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Share Name | Share Symbol | Market | Type |
---|---|---|---|
NorthStar Realty Europe Corp | NYSE:NRE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.02 | 0 | 01:00:00 |
|
|
|
|
|
Maryland
(State or Other Jurisdiction of
Incorporation or
Organization)
|
32-0468861
(IRS Employer
Identification No.)
|
Large accelerated filer
o
|
|
Accelerated filer
x
|
|
Non-accelerated filer
o
(Do not check if a
smaller reporting company)
|
|
Smaller reporting company
o
Emerging growth company
x
|
|
Index
|
|
Page
|
|
|
|
Part I
.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
•
|
the effect of economic conditions, particularly in Europe, on the valuation of our investments and on the tenants of the real property that we own;
|
•
|
the effect of the Mergers (as defined in Note 1) on our business;
|
•
|
the ability of Colony NorthStar Inc., or CLNS, to scale its operations in Europe to effectively manage our company;
|
•
|
the unknown impact of the exit of the United Kingdom, or Brexit, or one or more other countries from the European Union, or EU, or the potential default of one or more countries in the EU or the potential break-up of the EU;
|
•
|
our ability to qualify and remain qualified as a real estate investment trust, or REIT;
|
•
|
adverse domestic or international economic geopolitical conditions and the impact on the commercial real estate industry;
|
•
|
volatility, disruption or uncertainty in the financial markets;
|
•
|
access to debt and equity capital and our liquidity;
|
•
|
our substantial use of leverage and our ability to comply with the terms of our borrowing arrangements;
|
•
|
our ability to monetize our assets on favorable terms or at all;
|
•
|
our ability to obtain mortgage financing on our real estate portfolio on favorable terms or at all;
|
•
|
our ability to acquire attractive investment opportunities and the impact of competition for attractive investment opportunities;
|
•
|
the effect of an increased amount of activist stockholders owning our stock and stockholder activism generally;
|
•
|
the effects of being an externally-managed company, including our reliance on CLNS and its affiliates and sub-advisors/co-venturers in providing management services to us, the payment of substantial base management and incentive fees to our manager, the allocation of investments by CLNS among us and CLNS’s other sponsored or managed companies and strategic vehicles and various conflicts of interest in our relationship with CLNS;
|
•
|
performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution;
|
•
|
restrictions on our ability to engage in certain activities and the requirement that we may be required to access capital at inopportune times as a result of our borrowings;
|
•
|
our ability to make borrowings under our credit facility;
|
•
|
the impact of adverse conditions affecting office properties;
|
•
|
illiquidity of properties in our portfolio;
|
•
|
our ability to realize current and expected return over the life of our investments;
|
•
|
tenant defaults or bankruptcy;
|
•
|
any failure in our due diligence to identify all relevant facts in our underwriting process or otherwise;
|
•
|
the impact of terrorism or hostilities involving Europe;
|
•
|
our ability to manage our costs in line with our expectations and the impact on our cash available for distribution, or CAD, and net operating income, or NOI, of our properties;
|
•
|
our ability to satisfy and manage our capital requirements;
|
•
|
environmental and regulatory requirements, compliance costs and liabilities relating to owning and operating properties in our portfolio and to our business in general;
|
•
|
effect of regulatory actions, litigation and contractual claims against us and our affiliates, including the potential settlement and litigation of such claims;
|
•
|
changes in European, international and domestic laws or regulations governing various aspects of our business;
|
•
|
our ability to effectively structure our investments in a tax efficient manner, including foreign, federal, state and local tax purposes;
|
•
|
the impact that a rise in future interest rates may have on our floating rate financing;
|
•
|
potential devaluation of foreign currencies, predominately the Euro and U.K. Pound Sterling, relative to the U.S. dollar due to quantitative easing in Europe, Brexit and/or other factors which could cause the U.S. dollar value of our investments to decline;
|
•
|
general foreign exchange risk associated with properties located in European countries located outside of the Euro Area, including the United Kingdom;
|
•
|
the loss of our exemption from the definition of an “investment company” under the Investment Company Act of 1940, as amended;
|
•
|
CLNS’ ability to hire and retain qualified personnel and potential changes to key personnel providing management services to us;
|
•
|
the lack of historical financial statements for properties we have acquired and may acquire in compliance with U.S. Securities and Exchange Commission, or SEC, requirements and U.S. generally accepted accounting principles, or U.S. GAAP, as well as the lack of familiarity of our tenants and third-party service providers with such requirements;
|
•
|
the potential failure to maintain effective internal controls and disclosure controls and procedures;
|
•
|
our status as an emerging growth company; and
|
•
|
compliance with the rules governing REITs.
|
|
June 30, 2017 (Unaudited)
|
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Operating real estate, gross
|
$
|
1,738,608
|
|
|
$
|
1,614,432
|
|
Less: accumulated depreciation
|
(88,242
|
)
|
|
(63,585
|
)
|
||
Operating real estate, net
|
1,650,366
|
|
|
1,550,847
|
|
||
Preferred equity investments
|
34,064
|
|
|
—
|
|
||
Cash and cash equivalents
|
69,256
|
|
|
66,308
|
|
||
Restricted cash
|
10,654
|
|
|
10,242
|
|
||
Receivables, net of allowance of $579 and $553 as of June 30, 2017 and December 31, 2016, respectively
|
6,882
|
|
|
6,015
|
|
||
Assets held for sale
|
9,427
|
|
|
28,208
|
|
||
Derivative assets, at fair value
|
9,839
|
|
|
13,729
|
|
||
Intangible assets, net
|
149,352
|
|
|
148,403
|
|
||
Other assets, net
|
25,393
|
|
|
21,640
|
|
||
Total assets
|
$
|
1,965,233
|
|
|
$
|
1,845,392
|
|
Liabilities
|
|
|
|
||||
Mortgage and other notes payable, net
|
$
|
1,232,354
|
|
|
$
|
1,149,119
|
|
Credit facility
|
23,000
|
|
|
—
|
|
||
Accounts payable and accrued expenses
|
26,778
|
|
|
28,004
|
|
||
Due to related party (refer to Note 6)
|
3,544
|
|
|
4,991
|
|
||
Derivative liabilities, at fair value
|
3,666
|
|
|
—
|
|
||
Intangible liabilities, net
|
31,010
|
|
|
30,802
|
|
||
Liabilities held for sale
|
—
|
|
|
2,041
|
|
||
Other liabilities
|
33,349
|
|
|
28,918
|
|
||
Total liabilities
|
1,353,701
|
|
|
1,243,875
|
|
||
Commitments and contingencies
|
|
|
|
||||
Redeemable non-controlling interest (refer to Note 9)
|
1,749
|
|
|
1,610
|
|
||
Equity
|
|
|
|
||||
NorthStar Realty Europe Corp. Stockholders’ Equity
|
|
|
|
||||
Preferred stock, $0.01 par value, 200,000,000 shares authorized, no shares issued and outstanding as of June 30, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 55,258,084 and 55,395,143 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively
|
553
|
|
|
554
|
|
||
Additional paid-in capital
|
934,136
|
|
|
925,473
|
|
||
Retained earnings (accumulated deficit)
|
(325,158
|
)
|
|
(282,769
|
)
|
||
Accumulated other comprehensive income (loss)
|
(5,276
|
)
|
|
(51,424
|
)
|
||
Total NorthStar Realty Europe Corp. stockholders’ equity
|
604,255
|
|
|
591,834
|
|
||
Non-controlling interests
|
5,528
|
|
|
8,073
|
|
||
Total equity
|
609,783
|
|
|
599,907
|
|
||
Total liabilities, redeemable non-controlling interest and equity
|
$
|
1,965,233
|
|
|
$
|
1,845,392
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
26,025
|
|
|
$
|
33,990
|
|
|
$
|
51,561
|
|
|
$
|
68,823
|
|
Escalation income
|
5,558
|
|
|
5,908
|
|
|
10,719
|
|
|
11,998
|
|
||||
Interest income
|
297
|
|
|
—
|
|
|
297
|
|
|
—
|
|
||||
Other income
|
508
|
|
|
46
|
|
|
537
|
|
|
749
|
|
||||
Total revenues
|
32,388
|
|
|
39,944
|
|
|
63,114
|
|
|
81,570
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Properties - operating expenses
|
7,680
|
|
|
8,540
|
|
|
15,002
|
|
|
17,771
|
|
||||
Interest expense
|
6,722
|
|
|
11,641
|
|
|
13,105
|
|
|
24,183
|
|
||||
Transaction costs
|
973
|
|
|
1,652
|
|
|
1,233
|
|
|
2,483
|
|
||||
Impairment losses
|
—
|
|
|
27,468
|
|
|
—
|
|
|
27,468
|
|
||||
Management fee, related party
|
3,572
|
|
|
3,500
|
|
|
7,131
|
|
|
7,000
|
|
||||
Other expenses
|
2,608
|
|
|
3,041
|
|
|
4,608
|
|
|
6,731
|
|
||||
General and administrative expenses
|
1,555
|
|
|
1,502
|
|
|
4,152
|
|
|
2,978
|
|
||||
Compensation expense
(1)
|
1,385
|
|
|
3,766
|
|
|
17,255
|
|
|
7,034
|
|
||||
Depreciation and amortization
|
12,520
|
|
|
18,404
|
|
|
25,083
|
|
|
37,275
|
|
||||
Total expenses
|
37,015
|
|
|
79,514
|
|
|
87,569
|
|
|
132,923
|
|
||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) on derivatives and other (refer to Note 11)
|
(7,655
|
)
|
|
1,159
|
|
|
(8,596
|
)
|
|
(14,594
|
)
|
||||
Realized gain (loss) on sales and other
|
1,981
|
|
|
4,622
|
|
|
6,951
|
|
|
2,174
|
|
||||
Income (loss) before income tax benefit (expense)
|
(10,301
|
)
|
|
(33,789
|
)
|
|
(26,100
|
)
|
|
(63,773
|
)
|
||||
Income tax benefit (expense)
|
(237
|
)
|
|
(520
|
)
|
|
36
|
|
|
139
|
|
||||
Net income (loss)
|
(10,538
|
)
|
|
(34,309
|
)
|
|
(26,064
|
)
|
|
(63,634
|
)
|
||||
Net (income) loss attributable to non-controlling interests
|
91
|
|
|
400
|
|
|
267
|
|
|
743
|
|
||||
Net income (loss) attributable to NorthStar Realty Europe Corp. common stockholders
|
$
|
(10,447
|
)
|
|
$
|
(33,909
|
)
|
|
$
|
(25,797
|
)
|
|
$
|
(62,891
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.19
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.06
|
)
|
Diluted
|
$
|
(0.19
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.06
|
)
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
55,023,535
|
|
|
59,115,895
|
|
|
54,928,364
|
|
|
59,266,850
|
|
||||
Diluted
|
55,587,897
|
|
|
59,805,545
|
|
|
55,546,668
|
|
|
59,957,559
|
|
||||
Dividends per share of common stock
|
$0.15
|
|
$0.15
|
|
$0.30
|
|
$0.30
|
(1)
|
Compensation expense for the
three and six months ended
June 30, 2017
and
2016
is comprised of equity-based compensation expenses. For the six months ended
June 30, 2017
, compensation expense includes the impact of substantially all time based and certain performance based awards vesting in connection with the change of control of the Manager (refer to Note 7).
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
(10,538
|
)
|
|
$
|
(34,309
|
)
|
|
$
|
(26,064
|
)
|
|
$
|
(63,634
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment, net
|
37,229
|
|
|
(32,363
|
)
|
|
46,473
|
|
|
(5,789
|
)
|
||||
Total other comprehensive income (loss)
|
37,229
|
|
|
(32,363
|
)
|
|
46,473
|
|
|
(5,789
|
)
|
||||
Comprehensive income (loss)
|
26,691
|
|
|
(66,672
|
)
|
|
20,409
|
|
|
(69,423
|
)
|
||||
Comprehensive (income) loss attributable to non-controlling interests
|
(203
|
)
|
|
65
|
|
|
(325
|
)
|
|
469
|
|
||||
Comprehensive income (loss) attributable to NorthStar Realty Europe Corp. common stockholders
|
$
|
26,488
|
|
|
$
|
(66,607
|
)
|
|
$
|
20,084
|
|
|
$
|
(68,954
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(26,064
|
)
|
|
$
|
(63,634
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,083
|
|
|
37,275
|
|
||
Amortization of deferred financing costs
|
1,689
|
|
|
3,789
|
|
||
Amortization of equity-based compensation
|
17,230
|
|
|
6,517
|
|
||
Allowance for uncollectible accounts
|
266
|
|
|
287
|
|
||
Unrealized (gain) loss on derivatives and other
|
8,596
|
|
|
14,594
|
|
||
Realized (gain) loss on sales and other
|
(6,951
|
)
|
|
(2,174
|
)
|
||
Impairment losses
|
|
|
27,468
|
|
|||
Amortization of capitalized above/below market leases
|
533
|
|
|
2,318
|
|
||
Straight line rental income
|
(1,671
|
)
|
|
(3,825
|
)
|
||
Deferred income taxes, net
|
(310
|
)
|
|
(859
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Restricted cash
|
424
|
|
|
(4,142
|
)
|
||
Receivables
|
76
|
|
|
(4,788
|
)
|
||
Other assets
|
(1,850
|
)
|
|
(691
|
)
|
||
Accounts payable and accrued expenses
|
(4,914
|
)
|
|
(5,902
|
)
|
||
Due to related party
|
(1,447
|
)
|
|
(389
|
)
|
||
Other liabilities
|
2,702
|
|
|
2,914
|
|
||
Net cash provided by (used in) operating activities
|
13,392
|
|
|
8,758
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Improvements of operating real estate
|
(5,552
|
)
|
|
(5,792
|
)
|
||
Origination of preferred equity investments
|
(34,064
|
)
|
|
—
|
|
||
Proceeds from sale of operating real estate
|
34,510
|
|
|
74,923
|
|
||
Other assets
|
(1,179
|
)
|
|
(10,691
|
)
|
||
Change in receivable
|
2,256
|
|
|
—
|
|
||
Changes in restricted cash
|
—
|
|
|
9,915
|
|
||
Net cash provided by (used in) investing activities
|
(4,029
|
)
|
|
68,355
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of mortgage and other notes payable
|
(7,451
|
)
|
|
(32,088
|
)
|
||
Borrowings from credit facility
|
35,000
|
|
|
65,000
|
|
||
Repayment of credit facility
|
(12,000
|
)
|
|
(6,358
|
)
|
||
Repurchase of Senior Notes
|
|
|
|
(230,782
|
)
|
||
Payment of financing costs
|
(501
|
)
|
|
(2,271
|
)
|
||
Purchase of derivative instruments
|
—
|
|
|
(380
|
)
|
||
Settlement of derivatives
|
1,456
|
|
|
(1,195
|
)
|
||
Retirement of shares of common stock
|
—
|
|
|
(4,919
|
)
|
||
Tax withholding related to vesting of equity-based compensation
|
(10,994
|
)
|
|
(113
|
)
|
||
Dividends
|
(16,769
|
)
|
|
(17,986
|
)
|
||
Net cash provided by (used in) financing activities
|
(11,259
|
)
|
|
(231,092
|
)
|
||
Effect of foreign currency translation on cash and cash equivalents
|
4,844
|
|
|
(4,763
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
2,948
|
|
|
(158,742
|
)
|
||
Cash and cash equivalents—beginning of period
|
66,308
|
|
|
283,844
|
|
||
Cash and cash equivalents—end of period
|
$
|
69,256
|
|
|
$
|
125,102
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Reclassification of operating real estate to assets held for sale
|
$
|
8,468
|
|
|
$
|
276,513
|
|
Conversion of Common Units to common stock
|
2,799
|
|
|
—
|
|
||
Reclassification of intangibles to assets held for sale
|
959
|
|
|
37,394
|
|
||
Reclassification of other assets and liabilities to assets held for sale
|
—
|
|
|
7,593
|
|
||
Reclassification related to measurement adjustments/other
|
—
|
|
|
5,628
|
|
||
Retirement of shares of common stock
|
—
|
|
|
1,351
|
|
||
Reallocation of interest in Operating Partnership
|
1,801
|
|
|
1,360
|
|
||
Accrued capital expenditures and deferred assets
|
668
|
|
|
—
|
|
||
Reclassification from other assets to operating real estate
|
—
|
|
|
774
|
|
1.
|
Formation and Organization
|
2.
|
Summary of Significant Accounting Policies
|
Category:
|
|
Term:
|
Building
|
|
40 years
|
Building improvements
|
|
Lesser of the useful life or remaining life of the building
|
Building leasehold interests
|
|
Lesser of 40 years or remaining term of the lease
|
Tenant improvements
|
|
Lesser of the useful life or remaining term of the lease
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-place lease
|
$
|
89,838
|
|
|
$
|
(36,364
|
)
|
|
$
|
53,474
|
|
|
$
|
84,743
|
|
|
$
|
(29,012
|
)
|
|
$
|
55,731
|
|
Above-market lease
|
38,108
|
|
|
(10,066
|
)
|
|
28,042
|
|
|
36,704
|
|
|
(8,198
|
)
|
|
28,506
|
|
||||||
Below-market ground lease
|
54,000
|
|
|
(1,132
|
)
|
|
52,868
|
|
|
51,218
|
|
|
(832
|
)
|
|
50,386
|
|
||||||
Goodwill
(1)
|
14,968
|
|
|
N/A
|
|
|
14,968
|
|
|
13,780
|
|
|
N/A
|
|
|
13,780
|
|
||||||
Total
|
$
|
196,914
|
|
|
$
|
(47,562
|
)
|
|
$
|
149,352
|
|
|
$
|
186,445
|
|
|
$
|
(38,042
|
)
|
|
$
|
148,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Below-market lease
|
$
|
36,517
|
|
|
$
|
(10,625
|
)
|
|
$
|
25,892
|
|
|
$
|
34,163
|
|
|
$
|
(8,104
|
)
|
|
$
|
26,059
|
|
Above-market ground lease
|
5,258
|
|
|
(140
|
)
|
|
5,118
|
|
|
4,839
|
|
|
(96
|
)
|
|
4,743
|
|
||||||
Total
|
$
|
41,775
|
|
|
$
|
(10,765
|
)
|
|
$
|
31,010
|
|
|
$
|
39,002
|
|
|
$
|
(8,200
|
)
|
|
$
|
30,802
|
|
(1)
|
Represents goodwill associated with certain share-deal acquisitions in exchange for shares in the underlying portfolios. The goodwill and a corresponding deferred tax liability was recorded at acquisition based on tax basis differences.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Other assets:
|
|
|
|
||||
Prepaid expenses
|
$
|
3,521
|
|
|
$
|
1,951
|
|
Deferred costs, net
|
4,765
|
|
|
3,029
|
|
||
Deferred tax assets, net
|
267
|
|
|
—
|
|
||
Straight-line rent, net
|
12,613
|
|
|
10,182
|
|
||
Escrow receivable
|
3,185
|
|
|
6,168
|
|
||
Other
|
1,042
|
|
|
310
|
|
||
Total
|
$
|
25,393
|
|
|
$
|
21,640
|
|
|
|
|
|
||||
|
June 30, 2017
|
|
December 31, 2016
|
||||
Other liabilities:
|
|
|
|
||||
Deferred tax liabilities
|
$
|
9,795
|
|
|
$
|
8,916
|
|
Prepaid rent received and unearned revenue
|
16,626
|
|
|
13,585
|
|
||
Tenant security deposits
|
4,807
|
|
|
4,322
|
|
||
Prepaid escalation income
|
1,907
|
|
|
1,560
|
|
||
Other
|
214
|
|
|
535
|
|
||
Total
|
$
|
33,349
|
|
|
$
|
28,918
|
|
3.
|
Operating Real Estate
|
|
|
June 30, 2017 (Unaudited)
|
|
December 31, 2016
|
||||
Land
|
|
$
|
387,254
|
|
|
$
|
360,555
|
|
Buildings and improvements
|
|
1,057,562
|
|
|
980,053
|
|
||
Building, leasehold interests and improvements
|
|
227,054
|
|
|
212,864
|
|
||
Furniture, fixtures and equipment
|
|
1,384
|
|
|
1,214
|
|
||
Tenant improvements
|
|
65,354
|
|
|
59,746
|
|
||
Operating real estate, gross
|
|
1,738,608
|
|
|
1,614,432
|
|
||
Less: accumulated depreciation
|
|
(88,242
|
)
|
|
(63,585
|
)
|
||
Operating real estate, net
|
|
$
|
1,650,366
|
|
|
$
|
1,550,847
|
|
|
|
|
|
|
|
Assets
(1)
|
||||||||||
Location
|
|
Type
|
|
Properties
|
|
Operating Real Estate, Net
|
|
Intangible Assets, Net
|
|
Total
(2)
|
||||||
Spain
(3)
|
|
Office
|
|
1
|
|
$
|
6,373
|
|
|
$
|
958
|
|
|
$
|
7,331
|
|
Netherlands
|
|
Office
|
|
1
|
|
2,095
|
|
|
1
|
|
|
2,096
|
|
|||
Total
|
|
|
|
2
|
|
$
|
8,468
|
|
|
$
|
959
|
|
|
$
|
9,427
|
|
(1)
|
The assets and liabilities classified as held for sale are expected to be sold on the open market as asset sales and share sales subject to standard industry terms and conditions. The assets contributed
$0.3 million
and
$0.4 million
of revenue and a loss before income tax benefit (expense) of
$0.3 million
and
$0.1 million
for the three months ended
June 30, 2017
and
2016
, respectively.
|
(2)
|
Represents operating real estate and intangible assets, net of accumulated depreciation and amortization of
$4.1 million
prior to being reclassified into held for sale.
|
(3)
|
Asset was subsequently sold in July 2017 for
$9.0 million
.
|
4.
|
Preferred Equity Investments
|
|
|
June 30, 2017 (Unaudited)
|
|
|
|
|
|||||||
Asset Type
|
|
Principal Amount
|
|
Carrying Value
|
|
Fixed Rate
|
|
Mandatory Redemption
|
|||||
Preferred equity investment
|
|
$
|
34,064
|
|
|
$
|
34,064
|
|
|
8.00
|
%
|
|
May 2020
|
5.
|
Borrowings
|
|
|
|
|
|
|
June 30, 2017 (Unaudited)
|
|
December 31, 2016
|
||||||||||||
|
|
Final
Maturity |
|
Contractual
Interest Rate (2) |
|
Principal
Amount |
|
Carrying
Value |
|
Principal
Amount |
|
Carrying
Value |
||||||||
Mortgage and other notes payable:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.K. Complex
|
|
Jan-20
|
|
GBP LIBOR + 1.75%
|
|
$
|
52,819
|
|
|
$
|
52,084
|
|
|
$
|
50,116
|
|
|
$
|
49,284
|
|
U.K. Complex - Mezzanine
|
|
Jan-20
|
|
8.325%
|
|
12,189
|
|
|
12,127
|
|
|
11,565
|
|
|
11,497
|
|
||||
Trias Portfolio 1
(3)(5)(8)
|
|
Apr-20
|
|
EURIBOR + 2.70%
|
|
12,107
|
|
|
11,854
|
|
|
9,477
|
|
|
13,301
|
|
||||
Trias Portfolio 2
(3)(5)
|
|
Dec-20
|
|
EURIBOR + 1.55%
|
|
81,615
|
|
|
81,429
|
|
|
78,952
|
|
|
78,708
|
|
||||
Trias Portfolio 3
(3)(5)
|
|
Apr-20
|
|
EURIBOR + 1.65%
|
|
43,539
|
|
|
42,240
|
|
|
45,170
|
|
|
39,568
|
|
||||
Trias Portfolio 4
(3)(5)
|
|
Apr-20
|
|
GBP LIBOR + 2.70%
|
|
16,697
|
|
|
16,314
|
|
|
15,843
|
|
|
15,446
|
|
||||
SEB Portfolio 1
(5)
|
|
Apr-22
|
|
EURIBOR + 1.80%
|
|
302,590
|
|
|
298,769
|
|
|
278,539
|
|
|
274,614
|
|
||||
SEB Portfolio 2
(5)
|
|
Apr-22
|
|
GBP LIBOR + 1.80%
|
|
241,724
|
|
|
238,613
|
|
|
229,353
|
|
|
226,078
|
|
||||
SEB Portfolio - Preferred
(4)
|
|
Apr-60
|
|
2.30%
|
|
97,800
|
|
|
97,492
|
|
|
90,033
|
|
|
89,720
|
|
||||
Trianon Tower
(5)
|
|
Jul-23
|
|
EURIBOR + 1.30%
|
|
376,949
|
|
|
375,356
|
|
|
347,012
|
|
|
345,422
|
|
||||
Other - Preferred
(6)
|
|
Oct-45
|
|
1.00%
|
|
6,684
|
|
|
6,076
|
|
|
6,151
|
|
|
5,481
|
|
||||
Total mortgage and other notes payable
|
|
|
|
|
|
1,244,713
|
|
|
1,232,354
|
|
|
1,162,211
|
|
|
1,149,119
|
|
||||
Credit Facility
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Credit Facility
|
|
Apr-19
(7)
|
|
LIBOR + 2.75%
|
|
23,000
|
|
|
23,000
|
|
|
—
|
|
|
—
|
|
||||
Grand Total
|
|
|
|
|
|
$
|
1,267,713
|
|
|
$
|
1,255,354
|
|
|
$
|
1,162,211
|
|
|
$
|
1,149,119
|
|
(1)
|
All mortgage notes and other notes payable are denominated in local currencies, as such, the principal amount generally increased due to the change in the Euro or U.K. Pound Sterling compared to the U.S. dollar. All borrowings are non-recourse and are interest-only through maturity, subject to compliance with covenants of the respective borrowing, and denominated in the same currency as the assets securing the borrowing.
|
(2)
|
All floating rate debt is subject to interest caps of
0.5%
for EURIBOR and
2.0%
for GBP LIBOR which are used to manage interest rate exposure.
|
(3)
|
Trias Portfolio represents the cross-collateralized borrowings among the IVG Portfolio, Internos Portfolio and Deka Portfolio. Such three portfolios were not under common control or management at the time of acquisition.
|
(4)
|
Represents preferred equity certificates with a contractual interest rate of
2.3%
through May 2019, which can be prepaid at that time without penalty in part or in full, which increases to EURIBOR plus
12.0%
through May 2022 and subsequently to EURIBOR plus
15.0%
through final maturity. Certain prepayments prior to May 2019 are subject to the payment of the unpaid coupon on outstanding principal amount through May 2019.
|
(5)
|
Prepayment provisions include a fee based on principal amount ranging from
0.25%
to
1.0%
through December 2019 for the Trias Portfolio borrowings and
0.5%
to
1.0%
through April 2019 for the SEB Portfolio borrowings and
0.80%
through June 30, 2017,
0.60%
through June 30, 2018 and
0.30%
through June 30, 2019 for Trianon Tower.
|
(6)
|
Represents preferred equity certificates each with a fixed contractual interest rate of
1.0%
per annum plus variable interest based on specified income levels associated with the German property companies of the Trias Portfolios which can be prepaid at any time without penalty through final maturity, which is
thirty
years from the issuance date.
|
(7)
|
Subject to a
one
year extension at the discretion of the Company.
|
(8)
|
In June 2017, the Company amended and restated the agreement to increase the loan amount by
$5.1 million
and reduce future minimum capital expenditure spending requirements.
|
|
|
June 30, 2017 (Unaudited)
|
|
December 31, 2016
|
||||
Principal amount
|
|
$
|
1,267,713
|
|
|
$
|
1,162,211
|
|
Deferred financing costs, net
|
|
(12,359
|
)
|
|
(13,092
|
)
|
||
Carrying value
|
|
$
|
1,255,354
|
|
|
$
|
1,149,119
|
|
|
|
Total
|
|
Mortgage
and Other Notes Payable |
|
Credit Facility
|
||||||
July 1 to December 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Years ending December 31:
|
|
|
|
|
|
|
|
|||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2019
|
|
23,000
|
|
|
—
|
|
|
23,000
|
|
|||
2020
|
|
218,967
|
|
|
218,967
|
|
|
—
|
|
|||
2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2022 and thereafter
|
|
1,025,746
|
|
|
1,025,746
|
|
|
—
|
|
|||
Total
|
|
$
|
1,267,713
|
|
|
$
|
1,244,713
|
|
|
$
|
23,000
|
|
•
|
any equity the Company issues in exchange or conversion of exchangeable or stock-settlable notes;
|
•
|
any other issuances by the Company of common equity, preferred equity or other forms of equity, including but not limited to LTIP Units in the Operating Partnership (excluding units issued to the Company and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and
|
•
|
cumulative cash available for distribution (“CAD”), if any, of the Company in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards which began with the Company’s fiscal quarter ended March 31, 2016.
|
•
|
the product of: (a)
15.0%
and (b) the Company’s CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of
$0.30
per share and up to
$0.36
per share; plus
|
•
|
the product of: (a)
25.0%
and (b) the Company’s CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of
$0.36
per share;
|
•
|
multiplied by the Company’s weighted average shares outstanding for the calendar quarter.
|
7.
|
Compensation Expense
|
|
Six Months Ended June 30, 2017
|
|||||||||||||||||
|
Restricted Stock
(1)
|
|
Common Units
(3)
|
|
Restricted Stock Units
(4)
|
|
Performance RSUs
(5)
|
|
Total Grants
|
|
Weighted
Average Grant Price |
|||||||
December 31, 2016
|
1,139
|
|
|
688
|
|
|
83
|
|
|
1,868
|
|
|
3,778
|
|
|
$
|
11.29
|
|
Granted
|
501
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
501
|
|
|
12.69
|
|
|
Converted
|
—
|
|
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
|
21.21
|
|
|
Vested
(2)
|
(1,519
|
)
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
(1,697
|
)
|
|
10.22
|
|
|
Forfeited
(6)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(334
|
)
|
|
(335
|
)
|
|
5.62
|
|
|
June 30, 2017
|
121
|
|
|
451
|
|
|
83
|
|
|
1,356
|
|
|
2,011
|
|
|
$
|
12.30
|
|
(1)
|
Represents restricted stock included in common stock.
|
(2)
|
Vested primarily includes the acceleration of substantially all outstanding equity awards of the Company in connection with the change of control of NSAM as a result of the Mergers.
|
(3)
|
Includes vested and unvested Common Units in the Operating Partnership issued in the Spin-Off with respect to equity-based awards granted by NorthStar Realty prior to the Spin-Off. As of
June 30, 2017
, all of these Common Units in the Operating Partnership were vested.
|
(4)
|
Relates to an equity-based award granted by NorthStar Realty prior to the Spin-Off and represents a non-employee grant subject to service-based vesting conditions, which is scheduled to vest on January 22, 2019, unless certain conditions are met. The RSUs are entitled to dividend equivalents prior to vesting and may be settled either in shares of the Company’s common stock or in cash at the option of the Manager.
|
(5)
|
As of
June 30, 2017
, represented outstanding Absolute and Relative RSUs.
|
(6)
|
Includes the forfeiture of performance based RSUs issued to NSAM executives as part of historical bonus plans in connection with the change of control of NSAM.
|
8.
|
Stockholders’ Equity
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to NorthStar Realty Europe Corp. common stockholders
|
$
|
(10,447
|
)
|
|
$
|
(33,909
|
)
|
|
$
|
(25,797
|
)
|
|
$
|
(62,891
|
)
|
Net income (loss) attributable to Unit Holders non-controlling interest
|
(117
|
)
|
|
(349
|
)
|
|
(310
|
)
|
|
(700
|
)
|
||||
Net income (loss) attributable to common stockholders and Unit Holders
(1)
|
$
|
(10,564
|
)
|
|
$
|
(34,258
|
)
|
|
$
|
(26,107
|
)
|
|
$
|
(63,591
|
)
|
Denominator:
(2)
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock
|
55,024
|
|
|
59,116
|
|
|
54,928
|
|
|
59,267
|
|
||||
Weighted average Unit Holders
(1)
|
564
|
|
|
690
|
|
|
619
|
|
|
691
|
|
||||
Weighted average shares of common stock and Unit Holders
(2)
|
55,588
|
|
|
59,806
|
|
|
55,547
|
|
|
59,958
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.19
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.06
|
)
|
Diluted
|
$
|
(0.19
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(1.06
|
)
|
(1)
|
The EPS calculation takes into account Unit Holders, which receive non-forfeitable dividends from the date of grant, share equally in the Company’s net income (loss) and convert on a
one
-for-one basis into common stock.
|
(2)
|
Excludes the effect of restricted stock and RSUs outstanding that were not dilutive as of
June 30, 2017
. These instruments could potentially impact diluted EPS in future periods, depending on changes in the Company’s stock price and other factors.
|
9.
|
Non-controlling Interests
|
10.
|
Risk Management and Derivative Activities
|
|
Number
|
|
Notional
Amount
|
|
Fair Value
Asset (Liability) |
|
Range of
Fixed GBP LIBOR / EURIBOR |
|
Range of Maturity
|
|||||
As of June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate caps
|
4
|
|
|
$
|
1,193,235
|
|
|
$
|
8,674
|
|
|
(1)
|
|
January 2020 - July 2023
|
Foreign currency forwards, net
(2)
|
2
|
|
|
102,157
|
|
|
(2,501
|
)
|
|
N/A
|
|
August 2017 - November 2018
|
||
Total
|
6
|
|
|
$
|
1,295,392
|
|
|
$
|
6,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest rate caps
|
4
|
|
|
$
|
1,107,400
|
|
|
$
|
8,659
|
|
|
(1)
|
|
January 2020 - July 2023
|
Foreign currency forwards
(2)
|
2
|
|
|
72,806
|
|
|
5,070
|
|
|
N/A
|
|
February 2017 - November 2017
|
||
Total
|
6
|
|
|
$
|
1,180,206
|
|
|
$
|
13,729
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Amount of gain (loss) recognized in earnings:
|
Statements of operations location:
|
|
|
|
|
|
|
|
|
||||||||
Adjustment to fair value of interest rate caps
|
Unrealized gain (loss) on derivatives and other
(1)
|
|
$
|
(1,032
|
)
|
|
$
|
(3,391
|
)
|
|
$
|
(713
|
)
|
|
$
|
(14,175
|
)
|
Adjustment to fair value of foreign currency forwards
|
Unrealized gain (loss) on derivatives and other
(1)
|
|
(6,308
|
)
|
|
4,638
|
|
|
(7,572
|
)
|
|
207
|
|
||||
Net cash receipt (payment) on derivatives
|
Realized gain (loss) on sales and other
|
|
639
|
|
|
(776
|
)
|
|
1,456
|
|
|
(1,194
|
)
|
11.
|
Fair Value
|
Level 1.
|
Quoted prices for identical assets or liabilities in an active market.
|
Level 2.
|
Financial assets and liabilities whose values are based on the following:
|
(a)
|
Quoted prices for similar assets or liabilities in active markets.
|
(b)
|
Quoted prices for identical or similar assets or liabilities in non-active markets.
|
(c)
|
Pricing models whose inputs are observable for substantially the full term of the asset or liability.
|
(d)
|
Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability.
|
Level 3.
|
Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Principal/Notional
Amount |
|
Carrying
Value
|
|
Fair
Value |
|
Principal/Notional
Amount |
|
Carrying
Value
|
|
Fair
Value |
||||||||||||
Financial assets:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets
|
$
|
1,198,630
|
|
|
$
|
9,839
|
|
|
$
|
9,839
|
|
|
$
|
1,180,206
|
|
|
$
|
13,729
|
|
|
$
|
13,729
|
|
Preferred equity investment
|
34,064
|
|
|
34,064
|
|
|
34,064
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Financial liabilities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage and other notes payable, net
|
$
|
1,244,713
|
|
|
$
|
1,232,354
|
|
|
$
|
1,228,918
|
|
|
$
|
1,162,211
|
|
|
$
|
1,149,119
|
|
|
$
|
1,146,134
|
|
Credit Facility
|
23,000
|
|
|
23,000
|
|
|
23,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivative liabilities
|
96,762
|
|
|
3,666
|
|
|
3,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
The fair value of other financial instruments not included in this table is estimated to approximate their carrying value.
|
12.
|
Commitments and Contingencies
|
13.
|
Segment Reporting
|
•
|
Real Estate Equity-
Focused on European prime office properties located in key cities within Germany, the United Kingdom and France.
|
•
|
Preferred Equity
- Represents the Company’s preferred equity investment secured by interest in an European prime office property.
|
•
|
Corporate
- The corporate segment includes corporate level interest expense, management fee and general and administrative expenses.
|
|
Three Months Ended June 30, 2017
|
||||||||||||||
Statement of Operations:
|
Real Estate Equity
|
|
Preferred Equity
|
|
Corporate
|
|
Total
|
||||||||
Rental income
|
$
|
26,025
|
|
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,025
|
|
Escalation income
|
5,558
|
|
(1)
|
—
|
|
|
—
|
|
|
5,558
|
|
||||
Interest income
|
—
|
|
|
297
|
|
|
—
|
|
|
297
|
|
||||
Interest expense
(2)
|
6,451
|
|
|
—
|
|
|
271
|
|
|
6,722
|
|
||||
Management fee, related party
|
—
|
|
|
—
|
|
|
3,572
|
|
|
3,572
|
|
||||
Transaction costs
|
—
|
|
|
546
|
|
|
427
|
|
|
973
|
|
||||
Depreciation and amortization
|
12,520
|
|
|
—
|
|
|
—
|
|
|
12,520
|
|
||||
Other expenses
|
9,804
|
|
(3)
|
—
|
|
|
8,590
|
|
(4)
|
18,394
|
|
||||
Income (loss) before income tax benefit (expense)
|
2,808
|
|
|
(249
|
)
|
|
(12,860
|
)
|
|
(10,301
|
)
|
||||
Income tax benefit (expense)
|
(237
|
)
|
|
—
|
|
|
—
|
|
|
(237
|
)
|
||||
Net income (loss)
|
$
|
2,571
|
|
|
$
|
(249
|
)
|
|
$
|
(12,860
|
)
|
|
$
|
(10,538
|
)
|
(1)
|
Includes revenues primarily attributable to Germany, the United Kingdom, France and the Netherlands of
$13.1 million
,
$8.9 million
,
$5.5 million
and
$3.7 million
, respectively.
|
(2)
|
Includes
$0.7 million
and
$0.1 million
of amortization of deferred financing costs in the real estate equity and corporate segments, respectively.
|
(3)
|
Primarily relates to properties - operating expenses and unrealized loss on interest rate caps.
|
(4)
|
Primarily relates to general and administrative expense and unrealized loss on foreign currency forwards.
|
|
Three Months Ended June 30, 2016
|
||||||||||
Statement of Operations:
(1)
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||
Rental income
|
$
|
33,990
|
|
(2)
|
$
|
—
|
|
|
$
|
33,990
|
|
Escalation income
|
5,908
|
|
(2)
|
—
|
|
|
5,908
|
|
|||
Interest expense
(3)
|
8,691
|
|
|
2,950
|
|
|
11,641
|
|
|||
Management fee, related party
|
—
|
|
|
3,500
|
|
|
3,500
|
|
|||
Transaction costs
|
—
|
|
|
1,652
|
|
|
1,652
|
|
|||
Depreciation and amortization
|
18,404
|
|
|
—
|
|
|
18,404
|
|
|||
Other expenses
|
34,551
|
|
(4)
|
3,939
|
|
(5)
|
38,490
|
|
|||
Income (loss) before income tax benefit (expense)
|
(21,748
|
)
|
|
(12,041
|
)
|
|
(33,789
|
)
|
|||
Income tax benefit (expense)
|
(520
|
)
|
|
—
|
|
|
(520
|
)
|
|||
Net income (loss)
|
$
|
(22,268
|
)
|
|
$
|
(12,041
|
)
|
|
$
|
(34,309
|
)
|
(1)
|
The Company did not have a preferred equity segment for the three months ended June 30, 2016.
|
(2)
|
Includes revenues primarily attributable to Germany, the United Kingdom, France and the Netherlands of
$14 million
,
$10.2 million
,
$5.1 million
and
$4.7 million
, respectively.
|
(3)
|
Includes
$0.8 million
and
$1.2 million
of amortization of deferred financing costs in the real estate equity and corporate segment, respectively.
|
(4)
|
Primarily relates to properties - operating expenses, unrealized loss on interest rate casps and impairment loss of
$27.5 million
.
|
(5)
|
Primarily relates to general and administrative expense, realized loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and unrealized gain on foreign currency forwards.
|
|
Six Months Ended June 30, 2017
|
||||||||||||||
Statement of Operations:
|
Real Estate Equity
|
|
Preferred Equity
|
|
Corporate
|
|
Total
|
||||||||
Rental income
|
$
|
51,561
|
|
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,561
|
|
Escalation income
|
10,719
|
|
(1)
|
—
|
|
|
—
|
|
|
10,719
|
|
||||
Interest income
|
—
|
|
|
297
|
|
|
—
|
|
|
297
|
|
||||
Interest expense
(2)
|
12,571
|
|
|
—
|
|
|
534
|
|
|
13,105
|
|
||||
Management fee, related party
|
—
|
|
|
—
|
|
|
7,131
|
|
|
7,131
|
|
||||
Transaction costs
|
—
|
|
|
546
|
|
|
687
|
|
|
1,233
|
|
||||
Depreciation and amortization
|
25,083
|
|
|
—
|
|
|
—
|
|
|
25,083
|
|
||||
Other expenses
|
14,774
|
|
(3)
|
—
|
|
|
27,351
|
|
(4)
|
42,125
|
|
||||
Income (loss) before income tax benefit (expense)
|
9,852
|
|
|
(249
|
)
|
|
(35,703
|
)
|
|
(26,100
|
)
|
||||
Income tax benefit (expense)
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||
Net income (loss)
|
$
|
9,888
|
|
|
$
|
(249
|
)
|
|
$
|
(35,703
|
)
|
|
$
|
(26,064
|
)
|
(1)
|
Includes revenues primarily attributable to Germany, the United Kingdom, France and the Netherlands of
$25.8 million
,
$17.5 million
,
$10.8 million
and
$7.3 million
, respectively.
|
(2)
|
Includes
$1.5 million
and
$0.2 million
of amortization of deferred financing costs in the real estate equity and corporate segments, respectively.
|
(3)
|
Primarily relates to properties - operating expense offset by the realized gain on the sale of real estate.
|
(4)
|
Primarily relates to general and administrative expense and unrealized loss on foreign currency forwards.
|
|
Six Months Ended June 30, 2016
|
||||||||||
Statement of Operations:
(1)
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||
Rental income
|
$
|
68,823
|
|
(2)
|
$
|
—
|
|
|
$
|
68,823
|
|
Escalation income
|
11,998
|
|
(2)
|
—
|
|
|
11,998
|
|
|||
Interest expense
(3)
|
17,117
|
|
|
7,066
|
|
|
24,183
|
|
|||
Management fee, related party
|
—
|
|
|
7,000
|
|
|
7,000
|
|
|||
Transaction costs
|
—
|
|
|
2,483
|
|
|
2,483
|
|
|||
Depreciation and amortization
|
37,275
|
|
|
—
|
|
|
37,275
|
|
|||
Other expenses
|
57,973
|
|
(4)
|
15,680
|
|
(5)
|
73,653
|
|
|||
Income (loss) before income tax benefit (expense)
|
(31,544
|
)
|
|
(32,229
|
)
|
|
(63,773
|
)
|
|||
Income tax benefit (expense)
|
139
|
|
|
—
|
|
|
139
|
|
|||
Net income (loss)
|
$
|
(31,405
|
)
|
|
$
|
(32,229
|
)
|
|
$
|
(63,634
|
)
|
(1)
|
The Company did not have a preferred equity segment for the six months ended June 30, 2016.
|
(2)
|
Includes revenues primarily attributable to Germany, the United Kingdom, France and the Netherlands of
$28.4 million
,
$20.0 million
,
$10.9 million
and
$9.8 million
, respectively.
|
(3)
|
Includes
$1.7 million
and
$2.1 million
of amortization of deferred financing costs in the real estate equity and corporate segment, respectively.
|
(4)
|
Primarily relates to properties - operating expense, unrealized loss on derivatives and impairment loss of
$27.5 million
offset by the realized gain on the sale of real estate.
|
(5)
|
Primarily relates to management fees, general and administrative expense, realized loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and includes an allocation of general and administrative expenses from the Manager of
$0.1 million
.
|
Total Assets
|
Real Estate Equity
|
|
Preferred Equity
|
|
Corporate
|
|
Total
|
||||||||
June 30, 2017
|
$
|
1,925,692
|
|
|
$
|
34,662
|
|
|
$
|
4,879
|
|
|
$
|
1,965,233
|
|
December 31, 2016
|
1,835,531
|
|
|
—
|
|
|
9,861
|
|
|
1,845,392
|
|
14.
|
Subsequent Events
|
Investment Type
|
|
Primary Location(s)
|
|
Property Type
|
|
Cost
(1)
|
|
Count
|
|
Ownership Interest
|
|
||
Real estate equity
|
|
|
|
|
|
|
|
|
|
|
|
||
U.K. Complex
|
|
United Kingdom
|
|
Multi-tenant office
|
|
$
|
77
|
|
|
1
|
|
93%
|
|
SEB Portfolio
|
|
Germany, United Kingdom, France
|
|
Multi-tenant office
|
|
984
|
|
|
7
|
|
95%
|
(2)
|
|
Trias Portfolio
(3)
|
|
Germany, United Kingdom, France
|
|
Office/Hotel/Industrial/Retail
|
|
358
|
|
|
16
|
(4)
|
95%
|
(2)
|
|
Trianon Tower
|
|
Germany
|
|
Multi-tenant office
|
|
666
|
|
|
3
|
|
95%
|
(2)
|
|
Total real estate equity
|
|
|
|
|
|
2,085
|
|
|
27
|
|
|
|
|
Preferred Equity
|
|
|
|
|
|
|
|
|
|
|
|
||
Preferred equity investment
|
|
|
|
|
|
34
|
|
|
1
|
|
|
|
|
Total preferred equity
|
|
|
|
|
|
34
|
|
|
1
|
|
|
|
|
Total investments
|
|
|
|
|
|
$
|
2,119
|
|
|
28
|
|
|
|
(1)
|
Amount includes transaction costs incurred, deferred financing costs and other assets assumed and is translated using exchange rates as of
June 30, 2017
.
|
(2)
|
We are entitled to
100%
of the economic benefits and incur 100% of the economic losses in accordance with the applicable governing documents.
|
(3)
|
Trias Portfolio represents the IVG Portfolio, Internos Portfolio and Deka Portfolio. Such three portfolios were not under common control or management at the time of acquisition.
|
(4)
|
Includes one asset held for sale.
|
|
|
|
Portfolio by Geographic Location
|
|
|
|
June 30, 2017
|
December 31, 2016
|
|
Total portfolio, at cost
(1)
|
$2.1 billion
|
|
|
|
Number of properties
|
27
|
|||
Number of countries
|
5
|
|||
Total square meters
(2)
|
351,514
|
|||
Weighted average occupancy
|
83%
|
|||
Weighted average lease term
|
5.9 years
|
|||
In-place rental income:
(3)
|
|
|||
Core Portfolio
|
85%
|
|||
Other markets
|
15%
|
(1)
|
Amount includes transaction costs incurred, deferred financing costs and other assets assumed and is translated using exchange rates as of
June 30, 2017
.
|
(2)
|
Based on contractual rentable area, located in many key European markets, including Frankfurt, Hamburg, Berlin, London and Paris.
|
(3)
|
In-place rental income represents gross rent adjusted for vacancies based on the rent roll as of
June 30, 2017
and is translated using exchange rates as of
June 30, 2017
.
|
Significant tenants:
|
|
Industry
|
|
Square Meters
(1)
|
|
Percentage of In-Place Rental Income
|
|
Weighted Average Lease Term (in years)
|
DekaBank Deutsche Girozentrale
|
|
Finance
|
|
35,972
|
|
19%
|
|
6.9
|
BNP PARIBAS RE
|
|
Finance
|
|
15,406
|
|
9%
|
|
2.6
|
Deloitte Holding B.V.
|
|
Legal, Tax & Management Consultancy
|
|
23,684
|
|
7%
|
|
2.4
|
Deutsche Bundesbank
|
|
Finance
|
|
15,120
|
|
5%
|
|
9.4
|
BNP PARIBAS SA
|
|
Finance
|
|
11,235
|
|
5%
|
|
3.8
|
Cushman & Wakefield LLP
|
|
Legal, Tax & Management Consultancy
|
|
5,150
|
|
5%
|
|
7.8
|
Morgan Lewis & Bockius LLP
|
|
Legal, Tax & Management Consultancy
|
|
4,848
|
|
4%
|
|
8.2
|
PAREXEL International GmbH
|
|
Public Utilities & Telecommunications
|
|
18,254
|
|
3%
|
|
17.0
|
Moelis & Co UK LLP
|
|
Legal, Tax & Management Consultancy
|
|
3,366
|
|
3%
|
|
7.8
|
Bigpoint GmbH
|
|
Other
|
|
11,916
|
|
2%
|
|
3.9
|
|
|
|
|
144,951
|
|
62%
|
|
6.4
|
(1)
|
Based on contractual rentable area.
|
Country
|
|
Number of Properties
|
|
Percentage of In-Place Rental Income
(1)
|
|
Square Meters
(2)
|
|
Weighted Average Lease Term (in years)
|
||
Germany
|
|
11
|
|
46
|
%
|
|
154,294
|
|
|
7.4
|
United Kingdom
|
|
5
|
|
27
|
%
|
|
46,520
|
|
|
6.7
|
France
|
|
4
|
|
16
|
%
|
|
32,075
|
|
|
3.8
|
Other
(3)
|
|
7
|
|
11
|
%
|
|
118,626
|
|
|
2.8
|
Total
|
|
27
|
|
100
|
%
|
|
351,515
|
|
|
5.9
|
(1)
|
In-place rental income represents gross rent adjusted for vacancies based on the rent roll as of
June 30, 2017
.
|
(2)
|
Based on contractual rentable area.
|
(3)
|
Includes assets in Portugal, Netherlands and assets outside our Core Portfolio in Germany, the United Kingdom and France.
|
|
Three Months Ended June 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Rental income
|
$
|
26,025
|
|
|
$
|
33,990
|
|
|
$
|
(7,965
|
)
|
|
(23
|
)%
|
Escalation income
|
5,558
|
|
|
5,908
|
|
|
(350
|
)
|
|
(6
|
)%
|
|||
Interest income
|
297
|
|
|
—
|
|
|
297
|
|
|
100
|
%
|
|||
Other income
|
508
|
|
|
46
|
|
|
462
|
|
|
1,004
|
%
|
|||
Total revenues
|
32,388
|
|
|
39,944
|
|
|
(7,556
|
)
|
|
(19
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Properties - operating expenses
|
7,680
|
|
|
8,540
|
|
|
(860
|
)
|
|
(10
|
)%
|
|||
Interest expense
|
6,722
|
|
|
11,641
|
|
|
(4,919
|
)
|
|
(42
|
)%
|
|||
Transaction costs
|
973
|
|
|
1,652
|
|
|
(679
|
)
|
|
(41
|
)%
|
|||
Impairment losses
|
—
|
|
|
27,468
|
|
|
(27,468
|
)
|
|
(100
|
)%
|
|||
Management fee, related party
|
3,572
|
|
|
3,500
|
|
|
72
|
|
|
2
|
%
|
|||
Other expenses
|
2,608
|
|
|
3,041
|
|
|
(433
|
)
|
|
(14
|
)%
|
|||
General and administrative expenses
|
1,555
|
|
|
1,502
|
|
|
53
|
|
|
4
|
%
|
|||
Compensation expense
|
1,385
|
|
|
3,766
|
|
|
(2,381
|
)
|
|
(63
|
)%
|
|||
Depreciation and amortization
|
12,520
|
|
|
18,404
|
|
|
(5,884
|
)
|
|
(32
|
)%
|
|||
Total expenses
|
37,015
|
|
|
79,514
|
|
|
(42,499
|
)
|
|
(53
|
)%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) on derivatives and other
|
(7,655
|
)
|
|
1,159
|
|
|
(8,814
|
)
|
|
(760
|
)%
|
|||
Realized gain (loss) on sales and other
|
1,981
|
|
|
4,622
|
|
|
(2,641
|
)
|
|
(57
|
)%
|
|||
Income (loss) before income tax benefit (expense)
|
(10,301
|
)
|
|
(33,789
|
)
|
|
23,488
|
|
|
(70
|
)%
|
|||
Income tax benefit (expense)
|
(237
|
)
|
|
(520
|
)
|
|
283
|
|
|
(54
|
)%
|
|||
Net income (loss)
|
$
|
(10,538
|
)
|
|
$
|
(34,309
|
)
|
|
$
|
23,771
|
|
|
(69
|
)%
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||||||||
Change in fair value of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives, at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate caps
|
|
$
|
(1,032
|
)
|
|
$
|
—
|
|
|
$
|
(1,032
|
)
|
|
$
|
(3,391
|
)
|
|
$
|
—
|
|
|
$
|
(3,391
|
)
|
Foreign currency forwards
|
|
—
|
|
|
(6,308
|
)
|
|
(6,308
|
)
|
|
—
|
|
|
4,638
|
|
|
4,638
|
|
||||||
Foreign currency remeasurement and other
|
|
(261
|
)
|
|
(54
|
)
|
|
(315
|
)
|
|
(9
|
)
|
|
(79
|
)
|
|
(88
|
)
|
||||||
Total unrealized gain (loss) on derivatives and other
|
|
$
|
(1,293
|
)
|
|
$
|
(6,362
|
)
|
|
$
|
(7,655
|
)
|
|
$
|
(3,400
|
)
|
|
$
|
4,559
|
|
|
$
|
1,159
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
|
Real Estate Equity
|
|
Corporate
|
|
Preferred Equity
|
|
Total
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||||||||||
Sale of real estate investments
(1)
|
|
$
|
1,433
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,433
|
|
|
$
|
8,078
|
|
|
$
|
—
|
|
|
$
|
8,078
|
|
Foreign currency transactions
(2)
|
|
45
|
|
|
12
|
|
|
(6
|
)
|
|
51
|
|
|
(284
|
)
|
|
—
|
|
|
(284
|
)
|
|||||||
Write-off of deferred financing costs
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
—
|
|
|
(2,396
|
)
|
|
(2,396
|
)
|
|||||||
Net cash payments (receipts) on derivatives
|
|
—
|
|
|
639
|
|
|
—
|
|
|
639
|
|
|
—
|
|
|
(776
|
)
|
|
(776
|
)
|
|||||||
Total realized gain (loss) on sales and other
|
|
$
|
1,336
|
|
|
$
|
651
|
|
|
$
|
(6
|
)
|
|
$
|
1,981
|
|
|
$
|
7,794
|
|
|
$
|
(3,172
|
)
|
|
$
|
4,622
|
|
(1)
|
Excludes escrow arrangements entered into for specific indemnification obligations in relation to the sales.
|
(2)
|
Includes
$0.1 million
relating to the reclassification of the currency translation adjustment from a component of accumulated OCI to realized gain (losses) due to the sale of certain real estate assets, offset by the realized loss on the repayment of the intercompany loans in different currencies.
|
|
Same Store
(3)
|
|
|
|
|
|||||||||
|
Three Months Ended June 30,
|
|
Increase (Decrease)
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Amount
|
|
%
|
|||||||
Occupancy (end of period)
|
83.4
|
%
|
|
83.5
|
%
|
|
|
|
|
|||||
Same store
|
|
|
|
|
|
|
|
|||||||
Rental income
(2)
|
$
|
25,972
|
|
|
$
|
25,885
|
|
|
$
|
87
|
|
|
|
|
Escalation income
|
5,489
|
|
|
4,633
|
|
|
856
|
|
|
|
||||
Other income
|
409
|
|
|
31
|
|
|
378
|
|
|
|
||||
Total revenues
|
31,870
|
|
|
30,549
|
|
|
1,321
|
|
|
4.3
|
%
|
|||
Utilities
|
2,015
|
|
|
1,833
|
|
|
182
|
|
|
|
|
|||
Real estate taxes and insurance
|
1,477
|
|
|
1,211
|
|
|
266
|
|
|
|
|
|||
Non-recoverable value added tax (VAT)
|
468
|
|
|
339
|
|
|
129
|
|
|
|
|
|||
Management fees
|
557
|
|
|
560
|
|
|
(3
|
)
|
|
|
|
|||
Repairs and maintenance
|
2,446
|
|
|
1,834
|
|
|
612
|
|
|
|
|
|||
Ground rent
(2)
|
184
|
|
|
167
|
|
|
17
|
|
|
|
|
|||
Other
|
424
|
|
|
55
|
|
|
369
|
|
|
|
|
|||
Properties - operating expenses
|
7,571
|
|
|
5,999
|
|
|
1,572
|
|
|
26.2
|
%
|
|||
Same store net operating income
|
$
|
24,299
|
|
|
$
|
24,550
|
|
|
$
|
(251
|
)
|
|
(1.0
|
)%
|
(1)
|
Three months ended June 30, 2016 is translated using the average exchange rate for the three months ended June 30, 2017.
|
(2)
|
Adjusted to exclude amortization of above/below market leases.
|
(3)
|
We believe same store net operating income, a non-GAAP metric, is a useful metric of the operating performance as it reflects the operating performance of the real estate portfolio excluding effects of non-cash adjustments and provides a better measure of operational performance for a quarter-over-quarter comparison. Same store net operating income is presented for the same store portfolio, which represents all properties that were owned by us in the end of the reporting period. We define same store net operating income as NOI excluding (i) properties that were acquired or sold during the period, (ii) impact of foreign currency changes and (iii) amortization of above/below market leases. We consider same store net operating income to be an appropriate and useful supplemental performance measure. Same store net operating income should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating same store net operating income involves subjective judgment and discretion and may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies.
|
|
Same Store Reconciliation
|
|
||||||
|
Three Months Ended June 30,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Net income (loss)
|
$
|
(10,538
|
)
|
|
$
|
(34,309
|
)
|
|
Corporate segment net (income) loss
(1)
|
12,860
|
|
|
12,041
|
|
|
||
Interest income
(2)
|
(297
|
)
|
|
—
|
|
|
||
Impairment losses
|
—
|
|
|
27,468
|
|
|
||
Other (income) loss
(3)
|
22,736
|
|
|
27,424
|
|
|
||
Net operating income
|
24,761
|
|
|
32,624
|
|
|
||
Sale of real estate investments and other
(4)
|
(462
|
)
|
|
(8,074
|
)
|
(5)
|
||
Same store net operating income
|
$
|
24,299
|
|
|
$
|
24,550
|
|
|
(1)
|
Includes management fees, general and administrative expense, compensation expense, corporate interest expense and corporate transaction costs.
|
(2)
|
Represents interest income earned in the preferred equity segment.
|
(3)
|
Includes depreciation and amortization expense, transaction costs and other expenses in the real estate equity segment.
|
(4)
|
Represents the impact of assets sold during the period.
|
(5)
|
Three months ended June 30, 2016 is translated using the average exchange rate for the three months ended June 30, 2017.
|
|
Six Months Ended
June 30, |
|
Increase (Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Rental income
|
$
|
51,561
|
|
|
$
|
68,823
|
|
|
$
|
(17,262
|
)
|
|
(25
|
)%
|
Escalation income
|
10,719
|
|
|
11,998
|
|
|
(1,279
|
)
|
|
(11
|
)%
|
|||
Interest income
|
297
|
|
|
—
|
|
|
297
|
|
|
100
|
%
|
|||
Other income
|
537
|
|
|
749
|
|
|
(212
|
)
|
|
(28
|
)%
|
|||
Total revenues
|
63,114
|
|
|
81,570
|
|
|
(18,456
|
)
|
|
(23
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Properties - operating expenses
|
15,002
|
|
|
17,771
|
|
|
(2,769
|
)
|
|
(16
|
)%
|
|||
Interest expense
|
13,105
|
|
|
24,183
|
|
|
(11,078
|
)
|
|
(46
|
)%
|
|||
Transaction costs
|
1,233
|
|
|
2,483
|
|
|
(1,250
|
)
|
|
(50
|
)%
|
|||
Impairment losses
|
—
|
|
|
27,468
|
|
|
(27,468
|
)
|
|
(100
|
)%
|
|||
Management fee, related party
|
7,131
|
|
|
7,000
|
|
|
131
|
|
|
2
|
%
|
|||
Other expenses
|
4,608
|
|
|
6,731
|
|
|
(2,123
|
)
|
|
(32
|
)%
|
|||
General and administrative expenses
|
4,152
|
|
|
2,978
|
|
|
1,174
|
|
|
39
|
%
|
|||
Compensation expense
|
17,255
|
|
|
7,034
|
|
|
10,221
|
|
|
145
|
%
|
|||
Depreciation and amortization
|
25,083
|
|
|
37,275
|
|
|
(12,192
|
)
|
|
(33
|
)%
|
|||
Total expenses
|
87,569
|
|
|
132,923
|
|
|
(45,354
|
)
|
|
(34
|
)%
|
|||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized gain (loss) on derivatives and other
|
(8,596
|
)
|
|
(14,594
|
)
|
|
5,998
|
|
|
(41
|
)%
|
|||
Realized gain (loss) on sales and other
|
6,951
|
|
|
2,174
|
|
|
4,777
|
|
|
220
|
%
|
|||
Income (loss) before income tax benefit (expense)
|
(26,100
|
)
|
|
(63,773
|
)
|
|
37,673
|
|
|
(59
|
)%
|
|||
Income tax benefit (expense)
|
36
|
|
|
139
|
|
|
(103
|
)
|
|
(74
|
)%
|
|||
Net income (loss)
|
$
|
(26,064
|
)
|
|
$
|
(63,634
|
)
|
|
$
|
37,570
|
|
|
(59
|
)%
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||||||||
Change in fair value of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives, at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate caps
|
|
$
|
(713
|
)
|
|
$
|
—
|
|
|
$
|
(713
|
)
|
|
$
|
(14,175
|
)
|
|
$
|
—
|
|
|
$
|
(14,175
|
)
|
Foreign currency forwards
|
|
—
|
|
|
(7,572
|
)
|
|
(7,572
|
)
|
|
—
|
|
|
207
|
|
|
207
|
|
||||||
Foreign currency remeasurement and other
|
|
(247
|
)
|
|
(64
|
)
|
|
(311
|
)
|
|
(210
|
)
|
|
(416
|
)
|
|
(626
|
)
|
||||||
Total unrealized gain (loss) on derivatives and other
|
|
$
|
(960
|
)
|
|
$
|
(7,636
|
)
|
|
$
|
(8,596
|
)
|
|
$
|
(14,385
|
)
|
|
$
|
(209
|
)
|
|
$
|
(14,594
|
)
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
|
|
Real Estate Equity
|
|
Corporate
|
|
Preferred Equity
|
|
Total
|
|
Real Estate Equity
|
|
Corporate
|
|
Total
|
||||||||||||||
Sale of real estate investments
(1)
|
|
$
|
5,997
|
|
|
$
|
—
|
|
|
|
|
$
|
5,997
|
|
|
$
|
7,825
|
|
|
$
|
—
|
|
|
$
|
7,825
|
|
||
Foreign currency transactions
(2)
|
|
(323
|
)
|
|
10
|
|
|
(6
|
)
|
|
(319
|
)
|
|
(116
|
)
|
|
—
|
|
|
(116
|
)
|
|||||||
Write-off of deferred financing costs
|
|
(183
|
)
|
|
—
|
|
|
|
|
(183
|
)
|
|
—
|
|
|
(4,341
|
)
|
|
(4,341
|
)
|
||||||||
Net cash payments (receipts) on derivatives
|
|
|
|
1,456
|
|
|
|
|
1,456
|
|
|
—
|
|
|
(1,194
|
)
|
|
(1,194
|
)
|
|||||||||
Total realized gain (loss) on sales and other
|
|
$
|
5,491
|
|
|
$
|
1,466
|
|
|
$
|
(6
|
)
|
|
$
|
6,951
|
|
|
$
|
7,709
|
|
|
$
|
(5,535
|
)
|
|
$
|
2,174
|
|
(1)
|
Excludes escrow arrangements entered into for specific indemnification obligations in relation to the sales.
|
(2)
|
Includes
$0.1 million
relating to the reclassification of the currency translation adjustment from a component of accumulated OCI to realized gain (losses) due to the sale of certain real estate assets, offset by the realized loss on the repayment of the intercompany loans in different currencies.
|
•
|
our operating expenses and investment activities, including the repurchase of our common stock;
|
•
|
acquisitions of our target assets and related ongoing commitments;
|
•
|
capital improvements
|
•
|
distributions to our stockholders;
|
•
|
principal and interest payments on our borrowings; and
|
•
|
income tax liabilities of taxable REIT subsidiaries and we are subject to limitations as a REIT.
|
•
|
net proceeds from asset disposals;
|
•
|
financings secured by our assets such as mortgage notes, long-term senior and subordinate corporate capital such as revolving credit facilities, senior term loans, senior notes, senior exchangeable notes and perpetual preferred stock and common stock;
|
•
|
cash on hand; and
|
•
|
cash flow generated from our investments, both from operations and return of capital.
|
|
|
Six Months Ended June 30,
|
||||||
Cash flow provided by (used in):
|
|
2017
|
|
2016
|
||||
Operating activities
|
|
$
|
13,392
|
|
|
$
|
8,758
|
|
Investing activities
|
|
(4,029
|
)
|
|
68,355
|
|
||
Financing activities
|
|
(11,259
|
)
|
|
(231,092
|
)
|
||
Effect of foreign currency translation on cash and cash equivalents
|
|
4,844
|
|
|
(4,763
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
2,948
|
|
|
$
|
(158,742
|
)
|
•
|
any equity we issue in exchange or conversion of exchangeable or stock-settlable notes;
|
•
|
any other issuances by us of common equity, preferred equity or other forms of equity, including but not limited to limited partnership interests in the Operating Partnership, which are structured as profits interests, or LTIP units (excluding units issued to us and equity-based compensation, but including issuances related to an acquisition, investment, joint venture or partnership); and
|
•
|
cumulative CAD, if any, in excess of cumulative distributions paid on common stock, LTIP Units or other equity awards which began with our fiscal quarter ended March 31, 2016.
|
•
|
the product of: (a) 15% and (b) our CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $0.30 per share and up to $0.36 per share; plus
|
•
|
the product of: (a) 25% and (b) our CAD before such incentive fee, divided by the weighted average shares outstanding for the calendar quarter, of any amount in excess of $0.36 per share;
|
•
|
multiplied by our weighted average shares outstanding for the calendar quarter.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
(10,447
|
)
|
|
$
|
(33,909
|
)
|
|
$
|
(25,797
|
)
|
|
$
|
(62,891
|
)
|
Non-controlling interests
|
(91
|
)
|
|
(400
|
)
|
|
(267
|
)
|
|
(743
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization items
(1)(2)
|
14,990
|
|
|
25,134
|
|
|
44,560
|
|
|
50,434
|
|
||||
Impairment losses
|
—
|
|
|
27,468
|
|
|
—
|
|
|
27,468
|
|
||||
Unrealized (gain) loss on derivatives and other
|
7,655
|
|
|
(1,159
|
)
|
|
8,596
|
|
|
14,594
|
|
||||
Realized (gain) loss on sales and other
(3)(4)
|
(1,342
|
)
|
|
(5,398
|
)
|
|
(5,495
|
)
|
|
(3,368
|
)
|
||||
Transaction costs and other
(5)(6)
|
973
|
|
|
1,623
|
|
|
2,148
|
|
|
2,769
|
|
||||
CAD
|
$
|
11,738
|
|
|
$
|
13,359
|
|
|
$
|
23,745
|
|
|
$
|
28,263
|
|
(1)
|
Three months ended
June 30, 2017
represents an adjustment to exclude depreciation and amortization of
$12.5 million
, amortization expense of capitalized above/below market leases of
$0.3 million
, amortization of deferred financing costs of
$0.8 million
and amortization of equity-based compensation of
$1.4 million
.
Three months ended
June 30, 2016
represents an adjustment to exclude depreciation and amortization of $18.4 million, amortization of above/below market leases of $0.9 million, amortization of deferred financing costs of $2.0 million and amortization of equity-based compensation of $3.8 million.
|
(2)
|
Six months ended
June 30, 2017
represents an adjustment to exclude depreciation and amortization of
$25.1 million
, amortization expense of capitalized above/below market leases of
$0.5 million
, amortization of deferred financing costs of
$1.7 million
and amortization of equity-based compensation of
$17.3 million
.
Six months ended
June 30, 2016
represents an adjustment to exclude depreciation and amortization of $37.3 million, amortization expense of capitalized above/below market leases of $2.3 million, amortization of deferred financing costs of $3.8 million and amortization of equity-based compensation of $7.0 million.
|
(3)
|
Three months ended
June 30, 2017
represents an adjustment to exclude a
$1.4 million
net gain related to the sale of real estate,
$0.1 million
loss related to the write-off of the deferred financing costs associated with the repayment of the mortgage notes and a
$0.1 million
net gain related to foreign currency. CAD includes a
$0.6 million
net gain related to the settlement of foreign currency derivatives.
Three months ended
June 30, 2016
represents an adjustment to exclude an $8.1 million net gain related to the sale of real estate, $2.4 million loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and a $0.3 million net loss related to foreign currency. CAD includes a $0.8 million net loss related to the settlement of foreign currency derivatives.
|
(4)
|
Six months ended
June 30, 2017
represents an adjustment to exclude a
$6.0 million
net gain related to the sale of real estate investment,
$0.2 million
loss related to the write-off of the deferred financing costs associated with the repayment of the mortgage notes and a
$0.3 million
net loss related to foreign currency. CAD includes a
$1.5 million
net gain related to the settlement of foreign currency derivatives.
Six months ended
June 30, 2016
represents an adjustment to exclude a $7.8 million net gain related to the sale of real estate, $4.3 million loss related to the write-off of the deferred financing costs associated with the repurchase of the Senior Notes and a $0.1 million net loss related to foreign currency. CAD includes a $1.2 million net loss related to the settlement of foreign currency derivatives.
|
(5)
|
Three months ended
June 30, 2017
represents an adjustment to exclude $1.0 million of transaction costs relating to the Mergers and transaction fees related to our preferred equity investment.
Three months ended
June 30, 2016
represents an adjustment to exclude $1.6 million of transaction costs.
|
(6)
|
Six months ended
June 30, 2017
represents an adjustment to exclude
$1.2 million
of transaction costs relating to the Mergers and transaction fees related to our preferred equity investment and
$0.9 million
of payroll taxes associated with the acceleration of equity awards due to the Mergers.
Six months ended
June 30, 2016
represents an adjustment to exclude $2.4 million of transaction costs and $0.3 million of other one-time items.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Rental income
|
$
|
26,025
|
|
|
$
|
33,990
|
|
|
$
|
51,561
|
|
|
$
|
68,823
|
|
Escalation income
|
5,558
|
|
|
5,908
|
|
|
10,719
|
|
|
11,998
|
|
||||
Other income
|
508
|
|
|
46
|
|
|
537
|
|
|
749
|
|
||||
Total property and other income
|
32,091
|
|
|
39,944
|
|
|
62,817
|
|
|
81,570
|
|
||||
Properties - operating expenses
|
7,680
|
|
|
8,540
|
|
|
15,002
|
|
|
17,771
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
297
|
|
|
—
|
|
|
297
|
|
|
—
|
|
||||
Amortization and other items
(1)(2)
|
253
|
|
|
1,220
|
|
|
533
|
|
|
2,651
|
|
||||
NOI
(3)
|
$
|
24,961
|
|
|
$
|
32,624
|
|
|
$
|
48,645
|
|
|
$
|
66,450
|
|
(1)
|
Three months ended
June 30, 2017
primarily includes
$0.3 million
of amortization of above/below market leases.
Three months ended
June 30, 2016
primarily includes $1.1 million of amortization of above/below market leases.
|
(2)
|
Six months ended
June 30, 2017
primarily includes
$0.5 million
of amortization of above/below market leases.
Six months ended
June 30, 2016
primarily includes
$2.3 million
of amortization of above/below market lease and
$0.3 million
of non-recurring bad debt expense.
|
(3)
|
The following table presents a reconciliation of net income (loss) to NOI of our real estate segment for the
three and six months ended
June 30, 2017
and 2016 (dollars in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
(10,538
|
)
|
|
$
|
(34,309
|
)
|
|
$
|
(26,064
|
)
|
|
$
|
(63,634
|
)
|
Remaining segments
(i)
|
13,109
|
|
|
12,041
|
|
|
35,952
|
|
|
32,229
|
|
||||
Real estate segment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
6,451
|
|
|
8,691
|
|
|
12,571
|
|
|
17,117
|
|
||||
Other expenses
|
2,415
|
|
|
3,007
|
|
|
4,443
|
|
|
6,697
|
|
||||
Depreciation and amortization
|
12,520
|
|
|
18,404
|
|
|
25,083
|
|
|
37,275
|
|
||||
Unrealized (gain) loss on derivatives and other
|
1,293
|
|
|
3,400
|
|
|
960
|
|
|
14,385
|
|
||||
Realized (gain) loss on sales and other
|
(1,336
|
)
|
|
(7,794
|
)
|
|
(5,491
|
)
|
|
(7,709
|
)
|
||||
Income tax (benefit) expense
|
237
|
|
|
520
|
|
|
(36
|
)
|
|
(139
|
)
|
||||
Impairment losses
|
—
|
|
|
27,468
|
|
|
—
|
|
|
27,468
|
|
||||
Other items
|
810
|
|
|
1,196
|
|
|
1,227
|
|
|
2,761
|
|
||||
Net (income) loss - Real estate segment
|
22,390
|
|
|
54,892
|
|
|
38,757
|
|
|
97,855
|
|
||||
NOI
|
$
|
24,961
|
|
|
$
|
32,624
|
|
|
$
|
48,645
|
|
|
$
|
66,450
|
|
(i)
|
Represents the net (income) loss in our corporate and preferred equity segments to reconcile to net operating income.
|
|
Period
(1)
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||
May 1 - May 31
|
|
4,376,102
|
|
|
$
|
12.64
|
|
|
N/A
|
|
N/A
|
June 1- June 30
|
|
315,769
|
|
|
$
|
12.27
|
|
|
N/A
|
|
N/A
|
(1)
|
There were no purchases made by affiliated purchasers during April 2017.
|
Exhibit
Number
|
|
Description of Exhibit
|
|
10.1
|
|
*
|
|
31.1
|
|
*
|
|
31.2
|
|
*
|
|
32.1
|
|
*
|
|
32.2
|
|
*
|
|
101.0
|
|
*
|
The following materials from the NorthStar Realty Europe Corp. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016; (ii) Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended June 30, 2017 and 2016; (iv) Consolidated Statements of Equity for the six months ended June 30, 2017 (unaudited) and year ended December 31, 2016; (v) Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements (unaudited)
|
|
|
|
NorthStar Realty Europe Corp.
|
||
Date:
|
August 8, 2017
|
|
|
By:
|
/s/ MAHBOD NIA
|
|
|
|
|
|
Mahbod Nia
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ KEITH A. FELDMAN
|
|
|
|
|
|
Keith A. Feldman
|
|
|
|
|
|
Chief Financial Officer and Treasurer
|
1 Year NorthStar Realty Europe Chart |
1 Month NorthStar Realty Europe Chart |
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