Digital Colony

Digital business boosts Digital Colony’s Q2 results

10 August 2020 | Melanie Mingas

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Digital Colony and its subsidiaries highlighted a “resilient underlying business” in its Q2 financial results – the first results to be published since the appointment of a new CEO and CFO.

Despite the impact of Covid-19, Digital Colony’s digital portfolio companies across investment management and operating businesses, saw core organic revenues increase by “approximately 9% on average YoY in the second quarter”.

Further, Colony Capital’s digital investment management business continued to grow, with FEEUM increasing year to date by US$1.5 billion, or 22%, accounting for the Vantage transaction in July.

The company’s hospitality segment experienced a sharp rebound from its trough occupancy of 22% during April to “almost 40% during June 2020, generating positive NOI before FF&E for the month”. However, the healthcare segment generated Q2 revenues 2% lower year-over-year and collected 96% of contractual triple-net and medical office rents during the quarter.

“Since our last earnings, Colony has delivered on many of the key commitments we’ve made to shareholders,” said Marc Ganzi, president and CEO.

“We’ve continued to drive strong growth in our digital business: (i) digital FEEUM is now up 22% for the year, well ahead of our prior 15% growth target for 2020, (ii) we brought in a strategic investor to our digital investment management business, boosting permanent investment capital and commitments to our digital investment products, and (iii) our investment in Vantage Data Centers’ portfolio of stabilised hyperscale data centres brings the kind of high-quality digital assets onto our balance sheet that we’ve outlined to investors.

“Just as importantly, we executed a series of decisive steps to solidify our liquidity position by successfully renegotiating our revolver on favourable terms and issuing new exchangeable notes that extend corporate debt maturities. Near-term debt maturities have now been dealt with. Despite an adverse environment created by the Covid-19 pandemic, these developments position us to preserve value at our legacy assets, make significant progress on our digital transformation and accelerate our alignment with the powerful secular tailwinds driving growth in digital infrastructure.”

The results followed a series of significant developments year to date. In Q1, the JV of Digital Colony and EQT completed the $14.3 billion purchase of Zayo, 10 months after the deal was first announced.

In May, Digital Colony announced a “strategic recapitalisation” of Beanfield Metroconnect, which it acquired in 2019, that saw the digital infrastructure investment platform of Colony Capital Inc invest $181 million in Beanfield to capitalise on “a variety of new segment and revenue opportunities”.

July saw Colony Capital agree to Wafra’s strategic investment of more than $400 million for a minority stake in the Digital Colony platform, and later the company formed a $3.5 billion partnership with Vantage Data Centres.

Later the same month it was announced that Ganzi would take on the role of president and CEO of Colony Capital in addition to his CEO role at Digital Colony, effective 1 July. Further, Jacky Wu assumed the role of CFO and treasurer, effective on the same day, which Colony Capital said finalised its “transition to a digital-focused management team”.

Tom Barrack continued to serve as executive chairman and Mark Hedstrom continued to serve as COO.