FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act, and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this Annual Report on Form 10-K reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a detailed discussion of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements, refer to the section entitled “Risk Factors” beginning on page of this Annual Report on Form 10-K, together with any risk factors contained in or incorporated by reference to other documents that we may file from time to time in the future with the Securities and Exchange Commission. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
PART I
Item 1. Business
References to “we,” “us,” “our,” the “Company” or “Colony NorthStar” refer to Colony NorthStar, Inc. subsequent to the Mergers, as defined below, unless the context specifically requires otherwise. References to “NSAM” refer to the historical business of NorthStar Asset Management Group Inc., prior to the Mergers unless the context specifically requires otherwise. References to the “Operating Partnership” and the “OP” refer to Colony Capital Operating Company, LLC, a Delaware limited liability company, the operating partnership of Colony NorthStar.
Overview
Mergers of NorthStar Asset Management Group Inc. with Colony Capital, Inc. and NorthStar Realty Finance Corp.
On January 10, 2017, NSAM completed the tri-party merger with Colony Capital, Inc., or Colony, and NorthStar Realty Finance Corp., or NorthStar Realty or NRF, under which the companies combined in an all-stock merger of equals transaction, referred to as the Mergers, to create Colony NorthStar, an internally-managed, diversified real estate and investment management company. The Mergers create a leading global equity real estate investment trust, or REIT, with an embedded investment management platform with increased scale and capabilities with approximately $56 billion of assets under management.
Under the terms of the merger agreement, NSAM redomesticated to Maryland to be treated as a REIT beginning in 2017 and Colony and NorthStar Realty, through a series of transactions, merged with and into the redomesticated NSAM, which was renamed Colony NorthStar, Inc. NSAM’s common stockholders received one share of Colony NorthStar’s common stock for each share of NSAM common stock they owned. Upon closing of the Mergers, NSAM’s stockholders received approximately 32.85%, Colony stockholders received approximately 33.25% and NorthStar Realty stockholders received approximately 33.90% of the combined company on a fully diluted basis, excluding the effect of certain equity-based awards issued in 2017 in connection with the Mergers. Prior to the closing of the Mergers, NSAM’s board of directors declared a special cash dividend in the amount of $228 million to its common stockholders, which was paid in January 2017.
NSAM, Colony and NorthStar Realty each have significant pre-combination activities and the Mergers will be accounted for as a business combination by the combined company in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification 805, Business Combinations. Although NSAM is the legal acquirer in the Mergers, Colony has been designated as the accounting acquirer, resulting in a reverse acquisition of NSAM for accounting purposes.
NSAM Historical Business
The historical consolidated financial statements included herein represent the consolidated financial position, results of operations, other comprehensive income and cash flows of NSAM prior to the Mergers. As such, the consolidated financial statements included herein do not reflect the Colony NorthStar consolidated balance sheet, statement of operations, other comprehensive income and cash flows in the future or what Colony NorthStar’s consolidated balance sheet, statement of operations, other comprehensive income and cash flows would have been had NSAM been merged with Colony and NorthStar Realty during the historical periods presented. The consolidated financial statements included herein should be read and considered with the Colony and NorthStar Realty consolidated financial statements and notes thereto that are included as exhibits to this Form 10-K and pro forma financial statements and notes thereto that are filed with the SEC.