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Colony Credit Real Estate, Inc. Class Action Lawsuit

51 days left to seek lead plaintiff status

Case Summary

Company Name
Colony Credit Real Estate, Inc.
Stock Symbol
CLNC
Class Period
Pursuant and/or traceable to Colony Credit’s Registration Statement and Prospectus issued in connection with the combination of Colony NorthStar, Inc., NorthStar Real Estate Income Trust, Inc., and NorthStar Real Estate Income II, Inc. on or about February 1, 2018
Motion Deadline
November 9, 2020
Court
Central District of California

The Colony Credit Real Estate, Inc. class action lawsuit charges Colony Credit and certain of Colony Credit’s officers and directors with violations of the Securities Act of 1933.  The Colony Credit class action lawsuit was filed in the Central District of California and seeks to represent purchasers or acquirers of Colony Credit common stock pursuant and/or traceable to Colony Credit’s Registration Statement and Prospectus (collectively, the “Registration Statement”) issued in connection with the combination of Colony NorthStar, Inc. (“Colony NorthStar”), 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 Colony Credit class action lawsuit is captioned Peters v. Colony Credit Real Estate, Inc., No. 20-cv-08305, and was commenced on September 10, 2020.

Colony Credit is a commercial real estate (“CRE”) real estate investment trust 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 United States.  Following the Merger, Colony Credit common stock was listed on the New York Stock Exchange without an initial public offering: stockholders of NorthStar I received 0.3532 shares of Colony Credit Class A common stock for each share of NorthStar I common stock they owned; and stockholders of NorthStar II received 0.3511 shares of Colony Credit Class A common stock for each share of NorthStar II common stock they owned.

The Colony Credit class action lawsuit alleges that the Registration Statement was materially false and misleading and omitted to state: (i) that the credit quality of certain of Colony Credit’s assets had deteriorated prior to the Merger and was continuing to deteriorate at the time of the Merger; (ii) that certain of Colony Credit’s loans, including four loans for 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 Colony Credit’s assets was overstated; (iv) that certain of the assets contributed as part of the Merger were of substantially lower value than reflected in Colony Credit’s financial statements and the Registration Statement; (v) that, as a result, Colony Credit’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 Colony Credit’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

On November 6, 2018, Colony Credit reported a $35 million provision for loan losses for four loans secured by a New York hotel.  On this news, Colony Credit’s share price fell more than 5%.

Then, on February 28, 2019, Colony Credit disclosed a $77 million provision for loan losses “related to four separate borrowers as a result of updates to the timing and likely range of outcomes achievable in connection with the asset foreclosures and dispositions.” On this news, Colony Credit’s share price fell more than 5%.

Thereafter, on August 8, 2019, Colony Credit reported a $119 million provision for loan losses “related to four separate borrowers.” On this news, Colony Credit’s share price fell more than 12% over two consecutive trading sessions.

Finally, on November 8, 2019, Colony Credit announced a portfolio bifurcation of certain assets and disclosed a $127 million provision for loan losses.  On this news, Colony Credit’s share price fell nearly 18%, further damaging investors.

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased or acquired Colony Credit common stock pursuant and/or traceable to Colony Credit’s Registration Statement issued in connection with the Merger to seek appointment as lead plaintiff in the Colony Credit class action lawsuit.  A lead plaintiff will act on behalf of all other class members in directing the Colony Credit class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the Colony Credit class action lawsuit.  An investor’s ability to share in any potential future recovery of the Colony Credit class action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the Colony Credit class action lawsuit or have questions concerning your rights regarding the Colony Credit class action lawsuit, please provide your information here or contact counsel, J.C. Sanchez of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at jsanchez@rgrdlaw.com.  Lead plaintiff motions for the Colony Credit class action lawsuit must be filed with the court no later than November 9, 2020.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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