COLONY NORTHSTAR, INC. (NYSE:CLNS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
The foregoing description of the Management Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Management Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Stockholders Agreement
In connection with the Combination, on January31, 2018, CLNS OP entered into a stockholders agreement with Colony NorthStar Credit (the “Stockholders Agreement”). to the Stockholders Agreement, until the later of the two year anniversary of the closing of the Combination and the second annual meeting of stockholders of Colony NorthStar Credit, CLNS OP will cause its shares of Common Stock (as defined below) to be present for purposes of establishing a quorum of the stockholders at any meeting of stockholders of Colony NorthStar Credit and to cause its shares of Common Stock to be voted in favor of the director nominees recommended by the CLNC Board in Colony NorthStar Credit’s definitive proxy statement on Schedule 14A. The Stockholders Agreement also provides that, until the later of the two year anniversary of the closing of the Combination and the second annual meeting of stockholders of Colony NorthStar Credit, CLNS OP will not, and will cause its affiliates not to (each solely in its capacity as a Colony NorthStar Credit stockholder), take any action to change the composition of the CLNC Board in a manner that results in the CLNC Board being comprised of less than a majority of independent directors.
to the Stockholders Agreement, CLNS OP will, and will cause RED REIT to, enter into a customary lock-up agreement with the underwriters of any offering of Common Stock for a term not to extend beyond the one year anniversary of the closing of the Combination. In addition, until the one year anniversary of the closing of the Combination, CLNS OP will not, and will cause its affiliates not to, make any transfers of OP Units (as defined below) to non-affiliates of CLNS OP unless such transfer is approved by a majority of the CLNC Board, including a majority of the independent directors. However, the approval of the CLNC Board is not required in connection with a transfer by operation of law or to a merger, sale of all or substantially all of the assets or similar fundamental transaction involving the Company and/or CLNS OP. The foregoing does not restrict any conversion of OP Units for equity of Colony NorthStar Credit to Credit OP’s limited liability company agreement.
The foregoing description of the Stockholders Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Stockholders Agreement, which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Registration Rights Agreement
In connection with the closing of the Combination, on January31, 2018, CLNS OP and RED REIT entered into a registration rights agreement with Colony NorthStar Credit (the “Registration Rights Agreement”). to the Registration Rights Agreement, subject to certain exceptions, Colony NorthStar Credit will be required to use commercially reasonable efforts to file one or more registration statements within thirteen (13)months following the consummation of the Combination that (i)register for resale the Common Stock issued in the Combination and (ii)register the issuance or resale of the ClassA Common Stock, par value $0.01 per share, of Colony NorthStar Credit (the “ClassA Common Stock”) issued upon redemption of the OP Units issued in the Combination. Further, to the Registration Rights Agreement, at the request of a holder, Colony NorthStar Credit must use commercially reasonable efforts to effect the sale of all or part of the registrable securities through an underwritten public offering under the applicable registration statement; provided, however, that such holders may not exercise such registration rights more than once in any consecutive 120-day period.
to the Registration Rights Agreement, CLNS OP and RED REIT are also entitled to receive notice of any proposed underwritten public offering for Colony NorthStar Credit’s own account or for another security holder. Such holders may request in writing within five business days following receipt of such notice to participate in any underwritten public offering; provided that if the number of shares of Common Stock as to which registration has been demanded exceeds the maximum number of shares that can be sold in such offering without adversely affecting its success, the shares of common stock requested by CLNS OP or RED REIT may be cutback from such underwritten public offering.
Colony NorthStar Credit is required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares by the holders. Colony NorthStar Credit also is required to indemnify each holder who includes registrable securities in any registration and any person who is or might be deemed a controlling person of such holder within the meaning of Section15 of the Securities Act of 1933, as amended (the “Securities Act”), or Section20 of the Securities Exchange Act of 1934, as amended, against certain liabilities incurred in connection with the registration of such holder’s registrable securities.
The registration rights described above will terminate as to any stockholder at such time as all of such stockholder’s securities could be sold in a single calendar quarter without compliance with the registration requirements of the Securities Act to Rule 144.
The foregoing description of the Registration Rights Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Item 1.01. Completion of Acquisition or Disposition of Assets.
The information set forth in the Explanatory Note of this Current Report on Form 8-K is incorporated herein by reference.
On January31, 2018, prior to the effective time of the Mergers, to the Combination Agreement, CLNS OP made the CLNS OP Contribution in exchange for approximately 44.4million shares of the ClassB-3 Common Stock, par value $0.01 per share, of Colony NorthStar Credit (the “ClassB-3 Common Stock” and, together with the ClassA Common Stock, the “Common Stock”). Each share of ClassB-3 Common Stock will convert into one (1)share of ClassA Common Stock upon the close of trading on February1, 2019.
Immediately following the CLNS OP Contribution and prior to the effective time of the Mergers, to the Combination Agreement, RED REIT made the RED REIT Contribution in exchange for approximately 3.1million units representing limited liability company interest in Credit OP (“OP Units” and, together with the ClassB-3 Common Stock, the “CLNS Contribution Consideration”).
to the Combination Agreement, at the NorthStar I Merger Effective Time, each share of NorthStar I common stock, par value $0.01 per share (the “NorthStar I Common Stock”), issued and outstanding immediately prior to the NorthStar I Merger Effective Time was cancelled and converted into the right to receive 0.3532 shares of ClassA Common Stock, plus cash in lieu of any fractional shares (the “NorthStar I Merger Consideration”). Additionally, all of the shares of restricted stock granted under NorthStar I’s Long Term Incentive Plan that were outstanding immediately prior to the NorthStar I Merger Effective Time automatically became fully vested and entitled to receive the NorthStar I Merger Consideration.
Also to the Combination Agreement, at the NorthStar II Merger Effective Time, each share of NorthStar II common stock, par value $0.01 per share, issued and outstanding immediately prior to the NorthStar II Merger Effective Time was cancelled and converted into the right to receive 0.3511 shares of ClassA Common Stock, plus cash in lieu of any fractional shares (the “NorthStar II Merger Consideration”). Additionally, all of the shares of restricted stock granted under NorthStar II’s Long Term Incentive Plan that were outstanding immediately prior to the NorthStar II Merger Effective Time automatically became fully vested and entitled to receive the NorthStar II Merger Consideration.
Immediately following the Mergers, Colony NorthStar Credit contributed and conveyed to Credit OP (i)the CLNS OP Contributed Entities, (ii)the equity interests of NorthStar I OP and (iii)the equity interests of NorthStar II OP, in exchange for an aggregate number of OP Units equal to the sum of (A) 44,399,444, (B) the number of shares of ClassA Common Stock issued to the NorthStar I Merger and (C)the number of shares of ClassA Common Stock issued to the NorthStar II Merger, respectively.
In connection with the Combination, Colony NorthStar Credit issued approximately 42.1million shares of ClassA Common Stock to former NorthStar I stockholders and approximately 40.4million shares of ClassA Common Stock to former NorthStar II stockholders. Further, as noted above, Colony NorthStar Credit issued approximately 44.4million shares of ClassB-3 Common Stock to CLNS OP. Credit OP issued approximately 3.1million OP Units to RED REIT and approximately 126.9million OP Units to Colony NorthStar Credit.
In addition, prior to the closing of the Combination, Colony NorthStar Credit calculated the amount by which distributions by NorthStar I and NorthStar II from July1, 2017 through January30, 2018 (the “Measurement Period”) (excluding the dividend payment made on July1, 2017) exceeded each such company’s funds from operations. On January31, 2018, NorthStar I, which generated the least amount of cash leakage in excess of funds from operations during the Measurement Period, declared a special cash dividend (the “NorthStar I Special Dividend”) to the holders of record of the shares of NorthStar I common stock as of 9:00 p.m., Eastern Time, on January31, 2018 (the “NorthStar I Record Holders”) in the amount of $0.013777364 per share of NorthStar I common stock, in order to true up the agreed contribution values of NorthStar I and NorthStar II in relation to each other. The NorthStar I Special Dividend has been deposited with NorthStar I’s transfer agent for further payment to the NorthStar I Record Holders in accordance with the Combination Agreement.
The issuance of the ClassA Common Stock in connection with the Combination was registered under the Securities Act to Colony NorthStar Credit’s registration statement on Form S-4 (File No.333-221685) filed with the SEC on November21, 2017 (as amended, the “Registration Statement”), and declared effective on December6, 2017. The offer and sale of the ClassB-3 Common Stock and OP Units in the Combination were made in reliance upon an exemption from registration provided by Section4(a)(2) of the Securities Act. The definitive joint proxy statement/prospectus of Colony NorthStar Credit, NorthStar I and NorthStar II, dated December6, 2017 (as supplemented by Colony NorthStar Credit’s, NorthStar I’s and NorthStar II’s Current Reports on Form 8-K filed on January8, 2018), which forms a part of the Registration Statement, contains additional information about the Combination and the other transactions contemplated by the Combination Agreement, which is incorporated by reference into this Item 1.01.
Shares of the ClassA Common Stock have been approved for listing on the New York Stock Exchange (the “NYSE”) and will begin trading under the symbol “CLNC” on the NYSE effective as of the opening of trading on February1, 2018.
The foregoing description of the Combination Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Combination Agreement, which was filed as Exhibit 2.1 to the Registration Statement and is incorporated herein by reference.
Item 1.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements required by this Item 1.01(a) will be filed by an amendment to this Current Report on Form 8-K no later than 71 days following the date that this Current Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information.
The pro forma financial information, including the pro forma effects of the disposition of the CLNS Contributions, which will be provided concurrently with the effects of the acquisition of the CLNS Contribution Consideration, required by this Item 1.01(b) will be filed in accordance with Article 11 of Regulation S-X by an amendment to this Current Report on Form 8-K no later than 71 days following the date that this Current Report is required to be filed. It is currently estimated that the pro forma effect of the contribution of the CLNS Contributions to Colony NorthStar Credit will be a reduction of the Company’s total assets by approximately $1.9billion, total liabilities by approximately $0.4billion and noncontrolling interests in investment entities by approximately $0.3billion as of December31, 2017, and a reduction of total revenues by $165million for the year ended December31, 2017. Additionally, it is currently estimated that the Company’s acquisition of the CLNS Contribution Consideration will increase its total assets by approximately $1.2billion (assuming a listing price of the Common Stock of $24.89 per share, which represents the as adjusted, pro forma book value of the Common Stock as of September30, 2017).
(d) Exhibits.
|
Exhibit Number |
Description |
| 2.1 | Amended and Restated Master Combination Agreement, dated as of November 20, 2017, among Colony Capital Operating Company, LLC, NRF RED REIT Corp., NorthStar Real Estate Income Trust, Inc., NorthStar Real Estate Income Trust Operating Partnership, LP, NorthStar Real Estate Income II, Inc., NorthStar Real Estate Income Operating Partnership II, LP, Colony NorthStar Credit Real Estate, Inc. and Credit RE Operating Company, LLC (incorporated by reference to Exhibit 2.1 to Colony NorthStar, Inc.’s Current Report on Form 8-K filed on November21, 2017) |
| 10.1 | Management Agreement, dated as of January31, 2018, by and among Colony NorthStar Credit Real Estate, Inc., Credit RE Operating Company, LLC and CLNC Manager, LLC |
| 10.2 | Stockholders Agreement, dated as of January31, 2018, by and between Colony NorthStar Credit Real Estate, Inc. and Colony Capital Operating Company, LLC |
| 10.3 | Registration Rights Agreement, dated as of January31, 2018, by and among Colony NorthStar Credit Real Estate, Inc., Colony Capital Operating Company, LLC and NRF RED REIT Corp. |
EXHIBIT INDEX
|
Exhibit Number |
Description |
| 2.1 | Amended and Restated Master Combination Agreement, dated as of November 20, 2017, among Colony Capital Operating Company, LLC, NRF RED REIT Corp., NorthStar Real Estate Income Trust, Inc., NorthStar Real Estate Income Trust Operating Partnership, LP, NorthStar Real Estate Income II, Inc., NorthStar Real Estate Income Operating Partnership II, LP, Colony NorthStar Credit Real Estate, Inc. and Credit RE Operating Company, LLC (incorporated by reference to Exhibit 2.1 to Colony NorthStar, Inc.’s Current Report on Form 8-K filed on November21, 2017) |
| 10.1 | Management Agreement, dated as of January31, 2018, by and among Colony NorthStar Credit Real Estate, Inc., Credit RE Operating Company, LLC and CLNC Manager, LLC |
| 10.2 | Stockholders Agreement, dated as of January31, 2018, by and between Colony NorthStar Credit Real Estate, Inc. and Colony Capital Operating Company, LLC |
| 10.3 | Registration Rights Agreement, dated as of January31, 2018, by and among Colony NorthStar Credit Real Estate, Inc., Colony Capital Operating Company, LLC and NRF RED REIT Corp. |
Colony NorthStar, Inc. ExhibitEX-10.1 2 d514676dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 MANAGEMENT AGREEMENT by and among Colony NorthStar Credit Real Estate,…To view the full exhibit click here
About COLONY NORTHSTAR, INC. (NYSE:CLNS)
Colony NorthStar, Inc. is a diversified equity real estate investment trust (REIT). The Company combines a portfolio of real assets across the world, which are managed with a global real estate investment manager. The Company has property holdings in the healthcare, industrial and hospitality sectors, opportunistic equity and debt investments, and an embedded institutional and retail investment management business. In addition, the Company owns NorthStar Securities, LLC, a captive broker-dealer platform which raises capital in the retail market. The Company acquires, develops and operates industrial properties in metropolitan markets throughout the United States with a focus on light industrial buildings. The Company provides investment management services and offers investment products while serving as a fiduciary to a set of institutional and individual investors.