Recent Securities Litigations
Colony Credit Real Estate Inc. Class A Common Stock (NYSE: CLNC)
According to the Complaint, Colony Credit Real Estate, Inc. is a commercial real estate (“CRE”) credit real estate investment trust (“REIT”) that purports to manage a diversified portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties predominantly in the U.S.
This Complaint is filed on behalf of a class consisting of all persons other than Defendants who purchased or otherwise, acquired the common stock of Colony Credit pursuant and/or traceable to the Company’s Registration Statement and Prospectus (collectively, the “Registration Statement”) issued in connection with the combination of Colony NorthStar, Inc. (“Colony NorthStar”) and NorthStar Real Estate Income Trust, Inc. (“NorthStar I”) and NorthStar Real Estate Income II, Inc. (“NorthStar II”) on or about February 1, 2018 (the “Merger”).
The Company’s common stock was registered with the SEC in connection with the Merger. Following the Merger, Colony Credit’s common stock was listed on the New York Stock Exchange (“NYSE”) without an initial public offering: stockholders of NorthStar I received 0.3532 shares of the Company’s Class A common stock for each share of NorthStar I common stock they owned; and stockholders of NorthStar II received 0.3511 shares of the Company’s Class A common stock for each share of NorthStar II common stock they owned.
The Complaint alleges that the Registration Statement was materially false and misleading and omitted to state: (i) that the credit quality of certain of the Company’s assets had deteriorated prior to the Merger and were continuing to deteriorate at the time of the Merger; (ii) that certain of the Company’s loans, including four loans of approximately $261 million related to a New York hotel, were substantially impaired, there was insufficient collateral to secure the loans, and it was unlikely that the loans would be repaid; (iii) that, as a result, the valuation attributed to certain of the Company’s assets was overstated; (iv) that certain of the assets contributed as part of the Merger were of substantially lower value than reflected in the Company’s financial statements and the Registration Statement; (v) that, as a result, the Company’s financial condition, including its book value, was materially overstated; and (vi) that, as a result of the foregoing, the positive statements in the Registration Statement about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.