CLNY - Earnings call transcript Q2 2018 | DigitalBridge Group, Inc.

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Operator

Greetings, and welcome to Colony Capital Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I'd now like to turn the conference over to Lasse Glassen, ADDO Investor Relations. Please go ahead.

Lasse Glassen

welcome Call. Capital and XXXX Second everyone, Conference Earnings morning, to Inc.'s Colony Quarter Good today the Financial us Executive Redington, With from company's Officer; and Saltzman, the Darren Chief President Tangen, Accounting Chief Chief Officer; Neale company and Officer. is Richard

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

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

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

Richard Saltzman

very particular, ahead our morning, our us today. meaningfully strategies. Lasse. generally pleased Investment in ahead quarter verticals Fundraising plan. monetizations, first and for everyone, joining and are results all for operating are and and thanks Good Management results. half with of Furthermore, you, asset second Thank We're of

in to deployment these therefore, incremental core plan fundraising still year monetizations XXXX is faster replace with and/or FFO full be and despite lost However, require line to our earnings expected positives. only

FFO positive, first result $X.XX which higher mainly included core of core of number items. onetime share, to quarter a this and Contribution was you'll Investment period share, but Second FFO accelerated was as verticals, core assets nonrecurring quarter recall following $X.XX equity FFO per in continued real in estate per a at pace. to and monetized Management generally other be quarter-over-quarter nonstrategic our lower debt an

in Aggregate billion $X.X million now we billion, platform. platform. committed Colony capital equity the to interest base started subsequent months closed capital added granular created this of itself. each across the first declined in of very or of a quarter billion Starting $XXX cap from excess in year, this capital. million these $X.X XX% new Partners more provide segment an Fundraising when total, billion with new to me of various on this initiatives. was of quarter, strong again likewise of Industrial new this CLNY color $XXX with to having in We're of areas. Digital million limit XXXX quarter Let is platforms another Investment Digital this closed through $XXX hard percentage $X.X equity third-party at $XXX of $X.X million with its total inclusive that late Management. success with CLNY's Colony third-party second incremental X and bringing end. represents quarter, to equity committed XX% Colony

of be approximately scale hotels interest property alongside and a XXX containing to X.X advantages. of significant existing newly XXX,XXX We acquire properties position we value billion. that other in institutional this and in approximately Accor, quarter limited AccorHotels, AccorInvest, size. formed $XX arm notably the market equity acquisition Colony with debt for hospitality the continue participated entity located EUR a are supply. operator million an coinvestment in rooms, a investors. in new global also Most formed of quarter, capital hotels the with the majority during of an investment to in leading grew against are by raised gross the The of asset Europe consortium a will backdrop in primarily fundamentals The managed demand improving of a where hotel new AccorInvest,

million our Colony's commitment fee-bearing end by Nadra is and fundraising. European close and global we team, this a Paris in third-party reach later to of quarter Moussalem additional EUR share, of EUR XXX capital, million that great expected received execution A raised in For to inclusive an our deal and led subsequent month. of tremendous XXX demonstration sourcing

Colony's business healthcare quarter. Moving the to mixed verticals. real results second in witnessed estate our

While to different appears deterioration NOI in facility of down and nursing same-store second to XXXX of skilled flat The diversified ahead and was of within fundamentals the subsegments quarter virtually be X.X% XXXX, varied were portfolio. Healthcare Real compared aggregate Estate rate quarter-over-quarter decelerating. budget results the

good we concurrently, making sector. the restructurings, confronting While current progress through various the working conditions lease macro reflecting are

shop and future which senior consistent with operating is put housing labor flat performance quarter-over-quarter, recently results rising are REITs, results. expected to business, downward public our pressure was by care but costs, or largely Within health reported RIDEA the on new other supply

outsourced both on how we our direct due and more to a are a side, strong asset business. is medical generally asset demand from change business, positive approach leasing on historically model. seeing in the managed emphasis and good office active The activity the management to in-house building tenant relied NorthStar which, active business portfolio healthcare the an On more management speaking,

our reports of results across has work management regular We the leadership on there provide in encouraging. but on more asset value-added do to much will plan to still performing initiatives Welch, we quarters continue been and these of front direct ahead have the including Rich healthcare under the Overall, the business to healthcare management the the is teams undertake professionals to asset recently year-to-date, business liability healthcare approach and a are management ahead. and experienced very investment entire added seasoned early

hospitality. last began same-store a year, renovation on to rate, positive the with occupancy witnessed Next, We across business quarter period. see the X.X%. portfolio EBITDA good posted X.X% stronger second Compared segment the hospitality and quarter revenue portfolio. second demand effects higher we increased our second and corporate and trends The during quarter, to work in increased accelerating from positive the

in properties. also increased energy certain markets new to unbudgeted at activity We observed that led centric business

extended quarter, Finally, which in to hospitality our be mortgage we that last completed XXXX. extended fully the date $XXX from addressed, needed million second a XXXX the maturity was -- maturity extending near-term to refinancing

from January completed X more term portfolio this we've merger now fact, the to years. financings loans In remaining has than average last year, $X.X billion of since for NorthStar our the X.X in in closing the where X.X increased of back segment,

a Next, strong new to continued by industrial. continue demand, net industrial a Rental led including performance supply trends and light as to of a experience positive growth. accelerating in strong of these increase result rates limited Colony's quarter income GDP and e-commerce operating and the factors platform second result variety same-store fundamentals. as positive of

the higher to due down, growth and rent. backfilled starting X quarter-over-quarter this leases we quarter same-store rent large X.X% new the X.X% at and X% the quarter, and largest occupancy experienced renewal of second the experienced which than a rate is quarter growth the X% vacancies, over to end prior of quarter-over-quarter of predominantly of NOI same rental ticking positive same-store prior despite on subsequent We year. growth already For

strong X other tenant and The well, are experiencing soon. expect as we vacancies interest to backfill

deals have raised where continue positive enhanced with first at to we a markets of sizable regards equity third-party leasing more are than Given in rents acquire now These faster trends, In order additional million to value-added planned generate this above yields. through underwriting. year. $XXX we've half the vacancy capitalization, up of these presence in we to and stabilized

million continued We also our of Francisco by by XX-year portfolio execute strategy closing debt fixed fixed in loan a rate assets San long-term secured Bay Area. $XX rate to the a

Our segment X.XX% rate an and term this at separate average fixed remaining of billion total XX at debt portfolio $X.XX loans now XX interest years. stands a and of in

earnings investment and preferred deployment areas senior triple and CLNC net talk securities and CLNC. for investments. it lease investments, to equity originations, the a loan key subordinated about on across particularly overall, target was Next, capital I'd CMBS of company quarter productive reported like front its the yesterday

XX% of have an in earnings second totaled stages capital capital in significant the average been the additional million million it $XXX X.X% funded investments, The to is third invested levered the its through CLNC very investments. initial to per expanding capital have from per only expected quarter, capital include XX%. or ramp first underwritten During deployment sanguine of approximately with allocated the we in increased All as weighted $XXX of European an invested yesterday. substantially this as below XX% advanced which rate $XXX rate XX% activity earnings result. and Liquidity internal a base a institutional approximately approximately $X.X CLNC million and identified optimal return existing capital $X.XX for QX allocation second about Year-to-date, CLNC levered another continues remains shares of all, more through that Together, already share not The the peers. leading level quarter, of CLNC's per has is of yet about shareholder execution, structure. that industry the these recent investments investments of and has including but in the allocated closed significant figure. ownership, an approximately above return to earnings prospects its of from core run price company billion deployment reported end remain expected movement quarter and more quarter, capital provides of today, has of share and

monetizing active had to businesses. balance and sheet, and nonstrategic we a successful assets As our quarter also very

liquidity equity of respectively highlight and our Asset of year-to-date quarter of OED, the restructuring Estate, and, have cases, the was generated in end has all reduction. we net certain XX% value year. in Real at to the simplification exit and that months the approximately of and Debt, of Other business at the of of and the was and XXXX to meaningful book of equity to contracted net highlighted billion respectively XX, segment, sales This XX $X.X or discrete of beginning assets are third modernizations proceeds at the the and totaled first of close June Equity year. or of a monetizations coming XXXX billion proceeds above over versus equity asset $XXX the evidence Colony million. also second of that the Credit budget of net start this approximately asset third priorities formation returned including from various a $X billion, which accelerated million the continued for little we $XXX respectively contributor the XX% quarter net these streamlining liquidation pace $X.X as The The and $XXX Most was like had segment, in investments. now a quarter aggregate the a proceeds from million expected over and quarter year. combined in the carrying billion, into gross $X and and this first billion in $X.X is proceeds X of across I'd decrease, this overall CLNC, as the value of

an have back have activities. thus program. to Now through average the Consistent prior counterpart securities our include This capital is of the the sheet XXXX bought repurchase common in shares size XX% these far of initiation monetizations have and $XXX at equity or price of asset of approximately million stock reduced with share. equates actively Securities deployment we to $X.XX earlier repurchased repurchases stock also XXXX the communications, outstanding the been million we XX.X where balance busy. per of to marginally

preferred and July. common announced, securities, of bought previously As equity the preferred million we of redeemed we have back stock $XXX beginning $XXX since All told, the million year. also of now in both

equity remain Management putting will Colony for balance a the capital this in to this estate focused while Investment the strategic maintaining on of addition a far, we million we XXXX momentum. includes set have we who economics. third-party the we a our will of where value. where nonstrategic a more over This focused continue in we we been earlier And In common busy this to investment the second year-to-date primarily to productive higher a through constructs net turn most year: the repurchases, it's we more Management our Furthermore, into real will goals our a streamline take and and on we detailed forth maximize simplify, broader competitive and $XX investments, In thus Investment company summary, opportunities the position earn and preferred and and are quarter ourselves edge. business million call to be compelling achieving goal very around generate return seller grow globe. capital deployed and stock and with redeploying new in on results. At a you have Darren, that, restore shareholder sheet-light with assets to quarterly I'll into become margin, summary $XXX

Darren Tangen

and Thank everyone. you, morning, good Richard,

on X start website. second of will reportable shareholders' in As to additional with an release earnings, provide each segments our Richard supplemental available few this a review the addition performance of quarter business our that I then cover. a didn't our of details of quarter overall results, filed otherwise the of morning. documents section within second Both report a these reminder, financial the public of we are

loss intangible Turning Notably, component of to a million was intangible was $X.XX per an NorthStar Colony company was NorthStar Colony stockholders million to loss $XX.X to effect the triggered quarter attributable Net in of our Capital decision in closing value by which at large of a write-off trade The common the results. XXXX. share. XX, remaining overall rename this asset asset which or name, took to $XX the was Inc., created second January the merger June of the XXXX. elimination the the

calculation of we these Investment core holdings. Additionally, for million these charges, within Management $XX noncash non-wholly-owned had were FFO. all real were added estate back Because the items platform impairments our of

per net of included gains FFO share, million million. or which core Second approximately $X $X.XX was quarter $XX.X

per per quarter $X.XX another $X.XX FFO of $X.XX per net nonrecurring share gains was positive First which included items. share, of and core share

core the the quarter our variance was sequential the core in of multiple hospitality improvement Excluding for share. expected exceeded contributor the quarter second $X.XX nonrecurring impact net but by first per There positive gains FFO FFO and reasons items, segment. largest were seasonal quarter-over-quarter

and first our Our the of year sets performance beat meet half the beginning balance up the year. at to established the budget us earnings well of for even possibly

of from mentioned common capital capital gap the offset As Year-to-date, redeployed minimize is and we sales preferred to the from Richard businesses new investments, to million during and all, over redeploy earnings into earlier, accelerated this our recycling earnings monetizations most, $XXX have nonstrategic the which year-to-date. of assets should not and challenge process. asset the of stock loss repurchase if

been temporary between and funding While there sales may be some our any earnings using timing corporate differences minimize bridge a revolver have redeployment, to as we actively disruption.

expenses decrease approximately million, interest quarter, same FFO restructurings quarter, period. the our property million debt of a quarter remained provide count on and $XX.X provided prior prior was to I'll ownership Healthcare second X related Real this the Relative bad starting our core a continued Estate business. $X.X we the to segment. lease million to of primarily connection from of with Richard earlier in recognized Estate Now mixed summary results financial results reportable Healthcare and commentary Real each the observe operating our for with segments, in the $X

Estate of Industrial consisted XX% segment. to million U.S. leased properties the rentable increase quarter. XX.X on of properties June This The XXX and net totaling across represents major over markets feet portfolio the XX a of XX feet square and was XX, million approximately X.X Real square prior Moving XXXX. as

fundamentals increase and an sector capital funds, at of we limited fund demand strong fueled end second To we e-commerce this Core continued from Given operating interest XX% primarily additional open-end supply. in our remain $XX.X of with which same contribution ownership in million approximately compared this million store from acquisitive in raised acquisitions. given in quarter the prior new the earnings point, in growth our quarter, open-end to related in quarter, $XX.X improvement second third-party new XX%. FFO was the the and $XXX contribution business million to the to decreased the

Turning year. same primarily Estate period to to from interest Richard the rates. second X.X% Real year to EBITDA this growth Hospitality more segment. however, the strong due our quarter was last highlighted FFO muted, higher growth of the Core Again,

XXXX, XXXX higher debt. during a environment business core $XX.X quarter floating million million finance reflecting with of on the quarter LIBOR compared increased second $XX.X Second FFO rate to to the

the OED just merger With for to NorthStar reportable or Realty credit opportunistic being ownership earnings ownership and $XXX our equity the do Undepreciated alongside our Inc., strong legacy long for fund, monetizations. invested has new latest of quarter, managed first earlier, of the XX% strategy the million in CLNC the CLNC categorized quarters $X.X of June earnings subcategories: believe of March Real figure second end billion capital credit in capital XX completion third-party Other quarter, its rate CDCF to on our approximately $X.X team. Management primarily segment. XX% in Undepreciated committed Europe, Strategic Debt, due listing different from to CLNC the and of construct. decreased million given billion strategic nonstrategic balance quarter, Credit earns the quarter CLNC, we to million ahead. primarily Since the Nonstrategic we in a hold and fundamentals core and and significantly ramp Strategic OED coinvestment economics. our on reported continues grow that to to asset IV. XX, and under our This excess not stand-alone MRE, in are value $XX we recent which where our contributed $XX number in of or term $XXX equity Colony Switching segment Estate, in and approximately prospects externally value third-party investments this in transactions. include under-levered secondary sold capital run OED global have the under due million includes are yesterday up which current a we fund the OED. sell XX% we positions. the $XX.X year CDO OED the third-party includes the Equity and contract of and majority highlighted Colony vast a or capital started OED. alongside our of $XXX are interest FFO our and first we sheet in and CLNC securities, to long-term to sold with deployment, across million Examples We Richard private will to and having expect million, or nonstrategic X remain equity increased Investment during deployment alongside and OED expect and interest the liquidity. CMBS represents not REIT, investments

recall, securities were you are CDO for exposure our significant earnings If pleased to so in year, equity and a secondary interest reduce private those areas. two fund we volatility reason last

As nonstrategic year-to-date turn in approximately the of significant CLNY or in monetizations with fair step-up was of value and results to from asset approximately investments base. billion initiative The equity quarter the portfolio balance and FFO have compared contributed from sheet. has we $X to smaller CLNC first $XX.X two, sales quarter million areas. mentioned, $XX strategic due redeployment Richard earnings remainder free million the reclassification a of month into portion first monetized $X gain. contribution quarter. monetizations. OED case, CLNC of is asset XXXX to more quarter; approximately asset which Operationally, balance earnings attributable a remains CLNC, OED our the to: one, core core operations up decrease thus The to value, and decrease attractive XXXX to Monetizing the formation sheet, OED $XX.X was remainder from primarily for of capital of and first $XXX the key first will second our In simplify in FFO million, million the repatriate included which in proceeds net decreased our of our a a X portfolio primarily in and streamline million

we to we core As as sale FFO asset continue have continue will record the from communicated, we lower OED nonstrategic program. our segment

and of which as strategic $XX.X Management constructs, the our work Management the ended to sheet we third-party prior June Management, continue Investment co-investments a core quarter. business, transaction. perfect our put in The XXXX, the to the billion $XX.X However, in balance various capital Digital Fee-Earning Investment as Equity majority from of share to to segue capital AUM with compared FEEUM, is $XX.X quarter of billion should Under industrial which as other to AccorInvest billion increased from including XX. Colony increase or investments raised vehicle, $XX.X grow alongside March our FFO XX, of capital third-party is attributable as the OED open-end billion of of to fund

contribution up Management fees capital in primarily core CLNC, raise $XX.X AccorInvest with lower was and up fees pick by associated and quarter, to from quarter million holdings companies. million, real Second the a management in nontraded earnings due full quarter the FFO lower $XX.X prior from REIT estate fee non-wholly-owned Investment offset from

sheet Finally, the and on happened monetizations areas beating capital end. perspective, quarter structure common XXXX, Operator? in and particularly year-end. of for the hand to forma the objectives fundraising, corporate operator availability With that, redemption cash the pro pay-downs to goals we and full $XXX continue debt credit visibility the our I'd stock sales. or stock billion turn meeting coming our call liquidity on our first asset of with during half from a remain capital deployment In in From standpoint, our we to that due sales, with shortly repurchases on we approximately and to good decreased financial are and modestly on during year very begin and balance and $X.X summary, after under by the strategic million excellent be asset have results liquidity facility, quarter like shape Q&A. asset between a focused progress to ongoing from pleased preferred additional

Operator

[Operator Instructions].

of the Jade from Rahmani is with question KBW. The first line

Ryan Tomasello

Ryan for is Jade. on This

color the just were some know and assets prepared XQ in at the earnings. you I an gains? investments? that to remarks, those what earnings the post but sold fund of you and color are the of on And were generate assets Just the some can secondary monetizations that be during CDOs a on gave as follow-up, give XQ you your sold book expect any or from Do rate PE monetizations, on perspective the particular above first, and any quarter? value post themes run impact

Darren Tangen

Ryan, Darren. it's Sure

why of were I lot and that. I mean big mention also well completed the CDO my did of equity that private as I in quarter. try monetizations and triple fund monetizations different to remarks secondary in had don't But net So the and We the end. and a a lease well pretty CMBS component to quarter we in we we asset equity securities subsequent loan sales interest well. both take payoffs. post European some we quarter had as investment a preferred quarter investment as had sold that as also as a the

that redemptions and speaking, the our was as through have remarks, common given lot when that of earnings asset either of we've So of earnings. generally or and the to that be Debt we that monetizations. in investments, should to redeployed all we've repurchases, redeployed, our a gap again, number nonstrategic it new this of Equity came little is terms of how as forward, stock sold. impact capital a this a subcomponents that earnings my again, how of different Other question away proceeds mentioned there your I mean, in a And timing but could in bit preferred going little we be proceeds any gone replacing of got expectations various between the when I of a should into bit replacing should be

didn't, please If your I repeat. just it hopefully answered all So questions.

Ryan Tomasello

themes guess Colony could Sure. are vehicles? the think Yes, Management the helpful. capital raising traction? fund, third-party strategies in on that then capital infrastructure raise are other there, clearly where success I there was business on in the most capitalize and seeing And additional you You've you and but Investment just any which had

Richard Saltzman

this infrastructure more strategies Yes, groups AccorInvest, Ryan. typically, the exceptions, sector-specific the we fund broader, fundraising It's about industrial think funds. success Richard. doing these we're opposed so are think success dedicated some to is theme seeing that one-size-fits-all, certain having of when are diversified estate our real the all as the kind -- of focusing within the tend that with with that world, Look, be are geographies. or to teams you in There are property enjoyed management or most about I Digital full-time but that digital you on Colony, just sector-specific in more think

Sometimes in we're of we hope are do funds think the in behind terms there's in and/or more what geographies new speak able terms And then some have where do where been that real of we to looking to to legacy some now series. there's away traction next I of that Colony here. funds may hope as we're particular exhausted their looking hospitality either and at things to in successor And that at, going we the quite be even capital programs from programs estate broad. terms we've in get

this narrowly be focused in market, bit a team. positive so ability to to a with supply-demand got albeit more terms that typically, are niches in compelling raise in dedicated you've think quite fund and a standpoint the we're I And of from little

Ryan Tomasello

post you those follow-up sales color a to can contract, at under value? just million Darren, us if carrying of The And XQ question. my $XXX give any initial were monetizations

Darren Tangen

all yes, Oh right.

as you ask right, that You're well. did

the the of on value. since sales So average, above first the have completed quarter that carrying end we been

these is there all QX So in small sales from will a gain or in up in exit. -- will up the either be of picked been picked that QX has

it above or value average, little there aggregate, value value. in within Now carrying that, were but carrying were the and was some above were carrying bit below there on that some a

Ryan Tomasello

share? as Okay, the estimated otherwise, stands and willing be how NAV back just queue. Colony jump Colony should valuing today I you last Or one in any that investor state? to current great. range then And the I'll of guess in be have its I think would guess you valuation, community you do

Richard Saltzman

our an a of value or updated challenging several -- or give business, away of financial parts ago, but do to the of I the we've has has as various years the NAV kind what which to business started more I would Equity becoming we put the website Well, to we tried equity we when our put sum components we package, through know parts segment. an this Debt of value morning, aspects underwrite the the certainly, if and been when an version quarterly fair on from to a Other to one people opposed try or REIT. NAV of REIT But moved per of do do and providing But share market the mortgage supplemental the been for think wish. -- any out I buildup of a they oriented that was

so is sales completing to And and the been the that thus good your relating I question OED within how far think segment have one a year we here this we've asset to we're report value executing have sales been to carrying at And far year above relative think on doing carrying that or thus been been we've the this I pleased average. value.

the words, reflection sales. value actually that think we have the a in value asset been So of these other I execute segment that good has carrying in as we're we seeing

Darren Tangen

a we streamline would recognize to a at the which and as the core our of some point, of we of of that and standpoint quality of re-rates terms refine what market look, that, FFO quality begins just is in is Ryan, improving us earnings. And we're kind the hope and arguably, would that I following, doing, improved from add earnings multiple

Operator

from The is Binner the line next Riley. Randy of with question B.

Randolph Binner

the asset one have on follow-up sales. just I

CRE other block carrying would CDOs So a above and investments for good in value there saying be result. that of it's

those and of Can Or how it execute assets? share those process? characterize competitive those bit how sales? Was how you a were you active could just for market is there did I'm little negotiations? kind of a private types of executed the were you So curious

Darren Tangen

Sure, of the to varied don't But generally to I kind terms asset going some us. auction on. that from of you're try that Randy. helped into program an process asset Why take mean, that I with of of for in it broker transaction we type kind who intermediary sale speaking, some executed.

which assets. selling assets the I you XXXX. have a the last fund And securities carrying fact riskier of the these a earnings area, which have I equity going forward, those bit asset a mentioned exit CDO exposure environment little given hired was the Richard's the class. in private to and is I think sell. we case that into interest, a we to that intermediating. those quite quality the investment all an adviser of fund terms a we volatility these types some We going to -- those specialized fair, we've of secondary bank is fact mean, type lower is certainly we So mean, of I I'm forward the speaks that interest, X try areas the got think are for securities We ultimately, we and equity that happy But CDO positions. and those certainly, had comment of year shouldn't we type did value I separate year, mean, bit carrying as where that that an why different values ultimately a about from some I now of want private I think volatility of be terms the in And to that in to secondary financial we of classes had you asset create to extent to in that earnings going impairments feel cases, of this in right can, in competitive where did

Randolph Binner

on into jump your comments then And liquidity. Great.

In is positive Can a up? revolver is ability used everyday what 'XX, generate activities. back you addition, my how going the how you for revolver it the look in of sense to to and that, were on not think of is, quantify builds the be there the the lot half to liquidity. that's I is cash

the interested in you balance, half of see how that that just back up 'XX. cash building I'm So

Darren Tangen

the it flow roughly bought think we've of the what off common as asset capital after And mentioned corporate of mean, it's into preferred, new that depends both $XXX $XXX redeploying. preferred, course, and dividend, on sales investments. we proceeds the highlighted has million been deployment doing and common been and really operating we're gone use and back, of side, $XXX on that's paying securities I that Well, equity Sure. on paying from we've million had right. cash returned debt of roughly call, that's there's on we year-to-date, the why the been and, I we million top

of nonstrategic this presumably to still equity addition promote. and continue invested up quarter, segment, common second new $X.X capital. of equity fees gets that to end that, the capital third-party monetize getting -- ultimately alongside over And the where capital we're investment capital So preferred returns, a and as the into more redeploy as OED third-party sheet we're the repurchases, ideally be construct, had and investments, value to we which of time get will in underlying billion new freed going and/or into balance And investments. in to

Randolph Binner

fact expect kind that so I good And plan the you're should to for mean guess of is you had mean, good in kind of the I of of progress expect price good. continued far this then that where is? ahead you ahead say that we should -- process to it dispositions? Very and mean plan, advantage I be of to OED -- continue this that given fair take market discovery and does in is we

Darren Tangen

sell we just It time. that in. sort also it plan are goal create we refinanced that we sales I then we're as late And it. we OED be and That's and last portfolio even that in fully a that because so or portfolio. ended not completing within a some nonstrategic quickly or OED however, it's exit There value-add some I quickly can speaking, in process XXXX that of spending which to our going that but the business segment it is strategy asset prospect. refinanced generally could process that won't can capital. mean, business as an monetize as XXXX. the of the segment, we and began potentially a and at take certain portfolio stabilize looking redeploy loan-to-own that highlight to there's It execution debt to of investments as it's a sale taking just are monetizations whole some until year even we Portfolio. may ultimately certainly as XXXX a But the We -- ownership hotel loan investment, CapEx not that It that we are Hotel can so end THL within up example, as to was segment. plan

Randolph Binner

one if just more, And I right. All can.

that, to -- good make comments of operating that made so with as took right? run expectation the I of around any on $X.XX kind planning basically you you the the want of to and sense Going in heard as came that on side correctly were the sure that And rate seasonality guess FFO. of third second expected, you just quarter? around I seasonality in kind into is quarter, we're XQ I well

Darren Tangen

Sure. seasonality and relates Well, strong to QX it our QX hospitality, perspective. for our are and are generally QX and as from weaker speaking, QX portfolio, quarters, our quarters a

we So and the the in May. I see -- June in latter performance quarter, hope hospitality good our versus portfolio fundamentals i.e., would in did part of and accelerating April

the in QX into hopefully, hospitality we did So would like that quarter I segment. see that for continues we'd the performance, QX and here hope good another third

performed at in first for half, the $X.XX on, rate end or through run $X.XX we But and if -- kind for this perspective, you think think think core we the a based year Richard of So expected I as half. on I right, would $X.XX think the half but in hopefully of the I on think we commented beginning of quarter. the don't sort average, which year, at second whole for $X.XX we'll well, being at QX look good had think about of sort hopefully, sort here over how the on quarter and And we sets I'm run us of year, how in earnings the doing don't so half is the rate in good And we from that I performance, thought QX, -- beginning we result I talked the ahead than or up we -- FFO year just it's of a where range the of in number we I it. a $X.XX, an I year. of average, we guess walked the first first people is first commented tracking be better up I earlier the saying the well

Operator

Instructions]. The with from line the Mitch is next [Operator Germain of JMP Securities. question

Mitchell Germain

quarter, maybe understand, the this nonrecurring question remind of of had guess quarter. can I were you fast know that can I me, different last a number number you Darren, just I'm of each core kind impacted the last trying to about where quarter, in what so kind earnings and way? items refresh then last forward and $X.XX and some earnings, difference ask if we I Just one-timers, or the the that terms was to big was maybe quarter core gains what at in is

Darren Tangen

I mentioned think I remarks, in degree which is... my to And this some

Mitchell Germain

You did, there was just a information. lot of

Darren Tangen

no, no. I know. No, did, Yes. just I

For sure.

Okay.

there $X.XX in positive gains QX. nonrecurring QX, $X.XX FFO $X.XX of in and result of and So was items core

run it, some negligible had about $X.XX positives, you we pretty much we $X.XX, for or some at all if rate you gain at them those, very really at contribution positive of million And call added and up, it we came really QX, net more we a a So in were least then for adjust level FFO. or because negatives, had net we had $X was gain, flat. when but core

why remarks positive to in business. our the So seasonality really variance did you onetime of and QX, just per kind or I that those was adjust for that primary hospitality from that I I saw made the items we that of $X.XX to contributor out -- QX that's the when sort think of nonrecurring share

Mitchell Germain

get make just I this want had So you but had right. to -- sure I you --

nonrecurring of in that though, correct? You in reference... had Or quarter as said was well $X.XX the items second

Darren Tangen

No, that in was QX. That to was QX. reference

Mitchell Germain

okay. Oh

okay. So

So got you. basically --

clean $X.XX QX, number fairly in got you. QX, basically, a is So $X.XX XQ,

Darren Tangen

Correct.

Mitchell Germain

you economics deal. any Accor third-party you? for Or just Question in about Do that? construct a guys have the it Okay. is

Richard Saltzman

No, no.

We capital have invested too. there, some

Mitchell Germain

there raised. is are I of your capital terms the number you -- with know a Because separately co-invested So of have percentage what interest from also the in you other entirety? that parties that that

Richard Saltzman

unfortunately. a yet, think to at Yes, in disclose position I Mitch, don't that, we're, least

Mitchell Germain

million, around that in you mentioned equity know you I had were Richard, problem. No believe, I Okay. expecting monetizations. $XXX

of the or trending year on looking believe like of You're running at think a kind you a ahead target full that could that you're toward million, year? be I number. you're for full I Is now $XXX there the off for little

Richard Saltzman

so goal saying us for said to we're we're to mean, million. to be right. as earlier, full do, much we already the for at year was as the Equity is $XXX Debt sure, and going we're possible, Other trying to year-end down million and And as before and on this -- Well, I Darren more X. $XXX some nonstrategic do

constraints portfolio. there quality do ability there, mentioned of in Darren terms earnings, So instance, And of we et can. some to going our But simplification, trying the all. in we described, before, as and/or as cetera. THL it be operating can the get literally around monetized what's may better other for I the to do it we're as quickly on more constraints

next couple can be of the out years So this there'll be nonstrategic and within this we hopefully, more side. on year the category of

Mitchell Germain

know was nonstrategic And sit, that -- March June in balance it where I XXXX, Darren, strategic does classification quarter. do from nonstrategic, Do in believe of you like of you maybe XXXX? that not I the OED but you last to changed know the

Darren Tangen

how So has you're saying declined over XX it the much last months?

Mitchell Germain

$X.X Yes, billion your equity value like today? ago that versus what year was a

Darren Tangen

equity I all of ago, around of know year value. Well, a $X billion was OED about

started. strategic Now, almost down probably half we of where positions, kind that, from some by of but admittedly, we're included

Mitchell Germain

of you. closed, Got you your outlook Last know helpful. since will That's Richard, terms believe just seen one the short it's from me. in the deal and you've SXK forward? I going of period what really what discussions for time maybe really, be but,

Richard Saltzman

Sure, Mitch.

or the to already public figure institutional otherwise But a kind question. into distribution, of it's retail distribution progress bring in broader the retail can already on worth private you perhaps side placements inferred through we and significant that whether work sponsoring we're capital, retail in out we mean, focus have and products mass. where look, net critical high on still your So I as trying really is it's how

And out paradigm we're suites not what's something an right. retail the right in where our just capital XXX% can to that figure working way be products is it's capital. today, consumption, taking example, creating the institutional trying for necessarily retail alongside as So like institutional invested better create industrial opinion, on the to

the think is there's those products sponsorship of the retail reason game of the platform, in a alongside spaces in and entire what interest And part alignment where investors. some of past in slope exactly I institutional and better create across the slippery the investors terms the it's is been that. of skin to why the their in

So think not products to invest preponderance the but of won't where say I retail, that of retail that emphasize to to any is kind there the can oriented more be institutions. what are alongside we're trying

Operator

Rahmani The from next the follow-up a with question line Jade is KBW. of

Jade Rahmani

towards long You plans gave some that remarks, the various particularly and for You take? management, will repositioning nursing? portfolio, the you just think how restructuring skilled in-house wondering color more in shift your healthcare I lease mentioned on your so prepared detail can in a was us bit but you give

Richard Saltzman

look, I X-plus that we've the call and, course, years in let's ago. couple months Yes, indicated goes it, of past, a back think of to,

pretty year. have we It's in next think through I still certainly go ways of the of complicated. end So terms a to

plan we're with I We're the we're progress pleased of that ahead stated. we making. think as

And some of appear to these headwinds that be experiencing abating. we're

there. all more to little It's to gratification So be bit going going directionally, But good. there's instant still not us a take time.

Jade Rahmani

you've mentioned vertical still mentioned you've if interest. past, -- looking multifamily to I are some as of you wondering the was add And a in area in that an Okay. that's think I way?

Richard Saltzman

position it a you're housing. standpoint Candidly, the to But rent. in we single-family exit. But that had throughout that space. good that, strong be the I careful you it's wish space, round business, still to And had, housing, new just and from in a I we rent pretty given in strong. pockets. success think like should a certain rental sector, remain supply-demand we the like still the the for spectrum growth to fundamentals we with. think about supply that assuming underwrite we fundamental of we rental That was residential lot a have were of and in of had very And mean, we great the I great Perhaps. nature trip construct the

Jade Rahmani

the lastly, mortgage at a Richard, REITs I one-off larger have some high couple know take that your the investment given reported outlook CRE? of level, fundamental in delinquencies just on environment seen. overall that what's have a us And Okay. earnings commercial the for they've

are was -- or see wondering, expecting So deterioration? you if seeing any expect to

Richard Saltzman

Well, it's one-size-fits-all. not

it's spots perhaps cycle. pick we view reasons is you why like in late in where one very carefully. have from here And and in repurchases not it's our Europe So in earlier. this deployment Certainly, places the is other the conservative U.S., just a away as our the accordingly, your time got of securities later to

new certain some segments And moved are that now, technological experiencing of you can in pricing replacement supply as headwinds and/or there of either as from ahead comfortable pockets So are has development. just cost adverse and have change cases, risks it's very you to where you kind really growth. new justify be that of and/or good good credit those on can underwrite focused the feel niches you

the even multifamily and good space, in And one-size-fits-all. of of a short-term and how going terms not pockets right, of look business at markets, some growth. providing that's healthcare business It's It's we business. headwinds where be a of spectrum oversupply that term. housing will the good just through which we in certain headwinds the senior longer some is is in talked the So part in housing, about senior some

on geography You've new supply, by the new to sector, got really really going analyze from and standpoint. understand it product by what's

Operator

the We've come question-and-answer the back end I'd session. to Richard over our of turn Saltzman to floor remarks. for like to closing

Richard Saltzman

again, of everyone, look and on ensuing on forward progress rest call. to the joining Thanks initiatives Have the and more various quarterly We're for a this objectives quarters. us good we're making for with Okay. really in pleased day. that our reporting

Operator

today's teleconference. This concludes

disconnect may you lines at this for your time. Thank You your participation.

DigitalBridge (DBRG) 8 Aug 182018 Q2 Earnings call transcript