Why Colony’s Capital Stock Plunged Today
Shares of capital of the colony (NYSE: CLNY) plunged as much as 14% on Monday, after the real estate and investment company released its first quarter results on Friday.
As of 12:35 p.m. EDT, the stock was down 10%.
Colony Capital reported a net loss of $361.6 million, or $0.76 per share, which included more than $300 million in non-cash impairment charges. Investment losses incurred on the sale of a multi-tenant office building contributed to the deficit.
Worse still, Colony Capital said its portfolio companies defaulted on $3.2 billion in debt. The debt is secured by hotels and health-related properties.
Colony said it is negotiating with its lenders in hopes of securing forbearances or debt modifications, including extending future maturities, but it is uncertain whether the talks will prove successful.
While conducting these negotiations – and to preserve cash during the coronavirus pandemic — Colony suspends its dividend.
“COVID-19 is having an unprecedented impact on the global economy.” said CEO Thomas Barrack in a press release, “[C]Therefore, we are taking decisive action to preserve the financial flexibility and liquidity necessary to maintain the long-term resilience of our business, which, in turn, benefits our customers, our communities and our shareholders.”