CLNY - Earnings call transcript Q1 2018 | DigitalBridge Group, Inc.

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Operator

Greetings and welcome to Colony NorthStar Incorporated First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to your host Lasse Glassen, ADDO Investor Relations. you. Thank

begin. may You

Lasse Glassen

Darren and Company’s conference Colony from call. Saltzman, on and to Executive is everyone, Traenkle, line Officer; quarter Investment the Accounting Chief the Inc.’s Officer, XXXX Richard Officer; Officer; Chief and earnings With Redington, President questions. Chief welcome morning, Financial NorthStar, Kevin the to Neale first Company Tangen, Chief Good answer us also today are

in presented on the time-to-time. filed expectations the does hand undertakes them, of Colony over forward-looking or the to this Company’s are to call statements not information from All call today, and and update now future information to and risks, differ current that I call Before materially uncertainties Potential periodic SEC please based May certain with could described that these financial and is Company’s to from NorthStar uncertainties on intend cause are contains forward-looking subject management’s this business These statements. discussed XXXX results assumptions. as note circumstances. upon and duty the XX, reports risks no events are statements

why the and earnings GAAP measures morning In financial represents are useful basis. financial in Company a appropriate an available investors. information on such reported the is of and to release, believes presents Company’s segmented consolidated to on measure website this addition, non-GAAP The reconciliations which was both this non-GAAP call financial presented other certain released explanation Company’s measures the and

also turn Richard NorthStar. call GAAP and Richard? like Colony certain the table now, Company’s prepared Company financial non-GAAP and of measures this available measure Saltzman, the has to website. the reportable appropriate CEO would the And by addition, to reconciles on I segment over President a reconciliation is In to that

Richard Saltzman

Thank thanks Good everyone, morning, for you, and us. joining Lasse.

we a year our This reduction Colony results to recalibrating to headwinds NorthStar a including we've our based beginning of expectations, led progress with to first annualized $X.XX very dividend strategic the sure, year-to-date. an For integration. share. pleased merger had quarter made level on are Nonetheless, in corresponding difficult our experienced in and per

verticals, to only securities of temporary nature portfolio, First of goals share, accretive to as albeit, restructurings and from growing function likely healthcare buying share on This our items our progress the impact budget be gains absent as other of excellent somewhat a In rate were likely the earned our per same Debt certain strategic suffered sector carried sale as well $X.XX our period. per was balance various segment the of which in time, our FFO some positive dilute quarter positive property of the offset and the and over asset we're will future due generally in key monetizations to and Management making of is business, some excess in that this run one-time losses and income Investment At ahead excluding most interest. year Equity year, and Other outperformance Core surprises. profitability. this non-recurring results future success particular, with to of our the the dilutions back last our along was of in $X.XX merger

a accomplish we profitability we to add goals. and this capital more model. margin, the asset our shareholder evidence to we light, rely compelling these achievements from As simplify the risk balance first on the and which demonstrates while plan those permit us sheet a significant during and value. how maximize can and Various be predominantly become are quarter to shrink where towards streamline, we investor areas, third-party will standpoint exclusively focus on will reward At

of third-party all, of raised we billion $X from clients. approximately First capital institutional

vehicle, which this digital such Partners Colony a real total. data estate to was and new focuses Digital significant as cell contributor Our infrastructure on towers, centers global co-sponsored

our incremental U.S. fund portfolio we our capital raised called and raised for addition, non-performing industrial Project In of an open-end Tolka. Irish loan in co-investment initial capital tranche

an quarter institutional the to forward involving from quite generate economics a co-invested are the AccorHotels. second XXXX, balance hotel including investors European of Colony will announced In the the out we prospects, NorthStar. new for investors part of institutional to preponderance about will sanguine instance, are latter other fundraising acquisition recently our primarily be we large Investment and Looking this of initiative of another Management additional where participation of portfolio third-party syndicate that

and budget closed the financial We've Kantor our retail to this years relative SXK. broker-dealer last our XXXX to his of all with our any distribution venture building creativity from last be create firm, and in channels. be known and will mentioned from capital to are and him this with Notwithstanding, As Colony our SXK, upside many very based Therefore, merger current for assumes nature. upon excited no actual any Steve partnering new resourcefulness his raising contribution organization we quarter, platform, confidence week, plan. over businesses Steve

York great accomplishment instance, had milestone all and and Exchange. in already the ticker NorthStar of CLNC In listing under quarter, Real Another trades Colony track underlying Stock we one, the public team. significant a Credit symbol, including during and Inc., record the Estate pieces concurrent strategic formation this on the place, was which the New

on enthuse which real is a CLNC supply-demand and share expected we off estate catalyst economic the a dynamics about areas Real property infrastructure, a the debt that of we down with real to including thus ours senior core focused way, Company assets in industrial and third-party start. we entered NorthStar Estate and OED Trust permitting NorthStar focused that powder, under digital is deal now approximately residential of pursuing reporting note and debt, business a the relative mortgage loans, Income credit, and and looking $X Debt, as of of segment. to a cash the gross $X.XX we opportunities, capital NorthStar, be owned consisting have yesterday another select needed REITs and equity. investment that core initially new commercial Europe. created the estate capitalization portfolio where Colony with positive II, and activity most It and we Stated REIT also announcing is Inc. its substantial should and and entity, unit stages to cycle. a earnings. of impetus per equity. credit Europe competency a around real a CLNC for primarily CLNC estate line removed credit it of to ramp from later credit and some focus and construct CLNC took estate great two combining billion a arranged. to remain its up capital investments, current meaningful separate we has reported levered the Equity commercial were starts the of to activity, it from quarter of stack, earnings Income Estate The of and subordinated worthy select in been preferred first are Company one large-scale XX% or of up Real Real with The on Recent we along reorganize sectors are as opportunities dry also the our U.S. attractive or is to behind peers non-traded However, place Other is

of monetizing programs repositioning consisted in are of aggressive this $X.X and/or in backdrop progress of assets $X.X investments OED in and non-strategic $X.X and end also OED netbook balance the of the billion strategic first buyer quarter, effort value, the broader of billion billion assets have making stock. This segment $X at into in been accomplishments, year-end we the down As our the strategic XXXX. billion common we to from simplify sheet. Against an respectively, demonstrates our

we million planned quarter, repurchased share. we back significant of attractive, the our common program remains future per nearly an also as discount a want common stock have leverage in NAV XX we authorization, levels fact, at additional be shares do announced million repurchase average of stock to price so. In million our $X.XX but to $XXX the completed mindful approximately Buying of having last $XXX the at

across preferred of billion our accretively. yield, In our series X.X% approximately both lower have cash two representing callable the priority opportunity including to reduction a fact, which value, dividend outstanding currently capital stock, offering prior debt $X.X redemption $XXX million redeploy to levels We in preferred Company, near-term stock. blended of of an is and a have delever

the a Our real edge, competitive grow middle adjacent publicly-traded Management continuum strategic using management to Management companies those estate have our by who in asset alternative pure Simplify, Investment own In any focus vision sit including streamline unchanged: remains where peers. business, the for the substantial only with on sheet. business we few we balance our of that without and Company Investment

over with the context Management virtually no to the the of concentration percentage a On at is in as the and natural to ends our two we under a to of asset-light parts asset best we to That move sheet the speak balance approach any less our Alternative of will is heavy it leverage. off. much other and spectrum: based of Investment business measured assets given continue AUM there limited With definition, no in at is reduce capital hand, grow through assets managers will REITs, and invest picking and by this point cycles, business a Management to greater we Investment our be with our of a peers economic to a time core competency the upon and equity also of at other by growth pure coinvestments as more net become seems seller management. third-party our and simultaneously, company,

at the continue spaces, before or financial including our balance Investment repurchases higher that the generate this to flexibility returns interest earn. and equity carried one use intelligent more a sell mission while of important maximizing any to and company are shrink fees is In risk-adjusted the balance stages less interest most we at risk, compelling per on words, also our addition financial playing even the later in may business of In dollars grow point much economic those attractive AUM value, equity will cycle clear, sheet of securities as prudent less is particularly rates more DNA, deleveraging Thus, the our our of to Management time, return we sheet. through non-strategic margin a to the beginning our and shareholder total present AUM, and from view. other real rise. that favor same and otherwise, of and approach assets, strengths non-core, will perspective, a through a the investment from estate to this incentive generate With

And accomplished. lot into a those being of good of XXXX. merger, noise around continued with still goals ambitions year we'll little all to the bit there's a are and hopefully of that this these the Although execution, of be but over slowly and luck able believe accelerate we balance surely

So to with Darren? take our on I'll call quarterly Tangen over Darren who turn you a that, through the more basis. granular results will

Darren Tangen

good you, everyone. morning, Thank Richard, and

As our of quarter earnings, comments will analyze section conclude financial on our a performance release first report morning, of reportable a some addition and the first capital and review with of to our Shareholder and structure website. six each filed both are supplemental liquidity. these within of the Today, business I quarter available segments this the results, reminder, documents in we Public of

was financial to share. common Turning attributable loss stockholders $X.XX first to results, quarter per $XX.X net million or our

Colony non-recurring and off transaction quarter, last CLNC terminated carrying the and agreement. non-traded related as the NS II, previewed that CLNC and the closing. incurred intangible the intangible associated we agreements and I $XXX anticipated significant or and without corresponding created management management a million II on of non-cash Colony with GAAP The NorthStar agreements NorthStar sheet of written NS had NS value with new a Estate, result Real assets quarter to REITs, asset management loss being balance credit-oriented former a the two NS I we represented for a elimination Credit the this were of As

were agreement value and management NS materially and than elimination perspective, non-cash NS former from I added I charges, believe of CLNC II. II NS the is economic prior and Core NS with therefore, an FFO. greater the The back However, agreements agreements the two for management we in new

in per with share was share and FFO First $X.XX share Core $X.XX $XXX.X quarter. per FFO, quarter Core of compared the prior per

Separately, and $XX approximately Core per included sale up FFO quarter net million totaling driven carried were on gains CLNC CLNS share, to gains at by $XX.XX $XX of our Colony the and per opening carrying fund. First a of principally income million income a share. vehicle asset $X.X non-wholly-owned $X.XX or interest CLNC closing. by step interest certain value through to the ownership assets, Net in contributed real gain from related Other gains in loans from basis Debt, and step NorthStar was value CLNC, shares value to billion book within up an to Equity from our platform realized of various credit OED or the industrial at plus open-end received management CMBS the estate interest The we and produced liquidations resulted carried our the our contributed relative segment. the

first quarter by credit, which other was Core quarter. including this FFO segments, healthcare were ahead better-than-anticipated The mostly budget certain and positive internal and driven performance our result in non-recurring of various and items,

costs. weaker rate outlook line from with full-year healthcare, However, our quarter, expectations due and somewhat to primarily hospitality our internal XXXX remains interest a for last reforecast FFO Core in

of for ended Estate. quarter provide quarter the of shedding end prior compared our a reportable segments this ownership summary interest properties with The at the results each XX%. financial of We with non-core in six first segment the approximately to properties. I'll Company's XXX Healthcare remained after at starting brief Real Now XXX the some

a million consolidated fourth first increased $XX.X to former Further prior $XX.X Hurricane XXXX, a tenant due quarter NOI was Core XXXX lower quarter $XX.X FFO a X.X% the over Harvey by $X quarter. expenses. from building. by million. The approximately million, increase to received office quarter $X fee uninsured from consolidated non-recurring NOI First was million primarily XXXX Correspondingly same-store increase fourth $X.X by quarter was termination medical and million million the from driven

year. year over first positive beginning quarter Estate prior we expect full-year Real period our the the While the and remain expect Healthcare conditions to to and earnings we over challenging the were performance remainder budget in from still results line industry of the remain with of

FFO This quarter. as totaling The first portfolio the March over which XX% Moving feet onto increase XXX segment the XX% of quarter was mortgage Compared XX, of the square million million to decrease segment, consisted Management completed industrial first to new and primarily same million higher end after interest of financing $XX to income at million year. X.X first industrial Industrial Estate within operating due tax to modest operating the of and third-party in snow this XX has from the and last X.X%. leased. additional now the prior to Real increased feet prior million million Industrial end ownership was prior increased the fund. in revenue our interest capital the moved net XXXX expenses. the from period an the last carried interest $XX.X decreased segment, XXXX X.X% same-store Investment of quarter for approximately properties carried XX% the nine quarter re-categorization square we decrease Core in in that Company's quarter. X.X%, into the approximately properties XXXX year segment. of income the interest rentable $XX.X but expense quarter in same-store the Core quarter in raising $X Adjusting slightly NOI removal due property of in FFO in the income open-end but revenue approximately grew at net consolidated X.X% Operationally included represents grew was by contribution decreased income Note compared

Turning to our Hospitality Real Estate segment.

the select prior March As service properties of portfolio and XX% unchanged ownership XX, interest in primarily quarter. the was of both segment consisted XXXX, state hospitality Company’s extended the and XXX from

are same-store we quarters. for the the first year-over-year provide weaker mentioned than EBITDA in Therefore seasonally fourth comparisons I've calls, and hospitality. quarters second always and As third periods prior

compared a increased million was first to year. million first consolidated EBITDA Core period million, the same to than last quarter $XX.X compared offset First but quarter was colder same-store FFO revenues from this XXXX. X.X% was stemming the prior wages. a $XX.X Correspondingly, increased the $XX.X and X.X%, costs decrease quarter year's during by quarter Same-store utility of quarter consolidated increased XXXX

or $X.X value our carrying legacy asset segment Equity XX, XXXX. and Debt opportunistic un-depreciated investments, March $X.X of carrying of approximately co-investments Other un-depreciated value and and approximately totaled equity billion includes Our and as which of billion GP non-core OED

now segment earlier, OED reportable mentioned interest our separate segment. included is and Richard a within no As the in longer CLNC

reason, Securities sales segment and value OED prior for this the to CLNC transaction, the the FFO the non-strategic such CLNC of reduce a a assets fourth other XXXX after the the within contribution earnings million The from in is to the Core Including period, compared including contribution assets which of XXXX CDO was to $XX.X to is due fourth quarter our from OED XX% primarily in attributable segment positive were closing $XX one-month For quarter OED the gains included contributed of FFO impairments, million Core was loss netbook to million. asset than million the for accounting improvement lower first from that million quarter $XX.X total sale. with Due consistent approximately earnings to mid-quarter first segment. on to in the approximately compared $X.X this earnings, quarter period goal exposure to $X quarter.

this, billion two pursuing $X.X OED the aggressively the approximately up and non-strategic earnings timing. underlying the of as sellers accelerate assets billion monetize investments majority expect we of over being Given are over segment, goal made from netbook to to segment contribution of is next totaling of the specific, the stated to non-strategic Of assets. is monetized our the opportunities OED be value. particularly To time net we $X.X within expected decrease of be years this OED more

much preferred will new offset of investing While our we equity, the management in and co-investments business. monetized opportunistically of redeeming that bolster stock, back decrease lose investment buying we the common deleveraging GP to will related by investments, expect income

newest its co-investment call and a yesterday largest and to team GP is great the to segment, Turning CLNC reportable inaugural our start. off held earnings

ahead, scale ability diversification The its utilizing and its to and from to that its CLNC well Looking portfolio internally core and real will CLNC’s non-core and assets given solid time. competency under is Colony long-term returns business positioned for we exceptionally its capital shareholders. NorthStar leverage over balance produce growth, a expect for estate monetized recycling immediate be finance credit is sheet

was CLNC months XX Management, of of the represent a January of recorded equity Core During first which the final these is to we on CLNC of period exclusive as two FFO Investment transaction CLNC Management a $XX.X $X.X the gain. quarter management On months CLNC’s and from the XX, quarter, and because the base the down the of March to primarily billion one-time from closed prior to a XX% the fees FFO our XXXX. the merger of share contribution CLNC attributable from X million $XX $XX.X two in from period. earnings tax note earnings recorded II step X.X% approximately fourth Note closing Investment segment fees in shareholders from core million the benefit of quarter. first in for prior management up million XXXX. $XX February was the The to calculated acquisition related was [indiscernible] and segue and of of difference quarter million that contribution Core one-month NS I Overall, NS we in CLNC’s

capitalization, Investment primarily at management, agreement to FFO end Under billion the management of end billion Equity Management Townsend Healthcare which of the The to beginning of up year. ended billion third-party quarter. Fee-Earning $XX.X went in and the Equity $XX.X rata the structure with in representing I'd December recourse Under total when primarily the income, Management or fundraising Digital comment that $XX.X now billion as at healthcare the of to total non-recourse Fee-Earning that by NorthStar XX% at $X billion benefit, fourth under quarter the like debt $X financing, successful Under fourth ratio Colony added XX, The from the the the down of infrastructure a minority ratio, the due stock digital the amendment of from non-traded interest, will vehicle, asset-level, the is leverage. ended Management this were quarter balance billion, the cosponsored affect in million, rata the billion $XX.X on Management highlight $XX.X is $XX book debt-to-capitalization assets is was increases and quarter. up billion, Asset excluding increases estate first capital XX% sale And in quarter Core Excluding value The segment healthcare March was approximately and parent to was remaining tax into real REIT, XXXX, driven represents preferred principally debt of and XX% I of debt company. $X.X XXXX. hospitality liquidity. total that to corporate-level our of although our segments. this, pro to that Of Partners. pro

to ratio to leverage consistent assets. as sell down further XX% stated debt our this non-strategic with our leverage of capitalization, target While debt reduce is to is goal continue we

after Turning availability approximately our and the $XXX price which shares million XX.X is facility $X.X an currently approximately common hand. share. million, average March have of per billion to corporate early stocks we equates $X.XX of for since This between of repurchase cash to under on liquidity, our credit

As near-term under reductions, various delevering, the third-part and opportunities next will new now primary [indiscernible] mentioned a about of With our segment over earlier liquidity addition in on of in to comment capital our years. sale stock within the focused asset source liquidity, model. be two non-strategic my program, preferred priority is a growth earlier, significant investing OED debt our

management baseline the across from initiatives to is forward and new our new All the of the all the a continued unpleasant improve a ahead. growth-oriented establish balance mode. are quarters is move reporting which turn substantially merger unified investment of our model. goal light, for culture organization return, beginning performance-based increase return Colony like in shifting to to we results. company The now forward on the quarter economic a but was and difficult a operator and Operator? to integration efforts, for towards report to reset Last to to look for a necessary I'd sheet us, our of and us these business With simplifying stated have is consistent and call behind to sheet This and with incentives productivity a Q&A. total that, established progress align begin we our over NorthStar new balance

Operator

Our from Instructions] Mitch question [Operator with first with is Securities. you. Germain JMP your proceed Thank question. Please

Mitchell Germain

Good morning, guys.

Richard Saltzman

Good morning Mitch.

Darren Tangen

Good morning Mitch.

Mitchell Germain

Richard, you healthcare restructurings? restructurings you to pretty of were level mentioned much a insight there, you provide if be so kind you some maybe on high what but can seemed maybe on as refer to

Richard Saltzman

Okay, a instances order at in it’s operations mainly lease portfolio the in is in nursing stressed keeping about. we've in what's And skilled have in of is sound where leases. some these transparent to the coverage in the of that of and be been required, are industry that happening can I asset this terms you and the throughout results produce happening successful instances the to that tenant restructure are these place terms think

that. mainly it's So

Mitchell Germain

restructuring. lease it's So

a year. future. just maybe non-core pretty to sector? think of slug somewhat next you healthcare that view coming your to long-term healthcare got about I pretty kind think significant of strategy And been you the be you've So with regards have to clear the to What's debt guys

Richard Saltzman

did and year of to some long-term doing of was our to were about parts internalize for the kind a with terms this lease accomplish internalizing stabilize like mark going anticipating. to question already where what that this we this where look that a plan in and performing. I But still talked improve had these year is part once better of in of do for healthcare interim we absorption stabilizing operations the we're and medical Well, restructurings quarter office of of call last to instance where management and in forward go think own. we arguably until going management that of stabilize cash I and that we respect do we is we're portfolio had we the are what that down the flow portfolio it's with next year-over-year think can be trajectory how improvement and better demonstrating buildings really lot indicated of and we to We we

until performance, blocking blocking hesitant terms I a long-term of just to and upward nature. stable tackling to with tackling we're and we're done and So it's in trajectory and commit of and the think having its kind anything portfolio from a

Mitchell Germain

of really pretty You your do talked it about the the made see properties some is you mean general. but just much where – can portfolio with hotel I is there reducing it get in or monetizations you OED exposure, the

what's month plan of there? next kind So XX

Darren Tangen

Sure, from the some mentioned take the Mitch, in it's we were Darren. sale securities. quarter that. I'll I gains of that CMBS the realized first of some maybe

this the So I securities reduce of think of culprits one CMBS our one course certainly year. primary book OED CDO the last portfolio is the and which that part of we're of securities was volatility portfolio earnings year looking to over the

also real to put that again and another into fund of highlight here in real the that's of estate that in onto parts equity time. may year that Some looking last spill as monetize here XXXX we've OED source of or earnings would market the book private area and I the secondary fact well. of interest even was another part that volatility we're

we'll book hopefully here the that QX to in some see start part in of So or monetizations QX.

various accelerate beyond that on in through with and portfolios a our of put those organizations. been some I some market it's of have think to those lot in of have the liquidations that loan group management portfolios. the of We've interest tail portfolios investments the asset we debt brokerage loan legacy smaller may working

word again those through just the lot So steal the case it's I really different a mean in sales monetizations of positions OED about from there you and blocking an the a of it's so XX know was as it's in that and portfolio. book part Richard working tackling, in and the accelerating of non-strategic

Mitchell Germain

Great.

of like well. quarter buyback it a lot more the people seems a two me. like on seems seems emphasis as quarter like emphasis there Just this the de-levering on more it buyback it allocation Capital want last for was is lot more

weigh you different all of how how what's kind them So you look going how to your the you strategy terms kind forward? of most do in you at important put do also co-investments, of us

Richard Saltzman

I because Well, where will, think your your buyback of leverage, look the I reduce if but a leverage. and our part biggest for doing mean first prioritize that's term question, longer you right. answer buck goal We to we gave degree whereas bang is the to we some you're you as would increasing in buyback, our get the thought

to making and is on to And not shares plan we're that authorized sure leverage the close check if that to want the did with done consistent the of so with kind kept we that announced was extent that move repurchase. the last almost number we of in now quarter,

of deploy way So for Management growing capital always our by our strategic kind Albeit next intelligent that's where of business. in balanced Investment can a smart step. the purpose we

of to making the So liquidity adequate business third-party for of of predominantly terms we be mindful contract described. need that grow always have parts our that want that to we a we've in as just sure do we capital with

we how that's analyzed. So

Mitchell Germain

to for should the this almost Board other be one's been buyback in expect So we me last place putting I that one mean now utilized? is, fully

Richard Saltzman

adequately. that element next think with bridge have first the here and we after the deal delevered think we'll I Well, to we've that's then cross I deleveraging

Mitchell Germain

Thank you.

Richard Saltzman

you. Thank

Operator

next is KBW. Please Rahmani question. with your Jade Our from question proceed with

Jade Rahmani

thinking about And M&A asset much. very space Thanks management does in alternative sense? alternatives, make strategic the

Richard Saltzman

basis, think like a today compelling for and we we where necessarily consider forward could. areas don't have go very we might maybe sure. a that Certainly they It for on presence something

Jade Rahmani

in Company? case selling of the the about what And

Richard Saltzman

entire you our In mean? selling Company

Jade Rahmani

NorthStar be by acquired Colony larger Yes. firm. a

Richard Saltzman

time. in flexible trying about any that happening looked clearly given point maximize would and in like we're in be if minded look market value, incredibly it. always sure, synergistic, what something in all any way transom mean so to from, pretty we're group of I it but shareholder on came We're might the Well, opportunistic shape we sudden that across a focused our not was and compelling certainly or open consider

Jade Rahmani

hear. to helpful That's Okay.

net in If on gains estimate you have or of losses the an entirety? OED portfolio cumulative

Richard Saltzman

maybe future question, about segment realized in was what the is Jade, the that is realized what So are in latent talking first the or that within you quarter? that

Jade Rahmani

gain net would it today was just net entire there remaining or loss? a Well if the liquidated be portfolio

Darren Tangen

we're legacy segment closed. fair segment assets are valued, cost. you in legacy I marked Colony that merger at that that a sit There look I were carried know fairly when the investments NorthStar historic the ago that So were value think probably over year – within a think sit the as

So one that where investments gains others to produce that investments are we realize that during that And just I gains a generally one could place legacy in Colony some accounting realized certainly are our I've there that were optimistic such on are and in because past took is Albertsons/Safeway future. the as we they do highlighted future remain could be legacy the the of the are there in expect Colony gain think that investment the merger. that that. There

So I'm give number. specific hesitant to you a

our of here that last when is, a gains be in a this think approximately the were earnings, comment first percentage they in to maybe XXXX, saw that in year, think I is to part degree to expect we about talking to another well I certainly, in be contribution. gains of terms I just mention going This less not quarter quarter we topic fact, that continue quite as than fact picture XXXX XX% bit on of and mentioned. in the we earnings. our were to But same the we did that they’re earnings when gains here XXXX contribution do

latent are gains. there So still

portfolio the create? are the less they We sell would because CDO secondary hesitancy some PE those portfolios, a but ago. – of there the to they're and obviously, term one to earnings In that expecting entirety that to realize significant today year shot entire in headwind of were the than of the is

Richard Saltzman

private In of case more secondary probably securities, fund is mix it's fact liquidation the a of wholesale looking are in there – the the potential second appropriate we that all which case not be would CDO an together. for at CDO a or of buyer securities, eclectic the practical in that of equity and that interest, the of book. of No, sale part

we're in them, that or rather that them. segment, the at and approaching basis, non-strategic sell in may more a one it's price some OED securities difficult. or the in possible really But those we're And sale So maximize a to value a various or that assets in sell are in a monetize to a have two trying going quicker is complexities the liquid value on to that better. if make which next some cases, case-by-case think fair, we quarters the can we around

So simplifying balance just preferred I we’re or as it's mitigate to of into, not that that reinvest capital equity redemptions. worried all mentioned going there capital holding losing we stock, by common ways back are about back, we’re the income Richard mean, during his think we the we're while, because income. buybacks we the that If whether I remarks, sheet. and, loss can redeploying get

Jade Rahmani

billion you and that in segment, of be PHL What something Okay, remaining the else? billion? to $X.X of Equity $X.X Is is mentioned would the value that’s Neale, or net hear. monetization. portfolio, that Debt good billion book $X.X Other the

Richard Saltzman

hotel would the that as that last embarking at just last we year that end are significant ownership. a program two of the took for the ownership of fair Jade, that on portfolio, the and quite we're you deferred there's amount refinanced stepped into been CapEx we PHL now is the The portfolio say, remain big portfolio because case components large was which a there, that we maintenance of when year,

a of answer. goal that create window, there become that still in $XXX strategic CapEx, that's a preferred of figure potentially portfolio, a the got we've two-year multifamily focused the that so outside about out is sitting and on the would a the equity it past. We sector. Second, is new part And vehicles to portfolio we’ve so that's capital So try like third-party to spend a investment restructure could that, that investment in the to position some in and value, as million stabilize then multifamily sell. way The to an suggested our today,

which the are OED of are big liquidation of right part plan. areas those now, segment not two-year So our two

Jade Rahmani

a Thanks in queue. back I’ll much. very get

Richard Saltzman

Thanks, Jade

Darren Tangen

Jade. Thanks,

Operator

Markets. Arnold Capital from with question RBC Jason is next Our Please proceed with your question?

Jason Arnold

guys. good Hi, morning

on follow-up OED a that Just category.

wondering of still no kind kind of the category of or much yielding in that there? Just remaining how that's lower

Richard Saltzman

Jason, question. the thanks for

OED of we declining I over say, on projecting across we’re average investments this segment the approximately based on is looking of entire the as assets an strategic a sort yields as those you’re what quarter, and segment. both course would of no-strategic of last sell on I were balances around be some I well a the X% all But for across of at would this the last mentioned X% expect that OED that think we Core yields the FFO call, year.

that Now which currently zero in there you're that out example to are more the that point investments would are right of are than yield X% and perhaps that of that consortium certain producing is we that capital there And in an hopefully have no little then other investments investment there Albertsons/Safeway our producing levels. yield. be need of average, guide and gives rolling think to off relative sell this reinvest down And we the you of a as but that bit we of a reinvest part line kind what's those can to but book. accretively turnaround that

Jason Arnold

about was of the obviously the admin if we then you. in should But kind Okay. going expense forward go particular. on rate several lots Super run one curious about a past quarters. and how on comp just can I you speak think the And over thank been ends

Darren Tangen

to able over to and from people I we've annual a for that's date. around the well number we're excess had into year. cash the going achieve previously cost somewhere say the set number think had targets G&A guided the had net $XXX significant the last I to realized G&A cash of the would million communicated number merger that G&A savings an year, so company we a savings in of various of course Yes, that we

think number. right to certainly probably that's sort the to may But trying this savings that on find year that's there to some other now right and be opportunities as to manage will to goes now for us for for we're say would opportunities see the that the but. number about I of year So continue

Jason Arnold

maybe consider Okay. guide expect a paydown paydown the Super. one maybe you one last timeframe bigger And then like and ideally refi just kind that how leverage of would a of opportunity. that might for be be Would compare or something deliver I to guys over you just preferred and me achieving guess what on you'd picture time? sort then on target on

Darren Tangen

Sure.

balance that the prosecute sale now coincide as we to So not new frankly different and would we're And I migrate for with as with this pursue same we positions really sheet OED redemptions of use going redeem preferred business just monetize issue to proceeds to that's in the that capital the use asset today like. to of we model to I probably are plan. business and may say that need preferred. balance being sheet consistent more amount We don't capital think have going

a assets side amount that's mode well. And of our stock save investment of strategies But new dry bit. for think the We that's our of common highlighted redeeming or we some think pursue balance those some by redeploy right so we do these I want for offense buying I to back sheet now. as shrink Richard powder least assets as into reason the little and preferred to with can at play why and sell now can

want take and going we how exiting really assets timeline accomplish the long accomplish of for As It's balance to resetting to these to sheet. us it's all delivering and coincide everything terms the going non-strategic in businesses. to to with

three-year a that we be that years. So portfolio was a it's two of the complete or may next I of some other we could ultimately but mentioning timeline. we'll before whether the to non-strategic over accomplish think the be assets the some THL I four-year things on two lot want mean or like that more in sell years, won't I

process again beyond XXXX, ongoing work that. will going be accomplish it's but there be to will of a a the lot think So I by end

Jason Arnold

Okay. Super.

be just something where truly what is can more it dispose be opportunities So would kind on, – to or like achieve would and debt-to-cap based of maybe you I of maybe mean, them or what X.X the lie? like we

Darren Tangen

Yes.

correct. I debt-to-cap think X.X ultimately yes we to or would like be, would what get debt-to-equity, X.X to,

Jason Arnold

Okay. much. Super. Thanks so

Darren Tangen

Jason. Thanks

Operator

question. Riley from question next Please Our Binner B. proceed Financial. with your Instructions] with [Operator Randy is

Randolph Binner

the the back run the was and I – this get you. from you Thank of walk, morning. go reported rate. we hoping $X.XX to could good quarter FFO Core a Hey, $X.XX ongoing percent if jump of kind to kind will,

for you indicated last your that think in of the line I provided quarter. results rest should year, in we outlook with you the the Darren, expect quarterly comment, more

So of funding I the back how gained was that cost, items to much $X.XX? isolate kind to goes mean just trying other

Darren Tangen

question business. I as know some That remarks Well, good do Yes. our on the you the the this or on some of Core FFO were and exclude be little QX our various and you net other lower QX income, to that is significant non-recurring when and $X.XX than gains we down our touched of about and produce focusing you interest to quarter and was positive the $X.XX. seasonality another where that we occurred component business result business $X.XX this quarter, thanks mostly in hospitality in brings mentioned in And then that which the just items QX share. bit, part QX the But for was pretty tend there you which – Randy the some my that does morning. about have during a that aspect a quarter and first results carried share $X.XX a exclude seasonality

$X.XX So if the those the as you for bring something to closer adjust $X.XX relates quarter. first that would to to it down

to the there various business little of there last quarter I of where the is as and differences in your versus fourth which because quarter trying challenging results more question the mid are fourth Management which in things CLNC was back management today highlighted. particular the quarter. Things, part was quarter no longer was Townsend compare think or Investment was a restructured on quarter sold and lot which the to closed this first result just Now were including between that I various in the transaction going agreements a relevant

sort conversation of balance guidance the first a through. go fourth about I quarter of that components thinking to probably mentioned the you first as but hopefully of of longer the in that coming to everything far it's as quarter results, to some The XXXX. of just list least So from what back some quarter, change of gives at terms

Randolph Binner

potential capital perfect. management It then does. on and That's And just deleveraging.

XXXX. good called, call I you in about I'm want guess, and million Then if to expensive. I talked in have curious pretty but XXXX callable though, you be preferreds issuances. that's $XXX can be it, capital, didn't all permanent some separate the two detail You would albeit that it and think about converts

I that think nearest are perspective. maturities of think kind term those your you would from illiquidity about

between trade-off that So if the maturities? those do about higher of you long-term, retiring how think out liquidity we think cost in and about preferreds preserving light

Darren Tangen

planning for certainly both. we're Well

are XXXX are $XXX of XXXX. $XXX million $XXX debt in callable that and in You million there convertible outstanding is correct at million is the callable Company,

as now two then to are the that you $X.X bring what some, can't balance equity we of pay we're we like Now debt off maturities delevering call we as billion plan get to so XXXX, well. address looking and that at right or need those this that course, would at holistically preferred ultimately to in juncture, think series just and place debt down XXXX are But and I closer we mentioned. have the to about thinking that a callable we're

area focus planning accordingly. managing to and and And an so we'll there's certainly of be

Randolph Binner

All right, the for thanks. Thanks answers.

Richard Saltzman

Thanks Randy.

Darren Tangen

Thank you.

Operator

Our proceed Rahmani Jade question. next Please question is with from with KBW. your

Jade Rahmani

appreciate, taking the follow-up. I Thanks,

is there a to off hospitality, managed equity REIT? spin around prospect Just an externally

Richard Saltzman

is are construct that for that's select us the do on What selling we're the the groups of portions portfolio, thinking parts with thinking portfolio third that I moment. capital way Well, focused But what certainly had about party we that. round to mean selectively you currently. creating conversations a could. maybe certainly we've would and doing either at not we're love of or

Jade Rahmani

confirm million, expectations. target then seems are commitments management that what get yes fund, make spinning lined and rates you so see to $X would success targeting been on some it want exceeded the infrastructure although has more to-date be engineering, think you've total than mean are financial if really digital up I when And there's probably are that sense. Okay, just your and that to and reports fundraising of I what returns off fees? cap the

Richard Saltzman

that the able the to moment really in not of Well, only to we respond to unfortunately what terms listen We beyond Jade, for advisers were legal we at legal call. have about in can't go questions. we disclose so that your unfortunately. reasons did say could we're our best today's But we able with we what can that

Jade Rahmani

current the ownership with industrial for this and or you is your as – what best the of finally you IPO as it? do fund that platform, structure thoughts the could open or is business something structure think player fund Okay, well the merged open-end maturation the on business, eventual the of are another around your

Richard Saltzman

and that like we be open-end do, of structure. We to the interest a lot in fund seems structure there

sleeve on side institutional forward of the a On maybe consensually terms go basis. in of some retail even kind

that we're is more We're business great. where sanguine is doing about So which fragmented. area, in and pretty an the

the because moment. the strength some of infill of industrial proximity centers. at we so of platform still or We're mean – disproportionately So trends here our in consolidate. the course as economy the a I the market to the we generally light think additional the industrial we're and are is there's has speaking large from lots close We're XX% of about as to – prison locations investable in still to ability We're very in grow benefiting fraction of are that urban well what U.S. I offer even underlying owner. though e-commerce a and think space

place we to we're what couple to construct be the and So have formation also Capital to prospects do at that excellent fundamentals pieces able going the a the for that's next meaningfully great. minimum. business we are to in that have current really are in grow continue and years

Jade Rahmani

much. very Thanks

Richard Saltzman

End you. Thank of Q&A

Operator

for closing run call of to the Saltzman, the comments. session. question-and-answer and Richard I'd At CEO and President we for time have back gentlemen, time, Ladies this turn like to out

Richard Saltzman

again joining Thanks for everyone us. Okay.

really recalibration, growth. stability a behind full Following both our it's good us, to demonstrating quarter and have

simplify, is reporting forward Investment Management our grow mantra more look streamline on business quarters. Our to ensuing and in that and we progress

Operator

conference. today's concludes This

You may and disconnect we for your your participation. you this lines at time, thank

Lasse Glassen	Managing Director, ADDO IR
Richard Saltzman	President and Chief Executive Officer
Darren Tangen	Executive Vice President and Chief Financial Officer
Kevin Traenkle	Chief Investment Officer
Neale Redington	Chief Accounting Officer
Mitchell Germain	JMP Securities
Jade Rahmani	Keefe, Bruyette & Woods, Inc.
Jason Arnold	RBC Capital Markets
Randolph Binner	B. Riley FBR, Inc.

DigitalBridge (DBRG) 10 May 182018 Q1 Earnings call transcript