x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Drive Shack Inc.
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Maryland
|
|
81-0559116
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
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218 W. 18th Street, 3rd Floor, New York, NY
|
|
10011
|
(Address of principal executive offices)
|
|
(Zip Code)
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(646) 585-5591
|
(Former name, former address and former fiscal year, if changed since last report)
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Title of each class
|
Trading Symbols(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value per share
|
DS
|
New York Stock Exchange (NYSE)
|
9.75% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share
|
DS-PB
|
New York Stock Exchange (NYSE)
|
8.05% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share
|
DS-PC
|
New York Stock Exchange (NYSE)
|
8.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value per share
|
DS-PD
|
New York Stock Exchange (NYSE)
|
•
|
factors impacting attendance, such as local conditions, contagious diseases, including COVID-19, or the perceived threat of contagious diseases, disturbances, natural disasters, and terrorist activities;
|
•
|
regulations and guidance of federal, state and local governments and health officials regarding the response to COVID-19, including with respect to business operations, safety protocols and public gatherings;
|
•
|
our financial liquidity and ability to access capital;
|
•
|
the ability to retain and attract members and guests to our properties;
|
•
|
changes in global, national and local economic conditions, including, but not limited to, increases in unemployment levels, changes in consumer spending patterns, a prolonged economic slowdown and a downturn in the real estate market, particularly due to the COVID-19 pandemic;
|
•
|
effects of unusual weather patterns and extreme weather events, geographical concentrations with respect to our operations and seasonality of our business;
|
•
|
competition within the industries in which we operate or may pursue additional investments, including competition for sites for our Entertainment Golf venues;
|
•
|
material increases in our expenses, including, but not limited to, unanticipated labor issues, rent or costs with respect to our workforce, and costs of goods, utilities and supplies;
|
•
|
our inability to sell or exit certain properties, and unforeseen changes to our ability to develop, redevelop or renovate certain properties;
|
•
|
our ability to further invest in our business and implement our strategies;
|
•
|
difficulty monetizing our real estate debt investments;
|
•
|
liabilities with respect to inadequate insurance coverage, accidents or injuries on our properties, adverse litigation judgments or settlements, or membership deposits;
|
•
|
changes to and failure to comply with relevant regulations and legislation, including in order to maintain certain licenses and permits, and environmental regulations in connection with our operations;
|
•
|
inability to execute on our growth and development strategy by successfully developing, opening and operating new venues;
|
•
|
impacts of any failures of our information technology and cybersecurity systems;
|
•
|
the impact of any current or further legal proceedings and regulatory investigations and inquiries; and
|
•
|
other risks detailed from time to time, particularly under the heading “Risk Factors” in this report and in our subsequent filings with the Securities and Exchange Commission, (the "SEC").
|
•
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
•
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
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PAGE
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||
|
(unaudited)
|
|
|
||||
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
16,785
|
|
|
$
|
28,423
|
|
Restricted cash
|
3,041
|
|
|
3,103
|
|
||
Accounts receivable, net of allowance of $904 and $1,082, respectively
|
4,190
|
|
|
5,249
|
|
||
Real estate assets, held-for-sale, net
|
16,970
|
|
|
16,948
|
|
||
Real estate securities, available-for-sale
|
3,103
|
|
|
3,052
|
|
||
Other current assets
|
13,966
|
|
|
17,521
|
|
||
Total current assets
|
58,055
|
|
|
74,296
|
|
||
Restricted cash, noncurrent
|
513
|
|
|
438
|
|
||
Property and equipment, net of accumulated depreciation
|
184,219
|
|
|
179,641
|
|
||
Operating lease right-of-use assets
|
212,246
|
|
|
215,308
|
|
||
Intangibles, net of accumulated amortization
|
16,780
|
|
|
17,565
|
|
||
Other investments
|
24,365
|
|
|
24,020
|
|
||
Other assets
|
5,245
|
|
|
4,723
|
|
||
Total assets
|
$
|
501,423
|
|
|
$
|
515,991
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Obligations under finance leases
|
$
|
6,004
|
|
|
$
|
6,154
|
|
Membership deposit liabilities
|
10,784
|
|
|
10,791
|
|
||
Accounts payable and accrued expenses
|
31,242
|
|
|
25,877
|
|
||
Deferred revenue
|
25,118
|
|
|
26,268
|
|
||
Real estate liabilities, held-for-sale
|
4
|
|
|
4
|
|
||
Other current liabilities
|
23,367
|
|
|
23,964
|
|
||
Total current liabilities
|
96,519
|
|
|
93,058
|
|
||
Credit facilities and obligations under finance leases - noncurrent
|
12,468
|
|
|
13,125
|
|
||
Operating lease liabilities - noncurrent
|
185,802
|
|
|
187,675
|
|
||
Junior subordinated notes payable
|
51,190
|
|
|
51,192
|
|
||
Membership deposit liabilities, noncurrent
|
97,648
|
|
|
95,805
|
|
||
Deferred revenue, noncurrent
|
6,389
|
|
|
6,283
|
|
||
Other liabilities
|
3,496
|
|
|
3,278
|
|
||
Total liabilities
|
$
|
453,512
|
|
|
$
|
450,416
|
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Equity
|
|
|
|
||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares of 9.75% Series B Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, issued and outstanding as of March 31, 2020 and December 31, 2019
|
$
|
61,583
|
|
|
$
|
61,583
|
|
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 67,070,513 and 67,068,751 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
|
671
|
|
|
671
|
|
||
Additional paid-in capital
|
3,177,384
|
|
|
3,177,183
|
|
||
Accumulated deficit
|
(3,193,399
|
)
|
|
(3,175,572
|
)
|
||
Accumulated other comprehensive income
|
1,672
|
|
|
1,710
|
|
||
Total equity
|
$
|
47,911
|
|
|
$
|
65,575
|
|
|
|
|
|
||||
Total liabilities and equity
|
$
|
501,423
|
|
|
$
|
515,991
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenues
|
|
|
|
|
|
||
Golf operations
|
$
|
48,625
|
|
|
$
|
44,706
|
|
Sales of food and beverages
|
12,510
|
|
|
9,246
|
|
||
Total revenues
|
61,135
|
|
|
53,952
|
|
||
|
|
|
|
||||
Operating costs
|
|
|
|
||||
Operating expenses
|
54,367
|
|
|
47,723
|
|
||
Cost of sales - food and beverages
|
3,655
|
|
|
2,698
|
|
||
General and administrative expense
|
9,818
|
|
|
11,619
|
|
||
Depreciation and amortization
|
6,794
|
|
|
4,924
|
|
||
Pre-opening costs
|
552
|
|
|
1,179
|
|
||
Impairment and other losses
|
792
|
|
|
4,088
|
|
||
Total operating costs
|
75,978
|
|
|
72,231
|
|
||
Operating loss
|
(14,843
|
)
|
|
(18,279
|
)
|
||
|
|
|
|
||||
Other income (expenses)
|
|
|
|
||||
Interest and investment income
|
130
|
|
|
344
|
|
||
Interest expense, net
|
(2,745
|
)
|
|
(2,153
|
)
|
||
Other income, net
|
367
|
|
|
5,488
|
|
||
Total other income (expenses)
|
(2,248
|
)
|
|
3,679
|
|
||
Loss before income tax
|
(17,091
|
)
|
|
(14,600
|
)
|
||
Income tax expense
|
271
|
|
|
—
|
|
||
Net Loss
|
(17,362
|
)
|
|
(14,600
|
)
|
||
Preferred dividends
|
(1,395
|
)
|
|
(1,395
|
)
|
||
Loss Applicable to Common Stockholders
|
$
|
(18,757
|
)
|
|
$
|
(15,995
|
)
|
|
|
|
|
||||
Loss Applicable to Common Stock, per share
|
|
|
|
|
|
||
Basic
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
Diluted
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
||||
Weighted Average Number of Shares of Common Stock Outstanding
|
|
|
|
|
|
||
Basic
|
67,069,534
|
|
|
67,027,104
|
|
||
Diluted
|
67,069,534
|
|
|
67,027,104
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net loss
|
$
|
(17,362
|
)
|
|
$
|
(14,600
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
||
Net unrealized loss on available-for-sale securities
|
(38
|
)
|
|
—
|
|
||
Other comprehensive loss
|
(38
|
)
|
|
—
|
|
||
Total comprehensive loss
|
$
|
(17,400
|
)
|
|
$
|
(14,600
|
)
|
Comprehensive loss attributable to Drive Shack Inc. stockholders’ equity
|
$
|
(17,400
|
)
|
|
$
|
(14,600
|
)
|
|
Drive Shack Inc. Stockholders
|
||||||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional Paid-
in Capital |
|
Accumulated
Deficit |
|
Accumulated Other Comp.
Income |
|
Total Equity (Deficit)
|
||||||||||||||
Equity (deficit) - December 31, 2019
|
2,463,321
|
|
|
$
|
61,583
|
|
|
67,068,751
|
|
|
$
|
671
|
|
|
$
|
3,177,183
|
|
|
$
|
(3,175,572
|
)
|
|
$
|
1,710
|
|
|
$
|
65,575
|
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(465
|
)
|
|
—
|
|
|
(465
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
201
|
|
|
—
|
|
|
—
|
|
|
201
|
|
||||||
Shares issued from restricted stock units
|
—
|
|
|
—
|
|
|
1,762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,362
|
)
|
|
—
|
|
|
(17,362
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
||||||
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,400
|
)
|
|||||||||||||
Equity (deficit) - March 31, 2020
|
2,463,321
|
|
|
$
|
61,583
|
|
|
67,070,513
|
|
|
$
|
671
|
|
|
$
|
3,177,384
|
|
|
$
|
(3,193,399
|
)
|
|
$
|
1,672
|
|
|
$
|
47,911
|
|
Equity (deficit) - December 31, 2018
|
2,463,321
|
|
|
$
|
61,583
|
|
|
67,027,104
|
|
|
$
|
670
|
|
|
$
|
3,175,843
|
|
|
$
|
(3,105,307
|
)
|
|
$
|
1,878
|
|
|
$
|
134,667
|
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,395
|
)
|
|
—
|
|
|
(1,395
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,222
|
|
|
—
|
|
|
—
|
|
|
1,222
|
|
||||||
Adoption of ASC 842
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,831
|
)
|
|
|
|
(9,831
|
)
|
|||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,600
|
)
|
|
—
|
|
|
(14,600
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,600
|
)
|
|||||||||||||
Equity (deficit) - March 31, 2019
|
2,463,321
|
|
|
$
|
61,583
|
|
|
67,027,104
|
|
|
$
|
670
|
|
|
$
|
3,177,065
|
|
|
$
|
(3,131,133
|
)
|
|
$
|
1,878
|
|
|
$
|
110,063
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash Flows From Operating Activities
|
|
|
|
||||
Net loss
|
$
|
(17,362
|
)
|
|
$
|
(14,600
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
6,794
|
|
|
4,924
|
|
||
Amortization of discount and premium
|
(91
|
)
|
|
(56
|
)
|
||
Other amortization
|
1,904
|
|
|
1,938
|
|
||
Amortization of revenue on golf membership deposit liabilities
|
(364
|
)
|
|
(379
|
)
|
||
Amortization of prepaid golf membership dues
|
(4,076
|
)
|
|
(3,323
|
)
|
||
Non-cash operating lease expense
|
958
|
|
|
1,628
|
|
||
Stock-based compensation
|
201
|
|
|
1,222
|
|
||
Impairment and other losses
|
792
|
|
|
4,088
|
|
||
Equity in earnings from equity method investments, net of distributions
|
(344
|
)
|
|
(341
|
)
|
||
Other (gains) losses, net
|
46
|
|
|
(5,006
|
)
|
||
Change in:
|
|
|
|
|
|
||
Accounts receivable, net, other current assets and other assets - noncurrent
|
3,913
|
|
|
(1,052
|
)
|
||
Accounts payable and accrued expenses, deferred revenue, other current liabilities and other liabilities - noncurrent
|
5,052
|
|
|
(11,234
|
)
|
||
Net cash used in operating activities
|
(2,577
|
)
|
|
(22,191
|
)
|
||
Cash Flows From Investing Activities
|
|
|
|
|
|
||
Proceeds from sale of property and equipment
|
91
|
|
|
17,749
|
|
||
Acquisition and additions of property and equipment and intangibles
|
(6,573
|
)
|
|
(22,717
|
)
|
||
Net cash used in investing activities
|
(6,482
|
)
|
|
(4,968
|
)
|
||
Cash Flows From Financing Activities
|
|
|
|
||||
Repayments of debt obligations
|
(1,484
|
)
|
|
(1,397
|
)
|
||
Golf membership deposits received
|
489
|
|
|
357
|
|
||
Preferred stock dividends paid
|
(1,395
|
)
|
|
(1,395
|
)
|
||
Other financing activities
|
(176
|
)
|
|
(3
|
)
|
||
Net cash used in financing activities
|
(2,566
|
)
|
|
(2,438
|
)
|
||
Net Decrease in Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent
|
(11,625
|
)
|
|
(29,597
|
)
|
||
Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent, Beginning of Period
|
31,964
|
|
|
82,819
|
|
||
Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent, End of Period
|
$
|
20,339
|
|
|
$
|
53,222
|
|
|
|
|
|
||||
Supplemental Schedule of Non-Cash Investing and Financing Activities
|
|
|
|
||||
Preferred stock dividends declared but not paid
|
$
|
—
|
|
|
$
|
930
|
|
Additions to finance lease assets and liabilities
|
$
|
1,028
|
|
|
$
|
6,352
|
|
Increases in accounts payable and accrued expenses related to the purchase of property and equipment
|
$
|
3,771
|
|
|
$
|
2,258
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Collateral management fee income, net
|
72
|
|
|
128
|
|
||
Equity in earnings of equity method investments
|
344
|
|
|
341
|
|
||
Gain (loss) on sale of long-lived assets and intangibles
|
48
|
|
|
5,029
|
|
||
Other (loss) income
|
(97
|
)
|
|
(10
|
)
|
||
Other income, net
|
$
|
367
|
|
|
$
|
5,488
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Managed course receivables
|
|
$
|
3,434
|
|
|
$
|
5,426
|
|
Prepaid expenses
|
|
3,097
|
|
|
3,608
|
|
||
Deposits
|
|
962
|
|
|
1,374
|
|
||
Inventory
|
|
3,014
|
|
|
2,762
|
|
||
Miscellaneous current assets, net
|
|
3,459
|
|
|
4,351
|
|
||
Other current assets
|
|
$
|
13,966
|
|
|
$
|
17,521
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Prepaid expenses
|
|
$
|
604
|
|
|
$
|
317
|
|
Deposits
|
|
2,455
|
|
|
2,123
|
|
||
Miscellaneous assets, net
|
|
2,186
|
|
|
2,283
|
|
||
Other assets
|
|
$
|
5,245
|
|
|
$
|
4,723
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Operating lease liabilities
|
|
17,186
|
|
|
16,922
|
|
||
Accrued rent
|
|
2,586
|
|
|
2,769
|
|
||
Dividends payable
|
|
—
|
|
|
930
|
|
||
Miscellaneous current liabilities
|
|
3,595
|
|
|
3,343
|
|
||
Other current liabilities
|
|
$
|
23,367
|
|
|
$
|
23,964
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Service obligation intangible
|
|
1,687
|
|
|
1,776
|
|
||
Miscellaneous liabilities
|
|
1,809
|
|
|
1,502
|
|
||
Other liabilities
|
|
$
|
3,496
|
|
|
$
|
3,278
|
|
|
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||
|
|
Ent. golf venues
|
|
Public golf properties
|
|
Private golf properties
|
|
Managed golf properties (A)
|
|
Total
|
||||||||||
Golf operations
|
|
$
|
3,910
|
|
|
$
|
16,023
|
|
|
$
|
13,655
|
|
|
$
|
15,037
|
|
|
$
|
48,625
|
|
Sales of food and beverages
|
|
6,207
|
|
|
4,285
|
|
|
2,018
|
|
|
—
|
|
|
12,510
|
|
|||||
Total revenues
|
|
$
|
10,117
|
|
|
$
|
20,308
|
|
|
$
|
15,673
|
|
|
$
|
15,037
|
|
|
$
|
61,135
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
|
|
Ent. golf venues
|
|
Public golf properties
|
|
Private golf properties
|
|
Managed golf properties (A)
|
|
Total
|
||||||||||
Golf operations
|
|
$
|
681
|
|
|
$
|
17,464
|
|
|
$
|
15,454
|
|
|
$
|
11,107
|
|
|
$
|
44,706
|
|
Sales of food and beverages
|
|
1,040
|
|
|
5,476
|
|
|
2,730
|
|
|
—
|
|
|
9,246
|
|
|||||
Total revenues
|
|
$
|
1,721
|
|
|
$
|
22,940
|
|
|
$
|
18,184
|
|
|
$
|
11,107
|
|
|
$
|
53,952
|
|
(A)
|
Includes $13.3 million for the three months ended March 31, 2020, and $9.8 million for the three months ended March 31, 2019, due to management contract reimbursements reported under ASC 606.
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment Golf
|
|
Traditional Golf
|
|
Corporate
|
|
Total
|
||||||||
Three Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Golf operations
|
|
$
|
3,910
|
|
|
$
|
44,715
|
|
|
$
|
—
|
|
|
$
|
48,625
|
|
Sales of food and beverages
|
|
6,207
|
|
|
6,303
|
|
|
—
|
|
|
12,510
|
|
||||
Total revenues
|
|
10,117
|
|
|
51,018
|
|
|
—
|
|
|
61,135
|
|
||||
Operating costs
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
8,172
|
|
|
46,195
|
|
|
—
|
|
|
54,367
|
|
||||
Cost of sales - food and beverages
|
|
1,610
|
|
|
2,045
|
|
|
—
|
|
|
3,655
|
|
||||
General and administrative expense (A)
|
|
3,169
|
|
|
3,093
|
|
|
2,378
|
|
|
8,640
|
|
||||
General and administrative expense - acquisition and transaction expenses (B)
|
|
34
|
|
|
122
|
|
|
1,022
|
|
|
1,178
|
|
||||
Depreciation and amortization
|
|
3,020
|
|
|
3,703
|
|
|
71
|
|
|
6,794
|
|
||||
Pre-opening costs (C)
|
|
552
|
|
|
—
|
|
|
—
|
|
|
552
|
|
||||
Impairment and other losses
|
|
—
|
|
|
792
|
|
|
—
|
|
|
792
|
|
||||
Total operating costs
|
|
16,557
|
|
|
55,950
|
|
|
3,471
|
|
|
75,978
|
|
||||
Operating loss
|
|
(6,440
|
)
|
|
(4,932
|
)
|
|
(3,471
|
)
|
|
(14,843
|
)
|
||||
Other income (expenses)
|
|
|
|
|
|
|
|
|
||||||||
Interest and investment income
|
|
1
|
|
|
15
|
|
|
114
|
|
|
130
|
|
||||
Interest expense (D)
|
|
(105
|
)
|
|
(2,147
|
)
|
|
(526
|
)
|
|
(2,778
|
)
|
||||
Capitalized interest (D)
|
|
—
|
|
|
9
|
|
|
24
|
|
|
33
|
|
||||
Other (loss) income, net
|
|
—
|
|
|
(46
|
)
|
|
413
|
|
|
367
|
|
||||
Total other income (expenses)
|
|
(104
|
)
|
|
(2,169
|
)
|
|
25
|
|
|
(2,248
|
)
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
271
|
|
|
271
|
|
||||
Net (loss) income
|
|
(6,544
|
)
|
|
(7,101
|
)
|
|
(3,717
|
)
|
|
(17,362
|
)
|
||||
Preferred dividends
|
|
—
|
|
|
—
|
|
|
(1,395
|
)
|
|
(1,395
|
)
|
||||
(Loss) income applicable to common stockholders
|
|
$
|
(6,544
|
)
|
|
$
|
(7,101
|
)
|
|
$
|
(5,112
|
)
|
|
$
|
(18,757
|
)
|
|
|
Entertainment Golf
|
|
Traditional Golf
|
|
Corporate (E)
|
|
Total
|
||||||||
March 31, 2020
|
|
|
|
|
|
|
|
|
||||||||
Total assets
|
|
164,212
|
|
|
299,573
|
|
|
37,638
|
|
|
501,423
|
|
||||
Total liabilities
|
|
41,182
|
|
|
349,105
|
|
|
63,225
|
|
|
453,512
|
|
||||
Preferred stock
|
|
—
|
|
|
—
|
|
|
61,583
|
|
|
61,583
|
|
||||
Equity attributable to common stockholders
|
|
$
|
123,030
|
|
|
$
|
(49,532
|
)
|
|
$
|
(87,170
|
)
|
|
$
|
(13,672
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Additions to property and equipment (including finance leases) during the three months ended March 31, 2020
|
|
$
|
4,240
|
|
|
$
|
1,894
|
|
|
$
|
403
|
|
|
$
|
6,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entertainment Golf
|
|
Traditional Golf
|
|
Corporate
|
|
Total
|
||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Golf operations
|
|
$
|
681
|
|
|
$
|
44,025
|
|
|
$
|
—
|
|
|
$
|
44,706
|
|
Sales of food and beverages
|
|
1,040
|
|
|
8,206
|
|
|
—
|
|
|
9,246
|
|
||||
Total revenues
|
|
1,721
|
|
|
52,231
|
|
|
—
|
|
|
53,952
|
|
||||
Operating costs
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
1,747
|
|
|
45,976
|
|
|
—
|
|
|
47,723
|
|
||||
Cost of sales - food and beverages
|
|
251
|
|
|
2,447
|
|
|
—
|
|
|
2,698
|
|
||||
General and administrative expense (A)
|
|
3,379
|
|
|
3,897
|
|
|
3,944
|
|
|
11,220
|
|
||||
General and administrative expense - acquisition and transaction expenses (B)
|
|
157
|
|
|
153
|
|
|
89
|
|
|
399
|
|
||||
Depreciation and amortization
|
|
709
|
|
|
4,217
|
|
|
(2
|
)
|
|
4,924
|
|
||||
Pre-opening costs (C)
|
|
1,179
|
|
|
—
|
|
|
—
|
|
|
1,179
|
|
||||
Impairment and other losses
|
|
—
|
|
|
4,088
|
|
|
—
|
|
|
4,088
|
|
||||
Total operating costs
|
|
7,422
|
|
|
60,778
|
|
|
4,031
|
|
|
72,231
|
|
||||
Operating loss
|
|
(5,701
|
)
|
|
(8,547
|
)
|
|
(4,031
|
)
|
|
(18,279
|
)
|
||||
Other income (expenses)
|
|
|
|
|
|
|
|
|
||||||||
Interest and investment income
|
|
132
|
|
|
38
|
|
|
174
|
|
|
344
|
|
||||
Interest expense (D)
|
|
(3
|
)
|
|
(2,190
|
)
|
|
(626
|
)
|
|
(2,819
|
)
|
||||
Capitalized interest (D)
|
|
—
|
|
|
188
|
|
|
478
|
|
|
666
|
|
||||
Other (loss) income, net
|
|
(7
|
)
|
|
5,030
|
|
|
465
|
|
|
5,488
|
|
||||
Total other income (expenses)
|
|
122
|
|
|
3,066
|
|
|
491
|
|
|
3,679
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net loss
|
|
(5,579
|
)
|
|
(5,481
|
)
|
|
(3,540
|
)
|
|
(14,600
|
)
|
||||
Preferred dividends
|
|
—
|
|
|
—
|
|
|
(1,395
|
)
|
|
(1,395
|
)
|
||||
Loss applicable to common stockholders
|
|
$
|
(5,579
|
)
|
|
$
|
(5,481
|
)
|
|
$
|
(4,935
|
)
|
|
$
|
(15,995
|
)
|
(A)
|
General and administrative expenses include severance expense in the amount of $0.7 million for the three months ended March 31, 2020, and $0.4 million for the three months ended March 31, 2019.
|
(B)
|
Acquisition and transaction expenses include costs related to completed and potential acquisitions and transactions and strategic initiatives which may include advisory, legal, accounting and other professional or consulting fees.
|
(C)
|
Pre-opening costs are expensed as incurred and consist primarily of site-related marketing expenses, lease expense, employee payroll, travel and related expenses, training costs, food, beverage and other operating expenses incurred prior to opening an Entertainment Golf venue.
|
(D)
|
Interest expense includes the accretion of membership deposit liabilities in the amount of $1.9 million for the three months ended March 31, 2020, and $1.9 million for the three months ended March 31, 2019. Interest expense and capitalized interest are combined in interest expense, net on the Consolidated Statements of Operations.
|
(E)
|
Total assets in the corporate segment include an equity method investment in the amount of $24.4 million as of March 31, 2020 recorded in other investments on the Consolidated Balance Sheets.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Depreciation
|
|
Net Carrying Value
|
|
Gross Carrying Amount
|
|
Accumulated Depreciation
|
|
Net Carrying Value
|
||||||||||||
Land
|
$
|
6,770
|
|
|
$
|
—
|
|
|
$
|
6,770
|
|
|
$
|
6,770
|
|
|
$
|
—
|
|
|
$
|
6,770
|
|
Buildings and improvements
|
146,474
|
|
|
(38,359
|
)
|
|
108,115
|
|
|
147,146
|
|
|
(36,349
|
)
|
|
110,797
|
|
||||||
Furniture, fixtures and equipment
|
53,459
|
|
|
(21,317
|
)
|
|
32,142
|
|
|
52,327
|
|
|
(19,484
|
)
|
|
32,843
|
|
||||||
Finance leases - equipment
|
34,107
|
|
|
(14,893
|
)
|
|
19,214
|
|
|
36,166
|
|
|
(16,047
|
)
|
|
20,119
|
|
||||||
Construction in progress
|
17,978
|
|
|
—
|
|
|
17,978
|
|
|
9,112
|
|
|
—
|
|
|
9,112
|
|
||||||
Total Property and Equipment
|
$
|
258,788
|
|
|
$
|
(74,569
|
)
|
|
$
|
184,219
|
|
|
$
|
251,521
|
|
|
$
|
(71,880
|
)
|
|
$
|
179,641
|
|
|
|
|
Three Months Ended March 31, 2020
|
||
Finance lease cost
|
|
|
||
Amortization of right-of-use assets
|
|
$
|
1,532
|
|
Interest on lease liabilities
|
|
341
|
|
|
Total finance lease cost
|
|
1,873
|
|
|
|
|
|
||
Operating lease cost
|
|
|
||
Operating lease cost
|
|
9,267
|
|
|
Short-term lease cost
|
|
428
|
|
|
Variable lease cost
|
|
2,788
|
|
|
Total operating lease cost
|
|
12,483
|
|
|
Total lease cost
|
|
$
|
14,356
|
|
|
|
Operating Leases
|
|
Financing Leases
|
||
Right-of-use assets
|
|
212,246
|
|
|
19,214
|
|
Lease liabilities
|
|
202,988
|
|
|
18,272
|
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
||
Operating cash flows
|
|
8,303
|
|
|
340
|
|
Financing cash flows
|
|
N/A
|
|
|
1,484
|
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for lease liabilities
|
|
2,459
|
|
|
1,028
|
|
|
|
|
|
|
||
Weighted average remaining lease term
|
|
12.6 years
|
|
|
3.4 years
|
|
Weighted average discount rate
|
|
8.3
|
%
|
|
7.3
|
%
|
|
|
Operating Leases
|
|
Financing Leases
|
||||
April 1, 2020 - December 31, 2020
|
|
24,277
|
|
|
5,508
|
|
||
2021
|
|
31,944
|
|
|
6,018
|
|
||
2022
|
|
30,673
|
|
|
4,454
|
|
||
2023
|
|
30,511
|
|
|
3,434
|
|
||
2024
|
|
24,659
|
|
|
1,284
|
|
||
Thereafter
|
|
202,618
|
|
|
90
|
|
||
Total minimum lease payments
|
|
344,682
|
|
|
20,788
|
|
||
Less: imputed interest
|
|
141,694
|
|
|
2,516
|
|
||
Total lease liabilities
|
|
$
|
202,988
|
|
|
$
|
18,272
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||||||
Trade name
|
$
|
700
|
|
|
$
|
(146
|
)
|
|
$
|
554
|
|
|
$
|
700
|
|
|
$
|
(140
|
)
|
|
$
|
560
|
|
Management contracts
|
31,830
|
|
|
(17,435
|
)
|
|
14,395
|
|
|
32,331
|
|
|
(17,342
|
)
|
|
14,989
|
|
||||||
Internally-developed software
|
258
|
|
|
(40
|
)
|
|
218
|
|
|
252
|
|
|
(27
|
)
|
|
225
|
|
||||||
Membership base
|
5,236
|
|
|
(4,675
|
)
|
|
561
|
|
|
5,236
|
|
|
(4,488
|
)
|
|
748
|
|
||||||
Nonamortizable liquor licenses
|
1,052
|
|
|
—
|
|
|
1,052
|
|
|
1,043
|
|
|
—
|
|
|
1,043
|
|
||||||
Total Intangibles
|
$
|
39,076
|
|
|
$
|
(22,296
|
)
|
|
$
|
16,780
|
|
|
$
|
39,562
|
|
|
$
|
(21,997
|
)
|
|
$
|
17,565
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|||||||||||||||||||||||||
Debt Obligation/Collateral
|
|
Month Issued
|
|
Outstanding
Face Amount |
|
Carrying
Value |
|
Final Stated Maturity
|
|
Weighted
Average Coupon |
|
Weighted Average
Funding Cost (A) |
|
Weighted Average Life (Years)
|
|
Face Amount of
Floating Rate Debt |
|
Outstanding Face Amount
|
|
Carrying Value
|
|||||||||||
Credit Facilities and Finance Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Vineyard II
|
|
Dec 1993
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Dec 2043
|
|
3.09%
|
|
3.09
|
%
|
|
23.7
|
|
$
|
200
|
|
|
$
|
200
|
|
|
$
|
200
|
|
Finance leases (Equipment)
|
|
Jul 2014 - Mar 2020
|
|
18,272
|
|
|
18,272
|
|
|
Apr 2020 - Sep 2025
|
|
3.00% to 15.00%
|
|
7.33
|
%
|
|
3.4
|
|
—
|
|
|
19,079
|
|
|
19,079
|
|
|||||
|
|
|
|
18,472
|
|
|
18,472
|
|
|
|
|
|
|
7.28
|
%
|
|
3.6
|
|
200
|
|
|
19,279
|
|
|
19,279
|
|
|||||
Less current portion of obligations under finance leases
|
|
|
|
6,004
|
|
|
6,004
|
|
|
|
|
|
|
|
|
|
|
|
|
6,154
|
|
|
6,154
|
|
|||||||
Credit facilities and obligations under finance leases - noncurrent
|
|
|
|
12,468
|
|
|
12,468
|
|
|
|
|
|
|
|
|
|
|
|
|
13,125
|
|
|
13,125
|
|
|||||||
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Junior subordinated notes payable (B)
|
|
Mar 2006
|
|
51,004
|
|
|
51,190
|
|
|
Apr 2035
|
|
LIBOR+2.25%
|
|
3.99
|
%
|
|
15.1
|
|
51,004
|
|
|
51,004
|
|
|
51,192
|
|
|||||
Total debt obligations
|
|
|
|
$
|
69,476
|
|
|
$
|
69,662
|
|
|
|
|
|
|
4.86
|
%
|
|
12.0
|
|
$
|
51,204
|
|
|
$
|
70,283
|
|
|
$
|
70,471
|
|
(A)
|
Including the effect of deferred financing costs.
|
(B)
|
Interest rate based on 3 month LIBOR plus 2.25%. Collateral for this obligation is the Company's general credit.
|
|
|
March 31, 2020
|
||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
Amortized Cost Basis
|
|
Gross Unrealized
|
|
|
|
|
|
Weighted Average
|
||||||||||||||||||||||||||||||||
Asset Type
|
|
Outstanding Face Amount
|
|
Before Impairment
|
|
Other-Than- Temporary Impairment
|
|
After Impairment
|
|
Gains
|
|
Losses
|
|
Carrying
Value (A) |
|
Number of Securities
|
|
Rating (B)
|
|
Coupon
|
|
Yield
|
|
Life
(Years) (C) |
|
Principal Subordination (D)
|
||||||||||||||||||
ABS - Non-Agency RMBS
|
|
$
|
4,000
|
|
|
$
|
2,952
|
|
|
$
|
(1,521
|
)
|
|
$
|
1,431
|
|
|
$
|
1,672
|
|
|
$
|
—
|
|
|
$
|
3,103
|
|
|
1
|
|
|
CCC
|
|
1.53
|
%
|
|
30.37
|
%
|
|
3.9
|
|
45.6
|
%
|
Total Securities, Available for Sale (E)
|
|
$
|
4,000
|
|
|
$
|
2,952
|
|
|
$
|
(1,521
|
)
|
|
$
|
1,431
|
|
|
$
|
1,672
|
|
|
$
|
—
|
|
|
$
|
3,103
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
See Note 10 regarding the estimation of fair value, which is equal to carrying value for all securities.
|
|
(B)
|
Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the lowest rating is used. Ratings provided were determined by third-party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current.
|
(C)
|
The weighted average life is based on the timing of expected cash flows on the assets.
|
(D)
|
Percentage of the outstanding face amount of securities and residual interests that is subordinate to the Company’s investments.
|
(E)
|
The total outstanding face amount was $4.0 million for floating rate securities. The collateral securing the ABS - Non-Agency RMBS is located in various geographical regions in the U.S. The Company does not have significant investments in any geographic region.
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Fair Value Method (A)
|
||||
Assets
|
|
|
|
|
|
|
|
||
Real estate securities, available-for-sale
|
$
|
3,103
|
|
|
$
|
3,103
|
|
|
Pricing models - Level 3
|
Cash and cash equivalents
|
16,785
|
|
|
16,785
|
|
|
|
||
Restricted cash, current and noncurrent
|
3,554
|
|
|
3,554
|
|
|
|
||
Liabilities
|
|
|
|
|
|
||||
Junior subordinated notes payable
|
51,190
|
|
|
5,459
|
|
|
Pricing models - Level 3
|
(A)
|
Pricing models are used for (i) real estate securities that are not traded in an active market, and, therefore, have little or no price transparency, and for which significant unobservable inputs must be used in estimating fair value, or (ii) debt obligations which are private and untraded.
|
•
|
quoted prices for similar assets or liabilities in active markets,
|
•
|
inputs other than quoted prices that are observable for the asset or liability (such as interest rates and yield curves observable at commonly quoted intervals, implied volatilities and credit spreads), and
|
•
|
market corroborated inputs (derived principally from or corroborated by observable market data).
|
|
|
|
|
|
|
|
Weighted Average Significant Input
|
||||||||||||||
Asset Type
|
|
Amortized Cost Basis
|
|
Fair Value
|
|
Discount
Rate |
|
Prepayment
Speed |
|
Cumulative Default Rate
|
|
Loss
Severity |
||||||||
ABS - Non-Agency RMBS
|
|
$
|
1,431
|
|
|
$
|
3,103
|
|
|
10.0
|
%
|
|
8.0
|
%
|
|
2.6
|
%
|
|
70.0
|
%
|
|
|
ABS - Non-Agency RMBS
|
||
Balance at December 31, 2019
|
|
$
|
3,052
|
|
Total gains (losses) (A)
|
|
|
|
|
Included in other comprehensive income (loss)
|
|
(38
|
)
|
|
Amortization included in interest income
|
|
109
|
|
|
Purchases, sales and repayments (A)
|
|
|
|
|
Proceeds
|
|
(20
|
)
|
|
Balance at March 31, 2020
|
|
$
|
3,103
|
|
(A)
|
None of the gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. There were no purchases or sales during the three months ended March 31, 2020. There were no transfers into or out of Level 3 during the three months ended March 31, 2020.
|
Type of Liabilities Not Measured At Fair Value for Which Fair Value Is Disclosed
|
|
Fair Value Hierarchy
|
|
|
Valuation Techniques and Significant Inputs
|
Junior subordinated notes payable
|
|
Level 3
|
|
Valuation technique is based on discounted cash flows. Significant inputs include:
|
|
|
|
|
|
l
|
Amount and timing of expected future cash flows
|
|
|
|
|
l
|
Interest rates
|
|
|
|
|
l
|
Market yields and the credit spread of the Company
|
|
|
|
Number of Options
|
|
Weighted Average Strike Price
|
|
Weighted Average Life Remaining (in years)
|
|||
Balance at December 31, 2019
|
|
6,898,346
|
|
|
$
|
3.26
|
|
|
|
Expired
|
|
(1,117,118
|
)
|
|
5.44
|
|
|
|
|
Forfeited
|
|
(770,652
|
)
|
|
4.74
|
|
|
|
|
Balance at March 31, 2020
|
|
5,010,576
|
|
|
$
|
2.55
|
|
|
2.92
|
|
|
|
|
|
|
|
|||
Exercisable at March 31, 2020
|
|
3,702,422
|
|
|
$
|
2.56
|
|
|
2.94
|
|
|
Number of Options
|
||
Held by the former Manager
|
|
3,627,245
|
|
|
Issued to the former Manager and subsequently transferred to certain of the Manager’s employees (A)
|
|
1,382,998
|
|
|
Issued to the independent directors
|
|
333
|
|
|
Issued to Drive Shack employees
|
|
—
|
|
|
Total
|
|
5,010,576
|
|
|
Weighted average strike price
|
|
$
|
2.55
|
|
(A)
|
The Company and the former Manager agreed that options held by certain employees formerly employed by the Manager would not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018. In both February 2017 and April 2018, the former Manager issued 1,152,495 options to certain employees formerly employed by the Manager as part of their compensation. The options fully vest and are exercisable one year prior to the option expiration date, beginning March 2020 through January 2024. In July 2019, a certain employee was terminated by the Company and 921,992 options reverted back to the former Manager.
|
|
|
|
Number of RSUs
|
|
Weighted Average Grant Date Fair Value (per unit)
|
|||
Balance at December 31, 2019
|
|
520,618
|
|
|
$
|
4.66
|
|
Released
|
|
(1,762
|
)
|
|
$
|
4.73
|
|
Forfeited
|
|
(67,248
|
)
|
|
$
|
4.58
|
|
Balance at March 31, 2020
|
|
451,608
|
|
|
$
|
4.67
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Numerator for basic and diluted earnings per share:
|
|
|
|
||||
Loss from continuing operations after preferred dividends and noncontrolling interests
|
$
|
(18,757
|
)
|
|
$
|
(15,995
|
)
|
Loss Applicable to Common Stockholders
|
$
|
(18,757
|
)
|
|
$
|
(15,995
|
)
|
Denominator:
|
|
|
|
||||
Denominator for basic earnings per share - weighted average shares
|
67,069,534
|
|
|
67,027,104
|
|
||
Effect of dilutive securities
|
|
|
|
||||
Options
|
—
|
|
|
—
|
|
||
RSUs
|
—
|
|
|
—
|
|
||
Denominator for diluted earnings per share - adjusted weighted average shares
|
67,069,534
|
|
|
67,027,104
|
|
||
Basic earnings per share:
|
|
|
|
||||
Loss from continuing operations per share of common stock, after preferred dividends and noncontrolling interests
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
Loss Applicable to Common Stock, per share
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
Diluted earnings per share:
|
|
|
|
||||
Loss from continuing operations per share of common stock, after preferred dividends and noncontrolling interests
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
Loss Applicable to Common Stock, per share
|
$
|
(0.28
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Traditional golf properties (held-for-sale)
|
|
$
|
—
|
|
|
$
|
952
|
|
Traditional golf properties (held-for-use)
|
|
792
|
|
|
3,136
|
|
||
Total impairment and other losses
|
|
$
|
792
|
|
|
$
|
4,088
|
|
•
|
Entertainment Golf | Drive Shack
|
•
|
Traditional Golf | American Golf
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|||||||||||
|
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|
|||||||
Golf operations (A)
|
|
$
|
48,625
|
|
|
$
|
44,706
|
|
|
$
|
3,919
|
|
|
8.8
|
%
|
Sales of food and beverages
|
|
12,510
|
|
|
9,246
|
|
|
3,264
|
|
|
35.3
|
%
|
|||
Total revenues
|
|
61,135
|
|
|
53,952
|
|
|
7,183
|
|
|
13.3
|
%
|
|||
Operating costs
|
|
|
|
|
|
|
|
|
|||||||
Operating expenses (A)
|
|
54,367
|
|
|
47,723
|
|
|
6,644
|
|
|
13.9
|
%
|
|||
Cost of sales - food and beverages
|
|
3,655
|
|
|
2,698
|
|
|
957
|
|
|
35.5
|
%
|
|||
General and administrative expense
|
|
9,818
|
|
|
11,619
|
|
|
(1,801
|
)
|
|
(15.5
|
)%
|
|||
Depreciation and amortization
|
|
6,794
|
|
|
4,924
|
|
|
1,870
|
|
|
38.0
|
%
|
|||
Pre-opening costs
|
|
552
|
|
|
1,179
|
|
|
(627
|
)
|
|
(53.2
|
)%
|
|||
Impairment and other losses
|
|
792
|
|
|
4,088
|
|
|
(3,296
|
)
|
|
(80.6
|
)%
|
|||
Total operating costs
|
|
75,978
|
|
|
72,231
|
|
|
3,747
|
|
|
5.2
|
%
|
|||
Operating loss
|
|
(14,843
|
)
|
|
(18,279
|
)
|
|
(3,436
|
)
|
|
(18.8
|
)%
|
|||
Other income (expenses)
|
|
|
|
|
|
|
|
|
|||||||
Interest and investment income
|
|
130
|
|
|
344
|
|
|
(214
|
)
|
|
(62.2
|
)%
|
|||
Interest expense, net
|
|
(2,745
|
)
|
|
(2,153
|
)
|
|
592
|
|
|
27.5
|
%
|
|||
Other income (loss), net
|
|
367
|
|
|
5,488
|
|
|
(5,121
|
)
|
|
93.3
|
%
|
|||
Total other income (expenses)
|
|
(2,248
|
)
|
|
3,679
|
|
|
(5,927
|
)
|
|
161.1
|
%
|
|||
Loss before income tax
|
|
$
|
(17,091
|
)
|
|
$
|
(14,600
|
)
|
|
$
|
2,491
|
|
|
17.1
|
%
|
(A)
|
Includes $13.3 million for the three months ended March 31, 2020, and $9.8 million for the three months ended March 31, 2019, due to management contract reimbursements reported under ASC 606.
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Net cash (used in) provided by:
|
|
|
|
|
||
Operating activities
|
|
(2,577
|
)
|
|
(22,191
|
)
|
Investing activities
|
|
(6,482
|
)
|
|
(4,968
|
)
|
Financing activities
|
|
(2,566
|
)
|
|
(2,438
|
)
|
Net Decrease in Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent
|
|
(11,625
|
)
|
|
(29,597
|
)
|
•
|
Operating cash flows increased by:
|
◦
|
$14.1 million due to increased receipts from Traditional Golf properties primarily due to more playable days in the three months ended March 31, 2020 as compared to the three months ended March 31, 2019
|
◦
|
$3.5 million primarily due to the delayed payment of annual bonuses in 2020 that were earned in 2019 as a result of the temporary closure of its venues in response to the COVID-19 pandemic;
|
◦
|
$1.6 million decreased in general and administrative expenses primarily due to lower professional fee expenses; and
|
◦
|
$0.7 million in operating cash flows primarily due to the opening of Entertainment Golf venues in Raleigh, North Carolina; Richmond, Virginia; and West Palm Beach, Florida.
|
•
|
Operating cash flows decreased by:
|
◦
|
$0.3 million due to lower interest income as a result of lower average balances held in interest bearing accounts.
|
|
Nonrecourse
|
|
Recourse
|
|
Total
|
||||||
2020
|
$
|
241
|
|
|
$
|
—
|
|
|
$
|
241
|
|
2021
|
1,746
|
|
|
—
|
|
|
1,746
|
|
|||
2022
|
3,230
|
|
|
—
|
|
|
3,230
|
|
|||
2023
|
3,596
|
|
|
—
|
|
|
3,596
|
|
|||
2024
|
7,157
|
|
|
—
|
|
|
7,157
|
|
|||
2025
|
2,302
|
|
|
—
|
|
|
2,302
|
|
|||
Thereafter
|
200
|
|
|
51,004
|
|
|
51,204
|
|
|||
Total
|
$
|
18,472
|
|
|
$
|
51,004
|
|
|
$
|
69,476
|
|
|
|
|
|
Amount Per Share
|
||||||||||
Declared for the three months ended
|
|
Paid
|
|
Series B
|
|
Series C
|
|
Series D
|
||||||
January 31, 2020
|
|
January 2020
|
|
$
|
0.609
|
|
|
$
|
0.503
|
|
|
$
|
0.523
|
|
(a)
|
Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information is recorded, processed, summarized and reported accurately and completely. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
|
(b)
|
Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
Exhibit Description
|
|
|
|
|
Separation and Distribution Agreement dated April 26, 2013, between New Residential Investment Corp. and the Registrant (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, Exhibit 2.1, filed on May 3, 2013).
|
|
|
|
|
|
Separation and Distribution Agreement dated October 16, 2014, between New Senior Investment Group Inc. and the Registrant (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, Exhibit 2.2, filed on November 5, 2014).
|
|
|
|
|
|
Articles of Restatement (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 3.2, filed on December 8, 2016).
|
|
|
|
|
|
Articles Supplementary relating to the Series B Preferred Stock (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, Exhibit 3.3, filed on May 13, 2003).
|
|
|
|
|
|
Articles Supplementary relating to the Series C Preferred Stock (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 3.3, filed on October 25, 2005).
|
|
|
|
|
|
Articles Supplementary relating to the Series D Preferred Stock (incorporated by reference to the Registrant’s Report on Form 8-A, Exhibit 3.1, filed on March 14, 2007).
|
|
|
|
|
|
Articles Supplementary of Series E Junior Participating Preferred Stock (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 3.5, filed on March 2, 2017).
|
|
|
|
|
|
Amended and Restated By-laws (effective May 11, 2020).
|
|
|
|
|
|
Junior Subordinated Indenture between Newcastle Investment Corp. and The Bank of New York Mellon Trust Company, National Association, dated April 30, 2009 (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 4.1, filed on May 4, 2009).
|
|
|
|
|
|
Pledge and Security Agreement between Newcastle Investment Corp. and The Bank of New York Mellon Trust Company, National Association, as trustee, dated April 30, 2009 (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 4.2, filed on May 4, 2009).
|
|
|
|
|
|
Pledge, Security Agreement and Account Control Agreement among Newcastle Investment Corp., NIC TP LLC, as pledgor, and The Bank of New York Mellon Trust Company, National Association, as bank and trustee, dated April 30, 2009 (incorporated by reference to the Registrant’s Current Report on Form 8- K, Exhibit 4.3, filed on May 4, 2009).
|
|
|
|
|
|
Tax Benefits Preservation Plan, dated as of March 6, 2020, between Drive Shack Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 4.1, filed on March 6, 2020).
|
|
|
|
|
|
Termination and Cooperation Agreement, dated December 21, 2017, by and between Drive Shack Inc. and FIG
LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.1, filed on December
21, 2017).
|
|
|
|
|
|
Transition Services Agreement, dated December 21, 2017, by and between Drive Shack Inc. and FIG LLC
(incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.2, filed on December 21,
2017).
|
|
|
|
|
|
10.3*
|
Letter Agreement, dated December 21, 2017, by and between Drive Shack Inc. and Lawrence A. Goodfield, Jr.
(incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.4, filed on December 21,
2017).
|
|
|
|
|
10.4*
|
Letter Agreement, dated December 21, 2017, by and between Drive Shack Inc. and Sara A. Yakin (incorporated
by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.5, filed on December 21, 2017).
|
|
|
|
|
10.5*
|
Letter Agreement, dated November 7, 2018, by and between Drive Shack Inc. and Kenneth A. May (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.6, filed on March 15, 2019).
|
|
|
|
|
Exhibit Number
|
Exhibit Description
|
|
|
|
|
10.6*
|
Letter Agreement, dated November 7, 2018, by and between Drive Shack Inc. and David M. Hammarley (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.7, filed on March 15, 2019).
|
|
|
|
|
10.7*
|
2012 Newcastle Investment Corp. Nonqualified Stock Option and Incentive Award Plan, adopted as of May 7, 2012 (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.3, filed on February 28, 2013).
|
|
|
|
|
10.8*
|
Amended and Restated 2014 Newcastle Investment Corp. Nonqualified Stock Option and Incentive Award Plan, adopted as of November 3, 2014 (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.5, filed on March 2, 2015).
|
|
|
|
|
10.9*
|
2015 Newcastle Investment Corp. Nonqualified Option and Incentive Award Plan, adopted as of April 16, 2015 (incorporated by reference to Annex A of the Registrant’s definitive proxy statement for the 2015 annual meeting of stockholders filed on April 17, 2015).
|
|
|
|
|
2016 Newcastle Investment Corp. Nonqualified Option and Incentive Award Plan (incorporated by reference to the Registrant's Current Report on Form 8-K, Exhibit 10.1, filed on May 19, 2016).
|
|
|
|
|
|
2017 Drive Shack Inc. Nonqualified Option and Incentive Award Plan (incorporated by reference to the Registrant's definitive proxy statement for the 2017 annual meeting of stockholders, filed on April 13, 2017).
|
|
|
|
|
|
Drive Shack Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Annex A of the Registrant's definitive proxy statement for the 2018 annual meeting of stockholders filed on April 13, 2018).
|
|
|
|
|
|
Exchange Agreement between Newcastle Investment Corp. and Taberna Preferred Funding IV, Ltd., Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd. And Taberna Preferred Funding VII, Ltd., dated April 30, 2009 (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.1, filed on May 4, 2009).
|
|
|
|
|
|
Exchange Agreement, dated as of January 29, 2010, by and among Newcastle Investment Corp., Taberna Capital Management, LLC, Taberna Preferred Funding IV, Ltd., Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd. And Taberna Preferred Funding VII, Ltd. (incorporated by reference to the Registrant’s Current Report on Form 8-K, Exhibit 10.1, filed on February 1, 2010).
|
|
|
|
|
|
Form of Indemnification Agreement (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, Exhibit 10.19, filed on August 8, 2014).
|
|
|
|
|
|
Form of Drive Shack Inc. 2018 Omnibus Incentive Plan Director Restricted Stock Unit Award Agreement (incorporated by reference to the Registrant's Quarterly Report on Form 10-Q, Exhibit 10.15, filed on November 9, 2018).
|
|
|
|
|
|
Non-Qualified Stock Option Award Agreement dated November 12, 2018, by and between Drive Shack Inc. and
Kenneth A. May (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.18, filed on March 15, 2019).
|
|
|
|
|
|
Incentive Stock Option Award Agreement dated November 12, 2018, by and between Drive Shack Inc. and Kenneth A. May (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.19, filed on March 15, 2019).
|
|
|
|
|
|
Non-Qualified Stock Option Award Agreement dated November 12, 2018, by and between Drive Shack Inc. and
David M. Hammarley (incorporated by reference to the Registrant’s Annual Report on Form 10-K, Exhibit 10.20, filed on March 15, 2019).
|
|
|
|
|
|
Form of Drive Shack Inc. 2018 Omnibus Incentive Plan Executive Non-Qualified Stock Option Award Agreement (incorporated by reference to the Registrant's Quarterly Report on Form 10-Q, Exhibit 10.22, filed on May 10, 2019).
|
|
|
|
|
|
Form of Drive Shack Inc. 2018 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to the Registrant's Quarterly Report on Form 10-Q, Exhibit 10.23, filed on August 6, 2019).
|
|
|
|
|
|
Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit Number
|
Exhibit Description
|
|
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
101.INS
|
XBRL Instance Document.
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
DRIVE SHACK INC.
|
|
|
|
|
|
By:
|
/s/ Hana Khouri
|
|
|
Hana Khouri
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
May 11, 2020
|
|
|
|
|
By:
|
/s/ Lawrence A. Goodfield, Jr.
|
|
|
Lawrence A Goodfield, Jr.
|
|
|
Interim Chief Financial Officer, Chief Accounting Officer & Treasurer
|
|
|
|
|
|
May 11, 2020
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Drive Shack Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 11, 2020
|
|
/s/ Hana Khouri
|
|
|
|
Hana Khouri
|
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Drive Shack Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 11, 2020
|
/s/ Lawrence A. Goodfield, Jr.
|
|
|
Lawrence A Goodfield, Jr.
|
|
|
Interim Chief Financial Officer, Chief Accounting Officer & Treasurer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Hana Khouri
|
|
|
|
Hana Khouri
|
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
May 11, 2020
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Lawrence A. Goodfield, Jr.
|
|
|
|
Lawrence A Goodfield, Jr.
|
|
|
|
Interim Chief Financial Officer, Chief Accounting Officer & Treasurer
|
|
|
|
|
|
|
|
May 11, 2020
|
|