Market Overview

Gramercy Property Trust Reports Second Quarter 2018 Financial Results

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Gramercy Property Trust (NYSE:GPT) today reported financial results for
the second quarter of 2018.

As a result of the announcement of the Company's proposed merger with
affiliates of Blackstone Real Estate Partners VIII L.P.
("Blackstone"), Gramercy Property Trust will not conduct a conference
call and webcast to discuss results for the quarter.

Operating Results:

($ in millions, except per share data)   Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017   2018   2017
Net income to common shareholders $ 22.9   $ 6.5 $ 48.4   $ 14.1
Net income per common share $ 0.14 $ 0.04 $ 0.30 $ 0.09
FFO available to common shareholders and unitholders $ 93.2 $ 74.3 $ 176.5 $ 141.7
FFO per common share $ 0.56 $ 0.49 $ 1.06 $ 0.96
Core FFO available to common shareholders and unitholders $ 84.1 $ 74.2 $ 169.1 $ 146.7
Core FFO per common share $ 0.50 $ 0.49 $ 1.02 $ 1.00
AFFO available to common shareholders and unitholders $ 79.8 $ 65.9 $ 160.3 $ 134.0
AFFO per common share $ 0.48 $ 0.44 $ 0.96 $ 0.91
 

Second Quarter 2018 Highlights

  • Announced a definitive agreement with affiliates of Blackstone, under
    which Blackstone has agreed to acquire all of the Company's common
    shares for $27.50 per share in cash, plus, if the transaction is
    consummated after October 15, 2018, a per diem amount of approximately
    $0.004 per share for each day from October 15, 2018 until (but not
    including) the closing date.
  • Disposed of eight assets and one vacant land parcel for aggregate
    gross proceeds of $20.0 million.
  • Acquired two industrial properties for a purchase price of $22.2
    million.

Summary

Gramercy Property Trust (NYSE:GPT) today reported net income to common
shareholders of $22.9 million, or $0.14 per diluted common share, for
the three months ended June 30, 2018. For the second quarter of 2018,
the Company generated NAREIT defined funds from operations ("FFO") of
$93.2 million, or $0.56 per diluted common share. The Company also
reported diluted Core FFO of $84.1 million, or $0.50 per diluted common
share, during the quarter. The Company generated diluted adjusted funds
from operations ("AFFO") of $79.8 million, or $0.48 per diluted common
share, during the quarter. The Company had 160,792,820 common shares
issued and outstanding as of June 30, 2018 and had 166,771,937 diluted
weighted average common shares and units outstanding for its non-GAAP
financial measure calculations for the three months ended June 30, 2018.
A reconciliation of FFO, Core FFO and AFFO to net income available to
common shareholders is included in this press release.

For the second quarter of 2018, the Company recognized total revenues of
approximately $145.6 million, a decrease of 2.6% over total revenues of
$149.5 million reported in the prior quarter.

As of June 30, 2018, the Company owned 355 properties containing an
aggregate of approximately 81.1 million rentable square feet with 96.7%
occupancy and an ABR weighted average remaining lease term of 7.2 years.

Merger with Blackstone

On May 6, 2018, the Company and GPT Operating Partnership L.P. (the
"Operating Partnership") entered into an Agreement and Plan of Merger
(the "Merger Agreement") with BRE Glacier Parent L.P. ("Parent"), BRE
Glacier L.P. ("Merger Sub I"), and BRE Glacier Acquisition L.P. ("Merger
Sub II"), all of which are affiliates of Blackstone Real Estate Partners
VIII L.P., an affiliate of The Blackstone Group L.P. Pursuant to the
Merger Agreement, Merger Sub II will merge with, and into the Operating
Partnership and the Company will merge with and into Merger Sub I
(collectively, the "Mergers"). Following the Mergers, Merger Sub I and
the Operating Partnership will continue as the surviving entities and
the separate existence of Merger Sub II and the Company will cease. The
Merger Agreement, the Mergers, and the other transactions contemplated
thereby were unanimously approved by the Company's board of trustees.
Pursuant to the Merger Agreement, the closing of the Mergers will take
place on the third business day after satisfaction of waiver of the
conditions to the Merger (other than those conditions that by their
nature are to be satisfied or waived at the closing, but subject to the
satisfaction or waiver of such conditions) or at such other date as
mutually agreed to by the parties to the Merger Agreement; however,
Parent may on one or more occasions elect to delay the closing to a date
that is on or prior to October 10, 2018.

Pursuant to the terms and conditions in the Merger Agreement, each of
the Company's common shares that is issued and outstanding immediately
prior to the effective time of the Mergers will automatically be
converted into the right to receive an amount in cash equal to $27.50,
plus, if the Mergers are consummated after October 15, 2018, a per diem
amount of approximately $0.004 for each day from and after such date
until, but not including, the closing date (the "Merger Consideration")
without interest. Each of the Company's 7.125% Series A Preferred Shares
issued and outstanding immediately prior to the effective time of the
Mergers will be redeemed as of the closing date of the Mergers through
the payment of an amount in cash, without interest, equal to $25.00 plus
accrued and unpaid dividends, if any, until, but not including, the
closing date.

In addition, each outstanding Class A Unit of the Operating Partnership,
or Class A Partnership Unit, that is issued and outstanding immediately
prior to the effective time of the Mergers (other than certain specified
Class A Partnership Units) will automatically be converted into, and
will be canceled in exchange for, the right to receive an amount in cash
equal to the Merger Consideration, without interest, or in lieu of
receiving the Merger Consideration, each qualifying holder of a Class A
Partnership Unit may elect to receive one newly created Series B
Cumulative Preferred Unit in the surviving partnership for each OP Unit
of such holder. Each unvested Company LTIP Unit (as defined in the
Merger Agreement) will vest pursuant to its terms on the day prior to
the effective time of the Mergers, and each vested Company LTIP Unit
(including those that vest on the day prior to the effective time of the
Mergers) will convert into a Class A Partnership Unit immediately prior
to the effective time of the Mergers and be treated as a Class A
Partnership Unit as described above.

The Merger Agreement contains customary representations, warranties and
covenants, including, among others, covenants by the Company to, in all
material respects, use commercially reasonable efforts to carry on its
business in the ordinary course of business consistent with past
practice, subject to certain exceptions, during the period between the
execution of the Merger Agreement and the consummation of the Mergers.
The obligations of the parties to consummate the Mergers are not subject
to any financing condition or the receipt of any financing by Parent,
Merger Sub I, or Merger Sub II.

The Mergers and the other transactions contemplated by the Merger
Agreement must be approved by the affirmative vote of the holders of
common shares entitled to cast not less than a majority of all the votes
entitled to be cast on the matter at a special meeting of shareholders
to be held on August 9, 2018 at 9:30 a.m., New York time, at the offices
of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New
York, 10019. Please refer to the proxy statement filed with the SEC on
June 27, 2018, which is available on the Company's website www.gptreit.com
for more information.

Property Dispositions

During the second quarter of 2018, the Company disposed of eight assets
and one vacant land parcel for aggregate gross proceeds of $20.0 million.

The Company recorded net gains on disposals of $4.5 million for the
assets sold during the quarter.

Second quarter 2018 property dispositions are summarized in the chart
below:

($ in millions)
Disp. Date   MSA   Property Type  

Rentable
Square Feet

  Sale
Price
 

NTM Cash NOI
at Disposition

4/12/2018   St. Louis   Vacant Land   23,222   $ 1.0   $ 0.2
6/6/2018 Spartanburg Office 61,315 6.0 0.4
6/26/2018 Spartanburg Industrial 202,465 4.2 0.3
Various Various Retail Bank Branch / Office 80,186   8.8     0.8
Total 367,188   $ 20.0     $ 1.8
 

Property Acquisitions

In the second quarter of 2018, the Company acquired two industrial
properties in Orlando MSA and Atlanta MSA for a purchase price of $22.2
million.

Second quarter 2018 property acquisitions are summarized in the chart
below:

($ in millions)
Acq. Date   MSA   Property Type  

Rentable
Square Feet

 

Purchase
Price

 

Occupancy
as of
6/30/2018

 

Acq. Cash
NOI

5/8/2018   Orlando   Industrial   146,566   $ 9.8   100.0%   $ 0.6
6/28/2018 Atlanta Industrial 241,900   $ 12.4   89.0%   $ 0.8
Total 388,466   $ 22.2       $ 1.4
 

Build-to-suit and development activity during the quarter is summarized
in the charts below:

($ in millions)            
MSA  

Investment as
of 6/30/181

  Total Budget   Acreage  

Building SF at
Completion

 

Estimated
Completion
Date

 

Estimated Year
1 NOI

 

WALT Upon
Completion
(Yrs)

Ongoing Projects

Memphis   $ 21.4 $ 45.3 79.5 1,015,740 Q4 2018 3.0 10.0
Detroit $ 2.0 $ 11.3 20.0 150,000 Q4 2018 0.8 10.0
Charlotte $ 4.7   TBD   76.0   TBD   Various   N/A   N/A
Total $ 28.1   $ 56.6   175.5   1,165,740       $ 3.8    
 
MSA   Investment as of 6/30/181   Total Budget   Acreage  

Building SF at
Completion

 

Completion
Date

 

NTM Cash NOI
as of 6/30/18

 

WALT (Yrs) as
of 6/30/2018

Completed

Charleston $ 27.9   $ 29.1   25.8   240,800   Q2 2018   $ 2.5   19.8
Total $ 27.9   $ 29.1   25.8   240,800       $ 2.5    

1. Investment includes costs accrued as of June 30, 2018.

Joint Ventures

E-Commerce

During the second quarter of 2018, the E-Commerce JV acquired two
additional properties from its six asset seed portfolio for a pro rata
purchase price of approximately $92.4 million.

($ in millions)            
Acq. Date   MSA   Property Type  

Rentable
Square Feet

 

Purchase
Price (pro-
rata share)

 

Occupancy
as of
3/31/2018

 

Acq. Cash
NOI (pro-
rata share)

4/3/2018 Northern VA Industrial 1,016,041 $ 48.9 100.0% $ 2.7
4/3/2018 Dallas/Fort Worth Industrial 1,008,176   $ 43.5     100.0%   $ 2.4
Total 2,024,217   $ 92.4         $ 5.1
 

Europe

During the second quarter of 2018, the Fund acquired eleven properties
for a purchase price of $235.2 million (€216.9 million). The carrying
value of the Company's investment in the Fund was $27.0 million as of
June 30, 2018.

Strategic Office Partners

On July 18, 2018, the Company sold its 25% interest in Strategic Office
Partners for gross proceeds of $45.4 million, resulting in a profit to
the Company of approximately $12.0 million, net of selling costs. The
transaction valued the joint venture's assets at $388.0 million. The
carrying value of the Company's investment in Strategic Office Partners
was $31.5 million at June 30, 2018.

Corporate

As of June 30, 2018, the Company maintained approximately $468.0 million
of liquidity, as compared to approximately $599.4 million of liquidity
reported at the end of the prior quarter. Liquidity includes $59.7
million of unrestricted cash as compared to approximately $42.0 million
reported at the end of the prior quarter. As of June 30, 2018, there
were $441.8 million of borrowings outstanding under the revolving credit
facility.

General and administrative ("G&A"), expenses were $8.9 million for the
quarter ended June 30, 2018 compared to $9.7 million in the prior
quarter. G&A expenses included non-cash share-based compensation costs
of approximately $1.9 million and $0.5 million of transaction related
costs for the quarter ended June 30, 2018, compared to non-cash
share-based compensation costs of approximately $1.9 million and $0.9
million of transaction costs for the quarter ended March 31, 2017.
Transaction costs in the second quarter of 2018 were primarily
attributable to the E-Commerce JV acquisitions.

Quarterly Distributions

The Company's Board of Trustees previously declared a second quarter
2018 dividend of $0.375 per share of common stock. The second quarter
dividend was paid on July 16, 2018 to shareholders of record at the
close of business on June 29, 2018. The Company also paid a second
quarter 2018 dividend on its 7.125% Series A Cumulative Redeemable
Preferred Shares in the amount of $0.44531 per share on April 2, 2018 to
preferred shareholders of record as of March 19, 2018. Pursuant to the
terms of the merger agreement with Blackstone, the Company will not pay
dividends on the common shares for any quarter thereafter, provided that
if the Mergers are completed after October 15, 2018, shareholders will
receive a per diem amount of approximately $0.004 per share for each day
from October 15, 2018 until, but not including, the closing date.

Company Profile

Gramercy Property Trust is a leading global investor and asset manager
of commercial real estate. The Company specializes in acquiring and
managing high quality, income producing commercial real estate leased to
high quality tenants in major markets in the United States and Europe.

To review the Company's latest news releases and other corporate
documents, please visit the Company's website at www.gptreit.com
or contact Investor Relations at 888-686-0112.

Disclaimer

Non GAAP Financial Measures

The Company has used non-GAAP financial measures as defined by SEC
Regulation G in this press release. A reconciliation of each non-GAAP
financial measure and the comparable GAAP financial measure can be found
in this release.

 

Gramercy Property Trust

Consolidated Balance Sheets

(Unaudited, dollar amounts in thousands, except per share data)

  June 30, 2018   December 31, 2017
Assets:
Real estate investments, at cost:
Land $ 1,008,704 $ 1,023,908
Building and improvements 4,849,168 4,863,916
Less: accumulated depreciation (410,020 ) (333,151 )
Total real estate investments, net $ 5,447,852 $ 5,554,673
Cash and cash equivalents 59,741 30,231
Restricted cash 12,026 12,723
Investment in unconsolidated equity investments 147,282 70,214
Assets held for sale, net 402
Tenant and other receivables, net 94,260 88,750
Acquired lease assets, net of accumulated amortization of $265,990
and $220,473
537,824 598,559
Other assets 134,763   100,484  
Total assets $ 6,433,748   $ 6,456,036  
Liabilities and Equity:
Liabilities:
Senior unsecured revolving credit facility $ 441,773 $ 357,162
Mortgage notes payable, net 499,215 563,521
Senior unsecured notes, net 496,990 496,785
Senior unsecured term loans, net 1,448,330   1,448,152  
Total long-term debt, net 2,886,308 2,865,620
Accounts payable and accrued expenses 45,774 59,619
Dividends payable 62,601 61,971
Below market lease liabilities, net of accumulated amortization of
$33,302 and $28,978
148,661 166,491
Other liabilities 54,462   50,002  
Total liabilities $ 3,197,806   $ 3,203,703  
Commitments and contingencies
Noncontrolling interest in the Operating Partnership 156,293 113,530
Equity:

Common shares, par value $0.01, 160,792,820 and 160,686,822 issued
and outstanding at
June 30, 2018 and December 31, 2017,
respectively

1,608 1,607

Series A cumulative redeemable preferred shares, par value $0.01,
liquidation preference
$87,500, and 3,500,000 shares
authorized, issued and outstanding at June 30, 2018 and December
31, 2017

84,394 84,394
Additional paid-in-capital 4,406,445 4,409,677
Accumulated other comprehensive income 29,125 12,776
Accumulated deficit (1,442,153 ) (1,369,872 )
Total shareholders' equity $ 3,079,419 $ 3,138,582
Noncontrolling interest in other entities 230   221  
Total equity $ 3,079,649   $ 3,138,803  
Total liabilities and equity $ 6,433,748   $ 6,456,036  
 
 

Gramercy Property Trust

Consolidated Statements of Operations

(Unaudited, dollar amounts in thousands, except per share data)

  Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenues
Rental revenue $ 119,177 $ 108,261 $ 241,422 $ 211,543
Operating expense reimbursements 22,346 19,628 45,656 39,996
Third-party management fees 2,374 1,638 5,164 6,230
Other income 1,698   1,838   2,833   3,590  
Total revenues $ 145,595   $ 131,365   $ 295,075   $ 261,359  
Operating expenses
Depreciation and amortization 68,479 62,176 139,995 124,393
Property operating expenses 26,018 23,219 53,106 46,405
General and administrative expenses 8,862 9,100 18,548 17,856
Property management expenses 2,616 2,435 5,158 5,519
Merger-related expenses 1,945     1,945    
Total operating expenses 107,920   96,930   218,752   194,173  
Operating income $ 37,675 $ 34,435 $ 76,323 $ 67,186
Other expenses:
Interest expense (25,597 ) (23,239 ) (51,089 ) (46,295 )
Net impairment recognized in earnings (4,890 )
Gain on derivative instruments 14,970 14,970
Equity in net income (loss) of unconsolidated equity investments (1,838 ) 248 (2,764 ) 154
Gain on extinguishment of debt 83 268 83 60
Impairment losses (4,601 ) (5,580 ) (4,601 ) (18,351 )
Income (loss) from continuing operations before provision for
taxes
$ 20,692 $ 6,132 $ 32,922 $ (2,136 )
Benefit (provision) for taxes 62   (147 ) (559 ) 49  
Income (loss) from continuing operations $ 20,754 $ 5,985 $ 32,363 $ (2,087 )
Loss from discontinued operations   (28 )   (52 )
Income (loss) before net gain on disposals $ 20,754 $ 5,957 $ 32,363 $ (2,139 )
Net gain on disposals 4,523   2,002   20,778   19,379  
Net income $ 25,277 $ 7,959 $ 53,141 $ 17,240
Net (income) loss attributable to noncontrolling interest (845 ) 113   (1,647 ) (41 )
Net income attributable to Gramercy Property Trust 24,432 8,072 51,494 17,199
Preferred share dividends (1,558 ) (1,558 ) (3,117 ) (3,117 )
Net income available to common shareholders $ 22,874   $ 6,514   $ 48,377   $ 14,082  
Basic earnings per share:
Net income from continuing operations, after preferred dividends $ 0.14 $ 0.04 $ 0.30 $ 0.09
Loss from discontinued operations $   $   $   $  
Net income available to common shareholders $ 0.14   $ 0.04   $ 0.30   $ 0.09  
Diluted earnings per share:
Net income from continuing operations, after preferred dividends $ 0.14 $ 0.04 $ 0.30 $ 0.09
Loss from discontinued operations $   $   $   $  
Net income available to common shareholders $ 0.14   $ 0.04   $ 0.30   $ 0.09  
Basic weighted average common shares outstanding 160,420,278   148,542,916   160,414,240   144,746,251  
Diluted weighted average common shares outstanding 160,433,351   149,914,443   160,425,291   145,965,936  
 
 

Gramercy Property Trust

Reconciliation of Non-GAAP Financial Measures

(Unaudited, dollar amounts in thousands, except per share data)

  Three Months Ended   Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Net income attributable to common shareholders $ 22,874 $ 6,514 $ 48,377 $ 14,082
Depreciation and amortization 68,479 62,176 139,995 124,393
FFO adjustments for unconsolidated equity investments 4,470 2,337 6,391 4,590
Net income (loss) attributable to noncontrolling interest 845 (113 ) 1,647 41
Net loss from discontinued operations 28 52
Impairment loss on real estate investments 1,308 5,580 1,308 18,351
Other adjustments1 (221 ) (200 ) (421 ) (408 )
Net gain on disposals (4,523 ) (2,002 ) (20,778 ) (19,379 )
Funds from operations attributable to common shareholders and
unitholders
$ 93,232   $ 74,320   $ 176,519   $ 141,722  
Core FFO adjustments for unconsolidated equity investments 93 767
Other-than-temporary impairments on retained bonds 4,890
Transaction costs 614 189 1,658 189
Merger-related expenses 1,945 1,945
Gain on extinguishment of debt (83 ) (268 ) (83 ) (60 )
Gain on derivative instruments (14,970 ) (14,970 )
Impairment loss - other 3,293 3,293
Mark-to-market on interest rate swaps       (46 )
Core funds from operations attributable to common shareholders
and unitholders
$ 84,124   $ 74,241   $ 169,129   $ 146,695  
Non-cash share-based compensation expense 1,948 2,004 3,804 4,058
Amortization of deferred financing costs and non-cash interest 565 1,367 1,079 2,207
Other adjustments2 177 200 331 408
Amortization of free rent received at property acquisition 127 236 556 540
AFFO adjustments for unconsolidated equity investments (45 ) (21 ) (88 ) (7 )
Straight-line rent (5,803 ) (7,458 ) (12,828 ) (14,718 )
Amortization of market lease intangibles3 (1,313 ) (4,680 ) (1,705 ) (5,227 )
Adjusted funds from operations attributable to common
shareholders and unitholders
$ 79,780   $ 65,889   $ 160,278   $ 133,956  
 
Funds from operations per share – basic $ 0.56   $ 0.50   $ 1.06   $ 0.98  
Funds from operations per share – diluted $ 0.56   $ 0.49   $ 1.06   $ 0.96  
Core funds from operations per share – basic $ 0.51   $ 0.50   $ 1.02   $ 1.01  
Core funds from operations per share – diluted $ 0.50   $ 0.49   $ 1.02   $ 1.00  
Adjusted funds from operations per share – basic $ 0.48   $ 0.44   $ 0.97   $ 0.92  
Adjusted funds from operations per share – diluted $ 0.48   $ 0.44   $ 0.96   $ 0.91  
Basic weighted average common shares outstanding – EPS 160,420,278 148,542,916 160,414,240 144,746,251
Weighted average partnership units held by noncontrolling interest 5,934,765   560,443   5,490,217   590,547  
Weighted average common shares and units outstanding 166,355,043   149,103,359   165,904,457   145,336,798  
Diluted weighted average common shares and common share equivalents
outstanding – EPS
160,433,351 149,914,443 160,425,291 145,965,936
Weighted average partnership units held by noncontrolling interest 5,934,765 560,443 5,490,217 590,547
Weighted average share-based payment awards 403,821   597,543   396,794   594,460  
Diluted weighted average common shares and units outstanding 166,771,937   151,072,429   166,312,302   147,150,943  
1.   Includes non-real estate depreciation and amortization.
2. Includes non-real estate depreciation, amortization, and
straight-line rent related to corporate office leases. Corporate
office related straight-line rent has been reclassified into this
line for the three and six months ended June 30, 2018.
3. Includes amortization of lease inducement costs and market lease
intangibles.
 

Disclaimers

Non-GAAP Financial Measures and Other Definitions

The Company has used non-GAAP financial measures as defined by SEC
Regulation G in this press release. A reconciliation of each non-GAAP
financial measure and the comparable GAAP financial measure can be found
in this release.

Funds from operations ("FFO"): The revised White Paper on FFO approved
by the Board of Governors of the National Association of Real Estate
Investment Trusts, or NAREIT, defines FFO as net income (loss)
(determined in accordance with GAAP), excluding impairment write-downs
of investments in depreciable real estate and investments in
in-substance real estate investments and sales of depreciable operating
properties, plus real estate-related depreciation and amortization
(excluding amortization of deferred financing costs), less distributions
to noncontrolling interests and gains/losses from discontinued
operations and after adjustments for unconsolidated partnerships and
joint ventures.

Core FFO and adjusted funds from operations ("AFFO"): Core FFO and AFFO
are Company defined measures. CORE FFO is presented excluding
transaction costs, merger-related expenses, gain (loss) on
extinguishment of debt, other-than-temporary impairments on retained
bonds, mark-to-market on interest rate swaps, and one-time charges. AFFO
of the Company also excludes non-cash share-based compensation expense,
amortization of market lease intangibles, amortization of deferred
financing costs and non-cash interest, amortization of free rent
received at property acquisition, straight-line rent, and other
adjustments including non-real estate depreciation and amortization and
straight line rent related to corporate office leases. The Company
believes that Core FFO and AFFO are useful supplemental measures
regarding the Company's operating performances as they provide a
meaningful and consistent comparison of the Company's operating
performance and allow investors to more easily compare the Company's
operating results.

FFO, Core FFO and AFFO do not represent cash generated from operating
activities in accordance with GAAP and should not be considered as
alternatives to net income (determined in accordance with GAAP), as
indications of our financial performance, or to cash flow from operating
activities as measures of our liquidity, nor are they entirely
indicative of funds available to fund our cash needs, including our
ability to make cash distributions. Our calculations of FFO, Core FFO
and AFFO may be different from the calculations used by other companies
and, therefore, comparability may be limited.

Forward-looking Information

This press release contains forward-looking information based upon the
Company's current best judgment and expectations. Actual results could
vary from those presented herein. The risks and uncertainties associated
with forward-looking information in this release include, but are not
limited to, factors that are beyond the Company's control, including the
factors listed in the Company's Annual Report on Form 10-K, in the
Company's Quarterly Reports on Form 10-Q and in the Company's Current
Reports on Form 8-K. Any forward-looking information in this release,
speaks only as of the date on which it was made. Factors or events that
could cause actual results to differ may emerge from time to time, and
it is not possible for the Company to predict all of them. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. For further information, please refer to the Company's
filings with the Securities and Exchange Commission.

These forward-looking statements include, among other things, statements
about the expected benefits of the proposed merger with affiliates of
Blackstone Real Estate Partners VIII L.P. ("Blackstone"), the expected
timing and completion of the proposed merger with affiliates
of Blackstone and the future business, performance and opportunities
of Gramercy Property Trust. Forward-looking statements generally can be
identified by the use of words such as "anticipate," "believe,"
"estimate," "expect," "intend," "should," "will," or similar words
intended to identify information that is not historical in nature. These
risks and uncertainties include, without limitation: ability to obtain
the shareholder approval required to consummate the Merger and the
timing of the closing of the Mergers, including the risks that a
condition to closing would not be satisfied within the expected
timeframe or at all or that the closing of the Mergers will not occur;
unanticipated difficulties or expenditures relating to the Mergers; the
occurrence of any change, effect, event, circumstance, occurrence or
state of facts that could give rise to the termination of the Merger
Agreement; the outcome of any legal proceedings that have been, or may
be, instituted against the parties and others related to the Merger
Agreement; unanticipated difficulties or expenditures relating to the
transaction, the response of business partners and competitors to the
announcement of the Merger Agreement and/or potential difficulties in
employee retention as a result of the announcement and pendency of the
Merger Agreement; the Company's exclusive remedy against the
counterparties to the Merger Agreement with respect to any breach of the
Merger Agreement being to seek payment by Parent of a termination fee in
the amount of $414 million (which amount is guaranteed by Blackstone
Real Estate Partners VIII L.P.), which may not be adequate to cover the
Company's damages; the Company's restricted ability to pay dividends to
the holders of its common shares pursuant to the Merger Agreement.

Additional Information and Where to Find It

In connection with the proposed merger transaction involving Gramercy
Property Trust ("Gramercy") and affiliates of Blackstone, Gramercy filed
a definitive proxy statement on Schedule 14A (the "Proxy Statement")
with the SEC on June 27, 2018, has mailed the Proxy Statement and a
proxy card to Gramercy shareholders, and has filed and may file other
relevant documents relating to the proposed merger transaction with the
SEC. This communication does not constitute a solicitation of any vote
or proxy from any shareholder of Gramercy. This communication is not a
substitute for the Proxy Statement or for any other document that
Gramercy may file with the SEC in connection with the proposed merger
transaction. INVESTORS AND SECURITY HOLDERS OF GRAMERCY ARE URGED TO
READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS OR MATERIALS
FILED OR TO BE FILED WITH THE SEC OR INCORPORATED BY REFERENCE IN THE
PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED MERGER. The proxy statement and other documents are
available free of charge at the SEC's internet website, www.sec.gov.
The final proxy statement and other pertinent documents also may be
obtained free of charge on Gramercy's website,www.gptreit.com,
or by directing a written request to Gramercy Property Trust at 90 Park
Avenue, 32nd Floor, New York, NY 10016, Attention: Secretary.

Participants in the Solicitation

Gramercy and its trustees and certain of its executive officers may be
deemed to be participants in the solicitation of proxies with respect to
the proposed merger under the rules of the SEC. Information
regarding Gramercy's trustees and executive officers is set forth in its
proxy statement for its 2018 annual meeting of shareholders, which was
filed with the SEC on April 30, 2018, its proxy statement for its
special meeting of shareholders, which was filed with the SEC on June
27, 2018, its Annual Report of Form 10-K for the year ended December 31,
2017, which was filed with the SEC on March 1, 2018, its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2018, which was
filed with the SEC on May 1, 2018 and other filings filed with the SEC,
each of which can be obtained free of charge from the sources indicated
above. Additional information regarding the direct and indirect
interests of Gramercy's trustees and executive officers in the proposed
transaction is contained in the Proxy Statement and may be contained in
other relevant materials filed with the SEC with respect to the proposed
merger when they become available.

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