Gramercy Capital Corp. Reports First Quarter 2012 Financial Results

Gramercy Capital Corp. (NYSE: GKK):

FIRST QUARTER HIGHLIGHTS
  • For the quarter, generated funds from operations, or FFO, of negative $(13.8) million, a decrease of $38.1 million from FFO of $24.3 million generated in the same quarter of the previous year. On a fully diluted per common share basis, FFO was negative $(0.27) for the first quarter of 2012 as compared to FFO of $0.48 in the same quarter of the previous year. For the quarter, net loss to common stockholders was $(2.1) million, or $(0.04) per diluted common share, as compared to the net income of $5.0 million, or $0.10 per diluted common share, for the same quarter of the previous year. The decrease in FFO and net loss to common stockholders for the quarter was primarily attributable to other-than-temporary impairments of $21.1 million related to commercial mortgage-backed securities, or CMBS, held by our collateralized debt obligations, or CDOs.
  • Increased unrestricted corporate cash to $186.3 million at quarter end, as compared to approximately $163.7 million reported in the prior quarter. In addition, as of March 31, 2012, the Company holds an aggregate of $49.2 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 was approximately $39.3 million as of March 31, 2012.
  • Entered into an Asset Management Services Agreement, or the Management Agreement, with KBS Acquisition Sub, LLC, or KBSAS, a wholly owned subsidiary of KBS Real Estate Investment Trust, Inc., or KBS, which provides for the Company’s continued management of the real estate assets transferred to affiliates of KBS pursuant to the Settlement Agreement executed in September 2011, or the KBS Portfolio, through December 31, 2015 for a base management fee of $12.0 million per year and an incentive fee, or the Threshold Value Profits Participation, in an amount equal to the greater of: (a) $3.5 million or (b) 10% of the amount, if any, by which the portfolio equity value exceeds $375.0 million (as adjusted for future cash contributions into, and distributions out of, KBSAS by KBS). In any event, the Threshold Value Profits Participation is capped at a maximum of $12.0 million.
  • In January 2012, sold a three-building commercial office complex for $34.0 million generating approximately $16.1 million in incremental unrestricted corporate cash.

SUMMARY

Gramercy Capital Corp. (NYSE: GKK) today reported FFO of negative $(13.8) million, or negative $(0.27) per diluted common share, and net loss available to common stockholders of $(2.1) million, or $(0.04) per diluted common share for the quarter ended March 31, 2012. The Company generated total revenues of $30.6 million during the first quarter, an increase of $5.0 million from $25.6 million generated during the same quarter of the previous year. At March 31, 2012, the Company owned approximately $1.0 billion of loan investments, $872.7 million of commercial mortgage–backed real estate securities, or CMBS, $186.3 million of unrestricted cash, commercial real estate with an aggregate book value of approximately $85.4 million and $138.1 million in other assets. As of March 31, 2012, approximately 44.3% of the Company’s assets were comprised of debt investments, 37.9% of CMBS, 8.1% of unrestricted cash, 3.7% of commercial real estate and 6.0% of other assets.

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