UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 10, 2015
Gramercy Property Trust Inc.
(Exact name of registrant as specified in its charter)
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Maryland |
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001-32248 |
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06-1722127 |
(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer |
521 5th Avenue, 30th Floor
New York, New York 10175
(Address of principal executive offices) (Zip Code)
(212) 297-1000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K/A filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
1
Item 2.01 Completion of Acquisition or Disposition of Assets
On June 11, 2015, Gramercy Property Trust Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Report”) to report, among other things, the completion of a 20-year sale leaseback transaction with LTF Holdings, Inc., together with its affiliates, (the “Seller”) to acquire a portfolio of ten fitness center properties (the “Life Time Portfolio”). The Life Time Portfolio was owned by Life Time Fitness, Inc. (“Life Time”), and the Seller acquired the right to convey the properties to the Company immediately prior to the closing of the acquisition on June 10, 2015, pursuant to the closing of the previously announced merger of a subsidiary of Seller with and into Life Time, whereby Life Time became an indirect, wholly owned subsidiary of Seller. The Company hereby amends the Initial Report to include the historical financial statements and the pro forma financial information required by Item 9.01(a) and (b) of Form 8-K. This Form 8-K/A should be read in conjunction with the Initial Report.
Item 9.01 Financial Statements and Exhibits
(a) |
Financial Statements of Business Acquired |
All properties in the Life Time Portfolio are occupied by the Seller and subject to triple net leases whereby the Seller is responsible for all expenses associated with the property, and no single property included in the transaction represented 10% or more of the Company’s total assets reflected on its latest audited balance sheet filed with the Securities and Exchange Commission (the “SEC”) prior to the acquisition. In total, the Life Time Portfolio acquisition does not exceed 20% of the pro forma total assets of the Company, as included in the Company’s 8-K/A filed on May 21, 2015 for its acquisition of the Dividend Capital Portfolio. Additionally, although the Life Time Portfolio acquisition exceeds 10% of the aforementioned pro forma total assets of the Company included in the 8-K/A filed on May 21, 2015, there is no lease history related to the Life Time Portfolio, as the leases for the properties in the Life Time Portfolio were entered into concurrently with the acquisition. The Company believes that financial information about the tenants, or the parent company of which the tenant is a wholly owned subsidiary, is more relevant to investors than financial statements of the acquired tenant site for properties which are subject to triple net leases. Life Time Fitness was a public company prior to the previously announced merger, which occurred immediately prior to the Company’s acquisition of the Life Time Portfolio. Life Time Fitness (NYSE: LTM) provided publicly available financial statements in reports filed with the SEC at http://www.sec.gov. |
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(b) |
Pro Forma Financial Information |
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Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014 |
4 |
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Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014 |
5 |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2015 |
6 |
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Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2015 |
7 |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2014 |
8 |
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Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2014 |
9 |
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2
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF GRAMERCY PROPERTY TRUST INC.
The following unaudited pro forma financial information should be read in conjunction with the Consolidated Balance Sheets of the Company as of March 31, 2015 and December 31, 2014, the related Condensed Consolidated Statements of Operations, Comprehensive Income (Loss), Stockholders’ Equity, and Cash Flows for the three months ended March 31, 2015 and the year ended December 31, 2014, and the notes thereto. The Condensed Consolidated Financial Statements of the Company as of March 31, 2015 and December 31, 2014 and for the three months and year ended March 31, 2015 and December 31, 2014 have been included in the Company’s prior filings with the SEC.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014 has been prepared to give effect to the Life Time Portfolio acquisition as if the acquisition occurred on December 31, 2014. The following unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and the year ended December 31, 2014 have been prepared to give effect to the Life Time Portfolio acquisition as if the acquisition occurred on January 1, 2015 and January 1, 2014, respectively.
The unaudited pro forma financial information is not necessarily indicative of what the Company’s results of operations or financial condition would have been assuming the acquisition of the Life Time Portfolio had occurred at the beginning of the periods presented, nor is it indicative of the Company’s results of operations or financial condition for future periods. In management’s opinion, all adjustments necessary to reflect the effects of these transactions have been made. The unaudited pro forma financial information and accompanying notes should be read in conjunction with the Company’s Condensed Consolidated Financial Statements included in the Quarterly Report on Form 10-Q for the three months ended March 31, 2015 and the Company’s 2014 Annual Report on Form 10-K.
3
Gramercy Property Trust Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2014
(in thousands – except share and per share data)
(Unaudited)
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Gramercy Property Trust Inc. Historical (1) |
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Life Time Portfolio (2) |
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Pro Forma |
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Assets: |
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Real estate investments, at cost: |
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Land |
$ |
239,503 |
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$ |
25,110 |
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$ |
264,613 |
Building and improvements |
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828,117 |
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276,481 |
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1,104,598 |
Less: accumulated depreciation |
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(27,598) |
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- |
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(27,598) |
Total real estate investments, net |
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1,040,022 |
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301,591 |
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1,341,613 |
Cash and cash equivalents |
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200,069 |
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(1,591) |
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198,478 |
Restricted cash |
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1,244 |
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- |
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1,244 |
Servicing advances receivable |
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1,485 |
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- |
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1,485 |
Retained CDO bonds |
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4,293 |
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- |
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4,293 |
Tenant and other receivables, net |
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15,398 |
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- |
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15,398 |
Acquired lease assets, net |
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200,231 |
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- |
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200,231 |
Deferred costs, net |
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10,355 |
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- |
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10,355 |
Goodwill |
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3,840 |
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- |
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3,840 |
Other assets |
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23,063 |
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- |
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23,063 |
Total assets |
$ |
1,500,000 |
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$ |
300,000 |
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$ |
1,800,000 |
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Liabilities and Equity: |
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Liabilities: |
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Exchangeable senior notes, net |
$ |
107,836 |
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$ |
- |
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$ |
107,836 |
Senior unsecured term loan |
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200,000 |
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- |
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200,000 |
Unsecured credit facility |
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- |
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300,000 |
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300,000 |
Mortgage notes payable |
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161,642 |
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- |
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161,642 |
Total long term debt |
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469,478 |
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300,000 |
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769,478 |
Accounts payable and accrued expenses |
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18,806 |
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- |
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18,806 |
Dividends payable |
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9,579 |
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- |
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9,579 |
Accrued interest payable |
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2,357 |
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- |
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2,357 |
Deferred revenue |
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11,592 |
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- |
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11,592 |
Below-market lease liabilities, net |
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53,826 |
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- |
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53,826 |
Derivative instruments, at fair value |
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3,189 |
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- |
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3,189 |
Other liabilities |
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8,263 |
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- |
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8,263 |
Total liabilities |
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577,090 |
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300,000 |
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877,090 |
Commitments and contingencies |
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- |
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- |
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- |
Noncontrolling interest in operating partnership |
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16,129 |
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- |
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16,129 |
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Equity: |
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Common stock, par value $0.001, 220,000,000 shares authorized and 46,736,392 shares issued and outstanding. |
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47 |
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- |
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47 |
Series B cumulative redeemable preferred stock, par value $0.001, liquidation preference $87,500, 3,500,000 shares authorized, issued and outstanding. |
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84,394 |
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- |
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84,394 |
Additional paid-in-capital |
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1,768,977 |
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- |
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1,768,977 |
Accumulated other comprehensive loss |
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(3,703) |
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- |
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(3,703) |
Accumulated deficit |
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(942,934) |
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- |
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(942,934) |
Total equity |
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906,781 |
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- |
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906,781 |
Total liabilities and equity |
$ |
1,500,000 |
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$ |
300,000 |
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$ |
1,800,000 |
See accompanying notes to unaudited pro forma condensed consolidated balance sheet.
4
Gramercy Property Trust Inc.
Notes to Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2014
(in thousands – except share and per share data)
(Unaudited)
(1) Historical financial information derived from the Company’s 2014 Annual Report on Form 10-K.
(2) Reflects the acquisition of the Life Time Portfolio as if it had occurred on December 31, 2014 for approximately $300,500 plus closing costs, including a $300,000 drawdown made by the Company on its Unsecured Credit Facility to finance the acquisition. The Company is currently analyzing the fair value of the assets and liabilities of the Life Time Portfolio; and accordingly, the purchase price allocations are preliminary and subject to change.
5
Gramercy Property Trust Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2015
(in thousands – except share and per share data)
(Unaudited)
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Gramercy Property Trust Inc. Historical (1) |
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Pro Forma Adjustments |
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Pro Forma |
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Revenues |
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Rental revenue |
$ |
31,190 |
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$ |
5,663 |
(2) |
$ |
36,853 |
Management fees |
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8,186 |
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- |
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8,186 |
Operating expense reimbursements |
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8,138 |
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- |
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8,138 |
Investment income |
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238 |
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- |
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238 |
Other income |
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183 |
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- |
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183 |
Total revenues |
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47,935 |
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5,663 |
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53,598 |
Expenses |
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Property operating expenses: |
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Property management expenses |
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5,166 |
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- |
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5,166 |
Property operating expenses |
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8,383 |
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- |
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8,383 |
Total property operating expenses |
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13,549 |
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- |
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13,549 |
Depreciation and amortization |
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18,698 |
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1,906 |
(3) |
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20,604 |
Interest expense |
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6,270 |
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1,378 |
(4) |
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7,648 |
Management, general and administrative |
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4,773 |
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- |
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4,773 |
Acquisition expenses |
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3,506 |
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- |
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3,506 |
Total expenses |
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46,796 |
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3,284 |
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50,080 |
Income from continuing operations before equity in loss from joint ventures and equity investments and provision for taxes |
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1,139 |
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2,379 |
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3,518 |
Equity in net loss of joint ventures and equity investments |
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(1) |
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- |
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(1) |
Income from continuing operations before provision for taxes, and discontinued operations |
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1,138 |
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2,379 |
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3,517 |
Provision for taxes |
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(1,114) |
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- |
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(1,114) |
Income from continuing operations |
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24 |
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2,379 |
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2,403 |
Loss from discontinued operations |
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(62) |
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- |
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(62) |
Net income (loss) |
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(38) |
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2,379 |
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2,341 |
Net (income) loss attributable to noncontrolling interest |
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42 |
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(27) |
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15 |
Preferred stock dividends |
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(1,559) |
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- |
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(1,559) |
Net income (loss) available to common stockholders |
$ |
(1,555) |
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$ |
2,352 |
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$ |
797 |
Basic earnings per share: |
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Net income (loss) from continuing operations, after preferred dividends |
$ |
(0.03) |
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$ |
0.02 |
Net loss from discontinued operations |
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- |
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- |
Net income (loss) available to common stockholders |
$ |
(0.03) |
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$ |
0.02 |
Diluted earnings per share: |
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Net income (loss) from continuing operations, after preferred dividends |
$ |
(0.03) |
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$ |
0.02 |
Net loss from discontinued operations |
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- |
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- |
Net income (loss) available to common stockholders |
$ |
(0.03) |
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$ |
0.02 |
Basic weighted average common shares outstanding |
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46,747,557 |
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46,747,557 |
Diluted weighted average common shares and common share equivalents outstanding |
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46,747,557 |
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48,633,920 |
See accompanying notes to unaudited pro forma condensed consolidated statement of operations.
6
Gramercy Property Trust Inc.
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2015
(in thousands – except share and per share data)
(Unaudited)
(1) Historical financial information derived from the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015.
(2) Represents the straight-line rent that would be recorded for the Life Time Portfolio assuming the Company acquired the properties on January 1, 2015, based on the leases entered into on the properties at the time of acquisition.
(3) Represents the effect of recording the pro forma amortization and depreciation based on the new preliminary purchase price allocations resulting from the acquisition.
(4) Reflects the adjustment for interest expense the Company would incur on the Company’s drawdown of $300,000 on its Unsecured Credit Facility to finance the acquisition on January 1, 2015.
7
Gramercy Property Trust Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2014
(in thousands – except share and per share data)
(Unaudited)
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Gramercy Property Trust Inc. Historical (1) |
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Pro Forma Adjustments |
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Pro Forma |
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Revenues |
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Rental revenue |
$ |
60,258 |
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$ |
22,653 |
(2) |
$ |
82,911 |
Management fees |
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25,033 |
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- |
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25,033 |
Operating expense reimbursements |
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20,604 |
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- |
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20,604 |
Investment income |
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1,824 |
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- |
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1,824 |
Other income |
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221 |
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- |
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221 |
Total revenues |
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107,940 |
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22,653 |
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130,593 |
Expenses |
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Property operating expenses: |
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Property management expenses |
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17,500 |
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- |
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17,500 |
Property operating expenses |
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21,120 |
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- |
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21,120 |
Total property operating expenses |
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38,620 |
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- |
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38,620 |
Other-than-temporary impairment |
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4,064 |
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- |
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4,064 |
Portion of impairment recognized in other comprehensive loss |
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752 |
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- |
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|
752 |
Net impairment recognized in earnings |
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4,816 |
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- |
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4,816 |
Depreciation and amortization |
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36,408 |
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|
7,624 |
(3) |
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44,032 |
Interest expense |
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16,586 |
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|
5,513 |
(4) |
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22,099 |
Loss on derivative instruments |
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3,300 |
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- |
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3,300 |
Management, general and administrative |
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18,416 |
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- |
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18,416 |
Acquisition expenses |
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6,171 |
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- |
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6,171 |
Total expenses |
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124,317 |
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|
13,137 |
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|
137,454 |
Income (loss) from continuing operations before equity in net income from joint ventures and equity investments, gain on remeasurement of previously held joint venture, loss on extinguishment of debt, and provision for taxes |
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(16,377) |
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|
9,516 |
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(6,861) |
Equity in net income of joint ventures |
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1,959 |
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- |
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1,959 |
Income (loss) from continuing operations before gain on remeasurement of previously held joint venture, loss on extinguishment of debt, provision for taxes, and discontinued operations |
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(14,418) |
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9,516 |
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(4,902) |
Gain on remeasurement of previously held joint venture |
|
72,345 |
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- |
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|
72,345 |
Loss on extinguishment of debt |
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(1,925) |
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|
- |
|
|
(1,925) |
Provision for taxes |
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(809) |
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|
- |
|
|
(809) |
Income from continuing operations |
|
55,193 |
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|
9,516 |
|
|
64,709 |
Loss from discontinued operations |
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(524) |
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- |
|
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(524) |
Net income |
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54,669 |
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|
9,516 |
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|
64,185 |
Net (income) loss attributable to noncontrolling interest |
|
236 |
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(71) |
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|
165 |
Net income attributable to Gramercy Property Trust Inc. |
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54,905 |
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|
9,445 |
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|
64,350 |
Preferred stock redemption costs |
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(2,912) |
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- |
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(2,912) |
Preferred stock dividends |
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(7,349) |
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|
- |
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(7,349) |
Net income available to common stockholders |
$ |
44,644 |
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$ |
9,445 |
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$ |
54,089 |
Basic earnings per share: |
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Net income from continuing operations, after preferred dividends |
$ |
1.72 |
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$ |
2.08 |
Net loss from discontinued operations |
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(0.02) |
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|
(0.02) |
Net income available to common stockholders |
$ |
1.70 |
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$ |
2.06 |
Diluted earnings per share: |
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Net income from continuing operations, after preferred dividends |
$ |
1.68 |
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$ |
2.03 |
Net loss from discontinued operations |
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(0.02) |
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(0.02) |
Net income available to common stockholders |
$ |
1.66 |
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$ |
2.01 |
Basic weighted average common shares outstanding |
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26,202,954 |
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26,202,954 |
Diluted weighted average common shares and common share equivalents outstanding |
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26,937,585 |
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|
26,937,585 |
See accompanying notes to unaudited pro forma condensed consolidated statement of operations.
8
Gramercy Property Trust Inc.
Notes to Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2014
(in thousands – except share and per share data)
(Unaudited)
(1) Historical financial information derived from the Company’s 2014 Annual Report on Form 10-K.
(2) Represents the straight-line rent that would be recorded for the Life Time Portfolio assuming the Company acquired the properties on January 1, 2014, based on the leases entered into on the properties at the time of acquisition.
(3) Represents the effect of recording the pro forma amortization and depreciation based on the new preliminary purchase price allocations resulting from the acquisition.
(4) Reflects the adjustment for interest expense the Company would incur on the Company’s drawdown of $300,000 on its Unsecured Credit Facility to finance the acquisition on January 1, 2014.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Gramercy Property Trust Inc. |
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Date: June 23, 2015 |
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By: |
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/s/ Jon W. Clark |
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Jon W. Clark |
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Chief Financial Officer |
10