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Gramercy Capital Corp. Reports Third Quarter 2012 Financial Results

Gramercy Capital Corp. (NYSE: GKK):

THIRD QUARTER HIGHLIGHTS

  • For the quarter, the Company generated funds from operations, or FFO, of $1.3 million for the third quarter of 2012, an increase of $19.9 million from FFO of negative $(18.6) million generated in the prior quarter. On a fully diluted per common share basis, FFO was $0.03 for the third quarter of 2012 as compared to FFO of negative $(0.37) in the prior quarter. For the quarter, net loss to common stockholders was $(4.7) million, or $(0.09) per diluted common share, as compared to the net loss of $(21.5) million, or $(0.42) per diluted common share, for the prior quarter. The increase in FFO for the quarter was primarily attributable to the reversal of $16.4 million of provisions for loan losses in the Gramercy Finance segment and a $2.1 million reduction in provision for taxes which were partially offset by a $5.4 million litigation reserve related to the Gramercy Finance segment.
  • Held an investor call on September 28, 2012 to present the operational review of the Company’s existing assets and operations and to highlight the Company’s implementation of its new investment strategy of investing in net lease office and industrial properties.
  • Announced the acquisition of a 115-property office portfolio, or the Bank of America Portfolio, from an affiliate of KBS Real Estate Investment Trust, Inc., or KBS, in a joint venture with an affiliate of Garrison Investment Group, for a purchase price of $470.0 million in cash plus the issuance of six million shares of the Company’s common stock, valued at $15.0 million at the execution date of the purchase agreement. The acquisition is expected to close at the end of November 2012.
  • Entered into a contract to acquire two Class A industrial properties located near Indianapolis, Indiana totaling approximately 540,000 square feet for a purchase price of approximately $27.2 million.
  • Entered into a letter of intent to buy a portfolio of industrial buildings totaling approximately 1,000,000 square feet. The initial cap rate is expected to be in excess of 8.5%. However, there is no assurance that the transaction will be consummated on the terms described or at all.
  • Engaged Wells Fargo Securities LLC to assist in the potential sale of CDO management contracts, CDO securities and CDO equity.
  • Invested $19.0 million in the origination of the KBS mezzanine loan which KBS will pay off with the proceeds of the Bank of America Portfolio acquisition. The KBS mezzanine loan accounted for the decrease in unrestricted corporate cash of $175.2 million at quarter end, as compared to approximately $192.6 million reported in the prior quarter. In addition, as of September 30, 2012, the Company holds an aggregate of $45.4 million of par value Class A-1, A-2 and B securities previously issued by the Company’s collateralized debt obligations, or CDOs, that are available for re-issuance. The fair value of the repurchased CDO bonds was approximately $36.2 million and the amount owed from the CDOs to the Company for servicing advances is approximately $10.2 million as of September 30, 2012.

SUMMARY

Gramercy Capital Corp. (NYSE: GKK) today reported FFO of $1.3 million, or $0.03 per diluted common share, and net loss available to common stockholders of $(4.7) million, or $(0.09) per diluted common share for the quarter ended September 30, 2012. The Company generated total revenues of $29.5 million during the third quarter, an increase of $0.6 million from $28.9 million generated during the prior quarter. At September 30, 2012, the Company owned approximately $919.0 million of loan investments, $891.7 million of commercial mortgage–backed real estate securities, or CMBS, $175.2 million of unrestricted cash, $85.7 million of commercial real estate and $164.7 million in other assets. As of September 30, 2012, approximately 41.1% of the Company’s assets were comprised of debt investments, 39.9% of CMBS, 7.8% of unrestricted cash, 3.8% of commercial real estate and 7.4% of other assets.

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