Colony Capital, Inc.

Period: 08/09/2019 to 05/07/2020
Lead Plaintiff Deadline: 07/27/2020


A securities class action has been filed against Colony Capital, Inc. (CLNY) on behalf of a class consisting of investors who purchased or otherwise acquired Colony securities between August 9, 2019 through May 7, 2020. This case has been filed in the USDC – C.D.CA.

Colony is a leading global investment management firm with assets under management of $55 billion.  The Company manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, and traded and non-traded real estate investment trusts.

On August 9, 2019, Colony announced that it would sell its multi-billion-dollar industrial portfolio and, potentially, its related management platform.
On September 30, 2019, Colony announced that Blackstone would acquire Colony Industrial, the industrial real estate assets and affiliated industrial operating platform of the Company, for $5.9 billion.

On November 7, 2019, Colony Credit Real Estate (NYSE: CLNC) announced that “third party valuation experts assisted the [c]ompany in a robust strategic reassessment of [its] entire asset base,” that, “[d]uring this process [the company] identified and separated a Legacy, Non-Strategic Portfolio and made meaningful changes to the original business plans,” and that “[g]oing forward, [the company] plan[s] to report the operations and dispositions from [its] Core Portfolio and the Legacy, Non-Strategic Portfolio separately.”

The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Colony’s sale of its industrial real estate portfolio and the bifurcation of Colony Credit Real Estate’s portfolio were foreseeably likely to negatively impact Colony’s financial and operating results; (ii) certain of Colony’s remaining portfolio companies carried unsustainable levels of debt secured by hotels and healthcare-related properties and were thus at significant risk of default; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times.

On November 8, 2019, Colony announced its financial results for the third quarter of 2019.  Among other results, the Company reported a GAAP net loss of $555 million, or $1.15 per share, which “notably included reductions of goodwill, real estate and provision for loan losses totaling $540.3 million . . . of which $387.0 million was attributable to the reduction of goodwill primarily as a result of the pending sale of the Company’s industrial investment management business and related real estate portfolio, and the decrease in management fees from Colony Credit Real Estate, Inc. resulting from impairments related to its portfolio bifurcation.”

On this news, Colony’s stock price fell $0.48 per share, or 8.76%, to close at $5.00 per share on November 8, 2019.

Then, on May 8, 2020, Colony issued a press release announcing its financial and operating results for the first quarter of 2020.  In the press release, Colony reported that its portfolio companies had defaulted on $3.2 billion of debt secured by hotels and healthcare-related properties and that Colony had received a notice of acceleration covering $780 million of the defaulted debt.

On this news, Colony’s stock price fell $0.08 per share, or 3.81%, to close at $2.02 per share on May 8, 2020.