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Report of Colony Capital Asset Sale Surfaces After CorpGov Predicts Breakup

John Jannarone

By John Jannarone

Colony Capital (ticker: CLNY) is exploring a sale of its industrial real-estate unit, according to a Bloomberg report Wednesday, news that comes less than a week after CorpGov published an an analysis showing the company could be more valuable if it were broken up or sold outright.

The asset, which is structured as real estate investment trust (REIT), could fetch more than $5 billion, Bloomberg said, citing people familiar with the matter. A representative for Colony Capital declined to comment to CorpGov.

Last week, CorpGov published a detailed financial analysis including a sum of the parts valuation indicating the company could be worth more than $11 a share if it were broken into individual pieces. The report also explained that the presence of activist Blackwells Capital could be a catalyst for the company to take action after a troubled merger in 2017 triggered a dramatic decline in Colony’s share price.

Colony owns 34% of the industrial REIT that is reportedly up for sale. Such industrial space has been in high demand as companies increasingly seek out warehouse facilities for goods that are stored and shipped directly to consumers – the so-called Amazon Effect. In June, Blackstone spent $18.7 on such assets in one of its largest deals ever, with observers estimating a cap rate in the 4% to 5% range.

Assuming a 4.5% cap rate and an uptick in income from a recently announced deal, the industrial REIT could have an enterprise value of $6 billion, with Colony’s equity worth $1.2 billion or $1.69 a share.

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John Jannarone, Editor-in-Chief

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