Good morning, everyone, and welcome to Colony Financial, Inc.' s Third Quarter 2014 Earnings Conference Call.

With us today are the company's Executive Chairman, Tom Barrack; Chief Executive Officer, Richard Saltzman; and Chief Operating Officer and Chief Financial Officer, Darren Tangen. Kevin Traenkle, the company's Chief Investment Officer; and Neale Redington, the company's Chief Accounting Officer, are also on hand to answer questions.

Before I hand the call over to them, please note that on this call, certain information presented contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions.

Potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements are described in the company's periodic reports filed with the SEC from time to time. All information discussed on this call is as of today, November 5, 2014, and Colony Financial does not intend and undertakes no duty to update future events or circumstances.

In addition, certain of the financial information presented in this call represents non-GAAP financial measures. The company's earnings release, which was issued yesterday afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measure and an explanation of why the company believes such non-GAAP financial measures are useful to investors.

And now I'd like to turn the call over to Richard Saltzman, Chief Executive Officer of Colony Financial. Richard?

Thank you, Lasse, and welcome, everyone, to our Third Quarter 2014 Earnings Call. Colony Financial had another strong performance in the third quarter, producing core earnings of $42.8 million or $0.41 per share.

With 3 quarters now complete, 2014 is on track to be a record year. Through last week, capital deployment totaled $2.3 billion, investment realizations totaled approximately $460 million, generating a weighted average internal rate of return of 17%, and our balance sheet has grown to $4 billion in size.

While 2014 thus far has been a banner year for Colony Financial on multiple levels, it's what's ahead that is most exciting. Last night, press releases were issued regarding the prospective combination transaction with Colony Capital, and separately, Colony American Homes, or CAH, provided an update on its business activities, including the successful internalization of its external investment manager.

Along with a robust pipeline of deal flow in Europe and the U.S., 2015 has the potential to be a hugely transformative year for us. Now before I comment on the Colony Capital transaction and Colony American Homes, I'd like to provide a few other highlights about the quarter and general comments on the business and market.

During the third quarter we invested and committed to invest $453 million with almost half of this total being deployed in Europe. Investment activity was also diversified across our 3 main strategies: $175 million in 3 loan acquisitions, $181 million in 10 originations and $97 million in 2 equity investments.

More notably, we have already invested and committed to invest more than $500 million in the fourth quarter, bringing year-to-date deployment to $2.3 billion, well above our 2013 level of $1.5 billion. From a liquidity standpoint, we were able to fund this committed investment pipeline through cash on hand, expected loan repayments, investment-level financings and credit line availability.

Investment pipeline activity remains robust, including several equity platform investment opportunities in both the United States and Europe. These equity platform investment opportunities generally involve both an investment in real estate and a best-in-class management team and are thematically consistent with the strategic direction implied by the prospective Colony Capital combination transaction, whereby Colony Financial would add an investment and asset management business to its existing portfolio of real estate debt and equity investments.

The return profile of these equity platform investments generally has a foundation in the value and cash flow of the real estate, with an opportunity to enhance these returns through managing incremental third-party capital for a fee and profits interest. Furthermore, returns may be boosted by managing the platform to an accretive exit, such as an IPO, spin-off or strategic sale.

In addition to our equity-oriented investments, we continue to target higher-yielding debt investment strategies through both new originations and loan acquisitions. For example, our Transitional Commercial Real Estate Lending business continues to grow at a rapid pace.

This platform is on track to close in excess of $700 million of loans for 2014 and expects to finance its next pool of loans in a capital markets transaction similar in form to the first CLO securitization that we did in April 2014. Given recent loan portfolio metrics and financing market conditions, we expect the retained interest of a 70% levered loan portfolio to generate a yield in the range of 12% to 13%.

We view this as a very attractive return for the risk, given that we will sit in the approximate 50% to 75% part of the capital stack of the underlying collateral. We continue to commit additional resources to this Transitional CRE Lending Platform and expect origination volumes to double in 2015.

We also continue to see interesting loan acquisition opportunities in both the United States and Europe. You may recall that we acquired a $272 million performing loan portfolio from Fannie Mae at the end of the second quarter.

In the third quarter, we acquired another loan portfolio from a commercial bank with similar collateral characteristics and a total unpaid principal balance of $98 million across 110 loans. We contributed both portfolios into a securitization trust with $316 million of aggregate unpaid principal balance and sold $217 million of matched term, nonrecourse senior bonds or basically 69% of the UPB at a weighted average fixed rate of 2.5%.

Our retained interest now produces a 13% cash-on-cash return. Shifting to Europe.

We remain focused on investment strategies that typically derive from some form of distress. Examples include REO, loan acquisitions, recapitalizations and rescue capital financings, as Europe's recovery is still several years behind the U.S.

In the third quarter, almost half of our $450 million of capital deployment, or $214 million, was in Europe through 5 separate transactions. The largest investment is a 50% participation in the acquisition of a GBP 94 million, or $154 million, REO portfolio consisting of 25 office, industrial, retail and hospitality properties throughout the United Kingdom.

This was a distressed sale from a British bank, and the initial in-place cap rate is approximately 8.2%. The second-largest transaction is a 50% participation in an GBP 80 million sub-performing loan acquired at 70% of par from a German financial institution.

The loan is secured by 13 commercial real estate assets throughout the U.K., which include office, industrial and retail properties. The other 3 transactions consisted of 2 distressed borrower recaps and 1 acquisition financing of a prime office development site, which was purchased from a company placed in receivership by a bank.

In summary, the investing environment continues to be extraordinarily right for us in both the U.S. and Europe.

And as suggested, we further expect to announce details on some equity platform investments in the very near future. Now turning to the proposed combination transaction with Colony Capital.

We are very pleased to have reached an agreement in principle with the special committee of our Board of Directors. That agreement encompasses an expansive scope from what we previously outlined and announced with attendant benefits of alignment, empowerment and opportunity, which I will describe to you at a high level.

As you know, only once we have completed definitive binding documents and made appropriate filings with the SEC will we be able to give you full detail, including specific pro forma financial metrics. The proposed transaction would encompass the entirety of Colony's legacy and ongoing funds and investment businesses, including our funds management activity and all related assets, liabilities and personnel, representing approximately $19 billion of AUM and over $13 billion of equity under management, substantially all of which is real estate related.

It only excludes the interest Colony has in Colony American Homes because CAH ceased to be managed by Colony yesterday when CAH completed its separate management internalization transaction. Colony Financial is itself an important stakeholder in CAH and effectively owned a 10% interest in the manager, as you may recall, which is now converted to additional shares in CAH.

Following the proposed transaction, Colony Financial would be the sole vehicle empowered to sponsor and act as a general partner in new funds under the Colony name and would invest substantial capital in this capacity. Consistent with general market practices for publicly traded alternative asset managers, Colony Financial would then also receive all fees paid by limited partners in such funds, as well as 60% of the carried interest generated by such newly sponsored future funds.

The form of consideration payable by Colony Financial in the proposed transaction would not include cash, but rather would be paid entirely in a combination of operating partnership units and/or Colony Financial common stock. The proposed transaction would be valued using a reference price per share of $22.05 for purposes of determining the number of shares and units to be issued in the proposed transaction.

The $22.05 reference price represents our most recent fair value per share as disclosed in our earnings release last evening and was determined based on that amount being the higher of the Colony Financial's VWAP over the last 30 trading days and our fair value per share. The aggregate consideration of up to $657.5 million includes upfront consideration of $547.5 million and contingent consideration of up to $110 million, which will only be paid if Colony Financial achieves multi-year AFFO per share targets and capital-raising thresholds from the funds management businesses.

If the minimum performance target for either of these metrics is not met or exceeded, the contingent consideration paid in respect of the other metric would not be paid out in full. Also, up to $15 million of the contingent consideration would be reallocated to upfront consideration if the VWAP at the time of a shareholder vote exceeds $24.05 per share.

For Tom Barrack, myself and the rest of our 275 Colony professionals worldwide, the proposed transaction is a new beginning in terms of the enhanced power and reach of the combined platforms. At the same time, it is also essentially business as usual, with nothing changing from an operating standpoint.

All of Colony's senior executives would become employed by Colony Financial, with Tom and I entering into 5-year employment agreements, and other key senior executives having 3-year employment agreements. To emphasize our commitment and alignment with public shareholders, our shares would also be locked up for the length of our employment agreements, subject to limited exceptions and prorating over time.

Now some of the potential benefits for the proposed transaction that I'd like to highlight are as follows: first, management fees that have been paid to Colony Capital under the management agreement would be eliminated and replaced with directly incurred costs; two, a simplified business model unifying all of Colony Financial's and Colony Capital's investment activity and resources under a single transparent corporate structure; three, clean and evident alignment of interests achieved when all activities and employees are internalized within a single entity; four, shareholders would get the entirety of all Colony expertise and investment resources; five, combining Colony Capital's in-place, fee-generating and promote-bearing arrangements into Colony Financial will materially grow the company's revenues; and six, Colony Financial would have a much greater diversity of capital formation alternatives, serving as the sponsor of new funds and investment vehicles in which third-party investors participate, thereby reducing reliance on raising incremental shareholder capital. Although detailed financials will not be available for several weeks, we at Colony Capital believe that the pro forma financial metrics for shareholders are accretive, both immediately as well as in the long run.

Ultimately, all of these details will be disclosed in proxy materials and subject to the scrutiny of a shareholder vote. So lastly, I'd also like to provide just a brief update on our largest investment, Colony American Homes, otherwise known as CAH.

Last night, CAH reported that it completed the internalization of its external manager; closed on more than $300 million of loans within its Colony American Finance lending unit, otherwise known as CAF; and entered a few new markets in its core business. We have previously stated the importance of completing these steps as precursors to the ultimate strategic plan objectives for CAH, including getting public.

So in conclusion, we are incredibly well positioned to have a strong finish to 2014 and are carrying significant momentum into 2015. This includes our regular-way business along with the prospect of major transformative transactions with Colony Capital, and separately, for Colony American Homes.

And now I'll turn the call over to Darren Tangen, our COO and CFO, for a more detailed summary of our third quarter results.

Thank you, Richard. Before I go through my prepared remarks, I'd like to make a correction to one of the figures in our earnings release last night.

Invested and committed capital deployment subsequent to quarter end should state $508 million, not $556 million. A press release with the corrected amount was issued earlier today.

That said, we are pleased to report core earnings in the third quarter of $42.8 million or $0.41 per share. Third quarter net income was $32 million or $0.30 per share.

The $0.11 per share difference between net income and core earnings is composed of approximately $0.02 of noncash equity compensation expense and $0.09 of depreciation expense resulting from our interest in our various equity investments, including Colony American Homes. Book value per share at September 30, 2014, was $19.27, $0.30 higher than our book value per share at June 30, 2014.

Fair value per share was $22.05 at September 30, 2014, up from $21.39 as of June 30. We also paid a common dividend of $0.36 per share in the third quarter and just declared an increased $0.37 per share common dividend for the fourth quarter.

We have previously commented on financial performance at Colony American Homes and its contribution to earnings at Colony Financial. Third quarter core earnings contribution from Colony American Homes was $600,000 compared to $500,000 in the second quarter.

This result was slightly lower than expected, primarily due to an impairment taken in the period on a relatively small number of homes categorized as available for sale. These properties are being sold as part of a culling program to dispose of lower-quality homes that are not a good long-term fit for CAH's core business.

Excluding the impairment amount, core earnings contribution from CAH in the third quarter would have been approximately $1.3 million. I'd also like to highlight a few operating metrics for Colony American Homes.

As of last week, CAH's portfolio had approximately 18,500 homes, up from approximately 17,300 as of June 30, 2014. During the third quarter, CAH averaged approximately 700 renovations and over 950 new leases signed per month, while acquisitions averaged approximately 330 homes per month.

Total portfolio occupancy was 84% last week and 83% as of September 30, 2014, a marked increase from 76% as of June 30. Given these improving operating metrics, we expect to see even better earnings contributions from CAH in the quarters ahead.

CAH currently has approximately $900 million of liquidity between cash on-hand and undrawn capacity on its credit facility to make additional acquisitions or to originate additional loans through its wholly owned lending unit, Colony American Finance. As we've mentioned previously, CAF is a highly complementary business to Colony American Homes because of the ability to seamlessly underwrite the collateral and borrower credits and, separately, to cultivate relationships with borrowers who may become home sellers in the future.

Further, the high current income profile relative to the risk position provides diversification to the rental income of CAH, which should bode well for CAH's value in the long run. Returning to Colony Financial, we had a busy year on the capital markets front, which has supported our record pace of capital deployment.

As of the end of the third quarter, Colony Financial had a $4 billion balance sheet, which is a $1.3 billion increase from the end of 2013. The most notable capital-raising activity in the third quarter occurred in July, when we raised approximately $382 million through a follow-on common equity issuance at prices accretive to both book value and fair value per share.

We continue to have a relatively low-leverage balance sheet with effective leverage of 34% as of the end of the third quarter. Given this leverage level, we have the flexibility to generate additional liquidity by increasing debt, while still maintaining a conservatively leveraged balance sheet and enhancing overall return on equity.

As we have stated previously, our preference is to issue investment-level, nonrecourse debt over corporate debt. A good example is the financing execution mentioned earlier by Richard, where we completed a securitized financing on a $316 million multi-family loan portfolio.

The securitization provided $217 million of proceeds on a matched term, nonrecourse basis at a weighted average fixed rate of 2.5%. The company's retained interest in this portfolio now yields 13% before the amortization of financing costs.

This financing, combined with 2 other nonrecourse loan portfolio of financings earlier this year, has cumulatively raised gross proceeds of $400 million at an average interest rate of 2.4%. We expect to finance other loan portfolios in a similar fashion in the future.

From a liquidity standpoint, Colony Financial is well positioned to fund its existing pipeline of 2014 deal flow from approximately $200 million of cash on hand, expected loan payoffs, near-term investment-level financings and revolver availability. On the asset management front, I'd like to provide our typical performance update across our various investment strategies as of the end of the third quarter.

Loan acquisitions composed approximately 35% of our portfolio at quarter end. Of this, approximately 75% are represented by loans or loan portfolios that are primarily performing in nature, and this cohort is performing at or better than underwriting on average.

The remaining 25% represents our small balance loan portfolios, with a larger percentage of nonperforming loans at the time of acquisition and often requires various workout resolutions managed through our captive Asset Management Company or AMC. We continued to experience strong performance from our seasoned small balance loan portfolios during the third quarter.

We currently own an interest in 18 seasoned small balance loan portfolios, which were acquired at an average purchase price of $0.52 on the dollar. We have resolved approximately 52% of the unpaid principal balance of these portfolios as of September 30, and total collections on these resolved loans averaged 1.4x our purchase price basis.

Trailing 12-month weighted average current yield for the remaining loans in these portfolios as of September 30 was 7%, despite approximately 65% of the loans being nonperforming. Shifting to our book of originations, which represented approximately 35% of our total portfolio, these positions sat between an average first dollar loan-to-value of 35% and an average last dollar loan-to-value of 71% and are yielding 12% on a blended basis, an attractive risk-reward profile.

The balance of our portfolio, approximately 30%, falls under the equity or equity-linked category and includes our positions in Colony American Homes, the multi-family portfolio preferred equity, the recently acquired U.K. portfolio of commercial properties, select service hotel portfolio and several smaller loan-to-own and triple net lease assets, which are all performing very well.

All in all, it was another great quarter for Colony Financial. 2014 is on course to be an exceptional year for the company, and given the other communicated potential events on the horizon, prospects for 2015 are even brighter.

That concludes our prepared remarks, and we would now like to open up the call to Q&A. Operator?

Just a couple of questions on the internalization. Does the $13 billion of equity under management include the Colony Financial equity today?

Yes, it does.

Okay. And I guess, regarding the statement that you'd expect the operating expenses for Colony Financial to be lower moving forward, I guess, does that imply that to support all the third-party fund management, then all those costs will just be lower than your existing management expense today?

No. If we gave the impression that our operating expenses are going to be lower on a go-forward basis, that's not correct.

So all that we're saying is there's going to be an elimination of the fee, pro forma, for the transaction, paid to Colony Capital from Colony Financial. And then, of course, all of the operating, both revenues and expenses of Colony Capital, pro forma, again, for the transaction are going to be integrated with the company.

And the net effect of that is accretive based on the numbers that we've reviewed to date, both immediately and in the long run. Although we can't provide a lot more detail around that until we disclose more information a few weeks from now.

But we're not trying to suggest that the expenses will be lower. It's just that fees will be eliminated.

It's all going to be direct expense of the company. And incrementally, the new revenue that's coming in, less the new expense, will be accretive to the whole.

Got it. And how do you think about the third-party fund management longer term?

Is that something that will be sitting in a taxable REIT subsidiary? And is that something that you book longer term to potentially spin out?

Well, no. I think the fee income -- so in other words, there's a couple of different components to investing in the funds business.

There will be a significant general partner investment that will be invested in the assets, just like the limited partner capital. And that should receive regular-way retreatment and be good assets for repurposes, at least in terms of the real estate funds that we will be sponsoring on a go-forward basis.

On the other hand, the fees that are being generated from that activity, that needs to go into the TRS and will be tax-effected [ph]. Notwithstanding all of that, we have a high degree of confidence, based on numbers that we've been reviewing and also how we've been managing this business historically, that we will be able to retain our REIT status.

Starting with earnings, I just wanted to ask what drove the lower joint venture income sequentially.

Sure, Jade. I'll maybe take that.

I think there was a couple of things going on there. Number one, the third quarter of 2013, you're perhaps comparing it against, actually had some higher-than-normal gains that were flowing through.

Back then, we were still selling some of our position in First Republic Bank, and there was another gain that was back in that period. So it was a little bit of a tough comp, that was part of what was going on.

The second thing that happened in this third quarter of 2014 is there were some transaction expenses that were flowing through. The most notable is this U.K.

portfolio of REO properties that we bought created about a $0.035 transaction expense that was picked up through the equity and income line item on our income statement. So that was a pretty material number, which was one of the things that drove it down.

So there were some unusual things happening in 2013, there were some -- to the positive; and there were some unusual things happening to the negative in terms of transaction expense recognition here in 2014.

But sorry, when I compare it to just last quarter, I think it was $21.1 million. This quarter, it was $9.3 million and that $0.035, I think, is, I don't know, about $4 million or something.

So that's still about half of what last quarter was.

So there was some other transaction expenses that were recognized here in the third quarter. So that is probably one of the biggest things that's taking place.

I guess the other thing that happened in the second quarter, the second quarter, we still had income that was flowing through from one of our earlier loan purchases that has since resolved. So that might have been another reason why it dropped down.

But the primary thing was, in the third quarter, was transaction expenses that were flowing through that line item.

Okay. But safe to say, the run rate going forward is well below where it has been for the last few quarters?

No, no, not what I'm saying. What I'm saying is that going forward, the run rate is going to be higher than the third quarter, provided that we don't have more transaction expenses that are flowing through that line item.

And you also -- hey, Jade, it's Richard. You also have to look at the shift from joint ventures to wholly owned assets.

So in other words, as we've been progressing our business plan, while historically we did almost exclusively joint ventures at our beginning, increasingly, we've been doing transactions that are consolidated, that aren't in unconsolidated JVs. So I think you see a shift in our income from one category to the other.

You also have depreciation that's been flowing through all of these accounts, and that depreciation has only gotten larger as we've grown our business and done more regular-way equity investments of various types. So I think it's a combination of these different factors, but from a run rate perspective, it's only getting better.

Yes. And I do understand the shift that's taking place, but the balance sheet line item investments in unconsolidated JVs modestly increased sequentially, which is why I was surprised on that line item in particular.

Just wanted to ask, on the environment in general, can you just talk about where you see the best opportunities for risk-adjusted returns? And maybe if you could say anything further on the equity platforms, the kinds of situations you might be looking at?

Sure. I mean, well, first of all, I mean, as we've said, geographically, Europe is very ripe with opportunity right now.

It's kind of déjà vu vis-à-vis the U.S. a few years back in terms of really the banks seriously focused now on cleaning up their balance sheets.

And that's creating lots of activity in terms of sales of assets, sales of loans, recapitalizations. And at the same time, the banks are still very much handicapped in terms of providing new capital, given that they need to re-equitize just like the U.S.

banks did a few years ago. So that combination of things just means that we can be a provider of capital, either buying assets and/or financing vis-à-vis rescue capital-type situations just like we were doing in the U.S.

and lots of that kind of activity in Europe. On the other hand, in the U.S.

where progressively things have been getting better and fundamentals are now really improving as we see quarter-to-quarter, our business is more filling in the gaps where we continue to see arbitrage opportunities, such as in the transitional lending places where the banks and the regular-way lending markets are uncomfortable or things are a little bit more obtuse where we can really get some value-added returns as we've been doing. And that includes equity investments.

And the emphasis in the equity area, as we've said increasingly over the last few quarters, is in connection with platform investments, where we can get best-in-class management teams and participate in the sponsor economics, along with the returns that the assets are generating. We have several of these transactions in the shop under consideration, one even in Europe, notwithstanding that most of my comments here in terms of the equity opportunity right now is more focused on the U.S.

And we hope to have more to report on that very, very shortly.

Okay. Regarding the internalization proposal or nonbinding agreement, can you tell us what we should expect in terms of timing of when there'll be some document filings with the SEC and also if there's any guideposts you could offer?

I know there's probably not much you can say, but guideposts around management fees or margins to help think about the potential earnings impact?

Sure. So first, I would just say that I wish I could be terribly specific about the timing.

I mean, this is one of those situations and circumstances where, for sure, we're not in control of our own destiny by any stretch. And as a result, we have to adhere to a very strict protocol and process with our special committee and its advisers and the SEC.

So I mean, I think at the outside, we're pretty confident that this wraps up no later than the end of the first half of next year, and with a little bit of luck, inside of that by a month or 2. But again, we're not in control of that timing, and that's just a guess, maybe a good guesstimate, at this time.

With respect to providing more information, we hope to be in a position shortly. I mean, hopefully, even within the next month, to provide some more detail, even if we haven't necessarily filed a proxy statement by that time.

And lastly, I think with respect to specific guideposts in metrics, we're just not in a position to talk about that yet.

Okay. I appreciate that.

Just lastly, on Colony American, just wanted to see if you could comment on whether it's possible for Colony Financial to acquire the remaining 75% of the entity that it does not own and subsequently spin that company off, since I believe Colony Financial would be trading at a premium to where single-family rental REIT entities are currently trading?

Well, look, never say never. I mean, it's certainly theoretically possible, but I think highly unlikely that, that would happen.

Of the various things that we've talked about previously, there is the possibility that Colony Financial could just spin its position in Colony American Homes, which is approximately 25% of that company, as a way for Colony American Homes to get public. But that's just one of several paths that we have under consideration in terms of how we think that business could get public, all of which are under serious consideration and evaluation now that we continue to check all of the boxes that we think are appropriate as a precedent to getting public, including the internalization of the CAH manager.

So more to come on that, hopefully soon, too. But I think the scenario that you outlined, while theoretically possible, is unlikely.

Richard, maybe you can just give us a flavor, a little bit of a sense of how the deal price of Colony Capital was arrived? I know you can't maybe give specifics, but maybe just anything that might give us a flavor or color as to either the process or the valuation or anything there.

Well, I think all I can say at this juncture, Dan, first of all, thanks for your comments. We very much appreciate it.

But I think all we can say at this point is that it was a very rigorous and stringent process in terms of working with our special committee and advisers to arrive at an outcome that we believe is win-win for us as an organization and shareholders. The reality of something like this is that, unless it is a win-win, it just won't happen, right?

Because one side or the other won't feel comfortable with moving forward. So I mean, I know that's qualitative and not perhaps the type of precision that you're looking for at this juncture in terms of quantitative metrics and financial analysis.

But you just have to be a little patient in terms of receiving that information and material because we're subject to this very strict protocol.

Okay, that's understandable. I get it.

That's fine. We'll look for that in the proxy when it comes out.

You referenced that it's kind of business as normal, I guess, both at Financial and at Capital. But as we think about the financing side, also [ph] you're talking about a CLO transaction.

Does this impede either company from doing other forms of financing in the meantime, whether it's permanent equity capital or converts or maybe raising new funds at the capital side? I mean, is there anything that's impacted by this process?

Well, I mean, I think it's a fair point that you're raising, I mean, in terms of disclosure requirements that we might be subject to if we were to raise public capital at Colony Financial currently. Certainly if we were to do something like that, we would have to pay very close attention to making sure that we've adequately disclosed exactly what we need to from a materiality point of view.

But other than that, I -- there really is nothing that's changing here, right? From an organizational perspective, this is about as seamless as it could be because we're putting everything in.

And again, pro forma, and therefore, everything operates just as it is currently. The only thing that really changes is where the ownership lies and the synergies that are basically attainable as a function of putting the 2 organizations together, which we think are extremely powerful.

But that's really the essence of why we say this is transformative and really powerful. Because you have the investment management business now with a very substantial balance sheet that it can use for the betterment of shareholder returns.

But at the same time, from an operating standpoint, nothing's changed.

Okay, that's helpful. But in thinking about the combined company going forward also from a, I guess, financing standpoint, given that there's going to be probably, I guess, somewhat of a maybe stickier or longer-duration earnings stream that comes off the capital side, is one of potential outcomes of this the ability to use more leverage on the balance sheet to also enhance returns, given that there's going to be maybe a different cash flow profile of the combined company?

Well, our leverage has actually been increasing at the margin here over the last year or 2 versus how we started out when we were generating the same kind of returns without any leverage. So I think you've seen that happening in our business in any event.

And on a go-forward basis, I mean, for sure now we will have more options available to us in terms of how we raise capital, and to some degree, being able to raise fund capital is a form of leverage. Even though it's not debt, and it's not something that has a maturity and that we have to repay.

But it's a way to kind of leverage our shareholders' returns and position for the positive without really much if any incremental risk. So it's a type of leverage without it really being debt.

Right, yes. Maybe it's not exactly financial and it's not exactly structural.

It's maybe business leverage, I guess, if you will. I get that, I think.

Maybe...

That's a fair way to describe it.

Yes, business leverage. I kind of like that.

Then I'm just going to put you a little bit on the spot here, regardless of what the, maybe the pro forma accretion looks like, if you wanted to maybe compare what you think the pro forma company looks like or I should say who it looks like, who would you say maybe are the best maybe comps for what your unique company is going to look like on a go-forward basis?

I don't -- it's not clear to me there is anybody who's an exact look-alike. I mean, I think there are variations on a theme that are out there in the real estate world that you could look to that try in some form or another to combine some of the elements that we'll be putting together.

But one of the things that makes us so excited about this is we think it's kind of a unique, incredibly differentiated proposition in a very positive way that doesn't really exist out there. And that as people come to understand it hopefully it will be embraced that way.

Okay. Well, thanks, everyone, for joining us.

Lots of exciting news, and we couldn't be more pleased with our results and what we're looking at on a go-forward basis. So we look forward to chatting with you next quarter.

Thanks again.