Gramercy Property Trust — Merger or Acquisition (September 2015)
44 slides from Gramercy Property Trust's merger presentation, Sep 9, 2015
Slide 1: Asset Sales & Reinvestment Strategy
ASSET SALEs & Reinvestment STRATEGY September 2015 1 Filed by Chamber Street Properties Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Gramercy Property Trust, Inc. Commission File No.: 001-322
Slide 2: Forward-Looking Information and Disclaimers
Forward-Looking Information and Disclaimers Important Information For Investors And Shareholders This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the transactions referred to in
Slide 3: Table of Contents
3 Table of Contents Merger Rationale Page 4 Pro Forma Combined Portfolio Page 7 Portfolio Repositioning Strategy Page 12 Management & Platform Page 26 Gramercy Europe Page 34
Slide 4: Merger Rationale
Chagbers ” Sree. | SSAMERGY Merger Rationale
Slide 5: GPT Investment Strategy
GPT Investment Strategy 5 Assemble and manage a portfolio of high quality, functional single tenant real estate in major markets across the United States Portfolio comprised of industrial, office & specialty assets Diversified portfolio across assets, markets and tenants No speculative development O
Slide 6: Why Merge GPT & CSG?
Why Merge GPT & CSG? 6 Combine two highly complementary portfolios High quality industrial & office assets 85% of assets located in target markets across the United States Increased scale and diversification creating lower cost of capital Largest tenant represents less than 7% post-merger pro forma
Slide 7: Pro Forma Combined Portfolio
Pro Forma Combined Portfolio 7
Slide 8: High Quality Combined Portfolio
High Quality Combined Portfolio GPT Portfolio1 8 CSG Portfolio2 Combined Portfolio Before Asset Recycling Size 172 assets 21 million square feet Tenants 38% Investment Grade Lease Term 9.7 Years Geographic 83% of assets in Target Markets Largest market: LA Occupancy 99.6% ABR $157 million Cash NOI $
Slide 9: Top Markets By % of Contractual Base Rent
9 Top 10 Markets By % of Contractual Base Rent New York/New Jersey Dallas Baltimore/Washington Los Angeles Minneapolis Phoenix South Florida Chicago Jacksonville Central PA By Contractual Base Rent GPT CSG < $1MM $1MM -$3MM $4MM-$6MM $7MM-$9MM $10MM-$12MM Property Type CA WA MT ID NV WY UT CO AZ NM
Slide 10: Diverse Combined Tenant Base
Diverse Combined Tenant Base Based on contractual base rent for each property in Gramercy’s portfolio as of July 19, 2015. Pro Forma for two recently closed industrial transactions in Philadelphia, PA and Minneapolis, MN as well as the recent sale of two Bank of America portfolio assets and one Los
Slide 11: Combined Portfolio – Benefits & Challenges
Combined Portfolio – Benefits & Challenges 11 Combined portfolio is overweight office with pro forma exposure of 45% of NOI GPT has two tenants that currently account for more than 10% of ABR CSG portfolio includes 11%1 multi-tenant office and is comprised of assets with shorter average lease term a
Slide 12: Portfolio Repositioning Strategy
Portfolio Repositioning Strategy 12
Slide 13: GPT/CSG U.S. Portfolio Repositioning Strategy Phase II
GPT/CSG U.S. Portfolio Repositioning Strategy 14 Phase II Value-Add – Execute in-process lease extensions and lease restructurings where exit values can be maximized 2.1 million square feet of single and multi-tenant office assets targeted in California, Minneapolis, DC/Northern VA, Florida, Dallas,
Slide 14: GPT/CSG Portfolio Repositioning Strategy
GPT/CSG Portfolio Repositioning Strategy 15 Phase I and Phase II targeted dispositions total approximately $1.145 – $1.225 billion in estimated gross sale proceeds Approximately 4.5 million square feet Approximately $74 million in 2015 Cash NOI Average cash cap of 6.7% – 7.2%1 Five largest targeted
Slide 15: Gramercy Europe & CSG European Investments
Gramercy Europe & CSG European Investments 16 GPT has a fully integrated presence in Europe through its purchase of the ThreadGreen Europe Limited platform and the creation of Gramercy Europe Gramercy Europe is a joint venture with €350 million in equity among GPT and investment entities managed by
Slide 16: Anticipated Joint Benefits of Portfolio Repositioning
Anticipated Joint Benefits of Portfolio Repositioning Industrial Assets from 47% to 61% of Cash NOI Office Assets from 45% to 26% of Cash NOI – exit all multi-tenant office Specialty Assets from 8% to 13% of Cash NOI Average Lease Term from 7.6 to 8.3 years Capex Requirement Lease Rollover Risk Note
Slide 17: Higher Quality Net Leased Portfolio after Repositioning
Higher Quality Net Leased Portfolio after Repositioning PF for Planned Asset Sales including Europe + Reinvestment 18 PF for Planned US & Europe Asset Sales + Reinvestment3 Size >254 assets >46 million square feet Tenants >40% Investment Grade Lease Term 8.3 Years Geographic (U.S. assets only) ~85%
Slide 18: Projected Lease Maturity Schedules
Projected Lease Maturity Schedules 19 GPT + CSG Combined Company Lease Maturity Note: Excludes Chambers Street’s 300 Constitution Drive, Boston, MA, 225 Summit Avenue, Montvale, NJ and 70 Hudson, Jersey City, NJ. GPT data is pro forma for two recently closed industrial transactions in Philadelphia,
Slide 19: Capital Expenditure Assumptions
Capital Expenditure Assumptions 20 CapEx Assumptions1 Retail / Specialty 2.0% Industrial 3.5% Single Tenant Office 5.0% Multi-Tenant Office 15.0% Capex Reserves as a % of NOI Note: U.S. dollars in millions. Based upon reserve assumptions provided by Green Street Advisors. Assumes $1.5 billion in ass
Slide 20: Industrial Assets
Industrial Assets 21 Generally single tenant with long-term, triple net leases that provide stable cash flow Lower cap-ex, and re-tenanting costs GPT seeks industrial properties with low-rent basis with opportunity to increase rents upon expiration of lease term Owned Industrial Assets Size Lease Te
Slide 21: Industrial Geographic Footprint
22 Industrial Geographic Footprint Combined Industrial Portfolio is Concentrated in Top Industrial Markets Throughout the Country with 78% Located in Target Markets 22 Central PA 6.6% Phoenix 5.4% Baltimore / Washington 4.7% Jacksonville 3.9% Indianapolis 8.2% Chicago 8.6% Minneapolis 3.9% Los Angel
Slide 22: Specialty Assets
Specialty Assets 23 Triple net-leased Longer lease terms due to asset criticality Mission critical with high tenant retention Minimal-to-no capex requirements Real estate characteristics drive tenants’ businesses Owned Specialty Assets Size Lease Term Occupancy Target Allocation Cash NOI >18 assets;
Slide 23: Office / Banking Center Assets
Office / Banking Center Assets 24 High quality functional buildings in deep office markets that can be leased as both single and multi-tenant buildings Buildings with amenities that make them competitive within their sub-market with contract rents that are replicable in a releasing scenario Generall
Slide 24: Office Geographic Footprint
25 Office Geographic Footprint 94% of Combined Office and Banking Center Assets are Located in Target Markets 25 New York / New Jersey 10.3% Dallas 7.6% Philadelphia 7.3% Houston 5.6% Phoenix 10.6% Los Angeles 12.0% Columbus 5.2% Tampa/Orlando 4.0% Baltimore / Washington 3.9% Jacksonville 10.3% Base
Slide 25: Management & Platform
Gtagbers | cramency Sree. | SOAMERSY Management & Platform
Slide 26: Track Record Under GPT Leadership
27 115% 16% 24% Track Record Under GPT Leadership Annualized Dividend Per Share Source: SNL Financial and Company Filings. Total shareholder returns, inclusive of dividend reinvestment. Includes EPR, GTY, LXP, NNN, O, SIR, SRC, STAG, STOR, VER, and WPC. GPT Management Team has Delivered Outstanding
Slide 27: GPT Robust Platform and Track Record Repositioning Portfolios
GPT has Robust Platform and Established Track Record with Repositioning Portfolios 28 Asset management contract with KBS, Oak Tree and others aggregating over $800 million under management September 2011 through Today: Sold 315 properties – 12,200,000 square feet for $1.1 billion in sales proceeds w
Slide 28: Case Study: Wilmington, DE
Case Study: Wilmington, DE 263,503 square foot Class A office building located in suburban Wilmington, Delaware owned by KBS REIT 1 and asset managed on a third-party basis by GPT Farmer’s Insurance Exchange was the sole tenant leasing the entire property through December 31, 2014. In-place rents we
Slide 29: Case Study: Thousand Oaks, CA
Case Study: Thousand Oaks, CA 30 Two-story office building totaling 106,560 square feet located in Thousand Oaks, CA (Los Angeles MSA) Acquired in March 2015 as a part of the Dividend Capital Portfolio totaling $398.6 million. The office building had an allocated purchase price of $18.4 million ($17
Slide 30: Seasoned and Proven Management Team
31 Seasoned and proven management team – Gramercy executives are waiving change of control provisions under 2012 Outperformance Plan and leaving the Plan in place Mr. DuGan joined Gramercy in July 2012 Former CEO of W.P. Carey B.S. in Economics from the Wharton School at the University of Pennsylvan
Slide 31: Origination Process
Greater Chicago, IL Distribution 160,000 Sq. Ft. Origination Process Nine dedicated investment professionals Four person closing team Reliable, efficient underwriting 190 deals underwritten in 2014 74 deals under LOI in 2014 (39%) 32 deals closed in 2014 (17%) Vast network used to source transaction
Slide 32: Reinvestment Plan
Reinvestment Plan Objectives: 80 – 85% of disposition proceeds to be invested in single tenant industrial properties 15 – 20% of disposition proceeds to be invested in single tenant specialty assets Assets to be 100% leased with weighted average lease term of approximately 10 years 85% of assets to
Slide 33: Gramercy Europe
Gtagbes | cramency Sieet. | SSAMERGY Gramercy Europe
Slide 34: Gramercy Europe Pipeline
Gramercy Europe Pipeline 35 Robust Pipeline Tracking over €1.3 Billion of Investment Opportunities Throughout Major Markets in Europe Country Property Type Price (€ MM) City(s) Deal Type Exp. Cap Rate Lease Term (Yrs) LIVE / SIGNED LOI / SIGNED SPA Germany Logistics Center € 30 Dusseldorf Existing d
Slide 35: European Market Outlook
36 European Market Outlook European commercial real estate volumes have continued to grow rapidly in 2015 Total transaction value in Q2 2015 was nearly €65BN, 32% higher than Q2 2014; deal volume in UK, Germany, Spain and Norway increased most Further decline in prime yields in Q2 2015 after a signi
Slide 36: European Market Outlook
37 European Market Outlook Increased competition for grade A logistics is heightened by lack of product throughout region Significant positive yield spread remains and further downward pressure on yields is expected Spread of yields between Euro countries is slowly narrowing; southern and eastern Eu
Slide 37: Europe lags behind the U.S. in macroeconomic indicators
38 Europe lags significantly behind the U.S. in macroeconomic indicators and point in recovery cycle A pick-up in aggregate euro area economic growth appears to have taken hold towards the end of 2014 driven by domestic demand, further monetary easing, and lower energy prices. The euro area recovery
Slide 38: Market Size & Deal Flow
39 Market Size & Deal Flow Sale-leaseback strategy is very large market opportunity in Europe Owner-occupied property in Europe estimated at $4 trillion (twice that of US)1 Circa 44%2 of investable commercial property in Europe owner-occupied Increasing trend in Europe toward disposition of corporat
Slide 39: Case Study: Germany & the Netherlands
Case Study: Germany & the Netherlands 591,873 square foot portfolio of four fully occupied, out-of-town retail stores located throughout Germany and the Netherlands acquired for an aggregate purchase cost of €71.5 million (€121 psf) The cap rate at closing was 8.76%1 which equates to a net initial y
Slide 40: Case Study: Germany
Case Study: Germany 432,713 square foot warehouse and distribution facility, constructed in 2008, located in Dürrholz, Germany and acquired at a purchase cost of €21.4 million (€49 psf) The cap rate at closing was 8.26% which equates to a net initial yield of 7.77% after closing costs The facility i
Slide 41: Case Study: the Netherlands
Case Study: the Netherlands 239,578 square foot logistics warehouse and headquarters office property located in Oud-Beijerland, Netherlands, a sub-market of Rotterdam, which is the largest logistics market in the Netherlands Acquired at a purchase cost of €14.1 million (€59 psf) The cap rate at clos
Slide 42: Q&A
Q&A Chambers | GRAMERCY Street.| Property TRUST
Slide 43: Appendix
Gugbes | ceanercy Sree. | SHAMEREY Appendix
Slide 44: Definitions
Definitions 45 CSG and GPT have used non-GAAP financial measures as defined by SEC Regulation G in this presentation. Fund 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 a
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