Investigation of Colony Capital, Inc.

Colony Capital, Inc. (CLNY) Accused of Misleading Shareholders 

On September 30, 2019, Colony announced that Blackstone (NYSE: BX) would acquire Colony Industrial, the industrial real estate assets and affiliated operating platform for $5.9 billion. Colony claimed the sale would “achieve compelling returns for investors and generate significant liquidity.” Then, on November 7, 2019, Colony Credit Real Estate (NYSE: CLNC) announced that after an expert valuation, it would begin reporting operations of its Core portfolio and Legacy, Non-Strategic portfolio separately.  Unbeknownst to shareholders, Colony’s sale of its industrial real estate portfolio and the bifurcation of its real estate portfolio were likely to negatively impact Colony’s financial and operating results.  On November 8, 2019, Colony revealed a GAAP net loss that “included reductions of goodwill, real estate and provision for loan losses totaling $540.3 million.” Colony noted that $387 million of that loss was due to the pending sale of the Company’s industrial investment management business as well as the decrease in management fees from Colony Real Estate, Inc. related to impairments due to its portfolio bifurcation.  Colony’s stock price fell almost 9% to close at $5.00 per share. Finally, on May 8, 2020, Colony disclosed that its portfolio companies had defaulted on $3.2 billion of debt and that Colony had received notice of acceleration covering $780 million of the defaulted debt. On this news, Colony’s stock price fell almost 4% to close at $2.02 per share.

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