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.