What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 1022 added, 725 removed, 1464 unchanged (54% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

June 30, 2020 (Unaudited)

September 30, 2020 (Unaudited)

December 31, 2019

Cash and cash equivalents

$ 658,446 $ 1,205,190

Restricted cash

167,109 91,063

Real estate, net

Loans receivable (at fair value at June 30, 2020)

7,860,474 6,218,196

Loans receivable (at fair value at September 30, 2020)

1,325,144 1,566,328

Equity and debt investments ($ 377,278 and $ 457,693 at fair value, respectively)

1,911,988 2,313,805

851,757 1,452,891

Deferred leasing costs and intangible assets, net

Assets held for sale

1,275,039 632,157

Assets held for disposition ($ 3,592,940 and $ 4,679,169 held for sale, respectively)

4,379,558 5,743,085

Other assets ($ 6,007 and $ 21,382 at fair value, respectively)

534,734 557,989

Due from affiliates

78,801 51,480

$ 19,043,050 $ 19,832,184

$ 7,085,994 $ 5,517,918

Accrued and other liabilities ($ 107,698 and $ 127,531 at fair value, respectively)

789,866 887,519

Intangible liabilities, net

Liabilities related to assets held for sale

109,616 111,484

Liabilities related to assets held for disposition 3,908,474 3,862,521

Due to affiliates

Dividends and distributions payable

18,516 83,301

Preferred stock redemptions payable

Total liabilities

11,913,745 10,899,662

Commitments and contingencies (Note 21)

Redeemable noncontrolling interests

287,231 6,107

Stockholders’ equity:

3 unchanged sentences

41,350 shares issued and outstanding

999,490 999,490

Common stock, $ 0.01 par value per share

4 unchanged sentences

Additional paid-in capital

7,559,551 7,553,599

Accumulated deficit

( 6,054,881 ) ( 3,389,592 )

Accumulated other comprehensive income

76,610 47,668

Total stockholders’ equity

2,585,594 5,216,043

Noncontrolling interests in investment entities

4,085,739 3,254,188

Noncontrolling interests in Operating Company

170,741 456,184

6,842,074 8,926,415

Total liabilities, redeemable noncontrolling interests and equity

$ 19,043,050 $ 19,832,184

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Property operating income $ 246,122 $ 168,858 $ 666,657 $ 543,978

Interest income

14,816 40,237 70,060 121,356

Fee income ($ 43,527 , $ 111,359 , $ 129,765 and $ 175,477 from affiliates, respectively)

43,919 111,854 130,964 178,315

Other income ($ 5,528 , $ 34,058 , $ 16,537 and $ 55,242 from affiliates, respectively)

11,820 38,051 30,069 64,061

Total revenues

316,677 359,000 897,750 907,710

Property operating expense

108,393 80,877 309,553 248,714

Interest expense

71,849 74,592 213,947 236,756

Investment and servicing expense

30,532 8,605 47,897 39,215

Transaction costs

3,310 100 3,806 2,922

Depreciation and amortization

125,733 116,932 301,605 242,490

Provision for loan loss

— 17,233 — 35,847

Impairment loss

36,169 533,031 1,444,908 635,869

Compensation expense—cash and equity-based

53,780 85,800 169,192 157,283

Compensation expense—carried interest and incentive fee

912 10,846 ( 9,431 ) 13,264

Administrative expenses

23,500 21,968 75,246 63,404

Settlement loss — — 5,090 —

Total expenses

454,178 949,984 2,561,813 1,675,764

Other income (loss)

Gain on sale of real estate

13,258 8,221 24,058 42,841

Other loss, net

Equity method losses

( 12,979 ) ( 44,940 ) ( 199,320 ) ( 182,560 )

Equity method earnings (losses) ( 62,998 ) 46,777 ( 319,831 ) ( 178,448 )

Equity method earnings (losses)—carried interest 6,082 ( 474 ) ( 14,653 ) 6,258

Loss from continuing operations before income taxes

Income tax expense

( 194,138 ) ( 581,400 ) ( 2,173,809 ) ( 1,079,963 )

Income tax benefit (expense) 9,922 ( 10,096 ) ( 3,246 ) ( 11,723 )

Loss from continuing operations

( 184,216 ) ( 591,496 ) ( 2,177,055 ) ( 1,091,686 )

Income (loss) from discontinued operations

( 177,014 ) 25,654 ( 1,307,225 ) 11,043

Net loss ( 361,230 ) ( 565,842 ) ( 3,484,280 ) ( 1,080,643 )

Net income (loss) attributable to noncontrolling interests:

Redeemable noncontrolling interests

( 2,158 ) 364 ( 2,316 ) 2,317

Investment entities

( 149,154 ) 15,170 ( 640,955 ) 51,744

Operating Company

( 22,651 ) ( 53,560 ) ( 287,309 ) ( 90,160 )

Net loss attributable to Colony Capital, Inc.

( 187,267 ) ( 527,816 ) ( 2,553,700 ) ( 1,044,544 )

Preferred stock dividends

18,517 27,137 56,507 81,412

Net loss attributable to common stockholders

$ ( 205,784 ) $ ( 554,953 ) $ ( 2,610,207 ) $ ( 1,125,956 )

Basic loss per share

Loss from continuing operations per basic common share

$ ( 0.22 ) $ ( 1.16 ) $ ( 3.35 ) $ ( 2.30 )

Net loss per basic common share

$ ( 0.44 ) $ ( 1.16 ) $ ( 5.51 ) $ ( 2.35 )

Diluted loss per share

Loss from continuing operations per diluted common share

$ ( 0.22 ) $ ( 1.16 ) $ ( 3.35 ) $ ( 2.30 )

Net loss per diluted common share

$ ( 0.44 ) $ ( 1.16 ) $ ( 5.51 ) $ ( 2.35 )

Weighted average number of shares

471,739 479,776 474,081 479,412

Dividends declared per common share

$ — $ 0.11 $ 0.11 $ 0.33

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net loss $ ( 361,230 ) $ ( 565,842 ) $ ( 3,484,280 ) $ ( 1,080,643 )

Changes in accumulated other comprehensive income (loss) related to:

Investments in unconsolidated ventures, net

4,385 ( 2,721 ) 3,397 6,598

Available-for-sale debt securities

( 2,446 ) 5,067 ( 3,535 ) 6,365

Cash flow hedges ( 14 ) ( 2,302 ) ( 15 ) ( 9,152 )

Foreign currency translation

89,030 ( 78,729 ) 58,821 ( 99,401 )

Net investment hedges

( 414 ) 27,004 21,001 43,474

Other comprehensive income (loss) 90,541 ( 51,681 ) 79,669 ( 52,116 )

9 unchanged sentences

(In thousands, except per share data)

Preferred Stock

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income

Total Stockholders’ Equity

Noncontrolling Interests in Investment Entities

Noncontrolling Interests in Operating Company

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Stockholders’ Equity Noncontrolling Interests in Investment Entities Noncontrolling Interests in Operating Company Total Equity

Balance at December 31, 2018 $ 1,407,495 $ 4,841 $ 7,598,019 $ ( 2,018,302 ) $ 13,999 $ 7,006,052 $ 3,779,728 $ 360,590 $ 11,146,370

Cumulative effect of adoption of new accounting pronouncement

— — — ( 2,905 ) — ( 2,905 ) ( 1,378 ) ( 185 ) ( 4,468 )

Net income (loss)

— — — ( 74,976 ) — ( 74,976 ) 49,988 ( 6,611 ) ( 31,599 )

Other comprehensive income (loss)

— — — — 8,045 8,045 ( 17,629 ) 513 ( 9,071 )

Common stock repurchases

— ( 7 ) ( 3,160 ) — — ( 3,167 ) — — ( 3,167 )

Redemption of OP Units for class A common stock

— — 33 — — 33 — ( 33 ) —

Equity-based compensation

— 27 6,323 — — 6,350 191 — 6,541

Shares canceled for tax withholdings on vested stock awards

— ( 6 ) ( 3,001 ) — — ( 3,007 ) — — ( 3,007 )

Contributions from noncontrolling interests

— — — — — — 305,216 — 305,216

Distributions to noncontrolling interests

— — — — — — ( 107,377 ) ( 3,450 ) ( 110,827 )

Preferred stock dividends

— — — ( 27,137 ) — ( 27,137 ) — — ( 27,137 )

Common stock dividends declared ($ 0.11 per share)

— — — ( 53,410 ) — ( 53,410 ) — — ( 53,410 )

Reallocation of equity (Notes 2 and 15)

— — 12,733 — 94 12,827 ( 12,533 ) ( 294 ) —

Balance at March 31, 2019 1,407,495 4,855 7,610,947 ( 2,176,730 ) 22,138 6,868,705 3,996,206 350,530 11,215,441

— — — ( 441,752 ) — ( 441,752 ) ( 13,414 ) ( 29,989 ) ( 485,155 )

Other comprehensive income

— — — — 4,819 4,819 3,508 309 8,636

Redemption of OP Units for class A common stock

— 2 2,061 — — 2,063 — ( 2,063 ) —

Equity-based compensation

— 20 7,720 — — 7,740 197 — 7,937

Contributions from noncontrolling interests

— — — — — — 87,304 — 87,304

Distributions to noncontrolling interests

— — — — — — ( 212,842 ) ( 3,429 ) ( 216,271 )

Preferred stock dividends

— — — ( 27,138 ) — ( 27,138 ) — — ( 27,138 )

Common stock dividends declared ($ 0.11 per share)

— — — ( 53,656 ) — ( 53,656 ) — — ( 53,656 )

Reallocation of equity (Notes 2 and 15)

— — 927 — 10 937 88 ( 1,025 ) —

Balance at June 30, 2019 1,407,495 4,877 7,621,655 ( 2,699,276 ) 26,967 6,361,718 3,861,047 314,333 10,537,098

3 unchanged sentences

(In thousands, except per share data)

Preferred Stock

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Total Stockholders’ Equity

Noncontrolling Interests in Investment Entities

Noncontrolling Interests in Operating Company

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Noncontrolling Interests in Investment Entities Noncontrolling Interests in Operating Company Total Equity

Balance at June 30, 2019 $ 1,407,495 $ 4,877 $ 7,621,655 $ ( 2,699,276 ) $ 26,967 $ 6,361,718 $ 3,861,047 $ 314,333 $ 10,537,098

Net income (loss) — — — ( 527,816 ) — ( 527,816 ) 15,170 ( 53,560 ) ( 566,206 )

Other comprehensive loss — — — — ( 5,057 ) ( 5,057 ) ( 46,136 ) ( 488 ) ( 51,681 )

Redemption of OP Units for class A common stock — — 8 — — 8 — ( 8 ) —

Equity-based compensation — 2 9,569 — — 9,571 191 — 9,762

Shares canceled for tax withholdings on vested stock awards — ( 1 ) ( 393 ) — — ( 394 ) — — ( 394 )

OP Unit issuance — — — — — — — 111,903 111,903

Contributions from noncontrolling interests — — — — — — 109,604 — 109,604

Distributions to noncontrolling interests — — — — — — ( 88,052 ) ( 5,791 ) ( 93,843 )

Preferred stock dividends — — — ( 27,137 ) — ( 27,137 ) — — ( 27,137 )

Common stock dividends declared ($ 0.11 per share)

— — — ( 53,657 ) — ( 53,657 ) — — ( 53,657 )

Reallocation of equity (Notes 2 and 15)

— — ( 92,483 ) — ( 1,022 ) ( 93,505 ) 3,510 89,995 —

Balance at September 30, 2019 $ 1,407,495 $ 4,878 $ 7,538,356 $ ( 3,307,886 ) $ 20,888 $ 5,663,731 $ 3,855,334 $ 456,384 $ 9,975,449

The accompanying notes are an integral part of the consolidated financial statements.

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(In thousands, except per share data)

Balance at December 31, 2019 $ 999,490 $ 4,878 $ 7,553,599 $ ( 3,389,592 ) $ 47,668 $ 5,216,043 $ 3,254,188 $ 456,184 $ 8,926,415

Cumulative effect of adoption of new accounting pronouncement (Note 2)

— — — ( 3,187 ) — ( 3,187 ) ( 1,577 ) ( 349 ) ( 5,113 )

Net loss — — — ( 342,159 ) — ( 342,159 ) ( 21,749 ) ( 39,601 ) ( 403,509 )

Other comprehensive loss — — — — ( 31,414 ) ( 31,414 ) ( 28,859 ) ( 3,440 ) ( 63,713 )

2 unchanged sentences

Shares canceled for tax withholdings on vested stock awards

— ( 18 ) ( 5,051 ) — — ( 5,069 ) — — ( 5,069 )

Contributions from noncontrolling interests — — — — — — 87,736 — 87,736

2 unchanged sentences

Common stock dividends declared ($ 0.11 per share)

— — — ( 52,854 ) — ( 52,854 ) — — ( 52,854 )

Reallocation of equity (Note 2)

— — ( 3,827 ) — ( 32 ) ( 3,859 ) — 3,859 —

Balance at March 31, 2020 999,490 4,809 7,532,213 ( 3,806,308 ) 16,222 4,746,426 3,233,910 411,380 8,391,716

Net loss — — — ( 2,024,274 ) — ( 2,024,274 ) ( 470,052 ) ( 225,057 ) ( 2,719,383 )

Other comprehensive income — — — — 28,133 28,133 21,609 3,099 52,841

Redemption of OP Units for class A common stock

— 2 1,421 — — 1,423 — ( 1,423 ) —

Equity-based compensation — 16 8,946 — — 8,962 296 584 9,842

Shares canceled for tax withholdings on vested stock awards

— ( 6 ) ( 1,151 ) — — ( 1,157 ) — — ( 1,157 )

Contributions from noncontrolling interests — — — — — — 112,721 — 112,721

2 unchanged sentences

Reallocation of equity (Note 2)

— — ( 1,232 ) — 12 ( 1,220 ) 1,615 ( 395 ) —

Balance at June 30, 2020 999,490 4,821 7,540,197 ( 5,849,098 ) 44,367 2,739,777 2,776,604 188,188 5,704,569

1 unchanged sentence

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(In thousands, except per share data)

Balance at June 30, 2020 $ 999,490 $ 4,821 $ 7,540,197 $ ( 5,849,098 ) $ 44,367 $ 2,739,777 $ 2,776,604 $ 188,188 $ 5,704,569

Net loss — — — ( 187,267 ) — ( 187,267 ) ( 149,154 ) ( 22,651 ) ( 359,072 )

Other comprehensive income — — — — 32,239 32,239 54,753 3,549 90,541

Fair value of noncontrolling interest assumed in asset acquisition — — — — — — 366,136 — 366,136

Equity-based compensation — 5 6,566 — — 6,571 148 668 7,387

Shares canceled for tax withholdings on vested stock awards

— ( 2 ) ( 510 ) — — ( 512 ) — — ( 512 )

Warrant issuance (Note 15)

— — 20,240 — — 20,240 — — 20,240

Costs of noncontrolling interests — — ( 6,287 ) — — ( 6,287 ) — — ( 6,287 )

Contributions from noncontrolling interests — — — — — — 1,101,099 — 1,101,099

Distributions to noncontrolling interests — — — — — — ( 63,511 ) — ( 63,511 )

Preferred stock dividends — — — ( 18,516 ) — ( 18,516 ) — — ( 18,516 )

Reallocation of equity (Note 2)

— — ( 655 ) — 4 ( 651 ) ( 336 ) 987 —

Balance at September 30, 2020 $ 999,490 $ 4,824 $ 7,559,551 $ ( 6,054,881 ) $ 76,610 $ 2,585,594 $ 4,085,739 $ 170,741 $ 6,842,074

The accompanying notes are an integral part of the consolidated financial statements.

COLONY CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows from Operating Activities

Net loss $ ( 3,484,280 ) $ ( 1,080,643 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of discount and net origination fees on loans receivable and debt securities

( 5,090 ) ( 15,215 )

Paid-in-kind interest added to loan principal, net of interest received

( 36,856 ) ( 42,609 )

Straight-line rents ( 13,916 ) ( 13,263 )

1 unchanged sentence

Amortization of deferred financing costs and debt discount and premium

31,061 61,779

Equity method losses

334,648 137,069

Distributions of income from equity method investments

92,445 78,219

Provision for loan losses — 35,847

3 unchanged sentences

Depreciation and amortization

439,463 476,886

Equity-based compensation

26,415 25,051

Unrealized settlement loss 3,890 —

4 unchanged sentences

Decrease (increase) in other assets and due from affiliates

Decrease in accrued and other liabilities and due to affiliates

10,344 ( 16,487 )

(Increase) decrease in accrued and other liabilities and due to affiliates ( 16,764 ) 39,038

Other adjustments, net

( 4,583 ) ( 4,896 )

Net cash provided by operating activities 89,886 234,590

1 unchanged sentence

Contributions to and acquisition of equity investments

( 289,091 ) ( 222,157 )

Return of capital from equity method investments

123,952 176,508

Acquisition of loans receivable and debt securities

Net disbursements on originated loans

( 180,756 ) ( 94,816 )

Repayments of loans receivable

131,368 228,480

Proceeds from sales of loans receivable and debt securities

1 unchanged sentence

Acquisition of and additions to real estate, related intangibles and leasing commissions

( 1,278,957 ) ( 1,798,039 )

Proceeds from sales of real estate 258,440 659,245

2 unchanged sentences

Investment deposits

( 8,150 ) ( 13,210 )

Net receipts on settlement of derivatives 27,097 43,938

Payment of deferred purchase price on DBH Acquisition (Note 3)

Acquisition of DBH, net of cash acquired, and payment of deferred purchase price (Note 3) ( 32,500 ) ( 181,167 )

Other investing activities, net

Net cash provided by (used in) investing activities

Net cash used in investing activities ( 981,923 ) ( 937,667 )

COLONY CAPITAL, INC.

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows from Financing Activities

2 unchanged sentences

Repurchase of common stock ( 24,749 ) ( 10,734 )

Payment of offering costs ( 2,962 ) —

Proceeds from issuance of exchangeable senior notes 291,000 —

Repurchase of convertible senior notes ( 370,998 ) —

Borrowings from corporate credit facility 600,000 740,200

5 unchanged sentences

Distributions to and redemptions of noncontrolling interests ( 261,314 ) ( 443,614 )

Contribution from Wafra (Note 15) 253,575 —

Redemption of preferred stock ( 402,855 ) —

7 unchanged sentences

Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets

Six Months Ended June 30,

Nine Months Ended September 30,

Beginning of the period

1 unchanged sentence

Restricted cash 91,063 135,650

Restricted cash included in assets held for sale

Restricted cash included in assets held for disposition 128,445 235,168

Total cash, cash equivalents and restricted cash, beginning of period $ 1,424,698 $ 832,730

2 unchanged sentences

Restricted cash 167,109 113,897

Restricted cash included in assets held for sale

Restricted cash included in assets held for disposition 73,831 159,850

Total cash, cash equivalents and restricted cash, end of period $ 899,386 $ 729,077

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

September 30, 2020

Colony Capital, Inc.

(together with its consolidated subsidiaries, the "Company") is a global investment firm with a focus on becoming the leading digital real estate provider and funding source for the occupancy, infrastructure, equity and credit needs of the world’s mobile communications and data-driven companies.

Following the acquisition in July 2019 of Digital Bridge Holdings, LLC (“DBH”), an investment manager dedicated to digital real estate and infrastructure, the Company is currently the only global REIT that owns, manages, and/or operates across all major infrastructure components of the digital ecosystem including data centers, cell towers, fiber networks and small cells .

(together with its consolidated subsidiaries, the "Company") is a leading global investment firm with a focus on identifying and capitalizing on key secular trends in digital real estate.

Following the acquisition in July 2019 of Digital Bridge Holdings, LLC (“DBH”), an investment manager dedicated to digital real estate and infrastructure, the Company is currently the only global real estate investment trust ("REIT") that owns, manages, and/or operates across all major infrastructure components of the digital ecosystem including data centers, cell towers, fiber networks and small cells .

As previously disclosed, Marc C.

5 unchanged sentences

In addition, Jacky Wu was appointed as the Company’s Chief Financial Officer and Treasurer, effective July 1, 2020.

Hedstrom, who prior to July 1, 2020 served as the Company’s Chief Financial Officer and Treasurer, continues to serve in his role as Executive Vice President and Chief Operating Officer of the Company.

At June 30, 2020 , the Company has approximately $ 46 billion of assets under management, of which $ 36 billion is capital managed on behalf of third-party investors and the remainder represents investment interests on the Company's own balance sheet managed on behalf of its stockholders .

With respect to investment interests, the Company owns (a) a 20 % controlling interest in Data Bridge Holdings, LLC and its wholly-owned subsidiary, DataBank Holdings, Ltd.

(collectively, "DataBank"), a leading provider of enterprise-class data center, cloud, and connectivity services, (b) a portfolio of healthcare properties, (c) a portfolio of hospitality properties, (d) a 36.4 % interest in Colony Credit Real Estate, Inc.

CLNC) and (e) interests in various other equity and debt investments, including general partner (“GP”) interests in funds sponsored by the Company, commercial real estate equity and debt investments and other real estate related securities.

The Company also owns and operates an investment management business with $ 16.3 billion of fee earning equity under management, including $ 7.8 billion in digital real estate investments and the remainder in traditional commercial real estate debt and equity investments.

At September 30, 2020, the Company has $46.8 billion of assets under management, of which $23.3 billion is dedicated to digital real estate and infrastructure, managed on behalf of third party investors, and the Company's own balance sheet on behalf of its stockholders.

The Company was organized in May 2016 as a Maryland corporation and was formed through a tri-party merger (the "Merger") among Colony Capital, Inc.

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The Company conducts all of its activities and holds substantially all of its assets and liabilities through its operating subsidiary, Colony Capital Operating Company, LLC (the "Operating Company" or the "OP") .

At June 30, 2020 , the Company owned 90 % of the OP , as its sole managing member.

At September 30, 2020, the Company owned 90 % of the OP , as its sole managing member.

The remaining 10 % is owned primarily by certain current and former employees of the Company as noncontrolling interests.

2 unchanged sentences

Efforts to address the pandemic, such as social distancing, closures or reduced capacity of retail and service outlets, hotels, factories and public venues, often mandated by governments, are having a significant impact on the global economy and financial markets across major industries, including many sectors of real estate.

In particular, the Company's real estate investments in the hospitality, healthcare and retail sectors have experienced a myriad of challenges, including, but not limited to:

significant declines in operating cash flows at the Company's hotel and healthcare properties, which in turn, affect their ability to meet debt service and covenant requirements on investment-level debt (non-recourse to the Company) and ability to refinance or extend upcoming maturities (Note 10);

In particular, the Company's real estate investments in the hospitality, wellness infrastructure and retail sectors have experienced a myriad of challenges, including, but not limited to:

significant declines in operating cash flows at the Company's hotel and wellness infrastructure properties, which in turn, affect their ability to meet debt service and covenant requirements on investment-level debt (non-recourse to the Company) and ability to refinance or extend upcoming maturities (Note 10);

flexible lease payment terms sought by tenants;

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The sharp decline and volatility in equity and debt markets, and the economic recession due to COVID-19 have adversely affected the valuation of certain of the Company's financial assets carried at fair value, and also resulted in impairment on certain non-financial assets.

Such effects include the determination that the Company's equity method investment in CLNC was other-than-temporarily impaired at June 30, 2020 (Note 6), decreases in fair value of debt securities (Note 6) and loans receivable (Note 12), and impairment of real estate assets in the Company's healthcare, hospitality and other equity and debt segments (Note 4).

Additionally, the COVID-19 crisis has reinforced the critical role and the resilience of the digital real estate and infrastructure sector in a global economy that is increasingly reliant on digital infrastructure.

Accordingly, in the second quarter of 2020, the Company determined that it would accelerate its shift to a digitally-focused strategy in order to better position the Company for growth.

This digital transformation would require a rotation of the Company's non-digital assets into digital-focused investments.

As a result, the Company shortened its assumptions of holding periods on its non-digital assets, in particular its hotel and healthcare assets, which significantly reduced the undiscounted future net cash flows to be generated by these assets below their carrying values at June 30, 2020.

This digital transformation requires a rotation of the Company's non-digital assets into

digital-focused investments.

As a result, the Company shortened its assumptions of holding periods on its non-digital assets, in particular its hotel and wellness infrastructure assets, which significantly reduced the undiscounted future net cash flows to be generated by these assets below their carrying values at June 30, 2020.

The shortfall in estimated future net cash flows from these assets was further exacerbated by the negative effects of COVID-19 on property operations and market values, as noted above.

As a result, significant impairment was recognized in the second quarter of 2020 on the Company's hotel and healthcare assets.

As a result, significant impairment was recognized in the second quarter of 2020 on the Company's hotel and wellness infrastructure assets.

In the third quarter of 2020, as the Company looks to exit its hospitality business through a sale of its hotel assets (as discussed further below), additional write-downs were recorded to align the hotel carrying values to the agreed upon selling price.

The acceleration of the Company's digital transformation and the overall reduction in value of the Company's non-digital balance sheet also caused a shortfall in the fair value of the Company's other investment management reporting unit over its carrying value, resulting in significant impairment to the other investment management goodwill in the second quarter of 2020 (Note 7).

The various impairment and fair value decreases collectively accounted for $2.6 billion of charges in the second quarter of 2020, in addition to an approximately $0.4 billion charge in the first quarter of 2020, of which $2.1 billion and $0.3 billion, respectively, were attributable to the OP.

These amounts are reflected within impairment loss, other loss and equity method losses on the statement of operations.

The Company believes that it has materially addressed overall recoverability in value across all of its non-digital assets as of June 30, 2020, applying the Company's best estimates and assumptions at this time based upon external factors known to date and the Company's expected digital transformation timeline.

The various impairment and fair value decreases as a result of the acceleration of the Company's digital transformation collectively accounted for $3.2 billion of charges in the nine months ended September 30, 2020, of which $2.5 billion was attributable to the OP.

These amounts are reflected within impairment loss, other loss, equity method losses and within impairment loss in discontinued operations on the statement of operations.

The Company believes that it has materially addressed overall recoverability in value across all of its non-digital assets as of September 30, 2020, applying the Company's best estimates and assumptions at this time based upon external factors known to date and the Company's expected digital transformation timeline.

If the extent and duration of the economic effects of COVID-19 negatively affect the Company's financial condition and results of operations beyond the Company's current projections, the estimates and assumptions currently applied by the Company may change, which may lead to further impairment and fair value decreases in its non-digital assets that could be material in the future.

Exit of the Hospitality Business

In September 2020, the Company entered into a definitive agreement with a third party to sell five of the six hotel portfolios in its Hospitality segment (the remaining portfolio is in receivership) and its 55.6% interest in the THL Hotel Portfolio in the Other segment (the remaining interests will continue to be held by investment vehicles managed by the Company), composed of 197 hotel properties in aggregate.

Two of the hotel portfolios that are being sold in the Hospitality segment are held through joint ventures in which the Company holds a 90% and a 97.5% interest, respectively.

The aggregate gross proceeds of $67.5 million, subject to certain adjustments as provided in the sale agreement, as amended, represents a transaction value of approximately $2.8 billion, with the acquirer's assumption of $2.7 billion of investment-level debt.

Consummation of the sale is subject to customary closing conditions, including but not limited to, acquirer’s assumption of the outstanding mortgage notes encumbering the hotel properties and third party approvals.

In October 2020, the parties amended the sale agreement to address certain payments made by the Company to lenders in order to cure certain defaults on the debt associated with a hotel portfolio, and, subject to the satisfaction of certain conditions, to provide the Company with a purchase price credit for a portion of such funded amount.The sale agreement provides that the closing will occur no earlier than January 15, 2021, which may be extended or accelerated by mutual agreement of the Company and the acquirer, provided that, if certain third party approvals have not been obtained by February 15, 2021, each of the Company and the acquirer has the right to extend the closing date until March 15, 2021.

There can be no assurance that the sale will close in the timeframe contemplated or on the terms anticipated, if at all.

The Company’s exit from the hospitality business represents a key milestone in its digital transformation.

Accordingly, the sale of these hotel portfolios is a strategic shift that will have a significant effect on the Company’s operations and financial results, and has met the criteria as held for sale and discontinued operations.

For all current and prior periods presented, the related assets and liabilities are presented as assets and liabilities held for disposition on the consolidated balance sheets (Note 8) and the related operating results are presented as loss from discontinued operations on the consolidated statements of operations (Note 16).

Cooperation Agreement with Blackwells Capital

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Distributions to be made through the joint venture arrangement effectively represent a settlement of the proxy contest with Blackwells.

At the inception of the arrangement, the fair value of future distributions to Blackwells was estimated at $3.9 million, included in other liabilities on the consolidated balance sheet, and as a settlement loss on the consolidated statement of operations, along with $1.2 million reimbursement of legal costs to Blackwells in March 2020 .

At the inception of the arrangement, the fair value of future distributions to Blackwells was estimated at $3.9 million, included in other liabilities on the consolidated balance

sheet, and as a settlement loss on the consolidated statement of operations, along with $1.2 million reimbursement of legal costs to Blackwells in March 2020.

The settlement liability is remeasured at fair value each quarter until such time final distributions are made to Blackwells.

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These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.

However, the results of operations for the interim period presented are not necessarily indicative of the results that may be

expected for the year ending December 31, 2020, or any other future period.

However, the results of operations for the interim period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or any other future period.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in, or presented as exhibits to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

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Voting Interest Entities —Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights.

The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities' voting interests or through other arrangements.

consolidates such entities when it has the power to control these entities through ownership of a majority of the entities' voting interests or through other arrangements.

At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a change in the Company's consolidation assessment.

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Noncontrolling Interests

Redeemable Noncontrolling Interests —This represents noncontrolling interests in a consolidated open-end fund sponsored by the Company.

The limited partners in the consolidated open-end fund who represent noncontrolling interests generally have the ability to withdraw all or a portion of their interests in cash with 30 days' notice.

Redeemable Noncontrolling Interests —This represents noncontrolling interests in the Company's digital investment management business and in consolidated open-end funds sponsored by the Company.

The noncontrolling interests either have redemption rights that will be triggered upon the occurrence of certain events (Note 16) or have the ability to withdraw all or a portion of their interests from the consolidated open-end funds in cash with advance notice.

Redeemable noncontrolling interests is presented outside of permanent equity.

Allocation of net income or loss to redeemable noncontrolling interests is based upon their ownership percentage during the period.

The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period to an amount not less than its initial carrying value, with such adjustments recognized in additional paid-in capital.

The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period to an amount not less than its initial carrying value, except for amounts contingently redeemable which will be adjusted to redemption value only when redemption is probable.

Such adjustments will be recognized in additional paid-in capital.

Noncontrolling Interests in Investment Entities —This represents predominantly interests in consolidated investment entities held by private investment funds or retail companies managed by the Company or held by third party joint venture partners.

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A business or asset group acquired in connection with a purchase business combination that meets the criteria to be accounted for as held for sale at the date of acquisition is reported as discontinued operations, regardless of whether it meets the strategic shift criteria.

The sale of the industrial business in December 2019, including its related management platform, represented a strategic shift that had a major effect on the Company’s operations and financial results, and had met the criteria as held for sale and discontinued operations in June 2019.

Accordingly, for all prior periods presented, the related assets and liabilities are presented as assets and liabilities held for sale on the consolidated balance sheets (Note 8) and the related operating results are presented as income from discontinued operations on the consolidated statement of operations (Note 16 ).

The pending disposition of the hotel business, composed of the Hospitality segment and the THL Hotel Portfolio in the Other segment, and the disposition of the industrial business in December 2019, including its related management platform, represent strategic shifts that have major effects on the Company’s operations and financial results, and have met the criteria as held for sale and discontinued operations in September 2020 and June 2019, respectively.

Accordingly, for all prior periods presented, the related assets and liabilities are presented as assets and liabilities held for disposition on the consolidated balance sheets (Note 8) and the related operating results are presented as income from discontinued operations on the consolidated statements of operations (Note 16).

Reclassifications

Interest receivable, which was included in other assets as of December 31, 2019, has been reclassified to be presented as part of loans receivable to conform to current period presentation.

The reclassification did not affect the Company's financial position, results of operations or cash flows.

Reclassifications were made related to discontinued operations as discussed above and to prior period segment reporting presentation as discussed in Note 22.

Additionally, interest receivable, which was included in other assets as of December 31, 2019, has been reclassified to be presented as part of loans receivable to conform to current period presentation.

These reclassification did not affect the Company's financial position, results of operations or cash flows.

Accounting Standards Adopted in 2020

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The accounting model for purchased credit-impaired loans and debt securities will be simplified to be consistent with the CECL model for originated and purchased non-credit-impaired assets.

For AFS debt securities, unrealized credit losses will be recognized as allowances rather than reductions in amortized cost basis and elimination of the other-than-temporary impairment ("OTTI") concept will result in more frequent estimation of credit losses.

For AFS debt securities, unrealized credit

losses will be recognized as allowances rather than reductions in amortized cost basis and elimination of the other-than-temporary impairment ("OTTI") concept will result in more frequent estimation of credit losses.

ASC 326 also requires expanded disclosures on credit risk, including credit quality indicators by vintage of financing receivables.

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The ASU simplifies accounting for income taxes by eliminating certain exceptions to the general approach in ASC 740, Income Taxes, and clarifies certain aspects of the guidance for more consistent application.

The simplifications relate to intraperiod tax allocations when there is a loss in continuing operations and a gain outside of continuing operations, accounting for tax law or tax rate changes and year-to-date losses in interim periods, recognition of deferred tax liability for outside basis

difference when investment ownership changes, and accounting for franchise taxes that are partially based on income.

The ASU also provides new guidance that clarifies the accounting for transactions resulting in a step-up in tax basis of goodwill, among other changes.

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Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

With respect to convertible instruments, under the new guidance, a convertible debt instrument will be accounted for wholly as debt, and convertible preferred stock wholly as preferred stock, that is, as a single unit of account, except for (1) a convertible instrument that contains features requiring bifurcation as a derivative under Topic 815 or (2) a convertible debt instrument that was issued at a substantial premium.

Expanded disclosures are required, including, but not limited to, the terms and features of convertible instruments, and information about events, conditions, and circumstances that could affect assessment of the amount or timing of future cash flows related to those instruments.

With respect to contracts on an entity's own equity, one of the requirements prescribed by the new guidance is to account for freestanding contracts on an entity’s own equity that do not qualify as equity under Subtopic ASC 815-40 at fair value, with changes in fair value recognized in earnings, irrespective of whether such contracts meet the definition of a derivative in Topic 815.

The ASU also amends certain guidance on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity.

In calculating diluted earnings per share, the new guidance (1) requires the if-converted method to be applied for all convertible instruments (the treasury stock method is no longer available), and (2) removes the ability to rebut the presumption of share settlement for contracts that may be settled in cash or stock.

Upon adoption, a one-time election may be made to apply the fair value option for any liability-classified financial instrument that is a convertible security.

In the period of adoption, disclosure is required of (1) the nature of and reason for the change in accounting principle in both the interim and annual period of change, and (2) earnings per share transition information about the effect of the change on affected per-share amounts.

Adoption of the new standard may be made either on a full or modified retrospective approach, with cumulative effect adjustment recorded to beginning retained earnings under the latter.

2020-06 is effective January 1, 2022, with early adoption permitted in interim periods beginning January 1, 2021.

The Company is currently evaluating the impact of this new guidance.

The ASU (1) simplifies an issuer’s accounting for convertible instruments as a single unit of account;

(2) allows more contracts on an entity’s own equity to qualify for equity classification and more embedded derivatives meeting the derivative scope exception;

and (3) simplifies diluted earnings per share (“EPS”) computation.

• The guidance eliminates the requirement to separate embedded conversion features in convertible instruments, except for (1) a convertible instrument that contains features requiring bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument that was issued at a substantial premium.

• Under the new guidance, certain conditions under Subtopic ASC 815-40 that may result in contracts being settled in cash rather than shares and therefore preclude (1) equity classification for contracts on an entity’s own equity;

and (2) embedded derivatives from qualifying for the derivative scope exception, have been removed;

for example, the requirement that equity contracts permit settlement in unregistered shares unless such contracts explicitly require settlement in cash if registered shares are unavailable.

The guidance also clarifies that freestanding contracts on an entity’s own equity that do not qualify for equity classification under the indexation criteria (ASC 815-4015) or settlement criteria (ASC 815-40-25) are to be measured at fair value through earnings, even if they do not meet the definition of a derivative under ASC 815.

• The ASU also amends certain guidance on computation of diluted EPS for convertible instruments and contracts on an entity’s own equity that results in a more dilutive EPS, including (1) requiring the if converted method to be applied for all convertible instruments (the treasury stock method is no longer available), and (2) removing the ability to rebut the presumption of share settlement for contracts that may be settled in cash or stock and that are not liability classified share based payments.

• Expanded disclosures are required, including but not limited to, (1) terms and features of convertible instruments and contracts on entity’s own equity;

and (2) information about events, conditions, and circumstances that could affect amount or timing of future cash flows related to these instruments or contracts;

and in the period of adoption (3) nature of and reason for the change in accounting principle;

and (4) effects of the change on EPS.

Upon adoption, a one-time election may be made to apply the fair value option for any liability-classified convertible securities.

Adoption of the new standard may be made either on a full retrospective approach or a modified retrospective approach, with cumulative effect adjustment recorded to beginning retained earnings.

2020-06 is effective January 1, 2022, with early adoption permitted on January 1, 2021.

The Company is currently evaluating the effects of this new guidance.

Business Combinations

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The acquisition is a strategic transaction that is expected to generate meaningful accretion in value to the Company through expansion of the digital real estate management platform by combining the industry sector knowledge, experience and relationships from the DBH team with the capital raising resources of the Company, as represented by the goodwill value.

The Company's acquisition of DBH included the remaining 50 % equity interest held by DBH in Digital Colony Management, LLC ("Digital Colony Manager"), previously an equity method joint venture with DBH, which manages DCP.

Upon closing of the acquisition, the Company obtained a controlling interest in Digital Colony Manager and remeasured its existing 50 % interest at a fair value of $ 51.4 million .

The full amount, representing the excess of fair value over carrying value of the Company's investment in Digital Colony Manager, was recognized in other gain on the Company's statement of operations, as the Company's carrying value of its investment in Digital Colony Manager prior to the business combination was nil .

The Company's acquisition of DBH included the remaining 50 % equity interest held by DBH in Digital Colony Management, LLC ("DCM"), previously an equity method joint venture with DBH, which manages DCP.

Upon closing of the acquisition, the Company obtained a controlling interest in DCM and remeasured its existing 50 % interest at a fair value of $ 51.4 million.

The full amount, representing the excess of fair value over carrying value of the Company's investment in DCM, was recognized in other gain on the Company's statement of operations, as the Company's carrying value of its investment in DCM prior to the business combination was nil.

The fair value was based upon the value of 50 % of estimated future net cash flows from the DCP fund management contract, discounted at 8 %.

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The Company is deemed to have a controlling interest in DataBank as control over the operations of DataBank resides substantially with the Company.

Consideration included the payment of cash to third parties for the Company’s interests in DataBank and the issuance of 612,072 OP Units to Mr.

Ganzi and Benjamin Jenkins (the DBH principals) for incentive units owned by the DBH principals and allocable to the Company’s acquired interests, measured based upon the closing price of the Company's class A common stock on December 20, 2019 of $ 4.85 per share.

The OP Units were issued to the principals of DBH who had previously received incentive units from DataBank, in exchange for certain of their incentive units such that the Company will not be subject to future carried interest payments to the DBH principals with respect to the Company's investment in DataBank (Note 20 ).

Consideration included the payment of cash to third parties for the Company’s interests in DataBank and the issuance of 612,072 OP Units to the DBH principals, Marc Ganzi and Ben Jenkins, now the chief investment officer of the Company’s digital real estate platform, for incentive units owned by the DBH principals and allocable to the Company’s acquired interests, measured based upon the closing price of the Company's class A common stock on December 20, 2019 of $ 4.84 per share.

The OP Units were issued to the DBH principals who had previously received incentive units from DataBank, in exchange for certain of their incentive units such that the Company will not be subject to future carried interest payments to the DBH principals with respect to the Company's investment in DataBank (Note 20).

The DBH principals otherwise retained their equity interests in DataBank.

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Accordingly, these provisional values may be subject to adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed at the time of closing.

During the second quarter of 2020, certain measurement period adjustments were made to the purchase price allocation for DataBank, primarily (i) a reallocation of value to data center service contract intangible asset, (ii) changes in valuation and underlying assumptions pertaining to data center construction and market value of existing data center lease contracts, and (iii) the corresponding effect on deferred tax liabilities.

(In thousands)

June 30, 2020

December 20, 2019

Measurement Period Adjustments

(In thousands) Final As Reported

June 30, 2020

Consideration

Cash $ 181,167 $ 182,731

Deferred consideration 35,500 —

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Fair value of equity interest in Digital Colony Manager 51,400 —

$ 379,970 $ 185,693

Assets acquired, liabilities assumed and noncontrolling interests

Assets held for sale

Cash $ — $ 10,366

Real estate — 839,053

Assets held for disposition — 29,266

Intangible assets 153,300 219,651

Tax liabilities, net

Other assets 13,008 108,896

Debt — ( 539,155 )

Tax liabilities ( 17,392 ) ( 109,587 )

Intangible and other liabilities ( 16,194 ) ( 120,178 )

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Noncontrolling interests in investment entities — ( 724,567 )

Goodwill $ 247,248 $ 471,948

• Intangible assets acquired included primarily management contracts, investor relationships and trade name.

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• Other liabilities assumed were primarily deferred revenues and deferred tax liabilities recognized upon acquisition, representing the tax effect on the book-to-tax basis difference associated with management contract intangibles.

Real estate and lease intangibles of DataBank were measured based upon recent third party appraised values, allocated to tangible assets of land, building, construction in progress, data center infrastructure, as well as identified intangibles of in-place leases, above- and below-market leases, and tenant relationships.

The remaining intangible assets acquired include data center service contracts, customer relationships and trade name.

The value of data center service contracts was estimated based upon net cash flows generated from these contracts.

Customer relationships were valued as the incremental net income attributable to these relationships considering the projected net cash flows of the business with and without the customer relationships in place.

The trade name of DataBank was valued based upon estimated savings from avoided royalty at a royalty rate of 2 % .

Other assets acquired and liabilities assumed primarily include right-of-use lease assets associated with leasehold data centers and corresponding lease liabilities.

Deferred tax liabilities represent the tax effect on the book-to-tax basis difference related primarily to real estate assets arising from the transaction.

• Real estate was valued based upon (i) current replacement cost for buildings, improvements and data center infrastructure assets;

(ii) recent comparable sales or current listings for land;

and (iii) contracted price net of selling cost for real estate held for sale.

• Lease related intangibles include in-place leases, leasing commissions and tenant relationships which reflect the value of income foregone or cost incurred if the properties were otherwise vacant and the likelihood of lease renewal by existing tenants, as well as above- and below-market leases which represent the differential between market and contractual rents.

• The remaining intangible assets acquired are data center service contracts, customer relationships and trade name.

• The value of data center service contracts was estimated based upon net income generated from these services that would otherwise have been foregone if such customer contracts were not in place.

• Customer relationships were valued as the incremental net income attributable to these relationships considering the projected net cash flows of the business with and without the customer relationships in place, discounted at 9.5 %.

• The trade name of DataBank was valued based upon estimated savings from avoided royalty at a royalty rate of 2 %, discounted at 9.5 %, with a 5 year useful life.

• Other assets acquired and liabilities assumed include primarily right-of-use ("ROU") lease assets associated with leasehold data centers and corresponding lease liabilities.

Deferred tax liabilities represent the tax effect on book-to-tax basis difference, primarily on real estate assets.

• All assumed debt bears variable rates, with carrying values approximating fair values based upon market rates and spreads that prevailed at the time of acquisition.

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The following table summarizes the Company's real estate held for investment.

Real estate held for sale is presented in Note 8 .

(In thousands)

June 30, 2020

December 31, 2019

Real estate held for disposition is presented in Note 8.

(In thousands) September 30, 2020 December 31, 2019

Land $ 830,365 $ 716,340

Buildings and improvements 4,773,492 5,068,639

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Construction in progress 91,651 115,933

8,488,886 6,700,794

Accumulated depreciation ( 628,412 ) ( 482,598 )

Real estate assets, net (1)

$ 7,860,474 $ 6,218,196

(1) For real estate acquired in a business combination, the purchase price allocation may be subject to adjustments during the measurement period, not to exceed 12 months from date of acquisition, based upon new information obtained about facts and circumstances that existed at time of acquisition (Note 3).

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Results from sales of real estate, including discontinued operations (Note 16), are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Proceeds from sales of real estate $ 88,423 $ 216,588 $ 258,440 $ 659,245

Gain (Loss) on sale of real estate

Gain on sale of real estate 12,248 12,899 15,261 71,824

Real Estate Acquisitions

The following table summarizes the Company's real estate acquisitions, excluding real estate acquired as part of business combinations discussed in Note 3 .

($ in thousands)

Purchase Price Allocation (1)

Acquisition Date

Property Type and Location

Number of Buildings

Buildings and Improvements

Lease Intangible Assets

ROU Lease and Other Assets

Lease Intangible Liabilities

Debt, Lease and Other Liabilities

Six Months Ended June 30, 2020

The following table summarizes the Company's real estate acquisitions, excluding real estate acquired in business combinations discussed in Note 3.

($ in thousands) Purchase Price Allocation (1)

Acquisition Date Property Type and Location Number of Buildings Purchase

Land Buildings, Improvements and Infrastructure Lease-Related Intangible Assets ROU Lease and Other Assets Lease Intangible Liabilities Debt, Lease and Other Liabilities

Nine Months Ended September 30, 2020

Asset Acquisitions (2)

Hotel—France (2)

Various Hotel—France (3)

6 $ 21,231 $ 2,955 $ 18,436 $ — $ 10,563 $ — $ ( 10,723 )

July Hyperscale data centers—U.S.

and Canada 12 1,524,610 103,036 2,606,305 776,666 181,260 ( 26,723 ) ( 2,115,934 )

Various Easements—Various in U.S.

— 2,586 2,586 — — — — —

$ 1,548,427 $ 108,577 $ 2,624,741 $ 776,666 $ 191,823 $ ( 26,723 ) $ ( 2,126,657 )

Year Ended December 31, 2019

Asset Acquisitions

Bulk industrial—Various in U.S.

Healthcare—United Kingdom (4)

Light industrial—Various in U.S.

February Bulk industrial—Various in U.S.

6 $ 373,182 $ 49,446 $ 296,348 $ 27,553 $ — $ ( 165 ) $ —

October Wellness infrastructure—United Kingdom (5)

1 12,376 3,478 9,986 732 — ( 1,820 ) —

Various Light industrial—Various in U.S.

84 1,158,423 264,816 850,550 47,945 — ( 4,888 ) —

$ 1,543,981 $ 317,740 $ 1,156,884 $ 76,230 $ — $ ( 6,873 ) $ —

(1) Dollar amounts of purchase price and allocation to assets acquired and liabilities assumed are translated using foreign exchange rates as of the respective dates of acquisition, where applicable.

(2) Useful life of real estate acquired ranges from 40 to 50 years for buildings, 12 to 21 years for site improvements, 12 to 19 years for data center infrastructure, 1 to 7 years for furniture, fixtures, and equipment, 2 to 15 years for lease intangibles, and 5 to 6 years for ROU lease assets.

(3) Bids for hotels under receivership were accepted by the French courts in prior years, with the transactions closing in 2020.

Amounts include acquisition of hotel operations pursuant to operating leases on real estate owned by third parties.

Useful life of real estate acquired is 40 years for buildings, 15 years for site improvements, 7 years for furniture, fixtures, and equipment, and 6 years for right-of-use ("ROU") lease assets.

(4) The bulk industrial portfolio was classified as held for sale in June 2019.

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(6) The entire light industrial portfolio was sold in December 2019.

Investment in Hyperscale Data Centers

In July 2020 and following an additional investment in October 2020, the Company, alongside fee bearing third party capital, invested $ 1.36 billion for approximately 90 % equity interest ($ 1.2 billion or approximately 80 % at September 30, 2020) in entities that hold Vantage Data Centers' ("Vantage") portfolio of 12 stabilized hyperscale data centers in North America and $ 2.0 billion of secured indebtedness (“Vantage SDC”).

The Company's balance sheet investment is approximately $ 200 million, representing approximately 13 % equity interest (approximately 12 % at September 30, 2020).

Vantage SDC is a carve-out from Vantage's data center business, with the acquisition excluding Vantage's remaining portfolio of development-stage data centers and its employees, all of whom were retained by Vantage.

The day-to-day operations of Vantage SDC will continue to be managed by Vantage's existing management company in exchange for management fees, and subject to certain approval rights held by the Company and the co-investors in connection with material actions.

Additional purchase price of up to an estimated $ 240 million may be payable if Vantage SDC enters into additional leases for vacant inventory and expansion capacity.

It is anticipated that all, if not most, of the additional purchase price will be funded by Vantage SDC from borrowings under its credit facilities and/or cash from operations.

Depreciation and Impairment

The following table summarizes real estate depreciation and impairment.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

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Impairment of real estate and related asset group (1)

Held for sale

Held for disposition 134,097 50,855 161,735 119,036

Held for investment (2)

Includes impairment of real estate intangibles of $ 2.3 million and $ 9.3 million and right-of-use asset on ground leases of $ 0.8 million and $ 13.9 million in the three and six months ended June 30, 2020 , respectively.

Impairment of Real Estate Held for Sale

Real estate held for sale is carried at the lower of amortized cost or fair value.

Real estate carried at fair value totaled $ 197.8 million at June 30, 2020 and $ 253.4 million at December 31, 2019 based upon impairments recorded during the six months ended June 30, 2020 and year ended December 31, 2019 , respectively, generally representing Level 3 fair values.

Real estate held for sale that was written down was generally valued using either broker opinions of value, or a combination of market information, including third-party appraisals and indicative sale prices, adjusted as deemed appropriate by management to account for the inherent risk associated with specific properties.

In all cases, fair value of real estate held for sale is reduced for estimated selling costs ranging from 1 % to 3 % .

In 2020, the Company also considered the impact of a global economic downturn as a result of COVID-19, specifically as it affects real estate values, and where appropriate, factored in a reduction in potential sales prices, which resulted in additional impairment on real estate held for sale in 2020.

9,345 127,044 1,764,235 168,531

(1) Includes impairment of real estate intangibles of $ 9.3 million in the nine months ended September 30, 2020 and ROU on ground leases of $ 1.4 million and $ 15.1 million in the three and nine months ended September 30, 2020, respectively.

For both the three and nine months ended September 30, 2019, amounts include impairment of real estate intangibles of $ 0.9 million.

(2) Includes impairment of hotel properties prior to their reclassification as held for sale and discontinued operations.

Impairment of Real Estate Held for Disposition

Real estate held for disposition is carried at the lower of amortized cost or fair value.

Real estate carried at fair value totaled $ 1.1 billion at September 30, 2020 and $ 253.4 million at December 31, 2019 based upon impairments recorded during the nine months ended September 30, 2020 and year ended December 31, 2019, respectively, generally representing Level 3 fair values.

Real estate held for disposition that was written down was generally valued using either broker opinions of value, or a combination of market information, including third-party appraisals and indicative sale prices, adjusted as deemed appropriate by management to account for the inherent risk associated with specific properties.

In all cases, fair value of real estate held for disposition is reduced for estimated selling costs ranging from 1 % to 16 %.

Impairment of Real Estate Held for Investment

Real estate held for investment that was written down to fair value during the six months ended June 30, 2020 and year ended December 31, 2019 had carrying values totaling $ 3.7 billion and $ 355.0 million , respectively, at the time of impairment, representing Level 3 fair values.

Impairment was driven by shortened holding period assumptions made in connection with the preparation and review of the financial statements, particularly in the hotel and healthcare portfolios.

Real estate held for investment that was written down to fair value during the nine months ended September 30, 2020 and year ended December 31, 2019 had carrying values totaling $ 3.6 billion and $ 355.0 million, respectively, at the time of impairment (including properties in the Hospitality segment that were impaired in 2020 and 2019 prior to their reclassification as held for sale and discontinued operations, and similarly including properties in the THL Hotel Portfolio that were impaired in 2019), representing Level 3 fair values.

Impairment was driven by shortened holding period assumptions made in connection with the preparation and review of the financial statements, particularly in the hotel and wellness infrastructure portfolios.

The shortened holding period assumption is attributable to both the Company's accelerated digital transformation, and the risk that the Company is unable to obtain accommodation from lenders on non-recourse mortgage debt that is in default or at risk of default.

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For hotel properties, the Company applied a range of reductions to near term cash flow projections to account for uncertainties due to COVID-19.

For properties for which undiscounted expected net cash flows over their respective

holding periods fell short of carrying values, the Company expects that the carrying value of these properties would likely not be recoverable.

For properties for which undiscounted expected net cash flows over their respective holding periods fell short of carrying values, the Company expects that the carrying value of these properties would likely not be recoverable.

Fair values were estimated for these properties based upon one or a combination of the following:

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or (iv) discounted cash flow analyses with terminal values determined using terminal capitalization rates between 7.0 % and 11.3 %, and discount rates between 8.5 % and 12.0 %.

The Company considered the risk characteristics of each property in determining capitalization rates and where applicable, used higher capitalization rates or discount rates to reflect the inherent stress on real estate values in a deteriorating economic environment.

The Company considered the risk characteristics

of each property in determining capitalization rates and where applicable, used higher capitalization rates or discount rates to reflect the inherent stress on real estate values in a deteriorating economic environment.

Impairment was measured as the excess of carrying value over fair value for each of these properties.

As of June 30, 2020 , the Company believes that it has materially addressed overall recoverability in the value of its non-digital real estate assets, applying the Company's best estimates and assumptions at this time based upon external factors known to date and the Company's expected digital transformation timeline.

If the extent and duration of the economic effects of COVID-19 negatively affect the Company's real estate operations and its ability to meet its non-recourse mortgage debt obligations beyond the Company's current projections, the estimates and assumptions currently applied by the Company may change, which may lead to further impairment of its non-digital real estate assets, in particular, its healthcare and hospitality assets, that could be material in the future.

The Company believes that it has materially addressed overall recoverability in the value of its non-digital real estate assets, applying the Company's best estimates and assumptions at this time based upon external factors known to date and the Company's expected digital transformation timeline.

If the extent and duration of the economic effects of COVID-19 negatively affect the Company's real estate operations and its ability to meet its non-recourse mortgage debt obligations beyond the Company's current projections, the estimates and assumptions currently applied by the Company may change, which may lead to further impairment of its non-digital real estate assets, in particular, its wellness infrastructure assets, that could be material in the future.

Property Operating Income

Following the acquisition of DataBank in December 2019, lease income includes:

(i) fixed lease payments for colocation rent, interconnection services and a committed amount of power in connection with contracted leased space;

and (ii) variable payments for additional metered power reimbursements based upon usage at prevailing rates.

The Company also earns data center service revenue, primarily composed of cloud services, data storage, data protection, network services, software licensing, and other related information technology services, which are recognized as services are provided;

Since December 2019, lease income includes:

(i) fixed lease payments for interconnection services and a committed amount of power in connection with contracted data center leased space;

and (ii) variable payments for additional metered power reimbursements based upon usage by data center tenants at prevailing rates.

and to a lesser extent, installation services that are recognized at a point in time upon completion of the installation and accompanying services.

For the three and six months ended June 30, 2020 and 2019 , components of property operating income are as follows, excluding amounts related to discontinued operations (Note 16 ).

Three Months Ended June 30,

Six Months Ended June 30,

For the three and nine months ended September 30, 2020 and 2019, components of property operating income are as follows, excluding amounts related to discontinued operations (Note 16).

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

1 unchanged sentence

Fixed lease income

$ 193,873 $ 152,050 $ 555,979 $ 487,404

Variable lease income

37,827 13,641 70,934 44,881

231,700 165,691 626,913 532,285

Hotel operating income

2,860 3,167 5,015 11,693

Data center service revenue 11,562 — 34,729 —

$ 246,122 $ 168,858 $ 666,657 $ 543,978

Lease Concessions Related to COVID-19

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Under the relief, the concessions will not be treated as lease modifications that are accounted for over the remaining term of the respective leases, as the Company believes this would not accurately reflect the temporary economic effect of the concessions.

Instead, (i) rent deferrals that meet the criteria will be treated as if no changes were made to the lease contract, with continued recognition of lease income and receivable

under the original terms of the contract;

Instead, (i) rent deferrals that meet the criteria will be treated as if no changes were made to the lease contract, with continued recognition of lease income and receivable under the original terms of the contract;

and (ii) rent forgiveness that meets the criteria will be accounted for as variable lease payments in the affected periods.

The Company has agreed to provide the affected tenants primarily with a deferral of full or partial rent for two to three months , generally with deferred rent to be repaid in monthly installments over periods of four to 18 months .

This resulted in an increase in receivables totaling $ 0.7 million as of June 30, 2020 .

This resulted in an increase in receivables totaling $ 0.4 million as of September 30, 2020.

All lease income receivable, including straight-line rents, are subject to the Company's policy for evaluation of collectability based upon creditworthiness of the lessee.

In certain instances, the Company has also agreed to rent forgiveness, totaling $ 0.6 million for full year 2020, of which $ 0.2 million relates to the six months ended June 30, 2020 .

In certain instances, the Company has also agreed to rent forgiveness, totaling $ 0.6 million for both the nine months ended September 30, 2020 and full year 2020.

Loans Receivable

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Refer to Note 12 for additional disclosures on loans receivable carried at fair value under the fair value option.

Loans receivable carried at fair value at June 30, 2020 are as follows:

June 30, 2020

($ in thousands)

Unpaid Principal Balance

Weighted Average Coupon

Weighted Average Maturity in Years

Loans receivable carried at fair value at September 30, 2020 are as follows:

September 30, 2020

($ in thousands) Unpaid Principal Balance Fair Value Weighted Average Coupon Weighted Average Maturity in Years

Mortgage loans $ 1,623,432 $ 659,673 7.7 % 0.7

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Non-mortgage loans 189,296 172,249 13.9 % 4.5

2,404,848 1,158,947

Variable rate

1 unchanged sentence

Mezzanine loans — — — % 0.0

167,161 166,197

Loans receivable $ 2,572,009 $ 1,325,144

1 unchanged sentence

December 31, 2019

($ in thousands)

Unpaid Principal Balance

Amortized Cost

Weighted Average Coupon

Weighted Average Maturity in Years

($ in thousands) Unpaid Principal Balance Amortized Cost Weighted Average Coupon Weighted Average Maturity in Years

Non-PCI Loans

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Non-mortgage loans 149,380 148,623 12.9 % 5.4

1,116,034 1,135,570

Variable rate

1 unchanged sentence

Mezzanine loans 44,887 44,637 12.7 % 1.6

216,735 216,906

1,332,769 1,352,476

Mortgage loans 1,165,804 248,535

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Loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status.

The table below presents the fair value and unpaid principal balance by aging of loans receivable at June 30, 2020 for which fair value option was elected.

June 30, 2020

(In thousands)

Unpaid Principal Balance

Fair Value less Unpaid Principal Balance

The following table presents the fair value and unpaid principal balance by aging of loans held for investment at September 30, 2020 for which fair value option was elected.

September 30, 2020

(In thousands) Fair Value Unpaid Principal Balance Fair Value less Unpaid Principal Balance

Loans receivable—fair value option

3 unchanged sentences

90 days or more past due or nonaccrual 974,772 2,210,622 ( 1,235,850 )

$ 1,325,144 $ 2,572,009 $ ( 1,246,865 )

The following table provides an aging summary of non-PCI loans at carrying values before allowance for loan losses and interest receivable at December 31, 2019:

(In thousands)

December 31, 2019

(In thousands) December 31, 2019

Non-PCI loans at carrying values before allowance for loan losses

3 unchanged sentences

90 days or more past due or nonaccrual 310,216

For the Three and Six Months Ended June 30, 2019 and as of December 31, 2019

For the Three and Nine Months Ended September 30, 2019 and as of December 31, 2019

Troubled Debt Restructuring

During the three and six months ended June 30, 2019 , there were no loans modified in a troubled debt restructuring ("TDR"), in which the Company provided borrowers, who are experiencing financial difficulties, with concessions in interest rates, payment terms or default waivers.

During the three and nine months ended September 30, 2019, there were no loans modified in a troubled debt restructuring ("TDR"), in which the Company provided borrowers, who are experiencing financial difficulties, with concessions in interest rates, payment terms or default waivers.

At December 31, 2019, the Company had one existing TDR loan that was in maturity default with a carrying value before allowance for loan loss and interest receivable of $ 37.8 million and an allowance for loan loss of $ 37.8 million.

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Gross Carrying Value before Interest Receivable

(In thousands)

Unpaid Principal Balance

With Allowance for Loan Losses

Without Allowance for Loan Losses

Allowance for Loan Losses

(In thousands) Unpaid Principal Balance With Allowance for Loan Losses Without Allowance for Loan Losses Total Allowance for Loan Losses

December 31, 2019 $ 326,151 $ 71,754 $ 259,011 $ 330,765 $ 48,146

The average carrying value and interest income recognized on non-PCI impaired loans for the three and six months ended June 30, 2019 were as follows.

(In thousands)

Three Months Ended June 30, 2019

Six Months Ended June 30, 2019

The average carrying value and interest income recognized on non-PCI impaired loans for the three and nine months ended September 30, 2019 were as follows.

(In thousands) Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Average carrying value before allowance for loan losses and interest receivable $ 306,114 $ 298,925

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and (iv) changes in interest rates on variable rate loans.

There were no PCI loans acquired in the six months ended June 30, 2019 .

Changes in accretable yield of PCI loans for the six months ended June 30, 2019 were as follows:

(In thousands)

Six Months Ended June 30, 2019

There were no PCI loans acquired in the nine months ended September 30, 2019.

Changes in accretable yield of PCI loans for the nine months ended September 30, 2019 were as follows:

(In thousands) Nine Months Ended September 30, 2019

Beginning accretable yield $ 9,620

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December 31, 2019

(In thousands)

Allowance for

(In thousands) Allowance for

Carrying Value

Non-PCI loans $ 48,146 $ 71,754

Changes in allowance for loan losses for the six months ended June 30, 2019 are presented below.

PCI loans 41 17,935

$ 48,187 $ 89,689

Changes in allowance for loan losses for the nine months ended September 30, 2019 are presented below.

(In thousands)

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Allowance for loan losses at January 1

Provision for loan losses, net

Allowance for loan losses at June 30

Allowance for loan losses at September 30 $ 51,858

Provision for loan losses by loan type was as follows:

(In thousands)

Three Months Ended June 30, 2019

Six Months Ended June 30, 2019

(In thousands) Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Non-PCI loans $ 17,228 $ 30,035

PCI loans 5 5,812

Total provision for loan losses, net $ 17,233 $ 35,847

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The Company has lending commitments to borrowers pursuant to certain loan agreements in which the borrower may submit a request for funding contingent on achieving certain criteria, which must be approved by the Company as lender, such as leasing, performance of capital expenditures and construction in progress with an approved budget.

At June 30, 2020 , total unfunded lending commitments was $ 140.6 million , of which the Company's share was $ 37.9 million , net of amounts attributable to noncontrolling interests.

At September 30, 2020, total unfunded lending commitments was $ 133.6 million, of which the Company's share was $ 29.5 million, net of amounts attributable to noncontrolling interests.

Equity and Debt Investments

The Company's equity investments and debt securities are represented by the following:

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Equity Investments

2 unchanged sentences

Private funds 237,750 142,386

1,700,480 1,987,515

Other equity investments

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The Company’s investments accounted for under the equity method are summarized below:

($ in thousands)

Carrying Value at

($ in thousands) Carrying Value at

Investments (1)

June 30, 2020

December 31, 2019

Description September 30, 2020 December 31, 2019

Colony Credit Real Estate, Inc.

Common equity in publicly traded commercial real estate credit REIT managed by the Company and membership units in its operating subsidiary ( 36.4 % ownership)

RXR Realty, LLC

Common equity in investment venture with a real estate investor, developer and investment manager (sold in February 2020)

Preferred equity

Preferred equity investments with underlying real estate

ADC investments

Investments in acquisition, development and construction loans in which the Company participates in residual profits from the projects, and the risk and rewards of the arrangements are more similar to those associated with investments in joint ventures

Private funds

General partner and/or limited partner interests in private funds (excluding carried interest allocation)

Private funds—carried interest

Disproportionate allocation of returns to the Company as general partner or equivalent based on the extent to which cumulative performance of the fund exceeds minimum return hurdles

$ 365,872 $ 725,443

RXR Realty, LLC Common equity in investment venture with a real estate investor, developer and investment manager (sold in February 2020)

Preferred equity Preferred equity investments with underlying real estate

126,706 138,428

ADC investments Investments in acquisition, development and construction loans in which the Company participates in residual profits from the projects, and the risk and rewards of the arrangements are more similar to those associated with investments in joint ventures

625,999 543,296

Private funds General partner and/or limited partner interests in private funds (excluding carried interest allocation)

234,765 115,055

Private funds—carried interest Disproportionate allocation of returns to the Company as general partner or equivalent based on the extent to which cumulative performance of the fund exceeds minimum return hurdles

Other investment ventures

Interests in 11 investments at June 30, 2020

Fair value option

Interests in initial stage, real estate development and hotel ventures and limited partnership interests in private equity funds

Interests in 11 investments at September 30, 2020

180,958 127,088

Fair value option Interests in initial stage ventures, real estate development, hotel co-investments, and limited partnership interests in private equity funds 165,770 222,875

$ 1,700,480 $ 1,987,515

(1) Each equity method investment has been determined to be either a VIE for which the Company was not deemed to be the primary beneficiary or a voting interest entity in which the Company does not have the power to control through a majority of voting interest or through other arrangements.

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Impairment of Equity Method Investments

The Company evaluates its equity method investments for OTTI at each reporting period and recorded impairment of $ 297.0 million and $ 247.8 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 297.8 million and $ 250.4 million for the six months ended June 30, 2020 and 2019 , respectively.

Equity method investments that were written down to fair value during the six months ended June 30, 2020 and year ended December 31, 2019 had carrying values totaling $ 388.8 million and $ 745.3 million , respectively, at the time of impairment.

The Company evaluates its equity method investments for OTTI at each reporting period and recorded impairment of $ 26.0 million and $ 3.1 million for the three months ended September 30, 2020 and 2019, respectively, and $ 323.8 million and $ 253.5 million for the nine months ended September 30, 2020 and 2019, respectively.

Equity method investments that were written down to fair value during the nine months ended September 30, 2020 and year ended December 31, 2019 had carrying values totaling $ 551.2 million and $ 745.3 million, respectively, at the time of impairment.

Impairment charges were generally determined using recoverable values for investments resolved or sold, or investment values based upon projected exit strategies, other than for CLNC as discussed below.

Other-Than-Temporary Impairment ("OTTI") —In the second quarter of 2020 and 2019, the Company determined that its investment in CLNC was other-than-temporarily impaired and recorded an impairment charge, included in equity method losses, of $ 274.7 million and $ 227.9 million , respectively.

Other-Than-Temporary Impairment ("OTTI") —In the third quarter of 2020, the Company determined that the decline in CLNC's stock price, closing at $ 4.91 per share at September 30, 2020, does not represent further OTTI of its investment in CLNC.

In the second quarters of 2020 and 2019, the Company determined that its investment in CLNC was other-than-temporarily impaired and recorded an impairment charge, included in equity method losses, of $ 274.7 million and $ 227.9 million, respectively.

In each case, the OTTI charge was measured as the excess of carrying value over market value of its investment in CLNC based upon CLNC's closing stock price on the last trading day of the quarter of $ 7.02 per share on June 30, 2020 and $ 15.50 per share on June 28, 2019.

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Nevertheless, with increasing uncertainty over the extent and duration of the COVID-19 crisis, and the timeline for a recovery in the U.S economy, the Company believes that it is unlikely that the CLNC stock will recover and trade closer to its NAV in the near term.

Accordingly, the Company also believes that it would be unlikely that the shortfall in market value relative to carrying value of its investment in CLNC would recover in the near term.

As a result, the Company recognized an other-than-temporary impairment on its investment in CLNC.

Basis Difference —The impairment charge in June 2019 resulted in a basis difference between the Company's carrying value of its investment in CLNC and the Company's proportionate share of CLNC's book value of equity.

Accordingly, the Company also believes that it would

be unlikely that the shortfall in market value relative to carrying value of its investment in CLNC would recover in the near term.

As a result, the Company recognized OTTI on its investment in CLNC.

Basis Difference —The impairment charges resulted in a basis difference between the Company's carrying value of its investment in CLNC and the Company's proportionate share of CLNC's book value of equity.

The impairment charge was applied to the Company's investment in CLNC as a whole and was not determined based on an impairment assessment of individual assets held by CLNC.

In order to address this basis difference, the Company allocated the impairment charge on a relative fair value basis to investments identified by CLNC as non-strategic assets.

Accordingly, for any future impairment charges taken by CLNC on these non-strategic assets, the Company's share thereof will be applied to reduce the basis difference and will not be recorded as an equity method loss until such time the basis difference associated with the respective underlying investments has been fully eliminated.

For the three and six months ended June 30, 2020 , the Company reduced its share of net loss from CLNC by $ 8.7 million and $ 27.9 million , respectively, representing the basis difference allocated to non-strategic assets realized by CLNC during these periods.

The remaining basis difference at June 30, 2020 was $ 58.9 million .

The impairment charge on its investment in CLNC in June 2020 will establish additional basis difference moving forward.

In order to address this basis difference, the impairment charges were generally allocated on a relative fair value basis across CLNC's various investments.

Accordingly, for any future impairment charges taken by CLNC on these investments, the Company's share thereof will be applied to reduce the basis difference and will not be recorded as an equity method loss until such time the basis difference associated with the respective investments has been fully eliminated.

For the three and nine months ended September 30, 2020, the Company reduced its share of net loss from CLNC by $ 21.9 million and $ 49.8 million, respectively, representing the basis difference allocated to investments that were resolved or impaired by CLNC during these periods.

The remaining basis difference at September 30, 2020 was $ 311.7 million.

Other Equity Investments

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The Company also has lending commitments under ADC arrangements which are accounted for as equity method investments.

At June 30, 2020 , the Company’s share of these commitments was $ 49.7 million .

Private Funds— At June 30, 2020 , the Company has unfunded commitments of $ 228.6 million to Company sponsored and third party sponsored funds.

At September 30, 2020, the Company’s share of these commitments was $ 18.9 million.

Private Funds— At September 30, 2020, the Company has unfunded commitments of $ 147.7 million to Company sponsored and third party sponsored funds.

Debt Securities

The Company's investment in debt securities is composed of available-for-sale N-Star CDO bonds and commercial mortgage-backed securities (“CMBS”) held by a consolidated sponsored investment company which is currently in liquidation.

The CMBS held by the sponsored investment company were sold and liquidating distributions were made subsequent to June 30, 2020 .

AFS Debt Securities

The N-Star CDO bonds are investment-grade subordinate bonds retained by NRF from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF that were subsequently repurchased by NRF at a discount.

The Company's investment in debt securities is composed of available-for-sale N-Star CDO bonds, which are investment-grade subordinate bonds retained by NRF from its sponsored collateralized debt obligations ("CDOs"), and CDO bonds originally issued by NRF that were subsequently repurchased by NRF at a discount.

These CDOs are collateralized primarily by commercial real estate ("CRE") debt and CRE securities.

Commercial mortgage-backed securities (“CMBS”) held by a consolidated sponsored investment company, which is in the process of dissolution, were sold in the third quarter of 2020 and liquidating distributions made to its shareholders.

AFS Debt Securities

The following tables summarize the balance and activities of the N-Star CDO bonds.

Amortized Cost Without Allowance for Credit Loss

Allowance for Credit Loss

Gross Cumulative Unrealized

(in thousands)

June 30, 2020

December 31, 2019

There were no sales of N-Star CDO bonds during the six months ended June 30, 2020 and year ended December 31, 2019 .

At June 30, 2020 , the N-Star CDO bonds have contractual maturity ranging from approximately 17 to 21 years, and expected maturity of 7 months to 3.5 years based upon expected cash flows.

Allowance for Credit Loss Gross Cumulative Unrealized

(in thousands) Gains Losses Fair Value

September 30, 2020 $ 46,739 $ ( 23,973 ) $ 5,132 $ — $ 27,898

December 31, 2019 46,002 NA 8,857 — 54,859

There were no sales of N-Star CDO bonds during the nine months ended September 30, 2020 and year ended December 31, 2019.

These CDOs have long dated stated maturities through 2037 and 2041, however, the Company expects the N-Star CDO bonds to have remaining future cash flows up to 3.3 years from September 30, 2020.

Impairment of AFS Debt Securities

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If the impairment is not other-than-temporary, the entire unrealized loss is recognized in OCI.

For the three and six months ended June 30, 2020 , the Company recorded allowance for credit loss in other loss of $ 21.4 million and $ 22.2 million , respectively.

2020— For the three and nine months ended September 30, 2020, the Company recorded allowance for credit loss in other loss of $ 1.7 million and $ 24.0 million, respectively.

The credit loss was determined based upon an analysis of the present value of contractual cash flows expected to be collected from the underlying collateral as compared to the amortized cost basis of the security.

At June 30, 2020 , there were no AFS debt securities in unrealized loss positions without allowance for credit loss.

For both three and six months ended June 30, 2019 , the Company recorded OTTI loss on AFS debt securities of $ 0.7 million in other loss.

At September 30, 2020, there were no AFS debt securities in unrealized loss positions without allowance for credit loss.

2019— The Company recorded OTTI loss on AFS debt securities of $ 6.4 million and $ 7.1 million in other loss for the three and nine months ended September 30, 2019, respectively.

The losses were due to an adverse change in expected cash flows on N-Star CDO bonds.

3 unchanged sentences

The following table presents changes in the carrying value of goodwill.

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2020 2019

1 unchanged sentence

Business combination (Note 3) (1)

( 7,134 ) 247,248

Impairment ( 594,000 ) ( 387,000 )

Ending balance $ 851,757 $ 1,374,809

(1) Includes the effects of measurement period adjustments within a one year period following the consummation of a business combination.

In the first quarter of 2020, $ 51.0 million of goodwill was reassigned from the other investment management segment to the digital reportable segment to reflect the value associated with certain existing investment vehicles that were repurposed to execute an investment strategy focused on the digital sector, as well as a team of professionals dedicated to the strategy.

The amount that was reassigned to the digital segment was determined based upon the fair value of this digital strategy platform relative to the overall other investment management goodwill balance prior to the reassignment.

In the first quarter of 2020, $ 51.0 million of goodwill was reassigned from the Other segment to the Digital Investment Management segment to reflect the value of expected future investment management economics associated with certain existing investment vehicles that were repurposed to execute an investment strategy focused on the digital sector, as well as a team of professionals dedicated to the strategy.

The amount that was reassigned to the digital segment was determined based upon the fair value of this digital strategy platform relative to the overall fair value of the other investment management reporting unit prior to the reassignment.

Goodwill balance by reportable segment is as follows.

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Balance by reportable segment:

Other investment management

At June 30, 2020 and December 31, 2019 , goodwill of $ 140.5 million related to the DBH acquisition was deductible for income tax purposes.

Digital Operating $ 471,948 $ 479,082

Digital Investment Management (1)

298,248 247,248

Other 81,561 726,561

$ 851,757 $ 1,452,891

(1) At September 30, 2020 and December 31, 2019, goodwill of $ 140.5 million related to the DBH acquisition was deductible for income tax purposes.

Impairment of Goodwill

Digital —The Company believes that the current shift and increased reliance on a digital economy positions the Company's digital real estate and digital investment management business for further growth.

Therefore, the Company determined that there were no indicators of impairment on goodwill in the digital reportable segment.

Other Investment Management —In connection with the review and preparation of the financial statements, the Company determined that the deterioration in economic conditions as a result of COVID-19 and the Company's acceleration of its digital transformation in the second quarter of 2020 represent indicators of impairment to its other investment management goodwill.

Accordingly, the Company updated its quantitative test of the other investment management goodwill, which indicated that the carrying value of the other investment management reporting unit including goodwill at March 31, 2020 and at June 30, 2020 exceeded its estimated fair value at each balance sheet date.

Digital Segments

The Company believes that the current shift and increased reliance on a digital economy positions the Company's digital business for further growth.

Therefore, the Company determined that there were no indicators of impairment on goodwill in the digital reportable segments.

Other Segment

Three Months Ended September 30, 2020 —The Company determined that there were no indicators of additional impairment in the third quarter of 2020 on the remaining balance of goodwill in its other investment management business.

Six Months Ended June 30, 2020 —In connection with the review and preparation of the financial statements, the Company determined that the deterioration in economic conditions as a result of COVID-19 and the Company's acceleration of its digital transformation in the second quarter of 2020 represent indicators of impairment to the goodwill in its other investment management business.

As a result, the Company recognized impairment loss on its other investment management goodwill of $ 79.0 million and $ 515.0 million in the first and second quarters of 2020, respectively.

1 unchanged sentence

As discussed in Note 1, the Company determined in the second quarter of 2020 that it would accelerate the transition and focus on growing its digital investment management business.

Consequently, as of June 30, 2020 , the Company did not ascribe any value to future capital raising potential of the other investment management reporting unit, which represents the credit and opportunity fund management business, as it is no longer part of the Company's long-term strategy.

Consequently, as of June 30, 2020, the Company did not ascribe any value to future capital raising potential of the other investment management reporting unit, which represents the credit and opportunity fund management business, as it is no longer part of the

Company's long-term strategy.

Regarding the CLNC management contract, the COVID-19 crisis has caused the Company to postpone its plan to sell the contract.

2 unchanged sentences

Such reduction in turn translated into a significant decrease in value of the other investment management reporting unit.

The Company had previously considered the hypothetical value of its non-digital investment management business in a spinoff that would result in the Company becoming externally managed, and assigned a value

to internally managing the Company's non-digital balance sheet assets.

Under current circumstances, the Company determined that as of June 30, 2020, the hypothetical contract would have inconsequential, if any, remaining value to a market participant, and wrote off the value of internally managing its non-digital balance sheet.

The remaining balance of the goodwill in the other investment management segment of $ 81.6 million as of June 30, 2020 is expected to be fully written off in the near future when a runoff of the credit management business is substantially completed.

The remaining balance of the other investment management goodwill in the Other segment of $ 81.6 million as of September 30, 2020 is expected to be fully written off in the near future when a runoff of the credit management business is substantially completed.

2019 —In the third and fourth quarters of 2019, the Company recognized impairment losses to its other investment management goodwill of $ 387.0 million and $ 401.0 million, respectively, reflecting:

• loss of future fee income from sale of the industrial business, and reduction in CLNC's fee base to reflect its reduced book value in the third quarter of 2019;

• beginning of the Company's transition to a digital focused investment management business in the fourth quarter of 2019.

Deferred Leasing Costs, Other Intangible Assets and Intangible Liabilities

Deferred leasing costs and identifiable intangible assets and liabilities, excluding those related to assets held for sale, are as follows.

June 30, 2020

December 31, 2019

(In thousands)

Carrying Amount (Net of Impairment) (1)

Deferred leasing costs and identifiable intangible assets and liabilities, excluding those related to assets held for disposition, are as follows.

September 30, 2020 December 31, 2019

(In thousands) Carrying Amount (Net of Impairment) (1)

Accumulated Amortization (1)

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Deferred Leasing Costs and Intangible Assets

Deferred leasing costs and lease intangible assets (2)

Deferred leasing costs and lease related intangible assets (2)

$ 1,179,939 $ ( 196,594 ) $ 983,345 $ 424,987 $ ( 123,649 ) $ 301,338

Investment management intangibles (3)

277,761 ( 123,055 ) 154,706 285,233 ( 96,466 ) 188,767

Customer relationships (4)

73,400 ( 4,818 ) 68,582 71,000 ( 250 ) 70,750

Trade names (5)

39,600 ( 3,504 ) 36,096 39,600 ( 185 ) 39,415

38,325 ( 6,015 ) 32,310 32,285 ( 398 ) 31,887

Total deferred leasing costs and intangible assets

$ 1,609,025 $ ( 333,986 ) $ 1,275,039 $ 853,105 $ ( 220,948 ) $ 632,157

Intangible Liabilities

Lease intangible liabilities (2)

$ 186,539 $ ( 76,923 ) $ 109,616 $ 174,208 $ ( 62,724 ) $ 111,484

(1) For intangible assets and intangible liabilities recognized in connection with business combinations, purchase price allocations may be subject to adjustments during the measurement period, not to exceed 12 months from date of acquisition, based upon new information obtained about facts and circumstances that existed at time of acquisition (Note 3).

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The Colony trade name with a carrying value of $ 15.5 million is determined to have an indefinite useful life and is not currently subject to amortization.

Represents primarily DataBank data center service contracts and hotel franchise agreements which are amortized over the term of the respective contracts or agreements, and value of certificates of need associated with certain healthcare portfolios which are not amortized.

(6) Represents primarily DataBank data center service contracts and hotel franchise agreements which are amortized over the term of the respective contracts or agreements, and value of certificates of need associated with certain wellness infrastructure portfolios which are not amortized.

Impairment of Identifiable Intangible Assets

An investment management contract that was written down to fair value during the year ended December 31, 2019 had a carrying value of $ 62.4 million at the time of impairment.

The fair value of the intangible asset was based upon revised future net cash flows to be generated over the remaining life of the contract, representing Level 3 fair value.

Other than real estate intangibles which were impaired as part of the real estate asset group as discussed in Note 4 , there were no impairments of identifiable intangible assets in the three and six months ended June 30, 2020 and 2019 .

In the three and nine months ended September 30, 2020 and in the fourth quarter of 2019, management contract intangible assets were impaired $ 8.2 million and $ 8.6 million, respectively, and written down to aggregate fair value of $ 12.4 million and $ 62.4 million at the time of impairment, respectively.

Fair value was generally based upon revised future net cash flows to be generated over the remaining life of the respective management contracts, representing Level 3 fair value.

Real estate intangibles are subject to impairment as part of the real estate asset group, as discussed in Note 4.

Amortization of Intangible Assets and Liabilities

The following table summarizes amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities, excluding amounts related to discontinued operations (Note 16):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Net increase to rental income (1)

$ 370 $ 1,921 $ 5,002 $ 5,662

Amortization expense

2 unchanged sentences

Customer relationships 1,572 1,327 4,569 2,999

Trade name 1,098 78 3,320 78

Other 4,169 80 5,617 184

$ 26,930 $ 72,819 $ 109,149 $ 105,036

(1) Represents the impact of amortizing above- and below-market leases and lease incentives.

The following table presents the future amortization of deferred leasing costs and finite-lived intangible assets and intangible liabilities, excluding those related to assets and liabilities held for sale.

Year Ending December 31,

(In thousands)

Remaining 2020

2025 and Thereafter

(In thousands) Remaining 2020 2021 2022 2023 2024 2025 and Thereafter Total

Net increase (decrease) to rental income $ 123 $ 3,350 $ 4,671 $ 5,857 $ ( 6,380 ) $ ( 10,799 ) $ ( 3,178 )

Amortization expense 56,992 201,216 156,612 128,763 94,469 487,474 1,125,526

Assets and Related Liabilities Held for Sale

The Company's assets and related liabilities held for sale are summarized below:

(In thousands)

June 30, 2020

December 31, 2019

Assets and Related Liabilities Held for Disposition

Total assets and related liabilities held for disposition are summarized below.

Assets and liabilities held for non-sale disposition in all periods presented represent a portfolio of 48 hotels in the Hospitality segment that has been placed in receivership following the lender's acceleration of the underlying debt that was defaulted in April 2020.

Control over the operations and any eventual sale of these hotels has been transferred to the receivers, who are acting for the benefit of the lender.

The Company has not been released from its debt obligations, however, the debt is non-recourse to the Company.

September 30, 2020 December 31, 2019

(In thousands) Disposition by Sale Non-Sale Disposition Total Held for Disposition Disposition by Sale Non-Sale Disposition Total Held for Disposition

Restricted cash $ 59,802 $ 14,029 $ 73,831 $ 122,663 $ 5,782 $ 128,445

Real estate, net 3,385,797 751,430 4,137,227 4,421,888 1,019,849 5,441,737

Loans receivable 42,985 — 42,985 — — —

Deferred leasing costs and intangible assets, net 29,919 437 30,356 37,399 2,533 39,932

Total assets held for sale

Lease intangibles and other liabilities, net

Total liabilities related to assets held for sale

Assets and Liabilities Related to Discontinued Operations

At June 30, 2020 and December 31, 2019 , the bulk industrial portfolio remained held for sale, with assets consisting primarily of real estate and related intangibles totaling $ 370.0 million and $ 372.0 million , respectively, and liabilities consisting primarily of debt totaling $ 235.6 million and $ 235.0 million , respectively.

Other assets 74,437 20,722 95,159 97,219 35,752 132,971

Total assets held for disposition $ 3,592,940 $ 786,618 $ 4,379,558 $ 4,679,169 $ 1,063,916 $ 5,743,085

Debt, net (1)

$ 2,932,982 $ 780,000 $ 3,712,982 $ 2,926,449 $ 772,485 $ 3,698,934

Lease intangibles and other liabilities 153,354 42,138 195,492 141,426 22,161 163,587

Total liabilities related to assets held for disposition $ 3,086,336 $ 822,138 $ 3,908,474 $ 3,067,875 $ 794,646 $ 3,862,521

(1) Represents debt related to assets held for disposition if the debt is expected to be assumed by the acquirer upon sale or the debt is expected to be extinguished through lender's assumption of underlying collateral.

Included in the table above are assets and liabilities held for sale and for non-sale disposition that are related to discontinued operations (Note 16), as follows:

September 30, 2020 December 31, 2019

(In thousands) Hotel Industrial Hotel Industrial

Restricted cash $ 69,033 $ — $ 112,923 $ —

Real estate, net 3,517,983 342,758 4,658,477 342,758

Deferred leasing costs and intangible assets, net 1,851 23,599 6,802 25,371

Other assets 80,198 4,247 111,229 3,917

Total assets held for disposition—discontinued operations

$ 3,669,065 $ 370,604 $ 4,889,431 $ 372,046

Debt, net $ 3,479,355 $ 233,627 $ 3,465,990 $ 232,944

Lease intangibles and other liabilities 165,010 2,230 128,155 2,090

Total liabilities related to assets held for disposition—discontinued operations

$ 3,644,365 $ 235,857 $ 3,594,145 $ 235,034

Non-Recourse Investment-Level Debt in Default

Investment-level secured debt, which is non-recourse to the Company, totaling $ 1.3 billion related to hotel assets held for disposition was in default as of the date of this filing, driven by the economic fallout from COVID-19.

Of this amount, the Company is in negotiation with lenders to restructure $ 0.5 billion of defaulted hotel debt, which is expected to be assumed by the buyer upon sale of the underlying hotel assets.

The remaining $ 0.8 billion of defaulted hotel debt relates to debt that has been accelerated by the lender, as discussed above.

In August 2020, $ 0.8 billion of debt related to the THL Hotel Portfolio that is held for sale was modified in a troubled debt restructure with no resulting gain from the restructuring.

The debt is no longer in default and will be assumed by the buyer upon sale of the THL Hotel Portfolio.

Restricted Cash, Other Assets and Other Liabilities

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The following table summarizes the Company's restricted cash balance:

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Capital expenditures reserves (1)

$ 13,802 $ 18,314

Real estate escrow reserves (2)

21,247 15,455

Borrower escrow deposits 6,707 8,079

Lender restricted cash (3)

87,155 27,409

38,198 21,806

Total restricted cash $ 167,109 $ 91,063

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(3) Represents operating cash from the Company's investment properties that are restricted by lenders in accordance with respective debt agreements.

(4) Includes investment sales proceeds held in escrow.

The following table summarizes the Company's other assets:

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Straight-line rents $ 52,878 $ 37,230

Hotel-related deposits and reserves (1)

Investment deposits and pending deal costs 14,844 32,994

Prefunded capital expenditures for Vantage SDC 75,235 —

Deferred financing costs, net (1)

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Accounts receivable, net (3)

63,241 53,387

Prepaid expenses 33,491 22,417

Other assets 22,965 29,219

Fixed assets, net (4)

28,802 44,768

Total other assets $ 534,734 $ 557,989

Represents reserves held by third party managers at certain hotel properties to fund furniture, fixtures and equipment ("FF&E") expenditures and to a lesser extent, working capital deposits.

Funding of FF&E reserves is made periodically based on a percentage of hotel operating income.

(1) Deferred financing costs relate to revolving credit arrangements.

(2) Represents proceeds from loan repayments and real estate sales held in escrow, and sales of equity investments pending settlement.

Includes receivables from tenants, hotel operating income, resident fees, property level insurance, and asset management fees, net of allowance for doubtful accounts, where applicable, of $ 6.4 million at June 30, 2020 and $ 2.8 million at December 31, 2019 .

(3) Includes receivables from tenants, resident fees, property level insurance, and asset management fees, net of allowance for doubtful accounts, where applicable, of $ 1.5 million at September 30, 2020 and $ 0.1 million at December 31, 2019.

(4) Reflects impairment of $ 12.3 million on the corporate aircraft in the second quarter of 2020 to estimated recoverable value based upon a shortened holding period.

Deferred Tax Asset

Valuation Allowance —During the six months ended June 30, 2020 , there was a net increase in valuation allowance of $ 42.4 million , primarily as a result of uncertainties in future realization of tax benefit on net operating losses in the hospitality and healthcare segments, taking into consideration the impairment of assets in these segments.

At June 30, 2020 , total valuation allowance was $ 70.3 million .

Impact of CARES Act —The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted on March 27, 2020.

Valuation Allowance —During the nine months ended September 30, 2020, a net valuation allowance of $ 60.3 million was established, including $ 26.7 million of allowance related to deferred tax asset in the Company's discontinued hotel operations (Note 16), primarily as a result of uncertainties in future realization of tax benefit on net operating losses in the hotel and healthcare businesses, taking into consideration impairment losses on these assets.

At September 30, 2020, total valuation allowance was $ 92.4 million, of which $ 32.5 million related to deferred tax asset of the Company's hotel business that is held for disposition (Note 8).

Effect of CARES Act —The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted on March 27, 2020.

Among other things, the CARES Act temporarily removed the 80% limitation on the amount of taxable income that can be offset with a net operating loss (“NOL”) for 2019 and 2020, and allowed for a carryback of NOL generated in years 2018 through 2020 to the five taxable years preceding the taxable year of loss.

The Company has approximately $ 28.1 million of NOL available for carryback under the CARES Act and recorded $ 3.3 million of income tax benefit to reflect the carryback.

The Company also reclassified $ 8.8 million of deferred tax asset to current tax receivable

as of June 30, 2020 , which reflects refunds received in July 2020 or expected to be received in the next twelve months as a result of the carryback.

The Company has approximately $ 28.1 million of NOL available for carryback under the CARES Act and recorded $ 3.3 million of income tax benefit to

reflect the carryback.

The Company also reclassified $ 8.8 million of deferred tax asset to current tax receivable as of September 30, 2020, which reflects refunds received in July 2020 or expected to be received in the next twelve months as a result of the carryback.

Accrued and Other Liabilities

The following table summarizes the Company's accrued and other liabilities:

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Tenant security deposits and payable $ 13,676 $ 12,457

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Deferred income (1)

40,067 30,040

Interest payable 28,072 28,902

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(1) Represents primarily prepaid rental income, prepaid interest from borrowers held in reserve accounts, and deferred management fees, primarily from digital investment vehicles.

Deferred management fees totaling $ 17.7 million at June 30, 2020 and $ 18.3 million at December 31, 2019 will be recognized as fee income over a weighted average period of 1.5 years and 1.2 years , respectively.

Deferred management fees recognized as income of $ 6.6 million and $ 0.4 million in the three months ended June 30, 2020 and 2019 , respectively, and $ 8.7 million and $ 0.7 million in the six months ended June 30, 2020 and 2019 , respectively, pertain to the deferred management fee balance at the beginning of each respective period.

The Company's debt consists of the following components, excluding debt associated with the industrial segment, which is included in liabilities related to assets held for sale (Note 8 ).

(In thousands)

Corporate Credit Facility (1)

Convertible and Exchangeable Senior Notes

Secured Debt (2)

Junior Subordinated Notes

June 30, 2020

Deferred management fees totaling $ 13.4 million at September 30, 2020 and $ 18.3 million at December 31, 2019 will be recognized as fee income over a weighted average period of 1.6 years and 1.2 years, respectively.

Deferred management fees recognized as income of $ 6.2 million and $ 0.3 million in the three months ended September 30, 2020 and 2019, respectively, and $ 12.0 million and $ 1.0 million in the nine months ended September 30, 2020 and 2019, respectively, pertain to the deferred management fee balance at the beginning of each respective period.

The Company's debt consists of the following components, excluding debt related to assets held for disposition that is expected to be assumed by the counterparty upon disposition, which is included in liabilities related to assets held for disposition (Note 8).

(In thousands) Corporate Credit Facility (1)

Convertible and Exchangeable Senior Notes Secured Debt (2)

Junior Subordinated Notes Total Debt

September 30, 2020

Debt at amortized cost

Principal $ — $ 545,107 $ 6,340,635 $ 280,117 $ 7,165,859

Premium (discount), net — ( 6,913 ) 47,648 ( 77,199 ) ( 36,464 )

Deferred financing costs — ( 2,598 ) ( 40,803 ) — ( 43,401 )

$ — $ 535,596 $ 6,347,480 $ 202,918 $ 7,085,994

December 31, 2019

Debt at amortized cost

Principal $ — $ 616,105 $ 4,766,594 $ 280,117 $ 5,662,816

Premium (discount), net — 2,243 ( 12,598 ) ( 78,927 ) ( 89,282 )

Deferred financing costs — ( 4,296 ) ( 51,320 ) — ( 55,616 )

$ — $ 614,052 $ 4,702,676 $ 201,190 $ 5,517,918

(1) Deferred financing costs related to the corporate credit facility are included in other assets.

Debt principal totaling $ 449.7 million at June 30, 2020 and $ 515.6 million at December 31, 2019 relates to financing on assets held for sale.

Debt associated with assets held for sale that is expected to be assumed by the buyer is included in liabilities related to assets held for sale (Note 8 ).

(2) Debt principal totaling $ 180.2 million at September 30, 2020 and $ 265.6 million at December 31, 2019 relates to financing of assets held for disposition, and are expected to be repaid upon disposition of the respective underlying assets.

Debt associated with assets held for disposition that is expected to be assumed by the counterparty upon disposition is included in liabilities related to assets held for disposition (Note 8).

The following table summarizes certain information about debt carried at amortized cost.

For information as of June 30, 2020 , weighted average years remaining to maturity is based on initial maturity dates or extended maturity dates if the criteria to extend have been met as of the date of this filing, and the extension option is at the Company’s discretion.

The Company is providing the updated information even if extension criteria had been met as of June 30, 2020 given the post period defaults as described below.

For information as of December 31, 2019, weighted average years remaining to maturity is based on initial maturity dates or extended maturity dates if the criteria to extend have been met as of December 31, 2019 and the extension option is at the Company’s discretion.

Variable Rate

($ in thousands)

Outstanding Principal

Weighted Average Interest Rate (Per Annum) (4)

Fixed Rate Variable Rate Total

($ in thousands) Outstanding Principal Weighted Average Interest Rate (Per Annum) (4)

Weighted Average Years Remaining to Maturity (5)

Outstanding Principal

Weighted Average Interest Rate (Per Annum) (4)

Outstanding Principal Weighted Average Interest Rate (Per Annum) (4)

Weighted Average Years Remaining to Maturity (5)

Outstanding Principal

Weighted Average Interest Rate (Per Annum) (4)

Outstanding Principal Weighted Average Interest Rate (Per Annum) (4)

Weighted Average Years Remaining to Maturity (5)

June 30, 2020

Corporate credit facility

September 30, 2020

Corporate credit facility $ — N/A N/A $ — N/A 1.3 $ — N/A 1.3

Convertible and exchangeable senior notes (1)

545,107 5.36 % 3.9 — N/A N/A 545,107 5.36 % 3.9

Junior subordinated debt (2)

— N/A N/A 280,117 3.10 % 15.7 280,117 3.10 % 15.7

Secured debt (3)

Other Real Estate Equity

Real Estate Debt

33,388 5.02 % 5.2 — N/A N/A 33,388 5.02 % 5.2

578,495 280,117 858,612

Non-recourse (6)

Digital Operating 1,711,314 3.89 % 3.0 835,045 4.67 % 3.8 2,546,359 4.15 % 3.3

Wellness Infrastructure (7)

403,490 4.55 % 4.4 2,370,198 4.00 % 3.7 2,773,688 4.08 % 3.8

Other 154,850 4.20 % 2.6 832,350 2.97 % 2.2 987,200 3.17 % 2.3

2,269,654 4,037,593 6,307,247

$ 2,848,149 $ 4,317,710 $ 7,165,859

December 31, 2019

Corporate credit facility

Corporate credit facility $ — N/A N/A $ — N/A 2.0 $ — N/A 2.0

Convertible and exchangeable senior notes (1)

616,105 4.27 % 2.0 — N/A N/A 616,105 4.27 % 2.0

Junior subordinated debt (2)

— N/A N/A 280,117 4.77 % 16.4 280,117 4.77 % 16.4

Secured debt (3)

Other Real Estate Equity

Real Estate Debt

The 5.375 % exchangeable senior notes represent an obligation of a subsidiary of NRF as the issuer.

The exchangeable notes may be exchanged for cash, Colony Capital, Inc.'s common stock or a combination thereof, at the issuer's election, as described further below.

Represents an obligation of NRF as the junior subordinated debt was issued by certain subsidiaries of NRF, as described further below.

35,072 5.02 % 5.9 — N/A N/A 35,072 5.02 % 5.9

651,177 280,117 931,294

Non-recourse (6)

Digital Operating — N/A N/A 539,155 6.98 % 4.8 539,155 6.98 % 4.8

Wellness Infrastructure (7)

405,980 4.55 % 5.1 2,547,726 5.22 % 4.3 2,953,706 5.13 % 4.4

Other 151,777 4.26 % 3.4 1,086,884 3.24 % 2.6 1,238,661 3.37 % 2.7

557,757 4,173,765 4,731,522

$ 1,208,934 $ 4,453,882 $ 5,662,816

(1) Includes the 5.375 % exchangeable senior notes which is an obligation of NRF Holdco, LLC as the issuer, a subsidiary of Colony Capital, Inc., as described further below.

(2) Represents an obligation of NRF Holdco, LLC as the junior subordinated debt was issued by certain of its subsidiaries, as described further below.

Accordingly, Colony Capital, Inc.

and its operating company, Colony Capital Operating Company, LLC, are not guarantors on the junior subordinated debt.

and its operating company, Colony Capital Operating Company, LLC, do not act as guarantors.

(3) The fixed rate recourse debt is secured by the Company's aircraft.

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(5) Calculated based upon initial maturity dates of the respective debt, or extended maturity dates if extension criteria are met and extension option is at the Company's discretion as described above.

Non-Recourse Investment-Level Debt in Default

The Company has investment-level debt, which is non-recourse to the Company, with aggregate outstanding principal of $ 7.5 billion in the hospitality, healthcare and other equity and debt segments at June 30, 2020 .

Of this amount, $ 3.28 billion , based on outstanding balance at June 30, 2020 , was in default as of the date of this filing.

The majority of the defaulted debt was in the hospitality segment and the THL Hotel Portfolio in the other equity and debt segment for a combined total of $ 3.03 billion as a result of the economic fallout from COVID-19.

The Company received notices of acceleration with respect to defaulted debt of $ 780.0 million in the hospitality segment and $ 842.7 million related to the THL Hotel Portfolio.

The $ 780.0 million accelerated debt in the hospitality segment is secured by a portfolio of 48 hotels, and receivers have been or are expected to be appointed for all of these assets.

In connection with the remaining defaulted hotel debt, the Company continues to be in active negotiations with the respective lenders or servicers to execute or extend forbearances, execute debt modifications, including extension of upcoming maturities in 2020, or make other arrangements, as appropriate.

The remaining $ 482.4 million of debt in the hospitality segment was not in default.

Other defaulted debt is composed of $ 203.0 million in the healthcare segment and $ 51.7 million in the other equity and debt segment based on outstanding balance at June 30, 2020 ( $ 235.6 million in total across both segments at December 31, 2019 ), the majority of which was in default prior to the COVID-19 crisis.

In August 2020, the Company indirectly conveyed the equity of certain of its healthcare borrower subsidiaries, comprising 36 assets in its senior housing operating portfolio and $ 157.9 million of the aforementioned defaulted healthcare debt (based on outstanding balance at June 30, 2020 ), to an affiliate of the lender, which released the Company from all rights and obligations with respect to those healthcare assets and corresponding debt.

In connection with the remaining defaulted debt in the healthcare segment of $ 45.1 million and also in the other equity and debt segment, the Company is negotiating with its lenders to restructure the debt or make other arrangements, as appropriate.

There can be no assurance that the Company will be successful in any of the negotiations with its lenders or servicers with respect to the aforementioned non-recourse investment level debt that is in default.

(6) Investment-level secured debt that is non-recourse to the Company of $ 45.0 million financing wellness infrastructure assets and $ 114.0 million financing the Other Equity and Debt portfolio in the Other segment based on outstanding balance at September 30, 2020 ($ 235.6 million in total across both segments at December 31, 2019), was in default as of the date of this filing.

The wellness infrastructure debt is expected to be repaid through a sale of the underlying property that is currently under negotiation.

Of the defaulted debt in the Other Equity and Debt portfolio, the Company has received notice of acceleration on $ 21.3 million of debt and the underlying property has been placed in receivership.

In connection with the remaining defaulted debt, the Company is negotiating with its lenders to restructure the debt or make other arrangements, as appropriate, with no assurance that the Company will be successful in any of the negotiations.

(7) Previously referred to as Healthcare.

Conveyance to Lender

In August 2020, the Company indirectly conveyed the equity of certain of its wellness infrastructure borrower subsidiaries, comprising 36 properties in its senior housing operating portfolio with a carrying value of $ 156.3 million and $ 157.5 million of outstanding principal ($ 156.7 million carrying value) of previously defaulted wellness infrastructure debt, to an affiliate of the lender, which released the Company from all rights and obligations with respect to those wellness infrastructure assets and corresponding debt.

The conveyance of equity in full satisfaction of the outstanding debt was deemed to be a troubled debt restructuring that resulted in an immaterial gain.

Corporate Credit Facility

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The maximum amount available to be drawn at any time under the credit facility is limited by a borrowing base of certain investment assets, with the valuation of such investment assets generally determined according to a percentage of adjusted net book value or a multiple of base management fee EBITDA (as defined in the Credit Agreement).

In connection with the Amendment, the Company paid down $ 200 million of the $ 600 million previously drawn and outstanding on the credit facility and in July 2020, fully repaid all outstanding amounts.

As of the date of this filing, the full $ 500 million is available to be drawn under the facility.

1 unchanged sentence

exclusion of certain non-recourse debt and related assets in the calculation of certain financial ratios (such assets, the “Specified Excluded Assets”), exclusion of EBITDA and fixed charges of Specified Excluded Assets in the calculation of the OP’s fixed charge coverage ratio, which must exceed 1.3 to 1.0 , reduction of the minimum tangible net worth covenant from $ 4.55 billion to $ 1.74 billion, which must exclude the net worth of Specified Excluded Assets, and modification to the borrowing base to increase capacity for digital investment management and include digital infrastructure investments.

As of June 30, 2020 and through the date of this filing, the Company was in compliance with all of the financial covenants.

As of September 30, 2020 and through the date of this filing, the Company was in compliance with all of the financial covenants.

The Credit Agreement also contains various additional affirmative and negative covenants, including financial covenants that require the Company to maintain minimum tangible net worth, liquidity levels and financial ratios, as defined in the Credit Agreement.

6 unchanged sentences

Convertible and Exchangeable Senior Notes

The convertible senior notes and the 5.375 % exchangeable senior notes were issued by Colony Capital, Inc.

and by a subsidiary of NRF, respectively, representing senior unsecured obligations that are guaranteed on a senior unsecured basis by their respective issuers.

Convertible and exchangeable senior notes issued by the Company and outstanding as of June 30, 2020 are as follows:

Issuance Date

Interest Rate

Conversion or Exchange Price (per share of common stock)

Conversion or Exchange Ratio

Convertible and exchangeable senior notes (collectively, the senior notes) outstanding as of September 30, 2020 are as follows, each representing senior unsecured obligations of the respective issuers of the senior notes:

Description Issuance Date Due Date Interest Rate (per annum) Conversion or Exchange Price (per share of common stock) Conversion or Exchange Ratio

(in shares) (1)

Conversion or Exchange Shares (in thousands)

Earliest Redemption Date

Outstanding Principal

June 30, 2020

December 31, 2019

5.00% Convertible Notes

April 15, 2023

April 22, 2020

3.875% Convertible Notes

January and June 2014

January 15, 2021

January 22, 2019

5.375% Exchangeable Notes

June 15, 2033

June 15, 2023

The conversion or exchange rate for convertible and exchangeable senior notes is subject to periodic adjustments to reflect the carried-forward adjustments relating to common stock splits, reverse stock splits, common stock adjustments in connection with spin-offs and cumulative cash dividends paid on the Company's common stock since the issuance of the convertible and exchangeable senior notes.

The conversion or exchange ratios are presented in shares of common stock per $ 1,000 principal of each convertible or exchangeable note.

The convertible and exchangeable senior notes mature on their respective due dates, unless redeemed, repurchased or exchanged prior to such date in accordance with the terms of their respective governing documents.

The convertible and exchangeable senior notes are redeemable at a redemption price equal to 100 % of their principal amount, plus accrued and unpaid interest up to, but excluding, the redemption date.

The Company may redeem the convertible notes for cash at its option at any time on or after their respective redemption dates if the last reported sale price of the Company's common stock has been at least 130 % of the conversion price of the convertible notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

The exchangeable notes may be exchanged for cash, Colony Capital, Inc's common stock or a combination thereof, at the issuer's election, upon the occurrence of specified events, and at any time on or after their respective redemption dates, and on the second business day immediately preceding their maturity dates.

The holders of the exchangeable notes have the right, at their option, to require the issuer to repurchase the exchangeable notes for cash on certain specific dates in accordance with the terms of their respective governing documents.

Issuance of Exchangeable Notes and Repurchase of Convertible Notes

In July 2020, the OP issued $ 300.0 million of exchangeable notes with maturity in July 2025, bearing interest at 5.75 % per annum, and exchangeable into shares of the Company's class A common stock at an initial exchange rate

equal to 434.7826 shares of common stock per $1,000 principal amount of notes, equivalent to an exchange price of approximately $ 2.30 per share.

The initial exchange rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.

Net proceeds from this issuance, after deducting underwriting discounts, commissions and offering expenses, were $ 291.0 million , which were applied to partially repurchase $ 289.7 million of the outstanding principal of the 3.875 % convertible notes for total purchase price of $ 289.2 million , including accrued and unpaid interest.

Conversion or Exchange Shares (in thousands) Earliest Redemption Date Outstanding Principal

September 30, 2020 December 31, 2019

Issued by Colony Capital, Inc.

5.00% Convertible Senior Notes April 2013 April 15, 2023 5.00 % $ 15.76 63.4700 12,694 April 22, 2020 $ 200,000 $ 200,000

3.875% Convertible senior Notes January and June 2014 January 15, 2021 3.875 % 16.57 60.3431 1,901 January 22, 2019 31,502 402,500

Issued by Colony Capital Operating Company, LLC

5.75% Exchangeable Senior Notes July 2020 July 15, 2025 5.750 % 2.30 434.7826 130,435 July 21, 2023 300,000 —

Issued by NRF HoldCo, LLC

5.375% Exchangeable Senior Notes June 2013 June 15, 2033 5.375 % 12.04 83.0837 1,130 June 15, 2023 13,605 13,605

$ 545,107 $ 616,105

(1) The conversion or exchange rate for the senior notes is subject to periodic adjustments to reflect certain carried-forward adjustments relating to common stock splits, reverse stock splits, common stock adjustments in connection with spin-offs and cumulative cash dividends paid on the Company's common stock since the issuances of the respective senior notes.

The conversion or exchange ratios are presented in shares of common stock per $ 1,000 principal of each senior note.

The senior notes mature on their respective due dates, unless earlier redeemed, repurchased, converted or exchanged, as applicable.

The outstanding senior notes are convertible or exchangeable at any time by holders of such notes into shares of the Company’s common stock at the applicable conversion or exchange rate, which is subject to adjustment upon occurrence of certain events.

In the case of the 5.375 % exchangeable senior notes, NRF Holdco, LLC, a subsidiary of the Company, may elect to settle a holder’s exchange into cash, the Company’s common stock or a combination thereof.

To the extent certain trading conditions of the Company’s common stock are met, the senior notes are redeemable by the applicable issuer thereof in whole or in part for cash at any time on or after their respective earliest redemption dates at a redemption price equal to 100 % of the principal amount of such senior notes being redeemed, plus accrued and unpaid interest (if any) up to, but excluding, the redemption date.

In addition, prior to June 15, 2023 and subject to certain trading conditions of the Company’s common stock, NRF Holdco, LLC may redeem its 5.375 % exchangeable senior notes at a make-whole redemption price.

In the event of certain change in control transactions and, for the 5.375 % exchangeable senior notes only, on each of June 15, 2023 and June 15, 2028, holders of the senior notes have the right to require the applicable issuer to purchase all or part of such holder's senior notes for cash in accordance with terms of the governing documents of the respective senior notes.

Issuance of Exchangeable Senior Notes

In July 2020, the OP issued $ 300.0 million of exchangeable senior notes with maturity in July 2025, bearing interest at 5.75 % per annum, and exchangeable into shares of the Company's class A common stock at an initial exchange rate equal to 434.7826 shares of common stock per $1,000 principal amount of notes, equivalent to an exchange price of approximately $ 2.30 per share.

The initial exchange rate is subject to adjustment upon occurrence of certain events, but will not be adjusted for any accrued and unpaid interest.

Net proceeds from this issuance, after deducting underwriting discounts, commissions and offering expenses, were $ 291.0 million.

Repurchase of Convertible Senior Notes

The Company repurchased $ 371.0 million of the outstanding principal of the 3.875 % convertible senior notes in the third quarter of 2020 for total purchase price of $ 371.1 million, including accrued and unpaid interest, funded with net proceeds from issuance of the 5.75 % exchangeable senior notes in July 2020 and cash on hand through a tender offer of the 3.875 % convertible senior notes completed in September 2020.

These are primarily investment level financing, which are non-recourse to the Company, and secured by underlying commercial real estate and mortgage loans receivable.

In October 2020, Vantage SDC in the Digital Operating segment raised $ 1.3 billion in aggregate across two tranches of securitized notes at a blended fixed rate of 1.8 %, with a 6 year weighted average maturity.

The proceeds were applied primarily to refinance outstanding debt, which will meaningfully reduce the cost of debt and extend debt maturities in Vantage SDC.

Junior Subordinated Debt

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Fair value of derivative assets and derivative liabilities are as follows:

June 30, 2020

December 31, 2019

(In thousands)

Designated Hedges

Non-Designated Hedges

Designated Hedges

Non-Designated Hedges

September 30, 2020 December 31, 2019

(In thousands) Designated Hedges Non-Designated Hedges Total Designated Hedges Non-Designated Hedges Total

Derivative Assets

8 unchanged sentences

Certain counterparties to the derivative instruments require the Company to deposit cash or other eligible collateral.

The Company had cash collateral on deposit, included in other assets, of $ 12.8 million and $ 10.0 million at June 30, 2020 and December 31, 2019 , respectively, all of which related to the forward contracts and performance swaps discussed below.

The Company had cash collateral on deposit, included in other assets, of $ 10.8 million at September 30, 2020 and $ 10.0 million at December 31, 2019, all of which related to the forward contracts and performance swaps discussed below.

Foreign Exchange Contracts

The following table summarizes the aggregate notional amounts and certain key terms of non-designated foreign exchange contracts in place at June 30, 2020 :

The following table summarizes the aggregate notional amounts and certain key terms of non-designated foreign exchange contracts in place at September 30, 2020:

Hedged Currency

4 unchanged sentences

Range of Expiration Dates

Min $0.95 / Max $1.00

EUR Put options € 336,000 Min $ 0.95 / Max $ 1.00

November 2020 to May 2022

Min $1.05 / Max $1.10

GBP Put options £ 64,000 Min $ 1.05 / Max $ 1.10

November 2020 to May 2021

The Company’s foreign denominated net investments in subsidiaries or joint ventures were € 491.8 million and £ 267.6 million , or a total of $ 0.9 billion at June 30, 2020 , and € 517.9 million and £ 275.5 million , or a total of $ 0.9 billion at December 31, 2019 .

The Company’s foreign denominated net investments in subsidiaries or joint ventures were € 485.3 million and £ 262.7 million, or a total of $ 0.9 billion at September 30, 2020, and € 517.9 million and £ 275.5 million, or a total of $ 0.9 billion at December 31, 2019.

The Company enters into foreign exchange contracts to hedge the foreign currency exposure of certain investments in foreign subsidiaries or equity method joint ventures, with notional amounts and termination dates based upon the anticipated return of capital from the investments.

8 unchanged sentences

Upon sale, complete or substantially complete liquidation of an investment in a foreign subsidiary, or partial sale of an equity method investment, the gain or loss on the related net investment hedge is reclassified from AOCI to other gain (loss) as summarized below.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

4 unchanged sentences

Any unrealized gain or loss on the dedesignated portion of net investment hedges and on non-designated foreign exchange contracts are recorded in other gain (loss).

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

5 unchanged sentences

The Company uses various interest rate contracts, some of which may be designated as cash flows hedges, to limit its exposure to changes in interest rates on various floating rate debt obligations.

The following table summarizes the interest rate contracts held by the Company at June 30, 2020 .

The following table summarizes the interest rate contracts held by the Company at September 30, 2020.

Notional Amount

1 unchanged sentence

Strike Rate / Forward Rate

Instrument Type

Non-Designated

Range of Expiration Dates

Instrument Type Designated Non-Designated Index Range of Expiration Dates

Interest rate caps

$ — $ 3,868,574 1-Month LIBOR 3.00 % - 5.70 %

July 2020 to November 2021

November 2020 to November 2021

Interest rate caps

5 unchanged sentences

The following table summarizes amounts recorded in the income statements related to interest rate contracts.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Interest expense on designated interest rate contracts (1)

$ 6 $ — $ 12 $ —

Realized and unrealized gain (loss), net on non-designated interest rate contracts (2)

( 197 ) ( 91,574 ) ( 123 ) ( 240,710 )

(1) Represents amortization of the cost of designated interest rate caps to interest expense based upon expected hedged interest payments on variable rate debt.

For the three and six months ended June 30, 2019 , amounts include unrealized loss of $ 86.9 million and $ 146.1 million , respectively, on a $ 2.0 billion notional forward starting swap assumed through the Merger, which was settled at the end of 2019.

(2) For the three and nine months ended September 30, 2019, amounts include unrealized loss of $ 91.5 million and $ 237.6 million, respectively, on a $ 2.0 billion notional forward starting swap assumed through the Merger, which was settled at the end of 2019.

Forward Contracts and Performance Swaps

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All realized and unrealized gains (losses) are recorded in other gain (loss) as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

8 unchanged sentences

The following table sets forth derivative positions where the Company has a right of offset under netting arrangements with the same counterparty.

Gross Assets (Liabilities) on Consolidated Balance Sheets

Gross Amounts Not Offset on Consolidated Balance Sheets

Net Amounts of Assets (Liabilities)

(In thousands)

(Assets) Liabilities

Cash Collateral Pledged

June 30, 2020

Gross Assets (Liabilities) on Consolidated Balance Sheets Gross Amounts Not Offset on Consolidated Balance Sheets Net Amounts of Assets (Liabilities)

(In thousands) (Assets) Liabilities Cash Collateral Pledged

September 30, 2020

Derivative Assets

2 unchanged sentences

Performance swaps 5,675 ( 5,675 ) — —

$ 6,007 $ ( 5,675 ) $ — $ 332

Derivative Liabilities

5 unchanged sentences

Performance swaps 4,493 ( 4,493 ) — —

$ 21,386 $ ( 8,878 ) $ — $ 12,508

Derivative Liabilities

1 unchanged sentence

Forward contracts ( 116,915 ) 4,493 9,981 ( 102,441 )

$ ( 127,531 ) $ 8,878 $ 9,981 $ ( 108,672 )

Recurring Fair Values

4 unchanged sentences

Fair Value Measurements

(In thousands)

June 30, 2020

(In thousands) Level 1 Level 2 Level 3 Total

September 30, 2020

Marketable equity securities $ 147,051 $ — $ — $ 147,051

AFS debt securities — — 27,898 27,898

CMBS of consolidated fund

Other assets—derivative assets — 6,007 — 6,007

Fair Value Option:

Loans receivable

Loans held for investment — — 1,325,144 1,325,144

Loans held for disposition — — 42,985 42,985

Equity method investments — — 165,770 165,770

Other liabilities — derivative liabilities

— 96,944 — 96,944

Other liabilities—settlement liability — — 10,754 10,754

7 unchanged sentences

Other liabilities — derivative liabilities

— 127,531 — 127,531

Other liabilities—contingent consideration for THL Hotel Portfolio — — 9,330 9,330

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All N-Star CDO bonds are classified as Level 3 of the fair value hierarchy.

CMBS of consolidated fund—Fair value is determined based on broker quotes or third party pricing services, classified as Level 2 of the fair value hierarchy.

Derivative instruments consist of interest rate contracts and foreign exchange contracts that are generally traded over-the-counter, and are valued using a third-party service provider, except for exchange traded futures contracts which are Level 1 fair values.

CMBS of consolidated fund—Fair value was determined based on broker quotes or third party pricing services, classified as Level 2 of the fair value hierarchy.

These CMBS were fully disposed of in the third quarter of 2020.

Derivative instruments consist of interest rate contracts and foreign exchange contracts that are generally traded over-the-counter, and are valued using a third-party service provider.

Quotations on over-the-counter derivatives are not adjusted and are generally valued using observable inputs such as contractual cash flows, yield curve, foreign currency rates and credit spreads, and are classified as Level 2 of the fair value hierarchy.

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The contingent consideration is measured based upon the probability of the former preferred equity holder receiving such payment, classified as Level 3 fair value.

At June 30, 2020 , the contingent consideration liability was determined to have zero value as it was no longer probable that such payment would be made following the adverse effect of COVID-19 on the operations and performance

of the THL Hotel Portfolio.

The liability, valued at $ 9.3 million at December 31, 2019 , was written off in the second quarter of 2020 as a gain, recorded in other gain (loss) on the consolidated statements of operations.

At September 30, 2020, the contingent consideration liability was determined to have zero value as it was no longer probable that such payment would be made following the adverse effect of COVID-19 on the operations and performance of the THL Hotel Portfolio.

The liability, valued at $ 9.3 million at December 31, 2019, was written off in the

second quarter of 2020 as a gain, recorded in other gain (loss) within income (loss) from discontinued operations (Note 16) on the consolidated statements of operations.

Other Liabilities — Settlement Liability

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The settlement liability, classified as a Level 3 fair value, is measured using a Monte Carlo simulation under a risk-neutral premise, assuming that the final distribution occurs at the end of the third year in March 2023, and is remeasured at each reporting period.

At June 30, 2020 , the settlement liability was valued at $ 9.1 million , applying the following assumptions:

At September 30, 2020, the settlement liability was valued at approximately $ 10.8 million, applying the following assumptions:

(a) expected volatility of the Company's class A common stock of 70.6 % based upon a combination of historical and implied volatility of the Company's class A common stock;

(b) zero expected dividend yield given the Company's suspension of its common stock dividend for the second quarter of 2020;

(b) zero expected dividend yield given the Company's suspension of its common stock dividend beginning the second quarter of 2020;

and (c) risk free rate of 0.14 % per annum based upon a compounded zero-coupon U.S.

Treasury yield.

The settlement liability increased $ 5.3 million from inception to June 30, 2020 , recorded as other loss on the consolidated statement of operations.

The settlement liability increased approximately $ 6.9 million from inception to September 30, 2020, recorded as other loss on the consolidated statement of operations.

Fair Value Option

12 unchanged sentences

Level 3 Recurring Fair Value Measurements

Quantitative information about recurring Level 3 fair value assets, for which information about unobservable inputs is reasonably available to the Company, are as follows.

Valuation Technique

Key Unobservable Inputs

Effect on Fair Value from Increase in Input Value (2)

Quantitative information about recurring Level 3 fair value assets are as follows.

Valuation Technique Key Unobservable Inputs Input Value Effect on Fair Value from Increase in Input Value (2)

Financial Instrument

1 unchanged sentence

Weighted Average (1)

June 30, 2020

September 30, 2020

AFS debt securities

Discounted cash flows

Discount rate

$ 27,898 Discounted cash flows Discount rate

( 18.3 % - 57.8 %)

Fair Value Option:

Loans receivable

Discounted cash flows

Discount rate

Loans held for investment 1,295,444 Discounted cash flows Discount rate

( 8.1 % - 26.7 %)

Loans receivable

Transaction price (5)

Loans held for investment 29,700 Transaction price (5)

Loans held for disposition 42,985 Transaction price (5)

Equity method investments—third party private equity funds

2,575 NAV (3)

Equity method investments—other

Discounted cash flows

Discount rate

8,417 Discounted cash flows Discount rate 18.3 %

( 18.1 % - 20.0 %)

Equity method investments—other

Revenue multiple

14,710 Multiple Revenue multiple 4.1 x (4)

Equity method investments—other

2 unchanged sentences

AFS debt securities

Discounted cash flows

Discount rate

$ 54,859 Discounted cash flows Discount rate 22.3 %

( 16.8 % - 65.0 %)

1 unchanged sentence

Equity method investments—third party private equity funds

5,391 NAV (3)

Equity method investments—other

Discounted cash flows

Discount rate

18,574 Discounted cash flows Discount rate 10.1 %

( 5.1 % - 15.8 %)

Equity method investments—other

Revenue multiple

Equity method investments—other

Transaction price (5)

25,000 Multiple Revenue multiple 3.7 x (4)

Equity method investments—other 173,910 Transaction price (5)

(1) Weighted average discount rates are calculated based upon undiscounted cash flows.

4 unchanged sentences

(4) Fair value is affected by change in revenue multiple relative to change in rate of revenue growth.

Valued based upon transaction price of investments recently acquired or offer prices on loans, investments or underlying assets of investee pending sales.

(5) Valued based upon transaction price of investments recently acquired, settlement amounts under contract, or offer prices on loans, investments or underlying assets of investee pending sales.

Transaction price approximates fair value for investee engaged in real estate development during the development stage.

1 unchanged sentence

Fair Value Option

(In thousands)

AFS Debt Securities

Loans Receivable

Equity Method Investments

(In thousands) AFS Debt Securities Loans Held for Investment Equity Method Investments

Fair value at December 31, 2018 $ 64,127 $ 81,085

Purchases, contributions and accretion

5,272 — 101,203

Paydowns, distributions and sales ( 8,727 ) — ( 8,082 )

Realized and unrealized gains (losses) in earnings, net

( 7,083 ) — ( 1,811 )

Other comprehensive income 6,364 — —

Fair value at June 30, 2019

Net unrealized gains (losses) in earnings on instruments held at June 30, 2019

Fair value at September 30, 2019 $ 59,953 $ — $ 172,395

Net unrealized gains (losses) in earnings on instruments held at September 30, 2019 $ ( 7,083 ) $ — $ ( 2,589 )

Fair value at December 31, 2019 $ 54,859 $ — $ 222,875

Election of fair value option on January 1, 2020

— 1,556,131 —

Reclassification of accrued interest on January 1, 2020

Purchases, drawdowns, contributions and accretion

2,979 156,179 4,614

Paydowns, distributions and sales

( 4,542 ) ( 131,365 ) ( 900 )

Interest accrual, including capitalization of paid-in-kind interest

Transfer to held for disposition — ( 42,985 ) —

Allowance for credit losses

( 23,973 ) — —

Realized and unrealized gains (losses) in earnings, net (1)

— ( 289,283 ) ( 66,418 )

Other comprehensive income (loss) (2)

Fair value at June 30, 2020

Net unrealized gains (losses) on instruments held at June 30, 2020:

( 1,425 ) 30,419 5,599

Fair value at September 30, 2020 $ 27,898 $ 1,325,144 $ 165,770

Net unrealized gains (losses) on instruments held at September 30, 2020:

$ — $ ( 280,822 ) $ ( 66,418 )

In other comprehensive income (loss)

$ ( 1,425 ) N/A N/A

(1) Includes $ 4.8 million of unrealized losses on loans held for disposition with aggregate fair value of $ 43.0 million at September 30, 2020 .

(2) Amounts recorded in OCI for loans receivable and equity method investments represent foreign currency translation differences on the Company's foreign subsidiaries that hold the respective foreign currency denominated investments.

1 unchanged sentence

Investments in a Company-sponsored private fund and a non-traded REIT, and limited partnership interest in a third party private fund are valued using NAV of the respective vehicles.

June 30, 2020

December 31, 2019

(In thousands)

Unfunded Commitments

September 30, 2020 December 31, 2019

(In thousands) Fair Value Unfunded Commitments Fair Value Unfunded Commitments

Private fund—real estate $ 15,668 $ 9,137 $ 16,271 $ 11,058

8 unchanged sentences

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or otherwise, write-down of asset values due to impairment.

Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for disposition or otherwise, write-down of asset values due to impairment.

Impairments are discussed in Note 4 for real estate, Note 6 for equity method investments, and Note 7 for investment management intangible assets, including goodwill.

3 unchanged sentences

There are no loans receivable carried at amortized cost in 2020 as the Company elected the fair value option for all loans receivable effective January 1, 2020.

Fair Value Measurements

Carrying Value

(In thousands)

June 30, 2020

Fair Value Measurements Carrying Value

(In thousands) Level 1 Level 2 Level 3 Total

September 30, 2020

Debt at amortized cost

Corporate credit facility

Convertible and exchangeable senior notes $ 671,421 $ 13,095 $ — $ 684,516 $ 535,596

Secured debt related to assets held for sale

Secured debt — — 6,113,253 6,113,253 6,347,480

Secured debt related to assets held for disposition — — 3,660,152 3,660,152 3,712,982

Junior subordinated debt — — 197,460 197,460 202,918

3 unchanged sentences

Convertible and exchangeable senior notes 602,000 13,095 — 615,095 614,052

Secured debt related to assets held for sale

Secured debt — — 4,747,560 4,747,560 4,702,676

Secured debt related to assets held for disposition — — 3,700,990 3,700,990 3,698,934

Junior subordinated debt — — 225,835 225,835 201,190

Debt —Fair value of convertible notes and exchangeable notes were determined using the last trade price in active markets and unadjusted quoted prices in non-active market, respectively.

Fair values of the corporate credit facility and secured debt were estimated by discounting expected future cash outlays at interest rates available to the Company for similar instruments, which fair values approximated carrying value for floating rate debt with credit spreads that approximate market rates.

Fair values of the corporate credit facility and secured debt were estimated by discounting expected future cash outlays at interest rates available to the Company for similar instruments.

Fair value of junior subordinated debt was based on unadjusted quotations from a third party valuation firm, with such quotes derived using a combination of internal valuation models, comparable trades in non-active markets and other market data.

As a reaction to the COVID-19 crisis, the credit market has generally stalled refinancing for most product types except at the lowest leverage levels.

While it is difficult to gauge market rates across the Company's portfolio for specific assets, fair value of debt associated with hospitality and healthcare assets presented as of June 30, 2020 incorporate a premium to nominal contractual rates to reflect the increased risk and lack of available financing in the current environment.

Other —Carrying values of cash, due from and to affiliates, other receivables and other payables generally approximate fair value due to their short term nature, and credit risk, if any, are negligible.

6 unchanged sentences

The noncontrolling interests in OP do not have substantive liquidation rights, substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest members (including by such a member unilaterally).

The absence of such rights, which represent voting rights in a limited partnership equivalent structure, would render OP to be a VIE.

The absence of such rights, which represent voting rights in a limited partnership

equivalent structure, would render OP to be a VIE.

The Company, as managing member, has the power to direct the core activities of OP that most significantly affect OP's performance, and through its majority interest in OP, has both the right to receive benefits from and the obligation to absorb losses of OP.

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The fee arrangements are commensurate with the level of management services provided by the Company, and contain terms and conditions that are customary to similar at-market fee arrangements.

Consolidated Company-Sponsored Private Fund —The Company currently consolidates a sponsored private fund in which it has more than an insignificant equity interest in the fund as general partner.

Consolidated Company-Sponsored Private Funds —The Company currently consolidates sponsored private funds in which it has more than an insignificant equity interest in the fund as general partner.

As a result, the Company is considered to be acting in the capacity of a principal of the sponsored private fund and is therefore the primary beneficiary of the fund.

The Company’s exposure is limited to the value of its outstanding investment in the consolidated private fund of $ 17.4 million at June 30, 2020 and $ 18.5 million at December 31, 2019 .

The Company, as general partner, is not obligated to provide any financial support to the consolidated private fund.

At June 30, 2020 and December 31, 2019 , the consolidated private fund had total assets of $ 47.0 million and $ 24.7 million , respectively, and total liabilities of $ 0.6 million and $ 0.1 million , respectively.

Assets and liabilities were made up primarily of marketable equity securities and unsettled trades.

The Company’s exposure is limited to the value of its outstanding investment in the consolidated private funds of $ 42.7 million at September 30, 2020 and $ 18.5 million at December 31, 2019.

The Company, as general partner, is not obligated to provide any financial support to the consolidated private funds.

At September 30, 2020 and December 31, 2019, the consolidated private funds had total assets of $ 101.4 million and $ 24.7 million, respectively, and total liabilities of $ 2.1 million and $ 0.1 million, respectively.

Assets and liabilities were made up primarily of cash, marketable equity securities and unsettled trades.

Unconsolidated Company-Sponsored Private Funds —The Company does not consolidate its sponsored private funds where it has insignificant direct equity interests or capital commitments to these funds as general partner.

3 unchanged sentences

The Company accounts for its equity interests in unconsolidated sponsored private funds under the equity method.

The Company's maximum exposure to loss is limited to the carrying value of its investment in the unconsolidated sponsored private funds, totaling $ 179.7 million at June 30, 2020 and $ 137.0 million at December 31, 2019 , included within equity and debt investments and additionally at December 31, 2019 , within assets held for sale, on the consolidated balance sheets.

The Company's maximum exposure to loss is limited to the carrying value of its investment in the unconsolidated sponsored private funds, totaling $ 235.2 million at September 30, 2020 and $ 137.0 million at December 31, 2019, included within equity and debt investments and additionally at December 31, 2019, within assets held for disposition, on the consolidated balance sheets.

Securitizations

9 unchanged sentences

The Company determined that the fees paid to the third party collateral manager or collateral manager delegate represent a variable interest in the CDOs and that the third party is acting as a principal.

The Company concluded that it does not have the power to direct the activities that most significantly impact the economic performance of these CDOs, which include but are not limited to, the ability to sell distressed collateral, and therefore the Company is not the primary beneficiary of such CDOs and does not consolidate these CDOs.

The Company’s exposure to loss is limited to its investment in these unconsolidated CDOs, comprising CDO bonds, which aggregate to $ 24.7 million at June 30, 2020 and $ 46.0 million at December 31, 2019 .

The Company concluded that it does not have the power to direct the activities that most significantly impact the

economic performance of these CDOs, which include but are not limited to, the ability to sell distressed collateral, and therefore the Company is not the primary beneficiary of such CDOs and does not consolidate these CDOs.

The Company’s exposure to loss is limited to its investment in these unconsolidated CDOs, comprising CDO bonds, which aggregate to $ 22.8 million at September 30, 2020 and $ 46.0 million at December 31, 2019.

The Company, through the Merger, acquired the Trusts, wholly-owned subsidiaries of NRF formed as statutory trusts.

1 unchanged sentence

The Company owns all of the common stock of the Trusts but does not consolidate the Trusts as the holders of the preferred securities issued by the Trusts are the primary beneficiaries of the Trusts.

The Company accounts for its interest in the Trusts under the equity method and its maximum exposure to loss is limited to its investment carrying value of $ 3.7 million at June 30, 2020 and December 31, 2019 , recorded in investments in unconsolidated ventures on the consolidated balance sheet.

The Company accounts for its interest in the Trusts under the equity method and its maximum exposure to loss is limited to its investment carrying value of $ 3.7 million at September 30, 2020 and December 31, 2019, recorded in investments in unconsolidated ventures on the consolidated balance sheet.

The junior subordinated notes are recorded as debt on the consolidated balance sheet.

2 unchanged sentences

Number of Shares

(In thousands)

Preferred Stock

(In thousands) Preferred Stock Class A

Shares outstanding at December 31, 2018 57,464 483,347 734

3 unchanged sentences

Shares canceled for tax withholding on vested stock awards — ( 651 ) —

Shares outstanding at June 30, 2019

Shares outstanding at September 30, 2019 57,464 487,018 734

Shares outstanding at December 31, 2019 41,350 487,044 734

1 unchanged sentence

Repurchase of common stock, net (1)

— ( 12,733 ) —

Equity-based compensation, net of forfeitures — 9,721 —

Shares canceled for tax withholding on vested stock awards — ( 2,554 ) —

Shares outstanding at June 30, 2020

Shares outstanding at September 30, 2020 41,350 481,662 734

(1) Net of reissuance of 964,160 shares of class A common stock that had been repurchased by the Company during March 2020.

2 unchanged sentences

In the event of a liquidation or dissolution of the Company, preferred stockholders have priority over common stockholders for payment of dividends and distribution of net assets.

The table below summarizes the preferred stock issued and outstanding at June 30, 2020 :

Dividend Rate Per Annum

Initial Issuance Date

Shares Outstanding

The table below summarizes the preferred stock issued and outstanding at September 30, 2020:

Description Dividend Rate Per Annum Initial Issuance Date Shares Outstanding

(in thousands)

3 unchanged sentences

Earliest Redemption Date

Currently redeemable

September 2017

September 22, 2022

Series G 7.5 % June 2014 3,450 $ 35 $ 86,250 Currently redeemable

Series H 7.125 % April 2015 11,500 115 287,500 Currently redeemable

Series I 7.15 % June 2017 13,800 138 345,000 June 5, 2022

Series J 7.125 % September 2017 12,600 126 315,000 September 22, 2022

41,350 $ 414 $ 1,033,750

All series of preferred stock are at parity with respect to dividends and distributions, including distributions upon liquidation, dissolution or winding up of the Company.

2 unchanged sentences

Each series of preferred stock is redeemable on or after the earliest redemption date for that series at $ 25.00 per share plus accrued and unpaid dividends (whether or not declared) exclusively at the Company’s option.

The redemption period for each series of preferred stock is subject to the Company’s right under limited circumstances to redeem the preferred stock earlier in order to preserve its qualification as a REIT or upon the occurrence of a change of control (as defined in the articles supplementary relating to each series of preferred stock).

The redemption

period for each series of preferred stock is subject to the Company’s right under limited circumstances to redeem the preferred stock earlier in order to preserve its qualification as a REIT or upon the occurrence of a change of control (as defined in the articles supplementary relating to each series of preferred stock).

Preferred stock generally does not have any voting rights, except if the Company fails to pay the preferred dividends for six or more quarterly periods (whether or not consecutive).

1 unchanged sentence

In addition, certain changes to the terms of any series of preferred stock cannot be made without the affirmative vote of holders of at least two-thirds of the outstanding shares of each such series of preferred stock voting separately as a class for each series of preferred stock.

In June 2020, the Board declared dividends on all series of preferred stock for the second quarter of 2020, which was paid in July 2020.

In August 2020, the Board declared dividends on all series of preferred stock for the third quarter of 2020.

Redemption of Preferred Stock

9 unchanged sentences

The Company suspended dividends on its class A common stock beginning with the second quarter of 2020.

Under the terms of the Company's amended credit facility, the Company is restricted from paying common dividends other than

to maintain the Company’s status as a REIT or to reduce income tax payments.

Under the terms of the Company's amended credit facility, the Company is restricted from paying common dividends other than to maintain the Company’s status as a REIT or to reduce income tax payments.

The Company will continue to monitor its financial performance and liquidity position, and as economic conditions improve, the Company will reevaluate its dividend policy in consultation with its revolver lending group.

Common Stock Repurchases

During the six months ended June 30, 2020 and for the year ended December 31, 2019 , the Company repurchased its class A common stock totaling 12,733,204 shares at a cost of $ 24.6 million and 652,311 shares at a cost of $ 3.2 million , respectively, or a weighted average price of $ 1.93 and $ 4.84 per share, respectively.

During the first quarter of 2020 and for the year ended December 31, 2019, the Company repurchased its class A common stock totaling 12,733,204 shares at a cost of $ 24.6 million and 652,311 shares at a cost of $ 3.2 million, respectively, or a weighted average price of $ 1.93 and $ 4.84 per share, respectively.

All share repurchases were made pursuant to a $ 300 million share repurchase program which expired in May 2020.

The Company is restricted from repurchasing additional common shares, subject to certain exceptions, under the terms of the amended credit facility.

The Company is restricted from repurchasing additional common shares, subject to certain exceptions, under the terms of its amended corporate credit facility.

Dividend Reinvestment and Direct Stock Purchase Plan

The Company's Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) provides existing common stockholders and other investors the opportunity to purchase shares (or additional shares, as applicable) of the Company's class A common stock by reinvesting some or all of the cash dividends received on their shares of the Company's class A common stock or making optional cash purchases within specified parameters.

The DRIP Plan involves the acquisition of the Company's class A common stock either in the open market, directly from the Company as newly issued common stock, or in privately negotiated transactions with third parties.

The DRIP Plan involves the acquisition of the Company's class A common stock either in the open market, directly from the Company as

newly issued common stock, or in privately negotiated transactions with third parties.

There were no shares of class A common stock acquired under the DRIP Plan in the form of new issuances in 2020 and 2019.

4 unchanged sentences

(In thousands)

Company's Share in AOCI of Equity Method Investments

Unrealized Gain (Loss) on AFS Debt Securities

Unrealized Gain (Loss) on Cash Flow Hedges

Company's Share in AOCI of Equity Method Investments Unrealized Gain (Loss) on AFS Debt Securities Unrealized Gain (Loss) on Cash Flow Hedges

Foreign Currency Translation Gain (Loss)

2 unchanged sentences

Other comprehensive income (loss) before reclassifications

9,425 ( 606 ) ( 2,670 ) ( 36,511 ) 37,071 6,709

Amounts reclassified from AOCI

AOCI at June 30, 2019

( 3,554 ) 6,479 — ( 1,128 ) ( 1,617 ) 180

AOCI at September 30, 2019 $ 9,500 $ 2,698 $ ( 2,761 ) $ ( 31,021 ) $ 42,472 $ 20,888

AOCI at December 31, 2019 $ 9,281 $ 7,823 $ ( 226 ) $ 139 $ 30,651 $ 47,668

Other comprehensive income (loss) before reclassifications

3,053 395 ( 3 ) 13,961 15,821 33,227

Amounts reclassified from AOCI

AOCI at June 30, 2020

— ( 3,585 ) — 225 ( 925 ) ( 4,285 )

AOCI at September 30, 2020 $ 12,334 $ 4,633 $ ( 229 ) $ 14,325 $ 45,547 $ 76,610

Changes in Components of AOCI—Noncontrolling Interests in Investment Entities

(In thousands)

Unrealized Gain (Loss) on Cash Flow Hedges

Foreign Currency Translation Gain (Loss)

Unrealized Gain (Loss) on Net Investment Hedges

(In thousands) Unrealized Gain (Loss) on Cash Flow Hedges Foreign Currency Translation Gain (Loss) Unrealized Gain (Loss) on Net Investment Hedges Total

AOCI at December 31, 2018 $ ( 390 ) $ ( 600 ) $ 9,644 $ 8,654

Other comprehensive income (loss) before reclassifications

( 6,190 ) ( 57,492 ) 4,543 ( 59,139 )

Amounts reclassified from AOCI

AOCI at June 30, 2019

— ( 465 ) ( 653 ) ( 1,118 )

AOCI at September 30, 2019 $ ( 6,580 ) $ ( 58,557 ) $ 13,534 $ ( 51,603 )

AOCI at December 31, 2019 $ ( 1,005 ) $ ( 17,913 ) $ 10,659 $ ( 8,259 )

Other comprehensive income (loss) before reclassifications

( 12 ) 43,170 5,313 48,471

Amounts reclassified from AOCI — ( 95 ) ( 873 ) ( 968 )

AOCI at June 30, 2020

AOCI at September 30, 2020 $ ( 1,017 ) $ 25,162 $ 15,099 $ 39,244

Reclassifications out of AOCI—Stockholders

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(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Affected Line Item in the

Three Months Ended September 30, Nine Months Ended September 30, Affected Line Item in the

Consolidated Statements of Operations

Component of AOCI reclassified into earnings

2020 2019 2020 2019

Relief of basis of AFS debt securities

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373 — 373 963 Other gain (loss), net

Release of equity in AOCI of unconsolidated ventures

— 3,554 — 3,554 Equity method earnings (losses)

Noncontrolling Interests

Redeemable Noncontrolling Interests

The following table presents the activity in redeemable noncontrolling interests in a consolidated open-end fund sponsored by the Company.

Six Months Ended June 30,

The following table presents the activity in redeemable noncontrolling interests in the Company's digital investment management business and in consolidated open-end funds sponsored by the Company.

Nine Months Ended September 30,

(In thousands) 2020 2019

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Ending balance $ 287,231 $ 5,987

Strategic Partnership in the Company's Digital Investment Management Business

In July 2020, the Company formed a strategic partnership with affiliates of Wafra, Inc.

(collectively, "Wafra"), a private investment firm and a global partner for alternative asset managers, in which Wafra made a minority investment in substantially all of the Company's digital investment management business (as defined for purposes of this transaction, the "Digital IM Business").

The investment entitles Wafra to participate in approximately 31.5 % of the net management fees and carried interest generated by the Digital IM Business.

Wafra has agreed to assume certain of the Company's existing commitments made to DCP and to make commitments to the successor fund to DCP and to the Company’s initial digital credit fund, in an aggregate amount of at least $ 130.0 million.

Wafra has also agreed to make commitments to the Company's future digital funds and investment vehicles on a pro rata basis with the Company based on Wafra's percentage interest in the Digital IM Business, subject to certain caps.

In addition, the Company issued Wafra five warrants to purchase up to an aggregate of 5 % (on a fully-diluted, post-transaction basis) of the Company’s class A common stock.

Each warrant entitles Wafra to purchase up to 5,352,000 shares of the Company's class A common stock, with staggered strike prices between $ 2.43 and $ 6.00 for each warrant, exercisable until July 17, 2026.

Consideration paid by Wafra in exchange for its investment in the Digital IM Business and for the warrants is composed of:

(i) cash consideration of $ 253.6 million paid at closing;

and (ii) contingent consideration of approximately $ 29.9 million to be paid if the run-rate of earnings before interest, tax, depreciation and amortization ("EBITDA") of the digital investment management business, as defined, is equal to or greater than $ 72.0 million as of December 31, 2020.

Under certain circumstances following such time as the Digital IM Business comprises 90 % or more of the Company's assets, the Company has agreed to use commercially reasonable efforts to facilitate the conversion of Wafra's interest into shares of the Company's class A common stock.

There can be no assurances that such conversion would occur or on what terms and conditions such conversion would occur, including whether such conversion, if it did occur in the future, would have any adverse impact on the Company, the Company’s stock price, governance and other matters.

Wafra has customary minority rights and certain other structural protections designed to protect its interests, including redemption rights with respect to its investment in the Digital IM Business and its funded commitments in certain digital funds.

Wafra's redemption rights will be triggered upon the occurrence of certain events, including key person or cause events under the governing documents of certain digital funds and for a limited period, upon Mr.

Ganzi and Mr.

Jenkins ceasing to fulfill certain time and attention commitments to the Digital IM business.

To further enhance the alignment of interests, the Company entered into an amended and restated restrictive covenant agreement with each of Marc Ganzi and Ben Jenkins, pursuant to which each of Messrs.

Ganzi and Jenkins agreed to certain enhanced non-solicitation provisions and extension of the term of existing non-competition agreements.

Wafra’s investment provides the Company with permanent capital to pursue strategic digital infrastructure investments and grow the Digital IM Business.

Noncontrolling Interests in Investment Entities

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The Company's investment in its light industrial portfolio, prior to its sale in December 2019, was made alongside third party limited partners through a joint venture consolidated by the Company.

The Company's ownership interest changed over time as result of capital contributions from or redemptions of limited partner interests.

The Company's ownership interest

changed over time as result of capital contributions from or redemptions of limited partner interests.

Limited partners were admitted or redeemed at the net asset value of the joint venture, based upon valuations determined by independent third parties, at the time of their contributions or redemptions.

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Issuance of OP Units —The Company issued 21,478,515 OP Units in July 2019 and 612,072 OP Units in December 2019 as part of the consideration for the acquisitions of DBH, valued at $ 111.9 million, and DataBank, valued at $ 3.0 million, based upon the closing price of the Company's class A common stock on July 24, 2019 and December 20, 2019, respectively (Note 3).

There were no OP Units issued in the six months ended June 30, 2020 .

Redemption of OP Units —The Company redeemed 184,395 OP Units during the six months ended June 30, 2020 and 187,995 OP Units during the year ended December 31, 2019 , with the issuance of an equal number of shares of class A common stock on a one -for-one basis.

There were no OP Units issued in the nine months ended September 30, 2020.

Redemption of OP Units —The Company redeemed 184,395 OP Units during the nine months ended September 30, 2020 and 187,995 OP Units during the year ended December 31, 2019, with the issuance of an equal number of shares of class A common stock on a one -for-one basis.

Discontinued Operations

In 2020, discontinued operations represent (i) results of operations of the bulk industrial portfolio;

and (ii) in the second quarter of 2020, final adjustments to proceeds from the December 2019 sale of the light industrial portfolio upon release of escrowed funds, which resulted in a net loss of $7.4 million, including a corresponding effect on carried interest and related compensation.

In 2019, discontinued operations encompassed predominantly results of the light industrial portfolio and the related management platform prior to its sale in December 2019 , and included (i) direct compensation and administrative expenses of the industrial business, and (ii) associated fee income, equity method earnings from general partner interest in the industrial open-end fund, predominantly carried interest, and compensation related to carried interest sharing, all of which were previously reported under the investment management segment.

Noncontrolling interests in investment entities in 2019 also included the interests of all limited partners in the industrial closed-end and open-end funds.

Discontinued operations represent results of operations of the following:

• Hotel —in 2020 and 2019, the Company's Hospitality segment and the THL Hotel Portfolio in the Other segment;

• Industrial —(i) light industrial portfolio and related management platform in 2019 prior to its sale in December 2019, which included fee income and general partner interest in the industrial open-end fund that earned carried interest, and interests of all limited partners in the industrial closed-end and open-end funds who represented noncontrolling interests, and (ii) bulk industrial portfolio in 2020 and 2019.

In the second quarter of 2020, final adjustments were made to net sales proceeds from the light industrial business upon release of escrowed funds, resulting in a net loss of $ 7.4 million.

In November 2020, the Company entered into an agreement to sell its 51 % interest in the bulk industrial portfolio to its joint venture partner, with the sale expected to close by the end of 2020.

Income (loss) from discontinued operations is presented below.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

(In thousands)

Hotel Industrial Total Hotel Industrial Total

Property operating income $ 144,130 $ 5,866 $ 149,996 $ 293,297 $ 97,188 $ 390,485

Fee income — — — — 3,400 3,400

Interest and other income 40 5 45 198 1,454 1,652

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Investment and servicing expense 6,053 20 6,073 4,491 54 4,545

Transaction costs 4,500 — 4,500 — — —

Depreciation and amortization 39,978 639 40,617 42,073 12,342 54,415

Impairment loss 115,792 — 115,792 31,868 — 31,868

Compensation expense—cash and equity-based (1)

863 — 863 1,243 3,914 5,157

Compensation expense—carried interest — — — — 17,796 17,796

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Other gain (loss), net ( 113 ) ( 2 ) ( 115 ) 378 ( 12 ) 366

Equity method losses, including carried interest

Equity method earnings, including carried interest — — — — 35,765 35,765

Income (loss) from discontinued operations before income taxes ( 177,946 ) 709 ( 177,237 ) ( 34,824 ) 60,223 25,399

Income tax benefit (expense) 225 ( 2 ) 223 128 127 255

Income (loss) from discontinued operations ( 177,721 ) 707 ( 177,014 ) ( 34,696 ) 60,350 25,654

Income (loss) from discontinued operations attributable to:

Noncontrolling interests in investment entities ( 60,938 ) 82 ( 60,856 ) ( 3,470 ) 27,728 24,258

Noncontrolling interests in Operating Company ( 11,581 ) 62 ( 11,519 ) ( 2,817 ) 2,870 53

Income (loss) from discontinued operations attributable to Colony Capital, Inc.

$ ( 105,202 ) $ 563 $ ( 104,639 ) $ ( 28,409 ) $ 29,752 $ 1,343

(1) Includes equity-based compensation of $ 0.2 million and $ 1.0 million for the three months ended September 30, 2020 and 2019, respectively.

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

(In thousands)

Hotel Industrial Total Hotel Industrial Total

Property operating income $ 442,827 $ 16,169 $ 458,996 $ 865,863 $ 270,161 $ 1,136,024

Fee income — — — — 8,849 8,849

Interest and other income 149 78 227 420 3,822 4,242

Revenues from discontinued operations 442,976 16,247 459,223 866,283 282,832 1,149,115

Property operating expense 375,984 4,577 380,561 575,619 74,058 649,677

Interest expense 122,834 5,654 128,488 169,905 55,482 225,387

Investment and servicing expense 12,514 20 12,534 12,347 592 12,939

Transaction costs 4,500 — 4,500 — — —

Depreciation and amortization 135,944 1,914 137,858 137,249 97,147 234,396

Impairment loss 1,095,878 — 1,095,878 39,347 — 39,347

Compensation expense—cash and equity-based (1)

2,998 82 3,080 3,707 10,253 13,960

Compensation expense—carried interest — ( 524 ) ( 524 ) — 18,136 18,136

Administrative expenses 1,294 892 2,186 1,513 3,976 5,489

Expenses from discontinued operations 1,751,946 12,615 1,764,561 939,687 259,644 1,199,331

Other income (loss)

Gain (loss) on sale of real estate ( 10 ) ( 8,787 ) ( 8,797 ) 913 28,070 28,983

Other gain (loss), net 9,727 — 9,727 ( 577 ) ( 69 ) ( 646 )

Equity method earnings (losses), including carried interest — ( 164 ) ( 164 ) — 35,121 35,121

Income (loss) from discontinued operations before income taxes ( 1,299,253 ) ( 5,319 ) ( 1,304,572 ) ( 73,068 ) 86,310 13,242

Income tax expense ( 2,651 ) ( 2 ) ( 2,653 ) ( 2,028 ) ( 171 ) ( 2,199 )

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Income (loss) from discontinued operations attributable to Colony Capital, Inc.

Included equity-based compensation of $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2019 , respectively.

$ ( 1,022,120 ) $ ( 697 ) $ ( 1,022,817 ) $ ( 59,769 ) $ 37,084 $ ( 22,685 )

(1) Includes equity-based compensation of $ 0.6 million and $ 3.1 million for the nine months ended September 30, 2020 and 2019, respectively .

Earnings per Share

The following table provides the basic and diluted earnings per common share computations:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except per share data) 2020 2019 2020 2019

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Loss from continuing operations attributable to noncontrolling interests

101,588 62,337 646,172 69,827

Loss from continuing operations attributable to Colony Capital, Inc.

( 82,628 ) ( 529,159 ) ( 1,530,883 ) ( 1,021,859 )

Income (loss) from discontinued operations attributable to Colony Capital, Inc.

( 104,639 ) 1,343 ( 1,022,817 ) ( 22,685 )

Net loss attributable to Colony Capital, Inc.

( 187,267 ) ( 527,816 ) ( 2,553,700 ) ( 1,044,544 )

Preferred dividends ( 18,517 ) ( 27,137 ) ( 56,507 ) ( 81,412 )

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Weighted average number of common shares outstanding—basic

471,739 479,776 474,081 479,412

Weighted average effect of dilutive shares (1)(2)(3)

Weighted average number of common shares outstanding—diluted

471,739 479,776 474,081 479,412

Basic loss per share

Loss from continuing operations $ ( 0.22 ) $ ( 1.16 ) $ ( 3.35 ) $ ( 2.30 )

Income from discontinued operations

Loss from discontinued operations ( 0.22 ) — ( 2.16 ) ( 0.05 )

Net loss attributable to common stockholders per basic common share

$ ( 0.44 ) $ ( 1.16 ) $ ( 5.51 ) $ ( 2.35 )

Diluted loss per share

Loss from continuing operations $ ( 0.22 ) $ ( 1.16 ) $ ( 3.35 ) $ ( 2.30 )

Income from discontinued operations

Loss from discontinued operations ( 0.22 ) — ( 2.16 ) ( 0.05 )

Net loss attributable to common stockholders per diluted common share

For both the three months ended June 30, 2020 and 2019 , excluded from the calculation of diluted earnings per share is the effect of adding back $ 7.1 million of interest expense and 38,112,100 weighted average dilutive common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as their inclusion would be antidilutive.

For the six months ended June 30, 2020 and 2019 , excluded from the calculation of diluted earnings per share is the effect of adding back $ 14.2 million and $ 14.3 million , respectively, and 38,112,100 weighted average dilutive common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as their inclusion would be antidilutive.

The calculation of diluted earnings per share excludes the effect of weighted average unvested non-participating restricted shares of 92,700 and 115,200 for the three and six months ended June 30, 2019 , respectively, as the effect would be antidilutive.

No unvested non-participating restricted shares were outstanding during the six months ended June 30, 2020 .

The calculation of diluted earnings per share also excludes the effect of weighted average shares of class A common stock that are contingently issuable in relation to PSUs (Note 19 ) of 6,047,300 and 459,800 for the three months ended June 30, 2020 and 2019 , respectively, and 3,784,000 and 755,700 for the six months ended June 30, 2020 and 2019 , respectively.

$ ( 0.44 ) $ ( 1.16 ) $ ( 5.51 ) $ ( 2.35 )

(1) For the three months ended September 30, 2020 and 2019, excluded from the calculation of diluted earnings per share is the effect of adding back $ 8.2 million and $ 7.1 million, respectively, of interest expense and 126,454,900 and 38,112,100 , respectively, weighted average dilutive common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as their inclusion would be antidilutive.

For the nine months ended September 30, 2020 and 2019, excluded from the calculation of diluted earnings per share is the effect of adding back $ 22.4 million and $ 21.2 million, respectively, and 67,774,600 and 38,112,100 , respectively, weighted average dilutive common share equivalents for the assumed conversion or exchange of the Company's outstanding convertible and exchangeable notes, as their inclusion would be antidilutive.

(2) The calculation of diluted earnings per share excludes the effect of weighted average unvested non-participating restricted shares of 67,300 and 99,100 for the three and nine months ended September 30, 2019, respectively, as the effect would be antidilutive.

No unvested non-participating restricted shares were outstanding during the nine months ended September 30, 2020.

The calculation of diluted earnings per share also excludes the effect of weighted average shares of class A common stock that are contingently issuable in relation to performance stock units (Note 19) of 5,183,400 and 2,451,400 for the three months ended September 30, 2020 and 2019, respectively, and 4,250,400 and 1,320,900 for the nine months ended September 30, 2020 and 2019, respectively.

(3) OP Units, subject to lock-up agreements, may be redeemed for registered or unregistered class A common stock on a one -for-one basis.

At June 30, 2020 and 2019 there were 53,076,700 and 31,171,300 redeemable OP Units, respectively.

At September 30, 2020 and 2019 there were 53,076,700 and 52,649,000 redeemable OP Units, respectively.

These OP Units would not be dilutive and were not included in the computation of diluted earnings per share for all periods presented.

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The Company's fee income is earned from the following sources:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Institutional funds and other investment vehicles

$ 31,648 $ 26,612 $ 93,461 $ 50,283

Public companies (CLNC, and NRE prior to its sale in September 2019)

7,355 79,633 22,636 109,777

Non-traded REIT

4,431 4,994 13,293 15,089

485 615 1,574 3,166

$ 43,919 $ 111,854 $ 130,964 $ 178,315

The following table presents the Company's fee income by type:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Base management fees ($ 42,009 , $ 45,572 , $ 124,457 and $ 108,192 from affiliates, respectively)

$ 42,085 $ 45,763 $ 124,742 $ 108,739

Asset management fees ($ 525 , $ 539 , $ 1,784 and $ 1,775 from affiliates, respectively)

818 819 2,629 2,684

Incentive and termination fee—from affiliates

— 64,555 — 64,555

Other fee income ($ 993 , $ 693 , $ 3,524 and $ 955 from affiliates, respectively)

1,016 717 3,593 2,337

Total fee income

$ 43,919 $ 111,854 $ 130,964 $ 178,315

Base Management Fees — The Company earns base management fees for the day-to-day operations and administration of its managed private funds, traded and non-traded REITs, and other investment vehicles, calculated as follows:

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A portion of the incentive fees earned by the Company (generally 40 % to 50 %) is allocable to senior management, investment professionals and certain other employees of the Company, included in carried interest and incentive fee compensation expense.

There were no incentive fees earned in the three and six months ended June 30, 2020 and 2019 .

There were no incentive fees earned in the three and nine months ended September 30, 2020.

Termination of the NRE management contract in September 2019 resulted in payment and recognition of a termination fee to the Company of $ 64.6 million, of which $ 21.5 million represents incentive fees earned for fiscal year 2019 through the date of termination.

Other Fee Income —Other fees include service fees for information technology and operational support services and facilities to portfolio companies, advisory fees, and licensing fee on the Company's proprietary real estate index, a rules-based strategy that invests in common stock of U.S.

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Shares reserved for the issuance of awards under the Equity Incentive Plan are subject to equitable adjustment upon the occurrence of certain corporate events, provided that this number automatically increases each January 1st by 2 % of the outstanding number of shares of the Company’s class A common stock on the immediately preceding December 31st.

At June 30, 2020 , an aggregate 64.1 million shares of the Company's class A common stock were reserved for the issuance of awards under the Equity Incentive Plan.

At September 30, 2020, an aggregate 64.1 million shares of the Company's class A common stock were reserved for the issuance of awards under the Equity Incentive Plan.

Restricted Stock — Restricted stock awards relating to the Company's class A common stock are granted to senior executives, directors and certain employees, with a service condition only and are generally subject to annual time-based vesting in equal tranches over a three-year period.

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Fair value of PSUs, including dividend equivalent rights, was determined using a Monte Carlo simulation under a risk-neutral premise, with the following assumptions:

2020 PSU Grants

2019 PSU Grants

2018 PSU Grant (4)

2020 PSU Grants 2019 PSU Grants 2018 PSU Grant (4)

Expected volatility of the Company's class A common stock (1)

34.1 % 26.2 % 29.0 %

Expected annual dividend yield (2)

9.3 % 8.5% - 8.7%

Risk-free rate (per annum) (3)

0.4 % 2.2% - 2.4%

(1) Based upon the Company's historical stock volatility or in combination with historical stock volatility of a specified peer group, or a combination of historical volatility and implied volatility on actively traded stock options of a specified peer group.

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The dividend equivalent right is accounted for as a liability-classified award.

The fair value of the dividend equivalent right is recognized as compensation expense on a straight-line basis over the measurement period, and is subject to adjustment to fair value at each reporting period.

The fair value of the dividend

equivalent right is recognized as compensation expense on a straight-line basis over the measurement period, and is subject to adjustment to fair value at each reporting period.

LTIP Units — LTIP units are units in the Operating Company that are designated as profits interests for federal income tax purposes.

Unvested LTIP units do not accrue distributions.

Each vested LTIP unit is convertible, at the election of the

holder (subject to capital account limitation), into one common OP Unit and upon conversion, subject to the redemption terms of OP Units (Note 15 ).

LTIP units issued to certain employees have a service condition only, and are valued based upon the Company's class A common stock price on grant date.

In connection with the acquisition of DBH in July 2019, the Company granted 10 million LTIP units to Mr.

Ganzi, co-founder and CEO of DBH and CEO of the Company, subject to both a service condition and a market condition.

The LTIP units will vest based upon achievement of the Company's class A common stock price closing at or above $ 10.00 over any 90 consecutive trading days prior to the fifth anniversary of the grant date, subject to Mr.

Ganzi's continuous employment to the time of such vesting.

Fair value of these LTIP units was determined using a Monte Carlo simulation under a risk-neutral premise, with the following assumptions:

Each vested LTIP unit is convertible, at the election of the holder (subject to capital account limitation), into one common OP Unit and upon conversion, subject to the redemption terms of OP Units (Note 15).

LTIP units issued have either (1) a service condition only, valued based upon the Company's class A common stock price on grant date;

or (2) both a service condition and a market condition based upon the Company's class A common stock achieving target closing prices over predetermined measurement periods subject to continuous employment to the time of vesting, valued using a Monte Carlo simulation.

The following assumptions were applied in the Monte Carlo model under a risk-neutral premise:

2020 LTIP Grant 2019 LTIP Grant (1)

Expected volatility of the Company's class A common stock (2)

43.1 % 28.3 %

Expected dividend yield (3)

Risk-free rate (per annum) (4)

(1) Represents 10 million LTIP units granted to Marc Ganzi in connection with the acquisition of DBH in July 2019, with vesting based upon achievement of the Company's class A common stock price closing at or above $ 10.00 over any 90 consecutive trading days prior to the fifth anniversary of the grant date.

(2) Based upon historical volatility of the Company's stock and those of a specified peer group.

(3) Based upon the Company's most recently issued dividend prior to grant date and closing price of the Company's class A common stock on grant date.

Expected dividend yield is zero for the 2020 LTIP award as the Company suspended common dividends beginning with the second quarter of 2020.

(4) Based upon the continuously compounded zero-coupon US Treasury yield for the term coinciding with the measurement period of the award as of valuation date.

Equity-based compensation cost on LTIP units is recognized on a straight-line basis over either the service period for awards with a service condition only, or over the derived service period for awards with both a service condition and a market condition.

Equity-based compensation cost on LTIP units is recognized on a straight-line basis either over (1) the service period for awards with a service condition only;

or (2) the derived service period for awards with both a service condition and a market condition, irrespective of whether the market condition is satisfied.

The derived service period is a service period that is inferred from the application of the simulation technique used in the valuation of the award, and represents the median of the terms in the simulation in which the market condition is satisfied.

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Fair value of DSUs are determined based on the price of the Company's class A common stock on grant date and recognized immediately if fully vested upon grant, or on a straight-line basis over the vesting period as equity based compensation expense and equity.

Equity-based compensation expense, excluding amounts related to the industrial segment in 2019 which is presented as discontinued operations (Note 16 ), is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Equity-based compensation expense, excluding amounts related to the industrial and hotel businesses which are presented as discontinued operations (Note 16), is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands)

2020 2019 2020 2019

Compensation expense (including $ 358 , $ 345 , $ 1,221 and $ 777 amortization of fair value of dividend equivalent rights)

$ 7,542 $ 9,119 $ 25,794 $ 21,957

Changes in the Company’s unvested equity awards are summarized below:

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Grant Date Fair Value

Restricted Stock

All Other Awards

Restricted Stock LTIP Units DSUs RSUs (1)

Total PSUs All Other Awards

Unvested shares and units at December 31, 2019

Unvested shares and units at June 30, 2020

7,641,708 10,000,000 265,784 — 5,680,195 23,587,687 $ 3.66 $ 3.25

Granted 10,130,282 1,845,018 655,468 10,799,244 4,324,375 27,754,387 1.64 2.20

Vested ( 5,894,704 ) — ( 474,547 ) — — ( 6,369,251 ) — 5.19

Forfeited ( 575,304 ) — — ( 1,209,680 ) ( 53,220 ) ( 1,838,204 ) 4.27 3.78

Unvested shares and units at September 30, 2020

11,301,982 11,845,018 446,705 9,589,564 9,951,350 43,134,619 2.78 2.11

(1) Represents the number of RSUs granted that are subject to vesting only upon achievement of performance condition.

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(2) Represents the number of PSUs granted, which does not reflect potential increases or decreases that could result from the final outcome of the total shareholder return measured at the end of the performance period.

Fair value of equity awards that vested, determined based on their respective fair values at vesting date, was $ 3.3 million and $ 1.3 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 13.4 million and $ 9.8 million for the six months ended June 30, 2020 and 2019 , respectively.

At June 30, 2020 , aggregate unrecognized compensation cost for all unvested equity awards was $ 58.9 million , which is expected to be recognized over a weighted average period of 2.5 years .

Fair value of equity awards that vested, determined based on their respective fair values at vesting date, was $ 1.4 million and $ 1.2 million for the three months ended September 30, 2020 and 2019, respectively, and $ 14.8 million and $ 11.0 million for the nine months ended September 30, 2020 and 2019, respectively.

At September 30, 2020, aggregate unrecognized compensation cost for all unvested equity awards was $ 65.5 million, which is expected to be recognized over a weighted average period of 2.6 years.

Awards Granted by Managed Companies

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The other asset and other liability associated with managed company awards granted to employees are subject to adjustment to fair value at each reporting period, with changes reflected in equity-based compensation and other income, respectively.

Equity-based compensation recognized related to managed company awards was $ 3.0 million and $ 3.6 million for the three months ended June 30, 2020 and 2019 , respectively, and an expense reversal of $ 0.4 million and an expense of $ 6.4 million for the six months ended June 30, 2020 and 2019 , respectively.

Equity-based compensation recognized related to managed company awards was an expense reversal of $ 0.9 million and $ 1.3 million for the three and nine months ended September 30, 2020, respectively, an expense of $ 24.3 million and $ 30.6 million for the three and nine months ended September 30, 2019, respectively.

A corresponding amount is recognized in other income for managed company awards granted to employees (Note 20).

At June 30, 2020 , aggregate unrecognized compensation cost for unvested managed company awards of CLNC was $ 4.3 million , which is expected to be recognized over a weighted average period of 1.3 years .

At September 30, 2020, aggregate unrecognized compensation cost for unvested managed company awards of CLNC was $ 2.3 million, which is expected to be recognized over a weighted average period of 1.1 years.

Transactions with Affiliates

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Amounts due from and due to affiliates consist of the following:

(In thousands)

June 30, 2020

December 31, 2019

(In thousands) September 30, 2020 December 31, 2019

Due from Affiliates

Investment vehicles, portfolio companies and unconsolidated ventures

Fee income $ 32,633 $ 36,106

Cost reimbursements and recoverable expenses 10,571 14,624

1 unchanged sentence

Employees and other affiliates 597 750

$ 78,801 $ 51,480

Due to Affiliates

Employees and other affiliates

$ 1,279 $ 34,064

Transactions with affiliates include the following:

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Amounts related to NRE pertain to periods prior to termination of its management agreement in September 2019.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

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Equity awards of CLNC and NRE (Note 19) ( 1,005 ) 24,049 ( 1,605 ) 30,632

$ 5,528 $ 34,058 $ 16,537 $ 55,242

Recoverable Expenses— The Company pays organization and offering costs associated with the formation and capital raising of the retail companies and private funds sponsored by the Company, for which the Company recovers from these investment vehicles, up to specified thresholds for certain private funds and up to 1 % of proceeds expected to be raised from the offering of retail companies (excluding shares offered pursuant to distribution reinvestment plans).

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The credit facility is intended to provide additional liquidity to NorthStar Healthcare on an as needed basis.

In April 2020, the credit facility was drawn for the full amount of $ 35.0 million and remained outstanding a t June 30, 2020 .

In April 2020, the credit facility was drawn for the full amount of $ 35.0 million and remained outstanding a t September 30, 2020 .

There were no amounts outstanding at December 31, 2019 .

Liquidating Trust— As contemplated in the combination agreement, a certain loan receivable previously held by NorthStar I was not transferred to CLNC, for which the Company acquired a senior participation interest at par, and the remaining junior participation interest ("NorthStar I Retained Asset") was transferred to a liquidating trust.

Liquidating Trust— In the formation of CLNC through a merger with NorthStar Real Estate Income Trust, Inc.

("NorthStar I") and NorthStar Real Estate Income II, Inc., non-traded REITs previously sponsored by the Company, a certain loan receivable previously held by NorthStar I was not transferred to CLNC, for which the Company acquired a senior participation interest at par, and the remaining junior participation interest ("NorthStar I Retained Asset") was transferred to a liquidating trust.

The Company entered into a management services agreement with the liquidating trust to service and assist in the potential sale of the NorthStar I Retained Asset, and to provide administrative services on such terms and conditions as approved by the trustees for a management fee of 1.25 % per annum of the net assets of the liquidating trust.

Such fee amount is immaterial.

Acquisition of DBH and DataBank— In connection with the acquisition of DBH in July 2019, payment of a portion of the cash consideration to the principals of DBH, including Mr.

Ganzi, who became employees or affiliate of the Company post-acquisition, was deferred until the expiration of certain customary seller indemnification obligations (Note 3 ).

In October 2020, the loan was paid off at a discount and the liquidating trust is expected to be liquidated by the end of the year.

Deferred Consideration— In the acquisition of DBH in July 2019 (Note 3), payment of a portion of the cash consideration to the principals of DBH, including Marc Ganzi, who became employees or affiliate of the Company post-acquisition, was deferred until the expiration of certain customary seller indemnification obligations.

The entire deferred consideration of $ 32.5 million was paid in May 2020.

In connection with the Company's acquisition in December 2019 of interests in DataBank from third parties (Note 3 ) , Mr.

Ganzi and Mr.

Jenkins , the Chairman of the Company’s digital realty platform, entered into voting agreements with the Company, which provide the Company with majority voting power over DataBank's board.

T he Company took a series of steps to mitigate conflicts in the transaction, including receiving a fairness opinion on its purchase price from a nationally recognized third party valuation firm.

Digital Real Estate Acquisitions— In connection with the acquisition of third party interests in DataBank in December 2019 (Note 3) , Marc Ganzi and Ben Jenkins entered into voting agreements with the Company, which provided the Company with majority voting power over DataBank's board of directors.

Additionally, in exchange for incentive units owned by Messrs.

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Ganzi and Jenkins by the Company for such incentive units in connection with its investment in DataBank, which was in addition to the cash consideration paid to third parties by the Company for its acquired interests in DataBank.

As a result, the Company will not be subject to future carried interest payments to the DBH principals with respect to the Company's investment in DataBank.

In addition, the DataBank transaction was approved by the Company's board of directors.

As a result, the Company will not be subject to future carried interest payments to Messrs.

Ganzi and Jenkins with respect to the Company's investment in DataBank.

In connection with acquisition of Vantage SDC in July 2020 (Note 4), the Company entered into a series of agreements with Messrs.

Ganzi and Jenkins, and their respective affiliates, pursuant to which Messrs.

Ganzi and Jenkins invested $ 8.7 million and $ 2.1 million, respectively, in Vantage SDC alongside the Company and the co-investors on the same economic terms.

Such amounts invested represented 40 % of carried interest payments received by each of Messrs.

Ganzi and Jenkins in connection with Vantage SDC acquisition as a result of their respective personal investments in Vantage made prior to the Company’s acquisition of DBH (such carried interest was determined excluding any additional purchase price that may be payable if certain leasing milestones are achieved).

Additionally, the day-to-day operations of Vantage SDC will continue to be managed by Vantage's existing management company, in which Messrs.

Ganzi and Jenkins own a 50 % interest in the aggregate.

Fees paid to Vantage's management company for Vantage SDC was $ 2.3 million for the three and nine months ended September 30, 2020.

In the aforementioned transactions, t he Company took a series of steps to mitigate conflicts in the transactions, including receiving fairness opinions on the purchase price from a nationally recognized third party valuation firm.

Additionally, the transactions, specifically the related party aspects of the transactions, were subjected to the approval of either the Company's board of directors or the audit committee of the board of directors.

Arrangements with Company-Sponsored Private Funds— The Company co-invests alongside its sponsored private funds through joint ventures between the Company and the sponsored private fund.

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In connection with the Company's commitments as an affiliate of the general partner, the Company is allocated a proportionate share of the costs of the private funds such as financing and administrative costs.

Such costs expensed during the three and six months ended June 30, 2020 and 2019 were immaterial and relate primarily to the Company's share of the fund's operating costs and deferred financing costs on borrowings of the fund.

Such costs expensed during the three and nine months ended September 30, 2020 and 2019 were immaterial and relate primarily to the Company's share of the fund's operating costs and deferred financing costs on borrowings of the fund.

Equity Awards of CLNC and NRE —As discussed in Note 19, CLNC and NRE (prior to termination of the NRE management agreement) grant equity awards to the Company and certain of the Company's employees, either directly or indirectly through the Company, are recognized as a gross-up of equity-based compensation expense over the vesting period with a corresponding amount in other income.

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These investments are generally not subject to management fees, but otherwise bear their proportionate share of other operating expenses of the investment vehicles.

At June 30, 2020 and December 31, 2019 , such investments in consolidated investment vehicles and general partner entities totaled $ 7.9 million and $ 4.0 million , respectively, reflected in redeemable noncontrolling interests and noncontrolling interests on the balance sheet.

For the three months ended June 30, 2020 and 2019 , their share of net income was $ 0.3 million and $ 0.5 million , respectively.

For the six months ended June 30, 2020 and 2019 , their share was a net loss of $ 0.2 million and net income of $ 1.0 million , respectively.

Corporate Aircraft— The Company, through its subsidiary, Colony Capital Advisors, LLC, has entered into a time sharing agreement with Thomas J.

At September 30, 2020 and December 31, 2019, such investments in consolidated investment vehicles and general partner entities totaled $ 13.2 million and $ 4.0 million, respectively, reflected in redeemable noncontrolling interests and noncontrolling interests on the balance sheet.

Their share of net

income was $ 4.4 million and $ 0.3 million for the three months ended September 30, 2020 and 2019, respectively, and $ 4.2 million and $ 1.3 million for the nine months ended September 30, 2020 and 2019, respectively.

Aircraft— The Company, through its subsidiary, Colony Capital Advisors, LLC, has entered into a time sharing agreement with Thomas J.

Barrack, Jr., the Company's Executive Chairman, under which Mr.

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Barrack pays the Company for personal usage based on the incremental cost to the Company, including direct and indirect variable costs, but in no case more than the maximum reimbursement permitted by the Federal Aviation Regulations under the agreement.

Barrack has reimbursed the Company $ 0.4 million during the three months ended June 30, 2019 , and $ 0.4 million and $ 0.6 million for the six months ended June 30, 2020 and 2019 , respectively.

There were no reimbursements in the three months ended June 30, 2020 .

Barrack reimbursed the Company $ 0.2 million for both the three months ended September 30, 2020 and 2019, and $ 0.6 million and $ 0.8 million for the nine months ended September 30, 2020 and 2019, respectively.

Separately, pursuant to Mr.

Ganzi’s employment agreement, the Company has agreed to reimburse Mr.

Ganzi for certain variable operational costs of business travel on a chartered or private jet (including any aircraft that Mr.

Ganzi may partially or fully own);

provided that the Company will not reimburse the allocable share (based on the number of passengers) of variable operational costs for any passenger on such flight who is not traveling on Company business.

The Company reimbursed Mr.

Ganzi $ 39,000 and $ 0.1 million for the three months ended September 30, 2020 and 2019, respectively, and $ 0.4 million and $ 0.1 million for the nine months ended September 30, 2020 and 2019, respectively.

In November 2020, the Company's board of directors approved an amendment to Mr.

Ganzi's employment agreement to provide for the reimbursement by the Company of certain defined fixed costs of any aircraft owned by Mr.

Commitments and Contingencies

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The Company may be involved in litigation and claims in the ordinary course of business.

As of June 30, 2020 , the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

As of September 30, 2020, the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

Segment Reporting

The Company's six reportable segments are as follows:

Digital Real Estate and Investment Management ("Digital")— The Company's digital segment is composed of balance sheet equity interests in digital infrastructure and real estate;

and digital infrastructure and real estate investment management business.

For digital investments on our balance sheet, these assets earn rental income from providing use of space and/or capacity in or on our digital assets through long-term leases, services and other agreements .

In the digital investment management business, we earn management fees, generally based on the

amount of assets or capital managed in investment vehicles, and have the potential to earn carried interest based on the performance of such investment vehicles subject to the achievement of minimum return hurdles.

Healthcare— The Company's healthcare segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals.

The Company's five reportable segments are as follows:

• Digital Investment Management ("Digital IM")— This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate.

The Company's flagship opportunistic strategy is conducted through DCP and separately capitalized vehicles while other strategies, including digital credit and public equities, will be or are conducted through other investment vehicles.

The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and have the potential to earn carried interest based on the performance of such investment vehicles subject to achievement of minimum return hurdles.

• Digital Operating— This business is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earns rental income from providing use of space and/or capacity in or on digital assets through leases, services and other agreements.

The Company currently owns interests in two companies, DataBank's edge colocation data centers and Vantage stabilized hyperscale data centers, which are also portfolio companies under Digital IM for the equity interests owned by third party capital.

• Digital Other— This segment is composed of equity interests in digital investment vehicles, the largest of which is the Company’s investment and commitment to DCP.

This segment also includes the Company’s investment and commitment to the digital liquid strategies and seed investments for future digital investment vehicles.

• Wellness Infrastructure (previously referred to as Healthcare)— This segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals.

The Company earns rental income from senior housing, skilled nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant.

In addition, certain of the Company's senior housing properties are managed by operators under a RIDEA (REIT Investment Diversification and Empowerment Act) structure, which allows the Company to gain financial exposure to underlying operations of the facility in a tax efficient manner versus receiving contractual rent under a net lease arrangement.

Hospitality— The Company's hospitality segment is composed of primarily extended stay and select service hotels located mainly in major metropolitan and high-demand suburban markets in the U.S., with the majority affiliated with top hotel brands such as Marriott and Hilton.

CLNC — This segment is composed of our 36% interest in CLNC, an externally managed commercial real estate credit REIT.

CLNC is focused on originating, acquiring, financing and managing a diversified commercial real estate portfolio, consisting primarily of senior mortgage loans, mezzanine loans, preferred equity, debt securities and net leased properties predominantly in the United States.

Other Equity and Debt— This segment is composed of a diversified group of non-digital real estate and real estate-related debt and equity investments, including investments for which the Company acts as a general partner and/or manager ("GP co-investments") and receives various forms of investment management economics on related third-party capital on such investments, other real estate equity and debt investments and other real estate related securities, among other holdings.

Over time, the Company expects to monetize the bulk of its existing portfolio as it completes its digital evolution.

Other Investment Management— This segment, which is separate from the digital investment management business that resides in the digital segment, encompasses primarily the Company’s management of private real estate credit funds and related co-investment vehicles, CLNC, and NorthStar Healthcare, a public non-traded healthcare REIT.

The Company earns management fees, generally based on the amount of assets or capital managed, and contractual incentive fees or potential carried interest based on the performance of the investment vehicles managed subject to the achievement of minimum return hurdles .

• Other— This segment is composed of other equity and debt investments ("OED") and non-digital investment management business ("Other IM").

OED encompasses a diversified group of non-digital real estate and real estate-related equity and debt investments, including investments for which the Company acts as a general partner and/or manager ("GP co-investments") and receives various forms of investment management economics on related third-party capital on such investments (including CLNC), other real estate equity and debt investments and

other real estate related securities, among other holdings.

Over time, the Company expects to monetize the bulk of its OED portfolio as it completes its digital evolution.

Other IM, which is separate from Digital IM, encompasses the Company’s management of private real estate credit funds and related co-investment vehicles, CLNC, and NorthStar Healthcare, a public non-traded healthcare REIT.

Many of the investments underlying these vehicles are co-owned by the Company’s balance sheet and categorized under OED.

Amounts not allocated to specific segments generally include corporate level cash and corresponding interest income, fixed assets for administrative use, corporate level financing and related interest expense, income and expense related to cost reimbursement arrangements with certain affiliates, costs in connection with unconsummated investments, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs as well as corporate level transaction costs.

The chief operating decision maker assesses the performance of the business based on net income (loss) of each of the reportable segments.

The various reportable segments generate distinct revenue streams, consisting of property operating income, interest income and fee income.

Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic allocation, have been allocated to each of the reportable segments.

Selected Segment Results of Operations

The results of operations of the Company's digital reportable segment is derived from its equity method investments in the DCP fund and its manager beginning in 2018, the DBH investment management business beginning in July 2019 and the DataBank data center business beginning in December 2019.

Effective March 31, 2020, the digital segment also includes operating results from interests in certain existing Colony investment vehicles that were repurposed to execute an investment strategy focused around the digital sector.

Beginning in 2020, the industrial segment no longer constitutes a reportable segment.

In the third quarter of 2020, the Company applied a more specific identification of individual compensation and administrative costs to more precisely attribute these costs to the respective reportable segments.

The more refined cost attribution methodology is a better reflection of the underlying cost of operations of the individual reportable segments and was retrospectively applied to prior periods.

Aligned with the Company's acceleration of its digital transformation, the Company disaggregated its digital operating segments and beginning the third quarter of 2020, presents three digital reportable segments, as described further below.

Concurrently, the Company aggregated three of its non-digital operating segments, that is CLNC, OED and Other IM, and presents a single reportable segment, renamed as Other.

These changes reflect the different business strategies for the various digital operating segments and collectively, for the non-digital operating segments, and also reflect the Company's focus on its digital business which represents the future growth of the Company.

Additionally, effective the first and third quarters of 2020, the Industrial segment and the Hospitality segment, respectively, no longer constitute reportable segments.

In December 2019, the Company completed the sale of the light industrial portfolio and its related management platform, which represented the vast majority of the industrial segment.

The Company continues to own the bulk industrial assets which remain held for sale.

Current and prior period results of the industrial segment and the industrial investment management business which resides in the other investment management segment are presented as discontinued operations on the consolidated statements of operations (Note 16 ).

The following table presents selected results of operations of the Company's reportable segments.

(In thousands)

Other Equity and Debt

Other Investment Management

Amounts Not Allocated to Segments

Three Months Ended June 30, 2020

In September 2020, the Company entered into a definitive agreement to sell five of the six hotel portfolios in its Hospitality segment (remaining portfolio is in receivership) and the THL Hotel Portfolio in the Other segment.

Current and prior period results of the Industrial segment, Hospitality segment and THL Hotel Portfolio in the Other segment are presented as discontinued operations on the consolidated statements of operations (Note 16).

Segment Results of Operations

The following table presents results of operations of the Company's reportable segments.

(In thousands) Digital Operating Digital Investment Management Digital Other Wellness Infrastructure Other Amounts Not Allocated to Segments Total

Three Months Ended September 30, 2020

Total revenues $ 98,549 $ 20,137 $ 736 $ 124,193 $ 69,298 $ 3,764 $ 316,677

Property operating expenses

Income (loss) from continuing operations ( 38,479 ) 3,539 6,757 ( 6,969 ) ( 101,128 ) ( 47,936 ) ( 184,216 )

Net income (loss) from continuing operations attributable to Colony Capital, Inc.

( 4,797 ) 1,730 5,616 ( 11,349 ) ( 32,481 ) ( 41,347 ) ( 82,628 )

Net loss from discontinued operations attributable to Colony Capital, Inc.

Net loss attributable to Colony Capital, Inc.

$ ( 187,267 )

Three Months Ended September 30, 2019

Total revenues $ — $ 14,517 $ — $ 136,091 $ 205,706 $ 2,686 $ 359,000

Income (loss) from continuing operations — 41,841 ( 251 ) ( 114,154 ) ( 369,511 ) ( 149,421 ) ( 591,496 )

Net income (loss) from continuing operations attributable to Colony Capital, Inc.

— 38,160 ( 229 ) ( 84,222 ) ( 348,898 ) ( 133,970 ) ( 529,159 )

Net income from discontinued operations attributable to Colony Capital, Inc.

Net loss attributable to Colony Capital, Inc.

$ ( 527,816 )

Nine Months Ended September 30, 2020

Total revenues $ 185,737 $ 60,045 $ 1,559 $ 406,055 $ 231,205 $ 13,149 $ 897,750

Income (loss) from continuing operations ( 77,916 ) 7,953 16,014 ( 755,254 ) ( 1,192,092 ) ( 175,760 ) ( 2,177,055 )

Net income (loss) from continuing operations attributable to Colony Capital, Inc.

( 12,384 ) 5,597 14,097 ( 497,371 ) ( 888,049 ) ( 152,773 ) ( 1,530,883 )

Net loss from discontinued operations attributable to Colony Capital, Inc.

( 1,022,817 )

Net loss attributable to Colony Capital, Inc.

$ ( 2,553,700 )

Nine Months Ended September 30, 2019

Total revenues $ — $ 14,517 $ — $ 427,761 $ 455,174 $ 10,258 $ 907,710

Income (loss) from continuing operations — 46,655 ( 92 ) ( 205,080 ) ( 548,218 ) ( 384,951 ) ( 1,091,686 )

Net income (loss) from continuing operations attributable to Colony Capital, Inc.

— 42,683 ( 80 ) ( 152,375 ) ( 559,982 ) ( 352,105 ) ( 1,021,859 )

Net loss from discontinued operations attributable to Colony Capital, Inc.

Net loss attributable to Colony Capital, Inc.

$ ( 1,044,544 )

The following table presents selected income and expense items of reportable segments.

(In thousands) Digital Operating Digital Investment Management Digital Other Wellness Infrastructure Other Amounts Not Allocated to Segments Total

Three Months Ended September 30, 2020

Interest income $ — $ 2 $ 2 $ 992 $ 12,566 $ 1,254 $ 14,816

Interest expense 18,589 — — 32,310 6,479 14,471 71,849

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Gain on sale of real estate — — — 186 13,072 — 13,258

Equity method earnings (losses)

Equity method losses—carried interest

Equity method earnings (losses), including carried interest — 6,134 4,400 — ( 67,450 ) — ( 56,916 )

Income tax benefit (expense) 6,091 ( 144 ) ( 73 ) ( 5,868 ) 10,053 ( 137 ) 9,922

Loss from continuing operations

Net income (loss) attributable to Colony Capital, Inc.

from continuing operations

Net loss attributable to Colony Capital, Inc.

from discontinued operations

Net loss attributable to Colony Capital, Inc.

Three Months Ended June 30, 2019

Total revenues

Property operating expenses

Three Months Ended September 30, 2019

Interest income $ — $ 7 $ — $ 956 $ 38,828 $ 446 $ 40,237

Interest expense — 1,585 — 46,029 12,627 14,351 74,592

Depreciation and amortization — 4,753 — 38,998 71,678 1,503 116,932

Provision for loan losses

Impairment loss — — — 92,885 440,146 — 533,031

Gain on sale of real estate — — — 833 7,388 — 8,221

Equity method earnings (losses)

Equity method earnings—carried interest

Equity method earnings (losses), including carried interest — 848 ( 251 ) — 45,706 — 46,303

Income tax benefit (expense) — ( 13,090 ) — 566 2,717 ( 289 ) ( 10,096 )

Income (loss) from continuing operations

Net income (loss) attributable to Colony Capital, Inc.

from continuing operations

Net loss attributable to Colony Capital, Inc.

from discontinued operations

Net loss attributable to Colony Capital, Inc.

(In thousands)

Other Equity and Debt

Other Investment Management

Amounts Not Allocated to Segments

Six Months Ended June 30, 2020

Total revenues

Property operating expenses

Nine Months Ended September 30, 2020

Interest income $ — $ 36 $ 11 $ 2,967 $ 61,972 $ 5,074 $ 70,060

Interest expense 36,161 — — 106,875 26,341 44,570 213,947

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Gain on sale of real estate — — — 186 23,872 — 24,058

Equity method earnings (losses)

Equity method losses—carried interest

Equity method earnings (losses), including carried interest — 6,295 12,647 — ( 353,426 ) — ( 334,484 )

Income tax benefit (expense) 14,494 ( 817 ) ( 752 ) ( 17,874 ) 1,749 ( 46 ) ( 3,246 )

Loss from continuing operations

Net income (loss) attributable to Colony Capital, Inc.

from continuing operations

Net loss attributable to Colony Capital, Inc.

from discontinued operations

Net loss attributable to Colony Capital, Inc.

Six Months Ended June 30, 2019

Total revenues

Property operating expenses

Nine Months Ended September 30, 2019

Interest income $ — $ 7 $ — $ 2,833 $ 116,579 $ 1,937 $ 121,356

Interest expense — 1,585 — 150,691 42,889 41,591 236,756

Depreciation and amortization — 4,753 — 119,907 113,294 4,536 242,490

Provision for loan losses

Impairment loss — — — 144,209 491,011 649 635,869

Gain on sale of real estate — — — 833 42,008 — 42,841

Equity method earnings (losses)

Equity method earnings—carried interest

Equity method earnings (losses), including carried interest — 7,112 ( 92 ) — ( 179,210 ) — ( 172,190 )

Income tax benefit (expense) — ( 13,090 ) — 1,844 ( 89 ) ( 388 ) ( 11,723 )

Income (loss) from continuing operations

Net income (loss) attributable to Colony Capital, Inc.

from continuing operations

Net income attributable to Colony Capital, Inc.

from discontinued operations

Net loss attributable to Colony Capital, Inc.

Total assets and equity method investments excluding investments held for sale (Note 8 ) of the reportable segments are summarized as follows:

June 30, 2020

December 31, 2019

(In thousands)

Equity Method Investments

Other Equity and Debt

Other Investment Management

Total assets and equity method investments of the reportable segments are summarized as follows:

September 30, 2020 December 31, 2019

(In thousands) Total Assets Equity Method Investments Total Assets Equity Method Investments

Digital Operating $ 5,314,920 $ — $ 1,684,867 $ —

Digital Investment Management 487,898 11,640 428,703 1,059

Digital Other 396,429 177,745 46,832 46,832

Wellness Infrastructure 3,930,425 — 4,886,374 —

Other 4,516,516 1,507,353 6,403,002 1,935,882

Amounts not allocated to segments 357,193 3,742 1,120,929 3,742

Assets held for sale related to discontinued operations

Assets held for disposition related to discontinued operations 4,039,669 — 5,261,477 —

$ 19,043,050 $ 1,700,480 $ 19,832,184 $ 1,987,515

Geographic information about the Company's total income and long-lived assets are as follows.

Geography is generally presented as the location in which the income producing assets reside or the location in which income generating services are performed.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands)

2020 2019 2020 2019

Total income by geography:

United States

(In thousands)

June 30, 2020

December 31, 2019

$ 271,480 $ 283,323 $ 767,141 $ 673,309

7,022 88,561 98,840 256,064

1,744 2,472 4,554 4,450

$ 280,246 $ 374,356 $ 870,535 $ 933,823

(In thousands) September 30, 2020 December 31, 2019

Long-lived assets by geography:

United States $ 7,663,900 $ 5,267,189

Total income includes the Company's share of earnings (loss) from its equity method investments (but excludes the Company's impairment of its equity method investments of $ 297.0 million and $ 247.8 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 297.8 million and $ 250.4 million for the six months ended June 30, 2020 and 2019 , respectively);

Europe 1,418,881 1,508,347

$ 9,082,781 $ 6,775,536

(1) Total income includes the Company's share of earnings (loss) from its equity method investments (but excludes the Company's impairment of its equity method investments of $ 26.0 million and $ 3.1 million for the three months ended September 30, 2020 and 2019, respectively, and $ 323.8 million and $ 253.5 million for the nine months ended September 30, 2020 and 2019, respectively);

and excludes cost reimbursement income from affiliates and income from discontinued operations.

All income from discontinued operations is generated in the United States.

Long-lived assets comprise real estate held for investment, real estate related intangible assets, operating lease right-of-use assets and fixed assets, and exclude financial instruments, assets held for sale and investment management related intangible assets.

Long-lived assets that are held for sale at June 30, 2020 and December 31, 2019 included $ 431 million and $ 522 million located in the United States, respectively, and $ 252 million and $ 283 million located in Europe, respectively.

(2) Long-lived assets comprise real estate held for investment, real estate related intangible assets, operating lease right-of-use assets and fixed assets, and exclude financial instruments, assets held for disposition and investment management related intangible assets.

Long-lived assets that are held for disposition at September 30, 2020 and December 31, 2019 included $ 4.0 billion and $ 5.2 billion located in the United States, respectively, and $ 0.2 billion and $ 0.3 billion located in Europe, respectively.

Supplemental Disclosure of Cash Flow Information

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2020 2019

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Cash paid for interest, net of amounts capitalized of $ 655 and $ 2,569

Cash received (paid) for income tax refunds (liabilities), net

$ 258,508 $ 397,475

Cash paid for income taxes, net 36,098 6,377

Cash paid for operating leases

21,022 11,777

Supplemental Disclosure of Cash Flows from Discontinued Operations

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Net cash provided by (used in) financing activities of discontinued operations 1,280 ( 28,211 )

Net cash provided by (used in) operating activities of discontinued operations ( 35,073 ) 142,635

Net cash provided by (used in) investing activities of discontinued operations 37,074 ( 1,434,477 )

Net cash provided by (used in) financing activities of discontinued operations ( 34,546 ) 1,271,866

Supplemental Disclosure of Cash Flows from Investing and Financing Activities

Dividends and distributions payable

$ 18,516 $ 86,588

Improvements in operating real estate in accrued and other liabilities

19,806 22,253

Proceeds from loan repayments and asset sales held in escrow

Right-of-use assets and operating lease liabilities established

14,683 138,731

Redemption of OP Units for common stock

Assets and liabilities of investment entities deconsolidated 172,927 —

Assets consolidated in real estate acquisition, net of cash and restricted cash 3,597,271 —

Liabilities assumed in real estate acquisition 2,142,657 —

Noncontrolling interests assumed in real estate acquisition 366,136 —

Deferred cash consideration for acquisition of DBH (Note 3) — 35,500

Issuance of OP Units for business combinations (Note 3) — 111,903

Foreclosures and exchanges of loans receivable for real estate

Financing provided to buyer in sale of real estate — 4,000

Fair value of Digital Colony Manager contract intangible consolidated (Note 3)

Subsequent Events

Path To Digital

Strategic Partnership in the Company's Digital Investment Management Business

On July 17, 2020, the Company formed a strategic partnership with affiliates of Wafra, Inc.

(collectively, "Wafra"), a private investment firm and a global partner for alternative asset managers, in which Wafra made a minority investment in the Company's digital investment management business (the "Digital IM Business").

Wafra, through its investment, will participate in approximately 31.5 % of the net management fees and carried interest generated by the Digital IM Business.

In addition, the Company issued Wafra five warrants to purchase up to an aggregate of 5 % (on a fully-diluted, post-transaction basis) of the Company’s class A common stock.

Consideration paid by Wafra in exchange for its investment in the Digital IM Business and for the warrants is composed of:

(i) cash consideration of $ 253.6 million paid at closing;

Under certain circumstances following such time as the Digital IM Business comprises 90 % or more of the Company's assets, the Company agreed to use commercially reasonable efforts to facilitate the conversion of Wafra's interest into shares of the Company's class A common stock.

In connection with Wafra's investment, the Company also entered into an amended and restated restrictive covenant agreement with each of Marc Ganzi, the Company’s CEO, and Ben Jenkins, the chairman and chief investment officer of the Company’s digital segment, pursuant to which each of Messrs.

Ganzi and Jenkins agreed to certain enhanced non-solicitation provisions and the extension of the term of existing non-competition agreements.

In the event that certain post-closing regulatory approvals are not received within 12 months following the consummation of Wafra's investment (which period may be extended for up to an additional three months under certain circumstances), the Company has the right to cause Wafra’s investment in the Digital IM Business to be redeemed, in which case Wafra's carried interest participation rights will terminate and the warrants will be canceled.

If such redemption right is exercised, Wafra will have a redemption right with respect to limited partnership commitments previously made in any of the digital funds or investment vehicles.

Wafra’s investment provides the Company with permanent capital to pursue strategic digital infrastructure investments and grow the Digital IM Business.

Investment in Hyperscale Data Centers

On July 22, 2020, the Company, alongside an approximate $ 1 billion of fee bearing third party capital that the Company raised, invested $ 1.21 billion for an approximate 80 % equity stake in Vantage Data Center Holdings, LLC's ("Vantage") portfolio of 12 stabilized hyperscale data centers in North America (the “Stabilized VDC” and the related transactions, the “Investment Transactions”).

The Company's balance sheet investment is $ 185.1 million , representing a 12.3 % interest.

The management team of Vantage will continue to manage the day-to-day operations of these data centers in exchange for management fees, and subject to certain approval rights held by the Company and the investor group in connection with material actions.

In connection with the Investment Transactions, the Company entered into a series of agreements with Marc Ganzi, the Company’s CEO, and Ben Jenkins, the Chairman and Chief Investment Officer of the Company’s digital segment, and their respective affiliates, pursuant to which Messrs.

Ganzi and Jenkins invested approximately $ 8 million and $ 2 million , respectively, in the Stabilized VDC alongside the Company and the co-investors on the same economic terms.

Such amounts invested represented 40 % of carried interest payments received by each of Messrs.

Ganzi and Jenkins as a result of the Investment Transactions.

Other than as disclosed elsewhere, no subsequent events have occurred that would require recognition in the

consolidated financial statements or disclosure in the accompanying notes.

FORWARD-LOOKING STATEMENTS

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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:

the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, healthcare and hospitality real estate, other commercial real estate equity and debt, and investment management sectors;

• the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, wellness infrastructure and hospitality real estate, other commercial real estate equity and debt, and investment management sectors;

• the impact of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments, as well as the increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company;

whether we will successfully execute our strategic transition to become a digital real estate and infrastructure focused company within the timeframe contemplated or at all, and the impact of such transition on the Company's legacy portfolios and assets, including whether such transition will result in significant further impairments to certain of our investments, including healthcare and hospitality assets and whether such transition and any resulting impairments will be consistent with the Company’s REIT status;

• whether we will successfully execute our strategic transformation to become a digital infrastructure and real estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Company's legacy portfolios and assets, including whether such transformation will result in significant further impairments to certain of our investments, including wellness infrastructure and hospitality assets and whether such transformation and any resulting impairments or dispositions will be consistent with the Company’s REIT status;

• our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all, including our ability to obtain forbearances and/or debt modifications on our corporate credit facility and our non-recourse mortgage debt;

• the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all;

• the Company's ability to complete the pending exit of the Company's hospitality business within the timeframe and on the terms contemplated, if at all, and the amount of proceeds, if any, the Company will receive as a result of the exit after the impact of transaction costs and other transaction related expenses, including any required capital contributions to the hotel portfolios;

• whether we will realize any of the anticipated benefits of the Company's pending exit from its hospitality business, if consummated;

• the impact of completed or anticipated initiatives related to our strategic shift to the digital industry, including the acquisitions of Digital Bridge Holdings, LLC and an ownership interest in Data Bridge Holdings, LLC, the strategic investment by Wafra, and the formation of certain other investment management platforms, on our company's growth and earnings profile;

whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments to our digital investment management business;

• whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital Other and Digital Operating segments;

• our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively (such as Digital Bridge Holdings, LLC and Data Bridge Holdings, LLC);

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• our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as Colony Credit Real Estate, Inc.

(NYSE:CLNC)) to execute their business strategies;

(NYSE:CLNC)) to execute their business strategies, particularly in light of the current COVID-19 pandemic;

• CLNC's trading price and its impact on the carrying value of the Company's investment in CLNC, including whether the Company will recognize further other-than-temporary impairments on such CLNC investment;

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• the impact of adverse conditions affecting a specific asset class in which we have investments;

the availability of attractive investment opportunities;

• the availability of, and competition for, attractive investment opportunities;

• our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products;

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• the general volatility of the securities markets in which we participate;

stability of the capital structure of our healthcare and hospitality portfolios;

• stability of the capital structure of our wellness infrastructure and hospitality portfolios;

• changes in interest rates and the market value of our assets;

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government policies and the execution and impact of these actions, initiatives and policies, including regulations permitting or requiring forbearance of rent obligations and inhibiting the ability to pursue evictions and obtain late fees from non-paying tenants;

our ability to maintain our qualification as a real estate investment trust for U.S.

federal income tax purposes;

• whether we will maintain our qualification as a real estate investment trust for U.S.

federal income tax purposes and our ability to do so;

• our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”);

changes in our board of directors or management team, including Chief Executive Officer succession plans and availability of qualified personnel;

the performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution;

• changes in our board of directors or management team, and availability of qualified personnel;

• our ability to make or maintain distributions to our stockholders;

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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.

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.

Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time.

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A.

“Risk Factors” in this

Quarterly Report.

“Risk Factors” in this Quarterly Report.

Readers of this Quarterly Report should also read our other periodic filings made with the Securities and Exchange Commission and other publicly filed documents for further discussion regarding such factors.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements