Expense
This includes costs incurred by the Company for servicing and managing loan portfolios and foreclosed properties, fees paid to third parties for management of our real estate portfolios, and unconsummated deal costs. The $26.5 million

increase in costs between the nine months ended September 30, 2017 compared to the same period in 2016 can be attributed predominantly to expenses incurred in relation to assets and service arrangements acquired from NSAM and NRF.
Transaction Costs
For the nine months ended September 30, 2017, transaction costs of $85.3 million were incurred in connection with the Merger. These costs consisted primarily of professional fees for legal, financial advisory, accounting and consulting services, as well as fees incurred on a bridge loan facility commitment that was terminated on the Closing Date. Approximately $66.8 million of transaction costs represent fees paid to investment bankers that were contingent upon consummation of the Merger. Excluding Merger-related costs, other transaction costs were related predominantly to new acquisitions and the potential Combination transaction to create a new publicly traded commercial real estate credit REIT.
For the nine months ended September 30, 2016, we incurred $11.3 million of transaction costs related to the Merger, with remaining costs pertaining primarily to new investments.
Depreciation and Amortization
The significant increase in the nine months ended September 30, 2017 was driven by the real estate and related intangible assets as well as the investment management intangible assets acquired from NRFbusiness in Other IM; and NSAM, respectively, which contributed $293.7 million of depreciation and amortization in aggregate. Colony real estate and intangible assets recorded an $30.2 million increase in depreciation and amortization resulting largely from the acquisitions of CPI and THL Hotel Portfolio as well as continued growth in our industrial portfolio, partially offset by real estate sales or classification as held for sale, mainly in our non-core hotel and European portfolios.
Provision for Loan Losses
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Non-PCI loans $6,890
 $4,101
 $2,789
PCI loans 6,017
 13,311
 (7,294)
Total provision for loan losses $12,907
 $17,412
 (4,505)
Provision for loan losses in both periods reflected primarily a decrease in expected cash flows on PCI loans. In 2017, this was net of a $2.1 million reversal of provision following higher recoveries upon the bulk sale of a portfolio of PCI loans.
Significant drivers of provision for loan losses on non-PCI loans in 2017 included $1.8 million on a development loan based on revised cash flow projections, $1.6 million on a loan in the healthcare segment due to a decline in collateral value and $1.5 million on certain securitized loans which were subsequently resolved. In 2016, provision for loan losses on non-PCI loans reflected primarily a decrease in underlying collateral value and losses on a TDR loan.
For the nine months ended September 30, 2017 and 2016, provision for loan losses of $6.3 million and $10.6 million, respectively, were attributed to noncontrolling interests in investment entities.
Impairment Loss
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Healthcare $8,250
 $—
 $8,250
Industrial 44
 137
 (93)
Other Equity and Debt 27,998
 5,004
 22,994
Investment Management 9,061
 320
 8,741
  $45,353
 $5,461
 39,892
Healthcare—Impairment of $7.6 million was recorded on three net lease properties in Illinois which were classified as held for sale in September 2017. The remaining $0.6 million of impairment, net of expected insurance recoveries, was taken on four senior housing operating facilities in Texas as a result of Hurricane Harvey.
Industrial—Impairment loss reflects selling costs on properties sold.

Other Equity and Debt—The higher impairment in 2017 can be attributed to a $13.9 million increase in impairment on our European real estate due to declining performance or decreases in value of properties to be sold, $5.1 million from the sale of our remaining six non-core limited service hotels, and $3.2 million on three net lease warehouses in Ohio based on their contracted selling price. Additionally, twenty-five hotels in our THL Hotel Portfolio located in Texas, Florida and Georgia suffered varying degrees of physical damage from Hurricanes Harvey and Irma in the third quarter of 2017, resulting in estimated impairment loss of approximately $0.8 million, net of insurance recoveries.
Investment Management—The $9.1 million impairment in 2017 represents a write-down of goodwill allocated to the Townsend operating segment based on the net asset value of the Townsend business compared to its contracted sale price. The sale is expected to close in the fourth quarter of 2017 or the first quarter of 2018. In 2016, our investment management contract intangible was written down by $0.3 million due to a change in fee basis on a liquidating fund.
Impairment loss of $20.2 million and $4.0 million in the nine months ended September 30, 2017 and 2016, respectively, were attributed to noncontrolling interests in investment entities.
Compensation Expense
The following table provides the components of compensation expense. In addition to a significantly larger workforce following the Merger, the nine months ended September 30, 2017 also included Merger-related compensation expense:
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Cash compensation and benefits $126,623
 $70,363
 $56,260
Equity-based compensation 20,783
 10,326
 10,457
  147,406
 80,689
 66,717
Merger-related compensation expense      
Equity-based compensation for replacement awards to NSAM executives subject to one year vesting 

 86,390
 —
 86,390
Severance and other employee transition 23,803
 —
 23,803
  110,193
 —
 110,193
  $257,599
 $80,689
 176,910
Administrative Expense
In addition to operating a much larger organization following the Merger, in the nine months ended September 30, 2017, we also incurred $11.1 million of administrative costs in connection with integrating the operations of the combined entities, including but not limited to system integration, office lease rationalization, legal costs as well as other professional fees paid to third party advisors and consultants. Such costs are not expected to recur and do not represent the on-going costs of a fully integrated combined organization.
Gain on Sale of Real Estate
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Industrial $8,695
 $2,749
 $5,946
Other Equity and Debt 88,006
 65,365
 22,641
  $96,701
 $68,114
 28,587
Industrial—The higher gain in the nine months ended September 30, 2017 was driven by the sale of eight industrial properties in the Chicago market in May 2017.
Other Equity and Debt—We recorded significant gains from a single sale transaction in each of the nine months ended September 30, 2017 and 2016, comprised of a $68.1 million gain from the sale of two net lease properties in Switzerland in July 2017 and a $49.3 million gain from the sale of a foreclosed property in Germany in February 2016, respectively.
Gain on sale of $14.3 million and $44.7 million in the nine months ended September 30, 2017 and 2016, respectively, were attributed to noncontrolling interests in investment entities.

Other Gain (Loss), Net
During the nine months ended September 30, 2017, a net loss of $7.3 million was recorded, resulting primarily from the net impact of the following:
$14.3 million unrealized loss on an undesignated out-of-money interest rate swap assumed through the Merger; and
$12.5 million loss due to OTTI and write off of basis, primarily on CMBS securities held by consolidated N-Star CDOs, as the underlying securitization tranches continue to wind up.
These losses were offset by:
$14.3 million gain due to a decrease in fair value of the contingent consideration liability from the Internalization transaction in 2015;
$6.2 million gain on remeasurement of a foreign currency loan receivable in our healthcare segment; and
approximately $2.0 million gain resulting from the syndication of 90% of the equity in a California office building in September 2017. The new equity partners were granted certain participation rights in the business, resulting in a deconsolidation of the investment. The deconsolidation resulted in a gain, which represents the excess of proceeds from the syndication over the carrying value of our equity that was sold.
In the same period in 2016, the gain of $18.3 million was due to a $13.6 million decrease in fair value of the contingent consideration liability from the Internalization, with other unrealized gains from derivative fair value changes.
Earnings from Investments in Unconsolidated Ventures
  Nine Months Ended September 30,  
(In thousands) 2017 2016 Change
Industrial $62
 $—
 $62
Other Equity and Debt 241,462
 69,189
 172,273
Investment Management 12,309
 3,037
 9,272
  $253,833
 $72,226
 181,607
The significant increase in earnings from investments in unconsolidated ventures in the nine months ended September 30, 2017 was driven by a $191.2 million gain from the sale of all of our 14% interest in SFR and $22.5 million of net earnings from investments acquired through the Merger. This was partially offset by a $45.0 million gain from the redemption of our preferred equity in a joint venture investment in the nine months ended September 30, 2016.
Income Tax Expense
While we incurred additional income tax expense on the healthcare, industrial and hospitality segments, there was a larger income tax benefit in the investment management segment post Merger, which resulted in an overall higher net income tax benefit of $7.0 million in the nine months ended September 30, 2017 compared to a $0.9 million income tax benefit in the same period in 2016.
Income from Discontinued Operations
Income from discontinued operations represents net income generated from businesses that we acquired through business combinations which were classified as held for sale at the time of acquisition. In the nine months ended September 30, 2017, net income from discontinued operations included $12.6 million from the operations of our manufactured housing portfolio during the two month period(4) prior to its disposition in March 20172021, the Company's hotel business, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.
Results from discontinued operations reflect the sale of our hotel business in March 2021 and $1.5 million from the operationsmonetization of hotels held for salevarious properties in our Wellness Infrastructure segment in the THL Hotel Portfolio acquiredfirst six months of 2021.
Losses in July 2017.the year-to-date period are driven by significant impairment expense and decreases in asset fair values, particularly in the second quarter of 2020. Our determination to accelerate our digital transformation in the second quarter of 2020 necessitated an assumption of accelerated monetization of all of our non-digital businesses in estimating recoverable values and in combination with the negative economic effects of COVID-19, resulted in significant write-down in asset values. In the year-to-date period in 2021, asset values were further written-down, but to a much lesser extent than in 2020, based upon recoverable values, in particular, the respective sales price for our Wellness Infrastructure, and OED and Other IM business.
The third quarter of 2021, however, benefited from significantly less depreciation and amortization expense. Additionally, impairment of our investment assets were largely offset by various gains recognized during the period, including a gain on extinguishment of debt on our hotel portfolio that was sold in September 2021. Such gains were attributed predominantly to DBRG while impairment loss was largely attributable to noncontrolling interests in investment entities, resulting in a net income attributed to DBRG in the third quarter of 2021.
Further discussion on the monetization of our discontinued businesses is included above under "—Business."
Preferred Stock Redemption
A $4.5 million charge againstIn connection with the redemption of Series G preferred stock in August 2021, net income availableattributable to common stockholders was recorded in the nine months ended September 30, 2017,reduced by $2.9 million, representing the excess of the redemption price of $25.00 per share redemption price over the carrying value of our Series A and Fthe preferred stock which we redeemed in June 2017 and Series B and C preferred stock for which redemption notices were delivered in September 2017 and settled in October 2017.is net of issuance cost.

Segments
The following discussion summarizes key information on each of our five segments.
Net operating income ("NOI") and earnings before interest, income tax, depreciation and amortization ("EBITDA") for our core real estate segments were determined as follows. NOI and EBITDA are discussed further and reconciled to GAAP in "—Non-GAAP Measures."
  Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
(In thousands) Healthcare Industrial Hospitality Industrial
Total revenues $157,732
 $63,410
 $221,987
 $49,494
Straight-line rent revenue and amortization of above- and below-market lease intangibles

 (6,513) (2,011) (3) (608)
Interest income —
 (165) —
 —
Property operating expenses (1)
 (73,217) (16,620) (143,042) (13,921)
Compensation expense (1)
 —
 (336) —
 (238)
NOI or EBITDA $78,002
 $44,278
 $78,942
 $34,727
  Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(In thousands) Healthcare Industrial Hospitality Industrial
Total revenues $455,902
 $176,577
 $619,222
 $143,956
Straight-line rent revenue and amortization of above- and below-market lease intangibles

 (21,897) (4,824) (30) (2,410)
Interest income —
 (165) —
 —
Property operating expenses (1)
 (206,363) (49,312) (401,351) (41,636)
Transaction, investment and servicing costs —
 (101) —
 (14)
Compensation expense (1)
 —
 (1,229) —
 (1,264)
NOI or EBITDA $227,642
 $120,946
 $217,841
 $98,632
_______
(1)
For healthcare and hospitality, fees paid to third parties for property management are included in property operating expenses. For industrial, compensation costs of employees engaged in property management and operations are included in compensation expense.
Healthcare
Our healthcare segment is composed of a diverse portfolio of medical office buildings, senior housing, skilled nursing and other healthcare properties. Over half of our healthcare properties are medical office buildings and properties structured under net leases to healthcare operators for which we earn rental income. Substantially all of our net leases include annual escalating rent provisions. We also earn resident fee income from senior housing operating facilities that operate through management agreements with independent third-party operators, predominantly through structures permitted by RIDEA, which allows us, through a TRS, to have direct exposure to resident fee income and incur customary related operating expenses.
In connection with our on-going sales initiative, subsequent to the Merger, we closed on the sale of an 19% noncontrolling interest in our healthcare real estate portfolio through a newly formed joint venture for $350 million (including $20 million of certain pre-funded capital items). Our healthcare joint venture in turn owns approximately 88% of our healthcare portfolio, with the remaining 12% owned by existing minority interest holders. We act as the manager of our healthcare joint venture and are responsible for the day-to-day business and affairs of our healthcare portfolio.
At September 30, 2017, our interest in our healthcare segment was approximately 71%.
Our healthcare portfolio is located across 33 states domestically and 10% of our portfolio (based on property count) is in the United Kingdom.

The following table presents selected operating metrics of our healthcare segment:
Type 
Number of Buildings
at September 30, 2017
 
Capacity
at September 30, 2017
 
Average Occupancy(1)
 Average Remaining Lease Term (Years) 
NOI for Three Months Ended September 30, 2017
(In thousands)
 
NOI for Nine Months Ended September 30, 2017
(In thousands)
Medical office buildings 109
 3.9 million
square feet 83.5% 4.9
 $13,843
 $40,225
Senior housing—operating
 109
 6,436
units 87.8%  N/A
 18,704
 54,436
Net lease—senior housing

 82
 4,065
units 82.3% 11.1
 14,638
 41,506
Net lease—skilled nursing facilities 103
 12,420
beds 82.1% 7.2
 25,513
 75,801
Net lease—hospitals 14
 872
beds 61.5% 11.7
 5,304
 15,674
Total 417
    82.9% 9.0
 $78,002
 $227,642
__________
(1)
Occupancy represents property operator's patient occupancy for all types except medical office buildings. Average occupancy is based on the number of units, beds or square footage by type of facility. Occupancy percentage is as of the last day of the quarter presented for medical office buildings, average of the quarter presented for senior housing—operating, and average of the prior quarter for net lease properties.
Revenue mix of our healthcare portfolio weighted by NOI was as follows. This data is presented for the trailing twelve months ended June 30, 2017 as our operators report on a quarter lag and excludes two operating partners who do not track or report payor source data.
Payor SourcesRevenue Mix %
Private Pay56%
Medicaid33%
Medicare11%
Total100%
Subsequent to the Merger, we sold five medical office buildings totaling 0.2 million square feet and four skilled nursing facilities totaling 374 beds for aggregate net proceeds of $2.8 million. At September 30, 2017, we had one portfolio, one medical office building and four skilled nursing facilities held for sale, with an aggregate real estate carrying value of $197.5 million and corresponding debt carrying value of $143.4 million. These activities reflect our continued monetization initiatives on non core assets.
As a result of Hurricanes Harvey and Irma in the third quarter of 2017, a small number of medical office buildings and net lease properties in Texas and Florida suffered some physical damage. This includes the closure of one hospital in Texas, which is expected to re-open in December 2017. Our senior housing operating facilities, however, experienced only minor damage. As of September 30, 2017, we have recognized $0.6 million of impairment loss for damage on our properties, after taking into consideration approximately $7.0 million of anticipated insurance recoveries for property damage.
Industrial
Our industrial segment is composed primarily of light industrial assets. Our strategy is to pursue accretive asset acquisitions, capturing the benefits of scale as one of the few institutional investors primarily focused on the fragmented light industrial sector.
Light industrial buildings are generally either multi-tenant buildings of up to 500,000 square feet or single tenant buildings of up to 250,000 square feet with an office build-out of less than 20%. They are typically located in supply-constrained locations and are designed to meet the local and regional distribution needs of businesses of every size, from large international to local and regional firms, by providing smaller industrial distribution spaces located closer to a company's customer base.
Our investment in the industrial portfolio is made alongside third party limited partners through a joint venture, composed of two sponsored and managed partnerships, including an open-end industrial fund. We also have a wholly-owned industrial operating platform which provides vertical integration from acquisition and development to asset management and property management of the industrial assets.
At September 30, 2017, we owned 41% of our industrial portfolio based on net asset value through our capital contributions of $750.0 million. Our ownership interest decreased from 49% at December 31, 2016 as we continue to expand our industrial portfolio through third party capital.
In the nine months ended September 30, 2017, we called an additional $457.3 million of third party capital and contributed $131.5 million of additional capital from our balance sheet. In May 2017, we fully paid off our variable rate acquisition debt, which had an outstanding principal balance of $413.0 million at December 31, 2016, primarily through proceeds from new capital contributions and refinancing with new fixed rate debt.
Our portfolio is well-diversified with over 44 million square feet and over 1,000 tenants across 17 major U.S. markets, with significant concentrations (by total square feet) in Atlanta (18%) and Dallas (17%).
The following table presents selected operating metrics of our industrial portfolio:
  Number of Buildings 
Rentable Square Feet
(in thousands)
 Leased % Average Remaining Lease Term (Years) 
Annualized Gross Rent (1)
(in thousands)
September 30, 2017 388
 44,146
 95% 3.6
 $194,885
December 31, 2016 346
 37,613
 96% 3.7
 161,102
_________
(1)
Represents annualized fixed base rental amount using rental revenue computed on a straight-line basis in accordance with GAAP and excludes the impact of amortization of above- and below-market lease values.
At September 30, 2017, 75% of our tenants (based on leased square feet) were international and national companies, with the top ten tenants making up only 9% of our portfolio based on annualized gross rent.
2017 Activity
Total portfolio leased percentage declined marginally from 96% at December 31, 2016 to 95% at September 30, 2017. In the nine months ended September 30, 2017, we added 6.5 million of net rentable square feet, taking into account both acquisitions and dispositions during the period.
Leasing activity continued at a steady pace with 80 new leases totaling 2.1 million square feet and 74 lease renewals totaling 3.3 million square feet. At September 30, 2017, no more than 18% of existing leases were scheduled to expire in any single year over the next ten years.
Acquisitions and dispositions during the nine months ended September 30, 2017 are summarized below. We continually recycle capital into newer assets to improve the overall quality of our portfolio.
  Number of Buildings 
Rentable Square Feet
(in thousands)
 Weighted Average Occupancy % At Acquisition 
Purchase Price (1)
(in thousands)
 
Gross Sales Proceeds
(in thousands)
 Realized Gain
(in thousands)
Acquisitions 52
 7,971
 90% $603,591
 NA
 NA
Dispositions 10
 1,438
 NA
 NA
 $41,021
 $8,695
_________
(1)
Purchase price includes transaction costs for asset acquisitions.
At September 30, 2017, we had a purchase commitment of $8.5 million on one property in Las Vegas totaling 103,000 square feet that was 100% leased. The acquisition closed in November 2017. Also, at September 30, 2017, 12 buildings in Atlanta and one building in Dallas with aggregate carrying value of $62.8 million were held for sale.
None of our light industrial properties suffered structural damage as a result of Hurricanes Harvey and Irma in the third quarter of 2017. Certain properties in Orlando experienced minor damage. All of these properties remain fully operational.
Net Operating Income
NOI generated by our industrial portfolio was as follows:
  Three Months Ended September 30, Change Nine Months Ended September 30, Change
(In thousands) 2017 2016 $ % 2017 2016 $ %
NOI—Industrial $44,278
 $34,727
 $9,551
 27.5% $120,946
 98,632
 $22,314
 22.6%
The increase in NOI in both the quarter to-date and year to-date periods reflect primarily the continued growth of our portfolio, with a 7.7 million net increase in rentable square feet between September 30, 2016 and September 30, 2017, taking into account both acquisitions and dispositions during this period. Additionally, rental rates were higher across new

and renewal leases, including contractual rental rate increases within existing leases, which in aggregate, offset the higher real estate taxes incurred. Occupancy rate was largely stable at 95% across these periods.
Hospitality
Our hotel portfolio consists primarily of extended stay hotels and premium branded select service hotels. Select service hotels generally generate higher operating margins and have less volatile cash flow streams relative to full service hotels.
We seek to achieve value optimization through capital improvements, asset management and as appropriate, opportunistic asset sales.
At September 30, 2017, we owned approximately 94% of our hospitality segment.
Our hotel portfolio is geographically diverse, located across 26 states, with concentrations (based on EBITDA) in California (17%), Texas (9%) and New Jersey (9%).
The following table presents selected operating metrics of our hotel portfolio:
  At September 30, 2017 Three Months Ended September 30, 2017 Nine Months Ended
September 30, 2017
Type Number of Hotel Properties Number of Rooms Average Occupancy 
ADR (1)
 
RevPAR (2)
 
EBITDA
(In thousands)
 
EBITDA
(In thousands)
Select service 97
 13,193
 74.5% $123
 $92
 $40,944
 $117,386
Extended stay 66
 7,936
 84.4% 138
 117
 35,337
 91,078
Full service 4
 962
 74.2% 153
 114
 2,661
 9,377
Total 167
 22,091
 78.1% 130
 102
 $78,942
 $217,841
__________
(1)
Average daily rate (“ADR”) is calculated by dividing room revenue by total rooms sold.
(2)
Revenue per available room (“RevPAR”) is calculated by dividing room revenue by room nights available for the period.
A majority of our portfolio is affiliated with top hotel brands. Composition of our hotel portfolio by brand at September 30, 2017 was as follows:
Brands% by Rooms
Marriott79%
Hilton16%
Hyatt4%
Intercontinental1%
Total100%
In the second quarter of 2017, we refinanced debt with outstanding principal of $1.6 billion in our hotel portfolio at a moderately reduced interest rate and extended their fully extended maturity dates from 2019 to 2022.
There was only minor damage and business interruption to a small number of our hotels in the hospitality segment caused by Hurricanes Harvey and Irma in the third quarter of 2017. Business interruption losses were fully offset by incremental revenue from hurricane-related demand.
Other Equity and Debt
Our interests in other equity and debt assets are held as direct interests as well as through unconsolidated ventures. Over time, we intend to recycle capital from our other equity and debt investments and shift our balance sheet exposure to our core real estate segments.

Significant investments in our other equity and debt portfolio at September 30, 2017 were as follows:
Type 
Carrying Value
(In thousands)
Other real estate equity $2,860,703
Investments in unconsolidated ventures—third party private equity funds (1)
 287,886
Investments in unconsolidated ventures—other (2)
 1,088,913
Loans receivable 3,383,139
Securities 408,663
__________
(1)
Carrying value reflects fair value of our limited partnership interests in third party sponsored private equity funds as we elected fair value option accounting.
(2)
Represents various equity method and cost method investments. Significant investments include acquisition, development and construction loans ($330 million) and preferred equity investments ($433 million).
Significant activities during the nine months ended September 30, 2017 were as follows:
Acquired a portfolio of distressed CRE loans in Ireland for $578 million, at approximately 60% discount to par, utilizing approximately 64% debt financing.
Acquired a controlling interest in CPI, a real estate investment group in Europe, through a restructuring of our loan receivable, resulting in the assumption of $566 million of real estate with underlying debt of $278 million.
Sold all of our interest in SFR for net proceeds of $501 million and a gain of $191 million.
Acquired an additional 4.7 million shares of NRE common stock, increasing our ownership interest in NRE to approximately 9%, valued at $66 million based on the closing price of NRE on November 7, 2017.
Acquired a Class A office building in Los Angeles in June 2017 for $456 million, including transaction costs. In September 2017, we syndicated 90% of the equity to third party investors and deconsolidated the property holding entity, with our remaining interest reflected as an equity method investment.
Acquired the THL Hotel Portfolio of 148 limited service hotels across the Southwest and Midwest U.S. in July 2017 through a consensual foreclosure of our loan receivable, resulting in the assumption of $1,260 million of real estate with underlying debt of $908 million. As a result of Hurricanes Harvey and Irma in the third quarter of 2017, 25 hotels in the THL Hotel Portfolio suffered varying degrees of damage, with certain hotels experiencing business interruption. One hotel was forced to close and is expected to re-open in January 2018. As of September 30, 2017, we have recognized $0.8 million of impairment loss for property damage, after taking into consideration $1.2 million of anticipated insurance recoveries for property damage. We are still assessing the estimated business interruption losses affecting certain of our hotels.
Sold two net lease properties in Switzerland that were acquired in January 2015 for a gain of $68 million.
At September 30, 2017, we had $713 million of real estate held for sale, financed with $364 million of debt.
Investment Management
We manage capital on behalf of third party institutional and retail investors through private funds, traded and non-traded REITs and investment companies, which provide a stable stream of management fee income. We also have an embedded broker-dealer platform which raises capital in the retail market.
Our investment management platform allows us to raise private third party capital in partnership with our own balance sheet to further scale our core real estate segments and also allows us to pursue a balance sheet light tactical strategy.
For the nine months ended September 30, 2017, we closed on approximately $1.7 billion of third party capital commitments, including our pro rata share from equity method investments in third party asset managers.
Our total third party assets under management ("AUM") were as follows:
(In billions) September 30, 2017 December 31, 2016
Third party AUM (1)
 $41.7 $10.7
__________

(1)
All references to AUM herein refer to third party investments that we manage, excluding our own balance sheet investments. AUM refers to the assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. AUM is generally based on reported gross undepreciated carrying value of managed investments as reported by each underlying vehicle at September 30, 2017, except that AUM of the retail companies and NRE are presented as of November 3, 2017. AUM further includes a) uncalled capital commitments and b) for corporate investments in affiliates with asset and investment management functions, the Company’s pro rata share of assets of each affiliate as presented and calculated by the affiliate. The Company’s calculation of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.
Prior to the Merger, the Company's AUM was determined based on the gross fair value of managed investments. The AUM at December 31, 2016 is presented above in accordance with the current definition of AUM based on gross undepreciated carrying value of managed investments.     
The acquisition of NSAM's investment management business, including Townsend and NSAM's investments in third party asset managers, contributed $31.5 billion of our third party AUM at September 30, 2017. Colony's third party AUM of $10.2 billion at September 30, 2017 decreased $0.4 billion from December 31, 2016 due to continued realization of investments by liquidating funds, including the sale of shares in SFR held by our managed funds, partially offset by the July 2017 acquisition of the THL Hotel Portfolio which is co-invested with our managed funds, as well as the acquisition and subsequent syndication of a California office building investment to third party investors in September 2017.
Our third party AUM at September 30, 2017 by type is summarized below:
Type Products Description 
AUM
(in billions)
Institutional Funds Credit funds, opportunistic funds, value-add funds, Colony industrial open end fund, other co-investment vehicles and special accounts Earns base and asset management fees, potential for incentives on sponsored funds $10.6
Retail Companies NorthStar Income I, NorthStar Income II Public non-traded REITs and investment companies 7.0
 NorthStar Healthcare Broker-dealer subsidiary acts as dealer-manager for non-traded REIT product offerings or wholesale marketing agent for investment company product offerings  
 
NorthStar/RXR NY Metro (1)
 Earns base management fees from all retail companies, acquisition and disposition fees from non-traded REITs (except for NorthStar/RXR NY Metro), and potential for performance fees (except for NorthStar/Townsend)  
 NorthStar Capital Fund   
 
NorthStar/Townsend (2)

   
Public Companies NorthStar Realty Europe Corp. NYSE-listed European equity REIT 2.1
  Earns base management fees, potential for incentives  
Townsend (3)
 Commingled funds, segregated mandates, advisory services 84% interest in Townsend Group 14.8
  Manage fund-of-funds and custom portfolios primarily invested in direct real estate funds  
  Source co-investments and joint ventures alongside GPs  
  Earns base management fees, performance fees, advisory fees  
Pro Rata Corporate Investments Joint venture investments Earns share of earnings from unconsolidated ventures 7.2
  Includes investments in RXR Realty (27% interest), a real estate owner, developer and asset manager with AUM over $12 billion; and AHI (43% interest), a healthcare asset manager and sponsor of non-traded vehicles with AUM of $2.9 billion  
      $41.7
__________
(1)
Fee income is shared between the Company and its co-advisor, RXR Realty.
(2)
NorthStar/Townsend Institutional Real Estate Fund Inc. (“NorthStar/Townsend”) submitted a registration statement on Form N-2 to the SEC in May 2017, which as of November 7, 2017, is not yet effective. Townsend is the advisor for NorthStar/Townsend and an affiliate of Colony NorthStar will act as administrator and sub-advisor for certain investments.
(3)
The Townsend investment management business is held for sale as of September 30, 2017.
Sale of Townsend Business
In September 2017, we entered into a definitive agreement to sell the Townsend business for $475 million, subject to certain purchase price adjustments. Net proceeds for our 84% interest after transaction and other expenses is estimated to be approximately $379 million. The sale is expected to close in the fourth quarter of 2017 or first quarter of 2018.
NRE Management Agreement Amendment
On November 9, 2017, the Company agreed to amend and restate its management agreement with NRE effective January 1, 2018. Key terms of the amendment include, among other terms: 1) the restructuring of the base management fee, which will change from a fixed base fee to a variable fee based on the European Public Real Estate Association Net

Asset Value ("EPRA NAV" as defined in the agreement); 2) modification of the incentive fee, which will change from being based on Cash Available for Distribution ("CAD" as defined in the agreement) per share to 20% over the excess of the total stockholder return (defined as dividends and stock price appreciation, and subject to a high water mark established when a prior incentive is realized) over a cumulative 10% annual hurdle rate; and 3) reduction of term from an initial twenty year term to a five year term. Under the terms of the amended and restated management agreement, beginning with NRE's 2018 annual stockholders' meeting, the Company will have the right to nominate one director (who is expected to be one of NRE's current directors employed by the Company) to NRE's Board of Directors. In addition, NRE provided the Company with an ownership waiver under NRE’s charter, which allows the Company to purchase up to 45% of NRE’s common stock. In connection with the waiver, the Company agreed that for all matters submitted to a vote of NRE’s stockholders, to the extent the Company owns more than 25% of NRE’s common stock, the Company will vote the excess shares in the same proportion that the remaining NRE shares not owned by the Company are voted. The amendments to NRE’s management agreement and the ownership waiver were approved by a strategic review committee formed earlier this year by NRE's Board of Directors.
Non-GAAP Supplemental Financial Measures
The Company reportsWe report Company-wide funds from operations ("FFO") as an overall non-GAAP supplemental financial measure. The Company also reports NOIand for the healthcareDigital Operating segment, earnings before interest, tax, depreciation and industrial segments and EBITDAamortization for the hospitality segment,real estate ("EBITDAre"), both of which are supplemental non-GAAP financial measures widely used in the equity REIT industry. FFO, NOI and EBITDAThese non-GAAP measures should not be considered alternatives to GAAP net income (loss) as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. Our calculation of FFO NOI and EBITDAre may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.
Funds from Operations
We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains(i) real estate-related depreciation and losses from salesamortization; (ii) impairment of depreciable real estate and impairment write-downs associated withof investments in unconsolidated ventures directly attributable to decrease in value of depreciable real estate plusheld by the venture; (iii) gain
70
Table of Contents

from sale of depreciable real estate-related depreciationestate; (iv) gain or loss from a change in control in connection with interests in depreciable real estate or in-substance real estate; and amortization, and after similar(v) adjustments forto reflect the Company's share of FFO from investments in unconsolidated partnerships and joint ventures. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity investments, in unconsolidated joint ventures as well as investments inand debt and other equity securities, as applicable.
We believe that FFO is a meaningful supplemental measure of the operating performance of our business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values fluctuate with market conditions, management considers FFO an appropriate supplemental performance measure by excluding historical cost depreciation, as well as gains or losses related to sales of previously depreciated real estate.estate, and impairment of previously depreciated real estate which is an early recognition of loss on sale.
The following table presents a reconciliation of net income (loss) attributable to common stockholders to FFO attributable to common interests in Operating CompanyOP and common stockholders.stockholders, both of which include results from discontinued operations. Amounts in the table include our share of activitythe relevant activities from equity method investments, where applicable.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Net income (loss) attributable to common stockholders$41,036 $(205,784)$(365,030)$(2,610,208)
Adjustments for FFO attributable to common interests in OP and common stockholders:
Net income (loss) attributable to noncontrolling common interests in Operating Company4,311 (22,651)(38,565)(287,308)
Real estate depreciation and amortization ($6,825, $87,263, $99,794 and $284,472 related to discontinued operations)126,494 162,705 461,714 424,950 
(Reversal of) Impairment of real estate—discontinued operations(8,210)142,767 340,770 1,925,297 
Gain on sale of real estate—discontinued operations
(514)(12,332)(41,585)(15,346)
Adjustments attributable to noncontrolling interests in investment entities(1)
(95,512)(146,905)(446,029)(558,835)
FFO attributable to common interests in OP and common stockholders ($75,275, ($52,435), $2,336 and ($635,777) related to discontinued operations)$67,605 $(82,200)$(88,725)$(1,121,450)
__________
(1)     The components of adjustments attributable to noncontrolling interests in investment entities for FFO are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
FFO adjustments attributable to noncontrolling interests in investment entities:
Real estate depreciation and amortization ($4,161, $19,198, $29,401 and $70,872 related to discontinued operations)$101,535 $84,252 $323,177 $178,466 
(Reversal of) Impairment of real estate—discontinued operations
(5,999)70,734 123,590 390,708 
Gain on sale of real estate—discontinued operations
(24)(8,081)(738)(10,339)
$95,512 $146,905 $446,029 $558,835 
EBITDAre
We calculate EBITDAre for our Digital Operating segment in accordance with standards established by NAREIT, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding (i) interest expense; (ii) income tax benefit or expense; (iii) depreciation and amortization; (iv) impairment of depreciable real estate and impairment of investments in unconsolidated ventures.
  Three Months Ended September 30,
(In thousands) 2017 2016
Net income attributable to common stockholders $1,650
 $22,878
Adjustments for FFO attributable to common interests in Operating Company and common stockholders:    
Net income attributable to noncontrolling common interests in Operating Company 97
 4,189
Real estate depreciation and amortization 146,026
 46,239
Impairment of real estate 19,610
 991
Gain on sales of real estate (72,541) (14,970)
Less: Adjustments attributable to noncontrolling interests in investment entities (1)
 (46,160) (13,049)
FFO attributable to common interests in Operating Company and common stockholders $48,682
 $46,278
_________
(1)
For the three months ended September 30, 2017, adjustments attributable to noncontrolling interests in investment entities include $44.0 million of real estate depreciation and amortization, $4.9 million of impairment of real estate, offset by $2.7 million of gain on sales of real estate. For the three months ended September 30, 2016, adjustments attributable to noncontrolling interests in investment entities include $16.0 million of real estate depreciation and amortization, $0.8 million of impairment of real estate, offset by $4.4 million of gain on sales of real estate. The adjustments attributable to noncontrolling interests also reflect the correction of a $0.7 million over-allocation of loss to noncontrolling interests in the three

months ended September 30, 2016 that was recorded in the fourth quarter of 2016. The correction was not material to net incomeventures directly attributable to common stockholders or FFO attributable to common interestsdecrease in the Operating Company for the period presented.
NOI and EBITDA
NOI for healthcare and industrial segments represents total property and related income less property operating expenses, adjusted for the effectsvalue of (i) straight-line rental income adjustments; (ii) amortization of acquired above- and below-market lease adjustments to rental income; and (iii) other items such as adjustments for our share of NOI of unconsolidated ventures.
EBITDA for the hospitality segment represents net income from continuing operations of that segment, excluding interest expense, income tax expense or benefit, and depreciation and amortization.
We believe that NOI and EBITDA are useful measures of operating performance of our respectivedepreciable real estate portfolios as they are more closely linked toheld by the direct results of operations at the property level. NOI also reflects actual rents received during the period after adjusting for the effects of straight-line rents and amortization of above- and below-market leases; therefore, a comparison of NOI across periods better reflects the trend in occupancy rates and rental rates at our properties.
NOI and EBITDA exclude historical cost depreciation and amortization, which are basedventure; (v) gain on different useful life estimates depending on the age of the properties, as well as adjust for the effects of real estate impairment and gains or losses on salesdisposition of depreciated properties, which eliminate differences arising from investment and disposition decisions. This allows for comparability of operating performance of our properties period over period and also against the results of other equity REITs in the same sectors.
Additionally, by excluding corporate level expenses or benefits such as interest expense, anyreal estate; (vi) gain or loss on early extinguishmentfrom a change in control in connection with interests in depreciable real estate or in-substance real estate; and (vii) adjustments to reflect the Company's share of debt and income taxes,EBITDAre from investments in unconsolidated ventures.
EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which are incurred by the parent entity and are not directly linked towe believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of our properties, NOIa real estate business independent of its capital structure, leverage and EBITDA providenoncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a measurereflection of ongoing operating performance independentand allows for period-over-period comparability.
71
Table of our capital structureContents

As with other non-GAAP measures, the usefulness of EBITDAre may be limited. For example, EBITDAre focuses on profitability from operations, and indebtedness.
However, the exclusion of these items as well as others, such asdoes not take into account financing costs, and capital expenditures and leasing costs, which are necessaryneeded to maintain operating real estate.
EBITDAre generated by our Digital Operating segment is as follows.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)20212020Change20212020Change
Digital Operating
Total revenues$194,966 $98,549 $96,417 $573,261 $185,737 $387,524 
Property operating expenses(80,226)(37,544)(42,682)(237,228)(72,505)(164,723)
Transaction-related costs and investment expense(4,862)(2,362)(2,500)(16,682)(3,375)(13,307)
Compensation and administrative expense(29,766)(11,863)(17,903)(84,201)(34,983)(49,218)
Other gain (loss), net285 (45)330 (67)(45)(22)
EBITDAre
$80,397 $46,735 33,662 $235,083 $74,829 160,254 
The following table presents a reconciliation of net loss to EBITDAre for the operating performance of our properties,Digital Operating segment.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Digital Operating
Net loss$(71,822)$(38,795)$(146,932)$(78,472)
Adjustments:
Interest expense29,839 18,589 90,243 36,161 
Depreciation and amortization120,458 73,032 368,906 131,634 
Income tax expense (benefit)1,922 (6,091)(77,134)(14,494)
EBITDAre
$80,397 $46,735 $235,083 $74,829 
The higher 2021 year-to-date EBITDAre reflects the acquisition Vantage SDC in July 2020 and transaction costszColo in December 2020 and February 2021.
On a same store basis, EBITDAre was largely consistent quarter-to-date and year-to-date. While there was an increase in revenues attributed to an increase in rentable square footage, this was mostly offset by higher compensation and administrative costs may limitas we ramped up resources to support the usefulnessgrowth in our business, and additional costs were incurred in the restructuring of NOI and EBITDA.DataBank's operations for REIT qualification.
The following tables present reconciliations of net income (loss) from continuing operations of the healthcare, industrial and hospitality segments to NOI or EBITDA of the respective segments.
  Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
(In thousands) Healthcare Industrial Hospitality Industrial
Net income (loss) from continuing operations $(22,318) $5,775
 $4,169
 $439
Adjustments:        
Straight-line rent revenue and amortization of above- and below-market lease intangibles (6,513) (2,011) (3) (608)
Interest income —
 (165) —
 —
Interest expense 48,586
 8,803
 35,351
 11,532
Transaction, investment and servicing costs 4,631
 7
 1,784
 612
Depreciation and amortization 44,646
 29,010
 34,549
 22,295
Provision for loan losses 1,588
 —
 —
 —
Impairment loss 8,250
 44
 —
 —
Compensation and administrative expense 1,511
 2,833
 1,681
 2,489
Gain on sale of real estate —
 —
 —
 (1,949)
Other (gain) loss, net (1,971) —
 149
 (114)
Earnings from investments in unconsolidated ventures —
 (34) —
 —
Income tax (benefit) expense (408) 16
 1,262
 31
NOI or EBITDA $78,002
 $44,278
 $78,942
 $34,727

  Nine Months Ended September 30, 2017 Nine Months Ended
September 30, 2016
(In thousands) Healthcare Industrial Hospitality Industrial
Net income (loss) from continuing operations $(42,978) $15,394
 $6,303
 $652
Adjustments:        
Straight-line rent revenue and amortization of above- and below-market lease intangibles (21,897) (4,824) (30) (2,410)
Interest income —
 (165) —
 —
Interest expense 137,522
 29,163
 98,484
 30,906
Transaction, investment and servicing costs 9,052
 33
 6,570
 1,038
Depreciation and amortization 135,104
 79,453
 98,098
 65,461
Provision for loan losses 1,588

—

—
 —
Impairment loss 8,250
 44
 —
 137
Compensation and administrative expense 5,302
 8,441
 5,763
 5,773
Gain on sale of real estate —
 (8,695) —
 (2,749)
Other (gain) loss, net (5,925) —
 444
 (213)
Earnings from investments in unconsolidated ventures —
 (62) —
 —
Income tax (benefit) expense 1,624
 2,164
 2,209
 37
NOI or EBITDA $227,642
 $120,946
 $217,841
 $98,632

Liquidity and Capital Resources
Overview
We believe that our capital resources are sufficient to meet our short-term and long-term capital requirements.
Our financing strategyliquidity position was $774 million at September 30, 2021, composed of corporate cash on hand and the full $200 million availability under our VFN Notes.
We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating and investing activities, based upon our projected financial and operating performance, and investment opportunities as we divest non-digital assets and complete our digital transformation. Our evaluation of future liquidity requirements is regularly reviewed and updated for changes in internal projections, economic conditions, competitive landscape and other factors. At this time, while we are in compliance with all of our corporate debt covenants and have sufficient liquidity to employ investment-specific financing principallymeet our operational needs, we continue to evaluate alternatives to manage our capital structure and market opportunities to strengthen our liquidity and provide further operational and strategic flexibility. Stabilizing our capital structure and liquidity in 2020 has put us in a stronger position to execute our digital transformation.
72
Table of Contents

Recent Developments
Securitized Financing Facility
In July 2021, we replaced our corporate credit facility with the issuance of $500 million aggregate principal amount of Series 2021-1 Notes, composed of: (i) $300 million 3.933% Class A-2 Notes; and (ii) up to $200 million VFN Notes which allow for borrowings on a non-recourserevolving basis.
•These Series 2021-1 Notes provide a lower cost of capital, extend our revolving credit maturity to 2026 from 2022, and removes certain restrictions under our previous corporate credit facility around dividend payments and stock repurchases.
•Issuance of the Class A-2 Notes generated proceeds of $285.1 million, net of offering expenses and $5.4 million of interest reserve deposit.
•The Series 2021-1 Notes will provide funding for acquisition of digital infrastructure investments, satisfying commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or for general corporate utilization.
Preferred Stock Redemption
We redeemed all of our outstanding 7.5% Series G preferred stock in August 2021 for $86.8 million using proceeds from our securitized financing facility, which lowered our cost of corporate debt by approximately 350 basis points. Additionally, we issued notices of redemption in October 2021 for 2.6 million shares or 22% of our 7.125% Series H preferred stock with matching termsredemption to be settled with cash on hand in November 2021 for $64.4 million. Redemption amounts include accrued and currencies, as availableunpaid dividends through the redemption date.
Liquidity Needs and applicable, through first mortgages, senior loan participations or securitizations. In addition to investment-specific financings, we may use and have used credit facilities and repurchase facilities on a shorter term basis and public and private, secured and unsecured debt issuances on a longer term basis.Sources of Liquidity
Our current primary liquidity needs are to fund:
•our general partner and co-investment commitments to our investment vehicles;
•acquisitions of target digital assets for our target assetsbalance sheet and related ongoing commitments;
our general partner commitments to our future investment vehicles and co-investment commitments to other investment vehicles;
•principal and interest payments on our borrowings, including interest obligation on our convertible debt;
•our operations, including compensation, administrative and overhead costs;
•obligation for lease payments, principally leasehold data centers and corporate offices;
•capital expenditures for our real estate investments;
•distributions to our stockholders;common and preferred stockholders (to the extent distributions have not been suspended); and
acquisitions of common stock under our common stock repurchase program; and
•income tax liabilities of taxable REIT subsidiaries and of the Company subject to limitations as a REIT.
Our current primary sources of liquidity are:
•cash on hand;
•our credit facilities;corporate securitization financing facility;
fees received from our investment management business;
•cash flow generated from our investments, both from operations and return of capital;
•fees received from our investment management business, including incentive or carried interest payments, if any;
•proceeds from full or partial realization of investments;investments and/or businesses, particularly from investments in the Other segment;
•investment-level financing;
•proceeds from public or private equity and debt offerings; and
•third party capital commitments of sponsored investment vehicles.
We believe thatco-investors in our capital resources are sufficient to meet our short-term and long-term capital requirements. Distribution requirements imposed on us to qualify as a REIT generally require that we distribute to our stockholders 90% of our taxable income, which constrains our ability to accumulate operating cash flows.consolidated investments and/or businesses.
Additional discussions of our liquidity needs and sources of liquidity are presented below.
Liquidity Needs
Investment Commitments
OurAs of September 30, 2021, we have unfunded commitments of $117 million to the DCP funds. We expect to fund our commitments using proceeds from issuance of our Class A-2 Notes, sales of our BRSP shares and/or other future asset monetization, cash on hand or a combination thereof.
73
Table of Contents

Lease Obligations
At September 30, 2021, we have $143.6 million and $310.4 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, primarily leasehold data centers, and $43.0 million of operating lease obligations on corporate offices. These amounts represent fixed lease payments on an undiscounted basis, excluding any contingent or other variable lease payments, and factor in connection withlease renewal or termination options only if it is reasonably certain that such options would be exercised. Certain lease payments under ground leases are recoverable from our tenants. These lease obligations will be funded through operating cash generated by the investment activitiesproperties and other activities are described in “—Contractual Obligations, Commitments and Contingencies."corporate operating cash, respectively.
Dividends
U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. These distribution requirements may constrain our ability to accumulate operating cash flows. We intend to pay regular quarterly dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service, if any.including complying with any restrictions imposed by our lenders. If our cash available for distribution is less than our net taxable income, we may be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.
Common Stock—Our boardThe Company suspended dividends on its class A common stock beginning with the second quarter of directors declared2020. Payment of common dividends was previously subject to certain restrictions under the following dividendsterms of the corporate credit facility, which was terminated in 2017:July 2021. The Company continues to monitor its financial performance and liquidity position, and will reevaluate its dividend policy as conditions improve.
Declaration Date Record Date Payment Date Dividend Per Share 
February 23, 2017 March 31, 2017 April 17, 2017 $0.27
(1)
May 4, 2017 June 30, 2017 July 17, 2017 0.27
 
August 3, 2017 September 30, 2017 October 16, 2017 0.27
 
November 2, 2017 December 29, 2017 January 15, 2018 0.27
 
__________
(1)
In connection with the consummation of the Merger, on January 20, 2017, the Company paid a dividend of $0.04444 per share of each Colony and NRF common stock to stockholders of record on January 9, 2017, representing a pro rata dividend for the period from January 1, 2017 through January 10, 2017 on a pre-exchange basis (or $0.03 after giving effect to the Colony exchange ratio of 1.4663). Additionally, the Company declared a dividend of $0.24 per share for the period from January 11, 2017 through March 31, 2017. Accordingly, dividends declared for the first quarter of 2017 per common share is equivalent to $0.27 per share after giving effect to the exchange ratio.
Preferred Stock—We are required to make quarterly cash distributions onAfter redeeming Series G preferred stock in August 2021 and incorporating a partial redemption of Series H preferred stock that will settle in November 2021, our outstanding preferred stock as follows:
    
Shares Outstanding
September 30, 2017
(In thousands)
 Quarterly Cash Distributions
Description Dividend Rate Per Annum  
Total
(In thousands)
 Per Share
Series B 8.25% 6,114
 $3,153
 $0.5156250
Series D 8.5% 8,000
 4,250
 0.5312500
Series E 8.75% 10,000
 5,469
 0.5468750
Series G 7.5% 3,450
 1,617
 0.4687500
Series H 7.125% 11,500
 5,121
 0.4453125
Series I 7.15% 13,800
 6,167
 0.4468750
Series J 7.125% 12,600
 5,611
 0.4453125
    65,464
 $31,388
  
Common Stock Repurchases
On February 23, 2017, our boardis expected to total $883.5 million in liquidation preference, bearing a weighted average dividend rate of directors authorized a common stock repurchase program, pursuant to which we may repurchase up to $3007.135% per annum, with aggregate dividend payments of $15.8 million of our outstanding class A common stock over a one-year period, and of which $224.6 million has been repurchased as of September 30, 2017. This is described further in Note 15 to the consolidated financial statements.

per quarter.
Sources of Liquidity
Cash From Operations
Our investments generate cash, either from operations or as a return of our invested capital. We primarily generate revenue from net operating income of our real estate properties. We also generate interest income from commercial real estate related loans and securities as well as receive periodic distributions from some of our investments in unconsolidated ventures. Such incomedigital infrastructure business, which is partially offset by interest expense associated with non-recourse borrowings againston our investments.digital portfolio. We also receive periodic distributions from our equity investments, including our GP co-investments.
Additionally, we generate fee revenuerelated earnings from our digital investment management segment through the managementbusiness, of various types of investment products, including both institutional and retail capital.which 31.5% is attributable to our noncontrolling investor, Wafra. Management fee income is generally a predictable and stable revenue stream, while performance basedcarried interest and contractual incentive income isfees are by nature less predictable in amount and timing. Our ability to establish new investment vehicles and raise investor capital depends on general market conditions and availability of attractive investment opportunities as well as availability of debt capital.
Investment-Level FinancingAsset Monetization
We have various formsperiodically monetize our investments through opportunistic asset sales or to recycle capital from non-core assets. In August 2021, we sold 9.5 million BRSP shares through a secondary offering by BRSP for net proceeds of investment-level financing, including securitizations, as describedapproximately $81.8 million. As we complete our digital transformation, we anticipate monetizing a substantial majority of our OED assets and our Wellness Infrastructure assets.
Debt
Description of our debt is included in Note 11 to the consolidated financial statements.
Our ability to raise and access third party capital in our sponsored investment vehicles would allow us to scale our investment activities by pooling capital to access larger transactions and diversify our investment exposure.
Corporate Credit Facility
As described in Note 118 to the consolidated financial statements the JPM Credit Agreement provides a secured revolving credit facility in the maximum principal amount(and Note 11 for debt related to assets held for disposition).
74
Table of $1.0 billion, which may be increased up to $1.5 billion, subject to customary conditions. The JPM Credit Agreement matures in JanuaryContents

Summary of Indebtedness
Our indebtedness at September 30, 2021 with two 6-monthis summarized as follows:
($ in thousands)Outstanding PrincipalWeighted Average Interest Rate
(Per Annum)
Weighted Average Years Remaining to Maturity (1)
Secured Fund Fee Revenue Notes$300,000 3.93 %5.0
Convertible and exchangeable senior notes500,000 5.45 %2.9
Non-recourse investment level financing
Fixed rate2,786,223 2.49 %
Variable rate1,035,017 4.04 %
3,821,240 2.91 %3.7
Total debt (excluding amounts related to assets held for disposition)$4,621,240 
Debt related to assets held for disposition (to be assumed by counterparty)$3,554,000 
__________
(1)    Calculated based upon anticipated repayment dates for notes issued under securitization financing; otherwise based upon initial maturity dates, or extended maturity dates if extension options.
The maximum amountcriteria are met and extension is available at any time is limited by a borrowing base of certain investment assets. the Company's option.
Securitized Financing Facility
As of November 7, 2017, the borrowing base valuation was sufficient to permit borrowings of up to the full $1.0 billion commitment, of which $971.0 million was available to be drawn.
The JPM Credit Agreement contains covenantsdiscussed above and restrictions requiring us to meet certain financial ratios. We were in compliance with the financial covenants as of September 30, 2017.
Convertible and Exchangeable Senior Notes
Convertible and exchangeable senior notes issued by us and that remain outstanding are describedfurther in Note 11 8to the consolidated financial statements.statements, we replaced our corporate credit facility with a securitized financing facility in July 2021 through the issuance of $300 million 3.933% Class A-2 Notes, and $200 million of VFN Notes which is available to be drawn in full as of the date of this filing.
Non-Recourse Investment-Level Financing
Investment level financing is non-recourse to us, and secured by the respective underlying commercial real estate or loans receivable.
Developments in 2021
•Digital Operating—In March 2021 and October 2021, DataBank raised $658 million and $332 million of 5-year securitized notes at blended fixed rates of 2.32% and 2.43% per annum, respectively. Proceeds from the March securitization were applied principally to refinance $514 million of outstanding debt, which meaningfully reduced DataBank's overall cost of debt and extended its debt maturities, while the October proceeds will be used to repay borrowings on its credit facility and finance future acquisitions.
In June 2017 and July 2017, we repurchased all $13.0November 2021, Vantage SDC issued $530 million of 5-year securitized notes at a blended fixed rate of 2.17% per annum. Proceeds will be applied to replace its current bridge financing and fund capital expenditures on the outstanding principalSeptember 2021 add-on acquisition as well as to fund payments for future build-out and lease-up of expansion capacity.
•Other—In the 7.25% exchangeable notes upon exercisethird quarter of 2021, the repurchase optionCompany entered into a $50.0 million credit facility to fund the acquisition of loans that are warehoused for a future securitization vehicle.
•Hotels—$3.5 billion of underlying hotel debt (previously classified as held for disposition) have been assumed by the note holders.
On November 2, 2017, we exchanged $2.8 million of the outstanding principal of the 5.375% exchangeable notes into sharesacquirers upon sale of our class A common stock.hotel assets, resulting in a significant deleveraging of our balance sheet.
We expect to materially deleverage our balance sheet further when we consummate the sales of our remaining non-digital assets, which will include the assumption of all underlying debt, through a sale of our OED investments in the fourth quarter of 2021 and our NRF Holdco subsidiary that conducts our Wellness Infrastructure business in 2022, which have outstanding debt of $687.7 million and $2.87 billion, respectively, at September 30, 2021.
Public Offerings
We may offer and sell various types of securities under our shelf registration statement. These securities may be issued from time to time at our discretion based on our needs and depending upon market conditions and available pricing.
We issued 13.8 million shares
75
Table of Series I preferred stock in June 2017 and 12.6 million shares of Series J preferred stock in September 2017 with dividend rates of 7.15% and 7.125% per annum, respectively. We applied the proceeds from the offerings, combined with available cash, to redeem all of the outstanding shares of Series A, Series F and Series C preferred stock and a portion of the outstanding shares of Series B preferred stock. This is discussed in Note 15 to the consolidated financial statements.Contents

Cash Flows
As a result of the Merger, comparisons of the period to period cash flows may not be meaningful. The periods as of and prior to January 10, 2017 represent the pre-merger cash flows of Colony, while the cash flows of NSAM and NRF are incorporated into Colony NorthStar effective from January 11, 2017.

The following table summarizes the activities from our statements of cash flow activity for the periods presented:flows.
 Nine Months Ended September 30,Nine Months Ended September 30,
(In thousands) 2017 2016(In thousands)20212020
Net cash provided by (used in):    Net cash provided by (used in):
Operating activities $385,493
 $300,719
Operating activities$181,412 $89,886 
Investing activities 607,710
 183,478
Investing activities85,698 (981,923)
Financing activities (478,377) (230,296)Financing activities198,221 363,225 
Operating Activities
Cash inflows from operating activities are generated primarily through property operating income from our real estate portfolio,investments, interest received from our loans receivable and securities portfolio, distributions of earnings received from unconsolidated ventures,equity investments, and fee income from our investment management business. This is partially offset by payment of operating expenses, supporting our various lines of business, including property management and operations, loan servicing and workout of loans in default, investment transaction costs, as well as compensation and general administrative costs.
Our operating activities generated net cash inflows of $385.5$181.4 million in 2021 and $300.7$89.9 million for the nine months ended September 30, 2017 and 2016, respectively. The nine months ended September 30, 2017in 2020.
Notable items affecting operating cash flows included the operating activities of NSAM's investment management business, andfollowing:
•In 2021, the higher operating activities of NRF's real estate business, primarily in healthcare and hospitality. Additionally, we incurred significant payments of Merger-related costs, including $66.8 million of success-based fees paid to investment bankers.
We believe cash flows were driven by receipt of a $102.3 million one-time payment in connection with termination of the BRSP management agreement. Additionally, net operating cash flows were also contributed by our Digital Operating segment, specifically Vantage SDC acquired in July 2020 and zColo acquired in December 2020 and February 2021. These cash inflows were partially offset by severance payments in the first quarter of 2021.
•In 2020, operating cash inflows were lower and included $39.9 million paid in the first quarter of 2020 as carried interest compensation in connection with carried interest realized from operations, availablethe sale of our light industrial portfolio in December 2019. Additionally, operating cash balancesflows were negatively affected by the fallout from COVID-19 in the second quarter of 2020, particularly in our hospitality and our ability to generate cash through short- and long-term borrowings are sufficient to fund our operating liquidity needs.healthcare business.
Investing Activities
Investing activities include primarily cash outlays for acquisition of real estate, disbursements on new and/or existing loans, and contributions to unconsolidated ventures, which are partially offset by repayments and sales of loan receivables,loans receivable, distributions of capital received from unconsolidated ventures, and proceeds from sale of real estate as well as proceeds from maturity or saleand equity investments.
Our investing activities resulted in net cash inflows of securities.
Although the Merger was completed in an all-stock exchange, we assumed certain liabilities of NSAM and NRF which arose as a result of the Merger and were settled shortly after the Closing Date. These amounts included approximately $226.1 million which was paid to former NSAM stockholders, representing a one-time special dividend, and approximately $78.9$85.7 million in payroll taxes, representing shares that were canceled and remitted2021 compared to taxing authorities on behalf of employees whose equity-based compensation was accelerated and fully vested upon closing of the Merger. These amounts, net of $260.6 million of cash assumed, are presented as investing cash outflows of $981.9 million in the consolidated statement of2020.
•Debt investments—Investing cash flows.
Investing activitiesinflows in the nine months ended September 30, 2017 generated net cash inflow of $607.72021 included $390.8 million resulting from our initiativedebt investments, attributed to monetize non-core investmentsloan repayments, in 2017. This included the sale of all ofparticular a $305.0 million repayment received on two loans in our interest in SFR for $500.5 million, net of amounts held in escrow, and proceeds from the sale of various non-core real estate investments totaling $1,340.1 million, of which $664.4 million was from the sale of our manufactured housing portfolio. This wasIrish loan portfolio, partially offset by various property acquisitionsloans acquired and capital expenditureswarehoused for future digital credit vehicles, including a potential CLO, other loan disbursements and acquisition of $1,194.2 million, including the continuous recycle of capital into newer assetsadditional N-Star CDOs at a discount by our Wellness Infrastructure segment. In comparison, in our industrial portfolio, as well as net cash outlay of $198.6 million on additional contributions and/or new investments2020, loan disbursements exceeded repayments, resulting in unconsolidated ventures, net of distributions received. Our loan investments generated minimal net cash outflows with receipts, primarilyof $44.9 million, which partially offset net cash inflows from repayments and sales proceeds totaling $786.0 million and cash outflows for loan disbursements and acquisitions of $821.8 million, of which $538.1 million, net of deposits, was for the acquisition of a distressed loan portfolio in Ireland.equity investments.
In the nine months ended September 30, 2016,•Real estate investments—Real estate investing activities generated net cash inflowoutflows in both years, with significantly higher outflows in 2020 of $183.5$1.0 billion, driven by the acquisition of Vantage SDC in July 2020. In 2021, net cash outflows were $244.7 million as receipts from our loan portfolios, primarily from repayments and proceeds from sales totaling $731.3 million exceeded cash outflows for loan disbursements andadd-on acquisitions of $430.4 million. Our real estate investing activities resulted in minimal net cash outflow in aggregate with receipts from sale proceeds of $344.3 million and acquisitionsthe Vantage SDC portfolio and capital expenditures totaling $373.0 million.were partially offset by sales of various properties in Europe, in our Wellness Infrastructure segment and our hotel business.
76
Table of Contents

•Equity investments—In 2021, net cash inflows from our debt and real estate investments were partially offset by net cash outflows of $56.2 million in connection with our equity investments. This can be attributed largely to funding of our digital fund commitments and draws on acquisition, development and construction ("ADC") loans that are accounted for as equity method investments, partially offset by net proceeds of approximately $81.8 million from sales of 9.5 million BRSP shares, as well as trading activities in marketable equity securities by our consolidated funds in the digital liquid strategy. In contrast, 2020 had $89.8 million of net cash inflows from equity investments, attributed primarily to $179.1 million of net proceeds received from sale of our investment in RXR Realty and $87.4 million from recapitalization of our joint venture investment in Albertsons, both of which were partially offset by funding of our commitments to DCP I and additional draws on ADC loans.
Financing Activities
We finance our investing activities largely through borrowingsinvestment-level secured by our investmentsdebt along with capital from third party or affiliated co-investors. We also draw upon our corporate credit facility to finance our investing and operating activities, as well as have the ability to raise capital in the public markets through issuances of preferred stock, common stock and debt such as our convertible and exchangeable notes, as well as draw upon our

corporate credit facility, to finance our investing and operating activities.senior notes. Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, and third party debt, as well as dividends to our preferred stockholders and common stockholders (common dividends temporarily suspended), as well as distributions to noncontrolling interests in our various investments.
Financing activities generated net cash inflows of $198.2 million in 2021 and $363.2 million in 2020.
•In 2021, financing net cash inflows were driven by $285.9 million of borrowings exceeding debt repayments. Investment-level financing activities include primarily borrowings by Vantage SDC to finance an add-on acquisition and expansion capacity, issuance of securitized notes by DataBank that was largely used to refinance its existing debt, and repayment of debt financing real estate in Europe that were sold during the year. We replaced our corporate credit facility with a securitized financing facility, from which we received $285.1 million of net proceeds in July through issuance of Class A-2 Notes, some of which were applied to redeem our Series G preferred stock in August for $86.8 million. Additionally, there was $73.3 million of net contributions from noncontrolling interests. We haveSuch contributions were composed largely of a common stock repurchase program approved in 2017 that allows us to repurchase up to $300 millionsyndication of our outstanding class Ainterest to a new third party investor in our zColo investment vehicle, assumption of a portion of our commitments to DCP I by Wafra, and additional consideration paid by Wafra for its investment in our digital investment management business. Cash outflows include dividend payments of $56.1 million, which is lower in 2021 following the redemption of Series G preferred stock and suspension of common stock through February 2018.
Net cash used in financing activities for the nine months ended September 30, 2017 was $478.4 million.
Individends beginning with the second quarter of 2017, we refinanced debt with $1.62020.
•The financing net cash inflows in 2020 were driven by $1.3 billion of outstanding principalnet contributions from noncontrolling interests, of which $1.0 billion represented third party investors in Vantage SDC, primarily fee bearing capital that we raised, and a $253.6 million investment by Wafra in our hotel portfolio at a moderately reduced interest ratedigital investment management business. However, these financing cash inflows were largely offset by: (i) $402.9 million settlement in January 2020 of the December 2019 redemption of our Series B and extended their maturity dates.
InE preferred stock using proceeds from our industrial sale in December 2019; (ii) repayments on our investment level debt exceeding borrowings by $298.3 million; (iii) higher dividend payments of $167.3 million which included common stock dividends in the first quarter of 2020 in addition to financing activities related to our third party borrowings, which are used primarily to fund our real estatepreferred stock; and loan investments, other significant financing activities during the nine months ended September 30, 2017 included the following:
sold a minority interest in our healthcare platform for $330 million (excluding pre-funded capital expenditures);
terminated a call spread arrangement assumed through the Merger in which we received $21.9 million in settlement, including the release of $15.0 million of cash pledged as collateral;
repurchased 17.3 million shares(iv) partial repurchase of our class A common stock3.875% convertible senior notes for $224.6$81.3 million (including commissions);
repurchased allthrough a tender offer in September 2020. An additional repurchase of our 7.25% exchangeable3.875% convertible senior notes for $13.4 million; and
issued 13.8$289.7 million shareswas made through a concurrent application of Series I preferred stock in June 2017 and 12.6 million shares of Series J preferred stock in September 2017 with dividend rates of 7.15% and 7.125% per annum, respectively. We applied proceeds from the offerings totaling $637.9 million, combined with available cash, to redeem all of the outstanding sharesnet proceeds from our issuance of Series A, Series F and Series C preferred stock and a portion of the outstanding shares of Series B preferred stock for $644.9 million in aggregate.
In 2017, the availability of cash from asset sales resulted in a lower utilization of our corporate credit facility for working capital purposes.
For the nine months ended September 30, 2016, our net cash used in financing activities was $230.3 million, driven largely by $447.6$300.0 million of distributions made to noncontrolling interestsnew 5.75% exchangeable senior notes in investment entities, of which a significant portion was related to proceeds from sale of a foreclosed property in Germany.July 2020.
Contractual Obligations, Commitments and Contingencies
The following table sets forth our known contractual obligations and contingencies on an undiscounted basis as of September 30, 2017 and the future periods in which we expect to settle such obligations and contingencies. Amounts in the table do not reflect repayments or draws on our line of credit or new financing obtained subsequent to September 30, 2017 and exclude obligations that are not fixed and determinable such as amounts due under our derivative contracts.
  Payments Due by Period
(In thousands) Total Remaining 2017 2018-2019 2020-2021 2022 and after
Corporate credit facility (1)
 $11,647
 $894
 $7,097
 $3,656
 $—
Convertible and exchangeable senior notes (2)
 734,932
 6,586
 52,688
 440,241
 235,417
Secured and unsecured debt (3)
 10,582,803
 890,502
 6,553,334
 1,048,240
 2,090,727
Securitization bonds payable (4)
 550,711
 143,659
 356,879
 50,173
 —
Junior subordinated notes 501,261
 2,983
 23,670
 23,702
 450,906
Ground lease obligations (5)
 186,228
 1,592
 12,920
 13,011
 158,705
Office lease obligations (6)
 75,972
 2,493
 14,961
 14,946
 43,572
  12,643,554
 $1,048,709
 $7,021,549
 $1,593,969
 $2,979,327
Contingent consideration (7)
 33,681
        
Lending commitments (8)
 71,038
        
Investment commitments (9)
 192,696
        
Total $12,940,969
        
__________
(1)
Future interest payments on our corporate credit facility were estimated based on the applicable index at September 30, 2017 and unused commitment fee of 0.35% per annum, assuming principal is repaid on the initial maturity date of January 2021. See “—Liquidity and Capital Resources." There was no outstanding principal on the corporate credit facility at September 30, 2017.

(2)
The convertible and exchangeable senior notes mature on their respective due dates, unless redeemed, repurchased or exchanged in accordance with their terms prior to such date. Amounts reflect future principal and interest payments through contractual maturity dates of the respective notes. See Note 11 to the Consolidated Financial Statements.
(3)
Amounts include minimum principal or principal curtailment based upon cash flows from collateral loans after payment of certain loan servicing fees and monthly interest, as well as fixed or floating rate interest obligations and unused commitment fee on investment level credit facilities, through initial maturity date of the respective secured and unsecured debt. Interest on floating rate debt was determined based on the applicable index at September 30, 2017. Excludes investment-level debt financing related to assets held for sale. See Note 11 to the Consolidated Financial Statements.
(4)
The timing of future principal payments was estimated based on expected future cash flows of underlying collateral loans. Repayments are estimated to be earlier than contractual maturity only if proceeds from underlying loans are repaid by the borrowers.
(5)
We assumed noncancellable operating ground leases as lessee or sublessee in connection with certain properties acquired. The amounts represent minimum future base rent commitments through initial expiration dates of the respective leases, excluding any contingent rent payments, as well as exclude ground leases which require only nominal annual payments and those associated with real estate held for sale. Rents paid under ground leases are recoverable from tenants.
(6)
We lease office space under noncancellable operating leases. The amounts reflect only minimum lease payments and do not project any potential escalation or other lease-related payments. Excludes contractual minimum rental payments on Townsend office leases.
(7)
Contingent consideration liability is in connection with the following:
(i) our acquisition of the investment management business and operations of our former external manager. The amount is payable to certain senior executives of the Company in shares of class A and class B common stock, as well as OP Units, subject to achievement of multi-year performance targets. Although the earnout period expires on June 30, 2018, portions of contingent consideration related to capital raising targets may become due upon achieving those targets. See Note 13 to the Consolidated Financial Statements.
(ii) our acquisition of the THL Hotel Portfolio through a consensual foreclosure. An amount up to $13.0 million is payable to a preferred equity holder of the former borrower based on performance of the THL Hotel Portfolio, subject to meeting certain repayment and return thresholds. See Note 3 to the Consolidated Financial Statements.
The amount presented reflects the aggregate estimated fair value of the contingent considerations at September 30, 2017:
(8)
Future lending commitments may be subject to certain conditions that borrowers must meet to qualify for such fundings. Commitment amount assumes future fundings meet the terms to qualify for such fundings. Amount presented reflects only our share of investment commitments, excluding commitments attributable to noncontrolling interests. Potential future commitments that we have approved but are not yet legally binding as of September 30, 2017 are not included. See Note 5 to the Consolidated Financial Statements.
(9)
Amounts are in connection with our investments in unconsolidated ventures, including ADC arrangements accounted for as equity method investments, property acquisitions as well as commitments to third party-sponsored funds and Company-sponsored funds that are not consolidated. Potential future commitments that we have approved but are not yet legally binding as of September 30, 2017 are not included. See Notes 4 and 6 to the Consolidated Financial Statements.
Guarantees and Off-Balance Sheet Arrangements
In connection with financing arrangements for certain unconsolidated ventures, we provided customary non-recourse carve-out guarantees. We believe that the likelihood of making any payments under the guarantees is remote and no liability has been recorded as of September 30, 2017.remote.
In connection with certain hotel acquisitions, we entered into guarantee agreements with various hotel franchisors, pursuant to which we guaranteed the franchisees’ obligations, including payments of franchise fees and marketing fees, for the term of the agreements, which expire between 2025 and 2030. At September 30, 2017, the Company did not have any obligations under these guarantees.
We have off-balance sheet arrangements with respect to our retained interests in certain deconsolidated N-Star CDOs. In each case, our exposure to loss is limited to the carrying value of our investment.
Risk Management
Risk management is a significant component of our strategy to deliver consistent risk-adjusted returns to our stockholders. Given our need to maintain our qualification as a REIT for U.S. federal income tax purposes and our exemption from registration under the 1940 Act, we closely monitor our portfolio and actively manage risks associated with, among other things, our assets and interest rates. In addition, the riskThe audit committee of our board of directors, in consultation with our chief risk officer, internal auditor and other senior management, willmaintains oversight of risk management matters, and periodically reviewreviews our policies with respect to risk assessment and risk management, including key risks to which we are subject, including credit risk, liquidity risk, financing risk, foreign currency risk and market risk, and the steps that management has taken to monitor and control such risks. The audit committee
77
Table of our board of directors will maintain oversight of financial reporting risk matters.Contents

Underwriting and Investment Process
Prior to makingIn connection with executing any equitynew investment in digital assets for our balance sheet or debta managed investment vehicle, our underwriting team in conjunction with third-party providers, undertakes a rigorous asset-levelcomprehensive due diligence process involving intensive data collection and analysis, to ensure that we understand fully the stateall of the market and the risk-reward profile of the asset. Inmaterial risks involved with making such investment, in addition we evaluate material

to related accounting, legal, financial and business issues surrounding such investment. These issues andissues. If the risks are built intocan be sufficiently mitigated in relation to the valuationpotential return, we will pursue the investment on behalf of an asset and ultimate pricingour balance sheet and/or investment vehicles, subject to approval from the applicable investment committee, composed of an investment.senior executives of the Company.
During theSpecifically, as part of our underwriting process, we evaluate and review the following data, including, but not limited to: property financial data including historichistorical and budgeted financial statements, liquiditytenant or customer quality, lease terms and structure, renewal probability, capital expenditure plans, property operating metrics (including occupancy, leasing activity, lease expirations, sales information, tenant credit review, tenant delinquency reports, operating expense efficiencypipeline, technical/energy requirements and property management efficacy)supply, local and local real estatemacroeconomic market conditions, including vacancy rates, absorption, new supply, rent levelsESG, leverage and comparable sale transactions, as applicable. For debt investments, we also analyze metrics such as loan-to-collateral value ratios, debt service coverage ratios, debt yields, sponsor credit ratings and performance history.
In addition to evaluating the merits of any particular proposed investment, we evaluate the diversification of our or a particular managed investment vehicle’s portfolio of assets.assets, as the case may be. Prior to making a final investment decision, we determine whether a target asset will cause ourthe portfolio of assets to be too heavily concentrated with, or cause too much risk exposure to, any one digital real estate sector, geographic region, source of cash flow such as tenants or borrowers, or other geopolitical issues. If we determine that a proposed investment presents excessive concentration risk, we may decide not to pursue an otherwise attractive investment.
AssetAllocation Procedures
We currently manage, and may in the future manage, private funds, REITs and other entities that have investment and/or rate of return objectives similar to our own or to other investment vehicles that we manage. In order to address the risk of potential conflicts of interest among us and our managed investment vehicles, we have implemented an investment allocation policy consistent with our duty as a registered investment adviser to treat our managed investment vehicles fairly and equitably over time. Pursuant to this policy, and subject to certain priority rights in our DCP funds, investment allocation decisions are based on a suitability assessment involving a review of numerous factors, including the particular source of capital’s investment objectives, available cash, diversification/concentration, leverage policy, the size of the investment, tax, anticipated pipeline of suitable investments and fund life.
Portfolio Management
The comprehensive portfolio management process generally includes day-to-day oversight by the Company's portfolio management and servicing team, regular management meetings and quarterly creditasset review process. These processes are designed to enable management to evaluate and proactively identify asset-specific creditinvestment-specific issues and trends on a portfolio-wide basis for both assets on our balance sheet and assets of the companies within our investment management business. Nevertheless, we cannot be certain that such review will identify all issues within our portfolio due to, among other things, adverse economic conditions or events adversely affecting specific assets; therefore, potential future losses may also stem from investments that are not identified during these credit reviews.
We use many methods to actively manage our credit risk to preserve our income and capital, in orderincluding, but not limited to, minimize credit losses that could decrease income and portfolio value. For commercial real estate equity and debt investments, frequent re-underwriting andmaintaining dialogue with tenants, operators, partners and/or borrowers and performing regular inspections of our collateral and owned properties have proven to be an effective process for identifying issues early.properties. With respect to our healthcarewellness infrastructure properties, we consider the impact of regulatory changes on operator performance and property values. During thea quarterly credit review, or more frequently as necessary, investments are monitored and identified for possible asset impairment andor loan loss reserves, as appropriate,applicable, based upon several factors, including missed or late contractual payments, significant declines in collateralproperty operating performance and other data which may indicate a potential issue in our ability to recover our invested capital from an investment. In addition, we seek tomay utilize services of certain strategic partnerships and joint ventures with third parties with relevant expertise in commercial real estate or other sectors and markets to assist our portfolio management.
Given our needIn order to maintain our qualification as a REIT for U.S. federal income tax purposes and our exemption from registration under the 1940 Act, and in order to maximize returns and manage portfolio risk, we may dispose of an asset earlier than anticipated or hold an asset longer than anticipated if we determine it to be appropriate depending upon prevailing market conditions or factors regarding a particular asset. We can provide no assurances, however, that we will be successful in identifying or managing all of the risks associated with acquiring, holding or disposing of a particular asset or that we will not realize losses on certain assets.
78
Table of Contents

Interest Rate and Foreign Currency Hedging
Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our exemption from registration under the 1940 Act, we may mitigate the risk of interest rate volatility through the use of hedging instruments, such as interest rate swap agreements and interest rate cap agreements. The goal of our interest rate management strategy is to minimize or eliminate the effects of interest rate changes on the value of our assets, to improve risk-adjusted returns and, where possible, to lock in, on a long-term basis, a favorable spread between the yield on our assets and the cost of financing such assets.
In addition, because we are exposed to foreign currency exchange rate fluctuations, we employ foreign currency risk management strategies, including the use of, among others, currency hedges, and matched currency financing.
We can provide no assurances, however, that our efforts to manage interest rate and foreign currency exchange rate volatility will successfully mitigate the risks of such volatility on our portfolio.

Financing Strategy
Our financing strategy is to employ investment-specific financing principally on a non-recourse basis with matching terms and currencies, as available and applicable, through first mortgages, senior loan participations or securitizations. In addition to investment-specific financings, we may use and have used credit facilities on a shorter term basis and repurchase facilities and public and private, secured and unsecured debt issuances on a longer term basis. The amount of leverage we use is based on our assessment of a variety of factors, including, among others, the anticipated liquidity and price volatility of the assets in our investment portfolio, the potential for losses and extension risk in our portfolio, the ability to raise additional equity to reduce leverage and create liquidity for future investments, the availability of credit at favorable prices or at all, the credit quality of our assets, our outlook for borrowing costs relative to the income earned on our assets and financial covenants within our credit facilities. Our decision to use leverage to finance our assets is at our discretion and not subject to the approval of our stockholders.
We currently expect to target an overall leverage rate of approximately 50% or less. To the extent that we use leverage in the future, we may mitigate interest rate risk through utilization of hedging instruments, primarily interest rate swap and cap agreements, to serve as a hedge against future interest rate increases on our borrowings.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Certain Our critical accounting policies and estimates are consideredintegral to beunderstanding and evaluating our reported financial results as they require subjective or complex management judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain and unpredictable.
There have been no changes to our critical accounting policies. Critical accounting policies areor those that are most important to the portrayal of our financial conditionunconsolidated joint ventures since the filing of our Annual Report on Form 10-K for the year ended December 31, 2020.
With respect to critical estimates, we have established policies and results of operations and require management’s subjective and complex judgments, and forcontrol procedures which the impact of changes inseek to ensure that estimates and assumptions could have a material effect on our financial statements.are appropriately governed and applied consistently from period to period. We believe that all of the decisions and assessments upon which our financial statements are basedapplied were reasonable at the time made, based upon information available to us at that time.
We highlight below certain sections of our accounting policies that we believe are critical based on Due to the inherently judgmental nature of the various projections and assumptions used, unpredictability of economic and market conditions, uncertainty as to the timing and the manner by which the assets in our operationsWellness Infrastructure and require management judgment. Refer to discussionOther segments would be monetized and the recoverable values upon monetization, and uncertainties over the duration and severity of these significant accounting policiesthe resulting economic effects of COVID-19, actual results may differ from estimates, and changes in Note 2 toestimates and assumptions could have a material effect on our consolidated financial statements included in Item 1 of this Quarterly Report.the future.
Principles of consolidation—VIE assessment
Business combinations—evaluation of whether definition of a business is met; valuation of assets acquired, liabilities assumed and noncontrolling interests; purchase price allocation
Real estate assets—valuation of real estate and related intangibles at acquisition; classification as held for sale, impairment assessment; recognition of gain on sale of real estate
Loans receivable—nonaccrual policy; assessment of loan impairment and allowance for loan losses; accounting for PCI loans, including estimate of expected cash flows; accounting for ADC loans
Investments in unconsolidated ventures—impairment assessment
Securities—OTTI assessment; accounting for PCI debt securities
Identifiable intangibles—impairment assessment
Goodwill—assignment to reporting units; impairment assessment
Transfers of financial assets—qualification for sale accounting
Income taxes—assessment of deferred taxes and uncertain tax positions
Recent Accounting Updates
RecentThe effects of accounting updatesstandards adopted in 2021 and the potential effects of accounting standards to be adopted in the future are includeddescribed in Note 2 to our consolidated financial statements in Item 1 of this Quarterly Report.
ITEMItem 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk includes the exposure to loss resulting from changes in interest rates, credit curve spreads, foreign currency exchange rates, commodity prices, equity prices and credit risk in our underlying investments. Our primary market risks are credit risk, interest rate risk, credit curve spread risk, foreign currency risk and inflation, either directly or indirectly through our investments in unconsolidated ventures.
Credit Risk
We are subject to the credit risk of the tenant/operators of our properties. We seek to undertake a rigorous credit evaluation of each tenant and healthcare operator prior to acquiring properties. This analysis includes an extensive due diligence investigation of the tenant/operator’s business as well as an assessment of the strategic importance of the underlying real estate to the tenant/operator’s core business operations. Where appropriate, we may seek to augment the tenant/operator’s commitment to the facility by structuring various credit enhancement mechanisms into thetheir management assessments, where applicable, and underlying leases. These mechanisms could include security deposit requirements or guarantees from entities we deem creditworthy.
In addition, our investment in loans receivable is subject to a high degree of credit risk through exposure to loss from loan defaults. Default rates are subject to a wide variety of factors, including, but not limited to, borrower financial condition, property performance, property management, supply/demand factors, construction trends, consumer behavior, regional economics, interest rates, the strength of the U.S. economy and other factors beyond our control. All loans are subject to a certain probability of default. We manage credit risk through the underwriting process, acquiring our investments at the appropriate discount to face value, if any, and establishing loss assumptions. We also carefully monitor
the performance of the loans, including those held through our joint venture investments, as well as external factors that may affect their value.
For more information, see Item 2 “Management's Discussion and Analysis—Risk Management.”
79
Table of Contents

Interest Rate and Credit Curve Spread Risk
Interest rate risk relates to the risk that the future cash flow of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk is highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Credit curve spread risk is highly sensitive to the dynamics of the markets for loans and securities we hold. Excessive supply of these assets combined with reduced demand will cause the market to require a higher yield. This demand for higher yield will cause the market to use a higher spread over the U.S. Treasury securities yield curve, or other benchmark interest rates, to value these assets.
As U.S. Treasury securities are priced to a higher yield and/or the spread to U.S. Treasuries used to price the assets increases, the price at which we could sell some of our fixed rate financial assets may decline. Conversely, as U.S. Treasury securities are priced to a lower yield and/or the spread to U.S. Treasuries used to price the assets decreases, the value of our fixed rate financial assets may increase. Fluctuations in LIBOR and/or any alternative reference rate may affect the amount of interest income we earn on our floating rate borrowings and interest expense we incur on borrowings indexed to LIBOR,such reference rate, including under credit facilities and investment-level financing.
In connection with the Merger, we assumed a $2 billion notional forward starting interest rate swap intended to hedge against future refinancing costs of certain mortgage debt assumed in the Merger. The interest rate swap is currently out of the money and may be subject to future margin calls. If an early termination event were to occur with respect to the swap, we would be required to pay the termination value to our counterparty. As of November 7, 2017, the termination value was approximately $171.9 million. This interest rate swap does not qualify for hedge accounting, therefore, unrealized gains (losses) resulting from fair value changes at the end of each reporting period are recognized in earnings. As of November 7, 2017, a hypothetical 100 basis point increase or decrease in the 10-year treasury forward curve applied to our interest rate swap would result in an unrealized gain of approximately $173.8 million or unrealized loss of $199.7 million.
We utilize a variety of financial instruments on some of our investments, including interest rate swaps, caps, floors and other interest rate exchange contracts, in order to limit the effects of fluctuations in interest rates on our operations. The use of these types of derivatives to hedge interest-earning assets and/or interest-bearing liabilities carries certain risks, including the risk that losses on a hedge position will reduce the funds available for distribution and that such losses may exceed the amount invested in such instruments. A hedge may not perform its intended purpose of offsetting losses of rising interest rates. Moreover, with respect to certain of the instruments used as hedges, we are exposed to the risk that the counterparties with which we trade may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position. If we anticipate that the income from any such hedging transaction will not be qualifying income for REIT income purposes, we may conduct all or part of our hedging activities through a to-be-formed corporate subsidiary that is fully subject to federal corporate income taxation. Our profitability may be adversely affected during any period as a result of changing interest rates.
We have financing arrangements with various financial institutions bearing variable rate interest indexed primarily to 1 and 3-month LIBOR and 1 and 3-month Euribor. We limit our exposure to interest rate increases for our debt primarily through the use of interest rate caps. The interest rate sensitivity table below illustrates the hypothetical impact of changes in the index rates in 1% increments on our interest expense in a one year period, assuming no changes in our debt principal as it stood at September 30, 2021, and taking into account the effects of interest rate caps and contractual floors on indices. The maximum decrease in the interest rates is assumed to be the actual applicable indices at September 30, 2021, all of which were under 1% at September 30, 2021.
($ in thousands)+2.00%+1.00%Maximum Decrease in Applicable Index
Increase (decrease) in interest expense$75,703 $38,754 $(2,550)
Amount attributable to noncontrolling interests in investment entities33,581 17,403 (965)
Amount attributable to Operating Company$42,122 $21,351 $(1,585)
Foreign Currency Risk
We have foreign currency rate exposures related to our foreign currency-denominated investments.investments, in EUR and in GBP, held predominantly by our foreign subsidiaries and to a lesser extent, by U.S. subsidiaries. Changes in foreign currency rates can adversely affect the fair values and earnings of our non-U.S. holdings. We generally mitigate this foreign currency risk by utilizing currency instruments to hedge the capital portion ofour net investments in our foreign currency risk. The types of hedging instruments that we may employ on oursubsidiaries, using primarily foreign currency denominated investments are forwardsput options, forward contracts and costless collars (buying a protective put while writing an out-of the-money covered call with a strike price at which the premium received is equal to the premium of the protective put purchased) which involved no initial capital outlay. The puts are generally structured with strike prices up to 10% lower than our cost basis in such investments, thereby limiting any foreign exchange fluctuations to up to 10% of the original capital invested.
At September 30, 2017, we had approximately €498.2 million, £237.7 million, CHF0.2 million and NOK 802.4 million or a total of $1,008.1 million, in European investments. A 1% change in these foreign currency rates would result in a $10.1 millionincrease or decrease in translation gain or loss included in other comprehensive income. At September 30, 2017, our share of net tax-effected accumulated foreign exchange gain on the European investments was approximately $24.7 million, net of effect of hedging.
A summary of the foreign exchange contracts in place at September 30, 2017, including notional amount and key terms, is included in Note 12 to the consolidated financial statements.collars. The maturity dates of these instruments

approximate the projected dates of related cash flows for specific investments. Termination or maturity of
We expect our foreign currency hedging instruments may result in an obligation for paymentexposure to or from the counterparty to the hedging agreement. We are exposed to credit lossbe reduced significantly in the event of non-performance by counterparties for these contracts. To manage this risk,near future as we select major international banks and financial institutions as counterparties and performare currently pursuing a quarterly reviewmonetization of the financial health and stabilityremaining investments in our OED portfolio in the Other segment, which holds a substantial portion of our trading counterparties. Based onforeign currency denominated investments.
Commodity Price Risk
Certain operating costs in our reviewdata center portfolio are subject to price fluctuations caused by volatility of underlying commodity prices, primarily electricity used in our data center operations. We closely monitor the cost of electricity at September 30, 2017, we do not expect any counterparty to default on its obligations.
Inflation
Manyall of our assetslocations and liabilities are interest rate sensitivemay enter into power utility contracts to purchase electricity at fixed prices in nature. As a result, interest ratescertain locations in the U.S., with such contracts generally representing less than our forecasted usage. Our building of new data centers and other factors influence our performance more so than inflation, although inflation rates can often have a meaningful influence over
80
Table of Contents

expansion of existing data centers will also subject us to commodity price risk with respect to building materials such as steel and copper. Additionally, the direction of interest rates. Furthermore, our financial statements are prepared in accordance with U.S. GAAPlead time to procure data center equipment is substantial and our distributions as determined by our board of directors will be primarily based on our taxable income,procurement delays could increase construction cost and in each case, our activities and balance sheet are measured with reference to historical cost and/or fair value without considering inflation.delay revenue generation.
ITEMItem 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at September 30, 2017.2021.
Changes in Internal Control over Financial Reporting
As a result of the Merger, we are in the process of integrating the systems, processes and internal controls of Colony, NSAM and NRF, and we expect the integration to be sufficiently completed at the end of the current fiscal year. We will continue to review our internal control practices for the combined company in consideration of future integration and post-merger activities.

Except as described above in the preceding paragraph, during the quarter ended September 30, 2017, there wasThere have been no changechanges in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended September 30, 2021 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.reporting, other than our continuing evaluation of the policies, processes, systems and operations of Vantage SDC that was acquired in July 2020 and zColo that was acquired by DataBank in December 2020.



81
Table of Contents

PART II—OTHER INFORMATION
ITEMItem 1.  Legal Proceedings.
The Company may be involved in litigationslitigation and claims in the ordinary course of business. As of September 30, 2017,2021, the Company was not involved in any material legal proceedings.
ITEMItem 1A. Risk Factors.
Risks RelatedFor a discussion of our potential risks and uncertainties, please refer to the Proposed Combination among“Risk Factors” section in our Annual Report on Form 10-K for the Company, NorthStar I and NorthStar II
We cannot be sure of the market price of the Colony NorthStar Credit common stock we will receive as consideration for our contribution of the CLNS Contributed Portfolio.
Upon completion of the Combination, we will receive shares of Colony NorthStar Credit's Class A common stock (or Class B common stock in the event of a listing without an initial public offering). We anticipate that Colony NorthStar Credit’s Class A common stock will be traded on a national securities exchange; however, prior to the Combination, there has not been and will not be an established public trading market for Colony NorthStar Credit's common stock. The market price of Colony NorthStar Credit's class A common stock following the Combination will be unknown until the commencement of trading of Colony NorthStar Credit's class A common stock upon the consummation of the Combination. The value of Colony NorthStar Credit's class B common stock will be basedyear ended December 31, 2020, which is available on the market price of Colony NorthStar Credit's class A common stockSEC’s website at the time that the applicable class of Colony NorthStar Credit's class B common stock converts to Colony NorthStar Credit's class A common stock.www.sec.gov.
The number of Colony NorthStar Credit shares we will receive in consideration for our contribution of the CLNS Contributed Portfolio is fixed and generally will not be adjusted for changes in the value of the assets and liabilities that comprise the CLNS Contributed Portfolio.
If the Combination is completed, we will receive a fixed number of Colony NorthStar Credit's class A common stock (or Colony NorthStar Credit's class B common stock in the event of a listing without an initial public offering) in consideration for the CLNS Contributed Portfolio.
The number of shares of Colony NorthStar Credit's class A common stock (or Colony NorthStar Credit's class B common stock in the event of a listing without an initial public offering) is fixed and may be adjusted only under certain limited circumstances as set forth in the combination agreement and will not be adjusted to reflect any changes in the value of the assets and liabilities that comprise the CLNS Contributed Portfolio between the signing of the combination agreement and the closing of the Combination. However, immediately prior to the closing of the Combination, Colony NorthStar Credit will, if necessary, declare a special distribution to us in an amount that is intended to provide us a true up for the difference between (i) the sum of (a) the loss in value of NorthStar I and NorthStar II as a result of the distributions made by NorthStar I and NorthStar II in excess of funds from operations from July 1, 2017 through the day immediately preceding the closing date of the Combination (excluding the dividend payment made by each of NorthStar I and NorthStar II on July 1, 2017), (b) funds from operations of the investment entities in which subsidiaries of the Company own interests to be contributed to Colony NorthStar Credit (the “CLNS Investment Entities”) from July 1, 2017 through the day immediately preceding the closing date of the Combination, (c) cash contributions or contributions of certain intercompany receivables made to the CLNS Investment Entities from July 1, 2017 through the day immediately preceding the closing date of the Combination and (d) the expected present value of certain unreimbursed operating expenses of NorthStar I and NorthStar II paid on each company’s behalf by their respective advisors, and (ii) cash distributions made by the CLNS Investment Entities from July 1, 2017 through the day immediately preceding the closing date of the Combination, excluding that certain distribution made by the CLNS Investment Entities in July 2017 relating to the partial repayment of a certain investment.
Completion of the Combination is subject to many conditions and if these conditions are not satisfied or waived, the Combination will not be completed.
Completion of the Combination is subject to many conditions that must be satisfied or waived under the combination agreement for the Combination to be completed including, among others, receipt of approval of the stockholders of NorthStar I and NorthStar II.
In addition, each of the parties may terminate the combination agreement under certain circumstances, including, among other reasons, if the Combination is not completed by the outside date (as set forth in the combination agreement).

There can be no assurance that the conditions to the closing of the Combination will be satisfied or waived. For example, Colony NorthStar Credit’s ability to qualify as a REIT depends, in part, on its acquisition of NorthStar I’s and NorthStar II’s qualifying REIT assets in the Combination. Accordingly, for Colony NorthStar Credit’s counsel to deliver the REIT qualification opinion that is a condition to the closing of the Combination, Colony NorthStar Credit must be able to project, and its counsel to reasonably assume, that Colony NorthStar Credit will satisfy the REIT income and asset tests for the entire taxable year of the Combination. Accordingly, there can be no assurance that the Combination will be completed.
If the Combination does not occur, we may incur payment obligations to the others.
If the combination agreement is terminated under certain circumstances, we may be required to pay NorthStar I and NorthStar II certain termination fees or transaction expenses of up to $10 million each (depending on the specific circumstances), NorthStar I may be required to pay us and NorthStar II certain termination fees or transaction expenses of up to $10 million each (depending on the specific circumstances) and NorthStar II may be required to pay us or NorthStar I certain termination fees, as applicable, or transaction expenses of up to $10 million each (depending on the specific circumstances).
If the Combination is approved by the NorthStar I and NorthStar II stockholders, the date on which we will receive Colony NorthStar Credit common stock is uncertain.
Even if the Combination is approved by the NorthStar I and NorthStar II stockholders, the date on which the Combination is consummated and we receive Colony NorthStar Credit common stock will remain uncertain, and may not occur at all. Although it is expected that the Combination will be consummated the first quarter of 2018, the completion date of the Combination might be later than expected due to delays in satisfying the conditions to the closing of the Combination (including the listing by Colony NorthStar Credit of its class A common stock on a national securities exchange) or other unforeseen events. In addition, there can be no assurance that the Combination will be completed even if the required stockholder approvals are obtained.
Failure to complete the Combination could negatively affect our value and our future business and financial results.
If the combination agreement is terminated and the Combination is not completed for any reason, including as a result of the NorthStar I stockholders’ or NorthStar II stockholders’ failing to approve the necessary proposals, our ongoing business could be adversely affected and, without realizing any of the benefits of having completed the Combination, may be subject to several risks, including that:
we may experience negative reactions from our investors;
we will be required to pay certain costs relating to the Combination, whether or not the Combination is completed, and, depending on the circumstances relating to a termination, may be required to pay certain termination fees or transaction expenses; and
our management’s focus and resources may be diverted from operational matters and other strategic opportunities while working to implement the Combination.
ITEM 2.Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.
Issuance of Equity Securities Upon and Use of Proceeds.
Redemption of Membership Units in OP ("OP Units")
Holders of OP Units
In February 2017, we issued 45,371 have the right to require the OP to redeem all or a portion of their OP Units for cash or, at our option, shares of our class A common stock uponon a one-for-one basis. During the third quarter of 2021, in satisfaction of a redemption of an equal number of ourrequest by a former employee OP Units, of which 31,171 OP Units were held by FHB Holding LLC (which is controlled by certain of our employees) and 14,200 OP Units were allocated between two educational institutions that held the OP Units prior to their respective redemption requests. Such institutions received the OP Units as a charitable contribution from FHB Holdings LLC.
In April 2017,Unit holder, we issued 1,053,306 shares of our class A common stock upon redemption of an equal number of our OP Units, of which 607,841 OP Units were held by limited liability companies controlled by Thomas J. Barrack, Jr. and 445,465 OP Units were held by FHB Holdings LLC. In connection with such redemption of OP Units, we issued 28,166 shares of our class A common stock upon conversion of an equal number of shares of our class B common stock.
In May 2017, we issued 287,035 shares of our class A common stock upon redemption of an equal number of our OP Units held collectively by an educational institution and a religious institution, who in turn had received such units as charitable contributions from Colony Capital, LLC (which is controlled by certain members of our senior management).
In August 2017, we issued 295,201 shares of our class A common stock upon redemption of an equal number of our OP Units held by certain of our employees.

Such shares of class A common stock were issued and sold in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act").
Issuance of Equity Securities Upon Exchange of Notes
In August 2017, we issued 207,739500,000 shares of our class A common stock to a holder of the 5.375% exchangeable notes upon exchange by such holder of $2,500,000 of outstanding principal on the 5.375% exchangeable notes. No consideration was received by the Company upon exchange of the 5.375% exchangeable notes for shares of our class A common stock.former employee. Such shares of class A common stock were issued in reliance on Section 4(a)(2) of the Securities Act.Act of 1933, as amended.
Issuer Repurchase of Equity Securities
The number and weighted average price per share of shares purchased in the quarter ended September 30, 2017 is set forth in the table below:
Item 3.     Defaults Upon Senior Securities.
Period Total Number of Shares Purchased Weighted Average Price Paid Per Share 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Dollar Value of Shares that May Yet Be Purchased Under the Program (1)
July 1, 2017 through July 31, 2017

 —
 N/A
 —
 $132,014,594
August 1, 2017 through August 31, 2017 1,388,432
 $13.08
 1,388,432
 113,855,223
September 1, 2017 through September 30, 2017 2,974,145
 12.93
 2,974,145
 75,387,959
Total 4,362,577
 $12.98
 4,362,577
 75,387,959
__________
(1)
The Company's common stock repurchase program was announced by the Company on February 28, 2017. Pursuant to the common stock repurchase program, the Company may repurchase up to $300 million of the Company's class A common stock over a one-year period.
ITEM 3.Defaults Upon Senior Securities.
None.
ITEMItem 4. Mine Safety Disclosures.
Not applicable.
ITEMItem 5. Other Information.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.None.
On November 7, 2017, David Hamamoto delivered a Notice of Resignation to the Company, effective as of January 11, 2018, by which Mr. Hamamoto tendered his voluntary resignation of all director and officer positions held with the Company, its affiliates, subsidiaries and any other entity in which the Company or its affiliates is the manager or serves in a similar capacity. Mr. Hamamoto’s resignation did not involve a disagreement with the Company or any matter relating to the Company’s operations, policies or practices.
On November 7, 2017, the Board of Directors appointed Richard B. Saltzman, the Company’s Chief Executive Officer & President, as a director to fill the vacancy created by Mr. Hamamoto’s resignation. The appointment of Mr. Saltzman will be effective concurrently with the effective date of Mr. Hamamoto’s resignation.


ITEMItem 6. Exhibits.
Exhibit NumberDescription
Exhibit Number3.1Description
2.1
Master Combination Agreement, dated asArticles of August 25, 2017, among Colony Capital Operating Company, LLC, NRF RED REIT Corp., NorthStar Real Estate Income Trust, Inc., NorthStar Real Estate Income Trust Operating Partnership, LP, NorthStar Real Estate Income II, Inc., NorthStar Real Estate Income Operating Partnership II, LP,Amendment and Restatement of Colony NorthStar, Credit Real Estate, Inc. and Credit RE Operating Company, LLC (incorporated by reference to Exhibit 2.13.1 to Colony NorthStar, Inc.’sthe Company’s Current Report on Form 8-K filed on August 28,January 10, 2017)
3.1
3.2
Articles Supplementary designatingof Amendment of DigitalBridge Group, Inc. (fka Colony Capital, Inc. and Colony NorthStar, Inc.’s 7.125% Series J Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, par value $0.01 per share) (incorporated by reference to Exhibit 3.33.1 to Colony NorthStar, Inc.’s Registration Statementthe Company's Current Report on Form 8-A8-K filed on September 22, 2017)June 23, 2021)
3.3
4.1Amended and Restated Bylaws of DigitalBridge Group, Inc. (fka Colony Capital, Inc.) (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on June 23, 2021)
4.1Form
Base Indenture, dated as of stock certificate evidencingJuly 9, 2021, by and between DigitalBridge Issuer, LLC, DigitalBridge Co-Issuer, LLC, together as Co-Issuers, certain indirect and direct subsidiaries of the 7.125% Series J Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, par value $0.01 per shareCo-Issuers and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Colony NorthStar, Inc.’s Registration Statementthe Company's Current Report on Form 8-A8-K filed on September 22, 2017)July 15, 2021).
4.2
10.1*Series 2021-1 Supplement to Base Indenture, dated as of July 9, 2021, by and between DigitalBridge Issuer, LLC and DigitalBridge Co-Issuer, LLC, together as Co-Issuers of the Series 2021-1 secured fund fee revenue notes, Class A-2, and Series 2021-1 variable funding senior notes, Class A-1, certain indirect and direct subsidiaries of the Co-Issuers and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on July 15, 2021).
10.1
Amendment No. 25 to the Third Amended and Restated Limited Liability Company Agreement of DigitalBridge Operating Company, LLC (fka Colony Capital Operating Company, LLC,LLC), dated as of October 13, 2017July 1, 2021 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed on August 9, 2021)
82
Table of Contents

10.2*
Exhibit Number		Amendment No.Description
10.2
Class A-1 Note Purchase Agreement, dated as of July 9, 2021, by and among DigitalBridge Issuer, LLC and DigitalBridge Co-Issuer, LLC, together as Co-Issuers, each of DigitalBridge Holdings 1, LLC, DigitalBridge Holdings 2, LLC and DigitalBridge Holdings 3, LLC, DigitalBridge Guarantor, LLC and DigitalBridge Co-Guarantor, LLC, as Co-Guarantors, Colony Capital Investment Holdco, LLC, as Manager, the conduit investors party thereto, the financial institutions party thereto, certain funding agents, and Barclays Bank PLC, as L/C Provider and Administrative Agent (incorporated by reference to Exhibit 10.1 to the Third AmendedCompany's Current Report on Form 8-K filed on July 15, 2021).
10.3
The Guarantee and Restated Limited Liability CompanySecurity Agreement, dated as of July 9, 2021, between DigitalBridge Guarantor, LLC and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 15, 2021).
10.4
The Guarantee and Security Agreement, dated as of July 9, 2021, between DigitalBridge Co-Guarantor, LLC and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on July 15, 2021).
10.5
Management Agreement, dated as of July 9, 2021, by and among DigitalBridge Issuer, LLC and DigitalBridge Co-Issuer, LLC, together as Co-Issuers, each of DigitalBridge Holdings 1, LLC, DigitalBridge Holdings 2, LLC and DigitalBridge Holdings 3, LLC, DigitalBridge Guarantor, LLC and DigitalBridge Co-Guarantor, LLC, as Co-Guarantors, and Colony Capital Investment Holdco, LLC, as Manager (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on July 15, 2021).
10.6
Purchase and Sale Agreement, dated September 6, 2021, between DigitalBridge Operating Company, LLC dated as of October 18, 2017and CWP Bidco LP (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on September 10, 2021).
31.1*
Certification of Richard B. Saltzman, President andMarc C. Ganzi, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Darren J. Tangen,Jacky Wu, Chief Financial Officer, and Treasurer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Richard B. Saltzman, President andMarc C. Ganzi, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of Darren J. Tangen,Jacky Wu, Chief Financial Officer, and Treasurer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*101.INS**Financial statements from the Quarterly Report on Form 10-Q of Colony NorthStar, Inc. for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Operations, (3) Condensed Consolidated Statements of Comprehensive Income, (4) Condensed Consolidated Statements of Equity, (5) Condensed Consolidated Statements of Cash Flows and (6) Notes to Condensed Consolidated Financial Statements.Instance Document
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
104**Cover Page Interactive Data File
__________
† Denotes a management contract or compensatory plan contract or arrangement.
*     Filed herewith.
**     The document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
***     Schedules and exhibits to such agreement have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Registrant will furnish copies of such schedules and exhibits to the SEC upon request.


*Filed herewith
**Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
Table of Contents


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: November 9, 2017
2021
DigitalBridge Group, Inc.
COLONY NORTHSTAR, INC.By:/s/ Marc C. Ganzi
Marc C. Ganzi
By:/s/ Richard B. Saltzman
Richard B. Saltzman
Chief Executive Officer and President
(Principal Executive Officer)
By:/s/ Darren J. TangenJacky Wu
Darren J. TangenJacky Wu
Chief Financial Officer (Principal Financial Officer)
By:/s/ Neale RedingtonSonia Kim
Neale RedingtonSonia Kim
Chief Accounting Officer (Principal Accounting Officer)



116