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Colony Capital Sells Other Equity & Debt (OED) Portfolio, Reaps $535 Million

Colony Capital has agreed to sell the bulk of its Other Equity & Debt (OED) portfolio of real estate assets to Fortress Investment Group for $535 million.

“This transaction is a watershed moment for us, a big step towards our finish-the-mission goal as we rotate to a fully-digital business,” said Marc Ganzi, president and CEO of Colony Capital. “Not only are we freeing up over a half-billion dollars to redeploy into digital, we’re simplifying our business, making it easier to manage and to understand. Fortress is a world-class organization, so I know these assets will be stewarded in the most responsible way going forward, allowing us to maintain our singular focus on building the most compelling digital infrastructure real estate investment trust (REIT) in the world.”

Marc Ganzi, president and CEO of Colony Capital.

Colony Capital describes itself as a global digital infrastructure REIT and describes Fortress as a diversified global investment manager. In a prepared statement, Colony Capital said the OED portfolio sale advances several of its strategic goals:

  • Boost digital firepower: Over $500 million of capital available to fuel high-quality digital investments, harvested at levels in line with net carrying values.
  • Simplification: Substantial reduction in organizational complexity generates estimated overhead cost savings of over $18 million, allows enhanced focus on digital, and simplifies investor analysis.
  • Enhance liquidity, reduce leverage: The OED portfolio sale increases corporate liquidity to over $1.2 billion on a pro forma basis, while at the same time reducing consolidated investment-level debt by $945 million.

Fortress Managing Director Noah Shore said that the OED portfolio is a perfect fit with his company’s business and what he called its deep wells of experience and expertise in managing highly complex investments across a full range of asset types, structures, industries and geographies.

According to a statement from Colony Capital, the transaction will result in digital assets under management accounting for 80 percent of the company’s pro forma assets under management, with its wellness infrastructure segment and ownership stake in the publicly listed shares of Colony Credit Real Estate, which are not included in the sale, along with a small number of OED assets constituting its remaining material legacy assets.

“Combined with other monetizations to date, at closing, the Colony Capital will have generated approximately $790 million in total monetizations year-to-date, which would exceed the high end of the company’s 2021 monetization target of $400-600 million,” the statement reads. “As importantly, the OED portfolio sale resolves the material ownership of its OED assets in a single transaction, while assuring their continued responsible stewardship by a leading global investment manager, Fortress, focused on optimizing their value.”

Prior to the closing of this transaction, Colony’s non-digital European investment management platform will be privatized and will continue to provide sub advisory and management services to the relevant OED entities.

Source: Colony Capital