Colony Capital Sells Hospitality Portfolios to Highgate in $2.8 Billion Transaction

September 28, 2020

Willkie represented Colony Capital in the sale, which represents a key milestone in Colony Capital’s digital transformation.

On September 24, Colony Capital, Inc. (NYSE: CLNY) announced it entered into a definitive agreement to sell six of its hospitality portfolios to Highgate, a premier real estate investment and hospitality management company, in a transaction valued at $2.8 billion. The six portfolios consist of 22,676 rooms across 197 hotel properties. The transaction is aligned with Colony’s stated goal of simplifying its business profile to focus exclusively on digital infrastructure assets.

As part of the transaction with Highgate, Colony will transfer (i) five of the six portfolios held in the Hospitality segment and (ii) an approximately 55% interest in the THL Portfolio held in the Other Equity and Debt segment. The sixth portfolio in the Hospitality segment, the Inland portfolio, is under receivership and is excluded from the transaction. This transaction value includes $67.5 million of gross proceeds on a consolidated basis and the assumption of $2.7 billion in consolidated investment-level debt. The deal will reduce Colony Capital’s consolidated debt outstanding by $2.7 billion, including Colony Capital’s $2.3 billion pro-rata share.

Colony Capital, Inc. (NYSE: CLNY) is a leading global investment firm managing a $46 billion portfolio of real assets on behalf of its shareholders and limited partners, including over $20 billion in digital real estate investments through Digital Colony, its digital infrastructure platform. Colony Capital, structured as a REIT, is headquartered in Los Angeles with over 350 employees across 20 locations.

Highgate is a real estate investment and hospitality management company with over $10 billion of hospitality AUM and a longstanding track record of operating assets for the industry’s largest REITs, private equity firms, institutional funds and private investors. Highgate is a dominant hotel player in key gateway markets throughout the US and across Latin America, and operates more than 160 hotels around the world.

Willkie regularly represents longtime client Colony Capital in strategic transactions, including its $5.9 billion sale of Colony Industrial to Blackstone in 2019 and its $17 billion, three-way merger with NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. in 2017.

The Willkie team was led by partner Thomas Henry and associates Melissa Fischetti and Sydney Jay.