NEW YORK, October 17, 2020 / PRNewswire / – Pomerantz LLP announces that a class action lawsuit has been filed against Colony Credit Real Estate, Inc. (“Colony Credit” or the “Company”) (NYSE: CLNC) and certain of its officers. The class action, filed in United States District Court of the Central District of California, and registered as 20-cv-08305, is in the name of a class consisting of all persons other than the defendants who have purchased or otherwise acquired the common shares of Colony Credit in accordance with and / or traceable to the registration statement false and / or misleading Company 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”), seeking remedies under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”).
If you are a shareholder who purchased Colony Credit securities during the recourse period, you have until November 9, 2020, to ask the Court to appoint you as the principal plaintiff in the class. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, Ext. 7980. Those inquiring by e-mail are encouraged to include their mailing address, phone number and number of shares purchased.
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Colony Credit is a real estate investment trust (“REIT”) of commercial real estate credit (“CRE”) which aims to manage a diversified portfolio of senior CRE mortgages, mezzanine loans, preferred shares, debt securities. and net rental properties mainly in the United States
The company’s common stock has been registered with the SEC as part of the merger. Following the merger, the common shares of Colony Credit were listed on the New York Stock Exchange (“NYSE”) without an initial public offering: the shareholders of NorthStar I received 0.3532 Class A common shares of the Company for each common share of NorthStar I which they owned; and the shareholders of NorthStar II received 0.3511 Class A common shares of the company for each common share of NorthStar II they held.
The registration statement was materially false and misleading and failed to state: (i) that the credit quality of some of the Company’s assets had deteriorated prior to the merger and continued to deteriorate at the time of the merger; (ii) that some of the Company’s loans, including four loans of approximately $ 261 million linked to a New York hotel, were substantially depreciated, collateral was insufficient to secure loans, and loans were unlikely to be repaid; (iii) that as a result, the valuation attributed to some of the assets of the Company has been overstated; (iv) that some of the assets contributed in connection with the merger were of a significantly lower value than that reflected in the financial statements of the company and the registration statement; (v) that as a result, the financial position of the company, including its book value, has been significantly overstated; and (vi) that as a result of the foregoing, the positive statements in the registration statement regarding the business, operations and prospects of the company were substantially misleading and / or lacked reasonable basis.
Sure August 8, 2019, Colony Credit has issued a press release to publish its financial results for the second quarter of 2019, in which $ 119 million allowance for loan losses.
At this news, the company’s stock price fell $ 2.00 per share, or more than 12%, over two consecutive trading sessions to close at $ 14.05 per share on Aug 12, 2019.
Sure November 8, 2019, the company announced a bifurcation of the portfolio of certain assets and $ 127 million allowance for loan losses.
At this news, the company’s stock price fell $ 2.50 per share, or nearly 18%, to close at $ 11.75 per share on November 8, 2019.
On the date of filing this complaint, Colony Credit shares last closed at $ 5.40 per share, which represents a decrease of more than 78% compared to the 25 $ book value per share measured at the time of the merger.
The Pomerantz firm, with offices in New York, Chicago, Los Angeles, and Paris is recognized as one of the leading companies in the areas of corporate, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz was a pioneer in the field of class actions in securities. Today, more than 80 years later, Pomerantz continues the tradition it established, fighting for the rights of victims of securities fraud, breach of fiduciary duty and professional misconduct. The firm has recovered numerous indemnities of several million dollars on behalf of the members of the group. See www.pomerantzlaw.com.
Robert S. Willoughby
888-476-6529 ext. 7980
SOURCE Pomerantz LLP