Contact:

 

Jon W. Clark

Chief Financial Officer

(212) 297-1000

-Or-

Julia M. Rivera

Investor Relations

(212) 297-1000

 

 

Gramercy Capital Corp. Reports Second Quarter 2012 Financial Results

 

Second Quarter Highlights

 

q

Announced the conclusion of the Board of Directors’ strategic review process and the intention to remain independent and focus on deploying the Company's capital into income-producing net leased real estate.

 

q

Announced a new management team led by Gordon F. DuGan as the Company's Chief Executive Officer and a member of the Company's Board of Directors effective July 1, 2012.

 

q

For the quarter, generated funds from operations, or FFO, of negative $(18.6) million, a decrease of $4.8 million from FFO of negative $(13.8) million generated in the prior quarter. On a fully diluted per common share basis, FFO was negative $(0.37) for the second quarter of 2012 as compared to FFO of negative $(0.27) in the prior quarter. For the quarter, net loss to common stockholders was $(21.5) million, or $(0.42) per diluted common share, as compared to the net loss of $(2.1) million, or $(0.04) per diluted common share, for the prior quarter. The decrease in FFO for the quarter was primarily attributable to a charge of $2.3 million, or $0.05 per diluted common share, related to costs of the strategic review process and declining revenues and assets within the Gramercy Finance segment as repayments received on investments are directed to reduce liabilities outstanding.

 

q

Increased unrestricted corporate cash to $192.6 million at quarter end, as compared to approximately $186.3 million reported in the prior quarter. In addition, as of June 30, 2012, the Company holds an aggregate of $47.4 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 $37.9 million as of June 30, 2012.

 

Summary

 

NEW YORK, N.Y. – August 9, 2012 – Gramercy Capital Corp. (NYSE: GKK) today reported FFO of negative $(18.6) million, or negative $(0.37) per diluted common share, and net loss available to common stockholders of $(21.5) million, or $(0.42) per diluted common share for the quarter ended June 30, 2012. The Company generated total revenues of $28.9 million during the second quarter, a decrease of $1.7 million from $30.6 million generated during the prior quarter. At June 30, 2012, the Company owned approximately $974.4 million of loan investments, $851.9 million of commercial mortgage–backed real estate securities, or CMBS, $192.6 million of unrestricted cash, commercial real estate with an aggregate book value of approximately $91.6 million and $112.5 million in other assets. As of June 30, 2012, approximately 43.8% of the Company’s assets were comprised of debt investments, 38.3% of CMBS, 8.7% of unrestricted cash, 4.1% of commercial real estate and 5.1% of other assets.

 

 

The Company’s legacy businesses are organized into two business segments supported by a corporate balance sheet with a strong liquidity position and no recourse debt obligations.

 

The Company’s commercial real estate finance business, which operates under the name Gramercy Finance, manages approximately $2.0 billion of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, CMBS and other real estate related securities which are financed through three non-recourse CDOs.

 

The Company’s property management and investment business, which operates under the name Gramercy Realty, currently manages approximately $2.0 billion of commercial properties leased primarily to regulated financial institutions and affiliated users throughout the United States.

 

A summary of the Company’s GAAP financial position and operations by business segment and consolidated as of June 30, 2012 is as follows:

 

		Corporate				Finance Segment				Realty Segment				Intercompany Eliminations				Consolidated
Total real estate investments, net		$	-			$	52,334			$	28,617			$	-			$	80,951
Cash and cash equivalents			192,569				-				-				-				192,569
Loans and other lending investments and commercial     mortgage-backed securities			-				1,839,546				-				(28,497	)			1,811,049
Repurchased collateralized debt obligation bonds			47,351								-				(47,351	)			-
Other assets			-				131,832				5,452				1,157				138,441
Total assets		$	239,920			$	2,023,712			$	34,069			$	(74,691	)		$	2,223,010
Collateralized debt obligations		$	-			$	2,393,354			$	27,227			$	(74,578	)		$	2,346,003
Derivative instruments			-				180,753				-				-				180,753
Dividends payable			26,857				-				-				-				26,857
Other liabilities			-				15,498				6,829				(113	)			22,214
Total liabilities			26,857				2,589,605				34,056				(74,691	)			2,575,827
Total equity			213,063				(565,893	)			13				-				(352,817	)
Total liabilities and equity		$	239,920			$	2,023,712			$	34,069			$	(74,691	)		$	2,223,010
Revenues:
Net interest income		$	-			$	16,445			$	(404	)		$	-			$	16,041
Rental and reimbursement revenues			-				789				924				-				1,713
Management fees			-				-				9,616				-				9,616
Other revenue (1)			-				1,527				-				-				1,527
Total revenues			-				18,761				10,136				-				28,897
Expenses:
Property operating expenses			-				3,052				6,353				-				9,405
Impairment and loan losses			-				21,995				-				-				21,995
Management, general and administrative			9,822				1,264				842				-				11,928
Depreciation			-				115				197				-				312
Other expenses			-				-				-				-				-
Total expenses			9,822				26,426				7,392				-				43,640
Loss from continuing operations before     provision for taxes		$	(9,822	)		$	(7,665	)		$	2,744			$	-			$	(14,743	)

 

(1) Includes equity in net income from joint venture.

 

 

The Company’s GAAP book value per common share is negative $(8.39) per share, or $(439.0) million at June 30, 2012. Of the negative book value, approximately $(565.9) million, or $(10.82) per common share, is attributable to the Company’s commercial real estate finance business. While the assets and liabilities in the CDOs are consolidated on the Company’s books for GAAP purposes, the Company’s exposure to loss is limited to its investment in each CDO. The negative book value of the commercial real estate finance business is primarily attributable to impairments and mark-to-market adjustments made to the loan and CMBS investments financed in the CDOs in excess of the Company’s equity investment in each CDO. Due to the non-recourse nature of the CDOs, ultimately, any loss in excess of the CDO liabilities outstanding will not be realized by the Company.

 

New Business Strategy

 

Following a strategic review process which was completed in the second quarter of 2012, the Company’s Board of Directors concluded that the most attractive alternative available to the Company is to remain independent and to focus on building value by deploying the Company's capital into income-producing net leased real estate. The new investment criteria will focus on single tenant net lease investments with durable credits across the United States. The investments initially will be funded from existing financial resources. Subsequently, subject to market conditions, the Company expects to seek to raise additional debt and/or equity capital to support further growth. On July 1, 2012, Gordon F. DuGan became the Company’s Chief Executive Officer and will lead the new business effort. An operational review of the Company's existing assets and operations has begun with the goal of reducing the current cost structure, further strengthening the balance sheet and determining which legacy assets and operations complement the new investment strategy. The Company expects to provide an investor presentation to be posted to the Company’s website no later than September 30, 2012 to provide an update on the operational review and further communicate the new strategy.

 

Corporate

 

As of June 30, 2012, the Company maintained $192.6 million of unrestricted cash as compared to approximately $186.3 million reported as of March 31, 2012. In addition, as of June 30, 2012, the Company held an aggregate of $47.4 million of par value Class A-1, A-2 and B CDO securities previously issued by the Company’s CDOs that were available for re-issuance. The aggregate fair value of the repurchased CDO bonds was $37.9 million as of June 30, 2012.

 

A substantial portion of the Company’s cash flow has been generated by distributions from its CDOs within the Gramercy Finance division. The Company's CDOs contain minimum interest coverage and asset overcollateralization covenants that must be satisfied for the Company to receive cash flow on the interests in its CDOs retained by the Company and to receive the subordinate collateral management fees. During periods when these covenants are not satisfied for a particular CDO, cash flows from that CDO that would otherwise be paid to the Company as a subordinate bondholder, holder of the preferred shares and in respect of the subordinate collateral management fee are diverted from the Company to repay principal and interest on the senior-most outstanding CDO bonds. As of July 2012, the most recent distribution date, the Company’s 2006 CDO was in compliance with interest coverage and asset overcollateralization covenants; however, the compliance margins were narrow and relatively small declines in collateral performance and credit metrics from one or more assets could cause the CDO to fall out of compliance. The Company’s 2005 CDO failed its overcollateralization test in July 2012 and previously failed it overcollateralization tests at the October 2011, April 2011 and January 2011 distribution dates. The Company’s 2007 CDO has failed its overcollateralization test beginning with the November 2009 distribution date and it is unlikely that the 2007 CDO’s overcollateralization test will be satisfied in the foreseeable future. We cannot be certain that the CDO tests will continue to be satisfied and that we will continue to receive cash flows relating to the Company’s CDOs in the future, and believe that we will likely fail the overcollateralization test for the 2005 CDO and/or the 2006 CDO at the October distribution date. The following chart summarizes the CDO compliance tests as of the most recent distribution dates (July 25, 2012 for the Company’s 2005-1 and 2006-1 CDOs and May 19, 2012 for the Company’s 2007-1 CDO):

 

 

Cash Flow Triggers		CDO 2005-1				CDO 2006-1				CDO 2007-1
Overcollateralization (1)
Current			109.02	%			105.25	%			83.13	%
Limit			117.85	%			105.15	%			102.05	%
Compliance margin			-8.83	%			0.10	%			-18.92	%
Pass/Fail			Fail				Pass				Fail
Interest Coverage (2)
Current			332.82	%			627.79	%			N/A
Limit			132.85	%			105.15	%			N/A
Compliance margin			199.97	%			522.64	%			N/A
Pass/Fail			Pass				Pass				N/A

 

(1)

The overcollateralization ratio divides the total principal balance of all collateral in the CDO by the total bonds outstanding for the classes senior to those retained by the Company. To the extent an asset is considered a defaulted security, the asset’s principal balance is multiplied by the asset’s recovery rate which is determined by the rating agencies. For a defaulted security with a CUSIP that is actively traded, the lower of market value or the product of the security’s principal balance multiplied by the asset’s recovery rate as determined by the rating agencies is used for the overcollateralization ratio.

 

(2)

The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by the Company.

 

Cash flows generated from the Company’s CDOs with respect to its ownership of non-investment grade bonds, preferred equity and collateral management agreements for the year to date 2012 are summarized as follows:

 

		Collateral Manager Fees and CDO Distributions
		CDO 2005-1								CDO 2006-1								CDO 2007-1
		Fees				Distributions				Fees				Distributions				Fees				Distributions				Total
1Q 2012		$	2,398,596			$	3,495,260			$	1,026,567			$	9,160,260			$	172,153			$	-			$	16,252,836
2Q 2012			3,133,685				1,907,434				965,059				6,310,558				169,276				-				12,486,013
3Q 2012			331,519				-				933,494				8,238,366				175,009	(1)			-				9,678,388
Total 2012		$	5,863,800			$	5,402,694			$	2,925,120			$	23,709,184			$	516,438			$	-			$	38,417,237

 

(1) Estimated. Distribution date for CDO 2007-1 is August 15, 2012

 

 

Interest expense includes costs related to $2.3 billion of non-recourse long-term notes issued by the three CDOs that are consolidated on the Company’s balance sheet. Interest expense was $20.2 million for the three months ended June 30, 2012, compared to $20.4 million for the three months ended March 31, 2012.

 

Management, general and administrative expenses were $11.9 million for the three months ended June 30, 2012, as compared to $6.7 million in the prior quarter. The increase in management, general and administrative expenses is primarily attributable to the write-off of $2.3 million of costs related to our strategic review process, expensed at the conclusion of the process in the second quarter of 2012, and the remainder of the increase is primarily attributable to protective advances related to loan and other lending investments within our CDOs, and additional professional fees and other loan enforcement costs incurred by the Company in connection with the CDOs. Loan enforcement costs for assets financed in our CDOs are typically advanced by the Company and reimbursed as servicing advances once the loan is resolved. The amount owed from the CDOs to the Company for such advances is approximately $8.3 million as of June 30, 2012.

 

Gramercy Finance

 

Interest income is generated on the Company’s whole loans, subordinate interests in whole loans, mezzanine loans, preferred equity interests and CMBS within the Company’s Gramercy Finance division. For the three months ended June 30, 2012, $26.2 million was earned on fixed rate investments and $10.0 million was earned on floating rate investments.

 

Other income of $1.5 million for the three months ended June 30, 2012 is primarily composed of operating revenues from properties the Company owns through foreclosure.

 

The Company recorded a net provision for loan losses of approximately $6.0 million, or $0.12 per diluted common share, for the quarter ended June 30, 2012. By comparison, the Company’s provision for loan loss was approximately $2.5 million, or $0.05 per fully diluted common share, for the prior quarter. The Company’s reserve for loan losses at June 30, 2012 was approximately $203.7 million, or approximately 43.8% of the unpaid principal balance, in connection with 12 separate loans with an aggregate carrying value of approximately $263.6 million. In addition, the Company recorded non-cash impairment charges for the three months ended June 30, 2012 of approximately $15.0 million related to seven CMBS investments with an aggregate carrying value of $37.4 million deemed to be other-than-temporarily impaired and $1.0 million related to one loan held-for-sale with a carrying value of $15.3 million.

 

Substantially all of the Company’s debt investments and CMBS investments are owned in one or more of the Company’s three CDOs. As of June 30, 2012, debt investments owned by Gramercy Finance had an aggregate carrying value of approximately $974.4 million, including one loan held-for-sale, net of loan loss reserves, impairments, unamortized fees and discounts totaling approximately $256.7 million. CMBS investments had an aggregate carrying value of approximately $851.9 million as of June 30, 2012, net of impairments, unamortized fees, fair value adjustments and discounts of approximately $363.4 million. The Company’s CMBS investments are classified as available-for-sale and accordingly, such CMBS are carried at fair value. Changes in fair value are not necessarily indicative of current or future changes in cash flow, which are based on actual delinquencies, defaults and sales of the underlying collateral, and therefore are not recognized in earnings. Changes in fair value are reflected in accumulated other comprehensive loss in the equity section of the Condensed Consolidated Balance Sheet. The Company continues to monitor all of its CMBS investments for other-than-temporary impairments. The fair value adjustment for the Company’s CMBS investments as of June 30, 2012 was approximately $146.4 million as compared to a fair value adjustment of $138.7 million in the preceding quarter.

 

 

Loan prepayments, partial repayments and scheduled amortization payments in Gramercy Finance’s portfolio aggregated $60.1 million for the three months ended June 30, 2012. As of June 30, 2012, there are no unfunded commitments associated with existing loans.

 

First mortgage loans remain the majority of Gramercy Finance’s debt portfolio, decreasing to 83.1% at June 30, 2012, compared to 83.7% as of March 31, 2012. The weighted average remaining term of Gramercy Finance's debt investment portfolio remained unchanged as of June 30, 2012 at 2.3 years and the weighted average remaining term of Gramercy Finance's combined debt and CMBS portfolio remained unchanged as of June 30, 2012 at 3.3 years.

 

The aggregate carrying values, allocated by investment type, and weighted average yields of Gramercy Finance’s debt and CMBS investments, as of June 30, 2012 and December 31, 2011 were as follows (dollar amounts in thousands):

 

										Allocation by								Fixed Rate:								Floating Rate: Average Spread over
		Carrying Value (1)								Investment Type								Average Yield								LIBOR
		2012				2011				2012				2011				2012				2011				2012		2011
Whole loans, floating rate		$	607,597			$	689,685				62.3	%			63.8	%										339 bps			331 bps
Whole loans, fixed rate			202,542				202,209				20.8	%			18.7	%			8.33	%			8.35	%
Subordinate interests in whole loans, floating rate			3,710				25,352				0.4	%			2.3	%										250 bps			575 bps
Subordinate interests in whole loans, fixed rate			91,209				89,914				9.4	%			8.3	%			10.51	%			10.50	%
Mezzanine loans, floating rate			45,446				46,002				4.7	%			4.3	%										894 bps			860 bps
Mezzanine loans, fixed rate			23,659				23,847				2.4	%			2.2	%			10.34	%			10.34	%
Preferred equity, floating rate			250				3,615				0.0	%			0.3	%										288 bps			234 bps
Preferred equity, fixed rate			-				1,295				0.0	%			0.1	%			0.00	%			0.00	%
Subtotal/ Weighted average			974,413				1,081,919				100.0	%			100.0	%			9.10	%			9.08	%		377 bps			370 bps
CMBS, floating rate			48,313				47,855				5.7	%			6.2	%										106 bps			96 bps
CMBS, fixed rate			803,623				727,957				94.3	%			93.8	%			8.53	%			8.22	%
Subtotal/ Weighted average			851,936				775,812				100.0	%			100.0	%			8.53	%			8.22	%		106 bps			96 bps
Total		$	1,826,349			$	1,857,731				100.0	%			100.0	%			8.69	%			8.48	%		358 bps			354 bps

 

(1)	Loans and other lending investments are presented net of unamortized fees, discounts reserves for loan losses, and other adjustments.

 

At June 30, 2012, Gramercy Finance had one whole loan with a carrying value of $51.4 million classified as non-performing. At June 30, 2012, the Company had three whole loans with an aggregate carrying value of $38.8 million, one subordinate interest in whole loan with an aggregate carrying value of $4.0 million, three mezzanine loans with a carrying value of $26.7 million and two preferred equity investments with an aggregate carrying value of $0.3 million classified as sub-performing.

  

Gramercy Finance made no acquisitions during the second quarter of 2012.

 

 

Gramercy Realty

 

Summarized in the table below are key property portfolio statistics for Gramercy Realty’s owned portfolio as of June 30, 2012 and December 31, 2011:

 

		Number of Properties								Rentable Square Feet								Occupancy
Properties		June 30, 2012				December 31, 2011				June 30, 2012				December 31, 2011				June 30, 2012				December 31, 2011
Branches			31				41				209,578				261,732				32.1	%			28.9	%
Office Buildings			13				15				362,492				491,084				46.3	%			44.7	%
Total			44				56				572,070				752,816				41.1	%			39.2	%

 

In addition to its owned portfolio, Gramercy Realty also manages approximately $2.0 billion of real estate assets, or the KBS Portfolio, that were transferred to affiliates of KBS Real Estate Investment Trust, Inc., or KBS, pursuant to the Settlement Agreement executed in September 2011. The KBS Portfolio is comprised of 524 bank branches, 278 office buildings and one land parcel. As of June 30, 2012, the KBS Portfolio aggregated approximately 20.5 million rentable square feet.

 

Rental revenues and operating expense reimbursements are primarily comprised of revenue earned on the portfolio of 44 properties owned by Gramercy Realty as of June 30, 2012.

 

For the second quarter 2012, Gramercy Realty’s rental revenues totaled approximately $0.6 million, as compared to prior quarter’s rental revenues of approximately $0.6 million, inclusive of reclassification adjustments for discontinued operations.

 

In addition, Gramercy Realty earned fee revenues of $9.6 million in property management, asset management and administrative fees pursuant to the Management Agreement with an affiliate of KBS for the KBS Portfolio. Related operating expenses for the owned and managed portfolio aggregated approximately $6.4 million as compared to prior quarter’s operating expenses of approximately $5.9 million, inclusive of reclassification adjustments for discontinued operations.

 

During the second quarter of 2012, Gramercy Realty sold 11 buildings in its owned portfolio for $2.0 million generating approximately $0.2 million in incremental unrestricted corporate cash. The operating results for the buildings and the gain on sale of $0.1 million have been recorded in discontinued operations in the financial data in this press release. Gramercy Realty made no acquisitions during the second quarter of 2012.

 

Dividends

 

Beginning with the third quarter of 2008, the Company’s Board of Directors elected not to pay a dividend on the Company’s common stock. The Company’s Board of Directors also elected not to pay the Series A preferred stock dividend of $0.50781 per share beginning with the fourth quarter of 2008. In the early stages of the implementation of the Company’s new business strategy, the Company will seek to maximize capital available for investment and, therefore, expects to continue its policy of not paying dividends on its preferred or common stock. The Company expects, however, that as the new business strategy is implemented and sustainable cash flows grow, the Company will re-evaluate its dividend policy with the intention of resuming dividends to stockholders. In accordance with the provisions of the Company’s charter, the Company may not pay any dividends on its common stock until all accrued dividends and the dividend for the then current quarter on the Series A preferred stock are paid in full.

 

 

Company Profile

 

Gramercy Capital Corp. is a self-managed, integrated commercial real estate investment and asset management company whose Gramercy Finance division manages approximately $2.0 billion of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities and other real estate securities which are financed through three non-recourse CDOs, and whose Gramercy Realty division currently manages approximately $2.0 billion of commercial properties leased primarily to regulated financial institutions and affiliated users throughout the United States. The Company is headquartered in New York City and has regional investment and portfolio management offices in Jenkintown, Pennsylvania, Charlotte, North Carolina, and St. Louis, Missouri.

 

To review the Company’s latest news releases and other corporate documents, please visit the Company's website at www.gkk.com or contact Investor Relations at 212-297-1000.

 

Conference Call

 

The Company's executive management team will host a conference call and audio webcast on Thursday, August 9, 2012, at 2:00 PM EDT to discuss second quarter 2012 financial results.

 

The live call will be webcast in listen-only mode on the Company’s website at www.gkk.com and on Thomson’s StreetEvents Network. The presentation may also be accessed by dialing (888) 771-4371 - Domestic or (847) 585-4405 - International, using pass code ”GRAMERCY”.

 

A replay of the call will be available from August 9, 2012 at 4:30 PM EDT through August 12, 2012 at 11:59 PM EDT by dialing (888) 843-7419 - Domestic or (630) 652-3042 - International, using pass code 3299 3983#.

 

Disclaimer

 

Non GAAP Financial Measures

 

The Company has used non-GAAP financial measures as defined by SEC Regulation G in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 12 of this release. (GKK-EN)

 

Forward-looking Information

 

This press release contains forward-looking information based upon the Company's current best judgment and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking information in this release include, but are not limited to, factors that are beyond the Company's control, including those listed in the Company's Annual Report on Form 10-K and in the Company's Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For further information, please refer to the Company's filings with the SEC.

 

 

Selected Financial Data:

 

Gramercy Capital Corp.

Condensed Consolidated Statements of Operations

(Unaudited, dollar amounts in thousands, except share and per share data)

               

 

		Three months ended June 30,								Six months ended June 30,
		2012				2011				2012				2011
Revenues:
Interest income		$	36,225			$	39,748			$	74,795			$	80,259
Less: Interest expense			20,184				20,323				40,563				40,612
Net interest income			16,041				19,425				34,232				39,647
Other revenues:
Management fees			9,616				-				17,929				-
Rental revenue			1,360				1,349				2,679				2,735
Operating expense reimbursements			353				326				725				713
Other income			1,498				18,901				3,891				22,552
Total revenues			28,868				40,001				59,456				65,647
Expenses
Property operating expenses:
Real estate taxes			394				313				770				688
Utilities			379				434				866				987
Ground rent and leasehold obligations			356				254				570				424
Direct billable expenses			15				-				36				4
Other property operating expenses			8,261				3,857				17,594				8,656
Total property operating expenses			9,405				4,858				19,836				10,759
Other-than-temporary impairment			21,961				6,037				56,416				6,037
Portion of impairment recognized in other comprehensive loss			(6,955	)			-				(20,342	)			-
Impairment on loans held-for-sale			1,000				-				1,000				-
Net impairment recognized in earnings			16,006				6,037				37,074				6,037
Depreciation and amortization			312				292				608				607
Management, general and administrative			11,928				7,181				18,629				13,533
Provision for loan loss			5,989				18,783				8,534				36,283
Total expenses			43,640				37,151				84,681				67,219
Income (loss) from continuing operations before equity in net income from joint venture, and provisions for taxes			(14,772	)			2,850				(25,225	)			(1,572	)
Equity in net income from joint venture			29				31				57				61
Income (loss) from continuing operations before provision for taxes and gain on extinguishment of debt			(14,743	)			2,881				(25,168	)			(1,511	)
Gain on extinguishment of debt			-				10,870				-				14,526
Provision for taxes			(2,107	)			(3	)			(3,419	)			(73	)
Net income (loss) from continuing operations			(16,850	)			13,748				(28,587	)			12,942
Net income (loss) from discontinued operations			(2,914	)			2,077				(3,479	)			8,695
Net gains from disposals			53				1,437				11,996				2,374
Net income (loss) from discontinued operations			(2,861	)			3,514				8,517				11,069
Net income (loss) attributable to Gramercy Capital Corp.			(19,711	)			17,262				(20,070	)			24,011
Accrued preferred stock dividends			(1,790	)			(1,790	)			(3,580	)			(3,580	)
Net income (loss) available to common stockholders		$	(21,501	)		$	15,472			$	(23,650	)		$	20,431
Basic earnings per share:
Net income (loss) from continuing operations, net of preferred stock dividends		$	(0.36	)		$	0.24			$	(0.64	)		$	0.19
Net income (loss) from discontinued operations			(0.06	)			0.07				0.17				0.22
Net income (loss) available to common stockholders		$	(0.42	)		$	0.31			$	(0.47	)		$	0.41
Diluted earnings per share:
Net income (loss) from continuing operations, net of preferred stock dividends		$	(0.36	)		$	0.24			$	(0.64	)		$	0.18
Net income (loss) from discontinued operations			(0.06	)			0.07				0.17				0.22
Net income (loss) available to common stockholders		$	(0.42	)		$	0.31			$	(0.47	)		$	0.40
Basic weighted average common shares outstanding			50,759,306				49,998,728				50,739,482				49,995,429
Diluted weighted average common shares and common share     equivalents outstanding			50,759,306				50,692,846				50,739,482				50,716,953

 

 

Gramercy Capital Corp.

Condensed Consolidated Balance Sheets

(Unaudited, dollar amounts in thousands, except per share data)

 

		June 30,				December 31,
		2012				2011
Assets:
Real estate investments, at cost:
Land		$	10,381			$	11,915
Building and improvements			26,791				30,603
Other real estate investments			20,318				20,318
Less: accumulated depreciation			(2,679	)			(2,722	)
Total real estate investments, net			54,811				60,114
Cash and cash equivalents			192,438				163,629
Restricted cash			91				93
Loans and other lending investments, net			157				828
Investment in joint ventures			367				496
Assets held-for-sale, net			-				32,834
Tenant and other receivables, net			3,573				2,829
Derivative instruments, at fair value			1				6
Acquired lease assets, net of accumulated amortization of $347 and $342			367				477
Deferred costs, net of accumulated amortization of $2,937 and $4,899			1,371				1,961
Other assets			3,440				4,141
Subtotal			256,616				267,408
Assets of Consolidated Variable Interest Entities ("VIEs"):
Real estate investments, at cost:
Land			21,967				21,967
Building and improvements			4,495				4,205
Less:  accumulated depreciation			(322	)			(261	)
Total real estate investments directly owned			26,140				25,911
Cash and cash equivalents			131				96
Restricted cash			43,869				34,122
Loans and other lending investments, net			958,956				1,081,091
Commercial mortgage-backed securities - available-for-sale			851,936				775,812
Assets held-for-sale, net			10,265				10,131
Loans held-for-sale			15,300				-
Derivative instruments, at fair value			340				913
Accrued interest			27,356				28,660
Deferred costs, net of accumulated amortization of $33,516 and $31,498			7,048				9,086
Other assets			25,053				25,100
Subtotal			1,966,394				1,990,922
Total assets		$	2,223,010			$	2,258,330

 

 

Gramercy Capital Corp.

 Condensed Consolidated Balance Sheets

(Unaudited, dollar amounts in thousands, except per share data)

 

		June 30,				December 31,
		2012				2011
Liabilities and Equity:
Liabilities:
Accounts payable and accrued expenses		$	7,913			$	14,992
Dividends payable			26,857				23,276
Deferred revenue			2,572				2,392
Below-market lease liabilities, net of accumulated amortization of $1,305 and $1,189			1,789				1,905
Liabilities related to assets held-for-sale			-				1,459
Other liabilities			589				627
Subtotal			39,720				44,651
Non-Recourse Liabilities of Consolidated VIEs:
Collateralized debt obligations			2,346,003				2,468,810
Accounts payable and accrued expenses			4,332				4,554
Accrued interest payable			3,670				3,729
Deferred revenue			88				88
Liabilities related to assets held-for-sale			155				249
Derivative instruments, at fair value			180,753				175,915
Other liabilities			1,106				764
Subtotal			2,536,107				2,654,109
Total liabilities			2,575,827				2,698,760
Commitments and contingencies			-				-
Equity:
Common stock, par value $0.001, 100,000,000 shares authorized, 52,295,323    and 51,086,266 shares issued and outstanding at June 30, 2012 and    December 31, 2011, respectively.			52				50
Series A cumulative redeemable preferred stock, par value $0.001,     liquidation preference $88,146, 4,600,000 shares authorized, 3,525,822 shares     issued and outstanding at June 30, 2012 and December 31, 2011.			85,235				85,235
Additional paid-in-capital			1,084,516				1,080,600
Accumulated other comprehensive loss			(333,594	)			(440,939	)
Accumulated deficit			(1,189,929	)			(1,166,279	)
Total Gramercy Capital Corp. stockholders' equity			(353,720	)			(441,333	)
Non-controlling interest			903				903
Total equity			(352,817	)			(440,430	)
Total liabilities and equity		$	2,223,010			$	2,258,330

 

 

Gramercy Capital Corp.

Reconciliation of Non-GAAP Financial Measures

(Unaudited, amounts in thousands, except per share data)

 

		For the Three Months Ended								For the Six Months Ended
		June 30, 2012				June 30, 2011				June 30, 2012				June 30, 2011
Net income (loss) available to common stockholders		$	(21,501	)		$	15,472			$	(23,650	)		$	20,431
Add:
Depreciation and amortization			1,482				20,147				3,054				40,588
FFO adjustments for joint ventures			67				1,096				134				2,192
Non-cash impairment of real estate investments			2,639				691				2,639				1,282
Less:
Non real estate depreciation and amortization			(1,210	)			(1,823	)			(2,516	)			(3,630	)
Gain on sale of real estate			(53	)			(1,437	)			(11,996	)			(2,374	)
Funds from operations		$	(18,576	)		$	34,146			$	(32,335	)		$	58,489
Funds from operations per share - basic		$	(0.37	)		$	0.68			$	(0.64	)		$	1.17
Funds from operations per share - diluted		$	(0.37	)		$	0.67			$	(0.64	)		$	1.15