Gramercy Capital Corp. (GKK) Has Major Catalysts For 2013: Bank of America Corp (BAC), W.P. Carey Inc. REIT (WPC)

Gramercy Capital Corp. (NYSE:GKK) agreed to purchase for $485 million a Bank of America Corp (NYSE:BAC) Portfolio in a 50/50 joint venture with Garrison Investment Group in early December.  Gramercy receives a 10% promoted return over 10%.   The portfolio has an 89% occupancy and an 8.9% cap rate.  Gramercy expects an ROE of over 15% associate with the transaction.  Concurrent with closing, Gramercy sold two multi-tenant buildings for $144 million ($50 million total proceeds) and plans to sell 46 additional multi-tenant assets over the next 12-18 months.  After selling off the non-core portfolio, Gramercy expects 67 assets that are 98% occupied, of which 96% are leased to Bank of America with a 10.5 lease term.

Conclusion

At the end of 2012, Gramercy had 116 properties with a 10.2 year average lease term at 90% occupancy with 80% of tenants being investment grade.  Management is well on the way to generating better returns for equity holders through these transactions.  It has deployed close to $100 million in cash and has another $200 million it can investment. Additional transactions, reinstatement of the dividend and sales from its portfolio could each act as positive catalysts throughout 2013.

The article This REIT Has Major Catalysts For 2013 originally appeared on Fool.com and is written by Mike Thiessen.

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