Colony Capital Pops on New Portfolios

Colony Capital Inc (NYSE:CLNY) saw its stock price go skyward Friday on reporting the sale of six hospitality portfolios for $2.6 billion.

Colony today announced it has entered into a definitive agreement to sell six of its hospitality portfolios to Highgate, a premier real estate investment and hospitality management company, in a transaction valued at $2.8 billion, including $67.5 million of gross proceeds on a consolidated basis and the assumption of $2.7 billion in consolidated investment-level debt.

The six portfolios consist of 22,676 rooms across 197 hotel properties.

As part of the transaction with Highgate, Colony will transfer (i) five of the six portfolios held in the Hospitality segment and (ii) an approximately 55% interest in the THL Portfolio held in the Other Equity and Debt segment.

The sixth portfolio in the Hospitality segment, the Inland portfolio, is under receivership and is excluded from the transaction. This transaction will reduce the Company’s consolidated debt outstanding by $2.7 billion, including Colony Capital’s $2.3-billion pro-rata share.

The transaction is consistent with Colony’s stated intention of simplifying its business profile to focus exclusively on digital infrastructure assets. In addition to the strategic benefits of exiting the hospitality business, Colony Capital expects to generate segment and corporate-level G&A savings post-closing.

CEO Marc Ganzi said, "With its strong track record, unique insights into the hospitality market and creative approach to hotel management, we are confident that Highgate is ideally suited to own and operate these properties."

CLNY shares gained 30.5 cents, or 13%, to $2.645.