RCA in the commercial property press:

Gramercy Capital Facing Financial Loss as Lenders Stop Extending Troubled Debt

Businessweek reports: After failing to pay off nearly $800 million in outstanding loans, lenders working with New York-based Gramercy Capital Corp are threatening to take back about 195 properties in response, according to a recent article on Bloomberg’s Businessweek. Gramercy’s lenders include Citigroup, Goldman Sachs, SL Green Realty and KBS Debt Holdings.

This type of aggressive takeover of collateral is a growing trend in troubled and distressed loans, according to Real Capital Analytics (RCA). Based on data aggregated by RCA, Businessweek stated that, “Lenders that offered to extend troubled real estate debt after the 2008 financial crisis have turned increasingly to liquidating loans and selling the underlying assets…In the first quarter, 57 percent of workouts were permanently resolved, mostly through liquidations or sales, up from 49 percent a year earlier.”

According to persons interviewed by Businessweek, should Gramercy lose the portfolio of loans to creditors, the firm may sustain a substantial loss resulting in negative earnings in future quarters. Gramercy Capital Corp is formerly the financing unit of SL Green Realty Corp, a massive publicly-traded REIT and currently the largest office landlord in New York City.

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Posted by: Nina Turner

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