Gramercy Capital Corp., a newly formed specialty finance company, plans to use securitization as a source of funding, according to an S-11 filing with the Securities and Exchange Commission for the sale of $200 million in common stock. Gramercy specifically names collateralized debt obligations as a possibility.
Wachovia Securities is acting as sole lead on the IPO. The number of shares and the asking price have yet to be determined.
The nascent finance company will focus on originating and acquiring loans and securities related to commercial and multi-family properties, and plans to buy subordinate interests in whole loans, mezzanine loans and preferred equity interests in entities that own real estate and whole loans, the filing said. The aim is to grow the portfolio through investments that offer attractive risk-adjusted returns as opposed to minimum yields. Gramercy Capital intends to qualify for REIT status.
The company also plans to acquire and originate commercial mortgage-backed securities. Gramercy describes collateralized debt obligations as a means of acquiring and financing loans and other credit-sensitive and high yield debt instruments.
Gramercy Capital Corp. was created by SL Green Realty Corp., a publicly traded REIT that owns, manages, leases, acquires and repositions office properties exclusively in New York City. SL Green's portfolio is comprised of interests in 26 properties adding up to 15.1 million square feet. Since forming its commercial property high yield lending business in 1997, the company has invested $545 million in structured debt, mezzanine loans and preferred equity investments. SL Green, which will own roughly 25% of the common stock outstanding after Gramercy's offering, has established a subsidiary to act as external manger of Gramercy Capital. SL Green's portfolio will not be contributed in connection with the IPO.
Gramercy Capital will use the net proceeds of the IPO to make investments in real estate-related loans and securities and for general corporate purposes. Also, the company plans to reimburse SL Green approximately $2 million for formation expenses.
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