Full Description

Gramercy Capital Corp. (Gramercy) is an integrated commercial real estate finance and property investment company. The Company’s commercial real estate finance business, which operates under the name Gramercy Finance, focuses on the direct origination and acquisition of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, commercial mortgage-backed securities, or CMBS, and other real estate related securities.Gramercy has also established a real estate securities business that focuses on the acquisition, trading and financing of commercial mortgage-backed securities (CMBS). As of December 31, 2008, the Company held loans, other lending investments, and CMBS of approximately $3,083,445, net of fees, discounts, and unfunded commitments. It also held interests in three credit tenant net lease investments investments, two interests in joint ventures and a 100% fee interest in a property. Substantially all of Gramercy's operations are conducted through its general partner, GKK Capital LP. In April 2008, Gramercy completed the acquisition of American Financial Realty Trust. In April 2009, the Company acquired external manager, GKK Manager LLC, which was previously a wholly owned subsidiary of SL Green Realty Corp.

The Company is externally managed and advised by GKK Manager LLC, a majority owned subsidiary of SL Green Realty Corp. (SL Green). At December 31, 2008, SL Green also owned approximately 12.5% of the Gramercy’s common stock. Gramercy originates fixed-rate permanent whole loans with terms of up to 15 years. It may separate certain of these loans into tranches, which can be securitized and resold. The Company may sell these investments prior to maturity. It also offers floating rate bridge whole loans to borrowers who are seeking debt capital with a final term to maturity of not more than five years to be used in the acquisition, construction or redevelopment of a property. Bridge financing enables the borrower to employ short-term financing while improving the operating performance and physical aspects of the property and avoid burdening it with restrictive long-term debt.

The Company purchase purchases from third parties, and may retain from whole loans it originate and co-originate and securitize or sell, subordinate interests in whole loans. Subordinate interests are participation interests in mortgage notes or loans secured by a lien subordinated to a senior interest in the same loan. The subordination is generally evidenced by a co-lender or participation agreement between the holders of the related senior interest and the subordinate interest. In some instances, the subordinate interest lender may additionally require a security interest in the stock or partnership interests of the borrower as part of the transaction.

Gramercy may makes investments in other types of commercial or multi-family real estate assets. These may include acquisitions of real property and debt issued by REITs or other real estate companies. Subject to gross income and asset tests necessary for REIT qualification, it may also invest in securities of other REITs, or other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities. Some of these investments may be equity interests in properties with no stated maturity or redemption date, or long-term leasehold interests with expiration dates as long as 40 years beyond the date of investment.

The Company may invest in distressed debt and non-performing real estate loans acquired from financial institutions. Through its Real Estate Securities Group, the Company acquires CMBS that are created when commercial loans are pooled and securitized. CMBS are secured by or evidenced by ownership interests in a single commercial mortgage loan or a pool of mortgage loans secured by commercial properties. Gramercy originates preferred equity investments in entities that directly or indirectly own commercial real estate. Preferred equity is not secured, but holders have priority relative to common equity holders on cash flow distributions and proceeds from capital events.