Bloomberg News

Gramercy Capital Said to Consider Sale After Restructuring

September 14, 2011

(Updates with share price in first and sixth paragraphs.)

Sept. 14 (Bloomberg) -- Gramercy Capital Corp., the real estate investment trust whose stock has more than doubled in the past year, may consider a sale of the company after it completes a debt restructuring, said two people familiar with the plan. The shares surged almost 10 percent.

Gramercy, which is working with Wells Fargo & Co. and the bank’s Eastdil Secured LLC unit, plans to contact private-equity firms if it pursues a sale, said the people, who declined to be identified because the process is private. TPG and Angelo Gordon & Co. are among the firms that have previously expressed an interest in the New York-based REIT, one of the people said.

“Private-equity firms looking for a publicly traded real estate platform would likely have an interest in Gramercy,” said Ben Thypin, director of market analysis for New York-based Real Capital Analytics Inc. “With the company’s restructuring in place, Eastdil should be able to shop it as an opportunity to create or grow such a platform.”

Gramercy, which had been in default on its loans, agreed on Sept. 1 to settle $549.7 million in mortgage debt with lenders by transferring hundreds of U.S. buildings. The company plans to file financial reports for last year and the first two quarters of 2011 with regulators by Sept. 30. It may pursue a sale or other strategic options after submitting those filings, according to the people.

Officials for Gramercy, TPG, Angelo Gordon and Wells Fargo declined to comment.

Public REITs

Gramercy climbed 33 cents, or 9.7 percent, to $3.72 at 4:15 p.m. in New York, giving the company a market value of $185.8 million. The shares have jumped 172 percent in the past 12 months, making it the top performer in the 33-member Bloomberg Mortgage REIT Index.

Apollo Global Management LLC, Colony Capital LLC and Starwood Capital Group LLC are among private-equity firms that have backed publicly traded REITs. The companies are valuable to buyout firms because they invest in property and loans and have access to low-cost capital through the bond market, Thypin said.

“Publicly traded shares give the firm and its investors more liquidity than they have with their private partnership interests,” Thypin said.

Buyout managers such as TPG and KKR & Co. have been expanding their real estate efforts as they seek to rely less on traditional corporate takeovers for profits. Blackstone Group LP, the world’s largest private-equity company by total assets, is raising a new property fund slated to total about $10 billion.

--Editors: Jennifer Sondag, Kara Wetzel

To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net.

To contact the editor responsible for this story: David Scheer in New York at dscheer@bloomberg.net.


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