Gramercy Capital Corp. (NYSE: GKK):

THIRD QUARTER HIGHLIGHTS
  • In September 2011, entered into a settlement agreement, or the Settlement Agreement, for an orderly transfer of substantially all of Gramercy Realty’s assets to KBS Real Estate Investment Trust, Inc., or KBS, the senior mezzanine lender, in full satisfaction of the Company’s obligations with respect to the $240.5 million Goldman Mortgage Loan and $549.7 million Goldman Mezzanine Loans that matured on May 9, 2011 and, subject to certain termination provisions, an arrangement for the Company’s continued management of the transferred assets on behalf of KBS for a fixed fee plus incentive fees.
  • For the quarter, generated funds from operations, or FFO, of $146.3 million, an increase of $125.8 million from FFO of $20.5 million generated in the same quarter of the previous year. On a fully diluted per common share basis, FFO was $2.87 for the third quarter of 2011 as compared to FFO of $0.41 in the same quarter of the previous year. For the quarter, net income to common stockholders was $129.2 million, or $2.54 per diluted common share, as compared to the net income of $4.8 million, or $0.10 per diluted common share, for the same quarter of the previous year. The increase in FFO and net income to common stockholders for the quarter was primarily attributable to a gain on settlement of debt of $129.0 million, or $2.52 on a fully diluted per common share basis, resulting from the initial transfer of 317 Gramercy Realty properties in connection with the execution of the Settlement Agreement and the transfer of the Company’s Dana portfolio through a deed in lieu of foreclosure.
  • Maintained approximately $155.6 million of corporate liquidity at quarter end, as compared to approximately $245.1 million of corporate liquidity reported in the prior quarter. Corporate liquidity excludes cash held within the Gramercy Realty division, but includes other unrestricted cash and restricted cash available for investment in the Company’s 2007-1 CDO. The decline in corporate liquidity from the prior quarter is primarily attributable to the reinvestment of restricted cash within the Company’s 2006-1 CDO. In addition, as of September 30, 2011, the Company holds an aggregate of $54.0 million of par value Class A-1, A-2 and B securities previously issued by the Company’s CDOs that are available for re-issuance. The fair value of the repurchased CDO bonds is approximately $40.3 million as of September 30, 2011.

SUMMARY

Gramercy Capital Corp. (NYSE: GKK) today reported FFO of $146.3 million, or $2.87 per diluted common share, and net income available to common stockholders of $129.2 million, or $2.54 per diluted common share for the quarter ended September 30, 2011. The Company generated total revenues of $135.1 million during the third quarter, an increase of $6.4 million from $128.7 million generated during the same quarter of the previous year. At September 30, 2011, the Company owned 16.8 million rentable square feet of commercial real estate with an aggregate book value of approximately $2.0 billion, in addition to approximately $1.2 billion of loan investments, $731.3 million of commercial mortgage–backed real estate securities, or CMBS, and $594.1 million in other assets. As of September 30, 2011, approximately 44.4% of the Company’s assets were comprised of commercial property, 26.2% of debt investments, 16.2% of CMBS and 13.2% of other assets. After all transfers pursuant to the Settlement Agreement are complete, the Company expects to own a portfolio of commercial real estate with an aggregate book value of approximately $121.3 million, in addition to approximately $1.2 billion of loan investments, approximately $731.3 million of CMBS and approximately $299.1 million in other assets.

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