Gramercy Capital Corp., a real estate investment trust that finances commercial property, agreed to buy 115 office buildings from an affiliate of KBS Real Estate Investment Trust Inc. in a deal valued at $485 million.
Gramercy, in a joint venture with Garrison Investment Group, will acquire the properties for $470 million in cash and 6 million of its shares, valued at $15 million, the New York-based REIT said today in a statement. Gramercy and Garrison each hold a 50 percent interest in the venture.
The portfolio comprises 5.6 million square feet (520,000 square meters) of office space, 81 percent of which is leased to to Bank of America Corp. through June 2023. The buildings were previously part of Gramercy’s realty division and were transferred to KBS in September as part of a deal to settle $549.7 million in mortgage debt.
“This agreement begins the implementation of our strategy to create durable, recurring cash flows through the ownership of long-term leased properties,” Gordon F. DuGan, Gramercy’s chief executive officer, said in the statement. He was named CEO in June after Gramercy decided to remain independent following a strategic review.
The office portfolio is about 88 percent occupied, and its projected operating income this year is about $41.5 million, Gramercy said. The deal is expected to be completed in the fourth quarter.