Gramercy Property Trust — Investor Presentation (August 2013)
36 slides from Gramercy Property Trust's investor presentation, Aug 6, 2013
Slide 1: Business Plan Update August 2013
Business Plan Update August 2013
Slide 2: Forward-Looking Information/NOI and Cap Rate Disclaimers
Forward - Looking Information/NOI and Cap Rate Disclaimers Cautionary Note Regarding Forward - Looking Information This investment presentation contains "forward - looking statements" based upon the Company's current best judgment and expectations . You can identify forward - looking statements by t
Slide 3: Contents
Contents ▪ Investment Update ▪ Asset Management Update ▪ MG&A Update ▪ Financial Analysis ▪ Capital Markets Discussion 3
Slide 4: Investment Update
4 Investment Update
Slide 5: Target Markets
Target Markets Acquire primarily office and industrial properties in “Target Markets” with strong demographic, economic growth and high quality infrastructure 5 Investment Update Target Markets • Atlanta • Austin • Baltimore/DC • Central PA • Charlotte • Chicago • Cincinnati • Dallas • Denver • Hous
Slide 6: Gramercy Transaction Capability
Gramercy Transaction Capability Capability » Invested in 132 properties 1 since new management team began in July 2012 » Sold 93 properties totaling $408 million in 2012 2 Experience » 20+ years average real estate experience among top executives » Led by Gordon DuGan – 25 years of experience Former
Slide 7: Investment Portfolio
Investment Portfolio 7 Investment Update GAAP GAAP Investment Location MSA Major Tenants Property Type Sq. Ft./Doors Purchase Price Occupancy Cap Rate NOI Office Portfolio 1 Philips Electronics (25%) Somerset, NJ New York/New Jersey Philips Electronics Class A Office 49,975 12,562,500$ 100% 7.2% 907
Slide 8: Portfolio Characteristics
Portfolio Characteristics ▪ $32.7 million of real estate GAAP NOI ▪ $467 million real estate value @ 7% cap ▪ $151.1 million of mortgage financing ▪ 99% occupancy ▪ 11.9 - year average lease term ▪ 0.6% lease rollover in the next 4 years ▪ 57% investment grade 1 tenancy ▪ 1.58 million sq. ft. office
Slide 9: Investments
Investments Investment Update GPT Owned BOA Joint Venture 9
Slide 10: Portfolio Characteristics
Portfolio Characteristics 10 Investment Update Office 28% Bank Branch 18% Bulk Warehouse / Assembly 16% Warehouse - Freezer/Cooler 10% Specialty 18% Cross - Dock Truck Terminal 10% Portfolio by Property Type Bank of America 48% KAR Auction Services 19% Preferred Freezer 8% Five Below 6% YRC Freight
Slide 11: Lease Expirations
Lease Expirations* $8 $58 $10 $112 $26 $602 $2,825 $617 $2,065 $20,626 $- $2,500 $5,000 $7,500 $10,000 $12,500 $15,000 $17,500 $20,000 $22,500 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Amount in Thousands) Lease Expirations by Projected Annual Rent 11 Investment Update * Adjusted for G
Slide 12: Office Portfolio
Office Portfolio* ▪ $91.8 million purchase price ▪ 3 assets, totaling approximately 940,000 sq. ft. ▪ $9.2 million NOI (GAAP) ▪ 9.7 - year average lease term ▪ $9.28 average net rent/sq. ft. ▪ MSA’s: Jacksonville, Phoenix , New York/New Jersey ▪ Tenants: Bank of America (95%) and Philips Electronics
Slide 13: Bank of America Joint Venture
Bank of America Joint Venture $583 million $485 million $280 million 98% leased 10% cap rate Promote > $10 million $40 million equity $100 million debt $14 million NOI $10 million net cash flow $205 million 62% leased 90% sold 13 Investment Update 20 - year lease 100% leased 11 - year 81% leased 8.1
Slide 14: Bank Branch Portfolio
Bank Branch Portfolio* ▪ $63.3 million purchase price ▪ 54 assets, totaling approximately 645,000 sq. ft. ▪ $6.0 million NOI (GAAP) ▪ 8.4 - year average lease term ▪ MSA’s: California Branch Portfolio, Florida Branch Portfolio, Western Branch Portfolio, Other Branch Portfolio ▪ Tenants: Bank of Amer
Slide 15: Warehouse Portfolio
Warehouse Portfolio Bulk Warehouse/Assembly ▪ $66.7 million purchase price ▪ 5 assets, totaling approximately 1,550,000 sq. ft. ▪ $5.2 million NOI (GAAP) ▪ 11.6 - year average lease term ▪ MSA’s: Dallas/Ft. Worth , Indianapolis, Memphis, Philadelphia ▪ Tenants: Nestlé Waters, Five Below, Apex Tools,
Slide 16: Warehouse Portfolio
Warehouse Portfolio 16 Investment Update Logan Township, NJ Olive Branch, MS Indianapolis Industrial, IN Indianapolis Industrial, IN Garland, TX Hialeah, FL
Slide 17: Cross-Dock Truck Terminal Portfolio
Cross - Dock Truck Terminal Portfolio ▪ $41.3 million purchase price ▪ 6 assets, totaling 655 doors ▪ $3.4 million NOI (GAAP) ▪ 6.2 - year average lease term ▪ MSA’s: Atlanta, Baltimore/Washington DC, Houston, New York/New Jersey, Orlando ▪ Tenants: YRC Freight, Con - Way, FedEx, New Penn 17 Truck T
Slide 18: Specialty Assets
Specialty Assets ▪ $58.5 million purchase price ▪ One automotive auction facility ▪ 175 acres / 196,400 building sq. ft. / 15,000 parking spaces ▪ $5.7 million NOI (GAAP) ▪ 16 - year lease term ▪ MSA: Dallas/Ft. Worth ▪ Tenant: 100% occupied by KAR Auction Service 18 Investment Update Hutchins, TX
Slide 19: Asset Management Update
Asset Management Update 419
Slide 20: Current Status
Current Status ▪ 4 clients – KBS, Garrison Investment and two others KBS » Relationship strong, $9 million of asset management fees plus property management » KBS promote – updated value of $12 million (maximum amount) Garrison Investment » Asset Management service tied to life of Joint Venture, exp
Slide 21: Results
Results 21 Asset Management (Amount in Thousands) 1Q 13 2Q 13 Revenue Asset Management Revenue 3,298$ 3,285$ Property Management Revenue 5,018 5,184 TOTAL REVENUES 8,315$ 8,469$ Expenses TOTAL EXPENSES 6,850$ 6,022$ Net Contribution (Pre-Tax) 1,465$ 2,447$
Slide 22: Assets Under Management
Assets Under Management 22 Asset Management KBS 433 Garrison 88 Client III 40 Client IV 30 Total Properties 561 Number of Properties Under Management 6/30/2013
Slide 23: Management, General & Administrative (MG&A)
23 Management, General & Administrative (MG&A)
Slide 24: MG&A
MG&A 24 MG&A $25.4 million 2012 Full Year (GAAP) Q2 2013 Annualized $13.1 million Asset Management and Other MG&A $10.5 million Audit $1.1 million Insurance $0.4 million Legal $0.3 million Corporate MG&A
Slide 25: Significant Progress
Significant Progress 25 MG&A Personnel Reduction 6/30/12 7/30/13 Corporate/Investments 34 people 21 people Asset Management 81 people 59 people Totals 115 people 80 people 2012 2013 Audit Fees $1.80 $0.65 D&O Insurance 1 $1.29 $0.88 Corporate Legal $0.75 $0.45 Totals $3.84 $1.98 Amount in Millions 1
Slide 26: Financial Analysis
26 Financial Analysis
Slide 27: Business Dashboard/Contribution Analysis
Business Dashboard/Contribution Analysis 27 Financial Analysis (Amounts in thousands) Q1 2013 Q2 2013 Revenue Net Lease/Corporate NOI 4,609$ 5,735$ Asset Management 8,315 8,469 1 Total Revenue 12,924$ 14,204$ Expenses Net Lease/Corporate (MG&A and Interest) 4,962$ 4,652$ Asset Management 6,683 6,021
Slide 28: FFO & AFFO
FFO & AFFO 28 Financial Analysis (Unaudited, dollar amounts in thousands, except per share data) For the Three Months Ended June 30, 2013 June 30, 2012 Net income (loss) available to common shareholders (6,684)$ (21,501)$ Add: Depreciation and amortization 919 1,482 FFO adjustments for unconsolidate
Slide 29: CDO Equity
CDO Equity CDO Equity Initial Deal Size Initial Equity % Leverage Rate CDO 2005 - 1 $1,000 $189.5 19% 4.3 x CDO 2006 - 1 $1,000 $96.3 10% 9.4x CDO 2007 - 1 $1,000 $54.5 5% 19.2x 29 Financial Analysis Base Case Equity Recovery Base Case Equity & Recovery Plus 5% Asset Recovery Minus 5% Asset Recovery
Slide 30: Capitalization – GAAP
Capitalization – GAAP 30 Financial Analysis (Amount in thousands) Balance Sheet (GAAP) - 7/29/13 Real Estate Owned 252,700$ Debt - Fixed Cash 55,500$ Indianapolis 14,500$ CDO Advances and KBS Promote 17,700$ KAR/Adesa 32,300$ CDO Equity 7,600$ Preferred Freezer 4,800$ 333,500$ Preferred Accrued Divi
Slide 31: Capitalization – Market Value & Combined
Capitalization – Market Value & Combined 31 Financial Analysis Value of KBS Contract Value of Garrison Contract/Promote Value of Other AM Contracts (Amount in thousands) Balance Sheet (Combined at Market, as of 7/29/13) Real Estate Owned @ 7% 467,000$ Debt - Fixed Cash 55,500$ Philips 10,250$ CDO Ad
Slide 32: Capacity Analysis
Capacity Analysis 32 Financial Analysis * Includes Preferred Freezer BTS (Amounts in thousands) Acquisition Capacity (7/29/2013) Cash 55,500$ Borrowing Capacity (Today) 56,000$ Borrowing Capacity - Preferred Freezer BTS (Q2 2014) 15,000$ CDO Advances 9,900$ Asset Sales 10,600$ 147,000$ Preferred Acc
Slide 33: Capital Markets
33 Capital Markets
Slide 34: Net Lease Environment
Net Lease Environment ▪ Net Lease REIT’s continue to trade at very favorable valuations even after recent rate moves 34 Capital Markets (As of July 29, 2013) Company Ticker Stock Price Total Market Cap (1) Dividend Yield Price/FFO (2) Price/Proj. FFO (3) Est. Price/NAV Realty Income O $44.49 $13.4Bn
Slide 35: Top Equity REIT Stocks
Top 25 Equity REIT Stocks Price App. Div. Total Return 1.Gramercy Property Trust Inc 62.9% 0.0% 62.9% 2.CapLease Inc 52.1% 3.3% 55.4% 3.CommonWealth REIT 43.8% 5.5% 49.3% 4.Omega Healthcare Investors Inc 35.9% 6.4% 42.3% 5.Strategic Hotels & Resorts Inc 37.5% 0.0% 37.5% 6.WP Carey Inc 34.0% 3.3% 37.
Slide 36: Business Plan – 2013-2015
Business Plan – 2013 - 2015 ▪ Sell CDOs ▪ Invest cash to create recurring cash flow ▪ Maximize Gramercy Asset Management profit center ▪ Significantly reduce MG&A ▪ Streamline business, simplify story ▪ Grow equity base ▪ Create durable, growing dividends 36 x x x x x x x x x x x
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