Gramercy Capital Signs $549.7M Mezz Loan Settlement

Gramercy Capital Corp. has struck a deal with Goldman Sachs, Citicorp and KBS Debt Holdings involving $549.7 million in senior and junior mezzanine loans.

September 6, 2011
By Barbra Murray, Contributing Editor

Gramercy Capital Corp. has struck a deal with its lenders involving $549.7 million senior and junior mezzanine loans. The commercial real estate finance and property management and investment company entered into a collateral transfer and settlement agreement with Goldman Sachs Mortgage Co., Citicorp North America Inc. and KBS Debt Holdings L.L.C. that will relieve the company of its obligation to repay the outstanding balance on the group of loans.

As per terms of the settlement, Gramercy will convey beneficial ownership of the majority of the entities and properties of Gramercy Realty, a division of Gramercy, to a KBS affiliate. The transfer process has already begun. KBS took over ownership of 317 properties on September 1, and will be in receipt of the remaining assets following a series of transactions that are on track to transpire within the next several months.

Gramercy’s association with the assets being transferred, however, will not come to an end. The settlement agreement also allows Gramercy Realty to stay on as manager of the properties for an annual $10 million through 2013, plus an incentive fee totaling a minimum of $3.5 million.

While Gramercy is relinquishing ownership of a sizeable collection of assets, it will not be left with an empty portfolio, as the arrangement allows it to retain 58 properties with first lien mortgage debt totaling $31.8 million.