Colony Capital participated in the BAML 2019 GLOBAL REAL ESTATE CONFERENCE on 9/11/19. Any potential CLNY investor should listen to incoming CEO Marc Ganzi’s vision for the future of the company. Management comments went far beyond the contents of the PDF investor presentation. Paraphrasing key points:
Chairman Tom Barrack began by explaining that Northstar was “a mistake“. “It was more complicated, we mispriced it, the physical and financial obsolescence of the silos that we acquired were much more dramatic that we thought“.
CLNY had no clearly defined vision. Every traditional real estate segment requires massive capex to stay competitive. Management estimates that “organic cash flow growth” for real estate sectors over the past 5 years has been:
- Lodging 0%
- Healthcare +2%
- Retail -0.5%
- Data Centers +10%
- Towers +7%
- Fiber +3%
Digital infrastructure has long-term contracts (>10 years) with investment grade counterparties with growing businesses.
CLNY will launch a digital credit opportunity fund later this year and a second digital infrastructure fund next year.
CLNY expects that 50% of its assets will be digital by the end of 2020 and 90% digital by the end of 2021
The 90% digital target implies that most existing business (healthcare, hotels, and credit, and “other”) will be sold.
Koneko Research 
John .. thanks for following CLNC
deep value 2 months ago.. today?? CLNY filed to sell. now even cheaper.
give me a call.
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Hi Mark,
My August article argued that CLNC should be sold. CLNY’s September investor presentation suggests that it will be sold. So registration of the shares held by CLNY does not come as a surprise. I think the best outcome for all parties would be a block sale of the shares and management contract. I think an open market sale is very unlikely because CLNY would receive far less than fair value.
I don’t think I have any idea who you are or why you want me to call you.
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John. thanks for the reply. information about me. 25 years on Wall Street. lehman brothers,bear stearns and opco and some other places. all on the hi yield and distressed trading desks. also worked at few hedge funds and now retired. managing my meager portfolio. i own the stock , clnc, higher and understand the issues, but buy more as the discount becomes bigger. [ not happy ]. just thought they were beginning to get a handle on their problems[ wrong]. thought we could share some thoughts and ideas. up to you.
thanks for the work you do.
best regards
mark jacobs
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Hi Mark, I think a contact email is on this site konekoresearch@gmail.com
I don’t really have any new information. The biggest uncertainties when I wrote my last article were
1) CLNY’s intentions. Now I think it’s clear they will sell. They should be seeking maximum value for both their shares and the management contract. Some investors fear they will make a public offering of their CLNC shares, but that seems foolish and unnecessary. A stock acquisition of CLNC would be highly accretive for peers (STWD, BXMT, ARI, LADR). or the platform could be attractive for a new company to enter the space.
2) CLNC Asset quality. It would have been very foolish for CLNC to launch in 2018 with overvalued assets, but that’s exactly what happened. It would have been foolish for CLNC not to mark down all of its troubled assets at year-end 2018 in order to make a fresh start in 2019. But they blew it again. It would have been foolish for CLNC not to mark down all of its troubled assets at mid-year 2019 to prepare the company for sale and to give CLNY a clean base its shift to a digital business strategy. Did they blow it again? Or are the numbers clean now? We’ll get news in a few weeks. I have not seen any media reports about any CLNC assets (such as Row NYC).
What do you think?
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