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Why Colony Capital Stock Plunged Today

By Joe Tenebruso - May 11, 2020 at 1:00PM

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Mounting losses forced the firm to suspend its dividend.

What happened 

Shares of Colony Capital (NYSE: CLNY) dipped as much as 14% on Monday, following the release of the real estate and investment firm's first-quarter results on Friday. 

As of 12:35 p.m. EDT, the stock was down 10%. 

So what

Colony Capital reported a net loss of $361.6 million, or $0.76 per share, which included more than $300 million in non-cash impairment charges. Investment losses incurred from the sale of a multi-tenant office property contributed to the deficit.

A downwardly sloping stock chart.

Shares of Colony Capital fell sharply on Monday. Image source: Getty Images.

Worse still, Colony Capital said its portfolio companies had defaulted on $3.2 billion of debt. The debt is secured by hotels and healthcare-related properties.

Colony said it's negotiating with its lenders in hopes of obtaining forbearances or debt modifications, including extending upcoming maturities, but it's uncertain if the talks will prove fruitful.

Now what 

While it conducts these negotiations -- and to preserve cash during the coronavirus pandemic -- Colony is suspending its dividend.

"COVID-19 is causing an unprecedented impact on the global economy." said CEO Thomas Barrack in a press release, "[C]onsequently, we are taking decisive action to preserve the financial flexibility and liquidity necessary to maintain the long-term resilience of our company, which in turn, benefits our customers, our communities, and our shareholders."

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