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Gramercy Completes Buyout of BofA Portfolio from JV Partner

Acquisition of Remaining 50% Interest Values Bank Portfolio at $395M
June 10, 2014
Gramercy Property Trust Inc. (NYSE: GPT) said today it has closed its acquisition of Garrison Investment Group’s 50% interest in a joint venture that owns a portfolio totaling about 3.1 million square feet predominantly leased to Bank of America, N.A.

Gramercy, which already owned a 50% equity interest in the portfolio of 67 properties across the U.S., paid $92.2 million cash to a Garrison affiliate to acquire the remaining interest, valuing the joint venture at $395 million.

The properties are about 96.5% leased to Bank of America, N.A., through June 2023. The portfolio includes 31 bank properties in California, 17 in Florida, six in Arizona, three in Missouri, in Texas, two in Washington, two in Maryland, and one each in Georgia, Kansas and New Mexico.

The BofA Portfolio has budgeted 2014 cash and straight-line net operating income of about $27.5 million and $28.5 million, respectively. Morgan Stanley is the company’s financial advisor in the transaction.

The purchase and sales agreement values the joint venture’s assets at $395 million. At closing, New York-based Gramercy plans to repay the existing $200 million loan encumbering the portfolio with proceeds from a new unsecured credit facility. The acquisition is expected to close sometime during the second quarter.

The company also announced today it has closed its previously announced $400 million senior unsecured credit facility consisting of a $200 million senior term loan and a $200 million senior revolving credit facility.

The term facility has an initial term of five years and was used to repay an existing $200 million JV mortgage loan. The revolving credit facility has an initial term of four years with an option for a one-year extension and replaces Gramercy’s existing $150 million secured revolving credit facility.

Gramercy and Garrison acquired 115 assets and 5.6 million square feet for $485 million from a KBS Real Estate Investment Trust Inc. subsidiary in their August 2012 joint venture. The portfolio now stands at 67 properties.

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