Colony Credit

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

The contribution of the CLNY Contributed Portfolio (as described in Note 1) to Colony Credit and the concurrent all-stock merger of Colony Credit with NorthStar I and NorthStar II closed on January 31, 2018. Colony Credit's class A common stock began trading on the NYSE on February 1, 2018.

Upon closing of the Combination, the Company and its affiliates, NorthStar I stockholders and NorthStar II stockholders each owned approximately 37%, 32% and 31%, respectively, of Colony Credit on a fully diluted basis.

The Company, through certain of its subsidiaries, received 44,399,444 shares of Colony Credit's class B-3 common stock and 3,075,623 common membership units in Colony Credit's operating company (the “CLNC OP Units”) in exchange for its contribution of the CLNY Contributed Portfolio to Colony Credit.

The CLNY Contributed Portfolio comprised the Company's interests in certain commercial real estate loans, net lease properties and limited partnership interests in third party sponsored funds, which represented a select portfolio of U.S. investments within the Company’s other equity and debt segment that were transferable assets consistent with Colony Credit's strategy.

Each share of Colony Credit's class B-3 common stock automatically converted into Colony Credit's class A common stock on a one-for-one basis upon close of trading on February 1, 2019. The CLNC OP Units are redeemable for cash or Colony Credit’s Class A common stock on a one-for-one basis, in the sole discretion of Colony Credit.

In connection with the merger of NorthStar I and NorthStar II with and into Colony Credit, their respective stockholders received shares of Colony Credit's class A common stock based on pre-determined exchange ratios.

As contemplated in the combination agreement, a certain loan receivable previously held by NorthStar I in the original principal amount of $150.2 million was not transferred to Colony Credit (the “NorthStar I Excluded Asset”). Upon closing of the Combination, the Company acquired a $65 million senior participation interest in the NorthStar I Excluded Asset at par, and the remaining junior participation interest in the NorthStar I Excluded Asset (the "NorthStar I Retained Asset") was transferred to a liquidating trust in exchange for beneficial interests in the liquidating trust and subsequently distributed to NorthStar I stockholders.

As a result of the Combination, the Company's management contracts with NorthStar I and NorthStar II were terminated and the related management contract intangible assets totaling $139.0 million were written off (Note 9). Concurrent with the closing of the Combination, a wholly-owned subsidiary of the Company entered into a management agreement with Colony Credit.

Upon closing of the Combination, the Company's contribution of the CLNY Contributed Portfolio to Colony Credit, and the merger of Colony Credit with NorthStar I and NorthStar II, resulted in a deconsolidation of the CLNY Investment Entities. The following table presents the assets, liabilities and noncontrolling interests of the CLNY Investment Entities that were deconsolidated on January 31, 2018:



(In thousands)	January 31, 2018
Assets
Cash and cash equivalents	$	99,883
Restricted cash	41,270
Real estate	219,748
Loans receivable	1,287,994
Investments in unconsolidated ventures	208,738
Deferred leasing costs and intangible assets	10,831
Other assets	25,755
	1,894,219
Liabilities
Debt	$	379,927
Accrued and other liabilities	41,318
	421,245
Noncontrolling interests
Noncontrolling interests—investment entities	330,980
Noncontrolling interests—Operating Company	64,294
	395,274
Equity attributable to Colony Capital, Inc.	$	1,077,700

The Company measured its interest in Colony Credit based upon its proportionate share of Colony Credit's fair value at the closing date of the Combination. The excess of fair value over carrying value of the Company's equity interest in the CLNY Investment Entities upon deconsolidation of $9.9 million was recognized in other gain on the consolidated statement of operations.

The Company does not control Colony Credit as the Company's role as the external manager of Colony Credit is under the supervision and direction of the board of directors of Colony Credit, the majority of whom are independent directors. However, the Company has significant influence over Colony Credit through its representation on the board of directors and through its role as the external manager. Accordingly, the Company accounts for its investment in Colony Credit under the equity method.

Assets and Related Liabilities Held for Sale

The Company's assets and related liabilities held for sale are summarized below:



(In thousands)	December 31, 2018		December 31, 2017
Assets
Restricted cash	$	4,060	$	1,020
Real estate, net	852,402		720,686
Goodwill ⁽¹⁾	—		20,000
Intangible assets, net	41,590		37,337
Other assets	43,206		2,587
Total assets held for sale	$	941,258	$	781,630

Liabilities
Secured debt, net ⁽²⁾	$	—	$	196,905
Lease intangibles and other liabilities, net	68,217		76,393
Total liabilities related to assets held for sale	$	68,217	$	273,298

__________


⁽¹⁾	Goodwill is associated with the broker-dealer business that was held for sale at December 31, 2017. The broker-dealer business was contributed to the Colony S2K joint venture, an equity method investee, in April 2018.


⁽²⁾	Represents only debt that is expected to be assumed by the buyer upon sale of the related asset.

Other than properties acquired through business combinations that qualified as held for sale upon acquisition as discussed in Note 18, no assets and liabilities held for sale constituted discontinued operations.

Discontinued Operations

Asset groups acquired in connection with purchase business combinations that meet the criteria to be accounted for as held for sale at the date of acquisition are reported as discontinued operations.

Discontinued operations consisted of a manufactured housing portfolio acquired through the Merger in January 2017 and certain properties acquired through consensual foreclosure of the THL Hotel Portfolio in July 2017.

The manufactured housing portfolio was valued at its contracted sale price of $2.0 billion upon closing of the Merger, with $1.3 billion of related mortgage financing assumed by the buyer. The sale of the manufactured housing portfolio closed in March 2017, with the Company having received approximately $664.4 million in net proceeds, as adjusted for prorations and other reimbursements, for its interest in the portfolio.

The properties held for sale in the THL Hotel Portfolio that constituted discontinued operations were fully disposed in the second quarter of 2018.

Net income generated from operations of these held for sale asset groups is presented below. There were no discontinued operations during the year ended December 31, 2016.



	Year Ended December 31,
(In thousands)	2018			2017
Revenues
Property operating income	$	1,186		$	43,269
Other income	—			2,352
Expenses
Property operating expenses	1,159			20,530
Interest expense	—			9,028
Loss on sale of real estate assets	—			2,108
Other expenses	129			400
Net income (loss) from discontinued operations	(102		)	13,555
Income tax expense	—			—
Net income (loss) from discontinued operations after tax	(102		)	13,555
Net income (loss) from discontinued operations attributable to:
Noncontrolling interests in investment entities	(45		)	427
Noncontrolling interests in Operating Company	(4		)	31
Net income (loss) from discontinued operations attributable to Colony Capital, Inc.	$	(53	)	$	13,097