Colony Financial closes five new transactions totaling approximately US$170M of equity during May, June 2011
July 5, 2011
– Colony Financial, Inc. (the “Company”) (NYSE:CLNY - News) today announced that it closed five new transactions totaling approximately $170 million of equity participation during May and June 2011, with the largest two transactions accounting for $125 million of the total. Of the total amount invested by the Company during May and June 2011, 57% was comprised of loans that the Company acquired and 43% was comprised of loans that the Company originated. Collectively, these transactions represent the investment of more than 60% of the net proceeds from the follow-on equity offering that the Company completed in April 2011.
“Our second quarter investment activity puts us on pace to fully deploy our recent equity follow-on proceeds before the end of the third quarter, as suggested during our last earnings call,” said Richard Saltzman, the Company’s President and Chief Executive Officer. “From a portfolio perspective, our recent investments thematically resemble both our earlier transactions and the opportunities we are pursuing in our robust deal pipeline, with a balance of loan acquisitions and originations, broad diversity by product type and geography, and a blend of current yield and capital appreciation potential that combine to offer attractive risk-adjusted expected returns.”
As described in our recent announcement, the Company has now closed on the acquisition of a portfolio of 648 performing and non-performing loans with an unpaid principal balance of approximately $388 million from a U.S. commercial bank. The purchase price for the portfolio was approximately $197 million, or approximately 51% of the portfolio’s unpaid principal balance, and the portfolio consists of substantially all first mortgage, recourse loans. The Company, together with investment funds managed by affiliates of its manager, acquired the portfolio unleveraged on June 30, 2011. The Company’s pro rata share of the purchase price was approximately $65 million, which represents a 32.5% interest in the portfolio. The 648-loan portfolio is approximately 50% performing and 50% non-performing and is geographically concentrated in the Midwest.
In addition, on June 28, 2011, the Company participated in the origination of $400 million of mezzanine debt, which consists of four $100 million mezzanine loan tranches. The $400 million of mezzanine debt, of which the Company’s pro rata share is $60 million, is part of a $1.4 billion financing used to partially fund a financial sponsor’s acquisition of 107 assets out of Centro Properties Group’s 593-asset retail portfolio. The Company’s participation represents a 20% interest in the most senior and two most junior tranches of the mezzanine debt. The Company’s combined loan investment is scheduled to mature in July 2016, bears interest at a weighted-average rate of 9.75% per annum and has an expected yield-to-maturity of approximately 10%. The loan collateral includes pledges of equity interests in 107 primarily grocery-anchored shopping centers located in 27 states, which collectively comprise more than 16 million square feet.
The balance of the Company’s recent investment activity involved the following transactions: the discounted purchase of a series of tax-exempt bonds secured by a multifamily residential property located in the greater Atlanta region in order to facilitate the acquisition of the property by an institutional real estate firm; the origination of a first mortgage loan with a profit participation, in connection with the borrower’s acquisition of a Southern California master planned community and rights to purchase 1,000 additional lots in a second Southern California master planned community; and the secondary purchase of an interest in one of the Company’s existing FDIC structured transactions, otherwise known as the Cushman ADC FDIC Portfolio.
About Colony Financial, Inc.
Colony Financial, Inc. is a real estate finance and investment company that is focused primarily on acquiring and originating commercial real estate loans and real estate-related debt at attractive risk-adjusted returns. Secondary debt purchases may include performing, sub-performing or non-performing loans (including loan-to-own strategies). Colony Financial has elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes. Colony Financial is a component of the Russell 2000® and the Russell 3000® indices. For more information, visit www.colonyfinancial.com.
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