Colony Capital has completed the final sale of six hospitality portfolios to Highgate and an affiliate of Cerberus Capital Management.
With the transaction, Colony Capital completes its exit from the hospitality business. The six hospitality portfolios were sold to Highgate and an affiliate of Cerberus Capital Management in a deal valued at $2.8 billion, including $67.5 million of gross proceeds on a consolidated basis and the assumption of $2.7 billion in debt.
As part of the transaction with Highgate, Colony will transfer five of the six portfolios held in the hospitality segment and an approximately 55% interest in the THL portfolio held in the other equity and debt segment. The sixth portfolio in the hospitality segment, the Inland portfolio, is under receivership and is excluded from the transaction.
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"We are thrilled to be delivering on our commitment to dispose of non-core assets and harvest positive value for our hospitality business," said Marc Ganzi, CEO of Colony Capital, in prepared remarks.
The deal was originally announced in September. Cerberus and Highgate plan to upgrade the six portfolios, which consist of 22,676 rooms across 197 hotel properties.
Colony is pivoting to focus on digital assets, such as cell towers and other tech infrastructure. As such, it has been selling off its non-core assets.
"We made terrific progress on our digital transformation this quarter," Ganzi said in Colony's third-quarter 2020 earnings report. "Bringing high-quality digital assets onto the balance sheet, growing our digital investment management franchise, and harvesting value from our legacy assets are our key priorities."
In addition to hospitality, it also exited the industrial market in December with the sale of its bulk industrial portfolio for $400 million, generating $85 million in net equity proceeds.
"We remain focused on executing our digital transformation and this closing represents another positive step as we move to finish the mission," Ganzi said in a prepared statement.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
