Simultaneously with the execution of the purchase agreement for the Bank of America Portfolio, one of our affiliates and an affiliate of Garrison Investment Group, funded 50% as co-lenders, an approximately $39.0 million mezzanine loan to certain affiliates of KBS and is guaranteed by KBS. The mezzanine loan had a 1% origination fee, bears interest at 10% per annum and has a stated maturity of April 1, 2013. The loan is deemed matured upon the joint venture’s completion of the purchase of the Bank of America portfolio, and any outstanding loan balance will be applied as a credit against the purchase price at closing. As of September 30, 2012, the Company’s portion of the mezzanine loan had an outstanding balance of $19.3 million. In October 2012, at the request of the borrower, the $6.0 million was applied in reduction of the principal balance of the loan.We have also agreed that, effective upon the acquisition of the Bank of America Portfolio by the joint venture, the base management fee paid by KBS to our affiliate to manage the former Gramercy Realty portfolio will be reduced from $12.0 million to $9.0 million per year. Approximately $1.0 million of fee revenues are expected to be generated from the joint venture, offsetting in part, the decline in fee revenue from the management agreement with KBS.
Gramercy Capital Corp. Reports Third Quarter 2012 Financial Results
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