Q1 2020 Earnings Call

Thank you.

[music].

Greetings and welcome to the colony capital first quarter 2020 earnings conference call. At this time, all participants or any listen only mode. A brief question answer session will solve a formal presentation.

If anyone should require operator assistance during the conference. Please press star zero like or telephone keypad. As a reminder, this conference is being recorded it's now my pleasure to introduce your host separate white managing director of Investor Relations.

Good morning, everyone and welcome to colony Capital's first quarter.

2020 earnings conference call.

Speaking on the call today from the company as Tom Burke, our chairman and CEO.

Mark Ganzi, our CEO elect and current CEO of digital colony.

Mark Hedstrom, our COO and CFO.

Before I turn the call over to them quickly cover the safe Harbor some of the statements we make today regarding our business operations and financial performance, including the effect of the Coca 19 pandemic on those areas.

Maybe considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

All information discussed on this call is as of today May eight 2020, and colony capital does not intend and undertakes no duty to update for future events or circumstances.

For more information please refer to the risk factors discussed in our most recent form 10-K filed with the FCC and in our form 10-Q for the quarter ended March 30, Onest 2020.

During this call we will present, both GAAP and non-GAAP financial measures reconciliation of non-GAAP to GAAP measures is included in todays earnings press release, which is distributed and available to the public through the public shareholders section of our website located at CLM why dot com.

Thanks, and now I'd like to turn the call over to Tom Barrick, Chairman and CEO of colony capital.

Tom.

Thank you Sarah and good morning, everyone.

Where we began I want to hope your family of brands year colleagues are all say well.

Taking good care of yourself through these extraordinary times.

I also want to express our sincere gratitude and medical community first responders without whom we would be lost.

At colony, we've taken all possible measures to safeguard health safety and wellbeing of our employees tenants customers Counterparties and communities in which we operate on a global basis.

We transition to a virtual workplace more than 45 days ago and support our teams and their families as they continue to work for them Lee and dedicated lead from Paul.

Crises are not a new Saddam while we had the privilege to secure colonnade through at least five global pass tsunami. During my tenure at colony.

There are few lessons learned that are constant and I'd like to share with you.

Number one.

Many and investors, especially contrary gestures seem to always hope.

The volatility.

I look forward to that unforeseen intervening bad.

In order to have an edge or widening investable horizon.

It comes.

From that contrarian investment philosophy.

That is of course until that unforeseen intervening event occurs and then common theme becomes this is a crisis like no other crisis, where do we do where do we go and then panic.

What we've learned the key element to avoid panic its patients.

And at the Panacea is focused and continued dedication.

To the long term goal, which in our case as a pivot.

Secondly.

Concentrate on those things that we can control.

Don't waste time, and things that we can't control, there's no point in spending until resources of time and talent I'm trying to analyze the long term.

Elements.

In a crisis that we cannot control when will it and how will we saw.

What's the medical solution.

When do we go back to work when do the kids go to school will we ever go to a sporting event will we ever said in the middle seat of an airplane again.

We need to first and foremost focused on those elements that we can't control that mostly are right beneath our finger tips and wait for further information.

Next perhaps one of the most salient items is liquidity.

And volatile markets businesses in markets will experience temporary cash flow deficits as revenues rapidly decline.

There's a big difference between the liquidity crisis, and solvency crisis and were well where we are in the middle today is certainly.

Twitter equal crisis as a result of the cessation of most businesses and revenues.

An assessment of the long term profitability it the businesses that we operate quickly subordinates itself.

Near term liquidity.

Acquitted he is the magic elixir to assure long term optionality.

Next is optionality and adaptability the world changes quickly and so to long term business plans when wander into a jungle with no GPS you must choose the roads that will give you the option to re route in the event of future obstacles and we know not from where they come.

Adapt and keep all options open until the final point of decision and better information.

Next site.

There is no other option than every day, when we wake up to continue to strive.

Obtain the stress and fight through the obstacles, which we find ourselves in everyday.

And it reminds me of a terrible that we use in our company quite often.

Which is every day in the jungle Antelope awakens and knows he must do one can run faster than the fastest line and everyday eliana weights and knows he must do one thing which is run faster than slowest antelope.

The bottom line, whether a lie in our Antelope, you wake up you better start running.

Next communicate communicate communicate to all your constituents.

Shareholders lenders borrowers counterparties customers families showed trend wise associates.

Hopes and a commitment to a long term goals.

The company is essential.

Our instance, it's very simple we committed to a pivot to digital and all roads eventually regardless of what obstacles aren't trying to this will turn to that committed pit.

Now earlier this week, we finalize a series of strong proactive steps in consultation with our board designed to enhance the company's liquidity and financial flexibility as we adapt to the impacts of Kogan 19 on our businesses.

Want to talk about some of those and I'll start with where we are today.

As it makes this we had $1 billion of cash on balance sheet at the corporate level, while we're blessed to be in a strong position, we want to keep it that way and we know the road ahead, we'll continue to be rocky as near term.

First to conserve cash the board of directors as determined to suspend the dividend on our common stock for the second quarter of Twentytwenty.

This will preserve over $55 million and cash this quarter and we believe this is the right decision until we have a better sense for what the new normal looks like and exactly what is in front of this.

When it's time to revisit this dividend will be taking more of a total return approach.

As we look to align with our digital peers over time, which is our goal.

Second we drew down $600 million on our revolver to ensure funds are available to meet our commercial and debt service obligations.

We don't need the capital today, but it's a procol capital we took when the spread of co bid was accelerating like many of our peers and many corporations on wall Street.

[noise] fourth hospitality.

The reality is that most people are not going to hotels right now and consequently, we are experiencing the san reduced occupancy levels as our peers, averaging mostly in the twentys.

We don't expect us to change materially until the pandemic subsides and life goes back to normal and we need probably a new definition of normal.

The navigate this period of disruption our investment and asset management teams are working closely and aggressively with our operating partners and lenders.

Create near and long term solutions.

In short term our management operating partners moved quickly to reduce operating level expenses effectively shrinking hotel footwears, reducing staffing levels sharing staff across facilities and suspending non essential investment among other actions.

At the corporate level, we've recently engaged an external advisor to help us evaluate a variety of operational and strategic options as we work with our lenders Counterparties brands.

Yes.

While we suspended guidance with respect to the magnitude of other equity and debt Monetizations.

We remain intent on harvesting liquidity from those assets.

Just last week, we recaptured non strategic investment in the grocery retail business.

Generating over $70 million at proceeds well ahead of our carrying cost and bringing our year to date year to date monitors monetizations to over 300 million.

Our.

Finally credit.

We brought in Mike Massey formally of ladder capital at the end of March to Red seal and see where the goal is getting that business stabilize and ultimately back to trading in line with its intrinsic value.

Between to see a low created last year to finance $1 billion apart portfolio to success, we'd already had and liquidating CLM sees non strategic portfolio.

About 200 million at the 400 million had get monetized create kogut.

We've done a very good job.

Sealant see had an earnings call yesterday and our it for you for through further details Tibet transcript.

We believe these proactive initiatives are necessary prudent and allow us to face. The challenges ahead, we're working with lenders are operating partners the investment community and our teams all over the globe can make sure. We remain stable will capitalize in a good position to meet all of our obligations.

And that we stay on target to the commitment of our pivot.

While the Kobin 19, pandemic and we waited government imposed stay at home restrictions have impacted our legacy assets. Our digital business has remained resilient and viber over 19 has only amplified the fundamental demand for digital infrastructure and the world's reliance on the digital ecosystem.

And and todays shareholder call is a Prime example of how we are now communicate.

As Mark will discuss in great detail, our focus on shifting giggling infrastructure is stronger than ever.

Excuse me being mobile and remaining connected has never been so important and as Mark formally assumes the role of CEO economy as of July 1st the furnace strategically poised to become the leading digital real estate provider and funding sources across digital ecosystem.

In closing colony capital is a resilient.

And adaptable company the knows how to manage itself through adversity and has done so time and time again.

The code good 19 crisis.

Isn't that different.

It is challenging and we will all.

Successfully navigate our way through this obstacle.

Well this situation is challenging for everyone.

I have no doubt our ability to preserve.

And excel through this crisis and emerge even stronger.

And with that I'll pass this over to Mark to speak on the progress we're seeing on the digital pivot Mark.

Thank you Tom.

I'd like to Echo Tom's praised evolve our employees for their dedication. During this challenging time has I think many of you've heard me say in the past people create alpha.

And their hard work is truly appreciate it.

We've never been better prepared to face adversity like we're seeing today.

First I'd like to thank Tom and the colony team for making the CEO succession process. So seamless.

Jack you will my new partner and our incoming CFO and I are eager to get started in short the next course of colonies journey.

As Tom mentioned, our strategic pivot to digital is more relevant than ever.

As the pandemic has unfolded, we're all seeing how vital role mobility and reliable digital infrastructure plays in the world today.

I would offer you to all of you without today's technology, social distancing would have meant isolation.

Instead, we're seeing an explosion and usage and use cases from telecommuting to distance learning.

To virtual events telemedicine E Commerce online fitness and entertainment.

This unprecedented demand for remote connectivity cloud access in mobility is also highlighting the mission critical nature of digital infrastructure.

The unique combination of growth and resilient has made digital infrastructure, both the safe Haven, and an exciting or area for attractive returns and we're well prepared to capitalize on the opportunities across the digital ecosystem.

Not only are we built to serve the world's leading technology and telco companies as they deploy next generation networks.

Most importantly, we've got the capital and liquidity to execute.

Even as Kevin 19 has delayed the recycling of our balance sheet capital into digital.

Between our portfolio companies.

And the dry powder, a digital colony partners, we still have close to $3.5 billion ready to deploy into new opportunities in our existing companies.

We've never been busier.

I've, even insinuated instituted a daily meeting with our investment team to keep track of all of our activity on a global basis.

Let me a brief you on some of those activities that we prosecuted in the first quarter.

We recently closed four transactions this year that represent major milestones towards digital Revolution.

First and foremost we successfully completed the acquisition of their group for over 14 billion.

Adding a global leader in fiber connectivity with a 13 million fiber miles.

And 40 Datacenters to the digital colony portfolio.

And then the process, adding over 700 million and fee, earning AUM.

It's a real testament to the team's ability to handle complexity and deliver on extremely tight time milestones.

As we got to done in less than a year.

Anecdotally just in the past two months Zayo has experienced record sales and.

In lit and dark services across all of its fiber business units as companies look to light up fiber and meet increased demand.

Furthermore, I'd be remiss, if I didn't thank each UTI.

Our great partners in that transaction.

Second vantage Datacenters digital counties Hyperscale datacenter platform acquired he takes everywhere expanding our presence into Europe with datacenter campuses under construction or development in Frankfurt, Berlin, Warsaw, Milan and Zurich.

The demand for data center capacity in Europe is even stronger than US right. Now has the pandemic has pushed the transition to digital into high gear across Europe.

Third we supported vantage Europe and its acquisition of next generation data.

Expanding vantages footprint into a six and strategic market in Europe with over 180 megawatts located in Cardiff Wales.

Cardiff is a really unique location. This is where most of the sub oceana cables come into Europe from the U.S. and other parts of the world.

It's an incredibly strategic landing station.

And most importantly, one of the most powerful and largest datacenters in Europe.

Finally, we launched Scala Datacenters Hyperscale data center platform headquartered in some Paulo, Brazil.

To the acquisition of assets from UL Diviya.

At closing scholars Rd, one of the largest data center platforms in Brazil, and Latin America, and we see a multibillion dollar datacenter and digital infrastructure opportunity in the region.

Marcus Peejoe formally vice President I'd be in Latin America will lead Scala and oversee our growth strategy in Latin America.

I also want to highlight something Tom touched on earlier around the importance of lender relationships through this volatile period.

It's worth noting that the three deals that I described above and a four transaction, we completed internally a few days ago involving pricing in placing of for credit facility is just in the last 60 days.

We've got very strong relationships with our lenders who are supportive of our strategic pivot and we're getting deals done.

I want to thank all of the participant banks that helped us complete these financings.

These are relationships that I've had for multiple decades.

Through the good times and the hard times.

Our lender relationships have been there for us and it's proven to be no different through the pandemic.

Another step in our digital transformation that I wanted to quickly highlight is that beginning this quarter, we broken out a digital reporting segment designed to improve transparency and enhance the investment community to the ability to evaluate and monitor our pivot to digital infrastructure.

The segment is comprised of the digital investment management business.

Which currently manages the 4.1 billion dollar digital County Partners Fund.

Six separately capitalize digital infrastructure portfolio companies, formerly known as the digital Bridge holdings portfolio.

And balance sheet equity investments in digital assets, including the 20% controlling interest we haven't data bank and our 250 million dollar GP co investment commitment to digital Connie partners one.

We look forward to your feedback on this first step on what we will continue to be an iterative process.

Finally, let me leave you with two thoughts one first and foremost is simplification.

When I started this dialogue with the investor community many quarters ago.

When we think about transforming colony in it when I think about the transformation of colony and this undertaking.

Let me just be candid with all the it's not easy.

One of the guiding principles for coming out of this is the desire to reduce complexity.

We will increase transparency and simplify the business.

And the process of understanding it it's important to our investors it's important to us.

The second thought I'd like to leave you with as appreciation I want to thank the heroes of this pandemic the healthcare workers. The first responders, who are sitting on the front lines.

I also want to thank all the essential workers, those who go out and work each day to keep our systems working our communities clean and safe in our economy moving.

With that I'm going to turn it over to Mark Hedstrom for review of our first quarter financial results and business segment performance over to you Mark.

Thank you Mark and good morning, everyone. As a reminder, in addition to the release of our first quarter earnings.

While the corporate overview and supplemental financial report this morning, which is available within the public shareholders section our website.

On the call today I will provide a review of our first quarter 2020 results.

This segment performance and an update on liquidity and cost reductions.

Turning to our financial results for the first quarter GAAP net loss attributable to common stockholders was 362 billion or 76 cents per share.

The loss included $313 million noncash.

GAAP impairment charges, including $242 million real estate impairments, primarily the hospitality and healthcare segment.

As well as $71 million reduction in the carrying value of goodwill related to certain components of our legacy investment management business.

Core AFFO was negative $20 million or four cents per share excluding net losses of $22 million, primarily attributable to net investment losses and other equity in that segment core FFO was $2 million.

Companies results in the first quarter of 2020 were primarily impacted by the economic effects of Cobot 19 during the month of March, particularly within the non digital businesses, including most significantly our hotel exposure through our hospitality and THL portfolio and certain other equity and debt investment.

The company expects the effects of the economic impacts of Coca 19 pandemic can be more significant in future periods, beginning with the second quarter of 2020.

As Tom mentioned, we have taken a number of proactive steps to enhance the company's liquidity and financial flexibility as we adapt to the impacts of Coca 19 on our businesses.

First to conserve cash the board of directors as determined to spend the common dividends for the second quarter 2020.

This will preserve approximately $60 million in cash for the second quarter.

We will continue to assess the common dividend policy going forward, especially as we continue to make the pivot towards digital and as we received more information around the impacts of coven 19.

In the interest of all stakeholders and given the current economic environment. The company's board has decided to wait until no later than June thirtyth to make a decision as to the declaration of dividends payable to its preferred stockholders for the second quarter 2020.

Second.

We drew down $600 million from our corporate revolving credit facility in March.

Although we did not have an immediate need for this cash we took the step as of caution given that the given that the link and severity of the economic crisis remains uncertain.

We are currently in compliance with all covenants under that facility.

However, further deterioration in the markets and our operating performance may limit our ability to access facility under its current terms, including the revolver draw. The company currently has $1 billion.

Of cash on hand.

Third management recently have been identified and began executing on an immediate cost reduction program targeting over $40 million, an annual run rate cost savings.

Mostly from head count and compensation related cost reductions.

Which are expected to be implemented during the course of 2020.

These costs represent a significant percentage of our current non digital compensation and administrative costs.

This follows the pull achievement last quarter.

Of the previously announced $55 million of cost savings on same store run rate basis, which included the reduction of almost 30% of the company's non digital workforce existing at the time, the restructuring was announced in the fourth quarter of 2018.

Now I will provide a breakdown of call innings operating results by segment.

Starting with a new reporting segment digital real estate and investment management.

We ended the first quarter with third party digital.

Of $20.1 billion, 49% of last quarter.

And digital fee earnings equity under management or fee round of $7.7 billion up 13% from last quarter.

The increase in digital or UN and fee, earning equity under management was primarily attributable to the acquisition of Zayo.

A global leader in fiber connectivity with over 13 billion fiber miles and over 40 data centers.

With the combination of Zayo and two other digital infrastructure investments.

Our flagship digital fun digital comedy partners are DCP has now invested or committed 73% of its total capital commitments.

During the first quarter 2020, digital investment management generated $19 million of revenues.

Digital fee related earnings or I'm, sorry.

Approximately $10 million after deducting operating expenses.

As Mark discussed our digital platform has performed extremely well during the crisis and we continue our commitment to digital growth driver the business going forward.

Turning to our legacy other investment management segment, which exclude the digital business.

When we ended the first quarter was 17.4 billion of non digital third party anyway.

While fee, earning equity under management was $10.8 billion, which compared to the same period last year are each down over 30% as we continue to make our pivot to the digital business.

The decrease in the U.M. and fear the equity under management over the last year.

Was primarily attributable to sales of non digital like legacy investment management businesses, including the light industrial platform Northstar Realty Euro aren't Saar Realty Hamper trust as well as the reduction of fee basis at feeling C and North Star healthcare income.

We expect non digital legacy you and fee.

We continue to decrease in 2020, as we continue to monetize legacy investments.

Moving to the healthcare real estate segment first quarter same store NOI decreased only 2% compared to the same period last year.

Merely due to increased wages in senior housing operating portfolio and lower rent collections from certain tenants and the triple net lease skilled nursing facilities and hospitals portfolios.

For our hospitality real estate segment first quarter 2020, hospitality same store portfolio revenue decreased 18%.

And then why before FSD reserve decreased 45% compared to the same period last year.

Primarily due to the economic impacts over 19 across the entire hospitality portfolio during the month of March 2020.

As noted in our earnings release, the company's of default and a significant portion of the hotel portfolio in investment level non recourse debt as a result in the cobot 19 crisis and its impact on the hotel industry at large.

The cut the company as a dialogue Oliver plundered content.

With all with lending Counterparties and as well has begun discussions with advisors to evaluate strategic and financial alternatives to maximize the value of the hospitality assets.

Yesterday sealant see reported first quarter core portfolio core earnings of $46 million.

35 cents per share up from choir prior quarter amounts of $43 million or 33 cents per share.

Sealant fee is taken a number of actions led by newly appointed CEO, Mike Mazzie.

To maintain and preserve liquidity, including the Finalization of an amendment to the corporate revolving line of credit.

Suspension of the company's monthly common dividend.

More information can be found sealant fees earnings release.

Next is our other equity and debt or are we de segment, a 1.6 billion dollar equity carrying value portfolio non digital real estate real estate related debt and equity investments, including GP co investments.

From the beginning of 2020 through today. The company has generated total net proceeds of $339 million from asset dispositions, including 120 million of assets.

Classified under our Oh, we de segment and $219 million from the sale of our MSR Realty and hamper Trust.

Which are classified under our investment management reporting segment.

Looking ahead the company continues to concentrate on its key we focused efforts to monetize the entire legacy we de portfolio has an important source of liquidity and as it completes its digital evolution.

And finally, a word about the company's guidance policy.

As we noted in our earnings release until economic and financial condition stabilize become more predictable.

We will refrain from providing guidance with respect to core FFO or other operating metrics.

With that I'll turn the call over to the operator to begin humanity operator.

Yeah, we will now be conducting a question answer session. If you would like to ask a question. Please press star one on your telephone keypad confirmation total indicate your line is another question kill you May press star to if he would like to remove your question for Q.

For participants you think speaker equipment, it may be necessary to pick up your handset before a pressing the star Keith Please limit yourself to three question.

Our first question comes from Jade Rahmani with KBW. Please go ahead.

Thank you very much nice to hear from new and hope, you're all safe and doing well.

To start off with I wanted to ask with the suspension of the common stock dividend, which I believe is the prudent decision and with the deferred decision on the preferred stock dividend I think the most basic question I've been getting from investors relates to your confidence that the colony common equity position can be pretty.

Served and will in fact survive can you please speak to that and address the exposure of recourse debt, which is approximately I believe 20%.

[noise] jaded, it's Tom I'll I'll take a crack with both at the first part and Mark Engstrom can talk to you about the debt or hope you are safe and well surviving through this too.

First of all the survival of the common stock colony.

As a certainty we wake up every morning with 8000 different edges of this rubik's cube as you every one of our peers.

And evaluate.

Long term perspective on the basis of having enough liquidity to get through.

Scenario, which is the worst case, hoping that in front of us all on a helped basis on an economic basis is a better case.

We have.

A variety of legacy assets.

That are under pressure hospitality being the most significant as weve talked about.

And we have.

Created a pivot.

Almost 40% today you lab.

Rolling into digital.

Which has.

Unbelievable sustainability through any of these environments.

So this has a different kind of the crisis, we're not concerned about the solvency of our business were concerned about the liquidity of our business.

And as we've said time and time again. This crisis is about liquidity and all of the ramifications that we're dealing with our really.

Focused on liquidity Optionality adaptability and will navigate through this that look the prudent thing on the common dividend and on every decision you make every day is to retain optionality.

And we don't know just like you don't know what is in front of his tomorrow. So we can talk the hospitality occupancy as we didn't talk about what's happening in wellness infrastructure, we can talk about what's happening credit businesses.

And borrowers Counterparties tenants occupants are all under tremendous pressure.

So we go day to day.

On the basis of saying the key to long term survivability and common stock profitability is day to day liquidity.

And I think thats, the only answer anybody could get at this point in time, Mark do you want to comment on the recourse aspects of debt.

Sure sure timed and just briefly I think.

Yes, we have substantial corporate debt of course.

At the investment level, all of our debt subject to customary carve outs is non recourse.

And at the corporate level were in compliance with all of our debt.

Covenants and conditions, and we expect to be able to meet obligations.

As they as they arise. So we're we're there's there's really no leakage items the investment level and.

Corporate debt is.

Well under control today.

In terms of the liquidity the press release notes, a EUR $1 billion of corporate cash on hand.

Which includes 600 million.

Of revolving credit facility capacity, what are your expectations for cash utilization for 2020, what are your expectations for cash generation for 2020.

And what are the covenants on the recourse debt.

Mark.

We we expected to be able to.

Fund the operations of the business from.

Cash flow generated from our sales of assets in operations.

There the covenants of the non recourse debt our remain at the investment level.

Again subject to customary carve outs.

Those.

Those that that is non recourse.

And we.

Uh huh.

That 80% of our.

Debt stack.

His nonrecourse only 20% of that is corporate level as you rightly pointed out Jay.

We're we're in compliance, but right now we expect to be.

Able to.

Access our revolving line of credit.

And stay in compliance with corporate debt.

Nonrecourse debt.

At the investment level.

Typically in the hospitality portfolio, we're in discussions with with lenders as we speak.

I have received a number of positive reactions and forbearances.

From those lending parties and expect to continue to make progress there.

Lastly, our the.

Financial covenants recourse debt.

Primarily in the credit agreement or are there other.

Instruments that have covenants speaking to the recourse debt solely.

So the beyond the only the only read the only covenants.

That are related to operating performance our in our revolving line of credit.

That's the that's the only instrument that has.

Covenants and as of today, we're in compliance with all of those covenants under our revolver.

[noise], thanks for taking the questions.

Thank you next question comes around the better with B. Riley. Please go ahead.

Hi.

Good morning, So I'm just on the just quick one of the preferred.

Can you quantify.

How much cash that would potentially preserved on a quarterly basis.

And I believe all of those are cumulative so.

I guess, how would the accounting for that work with that Kashi save really be unencumbered. If you did.

Choose to defer that payment.

Yeah, Randy it's Tom So 76 million year more or less on for [noise].

So it's just a meaningful number on the count them side I'd to defer to Mark heads from Mark what's the accounting treatment.

We we would still accrue that.

Preferred dividends and.

Okay.

On on the balance sheet.

It's it so it would still it would still get carried.

In the and reflected in the financials.

And there are covenants within the preferred that that.

Say that if we don't make that preferred dividend.

Should bring it back to current within.

Six quarters, then there's consequences relating to that that are in.

In that in.

It it remains on it remains on the balance sheet.

Randy I think it's OK consideration, but the liquidity is not encumbered I guess is what I'm trying to figure out.

Correct.

It doesn't affect it would've been covered liquidity.

Yes, just on.

On health care I noticed you did dispose of skilled nursing facility can you.

And hospitality clearly, it's got a lot of pressure, but it can you talk a little bit the health care just.

It really with with the kind of an eye towards the ability to sell assets there how how.

What parts of your portfolio, our transacting, which aren't you be interesting to hear.

How the different pieces your portfolio are perceived in the market from an asset disposition perspective.

Randy It's Tom So if you take if you take wellness infrastructure and divided into it.

Medical office buildings.

Hospitals.

You'll nursing.

Senior housing.

So many different components, but the amazing thing is the resiliency of what's happened and our.

Ah wellness infrastructure categories on on all fronts right we've.

We've collected.

A little over 90%.

Revenue streams.

All of those categories.

Of course hard to said medical office buildings.

When you think of.

Doctors and what happens is resolved social business segment, where they're going hospitals, we know about skilled nursing.

Is.

Is unbelievably difficult and remembering that we are not operators ourselves. So we're a couple levels removed from.

The patient.

And the and the payment sequence and.

Without going into the parade of Wearables as a result of the epidemic.

I'm trying to relieve hospitals from the.

On coal good patients.

And adapting.

And every community at every regulatory environment, we have to those requirements, which has been remarkable so when we talked about asset sales I think as you look across our peers to the bigger and better each of those categories what's that.

Have specific focus on senior housing, which is which is hard hit.

Senior housing in our portfolio is doing well, but senior housing industry is not getting much subsidy from the governmental programs is it an orphan and it's very difficult because if you have senior housing gets normally rotating.

At.

Five or 10%.

Vacancy levels and relying on occupancy and perspective seniors, it's not happening.

Right you Cat you can't address a preview these facilities.

With even non code that patients because.

Of of all the all the great horrible so we know so.

When we talk about.

Moving to the assets for sale of the assets. We we are engaging and sale of some of the assets those assets are being sold and in many instances to the operators of those.

Assets.

Or to.

The competitors, who have some particular need of course the market the market is.

And.

Our strategy in this has really been just too narrow constant expenses concentrate on health and safety, which is.

Our teams have done an amazing job rich wells, who runs that that silo Uh huh.

You can imagine what he and all of our peers and the wellness industry are dealing with on a daily basis.

So we're not looking at your near term asset sales and healthcare as being a panacea.

The lever that we have on liquidity as Mark heads from was talking about we have plenty of flex and other equity and debt.

That we can monetize assets quicker, if we need to do it.

But.

Health care and steady as it goes and if you look at the effect on a core if that flow as to where it is and what the dissipation is performing much much better than hospitality.

Now a lot of that as result of.

Governmental intervention on things like medicated dances, and the operators getting some support.

But I would say asset sales are the least important thing because at the moment.

Okay, Great and then my third question is is on digital and.

You know, it's very welcome to have the digital segment broken out in the financials I'm right. It looks like the U.M. overall, and then that fee you almost 7 billion is pretty in line with what was covered if it's just December strategic Ali called maybe it's a little bit ahead of plan, but can you all just take a second to kind of.

Let us know where you are.

In what was delivered here in where you are trending in the second quarter and digital relative to what you laid out in December yeah, I'm kind of picking up again or blended fee is over all around 100 basis points. I think we're talking about a margin maybe to be around 40% and Ah in 2020 can you just give an overview of kind of where you are versus that X.

Station in December.

Yeah, Good morning, Jade its mark and see how are you [noise].

I've got Randy Randy Binner from you've already got.

So Randy just the guidance that we gave you back in December and where we're trending right. Now is let me sort of break it out into a couple of different subcategories for your ease of use first and foremost on the digital I am business.

We had a very strong first quarter a co investments came in quite strong we had the co investment related to Zayo, we had co investments related to vantage Europe, and so our total fee U.M. and a few embarrassing capital increased at a pretty good clip in the first quarter and what we had told you back in December as we wanted to grow for us.

By 10% to 15% this year and so far we're off to a very good start on that goal and ER and obviously raised a lot of third party capital for both of those opportunities on a co invest basis.

We don't see that slowing down we have a continued plan.

To deploy new digital I am products and to continue to deploy new digital co investments and so that guidance that we gave you that 10% to 15% PLM growth is something that we obviously intend to beat this year and I would say the fundraising environment right now for our digital I am business remains incredibly robust.

Investor demand for what we're doing an investor appetite.

For our I am products is quite strong and our capital formation team right now is out in active dialogue with literally a couple of hundred investors across a bunch of new products and new co investment. So we're obviously very excited about that I think as it relates to the assets that are on the balance sheet Digital County partners one is over.

73% deployed now.

With committed capital to those existing 10 investments the 10 portfolio companies and DCP, one where at 80% of committed capital and we have about 20% of the fund in reserve to do either maybe perhaps one more new platform, which were evaluating about four or five opportunities right now in late stage diligence or a we can continue.

Due to commit that capital Randy to existing portfolio companies that are seeing tremendous opportunities.

Inside of their own individual platforms.

So a in addition to that we have another asset on the balance sheet, which is data bank data Bank Oh, we just came out of the first quarter had a very very strong first quarter.

Strong net bookings strong EBITDA growth.

We continue to see data bank accelerating throughout the year like its peer group.

Relevant peer group would be perhaps equinix or digital Realty Trust.

Data Bank as you know is is a as a company that's focused on edge computing Datacenters and a we absolutely anticipate with the impact of cobot bookings are accelerating through the course of the year churn has been much lower than we thought and we expect a data bank to to perform through the end of first quarter. They were plus 6% on EBITDA. So.

We feel really good about the fund that we feel really good about data bank, we feel very good about digital I am products. There is a four sleeve inside of the digital reporting silo.

Which is our liquid securities strategy.

Colony has long had a real estate liquid security strategy, a fund led by Bill Hughes.

We've recently began the process of adding digital real estate to that liquid security strategy and eventually converting that to a full.

Digital liquid security strategy. So that silo now also reports into the digital business and the digital reporting segment.

Thank you for taking the question. This question for Mark and see if I may Mark there seems to be a lot of talk about the broadband infrastructure component to a possible for stimulus I'm curious as to the collection of assets you have there how do you see that plane out from what I understand by G. <unk>.

The very much wrapped into the so how do you see colony plane in that thank you.

Sure. Thanks, Jennifer well look I think or companies that are based here in the U.S., we'll certainly benefit from that.

Largest investment Jennifer in a digital Connie partners. One is a business called <unk> zero. Obviously is is a broadband communications provider. It engages in business with the government engages in businesses with other constituents inside the government like ebay plans, we really think the stimulus bill that is.

Being contemplated right now, we're really focus on rural broadband connectivity.

And my per view of sitting on the broadband deployment action Committee on behalf of Chairman Pie I think that is a core focus of the F.C.C. right now is bringing that connectivity to rural areas and that'll be something that perhaps they will will engage in I mean, most of our networks are traditionally in the urban core where we have debt.

Urban Metro fibre and we have obviously really strong long haul capacity long haul capacity here in the U.S. and in Europe and in the Ocean that connects US. So I think you know in thinking through the first stage of any stimulus. It will be focused on on real connectivity and they will probably have a a little bit of a seat at that table, we're not expecting.

No significant seat it really zero doesn't need a subsidy of any sorts because to be candid. The knitting is is quite strong and its core business. Today. So I wouldn't anticipate a short term stimulus bill would would impact us I think looking around the corner of any other potential government stimulus around five g. The most important thing right now Jennifer.

We need to get the C.B.R.S. spectrum out there I think that's a real important part we've got to continue to have the F.C.C. push spectrum auctions, along you've seen some of that activity in the first quarter and the best way to spur innovation is to put new spectrum out. So my hope is that the government will continue to accelerate spectrum deployments. So.

We can continue to innovate and invest and work with our customers to deploy that technology.

So I I really from our from our impact obviously these these stimulus is around broadband can certainly be helpful, but to be honest and caucuses with our 15 Ceos last week I didn't I didn't hear any of them say that they needed.

Stimulus package of any sort to enable their businesses.

Oh, one why if I may this obviously market as much disk location in terms of assets since we've talked about it do you as you look at your plan to continue to increase additional portion of your quite fully L.D.C. sound you know bargain basement out there or are there has there been.

Faction of multiple sorry, Hello to maybe we're holding out.

Yeah, I would say listen private market multiples really haven't moved that much yet Jennifer and I think that's probably going to persist through q. too and I think we won't see significant move in multiples probably till Q3 into for it really comes back to central thesis at Tom hit on earlier, it's just about liquidity right and so when liquidity gets constrained and.

Stopped lending.

That's when we really find that there's a a significant movement in private emanate pricing and so we're we're we've been patient we picked our spots of the last 90 days, we've been able to get a few deals done that that diligence was complete and Q4 or in January of this year and our lender showed up for us based on a a longstanding relation.

Chip. So if you can get deals financed and you can put you know adequate too conservative leverage on those deals you can you can get deals done in this environment.

I think looking sort of around the corner and where we think emanate will ultimately be that will be very much driven by the capital markets and I think we'll continue to see opportunities I mean at down at the portfolio company level for tuck ends in four greenfield opportunities. Those are are quite robust at the moment. So we're seeing a lot of opportunities.

Down at our 15 portfolio companies, where there's a a bigger opportunity to get closer to our customers and to help them you know enable into ploy next generation networks. So I think for us it's gonna be keeping a careful lie on them in a it's gonna be supporting our portfolio companies and then I would say just.

Small nuance towards credit for a second the real dislocation right now is perhaps happening in in companies that had older legacy assets and as we think about turning the corner towards you know five g. and and cloud computing and next generation applications, A.I. and autonomous driving vehicles and all of the things that we've.

Talking about in this new digital economy.

There are some legacy telco assets that are assets that were built in the seventies and eighties in early nineties and some of those assets. Currently are are going through some restructuring. So I won't name names, but there are certain digital businesses that are facing a transformation in terms of their physical plant and some of those cash flows are coming under stress.

So I always tell folks not all digital infrastructure assets are the same Jennifer you have to be a very careful buyer and so when we do see certain assets coming under stress one of the great things that Tom is built here a colony is a great legacy and credit.

We've assembled a fantastic digital credit team, we're looking at digital credit as a vertical and as an opportunity and we are seeing tremendous opportunities and digital credit so small preview without going into too much detail, but we're obviously excited about the opportunity to play opportunistically across the capital stack either.

Secondary steaks are in primary steaks first lean second lien convertible preferred mezzanine debt you name. It we think there's a lot of opportunity out there to help customers and help different companies be able to work through their capital structure issues as they pivot out a legacy assets.

Move towards you know more next generation digital assets I'm actually very excited about that opportunity.

Thank you.

Next question costs, a wreck practice with Raymond James place go ahead.

Morning.

Oh.

Hope you your family or friends and employees.

Okay. So far.

A couple of questions on the digital infrastructure side.

[noise] Mark you mentioned.

I think that's been pushed back from June July but.

Connie capital plan that is it the spectrum side is it.

Buildings.

Maybe with the cable guys it macro side.

The opportunity of spectrum, which is the life little wireless.

Yeah, I'm I'm very excited about C.B.R.S. and good morning wrecked good to hear your voice hope you're doing well and wish you and your family well you know for me C.B.R.S. is a huge catalyst Rick because it's it's the advent of what we call enterprise five g. and so we've been having seabear s. trials down at X. net one of digital colonies port full.

Leo companies and.

It's been it's been really encouraging and those those tests recur are really faced on the enterprise. So we're we're partnering up with a corporate logo or we're partnering with the government entity, where we own the infrastructure rebuild the infrastructure for the entity and we run it for them.

And so in that environment, where it's a control environment, whether it's a corporate headquarters it's a factory.

Or for example, it could be a port could be a downtown a C.D. area C.B.R.S. has so many applications right now wreck. So as we think about it there are a bunch of different ways that you can play in it and we are actually canvassing the spectrum Oh, we're canvassing the management of the spectrum, we're looking at owning the infrastructure and deploying and working.

On behalf of enterprises, where the enterprise engages us when we enter into long-term contract with them and building and managing that infrastructure and then of course, obviously a colony, we have a rich heritage and real estate and so having access to a lot of commercial real estate and a lot of the folks that we lend money too.

Some of the businesses like hospitals, where we actually have a hard infrastructure, where we can partner with hospital groups to deploy that spectrum and then just looking through other applications and outdoor applications, where we have a rich heritage and partnering with governments and partnering with municipalities. There are so many tentacles to C.B.R.S., Rick it's it's very exciting.

So.

First you got to prove the business model and so.

Or trial testing in the a few cases that we've already deployed this year have all gone incredibly successful. So that's good news the proof of the technology.

Was the was the first thing we had to get through we did not last year, improving out the technology and and testing radios and testing how the spectrum performs and looking most importantly, Rick beyond just spectrum performance looking at the applications and thinking about the applications and how you can enable and enterprise and help that company get through it. So we've been at C.B.R.S. now for about two.

Two years and we've actually got three different business models that were working on right now at digital colony, it'll be a big part of our push later this year and and into our future funds and so we're we're very excited about it and now that we've proved out the technology. We've proved out the business models and they use cases, there's a bunch of different ways. We can go about it.

County, and having that access to real estate and having those key relationships with landlords and hospital systems and other types of property owners that Thomas developed over the last 30 years and that I've developed as you know at apex Inspector site and G.T.P. and vertical bridge, we have access to real estate, so marrying that knowledge of how to build it.

How to manage it how to deploy it how to explain those applications to enterprises and explained the cost benefit to them. That's something we've already developed on a proprietary basis. So don't want to go too far ahead, but I can tell you that we've been at it for a couple of years now we're very excited about it and it is a big part of colonies future.

A certain question for me is on the fiber side.

Not all digital assets are crude equally how is the.

<unk>.

Economic time.

Is obviously between enterprise fiber dark fiber.

Shurn bad collectibles.

The whole fiber industry.

You know listen I'll I'll give you are experiencing at being filled and say Oh, which are are two of our portfolio companies and digital colony. One starting in the U.S. was <unk>. They had a tremendous first quarter I would say net bookings probably the strongest quarter. Yeah that day was had probably in in three or four years wreck so really tremendous net.

<unk> largely aided by let's services was significantly up spot bookings, we're we're up and that ability to deploy incremental it infrastructure for customers was was delivered upon so that was a great result on the dark side same thing focused on obviously data center connectivity supporting our cloud cuts.

Summers supporting mobility, all of those verticals, Rick had been up and have been performing incredibly well.

We have a data center business inside of it called C. Colo, It's had a a couple a bumpy quarters, but in March we turn that and reverse that trend in that had a positive quarter. So positive month and looks like it's continue to be positive in April so zero from a net bookings a net install base has had a very very strong first quarter.

So we think that was about 11% up over last year's first quarter. So really good first quarter on the binfield side in Toronto and in Montreal in northeast, Canada, a tremendous tremendous quarter for them, they're bookings were up over 100% over last quarter, that's not a typo. So they had a fantastic quarter that was.

Combination once again, it's lit in dark, but most of that being lit metro and focused on enterprise users.

So really a a tremendous moment for the fiber sector and owning you know good durable plant with high strand, count and having that strand count open where you can activate for customers quickly is really the name of the game and so owning older legacy assets that are still exposed to copper or have no strand count.

You have to overlapping overbuilt, that's not where you want to be right. Now. So we've tried to be very selective a colony about what good fiber <unk> want to own and then five or we don't want to own.

There are some distress opportunities in the marketplace right now we've stayed on the sidelines very very consciously decided that those are situations, we don't want to be in because the reality as we can continue to build a dark fiber with high strand count at a better costs than buying even some of those distress assets. So we're going to continue to measure that.

Are looking at select them any opportunities both it being field <unk> and also in central Europe as well so and also in zero Europe, Rick very very strong first quarter bookings as well. So net net fiber has been one of those really good pleasant surprises in Q1 looking at the backlog and pushing an acute too I don't see.

Any of that demand sort of subsiding I think we continue to see robust demand pushing into Q2 as well.

<unk>.

And your family.

Thanks for appreciate it.

Thank you I would like to kinda floor over the top Eric for closing comments.

Thanks to everybody and I hope you have a great weekend I I wanted to end with just a.

A notion which is.

We're all suffering through the unknown <unk>, what it does to all the businesses that we Stuart in managing all businesses in which you invest.

But in actuality for colony, we started this adventure a long time.

So we formed a joint venture would mark and his team in 2017.

<unk> ever forcing coded.

Starting this rotation from legacy assets, which at the time, we well we're fully valued.

<unk> digital which we believe to be the railroad future.

And 18 months from then a historic $4 billion fun, which had never been achieved before.

And.

In the last.

Really 18 months.

Digital colony moving through acquisition.

Companies like Dale 14.3 billion dollar transaction I wish D.C.P. itself committed 800 million.

The.

The addition to support Mark.

My successor coming on and July as we as we turn the corner to accompany with.

For new highly qualified rafters.

<unk> just came on board ads that.

Technological background also.

And all that's been jewels on digital by a legacy team, it's supply the capital to do that over $12 billion of asset sales.

In order to get to this rotation.

$220 billion digital assets from zero started three years.

So.

We're listening to the noise Kobe who's complicated everything.

So we had the right vision.

We created the right.

<unk>.

We've been disgusting the assets that we thought reached their optimal value.

We have a temporary liquidity issue, which we're going to solve and what's going to pay attention to.

Yeah, I knew C.O. and direction.

Mark is going to do it <unk> job that.

Manning the new digital frontier safeguarding the old I can see assets.

Sorry for the interruption.

Along the investment field. Thanks for your patients get this too will come to pass.

Oh, he will prevail.

Oh, he will become before most digital infrastructure provider.

And we'll get through this crisis all the good so.

We have a safe weekend keep your family's sake and thanks, so much for being what it is funny.

<unk> today's teleconference, you might get connected whilst at the time. Thank you for your participation.

Yeah.

[laughter].

[laughter].

[music].

[music].

[music].

Greetings and welcome to the colony capital first quarter 2020, <unk> earnings Conference call. At this time, all participants Arnie listen only mode. A brief question that after especially the will solve a formal presentation.

If anyone should require operator assistance during the conference. Please press Star Zero I got telephone keypad.

As a reminder, this conference is being recorded it's not my pleasure to introduce your host separate while managing director of Investor Relations.

Good morning, everyone and welcome to colony Capital's first quarter.

2020, <unk> earnings conference call.

Speaking on the call today from the company as Tom Burke, our chairman and CEO.

Mark Ganzi, our CEO elect and current CEO of digital colony.

Mark had strong our COO and CFO.

Before I turn the call over to them how quickly cover the safe Harbor some of the statements we make today regarding our business operations and financial performance, including the effect of the cold 19 pandemic on those areas.

Maybe considered forward looking in such statements involve a number of risks and uncertainties that could cause actual results could differ materially.

All information discussed on this call is as of today May eight 2020, and colony capital does not intend and undertakes no duty to update for future events or circumstances.

More information please refer to the risk factors discussed in our most recent form 10-K filed with the FCC and in our form 10-Q for the quarter ended March 31st 2020.

During this call we will present, both GAAP and non-GAAP financial measures reconciliation of non-GAAP to GAAP measures is included in todays earnings press release, which is distributed and available to the public through the public shareholders section of our website located at CLL why dot com, Thanks, and now I'd like to turn the call over to Tom Barrick.

Chairman and CEO of colony capital.

Tom.

Thank you Karen and good morning, everyone.

Before we begin I want to hope your family's your friends. Your colleagues are all states as well.

Taking good care of yourself through these extraordinary.

I also want to express our sincere gratitude and medical community first responders without them, we would be lost.

At colony, we've taken all possible measures safeguard the health safety and well being of our employees.

Customers.

Counterparties and communities, which we operate on a global basis.

We transition to a virtual workplace more than 45 days ago and support our teams and their families as they continue to work for exactly and dedicated fleet from Paul.

Crises or not a news.

We have the privilege to secure calling me through at least five global pass anomalies during my tenure at colony.

There are few lessons learned that are constant and I'd like to share with you.

Number one.

Many investors, especially contrary to investors seem to always hope.

For volatility.

We look forward to that unforeseen intervening that.

In order to have an edge or widening investable horizon.

It comes.

From that contrary and investment philosophy.

That is of course until that unforeseen intervening events occurs and then the common theme becomes this is a crisis like no other questions. What do we do where do we go and then Patrick.

What we've learned that a key element to avoid panic its patients.

And at the Panacea its focus continued dedication.

To the long term goal, which in our case its object.

Secondly.

Concentrate on those things that we can control.

Don't waste time, and things that we can't control, there's no point in spending untold resources of time and Alan.

I'm trying to analyze the long term.

Hello.

In a crisis that we cannot control when will it and how what we saw.

What's the medical solution.

When do we go back to work when do the kids go to school will we ever go to a sporting event.

Well, we ever said in the middle seat of an airplane again.

We need to first and foremost focused on those elements that we can't control that mostly are like beneath our fingertips.

And wait for further information.

Next perhaps one of the Australian items is liquidity.

And volatile markets businesses in markets will experience temporary cash flow deficits as revenues rapidly decline.

There's a big difference between the liquidity crisis solvency crisis and were well where we are in the middle today is certainly liquidity crisis as a result of the cessation of most businesses.

And revenues.

An assessment of the long term profitability of the businesses that we operate quickly subordinates itself near term liquidity.

Liquidity is the magic elixir to assure long term optionality.

Next is optionality and adaptability world changes quickly and so the long term business plans when wandering through a jungle was no GPS you must choose the roads that will give you the option to re route and these data future obstacles and we know not from where they cup.

Gap and keep all options open until the final point of decision and better information.

Next site.

There is no other option that every day, what we wake up.

Continue to strive.

Sure I became the stress and fight through the obstacles, which we find ourselves and every day.

It reminds me of the terrible that we use our company quite often.

Which is everyday in the jungle Antelope awakens and knows he must do once that run faster than the fastest life and everyday eliana waste and knows he must do one thing which is run faster than slowest analysts.

The bottom line, whether a lion Arnie Antelope, you wake up you better start running.

Next communicate communicate communicate all your constituents.

Shareholders lenders borrowers counterparties customers families children wives associates.

Okay, and a commitment to a long term goals.

The company is essential.

And our instance, it's very simple we committed to a pivot to digital and all roads eventually regardless of what obstacles aren't trying to this will turn to that submitted pivot.

Now earlier this week, we finalized the series a strong proactive steps consultation with our board designed to enhance the company's liquidity and financial flexibility as we adapt to the impacts of Kogan 19 on our businesses.

I want to talk about some of those and I'll start with where we are today.

As of May exist, we had $1 billion of cash on the balance sheet at the corporate level, while we're blessed to be in a strong position, we want to keep it that way and we know the road ahead, we'll continue to be rocky of near term.

First to conserve cash the board of directors have determined to suspend the dividend on our common stock for the second quarter of Twentytwenty.

This will preserve over $55 million cash this quarter and we believe this is the right decision until we have a better sense for what the new normal looks like and exactly what is in front of this.

When it's time to revisit this dividend will be taking more of a total return approach.

As we look to align with our digital peers overtime, which is our goal.

Second we drew down $600 million on our revolver to ensure funds are available to meet our commercial and debt service obligations.

We don't need the capital today, but it's a protocol that we took when the spread of coated was accelerating like many of our peers and many corporations.

On Wall Street.

[noise] fourth hospitality.

The reality is that most people are not going to hotels right now and consequently, we are experiencing the same reduced occupancy levels, that's our peers, averaging mostly in the twentys.

We don't expect us to change materially until the pandemic subsides and life goes back to normal and we need probably a new definition of normal.

To navigate this period of disruption our investment and asset management teams are working closely and aggressively with our operating partners lenders.

Create near and long term solutions.

And as short term our management operating partners moved quickly to reduce operating level expenses, you effectively shrinking hotel flips, reducing staffing levels sharing staff across facilities and suspending non essential investment among other actions.

At the corporate level, we've recently engaged an external advisor to help us evaluate a variety of operational and strategic options as we work with our vendors Counterparties and brands.

Yes.

While we suspended guidance with respect to the magnitude of other equity and debt Monetizations.

We remain intense harvesting liquidity for those assets.

Just last week, we recaptured not strategic investment in the grocery retail business.

Generating over $70 million proceeds well ahead of our carrying cost and bringing our year to date year to date monitors monetizations to over 300 million.

Finally credit.

We brought in my math formally of ladder capital at the end of March to Red seal and see where the goal is getting that business stabilize and ultimately Baptist trading in language intrinsic value.

Between Siloed created last year to finance $1 billion apart portfolio.

Yes, we'd already had in liquidating COO and CFO non strategic portfolio.

About 200 million of 400 million had get monetized <unk> co. good.

We've done a very good job.

Seal and see had an earnings call yesterday and I refer you for further details to that transcript.

We believe these proactive initiatives are necessary prudent and allow us to face. The challenges ahead, we're working with vendors are operating partners the investment community and our teams all over the globe can make sure we remain stable will capitalize and a good position to meet all of our obligations.

And that we stay on target to the commitment of our pivot.

Well, the Kogan 19 pandemic and we waited government imposed stay at home restrictions have impacted our legacy assets. Our digital business has remained resilient and viber over 19 has only amplified the fundamental demand for digital infrastructure and the world's reliance on the digital Echo system.

And and todays shareholder call is a prime example of how we communicate.

[noise] as Mark will discuss in great detail, our focus on shipping giggling infrastructure is stronger than ever.

Excuse me being mobile and remaining connected has never been so important and as Mark formally assumes the role of CEO at caught me as of July 1st the furnace strategically poised to become the leading digital real estate provider and funding sources across the digital ecosystem.

In closing colony capital is a resilient.

And adaptable company that knows how to manage itself through adversity and has done so time and time again.

The code good 19 crisis.

Got different.

As challenging.

We will all.

Successfully navigate our way through this obstacle.

Well this situation is challenging for everyone.

I have no doubt our ability to reserve.

And excel through this crisis and emerge even stronger.

That I'll pass this over to Mark to speak on the progress we're seeing on the digital pivot Mark.

Thank you Tom.

I'd like to Echo Tom's praised evolve our employees for their dedication. During this challenging time has I think many of you've heard me say in the past people create alpha.

And their hard work is truly appreciated.

We've never been better prepared to face adversity like we're seeing today.

First I'd like to thank Tom and the colony team for making the CEO succession process. So seamless.

Jack you will my new partner and our incoming CFO and I are eager to get started and chart. The next course of colonies journey.

As Tom mentioned, our strategic pivot to digital is more relevant than ever.

As the pandemic has unfolded, we're all seeing how vital role mobility and reliable digital infrastructure plays in the world today.

I would refer you to all of you without today's technology, social distancing would have meant isolation.

Instead, we're seeing an explosion and usage and use cases from telecommuting to distance learning.

To virtual events Tele Medicine E Commerce online fitness and entertainment.

This unprecedented demand for remote connectivity.

I would access and mobility is also highlighting the mission critical nature of digital infrastructure.

The unique combination of growth and resilience has made digital infrastructure, both the safe Haven, and an exciting or area for attractive returns and we're well prepared to capitalize on the opportunities across the digital ecosystem.

Not only are we built to serve the world's leading technology and telco companies as they deploy next generation networks.

Most importantly, we've got the capital and liquidity to execute.

Even as Kevin 19 has delayed the recycling of our balance sheet capital into digital.

Between our portfolio companies.

And the dry powder, a digital colony partners, we still have close to $3.5 billion ready to deploy into new opportunities and our existing companies.

We've never been busier.

I've, even insinuated instituted a daily meeting with our investment team to keep track of all of our activity on a global basis.

Let me a brief you on some of those activities that we prosecuted in the first quarter.

We recently closed four transactions this year that represent major milestones to our digital Revolution.

First and foremost we successfully completed the acquisition of Zillow group for over 14 billion.

Adding a global leader in fiber connectivity with over 13 million fiber miles.

And 40 Datacenters to the digital county portfolio.

And then the process, adding over 700 million and fee, earning AUM.

It's a real testament to the team's ability to handle complexity and deliver on extremely tight time milestones.

As we got to done in less than a year.

Anecdotally just in the past two months zero has experienced record sales in.

And lit and dark services across all of its fiber business units as companies look to light up fiber and meet increased demand.

Furthermore, I'd be remiss, if I didn't thank you tea.

Our great partners and that transaction.

Second vantage Datacenters digital colonies Hyperscale data center platform acquired he takes everywhere expanding our presence into Europe with data Center campus is under construction or development in Frankfurt, Berlin, Warsaw, Milan and Zurich.

The demand for data center capacity in Europe is even stronger than US right now as the pandemic has pushed the transition to digital into high gear across Europe.

Third we support advantage Europe and its acquisition of next generation data.

Expanding vantages footprint into a six and strategic market in Europe with over 180 megawatts located in Cardiff Wales.

Cardiff is a really unique location. This is where most of the sub oceana cables come into Europe from the U.S. and other parts of the world.

It's an incredibly strategic landing station.

And most importantly, one of the most powerful and largest datacenters in Europe.

Finally, we launched Scala Datacenters, Hey, Hyperscale data center platform headquartered in San Paulo, Brazil.

To the acquisition of assets from UL Diviya.

At closing scholars already one of the largest data center platforms in Brazil, and Latin America, and we see a multibillion dollar datacenter and digital infrastructure opportunity in the region.

Markets Peejoe, formerly Vice President I'd be in Latin America will lead Scala and oversee our growth strategy in Latin America.

I also want to highlight something Tom touched on earlier around the importance of lender relationships through this volatile period.

It's worth noting that the three deals that I described above and a four transaction, we completed internally a few days ago involving pricing in placing of for credit facilities just in the last 60 days.

We've got very strong relationships with our lenders who are supportive of our strategic pivot and we're getting deals done.

I want to thank all of the participant banks that helped us complete these financings.

These relationships that I've had for multiple decades.

Through the good times and the hard times.

Our lender relationships have been there for us and it's proven to be no different through the pandemic.

Another step in our digital transformation that I wanted to quickly highlight is that beginning this quarter, we broken out a digital reporting segment designed to improve transparency and enhance the investment community his ability to evaluate and monitor our pivot to digital infrastructure.

The segment is comprised of the digital investment management business.

Which currently manages the 4.1 billion dollar digital Connie Partners Fund.

Six separately capitalize digital infrastructure portfolio companies, formerly known as the digital Bridge holdings portfolio.

And balance sheet equity investments in digital assets, including the 20% controlling interest we haven't data bank and our 250 million dollar GP co investment commitment to digital colony partners one.

We look forward to your feedback on this first step on what we will continue to be an entered a process.

Finally, let me leave you with two thoughts one first and foremost is simplification.

When I started this dialogue with the investor community many quarters ago.

When we think about transforming colony and.

When I think about the transformation of colony and this undertaking.

Let me just be candidates all the it's not easy.

One of the guiding principles for coming out of this.

As the desire to reduce complexity.

We will increase transparency and simplify the business.

And the process of understanding it it's important for investors it's important to us.

The second thought I'd like to leave you with his appreciation I want to thank the heroes of this pandemic the healthcare workers. The first responders, who are sitting on the front lines.

I also want to thank all the essential workers, those who go out and work each day to keep our systems working our communities clean and safe in our economy moving.

With that I'm going to turn it over to Mark Hedstrom for a review of our first quarter financial results and business segment performance over to you Mark.

Thank you Mark and good morning, everyone. As a reminder, in addition to the release of our first quarter earnings.

While the corporate overview and supplemental financial report this morning, which is available in the public shareholders section our website.

On the call today I will provide a review of our first quarter 2020 results.

This segment performance.

And an update on liquidity and cost reductions.

Turning to our financial results for the first quarter GAAP net loss attributable to common stockholders was 362 million or 76 cents per share.

The loss included 313 million noncash.

Impairment charges, including $242 million real estate impairments, primarily in the hospitality and healthcare segment.

As well as 71 million dollar reduction in the carrying value of goodwill related to certain components of our legacy investment management business.

Core AFFO was negative $20 million or four cents per share excluding net losses of $22 million, primarily attributable to net investment losses, and other equity and debt segment core FFO was $2 million.

Companies results in the first quarter 2020 were primarily impacted by the economic effects of Cobot 19 during the month of March, particularly within the non digital businesses, including most significantly our hotel exposure.

Our hospitality and THL portfolio and certain other equity and debt investment.

The company expects the effects of the economic impacts of Coca 19 endemic to be more significant in future periods, beginning with the second quarter 2020.

As Tom mentioned, we have taken a number of proactive steps to enhance the company's liquidity and financial flexibility as we adapt to the impacts of coven 19 on our businesses.

First to conserve cash the board of directors as determined to spend the common dividends for the second quarter 2020.

This will preserve approximately $60 million and cash for the second quarter.

We will continue to assess the common dividend policy going forward, especially as we continue to make the pivot towards digital and as we receive more information around the impacts of coven 19.

The interest of all stakeholders and given the current economic environment.

Companies Board decided to wait until no later than June Thirtyth make a decision as to the declaration of dividends payable to its preferred stockholders for the second quarter 2020.

Second.

We drew down $600 million from our corporate revolving credit facility in March.

Although we did not have an immediate need for this cash we took the step as of caution give you that but given that the link and severity of the economic crisis remains uncertain.

We're currently in compliance with all covenants under that facility.

However, further deterioration in the markets and our operating performance may limit our ability to access the facility under its current terms, including the revolver draw. The company currently has $1 billion.

Cash on hand.

Third management recently have been identified and began executing on an immediate cost reduction program targeting over $40 million, an annual run rate cost savings.

Mostly from headcount and compensation related cost reductions.

Which are expected to be implemented during the course of 2020.

These cuts represent a significant percentage of our current non digital compensation and administrative costs.

This follows the pull achievement last quarter.

Of the previously announced $55 million of cost savings same store run rate basis, which included the reduction of almost 30%.

Companies non digital workforce existing at the time restructuring was announced in the fourth quarter 2018.

Now I will provide a breakdown of call innings operating results by segment.

Starting with a new reporting segment digital real estate and investment management.

We ended the first quarter with third party digital.

$20.1 billion, 49% of last quarter.

And digital fee earnings equity under management or fee round of $7.7 billion up 13% from last quarter.

The increase in digital a U.N. and fee, earning equity under management was primarily attributable to the acquisition of Zayo.

A global leader fiber connectivity with over 13 billion fiber miles and over 40 data centers.

With the consummation of Zayo and two other digital infrastructure investments.

Our flagship digital fun digital quality partners are DCP has now invested or committed 73% of its total capital commitments.

During the first quarter 2020, digital investment management generated $19 million of revenues.

Digital fee related earnings or I'm, sorry.

Approximately $10 million after deducting operating expenses.

As Mark discussed our digital platforms performed extremely well during the crisis, we continue our commitment to digital growth driver the business going forward.

Turning to our legacy other investment management segment, which exclude digital business.

We we ended the first quarter was 17.4 billion of non digital third party.

Well for yearning equity under management was $10.8 billion, which compared to the same period last year are each down over 30% as we continue to make our pivot to the digital business.

The decrease in the U.M. and fee, earning equity under management over the last year was primarily attributable to sales non digital like legacy investment management businesses.

Including the light industrial platform Northstar Realty Europe.

Oh, sorry, Realty Hamper trust as well as the reduction of fee basis, feeling C and North star help carry income.

We expect non digital legacy.

Fee.

To continue to decrease in 2020, as we continue to monetize legacy investments.

Moving to the healthcare real estate segment first quarter same store NOI decreased only 2% compared to the same period last year, primarily due to increased wages in the senior housing operating portfolio and lower recollections from certain tenants and the triple net lease skilled nursing facilities and how.

Optum portfolios.

For our hospitality real estate segment first quarter 2020, hospitality same store portfolio revenue decreased 18%.

No I before.

<unk>.

Decreased 45% compared to the same period last year.

Notably due to the economic impacts over 19 across the entire hospitality portfolio during the month March 2020.

As noted in our earnings release, the company's of default and a significant portion of the hotel portfolio investment level nonrecourse debt as a result, cobot 19 crisis and its impact on the hotel industry at large.

The company is a dialogue Oliver.

With all with London Counterparties.

Well has begun discussions with advisors to evaluate strategic and financial alternatives to maximize the value hospitality assets.

Yesterday sealant see reported first quarter core portfolio core earnings of $46 million.

35 cents per share.

Acquire prior quarter about $43 million worth three cents per share.

Let's see has taken a number of actions led by newly appointed CEO, Mike magazine to maintain and preserve liquidity.

During the Finalization of an amendment to the corporate revolving line of credit.

In the suspension of the company's monthly common dividend.

More information can be found sealant sees earnings release.

Next is our other equity and debt.

Segment, a 1.6 billion dollar.

Equity carrying value portfolio, non digital real estate real estate related debt and equity investments, including GP co investments.

From the beginning of 2020 through today. The company has generated a total net proceeds of $339 million from asset dispositions, including 120 million of assets.

Classified under our Oh, we de segment and $219 billion from the sale of our it's our Realty and hamper Trust.

Which are classified under our investment management reporting segment.

Looking ahead the company continues to concentrate on its keenly focused efforts to monetize the entire legacy portfolio has an important source of liquidity and does it completes its digital evolution.

And finally, a word about the company's guidance policy.

As we noted in our earnings release until economic and financial conditions stabilize become more predictable.

We will refrain from providing guidance with respect to core AFFO or other operating metrics.

With that I'll turn the call over to the operator to begin humana.

Operator.

Thank you we will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad.

Confirmation total indicate your line is in the question Q.

Hey Press star to if he would like to remove your question from the Q.

For participants using speaker equipment, it may be necessary to pick up your handset before press the star Keith Please limit yourself to three questions.

Our first question comes from Jade Rahmani with KBW. Please go ahead.

Thank you very much nice to hear from new and hope, you're all safe and doing well.

To start off with I wanted to ask with the suspension of the common stock dividend, which I believe is the prudent decision and with the deferred decision on the preferred stock dividend I think the most basic question I've been getting from investors relates to your confidence that the colony common equity position can be preserved.

And will in fact survive can you please speak to that and address the exposure of recourse debt, which is approximately I believe 20%.

Jay It's Tom.

Crack with both at the first part and Mark Engstrom can talk to you about the data I hope you are safe and well surviving through this too.

First of all that the survival of the common stock colony.

It's a certainty.

We wake up every morning with 8000 different hedges of this Rubik's cube as you every one of our peers.

And evaluate.

Long term perspective on the basis of having enough liquidity to get through.

Scenario, which is the worst case, hoping.

Right in front of US all on a health basis on an economic basis is a better case.

We have.

A variety of legacy assets.

That are under pressure hospitality being the most significant as weve talked about.

And we have.

Created a pivot.

I was 40% today you lab.

Rolling into digital.

Which has.

Unbelievable sustainability through any of these environments.

So this is a different kind of the crisis, we're not concerned about the solvency of our business were concerned about the liquidity of our business.

And as we've said time and time again. This crisis is about liquidity and all of the ramifications that we're dealing with.

Really.

Focused on liquidity Optionality adaptability and will navigate through this but look the prudent thing on the common dividend and not every decision you make every day is to retain optionality.

And we don't know just like you don't know what's in front of his tomorrow. So we can talk the hospitality occupancy as we didn't talk about what's happening in wellness infrastructure, we can talk about what's happening in credit businesses.

And borrowers Counterparties tenants occupants are all under tremendous pressure.

So we go day to day.

On the basis of saying the key to long term survivability had common stock profitability is day to day liquidity.

And I think thats the only answer anybody can get at this point in time, Mark do you want to comment on the recourse aspects of debt.

Sure sure timed and just briefly I think.

Yes, we have substantial corporate debt of course.

At the investment level, all of our debt subject to customary carve outs as non recourse.

And at the corporate level were in compliance with all of our debt.

Covenants and conditions, and we expect to be able to meet obligations.

As they as they arise. So we're we're there's there's really no leakage out of the investment level then.

Corporate debt is.

Well under control today.

In terms of the liquidity.

The press release notes, a EUR $1 billion of corporate cash on hand.

Which includes 600 million.

Of revolving credit facility capacity, what are your expectations for cash utilization for 2020, what are your expectations for cash generation for 2020.

And what are the covenants on the recourse debt.

Mark.

We we expect it to.

Be able to.

Fund.

Operations of the business from cash flow generated from our sales of assets and operations.

There the covenants of the non recourse debt our remain at the investment level.

Again subject to customary carve outs.

Those.

Those that that is non recourse.

And we.

Uh huh.

That 80% of our.

Debt stack.

His nonrecourse only 20% of that is corporate level as you pointed out Jay.

We're we're in compliance, but right now we expect to be.

Able to.

Access our revolving line of credit.

And stay in compliance with corporate debt.

Nonrecourse debt.

At the investment level.

And in the hospitality portfolio, we're in discussions with with lenders as we speak.

I have received a number of positive reactions and forbearances.

From those lending parties and expect to continue to make progress.

Lastly, our the.

Financial covenants recourse debt.

Primarily in the credit agreement or are there other.

Instruments that have.

Covenants speaking to the recourse debt solely.

So the.

The only the only read the only covenants.

Uh huh.

That are related to operating performance our in our revolving line of credit.

That's the that's the only instruments that has.

Covenants and as of today, we're in compliance with all of those covenants under our revolver.

Thanks for taking the questions.

Thank you next question comes to Randy Binner with B. Riley. Please go ahead.

Hi.

Good morning, So I'm just on the just quick one of the preferred.

Can you quantify.

How much cash that would potentially preserved on a quarterly basis.

And I believe all of those are cumulative so.

Yeah, I guess, how would the accounting for that work with that cash you save really be unencumbered. If you did.

Choose to defer that payment.

Yeah, Randy as Tom So 76 million year more or less on for [noise].

So it's a meaningful number on the accounting side.

Deferred remark heads remark, what's the accounting treatments.

We we would still accrue that.

Preferred dividend and.

Okay.

On on the balance sheet.

It's it's it would so it would still get carried.

In the and reflected in the financials.

And there are covenants within the preferred.

That.

Say that if we don't make that preferred dividend.

Should bring it back to current within.

Six quarters, then there's consequences relating to that that are in within that and.

It it remains on it remains on the balance sheet.

Randy I think it's okay, but consideration, but the liquidity is unencumbered I guess is what I'm trying to figure out.

Correct.

It doesn't affect.

It wouldn't uncovered liquidity.

Got it just on.

Healthcare I noticed you did dispose of the skilled nursing facility can you.

I mean, I hospitality clearly, it's got a lot of pressure, but it can you talk a little bit the health care just.

It really with with the kind of an eye towards the ability to sell assets there how how.

What parts of your portfolio, our transacting, which aren't you'd be interesting to hear.

You know how the different pieces your portfolio are perceived in the market from an asset disposition perspective.

Randy It's Tom So if you take if you take wellness infrastructure and divided into.

Medical office buildings.

Hospitals.

Field nursing.

Senior housing.

So many different components, but the amazing thing is the resiliency of what's happened and our.

Well in this infrastructure categories.

On all fronts right, we've we've collected.

A little over 90% of revenue streams.

And all of those categories.

Of course hard to said medical office buildings.

When you think of.

Doctors and what happens as result of social business segment, where they're going hospitals, we know about skilled nursing.

As.

Is unbelievably difficult and remembering that we're not operators ourselves. So we're a couple levels removed from.

The patient.

And the and the payment sequencing.

Without going into the parade of Wearables as a result of the epidemic.

[music].

I'm trying to relieve hospitals from the.

Non coal good patients.

And adapting and every community at every regulatory environment, we have to those requirements, which has been remarkable so when we talked about asset sales I think as you look across our peers to the bigger and better each of those categories books that.

Have specific focus on senior housing, which is which is hard hit.

Senior housing and our portfolio is doing well, but senior housing industry is not getting much subsidy from the governmental programs. It's it's an orphan and it's very difficult because if you have senior housing, but normally rotating.

Add.

Five or 10%.

They can see levels and relying on new occupancy and prospective seniors that's not happening.

Right you Cat you can't address a preview of these facilities.

We have even non coal that patients because.

All of the all the great horrible so we know so.

When we talk about.

Moving the assets for sale of the assets, we we are engaging and scale at some of the assets those assets are being sold.

And many instances to the operators of those.

Assets.

Our two.

Good competitors, who have some particular need.

Course, the market the market is.

And.

Our strategy in this has really been just too narrow costs and expenses concentrate on health and safety, which is.

Our teams have done an amazing job rich wells, who runs that that silo Uh huh.

You can imagine what he and all of our peers and and the wellness industry are dealing with Honda daily basis.

So we're not looking at near near term asset sales and health care as being a patent see it.

The lever that we have on liquidity as Mark heads from was talking about we have plenty of flex and other equity and debt.

That we can monetize assets quicker, if we need to do it.

But.

Health care and steady as it goes and if you look at the effect on a core if that flow as to where it is and what the anticipation is performing much much better than hospitality now a lot of that as result of.

Governmental intervention on things like Medicaid advances and the operators getting some support.

But I would say asset sales are the lease important thing because at the moment.

Okay, Great and then my third question is is on digital and.

It's very welcome to have the digital segment.

Broken out in the financials I'm sorry, it looks like the U.M. overall, and then that for you I'm on 7 billion is pretty in line with what was covered it. That's this December strategic outlook call, maybe it's a little bit ahead of plan, but can you all just take a second to kind of.

Let us know where you are.

And what was deliver here and where you're trending in the second quarter and digital relative to what you laid out in December yeah, I'm kind of thinking of the or blended fees over all around 100 basis points. I think we had talked about a margin maybe it'd be about 40% in ER. In 2020 can you just give an overview of kind of where you are versus that exit.

Station in December.

Yeah. Good morning, Jade its mark Andy how are you [noise].

I've got Randy Randy Binner from you've already got.

So Randy just the guidance that we gave you back in December and where we're trending right. Now is let me sort of break it out into a couple of different sub categories for your ease of use first and foremost on the digital I am business.

We had a very strong first quarter.

Our investments came in quite strong we had the co investment related to Zayo, we had co investments related to vantage Europe, and so our total fee U.M. and a few and bearing capital increased at a pretty good clip in the first quarter and what we had told you back in December as we wanted to grow for you and by 10% to 15% this year and so.

Far we're off to a very good start on that goal and ER and obviously raised a lot of third party capital for both of those opportunities on a co invest basis.

We don't see that slowing down we have a continued plan.

To deploy new digital I am products and to continue to deploy new digital co investments and so that guidance that we gave you that 10% to 15% PLM growth is something that we obviously intend to beat this year and I would say the fundraising environment right now for our digital I am business remains incredibly robust.

Investor demand for what we're doing an investor appetite.

For our I am products is quite strong and our capital formation team right now is out in active dialogue with literally a couple of hundred investors across a bunch of new products and new co investment. So we're obviously very excited about that I think as it relates to the assets that are on the balance sheet Digital County partners one is over.

73% deployed now.

With committed capital to those existing tenant investments to 10 portfolio companies and DCP. One we're at 80% of committed capital and we have about 20% of the fund in reserve to do either maybe perhaps one more new platform, which were evaluating about four or five opportunities right now in late stage diligence or we can continue.

Due to commit that capital Randy to existing portfolio companies that are seeing tremendous opportunities.

Inside of their own individual platforms.

So a in addition to that we have another asset on the balance sheet, which is data bank Databank Oh, we just came out of the first quarter had a very very strong first quarter.

Strong net bookings strong EBITDA growth.

We continue to see data bank accelerating throughout the year like its peer group.

Relevant peer group would be perhaps equinix or digital Realty Trust.

Data Bank as you know is is a as a company thats focused on edge computing Datacenters and we absolutely anticipate with the impact of cobot bookings are accelerating through the course of the year churn has been much slower than we thought and we expect data bank to perform to the into first quarter. They were plus 6% on EBITDA. So.

We feel really good about the fund that we feel really good about data bank, we feel very good about digital I am products. There is a four sleeve inside of the digital reporting silo.

Which is our liquid securities strategy.

Tony has long had a real estate liquid security strategy of fund led by Bill Hughes.

We've recently began the process of adding digital real estate to that liquid security strategy and eventually converting that to a full.

Digital liquid security strategy. So that silo now also reports into the digital business and the digital reporting segment.

So net net where we're at about where we thought we would be a I would say from my perspective, I think we feel really strong about the growth across all of the digital assets and my expectation is to outperform where we thought we would be in a in 2020.

Alright, well thanks for that best of luck.

Next question comes from Jennifer Fritzsche with Wells Fargo. Please go ahead.

Thank you for taking the question I'm just a question for Mark and see if I may Mark there seems to be a lot of and talk about the broadband infrastructure component to pass about four stimulus I'm curious as to the collection of assets you have there how do you see that playing out from what I understand side there.

Thanks, very much wrapped into that so how do you see colony playing in that thank you.

Sure. Thanks, Jennifer.

Well look I think our companies that are based here in the U.S.

Well certainly benefit from that.

Our largest investment Jennifer in digital County partners, one is a business called Zayo.

Zayo, obviously is a is it broadband communications provider.

Engages in business with the government and engages in businesses with.

Other constituents inside the government like E rate plans, we really think the stimulus bill that is being contemplated right now we're really focused on rural broadband connectivity.

And my purview of sitting on the broadband deployment action Committee on behalf of Chairman Pie I think that is a core focus of the FCC right now is bringing that connectivity to rural areas and that'll be something that perhaps zale will engage in I mean, most of our networks are traditionally in the urban core where we have dense.

Urban Metro fiber and we have obviously really strong long haul capacity long haul capacity here in the U.S. and in Europe and a in the ocean that connects US. So I think you know in thinking through the first stage of any stimulus. It will be focused on unroll connectivity and zale, we'll probably have a a little bit of a seat at that table, we're not expecting a.

Significant see it really zayo doesn't need a subsidy of any sorts because to be candid. The knitting is quite strong in its core business. Today. So I wouldn't anticipate a short term stimulus bill would would impact so I think looking around the corner of any other potential government stimulus.

Around fiveg.

Most important thing right now jennifers, we need to get the Crs spectrum out there I think thats a real important part we've got to continue to.

I have the FCC push spectrum auctions, along you've seen some of that activity in the first quarter in the best way to spur innovation is to put new spectrum out. So my hope is that the government will continue to accelerate spectrum deployment. So that we can continue to innovate and invest in work with our customers.

To deploy that technology.

So I I really from our from our impact obviously these these stimulus is around broadband can certainly be helpful, but to be honest and caucus thing with our 15th Ceos last week I didn't I didn't hear any of them say that they needed a stimulus package of any sort to enable their businesses.

Well why why if I may this obviously market it caused much dislocation in terms of assets that we talked about it to you as you look at your plan to continue to increase additional portion of your portfolio do you see some bargain basement out there or are there has there been tongue.

Traction at multiples for acceleration, maybe we're holding out.

Yes, I would say listen private market multiples really havent moved that much yet Jennifer and I think that's probably going to persist through Q2, and I think we won't see significant movement in multiples probably till Q3 in Q4. It really comes back to a central thesis that Tom hit on earlier, it's just about liquidity right and so when liquidity gets constrained and lenders stuff.

Lending.

That's when we really find that there's a significant movement in private M&A pricing and so we've been patient.

We picked our spots are less 90 days, we've been able to get a few deals done that diligence was complete in Q4 or in January of this year and our lender showed up for US based on a long standing relationship. So if you can get deals financed and you can put.

Adequate too conservative leverage on those deals you can you can get deals done in this environment I.

I think looking sort of around the corner and where we think M&A will ultimately be that'll be very much driven by the capital markets and I think we'll continue to see opportunities I mean at down at the portfolio company level for tuck ins and for Greenfield opportunities. Those are are quite robust at the moment. So we're seeing a lot of opportunities.

Down at our 15 portfolio companies, where there's a a bigger opportunity to get closer to our customers and to help them you know enable and deploy a next generation networks. So I think for us it's going to be keeping a careful lie on M&A, it's going to be supporting our portfolio companies and then I would say just us.

Small nuance towards credit for a second.

The real dislocation right now as perhaps happening in companies that had older legacy assets and as we think about turning the corner towards Fiveg and cloud computing and next generation applications, AI and autonomous driving vehicles and all of the things that we've been talking about in this new digital economy.

There are some legacy telco assets that are assets that were built in the seventies and eightys an early nineties in some of those assets.

Currently are going through some restructuring so I won't name names, but there are certain digital businesses that are facing a transformation in terms of their physical plant and some of those cash flows are coming under stress and so I always tell folks not all digital infrastructure assets are the same Jennifer you have to be a very careful buyer and so when we do see certain.

Assets coming under stress one of the great things that Tom has built here a colony as a great legacy in credit.

We've assembled a fantastic digital credit team, we're looking at digital credit as a vertical and as an opportunity and we are seeing tremendous opportunities in digital credits. So.

Small preview without going into too much detail, but we're obviously excited about the opportunity to play opportunistically across the capital stack either in secondary Stakes are in primary Stakes first lien second lien.

Convertible preferred a mezzanine debt you name. It we think theres a lot of opportunity out there to help customers and help different companies be able to work through their capital structure issues as they pivot out of legacy assets and move towards.

More next generation digital assets I'm actually very excited about that opportunity.

Thank you.

Next question comes from Rick Prentiss with Raymond James. Please go ahead.

Yes, good morning.

Copa Hope you your family or friends and employees stay well good to hear everything's going okay. So far.

Couple of questions on the digital infrastructure side.

Mark you mentioned the CBS auction I think that's been pushed back from June to July, but how do you see colony capital playing in that is it the spectrum side is at the end building side is it maybe with the cable guys. It macro side, what do you see the opportunity of spectrum, which is the lifeblood of wireless.

Yeah, I'm very excited about Crs and good morning, Rick Good to hear your voice hope, you're doing well and wish you and your family well.

You know for me Crs is a huge catalyst Rick because it's the advent of what we call enterprise Fiveg and so we've been having Cvs trials down at accident at one of digital counties portfolio companies and it's been it's been really encouraging and those those tests recur are really faced on the enterprise, So where we're partnering up with a.

Corporate logo or we're partnering with the government entity, where we own the infrastructure, we build the infrastructure for the entity and we run it for them.

So in that environment, where it's a control environment, whether it's a corporate headquarters it's a factory.

Or for example, it could be a port could be a downtown CBD area. Crs has so many applications right now Rick so as we think about it there are a bunch of different ways that you can play in it and we are actually canvassing the spectrum, our canvassing the management of the spectrum.

We're looking at owning the infrastructure in deploying and working on behalf of enterprises, where the enterprise engages us when we enter into long term contract with them and building and managing that infrastructure and then of course, obviously a colony, we have a rich heritage in real estate and so having access to a lot of commercial real estate and a lot of the folks that we lend money too.

Some of the businesses like hospitals, where we actually have a hard infrastructure, where we can partner with hospital groups to deploy that spectrum.

And then just looking through other applications in outdoor applications, where we have a rich heritage and partnering with governments in partnering with municipalities. There are so many tentacles to Crs Rick it's very exciting so first you've got to prove the business model and so.

Our trial testing a in the a few cases that we've already deployed this year have all gone incredibly successful. So that's good news.

The proof of the technology.

Does that was the first thing we had to get through we did that last year and proving out the technology and and testing radios and testing how the spectrum performs and looking most importantly, Rick beyond just spectrum performance looking at the applications and thinking about the applications and how you can enable an enterprise and help that company get through it. So we've been at Cvs now for about two.

Years, and we've actually got three different business models that were working on right now at digital colony, it'll be a big part of our push later this year and into our future funds and so we're very excited about it and now that we've proved out the technology. We've proved out the business models in the use cases, there's a bunch of different ways. We can go about it a call.

Tony and having that access to real estate and having those key relationships with landlords and hospital systems and other types of property owners that Tom has developed over the last 30 years in that I've developed as you know at apex Inspector site, and GGP and vertical bridge.

We have access to real estate, so marrying that knowledge of how to build it how to manage it how to deploy it how to explain those applications to enterprises and explain the cost benefit to them. That's something we've already developed on a proprietary basis. So.

I don't want to go too far ahead, but I can tell you that.

We've been out it for a couple of years now we're very excited about it and it is a big part of colonies future.

Great Second question for me is on the fiber side like you say not all digital assets are created equally.

How is the fiber business zayo doing through this economic time.

Theres differences, obviously between enterprise fiber dark fiber any issue with churn bad debt collectibles, and how do you see the whole fiber industry basically.

Okay.

Yeah, well listen I'll give you our experience it at being filled in sale, which are two of our portfolio companies and digital County, one starting in the U.S. was zayo. They had a tremendous first quarter I would say net bookings probably the strongest quarter add that sales had probably in three or four years, Rick So really tremendous net bookings are largely added.

By lit services was significantly up spot bookings were were up and that ability to deploy incremental it infrastructure for customers was was delivered upon so that was a great result on the dark side same thing.

Focused on obviously datacenter connectivity supporting our cloud customers supporting mobility all of those verticals, Rick had been up and have been performing incredibly well.

We have a data center business inside of it called see Colo, It's had a couple a bumpy quarters, but in March we turn that and reverse that trend and that had a positive quarter. So positive month and looks like it's continued to be positive in April so zayo from a net bookings and net installed base has had a very very strong first quarter.

So we think that was about 11% up over last year's first quarter. So really good first quarter on the binfield side in Toronto and in Montreal in northeast, Canada, a tremendous tremendous quarter for them.

Their bookings were up over 100%.

Over last quarter, that's not a typo.

So they had a fantastic quarter that was a combination once again uplift and dark, but most of that being let metro.

And focused on enterprise users.

So.

Really a tremendous moment for the fiber sector and owning good durable plant with high strand count.

And having that strand count open where you can activate for customers quickly is really the name of the game and so owning older legacy assets that are still exposed to copper or have no strand count or you have to overlap and overbuilt, that's not where you want to be right. Now. So we've tried to be very selective at colony about what good fiber, we don't want to own and then fiber we don't.

I want to own.

There are some distressed opportunities in the marketplace right now we've stayed on the sidelines very very consciously decided that those are situations. We don't want to be in because the reality is we can continue to build a dark fiber with high strand count at a better costs than buying even some of those distressed assets. So we're going to continue to measure that we are.

Looking at select M&A opportunities, both have been field handed zayo and.

And also in zero Europe as well so and also in zero Europe, Rick very very strong first quarter bookings as well.

So net net fiber has been one of those really good pleasant surprises in Q1 looking at the backlog and pushing into Q2, I don't see any of that demand sort of subsiding I think we continue to see robust demand pushing into Q2 as well.

Thanks, and best to you and your family and friends, everybody say well.

Thanks for appreciate it.

Thank you I would like to turn the floor over to Tom Barrick for closing comments.

Thanks, everybody and we hope you have a great weekend I wanted to end with just a.

A notion which is.

We're all suffering through the end down on coded and what it does to all the businesses that we steward and managing all businesses in which you invest.

But in actuality for colony, we started this adventure a long time ago. So we formed a joint venture with Mark and his team in 2017.

Not ever, forcing coded, but starting this rotation from legacy assets, which at the time, we sell we're fully valued.

To digital which we believed to be that the railroad future.

And 18 months from than historic $4 billion fund, which had never been achieved before.

And.

In the last.

Really 18 months.

Digital colony moving through acquisitions.

Companies like they owe a 14.3 billion dollar transaction, which DCP itself committed 800 million.

The.

The addition to support Mark as my successor coming on in July as we as we turn the corner to a new kind a company with.

For new highly qualified directors at Jennie getting better for you just came onboard ads that.

Technological background also.

And all that's than fueled on digital by a legacy team its supply the capital to do that over $12 billion of asset sales in.

In order to get to this rotation.

Sure $20 billion of digital assets from zero started three years ago.

So.

We're listening to the noise co bit is complicated everything.

So we had the right vision.

We created the REIT structure.

We've been divesting the assets that we thought to take reached their optimal value.

We have a temporary liquidity issue, which we're going to solve the what's going to pay attention to.

We have a new CEO and direction.

Mark is going to do it sensational job it at Manning, the new digital frontier and safeguarding the old legacy assets.

And.

Sorry for the interruption, along the investment field and thanks for your patience that this too will come to pass.

We will prevail.

Tony will become the foremost digital infrastructure provider.

And we'll get through this crisis altogether so.

Got speed Heaven sake, we can keep your family say and thanks, so much for being with US This morning.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.