Gramercy Capital Corp. GKK announced today the execution of a
definitive agreement to transfer the collateral management and sub-special
servicing agreements for its three Collateralized Debt Obligations, CDO
2005-1, CDO 2006-1 and CDO 2007-1, to CWCapital Investments LLC (“CWCapital”)
for approximately $9.9 million, less adjustments and closing costs.
The Company will retain its equity interests in the three CDOs, which will
provide the Company with the potential to recoup additional proceeds over the
remaining life of the CDOs based upon resolution of underlying assets within
the CDOs. Subject to customary closing conditions, the transfer is expected to
close in March 2013.
The Company intends to liquidate its CDO bond portfolio. The Company also
expects to receive additional cash proceeds for past CDO servicing advances of
approximately $14.0 million when specific assets within the CDOs are
liquidated.
The summary of the transaction is as follows:
Amount Timing
Collateral
Management $9.9 million 45 days
Agreements
CDO Equity Retained Liquidation of CDOs
CDO Bonds $32.0 million 30-90 days
CDO Advances $14.0 million Majority expected within
6-9 months
The transaction achieves a number of important objectives:
* It maximizes the value of the servicing business through the sale to a
large platform that has significant scale;
* It greatly simplifies the going-forward business and significantly reduces
the Company's ongoing MG&A expenses through elimination of CDO related
personnel costs and servicing advance requirements;
* It unlocks in excess of $50.0 million in liquidity currently invested in
the CDO business; and
* It allows the Company to retain potential future upside in the equity in
the three CDOs.
Gordon F. DuGan, Chief Executive Officer of Gramercy Capital Corp., commented,
“This sale is a significant milestone in the transformation of Gramercy into a
pure-play equity REIT. We are pleased to reach this agreement with CWCapital,
a world-class real estate organization. With this transaction, we expect to
achieve a number of important goals including an expected increase in
corporate liquidity, a significant reduction in going-forward expenses, and a
simplification of the balance sheet. We are very well positioned to continue
our focus on creating durable, high-quality income from net lease assets
throughout the United States.”
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