9/30/09 11:36 AMAmendment No. 5 to Form S-11Page 3 of 244http://www.sec.gov/Archives/edgar/data/1467076/000119312509196171/ds11a.htm
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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securitiesuntil the registration statement filed with the Securities and Exchange Commission is effective. This preliminaryprospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any statewhere the offer or sale of the securities is not permitted.
Subject to CompletionPreliminary Prospectus, dated September 23, 2009PROSPECTUS
12,500,000 Shares
Common Stock
We are a newly organized real estate finance company that will acquire, originate and manage a diversified portfolio of real estate-related debt instruments.We initially intend to focus primarily on acquiring, originating and managing commercial mortgage loans and other commercial real estate-related debt investments. Wealso may acquire other real estate and real estate-related debt assets. We will be externally managed and advised by Colony Financial Manager, LLC, a wholly ownedsubsidiary of Colony Capital, LLC, a privately-held independent global real estate investment firm founded in 1991. Colony Capital has an extensive global footprint andcorresponding infrastructure, with 14 offices in 10 countries.This is our initial public offering and no public market currently exists for our common stock. We are offering 12,500,000 shares of our common stock. Allof the shares of common stock offered by this prospectus are being sold by us. We expect the initial public offering price of our common stock to be $20.00 per share.Our common stock has been approved for listing on the New York Stock Exchange, or the NYSE, subject to official notice of issuance, under the symbol “CLNY.”Concurrently with the completion of this offering, certain of our executive officers and certain officers of Colony Capital, LLC and its affiliates will acquire250,000 shares of our common stock in a private placement at a price per share equal to the initial public offering price per share.We intend to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2009. To assist us in qualifying as a REIT, stockholders are generally restricted from owning more than 9.8% by value or number of shares,whichever is more restrictive, of our outstanding shares of common or preferred stock. See “Description of Capital Stock—Restrictions on Ownership and Transfer.”
Investing in our common stock involves risks. See “Risk Factors” beginning on page 23 of this prospectus for adiscussion of the following and other risks that you should consider before investing in our common stock:
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We have no operating history and may not be able to successfully operate our business or generate sufficient revenue to make or sustain distributionsto our stockholders.
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We have not yet identified any specific investments for our portfolio and, therefore, you will be unable to evaluate the allocation of net proceeds fromthis offering and the concurrent private placement or the economic merits of our investments prior to making an investment decision.
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There are various conflicts of interest in our relationship with Colony Capital and its affiliates, including our Manager, which could result in decisionsthat are not in the best interests of our stockholders.
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We are dependent on our Manager, Colony Capital and their key personnel for our success, and we may not find a suitable replacement for our Manager and Colony Capital if the management agreement or the investment advisory agreement is terminated, or for these key personnel if theyleave our Manager or Colony Capital or otherwise become unavailable to us, which would materially and adversely affect us.
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Maintenance of our exemption from registration under the Investment Company Act of 1940 will impose significant limits on our operations, whichmay have a material adverse effect on our ability to execute our business strategy.
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If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to U.S. federal income tax and potentially state and localtaxes, which would reduce the amount of cash available for distribution to our stockholders.
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We may change our business, investment, leverage and financing strategies without stockholder consent.
Per Share
Total
Public offering price
$20.00
$Underwriting discounts and commissions(1)
$1.00
$Proceeds, before expenses, to us
$19.00
$
(1)
The underwriters will be entitled to receive $.20 per share from us at closing in underwriting discounts and commissions. In addition, our Manager will pay to the underwriters $.40 per share for such shares sold in the offering at closing and the underwriters will forego the receipt of payment of $.40 per share in underwriting discounts and commissions, subject to the following. We will agree to reimburse the $.40 per share to our Manager and pay the $.40 per share in underwriting discounts and commissions to the underwriters if during any full four calendar quarter period during the24 full calendar quarters after the consummation of this offering our Core Earnings (as described herein) for any such four-quarter period exceeds an8% performance hurdle rate (as described herein). If this requirement is not satisfied, the aggregate underwriting discounts and commissions paid byus, based on $.20 per share (or 1% of the public offering price), and by our Manager, based on $.40 per share (or 2% of the public offering price),would be $7,500,000. See “Underwriting.”We have granted the underwriters the right to purchase up to 1,875,000 additional shares of our common stock from us at the initial public offering price, less
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