Bloomberg News

Gramercy Capital Said to Solicit Bids From Buyout Firms

November 09, 2011

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

Nov. 1 (Bloomberg) -- Gramercy Capital Corp., the real estate investment trust that agreed to settle almost $550 million in mortgage debt in September, is soliciting bids from private-equity firms for a buyout, according to people with knowledge of the matter. The shares rose as much as 9.1 percent.

Wells Fargo & Co. and its Eastdil Secured LLC unit, which are advising the New York-based REIT, have told buyout firms to expect marketing materials on Gramercy this week, said the people, who declined to be identified because the process is private. Blackstone Group LP, Centerbridge Capital Partners LLC, Angelo Gordon & Co. and TPG are among the firms that have been contacted, the people said.

Gramercy, which had been in default on its loans, agreed on Sept. 1 to settle $549.7 million in mortgage debt by transferring hundreds of U.S. buildings to lenders. It has since become current on filing financial reports with regulators. Private-equity firms including Apollo Global Management LLC, Colony Capital LLC and Starwood Capital Group LLC have backed publicly traded REITs that make property-related investments.

“Now that Gramercy is current on its debt payments and regulatory requirements, Eastdil can comfortably shop it to interested parties who can underwrite with more certainty,” said Ben Thypin, director of market analysis for New York-based Real Capital Analytics Inc. “A platform like Gramercy would allow private-equity firms to use public markets to raise debt and equity capital for investing in real estate.”

Expanding Real Estate

Officials from Gramercy and Centerbridge didn’t return calls seeking comment. A spokeswoman for Wells Fargo declined to comment. Representatives of Blackstone, Angelo Gordon and TPG declined to comment.

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

Gramercy fell 3 cents to $2.95 as of 2:37 p.m. New York time. The stock rose earlier by as much as 27 cents to $3.25 in New York Stock Exchange composite trading. The shares have jumped 29 percent this year through yesterday, for a market value of about $150 million.

--With assistance from Cristina Alesci in New York. Editors: Elizabeth Wollman, John Lear

To contact the reporter on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net

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


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