Gramercy Capital Corp., New York, is exiting the commercial real estate finance business, and effective April 15 will change its name to Gramercy Property Trust Inc. to reflect its focus going forward.
The company has sold its collateral management and subspecial servicing agreements for three collateralized debt offerings to CWCapital Investments LLC for $9.9 million. Gramercy is keeping the subordinate bonds, preferred shares and ordinary shares of the CDOs, with an opportunity to get additional proceeds over the life of those securities.
Gramercy said it decided to pursue the sale because of a significant decline in the cash flows during 2012 because of the failure of the overcollateralization tests. A strategic review by its
In February, it sold a portfolio of repurchased notes issued by two of the three CDO for cash proceeds of $34.4 million. And Gramercy expects to receive an additional $14 million from repayment of past servicing advances when specific assets in the CDOs are liquidated.
Exiting the commercial finance business through the sale to CWCapital helped Gramercy maximize the value of the servicing business through the sale to a large platform. It also simplifies its going forward business and significantly reduces expenses through the elimination of finance-related personnel costs and CDO servicing advance requirements. The deal generates over $50 million in liquidity for Gramercy.
For the fourth quarter, Gramercy lost $5 million and for the full year lost $25.5 million, both improvements of the losses of $11.4 million and $28.1 million in the same periods in 2011.
