Colony Financial Q3 Profit Beats View; Agrees On Merger With Colony Capital

(RTTNews) - Colony Financial, Inc. (CLNY) reported third-quarter net income attributable to common stockholders of $31.98 million, up from $21.09 million in the year-ago period. However, earnings per share declined to $0.30 from $0.32 in the prior-year period.

Core earnings for the quarter were $42.81 million or $0.38 per share, compared to $25.72 million or $0.38 per share in the year-ago quarter. On average, analysts polled by Thomson Reuters expected the company to earn $0.37 per share for the quarter. Analysts' estimates typically exclude special items.

Total income for the quarter rose to $77.28 million from $47.47 million in the same period last year. Analysts had a consensus revenue estimate of $82.55 million.

On November 4, 2014, Colony Financial's board of directors declared an increased dividend of $0.37 per common share for the fourth quarter of 2014.

The board also declared a cash dividend of $0.53125 per share on the company's 8.50 percent Series A Cumulative Perpetual Preferred Stock for the quarterly period ending January 15, 2015 and a cash dividend of $0.46875 per share on the company's 7.50 percent Series B Cumulative Perpetual Preferred Stock for the quarterly period ending January 15, 2015. All dividends will be paid on January 15, 2015 to respective stockholders of record on December 31, 2014.

In a separate statement, Colony Financial and the parent company of its manager, Colony Capital LLC, said they have agreed in principle with respect to certain terms for the potential contribution to Colony Financial of substantially all of Colony Capital's real estate and investment management businesses as well as operations.

Colony Capital is a privately-held independent global real estate investment firm and registered investment advisor headquartered in Los Angeles, California and founded in 1991 by Thomas J. Barrack, Jr.

The deal contemplates that the combined company would be led by Colony Financial's Executive Chairman Thomas Barrack, Jr. and Chief Executive Officer Richard Saltzman, together with the entire Colony Organization, with Colony Financial becoming a self-managed real estate investment trust.

The non-binding agreement in principle also contemplates that only Colony Capital's interests in Colony American Homes, which today announced it has become a self-managed REIT, would not be included in the proposed transaction.

The proposed deal would include aggregate consideration of up to about $657.5 million, to be paid in the form of Colony Financial units convertible into Colony Financial shares and/or shares, not cash.

Of this, $547.5 million would be paid upfront and up to $110 million would be contingent upon certain performance as well as fundraising targets. The transaction is expected to close by the end of the first half of 2015.

Pro forma for the proposed transactions, financial metrics would be immediately accretive. The companies expect that upon closing of the transaction, the combined company would be renamed Colony Capital, Inc.