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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2019~~March 31, 2020

ORor



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-37980



COLONY CAPITAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
	Maryland	46-4591526
	(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

515 South Flower Street, 44th Floor

Los Angeles, California 90071

(Address of Principal Executive Offices, Including Zip Code)

(310) 282-8820

(Registrant’s Telephone Number, Including Area Code)



Securities registered pursuant to Section 12(b) of the Act:
Title of Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value	CLNY	~~New York Stock Exchange~~
~~Preferred Stock, 8.25% Series B Cumulative Redeemable, $0.01 par value~~	~~CLNY.PRB~~	~~New York Stock Exchange~~
~~Preferred Stock, 8.75% Series E Cumulative Redeemable, $0.01 par value~~	~~CLNY.PRE~~	New York Stock Exchange
Preferred Stock, 7.50% Series G Cumulative Redeemable, $0.01 par value	CLNY.PRG	New York Stock Exchange
Preferred Stock, 7.125% Series H Cumulative Redeemable, $0.01 par value	CLNY.PRH	New York Stock Exchange
Preferred Stock, 7.15% Series I Cumulative Redeemable, $0.01 par value	CLNY.PRI	New York Stock Exchange
Preferred Stock, 7.125% Series J Cumulative Redeemable, $0.01 par value	CLNY.PRJ	New 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	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 ☒

As of ~~August 6, 2019, 486,966,409~~May 5, 2020, 481,201,839 shares of the Registrant's class A common stock and 733,931 shares of class B common stock were outstanding.

Table of Contents

COLONY CAPITAL, INC.

FORM 10-Q

TABLE OF CONTENTS



	PART I. FINANCIAL INFORMATION	Page
Item 1.	Financial Statements	4
	Consolidated Balance Sheets ~~as of June 30, 2019 and December 31, 2018 (Unaudited)~~	4
	Consolidated Statements of Operations ~~for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)~~	5
	Consolidated Statements of Comprehensive Income (Loss) ~~for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)~~	6
	Consolidated Statements of Equity ~~for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)~~	7
	Consolidated Statements of Cash Flows ~~for the Six Months Ended June 30, 2019 and 2018 (Unaudited)~~	98
	Notes to Consolidated Financial Statements:	1110
	1. Business and Organization	1110
	2. Summary of Significant Accounting Policies	1211
	3. Business Combinations	16
	4. Real Estate	18
	4.5. Loans Receivable	2021
	5.6. Equity and Debt Investments	2324
	6.7. Goodwill, Deferred Leasing Costs and Other Intangibles	2627
	7.8. Assets and Related Liabilities Held for Sale	2830
	8.9. Restricted Cash, Other Assets and Other Liabilities	29
	~~9. Debt~~	30
	10. ~~Derivatives~~Debt	3332
	11. ~~Fair Value~~Derivatives	3635
	12. Fair Value	35
	13. Variable Interest Entities	43
	~~13.~~14. Stockholders' Equity	45
	~~14.~~15. Noncontrolling Interests	48
	~~15.~~16. Discontinued Operations	48
	~~16.~~17. Earnings per Share	50
	~~17.~~18. Fee Income	50
	19. Equity-Based Compensation	51
	~~18. Equity-Based Compensation~~	52
	~~19.~~20. Transactions with Affiliates	54
	~~20.~~21. Commitments and Contingencies	56
	~~21.~~22. Segment Reporting	5756
	~~22.~~23. Supplemental Disclosure of Cash Flow Information	6159
	~~23.~~24. Subsequent Events	6160
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6463
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~101~~91
Item 4.	Controls and Procedures	~~103~~93
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	~~104~~94
Item 1A.	Risk Factors	~~104~~94
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~104~~98
Item 3.	Defaults Upon Senior Securities	~~105~~98
Item 4.	Mine Safety Disclosures	~~105~~98
Item 5.	Other Information	~~105~~99
Item 6.	Exhibits	~~106~~100
SIGNATURES		~~107~~101

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COLONY CAPITAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

~~(Unaudited)~~



	March 31, 2020 (Unaudited)			December 31, 2019
Assets
Cash and cash equivalents	$	1,361,769		$	1,205,190
Restricted cash	166,568			203,923
Real estate, net	10,458,057			10,860,518
Loans receivable (at fair value at March 31, 2020)	1,588,427			1,566,328
Equity and debt investments ($418,830 and $457,693 at fair value, respectively)	2,177,961			2,313,805
Goodwill	1,373,891			1,452,891
Deferred leasing costs and intangible assets, net	595,250			638,853
Assets held for sale	749,416			870,052
Other assets ($26,919 and $21,386 at fair value, respectively)	640,220			669,144
Due from affiliates	48,503			51,480
Total assets	$	19,160,062		$	19,832,184
Liabilities
Debt, net	$	9,453,338		$	8,983,908
Accrued and other liabilities ($95,811 and $136,861 at fair value, respectively)	837,281			1,015,898
Intangible liabilities, net	102,077			111,484
Liabilities related to assets held for sale	260,959			268,152
Due to affiliates	34,301			34,064
Dividends and distributions payable	77,228			83,301
Preferred stock redemptions payable	—			402,855
Total liabilities	10,765,184			10,899,662
Commitments and contingencies (Note 21)
Redeemable noncontrolling interests	3,162			6,107
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $1,033,750 liquidation preference; 250,000 shares authorized; 41,350 shares issued and outstanding	999,490			999,490
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 480,118 and 487,044 shares issued and outstanding, respectively	4,802			4,871
Class B, 1,000 shares authorized; 734 shares issued and outstanding	7			7
Additional paid-in capital	7,532,213			7,553,599
Accumulated deficit	(3,806,308		)	(3,389,592		)
Accumulated other comprehensive income	16,222			47,668
Total stockholders’ equity	4,746,426			5,216,043
Noncontrolling interests in investment entities	3,233,910			3,254,188
Noncontrolling interests in Operating Company	411,380			456,184
Total equity	8,391,716			8,926,415
Total liabilities, redeemable noncontrolling interests and equity	$	19,160,062		$	19,832,184

June 30, 2019
December 31, 2018⁽¹⁾
Assets
     Cash and cash equivalents $ 353,984
$ 461,912
     Restricted cash 336,491
364,605
     Real estate, net 10,348,430
10,826,010
     Loans receivable, net 1,487,611
1,659,217
     Equity and debt investments ($413,887 and $238,963 at fair value, respectively) 2,373,690
2,529,747
     Goodwill 1,514,561
1,514,561
     Deferred leasing costs and intangible assets, net 372,351
445,930
Assets held for sale 5,205,340
3,967,345
Other assets ($20,953 and $33,558 at fair value, respectively) 621,673
400,143
     Due from affiliates 44,407
45,779
Total assets $ 22,658,538
$ 22,215,249
Liabilities
Debt, net $ 8,739,667
$ 8,975,372
Accrued and other liabilities ($398,083 and $141,711 at fair value, respectively) 1,020,709
634,144
Intangible liabilities, net 100,730
147,470
Liabilities related to assets held for sale 2,168,168
1,218,495
Dividends and distributions payable 84,221
84,013
Total liabilities 12,113,495
11,059,494
Commitments and contingencies (Note 20)

Redeemable noncontrolling interests 7,945
9,385
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $1,436,605 liquidation preference; 250,000 shares authorized; 57,464 shares issued and outstanding 1,407,495
1,407,495
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 487,013 and 483,347 shares issued and outstanding, respectively 4,870
4,834
Class B, 1,000 shares authorized; 734 shares issued and outstanding 7
7
Additional paid-in capital 7,621,655
7,598,019
Distributions in excess of earnings (2,699,276 ) (2,018,302 )
Accumulated other comprehensive income 26,967
13,999
Total stockholders’ equity 6,361,718
7,006,052
     Noncontrolling interests in investment entities 3,861,047
3,779,728
     Noncontrolling interests in Operating Company 314,333
360,590
Total equity 10,537,098
11,146,370
Total liabilities, redeemable noncontrolling interests and equity $ 22,658,538
$ 22,215,249

~~__________~~


⁽¹⁾	Prior period amounts have been revised to reflect classification of the industrial business as a discontinued operation and presentation of the assets and liabilities of the industrial business as assets held for sale and liabilities related to assets held for sale on the consolidated balance sheets (Note 7).

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

Table of Contents

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾			2020			2019
Revenues
Property operating income	$	488,788		$	518,953		$	947,686		$	1,006,046		$	425,416		$	458,898
Interest income	35,055			44,121			81,125			107,443			32,868			46,070
Fee income ($33,267, $38,000, $64,118 and $73,458 from affiliates, respectively)	35,433			38,290			66,461			73,818
Other income ($11,339, $10,094, $21,184 and $16,887 from affiliates, respectively)	14,163			14,124			26,226			24,778
Fee income ($43,100 and $30,850 from affiliates, respectively)													43,505			31,028
Other income ($2,486 and $9,845 from affiliates, respectively)													5,724			12,063
Total revenues	573,439			615,488			1,121,498			1,212,085			507,513			548,059
Expenses
Property operating expense	279,240			300,191			549,982			585,150			263,633			270,742
Interest expense	141,738			142,453			276,627			281,152			123,413			134,889
Investment and servicing expense	20,017			25,891			38,466			44,470			12,178			18,449
Transaction costs	318			2,641			2,822			3,357			421			2,504
Placement fees	—			1,170			309			1,293
Depreciation and amortization	109,382			105,414			220,734			220,174			136,858			111,352
Provision for loan loss	15,003			13,933			18,614			19,308			—			3,611
Impairment loss	84,695			69,660			110,317			223,058			387,268			25,622
Compensation expense—cash and equity-based	42,430			52,527			73,947			99,616			53,034			31,517
Compensation expense—carried interest	1,146			—			2,418			—
Compensation expense—carried interest and incentive fee													(9,181		)	1,272
Administrative expenses	20,146			23,536			42,531			46,969			32,758			22,694
Settlement loss													5,090			—
Total expenses	714,115			737,416			1,336,767			1,524,547			1,005,472			622,652
Other income (loss)
Gain on sale of real estate	6,077			42,702			35,530			58,853			7,932			29,453
Other gain (loss), net	(89,506		)	28,798			(138,575		)	104,054
Equity method earnings (losses)	(259,288		)	(775		)	(225,225		)	29,307
Equity method earnings—carried interest	1,836			—			6,732			—
Other loss, net													(3,471		)	(49,069		)
Equity method earnings													115,702			34,063
Equity method earnings (losses)—carried interest													(18,411		)	4,896
Loss from continuing operations before income taxes	(481,557		)	(51,203		)	(536,807		)	(120,248		)	(396,207		)	(55,250		)
Income tax benefit (expense)	(2,585		)	531			(3,783		)	33,324
Income tax expense													(8,324		)	(1,198		)
Loss from continuing operations	(484,142		)	(50,672		)	(540,590		)	(86,924		)	(404,531		)	(56,448		)
Income (loss) from discontinued operations	(504		)	7,764			25,789			16,858
Income from discontinued operations													474			26,293
Net loss	(484,646		)	(42,908		)	(514,801		)	(70,066		)	(404,057		)	(30,155		)
Net income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests	509			1,873			1,953			1,177			(548		)	1,444
Investment entities	(13,414		)	26,360			36,574			45,603			(21,749		)	49,988
Operating Company	(29,989		)	(5,728		)	(36,600		)	(10,106		)	(39,601		)	(6,611		)
Net loss attributable to Colony Capital, Inc.	(441,752		)	(65,413		)	(516,728		)	(106,740		)	(342,159		)	(74,976		)
Preferred stock redemption (Note 13)	—			(3,995		)	—			(3,995		)
Preferred stock dividends	27,138			31,388			54,275			62,775			19,474			27,137
Net loss attributable to common stockholders	$	(468,890	)	$	(92,806	)	$	(571,003	)	$	(165,520	)	$	(361,633	)	$	(102,113	)
Basic loss per share
Loss from continuing operations per basic common share	$	(0.98	)	$	(0.20	)	$	(1.21	)	$	(0.35	)	$	(0.76	)	$	(0.23	)
Net loss per basic common share	$	(0.98	)	$	(0.19	)	$	(1.19	)	$	(0.33	)	$	(0.76	)	$	(0.21	)
Diluted loss per share
Loss from continuing operations per diluted common share	$	(0.98	)	$	(0.20	)	$	(1.21	)	$	(0.35	)	$	(0.76	)	$	(0.23	)
Net loss per diluted common share	$	(0.98	)	$	(0.19	)	$	(1.19	)	$	(0.33	)	$	(0.76	)	$	(0.21	)
Weighted average number of shares
Basic	479,228			488,676			479,577			509,562			479,106			478,874
Diluted	479,228			488,676			479,577			509,562			479,106			478,874
Dividends declared per common share	$	0.11		$	0.11		$	0.22		$	0.22		$	0.11		$	0.11

~~__________~~


⁽¹⁾	Prior period amounts have been revised to reflect classification of the industrial business as a discontinued operation and presentation of results of operations of the industrial business as income (loss) from discontinued operations on the consolidated statement of operations (Note 15).

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

Table of Contents

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net loss $ (484,646 ) $ (42,908 ) $ (514,801 ) $ (70,066 )
Other comprehensive income (loss):
Other comprehensive income from investments in unconsolidated ventures, net 4,409
999
9,319
2,098
Net change in fair value of available-for-sale debt securities (766 ) 1,632
1,298
(19,086 )
Net change in fair value of cash flow hedges (6,187 ) —
(6,850 ) —
Foreign currency translation adjustments:
Foreign currency translation gain (loss) 7,574
(103,050 ) (20,672 ) (26,649 )
Change in fair value of net investment hedges 3,606
37,937
16,470
13,559
Net foreign currency translation adjustments 11,180
(65,113 ) (4,202 ) (13,090 )
Other comprehensive income (loss) 8,636
(62,482 ) (435 ) (30,078 )
Comprehensive loss (476,010 ) (105,390 ) (515,236 ) (100,144 )
Comprehensive income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests 509
1,873
1,953
1,177
Investment entities (9,906 ) (9,329 ) 22,453
40,021
Operating Company (29,680 ) (7,286 ) (35,778 ) (11,544 )
Comprehensive loss attributable to stockholders $ (436,933 ) $ (90,648 ) $ (503,864 ) $ (129,798 )



	Three Months Ended March 31,
	2020			2019
Net loss	$	(404,057	)	$	(30,155	)
Changes in accumulated other comprehensive income (loss) related to:
Investments in unconsolidated ventures, net	(26,477		)	4,910
Available-for-sale debt securities	1,489			2,064
Cash flow hedges	41			(663		)
Foreign currency translation	(60,374		)	(28,246		)
Net investment hedges	21,608			12,864
Other comprehensive loss	(63,713		)	(9,071		)
Comprehensive loss	(467,770		)	(39,226		)
Comprehensive income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests	(548		)	1,444
Investment entities	(50,608		)	32,359
Operating Company	(43,041		)	(6,098		)
Comprehensive loss attributable to stockholders	$	(373,573	)	$	(66,931	)

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

Table of Contents

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share data)

(Unaudited)


	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			Preferred Stock		Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders’ Equity			Noncontrolling Interests in Investment Entities			Noncontrolling Interests in Operating Company			Total Equity


Balance at December 31, 2017	$	1,606,966			$	5,433		$	7,913,622		$	(1,165,412	)		$	47,316		$	8,407,925		$	3,539,072		$	402,395		$	12,349,392
Cumulative effect of adoption of new accounting pronouncements	—			—			—			(1,018		)		(202		)	(1,220		)	—			—			(1,220		)
Balance at December 31, 2018																													$	1,407,495	$	4,841		$	7,598,019		$	(2,018,302	)	$	13,999	$	7,006,052		$	3,779,728		$	360,590		$	11,146,370
Cumulative effect of adoption of new accounting pronouncement																													—		—			—			(2,905		)	—		(2,905		)	(1,378		)	(185		)	(4,468		)
Net income (loss)	—			—			—			(41,327		)		—			(41,327		)	19,243			(4,378		)	(26,462		)	—		—			—			(74,976		)	—		(74,976		)	49,988			(6,611		)	(31,599		)
Other comprehensive income	—			—			—			—				2,177			2,177			30,107			120			32,404
Other comprehensive income (loss)																													—		—			—			—			8,045		8,045			(17,629		)	513			(9,071		)
Common stock repurchases	—			(423		)	(246,018		)	—				—			(246,441		)	—			—			(246,441		)	—		(7		)	(3,160		)	—			—		(3,167		)	—			—			(3,167		)
Redemption of OP Units for cash and class A common stock																													—		—			33			—			—		33			—			(33		)	—
Equity-based compensation	—			33			10,722			—				—			10,755			—			1,414			12,169			—		27			6,323			—			—		6,350			191			—			6,541
Redemption of OP Units for cash and class A common stock	—			—			24			—				—			24			—			(2,120		)	(2,096		)
Shares canceled for tax withholdings on vested stock awards	—			(29		)	(31,723		)	—				—			(31,752		)	—			—			(31,752		)	—		(6		)	(3,001		)	—			—		(3,007		)	—			—			(3,007		)
Deconsolidation of investment entities	—			—			—			—				—			—			(330,980		)	—			(330,980		)
Contributions from noncontrolling interests	—			—			—			—				—			—			97,867			—			97,867			—		—			—			—			—		—			305,216			—			305,216
Distributions to noncontrolling interests	—			—			—			—				—			—			(82,512		)	(3,551		)	(86,063		)	—		—			—			—			—		—			(107,377		)	(3,450		)	(110,827		)
Preferred stock dividends	—			—			—			(31,387		)		—			(31,387		)	—			—			(31,387		)	—		—			—			(27,137		)	—		(27,137		)	—			—			(27,137		)
Common stock dividends declared ($0.11 per share)	—			—			—			(55,852		)		—			(55,852		)	—			—			(55,852		)	—		—			—			(53,410		)	—		(53,410		)	—			—			(53,410		)
Reallocation of equity (Note 2 and 14)	—			—			(11,675		)	—				(254		)	(11,929		)	(5,822		)	17,751			—
Balance at March 31, 2018	$	1,606,966		$	5,014		$	7,634,952		$	(1,294,996	)		$	49,037		$	8,000,973		$	3,266,975		$	411,631		$	11,679,579
Net income (loss)	—			—			—			(65,413		)		—			(65,413		)	26,360			(5,728		)	(44,781		)
Other comprehensive loss	—			—			—			—				(25,235		)	(25,235		)	(35,689		)	(1,558		)	(62,482		)
Redemption of preferred stock	(199,471		)	—			(529		)	—				—			(200,000		)	—			—			(200,000		)
Common stock repurchases	—			(125		)	(72,463		)	—				—			(72,588		)	—			—			(72,588		)
Equity-based compensation	—			1			9,193			—				—			9,194			—			—			9,194
Redemption of OP Units for cash and class A common stock	—			15			18,860			—				—			18,875			—			(18,875		)	—
Shares canceled for tax withholdings on vested stock awards	—			—			(298		)	—				—			(298		)	—			—			(298		)
Reclassification of contingent consideration out of liability at end of measurement period	—			—			12,539			—				—			12,539			—			—			12,539
Contributions from noncontrolling interests	—			—			—			—				—			—			287,090			—			287,090
Distributions to noncontrolling interests	—			—			—			—				—			—			(137,317		)	(3,344		)	(140,661		)
Preferred stock dividends	—			—			—			(29,356		)		—			(29,356		)	—			—			(29,356		)
Common stock dividends declared ($0.11 per share)	—			—			—			(53,952		)		—			(53,952		)	—			—			(53,952		)
Reallocation of equity (Note 2 and 14)	—			—			14,664			—				128			14,792			(15,357		)	565			—
Balance at June 30, 2018	$	1,407,495		$	4,905		$	7,616,918		$	(1,443,717	)		$	23,930		$	7,609,531		$	3,392,062		$	382,691		$	11,384,284
Reallocation of equity (Notes 2 and 15)																													—		—			12,733			—			94		12,827			(12,533		)	(294		)	—
Balance at March 31, 2019																													$	1,407,495	$	4,855		$	7,610,947		$	(2,176,730	)	$	22,138	$	6,868,705		$	3,996,206		$	350,530		$	11,215,441



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-based compensation	—		76			12,114			—			—			12,190			—			584			12,774
Shares canceled for tax withholdings on vested stock 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 (Note 2)	—		—			(3,827		)	—			(32		)	(3,859		)	—			3,859			—
Balance at March 31, 2020	$	999,490	$	4,809		$	7,532,213		$	(3,806,308	)	$	16,222		$	4,746,426		$	3,233,910		$	411,380		$	8,391,716

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

~~Table of Contents~~

~~COLONY CAPITAL, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY (Continued)~~

~~(In thousands, except per share data)~~

~~(Unaudited)~~

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, 2018 $ 1,407,495
$ 4,841
$ 7,598,019
$ (2,018,302 ) $ 13,999
$ 7,006,052
$ 3,779,728
$ 360,590
$ 11,146,370
Cumulative effect of adoption of new accounting pronouncement (Note 2) —
—
—
(2,905 ) —
(2,905 ) (1,378 ) (185 ) (4,468 )
Net income (loss) —
—
—
(74,976 ) —
(74,976 ) 49,988
(6,611 ) (31,599 )
Other comprehensive income (loss) —
—
—
—
8,045
8,045
(17,629 ) 513
(9,071 )
Common stock repurchases —
(7 ) (3,160 ) —
—
(3,167 ) —
—
(3,167 )
Redemption of OP Units for cash and class A common stock —
—
33
—
—
33
—
(33 ) —
Equity-based compensation —
27
6,323
—
—
6,350
191
—
6,541
Shares canceled for tax withholdings on vested stock awards —
(6 ) (3,001 ) —
—
(3,007 ) —
—
(3,007 )
Contributions from noncontrolling interests —
—
—
—
—
—
305,216
—
305,216
Distributions to noncontrolling interests —
—
—
—
—
—
(107,377 ) (3,450 ) (110,827 )
Preferred stock dividends —
—
—
(27,137 ) —
(27,137 ) —
—
(27,137 )
Common stock dividends declared ($0.11 per share) —
—
—
(53,410 ) —
(53,410 ) —
—
(53,410 )
Reallocation of equity (Notes 2 and 14) —
—
12,733
—
94
12,827
(12,533 ) (294 ) —
Balance at March 31, 2019 $ 1,407,495
$ 4,855
$ 7,610,947
$ (2,176,730 ) $ 22,138
$ 6,868,705
$ 3,996,206
$ 350,530
$ 11,215,441
Net loss —
—
—
(441,752 ) —
(441,752 ) (13,414 ) (29,989 ) (485,155 )
Other comprehensive income —
—
—
—
4,819
4,819
3,508
309
8,636
Redemption of OP Units for cash and class A common stock —
2
2,061
—
—
2,063
—
(2,063 ) —
Equity-based compensation —
20
7,720
—
—
7,740
197
—
7,937
Contributions from noncontrolling interests —
—
—
—
—
—
87,304
—
87,304
Distributions to noncontrolling interests —
—
—
—
—
—
(212,842 ) (3,429 ) (216,271 )
Preferred stock dividends —
—
—
(27,138 ) —
(27,138 ) —
—
(27,138 )
Common stock dividends declared ($0.11 per share) —
—
—
(53,656 ) —
(53,656 ) —
—
(53,656 )
Reallocation of equity (Notes 2 and 14) —
—
927
—
10
937
88
(1,025 ) —
Balance at June 30, 2019 $ 1,407,495
$ 4,877
$ 7,621,655
$ (2,699,276 ) $ 26,967
$ 6,361,718
$ 3,861,047
$ 314,333
$ 10,537,098

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

Table of Contents

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash Flows from Operating Activities
Net loss	$	(514,801	)	$	(70,066	)	$	(404,057	)	$	(30,155	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of discount and net origination fees on loans receivable and debt securities	(9,749		)	(14,347		)	(594		)	(5,426		)
Paid-in-kind interest added to loan principal, net of interest received	(25,028		)	(16,615		)	(21,218		)	(9,780		)
Straight-line rents	(12,502		)	(14,754		)	(2,069		)	(5,529		)
Amortization of above- and below-market lease values, net	(6,731		)	(1,503		)	(3,506		)	(3,643		)
Amortization of deferred financing costs and debt discount and premium	45,578			48,093			15,260			19,594
Equity method (earnings) losses	219,137			(34,140		)
Equity method earnings							(97,291		)	(38,487		)
Distributions of income from equity method investments	54,744			34,924			20,496			26,923
Provision for loan losses	18,614			19,308			—			3,611
Allowance for doubtful accounts	4,419			22,104			404			4,389
Impairment of real estate and intangibles	110,317			223,232
Impairment of real estate and related intangibles and right-of-use assets							308,268			25,622
Goodwill impairment							79,000			—
Depreciation and amortization	305,539			282,601			137,491			150,797
Equity-based compensation	14,929			21,566			8,249			6,663
Change in fair value of contingent consideration—Internalization	—			(1,730		)
Unrealized settlement loss							3,890			—
Gain on sales of real estate, net	(58,925		)	(61,146		)	(7,932		)	(52,301		)
Payments of cash collateral on derivative, net of cash received	(106,399		)	—
Deferred income tax expense (benefit)	247			(45,181		)
Other (gain) loss, net	137,300			(102,324		)
Payment of cash collateral on derivative							(6,641		)	(31,054		)
Deferred income tax benefit							(9,138		)	(840		)
Other loss, net							9,279			49,077
Increase in other assets and due from affiliates	(16,351		)	(52,562		)	(6,406		)	(3,584		)
Decrease in accrued and other liabilities and due to affiliates	(16,978		)	(26,999		)	(81,407		)	(37,205		)
Other adjustments, net	(4,209		)	919			(1,747		)	(2,036		)
Net cash provided by operating activities	139,151			211,380
Net cash provided by (used in) operating activities							(59,669		)	66,636
Cash Flows from Investing Activities
Contributions to and acquisition of equity investments	(116,520		)	(189,198		)	(126,837		)	(101,335		)
Return of capital from equity method investments	118,548			230,128			29,386			18,310
Acquisition of loans receivable and debt securities	(771		)	(82,477		)	—			(451		)
Net disbursements on originated loans	(40,415		)	(88,543		)	(63,812		)	(21,892		)
Repayments of loans receivable	226,888			57,434			49,133			89,199
Proceeds from sales of loans receivable and debt securities	28,920			125,733			—			13,373
Cash receipts in excess of accretion on purchased credit-impaired loans	10,145			44,155			—			8,607
Acquisition of and additions to real estate, related intangibles and leasing commissions	(1,590,459		)	(542,572		)	(78,283		)	(1,267,762		)
Proceeds from sales of real estate	442,657			428,562			126,741			294,667
Proceeds from paydown and maturity of debt securities	6,038			27,038			1,623			3,338
Cash and restricted cash contributed to Colony Credit	—			(141,153		)
Proceeds from sale of equity investments	28,163			89,115			231,078			19,505
Proceeds from sale of equity interests in securitization trusts, net of cash and restricted cash deconsolidated (Note 12)	—			142,270
Investment deposits	(20,253		)	(14,224		)	(3,593		)	(14,294		)
Net receipts (payments) on settlement of derivative instruments	29,793			(19,852		)
Net receipts on settlement of derivatives							3,227			19,608
Other investing activities, net	19,076			(3,059		)	(1,742		)	14,176
Net cash provided by (used in) investing activities	(858,190		)	63,357			166,921			(924,951		)

Table of Contents

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)

(Unaudited)

Six Months Ended June 30,
2019 2018
Cash Flows from Financing Activities
Dividends paid to preferred stockholders (54,274 ) (64,208 )
Dividends paid to common stockholders (106,836 ) (202,552 )
Repurchase of common stock (10,734 ) (319,029 )
Borrowings from corporate credit facility 218,000
504,000
Repayment of borrowings from corporate credit facility (133,000 ) (554,000 )
Borrowings from secured debt 3,026,410
432,408
Repayments of secured debt (2,396,309 ) (699,178 )
Payment of deferred financing costs (54,785 ) (8,176 )
Contributions from noncontrolling interests 446,936
405,381
Distributions to and redemptions of noncontrolling interests (349,811 ) (242,627 )
Shares canceled for tax withholdings on vested stock awards (3,007 ) (32,050 )
Redemption of OP Units for cash —
(2,096 )
Other financing activities, net (2,855 ) (350 )
Net cash provided by (used in) financing activities 579,735
(782,477 )
Effect of exchange rates on cash, cash equivalents and restricted cash 365
(4,920 )
Net decrease in cash, cash equivalents and restricted cash (138,939 ) (512,660 )
Cash, cash equivalents and restricted cash, beginning of period 832,730
1,393,920
Cash, cash equivalents and restricted cash, end of period $ 693,791
$ 881,260



	Three Months Ended March 31,
	2020			2019
Cash Flows from Financing Activities
Dividends paid to preferred stockholders	$	(23,785	)	$	(27,137	)
Dividends paid to common stockholders	(53,657		)	(53,426		)
Repurchase of common stock	(24,749		)	(10,734		)
Borrowings from corporate credit facility	600,000			—
Borrowings from secured debt	8,052			1,169,777
Repayments of secured debt	(111,678		)	(498,259		)
Payment of deferred financing costs	(140		)	(16,700		)
Contributions from noncontrolling interests	87,083			247,033
Distributions to and redemptions of noncontrolling interests	(68,320		)	(129,734		)
Redemption of preferred stock	(402,855		)	—
Shares canceled for tax withholdings on vested stock awards	(5,069		)	(3,007		)
Other financing activities, net	—			(1,138		)
Net cash provided by financing activities	4,882			676,675
Effect of exchange rates on cash, cash equivalents and restricted cash	(3,650		)	(1,196		)
Net increase (decrease) in cash, cash equivalents and restricted cash	108,484			(182,836		)
Cash, cash equivalents and restricted cash, beginning of period	1,424,698			832,730
Cash, cash equivalents and restricted cash, end of period	$	1,533,182		$	649,894

Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets


	Six Months Ended June 30,				Three Months Ended March 31,
	2019		2018		2020		2019
Beginning of the period
Cash and cash equivalents	$	461,912	$	921,822	$	1,205,190	$	461,912
Restricted cash	364,605		466,912		203,923		364,605
Restricted cash included in assets held for sale	6,213		5,186		15,585		6,213
Total cash, cash equivalents and restricted cash, beginning of period	$	832,730	$	1,393,920	$	1,424,698	$	832,730

End of the period
Cash and cash equivalents	$	353,984	$	480,230	$	1,361,769	$	321,199
Restricted cash	336,491		395,842		166,568		323,503
Restricted cash included in assets held for sale	3,316		5,188		4,845		5,192
Total cash, cash equivalents and restricted cash, end of period	$	693,791	$	881,260	$	1,533,182	$	649,894

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

109

Table of Contents

COLONY CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2019~~March 31, 2020

(Unaudited)

1. Business ~~and Organization~~

Colony Capital, Inc. (together with its consolidated subsidiaries, the "Company" ~~and formerly, Colony NorthStar, Inc. prior to June 25, 2018)~~) is a ~~leading~~ global investment ~~management~~ firm with ~~$43~~a focus on becoming the leading digital real estate provider and funding source for the occupancy, infrastructure, equity and credit needs of the world’s mobile communications and data-driven companies.

Following the acquisition in July 2019 of Digital Bridge Holdings, LLC (“DBH”), an investment manager dedicated to digital real estate and infrastructure, the Company is currently the only global 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. As part of the DBH transaction, Marc C. Ganzi, who co-founded DBH, is slated to become the Chief Executive Officer ("CEO") of the Company effective July 1, 2020. Thomas J. Barrack, Jr., the Company's Executive Chairman and CEO, will continue in his position as Executive Chairman.

At March 31, 2020, the Company has approximately $50 billion of assets under management, as of ~~June 30, 2019. The Company manages~~which $38 billion is capital managed on behalf of third-party investors and the remainder represents investment interests on the Company's own balance sheet managed on behalf of its ~~stockholders, as well as institutional~~stockholders. With respect to investment interests, the Company owns (a) a 20% controlling interest in Data Bridge Holdings, LLC and ~~retail investors~~its wholly-owned subsidiary, DataBank Holdings, Ltd. (collectively, "DataBank"), a leading provider of enterprise-class data center, cloud, and connectivity services, (b) a portfolio of healthcare properties, (c) a portfolio of hospitality properties, (d) a 36.5% interest in ~~private funds, and traded and non-traded real estate investment trusts ("REITs"). The Company has significant holdings in: (a) the healthcare, industrial and hospitality property sectors; (b)~~ Colony Credit Real Estate, Inc. (NYSE: CLNC) and ~~NorthStar Realty Europe, Corp. (NYSE: NRE), which are both externally managed by subsidiaries of the Company; and (c)~~(e) interests in various other equity and debt investments, including general partner (“GP”) interests in funds sponsored by the Company, commercial real estate equity and debt investments and other real estate related securities. The Company also owns and operates an investment management business with $18.5 billion of fee earning equity under management, including $7.7 billion in digital real estate investments and the remainder in traditional commercial real estate debt and equity investments. The Company continues to operate its non-digital business units to maximize cash flows and value over time.

Organization

The Company was organized in May 2016 as a Maryland corporation and was formed through a tri-party merger (the "Merger") among Colony Capital, Inc. ("Colony"), NorthStar Asset Management Group Inc. ("NSAM") and NorthStar Realty Finance Corp. ("NRF") ~~in an all-stock exchange on January 10, 2017.~~. The Company elected to be taxed as a REIT under the Internal Revenue Code for U.S. federal income tax purposes ~~beginning~~commencing with its initial taxable year ended December 31, 2017.

The Company conducts all of its activities and holds substantially all of its assets and liabilities through its operating subsidiary, Colony Capital Operating Company, LLC (the "Operating Company" or the "OP"). At ~~June 30, 2019,~~March 31, 2020, the Company owned ~~94%~~90% of the OP, as its sole managing member. The remaining 6%10% is owned primarily by certain current and former employees of the Company as noncontrolling interests.

~~Strategic Asset Review~~Effects of COVID-19

~~In February~~At the time of preparation of the first quarter 2020 financial statements, the world is facing a global pandemic, the coronavirus disease 2019, or COVID-19. Efforts to address the pandemic, such as social distancing, closures or reduced capacity of retail and service outlets, hotels, factories and public venues, often mandated by governments, are having a significant impact on the global economy and financial markets across major industries, including many sectors of real estate. While the Company ~~announced~~is transitioning to a digitally-focused strategy that the ~~implementation~~Company believes is more resilient and better positioned for growth in an increasingly digital reliant economy, currently a significant portion of a series of changes designed to enhance its corporate governance, and entered into a cooperation agreement with Blackwells Capital LLC, a stockholder of the Company. In connection with the cooperation agreement, the Company's board of directors formed a Strategic Asset Review Committee, composed solely of independent directors, to review, evaluate and make recommendations to the board on issues relating to the Company's assets and revenues continue to be tied to its non-digital real estate business ~~configuration.~~

~~As part~~and investments. In particular, the Company's real estate investments in the hospitality, healthcare and retail sectors either have experienced or anticipate a myriad of ~~a comprehensive review undertaken by~~challenges, including, but not limited to: significant declines in operating cash flows at the ~~Company, together with its Strategic Asset Review Committee~~Company's hotel and ~~an independent advisor,~~healthcare properties which ~~was unanimously supported by the Company’s board of directors, the Company has undertaken certain strategic initiatives intended~~in turn affect their ability to ~~build~~meet debt service and covenant requirements on core investment management competencies while focusing on high-growth businesses. A key component of this strategic evolution was the Company’s recent acquisition of Digital Bridge Holdings LLC (“DBH”), a leading investment manager of digital infrastructure investments dedicatedinvestment-level debt (non-recourse to the ~~next generation of mobile~~Company) and ~~internet connectivity (Note 23), which also addresses~~ability to refinance or extend upcoming maturities (see Note 10); flexible lease payment terms sought by tenants in our healthcare and retail properties; potential payment defaults on the Company's ~~Chief Executive Officer succession plans. These previously announced and/or completed initiatives~~loans receivable; and a distressed market affecting real estate values in general. The COVID-19 crisis may also ~~include~~lead to heightened risk of litigation at the ~~anticipated termination~~investment and corporate level, with an ensuing increase in litigation and related costs. As the timing of many of the ~~Company’s management agreement with NRE in connection with the pending sale of NRE, a corporate restructuring~~closures and reorganization plan that is on track with its cost savings objectives, the stabilization of the capital structure of the healthcare portfolio, the acquisition of a high growth Latin American private equity platform, and the formation of investment management platforms addressing innovative energy investments and a data-driven REIT public securities platform.

Additionally, the Company has engaged advisors to market the Company’s multi-billion dollar industrial portfolio for sale, which may include the related management platform. There has been significant appreciationensuing economic turmoil did not occur until late in the ~~value~~first quarter of 2020, the ~~industrial portfolio driven by favorable operating fundamentals and strong investor demand for light industrial assets. As a result, a sale~~effects of ~~the industrial portfolio may yield a price higher than the value that may be ascribed by the market to the industrial portfolio as part of~~COVID-19 on the Company's ~~overall valuation. The Company is seeking to complete a sale by~~business, other than hotel properties, were not material and adverse in the end of 2019, however, no assurances can be made that a sale can be completed within the time frame contemplated, or at all. If a sale is completed, the Company may redeploy a portion of the proceeds into higher total return strategies (e.g., digital infrastructure, emerging markets and energy) and may further consider the reduction of corporate leverage. The planned sale of the industrial segment, including its related management platform, represents a strategic shift that will have a major effect on the Company’s operations and financial results, and has met the criteria as held for sale and discontinued operations. Accordingly, for all current and prior periods presented, the related assets and liabilities are presented as assets and liabilities held for sale on the consolidated balance sheets (Note 7) and the related operating results are presented as income from discontinued operations on the consolidated statement of operations (Note 15).first

1110

Table of Contents

~~Colony Credit~~

~~The~~quarter of 2020. However, the Company ~~owns an approximate 36.4% interest,~~anticipates more pronounced and material effects on a fully diluted basis, in Colony Credit Real Estate, Inc. ("Colony Credit," formerly Colony NorthStar Credit Real Estate, Inc. prior to June 25, 2018). Colony Credit was formed on January 31, 2018 through a contribution of the CLNY Contributed Portfolio (as described below), represented by the Company's ~~ownership interests ranging from 38% to 100%~~financial condition and results of operations in ~~certain investment entities ("CLNY Investment Entities"),~~future periods, beginning with the second quarter of 2020.

The sharp decline and ~~a concurrent all-stock merger with~~ ~~NorthStar Real Estate Income Trust, Inc. (~~"~~NorthStar I~~"~~) and NorthStar Real Estate~~ Income II, Inc. ("NorthStar II"), both publicly registered non-traded REITs sponsored and managed by a subsidiary of the Company (the "Combination"). The CLNY Contributed Portfolio comprised the Company's interestsvolatility in certain commercial real estate loans, net lease properties and limited partnership interests in third party sponsored funds, which represented a select portfolio of U.S. investments within the Company’s other equity and debt ~~segment that were transferable assets consistent with Colony Credit's strategy. Upon closing~~markets, and the challenges faced by the Company as a result of the ~~Combination,~~economic fallout from COVID-19 have affected valuation of the Company's ~~management contracts~~financial assets carried at fair value, and also represent indicators of potential impairment on certain non-financial assets at the end of the first quarter of 2020. The Company's consideration and assessment of fair value and impairment are discussed further in Note 4 on real estate, Note 6 on equity and debt investments, and Note 7 on goodwill.

If a general economic downturn resulting from efforts to contain COVID-19 persists, it could have a prolonged material and negative impact on the Company's financial condition and results of operations. At this time, as the extent and duration of the increasingly broad effects of COVID-19 on the global economy remain unclear, it is difficult for the Company to assess and estimate the impact on the Company's results of operations with ~~NorthStar I~~any meaningful precision. Accordingly, any estimates of the effects of COVID-19 as reflected and/or discussed in these financial statements are based upon the Company's best estimates using information known to the Company at this time, and ~~NorthStar II were terminated; concurrently,~~such estimates may change in the near term, the effects of which could be material.

Cooperation Agreement with Blackwells Capital

In March 2020, the Company entered into a ~~new management~~cooperation agreement with ~~Colony Credit.~~

~~Corporate Restructuring~~

~~Following~~Blackwells Capital LLC ("Blackwells"), a ~~strategic review process,~~stockholder of the Company. Pursuant to the cooperation agreement, Blackwells agreed to a standstill in ~~November 2018,~~its proxy contest with the Company, ~~announced~~and to abide by certain voting commitments, including a ~~corporate restructuring~~standstill with respect to the Company until the expiration of the agreement in March 2030 and ~~reorganization plan aimed~~voting in favor of the Board of Director’s 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 CLNY common stock. Distributions to be made through the joint venture arrangement effectively represent a settlement of the proxy contest with Blackwells. At the inception of the arrangement, the fair value of future distributions to Blackwells was estimated at ~~reducing its annual compensation~~$3.9 million, included in other liabilities on the consolidated balance sheet, and ~~administrative expenses over approximately~~as a settlement loss on the ~~next 12 months. The restructuring plan was designed~~consolidated statement of operations, along with $1.2 million reimbursement of legal costs to ~~match resources that further align~~Blackwells in the ~~Company's increasing focus on its investment management business. In the fourth~~first quarter of ~~2018,~~2020. Refer to Note 12 for further description of the Company incurred $19.3 million of restructuring costs, predominantly severance costs and accelerated equity-based compensation. In the first six months of 2019, an additional $0.9 million of restructuring costs were incurred.settlement liability.

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, 2020, or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements 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, 2019.

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 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.

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Use of Estimates

The preparation of financial statements in conformity with ~~generally accepted accounting principles in the United States ("GAAP")~~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.

~~Merger~~

The Merger was accounted for under the acquisition method for a business combination as a reverse acquisition, with NSAM as the legal acquirer for certain legal and regulatory matters, and Colony as the accounting acquirer for financial reporting purposes.

The financial statements of the Company represent a continuation of the financial information of Colony as the accounting acquirer, except that the equity structure of the Company was adjusted to reflect the equity structure of the legal acquirer, including for any comparative periods presented.

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.

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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; 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 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 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.

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 a consolidated open-end fund sponsored by the Company. 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 to an amount not less than its initial carrying value, with such adjustments recognized in additional paid-in capital.

Noncontrolling Interests in Investment Entities—This represents predominantly 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.

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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~~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 applicable.

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Business Combinations

Definition of a Business—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 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 performs a substantive process.

Asset Acquisitions—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. 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.

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 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.

Contingent Consideration—Contingent consideration is classified as a liability or equity, as applicable. Contingent consideration in connection with the acquisition of a business 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. Contingent consideration in connection with the acquisition of assets is generally recognized only when the contingency is resolved, as part of the basis of the acquired assets.

In April 2019, the Company acquired the private equity platform of The Abraaj Group in Latin America, which has been renamed Colony Latam Partners, for approximately $5.5 million. The acquisition was accounted for as a business combination. The Company acquired primarily management contracts and customer relationship intangible assets and limited partnership interest in a fund, with certain Abraaj employees becoming employees of the Company.

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 is reported as discontinued operations, regardless of whether it meets the strategic shift criteria.

The ~~planned~~ sale of the industrial ~~segment,~~business in December 2019, including its related management platform, ~~represents~~represented a strategic shift that ~~will have~~had a major effect on the Company’s operations and financial results, and ~~has~~had met the criteria as held for sale and discontinued operations in June 2019. Accordingly, for all ~~current and~~ prior periods presented, the related assets and liabilities are presented as assets and liabilities held for sale on the consolidated balance sheets (Note 7)8) and the related operating results are presented as income from discontinued operations on the consolidated statement of operations (Note ~~15)~~16).

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Reclassifications

Interest receivable, which was included in other assets as of December 31, 2019, has been reclassified to be presented as part of loans receivable to conform to current period presentation. The reclassification did not affect the Company's financial position, results of operations or cash flows.

Accounting Standards Adopted in 2020

Credit Losses

In ~~addition to reclassifications related to discontinued operations~~June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses, followed by subsequent amendments, which modifies the credit impairment model for financial instruments, and codified as ~~discussed above, beginning in the fourth quarter of 2018, the portion of carried interests earned~~Accounting Standards Codification ("ASC") Topic 326. The multiple existing incurred loss models are replaced with a lifetime current expected credit loss ("CECL") model for off-balance sheet credit exposures that are not unconditionally cancellable by the lender and financial instruments carried at amortized cost, such as loans, loan commitments, held-to-maturity ("HTM") debt securities, financial guarantees, net investment in sales-type and direct financing leases, reinsurance and trade receivables. Targeted changes are also made to the impairment model of available-for-sale ("AFS") debt securities which are not within the scope of CECL.

The CECL model, in estimating expected credit losses over the life of a financial instrument at the time of origination or acquisition, considers historical loss experience, current conditions and the effects of a reasonable and supportable expectation of changes in future macroeconomic conditions. Recognition of allowance for credit losses under the CECL model will generally be accelerated as it encompasses credit losses over the full remaining expected life of the affected financial instruments. For collateralized financial assets, measurement of credit losses under CECL is based on fair value of the collateral if foreclosure is probable or if the collateral-dependent practical expedient is elected for financial assets expected to be repaid substantially through operation or sale of the collateral when the borrower is experiencing financial difficulty. The accounting model for purchased credit-impaired loans and debt securities will be simplified to be consistent with the CECL model for originated and purchased non-credit-impaired assets. For AFS debt securities, unrealized credit losses will be recognized as allowances rather than reductions in amortized cost basis and elimination of the other-than-temporary impairment ("OTTI") concept will result in more frequent estimation of credit losses. ASC 326 also requires expanded disclosures on credit risk, including credit quality indicators by vintage of financing receivables.

The Company ~~that is allocated~~adopted the new standard on January 1, 2020. The Company elected the fair value option for all of its outstanding loans receivable, with a cumulative effect adjustment to ~~employees is presented as carried interest~~increase beginning retained earnings by $3.3 million. Under the fair value option, the loans receivable are measured at each reporting period based upon their exit values in an orderly transaction and ~~incentive compensation~~unrealized gains or losses from changes in fair value are recorded in other gain (loss) on the consolidated statement of operations. ~~Such~~The loans are no longer be subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through fair value changes. Additionally, there is no longer an amortization of loan origination fees or discounts on purchased loans as additional interest income.

The Company had 0 debt securities with unrealized loss in accumulated other comprehensive income ("AOCI") at December 31, 2019 and accordingly, there was no impact upon adoption of the new standard. As it relates to the Company's other accounts receivable that are subject to CECL, the effect of adoption was immaterial.

The Company reflected the effect of adoption of CECL by its equity method investee, CLNC, through an adjustment to decrease beginning retained earnings by approximately $8.5 million on January 1, 2020, representing the Company's share of CLNC's cumulative effect adjustment.

Fair Value Disclosures

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The ASU requires new disclosures of changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements of instruments held at balance sheet date, as well as the range and weighted average or other quantitative information, if more relevant, of significant unobservable inputs for recurring and nonrecurring Level 3 fair values. Certain previously required disclosures are eliminated, specifically around the valuation process required for Level 3 fair values, policy for timing of transfers between levels of the fair value hierarchy, as well as amounts ~~had previously been presented as net income attributable to noncontrolling interests in investment entities. For the three~~ and ~~six months ended June 30, 2018, reclassifications were made in the statement of operations from net income attributable to noncontrolling interests in investment entities to carried interest~~reason for transfers between Levels 1 and ~~incentive compensation within net income from discontinued operations of $1.1~~2.

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~~million~~Additionally, the new guidance clarifies or modifies certain existing disclosures, including clarifying that information about measurement uncertainty of Level 3 fair values should be as of reporting date and ~~$1.9 million, respectively,~~requiring disclosures of the timing of liquidity events for investments measured under the net asset value ("NAV") practical expedient, but only if the investee has communicated this information or has announced it publicly. The provisions on new disclosures and modification to ~~conform to the current period presentation. The reclassification did not have an impact on net loss attributable to Colony Capital, Inc. and net loss attributable to common stockholders.~~

~~Accounting Standards Adopted in 2019~~

~~Leases~~

~~In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02,~~ ~~Leases~~, which amended lease accounting standards. ASU 2016-02, along with several clarifying amendments were codified in Accounting Standards Codification ("ASC") Topic 842. The new standard primarily requires lessees to recognize their rights and obligations under most leases on balance sheet,disclosure of Level 3 measurement uncertainty are to be ~~capitalized as a right-of-use ("ROU") asset and a corresponding liability for future lease obligations. Targeted changes were made~~applied prospectively, while all other provisions are to ~~lessor accounting, primarily to align to the lessee model and the new revenue recognition standard.~~

ASC 842 also limits the definition of initial direct leasing costs to only the incremental costs of obtaining a lease, such as leasing commissions, for both lessee and lessor accounting. Indirect costs such as allocated overhead, certain legal fees and negotiation costs are no longer capitalized under the new standard. The application of ASC 842 on accounting for initial direct leasing costs did not have a material impact on the Company's statement of operations.

be applied retrospectively. The Company adopted ~~the new lease standard and related amendments~~ASU No. 2018-13 on January 1, ~~2019 using~~2020.

Related Party Guidance for VIEs

In November 2018, the ~~modified retrospective method~~FASB issued ASU No. 2018-17, Targeted Improvements to ~~leases existing~~Related Party Guidance for Variable Interest Entities. The ASU amends the VIE guidance to align, throughout the VIE model, the evaluation of a decision maker's or ~~commencing on~~service provider's fee held by a related party, whether or ~~after January 1, 2019, with~~not they are under common control, in both the assessment of whether a ~~cumulative effect adjustment to beginning retained earnings. Comparative periods have not been restated and continue to be reported under the standards in effect for those prior periods.~~

The Company applied the package of practical expedients, which exempts the Company from having to reassess whether any expired or expiring contracts contain leases, revisit lease classification for any expired or expiring leases and reassess initial direct costs for any existing leases. The Company also elected the practical expedient related to land easements, allowing the Company to carry forward the accounting treatment for land easements on existing agreements. The Company did not, however, elect the hindsight practical expedient to determine the lease terms for existing leases.

~~Lessee Accounting—The Company determines if an arrangement contains a lease and determines the classification of leasing arrangements at inception. A leasing arrangement is classified by the lessee either~~fee qualifies as a ~~finance lease, which represents~~variable interest and the determination of a ~~financed purchase of the leased asset,~~primary beneficiary. Specifically, a decision maker or ~~as an operating lease. The Company's operating leases relate primarily to ground leases~~service provider considers interests in ~~connection with its acquired real estate and leases for its corporate offices. For these ground and office leases, the Company has elected the accounting policy to combine lease and~~a VIE held by a related ~~nonlease components as a single lease component.~~

ROU assets and lease liabilities are recognized at the lease commencement date based upon the present value of lease payments over the lease term. The ROU assets also include capitalized initial direct costs offset by lease incentives. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The Company makes variable lease payments for: (i) leases with rental payments that are adjusted periodically for inflation or increases in property fair value, (ii) hotel ground leases with rental payments calculated based on a percentage of revenue over contractual levels, and/or (iii) nonlease services, such asparty under common area maintenance in net leases. Variable lease payments are not included in lease liability and are instead recognized as lease expense when incurred. The Company made the accounting policy election to recognize lease payments from short-term leases on a straight-line basis over the lease term and will not record these leases on the balance sheet.

~~Lease renewal or termination options are factored into the lease asset and lease liability~~control only if it has a direct interest in that related party under common control and considers such indirect interest in the VIE held by the related party under common control on a proportionate basis, rather than in its entirety. Transition is ~~reasonably certain that~~generally on a modified retrospective basis, with the ~~option~~cumulative effect adjusted to ~~extend or~~retained earnings at the ~~option to terminate would be exercised.~~

~~As the implicit rate is not readily determinable in most leases, the present value~~beginning of the ~~remaining lease payments is calculated for each lease using an estimated incremental borrowing rate, which is the interest rate that the~~earliest period presented. The Company ~~would have to pay to borrow over the lease term~~adopted ASU No. 2018-17 on ~~a collateralized basis.~~

~~Lease expense is recognized over the lease term based on an effective interest method for finance leases and on a straight-line basis for operating leases.~~

On January 1, ~~2019,~~2020, with no transitional impact upon adoption.

Reference Rate Reform

In March 2020, the ~~Company recognized operating lease ROU assets totaling $143.7 million~~FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848):Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance in ~~other assets and corresponding operating lease liabilities totaling $126.8 million in accrued~~Topic 848 is optional, the election of which provides temporary relief for the accounting effects on contracts, hedging relationships and other ~~liabilities for ground leases in its real estate portfolio and corporate office leases. There was no impact to beginning equity as a result of adoption related to lessee accounting~~transactions affected by the transition from interbank offered rates (such as the ~~difference between~~London Interbank Offered Rate ("LIBOR")) that are expected to be discontinued by the ~~asset and liability balance is attributable~~end of 2021 to alternative reference rates (such as the ~~derecognition~~Secured Overnight Financing Rate ("SOFR")). Modification of ~~pre-~~

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~~existing balances, including straight-line rent, lease incentives, prepaid or deferred rent and ground lease obligation intangibles.~~

~~Lessor Accounting—The Company determines if an arrangement contains a lease and determines~~contractual terms to effect the ~~classification of leasing arrangements at inception. The Company has operating~~reference rate reform transition on debt, leases, with property tenants that expire at various dates through 2038 with renewal options typically exercised at the lessee's election. Therefore, such options are only recognized once they are deemed reasonably certain, typically at the time the option is exercised.

Lease revenue is composed of rental income, which includes the effect of minimum rent increases and rent abatements, resident fee income from healthcare properties, and tenant reimbursements, such as common area maintenance costsderivatives and other ~~costs associated with the leases.~~

~~As lessor, the Company made the~~contracts is eligible for relief from modification accounting policy election to treat the lease and nonlease components in a contract as a single component to the extent that the timing and pattern of transfer are similar for the lease and nonlease components and the lease component qualifies as an operating lease. Nonlease components of tenant reimbursements for net leases and resident fee income qualify for the practical expedient to be combined with their respective lease component and accounted for as a ~~single component under the lease standard as the lease component is predominant.~~

Lease revenue is recognized on a straight-line basis over the remaining lease term and is included in property operating income on the consolidated statements of operations. The Company receives variable lease revenues from tenant reimbursements and resident fee income from ancillary services provided to nursing home residents.

~~Under ASC 842, lessors are required to evaluate the collectability of all operating lease payments based upon the creditworthiness~~continuation of the ~~lessee. Lease revenue~~existing contract. Topic 848 is ~~recognized only~~effective upon issuance through December 31, 2022, and may be applied retrospectively to the extent collection of all rents over the life of the lease is determined to be probable. If collection is subsequently determined to no longer be probable, any previously accrued lease revenue that has not been collected is subject to reversal. If collection is subsequently determined to be probable, lease revenue and corresponding receivable would be reestablished to an amount that would have been recognized if collection had always been deemed to be probable. Upon adoption of ASC 842, the Company determined that collection of certain operating lease receivables, net of existing allowance for bad debts, is not probable and recorded a cumulative adjustment of $4.5 million to reduce beginning equity.

~~Beginning~~ January 1, 2019, the Company also made the accounting policy election to present on a net basis sales and similar taxes assessed by a governmental authority that is imposed on specific lease revenue producing transactions with related collections from lessees. Property taxes and insurance paid directly by lessees to third parties on behalf of the Company are no longer recognized in the statement of operations, while such amounts paid by the Company and reimbursed by lessees continue to be presented as gross property operating income and expenses.

~~Hedge Accounting~~

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities~~, 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.2020. 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.

The Company adopted the standard on its effective date of January 1, 2019. Upon adoption, as it relates to the Company’s cash flow and net investment hedges, the Company records 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 no hedge ineffectiveness is recorded in earnings. Additionally, subsequent to initial quantitative hedge assessment, the Company has elected to ~~perform~~apply the hedge accounting expedients related to probability and assessment of effectiveness ~~testing qualitatively so long as the Company can reasonably support an expectation~~for future LIBOR-indexed cash flows to assume that the ~~hedge is highly effective now~~index upon which future hedged transactions will be based matches the index on the corresponding derivatives, which preserves existing derivative treatment 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~~presentation. The Company may ~~be able to designate in the future~~elect other ~~contractually specified variable interest~~practical expedients or exceptions as applicable over time as reference rate ~~as the hedged risk, which if effective, could decrease fluctuations in earnings. There was no impact to the Company's financial condition and results of operations upon adoption of this standard.~~reform activities occur.

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Future Application of Accounting Standards

~~Credit Losses~~Income Tax Accounting

In ~~June 2016,~~December 2019, the FASB issued ASU No. ~~2016-13,~~2019-12, ~~Financial Instruments~~Simplifying Accounting for Income Taxes—. The ASU simplifies accounting for income taxes by eliminating certain exceptions to the general approach in ASC 740, ~~Credit Losses~~Income Taxes,~~, followed by subsequent amendments, which modifies~~ and clarifies certain aspects of the ~~credit impairment model~~guidance for ~~financial instruments,~~more consistent application. The simplifications relate to intraperiod tax allocations when there is a loss in continuing operations and ~~codified as ASC Topic 326. The multiple existing incurred loss models are replaced with~~ a ~~lifetime current expected credit loss ("CECL") model~~gain outside of continuing operations, accounting for ~~off-balance sheet credit exposures~~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 not unconditionally cancellable by the lender and financial instruments carried at amortized cost, such as loans, loan commitments, held-to-maturity ("HTM") debt securities, financial guarantees, net investment in sales-type and direct financing leases, reinsurance and trade receivables. Targeted changes are also made to the impairment model of available-for-sale ("AFS") debt securities which are not within the scope of CECL.

The CECL model, in estimating expected credit losses over the life of a financial instrument at the time of origination or acquisition, considers historical loss experience, current conditions and the effects of a reasonable and supportable expectation of changes in future macroeconomic conditions. For collateralized financial assets, measurement of credit losses under CECL ispartially based on ~~fair value~~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 ~~collateral if foreclosure~~provision related to outside basis difference which is probable or if the collateral-dependent practical expedient is elected for financial assets expected to be repaid substantially through operation or sale of the collateral when the borrower is experiencing financial difficulty. ASC 326 also requires expanded disclosures on credit risk, including credit quality indicators by vintage of financing receivables.

Transitional relief is provided through the ability, upon adoption of the new standard, to elect the fair value option for eligible financial instruments within the scope of the new standard, except for HTM and AFS debt securities. Transition will generally be on a modified retrospective basis ~~including~~with cumulative effect adjusted to retained earnings at the ~~election~~beginning of the ~~fair value option, with a cumulative effect adjustment to beginning retained earnings, except for prospective application for other than temporarily impaired debt securities~~period adopted, and ~~purchased credit-impaired assets. ASC 326~~franchise tax provision which is on either full or modified retrospective. ASU No. 2019-12 is effective ~~for fiscal years and~~January1, 2021, with early adoption permitted in an interim ~~periods beginning after December 15, 2019.~~

period, to be applied to all provisions. The Company will adopt the new standard on its effective date of January 1, 2020. The Company expects that recognition of allowance for credit losses under the CECL model will generally be accelerated as it encompasses credit losses over the full remaining expected life of the affected financial instruments. The extent of any changes in allowance for credit losses will depend upon the composition and risk characteristics of the Company's financial instrument portfolio that are within the scope of ASC 326 at adoption date, and conditions prevailing and forecasted at that time. Evaluation ofis currently evaluating the impact of ~~ASC 326 to the Company is ongoing.~~this new guidance.

~~Fair Value Disclosures~~Accounting for Certain Equity Investments

In ~~August 2018,~~January 2020, the FASB issued ASU No. ~~2018-13,~~2020-01, ~~Fair Value Measurement (Topic 820): Disclosure Framework~~—~~Changes to~~Clarifying the ~~Disclosure Requirements for Fair Value Measurements~~Interactions between Topic 321 Investments—Equity Securities, Topic 323—Investments Equity Method and Joint Ventures, and Topic 815—Derivatives and Hedging. The ASU ~~requires new disclosures~~clarifies that if as a result of ~~changes in unrealized gains~~an observable transaction, an equity investment under the measurement alternative is transitioned into equity method and ~~losses in other comprehensive income for recurring Level 3 fair value measurements~~vice versa, an equity method investment is transitioned into measurement alternative, the investment is to be remeasured immediately before and after the transaction, respectively. The ASU also clarifies that certain forward contracts or purchased options to acquire equity securities that are not deemed to be

Table of ~~instruments held at balance sheet date, as well as the range and weighted average~~Contents

derivatives or other quantitative information, if more relevant, of significant unobservable inputs for recurring and nonrecurring Level 3 fair values. Certain previously required disclosures are eliminated, specifically around the valuation process required for Level 3 fair values, policy for timing of transfers between levels ofin-substance common stock will generally be measured using the fair value ~~hierarchy, as well as amounts~~principles of ASC 321 before settlement or exercise, and ~~reason~~that an entity should not be considering how it will account for ~~transfers between Levels 1 and 2. Additionally,~~ the ~~new guidance clarifies~~resulting investments upon eventual settlement or modifies certain existing disclosures, including clarifying that information about measurement uncertainty of Level 3 fair values should be as of reporting date and requiring disclosures of the timing of liquidity events for investments measured under the net asset value ("NAV") practical expedient, but only if the investee has communicated this information or has announced it publicly. The provisions on new disclosures and modification to disclosure of Level 3 measurement uncertainty areexercise. ASU No. 2020-01 is to be applied prospectively, ~~while all other provisions are to be applied retrospectively. ASU No. 2018-13 is~~ effective ~~for fiscal years and interim periods beginning after December 15, 2019. Early~~January 1, 2021, with early adoption is permitted in an interim ~~period for which financial statements have not been issued, and may be made only to provisions that eliminate or modify existing disclosures.~~period. The ~~adoption~~Company is currently evaluating the impact of this ~~standard~~new guidance.

3. Business Combinations

DBH

On July 25, 2019, the Company acquired DBH in a combination of: (a) cash, a portion of which is deferred until the expiration of certain customary seller indemnification obligations (Note 20); and (b) issuance of 21,478,515 OP Units, which were measured based upon the closing price of the Company's class A common stock on July 24, 2019 of $5.21 per share.

The Company acquired the fee streams but not the equity interests related to the 6 portfolio companies managed by DBH. The principals of DBH retained their equity investments, including general partner interests in existing DBH investment vehicles and in Digital Colony Partners fund (“DCP”), which was previously co-sponsored by the Company and DBH.

The acquisition is a strategic transaction that is expected to generate meaningful accretion in value to the Company through expansion of the digital real estate management platform by combining the industry sector knowledge, experience and relationships from the DBH team with the capital raising resources of the Company, as represented by the goodwill value.

The Company's acquisition of DBH included the remaining 50% equity interest held by DBH in Digital Colony Management, LLC ("Digital Colony Manager"), previously an equity method joint venture with DBH, which manages DCP. Upon closing of the acquisition, the Company obtained a controlling interest in Digital Colony Manager and remeasured its existing 50% interest at a fair value of $51.4 million. The full amount, representing the excess of fair value over carrying value of the Company's investment in Digital Colony Manager, was recognized in other gain on the Company's statement of operations, as the Company's carrying value of its investment in Digital Colony Manager prior to the business combination was nil. The fair value was based upon the value of 50% of estimated future net cash flows from the DCP fund management contract, discounted at 8%.

DataBank

On December 20, 2019, the Company acquired from third party investors a 20% interest in DataBank, a portfolio company managed by DBH and invested in by the principals and senior professionals of DBH. The Company is deemed to have a ~~material~~controlling interest in DataBank as control over the operations of DataBank resides substantially with the Company. Consideration included the payment of cash to third parties for the Company’s interests in DataBank and the issuance of 612,072 OP Units to Mr. Ganzi and Benjamin Jenkins (the DBH principals) for incentive units owned by the DBH principals and allocable to the Company’s acquired interests, measured based upon the closing price of the Company's class A common stock on December 20, 2019 of $4.85 per share. The OP Units were issued to the principals of DBH who had previously received incentive units from DataBank, in exchange for certain of their incentive units such that the Company will not be subject to future carried interest payments to the DBH principals with respect to the Company's investment in DataBank (Note 20). The DBH principals otherwise retained their equity interests in DataBank.

Allocation of Consideration Transferred

The following table summarizes the consideration and allocation to assets acquired, liabilities assumed and noncontrolling interests at acquisition. The estimated fair values and allocation of consideration are preliminary, based upon information available at the time of closing as the Company continues to evaluate underlying inputs and assumptions. Accordingly, these provisional values may be subject to adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed at the time of closing.

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(In thousands)	DBH			DataBank
Consideration
Cash	$	181,167		$	182,731
Deferred consideration	35,500			—
OP Units issued	111,903			2,962
Total consideration for equity interest acquired	328,570			185,693

Fair value of equity interest in Digital Colony Manager	51,400			—
	$	379,970		$	185,693

Assets acquired, liabilities assumed and noncontrolling interests
Cash	$	—		$	10,366
Real estate	—			847,458
Assets held for sale	—			29,114
Intangible assets	153,300			222,455
Other assets	13,008			106,648
Debt	—			(539,155		)
Tax liabilities, net	(17,392		)	(113,228		)
Intangible and other liabilities	(16,194		)	(132,480		)
Fair value of net assets acquired	132,722			431,178
Noncontrolling interests in investment entities	—			(724,567		)
Goodwill	$	247,248		$	479,082

DBH

Intangible assets acquired included primarily management contracts, investor relationships and trade name.

The fair value of management contracts, including the Company's 50% interest in Digital Colony Manager, was estimated based upon estimated net cash flows generated from those contracts, discounted at 8%, with remaining lives estimated between 3 and 10 years.

Investor relationships represent the fair value of potential fees, net of operating costs, to be generated from repeat DBH investors in future sponsored funds, discounted at 11.5%, and potential carried interest discounted at 25%.

The Digital Bridge trade name was valued using a relief-from-royalty method, based upon estimated savings from avoided royalty at a rate of 1% on expected net income, discounted at 11.5%, with an estimated useful life of 10 years.

Other liabilities assumed were primarily deferred revenues and deferred tax liabilities recognized upon acquisition, representing the tax effect on the ~~Company's existing disclosures.~~book-to-tax basis difference associated with management contract intangibles.

~~Variable Interest Entities~~DataBank

~~In November 2018,~~Real estate and lease intangibles of DataBank were measured based upon recent third party appraised values, allocated to tangible assets of land, building, construction in progress, data center infrastructure, as well as identified intangibles of in-place leases, above- and below-market leases, and tenant relationships. The remaining intangible assets acquired include customer relationships and trade name. Customer relationships were valued as the ~~FASB issued ASU No. 2018-17,~~ ~~Targeted Improvements~~incremental net income attributable to ~~Related Party Guidance for Variable Interest Entities~~.these relationships considering the projected net cash flows of the business with and without the customer relationships in place. The ~~ASU amends~~trade name of DataBank was valued based upon estimated savings from avoided royalty at a royalty rate of 2%.

Other assets acquired and liabilities assumed primarily include right-of-use lease assets associated with leasehold data centers and corresponding lease liabilities. Deferred tax liabilities represent the ~~VIE guidance~~tax effect on the book-to-tax basis difference related primarily to ~~align, throughout~~real estate assets arising from the ~~VIE model,~~transaction.

All assumed debt bears variable rates, with carrying values approximating fair values based upon market rates and spreads that prevailed at the ~~evaluation~~time of a decision maker's or service provider's fee held by a related party, whether or not they are under common control, in both the assessment of whether a fee qualifies as a variable interest and the determination of a primary beneficiary. Specifically, a decision maker or service provider considersacquisition.

Noncontrolling interests in a VIE held by a related party under common control only if it has a direct interest in that related party under common control and considers such indirect interest in the VIE held by the related party under common control on ainvestment entities were valued based upon their proportionate ~~basis, rather than in its entirety. Transition is~~share of net assets of DataBank at fair value.

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~~generally on a modified retrospective basis, with the cumulative effect adjusted to retained earnings at the beginning~~The excess of the ~~earliest period presented. ASU No. 2018-17 is effective~~fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed and noncontrolling interests was recorded as goodwill assigned to the DataBank reporting unit within the digital segment. Goodwill represents the value of the business acquired not already captured in identifiable assets, such as the potential for ~~fiscal years~~future customers, synergies, revenue and ~~interim periods beginning after December 15, 2019, with early adoption permitted in an interim period for which financial statements have not been issued. The Company is currently evaluating~~profit growth, as well as industry knowledge, experience and relationships that 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.~~DataBank management team brings.

3.4. Real Estate

The following table summarizes the Company's real estate held for ~~investment was as follows.~~investment. Real estate held for sale is presented in Note 7.8.


(In thousands)	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Land	$	1,427,032		$	1,443,249		$	1,396,084		$	1,360,435
Buildings and improvements	9,058,689			9,442,442			8,658,473			9,022,971
Tenant improvements	100,912			96,740			105,277			105,440
Data center infrastructure							613,114			595,603
Furniture, fixtures and equipment	409,510			389,969			576,048			511,329
Construction in progress	188,970			123,002			196,125			255,115
	11,185,113			11,495,402			11,545,121			11,850,893
Less: Accumulated depreciation	(836,683		)	(669,392		)	(1,087,064		)	(990,375		)
Real estate assets, net	$	10,348,430		$	10,826,010
Real estate assets, net ⁽¹⁾							$	10,458,057		$	10,860,518

__________


⁽¹⁾	For real estate acquired in a business combination, the purchase price allocation 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.

Real Estate Sales

Results from sales of real estate, including discontinued operations ~~were~~(Note 16), are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2019		2018		2019		2018		2020		2019
Proceeds from sales of real estate	$	147,990	$	316,000	$	442,657	$	428,562	$	126,741	$	294,667
Gain on sale of real estate	6,624		42,702		58,925		61,146		7,932		52,301

Real Estate Acquisitions

There were no real estate acquisitions in the three months ended March 31, 2020. The following table summarizes the Company's real estate acquisitions in 2019, excluding ~~any~~ real estate acquired as part of business ~~combinations. Light and bulk industrial properties acquired, as presented below, form part of the industrial segment which is classified as held for sale.~~combinations discussed in Note 3.

($ in thousands)
Purchase Price Allocation ⁽¹⁾
Acquisition Date Property Type and Location Number of Buildings
Purchase
Price ⁽¹⁾
Land Building and Improvements Lease Intangible Assets Lease Intangible Liabilities
Six Months Ended June 30, 2019
Asset Acquisitions⁽²⁾

February Bulk industrial—Various in U.S. 6 $ 373,182
$ 49,446
$ 296,348
$ 27,553
$ (165 )
Various
Light industrial—Various in U.S.⁽³⁾
79 1,015,182
218,738
755,990
45,342
(4,888 )

$ 1,388,364
$ 268,184
$ 1,052,338
$ 72,895
$ (5,053 )
Year Ended Ended December 31, 2018
Asset Acquisitions
September
Healthcare—United Kingdom⁽⁴⁾
1 $ 24,444
$ 10,231
$ 12,733
$ 1,480
$ —
November Office and Industrial—France 220 478,844
109,858
330,752
38,234
—
Various
Light industrial—Various in U.S.⁽³⁾
40 569,442
111,194
433,040
30,183
(4,975 )

$ 1,072,730
$ 231,283
$ 776,525
$ 69,897
$ (4,975 )



($ in thousands)						Purchase Price Allocation ⁽¹⁾
	Acquisition Date	Property Type and Location	Number of Buildings	Purchase Price ⁽¹⁾		Land		Buildings and Improvements		Lease Intangible Assets		Lease Intangible Liabilities
Year Ended December 31, 2019
Asset Acquisitions
	February	Bulk industrial—Various in U.S. ⁽²⁾	6	$	373,182	$	49,446	$	296,348	$	27,553	$	(165	)
	October	Healthcare—United Kingdom ⁽³⁾	1	12,376		3,478		9,986		732		(1,820		)
	Various	Light industrial—Various in U.S. ⁽⁴⁾	84	1,158,423		264,816		850,550		47,945		(4,888		)
				$	1,543,981	$	317,740	$	1,156,884	$	76,230	$	(6,873	)

__________


⁽¹⁾	Dollar amounts of purchase price and allocation to assets acquired and liabilities assumed are translated using foreign exchange rates as of the respective dates of acquisition, where applicable.


⁽²⁾	~~Useful life of real estate acquired~~The bulk industrial portfolio was classified as held for sale in ~~2019 is 25 to 49 years for buildings, 9 to 14 years for site improvements, 4 to 11 years for tenant improvements and 1 to 15 years for lease intangibles (based on remaining lease terms).~~June 2019.


⁽³⁾	~~Includes acquisition of land totaling $20.7 million in~~Properties acquired pursuant to purchase option under the ~~six months ended June 30, 2019 and $13.1 million in the year ended December 31, 2018 for co-development with operating partners.~~Company's development facility to a healthcare operator at purchase price equivalent to outstanding loan balance.


⁽⁴⁾	~~Net leased senior housing acquired pursuant to a purchase option under the Company's development facility to the healthcare operator at a purchase price equivalent to the outstanding loan balance.~~The entire light industrial portfolio was sold in December 2019.

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Depreciation and Impairment

~~Depreciation expense on~~The following table summarizes real estate ~~excluding amounts related to discontinued operations (Note 15), was $92.7~~depreciation and impairment.



	Three Months Ended March 31,
(In thousands)	2020		2019
Depreciation of real estate held for investment	$	103,305	$	93,293
Impairment of real estate and related asset group
Held for sale	7,577		25,183
Held for investment ⁽¹⁾	300,691		439

__________


⁽¹⁾	Includes impairment of real estate intangibles of $7.0 million and right-of-use asset on ground leases of $13.0 million in the three months ended March 31, 2020.

Impairment of Real Estate Held for Sale

Real estate held for sale is carried at the lower of amortized cost or fair value. Real estate carried at fair value totaled $171.1 million at March 31, 2020 and ~~$89.3~~$253.4 million ~~for~~at December 31, 2019 based upon impairments recorded during the three months ended ~~June 30,~~March 31, 2020 and year ended December 31, 2019, respectively, generally representing Level 3 fair values.

Real estate held for sale that was written down was generally valued using either broker opinions of value, or a combination of market information, including third-party appraisals and ~~2018, respectively, and $184.9 million and $185.2 million and~~indicative sale prices, adjusted as deemed appropriate by management to account for the ~~six months ended June 30, 2019~~inherent risk associated with specific properties. In all cases, fair value of real estate held for sale is reduced for estimated selling costs ranging from 1% to 3%.

At March 31, 2020, the Company also considered the impact of a global economic downturn as a result of COVID-19, specifically as it affects real estate values, and ~~2018, respectively.~~

~~Refer to Note 11 for~~where appropriate, factored in a ~~discussion of~~reduction in potential sales prices on certain properties, which resulted in additional impairment on real ~~estate.~~estate held for sale in the first quarter of 2020.

Impairment of Real Estate Held for Investment

Real estate held for investment that was written down to fair value during the three months ended March 31, 2020 and year ended December 31, 2019 had carrying values totaling $990.4 million and $355.0 million, respectively, at the time of impairment, representing Level 3 fair values.

Impairment was driven by various factors, primarily: change in expected holding period assumptions and/or decline in operating performance which decreased the amount of carrying value recoverable from future cash flows, and economic fallout from COVID-19. Fair value of impaired real estate held for investment was estimated primarily utilizing the income approach, based upon direct income capitalization using capitalization rates between 7.8% and 12.0%, or discounted cash flow analyses using terminal capitalization rates between 8.0% and 8.3%, and discount rates between 9.8% and 12.0%.

In the first quarter of 2020, the Company engaged a third party advisor to evaluate strategic and financial alternatives to maximize the value of its hospitality portfolio while balancing the need to preserve liquidity and prioritize the growth of its digital business. Based upon preliminary results from the evaluation, certain properties in its hospitality portfolio indicated a low level of financial viability, and sub-optimal returns from the significant amount of capital expenditures and equity support that would be required in the near and intermediate future, indicating potential impairment of such assets. Accordingly, the Company reassessed and shortened the holding period for those assets and reduced the estimated undiscounted future net cash flows to be generated, which indicated that the carrying value in those assets would not be recoverable. As a result, the Company recognized an impairment charge on these hotels in the first quarter of 2020.

The Company also considered the likelihood of a lease renewal or tenant replacement and potential effects of COVID-19 on future net operating income of its real estate held for investment, particularly in its healthcare and hotel portfolios, as an indicator of impairment. The Company applied a combination of the following approaches to estimate revised cash flow projections for these properties to account for an expected decline in future operating performance: (i) reevaluated property holding periods, in some cases taking into consideration potential defaults on underlying mortgage debt as a result of expected shortfalls in future property operating cash flows; and/or (ii) applied a range of reductions to near term expected cash flows for individual properties. For properties for which undiscounted expected net cash flows over their respective holding periods fell short of carrying values, the Company expects that the carrying value of these properties would likely not be recoverable.

Fair values were estimated for the above mentioned properties based upon either: (i) the income capitalization approach, using net operating income for each property and applying indicative capitalization rates; or (ii) discounted cash

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flow analyses with terminal values determined using indicative capitalization rates. The Company considered the risk characteristics of each property in determining capitalization rates and where applicable, adjusted capitalization rates or discount rates higher to reflect the inherent stress on real estate values in a deteriorating economic environment. Impairment was measured as the excess of carrying value over fair value for each of these properties.

Due to uncertainties over the severity and duration of the economic fallout from COVID-19 on the Company's real estate operations and its ability to meet its mortgage debt obligations, it is difficult for the Company to assess and estimate the economic effects with meaningful precision. The Company has applied its best estimate for purposes of its impairment assessment as of March 31, 2020 based upon available information at this time. Actual impact of COVID-19 will depend upon many factors beyond the Company’s control and knowledge, and may differ materially from the Company's current expectations. Furthermore, if the Company is unable to restructure or receive forbearance or other accommodations from lenders on defaulted investment-level debt (Note 10), and if the Company is unable to repay the debt, the collateral securing the debt could potentially be foreclosed upon, which would significantly shorten the holding period for these assets. All of these factors may result in further impairment charges in the near future, which could be material.

Property Operating Income

~~Property~~Following the acquisition of DataBank in December 2019, lease income includes: (i) fixed lease payments for colocation rent, interconnection services and a committed amount of power in connection with contracted leased space; and (ii) variable payments for additional metered power reimbursements based upon usage at prevailing rates.

The Company also earns data center service revenue, primarily composed of cloud services, data storage, data protection, network services, software licensing, and other related information technology services, which are recognized as services are provided; and to a lesser extent, installation services that are recognized at a point in time upon completion of the installation and accompanying services.

For the three months ended March 31, 2020 and 2019, components of property operating income ~~presented below excludes~~are as follows, excluding amounts related to discontinued operations (Note ~~15)~~16).



	Three Months Ended March 31,
(In thousands)	2020		2019
Lease income:
Fixed lease income	$	182,092	$	170,414
Variable lease income	16,291		16,349
	198,383		186,763
Hotel operating income	215,060		272,135
Data center service revenue	11,973		—
	$	425,416	$	458,898

Lease Concessions Related to COVID-19

Beginning in April 2020, some tenants in our healthcare properties have failed to make rent payments, and some have sought more flexible payment terms as a result of the COVID-19 crisis. Local governments in certain jurisdictions are also implementing programs that permit or require the forbearance of rent payments by tenants affected by COVID-19. The Company is currently engaged with affected tenants on a case by case basis to evaluate and respond to the current environment.

For lease concessions resulting directly from the ~~three~~impact of COVID-19 that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee, for example, where total payments required by the modified contract will be substantially the same as or less than the original contract, the Company expects to make a policy election to account for the concessions as though the enforceable rights and ~~six months ended June 30, 2018, property operating~~obligations for those concessions existed in the lease contracts, under a relief provided by the FASB. Under the relief, the concessions will not be treated as lease modifications that are accounted for over the remaining term of the respective leases, as the Company believes this would not accurately reflect the temporary economic effect of the concessions. Instead, (i) rent deferrals that meet the criteria will be treated as if no changes were made to the lease contract, with continued recognition of lease income ~~was composed~~and receivable under the original terms of ~~$187.1 million~~the contract; and ~~$390.1 million~~(ii) rent forgiveness that meets the criteria will be accounted for as variable lease payments in the affected periods.

Table of ~~total lease revenue, respectively,~~Contents

5. Loans Receivable

Effective January 1, 2020, the Company elected the fair value option for all of its outstanding loans receivable under a transitional relief upon adoption of ASC 326. The previous distinction of purchased credit-impaired ("PCI") loans and ~~$331.9 million and $615.9 million of hotel operating income, respectively. For~~troubled debt restructurings ("TDR") are not applicable under fair value accounting. Refer to Note 12 for additional disclosures on loans receivable carried at fair value under the ~~three and six months ended June 30,~~fair value option.

Loans receivable carried at fair value at March 31, 2020 are as follows:



	March 31, 2020
($ in thousands)	Unpaid Principal Balance		Fair Value		Weighted Average Coupon		Weighted Average Maturity in Years
Fixed rate
Mortgage loans	$	1,570,885	$	651,113	8.2	%	1.0
Mezzanine loans	542,274		544,518		12.7	%	0.3
Non-mortgage loans	174,600		175,368		13.2	%	5.2
	2,287,759		1,370,999
Variable rate
Mortgage loans	164,335		171,089		3.9	%	0.2
Mezzanine loans	46,339		46,339		12.6	%	1.3
	210,674		217,428
Loans receivable	$	2,498,433	$	1,588,427

Loans receivable carried at amortized cost at December 31, 2019 ~~the components of property operating income~~ were as follows:

(In thousands) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Lease revenue:
Fixed lease revenue $ 164,940
$ 335,354
Variable lease revenue 14,891
31,240
179,831
366,594
Hotel operating income 308,957
581,092
$ 488,788
$ 947,686



	December 31, 2019
($ in thousands)	Unpaid Principal Balance		Amortized Cost			Weighted Average Coupon		Weighted Average Maturity in Years
Non-PCI Loans
Fixed rate
Mortgage loans	$	471,472	$	492,709		10.7	%	1.6
Mezzanine loans	495,182		494,238			12.6	%	0.6
Non-mortgage loans	149,380		148,623			12.9	%	5.4
	1,116,034		1,135,570
Variable rate
Mortgage loans	171,848		172,269			4.1	%	0.3
Mezzanine loans	44,887		44,637			12.7	%	1.6
	216,735		216,906
	1,332,769		1,352,476
PCI Loans
Mortgage loans	1,165,804		248,535
Allowance for loan losses			(48,187		)
			1,552,824
Interest receivable			13,504
Loans receivable	$	2,498,573	$	1,566,328

~~Future Fixed Lease Payments~~

~~At June 30, 2019, future fixed lease payments under noncancelable operating leases for real estate held for investment were as follows:~~

Year Ending December 31, (In thousands)
Remaining 2019 $ 148,699
2020 290,769
2021 268,028
2022 258,594
2023 244,058
2024 and thereafter 944,777
Total ⁽¹⁾
$ 2,154,925

~~__________~~


⁽¹⁾	Excludes future fixed lease payments for real estate in the industrial segment that is classified as held for sale totaling $1.34 billion through 2038, of which $136.9 million relates to the remainder of 2019.

~~At December 31, 2018, future contractual minimum lease payments to be received under noncancelable operating leases for real estate held for investment were as follows:~~

Year Ending December 31, (In thousands)
2019 $ 293,906
2020 285,051
2021 265,612
2022 254,881
2023 242,151
2024 and thereafter 961,591
Total ⁽¹⁾
$ 2,303,192

~~__________~~


⁽¹⁾	~~Excludes future contractual minimum lease payments for real estate in the industrial segment that is held for sale totaling $894.4 million.~~

~~Commitments and Contractual Obligations~~

~~Purchase Commitments—~~At June 30, 2019, the Company had funded aggregate deposits of $13.1 million with remaining unfunded purchase commitments totaling $171.8 million for the acquisition of eight light industrial buildings which are under construction. These are real estate acquisitions in the industrial segment and will be classified as held for sale upon closing.

1921

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~~Guarantee Agreements—~~In July 2017, the Company and certain investment vehicles managed by the Company took control of a portfolio of limited service hotels, primarily located across the Southwest and Midwest U.S. (the "THL Hotel Portfolio") through a consensual foreclosure following maturity default by the borrower on the junior mezzanine loan owned by the Company. In connection with the foreclosure, 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 2027 and 2032. In the event of default or termination of the franchise agreements, the Company is liable for liquidated damages not to exceed $75 million. The Company had similar provisions related to its core hotel portfolio in the hospitality segment, but has met the required minimum payments under the respective franchise agreements and no longer has an obligation to the franchisors.

~~4. Loans Receivable~~

~~The following table provides a summary of the Company’s loans held for investment, including PCI loans:~~

June 30, 2019 December 31, 2018
($ 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
Loans at amortized cost
Non-PCI Loans
Fixed rate
Mortgage loans $ 467,122
$ 488,296
10.6 % 1.9 $ 643,973
$ 667,590
10.7 % 2.2
Mezzanine loans 385,838
383,788
12.6 % 1.0 357,590
354,326
12.5 % 1.5
Corporate loans 106,923
106,131
12.4 % 6.1 108,944
107,796
12.3 % 5.8
959,883
978,215
1,110,507
1,129,712

Variable rate
Mortgage loans 175,850
176,195
4.3 % 0.4 178,650
179,711
4.3 % 0.1
Mezzanine loans 42,009
41,700
13.4 % 2.1 27,772
27,417
13.4 % 2.5
217,859
217,895

206,422
207,128

1,177,742
1,196,110
1,316,929
1,336,840

PCI Loans
Mortgage loans 1,302,214
338,768

1,324,287
351,646

Mezzanine loans 7,425
3,671
7,425
3,671

1,309,639
342,439
1,331,712
355,317

Allowance for loan losses

(50,938 )

(32,940 )
Loans receivable, net $ 2,487,381
$ 1,487,611
$ 2,648,641
$ 1,659,217

~~Nonaccrual and~~ Past Due and Nonaccrual Loans

~~Non-PCI loans, excluding loans carried at fair value,~~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 table below presents the fair value and unpaid principal balance by aging of loans receivable at March 31, 2020 for which fair value option was elected.



	March 31, 2020
(In thousands)	Fair Value		Unpaid Principal Balance		Fair Value less Unpaid Principal Balance
Loans receivable—fair value option
Current or less than 30 days past due	$	1,060,721	$	1,015,709	$	45,012
30-59 days past due	—		—		—
60-89 days past due	—		—		—
90 days or more past due or nonaccrual	527,706		1,482,724		(955,018		)
	$	1,588,427	$	2,498,433	$	(910,006	)

The following table provides an aging summary of non-PCI loans ~~held for investment~~ at carrying values before allowance for loan ~~losses:~~losses and interest receivable at December 31, 2019:

(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
June 30, 2019 $ 919,295
$ —
$ —
$ 276,815
$ 1,196,110
December 31, 2018 1,052,303
—
44,392
240,145
1,336,840



(In thousands)	December 31, 2019
Non-PCI loans at carrying values before allowance for loan losses
Current or less than 30 days past due	$	1,042,260
30-59 days past due	—
60-89 days past due	—
90 days or more past due or nonaccrual	310,216
	$	1,352,476

For the Three Months Ended March 31, 2019 and as of December 31, 2019

Troubled Debt Restructuring

During the ~~six~~three months ended ~~June 30,~~March 31, 2019, ~~and 2018,~~ there were no0 loans modified in a troubled debt restructuring ("TDR"), in which the Company provided borrowers, who are experiencing financial difficulties, with ~~various~~ concessions in interest rates, payment terms or default waivers.

At ~~both June 30, 2019 and~~ December 31, ~~2018,~~2019, the Company had ~~one~~1 existing TDR loan that was in maturity default with a carrying value before allowance for loan loss and interest receivable of $37.8 million and an allowance for loan loss of ~~$26.1 million and $12.8 million as of June 30, 2019 and December 31, 2018, respectively.~~$37.8 million. The Company ~~has no~~had 0 additional lending commitment on ~~this~~the TDR loan.

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Non-PCI Impaired Loans

Non-PCI loans, excluding loans carried at fair value, 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, as well as loans in maturity default.

The following table summarizes the non-PCI impaired ~~loans:~~loans at December 31, 2019:

Gross Carrying Value
(In thousands) Unpaid Principal Balance With Allowance for Loan Losses Without Allowance for Loan Losses Total Allowance for Loan Losses
June 30, 2019 $ 306,094
$ 71,754
$ 239,050
$ 310,804
$ 30,923
December 31, 2018 280,337
75,179
206,628
281,807
18,304



			Gross Carrying Value before Interest Receivable
(In thousands)	Unpaid Principal Balance		With Allowance for Loan Losses		Without Allowance for Loan Losses		Total		Allowance for Loan Losses
December 31, 2019	$	326,151	$	71,754	$	259,011	$	330,765	$	48,146

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The average carrying value and interest income recognized on non-PCI impaired loans for the three months ended March 31, 2019 were as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2019		2018		2019		2018		Three Months Ended March 31, 2019
Average carrying value before allowance for loan losses	$	310,914	$	226,532	$	298,092	$	279,986
Average carrying value before allowance for loan losses and interest receivable									$	244,532
Total interest income recognized during the period impaired	1,289		1,279		4,292		1,308		3,003
Cash basis interest income recognized	—		—		447		—		447

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. 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. The difference between contractually required payments as of the acquisition date and the cash flows expected to be collected, which represents the nonaccretable difference, is not recognized as an adjustment of yield, loss accrual or valuation allowance.

Factors that most significantly affect estimates 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.

There were no0 PCI loans acquired in the ~~six~~three months ended ~~June 30, 2019 and 2018.~~March 31, 2019.

Changes in accretable yield of PCI loans for the three months ended March 31, 2019 were as follows:


	Six Months Ended June 30,
(In thousands)	2019			2018			Three Months Ended March 31, 2019
Beginning accretable yield	$	9,620		$	42,435		$	9,620
Dispositions	—			(4,001		)
Changes in accretable yield	407			3,109			1,442
Accretion recognized in earnings	(5,924		)	(19,216		)	(3,087		)
Deconsolidation	—			(991		)
Effect of changes in foreign exchange rates	(15		)	(138		)	(40		)
Ending accretable yield	$	4,088		$	21,198		$	7,935

~~The Company applied either~~At December 31, 2019, there were 0 PCI loans on the cash basis or cost recovery method for recognition of interest income on PCI loans with carrying value before allowance for loan losses of $172.4 million at June 30, 2019 and $175.6 million at December 31, 2018, as the Company did not have reasonable expectations of the timing and amount of future cash receipts on these loans.income.

Allowance for Loan Losses

~~On a periodic basis,~~Allowance for loan losses and related carrying values before interest receivable of loans held for investment at December 31, 2019 were as follows:



	December 31, 2019
(In thousands)	Allowance for Loan Losses		Carrying Value
Non-PCI loans	$	48,146	$	71,754
PCI loans	41		17,935
	$	48,187	$	89,689

Changes in allowance for loan losses for the ~~Company analyzes~~three months ended March 31, 2019 are presented below. All provision for loan losses for the extent and effect of any credit migration from underwriting and the initial investment review associated with the performance of a loan and/or value of its underlying collateral, financial and operating capability of the borrower or sponsor, as well as amount and status of any senior loan, where applicable.period related to PCI loans.



(In thousands)	Three Months Ended March 31, 2019
Allowance for loan losses at January 1	$	32,940
Provision for loan losses, net	3,611
Charge-off	(194		)
Allowance for loan losses at March 31	$	36,357

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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.

Allowance for loan losses represents the estimated probable credit losses inherent in loans receivable at balance sheet date and 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 or an observable market price for the loan.

For PCI loans, provision for loan losses is recorded if it is assessed that decreases in cash flows expected to be collected would result in a decrease in the estimated fair value of the loan below its amortized cost.

~~The allowance for loan losses and related carrying values of loans held for investment were as follows:~~

June 30, 2019 December 31, 2018
(In thousands)
Allowance for
Loan Losses
Carrying Value
Allowance for
Loan Losses
Carrying Value
Non-PCI loans $ 30,923
$ 71,754
$ 18,304
$ 75,179
PCI loans 20,015
86,138
14,636
54,440
$ 50,938
$ 157,892
$ 32,940
$ 129,619

~~Changes in allowance for loan losses are presented below:~~

Six Months Ended June 30,
(In thousands) 2019 2018
Allowance for loan losses at January 1 $ 32,940
$ 52,709
Contribution to Colony Credit —
(518 )
Deconsolidation —
(5,983 )
Provision for loan losses, net 18,614
19,308
Charge-off (616 ) (10,220 )
Allowance for loan losses at June 30 $ 50,938
$ 55,296

~~Provision for loan losses by loan type is as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Non-PCI loans $ 12,807
$ 5,072
$ 12,807
$ 7,737
PCI loans 2,196
8,861
5,807
11,571
Total provision for loan losses, net $ 15,003
$ 13,933
$ 18,614
$ 19,308

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 ~~June 30, 2019,~~March 31, 2020, total unfunded lending commitments was ~~$201.8~~$220.8 million, of which the Company's share was ~~$94.6~~$85.3 million, net of amounts attributable to noncontrolling interests.

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5.6. Equity and Debt Investments

The Company's equity investments and debt securities are represented by the following:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Equity Investments
Equity method investments
Investment ventures	$	1,912,397	$	2,151,847	$	1,703,174	$	1,845,129
Private funds	132,288		124,826		183,150		142,386
	2,044,685		2,276,673		1,886,324		1,987,515
Other equity investments
Marketable equity securities	132,781		36,438		102,399		138,586
Investment ventures	92,417		95,196		91,147		91,472
Private funds and non-traded REIT	36,307		24,607		41,393		38,641
Total equity investments	2,306,190		2,432,914		2,121,263		2,256,214

Debt Securities
N-Star CDO bonds, available for sale	62,442		64,127		54,474		54,859
CMBS of consolidated fund, at fair value	5,058		32,706		2,224		2,732
Total debt securities	67,500		96,833		56,698		57,591
Equity and debt investments	$	2,373,690	$	2,529,747	$	2,177,961	$	2,313,805

Equity Investments

The Company's equity investments represent noncontrolling equity interests in various entities, including investments for which fair value option was elected.

Equity Method Investments

The Company owns a significant ~~interests~~interest in ~~Colony Credit and NRE, both~~CLNC, a publicly-traded ~~REITs~~REIT that it manages. The Company accounts for its ~~investments~~investment under the equity method as it exercises significant influence over operating and financial policies of ~~these entities~~CLNC through a combination of its ownership interest, its role as the external manager and board representation, but does not control ~~these entities.~~CLNC. The Company also owns equity method investments that 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 Company elected the fair value option to account for its interests in certain investment ventures and limited partnership interests in third party private equity funds (Note ~~11)~~12).

The liabilities of the equity method investment entities may only be settled using the assets of these entities and there is no recourse to the general credit of either the Company or the other investors for the obligations of these investment entities. Neither the Company nor the other investors are required to provide financial or other support in excess of their capital commitments. The Company’s exposure to the investment entities is limited to its equity method investment balance.

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The Company’s investments accounted for under the equity method ~~including investments for which fair value option was elected,~~ are summarized ~~below:~~below, excluding investments classified as held for sale (Note 8):


($ in thousands)			Ownership Interestat June 30, 2019⁽¹⁾		Carrying Value at										Ownership Interestat March 31, 2020⁽¹⁾		Carrying Value at
Investments	Description			June 30, 2019				December 31, 2018				Description			Ownership Interestat March 31, 2020⁽¹⁾	March 31, 2020				December 31, 2019
Colony Credit Real Estate, Inc.	Common equity in publicly traded commercial real estate credit REIT managed by the Company and membership units in its operating subsidiary	(2)	Ownership Interestat June 30, 2019⁽¹⁾	36.4%		$	743,015			$	1,037,754			Common equity in publicly traded commercial real estate credit REIT managed by the Company and membership units in its operating subsidiary	(2)	36.5%		$	666,059			$	725,443
NorthStar Realty Europe Corp.	Common equity in publicly traded equity REIT managed by the Company	(2)	11.1%		86,581				87,696
RXR Realty	Common equity in investment venture with a real estate investor, developer and investment manager		27.2%		93,395				95,418
RXR Realty, LLC													Common equity in investment venture with a real estate investor, developer and investment manager (sold in February 2020)		—%		—				93,390
Preferred equity	Preferred equity investments with underlying real estate	(3)	NA		139,185				219,913				Preferred equity investments with underlying real estate	(3)	NA		138,420				138,428
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		527,791				481,477				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		532,654				543,296
Private funds	General partner and/or limited partner interests in private funds (excluding carried interest allocation)	(5)	Various		110,617				109,393				General partner and/or limited partner interests in private funds (excluding carried interest allocation)		Various		175,274				115,055
Private funds—carried interest	Disproportionate allocation of returns to the Company as general partner or equivalent based on the extent to which cumulative performance of the fund exceeds minimum return hurdles	(5)	Various		16,174				9,525				Disproportionate allocation of returns to the Company as general partner or equivalent based on the extent to which cumulative performance of the fund exceeds minimum return hurdles		Various		3,260				21,940
Other investment ventures	Interests in 16 investments at June 30, 2019		Various		150,628				154,412				Interests in 12 investments at March 31, 2020		Various		152,317				127,088
Fair value option	Interests in initial stage, real estate development and hotel ventures and limited partnership interests in private equity funds		Various		177,299				81,085				Interests in initial stage, real estate development and hotel ventures and limited partnership interests in private equity funds		Various		218,340				222,875
					$	2,044,685			$	2,276,673							$	1,886,324			$	1,987,515

__________

⁽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⁾	~~These entities are~~CLNC is governed by ~~their respective boards~~its board of directors. The Company's role as manager is under the supervision and direction of ~~such entity's~~CLNC's board of directors, which includes representatives from the Company but the majority of whom are independent directors.

In connection with the Company's investment in NRE, the Company has an ownership waiver under NRE’s charter which allows the Company to own up to 45% of NRE’s common stock, and 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.


⁽³⁾	Some preferred equity investments may not have a stated ownership interest.


⁽⁴⁾	The Company owns varying levels of stated equity interests in certain acquisition, development and construction ("ADC") arrangements as well as profit participation interests without a stated ownership interest in other ADC arrangements.


⁽⁵⁾ Significant Sales of Equity Method Investments In February 2020, the Company sold its equity investment in RXR Realty, LLC for net proceeds after taxes of $179.1 million, recording a gain of $106.1 million, included in equity method earnings.	~~Excludes the Company's general partner equity, including carried interest associated with the open-end industrial fund, which is classified as held for sale for all periods presented (Note 7).~~

Impairment of Equity Method Investments

The Company evaluates its equity method investments for ~~other-than-temporary impairment~~OTTI at each reporting ~~period.~~

~~Impairment totaling $247.8~~period and recorded impairment of $0.8 million and ~~$250.4~~$2.6 million ~~were recorded in equity method earnings~~ for the three and six months ended June 30, 2019, respectively, driven by impairment on the Company's investment in Colony Credit, as discussed below. Other impairments resulted from a change in the Company's strategy as the Company terminated its future capital commitments to an investee, and separately, a write-down based upon a pending sale of the underlying real estate held by the investee.

Impairment of $16.5 million was recorded during the three and six months ended June 30, 2018. In making its assessment, the Company considered a variety of factors and assumptions specific to each investment, including: offer prices on the Company's investment; expected payoffs from sales of the underlying business of the investee; or estimated enterprise value of the investee.

~~Colony Credit~~—In January 2018, the Company deconsolidated the CLNY Contributed Entities and measured its interest in Colony Credit based upon its proportionate share of Colony Credit's estimated fair value at the closing date of the Combination. The excess of fair value over carrying value of the Company's equity interest in the CLNY Investment

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~~Entities upon deconsolidation of $9.9 million was recognized in other gain on the consolidated statement of operations in~~ the three months ended March 31, ~~2018.~~

~~Since Colony Credit began trading on February 1, 2018 through June 30,~~2020 and 2019, ~~Colony Credit's common stock~~respectively. Equity method investments that were written down to fair value during the year ended December 31, 2019 had ~~traded between $15.10 and $23.23 per share. During this period,~~carrying values totaling $745.3 million at the ~~carrying value~~time of their respective impairment. The investment impaired during the ~~Company's investment in Colony Credit ranged between $24.74 per share at inception and $21.43 at~~three months ended March 31, ~~2019. Based upon Colony Credit's closing stock price of $15.50 per share~~2020 was fully resolved during the quarter. Impairment charges were generally driven by write-downs to respective offer prices on ~~June 28,~~investments sold, other than for CLNC in 2019 ~~the last trading day of~~as discussed below.

CLNC

Other-Than-Temporary Impairment Assessment—In the second quarter of 2019, the ~~carrying value of the Company's~~Company determined that its investment in ~~Colony Credit~~CLNC was ~~$227.9 million in excess of its market value of $743.0 million. In connection with the preparation and review of the Company's financial statements,~~other-than-temporarily impaired given the prolonged period of time that the carrying value of the Company's investment in ~~Colony Credit has~~CLNC had exceeded its market value. The Company recorded an impairment charge, included in equity method loss, of $227.9 million, measured as the excess of carrying value over market value of its investment in CLNC based upon CLNC's closing stock price of $15.50 per share on June 30, 2019.

At March 31, 2020, the Company's investment in CLNC had a carrying value of $666.1 million, which was in excess of its fair value of $188.9 million based upon the closing stock price of $3.94 per share on March 31, 2020. The Company

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determined that its investment in ~~Colony Credit~~CLNC as of March 31, 2020 was not other-than-temporarily ~~impaired~~impaired. There was a notable decrease in CLNC's stock price in March 2020, which was reflective of the significant volatility in equity markets and ~~recorded~~significant decline in equity prices as a whole in response to the COVID-19 crisis. There was no large disparity, however, between the Company's carrying value in CLNC and CLNC's internal estimated NAV as of March 31, 2020. The Company believes that, over the long term, the equity markets at large as well as CLNC's stock will not sustain the losses experienced in March 2020. The Company considered that at this time, it has both the intent and the ability to hold its investment in CLNC for a period of time that it believes would be sufficient to allow for an anticipated recovery in market value. Given the uncertainty over how prolonged the economic fallout from COVID-19 will affect financial markets and global economies, the Company will continue to reassess the recoverability of its investment in CLNC as circumstances evolve, which may result in the recognition of an other-than-temporary impairment in the future.

Basis Difference—The impairment charge in June 2019 resulted in a basis difference between the Company's carrying value of its investment in CLNC and the Company's proportionate share of CLNC's book value of equity. The impairment charge was applied to the Company's investment in CLNC as a whole and was not determined based on an impairment assessment of individual assets held by CLNC. In order to address this basis difference, the Company allocated the impairment charge ~~of $227.9 million~~on a relative fair value basis to investments identified by CLNC as ~~part of~~non-strategic assets. Accordingly, for any future impairment charges taken by CLNC on these non-strategic assets, the Company's share thereof will be applied to reduce the basis difference and will not be recorded as an equity method loss inuntil such time the ~~second quarter~~basis difference associated with the respective underlying investments has been fully eliminated. For the three months ended March 31, 2020, the Company reduced its share of ~~2019.~~loss from CLNC by $19.2 million, representing the basis difference allocated to non-strategic assets realized by CLNC during the three months ended March 31, 2020. The remaining basis difference at March 31, 2020 was $67.5 million.

Other Equity Investments

Other equity investments that doare not ~~qualify~~accounted for under the equity method ~~accounting~~ consist of the following:

Marketable Equity Securities—These are primarily equity investment in a third party managed mutual fund and publicly traded equity securities held by a consolidated private open-end fund. The equity securities of the consolidated fund comprise listed stocks ~~predominantly~~primarily in the U.S. and to a lesser extent, in ~~the United Kingdom,~~Europe, and ~~primarily~~predominantly in the ~~financial,~~digital real estate and ~~consumer~~telecommunication sectors.

Investment Ventures—This represents primarily common equity in the Albertsons/Safeway supermarket chain (with 50% ownership by a co-investment partner) ~~which was initially recorded at cost and prior to 2018, adjusted for distributions in excess of cumulative earnings.~~. There were no adjustments for any impairment or observable price ~~changes.~~changes as of March 31, 2020.

Private Funds and Non-Traded REIT—This represents interests in a Company-sponsored private fund and a non-traded REIT, NorthStar Healthcare Income, Inc. ("NorthStar Healthcare"), and limited partnership interest in a third party private fund sponsored by an equity method investee, for which the Company elected the NAV practical expedient (see Note ~~11)~~12).

Investment Commitments

Investment Ventures—Pursuant to 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. At ~~June 30, 2019,~~March 31, 2020, the Company’s share of these commitments was ~~$12.8~~$58.2 million.

Private Funds—At ~~June 30, 2019,~~March 31, 2020, the Company has unfunded commitments of ~~$270.9~~$244.3 million to funds sponsored ~~or co-sponsored~~ by the Company that are accounted for as equity method investments.

Debt Securities

The Company's investment in debt securities is composed of N-Star CDO Bonds, classified as AFS, and commercial mortgage-backed securities (“CMBS”) held by a consolidated sponsored investment company that is currently in liquidation, accounted for at fair value through earnings.

AFS Debt Securities

The N-Star CDO bonds are investment-grade subordinate bonds retained by NRF from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF that were subsequently repurchased by NRF at a discount. These CDOs are collateralized primarily by commercial real estate ("CRE") debt and CRE securities.

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The following tables summarize the balance and activities of the N-Star CDO bonds.

Gross Cumulative Unrealized
(in thousands) Amortized Cost Gains Losses Fair Value
June 30, 2019 $ 64,394
$ 3,743
$ (5,695 ) $ 62,442
December 31, 2018 67,513
1,565
(4,951 ) 64,127



	Amortized Cost Without Allowance for Credit Loss		Allowance for Credit Loss			Gross Cumulative Unrealized
(in thousands)	Amortized Cost Without Allowance for Credit Loss		Allowance for Credit Loss			Gains		Losses		Fair Value
March 31, 2020	$	44,945	$	(816	)	$	10,345	$	—	$	54,474
December 31, 2019	46,002		NA			8,857		—		54,859

~~Results from disposition~~There were 0 sales of N-Star CDO bonds ~~with realized gains (losses) recorded in other gain (loss), were as follows for~~during the three ~~and six~~ months ended ~~June 30, 2018. There were no dispositions in~~March 31, 2020 and year ended December 31, 2019.

At March 31, 2020, the ~~three and six months ended June 30, 2019.~~

~~Table~~contractual maturities of ~~Contents~~

(In thousands) Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
Proceeds from sale $ 15,012
$ 78,197
Gross realized gain 2,921
11,304
Gross realized loss (592 ) (592 )
N-Star CDO bonds ranged from 17 to 21 years. The expected maturity, on a weighted average basis, was 1.8 years.

Impairment of AFS Debt Securities

~~The following table presents~~ AFS debt securities ~~that have been in a gross unrealized loss position:~~

June 30, 2019 December 31, 2018
Less Than 12 Months More Than 12 Months Less Than 12 Months
(In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss
N-Star CDO bonds $ 240
$ 12
$ 39,663
$ 5,683
$ 54,459
$ 4,951

~~The Company performs an assessment, at least quarterly,~~are considered to ~~determine whether a decline in~~be impaired if their fair value ~~below~~is less than their amortized cost ~~of AFS debt securities is other than temporary. Other-than-temporary impairment ("OTTI") exists when either (i)~~basis.

If the ~~holder has the intent~~Company intends to sell ~~the impaired security, (ii) it~~or is more likely than not required to sell the ~~holder will~~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:

Upon adoption of CECL effective January 1, 2020, 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 ~~(iii)~~if the ~~holder does~~Company deems the security to be uncollectible.

Prior to adoption of CECL on January 1, 2020, the Company evaluated if the decline in fair value is other than temporary, in which case, the credit loss component was recognized in earnings as a write-off of the amortized cost basis of the debt security that is not ~~expect~~subject to ~~recover~~subsequent reversal. The non-credit loss component was recognized in OCI. If the impairment is not other-than-temporary, the entire ~~amortized cost of~~unrealized loss is recognized in OCI.

For the ~~security. In assessing OTTI and estimating future expected cash flows, factors considered include, but are not limited to, credit rating of~~three months ended March 31, 2020, the ~~security, financial condition of the issuer, defaults for similar securities, performance and value of assets underlying an asset-backed security.~~

~~The~~ Company recorded ~~$0.7 million of OTTI~~an allowance for credit loss in other gain (loss) of $0.8 million. The credit loss was 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 March 31, 2020, there were 0 AFS debt securities in unrealized loss positions without allowance for ~~both~~credit loss.

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2019, ~~and $1.3 million and~~the Company recorded OTTI loss on AFS debt securities of $~~7.2~~0.7 million ~~for the three and six months ended June 30, 2018, respectively.~~in other gain (loss). The losses were due to an adverse change in expected cash flows on N-Star ~~CDOs, and CMBS held by consolidated N-Star CDOs which were subsequently deconsolidated in the second quarter of 2018.~~CDO bonds. The Company believed that it was not likely that it would recover the full amortized cost on these securities, ~~prior to selling them.~~

primarily based upon the performance and value of the underlying collateral. At ~~June 30, 2019 and~~ December 31, ~~2018, the Company believed that the N-Star CDOs~~2019, there were 0 AFS debt securities with unrealized loss in accumulated other comprehensive income were not other than temporarily impaired as it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.AOCI.

6.7. Goodwill, Deferred Leasing Costs and Other Intangibles

Goodwill

~~Goodwill balance~~During the three months ended March 31, 2020, $51.0 million of ~~$1.5 billion at June 30, 2019 and December 31, 2018 resides in~~goodwill was reassigned from the other investment management ~~segment. Goodwill~~segment to the digital reportable segment to reflect the value associated with certain existing investment vehicles that were repurposed to execute an investment strategy focused on the digital sector, as well as a team of professionals dedicated to the strategy. The amount that was reassigned to the digital segment was determined based upon the fair value of this digital strategy platform relative to the overall other investment management goodwill balance prior to the reassignment. The remaining goodwill balance assigned to the ~~industrial~~other investment management reportable segment was impaired by $79.0 million in the first quarter of ~~$20.0 million~~2020, as discussed further below.

Table of Contents

Goodwill balance by reportable segment is ~~classified~~ as ~~held for sale (Note 7).~~follows.



(In thousands)	March 31, 2020		December 31, 2019
Balance by reportable segment:
Digital ⁽¹⁾	$	777,330	$	726,330
Other investment management	596,561		726,561
	$	1,373,891	$	1,452,891

__________


⁽¹⁾	At March 31, 2020 and December 31, 2019, goodwill of $140.5 million related to the DBH acquisition was deductible for income tax purposes.

Impairment of Goodwill ~~is assessed for impairment at~~

In the first quarter of 2020, the Company considered whether changes in the current economic environment as a result of COVID-19 and the impact thereof on the Company's ~~operating segments or one level below.~~ real estate and investment management business represent indicators of potential impairment to goodwill.

Digital—The Company ~~performs~~believes that the current shift and increased reliance on a digital economy positions the Company's digital real estate and digital investment management business for further growth. Therefore, the Company determined that there were no indicators of impairment on goodwill in the digital reportable segment.

Other Investment Management—The Company determined that the prevailing deterioration in current economic conditions, particularly i) the recent decline in the Company's stock price which in turn resulted in a decline in the Company's market capitalization; ii) the potential effects of a global economic downturn on future capital raising assumptions and exit strategies; and iii) a distressed market affecting asset values on the Company's balance sheet, represent indicators of impairment of goodwill assigned to other investment management.

Accordingly, the Company updated its ~~annual~~quantitative test of the other investment management goodwill, which indicated that the carrying value of the other investment management reporting unit including goodwill at March 31, 2020 exceeded its estimated fair value. As a result, the Company recognized an impairment ~~test~~charge to its other investment management goodwill of $79.0 million in the first quarter of 2020.

Similar to the last valuation in the fourth quarter of ~~each year. Based~~2019, the fair value of the investment management reporting unit was generally estimated using the income approach. Projections of discounted net cash flows were based upon various factors, including, but not limited to, assumptions around forecasted capital raising for existing and future investment vehicles, fee related earnings multiples, operating profit margins and discount rates, adjusted for certain risk characteristics such as the predictability of fee streams and the estimated life of managed investment vehicles. The Company applied terminal year residual multiples on fee related earnings ranging from 16x to 20x, and discount rates between 10% and 15% for fee related earnings and 20% for carried interest. The Company considered a range of fee related earnings multiples and discount rates for a peer group of alternative asset managers as indicators to assess for reasonableness, noting that direct comparison generally cannot be drawn due to differences that exist between the Company's ~~most recent annual impairment test in 2018,~~business and those of other asset managers. As it relates to the CLNC management contract that was previously valued based upon a potential sale of the contract, the valuation was updated with a reduced sales price, taking into account bids received by the Company. At this time, the Company ~~determined~~has delayed any sale transaction until such time that market conditions improve.

The Company also considered the hypothetical value of its non-digital investment management business in a spinoff that would result in the Company becoming externally managed, and assigned a value to internally managing the Company's non-digital balance sheet assets based on market terms of management contracts of externally-managed REITs that otherwise engage in similar real estate operations. The valuation of the hypothetical contract contemplated a gradually diminishing balance sheet in non-digital assets, as the Company anticipates a redeployment of available capital into its digital business over time.

Due to the inherently judgmental nature of capital raising projections, exit strategies and various other assumptions used in the goodwill valuation, which are further exacerbated by uncertainties over the extent and duration of economic instability resulting from COVID-19, actual results may differ from current expectations which may lead to further decline in fair value of the other investment management reporting unit and further impairment to the other investment management goodwill ~~was not impaired. Additionally,~~ no ~~impairment was recognized on~~in the ~~investment management goodwill during the~~ ~~six months endedJune 30, 2019~~.future.

2628

Table of Contents

Deferred Leasing Costs, Other Intangible Assets and Intangible Liabilities

Deferred leasing costs and identifiable intangible assets and liabilities, excluding those related to assets held for sale, are as ~~follows:~~

follows.

June 30, 2019 December 31, 2018
(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 $ 154,466
$ (64,271 ) $ 90,195
$ 170,869
$ (55,103 ) $ 115,766
Above-market lease values 109,652
(34,616 ) 75,036
111,903
(29,497 ) 82,406
Below-market ground lease obligations ⁽²⁾
—
—
—
16,258
(984 ) 15,274
Deferred leasing costs 21,578
(6,584 ) 14,994
17,154
(4,465 ) 12,689
Lease incentives 14,169
(1,637 ) 12,532
14,169
(1,134 ) 13,035
Trade name ⁽³⁾
15,500
—
15,500
15,500
—
15,500
Investment management contracts 196,698
(106,520 ) 90,178
194,698
(92,618 ) 102,080
Customer relationships 50,753
(16,698 ) 34,055
49,291
(15,027 ) 34,264
Other ⁽⁴⁾
42,062
(2,201 ) 39,861
59,157
(4,241 ) 54,916
Total deferred leasing costs and intangible assets $ 604,878
$ (232,527 ) $ 372,351
$ 648,999
$ (203,069 ) $ 445,930
Intangible Liabilities
Below-market lease values $ 146,358
$ (45,628 ) $ 100,730
$ 176,013
$ (42,895 ) $ 133,118
Above-market ground lease obligations ⁽²⁾
—
—
—
15,909
(1,557 ) 14,352
Total intangible liabilities $ 146,358
$ (45,628 ) $ 100,730
$ 191,922
$ (44,452 ) $ 147,470



	March 31, 2020							December 31, 2019
(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 intangible assets ⁽²⁾	$	417,877	$	(145,658	)	$	272,219	$	425,106	$	(123,686	)	$	301,420
Investment management intangibles ⁽³⁾	285,233		(105,488		)	179,745		285,233		(96,466		)	188,767
Customer relationships ⁽⁴⁾	71,000		(1,723		)	69,277		71,000		(250		)	70,750
Trade names ⁽⁵⁾	39,600		(1,283		)	38,317		39,600		(185		)	39,415
Other ⁽⁶⁾	38,677		(2,985		)	35,692		41,211		(2,710		)	38,501
Total deferred leasing costs and intangible assets	$	852,387	$	(257,137	)	$	595,250	$	862,150	$	(223,297	)	$	638,853
Intangible Liabilities
Lease intangible liabilities ⁽²⁾	$	172,211	$	(70,134	)	$	102,077	$	174,208	$	(62,724	)	$	111,484

__________

⁽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 ~~twelve~~12 months from date of acquisition, based upon new information obtained about facts and circumstances that existed at time of acquisition. Amounts are presented net of impairments and write-offs.


⁽²⁾	~~Upon adoption~~Lease intangible assets are composed of ~~the new~~in-place leases, above-market leases and lease ~~standard on January 1, 2019,~~incentives. Lease intangible liabilities are composed of below-market ~~and above-market ground lease obligations were reclassified as a component of operating lease right-of-use asset, included in other assets.~~leases.


⁽³⁾	Composed of investment management contracts and investor relationships.


⁽⁴⁾	Represent DataBank customer relationships.


⁽⁵⁾	Finite-lived trade names are amortized over estimated useful lives of 5 to 10 years. The Colony trade name with a carrying value of $15.5 million is determined to have an indefinite useful life and is not currently subject to amortization.


⁽⁴⁾⁽⁶⁾	Represents primarily the value of certificates of need associated with certain healthcare portfolios which are not amortized and franchise agreements associated with ~~certain~~ hotel properties which are subject to amortization over the term of the respective agreements.

Impairment of Identifiable Intangible Assets

~~There~~An investment management contract that was ~~no impairment of identifiable intangible assets during the three and six months ended June 30, 2019.~~

~~The following impairment losses were recognized~~written down to fair value during the year ended December 31, ~~2018~~:

~~Investment Management Contracts—$147.4~~2019 had a carrying value of $62.4 million at the time of ~~impairment was recorded on investment management contract intangibles related to non-traded REITs. This consisted of $139.0 million write-off~~impairment. The fair value of the ~~NorthStar I and NorthStar II management contract intangibles as the contracts were terminated~~intangible asset was based upon closing of the Combination, and $1.4 million write off of the management contract intangible of the Company's sponsored non-traded REIT, NorthStar/RXR New York Metro Real Estate, Inc., in consideration of the termination of its offering period effective March 2018 and subsequent liquidation, both of which were recorded in the first quarter of 2018, and $7.0 million impairment in the third quarter of 2018 on the NorthStar Healthcare management contract intangible which was valued based uponrevised future net cash flows ~~discounted at 10%.~~

~~Customer Relationships—In the fourth quarter of 2018,~~to be generated over the remaining ~~value~~life of the ~~retail customer relationship intangible of $10.1 million was written off based on a reassessment of future capital raising for retail vehicles.~~contract, representing Level 3 inputs.

~~Trade Name—In June 2018, the Company changed its name from Colony NorthStar, Inc. to Colony Capital, Inc. and wrote off the remaining value~~Other than real estate intangibles which were impaired as part of the ~~NorthStar trade name of $59.5 million.~~real estate asset group as discussed in Note 4, there were 0 impairments on other identifiable intangible assets in the three months ended March 31, 2020 and 2019.

~~Table of Contents~~

Amortization of Intangible Assets and Liabilities

The following table summarizes amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities, excluding amounts related to discontinued operations (Note ~~15)~~16):

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Above-market lease values $ (2,944 ) $ (15,470 ) $ (5,677 ) $ (19,962 )
Below-market lease values 5,034
14,405
9,922
20,374
Lease incentives (252 ) (252 ) (504 ) (493 )
Net increase (decrease) to rental income $ 1,838
$ (1,317 ) $ 3,741
$ (81 )

Above-market ground lease obligations $ —
$ (247 ) $ —
$ (467 )
Below-market ground lease obligations —
188
—
369
Net increase (decrease) to ground rent expense $ —
$ (59 ) $ —
$ (98 )

In-place lease values $ 7,075
$ 7,093
$ 14,899
$ 15,384
Deferred leasing costs 799
781
1,646
1,628
Trade name —
802
—
1,606
Investment management contracts 6,075
4,125
13,902
9,811
Customer relationships 836
1,151
1,672
2,303
Other 402
619
654
1,134
Amortization expense $ 15,187
$ 14,571
$ 32,773
$ 31,866



	Three Months Ended March 31,
(In thousands)	2020		2019
Net increase to rental income ⁽¹⁾	$	3,354	$	1,903

Amortization expense
Deferred leasing costs and lease intangibles	$	20,089	$	8,671
Investment management intangibles	9,022		8,663
Customer relationships	1,473		—
Trade name	1,098		—
Other	286		252
	$	31,968	$	17,586

__________


⁽¹⁾	Represents the impact of amortizing above- and below-market leases and lease incentives.

Table of Contents

The following table presents the ~~effect of~~ future amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities, excluding those related to assets and liabilities held for ~~sale:~~sale.


	Year Ending December 31,															Year Ending December 31,
(In thousands)	Remaining 2019		2020		2021		2022		2023		2024 and Thereafter			Total		Remaining 2020		2021		2022		2023		2024		2025 and Thereafter			Total
Net increase (decrease) to rental income ⁽¹⁾	$	2,126	$	4,599	$	5,544	$	5,114	$	5,840	$	(10,061	)	$	13,162	$	8,509	$	5,561	$	3,711	$	6,716	$	249	$	(13,549	)	$	11,197
Amortization expense ⁽¹⁾	78,042		36,286		30,299		22,538		16,480		56,721			240,366		80,127		78,005		58,921		49,931		42,403		153,017			462,404

~~__________~~


⁽¹⁾	Excludes $10.8 million net increase to rental income and $150.2 million amortization expense related to deferred leasing costs and intangible assets and liabilities of the industrial segment that is held for sale.

7.8. Assets and Related Liabilities Held for Sale

The Company's assets and related liabilities held for sale are summarized below:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Assets
Restricted cash	$	3,316	$	6,213	$	4,845	$	15,585
Real estate, net	4,885,515		3,645,406		696,171		799,415
Equity investment—private fund	12,748		13,422
Goodwill	20,000		20,000
Deferred leasing costs and intangible assets, net	176,707		135,924		30,921		33,236
Other assets	107,054		146,380		17,479		21,816
Total assets held for sale	$	5,205,340	$	3,967,345	$	749,416	$	870,052

Liabilities
Debt, net	$	2,004,201	$	1,064,585	$	233,166	$	232,944
Lease intangibles and other liabilities, net	163,967		153,910		27,793		35,208
Total liabilities related to assets held for sale	$	2,168,168	$	1,218,495	$	260,959	$	268,152

~~Table of Contents~~

Assets and Liabilities Related to Discontinued Operations

At ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, assets totaling $4.4 billion and $3.0 billion, respectively, and liabilities totaling $2.1 billion and $1.2 billion, respectively, in connection with~~2019, the bulk industrial ~~segment and related management platform, were classified as~~portfolio remained held for sale, ~~and discontinued operations. The industrial~~with assets ~~held for sale consisted~~consisting primarily of real estate and related ~~intangible assets~~intangibles totaling $0.4 billion, and liabilities consisting primarily of $4.3 billion at June 30, 2019 and $2.9 billion at December 31, 2018, as well as goodwill associated with the industrial management platform and the Company's general partner interest in the industrial open-end fund, as presented in the table above. Debt classified as held for sale represents all outstanding debt of the industrial segment which is expected to be assumed by the buyer upon sale. At June 30, 2019, the outstanding debt of the industrial segment was composed of $1.2 billion fixed rate and $0.8 billion variable rate, bearing an overall weighted average interest rate of 3.87%, and weighted average remaining maturity of 7.8 years.totaling $0.2 billion.

8.9. Restricted Cash, Other Assets and Other Liabilities

Restricted Cash

The following table summarizes the Company's restricted cash balance:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Capital expenditures reserves ⁽¹⁾	$	141,812	$	214,863	$	61,524	$	89,901
Real estate escrow reserves ⁽²⁾	50,024		49,702		34,061		38,326
Borrower escrow deposits	13,864		10,412		8,234		8,079
Working capital and other reserves ⁽³⁾	14,453		19,586
Tenant lock boxes ⁽⁴⁾	12,226		15,666
Lender restricted cash ⁽³⁾					39,019		41,591
Other	104,112		54,376		23,730		26,026
Total restricted cash	$	336,491	$	364,605	$	166,568	$	203,923

__________


⁽¹⁾	Represents primarily cash held by lenders for 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~~operating cash from the Company's investment properties that are restricted by lenders in ~~connection~~accordance with ~~letter of credit provisions, as required in joint venture arrangements with the Federal Deposit Insurance Corporation.~~respective debt agreements.


⁽⁴⁾ 30 Table of Contents	~~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.~~

Other Assets

The following table summarizes the Company's other assets:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Interest receivable	$	12,659	$	14,005
Straight-line rents	36,945		34,931		$	39,111	$	37,352
Hotel-related deposits and reserves ⁽¹⁾	13,166		21,636		19,247		18,065
Investment deposits and pending deal costs	31,081		27,534		36,199		32,994
Deferred financing costs, net ⁽²⁾	4,247		5,467		2,168		2,794
Derivative assets(Note 10)	20,953		33,558
Derivative assets(Note 11)					26,919		21,386
Prepaid taxes and deferred tax assets, net	56,751		71,656		64,459		82,344
Receivables from resolution of investments ⁽³⁾	1,462		30,770		47,702		63,984
Operating lease right-of-use asset, net	115,048		—		202,764		220,560
Accounts receivable, net ⁽⁴⁾	91,537		58,830		83,047		83,723
Prepaid expenses	33,565		23,771		43,449		30,761
Other assets	159,922		30,604		31,957		30,413
Fixed assets, net	44,337		47,381		43,198		44,768
Total other assets	$	621,673	$	400,143	$	640,220	$	669,144

__________


⁽¹⁾	Represents ~~working capital deposits and~~ reserves held by third party managers at certain hotel properties to fund furniture, fixtures and equipment ~~expenditures.~~("FF&E") expenditures and to a lesser extent, working capital deposits. Funding of FF&E reserves is made periodically based on a percentage of hotel operating income.


⁽²⁾	Deferred financing costs relate to revolving credit arrangements.


⁽³⁾	Represents ~~primarily~~ proceeds from loan repayments and real estate sales held in escrow, and sales of ~~marketable~~ equity ~~securities~~investments pending settlement.


⁽⁴⁾	Includes receivables ~~for~~from tenants, hotel operating income, resident fees, ~~rent~~property level insurance, and ~~other tenant receivables,~~asset management fees, net of ~~allowance.~~allowance for doubtful accounts, where applicable, of $3.0 million at March 31, 2020 and $2.8 million at December 31, 2019.

Impact of CARES Act on Deferred Tax Asset

~~Table~~The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. Among other things, the CARES Act temporarily removed the 80% limitation on the amount of ~~Contents~~

taxable income that can be offset with a net operating loss (“NOL”) for 2019 and 2020, and allowed for a carryback of NOL generated in years 2018 through 2020 to the five taxable years preceding the taxable year of loss. The Company estimates that it has approximately $26.5 million of NOL available for carryback under the CARES Act and recorded $3.3 million of income tax benefit during the quarter ended March 31, 2020 to reflect the carryback. The Company also reclassified approximately $8.6 million of deferred tax asset to current tax receivable in anticipation of refunds expected to be received in the next twelve months as a result of the carryback.

Accrued and Other Liabilities

The following table summarizes the Company's accrued and other liabilities:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Tenant security deposits and payable	$	18,326	$	15,135	$	15,628	$	15,293
Borrower escrow deposits	13,822		13,001		8,234		9,903
Deferred income ⁽¹⁾	13,326		27,124		37,896		32,318
Interest payable	40,751		40,622		36,325		38,487
Derivative liabilities (Note 10)	388,338		132,808
Contingent consideration—THL Hotel Portfolio (Note 11)	9,745		8,903
Share repurchase payable ⁽²⁾	—		7,567
Derivative liabilities (Note 11)					84,271		127,531
Current and deferred income tax liability	97,312		92,808		208,818		222,206
Operating lease liability (Note 20)	116,020		—
Operating lease liability					178,692		181,297
Accrued compensation	45,068		79,320		34,963		83,351
Accrued carried interest and contractual incentive fee compensation	7,172		7,486
Accrued carried interest and incentive fee compensation					1,179		50,360
Accrued real estate and other taxes	46,717		38,714		37,709		39,923
Accounts payable and accrued expenses	96,220		91,244		136,439		143,852
Other liabilities	127,892		79,412		57,127		71,377
Total accrued and other liabilities	$	1,020,709	$	634,144	$	837,281	$	1,015,898

__________

⁽¹⁾

Represents primarily prepaid rental income, ~~and~~prepaid interest ~~income~~from borrowers held in reserve ~~accounts. Includes~~accounts, deferred asset management ~~fee income of $2.9~~fees from private funds, and deferred base management fees assumed in the DBH acquisition. Deferred management fees totaling $22.1 million at ~~June 30, 2019~~March 31, 2020 and ~~$3.2~~$18.3 million at December 31, ~~2018, which~~2019 will be recognized as fee income onover a ~~straight-line basis through 2024.~~weighted average period of 1.5 years and 1.2 years, respectively.


⁽²⁾	~~Represents the Company's common stock repurchases transacted in December 2018 and settled in January 2019.~~

Table of Contents

10. Debt

The Company's debt consists of the following components, excluding debt associated with the industrial segment, which is ~~expected to be assumed by the buyer and~~ included in liabilities related to assets held for sale (Note 7)8).


(In thousands)	Corporate Credit Facility⁽¹⁾		Convertible and Exchangeable Senior Notes			Secured Debt ⁽²⁾			Junior Subordinated Notes			Total Debt			Corporate Credit Facility⁽¹⁾		Convertible and Exchangeable Senior Notes			Secured Debt ⁽²⁾			Junior Subordinated Notes			Total Debt
June 30, 2019
March 31, 2020
Debt at amortized cost
Principal	$	85,000	$	616,105		$	7,954,870		$	280,117		$	8,936,092		$	600,000	$	616,105		$	8,131,000		$	280,117		$	9,627,222
Premium (discount), net	—		2,474			(20,311		)	(80,058		)	(97,895		)	—		2,127			(15,530		)	(78,373		)	(91,776		)
Deferred financing costs	—		(5,487		)	(93,043		)	—			(98,530		)	—		(3,690		)	(78,418		)	—			(82,108		)
	$	85,000	$	613,092		$	7,841,516		$	200,059		$	8,739,667		$	600,000	$	614,542		$	8,037,052		$	201,744		$	9,453,338
December 31, 2018
December 31, 2019
Debt at amortized cost
Principal	$	—	$	616,105		$	8,275,707		$	280,117		$	9,171,929		$	—	$	616,105		$	8,276,620		$	280,117		$	9,172,842
Premium (discount), net	—		2,697			(41,217		)	(81,031		)	(119,551		)	—		2,243			(17,126		)	(78,927		)	(93,810		)
Deferred financing costs	—		(6,652		)	(70,354		)	—			(77,006		)	—		(4,296		)	(90,828		)	—			(95,124		)
	$	—	$	612,150		$	8,164,136		$	199,086		$	8,975,372		$	—	$	614,052		$	8,168,666		$	201,190		$	8,983,908

__________


⁽¹⁾	Deferred financing costs related to the corporate credit facility are included in other assets.


⁽²⁾	Debt principal totaling ~~$393.7~~$474.1 million at ~~June 30, 2019~~March 31, 2020 and ~~$425.9~~$515.6 million at December 31, ~~2018~~2019 relates to financing on assets held for sale. Debt associated with assets held for sale that ~~will~~is expected to be assumed by the buyer is included in liabilities related to assets held for sale (Note 7)8).

~~Table of Contents~~

The following table summarizes certain information about ~~the different components of~~ debt carried at amortized cost. ~~Weighted~~For information as of March 31, 2020, weighted average years remaining to maturity is based on initial maturity dates or extended maturity dates if the criteria to extend have been met as of the ~~balance sheet~~ date of this filing, and the extension option is at the Company’s discretion. The Company is providing the updated information even if extension criteria had been met as of March 31, 2020 given the post period defaults as described below. For information as of December 31, 2019, weighted average years remaining to maturity is based on initial maturity dates or extended maturity dates if the criteria to extend have been met as of December 31, 2019 and the extension option is at the Company’s discretion.

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	Fixed Rate					Variable Rate					Total					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	Outstanding Principal		Weighted Average Interest Rate (Per Annum)⁽²⁾		Weighted Average Years Remaining to Maturity⁽³⁾	Outstanding Principal		Weighted Average Interest Rate (Per Annum)⁽²⁾		Weighted Average Years Remaining to Maturity⁽³⁾	Outstanding Principal		Weighted Average Interest Rate (Per Annum)⁽²⁾		Weighted Average Years Remaining to Maturity⁽³⁾
June 30, 2019
March 31, 2020
Recourse
Corporate credit facility	$	—	N/A		N/A	$	85,000	4.65	%	2.5	$	85,000	4.65	%	2.5	$	—	N/A		N/A	$	600,000	2.86	%	1.8	$	600,000	2.86	%	1.8
Convertible and exchangeable senior notes	616,105		4.27	%	2.5	—		N/A		N/A	616,105		4.27	%	2.5	616,105		4.27	%	1.8	—		N/A		N/A	616,105		4.27	%	1.8
Junior subordinated debt	—		N/A		N/A	280,117		5.18	%	16.9	280,117		5.18	%	16.9	—		N/A		N/A	280,117		4.31	%	16.2	280,117		4.31	%	16.2
Secured debt ⁽¹⁾	36,143		5.02	%	6.4	—		N/A		N/A	36,143		5.02	%	6.6	34,520		5.02	%	5.7	—		N/A		N/A	34,520		5.02	%	5.7
	652,248					365,117					1,017,365					650,625					880,117					1,530,742
Non-recourse
Healthcare ^{(2) (3)}	405,980		4.55	%	5.6	2,616,766		5.99	%	4.2	3,022,746		5.80	%	4.4
Secured debt
Digital																—		N/A		N/A	515,831		6.30	%	4.6	515,831		6.30	%	4.6
Healthcare																405,069		4.55	%	4.9	2,521,305		4.56	%	4.0	2,926,374		4.56	%	4.1
Hospitality	12,960		13.01	%	2.1	2,646,602		5.52	%	3.5	2,659,562		5.56	%	3.5	13,432		12.79	%	0.4	2,653,478		4.06	%	1.0	2,666,910		4.11	%	1.0
Other Real Estate Equity ⁽²⁾	167,035		4.14	%	3.5	1,766,128		4.20	%	3.1	1,933,163		4.20	%	3.1
Other Real Estate Equity																150,477		4.26	%	3.0	1,585,958		3.62	%	1.6	1,736,435		3.68	%	1.7
Real Estate Debt	—		N/A		N/A	303,256		4.56	%	2.3	303,256		4.56	%	2.3	—		N/A		N/A	250,930		3.37	%	1.7	250,930		3.37	%	1.7
	585,975					7,332,752					7,918,727					568,978					7,527,502					8,096,480
	$	1,238,223				$	7,697,869				$	8,936,092				$	1,219,603				$	8,407,619				$	9,627,222
December 31, 2018
December 31, 2019
Recourse
Corporate credit facility	$	—	N/A		N/A	$	—	N/A		3.0	$	—	N/A		3.0	$	—	N/A		N/A	$	—	N/A		2.0	$	—	N/A		2.0
Convertible and exchangeable senior notes	616,105		4.27	%	3.0	—		N/A		N/A	616,105		4.27	%	3.0	616,105		4.27	%	2.0	—		N/A		N/A	616,105		4.27	%	2.0
Junior subordinated debt	—		N/A		N/A	280,117		5.66	%	17.4	280,117		5.66	%	17.4	—		N/A		N/A	280,117		4.77	%	16.4	280,117		4.77	%	16.4
Secured debt ⁽¹⁾	37,199		5.02	%	6.9	—		N/A		N/A	37,199		5.02	%	6.9	35,072		5.02	%	5.9	—		N/A		N/A	35,072		5.02	%	5.9
	653,304					280,117					933,421					651,177					280,117					931,294
Non-recourse
Healthcare ⁽²⁾⁽³⁾	2,130,999		4.62	%	1.9	1,109,681		6.64	%	2.7	3,240,680		5.31	%	2.2
Secured debt
Digital																—		N/A		N/A	539,155		6.98	%	4.8	539,155		6.98	%	4.8
Healthcare																405,980		4.55	%	5.1	2,547,726		5.22	%	4.3	2,953,706		5.13	%	4.4
Hospitality	12,019		12.99	%	2.6	2,636,053		5.68	%	3.8	2,648,072		5.71	%	3.8	13,494		12.71	%	1.6	2,653,853		4.83	%	4.6	2,667,347		4.87	%	4.6
Other Real Estate Equity ⁽²⁾	200,814		4.02	%	3.8	1,789,431		4.43	%	3.6	1,990,245		4.39	%	3.7
Other Real Estate Equity																151,777		4.26	%	3.4	1,652,870		4.08	%	2.8	1,804,647		4.09	%	2.9
Real Estate Debt	—		N/A		N/A	359,511		4.50	%	2.4	359,511		4.50	%	2.4	—		N/A		N/A	276,693		3.72	%	1.8	276,693		3.72	%	1.8
	2,343,832					5,894,676					8,238,508					571,251					7,670,297					8,241,548
	$	2,997,136				$	6,174,793				$	9,171,929				$	1,222,428				$	7,950,414				$	9,172,842

__________


⁽¹⁾	The fixed rate recourse debt is secured by the Company's aircraft.

⁽²⁾

~~Mortgage~~Calculated based upon outstanding debt inprincipal at balance sheet date and for variable rate debt, the ~~healthcare and other real estate equity segment with an aggregate outstanding principal of $341.6 million~~applicable index plus spread at June 30, 2019 and $538.5 million at December 31, 2018 were either in payment default or were not in compliance with certain debt and/or lease covenants. The Company is negotiating with the lenders and the tenants to restructure the debt and leases, as applicable, or otherwise refinance the debt.balance sheet date.

⁽³⁾

~~At December 31, 2018, included $1.725 billion outstanding principal~~Calculated based upon initial maturity dates of ~~non-recourse fixed rate mortgage~~the respective debt, on certain properties in our U.S. healthcare portfolio that was scheduled to mature in December 2019. In June 2019, such debt was refinanced with $1.515 billion of variable rate debt, composed of $1.025 billion first mortgage debtor extended maturity dates if extension criteria are met and ~~$490 million mezzanine debt, with a two-year initial term and three 1-year~~ extension ~~options.~~option is at the Company's discretion as described above.

Investment-Level Debt in Default

Non-recourse mortgage debt in the hospitality, healthcare and other real estate equity segments with aggregate outstanding principal of $3.54 billion through the date of this filing ($234.1 million at March 31, 2020 and $235.6 million at December 31, 2019 in healthcare and other equity and debt segments) was either in payment default or was not in compliance with certain debt and/or lease covenants. A combined $3.16 billion of the defaulted debt related to the hospitality segment and the THL Hotel Portfolio (Note 12) in the other equity and debt segment as a result of the economic fallout from COVID-19. In May 2020, the Company received a notice of acceleration with respect to $780.0 million of defaulted debt in the hospitality segment. The Company is in active negotiations with the respective lenders to execute or extend forbearances, execute debt modifications, including extension of upcoming maturities in 2020, or seek

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other accommodations. The remaining $346.7 million of outstanding debt principal in the hospitality segment was not in default. With respect to other defaulted debt, the Company is negotiating with its lenders and tenants to restructure the debt and/or leases, as applicable. There can be no assurance that the Company will be successful in any of the negotiations with its lenders or tenants.

Corporate Credit Facility

On January 10, 2017, the OP entered into an amended and restated credit agreement (the “Credit Agreement”) with several lenders and JPMorgan Chase Bank, N.A. as administrative agent, and Bank of America, N.A. as syndication ~~agent.~~ agent, as amended from time to time (as amended, the “Credit Agreement”).

The Credit Agreement ~~provided~~provides a secured revolving credit facility in the maximum principal amount of ~~$1.0 billion,~~$750 million, with an option to increase up to ~~$1.5~~$1.25 billion, subject to agreement ofby existing or substitute lenders ~~to provide the additional loan commitment~~ and satisfaction of customary closing conditions. The credit facility is scheduled to mature in January 2021, with ~~two~~2 6-month extension options, each subject to a fee of 0.10% of the commitment amount upon exercise.

~~In April 2019, the Credit Agreement was amended to reduce the aggregate commitments available from $1.0 billion to~~ ~~$750 million, and the option to increase the borrowing commitments, subject to agreement by the lenders and~~

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customary closing conditions, from $1.5 billion to $1.125 billion. The amendment also provides that the Company may operate at below the minimum fixed charge coverage ratio, as defined in the Credit Agreement, for a reduced valuation of the borrowing base, and establishes a new floor for the minimum fixed charge coverage ratio beginning fiscal quarter ended March 31, 2019.

The maximum amount available at any time is limited by a borrowing base of certain investment assets, with the valuation of such investment assets generally determined according to a percentage of adjusted net book value or a multiple of base management fee EBITDA (as defined in the Credit Agreement). As of March 31, 2020, the Company had drawn $600 million of the approximately $700 million available under the credit facility.

Advances under the Credit Agreement accrue interest at a per annum rate equal to the sum of one-month ~~London Inter-bank Offered Rate ("LIBOR")~~LIBOR plus 2.25% or a base rate determined according to a prime rate or federal funds rate plus a margin of 1.25%. The Company pays a commitment fee of 0.25% or 0.35% per annum of the unused amount ~~(0.35%~~(0.25% at ~~June 30, 2019)~~March 31, 2020), depending upon the amount of facility utilization.

Some of the Company’s subsidiaries guarantee the obligations of the Company under the Credit Agreement. As security for the advances under the Credit Agreement, the Company and some of its affiliates pledged their equity interests in certain subsidiaries through which the Company directly or indirectly owns substantially all of its assets.

The Credit Agreement contains various affirmative and negative covenants, including financial covenants that require the Company to maintain minimum tangible net worth, liquidity levels and financial ratios, as defined in the Credit Agreement. ~~At June 30, 2019,~~As of March 31, 2020 and through the date of this filing, the Company was in compliance with all of the financial covenants.

The 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 termination of the credit facility, accelerate the Company’s repayment obligations, in certain cases limit the Company’s ability to make distributions, and allow the lenders to exercise all rights and remedies available to them with respect to the collateral. There have been no events of default since the inception of the credit facility.

Convertible and Exchangeable Senior Notes

Convertible senior notes and exchangeable senior notes are senior unsecured obligations of the Company and are guaranteed by the Company on a senior unsecured basis.

Convertible and exchangeable senior notes issued by the Company and outstanding are as follows:


Description	Issuance Date	Due Date		Interest Rate	Conversion or Exchange Price (per share of common stock)			Conversion or Exchange Ratio (in shares)⁽¹⁾			Conversion or Exchange Shares (in thousands)			Earliest Redemption Date		Outstanding Principal							Issuance Date		Due Date	Interest Rate		Conversion or Exchange Price (per share of common stock)				Conversion or Exchange Ratio (in shares)⁽¹⁾			Conversion or Exchange Shares (in thousands)			Earliest Redemption Date		Outstanding Principal
							June 30, 2019						December 31, 2018											March 31, 2020							December 31, 2019
							June 30, 2019						December 31, 2018											March 31, 2020							December 31, 2019
5.00% Convertible Notes	April 2013		April 15, 2023				5.00		$	15.76			63.4700			12,694			April 22, 2020		$	200,000		$	200,000		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			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	June 15, 2033		5.375	12.04			83.0837			1,130			June 15, 2023		13,605				13,605			June 2013		June 15, 2033	5.375		12.04				83.0837			1,130			June 15, 2023		13,605				13,605
																$	616,105			$	616,105																			$	616,105			$	616,105

__________

⁽¹⁾

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.

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The convertible and exchangeable senior notes mature on their respective due dates, unless redeemed, repurchased or exchanged prior to such date in accordance with the terms of their respective governing documents. The convertible and exchangeable senior notes are redeemable at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest up to, but excluding, the redemption date.

The Company may redeem the convertible notes for cash at its option at any time on or after their respective redemption dates if the last reported sale price of the Company's common stock has been at least 130% of the conversion price of the convertible notes then 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.

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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. The holders of the exchangeable notes have the right, at their option, to require the Company to repurchase the exchangeable notes for cash on certain specific dates in accordance with the terms of their respective governing documents.

Secured ~~and Unsecured~~ Debt

These are primarily investment level financing, which are generally subject to customary non-recourse carve-outs, secured by underlying commercial real estate and mortgage loans receivable.

Junior Subordinated Debt

~~The~~A subsidiary of the Company (the “Issuer”) assumed certain 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, NorthStar Realty Finance Trust 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 NRF at the time of the offerings (the "Junior Notes").

The ~~Company~~Issuer may redeem the Junior Notes at par, in whole or in part, for cash, after five years. To the extent the ~~Company~~Issuer redeems the Junior Notes, the Trusts are required to redeem a corresponding amount of TruPS. The ability of the Trusts to pay dividends depends on the receipt of interest payments on the Junior Notes. The ~~Company~~Issuer has the right, pursuant to certain qualifications and covenants, to defer payments of interest on the Junior Notes issued to NorthStar Realty Finance Trust I through III for up to ~~six~~6 consecutive quarters. If payment of interest on the Junior Notes is deferred, the Trusts will defer the quarterly distributions on the TruPS for a corresponding period. Additional interest accrues on deferred payments at the annual rate payable on the Junior Notes, compounded quarterly.

~~10.~~11. 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 duration 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”).

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Fair value of derivative assets and derivative liabilities ~~were~~are as follows:


	June 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
(In thousands)	Designated Hedges		Non-Designated Hedges		Total		Designated Hedges		Non-Designated Hedges		Total		Designated Hedges		Non-Designated Hedges		Total		Designated Hedges		Non-Designated Hedges		Total
Derivative Assets
Foreign exchange contracts	$	16,717	$	464	$	17,181	$	31,127	$	1,069	$	32,196	$	24,385	$	1,861	$	26,246	$	15,307	$	1,271	$	16,578
Interest rate contracts	81		121		202		862		500		1,362		115		411		526		78		237		315
Performance swaps	—		3,570		3,570		—		—		—		—		147		147		—		4,493		4,493
Included in other assets	$	16,798	$	4,155	$	20,953	$	31,989	$	1,569	$	33,558	$	24,500	$	2,419	$	26,919	$	15,385	$	6,001	$	21,386
Derivative Liabilities
Foreign exchange contracts	$	3,866	$	221	$	4,087	$	6,193	$	211	$	6,404	$	346	$	55	$	401	$	8,134	$	2,482	$	10,616
Interest rate contracts	6,083		271,878		277,961		—		126,404		126,404
Forward contracts	—		112,373		112,373		—		—		—		—		83,870		83,870		—		116,915		116,915
Included in accrued and other liabilities	$	9,949	$	384,472	$	394,421	$	6,193	$	126,615	$	132,808	$	346	$	83,925	$	84,271	$	8,134	$	119,397	$	127,531

Certain counterparties to the derivative instruments require the Company to deposit cash or other eligible collateral. The Company had cash collateral on deposit, ~~of $116.7 million at June 30, 2019 and $0.8 million at December 31, 2018,~~ included in other ~~assets.~~

~~Table~~assets, of ~~Contents~~$16.6 million and $10.0 million at March 31, 2020 and December 31, 2019, respectively, all of which related to the forward contracts and performance swaps discussed below.

Foreign Exchange Contracts

The following table summarizes the aggregate notional amounts of designated and non-designated foreign exchange contracts in place at ~~June 30, 2019,~~March 31, 2020, along with certain key terms:

Hedged Currency

Instrument Type

Notional Amount
(in thousands)

FX Rates
($ per unit of foreign currency)

Range of Expiration Dates

Instrument Type

Notional Amount
(in thousands)

FX Rates
($ per unit of foreign currency)

Range of Expiration Dates

Designated

Non-Designated

Designated

Non-Designated

EUR

FX Collar

€

71,986

€

177

Min $1.06 / Max $1.31

March 2020 to November 2020

FX Collar

€

8,099

€

9,950

Min $1.06 / Max $1.31

May 2020 to November 2020

GBP

FX Collar

8,632

708

Min $1.45 / Max $1.76

September 2019 to December 2019

EUR

FX Forward

€

443,169

€

32,763

Min $1.12 / Max $1.38

July 2019 to February 2024

FX Forward

€

286,119

€

7,610

Min $1.08 / Max $1.38

April 2020 to February 2024

GBP

FX Forward

126,005

—

Min $1.24 / Max $1.32

December 2019 to December 2020

FX Forward

65,957

11,533

Min $1.24 / Max $1.32

May 2020 to December 2020

Designated Net Investment Hedges

The Company’s foreign denominated net investments in subsidiaries or joint ventures were ~~€601.4~~€497.0 million and ~~£234.4~~£272.8 million, or a total of ~~$1.0~~$0.9 billion at ~~June 30, 2019,~~March 31, 2020, and ~~€614.0~~€517.9 million and ~~£235.7~~£275.5 million, or a total of ~~$1.0~~$0.9 billion at December 31, ~~2018.~~2019.

The Company entered into foreign exchange contracts 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; 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.

Foreign exchange contracts are used to protect the Company’s foreign denominated investments from adverse foreign currency fluctuations, with notional amounts and termination dates based upon the anticipated return of capital from the investments.

Release of ~~accumulated other comprehensive income ("AOCI")~~AOCI 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 AOCI to other gain (loss) as summarized below.


	Three Months Ended June 30,					Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2019		2018			2019		2018		2020		2019
Designated net investment hedges:
Realized gain (loss) transferred from AOCI to earnings	$	786	$	(247	)	$	1,026	$	2,336
Realized gain transferred from AOCI to earnings										$	—	$	240

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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 amount that is in excess of the beginning balance of its net investments. Any unrealized gain or loss on the dedesignated portion of net investment hedges is recorded in other gain (loss).


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	2019		2018		2019			2018		2020		2019
Non-designated net investment hedges:
Unrealized gain (loss) transferred from AOCI to earnings	$	19	$	4,120	$	(400	)	$	1,239	$	1,502	$	(419	)

Interest Rate Contracts

The Company uses various interest rate contracts, some of which may be designated as cash flows hedges, to limit its exposure to changes in interest rates on various floating rate debt obligations.

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~~At June 30, 2019,~~ The following table summarizes the interest rate contracts held by the Company ~~held~~at March 31, 2020.



	Notional Amount (in thousands)					Strike Rate / Forward Rate
Instrument Type	Designated		Non-Designated		Index	Strike Rate / Forward Rate	Range of Expiration Dates
Interest rate caps	$	—	$	6,436,254	1-Month LIBOR	3.0% - 6.26%	June 2020 to November 2021
Interest rate caps	€	232,845	€	485,405	3-Month EURIBOR	1.0% - 1.5%	January 2021 to June 2024
Interest rate caps	£	—	£	355,973	3-Month GBP LIBOR	1.5% - 2.25%	November 2020 to October 2022

The following table summarizes amounts recorded in the ~~following~~income statements related to interest rate ~~contracts:~~contracts.

Notional Amount
(in thousands)
Strike Rate / Forward Rate
Instrument Type Designated Non-Designated Index Range of Expiration Dates
Interest rate swap ⁽¹⁾
$ —
$ 2,000,000
3-Month LIBOR 3.39% December 2019
Interest rate swap $ 300,000
$ —
1-Month LIBOR 2.15% February 2022 to February 2024
Interest rate caps $ —
$ 5,942,714
1-Month LIBOR 3.0% - 6.26% August 2019 to June 2021
Interest rate caps € 247,513
€ 541,151
3-Month EURIBOR 1.0% - 1.5% October 2019 to June 2024
Interest rate caps £ —
£ 363,716
3-Month GBP LIBOR 1.5% - 2.5% November 2019 to February 2020



	Three Months Ended March 31,
(In thousands)	2020		2019
Interest expense on designated interest rate contracts ⁽¹⁾	$	2	$	—
Realized and unrealized gain (loss) net on non-designated interest rate contracts ⁽²⁾	179		(59,526		)

__________


⁽¹⁾	Represents ~~a forward-starting~~amortization of the cost of designated interest rate caps to interest expense based upon expected hedged interest payments on variable rate debt.


⁽²⁾	For the three months ended March 31, 2019, amount includes unrealized loss of $59.2 million on a $2.0 billion notional forward starting swap ~~that has a maturity date in December 2029, with mandatory settlement~~assumed through the Merger, which was settled at ~~fair value in December~~the end of 2019.

~~The following table summarizes amounts recorded in other gain (loss) related to interest rate derivative contracts:~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Unrealized gain (loss):
Non-designated interest rate contracts $ 89,610
$ 24,720
$ 149,136
$ 81,377

Forward Contracts and Performance Swaps

~~During December 2018 and January 2019, the~~The Company has an equity investment in a third party managed real estate mutual fund, accounted for as marketable equity securities carried at fair value. The Company had previously entered into a series of forward contracts on ~~a portfolio of~~its shares in ~~a real estate~~the mutual fund ~~with a counterparty~~ in an aggregate notional amount of $100 million, ~~with a one year term~~equal to ~~be settled, at~~its initial investment in the ~~election of the Company, in cash or through delivery of the mutual~~ fund, ~~shares. Concurrently with the forward contracts, the Company~~and concurrently, entered into a series of swap ~~transactions~~contracts with the same counterparty to pay the return of the Dow Jones U.S. Select REIT Total Return Index. The Company settled the forwards and swaps in cash upon expiration in January 2020, realizing a gain of $5.8 million. In January 2020, the Company entered into another series of forward and swap contracts with similar terms to the previous transaction. The forward contracts have a combined notional of $119 million and expire in January 2021, to be settled in cash or through delivery of the mutual fund shares at the election of the Company. The new forward and swap transactions required aan initial combined collateral deposit of ~~$12~~$14.3 million, subject to daily net settlements in net fair value changes in excess of a predetermined threshold.

The forwards and swaps are not designated as hedges for accounting ~~purposes~~purposes. All realized and unrealized gains (losses) are subject to fair value adjustments through earnings. For the three and six months ended June 30, 2019, fair value loss in the forwards of $1.1 million and $12.4 million, respectively, and fair value gain on the swaps of $1.0 million and $3.6 million, respectively, are includedrecorded in other gain (loss) ~~in the Company’s statement~~as follows:



	Three Months Ended March 31,
(In thousands)	2020			2019
Realized and unrealized gain (loss), net on derivatives:
Forward contracts	$	33,045		$	(11,284	)
Performance swaps	1,460			2,622
Unrealized gain (loss) on marketable equity securities held at period end:
Real estate mutual fund	(33,115		)	11,825

Table of operations. The Company’s investment in the mutual fund is carried at fair value and is included in equity and debt investments on the balance sheet. Unrealized gain on the mutual fund shares of $1.1 million and Contents~~$12.9 million~~ ~~for the three and six months ended June 30, 2019, respectively, is included in other gain (loss).~~

Offsetting Assets and Liabilities

The Company enters into agreements 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, notwithstanding the conditions for right of offset may have been ~~met. The Company~~met, and presents derivative assets and liabilities with the same counterparty on a gross basis on the consolidated balance sheets.

~~Table of Contents~~

The following table sets forth derivative positions where the Company has a right of offset under netting arrangements with the same counterparty.


	Gross Assets (Liabilities) Included on Consolidated Balance Sheets				Gross Amounts Not Offset on Consolidated Balance Sheets						Net Amounts of Assets (Liabilities)				Gross Assets (Liabilities) on Consolidated Balance Sheets			Gross Amounts Not Offset on Consolidated Balance Sheets					Net Amounts of Assets (Liabilities)
(In thousands)				(Assets) Liabilities				Cash Collateral Pledged						(Assets) Liabilities				Cash Collateral Pledged					Net Amounts of Assets (Liabilities)
June 30, 2019											Net Amounts of Assets (Liabilities)
March 31, 2020															Gross Assets (Liabilities) on Consolidated Balance Sheets
Derivative Assets
Foreign exchange contracts	$	17,181			$	(1,165	)		$	—	$	16,016			$	26,246		$	(244	)	$	—	$	26,002
Interest rate contracts	202				(77		)		—		125				526			—			—		526
Performance swaps	3,570				(3,570		)		—		—				147			(147		)	—		—
	$	20,953			$	(4,812	)		$	—	$	16,141			$	26,919		$	(391	)	$	—	$	26,528
Derivative Liabilities
Foreign exchange contracts	$	(4,087	)		$	1,165			$	—	$	(2,922	)		$	(401	)	$	244		$	—	$	(157	)
Interest rate contracts	(277,961		)		77				108,269		(169,615		)
Forward contract	(112,373		)		3,570				8,470		(100,333		)
Forward contracts															(83,870		)	147			16,622		(67,101		)
	$	(394,421	)		$	4,812			$	116,739	$	(272,870	)		$	(84,271	)	$	391		$	16,622	$	(67,258	)
December 31, 2018
December 31, 2019
Derivative Assets
Foreign exchange contracts	$	32,196			$	(1,743	)		$	—	$	30,453			$	16,578		$	(4,385	)	$	—	$	12,193
Interest rate contracts	1,362				(823		)		—		539				315			—			—		315
Performance swaps															4,493			(4,493		)	—		—
	$	33,558			$	(2,566	)		$	—	$	30,992			$	21,386		$	(8,878	)	$	—	$	12,508
Derivative Liabilities
Foreign exchange contracts	$	(6,404	)		$	1,743			$	—	$	(4,661	)		$	(10,616	)	$	4,385		$	—	$	(6,231	)
Interest rate contracts	(126,404		)		823				840		(124,741		)
Forward contracts															(116,915		)	4,493			9,981		(102,441		)
	$	(132,808	)		$	2,566			$	840	$	(129,402	)		$	(127,531	)	$	8,878		$	9,981	$	(108,672	)

~~11.~~12. 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 ~~following~~ three tier ~~hierarchy:~~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.

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	Fair Value Measurements								Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
June 30, 2019
March 31, 2020
Assets
Equity method investments	$	—	$	—	$	177,299	$	177,299
Marketable equity securities	132,781		—		—		132,781		$	102,399	$	—	$	—	$	102,399
Debt securities available for sale—N-Star CDO bonds	—		—		62,442		62,442		—		—		54,474		54,474
CMBS of consolidated fund	—		5,058		—		5,058		—		2,224		—		2,224
Other assets—derivative assets	—		20,953		—		20,953		—		26,919		—		26,919
Fair Value Option:
Loans receivable									—		—		1,588,427		1,588,427
Equity method investments									—		—		218,340		218,340
Liabilities
Other liabilities—derivative liabilities	—		394,421		—		394,421		—		84,271		—		84,271
Other liabilities—contingent consideration for THL Hotel Portfolio	—		—		9,745		9,745		—		—		6,630		6,630
December 31, 2018
Other liabilities—settlement liability									—		—		4,910		4,910
December 31, 2019
Assets
Equity method investments	$	—	$	—	$	81,085	$	81,085
Marketable equity securities	36,438		—		—		36,438		$	138,586	$	—	$	—	$	138,586
Debt securities available for sale—N-Star CDO bonds	—		—		64,127		64,127		—		—		54,859		54,859
CMBS of consolidated fund	—		32,706		—		32,706		—		2,732		—		2,732
Other assets—derivative assets	—		33,558		—		33,558		—		21,386		—		21,386
Fair Value Option:
Equity method investments									—		—		222,875		222,875
Liabilities
Other liabilities—derivative liabilities	—		132,808		—		132,808		—		127,531		—		127,531
Other liabilities—contingent consideration for THL Hotel Portfolio	—		—		8,903		8,903		—		—		9,330		9,330

~~Equity Method Investments~~

~~Equity method investments for which fair value option was elected are carried at fair value on a recurring basis.~~

Fair values are determined using either discounted cash flow models based on expected future cash flows for income and realization events of the underlying assets, applying revenue multiples, based on transaction price for recently acquired investments, or pending or comparable market sales price on an investment, as applicable. In valuing the Company's investment in third party private equity funds, the Company considers cash flows provided by the general partners of the funds and the implied yields of the funds. The Company has not elected the practical expedient to measure the fair value of its investments in these private equity funds using NAV of the underlying funds. Fair value of equity method investments are classified as Level 3 of the fair value hierarchy, unless investments are valued based on contracted sales prices which are classified as Level 2 of the fair value hierarchy. Changes in fair value of equity method investments under the fair value option are recorded in equity method earnings.

Marketable Equity Securities

Marketable equity securities consist primarily of investment in a third party managed mutual fund and equity securities held by a consolidated fund. These marketable equity securities are valued based on listed prices in active markets and classified as Level 1 of the fair value hierarchy.

Debt Securities

N-Star CDO bonds—Fair value of N-Star CDO bonds are determined internally based on recent trades, if any with such securitizations, the Company's knowledge of the underlying collateral and are 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 of consolidated fund—Fair value is determined based on broker quotes or third party pricing services, classified as Level 2 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. 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

~~Table of Contents~~

Level 3 inputs, these inputs are not significant to the overall valuation of its derivatives. As a result, derivative valuations in their entirety are classified as Level 2 of the fair value hierarchy.

Other Liabilities—Contingent Consideration for THL Hotel Portfolio

In connection with the consensual foreclosure in July 2017 of ~~the~~ a portfolio of limited service hotels ("THL Hotel ~~Portfolio (Note 3)~~Portfolio"), contingent consideration is payable to the former preferred equity holder of the borrower in an amount up to $13.0 ~~million.~~million based upon 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. Fair value of the contingent consideration is measured ~~using discounted cash flows~~ based onupon the probability of the former preferred equity holder receiving such ~~payment.~~payment, with

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cash flows discounted at 12%, classified as Level 3 fair value. The contingent consideration liability decreased $2.7 million to $6.6 million for the three months ended March 31, 2020, and increased $0.4 million to $9.3 million for the year ended December 31, 2019. Changes in fair value of the contingent consideration liability are recorded in other gain (loss) on the consolidated statements of operations.

Other Liabilities—Settlement Liability

As discussed in Note 1, in connection with the cooperation agreement entered into with Blackwells in March 2020, the Company and Blackwells contemporaneously 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 held by the Company in the venture. All of the class A common stock held in the venture had been repurchased by the Company in March 2020 (Note 14). Blackwells may cause the arrangement to be dissolved and all underlying assets distributed at any time, and the Company may do the same after three years. Distributions to be made through the joint venture arrangement effectively represent a settlement of the proxy contest with Blackwells. At the inception of the arrangement, the fair value of future distributions to Blackwells was estimated at $3.9 million, included in other liabilities on the consolidated balance sheet, and as a settlement loss on the consolidated statement of operations, along with $1.2 million reimbursement of legal costs to Blackwells in the first quarter of 2020.

The settlement liability is a fair value measurement of the disproportionate allocation of future profits distribution to Blackwells pursuant to the joint venture arrangement. Such profits will be derived from dividend payments and any appreciation in value of the Company's class A common stock, allocated between the Company and Blackwells based upon specified return hurdles. The profits distribution is payable in cash, the Company's class A common stock or a combination of both at the Company's election. The settlement liability is a Level 3 fair value using a Monte Carlo simulation under a risk-neutral premise, assuming that the final distribution occurs at the end of the third year in March 2023, and is remeasured at each reporting period. At March 31, 2020, the settlement liability was valued at $4.9 million, applying the following assumptions: (a) expected volatility of the Company's class A common stock of 67.1% based upon a combination of historical and implied volatility of the Company's class A common stock; (b) average historical dividend yield on the Company's class A common stock of 9.6%; and (c) risk free rate of 1.97%based upon a compounded zero-coupon U.S. Treasury yield. The $1.0 million increase in liability from inception was recorded as other loss on the consolidated statement of operations.

Fair Value Option

Loans Receivable

Effective January 1, 2020, the Company elected the fair value option for all of its outstanding loans receivable. Loans receivable consist of mortgage loans, mezzanine loans and non-mortgage loans. Fair values were 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 on discounted cash flow projections of principal and interest expected to be collected, which includes, but is 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.

Equity Method Investments

Equity method investments for which fair value option was elected are carried at fair value on a recurring basis. Fair values are determined using either discounted cash flow models based on expected future cash flows for income and realization events of the underlying assets, applying revenue multiples, based on transaction price for recently acquired investments, or pending or comparable market sales price on an investment, as applicable. In valuing the Company's investment in third party private equity funds, the Company considers cash flows provided by the general partners of the funds and the implied yields of the funds. The Company has not elected the practical expedient to measure the fair value of its investments in these private equity funds using NAV of the underlying funds. Fair value of equity method investments are classified as Level 3 of the fair value hierarchy, unless investments are valued based on contracted sales prices which are classified as Level 2 of the fair value hierarchy. Changes in fair value of equity method investments under the fair value option are recorded in equity method earnings.

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Level 3 Recurring Fair Value Measurements

Quantitative information about recurring Level 3 fair value ~~measurements,~~assets, for which information about unobservable inputs is reasonably available to the Company, are as follows.

Valuation Technique

Key Unobservable Inputs

Input Value

Effect on Fair Value from Increase in Input Value ⁽¹⁾

Valuation Technique

Key Unobservable Inputs

Input Value

Effect on Fair Value from Increase in Input Value ⁽²⁾

Financial Instrument

Fair Value

(In thousands)

Weighted Average

(Range)

Fair Value

(In thousands)

Weighted Average⁽¹⁾

(Range)

June 30, 2019

Level 3 Assets

March 31, 2020

N-Star CDO bonds

54,474

Discounted cash flows

Discount rate

24.9%
(18.2% - 65.0%)

Decrease

Fair Value Option:

Loans receivable

1,568,302

Discounted cash flows

Discount rate

12.7%
(7.2% - 25.5%)

Decrease

Loans receivable

20,125

Transaction price⁽⁵⁾

N/A

Equity method investments—third party private equity funds

5,498

Transaction price and NAV⁽²⁾

N/A

4,616

NAV⁽³⁾

N/A

Equity method investments—other

18,722

Discounted cash flows

Discount rate

13.7%
(12.1% - 14.4%)

Decrease

17,870

Discounted cash flows

Discount rate

12.0%
(5.1% - 16.5%)

Decrease

Equity method investments—other

25,000

Multiple

Revenue multiple

5.5x

⁽³⁾

25,000

Multiple

Revenue multiple

4.1x

⁽⁴⁾

Equity method investments—other

128,079

Transaction price⁽⁴⁾

N/A

170,854

Transaction price⁽⁵⁾

N/A

December 31, 2019

N-Star CDO bonds

62,442

Discounted cash flows

Discount rate

21.8%
(16.6% - 26.0%)

Decrease

54,859

Discounted cash flows

Discount rate

22.3%
(16.8% - 65.0%)

Decrease

Level 3 Liabilities

Other liabilities—contingent consideration for THL Hotel Portfolio

9,745

Discounted cash flows

Discount rate

20.0%

Decrease

December 31, 2018

Level 3 Assets

Fair Value Option:

Equity method investments—third party private equity funds

5,908

Transaction price and NAV⁽²⁾

N/A

5,391

NAV⁽³⁾

N/A

Equity method investments—other

21,831

Discounted cash flows

Discount rate

17.5%
(9.1% - 18.4%)

Decrease

18,574

Discounted cash flows

Discount rate

10.1%
(5.1% - 15.8%)

Decrease

Equity method investments—other

25,000

Multiple

Revenue multiple

5.8x

⁽³⁾

25,000

Multiple

Revenue multiple

3.7x

⁽⁴⁾

Equity method investments—other

28,346

Transaction price⁽⁴⁾

N/A

173,910

Transaction price⁽⁵⁾

N/A

N-Star CDO bonds

64,127

Discounted cash flows

Discount rate

21.6%
(13.6% - 56.5%)

Decrease

Level 3 Liabilities

Other liabilities—contingent consideration for THL Hotel Portfolio

8,903

Discounted cash flows

Discount rate

20.0%

Decrease

__________


⁽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.


⁽²⁾⁽³⁾	Fair value was estimated based on ~~a combination of inputs, namely indicative prices of investments sold by the Company as well as~~ underlying NAV of the respective funds on a quarter ~~lag.~~lag, adjusted as deemed appropriate by management


⁽³⁾⁽⁴⁾	Fair value is affected by change in revenue multiple relative to change in rate of revenue growth.


⁽⁴⁾⁽⁵⁾	Valued based upon transaction price of investments recently acquired or offer prices on loans, investments or underlying assets of investee pending sales. Transaction price approximates fair value for an investee engaged in real estate development during the development stage.

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The following table presents changes in recurring Level 3 fair value ~~measurements,~~assets, including realized and unrealized gains (losses) included in ~~earnings~~other gain (loss) on the consolidated statement of operations and ~~accumulated other comprehensive income.~~in AOCI.

Level 3 Assets Level 3 Liabilities
(In thousands) Securitized Loans Receivable Equity Method Investments Securities Debt—Securitized Bonds Payable Due to Affiliates—Contingent Consideration for Internalization Other Liabilities—Contingent Consideration for THL Hotel Portfolio
Fair value at December 31, 2017 $ 45,423
$ 363,901
$ 323,243
$ (44,542 ) $ (20,650 ) $ (7,419 )
Purchases, contributions or accretion —
60,995
5,360
—
—
—
Paydowns or distributions (638 ) (182,063 ) (108,924 ) 638
—
—
Deconsolidation (44,070 ) —
(124,344 ) 43,847
—
—
Transfer out of liabilities into equity —
—
—
—
12,539
—
Transfers out of Level 3 —
(132,527 ) —
—
6,381
—
Contribution to Colony Credit —
(26,134 ) —
—
—
—
Realized gains in earnings —
2,697
4,787
—
—
—
Unrealized gains (losses):
In earnings (715 ) (2,298 ) —
57
1,730
(702 )
In other comprehensive loss —
—
(21,917 ) —
—
—
Fair value at June 30, 2018 $ —
$ 84,571
$ 78,205
$ —
$ —
$ (8,121 )
Unrealized gains (losses) on ending balance:
In earnings $ (715 ) $ (2,298 ) $ —
$ 57
$ 1,730
$ (702 )
In other comprehensive income (loss) $ —
$ —
$ (3,827 ) $ —
$ —
$ —

Fair value at December 31, 2018 $ —
$ 81,085
$ 64,127
$ —
$ —
$ (8,903 )
Purchases, contributions or accretion —
102,273
3,267
—
—
—
Paydowns, distributions or sales —
(8,005 ) (5,582 ) —

—
Realized gains in earnings —
752
(667 ) —
—
—
Unrealized gains (losses):
In earnings —
1,194
—
—
—
(842 )
In other comprehensive income (loss) —
—
1,297
—
—
—
Fair value at June 30, 2019 $ —
$ 177,299
$ 62,442

$ —
$ —

$ (9,745 )
Unrealized gains (losses) on ending balance:
In earnings $ —
$ 1,194
$ —
$ —
$ —
$ (842 )
In other comprehensive income (loss) $ —
$ —
$ (2,087 ) $ —
$ —
$ —



				Fair Value Option
(In thousands)	Securities			Loans Receivable			Equity Method Investments
Fair value at December 31, 2018	$	64,127		$	—		$	81,085
Purchases, contributions and accretion	1,769			—			101,195
Paydowns, distributions and sales	(2,882		)	—			(6,341		)
Realized and unrealized gains (losses) in earnings, net	(667		)	—			2,192
Other comprehensive income	2,063			—			—
Fair value at March 31, 2019	$	64,410		$	—		$	178,131

Net unrealized gains (losses) in earnings on instruments held at March 31, 2019	$	—		$	—		$	1,437

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 accretion	594			74,236			762
Paydowns, distributions and sales	(1,651		)	(49,133		)	(781		)
Interest accrual, including capitalization of paid-in-kind interest	—			11,849			—
Allowance for credit losses	(816		)	—			—
Realized and unrealized gains (losses) in earnings, net	—			3,105			(179		)
Other comprehensive income (loss) ⁽¹⁾	1,488			(21,265		)	(4,337		)
Fair value at March 31, 2020	$	54,474		$	1,588,427		$	218,340

Net unrealized gains (losses) on instruments held at March 31, 2020:
In earnings	$	—		$	3,105		$	(179	)
In other comprehensive income (loss)	$	1,488		$	—		$	—

~~Transfers of Level 3 Assets and Liabilities~~__________

Transfers of assets and liabilities into or out of Level 3 are presented at their fair values as measured at the end of the reporting period. Assets transferred out of Level 3 represent investments in third party private equity funds that were valued based on their contracted sales price in June 2018. Liabilities transferred out of Level 3 represent dividends earned on the final number of shares of class A common stock and OP Units determined as of June 30, 2018, the end of the measurement period of the contingent consideration associated with the Internalization, and which were paid out in August 2018.

~~Securitized Loans and Securitized Bonds Payable~~

Prior to May 2018, the Company had elected the fair value option for loans receivable and bonds payable issued by a securitization trust that was consolidated by a N-Star CDO. The N-Star CDO was in turn consolidated by the Company. In May 2018, the Company sold its interests in the N-Star CDO and deconsolidated the N-Star CDO along with the securitization trust consolidated by the N-Star CDO.

Prior to deconsolidation, the Company had adopted the measurement alternative to measure the fair value of the loans receivable held by the securitization trust using the fair value of the bonds payable issued by the securitization trust as the latter represented the more observable fair value. As such, the net gain or loss that was reflected in earnings was limited to changes in fair value of the beneficial interest held by the Company in the previously consolidated securitization

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⁽¹⁾

trust, and not as a result of a remeasurement of the loans receivable and bonds payable held by third parties in the previously consolidated securitization trust. Fair value of the bonds payable issued by the securitization trust was determined based on broker quotes, which were generally derived from unobservable inputs, and therefore classified as Level 3 of the fair value hierarchy. Correspondingly, the fair value of the loans receivable held by the securitization trust was also classified as Level 3.

Amounts recorded in OCI for loans receivable and equity investments represent foreign currency translation differences on the Company's foreign subsidiaries that hold the respective foreign currency denominated investments.

~~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 management personnel of the Company. The contingent consideration is payable in a combination of shares of class A common stock, shares of class B common stock and OP Units, measured based on multi-year performance targets for achievement of a contractually-defined funds from operations ("Benchmark FFO") per share target, as well as real estate and non-real estate capital-raising thresholds from the funds management business, to the extent these targets are met. 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.

Prior to June 30, 2018, the contingent consideration had been remeasured at fair value using a third party valuation service provider and classified as Level 3 of the fair value hierarchy, with the change in fair value recorded in other gain (loss). Fair value of the contingent consideration was measured using a Monte Carlo probability simulation model for the Benchmark FFO component and a discounted payout analysis based on probabilities of achieving prescribed targets for the capital-raising component, adjusted for certain targets that had not been met and that had expired. The Company's class A common stock price and related equity volatilities were applied to convert the contingent consideration payout into shares.

At June 30, 2018, the end of the measurement period, the contingent consideration was settled with certain senior management personnel of the Company in a combination of approximately 15,000 shares of class A common stock, 40,000 shares of class B common stock and 1.95 million OP Units. At June 30, 2018, as the contingency was resolved and the number of shares and units to be issued was no longer variable, the payable of $12.5 million, valued based on the closing price of the Company's class A common stock on June 29, 2018, the last trading day of the second quarter, was reclassified out of liabilities into equity, while the associated dividends payable of approximately $6.4 million remained in liabilities. The contingent consideration and associated dividends were fully settled in August 2018.

Investments Carried at Fair Value Using Net Asset Value

Investments in a Company-sponsored private fund and a non-traded REIT, and limited partnership interest in a third party private fund are valued using NAV of the respective vehicles.


	June 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(In thousands)	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Private fund—real estate	$	16,659	$	10,153	$	12,617	$	13,658	$	17,271	$	9,137	$	16,271	$	11,058
Non-traded REIT—real estate	16,812		—		11,990		—		21,858		—		19,358		—
Private fund—emerging market private equity	2,836		—		—		—		2,264		—		3,012		—

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, expects to consider alternatives for providing liquidity to the non-traded REIT shares beginning five years from completion of the offering stage in January 2016, 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.

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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 sale or otherwise, write-down of asset values due to impairment.

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~~The following table summarizes assets carried at fair value on a nonrecurring basis, measured at the time of impairment.~~

June 30, 2019 December 31, 2018
(In thousands) Level 2 Level 3 Total Level 2 Level 3 Total
Real estate held for sale $ 173,907
$ 227,484
$ 401,391
$ 68,864
$ 200,281
$ 269,145
Real estate held for investment —
220,179
220,179
—
416,272
416,272
Intangible assets—lease intangibles —
—
—
—
15,608
15,608
Intangible assets—investment management contracts —
—
—
—
36,400
36,400
Equity method investments —
753,732
753,732
—
32,761
32,761

~~The following table summarizes the fair value write-downs to assets carried at nonrecurring fair values during the periods presented.~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Impairment loss
Real estate held for sale $ 42,998
$ 6,546
$ 68,181
$ 15,310
Real estate held for investment 41,048
2,975
41,487
7,181
Intangible assets—investment management contracts —
—
—
140,429
Intangible assets—trade name —
59,464
—
59,464
Equity method loss 247,812
16,467
250,434
16,467

~~Impairment is~~ Impairments are discussed in Note 4 for ~~loans receivable,~~real estate, Note 56 for equity method investments, and Note 67 for investment management intangible ~~assets.~~

~~Real Estate Held For Sale~~

At June 30, 2019 and December 31, 2018, real estate held for sale carried at fair value consisted primarily of properties in the European portfolio, valued using either broker price opinions, or a combination of market information,assets, including ~~third-party appraisals and indicative selling prices, adjusted as deemed appropriate by management to account for the inherent risk associated with the properties, and net of 2% to 3% selling costs.~~

~~In the second quarter of 2019, three properties in the healthcare portfolio were written down based upon a negotiated purchase option exercised by a tenant.~~

Other significant real estate held for sale carried at fair value comprised of certain hotels in the hospitality segment for which the Company previously held a long term hold strategy but in the third quarter of 2018, adopted a sales strategy. As of June 30, 2019, certain hotels have been sold while others are classified as held for sale. Impairment was mostly recorded in 2018 when the hotels were classified as held for investment, based on broker price opinions and net of 2% to goodwill.3% ~~selling costs. In the first six months of 2019, additional impairment was recorded on certain hotels based upon revised expected sales prices or final net proceeds from sale.~~

~~Real estate held for sale carried at fair value also included U.S. multi-tenant office buildings, valued based on broker quotes, net of 2% selling costs.~~

~~Additionally, at December 31, 2018, certain properties in the THL Hotel Portfolio were impaired and valued based on auction prices or contracted sales prices, net of 2% selling costs.~~

~~Real Estate Held For Investment~~

At June 30, 2019, real estate held for investment carried at fair value consisted primarily of certain net lease properties in the healthcare portfolio that were impaired based upon preliminary offers received by the Company, and certain properties in the THL Hotel Portfolio impacted by hurricanes in 2017 that were written down based upon revised insurance estimates.

At December 31, 2018, real estate held for investment carried at fair value consisted of $282.4 million of healthcare properties that were impaired in the fourth quarter of 2018, driven by shorter hold periods. In the fourth quarter of 2018, the Company had reassessed the hold period on its healthcare properties, taking into consideration the Company's ability to refinance the related debt with upcoming maturities. The Company considered the possibility of shorter hold periods to be an indicator of impairment, among other factors. For properties for which indicators of impairment were identified, the

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Company compared their carrying values to the undiscounted future net cash flows expected to be generated by these properties over their hold periods, with terminal values estimated based on indicative capitalization rates, adjusted as appropriate for risk characteristics of each property. In performing this analysis, the Company considered the likelihood of possible outcomes under various hold period scenarios depending on its ability to refinance the related debt and applied a probability-weighted approach to different hold periods for each property. For properties where carrying value exceeded undiscounted future net cash flows, the carrying value was determined to not be recoverable. Fair values were estimated for these properties based on the income capitalization approach, using net operating income for each property and applying capitalization rates ranging from 5.5% to 11%. Impairment was measured as the excess of carrying value over fair value, totaling $212.0 million. As the impairment assessment involved subjectivity and judgment, actual results may differ if changes occur in the assumptions used and/or in market conditions and accordingly, negative changes to these variables would result in further impairment charge in the future.

Other significant real estate held for investment carried at fair value at December 31, 2018 pertained to certain healthcare properties and THL Hotel Portfolio that were damaged by hurricanes or fire in 2017, and further impaired in 2018, with impairment based on estimates from insurance appraisers.

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. 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.

Fair Value Measurements Carrying Value
(In thousands) Level 1 Level 2 Level 3 Total
June 30, 2019
Assets
Loans at amortized cost $ —
$ —
$ 1,494,716
$ 1,494,716
$ 1,487,611
Liabilities
Debt at amortized cost
Corporate credit facility —
85,000
—
85,000
85,000
Convertible and exchangeable senior notes 585,944
13,095
—
599,039
613,092
Secured debt —
—
7,985,674
7,985,674
7,841,516
Secured and unsecured debt related to assets held for sale —
—
2,029,096
2,029,096
2,004,201
Junior subordinated debt —
—
197,766
197,766
200,059
December 31, 2018
Assets
Loans at amortized cost $ —
$ —
$ 1,667,892
$ 1,667,892
$ 1,659,217
Liabilities
Debt at amortized cost
Convertible and exchangeable senior notes 547,300
13,095
—
560,395
612,150
Secured debt —
—
8,141,497
8,141,497
8,164,136
Secured debt related to assets held for sale —
—
1,077,195
1,077,195
1,064,585
Junior subordinated debt —
—
169,619
169,619
199,086

~~Loans Receivable—Loans~~ There are no loans receivable carried at amortized cost ~~consist of first mortgages, subordinated mortgages and corporate loans. Fair values were determined by comparing~~in 2020 as the ~~current yield to~~Company elected the ~~estimated yield of newly originated~~fair value option for all 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 includes consideration of the financial standing of the borrower or sponsor as well as operating results of the underlying collateral. Carrying values of loans held for investment carried at amortized cost are presented net of allowance for loan losses, where applicable.receivable effective January 1, 2020.



	Fair Value Measurements								Carrying Value
(In thousands)	Level 1		Level 2		Level 3		Total
March 31, 2020
Liabilities
Debt at amortized cost
Corporate credit facility	—		600,000		—		600,000		600,000
Convertible and exchangeable senior notes	493,926		13,095		—		507,021		614,542
Secured debt	—		—		7,941,079		7,941,079		8,037,052
Secured debt related to assets held for sale	—		—		235,000		235,000		233,166
Junior subordinated debt	—		—		92,701		92,701		201,744
December 31, 2019
Assets
Loans at amortized cost	$	—	$	—	$	1,557,850	$	1,557,850	$	1,552,824
Liabilities
Debt at amortized cost
Convertible and exchangeable senior notes	602,000		13,095		—		615,095		614,052
Secured debt	—		—		8,213,550		8,213,550		8,168,666
Secured debt related to assets held for sale	—		—		235,000		235,000		232,944
Junior subordinated debt	—		—		225,835		225,835		201,190

Debt—Fair value of convertible notes ~~was~~and exchangeable notes were determined using the last trade price in active ~~markets. Fair value of exchangeable notes was determined based on~~markets and unadjusted quoted prices in a non-active ~~market.~~market, respectively. Fair values of the corporate credit facility and secured ~~and unsecured~~ debt were estimated by discounting expected future cash outlays at interest rates ~~currently~~ available to the Company for similar instruments, ~~with similar terms and remaining maturities; and such~~which fair values approximated carrying value for floating rate debt with credit spreads that approximate market rates. Fair value of

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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. As a reaction to the COVID-19 crisis, the credit market has generally stalled refinancing for most product types except at the lowest leverage levels. While it is difficult to gauge market rates across the Company's portfolio for specific assets, fair value of debt associated with hospitality and healthcare assets presented as of March 31, 2020 incorporate a premium to nominal contractual rates to reflect the increased risk and lack of available financing in the current environment.

Other—The carrying values of cash, due from and to affiliates, other receivables and other payables generally approximate fair value due to their short term nature, and credit risk, if any, are negligible.

~~12.~~13. 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.

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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 Fund—The Company currently consolidates a sponsored private fund 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 fund of ~~$16.7~~$15.7 million at ~~June 30, 2019~~March 31, 2020 and ~~$13.2~~$18.5 million at December 31, ~~2018.~~2019. The Company, as general partner, is not obligated to provide any financial support to the consolidated private fund. ~~The~~At March 31, 2020 and December 31, 2019, the consolidated private fund had total assets of ~~$24.6~~$19.5 million and ~~immaterial liabilities at June 30, 2019, and total assets of $42.7~~$24.7 million, respectively, and total liabilities of ~~$20.1~~$0.6 million ~~at December 31, 2018.~~and $0.1 million, respectively. Assets ~~are~~and liabilities were made up primarily of marketable equity ~~securities.~~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 ~~$111.4~~$178.5 million at ~~June 30, 2019~~March 31, 2020 and ~~$117.3~~$137.0 million at December 31, ~~2018,~~2019, included within equity and debt investments and where applicable, assets held for sale, on the consolidated balance sheets.

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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 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.

~~Consolidated Securitizations~~—Prior to June 30, 2018, the Company consolidated securitization trusts for which it had a retained interest and for which it acted as special servicer or collateral manager or otherwise, its interest in the trust may have become the controlling class or directing holder. The Company's role as special servicer, collateral manager or as controlling class or directing holder provided the Company with the ability to direct activities that most significantly impact the economic performanceTable of the securitization vehicles, and together with the interests previously retained by the Company in the securitization vehicles, the Company was deemed to be the primary beneficiary and consolidated these securitization vehicles.Contents

As of June 30, 2018, the Company no longer has any consolidated securitization trusts. The Company contributed its interests in three consolidated securitization trusts to Colony Credit upon closing of the Combination and sold its interests in two consolidated securitization trusts to third parties in the second quarter of 2018, resulting in a deconsolidation of these securitization trusts. The Company has retained its role as special servicer or as collateral manager in these securitization trusts. However, the Company may be removed as special servicer by the controlling class interest holders and may be removed as collateral manager through a right of removal provided to the buyer. Additionally, as of June 30, 2018, the underlying assets of the Company's remaining consolidated securitization trust was liquidated.

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 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 ~~$64.4~~$44.1 million at ~~June 30, 2019~~March 31, 2020 and ~~$67.5~~$46.0 million at December 31, ~~2018.~~2019.

Trusts

The Company, through the Merger, acquired the Trusts, 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 9)10). 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 ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, recorded in investments in unconsolidated ventures on the consolidated balance sheet. The junior subordinated notes are recorded as debt on the consolidated balance sheet.

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~~13.~~14. Stockholders’ Equity

The table below summarizes the share activities of the Company's preferred and common stock.


	Number of Shares						Number of Shares
(In thousands)	Preferred Stock		Class A Common Stock		Class B Common Stock		Preferred Stock	Class A Common Stock		Class B Common Stock
Shares outstanding at December 31, 2017	65,464		542,599		736
Redemption of preferred stock	(8,000	)	—		—
Shares issued upon redemption of OP Units	—		1,488		—
Conversion of class B to class A common stock	—		28		(28	)
Repurchase of common stock	—		(54,813	)	—
Equity-based compensation, net of forfeitures	—		3,412		—
Shares canceled for tax withholding on vested stock awards	—		(2,950	)	—
Shares outstanding at June 30, 2018	57,464		489,764		708

Shares outstanding at December 31, 2018	57,464		483,347		734		57,464	483,347		734
Shares issued upon redemption of OP Units	—		187		—		—	3		—
Repurchase of common stock	—		(652	)	—		—	(652	)	—
Equity-based compensation, net of forfeitures	—		4,713		—		—	2,659		—
Shares canceled for tax withholding on vested stock awards	—		(582	)	—		—	(582	)	—
Shares outstanding at June 30, 2019	57,464		487,013		734
Shares outstanding at March 31, 2019							57,464	484,775		734

Shares outstanding at December 31, 2019							41,350	487,044		734
Repurchase of common stock, net ⁽¹⁾							—	(12,733	)	—
Equity-based compensation, net of forfeitures							—	7,646		—
Shares canceled for tax withholding on vested stock awards							—	(1,839	)	—
Shares outstanding at March 31, 2020							41,350	480,118		734

__________


⁽¹⁾	Net of reissuance of 964,160 shares of class A common stock that had been repurchased by the Company during March 2020. Refer to discussion of settlement liability in Note 12.

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.

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The table below summarizes the preferred stock issued and outstanding at ~~June 30, 2019:~~March 31, 2020:


Description	Dividend Rate Per Annum		Initial Issuance Date	Shares Outstanding (in thousands)	Par Value (in thousands)		Liquidation Preference (in thousands)		Earliest Redemption Date	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	6,114	$	61	$	152,855	Currently redeemable
Series E	8.75	%	May 2014	10,000	100		250,000		Currently redeemable
Series G	7.5	%	June 2014	3,450	35		86,250		Currently redeemable	7.5	%	June 2014	3,450	$	35	$	86,250	Currently redeemable
Series H	7.125	%	April 2015	11,500	115		287,500		April 13, 2020	7.125	%	April 2015	11,500	115		287,500		April 13, 2020
Series I	7.15	%	June 2017	13,800	138		345,000		June 5, 2022	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	7.125	%	September 2017	12,600	126		315,000		September 22, 2022
				57,464	$	575	$	1,436,605					41,350	414		1,033,750

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~~Series G, H, I and J of preferred stock ~~of the Company~~ are payable quarterly in arrears in ~~the case of the~~January, April, July and October. Prior to their full redemption as discussed below, dividends on Series B and E preferred stock were payable 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.~~November.

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~~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.

~~Table~~In May 2020, the Company's board of ~~Contents~~directors elected to defer the declaration of a dividend on its preferred stock until June 30, 2020, subject to its assessment of the effects of COVID-19.

Redemption of Preferred Stock

~~In May 2018, the~~The Company ~~redeemed all~~issued notices of ~~its~~redemption for remaining outstanding shares of Series DB preferred stock ~~with settlement in July 2018. The~~and all outstanding shares of Series E preferred stock in December 2019, with redemption ~~was~~settled in January 2020.

All preferred stock redemptions were at $25.00 per share liquidation preference plus accrued and unpaid dividends prorated to ~~the~~their respective redemption ~~date.~~dates. The excess or deficit of the $25.00 per share liquidation preference over the carrying value of the respective preferred stock redeemed ~~resulted~~results in ana decrease or increase to net income attributable to common ~~stockholders.~~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 one 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 the Company's Chief Executive Officer. Each share of class B common stock shall convert automatically into ~~one~~1 share of class A common stock if the Chief Executive Officer 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 is suspending the dividend on its class A common stock for the second quarter of 2020 as the board of directors and management believe it is prudent to conserve cash during the current period of uncertainty.

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Common Stock Repurchases

During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and for the year ended December 31, 2019, the Company repurchased ~~652,311 shares of~~ its class A common stock totaling 12,733,204 shares at ~~an aggregate~~a cost of ~~approximately~~$24.6 million and 652,311 shares at a cost of $3.2 million, ~~(excluding commissions),~~respectively, or a weighted average price of $1.93 and $4.84 per share, respectively.

All share repurchases were made pursuant to a $300 million share repurchase program authorized by ~~its~~the Company's board of directors in May 2018, and extended in May 2019 for an additional one year term.

During the year ended December 31, 2018, the Company repurchased 61,417,755 shares of its class A common stock, at an aggregate cost of approximately $350.1 million (excluding commissions), or a weighted average price of $5.70 per share. These repurchases were made pursuant to the Company's share repurchase programs authorized in February 2018 and in May 2018 of $300 million each.

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 no0 shares of class A common stock acquired under the DRIP Plan in the form of new issuances during the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~during the year ended December 31, 2018.~~2019.

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.

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Changes in Components of AOCI—Stockholders


(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			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, 2017	$	5,616		$	14,418		$	—		$	45,931		$	(18,649	)	$	47,316
Cumulative effect of adoption of new accounting pronouncements	(202		)	—			—			—			—			(202		)
Other comprehensive income (loss) before reclassifications	1,968			(15,807		)	—			(21,612		)	13,107			(22,344		)
Amounts reclassified from AOCI	—			(4,806		)	—			4,158			(2,788		)	(3,436		)
Deconsolidation of N-Star CDO	—			2,596			—			—			—			2,596
AOCI at June 30, 2018	$	7,382		$	(3,599	)	$	—		$	28,477		$	(8,330	)	$	23,930

AOCI at December 31, 2018	$	3,629		$	(3,175	)	$	(91	)	$	6,618		$	7,018		$	13,999		$	3,629		$	(3,175	)	$	(91	)	$	6,618		$	7,018		$	13,999
Other comprehensive income (loss) before reclassifications	8,828			591			(2,063		)	(7,643		)	14,766			14,479			4,683			1,312			(129		)	(11,103		)	13,954			8,717
Amounts reclassified from AOCI	—			626			—			(1,128		)	(1,009		)	(1,511		)	—			626			—			(955		)	(249		)	(578		)
AOCI at June 30, 2019	$	12,457		$	(1,958	)	$	(2,154	)	$	(2,153	)	$	20,775		$	26,967
AOCI at March 31, 2019																			$	8,312		$	(1,237	)	$	(220	)	$	(5,440	)	$	20,723		$	22,138

AOCI at December 31, 2019																			$	9,281		$	7,823		$	(226	)	$	139		$	30,651		$	47,668
Other comprehensive income (loss) before reclassifications																			(23,850		)	1,330			7			(24,929		)	16,384			(31,058		)
Amounts reclassified from AOCI																			—			—			—			246			(634		)	(388		)
AOCI at March 31, 2020																			$	(14,569	)	$	9,153		$	(219	)	$	(24,544	)	$	46,401		$	16,222

Changes in Components of AOCI—Noncontrolling Interests in Investment Entities


(In thousands)	Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Gain (Loss)			Unrealized Gain (Loss) on Net Investment Hedges			Total			Unrealized Gain (Loss) on Cash Flow Hedges			Foreign Currency Translation Gain (Loss)			Unrealized Gain (Loss) on Net Investment Hedges			Total
AOCI at December 31, 2017	$	—		$	38,948		$	3,127		$	42,075
AOCI at December 31, 2018													$	(390	)	$	(600	)	$	9,644		$	8,654
Other comprehensive loss before reclassifications													(525		)	(15,379		)	(2,169		)	(18,073		)
Amounts reclassified from AOCI													—			—			444			444
AOCI at March 31, 2019													$	(915	)	$	(15,979	)	$	7,919		$	(8,975	)

AOCI at December 31, 2019													$	(1,005	)	$	(17,913	)	$	10,659		$	(8,259	)
Other comprehensive income (loss) before reclassifications	—			(12,639		)	3,292			(9,347		)	33			(32,958		)	4,865			(28,060		)
Amounts reclassified from AOCI	—			4,409			(644		)	3,765			—			—			(799		)	(799		)
AOCI at June 30, 2018	$	—		$	30,718		$	5,775		$	36,493

AOCI at December 31, 2018	$	(390	)	$	(600	)	$	9,644		$	8,654
Other comprehensive income (loss) before reclassifications	(4,656		)	(10,840		)	1,392			(14,104		)
Amounts reclassified from AOCI	—			(465		)	448			(17		)
AOCI at June 30, 2019	$	(5,046	)	$	(11,905	)	$	11,484		$	(5,467	)
AOCI at March 31, 2020													$	(972	)	$	(50,871	)	$	14,725		$	(37,118	)

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Reclassifications out of AOCI—Stockholders

Information about amounts reclassified out of AOCI attributable to stockholders by component is presented below:

(In thousands) Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the
Consolidated Statements of Operations
Component of AOCI reclassified into earnings 2019 2018 2019 2018
Realized gain (loss) on marketable securities $ —
$ 2,194
$ —
$ 10,100
Other gain (loss), net
Other-than-temporary impairment and write-offs of securities —
(1,188 ) (626 ) (5,294 ) Other gain (loss), net
Deconsolidation of N-Star CDO —
(2,596 ) —
(2,596 )
Other gain (loss), net
Release of cumulative translation adjustments 173
5
1,128
(4,158 ) Other gain (loss), net
Unrealized gain (loss) on dedesignated net investment hedges 22
2,082
46
584
Other gain (loss), net
Realized gain (loss) on net investment hedges 739
(232 ) 963
2,204
Other gain (loss), net



(In thousands)	Three Months Ended March 31,						Affected Line Item in the Consolidated Statements of Operations
Component of AOCI reclassified into earnings	2020			2019
Other-than-temporary impairment	$	—		$	(626	)	Other gain (loss), net
Release of cumulative translation adjustments	(246		)	955			Other gain (loss), net
Unrealized gain on dedesignated net investment hedges	634			24			Other gain (loss), net
Realized gain on net investment hedges	—			225			Other gain (loss), net

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~~14.~~15. Noncontrolling Interests

Redeemable Noncontrolling Interests

The following table presents the activity in redeemable noncontrolling interests in a consolidated open-end fund sponsored by the Company.


	Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2019			2018			2020			2019
Beginning balance	$	9,385		$	34,144		$	6,107		$	9,385
Contributions	—			305			250			—
Distributions and redemptions	(3,393		)	(2,103		)	(2,647		)	(3,366		)
Net income (loss)	1,953			1,177			(548		)	1,444
Ending balance	$	7,945		$	33,523		$	3,162		$	7,463

Noncontrolling Interests in Investment Entities

These are interests in consolidated investment entities held by private investment funds managed by the Company, or by third party joint venture partners.

The Company's investment in ~~the real estate~~its light industrial portfolio, ofprior to its ~~industrial segment is~~sale in December 2019, was made alongside third party limited partners through a joint venture consolidated by the Company. ~~Over time, capital contributions or redemptions from limited partners changes the~~The Company's ownership interest ~~in the joint venture.~~changed over time as result of capital contributions from or redemptions of limited partner interests. Limited partners ~~are~~were admitted or redeemed at the net asset value of the joint venture, based upon valuations determined by independent third parties, at the time of their contributions or redemptions. For the ~~six months~~year ended ~~June 30,~~December 31, 2019, ~~and 2018,~~ the difference between contributions or redemptions and the respective limited partners' share of the joint venture resulted in a net increase to additional paid-in capital of $12.4 ~~million and $21.1 million, respectively.~~million.

Noncontrolling Interests in Operating Company

Certain current and past 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-one~~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.

Issuance of OP Units—The Company issued 21,478,515 OP Units in July 2019 and 612,072 OP Units in December 2019 as part of the consideration for the acquisitions of DBH, valued at $111.9 million, and DataBank, valued at $3.0 million, based upon the closing price of the Company's class A common stock on July 24, 2019 and December 20, 2019, respectively (Note 3). There were 0 OP Units issued in the three months ended March 31, 2020.

Redemption of OP Units—For the ~~six months~~year ended ~~June 30,~~December 31, 2019, the Company redeemed ~~187,187~~187,995 OP Units, with the issuance of an equal number of shares of class A common stock on a ~~one-for-one~~1-for-one basis. There were 0 OP Units redeemed in the three months ended March 31, 2020.

16. Discontinued Operations

For the ~~year~~three months ended ~~December~~March 31, 2018, the Company redeemed 2,870,422 OP Units, of which 2,074,457 OP Units were redeemed in exchange for an equal number of shares of class A common stock on a one-for-one basis, and 795,965 OP Units were redeemed in exchange for cash of $4.8 million to satisfy tax obligations of OP unitholders. The redemptions included 1.0 million OP units issued for settlement of the contingent consideration in connection with the Internalization (Note 11).

~~15. Discontinued Operations~~

~~All of~~2020, discontinued operations ~~for 2019 and most of discontinued operations for 2018~~ represent the results of operations of ~~(i)~~ the bulk industrial ~~segment which includes~~portfolio. For the three months ended March 31, 2019, discontinued operations also included results of the light

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industrial portfolio and management platform in 2019 prior to their sale in December 2019. Discontinued operations in 2019 included (i) direct compensation and administrative expenses of the industrial business, and (ii) associated fee income, equity method earnings from the Company's general partner interest in the industrial open-end fund, ~~including~~predominantly carried interest, and compensation related to carried interest sharing, which ~~are~~were previously reported under the investment management ~~segment.~~

~~The first half~~segment, prior to the sale of ~~2018 also includes loss from discontinued operations~~the light industrial business, including the interests of ~~$0.2 million related to certain properties~~all limited partners in the ~~THL Hotel Portfolio acquired in July 2017 that qualified as held for sale at the time of foreclosure. Such properties were fully disposed of in the second quarter of 2018.~~

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industrial closed-end and open-end funds.

Income ~~(loss)~~ from discontinued operations is presented below.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	2019			2018		2019			2018		2020		2019
Revenues
Property operating income	$	91,741		$	72,155	$	172,973		$	140,508	$	5,379	$	81,232
Fee income	2,978			1,634		5,449			2,948		—		2,472
Interest and other income	1,228			792		2,368			1,908		17		1,140
Revenues from discontinued operations	95,947			74,581		180,790			145,364		5,396		84,844
Expenses
Property operating expense	25,669			21,054		48,007			42,453		1,473		22,337
Interest expense	19,726			10,856		34,352			21,046		2,406		14,627
Investment and servicing expense	8			178		538			263		—		530
Depreciation and amortization	45,360			32,482		84,805			62,427		633		39,445
Impairment loss	—			174		—			174
Compensation expense—cash and equity-based ⁽¹⁾	3,680			2,632		6,339			5,027		82		2,659
Compensation expense—carried interest	561			1,060		340			1,919		—		(221		)
Administrative expenses	1,386			1,084		3,016			2,391		332		1,629
Expenses from discontinued operations	96,390			69,520		177,397			135,700		4,926		81,006
Other income (loss)
Gain from sale of real estate	547			—		23,395			2,293
Other loss, net	(49		)	—		(57		)	—
Equity method earnings (losses)	(173		)	2,650		(644		)	4,833
Income (loss) from discontinued operations before income taxes	(118		)	7,711		26,087			16,790
Income tax benefit (expense)	(386		)	53		(298		)	68
Income (loss) from discontinued operations	(504		)	7,764		25,789			16,858
Income (loss) from discontinued operations attributable to:
Gain on sale of real estate											—		22,848
Other gain, net											4		(8		)
Equity method earnings (losses), including carried interest											—		(472		)
Income from discontinued operations before income taxes											474		26,206
Income tax benefit											—		87
Income from discontinued operations											474		26,293
Income from discontinued operations attributable to:
Noncontrolling interests in investment entities	674			3,709		17,983			8,728		170		17,309
Noncontrolling interests in Operating Company	(71		)	232		474			466		30		545
Income (loss) from discontinued operations attributable to Colony Capital, Inc.	$	(1,107	)	$	3,823	$	7,332		$	7,664
Income from discontinued operations attributable to Colony Capital, Inc.											$	274	$	8,439

__________


⁽¹⁾	Includes equity-based compensation of $0.7 million for ~~both~~ the three months ended ~~June 30, 2019 and 2018, and $1.4 million and $1.1 million for the six months ended June 30, 2019 and 2018, respectively.~~March 31, 2019.

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~~16.~~17. Earnings per Share

The following table provides the basic and diluted earnings per common share computations:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands, except per share data)	2019			2018			2019			2018			2020			2019
Net income (loss) allocated to common stockholders
Net loss allocated to common stockholders
Loss from continuing operations	$	(484,142	)	$	(50,672	)	$	(540,590	)	$	(86,924	)	$	(404,531	)	$	(56,448	)
(Income) loss from continuing operations attributable to noncontrolling interests	43,497			(18,564		)	16,530			(27,480		)	62,098			(26,967		)
Loss from continuing operations attributable to Colony Capital, Inc.	(440,645		)	(69,236		)	(524,060		)	(114,404		)	(342,433		)	(83,415		)
Income (loss) from discontinued operations attributable to Colony Capital, Inc.	(1,107		)	3,823			7,332			7,664
Income from discontinued operations attributable to Colony Capital, Inc.													274			8,439
Net loss attributable to Colony Capital, Inc.	(441,752		)	(65,413		)	(516,728		)	(106,740		)	(342,159		)	(74,976		)
Preferred stock redemption	—			3,995			—			3,995
Preferred dividends	(27,138		)	(31,388		)	(54,275		)	(62,775		)	(19,474		)	(27,137		)
Net loss attributable to common stockholders	(468,890		)	(92,806		)	(571,003		)	(165,520		)	(361,633		)	(102,113		)
Net income allocated to participating securities	(953		)	(643		)	(1,673		)	(1,272		)	(1,250		)	(720		)
Net loss allocated to common stockholders—basic	(469,843		)	(93,449		)	(572,676		)	(166,792		)	(362,883		)	(102,833		)
Interest expense attributable to convertible notes ⁽¹⁾	—			—			—			—			—			—
Net loss allocated to common stockholders—diluted	$	(469,843	)	$	(93,449	)	$	(572,676	)	$	(166,792	)	$	(362,883	)	$	(102,833	)
Weighted average common shares outstanding
Weighted average number of common shares outstanding—basic	479,228			488,676			479,577			509,562			479,106			478,874
Weighted average effect of dilutive shares ^(1)(2)(3)	—			—			—			—			—			—
Weighted average number of common shares outstanding—diluted	479,228			488,676			479,577			509,562			479,106			478,874
Basic loss per share
Loss from continuing operations	$	(0.98	)	$	(0.20	)	$	(1.21	)	$	(0.35	)	$	(0.76	)	$	(0.23	)
Income from discontinued operations	—			0.01			0.02			0.02			—			0.02
Net loss attributable to common stockholders per basic common share	$	(0.98	)	$	(0.19	)	$	(1.19	)	$	(0.33	)	$	(0.76	)	$	(0.21	)
Diluted loss per share
Loss from continuing operations	$	(0.98	)	$	(0.20	)	$	(1.21	)	$	(0.35	)	$	(0.76	)	$	(0.23	)
Income from discontinued operations	—			0.01			0.02			0.02			—			0.02
Net loss attributable to common stockholders per diluted common share	$	(0.98	)	$	(0.19	)	$	(1.19	)	$	(0.33	)	$	(0.76	)	$	(0.21	)

__________

⁽¹⁾

For both the three months ended ~~June 30,~~ March 31, 2020and2019, ~~and 2018,~~ excluded from the calculation of diluted earnings per share is the effect of adding back $7.1 million of interest expense and 38,112,100 weighted average diluted common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as applicable, as their inclusion would be antidilutive. For both the six months ended June 30, 2019 and 2018, excluded from the calculation of diluted earnings per share is the effect of adding back $14.3 million of interest expense and 38,112,100 weighted average dilutive common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as ~~applicable, as~~ their inclusion would be antidilutive.

⁽²⁾

The calculation of diluted earnings per share excludes the effect of weighted average unvested non-participating restricted shares of ~~92,700 and 605,800~~137,900 for the three months ended ~~June 30,~~March 31, 2019 ~~and 2018, respectively, and 115,200 and 634,200 for the six months ended June 30, 2019 and 2018, respectively,~~ as the effect would be antidilutive. NaN unvested non-participating restricted shares were outstanding during the three months ended March 31, 2020. The calculation of diluted earnings per share also excludes the effect of weighted average shares of class A common stock that are contingently issuable in relation to PSUs (Note ~~18)~~19) of ~~459,800~~1,520,659 and ~~2,137,500~~3,814,300 for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 755,700 and 1,074,700 for the six months ended June 30, 2019 and 2018,~~ respectively.

⁽³⁾

OP Units, subject to lock-up agreements, may be redeemed for registered or unregistered class A common ~~shares~~stock on a ~~one-for-one~~1-for-one basis. At ~~June 30,~~March 31, 2020 and 2019 ~~and 2018,~~ there were ~~31,171,300~~53,261,100 and ~~30,426,900~~31,355,700 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.

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~~17.~~18. Fee Income

The Company's real estate investment management platform manages capital on behalf of institutional and retail investors in private funds, ~~and~~ traded and non-traded REITs, and other investment vehicles for which the Company earns fee income. For investment vehicles in which the Company co-sponsors with a third party or for which the Company engages a third party sub-advisor, such fee income is shared with the respective co-sponsor or sub-advisor.

Fee income ~~for all periods~~as presented ~~excludes~~in 2019 excluded management fees from the Company's open-end light industrial fund which ~~is classified as held for sale. Such fees are~~was included in income from discontinued operations (Note ~~15).~~16) prior to the sale of the Company's light industrial platform in December 2019.

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The Company's fee income is earned from the following ~~sources.~~sources:

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Institutional funds $ 13,033
$ 15,537
$ 23,671
$ 27,364
Public companies (Colony Credit, NRE) 15,038
16,219
30,144
28,391
Non-traded REITs 4,989
6,244
10,095
17,703
Other 2,373
290
2,551
360
$ 35,433
$ 38,290
$ 66,461
$ 73,818



	Three Months Ended March 31,
(In thousands)	2020		2019
Institutional funds and other investment vehicles	$	30,476	$	10,638
Public companies (CLNC, and NRE prior to its sale in September 2019)	8,058		15,106
Non-traded REIT	4,431		5,106
Other	540		178
	$	43,505	$	31,028

The following table presents the Company's fee income by type:

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Base management fees ($32,418, $33,850, $62,620 and $66,712 from affiliates, respectively) $ 32,612
$ 34,116
$ 62,976
$ 66,978
Asset management fees ($601, $761, $1,236 and $1,435 from affiliates, respectively) 1,230
761
1,865
1,435
Acquisition and disposition fees—from affiliates —
—
—
1,922
Other fee income ($248, $3,389, $262 and $3,389 from affiliates, respectively) 1,591
3,413
1,620
3,483
Total fee income $ 35,433
$ 38,290
$ 66,461
$ 73,818



	Three Months Ended March 31,
(In thousands)	2020		2019
Base management fees ($41,514 and $30,201 from affiliates, respectively)	$	41,619	$	30,364
Asset management fees ($532 and $635 from affiliates, respectively)	809		635
Other fee income ($1,054 and $14 from affiliates, respectively)	1,077		29
Total fee income	$	43,505	$	31,028

Base Management Fees—The Company earns base management fees for the day-to-day operations and administration of its managed private funds, ~~and~~ traded and non-traded REITs, and other investment vehicles, calculated as follows:

Private ~~Funds—~~Funds and similar investment vehicles—generally (a) 1% per annum of limited partners' net funded capital, or (b) 0.9% to 1.75% per annum of ~~(i) total commitments~~investors' committed capital during commitment or investment period and ~~(ii)~~ thereafter, of contributed or invested capital;

~~Colony Credit—~~CLNC—1.5% per annum of ~~Colony Credit's~~CLNC's stockholders' equity (as defined in its management agreement);, with a reduction in fee base to reflect CLNC's reduced book value effective in the beginning of the fourth quarter of 2019;

Non-Traded ~~REITs—~~REIT—1.5% per annum of most recently published ~~net asset value~~NAV (as may be subsequently adjusted for any special distribution) for NorthStar Healthcare, ~~and prior to closing of the Combination on January 31, 2018, 1% to 1.25% per annum of gross assets for NorthStar I and NorthStar II.~~with $2.5 million per quarter ~~of base management fee for NorthStar Healthcare is~~ paid in shares of NorthStar Healthcare common stock at a price per share equal to its most recently published NAV per share (as may be subsequently adjusted for any special distribution); and

~~NRE—~~NorthStar Realty Europe ("NRE")—prior to termination of the management contract in connection with the sale of NRE on September 30, 2019, a variable fee of 1.5% per annum of NRE's reported European Public Real Estate Association ~~Net Asset Value~~NAV ("EPRA NAV" as defined in its management agreement) for EPRA NAV up to and including $2.0 billion, and 1.25% per annum for EPRA NAV amounts exceeding $2.0 billion. The management agreement had provided for the Company's management of NRE through at least January 1, 2023. In November 2018, NRE and the Company reached an agreement to terminate the management agreement upon a sale of NRE or, if no sale is consummated, upon internalization of the management of NRE. Such termination will result in a termination payment to the Company of $70 million, inclusive of incentive fees earned through termination, of which $5.4 million has been received for fiscal year 2018. In July 2019, following a comprehensive review by NRE's Strategic Review Committee and approval by its Board of Directors, NRE entered into an agreement to sell all of its outstanding common stock for an estimated price of $17.03 per share based on three-month forward foreign exchange rates. The sale is expected to close in the fourth quarter of 2019, subject to customary closing conditions, including approval of a majority of NRE's stockholders.

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Asset Management Fees—The Company earns asset management fees from its managed private funds, which represents 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.

~~Acquisition and Disposition Fees~~—Prior to closing of the Combination on January 31, 2018, the Company earned from NorthStar I and NorthStar II an acquisition fee of 1% of the amount funded or allocated to originate or acquire an investment, and a disposition fee of 1% to 2% of the contractual sales price for disposition of an investment.

Incentive Fees—The Company may earn incentive fees from ~~NRE~~CLNC, and ~~Colony Credit,~~prior to its termination, from NRE, determined based on the performance of the investment vehicles subject to the achievement of minimum return hurdles in accordance with the terms set out in their respective governing agreements. A portion of the incentive fees earned by the Company (generally 40% to 50%) is allocable to senior management, investment professionals and certain other employees of the Company, included in carried interest and incentive fee compensation expense. There were 0 incentive fees earned in the three months ended March 31, 2020 and 2019.

Other Fee Income—Other fees include service fees for information technology and operational support services and facilities to portfolio companies, advisory fees, and licensing fee ~~related to~~on the ~~Colony Capital Fundamental~~

~~U.S. Real Estate Index,~~Company's proprietary real estate index, a rules-based strategy that invests in common stock of REITs, and prior to May 2018, selling commission and dealer manager fees through its broker-dealer platform for selling equity in certain classes of shares in the retail companies. In April 2018, the Company combined its broker-dealer platform with a third party to form a joint venture to distribute future investment products. The Company's share of earnings or losses from the joint venture is reflected in equity method earnings.U.S. REITs.

~~18.~~19. Equity-Based Compensation

The Colony Capital, Inc. 2014 Omnibus Stock Incentive Plan (the "Equity Incentive Plan") provides for the grant of restricted stock, performance stock units ("PSUs"), Long Term Incentive Plan ("LTIP") 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 to the Company's officers, directors (including non-employee directors), employees, co-employees,

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consultants or advisors of the Company or of any parent or subsidiary who provides services to the Company. Shares reserved for the issuance of awards under the 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 ~~June 30, 2019,~~March 31, 2020, an aggregate ~~of 54.4~~64.1 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 relating to the Company's class A common stock are granted to senior executives, directors and certain employees, with a service condition only and are generally subject to 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 three-year service period.

Performance Stock Units ("PSUs")—PSUs are granted to senior executives and certain employees, and are subject to both a service condition and market condition. Following the end of the measurement period for the PSUs, the recipients of PSUs who remain employed will vest in, and be issued a number of shares of the Company's class A common stock, ranging from 0% to 200% of the number of PSUs granted, to be determined based upon the performance of the Company's class A common stock either relative to that of a specified peer group or against a target stock price over a three-year measurement period (such measurement metric the "total shareholder return"). In addition, recipients of PSUs whose employment is terminated after the first anniversary of the PSU grant are eligible to vest in a portion of the PSU award following the end of the measurement period based on achievement of the total shareholder return metric otherwise 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 ultimately issued at the end of the measurement period. In February 2019, the PSUs issued in 2018 were modified to, among other things, reduce the potential maximum number of shares of the Company’s class A common stock to be issued upon final vesting from 200% to 125% of the number of PSUs granted. The incremental value resulting from the modification was immaterial.

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Fair value of PSUs, including dividend equivalent rights, was determined using a Monte Carlo simulation under a risk-neutral premise, with the following assumptions:


	2019 PSU Grants	2018 PSU Grant ⁽⁴⁾	2020 PSU Grants	2019 PSU Grants	2018 PSU Grant ⁽⁴⁾
Expected volatility of the Company's class A common stock⁽¹⁾	26.2%	29.0%	34.1%	26.2%	29.0%
Expected annual dividend yield⁽²⁾	8.5% - 8.7%	7.3%	9.3%	8.5% - 8.7%	7.3%
Risk-free rate (per annum)⁽³⁾	2.2% - 2.4%	2.1%	0.4%	2.2% - 2.4%	2.1%

__________


⁽¹⁾	Based upon the Company's historical stock volatility or in combination with historical stock volatility of ~~the Company's stock, and where applicable,~~a specified peer group, or a combination of historical volatility and implied volatility on actively traded stock options of a specified peer group.


⁽²⁾	Based upon a combination of historical dividend yields and ~~the~~ current annualized dividends.


⁽³⁾	Based upon the continuously compounded zero-coupon USU.S. Treasury yield for the term coinciding with the remaining measurement period of the award as of valuation date.


⁽⁴⁾	Reflects assumptions applied in valuing the award upon modification in February 2019.

Fair value of PSU awards, excluding 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 market 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 do not accrue distributions. Each vested LTIP unit is convertible, at the election of the holder (subject to capital account limitation), into ~~one~~1 common OP Unit and upon conversion, subject to the redemption terms of OP Units (Note ~~14)~~15).

LTIP units issued to certain employees have a service condition only, and are valued based onupon the Company's class A common stock price on grant date.

In connection with the acquisition of DBH in July 2019, the Company granted 10 million LTIP units to Marc C. Ganzi, co-founder and Chief Executive Officer ("CEO") of DBH and CEO-elect of the Company, subject to both a service condition and a market condition. The LTIP units will vest based upon achievement of the Company's class A common stock price closing at or above $10.00 over any 90 consecutive trading days prior to the fifth anniversary of the grant date, subject to Mr. Ganzi's continuous employment to the time of such vesting. Fair value of these LTIP units was determined

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using a Monte Carlo simulation under a risk-neutral premise, with ~~equity-based~~the following assumptions:



Expected volatility of the Company's class A common stock⁽¹⁾		28.3%
Expected dividend yield ⁽²⁾		8.1%
Risk-free rate (per annum)⁽³⁾		1.8%

__________


⁽¹⁾	Based upon historical volatility of the Company's stock and those of a specified peer group.


⁽²⁾	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.


⁽³⁾	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 over either the service period for awards with a service condition only, or over the derived service period for awards with both a service condition and ~~represent an allocation to noncontrolling interest~~a market condition. The derived service period is a service period that is inferred from the application of the simulation technique used in the ~~Operating Company.~~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 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. Any such additional DSUs will also be credited with additional DSUs as cash dividends are paid, subject to the same restrictions and vesting conditions, if any. Upon separation of service from the Company, vested DSUs are to 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 on a straight-line basis over the vesting period as equity based compensation expense and equity.

Equity-based compensation expense, excluding amounts related to the industrial segment ~~that~~in 2019 which is presented as discontinued operations (Note ~~15)~~16), is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2019		2018		2019		2018		2020		2019
Compensation expense (including $315, $181, $432 and $203 amortization of fair value of dividend equivalent right)	$	7,577	$	8,716	$	13,491	$	20,429
Compensation expense (including $283 and $122 amortization of fair value of dividend equivalent rights)									$	8,249	$	5,914

Changes in the Company’s unvested equity awards are summarized below:


									Weighted Average Grant Date Fair Value													Weighted Average Grant Date Fair Value
	Restricted Stock		DSUs		PSUs ⁽¹⁾		Total		PSUs		All Other Awards		Restricted Stock		LTIP Units	DSUs		PSUs ⁽¹⁾		Total		PSUs		All Other Awards
Unvested shares and units at December 31, 2018	5,422,090		183,134		2,043,949		7,649,173		$	5.09	$	9.39
Unvested shares and units at December 31, 2019													7,641,708		10,000,000	265,784		5,680,195		23,587,687		$	3.66	$	3.25
Granted	4,869,734		315,961		3,760,864		8,946,559		2.92		5.20		7,676,444		—	42,455		4,324,375		12,043,274		1.64		1.94
Vested	(1,658,735	)	(244,111	)	—		(1,902,846	)	—		10.67		(4,195,879	)	—	(36,495	)	—		(4,232,374	)	—		4.40
Forfeited	(157,165	)	—		(24,071	)	(181,236	)	4.53		6.60		(30,948	)	—	—		(14,852	)	(45,800	)	4.53		5.45
Unvested shares and units at June 30, 2019	8,475,924		254,984		5,780,742		14,511,650		$	3.68	$	6.67
Unvested shares and units at March 31, 2020													11,091,325		10,000,000	271,744		9,989,718		31,352,787		2.78		2.55

__________


⁽¹⁾	Represents the number of PSUs granted, which 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.

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Fair value of equity awards that vested, determined based on their respective fair values at vesting date, was ~~$1.3~~$10.1 million and ~~$1.5~~$8.5 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $9.8 million and $106.5 million for the six months ended June 30, 2019 and 2018,~~ respectively.

At ~~June 30, 2019,~~March 31, 2020, aggregate unrecognized compensation cost for all unvested equity awards was ~~$58.0~~$52.8 million, which is expected to be recognized over a weighted average period of 2.2 years.

Awards Granted by Managed Companies

~~Colony Credit~~CLNC and NRE, both managed by the Company prior to termination of NRE's management agreement concurrent with the sale of NRE in September 2019, issued restricted stock and performance stock units to the Company and certain of the Company's employees (collectively, "managed company awards"). ~~Colony Credit~~CLNC awards are primarily restricted stock

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grants that typically vest over a three-year period, subject to service conditions. NRE awards generally ~~have~~had similar terms as the Company's stock awards, except that the NRE performance stock units ~~measure~~measured NRE's stock performance against either an absolute total shareholder return threshold or relative to the performance of a specified market index. Employees ~~are~~were entitled to receive shares of NRE common stock if service conditions and/or market conditions ~~are~~were met. Generally, the Company ~~then~~ grants the managed company awards that it receives in its capacity as manager to its employees with substantially the same terms and service requirements. Such grants are made at the discretion of the Company, and the Company may consult with the board of directors or compensation committees of the respective managed companies as to final allocation of awards to its employees.

Managed company awards granted to the Company, pending ~~the~~ grant by the Company to its employees, are recognized based upon their fair value at grant date as an equity investment ~~in unconsolidated ventures~~ 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 ~~by NRE or Colony Credit,~~ 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.

Equity-based compensation ~~expense~~ recognized related to managed company awards was ~~$3.6~~an expense reversal of $3.4 million and ~~$4.2~~an expense of $2.8 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $6.4 million and $5.0 million for the six months ended June 30, 2019 and 2018,~~ respectively. A corresponding amount is recognized in other income for managed company awards granted to employees (Note ~~19)~~20). At ~~June 30, 2019,~~March 31, 2020, aggregate unrecognized compensation cost for unvested managed company awards of CLNC was ~~$32.8~~$3.2 million, which is expected to be recognized over a weighted average period of ~~2.3~~1.6 years.

~~19.~~20. Transactions with Affiliates

Affiliates include (i) private funds, traded and non-traded REITs and investment companies that the Company manages or sponsors, and in which the Company may have an equity interest or co-invests with; (ii) the Company's investments in unconsolidated ventures; and (iii) directors, senior executives and employees of the Company (collectively, "employees").

Amounts due from and due to affiliates consist of the following:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Investment vehicles and unconsolidated ventures
Due from Affiliates
Investment vehicles, portfolio companies and unconsolidated ventures
Fee income	$	34,795	$	34,429	$	36,028	$	36,106
Cost reimbursements and recoverable expenses	8,924		10,754		11,460		14,624
Employees and other affiliates	688		596		1,015		750
	$	44,407	$	45,779	$	48,503	$	51,480
Due to Affiliates
Employees and other affiliates					$	34,301	$	34,064
					$	34,301	$	34,064

Transactions with affiliates include the following:

Fee ~~Income—~~Income—Fee income earned from investment vehicles that the Company manages and/or sponsors, and may have an equity interest or co-investment, are presented in Note ~~17.~~18.

Cost Reimbursements—The Company received cost reimbursement income related primarily to the following arrangements:

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 and ~~Colony Credit,~~CLNC, with reimbursements for ~~non-~~

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~~traded~~non-traded REITs limited to the greater of 2% of average invested assets or 25% of net income (net of base management fees);

Direct costs of personnel dedicated solely to NRE (prior to termination of management agreement concurrent with sale of NRE in September 2019) plus 20% of such personnel costs for related overhead charges, not to exceed, in aggregate, specified thresholds as set out in the NRE management agreement;

Costs incurred in performing investment due diligence for ~~retail companies~~NorthStar Healthcare and private funds managed by the Company;

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Equity awards granted ~~by Colony Credit and NRE~~ to employees of the Company by CLNC and NRE (prior to termination of the NRE management agreement), which are presented gross as other income and compensation expense (Note ~~18)~~19);

Services provided to the Company's unconsolidated investment ventures for servicing and managing their loan portfolios, including foreclosed properties, and services to the ~~Company's~~Digital Colony Manager joint venture ~~with DBH which manages~~prior to the Company's ~~digital infrastructure investment vehicle;~~acquisition of DBH in July 2019; and

Administrative services provided to certain senior executives of the Company.

Cost reimbursements, included in other income, ~~were~~are as follows. Amounts related to NRE pertain to periods prior to its sale in September 2019.

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Retail companies $ 689
$ 484
$ 1,427
$ 2,871
Public companies (Colony Credit, NRE) 2,663
2,944
5,295
4,694
Private funds and other 4,344
2,416
7,879
4,260
Equity awards of Colony Credit and NRE (Note 18) 3,643
4,250
6,583
5,062

$ 11,339
$ 10,094
$ 21,184
$ 16,887



	Three Months Ended March 31,
(In thousands)	2020			2019
Retail companies	$	951		$	738
Public companies (CLNC, NRE)	2,500			2,632
Private investment vehicles and other	2,946			3,535
Equity awards of CLNC and NRE (Note 19)	(3,911		)	2,940
	$	2,486		$	9,845

Recoverable Expenses—The Company pays organization and offering costs associated with the formation and capital raising of the retail companies and private funds sponsored by the Company, for which the Company recovers from these investment vehicles, up to specified thresholds for certain private funds and up to 1% of proceeds expected to be raised from the offering of retail companies(excluding shares offered pursuant to distribution reinvestment plans).

NorthStar Healthcare Credit Facility—The Company has committed to provide NorthStar Healthcare with an unsecured revolving credit facility at market terms with a maximum principal amount of $35.0 million. The credit facility matures in December 2020, with a six-month extension option. Advances under the credit facility accrue interest at LIBOR plus 3.5%. There is no0 commitment fee for the unused portion of the facility. The credit facility is intended to provide additional liquidity to NorthStar Healthcare on an as needed basis. At ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, there were no0 outstanding advances under the revolving credit facility. In April 2020, the credit facility was drawn for the full amount of $35.0 million.

Liquidating Trust—As contemplated in the combination agreement, a certain loan receivable previously held by NorthStar I was not transferred to ~~Colony Credit,~~CLNC, for which the Company acquired a senior participation interest at par, and the remaining junior participation interest ("NorthStar I Retained Asset") was transferred to a liquidating trust. The Company entered into a management services agreement with the liquidating trust to service and assist in the potential sale of the NorthStar I Retained Asset, and to provide administrative services on such terms and conditions as approved by the trustees for a management fee of 1.25% per annum of the net assets of the liquidating trust. Such fee amount is immaterial.

~~Sales~~Acquisition of DBH and DataBank—In connection with the acquisition of DBH in July 2019, payment of a portion of the cash consideration was deferred until the expiration of certain customary seller indemnification obligations (Note 3). The deferred consideration of $32.5 million remaining at March 31, 2020 is payable to ~~Colony Credit—~~principals of DBH, including Mr. Ganzi, who became employees or affiliate of the Company post-acquisition.

In connection with the Company's acquisition in December 2019 of interests in DataBank ~~There were no such sales~~ from third parties (Note 3), Mr. Ganzi and Mr. Jenkins, the Chairman of the Company’s digital realty platform, entered into voting agreements with the Company, which provide the Company with majority voting power over DataBank's board. The Company took a series of steps to mitigate conflicts in the ~~six months ended June 30, 2019. In May 2018,~~transaction, including receiving a fairness opinion on its purchase price from a nationally recognized third party valuation firm. Additionally, in exchange for incentive units owned by Messrs. Ganzi and Jenkins allocable to the DataBank stake acquired by the Company, ~~sold~~the Company issued OP Units with a ~~preferred equity~~value of $3 million, which are subject to a multi-year lockup. The value represents consideration paid to Messrs. Ganzi and Jenkins by the Company for such incentive units in connection with its investment ~~sponsored~~in DataBank, which was in addition to the cash consideration paid to third parties by the Company for its acquired interests in Databank. As a result, the Company will not be subject to future carried interest payments to the DBH principals with respect to the Company's investment in DataBank. In addition, the DataBank transaction was approved by the Company's ~~equity method investee, RXR Realty, to Colony Credit at the unpaid principal amount~~board of the investment of $89.1 million. In July 2018, the Company sold to Colony Credit its interest in a subsidiary holding a net lease property in Norway that was partially financed by a non-callable bond for $121.5 million based on an appraised value of the property, resulting in a gain on sale of $28.6 million.directors.

~~Healthcare Partnership—~~The Healthcare Partnership was previously formed by NRF with the intention of expanding the Company’s healthcare business (Note 18). The Healthcare 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. To date, no incentive fees have been earned by the Healthcare Partnership.

~~American Healthcare Investors Joint Venture—The Company has an equity method investment in American~~

Healthcare Investors, LLC (“AHI"). Prior to the termination of its management agreement in October 2018, AHI had provided certain healthcare-focused real estate investment management and related services to the Company and NorthStar Healthcare. For the three and six months ended June 30, 2018, the Company incurred property management fees and sub-advisory fees to AHI totaling $1.3 million and $2.6 million, respectively.

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Arrangements with Company-Sponsored Private ~~Fund—~~Funds—The Company co-invests alongside ~~a Company-sponsored~~its sponsored private ~~fund~~funds 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 ~~fund~~funds 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

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proportionate share of the costs of the private ~~fund~~funds such as financing and administrative costs. Such costs expensed during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were immaterial and relate primarily to the Company's share of the fund's operating costs and deferred financing costs on borrowings of the fund.

Equity Awards of ~~NRE~~CLNC and ~~Colony Credit~~NRE—As discussed in Note ~~18,~~19, CLNC and NRE ~~and Colony Credit~~(prior to termination of the NRE management agreement) grant equity awards to the Company and certain of the Company's employees, either directly ~~by NRE and Colony Credit,~~ 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.

Investment in Managed Investment Vehicles—Subject to the Company's related party policies and procedures, senior management, investment professionals and certain other employees may ~~participate~~invest on a discretionary basis in investment vehicles sponsored by the Company, either directly in the vehicle or indirectly through the general partner entity. These investments are generally not subject to management fees, but otherwise bear their proportionate share of other operating expenses of the investment vehicles. At ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, such investments ~~amounted to $6.7~~in consolidated investment vehicles and general partner entities totaled $6.5 million and ~~$5.7~~$4.0 million, respectively, reflected in redeemable noncontrolling interests and noncontrolling interests on the balance sheet. Their share of net income was ~~$0.5~~$0.7 million and ~~$1.6~~$0.5 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $1.0 million and $2.8 million for the six months ended June 30, 2019 and 2018,~~ respectively.

Corporate Aircraft—The Company, through its subsidiary, Colony Capital Advisors, LLC, has entered into a time sharing agreement with Thomas J. Barrack, Jr., the Company's Executive Chairman and Chief Executive Officer, under which Mr. Barrack may use the Company’s aircraft for personal travel. Under this arrangement, Mr. Barrack pays the Company for personal usage based on the incremental cost to the Company, including direct and indirect variable costs, but in no case more than the maximum reimbursement permitted by the Federal Aviation Regulations under the agreement. Mr. Barrack has reimbursed the Company $0.4 million and ~~$0.3~~$0.2 million for personal flights taken during the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $0.6 million and $0.4 million during the six months ended June 30, 2019 and 2018,~~ respectively.

~~20.~~21. Commitments and Contingencies

~~Operating Leases~~

The Company's operating leases, as lessee, are primarily ground leases assumed through its real estate acquisitions and leases for its corporate offices. Equipment leases are generally short term leases of less than 12 months or constitute immaterial lease payments.

~~At June 30, 2019, the weighted average remaining lease terms were 20.7 years for ground leases and 7.9 years for office leases.~~

~~For the three and six months ended June 30, 2018, lease expense, including variable lease expense, was $1.8 million and~~ ~~$3.8 million~~ ~~for ground leases, respectively, and $2.5 million and $5.2 million for office leases, respectively.~~

For the three and six months ended June 30, 2019, the following table summarizes lease expense for ground leases, included in property operating expense, and office leases, included in administrative expense.

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
(In thousands) Ground Leases Office Leases Ground Leases Office Leases
Operating lease expense:
Fixed lease expense $ 2,254
$ 2,063
$ 4,189
$ 4,210
Variable lease expense 506
669
1,079
1,036
$ 2,760
$ 2,732
$ 5,268
$ 5,246

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~~Operating Lease Commitments~~

The operating lease liability was determined using a weighted average discount rate of 5.5%. At June 30, 2019, the Company's future operating lease commitments for ground leases on real estate held for investment and for corporate office leases were as follows.

(In thousands)
Year Ending December 31, Ground Leases Office Leases Total
Remaining 2019 $ 3,179
$ 4,715
$ 7,894
2020 6,275
8,926
15,201
2021 5,922
8,537
14,459
2022 5,959
7,524
13,483
2023 5,912
6,986
12,898
2024 and thereafter 67,979
29,615
97,594
Total lease payments 95,226
66,303
161,529
Present value discount (45,509 )
Operating lease liability (Note 8) $ 116,020

~~At December 31, 2018, the Company's future minimum operating lease commitments for ground leases on real estate held for investment and for corporate office leases were as follows:~~

(In thousands)
Year Ending December 31, Ground Leases Office Leases Total
2019 $ 5,149
$ 9,380
$ 14,529
2020 5,217
9,007
14,224
2021 5,386
8,617
14,003
2022 5,776
7,602
13,378
2023 5,720
7,045
12,765
2024 and thereafter 87,150
29,615
116,765
Total lease payments $ 114,398
$ 71,266
$ 185,664

Contingent Consideration

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 ~~11).~~12), subject to the Company achieving certain agreed upon returns.

Litigation and Claims

The Company may be involved in litigation and claims in the ordinary course of business. As of ~~June 30, 2019,~~March 31, 2020, 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.

~~21.~~22. Segment Reporting

The ~~Company conducts its business through the following six~~Company's 6 reportable ~~segments:~~segments are as follows:

•

Digital Real Estate and Investment Management ("Digital")—The Company's digital segment is composed of balance sheet equity interests in digital infrastructure and real estate; and digital infrastructure and real estate investment management business. For digital investments on our balance sheet, these assets earn rental income from providing use of space and/or capacity in or on our digital assets through long-term leases, services and other agreements. In the digital investment management business, we earn management fees, generally based on the amount of assets or capital managed in investment vehicles, and have the potential to earn carried interest based on the performance of such investment vehicles subject to the achievement of minimum return hurdles.

•

Healthcare—The Company's healthcare segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals. The Company earns rental income from senior housing, skilled nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant. In addition, certain of the Company's senior housing properties are managed by operators under a RIDEA (REIT Investment Diversification and Empowerment Act) structure, which ~~effectively~~ allows the Company to gain financial exposure to underlying operations of the facility in a tax efficient manner versus receiving contractual rent under a net lease arrangement.

•

~~Industrial—~~The Company's industrial segment is composed of primarily light industrial assets throughout the U.S. Light industrial properties serve as the “last mile” of the logistics chain, which are vital for e-commerce and tenants that require increasingly quick delivery times. In addition, in February 2019, the Company entered into the bulk industrial market as bulk assets remain integral to highly functional distribution networks. Driven by significant appreciation in the value of the Company's industrial portfolio, in June 2019, the Company engaged advisors to market its industrial portfolio for sale, which may include the related management platform. As the planned sale represents a strategic shift that will have a major effect on the Company’s operations and financial

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~~results, the operating results of the industrial business are presented as discontinued operations on the consolidated statements of operations (Note 15).~~


•	Hospitality—The Company's hospitality ~~portfolio~~segment is composed of primarily extended stay and select service hotels located mainly in major metropolitan and high-demand suburban markets in the U.S., with the majority affiliated with top hotel brands such as Marriott and Hilton.

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•

CLNC—This ~~represents the Company's investment~~segment is composed of our 36% interest in ~~Colony Credit, a~~CLNC, an externally managed commercial real estate credit ~~REIT with~~REIT. CLNC is focused on originating, acquiring, financing and managing a ~~diverse~~diversified commercial real estate portfolio, consisting primarily of ~~CRE~~ senior mortgageloans, mezzanine loans, preferred equity, debt securities and net ~~lease~~leased properties ~~primarily~~predominantly in the ~~U.S.~~United States.

•

Other Equity and Debt—~~The Company's other equity and debt~~This segment ~~consists~~is composed of a diversified group of ~~strategic and non-strategic~~non-digital real estate and real estate-related debt and equity ~~investments. Strategic~~ investments, ~~include~~including investments for which the Company acts as a general partner and/or manager (“("GP ~~Co-Investments”~~co-investments") and receives various forms of investment management economics on related third-party ~~capital. Non-strategic~~capital on such investments, ~~are composed of those investments the Company does not intend to own for the long term including~~ other real estate equity and debt investments and other real estate ~~debt, and net leased assets,~~related securities, among other holdings. Over time, the Company expects to monetize the bulk of its existing portfolio as it completes its digital evolution.

•

Other Investment Management—~~The Company's~~This segment, which is separate from the digital investment management business ~~raises, invests~~that resides in the digital segment, encompasses the Company’s management of private real estate credit funds and ~~manages funds on behalf of~~related co-investment vehicles, CLNC, a ~~diverse set of institutional~~public non-traded healthcare REIT and ~~individual investors, for which the~~interests in other investment management platforms, among other smaller investment funds. The Company earns management fees, generally based on the amount of assets or capital managed, and contractual incentive fees or potential carried interest based on the performance of the investment vehicles managed subject to the achievement of minimum return hurdles.The potential sale of the industrial segment includes the Company's general partner interest in the industrial investment vehicles and related management contracts, reported under the investment management segment.

Amounts not allocated to specific segments generally include corporate level cash and corresponding interest income, fixed assets for administrative use, corporate level financing and related interest expense, income and expense related to cost reimbursement arrangements with certain affiliates, costs in connection with unconsummated investments, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs as well as corporate level 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 results of operations of the Company's digital reportable segment is derived from its equity method investments in the DCP fund and its manager beginning in 2018, the DBH investment management business beginning in July 2019 and the DataBank data center business beginning in December 2019.

Beginning in 2020, the industrial segment no longer constitutes a reportable segment. In December 2019, the Company completed the sale of the light industrial portfolio and its related management platform, which represented the vast majority of the industrial segment. The Company continues to own the bulk industrial assets which remain held for sale. Current and prior period results of the industrial segment and the industrial investment management business which resides in the other investment management segment are presented as discontinued operations on the consolidated statements of operations (Note 16).

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The following table presents selected results of operations of the Company's reportable segments.

Results of operations of (i) the industrial segment which includes direct compensation and administrative expenses of the industrial business, and (ii) associated fee income, equity method earnings from our general partner interest in the industrial open-end fund, including carried interest, and compensation related to carried interest sharing, which are reported under the investment management segment, are presented as discontinued operations for all current and prior periods presented (Note 15).



(In thousands)	Digital			Healthcare			Hospitality			CLNC			Other Equity and Debt			Other Investment Management			Amounts Not Allocated to Segments			Total

Three Months Ended March 31, 2020
Total revenues	$	64,506		$	139,182		$	153,526		$	—		$	121,119		$	24,299		$	4,881		$	507,513
Property operating expenses	16,906			66,567			120,995			—			59,165			—			—			263,633
Interest expense	9,402			39,866			39,789			—			20,588			—			13,768			123,413
Depreciation and amortization	36,633			37,460			36,444			—			22,220			2,591			1,510			136,858
Impairment loss	—			48,532			250,162			—			9,574			79,000			—			387,268
Gain on sale of real estate	—			—			—			—			7,932			—			—			7,932
Equity method earnings (losses)	468			—			—			(10,069		)	17,701			107,602			—			115,702
Equity method earnings—carried interest	—			—			—			—			—			(18,411		)	—			(18,411		)
Income tax benefit (expense)	5,337			130			1,879			—			(1,343		)	(14,482		)	155			(8,324		)
Income (loss) from continuing operations	(19,220		)	(64,145		)	(295,757		)	(10,069		)	29,977			18,130			(63,447		)	(404,531		)
Net income (loss) attributable to Colony Capital, Inc. from continuing operations	(3,758		)	(48,012		)	(241,232		)	(9,075		)	(1,452		)	16,359			(55,263		)	(342,433		)
Net income attributable to Colony Capital, Inc. from discontinued operations																						274
Net income (loss) attributable to Colony Capital, Inc.																						$	(342,159	)

Three Months Ended March 31, 2019
Total revenues	$	—		$	145,774		$	196,615		$	—		$	162,688		$	40,005		$	2,977		$	548,059
Property operating expenses	—			64,302			136,345			—			70,095			—			—			270,742
Interest expense	—			47,527			42,065			—			31,853			—			13,444			134,889
Depreciation and amortization	—			40,131			36,248			—			24,783			8,669			1,521			111,352
Provision for loan losses	—			—			—			—			3,611			—			—			3,611
Impairment loss	—			—			3,850			—			21,772			—			—			25,622
Gain on sale of real estate	—			—			139			—			29,314			—			—			29,453
Equity method earnings	3,276			—			—			5,513			24,573			701			—			34,063
Equity method earnings—carried interest	—			—			—			—			—			4,896			—			4,896
Income tax benefit (expense)	—			1,874			(836		)	—			(2,074		)	94			(256		)	(1,198		)
Income (loss) from continuing operations	3,016			(7,206		)	(26,077		)	5,513			59,528			17,657			(108,879		)	(56,448		)
Net income (loss) attributable to Colony Capital, Inc. from continuing operations	2,833			(7,462		)	(22,981		)	5,178			23,889			15,737			(100,609		)	(83,415		)
Net income attributable to Colony Capital, Inc. from discontinued operations																						8,439
Net income (loss) attributable to Colony Capital, Inc.																						$	(74,976	)

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(In thousands) Healthcare Industrial Hospitality CLNC Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total

Three Months Ended June 30, 2019
Total revenues $ 145,896
$ —
$ 227,080
$ —
$ 152,066
$ 43,802
$ 4,595
$ 573,439
Property operating expenses 63,924
—
144,691
—
70,625
—
—
279,240
Interest expense 57,135
—
41,591
—
29,216
—
13,796
141,738
Depreciation and amortization 40,778
—
37,008
—
23,166
6,918
1,512
109,382
Provision for loan loss —
—
—
—
15,003
—
—
15,003
Impairment loss 51,324
—
420
—
32,302
—
649
84,695
Gain on sale of real estate —
—
140
—
5,937
—
—
6,077
Equity method earnings (losses) —
—
—
(267,912 ) 25,757
(17,133 ) —
(259,288 )
Equity method earnings—carried interest —
—
—
—
—
1,836
—
1,836
Income tax benefit (expense) (596 ) —
(2,006 ) —
(406 ) 266
157
(2,585 )
Income (loss) from continuing operations (81,520 ) —
(3,505 ) (267,912 ) (4 ) 1,850
(133,051 ) (484,142 )
Income (loss) from discontinued operations —
(2,663 ) —
—
—
2,159
—
(504 )
Net income (loss) (81,520 ) (2,663 ) (3,505 ) (267,912 ) (4 ) 4,009
(133,051 ) (484,646 )
Net income (loss) attributable to Colony Capital, Inc. (58,616 ) (3,135 ) (3,330 ) (251,792 ) (5,841 ) 4,351
(123,389 ) (441,752 )

Three Months Ended June 30, 2018
Total revenues $ 145,419
$ —
$ 229,373
$ —
$ 190,950
$ 47,909
$ 1,837
$ 615,488
Property operating expenses 69,983
—
143,321
—
86,887
—
—
300,191
Interest expense 45,179
—
36,494
—
46,476
—
14,304
142,453
Depreciation and amortization 38,229
—
35,925
—
23,521
6,204
1,535
105,414
Provision for loan loss —
—
—
—
13,933
—
—
13,933
Impairment loss 1,982
—
—
—
7,366
60,312
—
69,660
Gain on sale of real estate —
—
—
—
42,702
—
—
42,702
Equity method earnings (losses) —
—
—
5,413
7,767
(13,955 ) —
(775 )
Income tax benefit (expense) (355 ) —
(1,556 ) —
(262 ) 2,791
(87 ) 531
Income (loss) from continuing operations (20,080 ) —
6,771
5,413
61,853
(53,075 ) (51,554 ) (50,672 )
Income (loss) from discontinued operations —
4,668
—
—
(219 ) 3,315
—
7,764
Net income (loss) (20,080 ) 4,668
6,771
5,413
61,634
(49,760 ) (51,554 ) (42,908 )
Net income (loss) attributable to Colony Capital, Inc. (14,356 ) 810
5,767
5,104
31,333
(47,070 ) (47,001 ) (65,413 )

Six Months Ended June 30, 2019
Total revenues $ 291,670
$ —
$ 423,695
$ —
$ 314,754
$ 83,807
$ 7,572
$ 1,121,498
Property operating expenses 128,226
—
281,036
—
140,720
—
—
549,982
Interest expense 104,662
—
83,656
—
61,069
—
27,240
276,627
Depreciation and amortization 80,909
—
73,256
—
47,949
15,587
3,033
220,734
Provision for loan losses —
—
—
—
18,614
—
—
18,614
Impairment loss 51,324
—
4,270
—
54,074
—
649
110,317
Gain on sale of real estate —
—
279
—
35,251
—
—
35,530
Equity method earnings (losses) —
—
—
(262,399 ) 50,365
(13,191 ) —
(225,225 )
Equity method earnings—carried interest —
—
—
—
—
6,732
—
6,732
Income tax benefit (expense) 1,278
—
(2,842 ) —
(2,480 ) 360
(99 ) (3,783 )
Income (loss) from continuing operations (88,726 ) —
(29,582 ) (262,399 ) 59,559
22,488
(241,930 ) (540,590 )
Income from discontinued operations —
21,491
—
—
—
4,298
—
25,789
Net income (loss) (88,726 ) 21,491
(29,582 ) (262,399 ) 59,559
26,786
(241,930 ) (514,801 )
Net income (loss) attributable to Colony Capital, Inc. (66,078 ) 3,293
(26,311 ) (246,614 ) 18,081
24,899
(223,998 ) (516,728 )

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(In thousands) Healthcare Industrial Hospitality CLNC Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total

Six Months Ended June 30, 2018
Total revenues $ 298,014
$ —
$ 425,155
$ —
$ 396,104
$ 89,116
$ 3,696
$ 1,212,085
Property operating expenses 136,949
—
279,416
—
168,785
—
—
585,150
Interest expense 96,120
—
70,855
—
86,756
—
27,421
281,152
Depreciation and amortization 79,356
—
71,382
—
52,490
13,880
3,066
220,174
Provision for loan losses —
—
—
—
19,308
—
—
19,308
Impairment loss 5,762
—
—
—
16,555
200,741
—
223,058
Gain on sale of real estate —
—
—
—
58,853
—
—
58,853
Equity method earnings (losses) —
—
—
1,759
34,984
(7,436 ) —
29,307
Income tax benefit (expense) (1,353 ) —
(75 ) —
(4,801 ) 39,576
(23 ) 33,324
Income (loss) from continuing operations (32,614 ) —
(5,115 ) 1,759
130,284
(141,214 ) (40,024 ) (86,924 )
Income (loss) from discontinued operations —
10,989
—
—
(102 ) 5,971
—
16,858
Net income (loss) (32,614 ) 10,989
(5,115 ) 1,759
130,182
(135,243 ) (40,024 ) (70,066 )
Net income (loss) attributable to Colony Capital, Inc. (24,716 ) 2,088
(4,283 ) 1,658
80,442
(127,590 ) (34,339 ) (106,740 )

Total assets and equity method investments excluding investments held for sale (Note 8) of the reportable segments are summarized as follows:

(In thousands) Healthcare Industrial Hospitality CLNC Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total
June 30, 2019
Total assets $ 5,309,607
$ 4,385,617
$ 3,960,218
$ 743,015
$ 6,039,486
$ 1,964,655
$ 255,940
$ 22,658,538
Equity method investments ⁽¹⁾
—
—
—
743,015
1,122,053
175,875
3,742
2,044,685
December 31, 2018
Total assets $ 5,395,550
$ 3,185,906
$ 3,980,988
$ 1,037,754
$ 6,371,999
$ 1,983,911
$ 259,141
$ 22,215,249
Equity method investments ⁽¹⁾
—
—
—
1,037,754
1,054,295
180,882
3,742
2,276,673



	March 31, 2020				December 31, 2019
(In thousands)	Total Assets		Equity Method Investments		Total Assets		Equity Method Investments
Digital	$	2,319,640	$	116,906	$	2,160,402	$	47,891
Healthcare	4,758,363		—		4,886,374		—
Hospitality	3,501,146		—		3,789,098		—
CLNC	666,059		666,059		725,443		725,443
Other Equity and Debt	5,518,288		1,071,775		5,749,455		1,070,462
Other Investment Management	792,465		27,842		1,085,234		139,977
Amounts not allocated to segments	1,163,767		3,742		977,505		3,742
Assets held for sale related to discontinued operations	440,334		—		458,673		—
	$	19,160,062	$	1,886,324	$	19,832,184	$	1,987,515

~~_________~~


⁽¹⁾	~~Excludes the Company's general partner equity, including carried interest allocation, in connection with its open-end industrial fund that is classified as held for sale (Note 7).~~

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 June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2019		2018		2019		2018		2020		2019
Total income by geography:
United States	$	221,425	$	535,407	$	712,340	$	1,076,818	$	557,070	$	490,915
Europe	81,245		69,212		167,503		147,385		44,371		86,258
Other	1,978		—		1,978		302		877		—
Total ⁽¹⁾	$	304,648	$	604,619	$	881,821	$	1,224,505	$	602,318	$	577,173

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(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Long-lived assets by geography:
United States	$	9,327,317	$	9,566,982	$	9,599,554	$	9,956,282
Europe	1,411,534		1,600,623		1,410,674		1,508,347
Total ⁽²⁾	$	10,738,851	$	11,167,605	$	11,010,228	$	11,464,629

__________


⁽¹⁾	Total income includes equity method earnings (loss), and excludes cost reimbursement income from affiliates and income from discontinued operations. All income from discontinued operations are sourced in the United States.

⁽²⁾

Long-lived assets comprise real estate held for investment, real estate related intangible assets, operating lease ~~ROU asset~~right-of-use assets and fixed assets, and exclude financial instruments, assets held for sale and investment management related intangible assets. Long-lived assets that are held for sale ~~as of June 30,~~at March 31, 2020 and December 31, 2019 ~~include $4.6 billion~~included $463 million and $522 million located in the United States, respectively, and ~~$0.5 billion~~$266 million and $283 million located in ~~Europe.~~Europe, respectively.

~~22.~~23. Supplemental Disclosure of Cash Flow Information

Six Months Ended June 30,
(In thousands) 2019 2018
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized of $1,588 and $1,864 $ 263,096
$ 258,626
Cash received for income tax refunds (paid for income taxes), net 14,960
(9,217 )
Cash paid for operating lease liabilities 7,652
—
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by operating activities of discontinued operations $ 95,142
$ 75,831
Net cash used in investing activities of discontinued operations (1,315,308 ) (444,626 )
Net cash provided by financing activities of discontinued operations 1,165,015
297,226
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Dividends and distributions payable $ 84,221
$ 86,656
Improvements in operating real estate in accrued and other liabilities 17,049
13,064
Redemption of OP Units for common stock 2,096
18,899
ROU assets and operating lease liabilities resulting from lease standard, net of related deferred receivables, intangibles and lease incentives derecognized upon adoption 129,488
—
Proceeds from loan repayments and asset sales held in escrow 1,392
—
Deconsolidation of net assets of securitization trusts (Note 15) —
131,386
Assets held for sale contributed to equity method investee —
20,350
Preferred stock redemptions payable —
200,000
Assets of CLNY Investment Entities deconsolidated, net of cash and restricted cash contributed —
1,753,066
Liabilities of CLNY Investment Entities deconsolidated —
421,245
Noncontrolling interests of CLNY Investment Entities deconsolidated —
395,274



	Three Months Ended March 31,
(In thousands)	2020			2019
Supplemental Disclosure of Cash Flow Information
Cash paid for interest, net of amounts capitalized of $214 and $1,046	$	112,278		$	127,948
Cash received for income tax refunds (paid for income taxes), net	(1,272		)	19,113
Cash paid for operating leases	7,096			3,438
Supplemental Disclosure of Cash Flows from Discontinued Operations
Net cash provided by (used in) operating activities of discontinued operations	$	(38,822	)	$	41,789
Net cash provided by (used in) investing activities of discontinued operations	4,534			(1,073,525		)
Net cash provided by (used in) financing activities of discontinued operations	(3,886		)	973,937

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	Three Months Ended March 31,
(In thousands)	2020		2019
Supplemental Disclosure of Cash Flows from Investing and Financing Activities
Dividends and distributions payable	$	77,228	$	83,996
Improvements in operating real estate in accrued and other liabilities	12,282		23,023
Proceeds from loan repayments and asset sales held in escrow	47,702		32,624
Right-of-use assets and operating lease liabilities	2,408		126,810
Contributions receivable from noncontrolling interests	—		113,200
Securities acquired, subject to forward contract deliverable, net of cash collateral	—		90,000
Distributions payable to noncontrolling interests included in other liabilities	—		3,756

~~23.~~24. Subsequent Events

In July 2019, the Company acquired DBH for $325 million, in a combination of cash and OP Units. Following the issuance of these OP Units, the Company's ownership in OP is approximately 90.3%. The Company isOther than as disclosed elsewhere, no subsequent events have occurred that would require recognition in the ~~process of analyzing~~consolidated financial statements or disclosure in the ~~fair value of assets acquired and liabilities assumed for purposes of allocating the purchase price.~~

accompanying notes.

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FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Quarterly Report on Form 10-Q (this "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 digital and communications technology, healthcare ~~hospitality~~ and ~~industrial~~hospitality real estate, other commercial real estate equity and debt, and investment management sectors;

the impact 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 strategic transition to become a digital real estate and infrastructure focused company within the timeframe contemplated or at all, and the impact of such transition on the Company's legacy portfolios and assets, including whether such transition will result in significant further impairments to certain of our investments, including healthcare and hospitality assets;

our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all, including our ability to obtain forbearances and/or debt modifications on our corporate credit facility and our non-recourse mortgage debt;

the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all;

the impact of completed or anticipated initiatives related to our strategic shift to the digital industry, including the ~~acquisition~~acquisitions of Digital Bridge Holdings, ~~the potential sale of our industrial platform, the acquisition of a Latin American private equity platform,~~LLC and an ownership interest in Data Bridge Holdings, LLC, and the formation of certain other investment management platforms, on our company's growth and earnings profile;

~~any decrease in our net income and funds from operations as a result of the Merger or otherwise, or our other acquisition activity;~~

our ability to integrate and maintain consistent standards and controls, ~~following the Merger,~~ including our ability to manage our acquisitions in the digital industry effectively (such as ~~Colony Latam Partners and~~ Digital Bridge ~~Holdings)~~Holdings, LLC and Data Bridge Holdings, LLC);

the impact to ~~realize the anticipated benefits~~our business operations and financial condition of ~~such acquisitions;~~

~~our ability to realize~~realized or anticipated compensation and administrative cost reductions in connection with ~~our~~ corporate ~~restructuring and reorganization plan;~~restructuring;

our ~~exposure~~ability to ~~risks to which we have not historically been exposed, including liabilities with respect to~~redeploy any proceeds received from the ~~assets acquired through the Merger and our other acquisitions;~~

~~whether we will complete a~~ sale of our ~~industrial business, and redeploy proceeds received from any such sale,~~non-digital or other legacy assets within the ~~time~~timeframe and manner ~~contemplated or at all;~~

~~whether the pending sale of NorthStar Realty Europe Corp. (NYSE:NRE), including the anticipated termination of our management agreement with NRE, will be completed within the time frame~~ contemplated or at all;

our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as Colony Credit Real Estate, Inc. (NYSE:CLNC)) to execute their business strategies;

CLNC's trading price and its impact on the carrying value of the Company's investment in CLNC, including whether the Company will recognize further other-than-temporary impairments on such CLNC investment;

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;

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;

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the impact of adverse conditions affecting a specific asset class in which we have investments;

the availability of 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 holding period for our assets and the impact of any changes in our expectations on the carrying value of such assets;

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the general volatility of the securities markets in which we participate;

~~our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all;~~

stability of the capital structure of our healthcare ~~portfolio;~~and hospitality portfolios;

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 the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors;

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;~~policies, including regulations permitting or requiring forbearance of rent obligations and inhibiting the ability to pursue evictions and obtain late fees from non-paying tenants;

our ability to maintain our qualification as a real estate investment trust for U.S. federal income tax purposes;

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, including Chief Executive Officer succession plans and availability of qualified personnel;

the 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;

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~~Part II, Item 1A. “Risk Factors” and 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 and other publicly filed documents for further discussion regarding such factors.

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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 accompanying notes thereto, which are included in Item 1 of this Quarterly Report, as well as information contained in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, which is accessible on the SEC's website at www.sec.gov.

Overview

We are a ~~leading~~ global investment ~~management~~ firm with ~~$55 billion in assets under management ("AUM"), which includes approximately $14 billion of AUM from our acquisition in July 2019 of Digital Bridge Holdings LLC (“DBH”),~~ a focus on becoming the leading ~~global investment manager of~~ digital infrastructure assets including cell towers, small cells, fiber and data centers. We manage capital on behalf of our stockholders, as well as institutional and retail investors in private funds, and traded and non-traded real estate ~~investment trusts ("REITs"). We have significant holdings in: (a)~~provider and funding source for the ~~healthcare, industrial~~occupancy, infrastructure, equity and ~~hospitality property sectors; (b) Colony Credit Real Estate, Inc. (NYSE: CLNC) and NorthStar Realty Europe, Corp. (NYSE: NRE), which are both externally managed by subsidiaries~~credit needs of the ~~Company;~~world’s mobile communications and ~~(c) various other equity and debt investments.~~data-driven companies. We are headquartered in Los Angeles, with key offices in Boca Raton, New York, Paris and London, and have over ~~450~~400 employees inacross 21 locations in 1312 countries.

We were organized on May 31, 2016 as a Maryland corporation, and ~~was~~were formed through a tri-party merger (the "Merger") among Colony Capital, Inc. ("Colony"), NorthStar Asset Management Group Inc. ("NSAM") and NorthStar Realty Finance Corp. ("NRF") ~~in an all-stock exchange on January 10, 2017.~~ .

We elected to be taxed as a ~~REIT~~real estate investment trust ("REIT") for U.S. federal income tax purposes commencing with ~~our~~its initial taxable year ended 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. 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 Company. At ~~June 30, 2019~~March 31, 2020, we owned ~~94.0%~~90% of the Operating Company, as its sole managing member.

Our Business

Our vision is to establish the Company as a leading owner, operator and investment manager of ~~assets, businesses,~~digital infrastructure and ~~investment management products in which~~real estate. We are currently the only global 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.

To execute this vision, the Company combined with Digital Bridge Holdings, LLC (“DBH”) in July 2019. DBH is an investment manager dedicated to digital real estate and infrastructure, managing approximately $14 billion of assets under management (“AUM”) and approximately $7 billion of fee earning equity under management (“FEEUM”) across six separately capitalized and managed portfolio companies and the $4 billion Digital Colony Partners fund (“DCP”). As part of the DBH transaction, Marc C. Ganzi, who co-founded DBH, is slated to become the Chief Executive Officer ("CEO") of the Company effective July 1, 2020 and will lead the Company’s strategic repositioning in becoming the leading platform for digital infrastructure and real ~~estate frontiers intersect. We believe our deep understanding~~estate. Thomas J. Barrack, Jr., the Company's Executive Chairman and CEO, will continue in his position as Executive Chairman. Further, the combination with DBH brings its world-class team of investment professionals and management of the DBH portfolio of high performing assets under the combined Digital Colony franchise.

At March 31, 2020, the Company has approximately $50 billion of assets under management, of which $38 billion is capital managed on behalf of third-party investors and the remainder represents investment interests on the Company's own balance sheet managed on behalf of its stockholders. With respect to investment interests, the Company owns (a) a 20% controlling interest in Data Bridge Holdings, LLC and its wholly-owned subsidiary, DataBank Holdings, Ltd. (collectively, "DataBank"), a leading provider of enterprise-class data center, cloud, and connectivity services, (b) a 71% interest in a portfolio of 357 healthcare properties, (c) a 94% interest in a portfolio of 157 hospitality properties, (d) a 36.5% interest in Colony Credit Real Estate, Inc. (NYSE: CLNC), and (e) interests in various other equity and debt investments, including general partner (“GP”) interests in funds sponsored by the Company, commercial real estate equity and debt investments and other real estate related securities. The Company also owns and operates an investment management business with $18.5 billion of FEEUM, including $8 billion in digital ~~infrastructure provides us a significant advantage~~real estate investments and the remainder in ~~identifying relative~~traditional commercial real estate debt and equity investments. The Company continues to operate its non-digital business units to maximize cash flows and value throughout economic cycles. Through our prudent sector or subsector capital allocation and operational capabilities, we aim to generate outsized total returns on our balance sheet and third-party capital. Specifically, our preference is to invest our balance sheet capital alongside third party capital to create alignment and generate returns for our shareholders in two ways. First, through the return on investment through our balance sheet capital. Second, through base management fees paid by third party capital and potential carried interest, which provides us with a greater participation of profits after a minimum return is achieved. Over time, our goal is to manage third party capital alongside the majority of our balance sheet capital at a higher ratio than what is currently in place.over time.

~~Currently, we conduct our business through the following~~The Company's six ~~segments:~~reportable segments are as follows:


•	Digital Real Estate and Investment Management ("Digital")—The Company's digital segment is composed of balance sheet equity interests in digital infrastructure and real estate; and digital infrastructure and real estate investment management business. For digital investments on our balance sheet, these assets earn rental income

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from providing use of space and/or capacity in or on our digital assets through long-term leases, services and other agreements. In the digital investment management business, we earn management fees, generally based on the amount of assets or capital managed in investment vehicles, and have the potential to earn carried interest based on the performance of such investment vehicles subject to the achievement of minimum return hurdles.

•

Healthcare—~~Our~~The Company's healthcare segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals. ~~We earn~~The Company earns rental income from ~~our~~ senior housing, skilled nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant. In addition, certain of ~~our~~the Company's senior housing properties are managed by operators under a RIDEA (REIT Investment Diversification and Empowerment Act) structure, which ~~effectively~~ allows usthe Company to gain financial exposure to ~~the~~ underlying operations of the facility in a tax efficient manner versus receiving contractual rent under a net lease arrangement.

•

~~Industrial—~~Our industrial segment is composed of primarily light industrial assets throughout the U.S. The light industrial properties serve as the “last mile” of the logistics chain, which are vital for e-commerce and tenants that require increasingly quick delivery times. In addition, in February 2019, the Company entered into the bulk industrial market as bulk assets remain integral to highly functional distribution networks. Driven by significant appreciation in the value of our industrial portfolio, in June 2019, we engaged advisors to market our industrial portfolio for sale, which may include the related management platform. As the planned sale represents a strategic

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shift that will have a major effect on the Company’s operations and financial results, the operating results of the industrial business are presented as discontinued operations on the consolidated statements of operations.


•	Hospitality—~~Our~~The Company's hospitality ~~portfolio~~segment is composed of primarily extended stay and select service hotels located mainly in major metropolitan and high-demand suburban markets in the U.S., with the majority affiliated with top hotel brands such as Marriott and Hilton.

•

CLNC—This ~~represents~~segment is composed of our ~~investment~~36% interest in ~~Colony Credit (as described below), a~~CLNC, an externally managed commercial real estate credit ~~REIT with~~REIT. CLNC is focused on originating, acquiring, financing and managing a ~~diverse~~diversified commercial real estate portfolio, consisting primarily of ~~commercial real estate ("CRE")~~ senior mortgageloans, mezzanine loans, preferred equity, debt securities and net ~~lease~~leased properties ~~primarily~~predominantly in the ~~U.S.~~United States.

•

Other Equity and Debt—~~Our other equity and debt~~This segment ~~consists~~is composed of a diversified group of ~~strategic and non-strategic~~non-digital real estate and real estate-related debt and equity ~~investments. Strategic~~ investments, ~~include~~including investments for which the Company acts as a general partner and/or manager (“("GP ~~Co-Investments”~~co-investments") and receives various forms of investment management economics on related third-party ~~capital. Non-strategic~~capital on such investments, ~~are composed of those investments the Company does not intend to own for the long term including~~ other real estate equity and debt investments and other real estate ~~debt, and net leased assets,~~related securities, among other holdings. Over time, the Company expects to monetize the bulk of its existing portfolio as it completes its digital evolution.

•

Other Investment Management—~~Our~~This segment, which is separate from the digital investment management business ~~raises, invests~~that resides in the digital segment, encompasses the Company’s management of private real estate credit funds and ~~manages funds on behalf of~~related co-investment vehicles, CLNC, a ~~diverse set of institutional~~public non-traded healthcare REIT and ~~individual investors, for which we earn~~interests in other investment management platforms, among other smaller investment funds. The Company earns management fees, generally based on the amount of assets or capital managed, and contractual incentive fees or potential carried interest based on the performance of the investment vehicles managed subject to the achievement of minimum return hurdles.The potential sale of the industrial segment includes our general partner interest in the industrial investment vehicles and related management contracts, reported under the investment management segment.

~~Colony Credit~~Effects of COVID-19

We own an approximate 36.4% interest, on a fully diluted basis, in Colony Credit Real Estate, Inc. ("Colony Credit," formerly Colony NorthStar Credit Real Estate, Inc. prior to June 25, 2018). Colony Credit was formed on January 31, 2018 through a contributionAt the time of preparation of the ~~CLNY Contributed Portfolio (as described below), represented~~first quarter 2020 financial statements, the world is facing a global pandemic, the coronavirus disease 2019, or COVID-19. Efforts to address the pandemic, such as social distancing, closures or reduced capacity of retail and service outlets, hotels, factories and public venues, often mandated by governments, are having a significant impact on the global economy and financial markets across major industries, including many sectors of real estate. While the Company is transitioning to a digitally-focused strategy that the Company believes is more resilient and better positioned for growth in an increasingly digital reliant economy, currently a significant portion of the Company's assets and revenues continue to be tied to its non-digital real estate business and investments. In particular, the Company's real estate investments in the hospitality, healthcare and retail sectors either have experienced or anticipate a myriad of challenges, including, but not limited to: significant declines in operating cash flows at the Company's hotel and healthcare properties which in turn affect their ability to meet debt service and covenant requirements on investment-level debt (non-recourse to the Company) and ability to refinance or extend upcoming maturities (see Note 10); flexible lease payment terms sought by tenants in our ~~ownership interests ranging from 38% to 100% in certain investment entities ("CLNY Investment Entities"),~~healthcare and retail properties; potential payment defaults on the Company's loans receivable; and a ~~concurrent all-stock merger with~~ ~~NorthStar Real Estate Income Trust, Inc. (“NorthStar I”) and NorthStar Real Estate~~ Income II, Inc. (“NorthStar II”), both publicly registered non-traded REITs sponsored and managed by our subsidiary (the "Combination"). The CLNY Contributed Portfolio comprised our interests in certain commercialdistressed market affecting real estate ~~loans, net lease~~values in general. The COVID-19 crisis may also lead to heightened risk of litigation at the investment and corporate level, with an ensuing increase in litigation and related costs. As the timing of many of the closures and ensuing economic turmoil did not occur until late in the first quarter of 2020, the effects of COVID-19 on the Company's business, other than hotel properties, were not material and ~~limited partnership interests~~adverse in ~~third party sponsored funds, which represented a select portfolio~~the first quarter of ~~U.S. investments within our other~~2020. However, the Company anticipates more pronounced and material effects on the Company's financial condition and results of operations in future periods, beginning with the second quarter of 2020.

The sharp decline and volatility in equity and debt ~~segment that were transferable assets consistent with Colony Credit's strategy. Upon closing~~markets, and the challenges faced by the Company as a result of the ~~Combination, our management contracts with NorthStar I and NorthStar II were terminated; concurrently, we entered into a new management agreement with Colony Credit.~~

~~Corporate Restructuring~~

Following a strategic review process, in November 2018, we announced a corporate restructuring and reorganization plan aimed at reducing our annual compensation and administrative expenses over approximately the next 12 months. The restructuring plan wasdesigned to match resources that further align our increasing focus on our investment management business by, among other things, reducing our workforce globally by 10% to 20%, primarily in connection with the exit of non-core assets and business lines, together with general cost reductions.

Weeconomic fallout from COVID-19 have ~~now achieved approximately two-thirds of our expected $50 to $55 million ($45 to $50 million on a cash basis)~~affected valuation of the ~~previously announced annual compensation~~Company's financial assets carried at fair value, and ~~administrative cost savings~~also represent indicators of potential impairment on ~~a run rate basis.~~

~~Corporate Governance Enhancements~~

~~In February 2019, we announced~~certain non-financial assets at the ~~implementation of a series of changes designed to enhance our corporate governance, and entered into a cooperation agreement with Blackwells Capital LLC, a stockholder~~end of the ~~Company. In connection with the cooperation agreement, our board~~first quarter of directors appointed three new independent directors to the board. In addition, in accordance with the cooperation agreement, our board of directors formed a Strategic Asset Review Committee composed solely of independent directors to review, evaluate and make recommendations to the board on issues relating to our assets and business configuration.

~~Strategic Asset Review Update~~

As part of a comprehensive review undertaken by management, together with the Strategic Asset Review Committee and an independent advisor, which was unanimously supported by our board of directors, we have undertaken certain strategic initiatives intended to build on core investment management competencies while focusing on high-growth2020. The

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~~businesses. A key component~~Company's consideration and assessment of fair value and impairment are discussed further in the consolidated financial statements in Note 4 on real estate, Note 6 on equity and debt investments, and Note 7 on goodwill.

If a general economic downturn resulting from efforts to contain COVID-19 persists, it could have a prolonged material and negative impact on the Company's financial condition and results of operations. At this ~~strategic evolution was our recent acquisition of DBH, which also addresses our Chief Executive Officer succession plans. These previously announced and/or completed initiatives also include~~time, as the ~~anticipated termination of our management agreement with NRE in connection with the pending sale of NRE, a corporate restructuring~~extent and ~~reorganization plan that is on track with its cost savings objectives, the stabilization~~duration of the ~~capital structure~~increasingly broad effects of COVID-19 on the global economy remain unclear, it is difficult for the Company to assess and estimate the impact on the Company's results of operations with any meaningful precision. Accordingly, any estimates of the ~~healthcare portfolio,~~effects of COVID-19 as reflected and/or discussed in these financial statements are based upon the ~~acquisition~~Company's best estimates using information known to the Company at this time, and such estimates may change in the near term, the effects of ~~a high growth Latin American private equity platform, and~~which could be material.

Proactive Steps to Mitigate the ~~formation~~Effects of ~~investment management platforms addressing innovative energy investments and a data-driven REIT public securities platform.~~COVID-19

In ~~connection with~~response to the ~~acquisition of DBH, we entered into an employment agreement with Marc C. Ganzi, co-founder and Chief Executive Officer of DBH, which provides that Mr. Ganzi serve as Managing Director of~~disruption from COVID-19, the Company and ~~Chief Executive Officer~~the board of directors have undertaken a series of proactive steps to mitigate the impact on its assets and business operations, with a principal focus on enhancing the Company’s liquidity and financial flexibility.


•	Corporate Revolver Draw—The Company drew $600 million from its revolving credit facility as a precaution to ensure funds are available to meet its operational needs.


•	Corporate General and Administrative Savings—The Company has identified and began executing a new cost reduction program with over $40 million in annual run-rate cost savings, mostly from headcount and compensation-related cost reductions, which are expected to be implemented during the course of 2020.

•

Suspension of Common Dividend—The Company is suspending the dividend on its class A common stock for the second quarter of 2020 as the board of directors and management believe it is prudent to conserve cash during the current period of uncertainty. If maintained for the balance of the year, the reduction in dividend payments will result in savings of approximately $175 million relative to the prior $0.11 per share quarterly dividend. As the Company continues its pivot to digital infrastructure, the board of directors will evaluate go-forward dividend policy in alignment with an increased emphasis on a ‘total return’ approach, which focuses more on capital appreciation relative to current yield as components of total shareholder return. Based upon the Company’s reforecast, the reduction in dividend is not anticipated to adversely impact the 2020 REIT dividend distribution requirement.


•	Deferred Consideration of Preferred Dividend—The Company's board of directors has elected to defer the declaration of a dividend on its preferred stock until June 30, 2020, subject to its assessment of the effects of COVID-19.


•	Hospitality Operations and Capital Structure—The Company has engaged a third party advisor to evaluate strategic and financial alternatives to maximize the value of its hospitality assets.

Efforts to mitigate the effects of COVID-19 on the Company's healthcare and hospitality business are discussed further in “—Segment Results” below.

Cooperation Agreement with Blackwells Capital

In March 2020, the Company entered into a cooperation agreement with Blackwells Capital LLC ("Blackwells"), a stockholder of the ~~Company's digital realty platform. Upon~~Company. Pursuant to the ~~later~~cooperation agreement, the Company nominated Jeannie Diefenderfer for election to its board of ~~such time as~~directors (the "Board") at the ~~termination~~2020 Annual Meeting of Stockholders (the “Annual Meeting”) on May 5, 2020, at which Ms. Diefenderfer was elected to the Board. In addition to withdrawing its previously submitted director nominees for election at the Annual Meeting, Blackwells agreed to vote its and its affiliates shares of the ~~investment period~~Company’s stock in accordance with the Board’s voting recommendations on all proposals (including in favor of ~~Digital Colony Partners ("Digital Colony," a fund co-sponsored by us and DBH)~~the Board’s director nominees), ~~and December 31, 2020, Mr. Ganzi will serve as the Company's Chief Executive Officer, succeeding Thomas J. Barrack, Jr., who will return~~subject to certain limited exceptions, prior to the ~~position of Executive Chairman~~third anniversary of the ~~Company.~~agreement. Furthermore, Blackwells agreed to a standstill with respect to the Company until the expiration of the cooperation agreement in March 2030.

~~Additionally, we have engaged advisors~~Contemporaneously, the Company and Blackwells entered into a joint venture arrangement for the purpose of acquiring, holding and disposing of CLNY common stock. Distributions to ~~market~~be made through the ~~Company's multi-billion dollar industrial portfolio for sale, which may include~~joint venture arrangement effectively represent a settlement of the ~~related management platform. There has been significant appreciation in~~proxy contest with Blackwells. At the inception of the arrangement, the fair value of the industrial portfolio driven by favorable operating fundamentals and strong investor demand for light industrial assets. As a result, a sale of the industrial portfolio may yield a price higher than the value that may be ascribed by the marketfuture distributions to the industrial portfolio as part of the Company's overall valuation. We are seeking to complete a sale by the end of 2019, however, no assurances can be made that a sale can be completed within the time frame contemplated, orBlackwells was estimated at all. If a sale is completed, we may redeploy a portion of the proceeds into higher total return strategies (e.g., digital infrastructure, emerging markets and energy) and may further consider the reduction of corporate leverage. The planned sale of the industrial segment, including its related management platform, represents a strategic shift that will have a major effect on the Company’s operations and financial results, and has met the criteria as held for sale and discontinued operations. Accordingly, for all current and prior periods presented, the related assets and$3.9 million, included in other liabilities ~~are presented as assets and liabilities held for sale~~ on the consolidated balance ~~sheets (see Note 7 to the consolidated financial statements)~~sheet, and ~~the related operating results are presented~~ as ~~income from discontinued operations~~a settlement loss on the consolidated statement of operations, ~~(see~~along with $1.2 million reimbursement of legal costs to Blackwells in the first quarter of 2020. Refer to Note ~~15 to~~12 of the consolidated financial ~~statements).~~statements for further description of the settlement liability.

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Developments in ~~2019~~2020

During the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and through ~~August 6, 2019,~~May 5, 2020, significant developments affecting our business and results of operations included the ~~following:~~following, in addition to the effects of COVID-19 as discussed throughout this Quarterly Report.

~~Acquisitions,~~ Dispositions ~~and Fundraising~~

In April 2019, acquired the private equity platform of the Abraaj Group in Latin America, which has been renamed Colony Latam Partners and manages approximately $574 million of AUM, for $5.5 million, consisting primarily of management contracts and customer relationship intangible assets and limited partnership interest in a fund. Colony Latam Partners will continue to be headed by its existing senior management team.

In June 2019, classified our industrial segment and the related management platform as held for sale and discontinued operations. In the first six months of 2019, the industrial segment acquired 85 buildings and three parcels of land for $1.4 billion, financed through $840 million of new debt, with its existing $400 million revolver replaced with a $600 million revolver. In terms of fundraising, additional $141.7 million of capital was raised in our open-end light industrial fund, bringing total third party capital raised to date in our light industrial platform to $1.66 billion. Additionally, raised $70.0 million of capital in our bulk industrial joint venture formed in February ~~2019.~~

In July 2019, NRE entered into an agreement to be acquired, with an expected closing of the acquisition in the fourth quarter of 2019, for an estimated price of $17.03 per share based on three month forward foreign exchange rates. This will result in2020, completed the sale of our ~~11% interest~~equity investment in ~~NRE~~RXR Realty, LLC for proceeds, net of tax, of $179 million.

In April 2020, recapitalized an investment in the other equity and ~~termination~~debt segment which generated $72.7 million of ~~our NRE management agreement which will result~~proceeds and resulted in a ~~termination payment by NRE of $70 million, inclusive of incentive fees paid and due to us through termination.~~

In July 2019, acquired DBH for $325 million, in a combination of cash and OP units, as part of our strategic evolution to become the leading platform for digital infrastructure and real estate. This acquisition follows the May 2019 final closing of Digital Colony.

In July 2019, formed a strategic joint venture with California Resources Corporation (NYSE: CRC) through our energy investment management arm, Colony HB2 Energy, for which we have committed to fund $320 million for

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~~the development of CRC’s flagship Elk Hills field; a substantial portion of this investment is expected to be syndicated to third-party investors.~~

In July 2019, held the first closing of our fifth global real estate credit fund (second as a public company), with total capital commitments of approximately $428 million (inclusive of our capital commitment of $121 million, which may be reduced to no less than 5% of total commitments from future third party commitments).

~~Financing and Capital Transactions~~

~~Repurchased 652,311 shares of our class A common stock for $3.2 million under our May 2018 stock repurchase program, which has been extended for an additional one-year term.~~


•	~~In April 2019, amended certain terms of our Credit Agreement, including a reduction of aggregate revolving commitments from $1.0 billion to~~ ~~$750 million~~ ~~and modification of a financial covenant and borrowing base formula.~~

Refinanced $1.935 billion of debt principal in our healthcare segment that was scheduled to mature in 2019 and extended their maturities to 2024 (including extension options). Our completed refinancings included $1.725 billion of mortgage debt, which was paid in full with proceeds from a new $1.515 billion secured debt, and $250 million of new equity contribution, of which $174 million was funded by us and remainder by our equity partners in the healthcare portfolio.

~~Refinanced $115.5 million of debt principal in our hospitality portfolio, extending its maturity to 2024 (including extension options).~~gain.

Other

Recorded anthe following impairment ~~charge~~charges:

$308 million on real estate and related asset group, primarily hotel and healthcare properties to reflect shortened holding periods on the assets and potential effects of ~~$227.9~~COVID-19 on future property operating cash flows; and

$79 million ~~to write down our 36.4% interest~~on goodwill in ~~Colony Credit to~~ the ~~closing price of Colony Credit's common stock at June 28, 2019, as part of equity method loss.~~other investment management segment, driven primarily by a decrease in estimated exit value on the CLNC management contract.

Results of Operations

The following table summarizes our results offrom continuing operations by reportable segment.

~~Results of operations of (i)~~Beginning in 2020, the industrial segment no longer constitutes a reportable segment. In December 2019, the Company completed the sale of the light industrial portfolio and its related management platform, which ~~includes direct compensation and administrative expenses~~represented the vast majority of the industrial segment. The Company continues to own the bulk industrial assets which remain held for sale. Current and prior period results of the industrial segment and the industrial investment management business ~~and (ii) associated fee income, equity method earnings from our general partner interest~~which resides in the ~~industrial open-end fund, including carried interest, and compensation related to carried interest sharing, which are reported under the~~other investment management segment are presented as discontinued operations ~~for all current and prior periods presented (see Note 15 to~~on the consolidated ~~financial statements)~~statements of operations (Note 16). Net income attributable to Colony Capital, Inc. from discontinued operations totaled $0.3 million and $8.4 million for the three months ended March 31, 2020 and 2019, respectively.


(in thousands)	Total Revenues				Net Income (Loss)						Net Income (Loss) Attributable to Colony Capital, Inc.
Three Months Ended June 30,	2019		2018		2019			2018			2019			2018
(In thousands)																	Total Revenues				Income (Loss) from Continuing Operations						Net Income (Loss) Attributable to Colony Capital, Inc. from Continuing Operations
Three Months Ended March 31,																	2020		2019		2020			2019			2020			2019
Digital																	$	64,506	$	—	$	(19,220	)	$	3,016		$	(3,758	)	$	2,833
Healthcare	$	145,896	$	145,419	$	(81,520	)	$	(20,080	)	$	(58,616	)	$	(14,356	)	139,182		145,774		(64,145		)	(7,206		)	(48,012		)	(7,462		)
Industrial	—		—		(2,663		)	4,668			(3,135		)	810
Hospitality	227,080		229,373		(3,505		)	6,771			(3,330		)	5,767			153,526		196,615		(295,757		)	(26,077		)	(241,232		)	(22,981		)
CLNC	—		—		(267,912		)	5,413			(251,792		)	5,104			—		—		(10,069		)	5,513			(9,075		)	5,178
Other Equity and Debt	152,066		190,950		(4		)	61,634			(5,841		)	31,333			121,119		162,688		29,977			59,528			(1,452		)	23,889
Investment Management	43,802		47,909		4,009			(49,760		)	4,351			(47,070		)
Other Investment Management																	24,299		40,005		18,130			17,657			16,359			15,737
Amounts not allocated to segments	4,595		1,837		(133,051		)	(51,554		)	(123,389		)	(47,001		)	4,881		2,977		(63,447		)	(108,879		)	(55,263		)	(100,609		)
	$	573,439	$	615,488	$	(484,646	)	$	(42,908	)	$	(441,752	)	$	(65,413	)	$	507,513	$	548,059	$	(404,531	)	$	(56,448	)	$	(342,433	)	$	(83,415	)
Six Months Ended June 30,
Healthcare	$	291,670	$	298,014	$	(88,726	)	$	(32,614	)	$	(66,078	)	$	(24,716	)
Industrial	—		—		21,491			10,989			3,293			2,088
Hospitality	423,695		425,155		(29,582		)	(5,115		)	(26,311		)	(4,283		)
CLNC	—		—		(262,399		)	1,759			(246,614		)	1,658
Other Equity and Debt	314,754		396,104		59,559			130,182			18,081			80,442
Investment Management	83,807		89,116		26,786			(135,243		)	24,899			(127,590		)
Amounts not allocated to segments	7,572		3,696		(241,930		)	(40,024		)	(223,998		)	(34,339		)
	$	1,121,498	$	1,212,085	$	(514,801	)	$	(70,066	)	$	(516,728	)	$	(106,740	)

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Selected Balance Sheet Data

The following table summarizes key balance sheet data by reportable segment, excluding assets and ~~the industrial business that is~~related liabilities held for sale.

~~All assets and liabilities of the industrial business are classified as held for sale for all current and periods presented (see Note 7 to the consolidated financial statements).~~



	Real Estate, net				Loans Receivable				Equity and Debt Investments				Debt, net
(In thousands)	March 31, 2020		December 31, 2019		March 31, 2020⁽¹⁾		December 31, 2019		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Digital	$	848,728	$	846,393	$	—	$	—	$	200,778	$	47,891	$	515,831	$	539,155
Healthcare	4,324,926		4,433,825		47,590		48,270		—		—		2,885,680		2,910,032
Hospitality	3,294,954		3,544,264		—		—		—		—		2,631,382		2,623,306
CLNC	—		—		—		—		666,059		725,443		—		—
Other Equity and Debt	1,989,449		2,036,036		1,540,837		1,518,058		1,279,540		1,396,752		1,969,639		2,061,101
Other Investment Management	—		—		—		—		27,842		139,977		—		—
Amounts not allocated to segments	—		—		—		—		3,742		3,742		1,450,806		850,314
Total	$	10,458,057	$	10,860,518	$	1,588,427	$	1,566,328	$	2,177,961	$	2,313,805	$	9,453,338	$	8,983,908

_________

(In thousands) Healthcare Hospitality CLNC Other Equity and Debt Investment Management Amounts Not Allocated to Segments Total Industrial Held For Sale
June 30, 2019
Real estate, net $ 4,757,528
$ 3,645,079
$ —
$ 1,945,823
$ —
$ —
$ 10,348,430
$ 4,115,436
Loans receivable, net 49,763
—
—
1,437,848
—
—
1,487,611
—
Equity and debt investments —
—
743,015
1,451,058
175,875
3,742
2,373,690
12,748
Debt, net 2,979,931
2,619,849
—
2,205,593
—
934,294
8,739,667
2,004,201
December 31, 2018
Real estate, net $ 4,995,298
$ 3,668,824
$ —
$ 2,161,888
$ —
$ —
$ 10,826,010
$ 2,793,004
Loans receivable, net 48,330
—
—
1,597,214
13,673
—
1,659,217
—
Equity and debt investments —
—
1,037,754
1,307,369
180,882
3,742
2,529,747
13,422
Debt, net 3,213,992
2,603,599
—
2,309,347
—
848,434
8,975,372
1,064,585


⁽¹⁾	Carried at fair value upon adoption of fair value option on January 1, 2020.

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Consolidated Results of Operations

Comparison of Three Months Ended ~~June 30, 2019~~March 31, 2020 to Three Months Ended ~~June 30, 2018~~March 31, 2019


	Three Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2019			2018			Change			2020			2019			Change
Revenues
Property operating income	$	488,788		$	518,953		$	(30,165	)	$	425,416		$	458,898		$	(33,482	)
Interest income	35,055			44,121			(9,066		)	32,868			46,070			(13,202		)
Fee income	35,433			38,290			(2,857		)	43,505			31,028			12,477
Other income	14,163			14,124			39			5,724			12,063			(6,339		)
Total revenues	573,439			615,488			(42,049		)	507,513			548,059			(40,546		)
Expenses
Property operating expense	279,240			300,191			(20,951		)	263,633			270,742			(7,109		)
Interest expense	141,738			142,453			(715		)	123,413			134,889			(11,476		)
Investment and servicing expense	20,017			25,891			(5,874		)	12,178			18,449			(6,271		)
Transaction costs	318			2,641			(2,323		)	421			2,504			(2,083		)
Placement fees	—			1,170			(1,170		)
Depreciation and amortization	109,382			105,414			3,968			136,858			111,352			25,506
Provision for loan loss	15,003			13,933			1,070			—			3,611			(3,611		)
Impairment loss	84,695			69,660			15,035			387,268			25,622			361,646
Compensation expense
Cash and equity-based compensation	42,430			52,527			(10,097		)
Carried interest and incentive compensation	1,146			—			1,146
Compensation expense—cash and equity-based										53,034			31,517			21,517
Compensation expense—carried interest and incentive fee										(9,181		)	1,272			(10,453		)
Administrative expenses	20,146			23,536			(3,390		)	32,758			22,694			10,064
Settlement loss										5,090			—			5,090
Total expenses	714,115			737,416			(23,301		)	1,005,472			622,652			382,820
Other income
Other income (loss)
Gain on sale of real estate	6,077			42,702			(36,625		)	7,932			29,453			(21,521		)
Other gain (loss), net	(89,506		)	28,798			(28,798		)
Equity method losses	(259,288		)	(775		)	(258,513		)
Equity method earnings—carried interest	1,836			—			1,836
Income (loss) before income taxes	(481,557		)	(51,203		)	(430,354		)
Income tax benefit (expense)	(2,585		)	531			(3,116		)
Income (loss) from continuing operations	(484,142		)	(50,672		)	(433,470		)
Other loss, net										(3,471		)	(49,069		)	45,598
Equity method earnings										115,702			34,063			81,639
Equity method earnings (losses)—carried interest										(18,411		)	4,896			(23,307		)
Loss before income taxes										(396,207		)	(55,250		)	(340,957		)
Income tax expense										(8,324		)	(1,198		)	(7,126		)
Loss from continuing operations										(404,531		)	(56,448		)	(348,083		)
Income from discontinued operations	(504		)	7,764			(8,268		)	474			26,293			(25,819		)
Net income (loss)	(484,646		)	(42,908		)	(441,738		)
Net loss										(404,057		)	(30,155		)	(373,902		)
Net income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests	509			1,873			(1,364		)	(548		)	1,444			(1,992		)
Investment entities	(13,414		)	26,360			(39,774		)	(21,749		)	49,988			(71,737		)
Operating Company	(29,989		)	(5,728		)	(24,261		)	(39,601		)	(6,611		)	(32,990		)
Net income (loss) attributable to Colony Capital, Inc.	(441,752		)	(65,413		)	(376,339		)
Preferred stock redemption	—			(3,995		)	3,995
Net loss attributable to Colony Capital, Inc.										(342,159		)	(74,976		)	(267,183		)
Preferred stock dividends	27,138			31,388			(4,250		)	19,474			27,137			(7,663		)
Net income (loss) attributable to common stockholders	$	(468,890	)	$	(92,806	)	(376,084		)
Net loss attributable to common stockholders										$	(361,633	)	$	(102,113	)	(259,520		)

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Property Operating Income and Property Operating Expenses


	Three Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2019		2018		Change			2020		2019		Change
Property operating income:
Digital								$	45,149	$	—	$	45,149
Healthcare	$	144,863	$	143,839	$	1,024		138,249		144,690		(6,441		)
Hospitality	227,016		229,259		(2,243		)	153,496		196,555		(43,059		)
Other Equity and Debt	116,909		145,855		(28,946		)	88,522		117,653		(29,131		)
	$	488,788	$	518,953	(30,165		)	$	425,416	$	458,898	(33,482		)
Property operating expenses:
Digital								$	16,906	$	—	$	16,906
Healthcare	$	63,924	$	69,983	$	(6,059	)	66,567		64,302		2,265
Hospitality	144,691		143,321		1,370			120,995		136,345		(15,350		)
Other Equity and Debt	70,625		86,887		(16,262		)	59,165		70,095		(10,930		)
	$	279,240	$	300,191	(20,951		)	$	263,633	$	270,742	(7,109		)

Digital—Amounts represent income and related operating expenses from our DataBank subsidiary that was acquired in December 2019, primarily in connection with colocation rent and data center services.

Healthcare—Property operating income ~~increased $1.0~~decreased $6.4 million, ~~and~~driven by sales of net lease properties in 2019. On a same store basis, however, property operating ~~expense decreased $6.1 million comparing~~income was largely consistent in the ~~three months ended June 30,~~periods under comparison. There was an increase in resident fee income in our senior housing operating portfolio from higher rents beginning the third quarter of 2019 ~~and 2018, which can be attributed~~although occupancy had declined, but such increase in income did not fully absorb the corresponding increase in resident service costs, primarily labor costs, due to increased competition. The higher resident fee income was also largely offset by lower ~~rent concessions provided in 2019~~rental income from net leased hospitals and ~~higher bad debt expense in 2018 related to our~~ skilled nursing ~~facilities.~~

~~Property income and property expense~~facilities that were ~~also affected by the adoption of the new lease accounting standard as (i) the threshold for recognizing lease income is subject~~previously assessed to higher probability of collection criteria under the new lease standard and bad debt is recorded as a direct reduction of revenue; and (ii) property taxes and insurance paid directly to third parties by tenants or operators are no longerbe uncollectible with contractual rents recognized on a ~~gross~~cash basis ~~in income~~beginning the second and ~~expense in~~third quarters of 2019.

Property operating expenses increased $2.3 million or $2.7 million on a same store basis, primarily due to higher resident service costs, as noted above.

Hospitality—Property operating income and expense decreased ~~$2.2~~$43.1 million ~~comparing the three months ended June 30, 2019~~ and ~~2018, which can be attributed to the sale~~$15.4 million, respectively, driven by sales of ~~three~~ten select service hotels in 2019. On a same store basis, property operating income and expense decreased $34.6 million and $8.1 million, respectively. The decrease in income reflects the ~~second quarter~~impact of ~~2019, weaker corporate~~COVID-19 with significant declines in room demand as average occupancy fell 16% to 59% and ~~new supply in certain markets. Property operating expenses increased $1.4 million in the three months ended June 30, 2019~~revenue per available room or RevPAR fell 18% compared to the same period last year. The corresponding decrease in ~~2018. Higher labor costs and property taxes contributed to this increase.~~expenses, however, was less pronounced as operating margins declined, coupled with additional benefits accrued for furloughed employees in March 2020.

Other Equity and Debt—Property operating income and expenses decreased ~~$28.9~~$29.1 million and ~~$16.3~~$10.9 million, respectively, ~~for the three months ended June 30, 2019 compared to the same period in 2018. The decreases were~~ driven by ~~continuing~~ sales of our ~~non-core properties, primarily~~multi-tenant offices, limited service hotels in our THL Hotel Portfolio and other properties in our European portfolio, as well as the impact of COVID-19 in March 2020 on the operating results of our THL Hotel Portfolio and ~~contribution of real estate to Colony Credit on January 31, 2018. These decreases were partially offset by property operating income and expenses from~~ a ~~portfolio of office and industrial buildings~~hotel in ~~France that was acquired in November 2018.~~Spain.

Interest Income

Interest income decreased ~~$9.1~~$13.2 million, ~~for the three months ended June 30, 2019 compared to the same period in 2018. The decrease can be~~ attributed to ~~continuing repayments,~~loan payoffs and sales ~~of our loan and securities portfolio, and sale and deconsolidation of our securitization trusts~~ in ~~the second quarter of 2018. These decreases more than~~2019, partially offset ~~new loan originations and~~by additional loan fundings ~~subsequent to the second quarter of 2018.~~in 2019.

Fee Income

Fee income is earned from the following sources:

Three Months Ended June 30,
(In thousands) 2019 2018 Change
Institutional funds $ 13,033
$ 15,537
$ (2,504 )
Public companies (Colony Credit, NRE) 15,038
16,219
(1,181 )
Non-traded REITs 4,989
6,244
(1,255 )
Other 2,373
290
2,083
$ 35,433
$ 38,290
(2,857 )

~~Fee income decreased $2.9 million during the three months ended June 30, 2019 compared to the same period in 2018, resulting from:~~

net decrease of $2.5 million in fees from institutional funds, attributable to approximately $3.4 million of non-recurring subscription fee in the second quarter of 2018, excluding which, fees were approximately $0.9 million



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Institutional funds and other investment vehicles	$	30,476	$	10,638	$	19,838
Public companies (CLNC, NRE prior to its sale in September 2019)	8,058		15,106		(7,048		)
Non-traded REITs	4,431		5,106		(675		)
Other	540		178		362
	$	43,505	$	31,028	12,477

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~~higher as~~Fee income increased $12.5 million resulting from:

net increase of $19.8 million in fees from ~~the new~~institutional funds and investment vehicles, driven by $20.6 million of fees from DBH (50% of fees from DCP was recognized as equity method income prior to acquisition of DBH) and Colony Latam, ~~funds~~which were acquired in July 2019 and ~~additional capital raises more than~~April 2019, respectively, partially offset by decreases ~~due to~~in fees from liquidating funds;

partially offset by:

$~~0.8~~3.2 million decrease in fees from Colony Credit due to a lower stockholders' equity fee basis;

~~approximately $0.4~~$3.9 million of ~~lower~~ fees from ~~NRE following the~~NorthStar Realty Europe ("NRE") in 2019 prior to its sale ~~of a significant real estate asset~~ in ~~the fourth quarter of 2018 which reduced NRE's net asset value ("NAV") fee basis;~~September 2019; and

~~approximately $1.0~~$0.6 million decrease in ~~fee income~~fees from NorthStar Healthcare Income, Inc. ("NorthStar Healthcare") following a decrease in its NAV fee basis effective December ~~2018; partially offset by~~

~~$2.1 million increase in other fees related to asset management and advisory services earned in the second quarter of~~ 2019.

Other Income

Other income was ~~largely consistent comparing~~$6.3 million lower, attributed primarily to reversal of other income in connection with CLNC equity awards that were remeasured at fair value based upon CLNC's stock price at period end, and other income recognized in 2019 in relation to NRE equity awards, with such amounts correspondingly recognized in equity-based compensation, as a gross-up of income and expense (refer to Note 19 to the ~~three months ended June 30, 2019 and 2018. In~~consolidated financial statements for a description of the ~~second quarter~~accounting treatment of ~~2019, there was higher cost reimbursement income related to investment due diligence activities and from our joint venture which manages our digital infrastructure vehicle, and dividend~~managed company awards). These decreases were partially offset by hotel management fee income from our ~~interest~~acquisition of a distressed hotel manager in ~~a mutual fund beginning~~France in 2019. However, these were mostly offset by a decrease in collateral management fees from N-Star CDO bonds, which are investment-grade subordinate bonds retained by NRF from its sponsored collateralizedJuly 2019 within our other equity and debt obligations ("CDOs"), lower amounts grossed up in other income and equity-based compensation expense related to equity awards granted by Colony Credit and NRE to the Company and certain of its employees, insurance recoveries in 2018 for business interruptions due to hurricanes that affected a portfolio of limited service hotels which we assumed control through a consensual foreclosure in 2017 ("THL Hotel Portfolio"), and lower recovery income from our loan portfolios which continue to resolve over time.segment.

Interest Expense


	Three Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2019		2018		Change			2020		2019		Change
Investment-level financing:
Digital								$	9,402	$	—	$	9,402
Healthcare	$	57,135	$	45,179	$	11,956		39,866		47,527		(7,661		)
Hospitality	41,591		36,494		5,097			39,789		42,065		(2,276		)
Other Equity and Debt	29,216		46,476		(17,260		)	20,588		31,853		(11,265		)
Corporate-level debt	13,796		14,304		(508		)	13,768		13,444		324
	$	141,738	$	142,453	(715		)	$	123,413	$	134,889	(11,476		)

~~There was a marginal net~~Net decrease in interest expense of ~~$0.7~~$11.5 million ~~during the three months ended June 30, 2019 compared~~is attributable to the ~~same period~~following:

Digital—Amount represents interest expense on debt assumed from our DataBank subsidiary acquired in ~~2018, attributed to the following:~~December 2019.

Healthcare—Interest expense was ~~approximately $12.0~~$7.7 million ~~higher, driven by the effects of the $1.7 billion~~lower as a result of: (i) interest expense recognized in prior year from debt discount that was subsequently written off in connection with a refinancing in June ~~2019, primarily a $7.5 million write-off~~2019; (ii) effect of ~~existing debt discount, and to a lesser extent, the impact of higher~~decrease in LIBOR ~~in 2019~~ on ~~overall healthcare~~predominantly variable rate debt on healthcare properties; and (iii) debt repayment upon sale of non-core properties in 2019. These decreases were partially offset by amortization of deferred financing costs on the June 2019 refinanced debt.

Hospitality—Interest expense ~~increased $5.1~~decreased $2.3 million, ~~resulting from the impact of higher~~driven by a decline in LIBOR on predominantly variable rate debt ~~additional debt obtained in connection with a refinancing, and~~on our hotel portfolio, largely offset by higher ~~amortization~~interest expense recognized from acceleration of deferred financing ~~costs as a result of the refinancing.~~costs.

Other Equity and Debt—Interest expense decreased ~~$17.3~~$11.3 million ~~driven by~~due to debt payoffs, primarily from ~~continued sales~~sale of properties in the THL Hotel Portfolio and ~~resolutions~~multi-tenant offices, and resolution of our non-core investments, and $5.3 million decrease in interest expense from the sale and deconsolidation of our securitization trusts in the second quarter of 2018. These decreases were partially offset by interest expense from new debt acquired to finance the acquisition of a portfolio of office and industrial buildings in France in November 2018.

~~Corporate-level Debt—~~Interest expense decreased as there was a lower average outstanding balance on our corporate credit facility in 2019, partially offset by the effect of higher LIBOR on our junior subordinated debt and higher unused fees on our corporate credit facility.European loans.

Investment and Servicing Expense

~~There was a $5.9 million net decrease in investment~~Investment and servicing costs ~~for~~were $6.3 million lower as the ~~three months ended June 30, 2019 compared to the same period in 2018. The decrease was driven by lower write-offs~~prior year included write-off of receivables ~~related~~from our managed investment company, higher unconsummated deal costs and higher expenses at our THL Hotel Portfolio. The higher costs in the prior year more than offset incremental cost of labor and supplies in our healthcare properties in response to ~~certain retail companies, lower management fees following~~COVID-19 and higher expenses in our European portfolio in the ~~termination~~first quarter of ~~a third party healthcare operator in October 2018, higher~~2020.

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cumulative franchise tax on our hotel portfolio in the prior year, and other decreases in investment related costs, all of which were partially offset by refinancing costs on our healthcare debt in the second quarter of 2019.

~~Transaction Costs~~

~~Higher transaction costs of $2.6 million was incurred in the prior year in connection with an investment in Spain.~~

~~Placement Fees~~

No placement fees were incurred in the three months ended June 30, 2019, while $1.2 million was incurred in the three months ended June 30, 2018 related primarily to fundraising for our co-investment vehicle in AccorInvest, a multinational European hospitality group.

Depreciation and Amortization

~~The net increase of $4.0 million in~~Higher depreciation and amortization ~~for the three months ended June 30, 2019 compared~~expense is attributed to ~~the same period in 2018 can be attributed mainly to: (i) acquisition of a portfolio of office~~real estate and ~~industrial buildings in France in November 2018, (ii) capital expenditures primarily on our hotel properties, and (iii) accelerated amortization of the NRE management contract beginning~~intangible assets acquired from DataBank in December ~~2018 based on an expected sale of NRE. These increases were largely~~2019 and DBH in July 2019, partially offset by non-core properties sold or transferred to held for sale, ~~and a decrease~~termination of NRE management contract in ~~amortization of the NorthStar trade name upon write-off in June 2019.~~

~~Provision for Loan Losses~~

Three Months Ended June 30,
(In thousands) 2019 2018 Change
Non-PCI loans $ 12,807
$ 5,072
$ 7,735
PCI loans 2,196
8,861
(6,665 )
Total provision for loan losses $ 15,003
$ 13,933
1,070

Provision for loan losses in the three months ended June 30, 2019 related to write-downs to collateral value or prices based upon potential offers received on certain loans. In the three months ended June 30, 2018, provision for loan loss was driven by sales of PCI loans and losses on certain securitized loans prior to the sale of our interest in the securitization trust that resulted in a deconsolidation of the trust in June 2018.

~~Of the total provision for loan losses, $4.2 million and $6.6 million in the three months ended June 30,~~September 2019 and ~~2018, respectively, were attributed to noncontrolling interests~~write-down of NorthStar Healthcare management contract in ~~investment entities.~~December 2019.

Impairment Loss


	Three Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2019		2018		Change			2020		2019		Change
Healthcare	$	51,324	$	1,982	$	49,342		$	48,532	$	—	$	48,532
Hospitality	420		—		420			250,162		3,850		246,312
Other Equity and Debt	32,302		7,366		24,936			9,574		21,772		(12,198		)
Investment Management	—		60,312		(60,312		)
Unallocated	649		—		649
Other Investment Management								79,000		—		79,000
	$	84,695	$	69,660	15,035			$	387,268	$	25,622	361,646

Impairment loss attributable to noncontrolling interests in investment entities								$	40,134	$	14,151

Impairment loss on real estate and goodwill are discussed further in Notes 4 and 7, respectively, to the consolidated financial statements.

Healthcare—Impairment totaling $48.5 million was recorded on a portfolio of senior housing operating facilities and net leased skilled nursing facilities, based upon potential shortfalls in future operating cash flows, taking into consideration the ~~three months ended June 30, 2019~~likelihood of a lease renewal or tenant replacement and the impact of COVID-19, which would heighten the risk of default on the respective non-recourse mortgage debt. A debt default would likely cause a shortened holding period on these properties such that their carrying values may not be recoverable, thereby resulting in a write-down in values.

Hospitality—The impairment loss of $250.2 million arose from a shortened holding period on certain hotel assets, which resulted in a shortfall in future operating cash flows such that the carrying value of these assets would not be recoverable. Prior year impairment of $3.9 million was based upon a negotiated purchase option exercised by a tenant on three hospitals and preliminary offers received on certain net lease properties. In the three months ended June 30, 2018, additional impairment was recordedrevised exit prices on properties ~~with hurricane-related damage from 2017.~~

~~Hospitality—Minimal additional impairment loss was recognized in the three months ended June 30, 2019 based on final net proceeds from a hotel~~held for sale.

Other Equity and Debt—Impairment ~~was $24.9~~decreased $12.2 million, attributed primarily to higher ~~at $32.3 million~~write-downs in 2019 on properties held for sale in Italy.

Other Investment Management—Goodwill in the ~~second quarter of 2019 compared to the second quarter of 2018. The increase~~other investment management segment was written down by $79.0 million, driven primarily by ~~impairments based upon revised expected sales prices~~a reduction in ~~the current market, primarily on a real estate portfolio in the United Kingdom due to uncertainties of Brexit, and additional write-downs upon real estate sales.~~

~~Table of Contents~~

~~Investment Management—Impairment in the three months ended June 30, 2018 was related predominantly to the write-off~~estimated exit value of the ~~NorthStar trade name in connection with our name change to Colony Capital, Inc. in June 2018~~CLNC management contract.

~~Unallocated—Impairment was recorded on an office operating lease asset in the second quarter of 2019.~~

Of the $84.7 million and $69.7 million of total impairment for the three months ended June 30, 2019 and 2018, $37.2 million and $5.6 million was attributable to noncontrolling interests in investment entities, respectively.

Compensation Expense

The table below provides the components of compensation expense:


	Three Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2019		2018		Change			2020			2019		Change
Cash compensation and benefits	$	31,294	$	39,611	$	(8,317	)	$	48,212		$	22,792	$	25,420
Carried interest compensation	1,146		—		1,146
Equity-based compensation	11,136		12,916		(1,780		)	8,249			5,914		2,335
Incentive and carried interest compensation								(9,181		)	1,272		(10,453		)
	$	43,576	$	52,527	(8,951		)	47,280			29,978		17,302
Compensation grossed up in income and expense
Equity-based compensation—CLNC and NRE (prior to September 2019) awards								(3,427		)	2,811		(6,238		)
Total compensation expense								$	43,853		$	32,789	11,064

~~Compensation~~Total compensation expense ~~decreased $9.0~~increased $11.1 million, ~~comparing the three months ended June 30,~~which can be attributed to additional compensation cost from our acquisitions of DBH and a distressed hotel manager in July 2019, and ~~2018, attributed to $5.5 million and $0.7 million of severance costs incurred~~DataBank in the second quarter of 2018 in connection with the Merger and contribution of our broker dealer business to a joint venture, respectively, $1.8 million decrease in equity based compensation due primarily to acceleration of awards in 2018, with remaining net decrease largely reflecting the impact of the corporate restructuring undertaken in November 2018 which was aimed at reducing the Company's global workforce.December 2019. These ~~decreases~~increases were partially offset by ~~$1.1 million~~a decrease in compensation cost following the sale of ~~compensation related to unrealized~~NRE in September 2019 and our industrial business in December 2019, and reversals in carried interest ~~recognized~~compensation and equity-based compensation on CLNC awards (refer to discussion in ~~the second quarter of 2019. Carried interest compensation is generally not paid to employees until the associated carried interest is distributed by the investment vehicles to the Company.~~Other Income).

~~Administrative Expense~~Fee Income

~~Administrative expense was $20.1 million in the three months ended June 30, 2019, a $3.4 million decrease~~Fee income is earned from the ~~same period in 2018, largely due to our ongoing cost reduction initiatives.~~

~~Gain on Sale of Real Estate~~following sources:

Three Months Ended June 30,
(In thousands) 2019 2018 Change
Hospitality $ 140
$ —
$ 140
Other Equity and Debt 5,937
42,702
(36,765 )
$ 6,077
$ 42,702
(36,625 )

~~Hospitality—We recorded a $0.1 million gain from the sale of a hotel property in Georgia in the three months ended June 30, 2019.~~

~~Other Equity and Debt—Gain on sale in both three months ended June 30, 2019 and 2018 relate primarily to our European properties, and additionally in the prior year period, the sale of a U.S. multi-tenant office.~~

~~Gain on sale of $3.8 million and $19.6 million in the three months ended June 30, 2019 and 2018, respectively, was attributed to noncontrolling interests in investment entities.~~

~~Equity Method Earnings (Losses)~~

Three Months Ended June 30,
(In thousands) 2019 2018 Change
Colony Credit $ (267,912 ) $ 5,413
$ (273,325 )
Other Equity and Debt 25,757
7,767
17,990
Investment Management (including $1,836 and $0 of carried interest, respectively) (15,297 ) (13,955 ) (1,342 )
$ (257,452 ) $ (775 ) (256,677 )

~~Colony Credit—In June 2019, we wrote down our investment in Colony Credit by $227.9 million~~given the prolonged period of time the carrying value of our investment in Colony Credit has exceeded its market value. The impairment was measured as the excess of carrying value over fair value of our investment based on Colony Credit's closing stock price



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Institutional funds and other investment vehicles	$	30,476	$	10,638	$	19,838
Public companies (CLNC, NRE prior to its sale in September 2019)	8,058		15,106		(7,048		)
Non-traded REITs	4,431		5,106		(675		)
Other	540		178		362
	$	43,505	$	31,028	12,477

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~~on June 28,~~Fee income increased $12.5 million resulting from:

net increase of $19.8 million in fees from institutional funds and investment vehicles, driven by $20.6 million of fees from DBH (50% of fees from DCP was recognized as equity method income prior to acquisition of DBH) and Colony Latam, which were acquired in July 2019 and April 2019, respectively, partially offset by decreases in fees from liquidating funds;

partially offset by:

$3.2 million decrease in fees from Colony Credit due to a lower stockholders' equity fee basis;

$3.9 million of fees from NorthStar Realty Europe ("NRE") in 2019 prior to its sale in September 2019; and

$0.6 million decrease in fees from NorthStar Healthcare Income, Inc. ("NorthStar Healthcare") following a decrease in its NAV fee basis effective December 2019.

Other Income

Other income was $6.3 million lower, attributed primarily to reversal of other income in connection with CLNC equity awards that were remeasured at fair value based upon CLNC's stock price at period end, and other income recognized in 2019 in relation to NRE equity awards, with such amounts correspondingly recognized in equity-based compensation, as a gross-up of income and expense (refer to Note 19 to the ~~last trading day~~consolidated financial statements for a description of the ~~second quarter. For~~accounting treatment of managed company awards). These decreases were partially offset by hotel management fee income from our acquisition of a distressed hotel manager in France in July 2019 within our other equity and debt segment.

Interest Expense



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Investment-level financing:
Digital	$	9,402	$	—	$	9,402
Healthcare	39,866		47,527		(7,661		)
Hospitality	39,789		42,065		(2,276		)
Other Equity and Debt	20,588		31,853		(11,265		)
Corporate-level debt	13,768		13,444		324
	$	123,413	$	134,889	(11,476		)

Net decrease in interest expense of $11.5 million is attributable to the ~~three months ended~~following:

Digital—Amount represents interest expense on debt assumed from our DataBank subsidiary acquired in December 2019.

Healthcare—Interest expense was $7.7 million lower as a result of: (i) interest expense recognized in prior year from debt discount that was subsequently written off in connection with a refinancing in June ~~30,~~2019; (ii) effect of decrease in LIBOR on predominantly variable rate debt on healthcare properties; and (iii) debt repayment upon sale of non-core properties in 2019. These decreases were partially offset by amortization of deferred financing costs on the June 2019 ~~we also recorded~~refinanced debt.

Hospitality—Interest expense decreased $2.3 million, driven by a decline in LIBOR on predominantly variable rate debt on our ~~share~~hotel portfolio, largely offset by higher interest expense recognized from acceleration of ~~net loss of $40.0 million~~in comparison to earnings of $5.4 million in the three months ended June 30, 2018. The net loss resulted from additional loan loss provision and real estate impairment recorded by Colony Credit in the second quarter of 2019.deferred financing costs.

Other Equity and Debt—~~Equity method earnings increased approximately $18.0~~Interest expense decreased $11.3 million ~~comparing the three months ended June 30, 2019 and 2018, resulting~~due to debt payoffs, primarily from ~~new ADC loan originations~~sale of properties in the THL Hotel Portfolio and ~~additional fundings, partially offset by repayments~~multi-tenant offices, and resolution of our ~~preferred equity investments~~European loans.

Investment and ~~sales of investments. Additionally,~~Servicing Expense

Investment and servicing costs were $6.3 million lower as the prior year ~~period~~ included ~~impairment charges based upon the selling price~~write-off of ~~an investment and losses~~receivables from our ~~interests in private equity funds, which have mostly been sold.~~

~~Investment Management—Equity method losses in both periods were driven by impairment charges, which were partially offset~~managed investment company, higher unconsummated deal costs and higher expenses at our THL Hotel Portfolio. The higher costs in the ~~three months ended June 30, 2019 by unrealized carried interest allocation from~~prior year more than offset incremental cost of labor and supplies in our ~~sponsored and/or co-sponsored investment vehicles,~~healthcare properties in response to COVID-19 and ~~management fees from~~higher expenses in our ~~joint venture which manages our digital infrastructure vehicle.~~

~~Other Gain (Loss), Net~~

~~We recognized a net loss of $89.5 million~~European portfolio in the ~~three months ended June 30, 2019 compared to a net gain of $28.8 million in the same period in 2018, resulting primarily from the following items:~~

$86.9 million loss in the three months ended June 30, 2019 compared to a $24.6 million gain in the same period 2018 on a non-designated out-of-money interest rate swap assumed through the Merger due to the flattening of the 10-year treasury forward curve. The swap was intended to hedge future refinancing risk on certain NRF mortgage debt;

~~$3.3 million of higher unrealized loss on investments held by a consolidated investment company; and~~

~~$10.9 million gain in 2018 from deconsolidation of N-Star CDOs;~~

~~The above items which had an unfavorable impact to the second~~first quarter of ~~2019 compared to 2018 were partially offset by:~~

~~$2.8 million lower remeasurement loss on a foreign currency denominated loan receivable; and~~

$8.7 million unrealized loss recorded upon final measurement in June 2018 of the contingent consideration liability in connection with Colony's management internalization in 2015, which was settled in August 2018 (refer to Note 11 of the consolidated financial statements).

~~Income Tax Benefit (Expense)~~

We recorded an income tax expense of $2.6 million compared to an income tax benefit of $0.5 million in the three months ended June 30, 2019 and 2018, respectively. In the second quarter of 2019, there were lower overall expense deductions as a result of our ongoing cost reduction initiatives and additionally, higher income tax expense related to our hospitality segment.2020.

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~~Income (Loss) from Discontinued Operations~~

Depreciation and Amortization

Three Months Ended June 30,
(In thousands) 2019 2018 Change
Revenues
Property operating income $ 91,741
$ 72,155
$ 19,586
Fee income 2,978
1,634
1,344
Interest and other income 1,228
792
436
Revenues from discontinued operations 95,947
74,581
21,366
Expenses
Property operating expense 25,669
21,054
4,615
Interest expense 19,726
10,856
8,870
Investment and servicing expense 8
178
(170 )
Depreciation and amortization 45,360
32,482
12,878
Impairment loss —
174
(174 )
Compensation expense—cash and equity-based 3,680
2,632
1,048
Compensation expense—carried interest 561
1,060
(499 )
Administrative expenses 1,386
1,084
302
Expenses from discontinued operations 96,390
69,520
26,870
Other income (loss)
Gain from sale of real estate 547
—
547
Other loss, net (49 ) —
(49 )
Equity method earnings (losses) (173 ) 2,650
(2,823 )
Income (loss) from discontinued operations before income taxes (118 ) 7,711
(7,829 )
Income tax benefit (expense) (386 ) 53
(439 )
Income (loss) from discontinued operations $ (504 ) $ 7,764
(8,268 )

All of discontinued operations for 2019 and most of discontinued operations for 2018 represent the results of operations of the industrial segment and the associated management platform, and include property operations, fee income, equity method earnings from the Company's general partner interest in the industrial open-end fund, and related compensation expense.

The second quarter of 2018 also includes loss from discontinued operations of $0.2 million related to certain properties in the THL Hotel Portfolio acquired in July 2017 that qualified as held for sale at the time of foreclosure. Such properties were fully disposed of in the second quarter of 2018.

The discontinued operations of our industrial business recorded a loss of $0.5 million in the three months ended June 30, 2019 and income of $7.8 million in the three months ended June 30, 2018, which can be attributed primarily to the following:

Property operating income and expense were $19.6 million and $4.6 million higher, respectively, resulting from continued growth in our industrial portfolio as acquisitions outpaced dispositions, including the acquisition of a $1.1 billion portfolio of 50 properties in February 2019. At June 30, 2019 and June 30, 2018, our industrial portfolio consisted of 452 and 392 buildings, respectively, with a net addition of 60 buildings and 12.4 million rentable square feet.

~~The positive impact to property operations was partially offset by a resulting increase in~~Higher depreciation and amortization expense ~~of $12.9 million.~~

~~Similarly, interest expense increased $8.9 million as we obtained $840 million of additional debt~~is attributed to ~~fund new acquisitions~~real estate and intangible assets acquired from DataBank in ~~the first six months of~~December 2019 along with additional drawdowns from our industrial revolver, which capacity was expanded from $400 million to $600 million. As a result, we also incurred higher deferred financing costs as well as higher unused fees on the revolver. These increases, however, wereand DBH in July 2019, partially offset by ~~higher capitalization~~non-core properties sold or transferred to held for sale, termination of ~~interest on development projects~~NRE management contract in September 2019 and write-down of NorthStar Healthcare management contract in December 2019.

Cash and equity-based compensation was also higher, driven by compensatory arrangements with employees of the industrial segment in order to retain their employment through completion of the sale of the industrial business.

In connection with managing third party capital in our sponsored open-end industrial fund, fee income, calculated based on net asset value of the fund, was $1.3 million higher as a result of additional capital raised and

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appreciation in value of our industrial properties. Carried interest, however, decreased as NAV appreciation was lower in 2019 compared to 2018. As a result, carried interest compensation decreased, partially offset by an adjustment to the employee sharing percentage approved by the compensation committee in 2019.

~~Preferred Stock Redemption~~

In the second quarter of 2018, $4.0 million was recorded to decrease net loss attributable to common stockholders, which amount represented the excess of carrying value over the redemption price of $25.00 per share of Series D preferred stock that was redeemed in full. This excess was due to the fact that the Series D preferred stock carrying value included a premium that was recognized when we assumed Series D preferred stock based upon its trading price at the closing of the Merger.

~~Comparison of Six Months Ended June 30, 2019 to Six Months Ended June 30, 2018~~Impairment Loss

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Revenues
Property operating income $ 947,686
$ 1,006,046
$ (58,360 )
Interest income 81,125
107,443
(26,318 )
Fee income 66,461
73,818
(7,357 )
Other income 26,226
24,778
1,448
Total revenues 1,121,498
1,212,085
(90,587 )
Expenses
Property operating expense 549,982
585,150
(35,168 )
Interest expense 276,627
281,152
(4,525 )
Investment and servicing expense 38,466
44,470
(6,004 )
Transaction costs 2,822
3,357
(535 )
Placement fees 309
1,293
(984 )
Depreciation and amortization 220,734
220,174
560
Provision for loan loss 18,614
19,308
(694 )
Impairment loss 110,317
223,058
(112,741 )
Compensation expense

Cash and equity-based compensation 73,947
99,616
(25,669 )
Carried interest and incentive fee compensation 2,418
—
2,418
Administrative expenses 42,531
46,969
(4,438 )
Total expenses 1,336,767
1,524,547
(187,780 )
Other income
     Gain on sale of real estate 35,530
58,853
(23,323 )
     Other gain (loss), net (138,575 ) 104,054
(242,629 )
Equity method earnings (losses) (225,225 ) 29,307
(254,532 )
Equity method earnings—carried interest 6,732
—
6,732
Loss before income taxes (536,807 ) (120,248 ) (416,559 )
     Income tax benefit (expense) (3,783 ) 33,324
(37,107 )
Loss from continuing operations (540,590 ) (86,924 ) (453,666 )
Income from discontinued operations 25,789
16,858
8,931
Net loss (514,801 ) (70,066 ) (444,735 )
Net income (loss) attributable to noncontrolling interests:
Redeemable noncontrolling interests 1,953
1,177
776
     Investment entities 36,574
45,603
(9,029 )
     Operating Company (36,600 ) (10,106 ) (26,494 )
Net loss attributable to Colony Capital, Inc. (516,728 ) (106,740 ) (409,988 )
Preferred stock redemption —
(3,995 ) 3,995
Preferred stock dividends 54,275
62,775
(8,500 )
Net loss attributable to common stockholders $ (571,003 ) $ (165,520 ) (405,483 )



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Healthcare	$	48,532	$	—	$	48,532
Hospitality	250,162		3,850		246,312
Other Equity and Debt	9,574		21,772		(12,198		)
Other Investment Management	79,000		—		79,000
	$	387,268	$	25,622	361,646

Impairment loss attributable to noncontrolling interests in investment entities	$	40,134	$	14,151

~~Table of Contents~~

~~Property Operating Income~~Impairment loss on real estate and ~~Property Operating Expenses~~

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Property operating income:
Healthcare $ 289,553
$ 294,976
$ (5,423 )
Hospitality 423,571
424,518
(947 )
Other Equity and Debt 234,562
286,552
(51,990 )
$ 947,686
$ 1,006,046
(58,360 )
Property operating expenses:
Healthcare $ 128,226
$ 136,949
$ (8,723 )
Hospitality 281,036
279,416
1,620
Other Equity and Debt 140,720
168,785
(28,065 )
$ 549,982
$ 585,150
(35,168 )
goodwill are discussed further in Notes 4 and 7, respectively, to the consolidated financial statements.

Healthcare—~~Property operating income and expenses decreased $5.4~~Impairment totaling $48.5 million ~~and $8.7 million, respectively, comparing the six months ended June 30, 2019 and 2018.~~

Property income and property expenses were affected by the adoption of the new lease accounting standard in 2019 as (i) the threshold for recognizing lease income is subject to higher probability of collection criteria under the new lease standard and bad debt is was recorded ~~as a direct reduction of revenue; and (ii) property taxes and insurance paid directly to third parties by tenants or operators are no longer recognized~~ on a ~~gross basis in income~~portfolio of senior housing operating facilities and ~~expense in 2019.~~

While resident fee income was higher in 2019, the recording of bad debt expense as a reduction to revenue contributed largely to the decrease in property operating income, along with a non-recurring termination fee received in 2018 from an early lease termination in our medical office building portfolio.

~~There was higher overall bad expense in 2018 related to our~~net leased skilled nursing facilities, ~~which caused property~~based upon potential shortfalls in future operating ~~expense in 2019 to decrease in comparison, in addition to lower property management fees in 2019 following~~cash flows, taking into consideration the ~~termination~~likelihood of a ~~third party management contract~~lease renewal or tenant replacement and the impact of COVID-19, which would heighten the risk of default on the respective non-recourse mortgage debt. A debt default would likely cause a shortened holding period on these properties such that their carrying values may not be recoverable, thereby resulting in ~~October 2018.~~a write-down in values.

Hospitality—~~Property~~The impairment loss of $250.2 million arose from a shortened holding period on certain hotel assets, which resulted in a shortfall in future operating ~~income decreased $0.9~~cash flows such that the carrying value of these assets would not be recoverable. Prior year impairment of $3.9 million comparing the six months ended June 30, 2019 and 2018, driven by the sale of three hotels, weaker corporate demand and new supply in certain markets. Property operating expense increased $1.6 million in the six months ended June 30, 2019 compared to the same period in 2018. Higher labor costs, property taxes, and ground lease expense contributed to this increase.was based upon revised exit prices on properties held for sale.

Other Equity and Debt—~~Property operating income~~Impairment decreased $12.2 million, attributed primarily to higher write-downs in 2019 on properties held for sale in Italy.

Other Investment Management—Goodwill in the other investment management segment was written down by $79.0 million, driven primarily by a reduction in estimated exit value of the CLNC management contract.

Compensation Expense

The table below provides the components of compensation expense:



	Three Months Ended March 31,
(In thousands)	2020			2019		Change
Cash compensation and benefits	$	48,212		$	22,792	$	25,420
Equity-based compensation	8,249			5,914		2,335
Incentive and carried interest compensation	(9,181		)	1,272		(10,453		)
	47,280			29,978		17,302
Compensation grossed up in income and expense
Equity-based compensation—CLNC and NRE (prior to September 2019) awards	(3,427		)	2,811		(6,238		)
Total compensation expense	$	43,853		$	32,789	11,064

Total compensation expense increased $11.1 million, which can be attributed to additional compensation cost from our acquisitions of DBH and ~~expenses decreased $52.0 million and $28.1 million, respectively, comparing the six months ended June 30,~~a distressed hotel manager in July 2019, and ~~2018. The decreases were driven by continued sales of our non-core properties, primarily~~DataBank in ~~our THL Hotel Portfolio and European portfolio, and contribution of real estate to Colony Credit on January 31, 2018.~~December 2019. These ~~decreases~~increases were partially offset by ~~property operating income and expenses from~~ a ~~portfolio of office and industrial buildings in France that was acquired in November 2018.~~

~~Interest Income~~

Interest income decreased $26.3 million for the six months ended June 30, 2019 compared to the same period in 2018. The decrease can be attributed to our contribution of $1.3 billion of loans to Colony Credit on January 31, 2018 which had generated $9.5 million of interest income in 2018 prior to contribution, $10.3 million decrease in compensation cost following the sale of NRE in September 2019 and our industrial business in December 2019, and reversals in carried interest ~~income from sale~~compensation and ~~deconsolidation of our securitization trusts~~equity-based compensation on CLNC awards (refer to discussion in the second quarter of 2018, and decreases due to continuing repayments, payoffs and sales of our loan and securities portfolio. These decreases more than offset new loan originations and additional loan fundings subsequent to the first quarter of 2018.Other Income).

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Fee Income

Fee income is earned from the following sources:

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Institutional funds $ 23,671
$ 27,364
$ (3,693 )
Public companies (Colony Credit, NRE) 30,144
28,391
1,753
Non-traded REITs 10,095
17,703
(7,608 )
Other 2,551
360
2,191
$ 66,461
$ 73,818
(7,357 )

~~Fee income decreased $7.4 million for the six months ended June 30, 2019 compared to the same period in 2018, resulting from:~~

net decrease of $3.7 million in fees from institutional funds, attributable to approximately $3.4 million of non-recurring subscription fee in the second quarter of 2018, excluding which, fees were $0.3 million lower higher due to continued liquidation of legacy funds which more than offset fees from the new Colony Latam funds and additional capital raises;

$3.0 million decrease in fee income from Colony Credit, which replaced fees from non-traded REITs, NorthStar I and NorthStar II beginning February 1, 2018 due to acquisition and disposition fees from NorthStar I and NorthStar II in 2018 prior to the closing of the Combination as such fees are excluded from the Colony Credit fee structure, and lower fee basis in the first half of 2019 based on Colony Credit's stockholders' equity;

~~approximately $0.7 million of lower fee income from NRE following the sale of a significant real estate asset in the fourth quarter of 2018 which reduced NRE's NAV fee basis; and~~

~~approximately $1.9 million decrease in fee income from NorthStar Healthcare following a decrease in its NAV fee basis effective December 2018; partially offset by~~


•	~~$2.2 million~~ ~~increase in other fees related to asset management and advisory services earned in the second quarter of 2019.~~

~~Other Income~~

Other income increased marginally by $1.4 million comparing the six months ended June 30, 2019 and 2018. In the first half of 2019, there were higher amounts grossed up in other income and equity-based compensation expense related to equity awards granted by Colony Credit and NRE to the Company and certain of its employees, higher cost reimbursement income in relation to investment due diligence activities and from our joint venture which manages our digital infrastructure vehicle, and dividend income from our interest in a mutual fund beginning in 2019. These were partially offset by a decrease in collateral management fees from N-Star CDOs, insurance recoveries in 2018 for business interruptions due to hurricanes that affected our THL Hotel Portfolio in 2017, a class action settlement received in 2018 related to our hospitality segment, and lower recovery income from our loan portfolios which continue to resolve over time.

~~Interest Expense~~

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Investment-level financing:
Healthcare $ 104,662
$ 96,120
$ 8,542
Hospitality 83,656
70,855
12,801
Other Equity and Debt 61,069
86,756
(25,687 )
Corporate-level debt 27,240
27,421
(181 )
$ 276,627
$ 281,152
(4,525 )

~~The $4.5 million net decrease in interest expense for the six months ended June 30, 2019 compared to the same period in 2018 can be attributed to the following:~~

~~Healthcare—Interest expense was $8.5 million higher, driven by the effects of the $1.7 billion debt refinancing in June 2019, primarily a $7.5 million write-off of existing debt discount.~~



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Institutional funds and other investment vehicles	$	30,476	$	10,638	$	19,838
Public companies (CLNC, NRE prior to its sale in September 2019)	8,058		15,106		(7,048		)
Non-traded REITs	4,431		5,106		(675		)
Other	540		178		362
	$	43,505	$	31,028	12,477

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Fee income increased $12.5 million resulting from:

partially offset by:

$3.2 million decrease in fees from Colony Credit due to a lower stockholders' equity fee basis;

$3.9 million of fees from NorthStar Realty Europe ("NRE") in 2019 prior to its sale in September 2019; and

$0.6 million decrease in fees from NorthStar Healthcare Income, Inc. ("NorthStar Healthcare") following a decrease in its NAV fee basis effective December 2019.

Other Income

Other income was $6.3 million lower, attributed primarily to reversal of other income in connection with CLNC equity awards that were remeasured at fair value based upon CLNC's stock price at period end, and other income recognized in 2019 in relation to NRE equity awards, with such amounts correspondingly recognized in equity-based compensation, as a gross-up of income and expense (refer to Note 19 to the consolidated financial statements for a description of the accounting treatment of managed company awards). These decreases were partially offset by hotel management fee income from our acquisition of a distressed hotel manager in France in July 2019 within our other equity and debt segment.

Interest Expense



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Investment-level financing:
Digital	$	9,402	$	—	$	9,402
Healthcare	39,866		47,527		(7,661		)
Hospitality	39,789		42,065		(2,276		)
Other Equity and Debt	20,588		31,853		(11,265		)
Corporate-level debt	13,768		13,444		324
	$	123,413	$	134,889	(11,476		)

Net decrease in interest expense of $11.5 million is attributable to the following:

Digital—Amount represents interest expense on debt assumed from our DataBank subsidiary acquired in December 2019.

Healthcare—Interest expense was $7.7 million lower as a result of: (i) interest expense recognized in prior year from debt discount that was subsequently written off in connection with a refinancing in June 2019; (ii) effect of decrease in LIBOR on predominantly variable rate debt on healthcare properties; and (iii) debt repayment upon sale of non-core properties in 2019. These decreases were partially offset by amortization of deferred financing costs on the June 2019 refinanced debt.

Hospitality—Interest expense ~~increased $12.8~~decreased $2.3 million, ~~resulting from the impact of higher~~driven by a decline in LIBOR on predominantly variable rate debt ~~additional debt obtained in connection with debt refinancing, and~~on our hotel portfolio, largely offset by higher interest expense recognized from acceleration of deferred financing ~~costs expensed as a result of the refinancing.~~costs.

Other Equity and Debt—Interest expense decreased ~~$25.7~~$11.3 million ~~driven by: (i)~~due to debt payoffs, primarily from ~~continued sales~~sale of properties in the THL Hotel Portfolio and ~~resolutions~~multi-tenant offices, and resolution of our non-core investments, (ii) $9.7 million decrease in interest expense from the sale and deconsolidation of our securitization trusts in the second quarter of 2018, and (iii) contribution of certain assets along with their underlying debt to Colony Credit on January 31, 2018. These decreases were partially offset by an increase in interest expense from new debt acquired to finance the acquisition of a portfolio of office and industrial buildings in France in November 2018.

~~Corporate-level Debt—~~While there was a lower average outstanding balance on our corporate credit facility in 2019, the effect of higher LIBOR on our junior subordinated debt and higher unused fees on our corporate credit facility resulted in only a marginal decrease in interest expense.European loans.

Investment and Servicing Expense

~~There was a $6.0 million net decrease in investment~~Investment and servicing costs ~~comparing~~were $6.3 million lower as the ~~six months ended June 30, 2019 and 2018. The decrease can be attributed mainly to lower write-offs~~prior year included write-off of receivables ~~related~~from our managed investment company, higher unconsummated deal costs and higher expenses at our THL Hotel Portfolio. The higher costs in the prior year more than offset incremental cost of labor and supplies in our healthcare properties in response to ~~certain retail companies, lower servicing~~COVID-19 and management fees following the termination of a third party healthcare operator in October 2018 and continued resolution of our loan portfolio, and other decreases in investment related costs, all of which were partially offset by higher expenses in ~~2019 related to refinancing of~~ our ~~healthcare debt and unconsummated deals.~~

~~Transaction Costs~~

~~Transaction costs were $2.8 million~~European portfolio in the ~~six months ended June 30, 2019 related to our acquisition~~first quarter of ~~the Latin American investment management business~~2020.

Table of ~~The Abraaj Group and acquisition of a hotel portfolio in France through a joint venture, and $3.4 million in the six months ended June 30, 2018 related mainly to an investment in Spain.~~Contents

~~Placement Fees~~

Immaterial placement fees were incurred in connection with our open-end industrial fund in the six months ended June 30, 2019, while $1.3 million was incurred in the six months ended June 30, 2018 related to fundraising for our co-investment vehicle in AccorInvest, a multinational European hospitality group.

Depreciation and Amortization

~~There was a minimal net increase of $0.6 million in~~Higher depreciation and amortization ~~comparing the six months ended June 30,~~expense is attributed to real estate and intangible assets acquired from DataBank in December 2019 and ~~2018 which can be attributed mainly to: (i) acquisition of a portfolio of office and industrial buildings~~DBH in France in November 2018, (ii) capital expenditures primarily on our hotel properties, and (iii) accelerated amortization of the NRE management contract beginning in December 2018 based on an expected sale of NRE. These increases were mostlyJuly 2019, partially offset by non-core properties sold or transferred to held for sale, termination of NRE management contract in September 2019 and write-down of NorthStar Healthcare management contract in December 2019.

Impairment Loss



	Three Months Ended March 31,
(In thousands)	2020		2019		Change
Healthcare	$	48,532	$	—	$	48,532
Hospitality	250,162		3,850		246,312
Other Equity and Debt	9,574		21,772		(12,198		)
Other Investment Management	79,000		—		79,000
	$	387,268	$	25,622	361,646

Impairment loss attributable to noncontrolling interests in investment entities	$	40,134	$	14,151

Impairment loss on real estate and goodwill are discussed further in Notes 4 and 7, respectively, to the consolidated financial statements.

Healthcare—Impairment totaling $48.5 million was recorded on a portfolio of senior housing operating facilities and net leased skilled nursing facilities, based upon potential shortfalls in future operating cash flows, taking into consideration the likelihood of a lease renewal or tenant replacement and the impact of COVID-19, which would heighten the risk of default on the respective non-recourse mortgage debt. A debt default would likely cause a shortened holding period on these properties such that their carrying values may not be recoverable, thereby resulting in a write-down in values.

Other Equity and Debt—Impairment decreased $12.2 million, attributed primarily to higher write-downs in 2019 on properties held for sale in Italy.

Compensation Expense

The table below provides the components of compensation expense:



	Three Months Ended March 31,
(In thousands)	2020			2019		Change
Cash compensation and benefits	$	48,212		$	22,792	$	25,420
Equity-based compensation	8,249			5,914		2,335
Incentive and carried interest compensation	(9,181		)	1,272		(10,453		)
	47,280			29,978		17,302
Compensation grossed up in income and expense
Equity-based compensation—CLNC and NRE (prior to September 2019) awards	(3,427		)	2,811		(6,238		)
Total compensation expense	$	43,853		$	32,789	11,064

Total compensation expense increased $11.1 million, which can be attributed to additional compensation cost from our acquisitions of DBH and a distressed hotel manager in July 2019, and DataBank in December 2019. These increases were partially offset by a decrease in ~~amortization of the NorthStar trade name upon write-off in June 2019.~~

~~Provision for Loan Losses~~

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Non-PCI loans $ 12,807
$ 7,737
$ 5,070
PCI loans 5,807
11,571
(5,764 )
Total provision for loan losses $ 18,614
$ 19,308
(694 )

Provision for loan losses in the six months ended June 30, 2019 related to write-downs to collateral value or prices based upon potential offers received on certain loans. In the six months ended June 30, 2018, provision for loan losses was driven by sales of PCI loans, losses on certain securitized loans prior tocompensation cost following the sale of ~~our interest~~NRE in ~~the securitization trust that resulted in a deconsolidation of the trust in June 2018 and a loan in maturity default.~~

~~Of the total provision for loan losses, $6.0 million and $3.8 million in the six months ended June 30,~~September 2019 and ~~2018, respectively,~~our industrial business in December 2019, and reversals in carried interest compensation and equity-based compensation on CLNC awards (refer to discussion in Other Income).

Administrative Expense

Administrative expense was $10.1 million higher, largely attributable to ~~noncontrolling interests~~higher professional service costs and additional expenses in ~~investment entities.~~connection with businesses acquired in 2019.

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~~Impairment~~Settlement Loss

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Healthcare $ 51,324
$ 5,762
$ 45,562
Hospitality 4,270
—
4,270
Other Equity and Debt 54,074
16,555
37,519
Investment Management —
200,741
(200,741 )
Unallocated 649
—
649
$ 110,317
$ 223,058
(112,741 )

~~Healthcare—Impairment~~Amount represents fair value of the settlement arrangement with Blackwells, including reimbursement of legal costs. Refer to additional discussion in the six months ended June 30, 2019 was based upon a negotiated purchase option exercised by a tenant on three hospitals and preliminary offers received on certain net lease properties. In the six months ended June 30, 2018, impairment was recorded based upon sales prices and separately, on properties with hurricane-related damage from 2017.

~~Hospitality—Additional impairment loss was recognized in the six months ended June 30, 2019 based upon revised expected sales prices or final net proceeds from sale.~~

~~Other Equity and Debt—Impairment was $37.5 million higher at $54.1 million in the six months ended June 30, 2019 compared~~Note 12 to the same period last year. The increase resulted from additional impairments based upon revised expected sales prices in the current market, primarily on our real estate portfolios in the United Kingdom and Italy, and incremental write-downs upon real estate sales.consolidated financial statements.

~~Investment Management—~~Impairment in the six months ended June 30, 2018 was related predominantly to the write-off of (i) NorthStar I and NorthStar II management contract intangibles totaling $139.0 million as these contracts were terminated upon closing of the Combination on January 31, 2018; (ii) NorthStar/RXR NY Metro management contract intangible of approximately $1.4 million upon the termination of its offering period effective March 31, 2018 and (iii) write-off of the NorthStar trade name of $59.5 million.

~~Unallocated—Impairment was recorded on an office operating lease asset in the second quarter of 2019.~~

Of the $110.3 million and $223.1 million of total impairment in the six months ended June 30, 2019 and 2018, respectively, $51.3 million and $13.4 million were attributable to noncontrolling interests in investment entities, respectively.

~~Compensation Expense~~

~~The following table provides the components of compensation expense.~~

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Cash compensation and benefits $ 54,086
$ 74,187
$ (20,101 )
Carried interest compensation 2,418
—
2,418
Equity-based compensation 19,861
25,429
(5,568 )
$ 76,365
$ 99,616
(23,251 )

Compensation expense decreased $23.3 million comparing the six months ended June 30, 2019 and 2018. The first six months of 2018 had included (i) $11.5 million of compensation related to the Merger, of which $8.1 million was severance costs and $3.3 million was equity-based compensation in connection with awards granted to certain NSAM executives that vested one year from closing of the Merger; and (ii) $1.9 million of severance costs related to contribution of our broker-dealer business to a joint venture. Remaining decrease can be attributed to acceleration of equity awards in 2018, and the impact of corporate restructuring undertaken in November 2018 which was aimed at reducing the Company's global workforce. These decreases were partially offset by $2.4 million of compensation related to unrealized carried interest recognized in the first six months of 2019. Carried interest compensation is generally not paid to employees until the associated carried interest is distributed by the investment vehicles to the Company.

~~Administrative Expenses~~

~~Administrative expenses were $42.5 million for the six months ended June 30, 2019, a $4.4 million decrease from the same period in 2018, largely due to our ongoing cost reduction initiatives.~~

~~Table of Contents~~

Gain on Sale of Real Estate

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Hospitality $ 279
$ —
$ 279
Other Equity and Debt 35,251
58,853
(23,602 )
$ 35,530
$ 58,853
(23,323 )

~~Hospitality—Gain on sale in the six months ended June 30, 2019 pertained to proceeds received on a parcel of land in Virginia subject to eminent domain and the sale of a hotel property in Georgia.~~

~~Other Equity and Debt—Gain on sale in both the six months ended June 30, 2019 and 2018 relate to our European portfolio and U.S. multi-tenant offices, with~~There were higher gains ~~derived~~in 2019, primarily from sales of our European properties ~~in the United Kingdom, France~~ and ~~Spain in the prior year period.~~

~~Gain on sale of $34.7 million and $30.4 million in the six months ended June 30, 2019 and 2018, respectively, were attributable to noncontrolling interests in investment entities.~~U.S. multi-tenant office buildings.

Equity Method Earnings (Losses)


	Six Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2019			2018			Change			2020			2019		Change
Colony Credit	$	(262,399	)	$	1,759		$	(264,158	)
Digital										$	468		$	3,276	$	(2,808	)
CLNC										(10,069		)	5,513		(15,582		)
Other Equity and Debt	50,365			34,984			15,381			17,701			24,573		(6,872		)
Investment Management (including $6,732 and $0 of carried interest, respectively)	(6,459		)	(7,436		)	977
Other Investment Management (including carried interest reversal of $18,411 and income of $4,896)										89,191			5,597		83,594
	$	(218,493	)	$	29,307		(247,800		)	$	97,291		$	38,959	58,332

Digital—Amounts represent net earnings from interest in our sponsored DCP fund and through July 2019, its

manager, Digital Colony ~~Credit—~~Manager, prior to its consolidation upon acquisition of DBH.

CLNC—In June 2019, we wrote down our investment in Colony Credit by $227.9 million given the prolonged period of time the carrying value of our investment in Colony Credit has exceeded its market value. The impairment was measured as the excess of carrying value over fair value of our investment based on Colony Credit's closing stock price on June 28, 2019, the last trading day of the second quarter. For the six months ended June 30, 2019, we also recorded ourOur share of net loss from CLNC was $10.1 million, inclusive of ~~$34.5~~an adjustment of $19.2 million to reduce the basis difference allocated to non-strategic assets resolved during the first quarter of 2020 (see Note 6 to the consolidated financial statements), compared to net income of $5.5 million in ~~comparison to earnings of $1.8 million in the six months ended June 30, 2018.~~prior year. The net loss resulted primarily from ~~additional~~ loan loss provision and ~~real estate impairment recorded by Colony Credit in~~unrealized losses on investments carried at fair value, largely due to the ~~second quarter~~impact of ~~2019.~~COVID-19.

Other Equity and ~~Debt~~Debt——Equity method earnings ~~increased $15.4~~decreased $6.9 million, ~~comparing the six months ended June 30, 2019 and 2018, driven by new ADC loan originations and additional fundings, and gains~~resulting primarily from ~~sale~~our share of ~~underlying real estate by an investee. Additionally, the prior year period included~~fair value losses from ~~our interests in private equity funds, which have mostly been sold. These increases were partially offset~~underlying investments held by investees and loss of earnings from repayments of our preferred equity investments and sales of investments in 2019. These decreases were partially offset by income from additional ADC loan disbursements and ~~contribution of investments to Colony Credit~~higher impairment recorded on ~~January 31, 2018.~~an equity method investee in prior year.

Other Investment Management—Equity method ~~losses~~income increased $83.6 million as we recorded a $106.1 million gain from sale of our equity investment in ~~both periods were driven by impairment charges,~~RXR Realty in February 2020, which was partially offset by a reversal of unrealized carried interest ~~allocation from our sponsored and/or co-sponsored investment vehicles, management fees from our joint venture which manages our digital infrastructure vehicle, and preferred equity interest income.~~allocation.

Other ~~Gain (Loss),~~Loss, Net

~~We recognized a~~Other losses, net, was $3.5 million compared to $49.1 million in prior year.

The first quarter of 2019 included unrealized loss of ~~$138.6~~$59.2 million ~~in the six months ended June 30, 2019 compared to a gain of $104.1 million in the same period in 2018, resulting primarily from the following items:~~

~~$146.1 million loss in the six months ended June 30, 2019 compared to $81.0 million gain in the same period in 2018~~ on a non-designated ~~out-of-money~~ interest rate swap assumed through the Merger ~~due to the flattening of the 10-year treasury forward curve. The swap~~that was intended to hedge future refinancing ~~risk~~ on certain ~~NRF~~healthcare mortgage ~~debt;~~debt. Such debt was refinanced in June 2019 and the swap was terminated at the end of 2019. This loss was partially offset by mainly fair value gains on equity and debt securities of consolidated funds, and remeasurement gain on a GBP denominated loan receivable in our healthcare segment in 2019; all of which recorded losses in 2020 as a result of the financial market distress in March 2020 and appreciation of the USD.

~~$1.8~~Income Tax Expense

Income tax expense was $7.1 million of higher, ~~unrealized loss~~driven primarily by tax liability on ~~investments held by a consolidated investment company;~~

~~$9.5 million of lower gains~~the gain from sale of ~~CRE securities;~~our equity investment in RXR Realty in February 2020, which was partially offset by deferred tax benefit in connection with our DataBank subsidiary acquired in December 2019.

~~Various gains recorded~~Income from Discontinued Operations

Discontinued operations represent the results of operations of the bulk industrial portfolio in 2020 and additionally, the ~~six months ended June 30, 2018 that were not recurring~~light industrial portfolio and management platform in 2019 ~~namely:~~prior to their sale in December 2019. Refer to Note 16 to the consolidated financial statements.

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Assets Under Management ("AUM") and Fee Earning Equity Under Management ("FEEUM")

Below is a summary of our third party AUM and FEEUM in connection with (i) our digital investment management business residing in the digital segment; and (ii) our other investment management segment.



			AUM ⁽¹⁾ (In billions)				FEEUM ⁽²⁾(In billions)
Type	Products	Description	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Digital segment
Other Investment Vehicles	Digital real estate and infrastructure	Earns base management fees and service fees; potential for carried interest from DCP	$	20.1	$	13.5	$	7.7	$	6.8
Other Investment Management segment
Institutional funds	Credit funds, opportunistic funds, value-add funds and other co-investment vehicles	Earns base and asset management fees from all managed funds; potential for carried interest on sponsored funds	8.8		8.5		5.7		5.6
Retail Companies	NorthStar Healthcare	Earns base management fees and potential for carried interest	3.4		3.4		1.2		1.2
Retail Companies	CC Real Estate Income Fund ⁽³⁾
Public Companies	Colony Credit Real Estate, Inc.⁽⁴⁾	NYSE-listed credit REIT	3.4		3.5		2.2		2.2
Public Companies		Earns base management fees and potential for incentive fees
Non-wholly owned real estate investment management platform	Joint venture investments in co-sponsored investment vehicles and third party asset managers	Earns share of earnings from equity method investments.
Non-wholly owned real estate investment management platform		Others include investments in RXR Realty (27% interest in a real estate investor, developer and asset manager, sold in February 2020), AHI (43% interest in a healthcare asset manager and sponsor of non-traded vehicles) and Alpine (49% interest in energy investment management platform)	1.8		7.4		1.7		3.6
Subtotal - Other Investment Management segment			17.4		22.8		10.8		12.6
Total Company			$	37.5	$	36.3	$	18.5	$	19.4

__________

⁽¹⁾

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 incentives. AUM is based upon reported gross undepreciated carrying value of managed investments as reported by each underlying vehicle. AUM further includes a) uncalled capital commitments and b) the Company’s pro rata share of assets of the real estate investment management platform of its joint ventures and investees as presented and calculated by them. The Company's calculation of AUM may differ materially from those of other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.

⁽²⁾

Equity for which the Company and its affiliates provide investment management services and derive management fees and/or incentives. FEEUM generally represents a) 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 and b) the Company’s pro rata share of fee bearing equity of its joint ventures and investees as presented and calculated by them. The Company's calculation of FEEUM may differ materially from other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.


⁽³⁾	In February 2019, the board of directors of CC Real Estate Income Fund (“CCREIF”) approved a plan to dissolve, liquidate and terminate CCREIF and distribute the net proceeds of such liquidation to its shareholders. As CCREIF’s advisor, we have begun the process of liquidating its portfolio, however, no assurances can be made as to the timing or completion of the liquidation.


⁽⁴⁾	Represents third party ownership share of CLNC's pro rata share of total assets, excluding consolidated securitization trusts.

Third party FEEUM decreased $0.9 billion to $18.5 billion.

In February 2020, DCP closed on its acquisition of Zayo Group Holdings, Inc. (NYSE: ZAYO), a provider of bandwidth infrastructure services in the United States and Europe, which added $0.7 billion FEEUM in our digital segment.

Our other investment management segment, however, saw a decrease of $1.8 billion FEEUM driven by the sale of our interest in a third party real estate asset manager, RXR Realty, in February 2020.

Segments

The following discussion summarizes key information on our reportable segments.

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Digital Real Estate and Investment Management ("Digital")

Our digital segment is composed of the following as of March 31, 2020:

•

Digital real estate—A 20% controlling interest in DataBank, acquired in December 2019. DataBank is a leading provider of enterprise-class data centers, connectivity and managed services. DataBank owns seven data centers and have leasehold interests in 12 data centers, operating in nine U.S. markets. This is our inaugural direct balance sheet investment in digital real estate and represents our first step in investing in the edge/colocation data center sector, which will support future growth opportunities through potential add-on acquisitions and greenfield edge data center developments. We earn rental and service income from providing use of space and/or capacity in our digital assets through long-term contracts and related service orders.

•

Digital investment management—DBH investment management business, acquired in July 2019, which currently manages DCP and six digital real estate portfolio companies, including DataBank. At March 31, 2020, our digital real estate FEEUM totaled $8 billion. Investment management products may include investment vehicles for co-investment partnerships and other managed assets, and digital credit and liquid securities products in the future. We earn management fees, generally based on the amount of assets or capital managed in investment vehicles, and have the potential to earn carried interest based on the performance of such investment vehicles subject to the achievement of minimum return hurdles.

•

Digital equity investments—DCP, our first sponsored digital real estate and infrastructure fund, which had its final closing in May 2019; and interests in existing Colony investment vehicles that were repurposed to execute an investment strategy focused around the digital sector. DCP has total commitments of $4.06 billion, including our $250 million commitment, of which we have funded $115 million through March 31, 2020, with an additional $44 million funded through DCP's revolving credit facility. As of May 5, 2020, DCP has called 73% of commitments, and is invested in ten geographically diversified portfolio companies across North America, South America, and Europe, composed of the digital infrastructure ecosystem of cell towers, data centers, small cells and fiber networks.

Digital is a new segment for the Company effective the fourth quarter of 2019, and is where we expect substantial growth to take place, both in terms of the balance sheet and investment management through (a) further investment of capital into digital real estate and infrastructure assets and GP co-investments and (b) net inflows of third-party capital into digital-related investment strategies sponsored by the Company.

Balance Sheet

The following table presents key balance sheet data of our digital segment:



(In thousands)	March 31, 2020		December 31, 2019
Real estate held for investment	$	848,728	$	846,393
Deferred leasing costs and identifiable intangibles, net (excluding goodwill)
Lease intangibles, customer relationships and trade name	181,085		195,291
Investment management intangibles	156,315		162,878
Equity investments	200,778		47,891
Secured debt	515,831		539,155

The increase in equity investments reflect additional funding in DCP, and interests in existing Colony investment vehicles that were repurposed to execute an investment strategy focused around the digital sector effective March 31, 2020.

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~~$9.9 million gain~~Operating Performance

Results of operations of our digital segment are as follows.



(In thousands)	Total Revenues ⁽¹⁾				Net Income (Loss)					Net Income (Loss) Attributable to Colony Capital, Inc.
Three Months Ended March 31,	2020		2019		2020			2019		2020			2019
Digital real estate	$	45,167	$	—	$	(18,295	)	$	—	$	(3,792	)	$	—
Digital investment management	19,179		—		2,110			2,981		2,521			2,800
Digital equity investments	160		—		(3,035		)	35		(2,487		)	33
Total	$	64,506	$	—	$	(19,220	)	$	3,016	$	(3,758	)	$	2,833

_________


⁽¹⁾	Prior to the acquisition of DBH in July 2019, our interest in the digital segment comprised only equity method investments and earnings.

Revenues from our digital segment in ~~connection with~~2020 represent primarily property operating income from DataBank, acquired in December 2019, and fee income from DBH, acquired in July 2019. The above net loss from our DataBank business includes the ~~Combination, which represents the excess~~effect of ~~fair value over carrying value~~interest expense from debt financing, and depreciation and amortization expense. Operating results of ~~the Company's equity~~DataBank excluding these effects is presented below as earnings before interest, ~~in the CLNY Investment Entities, retained through the Company’s interest in Colony Credit;~~tax and depreciation for real estate ("EBITDAre").

~~$10.9 million gain from deconsolidation of N-Star CDOs; and~~

~~$1.7 million~~In 2020, our results also included unrealized fair value ~~gain~~losses on ~~the contingent consideration liability in connection with Colony's management internalization, which~~equity securities of a legacy Colony consolidated fund that was ~~settled in August 2018 (refer to Note 11 of the consolidated financial statements).~~

~~The above items which had an unfavorable impact~~transferred to the ~~first six months of~~digital segment, with such losses resulting from a decline in value across equity markets in March 2020. On the other hand, in 2019, ~~compared to 2018 were partially offset by:~~

~~$6.6 million of lower impairment on CRE securities; and~~

~~$1.8 million of lower remeasurement loss on a foreign currency denominated loan receivable.~~

~~Income Tax Benefit (Expense)~~

We recorded income tax expense of $3.8 million and income tax benefit of $33.3 million in the six months ended June 30, 2019 and 2018, respectively. The large income tax benefit in the prior year resulted primarily from the write-off of deferred tax liabilities in connection with the write-off of the management contract intangible assets for NorthStar I and NorthStar II as the contracts were terminated upon closing of the Combination and for NorthStar RXR/NY Metro upon termination of its offering period.

~~Income from Discontinued Operations~~

Six Months Ended June 30,
(In thousands) 2019 2018 Change
Revenues
Property operating income $ 172,973
$ 140,508
$ 32,465
Fee income 5,449
2,948
2,501
Interest and other income 2,368
1,908
460
Revenues from discontinued operations 180,790
145,364
35,426
Expenses
Property operating expense 48,007
42,453
5,554
Interest expense 34,352
21,046
13,306
Investment and servicing expense 538
263
275
Depreciation and amortization 84,805
62,427
22,378
Impairment loss —
174
(174 )
Compensation expense—cash and equity-based 6,339
5,027
1,312
Compensation expense—carried interest 340
1,919
(1,579 )
Administrative expenses 3,016
2,391
625
Expenses from discontinued operations 177,397
135,700
41,697
Other income (loss)
Gain from sale of real estate 23,395
2,293
21,102
Other loss, net (57 ) —
(57 )
Equity method earnings (losses) (644 ) 4,833
(5,477 )
Income from discontinued operations before income taxes 26,087
16,790
9,297
Income tax benefit (expense) (298 ) 68
(366 )
Income from discontinued operations $ 25,789
$ 16,858
8,931

~~All of discontinued operations for 2019 and most of discontinued operations for 2018 represent the results of operations of the industrial~~our digital segment ~~and the associated management platform, and include property operations, fee income,~~generated equity method earnings from ~~the Company's general partner~~our 50% interest in ~~the industrial open-end fund, and related compensation expense.~~

~~The first half of 2018 also includes loss from discontinued operations of $0.1 million related~~Digital Colony Manager prior to ~~certain properties in the THL Hotel Portfolio acquired in July 2017 that qualified as held for sale at the time of foreclosure. Such properties were fully disposed of in the second quarter of 2018.~~

~~Table of Contents~~

~~Income from discontinued operations of our industrial business decreased $8.9 million comparing the six months ended June 30, 2019 and 2018, attributed primarily to the following:~~

Property operating income and expense were $32.5 million and $5.6 million higher, respectively, resulting from continued growth in our industrial portfolio as acquisitions outpaced dispositions, in particular, theits consolidation upon acquisition of ~~a $1.1 billion portfolio~~DBH. Our share of 50 properties in February 2019. At June 30, 2019 and June 30, 2018, our industrial portfolio consisted of 452 and 392 buildings, respectively, with a net addition of 60 buildings and 12.4 million rentable square feet.

~~The positive impact to property operations was partially offset by a resulting increase in depreciation and amortization expense of $22.4 million.~~

~~Similarly, interest expense increased $13.3 million as we obtained $840 million of additional debt to fund new acquisitions in the first six months of 2019, along with additional drawdowns~~results from our ~~industrial revolver,~~investment in DCP to date has not been material as the fund continues to ramp up its investing activities.

Earnings Before Interest, Tax and Depreciation for Real Estate

EBITDAre generated by our digital real estate business, which ~~capacity was expanded from $400 million to $600 million. As a result, we also incurred higher deferred financing costs~~currently consists solely of DataBank, is as ~~well as higher unused fees on the revolver. These increases, however, were partially offset by higher capitalization of interest on development projects in 2019.~~

~~Cash and equity-based compensation was also higher, driven by compensatory arrangements with employees~~follows. A reconciliation of the ~~industrial segment~~most directly comparable GAAP measure to EBITDAre is presented in ~~order to retain their employment through completion of the sale of the industrial business.~~"—Non-GAAP Supplemental Financial Measures."

In connection with managing third party capital in our sponsored open-end industrial fund, fee income, calculated based on net asset value of the fund, was $2.5 million higher as a result of additional capital raised and appreciation in value of our industrial properties. Carried interest, however, decreased as NAV appreciation was lower in 2019 compared to 2018. The corresponding decrease in carried interest compensation was more than offset by an adjustment to the employee sharing percentage approved by the compensation committee in 2019.

~~Preferred Stock Redemption~~

In the second quarter of 2018, $4.0 million was recorded to decrease net loss attributable to common stockholders, which amount represent the excess of carrying value over the redemption price of $25.00 per share of Series D preferred stock that was redeemed in full. The excess was due to the fact that the Series D preferred stock carrying value included a premium that was recognized when we assumed Series D preferred stock based upon its trading price at the closing of the Merger.

~~Segments~~

~~The following discussion summarizes key information on each of our six segments.~~



	Digital Real Estate
(In thousands)	Three Months Ended March 31, 2020
Total revenues	$	45,167
Property operating expenses	(16,906		)
Transaction, investment and servicing costs	(197		)
Compensation and administrative expense	(12,656		)
EBITDAre—Digital real estate	$	15,408

Healthcare

Our healthcare segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings and hospitals. We earn rental income from our senior housing, skilled nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant. In addition, we also earn resident fee income from senior housing properties that are managed by operators under a RIDEA structure, which effectively allows us to gain financial exposure to the underlying operations of the facility in a tax efficient manner versus receiving contractual rent under a net lease arrangement.

~~At June 30, 2019,~~We own between 69.6% and 81.3% of the various portfolios within our healthcare segment. Based upon our equity balance across all portfolios at March 31, 2020, we have an overall interest of 71% in our healthcare ~~segment was approximately 71%.~~segment.

Portfolio Overview

Our healthcare portfolio is located across 3332 states domestically and ~~13%~~in the United Kingdom (representing 15% of our portfolio ~~(based~~based upon ~~NOI) is in~~NOI for the ~~United Kingdom.~~first quarter of 2020).

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The following table presents key balance sheet data of our healthcare segment:

(In thousands) June 30, 2019 December 31, 2018
Real estate
Held for investment $ 4,757,528
$ 4,995,298
Held for sale 129,327
—
Debt 2,979,931
3,213,992

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(In thousands)	March 31, 2020		December 31, 2019
Real estate
Held for investment	$	4,324,926	$	4,433,825
Held for sale	51,128		57,664
Debt	2,885,680		2,910,032

The following table presents selected operating metrics of our healthcare segment:


	Number of Buildings	Capacity	Average Occupancy⁽¹⁾		Average Remaining Lease Term (Years)	Number of Properties⁽²⁾	Capacity	Average Occupancy⁽¹⁾		Average Remaining Lease Term (Years)
June 30, 2019
March 31, 2020
Senior housing—operating	108	6,388 units	84.8	%	N/A	83	6,388 units	85.3	%	N/A
Medical office buildings	108	3.8 million sq. ft.	82.3	%	4.5	106	3.8 million sq. ft.	82.2	%	4.5
Net lease—senior housing	84	4,231 units	80.9	%	11.2	71	4,039 units	79.9	%	11.1
Net lease—skilled nursing facilities	99	11,829 beds	83.3	%	5.6	88	10,458 beds	79.9	%	5.5
Net lease—hospitals	14	872 beds	63.4	%	9.7	9	456 beds	64.8	%	10.1
Total	413					357
December 31, 2018
December 31, 2019
Senior housing—operating	108	6,388 units	86.8	%	N/A	83	6,388 units	86.5	%	N/A
Medical office buildings	108	3.8 million sq. ft.	82.3	%	4.5	106	3.8 million sq. ft.	82.2	%	4.8
Net lease—senior housing	84	4,231 units	82.1	%	11.7	71	4,039 units	80.7	%	11.5
Net lease—skilled nursing facilities	99	11,829 beds	82.4	%	5.9	89	10,601 beds	82.7	%	5.8
Net lease—hospitals	14	872 beds	58.1	%	9.7	9	456 beds	58.0	%	5.5
Total	413					358

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⁽¹⁾

Occupancy represents the property operator's patient occupancy for all types except medical office buildings. Average occupancy is based upon the number of units, beds or square footage by type of facility. Occupancy ~~percentage is~~percentages are presented as follows: (i) as of the last day of the quarter ~~presented~~ for medical office ~~buildings,~~buildings; (ii) average offor the quarter ~~presented~~ for senior housing—~~operating,~~operating; and (iii) average of the prior quarter for net lease ~~properties.~~properties as our operators report on a quarter lag.

~~Revenue mix~~Held for Sale and Dispositions

We sold a portfolio of net lease skilled nursing facilities totaling 143 beds and a land parcel in the first quarter of 2020 in our effort to monetize non-core assets in our healthcare ~~portfolio weighted by net operating income ("NOI") for the twelve months ended~~segment. We received gross proceeds of $7.5 million, from which we paid off $6.5 million of associated debt.

At March 31, ~~2019 (as our operators report on a quarter lag) was as follows:~~



~~Payor Sources~~	~~Revenue Mix %~~ ⁽¹⁾2020, real estate properties with aggregate carrying value of $51.1 million were held for sale, comprising one portfolio of net lease skilled nursing facilities totaling 766 beds that were encumbered with $45.3 million of debt.
~~Private Pay~~	59	%
~~Medicaid~~	31	%
~~Medicare~~	10	%
~~Total~~	~~100~~	%

~~__________~~


⁽¹⁾	~~Excludes two operating partners who do not track or report payor source data.~~

Financing

At ~~June 30, 2019,~~March 31, 2020, our healthcare portfolio was financed by ~~$3.0~~$2.93 billion of outstanding debt principal, of which $0.4 billion was fixed and ~~$2.6~~$2.52 billion was variable rate debt, bearing a combined weighted average interest rate of ~~5.80%~~4.56%.

~~Through June 2019, we refinanced an aggregate~~Operating Performance

Results of ~~$1.935 billion~~operations of ~~debt principal, which collectively addressed~~our healthcare segment are as follows:



	Three Months Ended March 31,
(In thousands)	2020			2019			Change
Total revenues	$	139,182		$	145,774		$	(6,592	)
Net loss	(64,145		)	(7,206		)	(56,939		)
Net loss attributable to Colony Capital, Inc.	(48,012		)	(7,462		)	(40,550		)

Operating results at the property level are discussed under NOI below. Results summarized above include the effects of interest expense from mortgage financing, impairment charges and depreciation and amortization expense on our healthcare portfolio. While there was a ~~majority~~loss of ~~outstanding debt principal with maturities~~revenue from sales of net leased properties in 2019 ~~extending their maturities through 2024 (including extension options). Previous default due to debt and/or lease coverage ratios on two of the refinanced debt have been cured.~~

Our completed refinancings included $1.725 billion of non-recourse fixed rate mortgage debt on certain properties in our U.S. healthcare portfolio, which was paid in full with proceeds from a new secured debt, and $250 million of new equity contribution, of which $174 million was funded by us and remainder by our equity partners in the portfolio. The new $1.515 billion interest-only debt is comprised of $1.025 billion first mortgage debt and $490 million mezzanine debt, has an initial two year term with three one-year extension options and carries a blended interest rate of one-month LIBOR plus 3.33%. The underlying collateral for the new debt includes 158 U.S. healthcare properties or 189 buildings consisting of medical office buildings, senior housing properties, skilled nursing facilities and hospitals, but excludes certain assets that were collateral for the previous debt.operating

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~~Performance~~

profits declined as discussed below, the significantly higher net loss was driven primarily by $48.5 million of real estate impairment, as discussed in "—Results of ~~operations of our healthcare segment were as follows:~~Operations.

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Total revenues $ 145,896
$ 145,419
$ 291,670
$ 298,014
Net income (loss) attributable to Colony Capital, Inc. (58,616 ) (14,356 ) 66,078
24,716
"

Net Operating Income

NOI generated by our healthcare segment, in total and by portfolio, ~~was~~are as follows. NOI is reconciled to the most directly comparable GAAP measure in "—Non-GAAP Supplemental Financial Measures."


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2019			2018			2019			2018			2020			2019
Total revenues	$	145,896		$	145,419		$	291,670		$	298,014		$	139,182		$	145,774
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset	(4,817		)	(1,580		)	(10,044		)	(5,899		)	(3,966		)	(5,227		)
Other income	(36		)	—			(36		)	—
Interest income													(27		)	—
Property operating expenses⁽¹⁾	(63,924		)	(69,983		)	(128,226		)	(136,949		)	(66,567		)	(64,302		)
NOI—Healthcare	$	77,119		$	73,856		$	153,364		$	155,166		$	68,622		$	76,245

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⁽¹⁾	Fees paid to third parties for property management are included in property operating expenses.


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change					Three Months Ended March 31,				Change
($ in thousands)	2019		2018		$			%		2019		2018		$			%		2020		2019		$			%
Senior housing—operating	$	16,468	$	16,770	$	(302	)	(1.8	)%	$	33,803	$	34,242	$	(439	)	(1.3	)%	$	16,853	$	17,335	$	(482	)	(2.8	)%
Medical office buildings	13,481		13,718		(237		)	(1.7	)%	25,905		30,269		(4,364		)	(14.4	)%	12,991		12,424		567			4.6	%
Net lease—senior housing	15,290		14,483		807			5.6	%	30,669		30,022		647			2.2	%	14,304		15,379		(1,075		)	(7.0	)%
Net lease—skilled nursing facilities	26,895		24,079		2,816			11.7	%	52,639		50,904		1,735			3.4	%	22,523		25,744		(3,221		)	(12.5	)%
Net lease—hospitals	4,985		4,806		179			3.7	%	10,348		9,729		619			6.4	%	1,951		5,363		(3,412		)	(63.6	)%
NOI—Healthcare	$	77,119	$	73,856	3,263			4.4	%	$	153,364	$	155,166	(1,802		)	(1.2	)%	$	68,622	$	76,245	(7,623		)	(10.0	)%

~~Comparing~~NOI decreased $7.6 million, of which $5.9 million resulted from the ~~three months ended June 30, 2019~~sales of net lease properties in 2019. The remaining decrease in NOI can be attributed to lower rental income from net leased hospitals and ~~2018,~~skilled nursing facilities that were previously deemed to be uncollectible, with contractual rents recognized on a cash basis beginning the second and third quarters of 2019. Additionally, NOI ~~was $3.3 million or 4.4%~~on our senior housing operating portfolio decreased as higher ~~largely~~resident service costs, primarily labor costs, were not fully absorbed through higher rents as occupancy declined due to ~~lower bad debt expense and lower rent concessions provided in 2019 related to our skilled nursing facilities.~~

However, NOI was $1.8 million or 1.2% lower comparing the six months ended June 30, 2019 and 2018. Although there was higher resident fee income and lower bad debt expense in 2019, the impact was more thanincreased competition. These decreases were partially offset by ~~a non-recurring termination fee received in 2018 from an early lease termination~~higher NOI in our medical office building ~~portfolio.~~portfolio which had higher rent concessions in the prior year.

Effects of COVID-19 on our Healthcare Segment

~~Industrial~~

~~As previously discussed,~~Our first priority has been, and continues to be, the ~~operating results~~health and safety of the ~~industrial business~~residents and staff at our communities. We remain focused on supporting our operating partners during this challenging time. Concurrently, we are ~~presented~~actively managing capital needs and liquidity to mitigate the financial impact of COVID-19 on our healthcare business.

At this time, we understand from our operators and managers that our communities as ~~discontinued operations~~a whole are experiencing a moderate level of confirmed COVID-19 cases. The incidence of confirmed cases in our portfolio may continue and could accelerate depending on the duration, scope and depth of COVID-19.

The effect of COVID-19 varies by asset class in the ~~consolidated statements~~Company's healthcare portfolio. Specifically, efforts to address COVID-19 have forced temporary closures of ~~operations,~~medical offices, restricted the admission of new residents to senior housing and skilled nursing facilities, and caused incurrence of unanticipated costs and other business disruptions to the ~~related~~Company's healthcare properties. The Company will be directly impacted by these factors in its RIDEA assets, and ~~liabilities are presented~~indirectly impacted in its net leased assets as ~~assets~~these factors influence tenants’ ability to pay rent.

Beginning in April 2020, some tenants have failed to make rent payments, and ~~liabilities held for sale on the consolidated balance sheets.~~

~~Our industrial segment is primarily composed of light industrial assets throughout the U.S. Our light industrial strategy is to pursue accretive asset acquisitions, capturing the benefits of scale~~some have sought more flexible payment terms as ~~one~~a result of the ~~few institutional investors primarily focused~~COVID-19 crisis. Local governments in certain jurisdictions are also implementing programs that permit or require the forbearance of rent payments by tenants affected by COVID-19. The Company is currently engaged with affected tenants on a case by case basis to evaluate and respond to the ~~fragmented light industrial sector. Light industrial buildings are generally multi-tenant buildings up~~current environment.

We anticipate a decline in future occupancy in our senior housing and skilled nursing facilities as a result of statutory or self-imposed restrictions on admission of new residents into our communities in an effort to 250,000 square feet with an office build-out of less than 20%. They are typically located in supply constrained locations and serve as the “last mile” of the logistics chain, which are vital for e-commerce and tenants that require increasingly quick delivery times by providing smaller industrial distribution spaces located closer to a company's customer base. They are designed to meet the local and regional distribution needs of businesses of every size, from large international to local and regional firms.

~~In addition, in February 2019, we acquired six bulk industrial buildings, which are warehouses generally greater than 500,000 square feet, and are stabilizing the existing portfolio.~~

Our investment in the industrial portfolio is made alongside third party limited partners through joint ventures, composed of sponsored and managed partnerships, including an open end industrial fund for our light portfolio. We alsocontain

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COVID-19. Additionally, there is an increased risk of resident and staff illness and resident move-outs, particularly in communities which have ~~a wholly owned industrial operating platform which provides vertical integration from acquisitions~~experienced infections.

Operating costs have begun to rise as our healthcare operators take action to protect their residents and ~~development to asset management and property management.~~

~~Capitalization~~

~~Light Industrial—~~At June 30, 2019, we owned 33.6% of our light industrial platform based upon net asset value through our capital contributions totaling $749.2 million. Our ownership interest decreased from 35.3% at December 31, 2018 as we continued to expand our light industrial platform through third party capital, with $141.7 million of additional capital closed in the first quarter of 2019, bringing total third party capital to $1.66 billion at June 30, 2019. Additional fundraising is currently on hold in contemplation of the planned sale of the industrial business.

~~Bulk Industrial—~~We own 51% of our bulk industrial portfolio through a capital contribution of $72.5 million, with the remaining $70.0 million of capital contributed by a third-party institutional investor for a 49% interest in a newly formed joint venture.

~~Portfolio Overview~~

Our industrial portfolio is well-diversified with 55.7 million square feet of light industrial and 4.2 million square feet of bulk industrial, aggregating to over 1,000 tenants across 27 major U.S. markets, with significant concentrations (based upon NOI) in Atlanta (12%) and Dallas (12%).

~~The following table presents key balance sheet data of our industrial segment, which are classified as held for sale:~~

(In thousands) June 30, 2019 December 31, 2018
Real estate $ 4,115,436
$ 2,793,004
Debt 2,004,201
1,064,585

~~We present and discuss below certain key metrics related to our industrial portfolio:~~

June 30, 2019 December 31, 2018

Number of Buildings ⁽¹⁾

Rentable Square Feet
(in thousands)
Leased % Average Remaining Lease Term (Years) Number of Buildings Rentable Square Feet
(in thousands) Leased % Average Remaining Lease Term (Years)
Light industrial 446
55,728
91.6 % 3.9
400
48,526
94.5 % 3.8
Bulk industrial 6
4,183
67.4 % 11.7
—
—
—
—
Total 452
59,911
89.9 % 4.3
400
48,526
94.5 % 3.8

~~_________~~


⁽¹⁾	~~Includes two buildings for which development was completed in 2019.~~

At June 30, 2019, as it relates to our total portfolio, 78.0% of our tenants (based upon leased square feet) were international and national companies, with the top ten tenants making up 8.4% of our portfolio based upon annualized base rent.

Leased percentage for our light industrial portfolio declined from 94.5% at December 31, 2018 to 91.6% at June 30, 2019, driven largely by vacancy in new acquisitions. The market for light industrial space continues to experience capacity constraints and is driving rental rate growth and strong tenant demand, with initial rental rates on new and renewed leases commencing in 2019 (excluding leases less than 12 months) experiencing a 6.5% growth compared to prior ending rents (on a cash basis).

~~At June 30, 2019, no more than 15.0% of existing leases by square footage in our total portfolio was scheduled to expire in any single year over the next ten years.~~

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~~Acquisitions and dispositions in 2019 are summarized below. We continually seek to redeploy capital into high quality real estate.~~

Number of Buildings
Rentable Square Feet
(in thousands)
Weighted Average Leased % At Acquisition
Purchase Price ⁽¹⁾
(in thousands)

Gross Sales Price
(in thousands)
Realized Gain
(in thousands)
Acquisitions
Light industrial 79
9,241
81 % $ 1,015,182
NA
NA
Bulk industrial 6
4,183
67 % 373,182
NA
NA
85
13,424
$ 1,388,364

Dispositions
Light industrial 35
2,332
NA
NA
$ 139,417
$ 23,395

~~_________~~


⁽¹⁾	~~Purchase price reflects capitalized transaction costs. Acquisitions include three land parcels totaling $20.7 million for co-development with operating partners.~~

A significant value-add portfolio of 50 buildings was acquired in February 2019 at a purchase price of approximately $1.1 billion. The portfolio is located across 10 markets, totaling approximately 11.1 million square feet and averaged 73.4% leased at the time of purchase. Forty-four buildings are light industrial, while the remaining six buildings are bulk industrial. In addition, we will be acquiring another four light industrial buildings within the same portfolio that is expected to close upon completion of construction throughout the remainder of 2019.

In June 2019, we acquired a portfolio of 30 fully leased light industrial buildings in New Jersey, including two land parcels, for $192.0 million (excluding transaction costs), totaling 1.3 million square feet.

As of June 30, 2019, we had funded $13.1 million with remaining unfunded purchase commitment of $171.8 million for the acquisition of eight light industrial buildings which are under construction, aggregating 1.9 million square feet. In July and August 2019, we closed on the acquisition of one parcel of land and five light industrial buildings upon completion of construction totaling 1.1 million square feet.

~~Financing~~

~~At June 30, 2019, we have outstanding debt at total carrying value of $2.0 billion, bearing a weighted average interest rate of 3.87%, with a weighted average remaining maturity of 7.8 years.~~

In connection with our light industrial portfolio acquisition in February 2019, we obtained a $500 million floating rate, five-year term loan, of which $300 million is fixed through the use of interest rate swaps. We also replaced our existing $400 million revolver with a $600 million revolver having a four-year initial term, that was $102 million drawn at June 30, 2019. The combined financing is unsecured, supported by an unencumbered asset pool within the light industrial portfolio and is non-recourse to the Company. We also closed on $235 million first mortgage debt secured by the bulk industrial portfolio. Additionally, in June 2019, we obtained a $100 million fixed rate loan to finance the acquisition of our 30 building light industrial portfolio in New Jersey.

~~Performance~~

~~Results of operations of our industrial segment, presented as part of discontinued operations, were as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Total revenues $ 92,969
$ 72,477
$ 175,341
$ 141,230
Net income (loss) attributable to Colony Capital, Inc. (3,135 ) 810
3,293
2,088

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~~Same Store Property Operating Income and Expense~~

Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2019 2018 Change 2019 2018 Change
Industrial: ⁽¹⁾

Same store property operating income $ 61,201
$ 60,902
0.5 % $ 122,561
$ 122,735
(0.1 )%
Same store property operating expenses 17,649
17,398
1.4 % 35,398
36,051
(1.8 )%

~~__________~~

⁽¹⁾

The same store portfolio is defined once a year at the beginning of the current calendar year and includes buildings that were owned and stabilized throughout the entirety of both the current and prior years. Stabilized properties are properties held for more than one year or that are greater than 90% leased. Properties acquired or disposed after the same store portfolio is determined are excluded. Our same store portfolio consisted of 312 buildings for both the quarter-to-date and year-to-date periods.

On a same store basis, property operating income and expenses increased 0.5% and 1.4%, respectively, comparing the three months ended June 30, 2019 and 2018, but decreased 0.1% and 1.8%, respectively, comparing the six months ended June 30, 2019 and 2018. While average occupancy decreased in both the quarter-to-date (from 94.5% to 94.3%) and year-to-date (from 95.2% to 94.5%) periods under comparison, the quarter-to-date decrease was marginal and reflects natural tenant turnover in a stabilized portfolio, which averages approximately 95% occupancy.

~~In the quarter-to-date comparison, the increases in income and expenses in 2019 can be attributed largely to~~staff, specifically higher ~~base rents, which offsets the slightly lower average occupancy rate, and higher repair and maintenance~~labor costs, ~~respectively.~~

In the year-to-date comparison, income decreased in 2019 notwithstanding higher base rents in 2019, due to lower occupancy and compared to 2018, lower non-rental related income; while the decrease in expenses in 2019 can be attributed to bad debt allowance recorded in 2018 that has since been charged off.

Under the new lease accounting standard effective in 2019, bad debt expense is no longer recognized but income is adjusted for amounts not probable of collection, however such amounts are not material to-date in 2019.

~~Net Operating Income~~

~~NOI generated by our industrial segment was determined as follows. NOI is reconciled to the most directly comparable GAAP figure in~~ ~~"—Non-GAAP Supplemental Financial Measures."~~

Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
(In thousands) Light Industrial Bulk Industrial Total Light Industrial
Total revenues $ 88,079
$ 4,890
$ 92,969
$ 72,477
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset (3,562 ) (505 ) (4,067 ) (2,554 )
Interest income (119 ) —
(119 ) (62 )
Property operating expenses (24,236 ) (1,433 ) (25,669 ) (20,483 )
Compensation and administrative expense⁽¹⁾
(875 ) —
(875 ) (300 )
NOI—Industrial $ 59,287
$ 2,952
$ 62,239
$ 49,078

Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
(In thousands) Light Industrial Bulk Industrial Total Light Industrial
Total revenues $ 168,791
$ 6,550
$ 175,341
$ 141,230
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset (6,606 ) (692 ) (7,298 ) (4,851 )
Interest income (299 ) —
(299 ) (594 )
Property operating expenses (46,361 ) (1,646 ) (48,007 ) (41,294 )
Compensation and administrative expense⁽¹⁾
(1,659 ) —
(1,659 ) (779 )
NOI—Industrial $ 113,866
$ 4,212
$ 118,078
$ 93,712

~~__________~~


⁽¹⁾	~~Compensation and administrative costs of employees engaged in property management and operations are included in compensation and administrative expenses.~~

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~~The increase in total NOI comparing the three months ended June 30, 2019 and 2018 of $13.2 million (or 26.8%)~~ as well as ~~the six months ended June 30, 2019~~higher usage and ~~2018~~cost of ~~$24.4 million (or 26.0%) reflects the continued growth of our portfolio, with net~~personal protective equipment, and medical and sanitation supplies. We expect these incremental costs to increase further in total rentable square feet of 12.4 million, taking into account both acquisitions and dispositions during the period. The six buildings under the bulk portfolio were 67.4% occupied and contributed $3.0 million in NOI for the second quarter of ~~2019~~2020.

The challenges faced by our healthcare operators and ~~$4.2 million~~our tenants as a result of COVID-19 will put pressure on future revenues and operating margins in ~~NOI~~our healthcare segment.

As necessary, we will engage in discussions with our lenders on the deferral of payment obligations, forbearance, and/or waiver of non-payment defaults for ~~the six months ended June 30, 2019. In the light portfolio, although average occupancy decreased (from 92.5% to 90.6%~~any potential failure in the ~~three month periods~~future to satisfy certain financial or other covenants.

Given the ongoing nature of the pandemic, the extent of the financial impact and ~~from 93.2%~~how prolonged the impact would be to ~~91.3% in~~our healthcare business is uncertain at this time, and largely dependent on the ~~six month periods) due mainly to vacancy in newly acquired value-add properties,~~duration and severity of the ~~overall increase in revenues from new acquisitions, however, more than offset corresponding increase in property operating expenses.~~effects of COVID-19.

Hospitality

Our hotel portfolio consists primarily of extended stay hotels and premium branded select service hotels located in both major metropolitan markets and high-demand suburban markets throughout the U.S. The majority of our hotels are affiliated with top hotel brands such as Marriott and Hilton. We seek to achieve value optimization through capital improvements, asset management and as appropriate, opportunistic asset sales.

~~At June 30, 2019, we owned 94%~~We own between 89.7% and 100% of the various portfolios within our hospitality segment.

~~Financing~~

~~At June 30, 2019,~~ Based upon our ~~hotel portfolio was financed by $2.7 billion~~equity balance across all portfolios at March 31, 2020, we have an overall interest of ~~outstanding debt, predominantly variable rate debt, bearing a weighted average interest rate of 5.56%.~~

~~In February 2019, we refinanced $115.5 million of debt principal, extending its maturity to March 2021, with three one-year extension options.~~94% in our hospitality segment.

Portfolio Overview

Our hotel portfolio is located across 26 states in the U.S., with concentrations ~~(based~~in California (28.4%), Texas (17.2%) and Florida (13.9%), based upon NOI before FF&E ~~Reserve) in California (15.3%), Texas (10.5%) and Florida (9.8%).~~Reserve for the first quarter of 2019.

The following table presents key balance sheet data of our hospitality segment:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Real estate
Held for investment	$	3,645,079	$	3,668,824	$	3,294,954	$	3,544,264
Held for sale	44,580		69,699		16,173		16,155
Debt	2,619,849		2,603,599		2,631,382		2,623,306

A majority of our portfolio is affiliated with top hotel brands. Composition of our hotel portfolio by brand at ~~June 30, 2019~~March 31, 2020, based upon the number of rooms, is as follows:



Brands	% by Rooms
Marriott	7978	%
Hilton	16	%
Hyatt	4	%
Intercontinental	12	%
Total	100	%

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The following table presents selected operating metrics of our hotel portfolio:


	June 30,		Three Months Ended June 30,						Six Months Ended June 30,						March 31,		Three Months Ended March 31,
Type	Number of Hotel Properties	Number of Rooms	Average Occupancy		ADR ⁽¹⁾		RevPAR ⁽²⁾		Average Occupancy		ADR ⁽¹⁾		RevPAR ⁽²⁾		Number of Hotel Properties	Number of Rooms	Average Occupancy		ADR ⁽¹⁾		RevPAR ⁽²⁾
2020
Select service															87	11,737	54.7	%	$	125	$	68
Extended stay															66	7,936	64.8	%	124		80
Full service															4	966	55.6	%	175		97
Total															157	20,639	58.6	%	127		74
2019
Select service	94	12,762	76.0	%	$	128	$	98	71.5	%	$	127	$	91	97	13,194	67.1	%	$	126	$	84
Extended stay	66	7,936	83.0	%	135		112		78.6	%	132		104		66	7,936	74.1	%	130		96
Full service	4	966	78.2	%	168		132		74.1	%	170		126		4	966	70.0	%	171		120
Total	164	21,664	78.6	%	133		104		74.2	%	131		97		167	22,096	69.7	%	129		90
2018
Select service	97	13,193	77.7	%	$	127	$	99	73.1	%	$	125	$	91
Extended stay	66	7,936	82.9	%	136		113		78.6	%	133		104
Full service	4	962	77.3	%	166		128		72.5	%	173		126
Total	167	22,091	79.6	%	132		105		75.0	%	130		98

_________


⁽¹⁾	Average daily rate ("ADR") is calculated by dividing room revenue by total rooms sold.


⁽²⁾	RevPAR is calculated by dividing room revenue by room nights available for the period.

~~Dispositions~~Held for Sale

~~In the second quarter of 2019, we sold three hotel properties in our~~At March 31, 2020, one 120-room select service ~~portfolio totaling 432 rooms for aggregate gross sales proceeds of $22.0 million in our effort to monetize non-core assets.~~

~~At June 30, 2019, we have six properties in our select service portfolio totaling 876 rooms,~~hotel with ~~aggregate~~a carrying value of ~~$44.6~~$16.2 million ~~that~~ was held for ~~sale. There~~sale, financed with $15.0 million of debt.

Financing

At March 31, 2020, our hotel portfolio was nofinanced by $2.67 billion of predominantly variable rate debt, ~~financing~~bearing a weighted average interest rate of 4.11%. Refer to further discussion below on the ~~held for sale properties. In August 2019, we sold five properties totaling 731 rooms for aggregate gross sales proceeds~~effects of ~~$41.0 million.~~COVID-19.

Operating Performance

Results of operations of our hospitality segment ~~were~~are as ~~follows.~~follows:


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	2019			2018		2019		2018			2020			2019			Change
Total revenues	$	227,080		$	229,373	$	423,695	$	425,155		$	153,526		$	196,615		$	(43,089	)
Net income (loss) attributable to Colony Capital, Inc.	(3,330		)	5,767		26,311		(4,283		)
Net loss											(295,757		)	(26,077		)	(269,680		)
Net loss attributable to Colony Capital, Inc.											(241,232		)	(22,981		)	(218,251		)

Operating results at the property level are discussed under NOI before FF&E Reserve below. Results summarized above include the effects of interest expense from mortgage financing, impairment charges and depreciation and amortization expense on our hotel portfolio, which are discussed in "—Results of Operations."

The higher net loss resulted from a $250 million impairment charge due to a shortened holding period on certain hotel assets; and to a lesser extent, also reflects the effects of COVID-19 on operating performance.

Net Operating Income before Reserves for Furniture, Fixtures and Equipment ("NOI before FF&E Reserve")

NOI before FF&E Reserve for our hospitality segment, in total and by type, ~~was~~are as follows, and is reconciled to the most directly comparable GAAP figure in "—Non-GAAP Supplemental Financial Measures."


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2019			2018			2019			2018			2020			2019
Total revenues	$	227,080		$	229,373		$	423,695		$	425,155		$	153,526		$	196,615
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset	316			(6		)	626			(13		)	314			310
Interest income	(6		)	—			(6		)	—
Other income	(3		)	(68		)	(3		)	(556		)
Property operating expenses ⁽¹⁾	(144,691		)	(143,321		)	(281,036		)	(279,416		)	(120,995		)	(136,345		)
NOI before FF&E Reserve—Hospitality	$	82,696		$	85,978		$	143,276		$	145,170		$	32,845		$	60,580

__________


⁽¹⁾	Fees paid to third parties for hotel management are included in property operating expenses.

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	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change					Three Months Ended March 31,				Change
($ in thousands)	2019		2018		$			%		2019		2018		$			%		2020		2019		$			%
Select service	$	45,701	$	48,103	$	(2,402	)	(5.0	)%	$	79,882	$	80,468	$	(586	)	(0.7	)%	$	15,767	$	34,181	$	(18,414	)	(53.9	)%
Extended stay	32,723		33,549		(826		)	(2.5	)%	55,570		56,467		(897		)	(1.6	)%	15,388		22,847		(7,459		)	(32.6	)%
Full service	4,272		4,326		(54		)	(1.2	)%	7,824		8,235		(411		)	(5.0	)%	1,690		3,552		(1,862		)	(52.4	)%
NOI before FF&E Reserve—Hospitality	$	82,696	$	85,978	$	(3,282	)	(3.8	)%	$	143,276	$	145,170	$	(1,894	)	(1.3	)%	$	32,845	$	60,580	$	(27,735	)	(45.8	)%

NOI before FF&E Reserve decreased ~~$3.3~~$27.7 million, ~~or 3.8%~~of which $1.2 million is attributed to the sales of ten select service properties in 2019. The decrease otherwise reflects the impact of COVID-19, with significant declines in room demand as average occupancy fell 16% to 59% and ~~$1.9 million or 1.3% comparing~~RevPAR fell 18% compared to the ~~three and six months ended June 30, 2019 and 2018, respectively.~~same period last year. The decrease in NOI before FF&E Reserve was further exacerbated by a decline in ~~2019 was impacted by~~operating margins, coupled with additional benefits accrued for furloughed employees in March 2020.

Efforts to Mitigate Effects of COVID-19 on our Hospitality Segment and THL Hotel Portfolio in Other Equity and Debt Segment

Through the ~~sale~~date of ~~three~~this filing, all except for one of our hotels are operating, but at significantly reduced levels; however, we may determine or be required to temporarily suspend operations at some or all of our hotels in the future.

Operating Performance

The fallout from COVID-19 began to negatively affect room demand and occupancy in March 2020 and we expect the impact on our ~~select service portfolio~~revenues and operating cash flows will be even more significant in future periods beginning April 2020.

Same store occupancy for our hospitality segment and the THL Hotel Portfolio was 41.4% and 44.7%, respectively, for the month of March 2020 compared to 77.1% and 73.0%, respectively, for the month of March 2019.

Liquidity

In order to conserve capital and improve liquidity:

We have taken various steps to minimize operating expenses, including reduction of services, closure of amenities and floor spaces, and keeping only essential resources on the ground, with our hotel operators having furloughed a substantial number of personnel.

We will be deferring all non-essential capital expenditures in 2020 of approximately $85 million for our hospitality segment and $10 million for our THL Hotel Portfolio, which will provide notable cost savings in the ~~second quarter~~near term.

We did not make the April 2020 and/or May 2020 debt service payment on a combined $3.16 billion of ~~2019, lower corporate demand, new supply~~outstanding principal in ~~certain markets,~~our hospitality segment and ~~higher costs, mainly labor costs, property taxes~~the THL Hotel Portfolio. In May 2020, the Company received a notice of acceleration with respect to $780.0 million of defaulted debt in the hospitality segment. We are in active negotiations with the respective lenders to seek various relief, including executing or extending interest forbearance, temporary use of FF&E and ~~ground lease expense.~~other capital expenditure reserves ($58.0 million in our hospitality segment and $2.2 million in the THL Hotel Portfolio as of March 31, 2020) to fund interest payments and hotel operations, and execution of debt modifications, including extension of upcoming maturities in 2020, or seek other accommodations. The remaining $346.7 million of debt principal in our hospitality segment was not in default. There can be no assurance that the Company will be successful in any of the negotiations with its lenders.

Due to uncertainties as to the duration and severity of the economic fallout from COVID-19, at this time, we are unable to estimate with any meaningful precision the extent of the economic and financial impact of COVID-19 to our hospitality business and operations, and how prolonged the impact would be. We cannot predict when business will return to normal levels when the effects of COVID-19 subside.

Colony Credit Real Estate, Inc.

At ~~June 30, 2019,~~March 31, 2020, we have a ~~36.4%~~36.5% interest (on a fully diluted basis) in ~~Colony Credit.~~

~~In June 2019, we wrote down~~CLNC with a carrying value of $666.1 million. Our carrying value in CLNC decreased $59.4 million in the first quarter of 2020, resulting primarily from dividends received, as well as our ~~investment in Colony Credit by $227.9~~share of CLNC's loan loss provisions and unrealized losses on investments carried at fair value. Our share of net loss from CLNC was $10.1 million, inclusive of an adjustment of $19.2 million to ~~$743.0 million given~~reduce the ~~prolonged period~~basis difference allocated to non-strategic assets resolved during the first quarter of ~~time~~2020 (see Note 6 to the consolidated financial statements).

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Other-Than-Temporary Impairment Assessment

At March 31, 2020, the carrying value of ~~our~~the Company's investment in ~~Colony Credit has exceeded~~CLNC of $666.1 million was in excess of its ~~market value. The impairment was measured~~fair value of $188.9 million based ~~on Colony Credit's~~upon the closing stock price of ~~$15.50~~CLNC at $3.94 per share on ~~June 28, 2019, the last trading day~~March 31, 2020.

The Company determined that its investment in CLNC as of March 31, 2020 was not other-than-temporarily impaired. There was a notable decrease in CLNC's stock price in March 2020, which was reflective of the ~~second quarter, recorded~~significant volatility in equity markets and significant decline in equity prices as ~~part~~a whole in response to the COVID-19 crisis. There was no large disparity, however, between the Company's carrying value in CLNC and CLNC's internal estimated NAV as of March 31, 2020. The Company believes that, over the long term, the equity ~~method loss. For~~markets at large as well as CLNC's stock will not sustain the ~~three~~losses experienced in March 2020. The Company considered that at this time, it has both the intent and ~~six months ended June 30, 2019, we also recognized our share~~the ability to hold its investment in CLNC for a period of ~~net loss~~time that it believes would be sufficient to allow for an anticipated recovery in market value. Given the uncertainty over how prolonged the economic fallout from COVID-19 will affect financial markets and global economies, the Company will continue to reassess the recoverability of ~~$40.0 million and $34.5 million, respectively, compared to earnings of $5.4 million and $1.8 million~~its investment in CLNC as circumstances evolve, which may result in the ~~three~~recognition of an other-than-temporary impairment in the future.

CLNC Business Update

Michael J. Mazzei was appointed Chief Executive Officer and ~~six months ended June 30, 2018, respectively. The net loss resulted from additional loan loss provision~~President of CLNC effective April 1, 2020. Mr. Mazzei brings 35 years of experience, knowledge of navigating through cycles, and strong executive leadership in the commercial real estate ~~impairment recorded by Colony Credit~~finance and mortgage REIT business.

In an effort to conserve available liquidity, CLNC has suspended its monthly stock dividend beginning April 2020, a move that is in ~~the second quarter of 2019.~~line with other mortgage REITs.

Other Equity and Debt

~~Our other equity and debt~~This segment ~~consists~~is composed of a diversified group of ~~strategic and non-strategic~~non-digital real estate and real estate-related debt and equity ~~investments. Our interests in other equity and debt assets are held as direct interests as well as indirect interests through unconsolidated ventures. Strategic~~ investments, ~~include our co-investments~~including investments for which the Company acts as a general partner and/or manager ~~alongside third party capital that we raised~~("GP co-investments") and ~~manage for~~receives various forms of investment management economics ~~in the form of~~on related third-party capital on such investments, other real estate loans receivable and equity investments, including through direct limited partnership interests in our sponsored funds. Non-strategic investments include 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 private equity funds and various other equity investments. Over time, we intend to recycle capital from non-strategic investments in our other equity and debt investments and ~~shift our balance sheet exposure to strategic investments and our core~~other real estate ~~segments.~~related securities, among other holdings.

~~Our other equity~~Over time, the Company expects to monetize the bulk of its existing portfolio as it completes its digital evolution.

Investments and ~~debt segment generated the following results of operations:~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2019 2018 2019 2018
Total revenues $ 152,066
$ 190,950
$ 314,754
$ 396,104
Net income (loss) attributable to Colony Capital, Inc. (5,841 ) 31,333
18,081
80,442

~~Significant investments and corresponding debt~~financing in our other equity and debt portfolio ~~were as follows.~~are summarized below:


(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Real estate
Held for investment	$	1,945,823	$	2,161,888	$	1,989,449	$	2,036,036
Held for sale	596,172		651,303		286,112		353,724
Equity and debt investments
NRE	86,581		87,696
Limited partnership interests in our sponsored and co-sponsored funds	90,952		90,062		58,449		63,102
Other equity investments ⁽¹⁾	1,206,025		1,026,870		1,164,393		1,276,059
N-Star CDO bonds	62,442		64,127
CMBS of consolidated fund	5,058		32,706
Loans receivable	1,437,848		1,597,214
Debt ⁽²⁾	2,205,593		2,309,347
CRE debt securities					56,698		57,591
Loans receivable ⁽²⁾					1,540,837		1,518,058
Debt ⁽³⁾					1,969,639		2,061,101

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⁽¹⁾	Significant investments include acquisition, development and construction loans ($~~527.8~~532.7 million) and preferred equity investments ($~~139.2~~138.4 million).


⁽²⁾	Carried at fair value upon adoption of fair value option on January 1, 2020.


⁽³⁾	Includes debt carrying value of ~~$375.3~~$164.3 million related to real estate held for sale.

~~Significant activities~~Our other equity and debt segment generated the following results of operations:



	Three Months Ended March 31,
(In thousands)	2020			2019		Change
Total revenues	$	121,119		$	162,688	$	(41,569	)
Net income	29,977			59,528		(29,551		)
Net income (loss) attributable to Colony Capital, Inc.	(1,452		)	23,889		(25,341		)

Net income has decreased over time as we continued to monetize our other equity and debt portfolio in 2019, and also reflects the impact of COVID-19 in March 2020 on the operating results of our THL Hotel Portfolio, as discussed in

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"—Results of Operations." We recorded net loss attributable to the Company in the first quarter of 2020 as a result of disproportionate allocation of net income to noncontrolling interests at the investment level.

Generally, in 2020, we expect a slower pace of dispositions given the current global economic downturn resulting from efforts to contain COVID-19; nevertheless, we do intend to accelerate the sale of these non-core assets where reasonable values can be attained.

Most recently, in April 2020, we recapitalized an investment in the other equity and debt segment which generated $72.7 million of proceeds and resulted in a gain.

In terms of the effects of COVID-19, the impact has been significant to the THL Hotel Portfolio in our other equity and debt segment, inas discussed within the ~~six months ended June 30, 2019 were as follows:~~


•	~~Together with our sponsored credit fund,~~ ~~acquired a~~ ~~portfolio of six hotels in France from a distressed hotel owner, with the investment held through an equity method investee.~~

~~We continue to monetize other non-strategic assets, primarily our loan portfolios and our real estate in Europe, in our efforts to streamline our business and redeploy capital to more strategic areas.~~

In July 2019, NRE entered into an agreement to be acquired, with expected closing of the acquisition in the fourth quarter of 2019, for an estimated price of $17.03 per share based on three month forward foreign exchange rates. This will result in a sale of our 11% interest in NRE, totaling 5.6 million shares at June 30, 2019.Hospitality segment above.

Other Investment Management

~~We manage capital on behalf~~This segment, which is separate from the digital investment management business that resides in the digital segment, encompasses the Company’s management of ~~third party institutional and retail investors through~~ private real estate credit funds and ~~traded~~related co-investment vehicles, CLNC, a public non-traded healthcare REIT and ~~non-traded REITs, which provide a stable stream of management fee income. Our~~interests in other investment management ~~platform allows us~~platforms, among other smaller investment funds. The Company earns management fees, generally based on the amount of assets or capital managed, and contractual incentive fees or potential carried interest based on the performance of the investment vehicles managed subject to ~~raise private~~the achievement of minimum return hurdles.

As part of the Company’s ongoing transition and rotation to an investment management and operating business focused on digital real estate and infrastructure, the Company continues to pivot away from certain of its legacy investment management business. In light of the current economic conditions, the Company has postponed any decision on a disposition of its management contract with CLNC until such time that market conditions improve. Further, with respect to the other non-digital investment management business, the Company is exploring all potential opportunities to maximize value of the credit and opportunity fund investment management business, while minimizing balance sheet capital commitments, including, but not limited to, joint ventures with third party capital ~~in partnership with our own~~providers, sales and/or realignment of operational management.

Balance Sheet

Equity investments on the balance sheet ~~to further scale~~of our ~~core~~other investment management segment totaling $27.8 million at March 31, 2020 and $140.0 million at December 31, 2019 generally consist of our general partner and co-general partner interests in non-digital investment vehicles we sponsor or co-sponsor, and included unrealized carried interest of $3.3 million and $21.9 million, respectively, as well as interests in other real estate ~~segments and also allows us to pursue a balance sheet light strategy.~~

~~Significant Developments in the Investment Management Segment~~

~~Colony Latam—~~In April 2019, we acquired the private equity platform of the Abraaj Group in Latin America, which was renamed Colony Latam Partners. Colony Latam Partners, which manages approximately $574 million of fee earning equity under management ("FEEUM"), continues to be headed by its existing senior management team, who became our employees. The core strategy of the platform will focus on investing growth capital in mid-cap companies in the Latin American region.

~~NRE—~~In July 2019, NRE entered into a sale agreement that is expected to close in the fourth quarter of 2019. Termination of the NRE management agreement upon sale will result in a termination payment by NRE of $70 million, inclusive of incentive fees earned by us through termination, of which $5.4 million has been received for fiscal year 2018.

~~DBH—~~In July 2019, we acquired DBH for $325 million, in a combination of cash and OP units, as part of our strategic evolution to become the leading platform for digital infrastructure and real estate. This acquisition follows the May 2019 final closing of the Digital Colony fund, co-sponsored by us and DBH.

~~Global Credit Fund—~~In July 2019, we held an initial closing of our fifth global real estate credit fund (second as a public company), a United States dollar and Euro denominated fund structure primarily focused on opportunistic credit investments in Europe, with total capital commitments of approximately $428 million or €384 million (inclusive of our capital commitment of $121 million or €109 million, which may be reduced to no less than 5% of total commitments from future third party commitments).asset managers.

Performance

Results of operations of our ~~Investment Management~~other investment management segment ~~were~~are as follows.


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	2019		2018			2019		2018			2020		2019		Change
Total revenues ⁽¹⁾	$	43,802	$	47,909		$	83,807	$	89,116		$	24,299	$	40,005	$	(15,706	)
Net income (loss) attributable to Colony Capital, Inc.	4,351		(47,070		)	24,899		(127,590		)
Net income											18,130		19,796		(1,666		)
Net income attributable to Colony Capital, Inc.											16,359		17,748		(1,389		)

__________

⁽¹⁾

Includes cost reimbursement income from ~~Colony Credit,~~CLNC, NRE (prior to its sale in September 2019) and retail companies of ~~$3.4~~$3.5 million and $3.4 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $6.7 million and $7.6 million for the six months ended June 30, 2019 and 2018,~~ respectively, which are recorded gross as income and expense in the results of operations.

Net ~~loss~~income decreased $1.7 million. We recognized ~~in 2018 was driven by various impairment charges on intangible assets, specifically write-off~~a $96.9 million gain, net of ~~$139.0 million on~~tax, from the NorthStar I and NorthStar II management contracts that were terminated upon closing of the Combination; $1.4 million on the NorthStar/RXR NY Metro management contract upon termination of its offering period and subsequent liquidation; and (iii) $59.5 million on the NorthStar trade name.

~~Balance sheet investments of $175.9 million in our Investment Management segment generally consist~~sale of our ~~general partner and co-general partner interests~~equity investment in ~~investment vehicles we sponsor or co-sponsor, which, as of June 30, 2019, included $16.2~~RXR Realty in February 2020; however, this was largely offset by $79.0 million of ~~unrealized~~goodwill impairment, and a reversal of $9.2 million carried interest allocation, net of compensation, and $6.5 million decrease in fee income, as ~~well as interests~~discussed further in ~~other asset managers.~~

"~~Table~~—Results of ~~Contents~~Operations.

~~Capital Raising, Assets Under Management and Fee Earning Equity Under Management~~

In the six months ended June 30, 2019, we raised approximately $327 million of third party capital (including our pro rata share from equity method investments in third party asset managers of $38 million), driven primarily by $141.7 million in our open-end industrial fund, $70.0 million in our bulk industrial joint venture partnership and $59 million in Digital Colony, our digital real estate infrastructure vehicle.

~~Below is a summary of our third party AUM and FEEUM:~~

AUM ⁽¹⁾ (In billions)

FEEUM ⁽²⁾(In billions)
Type Products Description June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
Institutional funds Credit funds, opportunistic funds, value-add funds, Colony industrial open end fund and other co-investment vehicles Earns base and asset management fees from all managed funds; potential for carried interest on sponsored funds $ 10.2
$ 9.5
$ 6.8
$ 6.4
Retail Companies NorthStar Healthcare
Earns base management fees and potential for carried interest

3.4
3.5
1.4
1.4

CC Real Estate Income Fund ⁽³⁾

Public companies NorthStar Realty Europe Corp. NYSE-listed European equity REIT 1.5
1.7
1.0
1.0

Colony Credit Real Estate, Inc.⁽⁴⁾
NYSE-listed credit REIT 3.7
3.5
3.1
3.1
Earns base management fees and potential for incentive fees
Non-wholly owned real estate investment management platform Joint venture investments in co-sponsored investment vehicles and third party asset managers Earns share of earnings from equity method investments:

Digital Colony, 50% interest in co-sponsored digital infrastructure vehicle 1.9
1.9
1.9
1.9
Others include investments in RXR Realty (27% interest in a real estate investor, developer and asset manager) and AHI (43% interest in a healthcare asset manager and sponsor of non-traded vehicles) 7.9
8.3
3.8
3.8
$ 28.6
$ 28.4
$ 18.0
$ 17.6

~~__________~~

⁽¹⁾"

⁽²⁾


⁽³⁾	In February 2019, the board of directors of CC Real Estate Income Fund (“CCREIF”) approved a plan to dissolve, liquidate and terminate CCREIF and distribute the net proceeds of such liquidation to its shareholders. As CCREIF’s advisor, we have begun the process of liquidating its portfolio, however, no assurances can be made as to the timing or completion of the liquidation.


⁽⁴⁾	~~Represents third party ownership share of CLNC's pro rata share of total assets, excluding consolidated securitization trusts.~~

The Company's third party FEEUM was $18.0 billion at June 30, 2019 and $17.6 billion at December 31, 2018. The $0.4 billion net increase in the first six months of 2019 is attributable to the addition of FEEUM from the Colony Latam platform acquired in April 2019 and fee-bearing capital raised in our light and bulk industrial platform in the first quarter of 2019, both of which was partially offset by continued liquidation of legacy Colony private funds.

Non-GAAP Supplemental Financial Measures

The Company reports funds from operations ("FFO") as an overall non-GAAP supplemental financial measure. The Company also reports EBITDAre for the digital real estate segment, NOI for the healthcare segment and ~~industrial segments and EBITDA~~NOI Before FF&E Reserve for the hospitality segment, which are supplemental non-GAAP financial measures widely used in the equity REIT industry. ~~FFO and NOI~~These non-GAAP measures should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications

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of the availability of funds for our cash needs, including funds available to make distributions. Our calculation of FFO, EBITDAre and NOI may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.

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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 (i) extraordinary items, as defined by GAAP; (ii) gains and losses from sales of depreciable real estate; (iii) impairment write-downs associated with depreciable real estate; and (iv) gains and losses from a change in control in connection with interests in depreciable real estate or in-substance real estate; plus (v) real estate-related depreciation and amortization; and (vi) including similar adjustments for equity method investments. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, and equity and debt 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 attributable to common stockholders to FFO attributable to common interests in Operating Company and common stockholders. Amounts in the table include our share of activity in unconsolidated ventures.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2019			2018			2019			2018			2020			2019
Net loss attributable to common stockholders	$	(468,890	)	$	(92,806	)	$	(571,003	)	$	(165,520	)	$	(361,633	)	$	(102,113	)
Adjustments for FFO attributable to common interests in Operating Company and common stockholders:
Net loss attributable to noncontrolling common interests in Operating Company	(29,989		)	(5,728		)	(36,600		)	(10,106		)	(39,601		)	(6,611		)
Real estate depreciation and amortization	159,496			140,599			313,898			284,505			130,523			154,402
Impairment of real estate	87,600			9,522			113,222			24,462			308,268			25,622
Gain on sales of real estate	(7,088		)	(42,750		)	(62,322		)	(65,675		)	(7,933		)	(55,234		)
Less: Adjustments attributable to noncontrolling interests in investment entities⁽¹⁾	(88,705		)	(29,471		)	(123,979		)	(70,234		)	(82,329		)	(35,274		)
FFO attributable to common interests in Operating Company and common stockholders	$	(347,576	)	$	(20,634	)	$	(366,784	)	$	(2,568	)	$	(52,705	)	$	(19,208	)

__________

⁽¹⁾

For the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ adjustments attributable to noncontrolling interests in investment entities include ~~$56.4~~$47.7 million and ~~$44.4~~$51.8 million of real estate depreciation and amortization, ~~$36.5~~$40.1 million and ~~$5.6~~$14.2 million of impairment of real estate, offset by ~~$4.1~~$5.5 million and $20.5 million of gain on sales of real estate, respectively. For the six months ended June 30, 2019 and 2018, adjustments attributable to noncontrolling interests in investment entities include $108.2 million and $88.1 million of real estate depreciation and amortization, $50.6 million and $13.4 million of impairment of real estate, offset by $34.8 million and $31.2$30.7 million of gain on sales of real estate, respectively.

~~Net Operating Income~~

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EBITDAre

We calculate EBITDAre for our digital real estate 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 (expense); (iii) depreciation and amortization; (iv) gains on disposition of depreciated real estate, including gains or losses on change of control; (v) impairment write-downs of depreciated real estate and of investments in unconsolidated affiliates caused by a decrease in value of depreciated real estate in the affiliate; and (vi) including similar adjustments for equity method investments to reflect the Company's share of EBITDAre of unconsolidated affiliates

EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash 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 reflection of on-going operating performance and allows for period-over-period comparability.

As with other non-GAAP measures, the usefulness of EBITDAre may be limited. For example, EBITDAre focuses on profitability from operations, and does not take into account financing costs, and capital expenditures needed to maintain operating real estate.

NOI

NOI for our ~~real estate~~healthcare and hospitality segments ~~represents~~represent total property and related income less property operating expenses, adjusted primarily for the effects of (i) straight-line rental income adjustments; and (ii) amortization of acquired above- and below-market lease adjustments to rental income, where applicable. For our hospitality segment, NOI does not reflect the reserve contributions to fund certain capital expenditures, repair, replacement and refurbishment of furniture, fixtures, and equipment, ~~("FF&E Reserve"),~~ based on a percentage of revenues, typically 4% to 5%, that is required under certain debt agreements and/or franchise and brand-managed hotel agreements.

We believe that NOI is a useful measure of operating performance of our ~~respective real estate~~healthcare and hospitality portfolios as it is more closely linked to 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 excludes historical cost depreciation and amortization, which are based upon 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 sales 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.

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Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of our properties, NOI provides a measure of operating performance independent of our capital structure and indebtedness.

However, the exclusion of these items as well as others, such as capital expenditures, FF&E reserve and leasing costs, which are necessary to maintain the operating performance of our properties, and transaction costs and administrative costs, may limit the usefulness of NOI.

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The following tables present reconciliations of net ~~income (loss)~~loss of the digital real estate segment to EBITDAre, and net loss of the healthcare ~~industrial~~ and hospitality segments to ~~NOI of the respective segments.~~

NOI.

Healthcare Industrial
Hospitality ⁽¹⁾
Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,
(In thousands) 2019 2018 2019 2018 2019 2018
Net income (loss) $ (81,520 ) $ (20,080 ) $ (2,663 ) $ 4,668
$ (3,505 ) $ 6,771
Adjustments:
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset (4,817 ) (1,580 ) (4,067 ) (2,554 ) 316
(6 )
Interest income —
—
(119 ) (62 ) (6 ) —
Other income (36 ) —
—
—
(3 ) (68 )
Interest expense 57,135
45,179
19,726
10,856
41,591
36,494
Transaction, investment and servicing costs 9,097
3,110
8
60
2,712
3,546
Depreciation and amortization 40,778
38,229
45,360
32,482
37,008
35,925
Impairment loss 51,324
1,982
—
174
420
—
Compensation and administrative expense 2,301
2,196
4,192
3,416
2,183
1,598
Gain on sale of real estate —
—
(547 ) —
(140 ) —
Other loss, net 2,261
4,465
49

114
162
Income tax expense 596
355
300
38
2,006
1,556
NOI / NOI (before FF&E Reserve) $ 77,119
$ 73,856
$ 62,239
$ 49,078
$ 82,696
$ 85,978


	Healthcare						Industrial						Hospitality ⁽¹⁾						Digital Real Estate				Healthcare								Hospitality ⁽¹⁾
	Six Months Ended June 30,						Six Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31, 2020				Three Months Ended March 31,								Three Months Ended March 31,
(In thousands)	2019			2018			2019			2018			2019			2018						2020				2019				2020				2019
Net income (loss)	$	(88,726	)	$	(32,614	)	$	21,491		$	10,989		$	(29,582	)	$	(5,115	)
Net loss																			Three Months Ended March 31, 2020	$	(18,295	)		$	(64,145	)		$	(7,206	)		$	(295,757	)		$	(26,077	)
Adjustments:
Straight-line rent and amortization of above- and below-market lease intangibles and ground lease asset	(10,044		)	(5,899		)	(7,298		)	(4,851		)	626			(13		)	—				(3,966		)		(5,227		)		314				310
Interest income	—			—			(299		)	(594		)	(6		)	—			—				(27		)		—				—				—
Other income	(36		)	—			—			—			(3		)	(556		)
Interest expense	104,662			96,120			34,352			21,046			83,656			70,855			9,402				39,866				47,527				39,789				42,065
Transaction, investment and servicing costs	12,205			5,420			538			134			4,296			5,088			—				2,898				3,108				1,421				1,584
Depreciation and amortization	80,909			79,356			84,805			62,427			73,256			71,382			30,031				37,460				40,131				36,444				36,248
Impairment loss	51,324			5,762			—			174			4,270			—			—				48,532				—				250,162				3,850
Compensation and administrative expense	3,954			4,129			7,696			6,639			4,087			3,615			—				2,483				1,653				2,507				1,904
Gain on sale of real estate	—			—			(23,395		)	(2,293		)	(279		)	—			—				—				—				—				(139		)
Other (gain) loss, net	394			1,539			57						113			(161		)	—				5,651				(1,867		)		(156		)		(1		)
Income tax (benefit) expense	(1,278		)	1,353			131			41			2,842			75			(5,730		)		(130		)		(1,874		)		(1,879		)		836
NOI / NOI (before FF&E Reserve)	$	153,364		$	155,166		$	118,078		$	93,712		$	143,276		$	145,170
EBITDAre / NOI / NOI before FF&E Reserve																			$	15,408			$	68,622			$	76,245			$	32,845			$	60,580

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⁽¹⁾	NOI for the hospitality segment excludes FF&E Reserve which is determined based on a percentage of revenues.

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Liquidity and Capital Resources

Our financing strategy in general favors investment-specific financing principally on a non-recourse basis, and then corporate financing, which is generally recourse to the Company or the Company’s assets. We seek to match terms and currencies, as available and applicable.

Our current primary liquidity needs are to fund:

our general partner commitments to our future investment vehicles and co-investment commitments to other investment vehicles;

acquisitions of our target digital assets for our balance sheet and third party capital and related ongoing commitments;

principal and interest payments on our ~~borrowings, including interest obligation on our corporate level~~ debt;

our operations, including compensation, administrative and overhead costs;

capital expenditures for our traditional commercial real estate and digital real estate investments;

distributions to our common and preferred stockholders;

acquisitions of common stock under our common stock repurchase program and potentially other corporate securities; and

income tax liabilities of taxable REIT subsidiaries and of the Company subject to limitations as a ~~REIT; and~~

~~potential margin calls and/or out-of-the-money expiration of $2 billion notional interest rate swap in December 2019.~~REIT.

Our current primary sources of liquidity are:

cash on hand;

our credit facilities;

~~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 payments and carried interest;

proceeds from full or partial realization of ~~investments;~~investments and/or businesses;

investment-level financing;

proceeds from public or private equity and debt offerings; and

third party capital commitments of sponsored investment vehicles.

~~We believe that 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.

~~Additional discussions~~Through the date of this filing, our liquidity position was approximately $1.0 billion, including the $600 million drawn under our revolving credit facility.

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In order to mitigate the effects of COVID-19 on the Company's legacy business, we are taking various steps with a principal focus on enhancing the Company’s liquidity and financial flexibility, as discussed in “—Business” above.

While the Company is currently in compliance with the debt covenants under its corporate credit facility and anticipates having sufficient liquidity to meet its operational needs, general concerns over credit and liquidity continue to permeate the financial markets in an economic downturn environment. The Company continues to evaluate opportunities to address near-term maturities and enhance its long-term capital structure and liquidity profile including, but not limited to, asset sales and re-financings, issuance of new securities, modifications and/or extensions to existing credit agreements.

General discussion of our liquidity needs and sources of liquidity are presented below.

Liquidity Needs

Commitments

Our commitments in connection with our investment activities and other activities are described in "—Contractual Obligations, Commitments and Contingencies."

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. 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. 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.

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Common Stock—Our board of directors declared the following dividends ~~in 2019:~~through May 2020. The Company is suspending the dividend on its class A common stock for the second quarter of 2020 as the board of directors and management believe it is prudent to conserve cash during the current period of uncertainty. Our board of directors will also be re-evaluating the go-forward dividend policy to align with our ongoing pivot to digital infrastructure.

Declaration Date Record Date Payment Date Dividend Per Share
February 27, 2019 March 29, 2019 April 15, 2019 $ 0.11
May 7, 2019 June 28, 2019 July 15, 2019 0.11
August 6, 2019 September 30, 2019 October 15, 2019 0.11



Declaration Date	Record Date	Payment Date	Dividend Per Share
February 19, 2020	March 31, 2020	April 15, 2020	$	0.11

Preferred Stock—We are required to make quarterly cash distributions on our outstanding preferred stock, ~~as follows:~~

Shares Outstanding
June 30, 2019
(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 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
57,464
$ 27,138

~~Common Stock Repurchases~~

~~During the six months ended June 30, 2019, the Company repurchased 652,311 shares of its class A common stock, at an aggregate cost of approximately $3.2 million (excluding commissions), or~~with a weighted average ~~price~~dividend rate of ~~$4.84~~7.16% per ~~share pursuant to a $300~~annum, as follows. In January 2020, we settled the redemption of our Series B and E preferred stock for $402.9 million ~~share repurchase program authorized~~using proceeds from our industrial sale, which will reduce our annual dividends by ~~its board of directors in May 2018. As of August 6, 2019,~~ approximately $34.5 million.

~~$246.7 million~~ ~~remained outstanding under the May 2018 stock repurchase program.~~ In May ~~2019,~~2020, the Company's board of directors ~~authorized an extension~~elected to defer the declaration of a dividend on its preferred stock until June 30, 2020, subject to its assessment of the ~~stock repurchase program for an additional one year term.~~effects of COVID-19.

~~Settlement of Interest Rate Swap~~



		Shares Outstanding March 31, 2020 (In thousands)	Quarterly Cash Distributions
Description	Dividend Rate Per Annum	Shares Outstanding March 31, 2020 (In thousands)	Total (In thousands)		Per Share
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
		41,350	$	18,516

In connection with the Merger, we assumed a $2 billion notional interest rate swap intended to hedge against future interest rate increases of certain healthcare mortgage debt at a break-even 10-year swap rate of 3.394%. 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. The swap is currently out of the money and is subject to margin calls if the liability is in excess of $160 million. The swap expires in December 2019 with a mandatory cash settlement at fair value (receivable to the Company if the 10-year swap rate is greater than 3.394% and a liability of the Company if the 10-year swap rate is lower than 3.394%) and can be terminated by the Company any time prior to expiration at termination value. As of August 6, 2019, the termination value of the liability was approximately $344.0 million, and a hypothetical 100 basis point increase or decrease in the 10-year treasury forward curve would result in a reduction of $192.8 million or an additional $214.4 million in the cash settlement amount.

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 equity investments, including

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our GP ~~Co-Investments.~~co-investments. Such income is partially offset by interest expense associated with borrowings ~~against~~on our investments.

Additionally, we generate fee revenue from our investment management segment through the management of various types of investment products, including both institutional and retail capital. Management fee income is generally a predictable and stable revenue stream, while carried interest and contractual incentive fees 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.

Asset Monetization

We periodically monetize our investments through asset sales that are opportunistic in nature or to recycle capital from non-core assets.

In December 2019, we sold our light industrial portfolio, including its associated management platform, and received net proceeds of $1.2 billion. We have applied a portion of the proceeds into the acquisition of DataBank in December 2019, payoff of the outstanding balance on our corporate credit facility that was used to finance our acquisition of DBH, fund our remaining commitments to DCP, and redemption of preferred stock. We continue to seek opportunities to redeploy the proceeds into new digital investments, including general partner co-investments, permanent balance sheet investments and warehouse investments for future vehicles, as well as for our capital structure enhancement and other uses.

Investment-Level Financing

We have various forms of investment-level financing, as described in Note 910 to the consolidated financial statements.

Our ability to raise and access third party capital in our sponsored investment vehicles ~~would allow~~allows us to scale our investment activities by pooling capital to access larger transactions and diversify our investment exposure.

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Corporate Credit Facility

As described in Note 910 to the consolidated financial statements, the Credit Agreement ~~which was amended in April 2019,~~ provides a secured revolving credit facility in the maximum principal amount of $750 million, which may be increased to a maximum capacity of $1.125 billion, subject to customary conditions. The credit facility is scheduled to mature in January 2021, with two 6-month extension options. While we expect to extend the term of the corporate credit facility, further deterioration in the markets and our operating performance may limit our ability to extend the facility on its current terms including, without limitation, the borrowing base capacity.

The maximum amount available at any time is limited by a borrowing base of certain investment assets. As of ~~August 6, 2019,~~ the ~~borrowing base valuation was sufficient to permit borrowings~~date of ~~up to~~this filing, we have drawn $600 million of the ~~full~~ ~~$750~~approximately $700 million ~~commitment, of which $384 million was~~ available ~~to be drawn.~~under the credit facility.

The Credit Agreement contains various affirmative and negative covenants, including financial covenants that require the Company to maintain minimum tangible net worth, liquidity levels and financial ratios, as defined in the Credit ~~Agreement and as amended in April 2019. As~~Agreement. Through the date of ~~June 30, 2019,~~this filing, we were in compliance with the financial ~~covenants, as amended.~~covenants.

~~Convertible~~Other Corporate Level Debt

We have total outstanding principal of $616 million and ~~Exchangeable Senior Notes~~

~~Convertible~~$280 million on our convertible and exchangeable senior notes, ~~issued by us~~ and ~~that remain outstanding are~~junior subordinated debt, respectively, with weighted average interest rates of 4.27% and 4.31%, respectively, at March 31, 2020, as described in Note 910 to the consolidated financial statements.

We expect to address the January 2021 maturity of our outstanding $402.5 million convertible notes through cash on hand, proceeds from future asset monetization and/or a refinancing transaction.

Public Offerings

We may offer and sell various types of securities under our ~~effective~~ 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.

There were no public offerings of securities in the ~~six~~three months ended ~~June 30, 2019 and in the year ended December~~March 31, ~~2018.~~2020.

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Cash Flows

The following table summarizes our cash flow activity for the periods presented.


	Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2019			2018			2020			2019
Net cash provided by (used in):
Operating activities	$	139,151		$	211,380		$	(59,669	)	$	66,636
Investing activities	(858,190		)	63,357			166,921			(924,951		)
Financing activities	579,735			(782,477		)	4,882			676,675

Operating Activities

Cash inflows from operating activities are generated primarily through property operating income from our real estate investments, interest received from our loans and securities portfolio, distributions of earnings received from 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 outflows of ~~$139.2~~$59.7 million ~~and $211.4~~compared to net cash inflows of $66.6 million in the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

~~We believe~~The three months ended March 31, 2019 had included $41.8 million of operating cash ~~flows~~inflows from ~~operations, available cash balances and~~ our ~~ability to generate cash through short and long-term borrowings are sufficient to fund~~industrial business, which was sold in December 2019. The digital real estate business that was acquired in December 2019 is a much smaller portfolio in comparison.

The three months ended March 31, 2020 included the payment of $39.9 million of accrued carried interest compensation in connection with carried interest realized from the sale of our ~~operating liquidity needs.~~light industrial portfolio in December 2019.

Investing Activities

Investing activities include 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, proceeds from sale of real estate and equity investments, as well as proceeds from maturity or sale of debt securities.

Our investing activities ~~incurred~~generated net cash inflows of $166.9 million compared to net cash outflows of ~~$858.2 million while generating net cash inflows of $63.4~~$925.0 million in the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

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The significant net cash outflows in the ~~six~~three months ended ~~June 30,~~March 31, 2019 was driven by ~~$1.1 billion~~outflows of ~~cash paid~~$973.1 million for ~~real estate acquisitions,~~acquisition, net of ~~proceeds from~~sales, of real ~~estate sales,~~estate; in particular, ~~our~~ acquisition of a ~~50 building~~combined $1.1 billion light and bulk industrial portfolio in ~~our~~February 2019. Our entire light industrial ~~segment for $1.1 billion~~portfolio was sold in ~~February~~December 2019.

By contrast, our real estate investment activities in the ~~six~~three months ended ~~June 30, 2018~~March 31, 2020 generated ~~much lower~~net cash inflows of $48.5 million from sales of real estate with no new acquisitions.

Another significant contributor of net cash inflows in the three months ended March 31, 2020 was $133.6 million from our equity investments, driven by $179.1 million net proceeds from sale of our investment in RXR Realty in February 2020. In the three months ended March 31, 2019, we had net cash outflows of ~~$114.0 million. The first six~~$63.5 million related to equity investments, primarily in net equity contributions.

Lastly, our loan and securities portfolio generated net cash outflows of $13.1 million in the three months ~~of 2018 also generated higher~~ended March 31, 2020 compared to net cash inflows ~~from our equity investments as we received a return~~ of ~~capital from our initial investment~~$92.2 million in the digital real estate infrastructure joint venture upon raising third party capital through our Digital Colony Partners fund. In the first quarter of 2018, however, we had contributed the CLNY Contributed Portfolio to Colony Credit, which included ~~$141.2 million~~ ~~of cash and restricted cash.~~three months ended March 31, 2019 when loan repayments outpaced loan disbursements.

Financing Activities

We finance our investing activities largely through investment-level secured debt 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 notes. Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, dividends to our preferred and common stockholders, as well as distributions to our noncontrolling interests.

Financing activities generated net cash inflows of ~~$579.7~~$4.9 million and $676.7 million in the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019.

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The significant net financing cash inflows in the three months ended March 31, 2019 were driven by borrowings exceeding debt repayments by $654.8 million, specifically $735 million of borrowings to fund a large industrial portfolio acquisition in February 2019, a majority of which was sold in December 2019.

While borrowings exceeded debt repayments in the three months ended March 31, 2020 by $496.2 million, primarily due to a $600 million draw on our corporate credit facility, we also settled the redemption of our Series B and E preferred stock for $402.9 million in January 2020 using proceeds from our industrial sale.

Common stock repurchases were also higher in the three months ended March 31, 2020 totaling 12.7 million shares for $24.7 million compared to ~~net cash outflows of $782.5~~0.7 million shares for $10.7 million in the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019.

~~The~~Additionally, net contributions from noncontrolling interests of $117.3 million contributed to overall net cash inflows in the ~~six~~three months ended ~~June 30,~~March 31, 2019, ~~can be attributed to borrowings exceeding debt repayments by $660.3~~with $213.2 million ~~in particular aggregate borrowings~~ of ~~$840 million in our industrial segment, primarily to fund a large portfolio acquisition in February 2019.~~

~~In comparison, the net cash outflows~~third party capital raised in the ~~six~~industrial platform. In the three months ended ~~June 30, 2018~~March 31, 2020, net contributions from noncontrolling interests was ~~driven by repurchases of 42.3 million shares of common stock totaling $319.0 million and dividend payments of $266.8 million. In the six months ended June 30, 2019, dividend payments were~~much lower at $161.1 million, primarily as a result of lower per share dividends beginning in the second quarter of 2018 combined with dividend savings from common stock repurchases and preferred stock redemptions throughout 2018 and in the first quarter of 2019. Stock repurchase activity was also significantly reduced in the first six months of 2019, at 0.7 million shares for $10.7$18.8 million.

Contractual Obligations, Commitments and Contingencies

There were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Form 10-K for the year ended December 31, ~~2018.~~2019.

Guarantees and Off-Balance Sheet Arrangements

In connection with financing arrangements for certain ~~equity method investments,~~unconsolidated ventures, we ~~provide~~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 June 30, 2019.~~

In ~~connection with the THL Hotel Portfolio,~~addition, we have entered into guarantee or contribution agreements with ~~various~~certain hotel franchisors or operating partners, pursuant to which we guaranteed or agreed to contribute to the franchisees’ obligations, including payments of franchise fees and marketing fees, for the term of the ~~agreements, which expire between 2027 and 2032. In~~agreements. We believe that the ~~event~~likelihood of ~~default or termination of~~making any payments under the ~~franchise agreements, the Company~~guarantees is ~~liable for liquidated damages not to exceed $75 million.~~remote.

We have off-balance sheet arrangements with respect to our retained interests in certain 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. In order 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, theThe risk committee of our board of directors, in consultation with our chief risk officer, internal auditor and ~~other~~ management, periodically reviews 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 of our board of directors maintains oversight of financial reporting risk matters.

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Underwriting and Investment Process

In connection with ~~evaluating~~executing any ~~potential equity or debt~~new investment in digital assets for our ~~portfolio~~balance sheet or a managed investment vehicle, our underwriting team ~~in conjunction with third party providers,~~ undertakes ~~an asset-level~~a comprehensive due diligence process ~~involving data collection and analysis,~~ to ensure that we understand ~~the state~~all of the ~~market and the risk-reward profile of the asset. In~~material risks involved with making such investment, in addition ~~we evaluate material~~to related accounting, legal, financial and business ~~issues surrounding such investment. These issues and~~issues. If the risks ~~are built into~~can be sufficiently mitigated in relation to the ~~valuation~~potential return, we will pursue the investment on behalf of ~~an asset and ultimate pricing~~our balance sheet and/or investment vehicles, subject to approval from the applicable investment committee, composed of ~~an investment.~~senior executives of the Company.

~~During the~~Specifically, as part of our underwriting process, we evaluate and review the following data, including, but not limited to: ~~property~~ financial data including ~~historic~~historical and budgeted financial statements, ~~liquidity~~tenant 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 efficiency~~pipeline, technical/energy requirements and ~~property management efficacy) and~~supply, local and ~~real estate~~macroeconomic market conditions, ~~including vacancy rates, absorption, new supply, rent levels~~ESG, 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, as the case may be. Prior to making a final investment decision, we determine whether a target asset will cause the 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.

~~Investment Committees~~

~~We have established investment committees composed~~

Table of senior executives for our various business segments as well as for the portfolios of the funds we manage. These investment committees review and evaluate potential investment opportunities, and meet periodically with the Company’s portfolio management team to review and monitor risks posed by existing investments.Contents

Allocation Procedures

We currently manage, and may in the future manage, 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, 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 team, regular management meetings and quarterly asset review process. These processes are designed to enable management to evaluate and proactively identify ~~asset-specific~~investment-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 risk to preserve our income and ~~capital. For commercial real estate equity and debt investments, frequent re-underwriting and~~capital, including, but not limited to, maintaining 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 healthcare properties, we consider the impact of regulatory changes on operator performance and property values. During a quarterly review, or more frequently as necessary, investments are monitored and identified for possible asset impairment ~~and~~or loan loss reserves, as ~~appropriate,~~applicable, based upon several factors, including missed or late contractual payments, significant declines in ~~collateral~~property 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 to~~may 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.

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In 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 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.

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 in general is to favor investment-specific financing principally on a non-recourse basis, and then corporate financing, which is generally recourse to the Company or the Company’s assets. We seek to match terms and currencies, as available and applicable, and 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. 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.

Other than adoption of ~~the~~ new ~~lease~~ accounting ~~standard,~~standards, in particular, Topic 326Financial Instruments—Credit Losses, which ~~is included~~are discussed in Note 2 to our consolidated financial statements in Item 1 of this Quarterly Report, there have been no changes to our critical accounting policies or those of our unconsolidated joint ventures since the filing of our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2018.~~2019.

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The application of critical accounting policies that required significant management judgment, estimates and assumptions are discussed further in the following notes to the consolidated financial statements.

Impairment of real estate—Note 4

Other-than-temporary impairment on equity method investments—Note 6

Fair value measurement of loans receivable under fair value option—Note 12

Credit loss on available for sale debt securities—Note 6

Impairment of goodwill and intangible assets—Note 7

We believe that all of the underlying decisions and assessments applied were reasonable at the time made, based upon information available to us at that time. Due to the inherently judgmental nature of the various projections and assumptions used, the unpredictability of economic and market conditions, and the uncertainties over the duration and severity of the resulting economic effects of COVID-19, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our financial statements in the future.

Recent Accounting Updates

~~Recent~~The impact of accounting ~~updates~~standards adopted in 2020 and the potential impact of accounting standards to be adopted in the future are ~~included~~described in Note 2 to our consolidated financial statements in Item 1 of this Quarterly Report.

Item 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.

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 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/

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operator’s commitment to the facility by structuring various credit enhancement mechanisms into their 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.”

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.

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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. At March 31, 2020, we did not have any outstanding interest rate swap positions. 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 March 31, 2020, 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 March 31, 2020, all of which were under 2% at March 31, 2020.



($ in thousands)	+2.00%		+1.00%		-1.00%			Maximum Decrease in Applicable Index
Increase (decrease) in interest expense	$	166,742	$	86,326	$	(76,802	)	$	(78,781	)
Amount attributable to noncontrolling interests in investment entities	43,951		23,311		(18,690		)	(18,836		)
Amount attributable to Operating Company	$	122,791	$	63,015	$	(58,112	)	$	(59,945	)

Foreign Currency Risk

We have foreign currency rate exposures related to our foreign currency-denominated investments 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 our net investments in our foreign subsidiaries. The types of hedging instruments that we may employ on our foreign subsidiary investments are forwards 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 ~~June 30, 2019,~~March 31, 2020, we had approximately ~~€601.4~~€497.0 million and ~~£234.4~~£272.8 million or a total of ~~$1.0~~$0.9 billion, in net investments in our European ~~subsidiaries and a £39.2 million or $49.8 million loan receivable held by a U.S subsidiary.~~subsidiaries. A 1% change in these foreign currency rates would result in a ~~$9.8~~$8.5 million increase or decrease in translation gain or loss included in other comprehensive income in connection with our investment in our European subsidiaries, and a ~~$0.5~~$0.3 million gain or loss in earnings in connection with the foreign denominated loan receivable held by a U.S subsidiary.

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A summary of the foreign exchange contracts in place at ~~June 30, 2019,~~March 31, 2020, including notional ~~amount~~amounts and key terms, is included in Note 1011 to the consolidated financial statements. The maturity dates of these instruments approximate the projected dates of related cash flows for specific investments. Termination or maturity of currency hedging instruments may result in an obligation for payment to or from the counterparty to the hedging agreement. We are exposed to credit loss in the event of non-performance by counterparties for these contracts. To manage this risk, we select major international banks and financial institutions as counterparties and perform a quarterly review of the financial health and stability of our trading counterparties. Based on our review at ~~June 30, 2019,~~March 31, 2020, we do not expect any counterparty to default on its obligations.

Inflation

Many of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance more so than inflation, although inflation rates can often have a meaningful influence over the direction of interest rates. Furthermore, our financial statements are prepared in accordance with GAAP and our distributions as determined by our board of directors will be primarily based on our taxable income, and, in each case, our activities and balance sheet are measured with reference to historical cost and/or fair value without considering inflation.

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Item 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 ~~June 30, 2019.~~March 31, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes 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 ~~June 30, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~reporting, other than our continued evaluation of the policies, processes, systems and operations of DataBank that was acquired in December 2019.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company may be involved in litigations and claims in the ordinary course of business. As of ~~June 30, 2019~~,March 31, 2020, the Company was not involved in any material legal proceedings.

Item 1A. Risk Factors.

~~Other than the addition~~For a discussion of ~~the following, there have been no material changes~~our potential risks and uncertainties, please refer to the ~~risk factors included~~“Risk Factors” section in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2018.~~2019, which is available on the SEC’s website at www.sec.gov. The Company is providing the following additional risk factors to supplement the risk factors included in Item 1A. of the Annual Report:

The current pandemic of the novel coronavirus (COVID-19) and the volatility it has created, has significantly disrupted our business and is expected to continue to significantly, and may materially adversely, impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations, and our ability to pay dividends and other distributions to our stockholders. Future outbreaks of highly infectious or contagious diseases or other public health crises could have similar adverse effects on our business.

In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified, many countries, including the United States, have reacted by instituting quarantines, restricting and banning travel or transportation, mandating business and school closures, limiting size of gatherings and canceling sporting, business and other events and conferences.

While our company continues to pivot to a digitally-focused strategy, a significant portion of our assets consist of, and our revenues are derived from, real estate investments, including healthcare and hospitality assets. The COVID-19 pandemic has impacted states and cities where we and our tenants operate our and their respective healthcare, hospitality and other businesses and where our properties are located. The preventative measures taken to alleviate the public health crisis, including significant restrictions on travel between the United States and specific countries, and “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities, has significantly disrupted global travel and supply chains, and has adversely impacted global commercial activity across many industries, including in particular the travel, group meeting and conference, lodging and hospitality industries and has disrupted, and is anticipated to further disrupt, operations and businesses in the healthcare industries, as discussed further below.

The occupancy rates of and revenues generated by our hospitality properties depends on the ability and willingness of guests to travel to our hotels. The spread of COVID-19 has not only decreased guests’ willingness to travel, but also prevented guests from traveling to visit or stay at our hotels as a result of federal travel, social distancing or mandated “shelter-in-place” or “stay-at-home” orders and even if such orders are lifted, demand for travel may continue to be adversely impacted. Similarly, “shelter-in-place” or “stay-at-home” orders, as well as bans on admissions, have also begun to impact occupancy at our healthcare properties, as inquiries, tours and move-ins have all declined. In addition, some tenants in our medical office buildings within our healthcare portfolio have and may continue to seek concessions from us for paying lease charges as a result of such restrictions.

In addition, COVID-19 has had an adverse impact on the business and financial condition of publicly-traded mortgage REITs, including CLNC, the Company’s managed mortgage REIT and in which it owns an approximate 36% interest. The borrowers of CLNC’s real estate debt investments, including in the office, industrial, multifamily and hotel industries, have and will continue to be affected to the extent that COVID-19’s continued spread reduces occupancy, increases the cost of operation, results in limited hours or necessitates the closure of such properties. In addition, governmental measures, such as quarantines, states of emergencies, restrictions on travel, stay-at-home orders, and other measures taken to curb the spread of the COVID-19 may negatively impact the ability of CLNC’s borrowers or tenants to continue to obtain necessary goods and services or provide adequate staffing, which may also adversely affect

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CLNC's loan investments and operating results. Many mortgage REITs have suspended dividends to stockholders. In April 2020, CLNC announced that to conserve available liquidity, it would suspend its monthly stock dividend beginning with the monthly period ending April 30, 2020. As a result, our CLNC investment will not generate any dividend income and it is uncertain as to when, if ever, CLNC will resume paying distributions to stockholders, including us. In addition, the Company’s Core FFO is directly impacted by CLNC’s performance as a result of the Company's ownership interest in CLNC and, to the extent CLNC continues to experience operational challenges as a result of COVID-19, our Core FFO will similarly be adversely impacted. Further, during 2020 to date, CLNC’sclass A common stock traded between $2.46 and $14.01 per share, and closed at $3.94 per share on March 31, 2020. At March 31, 2020, the carrying value of our CLNC investment was $666 million or $13.89 per share. We have previously recognized an impairment on our CLNC investment, and if CLNC's class A common stock continues to trade below our current carrying value for a prolonged period of time, as a result of COVID-19 or otherwise, a further other-than-temporary impairment may be recognized in the future.

Furthermore, the difficult market and economic conditions created by COVID-19 are expected to adversely impact our ability to effectuate our business objectives and strategies. A key component of our business strategy is to monetize certain non-digital, non-core assets in our other equity & debt (OED) segment. Many experts predict that the outbreak will trigger, or may have already triggered, a period of global economic slowdown or a global recession. A sustained downturn in the U.S. economy could negatively impact our ability to consummate asset monetizations within the timeframe and at the values previously anticipated. In addition, the ability to raise capital for our current or anticipated digital-focused investment vehicles may be delayed or adversely impacted by the market and economic conditions which could prevent us from executing our digital pivot and growing our digital business.

The inability to consummate asset monetizations could adversely affect our liquidity and ability to meet our debt obligations or pay dividends to stockholders. For example, in May 2020, we announced the suspension of the second quarter of 2020 as the Company's board of directors and management believe it is prudent to conserve cash during the current period of uncertainty. In addition, the Company has elected to defer the declaration of a dividend on its preferred stock until June 30, 2020 subject to its assessment of the effects and trajectory of COVID-19. All distributions are made at the discretion of the Company's board of directors in accordance with Maryland law and depend on our financial condition; debt and equity capital available to us; our expectations for future capital requirements and operating performance; restrictive covenants in our financial or other contractual arrangements, including those in our corporate credit facility; maintenance of our REIT qualification; restrictions under Maryland law; and other factors as our board of directors may deem relevant from time to time.

As a result of these and other factors, we expect our cash flows generated by our real estate investments, particularly in the hospitality and healthcare industries, to be negatively impacted. Because a substantial portion of our income is derived from these businesses as well as our proceeds from asset monetizations, our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations and our ability to pay dividends and other distributions to our stockholders has been and will continue to be adversely affected if revenues at our hospitality and healthcare properties continue to decline or we are unable to complete certain asset monetizations.

Furthermore, our corporate credit facility requires us to maintain various financial covenants, including minimum tangible net worth, liquidity levels and financial ratios. Based on the decline in performance in our hospitality and healthcare portfolios we are currently experiencing as a result of the COVID-19 pandemic and given the limited visibility to the future recovery of demand in the hospitality industry, there is a range of possible outcomes which may result in a breach of certain financial covenants prior to the initial maturity of January 2021. If we anticipate a potential breach, we expect to seek an amendment or waiver from our lenders. There is no assurance that our efforts to obtain such an amendment or waiver would be successful. Furthermore, any amendment or waiver may lead to increased costs, decreased borrowing capacity, increased interest rates, additional restrictive covenants and other similar lender protections. The occurrence of any of the foregoing could materially and adversely impact our liquidity and business operations.

Additionally, non-recourse mortgage debt in the hospitality, healthcare and other real estate equity segment with aggregate outstanding principal of $3.54 billion as of March 31, 2020 was either in payment default or was not in compliance with certain debt and/or lease covenants, as discussed further below. The Company is in active negotiations with the respective lenders to execute forbearances or debt modifications; however, there is no assurance that our efforts to obtain forbearances or debt modifications will be successful. In addition, we have entered into customary non-recourse carve-out guarantees, which provide for these otherwise non-recourse borrowings to become partially or fully recourse against certain of the Company's affiliates in connection with certain limited trigger or "bad boy" events. Although we believe that “bad boy” carve-out guaranties are not guaranties of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently

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sought to make claims for payment under such guaranties. In the event such a claim were made against us under a “bad boy” carve-out guaranty, following foreclosure on mortgages or related loans, and such claim were successful, our business and financial results could be materially adversely affected.

In addition, the COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our business, income, cash flow, results of operations, financial condition, liquidity, prospects and ability to service our debt obligations and has, and may continue to have, a material and adverse effect on our ability to pay dividends and other distributions to our stockholders due to, among other factors:

difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants/borrowers’ abilities to fund their business operations and meet their obligations to us;

difficulty raising capital and attracting investors at our current and any future managed investment vehicles due to the volatility and instability in global financial markets may constrain the success of our managed investment vehicles and consequently our ability to sustain and grow our investment management business;

the financial impact has and could continue to negatively impact our ability to pay dividends to our stockholders or could result in a determination to reduce the size of one or more dividends, such as is the case with our upcoming dividend;

the financial impact could negatively impact our future compliance with financial covenants of our corporate credit facility and other debt agreements and could result in a default and potentially an acceleration of indebtedness, which non-compliance could also negatively impact our ability to make additional borrowings under our revolving credit facility or otherwise pay dividends to our stockholders;

the worsening of estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions as it relates to one or more of our adversely impacted properties could result in the recognition of substantial impairment charges imposed on our assets;

the credit quality of our tenants/borrowers could be negatively impacted and we may significantly increase our allowance for doubtful accounts;

a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our digital business or dispose of non-core assets as part of our asset monetization and digital pivot strategy;

potential impairments on our real estate assets or ceasing to own real estate assets as a result of foreclosure or otherwise may impact our ability to maintain our REIT qualification or are exemption from the 1940 Act;

CLNC's trading price and the impact on the carrying value of the Company's investment in CLNC, including whether the Company will recognize further other-than-temporary impairments on such CLNC investment;

we have and may continue to implement reductions in our workforce, which could adversely impact our ability to conduct our operations effectively;

unanticipated costs and operating expenses and decreased anticipated revenue related to compliance with regulations, such as inability to litigate non-paying tenants, additional expenses related to staff working remotely, requirements to provide employees with additional mandatory paid time off and increased expenses related to sanitation measures performed at each of our properties, as well as additional expenses incurred to protect the welfare of our employees, such as expanded access to health services;

our level of dependence on the Internet, stemming from employees working remotely, and increases in malware campaigns and phishing attacks preying on the uncertainties surrounding COVID-19, which may increase our vulnerability to cyber attacks;

increased risk of litigation, particularly with respect to our healthcare properties, related to the COVID-19 pandemic;

we, and in particular the success of our pivot to a digital real estate and infrastructure focused strategy, depend, to a significant extent, upon the efforts of our senior management team, including DBH’s key personnel. If one or more members of our senior management team or the DBH team become sick with COVID-19, the loss of services of such member could adversely affect our business; and

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the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption.

Moreover, the impact of COVID-19 pandemic may also exacerbate many of the risks identified under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Risks Related to ~~the DBH Acquisition~~

~~We may not realize the anticipated benefits~~Our Hospitality Business. The effects of the ~~DBH acquisition.~~COVID-19 pandemic on the hospitality industry are unprecedented with global demand for lodging drastically reduced and occupancy levels reaching historic lows. Many hotels have had to temporarily suspend operations or operate at reduced levels. As of the date of this report, all of our hotel properties remain open but are operating at reduced levels; however, we may determine or be required to temporarily suspend the operations at hotels in the future as a result of the COVID-19 pandemic.

~~The acquisition~~In addition, in order to reduce operating costs and improve efficiency, hotel operators, including our hotel operators, have furloughed a substantial number of ~~DBH is expected to result~~personnel and may, in ~~certain benefits to us, including, among others, providing us~~ the ~~potential to grow our revenue from management fees earned on DBH’s assets under management, leverage our~~future, furlough more of its personnel. Such steps and DBH’s respective platforms to drive future growth and stockholder value, and address CEO succession plans. The acquisition also represents an intention to strategically shift our focus to digital infrastructure and related, digitally-driven investment management businesses. There can be no assurance, however, regarding when or the extent to which we will be able to realize these and any other ~~benefits we expect from the transaction, which~~hotel personnel work schedule changes that may be ~~difficult, unpredictable~~made in the future to reduce costs for us or our hotel operators or franchisors, may have other consequences such as negatively impacting the reputation and ~~subject~~demand for our hotels or operational challenges if our operators are unable to ~~delays. There may also be potential unknown or unforeseen liabilities, increased expenses, delays or regulatory conditions associated with the DBH acquisition,~~re-hire furloughed personnel, all of which could have an adverse impact on our ability to improve performance and operations at our hotels when the COVID-19 pandemic subsides. In addition, if we are unable to access capital to make physical improvements to our hotels, the quality of our hotels may suffer, which may negatively impact demand for our hotels. Our third-party hotel managers may also face demands or requests from labor unions for additional compensation or other terms as a result of COVID-19 that could increase costs, and while we do not directly employ or manage employees at our hotels, we could incur costs in connection with such labor disputes or disruptions as our COVID-19 mitigation plans are implemented. We cannot predict when business levels will return to normalized levels when the effects of the pandemic subside. There also can be no guarantee that the demand for lodging, and consumer confidence in travel generally, will recover as quickly as other industries. As a result, the revenues from our hospitality portfolio have declined significantly and we expect this trend to continue.

Furthermore, we have significant non-recourse borrowings outstanding on our hospitality properties (including the THL Hotel Portfolio). As of the date of this report, $3.16 billion in aggregate principal amount of such borrowings (representing the majority of borrowings on our hospitality properties) is in default as a result of the failure to make interest payments in light of the impact COVID-19 has had on our hospitality properties. In addition, in May 2020, we received a notice of acceleration with respect to $780 million of such borrowings. We are in active discussions with the lenders on our non-recourse borrowings and for certain hospitality properties, we have entered into forbearance agreements permitting us not to make interest payments for a specified period of time. However, if we unable to restructure these borrowings or receive forbearance or other accommodations from our lenders, we may be required to repay outstanding obligations, including penalties, prior to the stated maturity, be subject to cash flow sweeps or potentially have assets foreclosed upon. For the quarter ended March 31, 2020, we incurred $252 million in impairments on hospitality properties primarily related to assets which are anticipated to be divested or sold in the near term and have fair market values below their respective carrying values. Moreover, depending on, among other factors, the status of ongoing negotiations with lenders, our anticipated holding periods for such assets and cash flow projections, we may take additional impairments on hospitality properties.

In addition, we have agreed to guarantee or contribute to guaranteed payments of franchise fees and marketing fees to our hotel franchisors. In certain instances, such guarantee or contribution agreements may also include an obligation to pay liquidated damages to the hotel franchisor on an early termination of the applicable franchise agreement. In the event that a lender forecloses on our hospitality properties, we may not be released from these payment guarantees or liquidated damages obligations and we may not have any control over whether a franchise agreement is terminated.

Risks Related to Our Healthcare Business. We anticipate that the impact of the COVID-19 pandemic will vary by asset class within our healthcare portfolio. Many of the tenants in our medical office buildings have discontinued non-essential activities, and accordingly are seeking rent relief. In our senior housing and skilled nursing facilities, occupancy, which is the primary driver of revenues, has declined and is expected to continue to decline during the pandemic as shelter-in-place restrictions and bans on admissions dramatically limit inquiries and tours and cause a significant reduction in move-ins, while COVID-19 at the same time increases the risk of resident illness and move-outs. In addition, operating costs at our senior housing and skilled nursing facilities have begun to rise to obtain adequate staffing and personal protective equipment. We will be directly impacted by these factors in our RIDEA assets, or indirectly impacted in our net leased assets as these factors influence our tenants’ ability and willingness to pay rent. We may be forced to restructure tenants’ long-term lease obligations or suffer adverse consequences from the bankruptcy, insolvency or financial deterioration of one or more of our tenants, operators, borrowers or managers.

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As a result, we expect a significant decline in revenues, net operating income and cash flow generated by operations from our healthcare portfolio.

We have significant non-recourse borrowings outstanding on our healthcare properties. As of the date of this report, $327 million in aggregate principal amount of such borrowings is in default and, as the impact of COVID-19 continues to influence performance at our healthcare properties, we expect that we will experience additional defaults and may be subject to cash flow sweeps. Any such defaults will negatively impact our liquidity and may increase our risk of loss associated with our healthcare properties. We have entered into forbearance agreements suspending debt service payments for a limited period of time for certain portfolios, subject to satisfaction of certain conditions, and are in active discussions with other lenders, where necessary, regarding deferral of payment obligations and forbearance/waiver of non-payments defaults for failure to satisfy certain financial or other covenants. However, if COVID-19 continues to impact performance and we are unable to obtain accommodations from our lenders, we may be required to repay outstanding obligations, including penalties, prior to the stated maturity, or potentially have assets foreclosed upon.

From time to time, we are involved in legal proceedings, lawsuits and other claims. We may also be named as defendants in lawsuits arising out of our alleged actions or the alleged actions of our tenants and operators for which such tenants and operators have agreed to indemnify, defend and hold us harmless. We may be subject to increased risk of litigation and liability claims as a result of the COVID-19 pandemic and our operating partners’ response efforts. Some of these claims may result in large damage awards, which may not be sufficiently covered by insurance or indemnity obligations. Any such litigation may have a material adverse effect on ~~DBH~~our business, results of operations and ~~could prevent us from realizing~~financial condition.

Given the ~~benefits~~ongoing nature of the ~~acquisition.~~

~~The digital infrastructure industry is highly competitive and such competition may materially and adversely affect~~outbreak, at this time we cannot reasonably estimate the ~~performance~~magnitude of the ~~DBH platform~~ultimate impact that COVID-19 will have on our business, financial performance and operating results. We believe COVID-19’s adverse impact on our ~~ability to executive our strategy.~~

~~The digital infrastructure~~ business, ~~is highly competitive based on~~financial performance and operating results will be significantly driven by a number of factors including brand recognition, reputation and pricing pressure on the products and services offered by the companies in which DBH invests. A reduction in the perceived quality of services and products offered, or if DBH’s competitors offer rental rates at below market rates or below the rates charged by the companies in which DBH invests, the performance of the companies in which DBH invests could be adversely impacted and, as a result, DBH’s ability to raise third party capital could be adversely impacted. In the event that we are unable to ~~grow our digital infrastructure platform as a result of DBH’s poor performance~~predict or ~~lack of available funding~~control, including, for ~~our investments, our business, results of operations, financial condition~~example: the severity and ~~prospects would be materially adversely affected.~~

~~DBH’s results of operations would be adversely affected if key personnel terminate their employment with us.~~

The success of DBH and our acquisition of DBH depends, to a significant extent, upon the continued services of DBH’s key personnel, including Marc Ganzi, DBH’s co-founder and Chief Executive Officer, and Ben Jenkins, DBH’s co-founder and Chairman, to operate DBH’s day-to-day business. For instance, the extent and natureduration of the ~~experience~~pandemic; the pandemic’s impact on the U.S. and global economies; the timing, scope and effectiveness of ~~Mr. Ganzi~~additional governmental responses to the pandemic; the timing and ~~Mr. Jenkins~~speed of economic recovery, including the availability of a treatment or vaccination for COVID-19; and the ~~nature of the relationships they have developed with DBH~~negative impact on our fund investors, and portfolio companies are critical to the success of DBH. In addition, upon the later of such time as the investment period for Digital Colony Partners terminates and December 31, 2020, Mr. Ganzi is expected to serve as our Chief Executive Officer. Although Mr. Ganzi and Mr. Jenkins received equity interests in us, and are subject to employment agreementsvendors and other ~~agreements containing restrictions on engaging in activities~~business partners that are deemed competitive to our business, there can be no assurances that DBH’s key personnel will continue employment with us. The loss of key DBH personnel could harm the DBH business and could impact negatively, or cause us to not realize, the anticipated benefits of the transaction tomay indirectly adversely affect us.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

~~Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities~~

~~Redemption of Membership Units in OP ("OP Units")~~—Holders of OP Units have the right to require the OP to redeem all of a portion of their OP Units for cash or, at our option, shares of our class A common stock on a one-for-one basis. During the six months ended June 30, 2019, in satisfaction of redemption requests by certain OP Unit holders, we issued an aggregate of 187,187 shares of our class A common stock, of which 2,793 shares were issued to certain of our employees and 184,394 shares to an educational institution. Such shares of class A common stock were issued in reliance on Section 4(a)(2) of the Securities Act.

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In connection with the acquisition of DBH, we issued 21,478,515 OP Units in July 2019. in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction not involving a public offering. Following the expiration of certain lock-up restrictions, the OP Units are redeemable by the holder 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 the Operating Company, through issuance of shares of Class A common stock on a one-for-one basis.

Purchases of Equity Securities by Issuer and Affiliated Purchasers

OnIn May ~~23,~~ 2018, 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. In May 2019, the Company's board of directors authorized an extension of the stock repurchase program for an additional one year term.

~~There were no~~The following table presents information related to our purchases byof the ~~Company of its~~Company's class A common stock induring the ~~second~~ quarter ~~of 2019. As of June 30, 2019, the maximum dollar value that may be purchased under the May 2018 repurchase program was $246.7 million.~~ended March 31, 2020:



Period	Total Number of Shares Purchased	Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Approximate Dollar Value that May Yet Be Purchased Under the Program
January 1 through January 31, 2020	—	$	—	—	$	246,744,227
February 1 through February 29, 2020	—	—		—	246,744,227
March 1 through March 31, 2020	13,697,364	1.90		13,697,364	220,661,780
Total	13,697,364	$	1.90	13,697,364	$	220,661,780


Item 3.	Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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Item 5. Other Information.

~~None.~~Submission of Matters to a Vote of Security Holders - Results of 2020 Annual Meeting of Stockholders

On May 5, 2020, the Company held its 2020 Annual Meeting of Stockholders to vote on the proposals described in detail in the Company’s 2020 definitive proxy statement filed with the U.S. Securities and Exchange Commission on April 1, 2020 (the “Proxy Statement”). The final results for the votes regarding each proposal are set forth below.

Proposal 1: Election of Directors

The following persons were duly elected to the Company’s Board of Directors to serve until the 2021 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified, by the following vote:



Nominee	Votes For	Votes Against	Abstentions	Broker Non-Votes
Thomas J. Barrack, Jr.	365,646,850	9,036,538	338,841	56,736,597
Douglas Crocker II	368,912,979	5,382,552	726,697	56,736,597
Nancy A. Curtin	369,571,924	5,074,185	376,119	56,736,597
Jeannie H. Diefenderfer	370,747,596	3,773,622	501,010	56,736,597
Jon A. Fosheim	367,416,812	6,922,732	682,684	56,736,597
Craig M. Hatkoff	368,002,328	6,353,796	666,104	56,736,597
Raymond C. Mikulich	366,435,867	8,025,922	560,439	56,736,597
George G. C. Parker	364,587,373	9,858,174	576,681	56,736,597
Dale Anne Reiss	369,643,205	4,822,117	556,906	56,736,597
Charles W. Schoenherr	364,731,207	9,682,889	608,133	56,736,597
John A. Somers	367,369,045	7,034,953	618,231	56,736,597
John L. Steffens	361,942,700	12,390,410	689,119	56,736,597

Proposal 2: Approval (on an advisory, non-binding basis) of Executive Compensation

The Company’s stockholders did not approve (on an advisory, non-binding basis) the compensation of the Company’s named executive officers as of December 31, 2019 as described in the Compensation Discussion and Analysis and executive compensation tables of the Proxy Statement. The table below sets forth the voting results for this proposal:

Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

The Company’s stockholders ratified the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, by the following vote:

~~105~~99

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Item 6. Exhibits.



Exhibit Number		Description

3.1		Articles of Amendment and Restatement of Colony NorthStar, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 10, 2017)
3.2		Articles of Amendment of Colony Capital, Inc. (fka Colony NorthStar, Inc.), as amended (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on August 9, 2018)
3.3		Amended and Restated Bylaws of Colony Capital, Inc. (fka Colony NorthStar, Inc.) (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on June 25, 2018)
3.4		Articles Supplementary designating Colony NorthStar, Inc.’s 7.15% Series I Cumulative Redeemable Perpetual Preferred Stock, liquidation preference $25.00 per share, par value $0.01 per share (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-A filed on June 5, 2017)
3.5		Articles Supplementary designating 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 3.3 to Colony NorthStar, Inc.’s Registration Statement on Form 8-A filed on September 22, 2017)
~~10.1~~10.1*		~~Third Amendment,~~Separation Agreement, dated as of April ~~5, 2019,~~1, 2020, by and between Colony Capital, Inc. and Darren J. Tangen
10.2*		Separation Agreement, dated as of February 26, 2020, by and between Colony Capital, Inc. and Kevin Traenkle
10.3		Cooperation Agreement, dated as of March 19, 2020, by and among Colony Capital, ~~Operating Company,~~Inc., Jason Aintabi and Blackwells Capital LLC ~~the Subsidiary Borrowers from time to time party thereto, the several lenders from time to time parties thereto and JPMorgan ChaseBank, N.A., as administrative agent~~ (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~April 11, 2019)~~March 25, 2020)
10.4		Limited Liability Company Agreement of CBW 2020, LLC, dated as of March 19, 2020, by and between CBW MM 2020, LLC and Blackwells Capital LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 25, 2020)
10.5		Employment Agreement, dated as of ~~July 25, 2019,~~March 11, 2020, by and between Colony Capital, Inc. and ~~Marc Ganzi~~Jacky Wu (incorporated by reference to Exhibit 10.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on ~~July 30, 2019)~~March 16, 2020)
31.1*		Certification of Thomas J. Barrack Jr., 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 Mark M. Hedstrom, Chief Financial Officer, 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 Thomas J. Barrack Jr., 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 Mark M. Hedstrom, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**		XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
104**		Cover Page Interactive Data File

__________


*	Filed herewith.


**	The ~~instance~~ document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document~~document.

~~106~~

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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: ~~August 9, 2019~~May 11, 2020



COLONY CAPITAL, INC.

By:		/s/ Thomas J. Barrack, Jr.
		Thomas J. Barrack, Jr.
		Chief Executive Officer ~~(Principal~~and President (Principal Executive Officer)

By:		/s/ Mark M. Hedstrom
		Mark M. Hedstrom
		Chief Financial Officer (Principal Financial Officer)

By:		/s/ Neale Redington
		Neale Redington
		Chief Accounting Officer (Principal Accounting Officer)



	June 30, 2019			December 31, 2018⁽¹⁾
Assets
Cash and cash equivalents	$	353,984		$	461,912
Restricted cash	336,491			364,605
Real estate, net	10,348,430			10,826,010
Loans receivable, net	1,487,611			1,659,217
Equity and debt investments ($413,887 and $238,963 at fair value, respectively)	2,373,690			2,529,747
Goodwill	1,514,561			1,514,561
Deferred leasing costs and intangible assets, net	372,351			445,930
Assets held for sale	5,205,340			3,967,345
Other assets ($20,953 and $33,558 at fair value, respectively)	621,673			400,143
Due from affiliates	44,407			45,779
Total assets	$	22,658,538		$	22,215,249
Liabilities
Debt, net	$	8,739,667		$	8,975,372
Accrued and other liabilities ($398,083 and $141,711 at fair value, respectively)	1,020,709			634,144
Intangible liabilities, net	100,730			147,470
Liabilities related to assets held for sale	2,168,168			1,218,495
Dividends and distributions payable	84,221			84,013
Total liabilities	12,113,495			11,059,494
Commitments and contingencies (Note 20)
Redeemable noncontrolling interests	7,945			9,385
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value per share; $1,436,605 liquidation preference; 250,000 shares authorized; 57,464 shares issued and outstanding	1,407,495			1,407,495
Common stock, $0.01 par value per share
Class A, 949,000 shares authorized; 487,013 and 483,347 shares issued and outstanding, respectively	4,870			4,834
Class B, 1,000 shares authorized; 734 shares issued and outstanding	7			7
Additional paid-in capital	7,621,655			7,598,019
Distributions in excess of earnings	(2,699,276		)	(2,018,302		)
Accumulated other comprehensive income	26,967			13,999
Total stockholders’ equity	6,361,718			7,006,052
Noncontrolling interests in investment entities	3,861,047			3,779,728
Noncontrolling interests in Operating Company	314,333			360,590
Total equity	10,537,098			11,146,370
Total liabilities, redeemable noncontrolling interests and equity	$	22,658,538		$	22,215,249



(In thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Lease revenue:
Fixed lease revenue	$	164,940	$	335,354
Variable lease revenue	14,891		31,240
	179,831		366,594
Hotel operating income	308,957		581,092
	$	488,788	$	947,686



			Gross Carrying Value
(In thousands)	Unpaid Principal Balance		With Allowance for Loan Losses		Without Allowance for Loan Losses		Total		Allowance for Loan Losses
June 30, 2019	$	306,094	$	71,754	$	239,050	$	310,804	$	30,923
December 31, 2018	280,337		75,179		206,628		281,807		18,304



(In thousands)	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Proceeds from sale	$	15,012		$	78,197
Gross realized gain	2,921			11,304
Gross realized loss	(592		)	(592		)



	June 30, 2019								December 31, 2018
	Less Than 12 Months				More Than 12 Months				Less Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
N-Star CDO bonds	$	240	$	12	$	39,663	$	5,683	$	54,459	$	4,951



(In thousands)
Year Ending December 31,	Ground Leases		Office Leases		Total
Remaining 2019	$	3,179	$	4,715	$	7,894
2020	6,275		8,926		15,201
2021	5,922		8,537		14,459
2022	5,959		7,524		13,483
2023	5,912		6,986		12,898
2024 and thereafter	67,979		29,615		97,594
Total lease payments	95,226		66,303		161,529
Present value discount					(45,509		)
Operating lease liability (Note 8)					$	116,020



	June 30, 2019					December 31, 2018
	Number of Buildings ⁽¹⁾	Rentable Square Feet (in thousands)	Leased %		Average Remaining Lease Term (Years)	Number of Buildings	Rentable Square Feet (in thousands)	Leased %		Average Remaining Lease Term (Years)
Light industrial	446	55,728	91.6	%	3.9	400	48,526	94.5	%	3.8
Bulk industrial	6	4,183	67.4	%	11.7	—	—	—		—
Total	452	59,911	89.9	%	4.3	400	48,526	94.5	%	3.8



	Number of Buildings	Rentable Square Feet (in thousands)	Weighted Average Leased % At Acquisition		Purchase Price ⁽¹⁾ (in thousands)		Gross Sales Price (in thousands)		Realized Gain (in thousands)
Acquisitions
Light industrial	79	9,241	81	%	$	1,015,182	NA		NA
Bulk industrial	6	4,183	67	%	373,182		NA		NA
	85	13,424			$	1,388,364
Dispositions
Light industrial	35	2,332	NA		NA		$	139,417	$	23,395

Votes Against

Abstentions

Broker
Non-Votes