NEW YORK CITY—Gramercy Property Trust Inc. saidlate Monday afternoon that it was buying out its joint venturepartner, Garrison Investment Group, in a3.1-million-square-foot portfolio of officeproperties leased mainly to Bank of America. Thedeal values the portfolio at about $395 million.


GPT will pay $92.2 million to buy Garrison's 50% stake in theJV, and will also repay the existing $200-million loan encumberingthe portfolio with proceeds from a new, unsecured $400-millioncredit facility, which it also announced on Monday. Separately, theREIT on Monday said that it would issue 34 million shares of commonstock, with proceeds going partly toward the cash portion of theGarrison JV buyout.


Now standing at 67 properties collateralizing the $200-millionloan plus three more that are held for sale, the portfolio ran to115 assets and 5.6 million square feet when GPT and Garrisonannounced their joint venture in August 2012. The JV acquiredthe portfolio from a KBS Real Estate InvestmentTrust Inc. subsidiary for $485 million.


“This agreement begins the implementation of our strategy tocreate durable, recurring cash flows through the ownership oflong-term leased properties,” GPT CEO Gordon F.DuGan said when the JV was announced. GPT and Garrisonsaid at the outset that the JV would sell non-core assets in orderto focus on the single-tenant properties long-term leased to BofA,and began doing so shortly after the deal closed. GPT's acquisitionof Garrison's stake is expected to close by the end of thisquarter.


BofA and JPMorgan Chase Bank are providingGPT's new unsecured credit facility, which replaces its existingfacility, with J.P. Morgan Securities andMerrill Lynch acting as lead arrangers. Itcosnsist of up to a $200-million senior revolving credit facilitywith an initial term of four years and a one-year extension option,and a senior term loan of up to $200 million. GPT can increase theamount of the facilities up to a maximum amount of $800 million, inthe aggregate, subject to lender approval.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.