UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2016~~March 31, 2017



¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from . to .

Commission File No. 1-35933

~~GRAMERCY PROPERTY TRUST~~

(Exact name of registrant as specified in its charter)



Maryland		56-2466617
(State or other jurisdiction incorporation or organization)		(I.R.S. Employer of Identification No.)

~~521 5~~90 Park Avenue, 32^th ~~Avenue, 30~~^thnd Floor, New York, NY ~~10175~~10016 (Address of principal executive offices – zip code)

(212) 297-1000 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨
Smaller reporting company ¨
	Emerging growth company ¨	(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The number of shares outstanding of the registrant’s common shares of beneficial interest, $0.01 par value, was ~~421,979,096~~151,873,041 as of ~~November 2, 2016.~~April 28, 2017.

GRAMERCY PROPERTY TRUST

FORM 10-Q

TABLE OF CONTENTS



		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Balance Sheets as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 (unaudited)	1
	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ (unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ (unaudited)	3
	Condensed Consolidated Statement of Equity for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
ITEM 2.	~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6352
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	8672
ITEM 4.	CONTROLS AND PROCEDURES	8975
PART II.	OTHER INFORMATION	9076
ITEM 1.	LEGAL PROCEEDINGS	9076
ITEM 1A.	RISK FACTORS	9277
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	9277
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	9277
ITEM 4.	MINE SAFETY DISCLOSURES	9277
ITEM 5.	OTHER INFORMATION	9277
ITEM 6.	INDEX TO EXHIBITS	9378
SIGNATURES		9479

Gramercy Property Trust

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands, except share and per share data)


PART I.	FINANCIAL INFORMATION


ITEM I.	FINANCIAL STATEMENTS


	September 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Assets:
Real estate investments, at cost:
Land	$	734,058		$	702,557		$	804,044		$	805,264
Building and improvements	3,538,377			3,313,747			4,108,891			4,053,125
Less: accumulated depreciation	(169,103		)	(84,627		)	(235,318		)	(201,525		)
Total real estate investments, net	4,103,332			3,931,677			4,677,617			4,656,864
Cash and cash equivalents	56,352			128,031			56,256			67,529
Restricted cash	171,895			17,354			13,101			12,904
Investment in unconsolidated equity investments	120,176			580,000			105,187			101,807
Servicing advances receivable	—			1,382
Retained CDO bonds	8,439			7,471
Assets held for sale, net	11,009			420,485			8,962			—
Tenant and other receivables, net	69,131			34,234			75,730			72,795
Acquired lease assets, net of accumulated amortization of $123,754 and $54,323	584,856			682,174
Deferred costs, net of accumulated amortization of $3,074 and $892	24,835			13,950
Goodwill	3,141			3,568
Acquired lease assets, net of accumulated amortization of $154,753 and $133,710							596,811			618,680
Other assets	30,064			14,192			73,196			72,948
Total assets	$	5,183,230		$	5,834,518		$	5,606,860		$	5,603,527
Liabilities and Equity:
Liabilities:
Senior unsecured revolving credit facility	$	163,365		$	296,724		$	121,759		$	65,837
Exchangeable senior notes, net	108,186			106,581			109,488			108,832
Mortgage notes payable, net	368,386			530,222			549,924			558,642
Senior unsecured notes, net	148,978			99,124			496,524			496,464
Senior unsecured term loans	1,225,000			1,225,000			1,225,000			1,225,000
Total long-term debt, net	2,013,915			2,257,651			2,502,695			2,454,775
Accounts payable and accrued expenses	48,412			59,808			42,381			58,380
Dividends payable	46,740			8,980			53,677			53,074
Accrued interest payable	5,180			4,546
Deferred revenue	31,343			36,031
Below market lease liabilities, net of accumulated amortization of $27,055 and $17,083	224,643			242,456
Below market lease liabilities, net of accumulated amortization of $28,350 and $26,416							216,401			230,183
Liabilities related to assets held for sale	129			291,364			3,128			—
Derivative instruments, at fair value	28,613			3,442
Other liabilities	10,080			8,271			49,409			46,081
Total liabilities	2,409,055			2,912,549			$	2,867,691		$	2,842,493
Commitments and contingencies
Noncontrolling interest in the Operating Partnership	9,076			10,892			6,129			8,643
Equity:
Common shares, par value $0.01, 421,978,800 and 420,523,153 issued and outstanding at September 30, 2016 and December 31, 2015, respectively.	4,220			4,205
Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference $87,500, 3,500,000 shares authorized, issued and outstanding at September 30, 2016 and December 31, 2015.	84,394			84,394
Common shares, par value $0.01, 141,522,527 and 140,647,971 issued and outstanding at March 31, 2017 and December 31, 2016, respectively							1,415			1,406
Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference $87,500, and 3,500,000 shares authorized, issued and outstanding at March 31, 2017 and December 31, 2016							84,394			84,394
Additional paid-in-capital	3,883,873			3,879,932			3,911,889			3,887,793
Accumulated other comprehensive loss	(38,717		)	(5,751		)	(1,611		)	(4,128		)
Accumulated deficit	(1,168,502		)	(1,051,454		)	(1,262,842		)	(1,216,753		)
Total shareholders' equity	2,765,268			2,911,326			2,733,245			2,752,712
Noncontrolling interest in other partnerships	(169		)	(249		)	(205		)	(321		)
Total equity	2,765,099			2,911,077			$	2,733,040		$	2,752,391
Total liabilities and equity	$	5,183,230		$	5,834,518		$	5,606,860		$	5,603,527

Gramercy Property Trust

Condensed Consolidated Statements of Operations

(Unaudited, amounts in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Revenues
Rental revenue	$	100,847		$	47,235		$	291,459		$	117,990		$	103,282		$	92,095
Third-party management fees	7,172			5,153			30,528			17,571			4,592			5,046
Operating expense reimbursements	21,231			11,237			65,718			29,113			20,368			22,582
Investment income	544			445			1,490			1,208
Other income	1,298			1,143			1,867			1,413			1,752			822
Total revenues	131,092			65,213			391,062			167,295			129,994			120,545
Operating Expenses
Property operating expenses	22,685			11,051			70,364			29,006			23,186			24,169
Property management expenses	4,810			4,780			14,922			14,557			3,084			4,521
Depreciation and amortization	62,863			25,120			181,649			68,534			62,217			58,248
General and administrative expenses	8,165			4,748			23,892			14,299			8,756			7,722
Acquisition and merger-related expenses	1,272			6,547			5,994			13,508
Acquisition expenses													—			410
Total operating expenses	99,795			52,246			296,821			139,904			97,243			95,070
Operating Income	31,297			12,967			94,241			27,391			32,751			25,475
Other Expense:
Other Expenses:
Interest expense	(18,409		)	(9,227		)	(57,271		)	(23,225		)	(23,056		)	(21,953		)
Other-than-temporary impairment													(4,081		)	—
Portion of impairment recognized in other comprehensive loss													(809		)	—
Net impairment recognized in earnings													(4,890		)	—
Equity in net loss of unconsolidated equity investments	(1,138		)	(1,096		)	(4,061		)	(974		)	(94		)	(2,755		)
Gain on dissolution of previously held U.S. unconsolidated equity investment interests	—			—			7,229			—
Loss on extinguishment of debt	(13,777		)	—			(20,890		)	—			(208		)	(5,757		)
Impairment of real estate investments	(1,053		)	—			(1,053		)	—			(12,771		)	—
Income (loss) from continuing operations before provision for taxes	(3,080		)	2,644			18,195			3,192
Loss from continuing operations before provision for taxes													(8,268		)	(4,990		)
Provision for taxes	(331		)	(985		)	(3,734		)	(2,116		)	196			(703		)
Income (loss) from continuing operations	(3,411		)	1,659			14,461			1,076
Income (loss) from discontinued operations	347			(41		)	3,115			17
Loss from continuing operations													(8,072		)	(5,693		)
Income (loss) from discontinued operations before gain on extinguishment of debt													(24		)	2,710
Gain on extinguishment of debt	—			—			1,930			—			—			1,930
Income (loss) from discontinued operations	347			(41		)	5,045			17			(24		)	4,640
Income (loss) before gains on disposals	(3,064		)	1,618			19,506			1,093
Net gains on disposals	2,336			392			2,336			593
Gain on sale of European unconsolidated equity investment interests held with a related party	—			—			5,341			—
Loss before net gain on disposals													(8,096		)	(1,053		)
Net gain on disposals													17,377			—
Net income (loss)	(728		)	2,010			27,183			1,686			9,281			(1,053		)
Net income (loss) attributable to noncontrolling interest	(221		)	(20		)	(152		)	43
Net (income) loss attributable to noncontrolling interest													(154		)	120
Net income (loss) attributable to Gramercy Property Trust	(949		)	1,990			27,031			1,729			9,127			(933		)
Preferred share dividends	(1,559		)	(1,559		)	(4,676		)	(4,676		)	(1,559		)	(1,559		)
Net income (loss) available to common shareholders	$	(2,508	)	$	431		$	22,355		$	(2,947	)	$	7,568		$	(2,492	)
Basic earnings per share:
Net income (loss) from continuing operations, after preferred dividends	$	(0.01	)	$	—		$	0.04		$	(0.02	)	$	0.05		$	(0.05	)
Net income from discontinued operations	—			—			0.01			—
Net income (loss) from discontinued operations													—			0.03
Net income (loss) available to common shareholders	$	(0.01	)	$	—		$	0.05		$	(0.02	)	$	0.05		$	(0.02	)
Diluted earnings per share:
Net income (loss) from continuing operations, after preferred dividends	$	(0.01	)	$	—		$	0.04		$	(0.02	)	$	0.05		$	(0.05	)
Net income from discontinued operations	—			—			0.01			—
Net income (loss) from discontinued operations													—			0.03
Net income (loss) available to common shareholders	$	(0.01	)	$	—		$	0.05		$	(0.02	)	$	0.05		$	(0.02	)
Basic weighted average common shares outstanding	420,772,508			183,945,495			423,542,467			169,781,590			140,907,399			140,060,405
Diluted weighted average common shares and common share equivalents outstanding	420,772,508			187,683,631			427,163,126			169,781,590
Diluted weighted average common shares outstanding													141,875,619			140,060,405

Gramercy Property Trust

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, amounts in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Net income (loss)	$	(728	)	$	2,010		$	27,183		$	1,686		$	9,281		$	(1,053	)
Other comprehensive income (loss):
Unrealized gain on debt securities and derivative instruments:
Unrealized gain (loss) on available for sale debt securities	(1,426		)	368			(459		)	6,129			(2,820		)	934
Unrealized gain (loss) on derivative instruments	7,653			(2,584		)	(25,996		)	(3,248		)	4,378			(22,189		)
Reclassification of accumulated foreign currency translation adjustments due to disposal	—			—			(3,737		)	—
Foreign currency translation adjustments	(1,120		)	(360		)	(3,687		)	(309		)	691			6,119
Reclassification of unrealized loss on terminated derivative instruments into earnings	282			—			913			—			268			360
Other comprehensive income (loss)	5,389			(2,576		)	(32,966		)	2,572			2,517			(14,776		)
Comprehensive income (loss)	4,661			(566		)	(5,783		)	4,258			$	11,798		$	(15,829	)
Net (income) loss attributable to noncontrolling interest	(221		)	(20		)	(152		)	43			(154		)	120
Other comprehensive (income) loss attributable to noncontrolling interest	(13		)	21			102			(32		)	(11		)	48
Comprehensive income (loss) attributable to Gramercy Property Trust	$	4,427		$	(565	)	$	(5,833	)	$	4,269		$	11,633		$	(15,661	)

Gramercy Property Trust

Condensed Consolidated Statements of Shareholders’ Equity (Deficit) and Noncontrolling Interests

(Unaudited, amounts in thousands, except share data)


	Common Shares			Preferred Shares			Additional Paid-In-Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings / (Accumulated Deficit)			Total Gramercy Property Trust				Noncontrolling Interest							Common Shares				Preferred Shares		Additional Paid-In-Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Accumulated Deficit)			Total Gramercy Property Trust			Noncontrolling Interest
	Shares	Par Value								Total				Shares				Total Gramercy Property Trust			Par Value									Total			Preferred Shares		Additional Paid-In-Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings / (Accumulated Deficit)			Total Gramercy Property Trust			Noncontrolling Interest
Balance at December 31, 2015	420,523,153	$	4,205	Preferred Shares		$	Additional Paid-In-Capital		84,394		Accumulated Other Comprehensive Income (Loss)			$	Retained Earnings / (Accumulated Deficit)	3,879,932		$	(5,751	)		Noncontrolling Interest		$	(1,051,454	)		$	2,911,326	$	(249	)	$	2,911,077
Balance at December 31, 2016																													140,647,971	$	1,406		$	84,394	$	3,887,793		$	(4,128	)	$	(1,216,753	)	$	2,752,712		$	(321	)	$	2,752,391
Net income	—	—		—			—				—				27,031			27,031				90				27,121			—	—			—		—			—			9,127			9,127			120			9,247
Change in net unrealized loss on derivative instruments	—	—		—			—				(25,996		)		—			(25,996		)		—				(25,996		)	—	—			—		—			4,378			—			4,378			—			4,378
Change in net unrealized gain on debt securities	—	—		—			—				(459		)		—			(459		)		—				(459		)	—	—			—		—			(2,820		)	—			(2,820		)	—			(2,820		)
Reclassification of unrealized gain of terminated derivative instruments into earnings	—	—		—			—				913				—			913				—				913
Reclassification of unrealized gain on terminated derivative instruments into earnings																													—	—			—		—			268			—			268			—			268
Offering costs	—	—		—			(105		)		—				—			(105		)		—				(105		)	—	—			—		(606		)	—			—			(606		)	—			(606		)
Issuance of shares																													731,453	7			—		19,993			—			—			20,000			—			20,000
Share based compensation - fair value	938,448	10		—			2,466				—				—			2,476				—				2,476			59,311	1			—		2,169			—			—			2,170			—			2,170
Proceeds from share options exercised	47,844	—		—			167				—				—			167				—				167
Dividend reinvestment program proceeds																													2,976	—			—		81			—			—			81			—			81
Conversion of OP Units to common shares	469,355	5		—			4,154				—				—			4,159				—				4,159			80,816	1			—		2,163			—			—			2,164			—			2,164
Reallocation of noncontrolling interest in the Operating Partnership	—	—		—			(2,741		)		—				—			(2,741		)		—				(2,741		)	—	—			—		296			—			—			296			—			296
Reclassification of accumulated foreign currency translation adjustments due to disposal	—	—		—			—				(3,737		)		—			(3,737		)		—				(3,737		)
Foreign currency translation adjustment	—	—		—			—				(3,687		)		—			(3,687		)		(10		)		(3,697		)	—	—			—		—			691			—			691			(4		)	687
Dividends on preferred shares	—	—		—			—				—				(4,676		)	(4,676		)		—				(4,676		)	—	—			—		—			—			(1,559		)	(1,559		)	—			(1,559		)
Dividends on common shares	—	—		—			—				—				(139,403		)	(139,403		)		—				(139,403		)	—	—			—		—			—			(53,657		)	(53,657		)	—			(53,657		)
Balance at September 30, 2016	421,978,800	$	4,220	$	84,394		$	3,883,873			$	(38,717	)		$	(1,168,502	)	$	2,765,268			$	(169	)		$	2,765,099
Balance at March 31, 2017																													141,522,527	$	1,415		$	84,394	$	3,911,889		$	(1,611	)	$	(1,262,842	)	$	2,733,245		$	(205	)	$	2,733,040

Gramercy Property Trust

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2016			2015			2017			2016
Operating Activities:
Net income	$	27,183		$	1,686
Net income (loss)							$	9,281		$	(1,053	)
Adjustments to net cash provided by operating activities:
Depreciation and amortization	181,649			68,534			62,217			58,248
Amortization of acquired leases to rental revenue and expense	(10,332		)	(10,365		)	(633		)	(163		)
Amortization of deferred costs	1,177			2,192			615			2,675
Amortization of discounts and other fees	(3,636		)	(2,069		)	(409		)	(1,109		)
Amortization of lease inducement costs	259			183			86			86
Straight-line rent adjustment	(19,084		)	(8,940		)	(7,260		)	(6,761		)
Other-than-temporary impairment on retained bonds							4,890			—
Non-cash impairment charges	1,053			—			12,771			—
Net gain on sale of properties	(2,336		)	(593		)	(17,377		)	—
Distributions received from unconsolidated equity investments	48,235			309			352			9,961
Equity in net income of unconsolidated equity investments	4,061			974
Gain from dissolution of previously held unconsolidated equity investment interests	(7,229		)	—
Gain from sale of unconsolidated equity investment interests held with a related party	(5,341		)	—
Equity in net loss of unconsolidated equity investments							94			2,755
Loss on extinguishment of debt	18,960			—			208			3,827
Amortization of share-based compensation	3,704			2,628			2,054			1,150
Other non-cash adjustments	23			(49		)
Changes in operating assets and liabilities:
Restricted cash	5,267			(938		)	(235		)	5,598
Payment of capitalized leasing costs	(11,910		)	(3,001		)	(3,790		)	(3,973		)
Tenant and other receivables	(19,890		)	(1,417		)	11,707			(2,151		)
Accrued interest	(8		)	(30		)
Other assets	(16,683		)	11,864			(4,368		)	(10,519		)
Accounts payable, accrued expenses and other liabilities	(16,945		)	1,040
Deferred revenue	(8,438		)	3,993
Accounts payable and accrued expenses							(9,755		)	(33,738		)
Other liabilities							(2,204		)	(3,085		)
Net cash provided by operating activities	169,739			66,001			58,244			21,748
Investing Activities:
Capital expenditures	(18,711		)	(2,362		)	(18,429		)	(6,416		)
Distributions from investing activities received from unconsolidated equity investments	84,588			—			—			47,408
Proceeds from sale of unconsolidated equity interests held with a related party	148,884			—
Proceeds from sale of real estate	860,783			68,779			33,053			416,094
Return of restricted cash held in escrow for 1031 exchange	(157,347		)	—			31			(145,500		)
Contributions to unconsolidated equity investments	(33,632		)	(10,834		)
Unconsolidated equity investments							(2,650		)	(4,790		)
Acquisition of real estate	(540,596		)	(879,551		)	(99,613		)	(52,874		)
Restricted cash for tenant improvements	7,058			(6,908		)	917			198
Proceeds from repayments of servicing advances receivable	1,390			—
Proceeds from servicing advances receivable							—			1,390
Net cash provided by (used in) investing activities	352,417			(830,876		)	(86,691		)	255,510
Financing Activities:
Proceeds from unsecured term loans and revolving credit facility	306,466			685,120
Proceeds from unsecured term loan and credit facility							60,000			75,000
Proceeds from senior unsecured notes	50,000			—			—			50,000
Repayment of unsecured term loans and revolving credit facility	(440,000		)	(315,000		)
Acquisition of treasury bonds for defeasance	(144,063		)	—
Repayment of unsecured term loans and credit facility							(5,000		)	(250,000		)
Proceeds from mortgage notes payable	9,550			—			2,582			9,550
Repayment of mortgage notes payable	(251,266		)	(4,049		)	(3,915		)	(198,189		)
Offering costs	(105		)	(12,121		)	(606		)	—
Proceeds from sale of common stock	—			289,910
Proceeds from sale of common shares							20,081			—
Payment of deferred financing costs	(1,734		)	(4,602		)	(252		)	(551		)
Payment of debt extinguishment costs	(15,868		)	—			—			(13,803		)
Preferred share dividends paid	(4,676		)	(4,676		)	(1,559		)	(1,559		)
Common share dividends paid	(101,804		)	(31,537		)	(53,025		)	(8,736		)
Proceeds from exercise of stock options and employee purchases under the employee share purchase plan	167			54
Contributions from noncontrolling interests in other entities	—			169
Distribution to noncontrolling interest holders	(303		)	(318		)
Proceeds from exercise of share options and purchases under the employee share purchase plan							—			167
Distribution to noncontrolling interest in the Operating Partnership							(118		)	(29		)
Change in restricted cash from financing activities	(62		)	(37		)	(909		)	(12		)
Net cash provided by (used in) financing activities	(593,698		)	602,913			17,279			(338,162		)
Net decrease in cash and cash equivalents	(71,542		)	(161,962		)	(11,168		)	(60,904		)
Decrease in cash and cash equivalents related to foreign currency translation	(137		)	1			(105		)	(3		)
Cash and cash equivalents at beginning of period	128,031			200,069			67,529			128,031
Cash and cash equivalents at end of period	$	56,352		$	38,108		$	56,256		$	67,124

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

1. Business and Organization

Gramercy Property Trust, or the Company or Gramercy, a Maryland real estate investment trust, or REIT, is a leading global investor and asset manager of commercial real estate. Gramercy specializes in acquiring and managing ~~single-tenant, net leased industrial, office, and specialty properties. The Company focuses on~~high quality, income producing ~~properties~~commercial real estate leased to high quality tenants in major markets in the United States and Europe.

Gramercy earns revenues primarily through rental revenues on properties that it owns in the United States and asset management revenues on properties owned by third parties in the United States and Europe. The Company also owns unconsolidated equity investments in the United States, Europe, and Asia.

As of March 31, 2017, the Company’s wholly-owned portfolio consists of 318 properties comprising 66,732,561 rentable square feet with 98.4% occupancy. As of March 31, 2017, the Company has ownership interests in 48 industrial and office properties which are held in unconsolidated equity investments in the United States and Europe and two properties held through the investment in CBRE Strategic Partners Asia. As of March 31, 2017, the Company’s asset management business manages approximately $1,147,000 of commercial real estate assets, primarily on behalf of its joint venture partners, including approximately $918,000 of assets in Europe.

During the three months ended March 31, 2017, the Company acquired seven properties aggregating 2,257,311 square feet for a total purchase price of approximately $124,672, including the acquisition of a previously consolidated variable interest entity, or VIE, for $29,605 and the acquisition of a vacant property for $2,400. During the three months ended March 31, 2017, the Company sold seven properties aggregating 487,872 square feet for total gross proceeds of approximately $51,683.

Prior to December 17, 2015, the Company was known as Chambers Street Properties, or Chambers. On December 17, 2015, Chambers ~~Street Properties, or Chambers, a Maryland REIT,~~ completed a merger, or the Merger, with Gramercy Property Trust Inc.~~, or Legacy Gramercy, a Maryland corporation, pursuant to which Legacy Gramercy stockholders received 3.1898 common shares~~ While Chambers was the surviving legal entity, immediately following consummation of ~~beneficial interest of Chambers for each share of common stock of Legacy Gramercy held. Following~~ the Merger, ~~Chambers~~the Company changed its name to “Gramercy Property Trust” and ~~began trading on the~~its New York Stock Exchange, or NYSE, ~~using the “GPT” stock symbol.~~

~~In the Merger, Chambers was the legal acquirer and Legacy Gramercy was the accounting acquirer for financial reporting purposes. Thus, the financial information set forth herein subsequent~~trading symbol to the close of the Merger on December 17, 2015 reflects results of the combined company, and financial information prior to the close of the Merger reflects Legacy Gramercy results. For this reason, period to period comparisons may not be meaningful. Refer to Note 4 for additional information on the Merger.

~~Unless the context requires otherwise, all references to “Company,~~“GPT.” “Gramercy,” “we,” “our,” and “us” mean Legacy Gramercy and one or more of its subsidiaries for the periods prior to the Merger closing and Gramercy Property Trust and one or more of its subsidiaries for periods following the Merger closing.

As of September 30, 2016, the Company’s wholly-owned portfolio consists of 295 properties comprising 53,306,568 rentable square feet with 98.5% occupancy. As of September 30, 2016, the Company has ownership interests in 46 industrial and office properties with 97.6% occupancy, which are held in unconsolidated equity investments.

As of September 30, 2016, the Company’s asset management business, which operates under the name Gramercy Asset Management, manages for third parties approximately $1,200,000 of commercial real estate assets, including approximately $871,000 of assets in Europe.

In August 2016, the Company and TPG Real Estate, or TPG, partnered to form Strategic Office Partners, an unconsolidated equity investment that will invest in single-tenant office properties in the United States. The Company contributed six properties to Strategic Office Partners valued at $187,500 and, in exchange, the Company received cash proceeds of $140,625, equivalent to TPG’s 75.0% interest in the venture, plus a 25.0% interest in Strategic Office Partners valued at $46,608. Concurrently with the initial funding of Strategic Office Partners, the Company received a distribution of $30,581 representing its pro rata share of loan proceeds, resulting in an initial equity investment of $16,027.

During the three months ended September 30, 2016, the Company acquired 16 properties aggregating 2,795,476 square feet for a total purchase price of approximately $237,432. During the nine months ended September 30, 2016, the Company acquired 48 properties aggregating 11,464,734 square feet for a total purchase price of approximately $862,341. Additionally, on June 30, 2016, the Company received 100.0% ownership of seven properties previously held in its joint venture with Duke Realty Corporation through a distribution of real estate assets by the joint venture, which had an aggregate 4,189,630 square feet and total fair value of $276,100.

During the three months ended September 30, 2016, the Company sold ten properties aggregating 2,435,130 square feet for total gross proceeds of approximately $394,241. During the nine months ended September 30, 2016, the Company sold 20 properties aggregating 5,070,129 square feet for total gross proceeds of approximately $1,041,941. Of the properties sold during the three months ended September 30, 2016, six properties comprising an aggregate 980,825 square feet and with total value of $187,500 were contributed to Strategic Office Partners. Additionally, on June 30, 2016, the Company sold 74.9% of its 80.0% interest in its European joint venture with the Goodman Group to its unconsolidated equity investment in Europe, Gramercy Property Europe plc, or the Gramercy European Property Fund, for gross proceeds of $148,884 (€134,336).

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, or IRC, and generally will not be subject to U.S. federal income taxes to the extent it distributes its taxable income, if any, to its shareholders. The Company has in the past established, and may in the future establish taxable REIT subsidiaries, or TRSs, to effect various taxable transactions. Those TRSs would incur U.S. federal, state and local taxes on the taxable income from their activities.

The Company’s operating partnership, GPT Operating Partnership LP, or the Operating Partnership, indirectly owns (i) all of the Company’s consolidated real estate investments, (ii) the Company’s interests in unconsolidated equity investments and (iii) the entities, primarily a TRS, that conduct the Company’s third-party asset management operations. The Company is the sole general partner of the Operating Partnership. In April 2016, the common units of limited partnership interest in Legacy Gramercy’s operating partnership were exchanged for common units of limited partnership interest in GPT Operating Partnership LP, or OP Units, and the Company’s partnership agreement was amended and restated to reflect the exchange, or the Fourth Amended and Restated Partnership Agreement. The Operating Partnership is the 100.0% owner of all of its direct and indirect ~~subsidiaries, except that, as~~subsidiaries. As of ~~September 30, 2016,~~March 31, 2017, third-party holders of limited partnership interests in the Operating Partnership owned approximately ~~0.22%~~0.40% of the beneficial interest of the Company. These interests are referred to as the noncontrolling interests in the Operating Partnership. See Note 12 for more information on the Company’s noncontrolling interests.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

2. Significant Accounting Policies

Basis of Quarterly Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The ~~2016~~2017 operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2016.~~2017. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. The Condensed Consolidated Balance Sheet at December 31, ~~2015 has been~~2016 was derived from the audited Consolidated Financial Statements at that date.

Reclassifications

Certain prior year ~~amounts~~balances have been reclassified to conform towith the current year presentation. During the first quarter of 2016, the Company adopted ASU 2015-03, Simplifying the Presentation of Debt Issuances Costs, which requires the Company to reclassify debt financing costs, which were previously accounted forThese reclassifications had no effect on the deferred costs line within the asset section, and present them in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, with the exception of deferred financing costs associated with the credit facility which remain in deferred costs in the asset section onpreviously reported net income (loss). On the Condensed Consolidated ~~Balance Sheets. Deferred financing costs totaling $6,389 have been~~Statements of Operations, the Company reclassified ininvestment income of $443 for the ~~December~~three months ended March 31, 2015 Condensed Consolidated Balance Sheet from the deferred costs line and netted against the corresponding debt liability. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance for deferred financing costs.2016 into other income.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the Company’s accounts and those of the Company’s subsidiaries which are wholly-owned or controlled by the Company, or entities which are ~~variable interest entities, or~~ VIEs in which the Company is the primary beneficiary. The primary beneficiary is the party that absorbs a majority of the VIE’s anticipated losses and/or a majority of the expected returns. The Company has evaluated its investments for potential classification as variable interests by evaluating the sufficiency of each entity’s equity investment at risk to absorb losses.

Entities which the Company does not control and are considered VIEs, but where the Company is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated. The equity interests of other limited partners in the Company’s Operating Partnership are reflected as noncontrolling interests.

Real Estate Investments

Real Estate Acquisitions

In January 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-01, Amendments to Business Combinations, which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. Although the Company is not required to implement ASU 2017-01 until annual periods beginning after December 15, 2017, including interim periods within those periods, the Company early adopted the new standard in the

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~Real Estate Investments~~first quarter of 2017. As a result, the Company evaluated its real estate acquisitions during the first quarter of 2017 under the new framework and determined the properties acquired did not meet the definition of a business, thus the transactions were accounted for as asset acquisitions. Refer to the "Recently Issued Accounting Pronouncements" section below for more information on the new guidance and refer to Note 4 for more information on the transactions during the first quarter of 2017.

The Company ~~records~~evaluates its acquisitions of real estate, including equity interests in entities that predominantly hold real estate assets, to determine if the acquired assets meet the definition of a business and need to be accounted for as a business combination, or alternatively, should be accounted for as an asset acquisition. An integrated set of assets and activities acquired does not meet the definition of a business if either (i) substantially all the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets, or (ii) the asset and activities acquired do not contain at least an input and a substantive process that together significantly contribute to the ability to create outputs. The Company expects that its acquisitions of real estate will continue to not meet the revised definition of a business.

Acquisitions of real estate that do not meet the definition of a business, including sale-leaseback transactions that have newly-originated leases and real estate investments under construction, or build-to-suit investments, are recorded as asset acquisitions. The accounting for asset acquisitions is similar to the accounting for business combinations, ~~when~~except that the acquisition consideration, including acquisition costs, is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. Based on this allocation methodology, asset acquisitions do not result in the recognition of goodwill or a bargain purchase. Additionally, for build-to-suit investments in which the Company may engage a developer to construct a property or provide funds to a tenant to develop a property, the Company capitalizes the funds provided to the developer/tenant and real estate ~~is occupied, at least~~taxes, if applicable, during the construction period.

To determine the fair value of assets acquired and liabilities assumed in ~~part, at acquisition. Costs directly related to the~~an acquisition, ~~of such investments are expensed as incurred. The Company allocates the purchase price of real estate to~~which generally include land, building, improvements, and intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases at the acquisition ~~date. The values~~date, the Company utilizes various estimates, processes and information to determine the as-if-vacant property value. Estimates of ~~the above-~~value are made using customary methods, including data from appraisals, comparable sales, and below-market leases are amortized and recorded as either an increase, in the case of below-market leases, or a decrease, in the case of above-market leases, to rental revenue over the remaining term of the associated lease. The values associated with in-place leases are amortized to depreciation and amortization expense over the remaining term of the associated lease.

~~The Company assesses the fair value of the leases at acquisition based upon estimated~~discounted cash flow ~~projections that utilize appropriate discount rates and available market information.~~analyses. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. ~~Additionally, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase at the time of acquisition.~~

Acquired real estate investments involving sale-leasebacks that have newly-originated leases are recorded as asset acquisitions and accordingly, transaction costs incurred in connection with the acquisition are capitalized. Acquired real estate investments which are under construction are considered build-to-suit transactions and other acquired real estate investments that do not meet the definition of a business combination are recorded at cost. In build-to-suit transactions, the Company engages a developer to construct a property or provides funds to a tenant to develop a property. The Company ~~capitalizes~~assesses the ~~funds provided~~fair value of leases assumed at acquisition based upon estimated cash flow projections that utilize appropriate discount rates and available market information. Refer to the ~~developer/tenant~~policy section "Intangible Assets and ~~real estate taxes, if applicable, during~~Liabilities" for more information on the ~~construction period.~~Company’s accounting for intangibles.

~~Certain improvements are capitalized when they are determined to increase the useful life of the building.~~ Depreciation is computed using the straight-line method over the shorter of the estimated useful life at acquisition of the capitalized item or 40 years for buildings, five to ten years for building equipment and fixtures, and the lesser of the useful life or the remaining lease term for tenant improvements and leasehold interests. Maintenance and repair expenditures are charged to expense as incurred.

For transactions that qualify as business combinations, the Company recognizes the assets acquired and liabilities assumed at fair value, including the value of intangible assets and liabilities, and any excess or deficit of the consideration transferred relative to the fair value of the net assets acquired is recorded as goodwill or a bargain purchase gain, as appropriate. Acquisition costs of business combinations are expensed as incurred.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

Capital Improvements

In leasing space, the Company may provide funding to the lessee through a tenant allowance. Certain improvements are capitalized when they are determined to increase the useful life of the building. During construction of qualifying projects, the Company capitalizes project management fees as permitted to be charged under the lease, if incremental and identifiable. In accounting for tenant allowances, the Company determines whether the allowance represents funding for the construction of leasehold improvements and evaluates the ownership of such improvements. If the Company is considered the owner of the leasehold improvements, ~~constructed using a tenant allowance,~~ the Company capitalizes the amount of the tenant allowance and depreciates it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or ifin the event the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Factors considered during this evaluation usually include (i) who holds legal title to the improvements, (ii) evidentiary requirements concerning the spending of the tenant allowance, and (iii) other controlling rights provided by the lease agreement (e.g. unilateral control of the tenant space during the build-out process). Determination of the accounting for a tenant allowance is made on a case-by-case basis, considering the facts and circumstances of the individual tenant lease.

Impairments

The Company reviews the recoverability of a property’s carrying value when circumstances indicate a possible impairment inof the value of a property, such as an adverse change in future expected occupancy or a significant decrease in the market price of an asset. The review of recoverability is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as changes in strategy resulting in an increased or decreased holding period, expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If management determines impairment exists due to the inability to recover the carrying value of a property, for properties to be held and used, an impairment loss is recorded ~~in the Condensed Consolidated Statements of Operations~~ to the extent that the carrying value exceeds the estimated fair value of the property ~~for properties to be held and used~~ and for assets held for sale, an impairment loss is recorded to the extent that the carrying value exceeds the fair value less estimated cost of disposal. These assessments are recorded as an impairment loss in the Condensed Consolidated Statements of Operations in the period the determination is made. The estimated fair value of the asset becomes its new cost ~~basis and if the~~basis. For a depreciable long-lived asset is to be held and used, the new cost basis will be depreciated or amortized over ~~its~~the remaining useful ~~life.~~

~~Intangible Assets and Liabilities~~

~~The Company follows the acquisition method~~life of accounting for business combinations. The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings and improvements on an as-if vacant basis and identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates, the value of in-place leases, and above-market and below-market ground rent intangibles.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The above- and below-market lease values are amortized as a reduction of and increase to rental revenue, respectively, over the remaining non-cancelable terms of the respective leases. The value of in-place leases is amortized to depreciation and amortization expense over the remaining non-cancelable term of the respective leases. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, the Company amortizes such below-market lease value into rental revenue over the renewal period. If a tenant terminates its lease prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the market lease intangibles will be written off to rental revenue and any unamortized balance of the in-place lease intangibles will be written off to depreciation and amortization expense. The above- and below-market ground rent intangible values are amortized as a reduction of and increase to rent expense, respectively, over the remaining non-cancelable terms of the respective leases. If the Company terminates its lease prior to its contractual expiration and no future rent payments will be paid, any unamortized balance of the ground rent intangibles will be written off to rent expense.

~~Intangible assets and liabilities consist of the following:~~

September 30, 2016 December 31, 2015
Intangible assets:

In-place leases, net of accumulated amortization of $108,993 and $49,125 $ 514,659
$ 644,540
Above-market leases, net of accumulated amortization of $14,519 and $5,051 65,663
94,202
Below-market ground rent, net of accumulated amortization of $242 and $147 5,141
5,236
Amounts related to assets held for sale, net of accumulated amortization of $0 (607 ) (61,804 )
Total intangible assets $ 584,856
$ 682,174
Intangible liabilities:
Below-market leases, net of accumulated amortization of $26,836 and $16,934 $ 221,191
$ 255,452
Above-market ground rent, net of accumulated amortization of $219 and $149 3,452
3,522
Amounts related to liabilities of assets held for sale, net of accumulated amortization of $0 —
(16,518 )
Total intangible liabilities $ 224,643
$ 242,456

~~The following table provides the weighted-average amortization period as of September 30, 2016 for intangible assets and liabilities and the projected amortization expense for the next five years.~~

Weighted-Average Amortization Period October 1 to December 31, 2016 2017 2018 2019 2020
In-place leases 10.1 $ 22,804
$ 80,438
$ 72,120
$ 61,496
$ 50,429
Total to be included in depreciation and amortization expense
$ 22,804
$ 80,438
$ 72,120
$ 61,496
$ 50,429

Above-market lease assets 7.8 $ 3,434
$ 11,807
$ 10,653
$ 9,522
$ 7,402
Below-market lease liabilities 20.2 (3,853 ) (12,455 ) (12,328 ) (12,160 ) (11,930 )
Total to be included in rental revenue
$ (419 ) $ (648 ) $ (1,675 ) $ (2,638 ) $ (4,528 )

Below-market ground rent 41.6 $ 32
$ 127
$ 127
$ 127
$ 127
Above-market ground rent 36.8 (23 ) (94 ) (94 ) (94 ) (94 )
Total to be included in property operating expense
$ 9
$ 33
$ 33
$ 33
$ 33

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The Company recorded $29,670 and $9,808 of amortization of in-place lease intangible assets as part of depreciation and amortization for the three months ended September 30, 2016 and 2015, respectively. The Company recorded $86,845 and $27,947 of amortization of in-place lease intangible assets as part of depreciation and amortization for the nine months ended September 30, 2016 and 2015, respectively. The Company recorded $4,578 and $4,309 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the three months ended September 30, 2016 and 2015, respectively. The Company recorded $10,388 and $10,359 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the nine months ended September 30, 2016 and 2015, respectively. The Company recorded $8 and $(1) of amortization of ground rent intangible assets and liabilities as part of other property operating expense for the three months ended September 30, 2016 and 2015, respectively. The Company recorded $25 and $(41) of amortization of ground rent intangible assets and liabilities as part of other property operating expense for the nine months ended September 30, 2016 and 2015, respectively.

~~Goodwill~~

Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. The Company initially recognized goodwill of $3,887 related to the acquisition of Gramercy Europe Limited, or Gramercy Europe Asset Management, however during the second quarter of 2015, as a result of finalization of the purchase price allocation for the acquisition, the Company decreased the amount allocated to goodwill by $85 and thus the final purchase price allocation to goodwill as a result of the acquisition was $3,802. The adjustment to goodwill for the finalized purchase price was primarily related to a reduction in the contract intangible value as well as an increase in the accrued income recorded for incentive fees. The carrying value of goodwill is adjusted each reporting period for the effect of foreign currency translation adjustments. The carrying value of goodwill at September 30, 2016 and December 31, 2015 was $3,141 and $3,568, respectively. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company did not record any impairment on its goodwill during the nine months ended September 30, 2016 or 2015.

~~Unconsolidated Equity Investments~~

The Company accounts for substantially all of its unconsolidated equity investments under the equity method of accounting since it exercises significant influence, but does not unilaterally control the entities, and is not considered to be the primary beneficiary.In unconsolidated equity investments, the rights of the other investors are protective and participating. Unless the Company is determined to be the primary beneficiary, these rights preclude it from consolidating the investments. The investments are recorded initially at cost as unconsolidated equity investments, as applicable, and subsequently are adjusted for equity interest in net income (loss) and cash contributions and distributions. The amount of the investments on the Condensed Consolidated Balance Sheets is evaluated for impairment at each reporting period. None of the unconsolidated equity investment debt is recourse to the Company. Transactions with unconsolidated equity method entities are eliminated to the extent of the Company’s ownership in each such entity. Accordingly, the Company’s share of net income (loss) of these equity method entities is included in consolidated net income (loss).

The Company’s 5.07% unconsolidated equity investment in CBRE Strategic Partners Asia, described more in Note 5, is presented in the Condensed Consolidated Financial Statements at fair value. CBRE Strategic Partners Asia is an investment company that accounts for its investments at fair value with changes in the fair value of the investments recorded in the statement of operations. See the “Fair Value Measurements” section of this Note 2 as well as Note 9, “Fair Value Measurements,” for further discussion of the fair value accounting methodology used for CBRE Strategic Partners Asia.

~~Carrying values of the Company’s unconsolidated equity investments were $120,176 and $580,000 at September 30, 2016 and December 31, 2015, respectively.~~asset.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Restricted Cash

The Company had restricted cash of ~~$171,895~~$13,101 and ~~$17,354~~$12,904 at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively, which primarily ~~consists~~consisted of ~~proceeds from property sales held by qualified intermediaries to be used for tax-deferred, like-kind exchanges under IRC Section 1031, as well as~~ reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations.

~~Variable Interest Entities~~

During the first quarter of 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis, which modified the analysis it must perform to determine whether it should consolidate certain types of legal entities. Under the revised guidance, the Company’s operating partnerships, including both GPT Operating Partnership, or the Operating Partnership, and Gramercy Operating Partnership, which is Legacy Gramercy’s operating partnership, were determined to be VIEs, for which the Company was the primary beneficiary due to its majority ownership and ability to exercise control over every aspect of the partnerships’ operations. Because the operating partnerships were already consolidated in the Company’s balance sheets, the revised guidance had no impact on the Company’s Consolidated Financial Statements. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption. In addition, there were no voting interest entities under prior existing guidance that were determined to be VIEs under the revised guidance. Following the adoption of the Company’s Fourth Amended and Restated Partnership Agreement, which was effective in April 2016, the Company’s Operating Partnership became its active operating partnership entity and Legacy Gramercy’s operating partnership became a disregarded entity. The assets and liabilities of the Company and its Operating Partnership are substantially the same, as the Company does not have any significant assets other than its investments in the Operating Partnership. All of the Company's debt is also an obligation of the Operating Partnership.

The Company had three consolidated VIEs as of September 30, 2016 and two consolidated VIEs as of December 31, 2015. The Company had four unconsolidated VIEs as of September 30, 2016 and December 31, 2015. The following is a summary of the Company’s involvement with VIEs as of September 30, 2016:

Company carrying value-assets Company carrying value-liabilities Face value of assets held by the VIEs Face value of liabilities issued by the VIEs
Assets

Consolidated VIEs
Operating Partnership $ 5,183,230
$ 2,409,055
$ 5,183,230
$ 2,409,055
Proportion Foods $ 16,850
$ 4,494
$ 16,850
$ 17,343
Gramercy Europe Asset Management (European Fund Manager) $ 1,028
$ 13
$ 1,028
$ 1,366
Unconsolidated VIEs
Gramercy Europe Asset Management (European Fund Carry Co.) $ —
$ —
$ 37
$ —
Retained CDO Bonds $ 8,439
$ —
$ 1,022,686
$ 1,117,564

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Variable Interest Entities

The Company had two and three consolidated VIEs as of March 31, 2017 and December 31, 2016, respectively. The Company had four unconsolidated VIEs as of March 31, 2017 and December 31, 2016. The following is a summary of the Company’s involvement with VIEs as of March 31, 2017:



	Company carrying value-assets		Company carrying value-liabilities		Face value of assets held by the VIEs		Face value of liabilities issued by the VIEs
Consolidated VIEs:
Operating Partnership	$	5,606,860	$	2,867,691	$	5,606,860	$	2,867,691
Gramercy Europe Asset Management (European Fund Manager)	$	1,062	$	9	$	1,062	$	1,473
Unconsolidated VIEs:
Gramercy Europe Asset Management (European Fund Carry Co.)	$	7	$	—	$	28	$	—
Retained CDO Bonds	$	4,828	$	—	$	446,451	$	577,169

The following is a summary of the Company’s involvement with VIEs as of December 31, ~~2015:~~2016:


	Company carrying value-assets		Company carrying value-liabilities		Face value of assets held by the VIEs		Face value of liabilities issued by the VIEs		Company carrying value-assets		Company carrying value-liabilities		Face value of assets held by the VIEs		Face value of liabilities issued by the VIEs
Assets
Consolidated VIEs
Consolidated VIEs:
Operating Partnership									$	5,603,527	$	2,842,493	$	5,603,527	$	2,842,493
Proportion Foods	$	7,949	$	16	$	7,949	$	8,183	$	22,836	$	3,041	$	22,836	$	23,514
Gramercy Europe Asset Management (European Fund Manager)	$	334	$	832	$	334	$	832	$	1,100	$	47	$	1,100	$	1,742
Unconsolidated VIEs
Unconsolidated VIEs:
Gramercy Europe Asset Management (European Fund Carry Co.)	$	—	$	—	$	11	$	16	$	8	$	—	$	31	$	—
Retained CDO Bonds	$	7,471	$	—	$	1,382,373	$	1,282,583	$	11,906	$	—	$	391,990	$	592,414

~~Consolidated~~Consolidated VIEs

~~Proportion Foods~~Operating Partnership

~~In December 2015,~~The Company’s Operating Partnership is a consolidated VIE because the Company ~~entered into a non-recourse financing arrangement with Big Proportion Austin LLC, or BIG, for a build-to-suit industrial property in Round Rock, Texas. Concurrently,~~is its primary beneficiary due to its majority ownership and ability to exercise control over every aspect of the Operating Partnership’s operations. The assets and liabilities of the Company entered into a forward purchase agreement with BIG, pursuant to which the Company will acquire the property, which is 100.0% leased to Proportion Foods, or Proportion Foods, upon substantial completion of the facility’s development. The Company has determined that Proportion Foods is a VIE, as the equity holders of the entity do not have controlling financial interests and the obligation to absorb losses. The Company controls the activities that most significantly affect the economic outcome of Proportion Foods through its financing arrangement to fund the property’s development and its ~~forward purchase agreement with BIG. As such,~~Operating Partnership are substantially the Company has concluded that it is the entity’s primary beneficiary and has consolidated the VIE. The Company has a note receivable from BIG related to the financing arrangement, which is a note payable for BIG and thus eliminates upon consolidation of the VIE.

The construction of the facility on the property is expected to be completed in December 2016 and the Company has committed $24,950 in financing for the construction. BIG is responsible for funding in excess of the $24,950 mortgage note. As of September 30, 2016, the Company has funded $12,849 for the property.same.

Gramercy Europe Asset Management (European Fund Manager)

In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. The Company ~~has~~ determined that European Fund

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

Manager is a VIE, as the equity holders of that entity do not have controlling financial interests and do not have the obligation to absorb losses. As Gramercy Europe Asset Management, through an investment advisory agreement with the VIE, controls the activities that most significantly affect the economic outcome of European Fund Manager, the Company ~~has~~ concluded that it is the entity’s primary beneficiary and has consolidated the VIE.

~~European Fund Manager is expected to generate~~ The Company receives net cash inflows ~~for the Company~~from European Fund Manager in the form of management fees, ~~in the future, however,~~and if the VIE’s cash inflows are not sufficient to cover its obligations, the Company may provide financial support for the VIE.

Proportion Foods

In December 2015, the Company entered into a non-recourse financing arrangement with Big Proportion Austin LLC, or BIG, for a build-to-suit industrial property in Round Rock, Texas, or Proportion Foods. Concurrently, the Company entered into a forward purchase agreement with BIG, pursuant to which the Company will acquire the property, which is 100.0% leased to Proportion Foods, upon substantial completion of the facility’s development. The Company determined that Proportion Foods was a VIE, as the equity holders of the entity did not have controlling financial interests and were not obligated to absorb losses. The Company controlled the activities that most significantly affected the economic outcome of Proportion Foods through its financing arrangement to fund the property’s development and its forward purchase agreement with BIG. As such, the Company concluded it was the entity’s primary beneficiary and consolidated the VIE. The construction of the facility on the property was completed in March 2017. The Company acquired the property upon completion in March 2017. As of March 31, 2017, the property was wholly-owned by the Company and was no longer a consolidated VIE.

Unconsolidated VIEs

Gramercy Europe Asset Management (European Fund Carry Co.)

In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Carry Co., entitled to receive certain preferential distributions, if any, made from time-to-time by the Gramercy European Property Fund. The Company determined that European Fund Carry Co. is a VIE, as the equity holders of that entity do not have controlling financial interests and do not have the obligation to absorb losses in excess of capital committed. Decisions that most significantly affect the economic performance of European Fund Carry Co. are decided by a majority vote of that VIE’s shareholders. As such, the Company does not have a controlling financial interest in the VIE and accounts for it as an equity investment.

Investment in Retained CDO Bonds

The Company has retained non-investment grade subordinate bonds, preferred shares and ordinary shares of three collateralized debt obligations, or CDOs, together the Retained CDO Bonds. The Company does not control the activities that most significantly impact the Retained CDO Bonds’ economic performance and is not obligated to provide any financial support to them, thus the Retained CDO Bonds have been determined to be unconsolidated VIEs, in which the Company’s interest is recorded at fair value within other assets on the Condensed Consolidated Balance Sheets. The Retained CDO Bonds may provide the potential for the Company to receive continuing cash flows in the future, however, there is no guarantee that the Company will realize any proceeds from the Retained CDO Bonds or what the timing of the proceeds may be. The Company’s maximum exposure to loss is limited to its interest in the Retained CDO Bonds.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

preferential distributions, if any, made from time-to-time by the Gramercy European Property Fund. The Company has determined that European Fund Carry Co. is a VIE, as the equity holders of the entity do not have controlling financial interests and the obligation to absorb losses. Decisions that most significantly affect the economic performance of European Fund Carry Co. are decided by a majority vote of the VIE’s shareholders. As such, the Company does not have a controlling financial interest in the VIE and has accounted for it as an equity investment.

~~As of September 30, 2016 and December 31, 2015, European Fund Carry Co. had net assets of $37 and $(5).~~

~~Investment in Retained CDO Bonds~~

The Company holds non-investment grade subordinate bonds, preferred shares and ordinary shares of three collateralized debt obligations, or the Retained CDO Bonds, which it recognized subsequent to the disposal of its Gramercy Finance segment, or Gramercy Finance, and exit from the commercial real estate finance business in March 2013. The Company is not obligated to provide any financial support to these collateralized debt obligations, or CDOs. The Company’s maximum exposure to loss is limited to its interest in the Retained CDO Bonds and the Company does not control the activities that most significantly impact the VIE’s economic performance.

~~Assets Held for Sale and Discontinued Operations~~

As of September 30, 2016 and December 31, 2015, the Company had one and six assets classified as held for sale, respectively, which represent Chambers properties that qualified as held for sale as of the closing date of the Merger and are included within discontinued operations, in accordance with ASC 360, as these assets acquired in the Merger do not align with the Company’s investment strategy and therefore will be sold. Real estate investments to be disposed of are reported at the lower of carrying amount or estimated fair value, less costs to sell. Once an asset is classified as held for sale, depreciation and amortization expense is no longer recorded. Refer to Note 3 for further information on the Company’s assets held for sale and discontinued operations.

Tenant and Other Receivables

Tenant and other receivables are derived from ~~management fees,~~ rental revenue, ~~and~~ tenant ~~reimbursements.~~

Management fees, including incentive management fees, are recognized as earned in accordance with the terms of the management agreements. The management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services,reimbursements, and management ~~of capital improvements or projects on the underlying assets.~~fees.

Rental revenue is recorded on a straight-line basis over the initial term of the lease. Since many leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that will only be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Tenant and other receivables also include receivables related to tenant reimbursements for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred.

Tenant and other receivables are recorded net of the allowances for doubtful accounts, which as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 were ~~$43~~$230 and ~~$204,~~$57, respectively. The Company continually reviews receivables related to rent, tenant reimbursements, and management fees, including incentive fees, and determines collectability by taking into consideration the tenant or asset management ~~client’s~~clients’ payment history, the financial condition of the tenant or asset management client, business conditions in the industry in which the tenant or asset management client operates and economic conditions in the area in which the property or asset management client is located. In the event that the collectability of a receivable is in doubt, the Company increases the allowance for doubtful accounts or records a direct write-off of the ~~receivable.~~receivable, as appropriate.

~~Deferred Costs~~Management fees, including incentive management fees, are recognized as earned in accordance with the terms of the management agreements. The management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets.

~~Deferred costs consist~~Intangible Assets and Liabilities

As discussed above in the policy section “Real Estate Acquisitions” the Company follows the acquisition method of ~~deferred financing costs, deferred acquisition costs,~~accounting for its asset acquisitions and ~~deferred leasing costs. Deferred costs~~business combinations and thus allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Identifiable intangible assets include amounts allocated to acquired leases for above- and below- market lease rates and the value of in-place leases. Management also considers information obtained about each property as a result of its pre-acquisition due diligence.

Above-market and below-market lease values for properties acquired are ~~presented net~~recorded based on the present value of ~~accumulated amortization.~~

the difference between the contractual amount to be paid pursuant to each in-place lease and management’s estimate of the fair market lease rate for each such in-place lease, measured over a period equal to the remaining non-cancelable term of the lease. The ~~Company’s deferred financing costs are comprised of costs~~present value calculation utilizes a discount rate that reflects the risks associated with the ~~Company’s unsecured credit facilities~~leases acquired. The above-market and ~~include commitment fees, issuance~~below-market lease values are amortized as a reduction of and increase to rental revenue, respectively, over the remaining non-cancelable terms of the respective leases. If a tenant terminates its lease prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the market lease intangibles will be written off to rental revenue.

The aggregate value of in-place leases represents the costs of leasing costs, other tenant related costs, and ~~legal and other third-party~~lost revenue that the Company did not have to incur by acquiring a property that is already occupied. Factors considered by management in its analysis of the in-place lease intangibles include an estimate of carrying costs ~~associated with obtaining~~during the expected

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

lease-up period for each property taking into account current market conditions and costs to execute similar leases, including leasing commissions and other related expenses. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the ~~related financing. Deferred financing costs~~anticipated lease-up period. The value of in-place leases is amortized to depreciation and amortization expense over the remaining non-cancelable term of the respective leases, but never over a term that exceeds the remaining depreciable life of the building. If a tenant terminates its lease prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the in-place lease intangible will be written off to depreciation and amortization expense.

Above-market and below-market ground rent intangibles are recorded for properties acquired in which the Company is the lessee pursuant to a ground lease assumed at acquisition. The above-market and below-market ground rent intangibles are valued similarly to above-market and below-market leases, except that, because the Company is the lessee as opposed to the lessor, the above-market and below-market ground lease values are amortized onas a ~~straight-line or effective interest basis~~reduction of and increase to rent expense, respectively, over the ~~contractual~~remaining non-cancelable terms of the respective ~~agreements~~leases.

Intangible assets and liabilities consist of the following:



	March 31, 2017			December 31, 2016
Intangible assets:
In-place leases, net of accumulated amortization of $137,416 and $117,717	$	536,913		$	553,924
Above-market leases, net of accumulated amortization of $17,325 and $15,719	56,198			59,647
Below-market ground rent, net of accumulated amortization of $306 and $274	5,078			5,109
Amounts related to assets held for sale, net of accumulated amortization of $294 and $0	(1,378		)	—
Total intangible assets	$	596,811		$	618,680
Intangible liabilities:
Below-market leases, net of accumulated amortization of $28,485 and $26,168	$	212,415		$	223,110
Above-market ground rent, net of accumulated amortization of $302 and $248	7,000			7,073
Amounts related to liabilities of assets held for sale, net of accumulated amortization of $437 and $0	(3,014		)	—
Total intangible liabilities	$	216,401		$	230,183

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

The following table provides the weighted-average amortization period as of March 31, 2017 for intangible assets and liabilities and the projected amortization ~~is reflected as interest expense. Unamortized deferred financing costs are expensed when~~expense for the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line pertaining to debt arrangements other than its unsecured credit facilities, that were within the asset section, to instead be netted against the corresponding debt liability for all periods presented. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance on deferred financing costs.next five years.



	Weighted-Average Amortization Period	April 1 to December 31, 2017			2018			2019			2020			2021
In-place leases	9.7	$	68,372		$	83,678		$	70,384		$	58,007		$	50,453
Total to be included in depreciation and amortization expense		$	68,372		$	83,678		$	70,384		$	58,007		$	50,453

Above-market lease assets	7.3	$	8,236		$	10,510		$	9,340		$	7,224		$	6,012
Below-market lease liabilities	19.2	(9,844		)	(12,763		)	(12,414		)	(12,120		)	(11,984		)
Total to be included in rental revenue		$	(1,608	)	$	(2,253	)	$	(3,074	)	$	(4,896	)	$	(5,972	)

Below-market ground rent	41.1	$	95		$	127		$	127		$	127		$	127
Above-market ground rent	33.0	(161		)	(214		)	(214		)	(214		)	(214		)
Total to be included in property operating expense		$	(66	)	$	(87	)	$	(87	)	$	(87	)	$	(87	)

The ~~Company’s deferred acquisition costs consist primarily~~Company recorded $24,172 and $27,560 of amortization of in-place lease ~~inducement fees paid~~intangible assets as part of depreciation and amortization for the three months ended March 31, 2017 and 2016, respectively. The Company recorded $621 and $181 of amortization of market lease intangible assets and liabilities as an increase to ~~secure acquisitions~~rental revenue for the three months ended March 31, 2017 and ~~are amortized on a straight-line basis over the related lease term~~2016, respectively. The Company recorded $21 and $9 of amortization of ground rent intangible assets and liabilities as a reduction of ~~rental revenue.~~

~~The Company’s deferred leasing costs include direct costs, such as lease commissions, incurred to initiate and renew~~other property operating ~~leases and are amortized on a straight-line basis over the related lease term as a reduction from rental revenue.~~

~~Fair Value Measurements~~

At September 30, 2016 and December 31, 2015, the Company measured its Retained CDO Bonds, derivative instruments, and CBRE Strategic Partners Asia on a recurring basis and measured its real estate investments classified as held for sale at Merger closing on a non-recurring basis. ASC 820-10, “Fair Value Measurements and Disclosures,” among other things, establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments and other assets and liabilities at fair value. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of these assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or an exit price. The level of pricing observability generally correlates to the degree of judgment utilized in measuring the fair value of financial instruments and other assets and liabilities. The investment manager of CBRE Strategic Partners Asia applies valuation techniquesexpense for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. The three ~~broad levels defined are as follows:~~

~~Level I –~~ ~~This level is comprised of financial instruments~~months ended March 31, 2017 and ~~other assets and liabilities that have quoted prices that are available in liquid markets for identical assets or liabilities.~~

~~Level II –~~ This level is comprised of financial instruments and other assets and liabilities for which quoted prices are available but which are traded less frequently and instruments that are measured at fair value using management’s judgment, where the inputs into the determination of fair value can be directly observed.

~~Level III –~~ This level is comprised of financial instruments and other assets and liabilities that have little to no pricing observability as of the reported date. These financial instruments do not have active markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment and assumptions.

~~For further discussion regarding fair value measurements see Note 9, “Fair Value Measurements.”~~2016, respectively.

Revenue Recognition

Real Estate Investments

Rental revenue from leases on real estate investments is recognized on a straight-line basis over the term of the lease, regardless of when payments are contractually due. The excess of rental revenue recognized over the amounts contractually due according to the underlying leases are included in ~~deferred revenue~~other liabilities on the Condensed Consolidated Balance Sheets. For leases on properties that are under construction at the time of acquisition, the Company begins recognition of rental revenue upon completion of construction of the leased asset and delivery of the leased asset to the tenant.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The Company’s lease agreements with tenants also generally contain provisions that require tenants to reimburse the Company for real estate taxes, insurance costs, common area maintenance costs, and other property-related expenses. Under lease arrangements in which the Company is the primary obligor for these expenses, such amounts are recognized as both revenues and operating expenses for the Company. Under lease arrangements in which the tenant pays these expenses directly, such amounts are not included in revenues or expenses. These reimbursement amounts are recognized in the period in which the related expenses are incurred.

The Company recognizes sales of real estate properties only upon closing. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

closing when the collectability of the sale price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate.

Asset Management Business

The Company’s asset and property management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. The Company recognizes revenue for fees pursuant to its management agreements in the period in which they are earned. ~~Management~~Deferred revenue from management fees received prior to the date earned are included in ~~deferred revenue~~other liabilities on the Condensed Consolidated Balance Sheets.

Certain of the Company’s asset management contracts include provisions that may allow it to earn additional fees, generally described as incentive fees or profit participation interests, based on the achievement of a targeted valuation of the managed assets or the achievement of a certain internal rate of return on the managed assets. The Company recognizes incentive fees on its asset management contracts based upon the amount that would be due pursuant to the contract, if the contract were terminated at the reporting date. If the contract may be terminated at will, revenue will only be recognized ~~for~~to the amount that would be due pursuant to that termination. If the incentive fee is a fixed amount, only a proportionate share of revenue is recognized at the reporting date, with the remaining fees recognized on a straight-line basis over the measurement period. The values of incentive management fees are periodically evaluated by management. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, the Company recognized incentive fees of ~~$2,931~~$1,449 and ~~$18,121, respectively. For the three and nine months ended September 30, 2015, the Company recognized incentive fees of $111 and $3,082,~~$973, respectively.

In the third quarter of 2016, concurrent with the formation of Strategic Office Partners, the Company entered into property management and leasing agreements with the venture, which provide for fees related to property management, property management, and leasing services. Additionally, the Company will receive an asset management fee of 0.35% of aggregate purchase price as well as a 5.0% promoted interest after achieving an internal rate of return of 13.5% from our investment in Strategic Office Partners.

~~Investment and~~ Other Income

~~Investment~~Other income primarily consists ~~primarily~~ of income accretion on the Company’s Retained CDO Bonds, which are measured at fair value on a quarterly basis using a discounted cash flow model, ~~as well as~~ realized foreign currency exchange gains (losses).

~~Share-Based Compensation Plans~~

The Company has share-based compensation plans, described more fully in Note 11. The Company accounts for share-based awards using the fair value recognition provisions. Awards of shares or restricted shares are expensed as compensation over the benefit period, interest income, and may require inputs that are highly subjective and require significant management judgment and analysis to develop. The Company assumes a forfeiture rate which impacts the amount of aggregate compensation cost recognized. In accordance with the provisions of the Company’s share-based compensation plans, the Company accepts the return of its common shares at the current quoted market price to satisfy minimum statutory tax-withholding requirementsmiscellaneous property related to shares that vested during the period. The Company also grants awards pursuant to its share-based compensation plans in the form of limited partnership interests in the Company’s Operating Partnership, or LTIP Units.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

income.

Foreign Currency

Gramercy Europe Asset Management operates an asset and property management business ~~located~~ in the United Kingdom. The Company ~~owns one property located in the United Kingdom, two properties in Canada, and~~ has unconsolidated equity investments in Europe and ~~Asia.~~Asia and had two wholly-owned properties in Canada and one wholly-owned property in the United Kingdom until their dispositions in March 2017 and December 2016, respectively. The Company also has ~~outstanding~~ borrowings ~~denominated~~outstanding in euros and British pounds sterling under the multicurrency portion of its revolving credit facility. Refer to Note 5 for more information on the Company’s foreign unconsolidated equity investments.

Foreign Currency Translation

~~The~~During the periods presented, the Company has had interests in Europe and Canada for which the functional currencies are the euro, the British pound sterling, and the Canadian ~~dollar.~~dollar, respectively. The Company performs the translation from ~~the euro, the British pound sterling or the Canadian dollar,~~these foreign currencies to the U.S. dollar for assets and liabilities using the exchange rates in effect at the balance sheet date and for ~~revenues~~revenue and ~~expenses~~expense accounts using a ~~weighted-average~~weighted average exchange rate during the period. The Company reports the gains and losses resulting from such translation as a component of other comprehensive income (loss). ~~The~~For the three months ended March 31, 2017 and 2016, the Company recorded net translation gains ~~(losses)~~ of ~~$(1,120)~~

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and ~~$(3,687) for the three~~property data)

March 31, 2017

$691 and ~~nine months ended September 30, 2016,~~$6,119, respectively. ~~The Company recorded a net translation loss of $(360) and $(309) for the three and nine months ended September 30, 2015, respectively. These translation~~Translation gains and losses are reclassified to other income within earnings when the Company has substantially exited from all investments in the related currency.

Foreign Currency Transactions

A transaction gain or loss realized upon settlement of a foreign currency transaction will be included in earnings ~~during~~for the period in which the transaction is settled. Foreign currency intercompany transactions that are scheduled for settlement are included in the determination of net income.

Intercompany foreign currency transactions of a long-term nature that do not have a planned or foreseeable future settlement date, ~~and~~ in which the entities to the transactions are consolidated or accounted for by the equity method in the Company’s financial statements, are not included in net income but are reported as a component of other comprehensive income (loss).

Net realized gains (losses) are recognized on foreign currency transactions in connection with the transfer of cash between foreign operations of subsidiaries or equity investments and the parent company. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, the Company recognized net realized foreign currency transaction gains (losses) of ~~$185~~$(9) and ~~$104,~~$105, respectively, on such transactions. ~~For the three and nine months ended September 30, 2015, the Company recognized net realized foreign currency transaction losses of $15 and $25, respectively, on such transactions.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

~~Derivatives and Non-Derivative Hedging Instruments~~

In the normal course of business, the Company is exposed to the effect of interest rate and foreign exchange rate changes. The Company limits these risks by following established risk management policies and procedures, including the use of derivatives and non-derivative net investment hedges. The Company uses a variety of derivative instruments that are considered “plain vanilla” derivatives to manage, or hedge, interest rate risk. The Company enters into derivative and hedging instruments that will be maximally effective in reducing the interest rate risk and foreign currency exchange rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company’s derivatives and non-derivative hedging instruments typically include interest rate swaps, caps, collars and floors, foreign currency forward contracts, as well as non-derivative net investment hedges. The Company expressly prohibits the use of unconventional derivative instruments and the use of derivative instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value is immediately recognized in earnings. Derivative accounting may increase or decrease reported net income and shareholders’ equity prospectively, depending on future levels of the London Interbank Offered Rate, or LIBOR, swap spreads, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

The Company’s non-derivative hedging instrument, the multicurrency tranche of the Company’s 2015 Revolving Credit Facility, is reported at carrying value on its Condensed Consolidated Balance Sheets. As the Company’s non-derivative net investment hedges are denominated in euros and British pounds sterling, the Company translates the carrying value of the hedges from foreign currency into its functional and reporting currency of U.S. dollars at the period-ending rate and reports this value in its financial statements, with the foreign currency translation adjustments associated with the hedged net investments reported in the cumulative translation adjustment within other comprehensive income (loss). Refer to Note 10 for more information on the Company’s derivatives and non-derivative hedging instruments.

Other Assets

The Company ~~makes payments for certain~~includes prepaid expenses, ~~such as insurance and property taxes in advance of the period in which it receives the benefit. These payments are classified as other~~capitalized software costs, contract intangible assets, ~~and amortized over the respective period of benefit relating to the contractual arrangement. Other~~deferred costs, goodwill, derivative assets, also includes deposits related to pending acquisitions and financing arrangements, as required by a seller or lender, respectively. Additionally, other assets includes costs of software purchased for internal use and as well as the value of contracts assumed by the Company pursuant to a business combination, such as asset or property management contracts.

~~Servicing Advances Receivable~~

The Company’s servicing advances receivable consisted of its accrual for the reimbursement of servicing advances, including expenses such as legal fees and professional fees incurred while the Company was the collateral manager of the CDOs, which were recognized as part of the disposal of Gramercy Finance in March 2013. For the three and nine months ended September 30, 2016, the Company received reimbursements from servicing advances of $1,390. For the three and nine months ended September 30, 2015, the Company did not receive any reimbursements. As of September 30, 2016, there were no servicing advances receivable, and Retained CDO Bonds in other assets.

Goodwill

Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. The Company initially recognized goodwill of $3,887 related to the acquisition of Gramercy Europe Limited, or Gramercy Europe Asset Management, which was adjusted to $3,802 in 2015 as a result of finalization of the purchase price allocation for the acquisition. The carrying value of goodwill is adjusted each reporting period for the effect of foreign currency translation adjustments. The carrying value of goodwill at March 31, 2017 and December 31, ~~2015, there were servicing advances receivable~~2016 was $3,039 and $2,988, respectively. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of ~~$1,382. All servicing advances were received as~~goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company did not record any impairment on its goodwill during the three months ended March ~~30, 2016, thus there will be no future activity related to servicing advances.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

31, 2017 or 2016.

Retained CDO Bonds

The ~~Company recognized its~~ Retained CDO Bonds ~~at fair value in March 2013 subsequent to the disposal~~are non-investment grade subordinate bonds, preferred shares and ordinary shares of ~~Gramercy Finance.~~three CDOs. Management estimated the timing and amount of cash flows expected to be collected and recognized an investment in the Retained CDO Bonds equal to the net present value of these discounted cash flows. There is no guarantee that the Company will realize any proceeds from this investment, or what the timing will be for the expected remaining life of the Retained CDO Bonds. The Company considers these investments to be not of high credit quality and does not expect a full recovery of interest and principal. Therefore, the Company has suspended interest income accruals on these investments. The Company classifies the Retained CDO Bonds as available for sale. On a quarterly basis, the Company evaluates the Retained CDO Bonds to determine whether significant changes in estimated cash flows or unrealized losses on these investments, if any, reflect a decline in value which is other-than-temporary. If there is a decrease in estimated cash flows and the investment is in an unrealized loss position, the Company will record an other-than-temporary impairment, or OTTI, in the Condensed Consolidated Statements of Operations. To determine the

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

component of the OTTI related to expected credit losses, the Company compares the amortized cost basis of the Retained CDO Bonds to the present value of the revised expected cash flows, discounted using the pre-impairment effective yield. Conversely, if the security is in an unrealized gain position and there is a decrease or significant increase in expected cash flows, the Company will prospectively adjust the yield using the effective yield method. Refer to Note 9 for further discussion regarding the fair value measurement of the Retained CDO Bonds. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015,~~ the Company recognized no OTTI of $4,890 and $0, respectively, on its Retained CDO Bonds.

A summary of the Company’s Retained CDO Bonds as of ~~September 30, 2016~~March 31, 2017 is as follows:

Description Number of Securities Face Value Amortized Cost Gross Unrealized Gain Other-than-temporary impairment Fair Value Weighted Average Expected Life
Available for Sale, Non- investment Grade:

Retained CDO Bonds 9
$ 382,104
$ 7,888
$ 551
$ —
$ 8,439
1.9
Total 9
$ 382,104
$ 7,888
$ 551
$ —
$ 8,439
1.9

~~The following table summarizes the activity related to credit losses on the Retained CDO Bonds for the nine months ended September 30, 2016 and for the year ended December 31, 2015:~~

2016 2015
Balance as of January 1, 2016 and January 1, 2015, respectively, of credit losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income $ 3,196
$ 6,818
Additions to credit losses:
On Retained CDO Bonds for which an OTTI was not previously recognized —
—
On Retained CDO Bonds for which an OTTI was previously recognized and a portion of an OTTI was recognized in other comprehensive income —
—
On Retained CDO Bonds for which an OTTI was previously recognized without any portion of OTTI recognized in other comprehensive income —
—
Reduction for credit losses:
On Retained CDO Bonds for which no OTTI was recognized in other comprehensive income at current measurement date —
—
On Retained CDO Bonds sold during the period —
—
On Retained CDO Bonds charged off during the period —
—
For increases in cash flows expected to be collected that are recognized over the remaining life of the Retained CDO Bonds (841 ) (3,622 )
Balance as of September 30, 2016 and December 31, 2015, respectively, of credit losses (gains) on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income $ 2,355
$ 3,196



Number of Securities	Face Value		Amortized Cost		Gross Unrealized Gain		Other-than-temporary impairment			Fair Value		Weighted Average Expected Life
9	$	387,304	$	8,839	$	879	$	(4,890	)	$	4,828	1.8

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~Income Taxes~~

The ~~Company elected~~following table summarizes the activity related to ~~be taxed as a REIT, under Sections 856 through 860 of~~credit losses on the ~~Internal Revenue Code, beginning with its taxable~~Retained CDO Bonds for the three months ended March 31, 2017 and for the year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90.0% of its ordinary taxable income, to shareholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that the Company distributes to its shareholders. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes on taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distributions to shareholders. However, the Company believes that it will be organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company is subject to certain state and local taxes. The Company’s TRSs are subject to federal, state and local taxes.2016:

For the three and nine months ended September 30, 2016, the Company recorded $331 and $3,734 of income tax expense, respectively. For the three and nine months ended September 30, 2015, the Company recorded $985 and $2,116 of income tax expense, respectively. Tax expense for each year is comprised of federal, state, local, and foreign taxes. Income taxes, primarily related to the Company’s TRSs, are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if the Company believes it is more likely than not that all or a portion of a deferred tax asset will not be realized. Any increase or decrease in a valuation allowance is included in the tax provision when such a change occurs.

~~Earnings Per Share~~

The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilutive instruments and is computed by dividing net income available to common shareholders by the weighted average number of vested common shares outstanding during the period. The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to common shares outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, as long as their inclusion would not be anti-dilutive. Refer to Note 11 for further discussion of the computation of EPS.



	2017			2016
Balance as of January 1, 2017 and 2016, respectively, of credit losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income (loss)	$	(491	)	$	3,196
Additions to credit losses:
On Retained CDO Bonds for which an OTTI was not previously recognized	—			—
On Retained CDO Bonds for which an OTTI was previously recognized and a portion of an OTTI was recognized in other comprehensive income (loss)	(4,890		)	—
On Retained CDO Bonds for which an OTTI was previously recognized without any portion of OTTI recognized in other comprehensive income (loss)	—			—
Reduction for credit losses:	—			—
On Retained CDO Bonds for which no OTTI was recognized in other comprehensive income at current measurement date	—			—
On Retained CDO Bonds sold during the period	—			—
On Retained CDO Bonds charged off during the period	—			—
For increases in cash flows expected to be collected that are recognized over the remaining life of the Retained CDO Bonds	—			(3,687		)
Balance as of March 31, 2017 and December 31, 2016, respectively, of credit of losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income (loss)	$	(5,381	)	$	(491	)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments, debt investments and accounts receivable. The Company places its cash investments in excess of insured amounts with high quality financial institutions.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Concentrations of credit risk also arise when a number of the Company’s tenants or asset management clients are engaged in similar business activities or are subject to similar economic risks or conditions that could cause their inability to meet contractual obligations to the Company. The Company regularly monitors its portfolio to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified. Asset management clients KBS ~~Real Estate Investment Trust, Inc., or KBS,~~ and Gramercy Europe Asset Management accounted for ~~82.8%~~68.8% and ~~15.9%~~26.8%, respectively, of the Company's management fee income for the three months ended March 31, 2017 and 86.3% and 12.8%, respectively, of the Company’s management fee income for the three months ended ~~September 30, 2016, respectively, and KBS~~March 31, 2016. No single tenant accounted for 90.5% of the Company’s management fee income for the nine months ended September 30, 2016. KBS and Gramercy Europe Asset Management accounted for 81.1% and 10.4% of the Company’s management fee income revenue for the three months ended September 30, 2015, respectively, and KBS accounted for 84.0% of the Company’s management fee income for the nine months ended September 30, 2015. One tenant, Bank of America, N.A., accounted for 13.7% and 13.3% of the Company’s rental revenue for the three and nine months ended September 30, 2016, respectively. Bank of America, N.A. and Healthy Way of Life II, LLC (d.b.a. Life Time Fitness) accounted for 21.2% and 11.6%more than 10.0% of the Company’s rental revenue for the three months ended ~~September 30, 2015, respectively, and~~March 31, 2017. One tenant, Bank of America, N.A., or BOA, accounted for ~~26.4%~~10.8% of the Company’s rental revenue for the ~~nine~~three months ended ~~September 30, 2015.~~March 31, 2016. The concentration of rental revenue from BOA was partially due to amortization recorded on the BOA below-market lease liabilities, which accounted for 2.9% of total rental revenue for the three months ended March 31, 2016. Additionally, for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, there were three states, California, Florida, and Texas, that each accounted for 10.0% or more of the Company’s rental revenue.

Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

Recently Issued Accounting Pronouncements

In May 2014, the ~~Financial Accounting Standards Board, or~~ FASB issued ASU 2014-09, Revenue from Contracts with Customers, which is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to customers in an amount reflecting the consideration it expects to receive in exchange for those goods or services. The guidance also requires enhanced disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. In April 2016, the FASB issued ASU 2016-10, which amends the new revenue recognition guidance on identifying performance obligations. In February 2017, the FASB issued ASU 2017-05, which clarifies the scope of gains and losses from the derecognition of nonfinancial assets and provides guidance for the partial sales of nonfinancial assets in context of the new revenue standard. The new revenue recognition guidance is effective for the first interim period within annual reporting periods beginning after December 15, 2017, with early adoption permitted for the first interim period within annual reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the new guidance. A substantial portion of the Company’s revenue consists of rental revenue from leasing arrangements, which is specifically excluded from the new revenue guidance, however the Company also generates revenue from operating expense reimbursements, management fees, and gains and impairments on disposals, which will be impacted by the new revenue standard. The Company is ~~currently evaluating the guidance~~continuing to ~~determine~~analyze the impact ~~it may have~~of the new revenue guidance on its ~~Condensed Consolidated Financial Statements.~~

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnershipsrecognition and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted.disclosure of these streams of revenue. The Company ~~adopted this guidance during~~currently expects to adopt the standard in the first quarter of ~~2016, which did not result in changes to~~2018 using the ~~Company’s conclusions regarding consolidation of applicable entities.~~

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which serves to simplify the presentation of debt issuance costs in a company’s financial statements. The amendments in the update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest, which allows an entity to present the debt issuance costs from a line-of-credit arrangement as an asset. The Company adopted this guidance during the first quarter of 2016 and reclassified amounts in each period presented. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements as the update relates only to changes in financial statement presentation. See the “Reclassification” section above for further details on the adoption of this guidance.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update requires companies to account for the software license element of a cloud computing arrangement consistent with the acquisition of other software licenses and other licenses of intangible assets. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance during the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.modified retrospective approach.

In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The update will be effective beginning in the first quarter of 2019 and early adoption is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company’s accounting for leases in which it is a lessor, which represents most of its leasing arrangements, will be largely unchanged under ASU 2016-02, however the Company is ~~currently evaluating~~a lessee in several operating and ground leases and the accounting for these arrangements is more significantly impacted by the new standard. Pursuant to the new guidance, lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The Company is continuing to evaluate the impact of adopting the new leases standard on its Condensed Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update serves to simplify the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification of awards on the statement of cash flows. The guidance in the ASU is effective for fiscal years beginning after December 15, ~~2016, including interim periods within those fiscal years, with early adoption permitted for any interim or annual period.~~2016. The Company ~~has not elected early adoption of the amendments in the updates and expects that~~adopted the new guidance ~~will~~in the first quarter of 2017. The adoption of this guidance did not have a material impact on ~~its~~the Company’s Condensed Consolidated Financial Statements.

In ~~June 2016,~~January 2017, the FASB issued ASU ~~2016-13, Financial Instruments - Credit Losses,~~2017-01, Amendments to Business Combinations, which amends the ~~existing accounting~~current guidance ~~related~~ to ~~credit losses on financial instruments. The amendments in~~clarify the ~~update replace the incurred loss impairment methodology in the current accounting standards with a methodology that reflects expected credit losses and requires consideration~~definition of a ~~broader range~~business in order to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of ~~reasonable and supportable information to inform credit loss estimates.~~assets or businesses. The ~~update~~guidance is effective for annual and interim periods beginning after December 15, ~~2019,~~2017, with early adoption ~~permitted.~~permitted under certain circumstances. The amendments must be applied prospectively as of the beginning of the period of adoption. The Company ~~is currently evaluating~~elected to early adopt ASU 2017-01 in the ~~impact~~first quarter of ~~adopting~~2017, as described in the ~~update on its~~“Real Estate Acquisitions” section above.

Gramercy Property Trust

Notes to Condensed Consolidated Financial ~~Statements.~~Statements

~~In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts~~(Unaudited, amounts in thousands, except share, per share and Cash Payments, which serves to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update is effective for fiscal years beginning after December 15,property data)

March 31, 2017 ~~and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting the update on its Condensed Consolidated Financial Statements.~~

3. Dispositions, Assets Held for Sale, and Discontinued Operations

Real Estate Dispositions and Impairments

During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, the Company sold ~~ten and 20~~seven properties, ~~respectively. The 20 properties sold in 2016~~which comprised an aggregate ~~5,070,129~~487,872 square ~~feet. The property sales~~feet and generated gross proceeds of ~~$394,241 and $1,041,941 during the three and nine months ended September 30, 2016, respectively. Of the properties sold~~$51,683. The Company recognized a gain on disposals of $17,377 during the three months ended September 30, 2016, six properties comprising an aggregate 980,825 square feet and with a total value of $187,500 were contributed to Strategic Office Partners, in which the Company has a 25.0% interest. Refer to Note 5 for further information on Strategic Office Partners. The Company recognized an impairment on real estate investments of $1,053 during the three and nine months ended September 30, 2016March 31, 2017 related to the properties sold during the period. ~~The Company recognized $2,336 in gains on disposals during the three and nine months ended September 30, 2016.~~ Of the properties sold in ~~2016, 16~~2017, one of the sales ~~were~~was structured as a like-kind ~~exchanges~~exchange within the meaning of Section 1031 of the IRC. As a result of the ~~sales,~~sale, the Company deposited ~~$617,873~~$23,218 of the total ~~sales~~sale proceeds into an IRC Section 1031 exchange escrow account with a qualified intermediary. The Company then used ~~$460,191~~$23,218 of these funds as consideration for 36one property ~~acquisitions~~acquisition during the ~~nine~~three months ended ~~September 30, 2016. Five of~~March 31, 2017. During the ~~properties sold during the nine~~three months ended ~~September 30, 2016,~~March 31, 2017, the Company recognized an impairment on real estate investments of $12,771 related to two properties held by the Company as of March 31, 2017, for which the Company determined there were ~~sold~~non-recoverable declines in value. Refer to Note 9 for ~~gross proceeds~~more information on how the Company determined the non-recurring fair value of ~~$386,000, represent~~these two properties.

Assets Held for Sale

The Company separately classifies properties ~~assumed~~held for sale in the ~~Merger~~Condensed Consolidated Financial Statements. The Company had one asset and two offices that ~~were designated~~are part of another asset classified as held for sale as of March 31, 2017 with total net asset value of $5,834 and no assets classified as held for sale as of December 31, 2016. In the normal course of business, the Company identifies non-strategic assets for sale. Real estate investments to be disposed of are reported at the ~~time~~lower of ~~Merger closing,~~carrying amount or estimated fair value, less costs to sell. Once an asset is classified as held for sale, depreciation and ~~are thus included in discontinued operations~~amortization expense is no longer recorded.

The following table summarizes the assets held for ~~all periods presented.~~sale and liabilities related to the assets held for sale as of March 31, 2017:



Assets held for sale	March 31, 2017
Real estate investments	$	7,538
Acquired lease assets	1,378
Other assets	46
Total assets	$	8,962
Liabilities related to assets held for sale
Below-market lease liabilities	3,014
Other liabilities	114
Total liabilities	$	3,128
Net assets held for sale	$	5,834

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~

During the three and nine months ended September 30, 2015, the Company sold two and five properties, respectively. The five properties sold in the nine months ended September 30, 2015 comprised an aggregate 336,000 square feet. The property sales generated gross proceeds of $70,100 and $78,719 during the three and nine months ended September 30, 2015, respectively. The Company recognized $392 and $742 in gains on disposals during the three and nine months ended September 30, 2015, respectively. The Company recognized impairments of $0 and $149 during the three and nine months ended September 30, 2015, respectively. Three of the properties sold in 2015 were structured as like-kind exchanges within the meaning of Section 1031 of the IRC. As a result of the sales, the Company deposited $8,619 of the total sales proceeds into an IRC Section 1031 exchange escrow account with a qualified intermediary. The Company then used $8,619 of these funds as consideration for two property acquisitions during the nine months ended September 30, 2015.

~~Assets Held for Sale~~

The Company separately classifies properties held for sale in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations. The Company had one and six assets classified as held for sale as of September 30, 2016 and DecemberMarch 31, 2015, respectively. In the normal course of business, the Company identifies non-strategic assets for sale. Changes in the market may compel the Company to decide to classify a property held for sale or classify a property that was designated as held for sale back to held for investment. During the three and nine months ended September 30, 2016 and 2015, the Company did not reclassify any properties previously identified as held for sale to held for investment.

~~The following table summarizes the assets held for sale and liabilities related to the assets held for sale as of September 30, 2016 and December 31, 2015:~~

Assets held for sale September 30, 2016 December 31, 2015
Real estate investments $ 9,950
$ 348,582
Acquired lease assets 607
61,804
Other assets 452
10,099
Total assets 11,009
420,485
Liabilities related to assets held for sale
Mortgage notes payable, net —
260,704
Below-market lease liabilities —
16,518
Other liabilities 129
14,142
Total liabilities 129
291,364
Net assets held for sale $ 10,880
$ 129,121

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~2017

Discontinued Operations

The ~~following operating results~~Company’s discontinued operations for ~~Gramercy Finance,~~ the ~~assets previously sold,~~three months ended March 31, 2017 and 2016 were related to the assets that were assumed in the Merger and simultaneously designated as held for ~~sale~~sale. The following operating results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ are included in discontinued operations for all periods presented:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Operating Results:
Revenues	$	262		$	19		$	6,258		$	(10	)	$	(6	)	$	5,857
Operating expenses	(58		)	(46		)	(2,293		)	202			6			(2,180		)
General and administrative expense	(3		)	(14		)	(41		)	(175		)	(24		)	(12		)
Interest expense	148			—			(807		)	—			—			(955		)
Depreciation and amortization	(2		)	—			(2		)	—
Gain on extinguishment of debt	—			—			1,930			—			—			1,930
Net income from discontinued operations	$	347		$	(41	)	$	5,045		$	17
Net income (loss) from discontinued operations													$	(24	)	$	4,640

Discontinued operations have not been segregated in the Condensed Consolidated Statements of Cash Flows. The table below presents additional relevant information pertaining to results of discontinued operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015,~~ including depreciation, amortization, capital expenditures, and significant operating and investing noncash items:


	Nine Months Ended September 30,					Three Months Ended March 31,
	2016			2015		2017		2016
Amortization expense	$	2		$	—
Significant operating noncash items	(9,647		)	—		$	—	$	(9,455	)
Increase in cash and cash equivalents related to foreign currency translation						—		275
Total	$	(9,645	)	$	—	$	—	$	(9,180	)

4. Real Estate Investments

Property Acquisitions

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, the Company acquired 48seven properties comprising ~~11,464,734~~2,257,311 square feet for an aggregate contract purchase price of approximately ~~$862,341. The acquisitions in 2016 include seven properties distributed to~~$124,672, including the ~~Company from~~acquisition of a consolidated VIE for $29,605 and the ~~Duke JV which comprise 4,189,630 square feet and~~acquisition of a ~~build-to-suit~~vacant property ~~with projected 240,800 square feet. The Company previously owned an 80.0% interest in these properties through its interest in the joint venture. The fair~~for $2,400. Total value of ~~these properties at 100.0% was $276,100. During~~ the ~~year ended December 31, 2015, the Company acquired 144 properties comprising 33,800,146 square feet for an aggregate purchase price of approximately $3,726,563. The acquisitions in 2015 include 95~~ properties acquired ~~as part of the Merger which comprise 24,560,739 square feet and a build-to-suit property with projected 200,411 square feet.~~

~~The Company recorded revenues and net income for~~during the three months ended ~~September 30, 2016~~March 31, 2017 was comprised of ~~$1,835~~$115,504 of real estate assets, $11,296 of intangible assets, and ~~$706, respectively, related~~$774 of intangible liabilities, including transaction costs capitalized for the asset acquisitions.

Property Purchase Price Allocations

During the first quarter of 2017, the Company adopted ASU 2017-01, Amendments to Business Combinations, which amends the definition of a business and provides a revised framework for the determination of whether an integrated set of assets and activities meets the definition of a business. The Company evaluated its real estate acquisitions during the ~~period.~~first quarter of 2017 under the new framework and determined the properties acquired did not meet the definition of a business, thus the transactions were accounted for as asset acquisitions. The Company ~~recorded revenues and net income for the nine months ended September 30, 2016 of $21,054 and $6,628, respectively, related to~~expects that its acquisitions ~~during the period. The Company recorded revenues and net income for the three months ended September 30, 2015~~ of ~~$1,335 and $543, respectively, related to its~~ real estate will not meet the revised definition of a business and will be accounted for as asset acquisitions ~~during~~going forward. Refer to Note 2 for more information on the ~~period. The Company recorded revenues~~new accounting standard and ~~net income for~~ the ~~nine months ended September 30, 2015 of $38,055 and $10,802, respectively, related to its acquisitions during the period.~~Company’s adoption thereof.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~Property Purchase Price Allocations~~

~~The Company is currently analyzing~~As noted above, the ~~fair value~~Company’s acquisitions in 2017 were accounted for as asset acquisitions, however the majority of the ~~lease and real estate assets~~Company’s acquisitions prior to 2017 were accounted for as business combinations pursuant to the definition of ~~26 and one~~a business prior to the adoption of ~~its property investments~~ASU 2017-01. Of the acquisitions prior to 2017, there were 21 properties acquired in 2016 ~~and 2015, respectively, and accordingly, the~~that were accounted for as business combinations which had preliminary purchase price allocations ~~for these properties are preliminary and subject to change. The initial recording~~recorded as of ~~the assets is summarized as follows:~~

Preliminary Allocations recorded
Period of Acquisition Number of Acquisitions Real Estate Assets Intangible Assets Intangible Liabilities
Nine Months Ended September 30, 2016 26 $ 420,685
$ 62,425
$ 11,648
Year Ended December 31, 2015⁽¹⁾
1 $ 7,947
$ —
$ —


~~(1)~~	Allocations exclude the properties acquired as part of the Merger, which are separately disclosed below in the section, “Merger with Chambers.” Additionally, allocations shown represent the real estate assets of Proportion Foods, a consolidated VIE. Refer to Note 2 for more information on Proportion Foods.

~~During the nine months ended September 30, 2016 and the year ended~~ December 31, ~~2015, the~~2016. The Company finalized the purchase price allocations ~~for 34 and 136~~of these 21 properties ~~acquired in prior periods, respectively, for which~~during the ~~Company had recorded preliminary purchase price allocations at the time~~first quarter of ~~acquisition.~~2017. The aggregate changes recorded from the preliminary purchase price allocations to the finalized purchase price allocations, ~~in accordance with ASU 2015-16,~~ are shown in the table below:

Preliminary Allocations recorded Finalized Allocations recorded
Period Finalized No. of Acquisitions Real Estate Assets Intangible Assets Intangible Liabilities Real Estate Assets Intangible Assets Intangible Liabilities Increase (Decrease) to Rental Revenue Increase to Depreciation and Amortization Expense
Nine Months Ended September 30, 2016 34 $ 701,513
$ 6,049
$ 1,037
$ 665,748
$ 48,499
$ 7,722
$ (30 ) $ (7 )
Year Ended December 31, 2015⁽¹⁾
136 $ 1,373,360
$ 320,066
$ 81,961
$ 1,535,763
$ 302,083
$ 226,381
$ 2,307
$ (205 )


~~(1)~~	~~Allocations for the year ended December 31, 2015 include the 67 properties acquired as part of a portfolio of properties primarily leased to Bank of America, N.A.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

~~Pro Forma~~

The following table summarizes, on an unaudited pro forma basis, the Company’s combined results of operations for the three and nine months ended September 30, 2016 and 2015 as though the acquisitions closed during the three and nine months ended September 30, 2016 and 2015 were completed on January 1, 2015. The supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods. The table includes pro forma operating results for the assets acquired in the Merger.

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Pro forma revenues⁽¹⁾
$ 126,644
$ 121,652
$ 378,674
$ 363,337
Pro forma net income available to common shareholders^{(1), (2)}
$ (5,643 ) $ 13,157
$ 16,729
$ 41,706
Pro forma income per common share-basic $ (0.01 ) $ 0.07
$ 0.04
$ 0.25
Pro forma income per common share-diluted $ (0.01 ) $ 0.07
$ 0.04
$ 0.24
Pro forma common shares-basic 420,772,508
183,945,495
423,542,467
169,781,590
Pro forma common share-diluted 420,772,508
187,683,631
427,163,126
175,551,239


~~(1)~~	The pro forma results for all periods presented include adjustments to reflect the Company’s continuing 5.1% interest in the Goodman Europe JV, its 100.0% interest in the seven properties it received through distribution from the Duke JV on June 30, 2016, and its 25.0% interest in Strategic Office Partners.


~~(2)~~	~~Net income for each period has been adjusted for acquisition costs related to the property acquisitions during the period.~~

~~Merger with Chambers~~

As described in Note 1, on December 17, 2015, the Company completed a merger transaction in which Legacy Gramercy merged with and into a subsidiary of Chambers. In accordance with ASC 805, Business Combinations, the Merger was accounted for as a reverse acquisition, with Chambers as the legal acquirer and Legacy Gramercy as the accounting acquirer for financial reporting purposes. At Merger closing, each share of Legacy Gramercy common stock, par value $0.001 per share, that was issued and outstanding immediately prior to the effective time of the Merger, was canceled and converted into the right to receive 3.1898 common shares, par value $0.01 per share, of the Company. Because the Merger is accounted for as a reverse acquisition, consideration for the Merger is computed as if Legacy Gramercy had issued its equity interests to Chambers shareholders. Consideration for the Merger was $1,829,241, based on Legacy Gramercy’s closing stock price of $24.63 on December 17, 2015, the number of Chambers common shares outstanding at the close of the Merger, and the Merger Agreement exchange ratio of 3.1898 set forth in the Agreement and Plan of Merger dated as of July 1, 2015, or the Merger Agreement.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

~~During the three months ended September 30, 2016, the Company finalized the purchase price allocation for the Merger. The following table summarizes the finalized purchase price allocation:~~

Assets
Investments:
Land $ 258,451
Buildings and improvements 1,628,335
Net investments 1,886,786
Cash and cash equivalents 24,687
Restricted cash 8,990
Unconsolidated equity investments 563,888
Tenant and other receivables, net 11,166
Acquired lease assets 411,361
Deferred costs and other assets 5,002
Assets held for sale 414,187
Total assets $ 3,326,067
Liabilities
Mortgage notes payable $ 220,429
Revolving credit facilities and term loans 860,000
Below-market lease liabilities 41,130
Accounts payable, accrued expenses, and other liabilities 82,773
Liabilities related to assets held for sale 292,494
Total liabilities $ 1,496,826
Fair value of net assets acquired $ 1,829,241

The final allocation of the purchase price was based on the Company’s assessment of the fair value of the acquired assets and liabilities. The final allocation recorded resulted in an increase to the allocation to assets acquired by $864 and an increase to the allocation to liabilities assumed by $864. The final purchase price allocation adjustment also resulted in a decrease in rental revenue of $106 and an increase in depreciation expense of $75 to record adjustments to depreciation and amortization expense related to the adjustments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

~~Acquisition of Gramercy Europe Asset Management~~

On December 19, 2014, the Company acquired ThreadGreen Europe Limited, a United Kingdom based property and asset management platform, which the Company subsequently renamed Gramercy Europe Limited, or Gramercy Europe Asset Management, for $3,755 and the issuance of 96,535 shares of the Company’s common stock, valued at $652 as of the date of closing. The Company accounted for the acquisition utilizing the acquisition method of accounting for business combinations. The Company initially recognized assets of $902, liabilities of $398, and goodwill of $3,887, as well as a $16 realized foreign currency transaction loss related to the acquisition and during the second quarter of 2015, the Company finalized the purchase price allocation, which resulted in an increase to the allocation to assets by $190, an increase to the allocation to liabilities by $105, a decrease to goodwill by $85, and a decrease to net income by $80 to record adjustments to amortization and incentive fees. The final allocation of the purchase price included assets of $1,092, liabilities of $503, and goodwill of $3,802. Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. For more information on Gramercy Europe Asset Management, refer to Note 5.



	Preliminary Allocations recorded							Finalized Allocations recorded
Period Finalized	No. of Acquisitions	Real Estate Assets		Intangible Assets		Intangible Liabilities		Real Estate Assets		Intangible Assets		Intangible Liabilities		Decrease to Rental Revenue		Increase to Depreciation and Amortization Expense
Three Months Ended March 31, 2017	21	$	513,424	$	61,178	$	11,093	$	513,087	$	60,627	$	10,205	$	27	$	16

5. Unconsolidated Equity Investments

The Company has investments in a variety of ventures. The Company will co-invest in entities that own multiple properties with various investors or with one partner. The Company may manage the ventures and collect asset and property management fees as well as incentive fees, otherwise known as profit participation, from its investment partners, or one of the other partners will manage the ventures for asset and property management fees as well as incentive fees. Depending on the structure of the venture, the Company’s voting interest may be different than its economic interest. As the Company does not control these ventures, the Company accounts for ~~these~~substantially all of its unconsolidated equity investments under the equity method of ~~accounting.~~accounting because it exercises significant influence, but does not unilaterally control the entities, and is not considered to be the primary beneficiary. In unconsolidated equity investments, the rights of the other investors are protective and participating. Unless the Company is determined to be the primary beneficiary, these rights preclude it from consolidating the investments. The investments are recorded initially at cost as unconsolidated equity investments, as applicable, and subsequently are adjusted for equity interest in net income (loss) and contributions and distributions. The amount of the investments on the Condensed Consolidated Balance Sheets is evaluated for impairment at each reporting period. None of the unconsolidated equity investment debt is recourse to the Company. Transactions with unconsolidated equity method entities are eliminated to the extent of the Company’s ownership in each such entity. Accordingly, the Company’s share of net income (loss) of these equity method entities is included in consolidated net income (loss).

As a result of the Merger in 2015, the Company acquired an interest in four unconsolidated entities, the ~~Duke JV,~~ Goodman Europe JV, the Goodman UK JV, the Duke JV, and ~~the~~ CBRE Strategic Partners ~~Asia, a real estate investment fund.~~Asia. The Company’s equity investment in the entities was fair valued on the Merger closing date, and the difference between the historical carrying value of the net assets and the fair value ~~has been~~was recorded as a basis ~~difference. The basis~~ difference, which is amortized to equity in net income (loss) from unconsolidated equity investments over the remaining ~~weighted-average~~weighted average useful life of the underlying assets of each entity.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company owned properties through unconsolidated equity investments and had investment interests in these unconsolidated entities as follows:


	As of September 30, 2016								As of December 31, 2015			As of March 31, 2017								As of December 31, 2016
Investment	Ownership %		Voting Interest %		Partner	Investment in Unconsolidated Equity Investment⁽¹⁾		No. of Properties	Investment in Unconsolidated Equity Investment⁽¹⁾		No. of Properties	Ownership %		Voting Interest %		Partner	Investment in Unconsolidated Equity Investment ¹		No. of Properties	Investment in Unconsolidated Equity Investment ¹		No. of Properties
Gramercy European Property Fund ^{(2), (3)}	14.2	%	14.2	%	Various	$	52,611	24	$	23,381	12
Philips JV	25.0	%	25.0	%	Various	—		1	—		1
Duke JV⁽⁴⁾	80.0	%	50.0	%	Duke Realty	—		—	352,932		13
Goodman Europe JV ⁽³⁾	5.1	%	5.1	%	Gramercy European Property Fund	9,126		9	158,863		9
Gramercy European Property Fund ²												14.2	%	14.2	%	Various	$	51,524	27	$	50,367	26
Goodman Europe JV ³												5.1	%	5.1	%	Gramercy European Property Fund	3,269		8	3,491		8
Strategic Office Partners												25.0	%	25.0	%	TPG Real Estate	18,444		7	15,872		6
Goodman UK JV	80.0	%	50.0	%	Goodman Group	35,525		3	36,698		3	80.0	%	50.0	%	Goodman Group	25,336		2	25,309		2
CBRE Strategic Partners Asia	5.1	%	5.1	%	Various	4,557		2	5,508		2	5.07	%	5.07	%	Various	3,999		2	4,145		2
Philips JV												25.0	%	25.0	%	Various	—		1	—		1
Morristown JV	50.0	%	50.0	%	21 South Street	2,620		1	2,618		1	50.0	%	50.0	%	21 South Street	2,615		1	2,623		1
Strategic Office Partners	25.0	%	25.0	%	TPG Real Estate	15,737		6	—		—
Total						$	120,176	46	$	580,000	41						$	105,187	48	$	101,807	46

~~(1)~~1.

The amounts presented include basis differences of ~~$2,603~~$2,279 and ~~$6,607,~~$3,918, net of accumulated amortization, for the Goodman Europe JV and Goodman UK JV, respectively, as of ~~September 30, 2016.~~March 31, 2017. The amounts presented include basis differences of ~~$136,198, $37,371~~$2,286 and ~~$6,578,~~$3,941, net of accumulated amortization, for the ~~Duke JV,~~ Goodman Europe JV and Goodman UK JV, respectively, as of December 31, ~~2015.~~2016.


~~(2)~~2.	Includes European Fund Carry Co., which has a carrying value of $9$7 and $0$8 for the Company’s 25.0% interest as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively.

~~(3)~~3.

As of ~~September 30, 2016,~~March 31, 2017, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest of Goodman Europe JV through its 14.2% interest in the Gramercy European Property Fund. In the table above, as of ~~September 30,~~December 31, 2016, the Company’s 94.9% interest in Goodman Europe JV held through its 14.2% interest in the Gramercy European Property Fund is included in the amount shown for the Gramercy European Property Fund and the Company’s 5.1% direct interest in the Goodman Europe JV is presented separately as the amount shown for the Goodman Europe JV.


~~(4)~~	The Duke JV was dissolved following the sale of its final property in July 2016. The Company’s ownership and voting interest in the Duke JV that are presented here represent values prior to its dissolution.

The following is a summary of the Company’s unconsolidated equity investments for the three months ended March 31, 2017:



	Unconsolidated Equity Investments
Balance at January 1, 2017	$	101,807
Contributions to unconsolidated equity investments	2,650
Equity in net loss of unconsolidated equity investments, including adjustments for basis differences	(94		)
Other comprehensive loss of unconsolidated equity investments	1,176
Distributions from unconsolidated equity investments	(352		)
Balance at March 31, 2017	$	105,187

Gramercy European Property Fund

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~The following is a summary of the Company’s unconsolidated equity investments for the nine months ended September 30, 2016:~~

Unconsolidated Equity Investments
Balance as of December 31, 2015 $ 580,000
Contributions to unconsolidated equity investments⁽¹⁾
76,856
Equity in net loss of unconsolidated equity investments, including adjustments for basis differences (4,061 )
Other comprehensive loss of unconsolidated equity investments (1,086 )
Distributions from unconsolidated equity investments⁽²⁾
(395,838 )
Purchase price allocation adjustments 5,000
Gains on sale and dissolution of unconsolidated equity investment interests 12,570
Sale of unconsolidated equity investment interests (148,884 )
Receivable from dissolution of joint venture (644 )
Reclassification of accumulated foreign currency translation adjustments due to disposal (3,737 )
Balance as of September 30, 2016 $ 120,176


~~(1)~~	~~Includes the fair value of the six properties of $46,608 contributed by the Company to Strategic Office Partners.~~


~~(2)~~	~~Includes the fair value of the seven properties of $276,100 distributed by the Duke JV to the Company.~~

~~Gramercy European Property Fund~~

In December 2014, the Company, along with several equity investment partners, formed the Gramercy European Property Fund, a private real estate investment fund ~~which~~that targets single-tenant industrial, office and specialty retail assets throughout Europe. ~~Since inception,~~In the ~~equity investors, including the Company, have collectively committed and funded $395,213 (€352,500) in equity capital to the Gramercy European Property Fund. As~~second quarter of ~~September 30, 2016, the commitments of all equity investors to the Gramercy European Property Fund, including the Company, have been fully funded.~~

~~On May 31, 2016, the Gramercy European Property Fund acquired the Goodman Group’s 20.0% interest in the Goodman Europe JV for a total purchase price of $47,633 (€42,766). On June 30,~~ 2016, the Gramercy European Property Fund acquired 74.9% of the Company’s 80.0% interest in the Goodman Europe ~~JV for a total purchase price of $148,884 (€134,336).~~JV. As of ~~September 30,~~March 31, 2017 and December 31, 2016, the Company has a 14.2% interest in the Gramercy European Property Fund, ~~owns~~which has a 94.9% ~~of the Goodman Europe JV, which holds nine properties located in Germany and France.~~

As of September 30, 2016 and December 31, 2015, the Company contributed $55,892 (€50,000) and $25,663 (€23,160) to the Gramercy European Property Fund, respectively. During the nine months ended September 30, 2016 and the year ended December 31, 2015, the Gramercy European Property Fund acquired 12 and 12 properties, respectively, located in Germany, the Netherlands, Poland, the United Kingdom. Refer to Note 8 for additional information on the equity transactions related to the Gramercy European Property Fund and the Goodman Europe JV.

~~Philips JV~~

The Philips JV is a fee interest in 200 Franklin Square Drive, a 199,900 square foot building located in Somerset, New Jersey which is 100.0% net leased to Philips Holdings, USA Inc., a wholly-owned subsidiary of Royal Philips Electronics through December 2021. The property is financed by a $40,130 fixed rate mortgage loan with maturity in September 2035. The loan had an anticipated repayment date in September 2015 and, as such, excess cash flow at the property began paying down the loan in September 2015. During the three and nine months ended September 30, 2016, the Company did not receive any distributions from the joint venture. During the three and nine months ended September 30, 2015 the Company received distributions of $103 and $309, respectively, from the joint venture.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

~~Duke JV~~

The Duke JV invested in industrial and office properties located throughout the United States. The Company’s investment partner, Duke Realty Corporation, or Duke, acted as the managing member of the Duke JV, was entitled to receive fees in connection with the services it provides to the Duke JV, including asset management, construction, development, leasing and property management services, and was entitled to a promoted interest in the Duke JV. The Company had joint approval rights with Duke over all major policy decisions.

In June 2016, the Company and Duke entered into a Dissolution and Liquidation Agreement, or the Dissolution Agreement. On June 30, 2016, pursuant to the Dissolution Agreement, the Duke JV distributed seven of its properties to the Company and one of its properties and $2,760 to Duke. As a result of the distributions, the Company recorded a gain of $7,229 in the second quarter of 2016. In July 2016, the Duke JV sold its remaining property to a third party which completed the dissolution of the joint venture, and as a result of this sale, the Company received a final distribution of $41,060 from the Duke JV. During the three and nine months ended September 30, 2016, the Company received cash distributions of $0 and $53,807 from the Duke JV, not including the final distribution related to dissolution.

~~Strategic Office Partners~~

In August 2016, the Company and TPG partnered to form Strategic Office Partners, an unconsolidated equity investment created for the purpose of acquiring, owning, operating, leasing and selling single-tenant office properties located in high-growth metropolitan areas in the United States. On September 9, 2016, the Company contributed six properties to Strategic Office Partners valued at $187,500 and in exchange, the Company received cash proceeds of $140,625, equivalent to TPG’s 75.0% interest in the venture, plus a 25.0% interest in Strategic Office Partners valued at $46,608. Concurrently with the initial funding of Strategic Office Partners, the Company received a distribution of $30,581 representing its pro rata share of loan proceeds, resulting in an initial equity investment of $16,027. As a result of the transactions, the Company recorded a gain of $2,336, which is recorded in net gain from disposals on its Condensed Consolidated Statements of Operations. The properties comprise an aggregate 980,825 square feet.

TPG and the Company have committed an aggregate $400,000 to Strategic Office Partners, including $100,000 from the Company. The Company provides asset and property management, accounting, construction, and leasing services to Strategic Office Partners, for which it earns management fees and is entitled to a promoted interest. During the three months ended September 30, 2016, the Company contributed $46,608 to Strategic Office Partners, representing the fair value of properties contributed, and received cash distributions of $30,581 from Strategic Office Partners.

~~Goodman JV~~

The Goodman UK JV invests in industrial properties in the United Kingdom and the Goodman Europe JV invests in industrial properties in France and Germany. As noted above, during the second quarter of 2016, the Gramercy European Property Fund acquired the Goodman Group’s 20.0% interest in the Goodman Europe JV and acquired 74.9% of the Company’s 80.0%ownership interest in the Goodman Europe JV. As of ~~September 30,~~March 31, 2017 and December 31, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV, as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund.

~~Pursuant~~Since inception, the equity investors, including the Company, have collectively funded $395,213 (€352,500) in equity capital to the Gramercy European Property Fund. As of March 31, 2017 and December 31, 2016 the Company's cumulative contributions to the Gramercy European Property Fund were $55,892 (€50,000). As of March 31, 2017, the remaining commitments of all equity investors to the Gramercy European Property Fund were $53,260 (€50,000), including $13,315 (€12,500) from the Company. During the three months ended March 31, 2017 and 2016, the Company received distributions of $352 and $3,561, respectively, from the Goodman Europe JV.

During three months ended March 31, 2017 and the year ended December 31, 2016, the Gramercy European Property Fund acquired one and 13 properties, respectively, located in Germany, the Netherlands, Poland, and the United Kingdom, and in 2016 also acquired the Company's 5.1% interest in one property located in Lille, France held by the Goodman Europe JV. Refer to Note 8 for additional information on the equity transactions related to the Gramercy European Property Fund and Goodman Europe JV. As of March 31, 2017, there were 27 properties in the Gramercy European Property Fund and eight additional properties held in the Goodman Europe JV.

Strategic Office Partners

In August 2016, the Company partnered with TPG Real Estate, or TPG, to form Strategic Office Partners, an unconsolidated equity investment created for the purpose of acquiring, owning, operating, leasing and selling single-tenant office properties located in high-growth metropolitan areas in the United States. In September 2016, the Company contributed six properties to Strategic Office Partners and in the first quarter of 2017 Strategic Office Partners acquired one property. The Company provides asset and property management, accounting, construction, and leasing services to Strategic Office Partners, for which it earns management fees and is entitled to a promoted interest. TPG and the Company have committed to fund an aggregate $400,000 to Strategic Office Partners, including $100,000 from the Company. During the three months ended March 31, 2017, the Company contributed $2,650 to Strategic Office Partners and as of March 31, 2017, the Company's remaining commitment is $81,323. During the three months ended March 31, 2017, the Company received no distributions from the Strategic Office Partners.

Goodman UK JV shareholder agreement, if a deadlock arises pertaining to a major decision regarding a specific property, either shareholder may exercise a buy-sell option in relation to the relevant property for the Goodman UK JV. Additionally, after the initial investment period, either shareholder wishing to exit the Goodman UK JV may exercise a buy-sell option with respect to its entire interest.

The Goodman UK JV ~~pays certain fees to certain Goodman Group subsidiaries~~invests in ~~connection with~~industrial properties in the ~~services they provide to~~United Kingdom. During the ~~Goodman UK JV, including but not limited to investment advisory, development management~~three months ended March 31, 2017 and ~~property management services. The Goodman Group is also entitled to a promoted interest in~~2016, the Company received no distributions from the Goodman UK JV.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

AsDuke JV

The Duke JV invested in industrial and office properties located throughout the United States. In June 2016, the Company and Duke entered into a ~~result~~Dissolution and Liquidation Agreement, pursuant to which the Duke JV distributed seven of the Gramercy European Property Fund’s acquisition of the Goodman Group’s 20.0% interest in the Goodman Europe JV, the Goodman Europe JV shareholder agreement, which previously had the same terms as that of the Goodman UK JV, was amended. In the amended Goodman Europe JV shareholder agreement, control is allocatedits properties to the ~~joint venture partners based upon ownership interest. Following~~Company and one of its properties to Duke on June 30, 2016, then was dissolved in July 2016 following the ~~sale transaction, the Company has a cumulative continuing 18.6% interest in the Goodman Europe JV, through~~disposition of its ~~direct 5.1% ownership interest as well as its indirect ownership interest~~remaining property and final distributions of ~~14.2% in the Gramercy European Property Fund which owns 94.9% of the Goodman Europe JV. Due~~cash to its continuing equity interest, the Company maintains significant influence in the Goodman Europe JV, and as a result of both of these factors, the Company continues to account for its outstanding interest in the joint venture using the equity method. Pursuant to the amended Goodman Europe JV shareholder agreement, the Goodman Europe JV pays accounting and property management fees to certain Goodman Group subsidiaries and pays investment advisory and other management-related fees to the Gramercy European Property Fund in connection with the services these entities provide to the Goodman Europe JV.

members. During the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2016, the Company received cash distributions of ~~$0 and $7,375, respectively,~~$53,807 from the ~~Goodman Europe JV. During the three and nine months ended September 30, 2016, the Company did not receive any distributions from the Goodman UK~~Duke JV.

CBRE Strategic Partners Asia

CBRE Strategic Partners Asia is a real estate investment fund with investments in China. CBRE Strategic Partners Asia ~~had~~has an eight-year ~~original~~ term, which began on January 31, 2008 and may be extended for up to two one-year periods with the approval of two-thirds of the limited partners. In March 2016, the limited partners approved a one-year extension. CBRE Strategic Partners ~~Asia’s~~Asia's commitment period has ~~ended;~~ended, however, it may call capital to fund operations, obligations and liabilities. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, the Company did not receive any distributions from CBRE Strategic Partners Asia. In February 2017, the fund commenced liquidation and will wind up over the succeeding 24 months.

Philips JV

The Company has a 25.0% interest in 200 Franklin Square Drive, a 199,900 square foot building located in Somerset, New Jersey which is 100.0% net leased to Philips Holdings, USA Inc., a wholly-owned subsidiary of Royal Philips Electronics, through December 2021, or the Philips JV. During the three months ended March 31, 2017 and 2016, the Company ~~has not contributed any capital nor~~ received ~~any distributions. In March 2016,~~no distributions and recognized no revenue from the limited partners approved a one-year extension of the fund’s life. CBRE Strategic Partners Asia is managed by CBRE Investors SP Asia II, LLC, an affiliate of CBRE Global Investors. CBRE Strategic Partners Asia is not obligated to redeem the interests of any of its investors, including of the Company, prior to 2017. Except in certain limited circumstances such as transfers to affiliates, successor trustees or state agencies, the Company will not be permitted to sell its interest in CBRE Strategic Partners Asia without the prior written consent of the general partner, which the general partner may withhold in its sole discretion.Philips JV.

Morristown JV

OnIn October 8, 2015, the Company contributed 50.0% of its interest in an office property located in Morristown, New Jersey to a joint venture the Company formed with 21 South Street, a subsidiary of Hampshire Partners Fund VIII ~~LP. In connection~~LP, or the Morristown JV. Concurrent with the contribution, the ~~Company entered into a joint venture agreement for a 50.0% equity interest in the property with 21 South Street, or the Morristown JV. The~~ Company sold the remaining 50.0% equity interest of the property to 21 South Street for gross proceeds of $2,600. In October 2015, the Morristown JV entered into a leasing and construction management agreement with Prism Construction Management, LLC to manage the construction of specific improvements at the property.Street.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The ~~Condensed Consolidated Balance Sheets~~balance sheets for the Company’s unconsolidated equity investments at ~~September 30,~~March 31, 2017 are as follows:



	Gramercy European Property Fund ¹
	Goodman Europe JV		Gramercy European Property Fund ²		Total		Strategic Office Partners		Goodman UK JV		CBRE Strategic Partners Asia		Other ³
Assets:
Real estate assets, net ⁴	$	224,122	$	480,477	$	704,599	$	181,655	$	30,763	$	85,175	$	49,342
Other assets	27,485		94,407		121,892		46,673		2,057		11,992		3,251
Total assets	$	251,607	$	574,884	$	826,491	$	228,328	$	32,820	$	97,167	$	52,593
Liabilities and members’ equity:
Mortgages payable	$	140,245	$	285,499	$	425,744	$	142,498	$	—	$	—	$	39,557
Other liabilities	2,753		20,958		23,711		9,974		957		14,314		3,445
Total liabilities	142,998		306,457		449,455		152,472		957		14,314		43,002
Gramercy Property Trust equity	11,924		42,862		54,786		18,444		25,336		3,999		2,622
Other members’ equity	96,685		225,565		322,250		57,412		6,527		78,854		6,969
Liabilities and members’ equity	$	251,607	$	574,884	$	826,491	$	228,328	$	32,820	$	97,167	$	52,593

As of March 31, 2017, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9%interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. In the table above, the Company’s equity interest in the Goodman Europe JV includes both its direct 5.1% interest as well as its indirect interest that is held through its 14.2%interest in the Gramercy European Property Fund, and the Company’s equity interest in the Gramercy European Property Fund represents its interest in all of the properties owned by the Gramercy European Property Fund except for the properties in the Goodman Europe JV.


2.	Excludes the Gramercy European Property Fund’s 94.9% interest in the Goodman Europe JV.


3.	Includes the Philips JV, the Morristown JV, and European Fund Carry Co.


4.	Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

The balance sheets for the Company’s unconsolidated equity investments at December 31, 2016 are as follows:


	Gramercy European Property Fund⁽¹⁾															Gramercy European Property Fund ¹
	Goodman Europe JV		Gramercy European Property Fund⁽²⁾		Total		Strategic Office Partners		Goodman UK JV			CBRE Strategic Partners Asia		Other⁽³⁾		Goodman Europe JV		Gramercy European Property Fund ²		Total		Strategic Office Partners		Goodman UK JV		CBRE Strategic Partners Asia		Other ³
Assets:
Real estate assets, net⁽⁴⁾	$	307,398	$	359,246	$	666,644	$	155,783	$	37,716		$	95,477	$	49,860
Real estate assets, net ⁴																$	285,087	$	347,069	$	632,156	$	149,484	$	25,128	$	87,852	$	49,580
Other assets	40,389		59,942		100,331		34,590		4,433			12,086		3,397		86,273		63,523		149,796		42,323		6,650		12,247		3,020
Total assets	$	347,787	$	419,188	$	766,975	$	190,373	$	42,149		$	107,563	$	53,257	$	371,360	$	410,592	$	781,952	$	191,807	$	31,778	$	100,099	$	52,600
Liabilities and members’ equity:
Liabilities and members' equity:
Mortgages payable	$	135,716	$	206,778	$	342,494	$	121,608	$	—		$	—	$	40,130	$	174,269	$	215,980	$	390,249	$	121,894	$	—	$	—	$	39,730
Other liabilities	8,758		25,853		34,611		3,738		(606		)	13,782		3,448		7,778		19,940		27,718		4,347		934		14,383		3,259
Total liabilities	144,474		232,631		377,105		125,346		(606		)	13,782		43,578		182,047		235,920		417,967		126,241		934		14,383		42,989
Gramercy Property Trust equity	33,282		28,446		61,728		15,737		35,525			4,557		2,629		12,734		41,116		53,850		15,872		25,309		4,145		2,631
Other members’ equity	170,031		158,111		328,142		49,290		7,230			89,224		7,050
Liabilities and members’ equity	$	347,787	$	419,188	$	766,975	$	190,373	$	42,149		$	107,563	$	53,257
Other members' equity																176,579		133,556		310,135		49,694		5,535		81,571		6,980
Liabilities and members' equity																$	371,360	$	410,592	$	781,952	$	191,807	$	31,778	$	100,099	$	52,600

~~(1)~~1.

As of ~~September 30,~~December 31, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. In the table above, the Company’s equity interest in the Goodman Europe JV includes both its direct 5.1% interest as well as its indirect interest that is held through its 14.2% interest in the Gramercy European Property Fund, and the Company’s equity interest in the Gramercy European Property Fund represents its interest in all of the properties owned by the Gramercy European Property Fund except for the properties in the Goodman Europe JV.


~~(2)~~2.	Excludes the Gramercy European Property Fund’s 94.9% interest in the Goodman Europe JV.


~~(3)~~3.	Includes the Philips JV, the Morristown JV, and European Fund Carry Co.


~~(4)~~4.	Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~

~~The Condensed Consolidated Balance Sheets for the Company’s unconsolidated equity investments at December~~March 31, ~~2015 are as follows:~~

Goodman Europe JV Gramercy European Property Fund Goodman UK JV Duke JV CBRE Strategic Partners Asia
Other⁽¹⁾
Assets:

Real estate assets, net⁽²⁾
$ 276,925
$ 236,312
$ 42,584
$ 443,313
$ 109,554
$ 50,698
Other assets 42,139
39,983
3,427
32,739
9,337
15,954
Total assets $ 319,064
$ 276,295
$ 46,011
$ 476,052
$ 118,891
$ 66,652
Liabilities and members’ equity:
Mortgages payable $ 121,350
$ 143,616
$ —
$ 56,105
$ —
$ 40,424
Other liabilities 8,622
14,581
1,783
6,035
13,948
16,540
Total liabilities 129,972
158,197
1,783
62,140
13,948
56,964
Gramercy Property Trust equity 158,863
23,385
36,698
352,932
5,508
2,614
Other members’ equity 30,229
94,713
7,530
60,980
99,435
7,074
Liabilities and members’ equity $ 319,064
$ 276,295
$ 46,011
$ 476,052
$ 118,891
$ 66,652


~~(1)~~	~~Includes the Philips JV, the Morristown JV, and European Fund Carry Co.~~


~~(2)~~	~~Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~2017

Certain real estate assets in the Company’s unconsolidated equity investments are subject to mortgage loans. The following is a summary of the secured financing arrangements within the Company’s unconsolidated equity investments as of ~~September 30, 2016:~~March 31, 2017:


						Outstanding Balance⁽²⁾										Outstanding Balance ²
Property	Unconsolidated Equity Investment	Economic Ownership		Interest Rate⁽¹⁾	Maturity Date	September 30, 2016		December 31, 2015			Unconsolidated Equity Investment	Economic Ownership		Interest Rate ¹	Maturity Date	March 31, 2017		December 31, 2016
Strategic Office Partners portfolio ³											Strategic Office Partners	25.0%		3.83%	10/7/2019	$	145,800	$	125,000
Durrholz, Germany	Gramercy European Property Fund	14.2%		1.52%	3/31/2020	$	13,128	$	12,937		Gramercy European Property Fund	14.2%		1.52%	3/31/2020	12,303		12,289
Venray, Germany											Gramercy European Property Fund	14.2%		3.32%	12/2/2020	13,149		13,015
Lille, France											Gramercy European Property Fund	14.2%		3.13%	12/17/2020	27,429		27,081
Carlisle, United Kingdom											Gramercy European Property Fund	14.2%		3.32%	2/19/2021	10,620		10,443
Oud Beijerland, Netherlands	Gramercy European Property Fund	14.2%		2.06%	12/30/2022	8,663		8,463			Gramercy European Property Fund	14.2%		2.09%	12/30/2022	8,148		8,077
Zaandam, Netherlands	Gramercy European Property Fund	14.2%		2.05%	12/30/2022	12,492		12,203			Gramercy European Property Fund	14.2%		2.08%	12/30/2022	11,749		11,647
Kerkrade, Netherlands	Gramercy European Property Fund	14.2%		2.05%	12/30/2022	10,320		10,081			Gramercy European Property Fund	14.2%		2.08%	12/30/2022	9,706		9,622
Friedrichspark, Germany	Gramercy European Property Fund	14.2%		2.05%	12/30/2022	9,325		9,109			Gramercy European Property Fund	14.2%		2.08%	12/30/2022	8,770		8,694
Fredersdorf, Germany	Gramercy European Property Fund	14.2%		2.05%	12/30/2022	12,063		11,783			Gramercy European Property Fund	14.2%		2.08%	12/30/2022	11,345		11,247
Breda, Netherlands	Gramercy European Property Fund	14.2%		1.87%	12/30/2022	10,668		7,796			Gramercy European Property Fund	14.2%		1.90%	12/30/2022	10,035		9,948
Juechen, Germany	Gramercy European Property Fund	14.2%		1.86%	12/30/2022	20,220		19,750			Gramercy European Property Fund	14.2%		1.89%	12/30/2022	19,017		18,852
Piaseczno, Poland	Gramercy European Property Fund	14.2%		1.95%	12/30/2022	8,731		8,522			Gramercy European Property Fund	14.2%		1.98%	12/30/2022	8,212		8,141
Strykow, Poland	Gramercy European Property Fund	14.2%		1.95%	12/30/2022	20,558		20,063			Gramercy European Property Fund	14.2%		1.98%	12/30/2022	19,335		19,167
Venray, Germany	Gramercy European Property Fund	14.2%		3.32%	12/2/2020	13,938		13,578
Uden, Netherlands	Gramercy European Property Fund	14.2%		1.95%	12/30/2022	9,560		9,331			Gramercy European Property Fund	14.2%		1.98%	12/30/2022	8,992		8,913
Rotterdam, Netherlands	Gramercy European Property Fund	14.2%		1.86%	12/30/2022	8,180		—			Gramercy European Property Fund	14.2%		1.89%	12/30/2022	7,700		7,633
Frechen, Germany											Gramercy European Property Fund	14.2%		1.49%	12/30/2022	6,101		6,043
Meerane, Germany											Gramercy European Property Fund	14.2%		1.35%	12/30/2022	10,236		10,138
Amsterdam, Netherlands											Gramercy European Property Fund	14.2%		1.59%	12/30/2022	3,123		3,093
Tiel, Netherlands											Gramercy European Property Fund	14.2%		1.59%	12/30/2022	9,262		9,174
Netherlands portfolio ⁴											Gramercy European Property Fund	14.2%		3.02%	6/28/2023	13,581		13,409
Kutno, Poland	Gramercy European Property Fund	14.2%		1.91%	7/21/2023	6,292		—			Gramercy European Property Fund	14.2%		1.91%	7/21/2023	5,965		5,890
Frechen, Germany	Gramercy European Property Fund	14.2%		1.46%	12/30/2022	6,476		—
Netherlands Portfolio⁽⁵⁾	Gramercy European Property Fund	14.2%		3.02%	6/28/2023	14,325		—
Meerane, Germany	Gramercy European Property Fund	14.2%		1.32%	12/30/2022	10,864		—
Graben, Germany⁽³⁾	Goodman Europe JV	18.6%	⁽⁴⁾	2.39%	7/27/2017	34,941		33,781
Koblenz Germany	Goodman Europe JV	18.6%	⁽⁴⁾	2.27%	12/12/2017	35,671		34,486
Bremen, Germany	Goodman Europe JV	18.6%	⁽⁴⁾	3.01%	11/25/2020	13,257		12,817
Bodenheim, Germany	Goodman Europe JV	18.6%	⁽⁴⁾	3.01%	11/25/2020	12,718		12,296
Lille, France	Goodman Europe JV	18.6%	⁽⁴⁾	3.13%	12/17/2020	28,930		27,970
Carlisle, United Kingdom	Gramercy European Property Fund	14.2%		3.32%	2/19/2021	10,978		—
Strategic Office Partners Portfolio⁽⁷⁾	Strategic Office Partners	25.0%		3.60%	10/7/2019	125,000		—
European Facility 1 ⁵											Goodman Europe JV	18.6%	⁶	0.90%	11/16/2023	31,957		31,551
European Facility 2 ⁵											Goodman Europe JV	18.6%	⁶	1.75%	11/16/2023	108,289		106,917
Utrecht, Netherlands											Gramercy European Property Fund	14.2%		1.95%	1/16/2024	36,616		—
Worksop, United Kingdom											Gramercy European Property Fund	14.2%		3.94%	10/20/2026	10,668		10,551
Somerset, NJ	Philips JV	25.0%		6.90%	9/11/2035	40,130		40,424			Philips JV	25.0%		6.90%	9/11/2035	39,557		39,730
Lake Forest, IL	Duke JV	80.0%		N/A	N/A	—		8,823
Tampa, FL	Duke JV	80.0%		N/A	N/A	—		4,231
Fort Lauderdale, FL⁽⁶⁾	Duke JV	80.0%		N/A	N/A	—		43,051
Total						$	497,428	$	361,495
Total mortgage notes payable										Total mortgage notes payable						$	607,665	$	546,265
Net deferred financing costs and net debt premium										Net deferred financing costs and net debt premium						134		5,608
Total mortgage notes payable, net										Total mortgage notes payable, net						$	607,799	$	551,873


~~(1)~~1.	Represents the current effective rate as of ~~September 30, 2016,~~March 31, 2017, including the swapped interest rate for loans that have interest rate swaps. The current interest rate is not adjusted to include the amortization of fair market value premiums or discounts.


~~(2)~~2.	Mortgage loans amounts are presented at 100.0% of the amount in the unconsolidated equity investment.


~~(3)~~3.	~~Represents two~~There are seven properties under this mortgage loan.


~~(4)~~4.	There are five properties under this mortgage loan.


5.	There are eight properties under this loan facility.


6.	Represents the Company’s economic ownership in the Goodman Europe JV, which includes both its 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund.


~~(5)~~	~~Represents five properties under this mortgage loan.~~


~~(6)~~	~~Represents four properties under this mortgage loan.~~


~~(7)~~	~~Represents six properties under this mortgage loan.~~

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The statements of operations for the Company’s unconsolidated equity investments for the three months ended ~~September 30, 2016 and 2015~~March 31, 2017 or partial period for acquisitions or dispositions which closed during these periods, are as follows:


	For the Three Months Ended September 30, 2016																							For the Three Months Ended September 30, 2015
	Gramercy European Property Fund⁽¹⁾																										Gramercy European Property Fund ¹
	Goodman Europe JV		Gramercy European Property Fund			Total			Strategic Office Partners			Goodman UK JV			Duke JV			CBRE Strategic Partners Asia			Other⁽²⁾			All Unconsolidated Equity Investments⁽³⁾			Goodman Europe JV			Gramercy European Property Fund ²		Total			Strategic Office Partners			Goodman UK JV			CBRE Strategic Partners Asia			Other ³
Revenues	$	6,195	$	7,329		$	13,524		$	1,291		$	557		$	417		$	(11,557	)	$	1,080		$	1,975		$	4,955		$	10,118	$	15,073		$	5,526		$	295		$	(2,445	)	$	1,114
Operating expenses	676		1,619			2,295			280			225			191			341			129			375			922			2,951		3,873			1,474			302			418			158
Acquisition expenses	—		2,141			2,141			664			—			—			—			—			5,289
Interest expense	653		1,138			1,791			410			—			—			—			698			700			672			1,474		2,146			1,510			—			—			641
Depreciation and amortization	3,276		2,800			6,076			898			339			—			—			333			820			2,021			4,473		6,494			2,503			375			—			333
Total expenses	4,605		7,698			12,303			2,252			564			191			341			1,160			7,184			3,615			8,898		12,513			5,487			677			418			1,132
Net income (loss) from operations	1,590		(369		)	1,221			(961		)	(7		)	226			(11,898		)	(80		)	(5,209		)	1,340			1,220		2,560			39			(382		)	(2,863		)	(18		)
Loss on derivatives	—		(1,124		)	(1,124		)	(129		)	—			—			—			—			(591		)
Net gain on disposals	—		—			—			—			—			28,170			—			—			—
Gain (loss) on derivatives																											—			1,221		1,221			(349		)	—			—			—
Provision for taxes	—		(284		)	(284		)	—			—			—			—			—			(178		)	(17		)	146		129			—			(8		)	—			—
Net income (loss)	$	1,590	$	(1,777	)	$	(187	)	$	(1,090	)	$	(7	)	$	28,396		$	(11,898	)	$	(80	)	$	(5,978	)	$	1,323		$	2,587	$	3,910		$	(310	)	$	(390	)	$	(2,863	)	$	(18	)
Company’s share in net income (loss)	$	322	$	(252	)	$	70		$	(273	)	$	(6	)	$	20,749		$	(605	)	$	(4	)	$	(1,096	)
Basis adjustments	11		—			11			—			(183		)	(20,897		)	—			—			—
Company’s equity in net income (loss) within continuing operations	$	333	$	(252	)	$	81		$	(273	)	$	(189	)	$	(148	)	$	(605	)	$	(4	)	$	(1,096	)
Company's share in net income (loss)																											$	67		$	446	$	513		$	(15	)	$	(312	)	$	(146	)	$	(9	)
Adjustments for REIT basis																											(36		)	—		(36		)	—			(89		)	—			—
Company's equity in net income (loss) within continuing operations																											$	31		$	446	$	477		$	(15	)	$	(401	)	$	(146	)	$	(9	)

~~(1)~~1.

As of and for the three months ended ~~September 30, 2016,~~March 31, 2017, the Company had a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the three months ended ~~September 30, 2016,~~March 31, 2017, the Company’s equity in net income (loss) ~~from~~of the entities is based on these ownership interest percentages during the period.


~~(2)~~2.	Excludes the results of the Gramercy European Property Fund’s 94.9% interest in the Goodman Europe JV, as the Goodman Europe JV is separately presented.


3.	Includes the Philips JV, the Morristown JV, and European Fund Carry Co.


~~(3)~~	~~Represents the Gramercy European Property Fund and the Philips JV.~~

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The ~~Condensed Consolidated Statements~~statements of ~~Operations~~operations for the Company’s unconsolidated equity investments for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 ~~and 2015~~ or partial period for acquisitions or dispositions which closed during these periods, are as follows:


	For the Nine Months Ended September 30, 2016																								For the Nine Months Ended September 30, 2015
	Gramercy European Property Fund⁽¹⁾
	Goodman Europe JV			Gramercy European Property Fund			Total			Strategic Office Partners			Goodman UK JV			Duke JV			CBRE Strategic Partners Asia			Other⁽²⁾			All Unconsolidated Equity Investments⁽³⁾			Goodman Europe JV			Gramercy European Property Fund			Goodman UK JV			Duke JV			Other ¹
Revenues	$	18,389		$	18,270		$	36,659		$	1,291		$	5,477		$	19,812		$	(11,315	)	$	3,245		$	4,249		$	6,121		$	5,057		$	4,284		$	10,536		$	301
Operating expenses	2,372			3,188			5,560			280			698			5,309			1,208			342			903			862			502			287			2,991			712
Acquisition expenses	4,960			4,678			9,638			664			—			—			—			27			5,289			—			666			—			—			—
Interest expense	2,519			3,032			5,551			410			—			602			—			2,131			1,795			923			927			—			436			729
Depreciation and amortization	7,907			7,632			15,539			898			1,461			7,154			—			998			1,658			2,290			2,345			750			3,729			333
Total expenses	17,758			18,530			36,288			2,252			2,159			13,065			1,208			3,498			9,645			4,075			4,440			1,037			7,156			1,774
Net income (loss) from operations	631			(260		)	371			(961		)	3,318			6,747			(12,523		)	(253		)	(5,396		)	2,046			617			3,247			3,380			(1,473		)
Loss on derivatives	—			(6,428		)	(6,428		)	(129		)	—			—			—			—			(591		)	—			(3,814		)	—			—			—
Loss on extinguishment of debt	—			—			—			—			—			(7,962		)	—			—			—			—			—			—			(7,962		)	—
Net gains on disposals	—			—			—			—			—			66,705			—			—			—
Net gain on disposals																												—			—			—			38,535			—
Provision for taxes	—			(876		)	(876		)	—			—			—			—			—			(178		)	—			(315		)	—			—			—
Net income (loss)	$	631		$	(7,564	)	$	(6,933	)	$	(1,090	)	$	3,318		$	65,490		$	(12,523	)	$	(253	)	$	(6,165	)	$	2,046		$	(3,512	)	$	3,247		$	33,953		$	(1,473	)
Company’s share in net income (loss)	$	(444	)	$	(1,386	)	$	(1,830	)	$	(273	)	$	2,655		$	50,424		$	(641	)	$	—		$	(974	)
Basis adjustments	455			—			455			—			(461		)	(54,390		)	—			—			—
Company’s equity in net income (loss) within continuing operations	$	11		$	(1,386	)	$	(1,375	)	$	(273	)	$	2,194		$	(3,966	)	$	(641	)	$	—		$	(974	)
Company's share in net income (loss)																												$	1,637		$	(695	)	$	2,597		$	27,162		$	(79	)
Adjustments for REIT basis																												(486		)	—			(270		)	(32,621		)	—
Company's equity in net income (loss) within continuing operations																												$	1,151		$	(695	)	$	2,327		$	(5,459	)	$	(79	)

~~(1)~~

On May 31, 2016, the Gramercy European Property Fund acquired a 20.0% interest in the Goodman Europe JV and on June 30, 2016, the Gramercy European Property Fund acquired 74.9% of the Company’s 80.0% interest in the Goodman Europe JV. As of September 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the nine months ended September 30, 2016, the Company’s equity in net income (loss) from the entities is based on these ownership interest percentages during the period.


~~(2)~~1.	Includes the Philips JV, the Morristown JV, ~~and~~ European Fund Carry Co., and CBRE Strategic Partners Asia.


~~(3)~~	~~Represents the Gramercy European Property Fund and the Philips JV.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

6. Debt Obligations

Secured Debt

Mortgage Loans

Certain ~~of the Company’s~~ real estate assets are subject to mortgage loans. During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, the Company assumed $3,680 of non-recourse mortgages ~~of $45,958~~ in connection with 11one real estate ~~acquisitions, $12,931 associated with two properties distributed from the Duke JV, and entered into a $9,550 mortgage.~~acquisition. During the year ended December 31, ~~2015,~~2016, the Company assumed ~~$618,169~~$244,188 of non-recourse mortgages in connection with 4227 real estate ~~acquisitions, of which $464,292 related to mortgages on 29 properties acquired in connection with the Merger.~~acquisitions.

During the three months ended ~~September 30,~~March 31, 2017, the Company refinanced the debt on two properties encumbered by a mortgage loan, subsequently transferred the mortgage on these two properties to the buyer of the properties, and, as a result, recorded a net loss on the early extinguishment of debt of $208. During the three months ended March 31, 2016, the Company paid off the debt on ~~14 properties encumbered by mortgage loans and during the nine months ended September 30, 2016, the Company paid off the debt on 22~~six properties encumbered by mortgage loans and transferred one ~~mortgage to the buyer of the~~property encumbered ~~property. Additionally, during the three months ended September 30, 2016 the Company defeased~~by a mortgage loan, with an outstanding principal balance of $124,605 that encumbered 11 properties, through the purchase of treasury securities valued at $144,063, which were immediately sold following the transaction. For the three and ~~nine months ended September 30, 2016,~~as a result, the Company recorded a net ~~losses~~loss on the early extinguishment of debt of ~~$(13,777) and $(20,890),~~$3,827, including a net ~~gains~~gain on extinguishment of debt of ~~$0 and~~ $1,930 within discontinued ~~operations, respectively,~~operations. The gains and losses recorded for extinguishments of debt are related to unamortized deferred financing costs and mortgage premiums ~~and discounts~~(discounts) that were immediately expensed upon termination as well as early termination fees ~~and other costs incurred related to the extinguishments. No gains or losses on debt extinguishments were recorded during the three and nine months ended September 30, 2015.~~incurred. The Company’s mortgage loans include a series of financial and other covenants ~~that~~with which the Company ~~has to~~must comply ~~with~~ in order to borrow under them. The Company was in compliance with the covenants under the mortgage loan facilities as of ~~September 30, 2016 and December~~March 31, ~~2015.~~2017.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The following is a summary of the Company’s secured financing arrangements as of ~~September 30, 2016:~~March 31, 2017:

Property
Interest Rate⁽¹⁾
Maturity Date Outstanding Balance
September 30, 2016 December 31, 2015
Buford, GA 7.46% 7/1/2017 $ 15,625
$ 15,947
Dallas, TX⁽²⁾
4.45% 3/1/2018 9,594
9,754
Cincinnati, KY⁽²⁾
4.45% 3/1/2018 6,666
6,777
Jacksonville, FL⁽²⁾
4.45% 3/1/2018 6,891
7,006
Phoenix, AZ⁽²⁾
4.45% 3/1/2018 4,144
4,213
Minneapolis, MN⁽²⁾
4.45% 3/1/2018 6,036
6,136
Ames, IA 5.53% 5/1/2018 16,556
16,900
Greenwood, IN 3.28% 6/15/2018 7,480
7,610
Greenfield, IN 3.28% 6/15/2018 6,045
6,150
Philadelphia, PA 4.28% 1/1/2019 12,423
12,696
Bridgeview, IL 7.40% 5/1/2019 6,056
—
KIK Canada Portfolio⁽³⁾
3.58% 5/5/2019 8,186
—
Spartanburg, SC 5.42% 6/1/2019 1,120
1,398
Charleston, SC 5.65% 8/1/2019 1,113
1,486
Lawrence, IN 4.00% 1/1/2020 20,860
21,371
Charlotte, NC 5.47% 1/1/2020 2,381
2,859
Hawthorne, CA 6.60% 8/1/2020 17,748
18,108
Charleston, SC 5.20% 10/1/2020 1,041
1,210
Charleston, SC 5.20% 10/1/2020 1,041
1,210
Charleston, SC 5.20% 10/1/2020 1,059
1,230
Charlotte, NC 5.27% 10/1/2020 903
1,049
Des Plaines, IL 5.25% 10/31/2020 2,482
2,537
Waco, TX 4.55% 12/19/2020 15,262
15,485
Winston-Salem, NC 5.53% 6/1/2021 4,403
4,998
Winston-Salem, NC 5.50% 7/1/2021 1,454
1,647
CCC Portfolio⁽⁴⁾
4.54% 10/6/2022 23,393
—
KIK USA Portfolio⁽⁵⁾
4.82% 7/6/2023 7,522
—
Yuma, AZ 5.15% 12/6/2023 12,107
12,247
Allentown, PA 5.07% 1/6/2024 23,172
23,443
Spartanburg, SC 6.33% 2/1/2024 6,534
7,040
Charleston, SC 5.80% 2/1/2025 6,816
7,277
Hackettstown, NJ 5.15% 3/6/2026 9,550
—
Hutchins, TX 6.95% 6/1/2029 23,048
23,870
Woodcliff Lake, NJ 5.97% 9/15/2017 35,703
36,681
Columbus, OH 3.78% 5/31/2018 19,942
20,644
Columbus, OH 3.95% 1/31/2019 5,955
6,094
Deerfield, IL 4.75% 1/1/2021 10,890
11,145
Wilson, NC N/A N/A —
8,603
Dividend Capital Portfolio⁽⁶⁾
N/A N/A —
126,161
Charlotte, NC N/A N/A —
13,025
Coppell, TX N/A N/A —
10,391
Jersey City, NJ⁽⁷⁾
N/A N/A —
112,000
Jersey City, NJ⁽⁷⁾
N/A N/A —
101,726
Blue Ash, OH⁽⁷⁾
N/A N/A —
14,896
Blue Ash, OH⁽⁷⁾
N/A N/A —
13,139
Blue Ash, OH⁽⁷⁾
N/A N/A —
12,485

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~


Property	Interest Rate⁽¹⁾	Maturity Date		Outstanding Balance							Interest Rate ¹		Maturity Date		Outstanding Balance
Property	Interest Rate⁽¹⁾		September 30, 2016			December 31, 2015						March 31, 2017				December 31, 2016
Bloomington, MN	N/A	Maturity Date	N/A		—			19,824			Interest Rate ¹
Bloomington, MN	N/A	N/A		—			21,825
Buford, GA											4.67%		Maturity Date	7/1/2017		$	15,393		$	15,512
Woodcliff Lake, NJ											3.04%		9/15/2017		35,024			35,366
Logistics Portfolio - Pool 2 ²											4.48%		1/1/2018		36,139			36,279
Dallas, TX ³											3.05%		3/1/2018		9,485			9,540
Cincinnati, KY ³											3.29%		3/1/2018		6,590			6,628
Jacksonville, FL ³											3.05%		3/1/2018		6,813			6,852
Phoenix, AZ ³											3.05%		3/1/2018		4,097			4,120
Minneapolis, MN ³											3.05%		3/1/2018		5,967			6,001
Ames, IA											5.05%		5/1/2018		16,312			16,436
Columbus, OH											3.57%		5/31/2018		19,474			19,708
Greenwood, IN											3.59%		6/15/2018		7,392			7,436
Greenfield, IN											3.63%		6/15/2018		5,974			6,010
Logistics Portfolio - Pool 3 ²											3.96%		8/1/2018		43,300			43,300
Philadelphia, PA											4.99%		1/1/2019		12,232			12,328
Columbus, OH											3.94%		1/31/2019		5,862			5,908
Bridgeview, IL											3.90%		5/1/2019		5,971			6,014
Spartanburg, SC											3.20%		6/1/2019		929			1,025
Charleston, SC											3.11%		8/1/2019		856			986
Lawrence, IN											5.02%		1/1/2020		20,545			20,703
Charlotte, NC											3.28%		1/1/2020		2,051			2,217
Hawthorne, CA											3.52%		8/1/2020		17,556			17,638
Charleston, SC											2.97%		10/1/2020		925			984
Charleston, SC											3.37%		10/1/2020		925			984
Charleston, SC											3.32%		10/1/2020		941			1,001
Charlotte, NC											3.38%		10/1/2020		802			853
Des Plaines, IL											5.54%		10/31/2020		2,444			2,463
Waco, TX											4.75%		12/19/2020		15,113			15,187
Deerfield, IL											3.71%		1/1/2021		10,716			10,804
Winston-Salem, NC											3.41%		6/1/2021		3,992			4,199
Winston-Salem, NC											3.42%		7/1/2021		1,320			1,388
Logistics Portfolio - Pool 1 ²											4.29%		1/1/2022		38,842			39,002
CCC Portfolio ²											4.46%		10/6/2022		23,162			23,280
Durham, NC											4.02%		9/6/2024		3,680			—
Logistics Portfolio - Pool 4 ²											4.36%		12/5/2022		79,500			79,500
KIK USA Portfolio ²											4.63%		7/6/2023		7,376			7,450
Yuma, AZ											5.27%		12/6/2023		12,007			12,058
Allentown, PA											5.16%		1/6/2024		22,979			23,078
Spartanburg, SC											3.72%		2/1/2024		6,183			6,360
Charleston, SC											3.80%		2/1/2025		6,497			6,658
Hackettstown, NJ											4.95%		3/6/2026		9,550			9,550
Hutchins, TX											7.65%		6/1/2029		22,476			22,764
KIK Canada Portfolio ²											3.57%		5/5/2019		—			7,914
Total mortgage notes payable				361,201			770,293			Total mortgage notes payable					$	547,392		$	555,484
Plus net deferred financing costs and net debt premium⁽⁸⁾				7,185			20,633
Net deferred financing costs and net debt premium										Net deferred financing costs and net debt premium					2,532			3,158
Total mortgage notes payable, net				368,386			790,926			Total mortgage notes payable, net					$	549,924		$	558,642
Total mortgage notes payable, net on assets held for sale				—			(260,704		)
Total mortgage notes payable, net				$	368,386		$	530,222

~~(1)~~1.

Represents the ~~current~~ interest rate as of ~~September 30, 2016, including~~March 31, 2017 or date of extinguishment if loan was extinguished during the ~~swapped~~period, that was recorded for financial reporting purposes, which reflects the effect of interest rate ~~for loans that have interest rate swaps. The current interest rate is not adjusted to include the~~swaps and amortization of financing costs and fair market value premiums or discounts.

~~(2)~~2.

There are five properties under the Logistics Portfolio - Pool 2 loan, two properties under the Logistics Portfolio - Pool 3 loan, three properties under the Logistics Portfolio - Pool 1 loan, five properties under the CCC Portfolio loan, six properties under the Logistics Portfolio - Pool 4 loan, three properties under the KIK USA Portfolio loan, and two properties under the KIK Canada Portfolio loan.


3.	These five mortgage loans are cross-collateralized.


~~(3)~~	~~Represents two properties under one mortgage loan.~~


~~(4)~~	~~Represents five properties under one mortgage loan.~~


~~(5)~~	~~Represents three properties under one mortgage loan.~~


~~(6)~~	~~Represents 11 properties under one mortgage loan.~~


~~(7)~~	These mortgage loans were related to properties that were classified as held for sale as of December 31, 2015, and accordingly the mortgage loans were included within liabilities related to assets held for sale on the Condensed Consolidated Balance Sheet as of December 31, 2015. These properties were sold and their loans were paid off during the first quarter of 2016.

~~(8)~~

During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line to net against the liability for all periods presented, including for mortgage notes payable, as shown here. See Note 2, “Summary of Significant Accounting Policies,” for further information.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Unsecured Debt

2015 Credit Facility and Term Loans

In December 2015, the Company entered into an agreement, or the Credit Agreement, for a new $1,900,000 credit facility, or the 2015 Credit Facility, consisting of an $850,000 senior unsecured revolving credit facility, or the 2015 Revolving Credit Facility, and ~~a $1,225,000~~$1,050,000 term loan facility ~~or the 2015 Term Loan,~~ with JPMorgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated and terminated Legacy ~~Gramercy’s~~Gramercy's 2014 Credit Facility. The 2015 Revolving Credit Facility consists of a $750,000 U.S. dollar revolving credit facility and a $100,000 multicurrency revolving credit facility. The 2015 Revolving Credit Facility matures in January 2020, but may be extended for two additional ~~six-month~~six month periods upon the payment of applicable fees and satisfaction of certain customary conditions. ~~Borrowings under~~The term loan facility, or the multicurrency loan denominated in euros and British pounds sterling are designated as non-derivative net investment hedges to mitigate the risk from fluctuations in foreign currency exchange rates. Refer to Note 10, “Derivatives and Non-Derivative Hedging Instruments,” for further information on the Company’s hedges. The 2015 Term Loan, consists of a $300,000 term loan facility that matures in January 2019 with one 12-month extension option, or the 3-Year Term Loan, and a $750,000 term loan facility that matures in January 2021, or the 5-Year Term Loan.

Outstanding borrowings under the 2015 Revolving Credit Facility incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted London Interbank Offered Rate, or LIBOR, plus an applicable margin ranging from 0.875% to 1.55%, depending on the Company’s credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.55%, depending on the Company’s credit ratings. The Company is also required to pay quarterly in arrears a 0.125% to 0.30% facility fee, depending on the ~~Company’s~~Company's credit ratings, on the total commitments under the 2015 Revolving Credit Facility. Outstanding borrowings under the 2015 Term Loan incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.90% to 1.75%, depending on the Company’s credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.75%, depending on the Company’s credit ratings. The alternate base rate is the greater of (x) the prime rate announced by JPMorgan Chase Bank, N.A., (y) 0.50% above the Federal Funds Effective Rate and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.

In December 2015, the Company also entered into a new $175,000 seven-year unsecured term loan with Capital One, N.A., or the 7-Year Term Loan, which matures in January 2023. Outstanding borrowings under the 7-Year Term Loan incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 1.30% to 2.10%, depending on the Company’s credit ratings, or (iii) the alternate base rate plus an applicable margin ranging from 0.30% to 1.10%, depending on the Company’s credit ratings. The alternate base rate is the greatest of (x) the prime rate announced by Capital One, ~~N.A.,~~ (y) 0.50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.

During the first half of 2016, the Company amended its 5-Year Term Loan and its 7-Year Term Loan in order to remove the 0.00% rate floor on the applicable LIBOR that existed in the original loan agreements. TheseThe Company’s unsecured borrowing facilities include a series of financial and other covenants that the Company has to comply with in order to borrow under the facilities. The Company was in compliance with the covenants under the facilities as of ~~September 30, 2016.~~ March 31, 2017. Refer to the table at the end of Note 6 for specific terms and the Company’s outstanding borrowings under the facilities.

Senior Unsecured Notes

During ~~the first quarter of~~ 2016 and 2015, the Company ~~adopted accounting guidance related~~issued and sold $400,000 and $100,000 aggregate principal amount of senior unsecured notes payable, respectively, in private placements, which have maturities ranging from 2022 through 2026 and bear interest semiannually at rates ranging from 3.89% to 4.97%. Refer to the ~~presentation~~table later in Note 6 for specific terms of ~~deferred financing costs on~~ the balance sheet and reclassified amounts from the deferred costs line to net against the liability for all periods presented. Deferred financing costs associated with the Company’s credit facility remain in deferred costs on the Condensed Consolidated Balance Sheets. See Note 2, “Significant Accounting Policies,” for further information.Company's Senior Unsecured Notes.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~The terms of the Company’s unsecured revolving credit facility and term loans, as well as outstanding balances as of September 30, 2016 and December 31, 2015, are set forth in the table below:~~

Unswapped Interest Rate
Effective Interest Rate⁽¹⁾
Maturity Date Outstanding Balance
September 30, 2016 December 31, 2015
2015 Revolving Credit Facility - U.S. dollar tranche 1.51 % 1.51 % 1/8/2020 $ 70,000
$ 275,000
2015 Revolving Credit Facility - Multicurrency tranche 1.07 % 1.07 % 1/8/2020 93,365
21,724
3-Year Term Loan 1.66 % 1.66 % 1/8/2019 300,000
300,000
5-Year Term Loan 1.66 % 2.70 % 1/8/2021 750,000
750,000
7-Year Term Loan 2.05 % 3.34 % 1/9/2023 175,000
175,000
Total Unsecured Revolving Credit and Term Loan Facilities $ 1,388,365
$ 1,521,724


~~(1)~~	~~Represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the effect of the interest rate swaps, excluding debt issuance costs.~~

~~Senior Unsecured Notes~~

On December 17, 2015, the Company issued and sold $100,000 aggregate principal amount of senior unsecured notes, or the Senior Unsecured Notes, and on January 12, 2016, the Company issued and sold an additional $50,000 aggregate principal amount of the Senior Unsecured Notes in private placements. The Senior Unsecured Notes are guaranteed by the Company and bear interest at a rate of 4.97% per annum, with interest payable in arrears on June 17 and December 17 of each year until maturity.

Exchangeable Senior Notes

On March 18, 2014, the Company issued $115,000 of 3.75% ~~exchangeable senior notes, or the~~ Exchangeable Senior Notes. The Exchangeable Senior Notes are senior unsecured obligations of a subsidiary of the ~~Company’s~~ Operating Partnership and are guaranteed by the Company on a senior unsecured basis. The Exchangeable Senior Notes mature on March 15, 2019, unless redeemed, repurchased or exchanged in accordance with their terms prior to such date and will be exchangeable, under certain circumstances, for cash, for common shares or for a combination of cash and common shares, at the election of the ~~Company’s~~ Operating Partnership. The Exchangeable Senior Notes will also be exchangeable prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date, at any time beginning on December 15, 2018, and also upon the occurrence of certain events. On or after March 20, 2017, in certain circumstances, the ~~Company’s~~ Operating Partnership may redeem all or part of the Exchangeable Senior Notes for cash at a price equal to 100.0% of the principal amount of the Exchangeable Senior Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.

As of ~~September 30, 2016,~~March 31, 2017, the Exchangeable Senior Notes have a current exchange rate of ~~41.5897~~14.0843 units of Merger consideration, where one unit of Merger consideration represents 3.1898 of the Company's common shares, or approximately 44.9261 of the ~~Company, or approximately 132.6628 of the Company’s~~Company's common shares for each $1.0 principal amount of the Exchangeable Senior Notes, representing an exchange price of ~~$7.54~~$22.26 per common share of the Company. The fair value of the Exchangeable Senior Notes was determined at issuance to be $106,689. The discount is being amortized to interest expense over the expected life of the Exchangeable Senior Notes. As of ~~September 30, 2016~~March 31, 2017 and December ~~31, 2015,~~2016, the Exchangeable Senior Notes were recorded as a liability at carrying value of ~~$108,186~~$109,488 and ~~$106,581,~~$108,832, respectively, net of unamortized discount and deferred financing costs of ~~$6,814~~$5,512 and ~~$8,419,~~$6,168, respectively. The fair value of the Exchangeable Senior Notes’ embedded exchange option of ~~the Exchangeable Senior Notes~~$11,726 was recorded in additional paid-in-capital within shareholders’ equity ~~of $11,726~~ as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016.

The terms of the Company’s unsecured debt obligations and outstanding balances as of March 31, 2017 and December 31, 2016 are set forth in the table below:



	Stated Interest Rate		Effective Interest Rate ¹		Maturity Date	Outstanding Balance
	Stated Interest Rate		Effective Interest Rate ¹		Maturity Date	March 31, 2017			December 31, 2016
2015 Revolving Credit Facility - U.S. dollar tranche	1.95	%	1.95	%	1/8/2020	$	55,000		$	—
2015 Revolving Credit Facility - Multicurrency tranche	1.02	%	1.02	%	1/8/2020	66,759			65,837
3-Year Term Loan	2.10	%	2.33	%	1/8/2019	300,000			300,000
5-Year Term Loan	2.10	%	2.70	%	1/8/2021	750,000			750,000
7-Year Term Loan	2.31	%	3.34	%	1/9/2023	175,000			175,000
2015 Senior Unsecured Notes	4.97	%	5.07	%	12/17/2024	150,000			150,000
2016 Senior Unsecured Notes	3.89	%	4.00	%	12/15/2022	150,000			150,000
2016 Senior Unsecured Notes	4.26	%	4.38	%	12/15/2025	100,000			100,000
2016 Senior Unsecured Notes	4.32	%	4.43	%	12/15/2026	100,000			100,000
Exchangeable Senior Notes	3.75	%	6.36	%	3/15/2019	115,000			115,000
Total unsecured debt						1,961,759			1,905,837
Net deferred financing costs and net debt discount						(8,988		)	(9,704		)
Total unsecured debt, net						$	1,952,771		$	1,896,133


1.	Represents the rate at which interest expense is recorded for financial reporting purposes as of March 31, 2017, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Combined aggregate principal maturities of the Company’s unsecured debt obligations, non-recourse mortgages, and Exchangeable Senior Notes, in addition to associated interest payments, as of ~~September 30, 2016~~March 31, 2017 are as follows:


	2015 Revolving Credit Facility		Term Loans		Mortgage Notes Payable		Senior Unsecured Notes		Exchangeable Senior Notes		Interest Payments			Total			2015 Revolving Credit Facility		Term Loans		Mortgage Notes Payable ¹		Senior Unsecured Notes		Exchangeable Senior Notes		Interest Payments ²			Total
October 1 to December 31, 2016	$	—	$	—	$	3,558	$	—	$	—	$	14,085		$	17,643
2017	—		—		63,995		—		—		54,530			118,525
April 1 to December 31, 2017																	$	—	$	—	$	61,474	$	—	$	—	$	65,562		$	127,036
2018	—		—		91,291		—		—		51,469			142,760			—		—		170,819		—		—		80,435			251,254
2019	—		300,000		39,936		—		115,000		42,599			497,535			—		300,000		33,672		—		115,000		70,155			518,827
2020	163,365		—		58,907		—		—		36,715			258,987			121,759		—		60,103		—		—		65,605			247,467
2021																	—		750,000		16,364		—		—		39,682			806,046
Thereafter	—		925,000		103,514		150,000		—		58,080			1,236,594			—		175,000		204,960		500,000		—		89,275			969,235
Below market interest	—		—		—		—		—		(651		)	(651		)
Above market interest																	—		—		—		—		—		(6,456		)	(6,456		)
Total	$	163,365	$	1,225,000	$	361,201	$	150,000	$	115,000	$	256,827		$	2,271,393		$	121,759	$	1,225,000	$	547,392	$	500,000	$	115,000	$	404,258		$	2,913,409


1.	Mortgage loan payments reflect accelerated repayment dates, when applicable, pursuant to related loan agreement.


2.	Interest payments do not reflect the effect of interest rate swaps.

7. Leasing Agreements

The Company’s properties are leased to tenants under operating leases with expiration dates extending through the year 2039. These leases generally contain rent increases and renewal options.

Future minimum rental revenues under non-cancelable leases excluding reimbursements for operating expenses as of ~~September 30, 2016~~March 31, 2017 are as follows:


	Operating Leases		Operating Leases
October 1 to December 31, 2016	$	86,390
2017	347,694
April 1 to December 31, 2017			$	289,129
2018	341,886		385,259
2019	320,834		358,794
2020	295,084		330,608
2021			305,318
Thereafter	1,762,937		1,615,136
Total minimum lease rental income	$	3,154,825	$	3,284,244

8. Transactions with Trustee Related Entities and Related Parties

In December 2016, the Company sold its 5.1% interest in one property located in Lille, France held by the Goodman Europe JV to the Gramercy European Property Fund, in which the Company has a 14.2% ownership interest, for gross proceeds of $2,662 (€2,563).

On June 30, 2016, the Company ~~entered into an agreement to sell~~sold 74.9% of its outstanding 80.0% interest in the Goodman Europe JV to the Gramercy European Property Fund, in which the Company has a 14.2% interest as of ~~September 30, 2016.~~March 31, 2017. The Company has ~~committed and funded total capital~~made cumulative contributions of $55,892 (€50,000), to the Gramercy European Property Fund and ~~the~~has a remaining funding commitment of $13,315 (€12,500) as of March 31, 2017. The Company’s CEO, who is on the board of directors, also has capital commitments to the investment, as noted below. The Company sold 74.9% of its interest in the Goodman

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

Europe JV to the Gramercy European Property Fund for gross proceeds of $148,884 (€134,336)., based on third-party valuations for the underlying properties. The Company’s sale of 74.9% of its interest in the Goodman Europe JV resulted in the Company recording a gain of $5,341 during the period, primarily related to depreciation and amortization recorded since Merger closing date. This gain amount is recorded as a gain on sale of unconsolidated equity investment interests held with a related party on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016. Following the sale transaction, the Company has a 5.1% continuing direct interest in the Goodman Europe JV. The transaction was entered into in order to achieve efficiencies from the combination of the two European platforms.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The Company’s CEO, Gordon F. DuGan, is on the board of directors of the Gramercy European Property Fund and has ~~invested~~committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. The two Managing Directors of Gramercy Europe Asset Management have collectively ~~invested~~committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on September 30, 2016, in the case of unfunded commitments.

One of the properties acquired in December 2015 as part of the Merger was partially leased to Duke Realty, the Company’s partner in the Duke JV. Duke Realty acted as the managing member of the Duke JV which was dissolved in July 2016 as described in Note 5, and as such provided asset management, construction, development, leasing and property management services, for which it was entitled to fees as well as a promoted interest. From the date of the Merger through lease expiration in May 2016, Duke Realty leased 30,777 square feet of one of the Company’s office properties located in Minnesota which had an aggregate 322,551 rentable square feet. Duke Realty paid the Company ~~$333~~$176 under the lease for the ~~nine~~three months ended ~~September 30,~~March 31, 2016. See Note 5 for more information on the Company’s transactions with the Duke JV.

The Company acquired three properties in January 2015 in an arms-length transaction from affiliates of KTR Capital Partners, a private industrial real estate investment company, for which one of the Company’s trustees, Jeffrey Kelter, served as Chief Executive Officer and Chairman of the Board. The properties are located in Milwaukee, Wisconsin, comprise an aggregate 450,000 square feet and were acquired for an aggregate purchase price of approximately $19,750.

9. Fair Value Measurements

ASC 820-10, “Fair Value Measurements and Disclosures,” among other things, establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments and other assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or an exit price. The Company discloses fair value information, whether or not recognized in the financial statements, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments and other assets and liabilities measured at fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts.

The level of pricing observability generally correlates to the degree of judgment utilized in measuring the fair value of financial instruments and other assets and liabilities. The three broad levels defined are as follows:

Level I - This level is comprised of financial instruments and other assets and liabilities that have quoted prices that are available in liquid markets for identical assets or liabilities.

Level II - This level is comprised of financial instruments and other assets and liabilities for which quoted prices are available but which are traded less frequently and instruments that are measured at fair value using management’s judgment, where the inputs into the determination of fair value can be directly observed.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Level III - This level is comprised of financial instruments and other assets and liabilities that have little to no pricing observability as of the reported date. These financial instruments do not have active markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment and assumptions. Instruments that are generally in this category include derivatives.

The following table presents the carrying value in the financial statements and approximate fair value of assets and liabilities measured on a recurring and ~~non-recurring~~nonrecurring basis at ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015:~~2016:

September 30, 2016 December 31, 2015
Carrying Value Fair Value Carrying Value Fair Value
Financial assets:

Retained CDO Bonds⁽¹⁾
$ 8,439
$ 8,439
$ 7,471
$ 7,471
Investment in CBRE Strategic Partners Asia $ 4,557
$ 4,557
$ 5,508
$ 5,508
Real estate investments classified as held for sale at Merger closing⁽²⁾
$ 10,558
$ 10,558
$ 393,984
$ 393,984
Financial liabilities:

Derivative instruments
Interest rate swaps $ 28,613
$ 28,613
$ 3,442
$ 3,442
Long-term debt

Revolving credit facilities⁽³⁾
$ 163,365
$ 163,003
$ 296,724
$ 297,394
3-Year Term Loan⁽³⁾
$ 300,000
$ 298,578
$ 300,000
$ 300,349
5-Year Term Loan⁽³⁾
$ 750,000
$ 743,273
$ 750,000
$ 751,304
7-Year Term Loan⁽³⁾
$ 175,000
$ 172,723
$ 175,000
$ 175,338
Mortgage notes payable^{(3), (4)}
$ 368,386
$ 379,372
$ 770,293
$ 805,590
Senior Unsecured Notes⁽³⁾
$ 148,978
$ 157,786
$ 100,000
$ 100,528
Exchangeable Senior Notes⁽³⁾
$ 108,186
$ 116,843
$ 109,394
$ 115,524



	March 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Interest rate swaps	$	8,010	$	8,010	$	3,769	$	3,769
Retained CDO Bonds	$	4,828	$	4,828	$	11,906	$	11,906
Investment in CBRE Strategic Partners Asia	$	3,999	$	3,999	$	4,145	$	4,145
Real estate investments ¹	$	46,188	$	46,188	$	2,413	$	2,413
Financial liabilities:
Interest rate swaps	$	517	$	517	$	700	$	700
Long-term debt
2015 Revolving Credit Facility ²	$	121,759	$	113,887	$	65,837	$	65,897
3-Year Term Loan ²	$	300,000	$	298,894	$	300,000	$	300,213
5-Year Term Loan ²	$	750,000	$	744,112	$	750,000	$	750,959
7-Year Term Loan ²	$	175,000	$	176,653	$	175,000	$	172,850
Mortgage notes payable ²	$	549,924	$	559,553	$	558,642	$	567,705
Senior Unsecured Notes ²	$	496,524	$	500,598	$	496,464	$	498,650
Exchangeable Senior Notes ²	$	109,488	$	116,382	$	108,832	$	115,625

~~(1)~~1.

~~Retained CDO Bonds~~Amounts as of March 31, 2017 and December 31, 2016 represent two and one real estate investments, respectively, that were impaired during the ~~CDOs’ subordinate bonds, preferred shares,~~three months ended March 31, 2017 and ~~ordinary shares, which were retained subsequent to~~ the ~~disposal of Gramercy Finance~~year ended December 31, 2016, respectively, and were ~~previously eliminated in consolidation.~~owned as of the end of the respective reporting periods.


~~(2)~~	Amounts include one and six real estate investments as of September 30, 2016 and December 31, 2015, respectively, classified as held for sale at Merger closing, which are included in discontinued operations.


~~(3)~~2.	Long-term debt instruments are classified as Level III due to the significance of unobservable inputs which are based upon management assumptions.


~~(4)~~	Amounts include mortgage notes payable on assets held for sale as of December 31, 2015, which had total carrying value of $260,704 and total fair value of $263,308 as of December 31, 2015. There were no mortgage notes payable on assets held for sale as of September 30, 2016.

The following methods and assumptions were used to estimate the fair value of each class of assets and liabilities for which it is practicable to estimate the value:

Cash and cash equivalents, accrued interest, and accounts payable:These balances in the Condensed Consolidated Financial Statements reasonably approximate their fair values due to the short maturities of these items.

Retained CDO Bonds: Non-investment grade, subordinate CDO bonds, preferred shares and ordinary shares are presented in other assets on the Condensed Consolidated Financial Statements at fair ~~value. The fair~~ value, which is determined byusing an internally developed discounted cash flow model. ~~Refer to Note 2 for more information on these instruments.~~

~~Interest rate swaps:~~CBRE Strategic Partners Asia:The investment manager of CBRE Strategic Partners Asia applies valuation techniques for the Company’s ~~interest rate swap agreements are~~investment carried at fair value ~~in the Condensed Consolidated Financial Statements~~ based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party ~~valuations. Refer~~appraisals to ~~Note 10 for more information on these derivative instruments.~~the underlying assets

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. Refer to Note 5 for more information on this investment.

Derivative instruments: The Company’s derivative instruments, which are comprised of interest rate swap agreements, are carried at fair value in the Condensed Consolidated Financial Statements based upon third-party valuations. Derivative fair values are presented within other assets or other liabilities, depending on the balance at the end of the period. Changes in fair value of derivative instruments that represent realized gains (losses) are recorded within interest expense on the Condensed Consolidated Statements of Operations. Refer to Note 10 for more information on the derivative instruments.

Mortgage notes payable, unsecured term loans, unsecured revolving credit facilities and senior unsecured ~~notes~~notes:: These instruments are presented in the Condensed Consolidated Financial Statements at amortized cost and not at fair value. The fair value of each instrument is estimated by a discounted cash flows model, using discount rates that best reflect current market rates for financings with similar characteristics and credit quality. Mortgage premiums and discounts are amortized to interest expense on the Condensed Consolidated Statements of Operations using the effective interest method over the terms of the related notes. Refer to Note 6 for more information on these instruments.

Exchangeable Senior Notes:The Exchangeable Senior Notes are presented at amortized cost on the Condensed Consolidated Financial Statements. The fair value is determined based upon a discounted cash-flow methodology using discount rates that best reflect current market rates for instruments with similar with characteristics and credit quality. Refer to Note 6 for more information on these instruments.

~~CBRE Strategic Partners Asia:~~ The Company’s unconsolidated equity investment, CBRE Strategic Partners Asia, is presented in the Condensed Consolidated Financial Statements at fair value. The investment manager of CBRE Strategic Partners Asia applies valuation techniques for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. Refer to Note 2 and Note 5 for more information on this investment.

~~Real estate investments designated as held for sale at Merger closing:~~ The Company designated six properties as held for sale at the closing of the Merger on December 17, 2015. There was one property in this classification as of September 30, 2016 and six properties as of December 31, 2015. These properties are reported at estimated fair value, less costs to sell and are included in discontinued operations. Refer to Note 2 and Note 3 for more information on these investments.

Disclosure about fair value measurements is based on pertinent information available to the Company at the reporting date. Although the Company is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for the purpose of these financial statements since ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, and current estimates of fair value may differ significantly from the amounts presented herein.

The following discussion of fair value ~~has been~~was determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the assets or liabilities. Determining which category an asset or liability falls within the hierarchy requires significant judgment and the Company evaluates its hierarchy disclosures each quarter.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Assets and liabilities measured at fair value on a recurring basis and on a non-recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations.

At September 30, 2016 Total Level I Level II Level III
Financial Assets:

Retained CDO Bonds:

Non-investment grade, subordinate CDO bonds $ 8,439
$ —
$ —
$ 8,439
Marketable securities:

Investment in CBRE Strategic Partners Asia 4,557
—
—
4,557
Real estate investments classified as held for sale at Merger closing 10,558
—
—
10,558
$ 23,554
$ —
$ —
$ 23,554
Financial Liabilities:

Derivative instruments:

Interest rate swaps $ 28,613
$ —
$ —
$ 28,613
$ 28,613
$ —
$ —
$ 28,613



At March 31, 2017	Total			Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds	$	4,828		$	—	$	—	$	4,828
Real estate investments	46,188			—		—		46,188
Investment in CBRE Strategic Partners Asia	3,999			—		—		3,999
Interest rate swaps	8,010			—		—		8,010
	$	63,025		$	—	$	—	$	63,025
Financial Liabilities:
Interest rate swaps	$	(517	)	$	—	$	—	$	(517	)
	$	(517	)	$	—	$	—	$	(517	)

At December 31, 2015 Total Level I Level II Level III
Financial Assets:

Retained CDO Bonds:

Non-investment grade, subordinate CDO bonds $ 7,471
$ —
$ —
$ 7,471
Marketable securities:

Investment in CBRE Strategic Partners Asia 5,508
—
—
5,508
Real estate investments classified as held for sale at Merger closing 393,984
—
—
393,984
$ 406,963
$ —
$ —
$ 406,963
Financial Liabilities:

Derivative instruments:
Interest rate swaps $ 3,442
$ —
$ —
$ 3,442
$ 3,442
$ —
$ —
$ 3,442



At December 31, 2016	Total			Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds	$	11,906		$	—	$	—	$	11,906
Real estate investments	2,413			—		—		2,413
Investment in CBRE Strategic Partners Asia	4,145			—		—		4,145
Interest rate swaps	3,769			—		—		3,769
	$	22,233		$	—	$	—	$	22,233
Financial Liabilities:
Interest rate swaps	$	(700	)	$	—	$	—	$	(700	)
	$	(700	)	$	—	$	—	$	(700	)

Valuation of Level III Instruments

~~Derivative instruments:~~ Interest rate swaps are valued with the assistance of a third-party derivative specialist, who uses a combination of observable market-based inputs, such as interest rate curves, and unobservable inputs which require significant judgment such as the credit valuation adjustments due to the risk of non-performance by both the Company and its counterparties. The most significant unobservable input in the fair valuation of derivative instruments is the credit valuation adjustment as it requires significant management judgment regarding changes in the credit risk of the Company or its counterparties, however the primary driver of the fair value of the interest rate swaps is the forward interest rate curve. Fair values of the Company’s derivative instruments were determined using a Black-Scholes model. Fair value of the Company’s embedded exchange option related to the Exchangeable Senior Notes was determined using a probabilistic valuation model with the assistance of third-party valuation specialists.

Total unrealized gains (losses) from derivatives for the three and nine months ended September 30, 2016 were $7,653 and $(25,996), respectively, in accumulated other comprehensive income (loss). Total unrealized gains (losses) from derivatives for the three and nine months ended September 30, 2015 were $(2,584) and $(3,248), respectively, in accumulated other comprehensive income (loss).

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Retained CDO ~~Bonds~~Bonds:: Retained CDO Bonds are valued on a recurring basis using an internally developed discounted cash flow model. Management estimates the timing and amount of cash flows expected to be collected and applies a discount rate equal to the yield that the Company would expect to pay for similar securities with similar risks at the valuation date. Future expected cash flows generated by management require significant assumptions and judgment regarding the expected resolution of the underlying collateral, which includes loans and other lending investments, and real estate ~~investments, and collateralized mortgage backed securities.~~investments. The resolution of the underlying collateral requires further management assumptions regarding capitalization rates, lease-up periods, future occupancy rates, market rental rates, holding periods, capital improvements, net property operating income, timing of workouts and recoveries, loan loss severities and other factors. The models are most sensitive to the unobservable inputs such as the timing of a loan default or property sale and the severity of loan losses. Significant increases (decreases) in any of those inputs in isolation as well as any change in the expected timing of those inputs would result in a significantly lower (higher) fair value measurement. Due to the inherent uncertainty in the determination of fair value, the Company has designated its Retained CDO Bonds as Level III.

Investment in CBRE Strategic Partners Asia: The Company’s investment in CBRE Strategic Partners Asia is based on the Level III valuation inputs applied by the investment manager of CBRE Strategic Partners Asia, utilizing a mix of different approaches for valuing the underlying real estate related investments within the investment company.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

The approaches include the income approach, direct market comparison approach and the replacement cost approach for newer properties. For investments owned more than one year, except for investments under construction or incurring significant renovation, CBRE Strategic Partners Asia obtains a third-party appraisal. For investments in real estate under construction or incurring significant renovation, the valuation analysis is prepared by the investment manager of CBRE Strategic Partners Asia. The valuations are most sensitive to the unobservable inputs of discount rates, as well as capitalization rates ~~and~~an expected future cash flows, and significant increases (decreases) in these inputs would result in a significantly lower (higher) fair value measurement. ~~On a quarterly basis,~~The fund’s term ended in January 2017 and commencement of the ~~Company obtains~~fund's liquidation was filed in early February 2017. The fund will wind up over the ~~financial results of CBRE Strategic Partners Asia and on an annual basis the Company receives its audited financial statements.~~succeeding 24 months.

Real estate investments: Real estate investments impaired during a period are reported at estimated fair value and real estate investments impaired during a period that are classified as held for sale ~~at Merger closing:~~ ~~Real estate investments classified~~ as ~~held for sale at the time~~ of the ~~Merger~~end of the period are reported at estimated fair value less costs to sell. The fair value of real estate investments and their related lease intangibles is determined ~~by an independent~~using third-party valuation ~~firm using valuation techniques~~support, including ~~the~~purchase-sale contracts and other available market ~~approach, income approach, and cost approach.~~information. Key assumptions in the valuations, to which the fair value determinations are most sensitive, include discount and capitalization rates as well as expected future cash flows. Significant increases (decreases) in these inputs would result in a significantly lower (higher) fair value measurement. As the inputs are unobservable, the Company determined the inputs used to value this liability ~~fall~~falls within Level III for fair value reporting.

Derivative instruments: Interest rate swaps are valued with the assistance of a third-party derivative specialist using a discounted cash flow model, which requires a combination of observable market-based inputs, such as interest rate curves, and unobservable inputs which require significant judgment such as the credit valuation adjustments due to the risk of nonperformance by both the Company and its counterparties. The most significant unobservable input in the fair valuation of derivative instruments is the credit valuation adjustment as it requires significant management judgment regarding changes in the credit risk of the Company or its counterparties, however the primary driver of the fair value of the interest rate swaps is the forward interest rate curve.

Total unrealized gains (losses) from derivatives for the three months ended March 31, 2017 and 2016 were $4,378 and $(22,189), respectively, in accumulated other comprehensive income (loss).

Fair Value on a Recurring Basis

Quantitative information regarding the valuation techniques and the range of significant unobservable Level III inputs used to determine fair value measurements on a recurring basis as of ~~September 30, 2016 are:~~March 31, 2017 are as follows:

Financial Asset or Liability

Fair Value

Valuation Technique

Unobservable Inputs

Range

Financial Asset (Liability)

Fair Value

Valuation Technique

Unobservable Inputs

Range

Non-investment grade, subordinate CDO bonds

8,439

Discounted cash flows

Discount rate

17.5%

4,828

Discounted cash flows

Discount rate

16.5%

Interest rate swaps

28,613

Hypothetical derivative method

Credit borrowing spread

135 to 245 basis points

Interest rate swaps ¹

7,493

Hypothetical derivative method

Credit borrowing spread

135 to 230 basis points

Investment in CBRE Strategic Partners Asia

4,557

Discounted cash flows

Discount rate

20.0%

3,999

Discounted cash flows

Discount rate

20.0%


1.	Fair value includes interest rate swap liabilities with an aggregate value of $517.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

The following rollforward table reconciles the beginning and ending balances of financial assets (liabilities) measured at fair value on a recurring basis using Level III inputs as of March 31, 2017:



	Retained CDO Bonds			Investment in CBRE Strategic Partners Asia			Interest Rate Swaps		Total Financial Assets (Liabilities) - Level III
Balance at January 1, 2017	$	11,906		$	4,145		$	3,069	$	19,120
Amortization of discounts or premiums	632			—			—		632
Adjustments to fair value:
Ineffective portion of change in derivative instruments	—			—			46		46
Unrealized gain on derivatives	—			—			4,378		4,378
Unrealized loss in other comprehensive income from fair value adjustment	(2,820		)	—			—		(2,820		)
Other-than-temporary impairments	(4,890		)	—			—		(4,890		)
Total loss on fair value adjustments	—			(146		)	—		(146		)
Balance at March 31, 2017	$	4,828		$	3,999		$	7,493	$	16,320

Fair Value on a Non-Recurring Basis

The Company measured its real estate investments that were impaired during the period on a non-recurring basis at estimated fair value based on the respective selling prices as of March 31, 2017 and December 31, 2016. The Company recorded impairment on these assets as a result of a change in intent to hold the real estate investments. The Company had two assets in this classification recorded at $46,188 as of March 31, 2017 and one asset in this classification recorded at $2,413 as of December 31, 2016.

10. Derivatives and Non-Derivative Hedging Instruments

In the normal course of business, the Company is exposed to the effect of interest rate changes and foreign exchange rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives and net investment hedges. The Company uses a variety of derivative instruments to manage, or hedge, interest rate risk. The Company enters into hedging and derivative instruments that will be maximally effective in reducing the interest rate risk and foreign currency exchange rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company uses a variety of commonly used derivative products that are considered “plain vanilla” derivatives. These derivatives typically include interest rate swaps, caps, collars and floors. The Company expressly prohibits the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value within other assets or other liabilities, depending on the balance at the end of the period. Derivatives that are not designated as hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~The following roll forward table reconciles the beginning and ending balances of financial assets measured at fair value on a recurring basis using Level III inputs:~~

Retained CDO Bonds Investment in CBRE Strategic Partners Asia Total Financial Assets – Level III
Balance as of December 31, 2015 $ 7,471
$ 5,508
$ 12,979
Amortization of discounts or premiums 1,427
—
1,427
Adjustments to fair value:

Unrealized gain in other comprehensive income from fair value adjustments (459 ) —
(459 )
Total income on fair value adjustments —
(637 ) (637 )
Purchase price allocation adjustments —
(314 ) (314 )
Balance as of September 30, 2016 $ 8,439

$ 4,557
$ 12,996

~~The following roll forward table reconciles the beginning and ending balances of financial liabilities measured at fair value on a recurring basis using Level III inputs:~~

Derivative Instruments
Balance as of December 31, 2015 $ 3,442
Adjustments to fair value:
Termination of derivative instrument⁽¹⁾
(8 )
Ineffective portion of change in derivative instruments (817 )
Unrealized loss on derivatives 25,996
Balance as of September 30, 2016 $ 28,613


~~(1)~~	The Company terminated one interest rate swap in connection with repayment of the related mortgage loan, and as a result of this termination, the Company recorded loss of $8 during the three months ended September 30, 2016.

~~Fair Value on a Non-Recurring Basis~~

The Company measured its real estate investments classified as held for sale at the time of the Merger on a non-recurring basis as of September 30, 2016 and December 31, 2015. The Company had one and six assets in this classification as of September 30, 2016 and December 31, 2015, respectively, as the Company sold five of the assets during the nine months ended September 30, 2016. These assets were recorded at fair value, less costs to sell of $10,558 and $393,984 as of September 30, 2016 and December 31, 2015, respectively, and are included in discontinued operations. Refer to Note 3 for further information on these assets.

~~10. Derivatives and Non-Derivative Hedging Instruments~~

As of September 30, 2016, the Company’s derivative instruments consist of interest rate swaps, which are cash flow hedges. Changes in the effective portion of the fair value of derivatives designated as hedging instruments are recognized in other comprehensive income (loss) until the hedged item expires or is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value and the change in value of a non-hedging derivative instrument are immediately recognized in earnings. Derivative accounting may increase or decrease reported net income and shareholders’ equity prospectively, depending on future levels of the LIBOR ~~interest rates, foreign exchange rates,~~swap spreads and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Borrowings on the Company’s multicurrency tranche of the 2015 Revolving Credit Facility, which are designated as non-derivative net investment hedges, are recognized at par value based on the exchange rate in effect on the date of the draw. Subsequent changes in the exchange rate of the Company’s non-derivative net investment hedge are recognized as part of the cumulative foreign currency translation adjustment within other comprehensive income (loss). Refer to Note ~~2 and Note~~ 9 for additional information on the ~~Company’s derivatives and non-derivative~~Company's hedging instruments, including the fair value measurement of these ~~instruments, as applicable.~~

The following table summarizes the notional and fair value of the Company’s derivatives and hedging instruments at September 30, 2016. The aggregate fair value of the Company’s derivatives is presented on its Condensed Consolidated Balance Sheets in derivative instruments and the aggregate carrying value of the non-derivative net investment hedges is included in the balance of the Company’s 2015 Revolving Credit Facility. The notional value is an indication of the extent of the Company’s involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks.instruments.

The Company’s derivatives and hedging instruments as of ~~September 30, 2016~~March 31, 2017 are as follows:

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Interest Rate Swap - Waco

1 mo. USD-LIBOR-BBA

15,262 USD

4.55%

12/19/2013

12/19/2020

882

1 mo. USD-LIBOR-BBA

15,113 USD

4.55%

12/19/2013

12/19/2020

(356

)

Interest Rate Swap - Atrium I

1 mo. USD-LIBOR-BBA

19,942 USD

1.78%

8/16/2011

5/31/2018

323

1 mo. USD-LIBOR-BBA

19,474 USD

1.78%

8/16/2011

5/31/2018

(108

)

Interest Rate Swap - Easton III

1 mo. USD-LIBOR-BBA

5,955 USD

1.95%

8/16/2011

1/31/2019

151

1 mo. USD-LIBOR-BBA

5,862 USD

1.95%

8/16/2011

1/31/2019

(52

)

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.22%

12/19/2016

12/17/2018

371

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.23%

12/19/2016

12/17/2018

364

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.24%

12/19/2016

12/17/2018

345

Interest Rate Swap - 5-Year Term Loan

1 mo. USD-LIBOR-BBA

750,000 USD

1.60%

12/17/2015

12/17/2020

19,515

1 mo. USD-LIBOR-BBA

750,000 EUR

1.60%

12/17/2015

12/17/2020

5,328

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

175,000 USD

1.82%

12/17/2015

1/9/2023

7,742

1 mo. USD-LIBOR-BBA

175,000 EUR

1.82%

12/17/2015

1/9/2023

1,601

Net Investment Hedge in EUR-denominated investments

USD-EUR exchange rate

45,000 EUR

N/A

9/28/2015

N/A

—

USD-EUR exchange rate

45,000 GBP

N/A

9/28/2015

N/A

—

Net Investment Hedge in GBP-denominated investments

USD-GBP exchange rate

33,000 GBP

N/A

7/15/2016

N/A

—

USD-GBP exchange rate

15,000 GBP

N/A

7/15/2016

N/A

—

Total

28,613

Total hedging instruments

7,493

As of March 31, 2017, the Company’s derivative instruments consist of interest rate swaps, which are cash flow hedges. Through its interest rate swaps, the Company is hedging exposure to variability in future interest payments on its debt facilities. At ~~September 30, 2016,~~March 31, 2017, the Company's interest rate swap derivative instruments were reported in other assets at ~~their~~ fair value ~~as a net liability~~ of ~~$28,613.~~$8,010 and in other liabilities at fair value of $(517). Swap ~~(gain) loss~~gain (loss) of ~~$(83)~~$46 and ~~$(817)~~$(1,830), was recognized asin interest expense ~~for the three and nine months ended September 30, 2016, respectively,~~ in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively, with respect to interest rate swap hedge ineffectiveness, or to amounts excluded from ineffectiveness, which relates to the off-market financing element associated with certain derivatives. As discussed in Note 6, during the first half of 2016, the Company amended its 5-Year Term Loan and its 7-Year Term Loan in order to remove the 0.00% rate floor on the applicable LIBOR that existed in the original loan agreements, and as a result, during the second quarter of 2016 the Company reversed previously recorded hedge ineffectiveness of $2,564. No gain or loss was recognized with respect to hedge ineffectiveness or to amounts excluded from ineffectiveness for the three and nine months ended September 30, 2015. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, the Company reclassified ~~$274~~$268 and ~~$905,~~$315, respectively, from accumulated other comprehensive income (loss) into interest expense related to a derivative terminated in 2015. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive income (loss) will be reclassified into earnings in the same periods in which the hedged interest payments affect earnings. During the next 12 months, the Company expects that ~~$9,113~~$3,536 will be reclassified from other comprehensive income as an increase in interest expense for the Company’s interest rate swaps as of ~~September 30, 2016.~~March 31, 2017. Additionally, the Company will recognize ~~$2,923~~ $2,382

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

in interest expense on a straight-line basis over the remaining original term of terminated swaps through June 2019, representing amortization of the remaining accumulated other comprehensive income balance related to the swap, and of this amount $1,087 will be recognized in interest expense during the next 12 months.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

The Company hedges its investments based in foreign currencies using non-derivative net investment hedges in conjunction with borrowings under the multicurrency tranche of its 2015 Revolving Credit Facility. The Company’s non-derivative net investment hedge on its euro-denominated investments, which was entered into in September 2015, is used to hedge exposure to changes in the ~~euro-U.S.~~euro U.S. dollar exchange rate underlying its unconsolidated ~~net~~ equity investments in the Gramercy European Property Fund and the Goodman Europe JV, both of which have euros as their functional currency. The Company’s non-derivative net investment hedge on its British pound sterling-denominated investments, which was entered into in July 2016, is used to hedge exposure to changes in the British pound ~~sterling-U.S.~~sterling U.S. dollar exchange rate underlying its unconsolidated ~~net~~ equity investment in the Goodman UK JV and its wholly-owned property in Coventry, UK until its disposition in December 2016, both of which have British pounds sterling as their functional currency. At ~~September 30, 2016,~~March 31, 2017, the non-derivative net investment hedge value is reported at carrying value as a net liability of ~~$93,365,~~$66,759, which is included in the balance of the senior unsecured revolving credit facility on the Condensed Consolidated Balance Sheets. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, the Company recorded a net ~~gain (loss)~~loss of ~~$(109)~~$923 and ~~$(175),~~$1,036, respectively, in other comprehensive income (loss) from the impact of exchange rates related to the non-derivative net investment hedges. No gain or loss was recognized with respect to non-derivative net investment hedge ineffectiveness, or to amounts excluded from ineffectiveness, in interest expense in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2016. When the non-derivative net investments being hedged are sold or substantially liquidated, the balance of the translation adjustment accumulated in other comprehensive income will be reclassified into earnings.

In June 2016, the Company entered into a foreign currency forward contract to mitigate its exposure to foreign currency exchange rate movements in the euro, specifically in relation to funds received in euros on the sale of 74.9% of its 80.0% interest in the Goodman Europe JV. The foreign currency forward was a derivative contract, which was not designated as a hedging instrument, through which the Company was committed to deliver a certain amount of currency at a set price on a specific date in the future. The forward contract locked in the Company’s future currency exchange rate for the term of the contract, thus minimizing the Company’s exposure to rate fluctuations during this period. The Company settled the contract on July 7, 2016. During the three and nine months ended September 30, 2016, the Company recognized net income (loss) of $128 and $(22), respectively, in other income on the Condensed Consolidated Statements of Operations, related to the change in the value of the euro-denominated asset underlying the contract.

11. Shareholders’ Equity (Deficit)

The equity structure in the Condensed Consolidated Financial Statements following the reverse merger reflects the equity structure of the Company, and as such, the Company’s common shares outstanding have been adjusted retroactively for all prior periods presented computed on the basis of the number of shares outstanding multiplied by the exchange ratio of 3.1898 established in the Merger Agreement. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the ~~Company’s~~Company's authorized capital shares ~~consist~~consists of ~~1,000,000,000~~500,000,000 shares of beneficial interest, $0.01 par value per share, of which the Company is authorized to issue up to ~~990,000,000~~490,000,000 common shares of beneficial interest, $0.01 par value ~~$0.01~~ per share, or common shares, and 10,000,000 preferred shares of beneficial interest, $0.01 par value ~~of $0.01,~~per share, or preferred shares. As of ~~September 30, 2016, 421,978,800~~March 31, 2017, 141,522,527 common shares and 3,500,000 preferred shares were issued and outstanding.

In December 2016, the Company's board of trustees approved a 1-for-3 reverse share split of its common shares and outstanding ~~respectively. All~~OP Units. The reverse share ~~share price, and per share data has been updated retroactively to reflect~~split was effective after the ~~Merger exchange ratio~~close of ~~3.1898.~~

~~During the nine months ended September~~trading on December 30, 2016 and the ~~Company’s~~Company's common ~~dividends are as follows:~~

Quarter Ended Record Date Payment Date Common dividend per share
March 31, 2016 March 31, 2016 April 15, 2016 $ 0.110
June 30, 2016 June 30, 2016 July 15, 2016 $ 0.110
September 30, 2016 September 30, 2016 October 14, 2016 $ 0.110

shares began trading on a reverse-split-adjusted basis on the NYSE on January 3, 2017.

In ~~July 2016,~~February 2017, the Company’s board of trustees approved the establishment of an “at the market” equity issuance program, or ATM. The Company expects to file a prospectus supplement to its currently effective registration statement with the SEC during November 2016, pursuant to whichauthorized and the Company ~~may offer and sell~~declared a dividend of $0.375 per common ~~shares with an aggregate gross sales price~~share for the first quarter of up2017, which was paid on April 14, 2017 to ~~$375,000.~~holders of record as of March 31, 2017.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Dividend Reinvestment Plan

In June 2016, the Company adopted a dividend reinvestment plan, or DRIP, under which shareholders may use their dividends and optional cash payments to purchase additional common shares of the Company. In August 2016, the Company registered ~~10,000,000~~3,333,333 common shares related to the DRIP. ~~There have been no~~During the three months ended March 31, 2017, 2,976 shares were issued under the DRIP and as of ~~September 30, 2016.~~March 31, 2017 there were 3,329,660 shares available for issuance under the DRIP.

Share Repurchase Program

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

In February 2016, the Company’s board of trustees approved a share repurchase program authorizing the Company to repurchase up to $100,000 of the Company’s outstanding common shares. ~~Purchases~~As of March 31, 2017, the Company had not repurchased any shares under the share repurchase program.

At-The-Market Equity Offering Program

In July 2016, the Company’s board of trustees approved the establishment of an “at the market” equity issuance program, ~~will be made from time~~or ATM Program, pursuant to ~~time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by~~which the Company ~~in its discretion~~may offer and ~~will be subject~~sell common shares with an aggregate gross sales price of up to ~~economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. For~~$375,000. During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, the Company ~~did not repurchase any shares.~~

~~In February 2015, Legacy Gramercy’s board~~sold 731,453 common shares through the ATM Program for net proceeds of directors approved a 1-for-4 reverse stock split of its common stock and outstanding OP Units. The reverse stock split was effective after the close of trading on March 20, 2015, and the Company’s common stock began trading on a reverse split-adjusted basis on the New York Stock Exchange on March 23, 2015.$19,700.

Preferred Shares

~~At September 30, 2016,~~Holders of the ~~Company has 3,500,000 of its~~Company's 7.125% Series A Preferred Shares, ~~outstanding with a mandatory liquidation preference of $25.00 per share. Holders of the~~or Series A Preferred Shares, are entitled to receive annual dividends of $1.78125 per share on a quarterly basis ~~which~~and dividends are cumulative, subject to certain provisions. On or after August 15, 2019, the Company can, at its option, redeem the Series A Preferred Shares at par for cash. At March 31, 2017, the Company had 3,500,000 of its Series A Preferred Shares outstanding with a mandatory liquidation preference of $25.00 per share.

Equity ~~Plan Activities~~Incentive Plans

In June 2016, the Company instituted its 2016 Equity Incentive Plan, which was approved by the Company’s board of trustees and shareholders. The 2016 Equity Incentive Plan allows for the following awards to be made: (i) stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, (ii) stock options that do not qualify, (iii) stock appreciation rights, (iv) share awards, (v) restricted share units, and (vi) dividend equivalents and other equity awards, including LTIP Units. The aggregate number of common shares of the Company that may be issued or transferred under the 2016 Equity Incentive Plan is 12,000,000 shares, subject to adjustment in certain circumstances. The Company’s common shares that are issued or transferred under the 2016 Equity Plan may be authorized but unissued common shares of the Company or reacquired common shares of the Company, including common shares of the Company purchased by it on the open market for purposes of the 2016 Equity Incentive Plan. The 2016 Equity Incentive Plan became effective on June 23, 2016 and will terminate on the day immediately preceding the tenth anniversary of its effective date, unless sooner terminated by the board of trustees. As of ~~September 30, 2016,~~March 31, 2017, there were ~~10,828,176~~3,343,365 shares available for grant under the 2016 Equity Incentive Plan. The Company accounts for share-based compensation awards using fair value recognition provisions and assumes an estimated forfeiture rate which impacts the amount of compensation cost recognized over the benefit period.

~~Following~~Through March 31, 2017, 908,985 restricted shares had been issued under the ~~Merger until the adoption of~~equity incentive plans, including the 2016 Equity Incentive Plan ~~in June 2016,~~and the Company’s ~~active~~previous equity incentive ~~plan, from~~plans, of which ~~share~~73.1% have vested. Compensation expense of $817 and $483 was recorded for the three months ended March 31, 2017 and 2016, respectively, related to the issuance of restricted shares. Compensation expense of $5,741 will be recorded over the course of the next 33 months representing the remaining weighted average vesting period of equity awards ~~were~~ issued ~~was~~under the ~~Chambers~~ equity incentive ~~plan, or the 2013 Equity Incentive Plan. The Company’s, 2004 Equity Incentive Plan, 2012 Inducement Plan, 2012 Outperformance Plan, 2013 Equity Incentive Plan,~~plans as of March 31, 2017. As of March 31, 2017 and ~~2015 Equity Incentive Plan continued to exist following the Merger, however they are inactive and thus no new share awards will be issued out of any of these plans.~~

~~In September~~December 31, 2016, the Company had 334,689 and 318,807 weighted average restricted shares outstanding, respectively.

Compensation expense of $1,056 and $488 was recorded for the three months ended March 31, 2017 and March 31, 2016, respectively, for the Company's Outperformance Plans. Compensation expense of $6,969 will be recorded over the course of the next 37 months, representing the remaining weighted average vesting period of the awards issued ~~a maximum total~~under the Outperformance Plans as of ~~1,140,304 LTIP Units~~March 31, 2017.

Earnings per Share

The Company presents both basic and diluted earnings per share, or EPS. Basic EPS is computed by dividing net income (loss) available to ~~three executives under its 2016 Equity Incentive Plan. The~~common shareholders, as adjusted for unallocated earnings attributable to certain participating securities, if any, by the weighted average number of ~~LTIPs units actually earned by the grantees will be based on the achievement of established performance hurdles with respect to the Company’s actual and relative total shareholder returns~~common shares outstanding during the ~~period July 1, 2016 through June 30, 2019. Of~~period. Diluted EPS reflects the ~~earned units, 50.0% will vest on June 30, 2019, and the remaining 50.0% will vest on June 30, 2020, based on continued employment through~~potential dilution that ~~date. Vested LTIP Units are convertible on a 1-for-1 basis~~could occur if securities or other contracts to ~~OP Units.~~

~~Effective at the closing of the Merger, the change in accelerated vesting control provisions of the 2012 Outperformance Plan~~issue common shares were ~~waived by all plan participants, and as a result the LTIP Units continued, subject to the original service and performance conditions.~~exercised or converted

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Through September 30, 2016, 2,920,116 restricted shares had been issued under the Company’s Equity Incentive Plans, of which 62.0% have vested. Except for certain performance based awards, the vested and unvested shares are currently entitled to receive distributions oninto common shares, if declared by the Company. Holders of restricted shares are prohibited from selling such shares until they vest but are provided the ability to vote such shares beginning on the date of grant. Compensation expense of $614 and $1,701 was recordedas long as their inclusion would not be anti-dilutive. The two-class method is an earnings allocation methodology that determines earnings per share for the three and nine months ended September 30, 2016, respectively, and compensation expense of $416 and $914 was recorded for the three and nine months ended September 30, 2015, respectively, related to the issuance of restricted shares. Compensation expense of $5,749 will be recorded over the course of the next 37 months representing the remaining weighted average vesting period of equity awards issued under the Equity Incentive Plans as of September 30, 2016. As of September 30, 2016 and December 31, 2015, the Company had 1,026,037 and 684,199 weighted-average unvested restricted shares outstanding, respectively.

Compensation expense of $488 and $1,464 was recorded for the three and nine months ended September 30, 2016, respectively, and compensation expense of $488 and $1,464 was recorded for the three and nine months ended September 30, 2015, respectively, for the Company’s Outperformance Plans. Compensation expense of $7,058 will be recorded over the course of the next 38 months, representing the remaining weighted average vesting period of the awards issued under the Outperformance Plans as of September 30, 2016.

~~Deferred Stock Compensation Plan for Directors~~

The Legacy Gramercy Directors’ Deferral Program terminated upon consummation of the Merger. In connection with the closing of the Merger, on December 17, 2015 each outstanding phantom share granted under Legacy Gramercy’s Directors’ Deferral Program, was vested and, on the first business day of the month following the Merger closing, converted into the right to receive a number of the Company’s common shares ~~rounded~~and participating securities according to ~~the nearest whole share, determined by multiplying the number of subject phantom shares by the exchange ratio of the Merger. As a result, the directors received an aggregate of $916~~dividends declared or accumulated and participation rights in ~~cash and 410,713 in shares in January 2016. The portion paid out in cash was classified as a liability on the Consolidated Balance Sheets as of December 31, 2015.~~

~~Earnings per Share~~

undistributed earnings. The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to vested common shares outstanding. A participating security is defined as an unvestedcertain share-based payment ~~award containing non-forfeitable~~awards that contain nonforfeitable rights to dividends, ~~regardless of whether or not the awards ultimately vest or expire. Net losses~~which are ~~not allocated to~~considered participating securities ~~unless~~for the ~~holder has a contractual obligation to share in the losses.~~

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share,~~purposes of computing earnings per share pursuant to the two-class method, and ~~property data)~~

~~September 30, 2016~~

therefore the Company applies the two-class method in its computation of EPS.

Earnings per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ are computed as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Numerator – Income (loss):

Net income (loss) from continuing operations $ (3,411 ) $ 1,659
$ 14,461
$ 1,076
Net income (loss) from discontinued operations 347
(41 ) 5,045
17
Income (loss) before gains on disposals (3,064 ) 1,618
19,506
1,093
Net gains on disposals 2,336
392
2,336
593
Gain on sale of European unconsolidated equity investment interests held with a related party —
—
5,341
—
Net income (loss) (728 ) 2,010
27,183
1,686
Net (income) loss attributable to noncontrolling interest (221 ) (20 ) (152 ) 43
Nonforfeitable dividends allocated to unvested restricted shareholders (196 ) —
(596 ) —
Preferred share dividends (1,559 ) (1,559 ) (4,676 ) (4,676 )
Net income (loss) available to vested common shares outstanding $ (2,704 ) $ 431
$ 21,759
$ (2,947 )
Denominator – Weighted average shares ⁽¹⁾:

Weighted average basic shares outstanding 420,772,508
183,945,495
423,542,467
169,781,590
Effect of dilutive securities:

Unvested share based payment awards —
1,686,542
413,409
—
Options —
37,975
41,406
—
Phantom shares —
514,834
—
—
Shares related to OP Units —
1,498,785
1,199,312
—
Exchangeable Senior Notes —
—
1,966,532
—
Diluted Shares 420,772,508
187,683,631
427,163,126
169,781,590



	Three Months Ended March 31,
	2017			2016
Numerator – Income (loss):
Net loss from continuing operations	$	(8,072	)	$	(5,693	)
Net income (loss) from discontinued operations	(24		)	4,640
Loss before net gain on disposals	(8,096		)	(1,053		)
Net gain on disposals	17,377			—
Net income (loss)	9,281			(1,053		)
Less: Net (income) loss attributable to noncontrolling interest	(154		)	120
Less: Nonforfeitable dividends allocated to participating shareholders	(276		)	(199		)
Less: Preferred share dividends	(1,559		)	(1,559		)
Net income (loss) available to common shares outstanding	$	7,292		$	(2,691	)
Denominator – Weighted average shares ¹:
Weighted average basic shares outstanding	140,907,399			140,060,405
Effect of dilutive securities:
Unvested non-participating share based payment awards	71,848			—
Options	15,576			—
Exchangeable Senior Notes	880,796			—
Weighted average diluted shares outstanding	141,875,619			140,060,405

~~(1)~~1.

~~As a result of the Merger, each outstanding~~Share and per share of common stock of Legacy Gramercy was converted into 3.1898 of a newly issued common share of the Company. Therefore, the historical data related to quarterly earnings per common share for the periods ended before December 31, 2015amounts have been adjusted byfor the ~~Merger exchange ratio of 3.1898.~~1-for-3 reverse share split completed on December 30, 2016.

~~Diluted income (loss) per share assumes~~The Company’s options and other share-based payment awards used in the ~~conversion~~computation of ~~all common share equivalents into an equivalent number of common shares if the effect is not anti-dilutive. Options~~EPS were ~~computed~~calculated using the treasury share method. The Company only includes the effect of the excess conversion premium ~~on its Exchangeable Senior Notes~~ in the calculation of ~~diluted earnings per share,~~Diluted EPS, as the Company has the intent and ability to settle the debt component of the Exchangeable Senior Notes in cash and the excess conversion premium in shares.

For the three months ended March 31, 2016, 961,155 unvested share based payment awards, 5,445 share options, and 458,101 common shares related to outside interests in the Operating Partnership were computed using the treasury share method, which due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period were anti-dilutive and excluded from Diluted EPS. The weighted average price of the Company’s common shares during the three months ended March 31, 2016 was below the exchange price of the Exchangeable Senior Notes for the period, thus there was no potential dilutive effect of the excess conversion premium and no effect was included in the calculation of Diluted EPS for the three months ended March 31, 2016. For the three months ended ended March 31, 2016, the Company excluded unvested restricted

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The average price of the Company’s common shares for the three and nine months ended September 30, 2016 was above the exchange price of $7.54 for the periods, therefore there is potential dilutive effect for these periods. The Company had net loss available to common shares outstanding during the three months ended September 30, 2016, thus the excess conversion premium was excluded from the calculation of earnings per share for the period, however during the nine months ended September 30, 2016, the Company had net income available to common shares outstanding, therefore, the potential dilutive effect of the excess conversion premium was included in the calculation of diluted earnings per share for the period. The average price of the Company’s common shares was below the exchange price of $7.76 for the three months ended September 30, 2015 and above the exchange price of $7.76 for the nine months ended September 30, 2015. Therefore, there is no potential dilutive effect for the three months ended September 30, 2015, however there is potential dilutive effect of the excess conversion premium for the nine months ended September 30, 2015, however due to the net loss available to common shares outstanding during the period, the excess conversion premium was excluded from the calculation of earnings per share for the nine months ended September 30, 2015.

For the three months ended September 30, 2016 the Company excluded from its number of diluted shares used for EPS 58,270 share options, 3,519,584 unvested share based payment awards, 1,017,326 OP Units, and 3,336,987 shares related to the Exchangeable Senior Notes, because, due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period, these shares were anti-dilutive during the period. For the nine months ended September 30, 2015, the Company excluded from its number of diluted shares used for EPS 44,624 share options, 2,969,744 unvested share based payment awards, 514,834 phantom share units, 1,582,067 OP Units, and 658,380 shares related to the Exchangeable Senior Notes, because, due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period, these shares were anti-dilutive during the period. For the three months ended September 30, 2016 and the nine months ended September 30, 2015, the Company excluded unvested restricted share awards of ~~1,118,760 and 630,566, respectively,~~259,976 from its weighted average basic shares outstanding due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the ~~periods.~~period. For the three months ended March 31, 2017, the net income attributable to the outside interests in the Operating Partnership has been excluded from the numerator and 620,586 of weighted average shares related to the outside interests in the Operating Partnership has been excluded from the denominator for the purpose of calculating Diluted EPS as there would have been no effect had such amounts been included. Refer to Note 13 for more information on the outside interests in the Operating Partnership.

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) as of ~~September��30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 is comprised of the following:


	September 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Net unrealized loss on derivative securities	$	(32,070	)	$	(6,074	)
Net unrealized gain (loss) on derivative securities							$	3,938		$	(440	)
Net unrealized gain on debt instruments	551			1,010			879			3,699
Foreign currency translation adjustments:
Gain (loss) on non-derivative net investment hedges⁽¹⁾	(161		)	14
Gain on non-derivative net investment hedges ¹							4,245			5,168
Write-off on non-derivative net investment hedge							(652		)	(652		)
Other foreign currency translation adjustments	(4,168		)	(656		)	(9,638		)	(11,252		)
Reclassification of accumulated foreign currency translation adjustments due to disposal	(3,737		)	—			(3,737		)	(3,737		)
Reclassification of swap gain (loss) into interest expense	868			(45		)
Disposition of European investment							1,944			1,944
Reclassification of swap gain into interest expense							1,410			1,142
Total accumulated other comprehensive loss	$	(38,717	)	$	(5,751	)	$	(1,611	)	$	(4,128	)


~~(1)~~1.	The foreign currency translation adjustment associated with the Company’s non-derivative net investment hedges related to its European investments are included in other comprehensive income (loss).

12. Noncontrolling Interest

Noncontrolling interests represent the outside equity interests in the Company’s Operating Partnership as well as third-party equity interests in the Company’s other consolidated subsidiaries.

Outside equity interests in Operating Partnership

The outside equity interests in the Company’s Operating Partnership include common units of limited partnership interest in the Operating Partnership, or OP Units, and the earned and vested portion of limited partnership interests in the Operating Partnership granted by the Company pursuant to its share-based compensation plans, or LTIP Units, which are convertible on a one-for-one basis into OP Units. The aggregate outstanding noncontrolling interest in the Operating Partnership as of March 31, 2017 represented an interest of approximately 0.40% in the Company. The Company attributes a portion of its net income (loss) during each reporting period to noncontrolling interest based on the weighted average percentage ownership of both OP Unit holders and earned and vested LTIP Unit holders relative to the sum of the Company’s total outstanding common shares, OP Units, and earned and vested LTIP Units.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~12. Noncontrolling Interest~~

~~Noncontrolling interests represent the common units of limited partnership interest in the Company’s Operating Partnership, or~~ OP Units not held by the Company as well as third-party equity interests in the Company’s other consolidated subsidiaries. OP Units are redeemable at the election of the holder for cash equal to the then fair market value of one of the Company’s common shares, par value $0.01 per share, except that the Company may, at its election, acquire each OP Unit for one of its common shares. The OP Unit holders do not have any obligation to provide additional contributions to the partnership, nor do they have any decision making powers or control over the business of the Operating Partnership. The OP Unit holders do not have voting rights; however, they are entitled to receive dividends. The OP Unit redemption rights are outside of the Company’s control, and thus the OP Units are classified as a component of temporary equity and are shown in the mezzanine equity section of the Company’s Condensed Consolidated Financial Statements. The Company is party by assumption to a registration rights agreement with the holders of the OP Units that requires the Company, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of its common shares upon redemption of OP Units.

In April 2016, each of the outstanding common units of limited partnership interest not held by the Company or its subsidiaries, which represented interests in Legacy Gramercy’s operating partnership and were redeemable for 3.1898 of the Company’s common shares following the Merger, were exchanged for 3.1898 OP Units, which are each redeemable for one of the Company’s common shares as described above. All references to OP Units in the Company’s Condensed Consolidated Financial Statements refer to common units of limited partnership interest in Legacy Gramercy’s operating partnership prior to the exchange and to common units of limited partnership interest in GPT Operating Partnership LP following the exchange, and reflect the updated exchange ratio of one OP Unit redeemable for one of the Company’s common shares.

As of ~~September 30, 2016, the noncontrolling interest unit holders owned 941,537~~March 31, 2017, 233,023 OP Units were outstanding, which can be redeemed for ~~941,537~~233,023 of the ~~Company’s common~~Company's shares. ~~The outstanding OP Units as of September 30, 2016 represent an interest of approximately 0.22% in the Company.~~ During the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 and the year ended December 31, ~~2015, 469,372~~2016, 80,816 and ~~453,129~~156,452 OP Units, respectively, were converted on a one-for-one basis into common shares of the Company. At ~~September 30, 2016, 941,537~~March 31, 2017, 233,023 common shares of the Company were reserved for issuance upon redemption of ~~OP Units.~~

units of limited partnership interest of the Company's Operating Partnership. OP Units are recorded at the greater of cost basis or fair market value based on the closing share price of the Company’s common shares at the end of the reporting period. As of ~~September 30, 2016,~~March 31, 2017, the value of the OP units was ~~$9,076. The Company attributes a portion~~$6,129.

LTIP Units

As of ~~its net income (loss) during each reporting period to~~March 31, 2017, noncontrolling interest ~~based on the percentage ownership~~owners held 329,759 earned and vested LTIP Units, which, upon conversion into OP Units, can be redeemed for 329,759 of ~~OP Unit holders relative to~~ the Company’s ~~total outstanding~~common shares. During the three months ended March 31, 2017 and year ended December 31, 2016, there were no earned and vested LTIP Units converted into OP Units or redeemed for common shares of the Company. At March 31, 2017, 329,759 common shares of the Company were reserved for issuance upon conversion of the earned and ~~OP Units. The Company recognizes changes in fair value in the~~vested LTIP Units into OP Units through accumulated deficit, however decreases in fair value are recognized only to the extent that increases to the amount in temporary equity were previously recorded. The Company’s diluted earnings per share includes the effect of any potential shares outstanding fromand their subsequent redemption ~~of the OP Units.~~for common shares.

Below is the rollforward of the activity relating to the noncontrolling interests in the Operating Partnership as of ~~September 30, 2016:~~March 31, 2017:


	Noncontrolling Interest			Noncontrolling Interest
Balance as of December 31, 2015	$	10,892
Balance at January 1, 2017				$	8,643
Redemption of noncontrolling interests in the Operating Partnership	(4,159		)	(2,164		)
Net loss attribution	62
Net income attribution				34
Fair value adjustments	2,741			(296		)
Dividends	(460		)	(88		)
Balance as of September 30, 2016	$	9,076
Balance at March 31, 2017				$	6,129

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Interests in Other Operating Partnerships

In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired a 50.0% equity interest in European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. European Fund Manager is a consolidated VIE of the Company and is consolidated into its Condensed Consolidated Financial Statements. Refer to Note 2 for further discussion of the VIE and consolidation considerations.

As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the value of the Company’s interest in European Fund Manager was ~~$(169)~~$(205) and ~~$(249)~~$(321), respectively. The Company’s interest in European Fund Manager is presented in the equity section of ~~the Company’s~~its Condensed Consolidated Balance Sheets.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

March 31, 2017

13. Commitments and Contingencies

Funding Commitments

During the three months ended March 31, 2017, construction was completed on our build-to-suit property in Round Rock, Texas, which we acquired upon completion in March 2017 for $29,605. The Company is obligated to fund the development of ~~two~~one build-to-suit ~~properties, including a 240,411 square foot~~ industrial property ~~in Round Rock, Texas,~~as of March 31, 2017, which is ~~a consolidated VIE that the Company will acquire upon substantial completion through a forward purchase contract and a 240,800 square foot industrial property~~located in Summerville, South ~~Carolina.~~Carolina and projected to have 240,800 rentable square feet upon completion. The Company’s remaining future commitment for ~~these properties at September 30, 2016~~this property as of March 31, 2017 is approximately ~~$47,460.~~$24,382.

As of ~~September 30,~~March 31, 2017 and December 31, 2016, the Company has ~~funded $55,892 (€50,000)~~made cumulative contributions to the Gramercy European Property Fund ~~representing its total funding~~of $55,892 (€50,000). As of March 31, 2017, the Company’s remaining commitment to the Gramercy European Property ~~Fund. As of December 31, 2015, the Company had funded $25,663~~Fund is $13,315 (€~~23,160) to the Gramercy European Property Fund.~~12,500). Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on ~~September 30, 2016,~~March 31, 2017, in the case of unfunded commitments.

The Company has committed to fund $100,000 to Strategic Office Partners, of which $18,677 and $16,027 ~~has been~~was funded as of ~~September 30, 2016.~~March 31, 2017 and December 31, 2016, respectively. See Note 5 ~~“Unconsolidated Equity Investments,”~~ for further information on the Gramercy European Property Fund and Strategic Office Partners.

Legal Proceedings

The Company evaluates litigation contingencies based on information currently available, including the advice of counsel and the assessment of available insurance coverage. The Company will establish accruals for litigation and claims when a loss contingency is considered probable and the related amount is reasonably estimable. The Company will periodically review these contingencies which may be adjusted if circumstances change. The outcome of a litigation matter and the amount or range of potential losses at particular points may be difficult to ascertain. If a range of loss is estimated and an amount within such range appears to be a better estimate than any other amount within that range, then that amount is accrued.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Legacy Gramercy, its board of directors, and Chambers ~~and/or Merger Sub are~~were named as defendants in ~~two pending~~various putative class action lawsuits brought by purported Legacy Gramercy stockholders challenging the Merger. ~~Two suits that~~The lawsuits were separately filed in New York Supreme Court, New York County, captioned (i) Berliner v. Gramercy Property Trust, et al., Index No. 652424/2015 (filed July 9, 2015) and (ii) Gensler v. Baum, et al., Index No. 157432/2015 (filed July 22, 2015), have been consolidated into a ~~single~~New York state court action, ~~under~~or the ~~caption In re Gramercy Property Trust Stockholder Litigation, Index No. 652424/2015 (the “New~~New York ~~Action”). In addition, four suits that were separately~~Action, and a Maryland state court action, or the Maryland Action. On March 1, 2017, the court entered a Final Order and Judgment approving the settlement, awarding plaintiffs’ attorney fees and expenses, and dismissing the New York Action with prejudice. On March 22, 2017, pursuant to the stipulation of settlement, plaintiffs in the Maryland Action filed in Circuit Court for Baltimore City, Maryland, captioned (i) Jobin v. DuGan, et al., Case No. 24C15003942 (filed July 27, 2015); (ii) Vojik v. Gramercy Property Trust, et al., Case No. 24C15004412 (filed August 25, 2015); (iii) Hoffbauer et al. v. Chambers Street Properties, et al., 24C15004904 (filed September 24, 2015) (originally filed as two separate suits ina notice of dismissal with prejudice with the Circuit Court for Baltimore County, Maryland, captioned Plemons v. Chambers Street Properties, et al., Case No. 03C15007943 (filed July 24, 2015) and Hoffbauer et al. v. Chambers Street Properties, et al., Case No. 03C15008639 (filed August 12, 2015), and refiled as a single action in the Circuit Court for Baltimore County on September 24, 2015); and (iv) Morris v. Gramercy Property Trust, et al., Case No. 24C15004972 (filed September 28, 2015) have been consolidated into a single action under the caption Glenn W. Morris v. Gramercy Property Trust Inc. et al., Case No. 24C15004972 (the “Maryland Action,” and together with the New York Action, the “Actions”). The complaints allege, among other things, that the directors of Legacy Gramercy breached their fiduciary duties to Legacy Gramercy stockholders by agreeing to sell the Company for inadequate consideration and agreeing to improper deal protection terms in the merger agreement, and that the preliminary joint proxy statement/prospectus filed with the SEC on Form S4 on September 11, 2015 was materially incomplete and misleading. The complaints also allege that Chambers, Merger Sub and/or Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The amended complaint in the Morris consolidated action also asserts derivative claims on behalf of Legacy Gramercy for breach of fiduciary duty against the directors of Legacy Gramercy. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief, an award of damages and/or costs/attorney fees.

~~On December 7, 2015, the parties to the Actions entered into a Memorandum of Understanding (the “MOU”),~~ which provides for the settlement of the Actions. While the defendants in the Actions continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of stockholders of Legacy Gramercy, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the Actions, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the Actions and (iii) permit the Merger to proceed without risk of the courts in New York or Maryland ordering an injunction or damages in connection with the Actions, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the MOU, to make certain supplemental disclosures related to the Merger, which were set forth in Legacy Gramercy’s Current Report on Form 8K filed with on December 7, 2015.

Pursuant to the MOU, the parties entered into a stipulation of settlement. The stipulation of settlement is subject to customary conditions, including, among other things, court approval following notice to Legacy Gramercy stockholders. On November 2, 2016, the court entered an order preliminarily approving the settlement and scheduling a hearing to consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it will resolve and release all claims by stockholders of Legacy Gramercy challenging the Merger, the Merger Agreement and any disclosure made in connection therewith, pursuant to terms that will be set forth in the notice sent to Legacy Gramercy stockholders prior to final approval of the settlement. In addition, in connection with the settlement, the parties contemplate that plaintiffs’ counsel will file a petition for an award of attorneys’ fees and expenses to be paid by Gramercy or its successor. There can be no assurance that the court will approve the settlement. In the event that the settlement is not approved or that the conditions are not satisfied, the settlement may be terminated.

On October 1, 2015, a putative class action lawsuit was filed in the Superior Court of New Jersey, Law Division, Mercer County by a purported shareholder of Chambers. The action, captioned Elstein v. Chambers Street Properties et al., Docket No. L00225415 (the “New Jersey Action”), names as defendants Chambers, its board of trustees and Legacy Gramercy. The complaint alleges, among other things, that the trustees of Chambers breached their fiduciary duties to Chambers’ shareholders by agreeing to the Merger after a flawed sales process and by approving improper deal protection terms in the merger agreement, and that Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The complaint also alleges that the preliminary joint proxy statement/prospectus was materially misleading and incomplete. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief and an award of damages.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

On December 3, 2015, the parties to the New Jersey Action entered into a Stipulation of Settlement providing for the settlement of the New Jersey Action. While the defendants in the New Jersey Action continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of shareholders of Chambers, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the New Jersey Action, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the New Jersey Action and (iii) permit the Merger to proceed without risk of the Superior Court of New Jersey ordering an injunction or damages in connection with the New Jersey Action, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the Stipulation of Settlement, to make certain supplemental disclosures related to the Merger, all of which were set forth in Legacy Gramercy’s Current Report on ~~Form 8K filed with on December 7, 2015. The Stipulation of Settlement is subject to customary conditions, including court approval following notice to the Chambers shareholders. On~~ April ~~4, 2016, the court granted preliminary approval of the settlement. On July 1, 2016 the court issued a final order approving the settlement.~~

~~The defendants believe the lawsuits are without merit.~~

In December 2010, the Company sold its 45.0% joint venture interest in the leased fee of the 2 Herald Square property in New York, New York, for approximately $25,600 plus assumed mortgage debt of approximately $86,100, or the 2 Herald Sale Transaction. Subsequent to the closing of the transaction, the New York City Department of Finance, or the NYC DOF, and New York State Department of Taxation, or the NYS DOT, issued notices of determination assessing, in the case of the NYC DOF notice, approximately $2,924 of real property transfer tax, plus interest, and, in the case of the NYS DOT notice, approximately $446 of real property transfer tax, plus interest, collectively, the Transfer Tax Assessments, against the Company in connection with the 2 Herald Sale Transaction.

In September 2013, the Company filed a petition challenging the NYC DOF Transfer Tax Assessment with the New York City Tax Appeal Tribunal. In July 2014, the Company filed a similar petition challenging the NYS DOT Transfer Tax Assessment. Trial of the Company’s NYC DOF Transfer Tax Assessment appeal was completed in December 2014.

In April 2015, a New York City Administrative Law Judge denied the Company’s petition challenging the NYC DOF Transfer Tax Assessment and ruled that the Company is liable for the NYC DOF Transfer Tax Assessment. In July 2015, the Company appealed the adverse Administrative Law Judge decision to the New York City Tax Appeals Tribunal, or the NYC Tribunal. In July 2016, the NYC Tribunal denied the Company’s appeal. In November 2016, the Company appealed the adverse decision of the NYC Tribunal to the Appellate Division of the Supreme Court of New York. A decision by the Appellate Division is expected in the second quarter of11, 2017.

In June 2016, a New York State Administrative Law Judge ruled in the Company’s favor in connection with the NYS DOT Transfer Tax Assessment. In July 2016, NYS DOT appealed the adverse Administrative Law Judge decision to the New York State Tax Appeals Tribunal, or the NYS Tribunal. A hearing before the NYS Tribunal is expected in the first quarter of 2017.

In April 2015, to stop the accrual of additional interest while the Company’s appeals are pending, the Company paid the NYC DOF $4,025 in full satisfaction of the NYC DOF Transfer Tax Assessment and the NYS DOT $617 in full satisfaction of the NYS DOF Transfer Tax Assessment. There was no additional interest recorded for the matter for the three and nine months ended September 30, 2016. There was $0 and $68 of additional interest recorded in discontinued operations for the matter for the three and nine months ended September 30, 2015, respectively.

In connection with the Company’s property acquisitions and the Merger, the Company has determined that there is a risk it will have to pay future amounts to tenants related to continuing operating expense reimbursement audits. ~~The~~In 2017, the Company settled the majority of its operating expense reimbursement audits and paid $3,500 pursuant to the settlement in February 2017. As of March 31, 2017, the Company has estimated a range of loss of $0 to $360 and determined that its best estimate of total loss is ~~$8,000, including $1,000~~$360, which is related to the Merger ~~which~~and has been accrued and recorded in other liabilities as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015. The Company has determined that there is a reasonable possibility that a loss may be incurred~~2016.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in ~~excess of $8,000~~thousands, except share, per share and ~~estimates this range to be $8,000 to $13,000.~~property data)

March 31, 2017

In addition, the Company and/or one or more of its subsidiaries is party to various litigation matters that are considered routine litigation incidental to its business, none of which are considered material.

~~Gramercy Property Trust~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited, amounts in thousands, except share, per share and property data)~~

~~September 30, 2016~~

Office Leases

The Company has several office locations, which are each subject to operating lease agreements. These office locations include the Company’s corporate office at ~~521 Fifth~~90 Park Avenue, New York, New York, and the Company’s seven regional offices located across the United States and Europe. Additionally, in April 2016, the Company entered into a lease for a new corporate office location at 90 Park Avenue, New York, New York. The Company will relocate to the new office upon completion of improvements to the space in the fourth quarter of 2016.

Capital and Operating Ground Leases

Certain properties acquired are subject to ground leases, which are accounted for as operating and capital ~~leases.~~leases, as applicable. The ground leases have varying ending dates, renewal options and rental rate escalations, with the latest ~~leases~~lease extending to June 2053. Future minimum rental payments to be made by the Company under these ~~noncancelable~~non-cancelable ground leases, excluding increases resulting from increases in the consumer price index, are as follows:


	Ground Leases - Operating		Ground Leases - Capital		Total		Ground Leases - Operating		Ground Leases - Capital		Total
October 1 to December 31, 2016	$	432	$	—	$	432
2017	1,728		—		1,728
April 1 to December 31, 2017							$	1,685	$	—	$	1,685
2018	1,731		—		1,731		2,262		1		2,263
2019	1,740		—		1,740		2,271		—		2,271
2020	1,732		—		1,732		2,263		—		2,263
2021							2,231		—		2,231
Thereafter	48,062		329		48,391		61,857		329		62,186
Total minimum rent expense	$	55,425	$	329	$	55,754	$	72,569	$	330	$	72,899

14. Income Taxes

The Company has elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code beginning with its taxable year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and ~~as such,~~operational requirements, including a requirement to distribute annually at least 90.0% of its ordinary taxable income to its shareholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that it distributes to its shareholders in accordance with REIT requirements. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes until it is able to qualify for REIT status again, however, the Company believes that it is organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes.shareholders. The ~~Company may, however, be subject to certain state and local taxes. Additionally, the~~ Company’s TRSs are subject to federal, state and local taxes.

The asset management agreement with KBS has been terminated effective in the first quarter of 2017, therefore the activity in the Company’s TRS will be immaterial going forward. Consequently, the tax expense from our TRSs for the three months ended March 31, 2017 is immaterial. Prior to 2017, income taxes, primarily related to the Company’s TRSs, were accounted for under the asset and ~~property management business, Gramercy Asset Management, partially conducts its business through a wholly-owned TRS. In addition~~liability method. Deferred tax assets and liabilities were recognized for the estimated future tax consequences attributable to differences between the ~~limitation on~~financial statement carrying amounts of existing assets and liabilities recorded in accordance with GAAP and their respective tax basis and operating loss carryforwards. Deferred tax assets and liabilities were measured using enacted tax rates in effect for the ~~Company’s use of its net operating losses under Section 382, since~~year in which those temporary differences were expected to be recovered or settled. A valuation allowance was provided if the Company ~~uses separate subsidiary REITs and taxable REIT subsidiaries to conduct different aspects~~believed it was more likely than not that all or a portion of ~~its business, losses incurred by~~a deferred tax asset would not be realized. Any increase or decrease in a valuation allowance was included in the ~~individual subsidiary REITs and TRSs are only available to offset taxable income derived by each respective subsidiary REIT or TRS.~~

~~For the three and nine months ended September 30, 2016 the~~tax provision when such a change occurs. The Company recorded ~~$331~~$(196) and ~~$3,734~~$703 of income tax expense ~~respectively. For the three and nine months ended September 30, 2015, the Company recorded $985 and $2,116 of income tax expense, respectively. Tax expense~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015 in continuing operations is comprised of state and local taxes and federal taxes primarily attributable to Gramercy Asset Management.~~

To the extent the Company incurs any interest or penalties on its material uncertain tax positions, these amounts will be recognized in the financial statements as interest expense and operating expense, respectively. ~~As of September 30, 2016 and December 31, 2015, the Company did not incur any material interest or penalties.~~

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

The Company’s policy for interest and penalties, if any, on material uncertain tax positions recognized in the financial statements is to classify these as interest expense and operating expense, respectively. As of March 31, 2017 and December 31, 2016, the Company did not incur any material interest or penalties.

15. Segment Reporting

As of ~~September 30, 2016,~~March 31, 2017, the Company has determined that it has two reportable operating segments: Asset Management and Investments/Corporate. The reportable segments are determined based upon the management approach, which looks to the Company’s internal organizational structure. The Company’s lines of business require different support infrastructures. All significant inter-segment balances and transactions have been eliminated.

The Asset Management segment includes substantially all of the Company’s activities related to asset and property management of commercial properties located throughout the United States and Europe. The Asset Management segment generates revenues from fee income related to the management agreements for properties owned by third parties throughout the United States and Europe.

The Investments/Corporate segment includes all of the Company’s activities related to the investment and ownership of commercial properties located throughout the United States and Europe. The Investments/Corporate segment generates revenues from rental revenues from properties owned by the Company, either directly or in unconsolidated equity investments.

The Company evaluates performance based on the following financial measures for each segment:

Asset Management Investments / Corporate Total Company
Three Months Ended September 30, 2016

Total revenues $ 7,250
$ 123,842
$ 131,092
Equity in net loss from unconsolidated equity investments —
(1,138 ) (1,138 )
Total operating and interest expense⁽¹⁾
(5,240 ) (128,125 ) (133,365 )
Net income from continuing operations $ 2,010
$ (5,421 ) $ (3,411 )



	Asset Management			Investments / Corporate			Total Company
Three Months Ended March 31, 2017
Total revenues	$	4,584		$	125,410		$	129,994
Equity in net loss from unconsolidated equity investments	—			(94		)	(94		)
Total operating and interest expense ¹	(1,603		)	(118,696		)	(120,299		)
Other expenses	(41		)	(17,632		)	(17,673		)
Net income (loss) from continuing operations	$	2,940		$	(11,012	)	$	(8,072	)

Asset Management Investments / Corporate Total Company
Three Months Ended September 30, 2015

Total revenues $ 5,138
$ 60,075
$ 65,213
Equity in net loss from unconsolidated equity investments —
(1,096 ) (1,096 )
Total operating and interest expense⁽¹⁾
(5,235 ) (57,223 ) (62,458 )
Net income (loss) from continuing operations $ (97 ) $ 1,756
$ 1,659



	Asset Management			Investments / Corporate			Total Company
Three Months Ended March 31, 2016
Total revenues	$	5,151		$	115,394		$	120,545
Equity in net loss from unconsolidated equity investments	—			(2,755		)	(2,755		)
Total operating and interest expense ¹	(5,075		)	(111,948		)	(117,023		)
Other expenses	(384		)	(6,076		)	(6,460		)
Net loss from continuing operations	$	(308	)	$	(5,385	)	$	(5,693	)

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

Asset Management Investments / Corporate Total Company
Nine Months Ended September 30, 2016

Total revenues $ 30,824
$ 360,238
$ 391,062
Equity in net loss from unconsolidated equity investments —
(4,061 ) (4,061 )
Total operating and interest expense⁽¹⁾
(19,222 ) (353,318 ) (372,540 )
Net income from continuing operations $ 11,602
$ 2,859
$ 14,461

Asset Management Investments / Corporate Total Company
Nine Months Ended September 30, 2015

Total revenues $ 17,546
$ 149,749
$ 167,295
Equity in net loss from unconsolidated equity investments —
(974 ) (974 )
Total operating and interest expense⁽¹⁾
(16,592 ) (148,653 ) (165,245 )
Net income from continuing operations $ 954
$ 122
$ 1,076

Asset Management Investments / Corporate Total Company
Total Assets:

September 30, 2016 $ 27,197
$ 5,156,033
$ 5,183,230
December 31, 2015 $ 5,882
$ 5,828,636
$ 5,834,518



	Asset Management		Investments / Corporate		Total Company
Total Assets:
March 31, 2017	$	14,191	$	5,592,669	$	5,606,860
December 31, 2016	$	21,004	$	5,582,523	$	5,603,527

~~(1)~~1.

Total operating and interest expense includes operating costs on commercial property assets for the Investments/Corporate segment and costs to perform required functions under the management agreement for the Asset Management segment. Depreciation and amortization of ~~$62,863~~$62,217 and ~~$25,120~~$58,248 and provision for taxes of ~~$331~~$196 and ~~$985~~$(703) for the three months ended ~~September 30,~~March 31, 2017 and 2016, and 2015, respectively, are included in the amounts presented above. Depreciation and amortization of $181,649 and $68,534 and provision for taxes of $3,734 and $2,116 for the nine months ended September 30, 2016 and 2015, respectively, are included in the amounts presented above.

16. Supplemental Cash Flow Information

The following table represents supplemental cash flow disclosures for the three months ended March 31, 2017 and 2016:



	Three Months Ended March 31,
	2017			2016
Supplemental cash flow disclosures:
Interest paid	$	17,447		$	20,638
Income taxes paid	$	71		$	322
Proceeds from 1031 exchanges from sales of real estate	$	23,219		$	175,808
Use of funds from 1031 exchanges for acquisitions of real estate	$	(23,218	)	$	(30,308	)
Non-cash activity:
Fair value adjustment to noncontrolling interest in the Operating Partnership	$	(296	)	$	1,207
Debt assumed in acquisition of real estate	$	3,680		$	—
Debt transferred in disposition of real estate	$	(10,456	)	$	(101,432	)
Non-cash acquisition of consolidated VIE	$	24,930		$	—
Dividend reinvestment plan proceeds	$	81		$	—
Redemption of units of noncontrolling interest in the Operating Partnership for common shares	$	(2,164	)	$	(524	)

17. Subsequent Events

In April 2017, the Company closed on the acquisition of two industrial properties which comprise an aggregate 787,074 rentable square feet and are 100.0% occupied for an aggregate purchase price of $51,500 and also closed on the acquisition of a land parcel for $1,000, on which it has committed to construct an industrial facility for an estimated $25,805, with projected completion in October 2017. In April 2017, the Company closed on the disposition of three office properties which comprised an aggregate 208,336 rentable square feet for gross proceeds of $47,030.

On April 26, 2017, the Company completed an underwritten public offering of 10,350,000 common shares, which includes the exercise in full by the underwriters of their option to purchase 1,350,000 additional common shares. The common shares were issued at a public offering price of $27.60 per share and the net proceeds from the offering were approximately $274,234.

Gramercy Property Trust

Notes to Condensed Consolidated Financial Statements

(Unaudited, amounts in thousands, except share, per share and property data)

~~September 30, 2016~~March 31, 2017

~~16. Supplemental Cash Flow Information~~

In April 2017, the Company entered into an agreement to sell its 14.2% interest in the Gramercy European Property Fund and its 5.1% interest in the Goodman Europe JV. The ~~following table represents supplemental cash flow disclosures for~~transaction is expected to close in the ~~three~~third quarter of 2017; however, there can be no assurances that the transaction will close at all or the amount and ~~nine months ended September 30, 2016 and 2015:~~

Nine Months Ended September 30,
2016 2015
Supplemental cash flow disclosures:
Interest paid $ 59,700
$ 22,388
Income taxes paid $ 2,614
$ 1,238
Proceeds from 1031 exchanges from sale of real estate $ 617,538
$ 8,619
Use of funds from 1031 exchanges for acquisitions of real estate $ (460,191 ) $ (8,619 )
Non-cash activity:
Fair value adjustment to noncontrolling interest in the Operating Partnership $ 2,741
$ (1,390 )
Debt assumed in acquisition of real estate $ (45,958 ) $ 153,877
Debt transferred in disposition of real estate $ (101,432 ) $ —
Treasury securities transferred in connection with defeasance of notes payable $ (144,063 ) $ —
Transfer of defeased note payable $ 124,605
$ —
Contribution of real estate assets as investment in unconsolidated equity investments $ (182,168 ) $ —
Redemption of units of noncontrolling interest in the Operating Partnership for common shares $ (4,159 ) $ (3,127 )
Distribution of real estate assets from unconsolidated equity investment $ 263,015
$ —
Non-cash activities recognized in other comprehensive income:
Change in net unrealized loss on securities available for sale $ (459 ) $ 6,129
Deferred losses and other non-cash activity related to derivatives $ (25,996 ) $ (3,248 )
Non-cash effect of foreign currency translation adjustments $ (3,687 ) $ (309 )

~~17. Subsequent Events~~timing of the transaction.

In ~~October 2016,~~May 2017, the ~~Company’s board~~Company declared a second quarter 2017 common dividend of ~~trustees approved~~$0.375 per share, payable on July 14, 2017 to shareholders of record as of June 30, 2017. In May 2017, the Company also declared a ~~fourth~~second quarter ~~2016~~2017 dividend on its 7.125% Series A Preferred Shares in the amount of ~~$0.125~~$0.44531 per share, payable on ~~January 13,~~June 30, 2017 to ~~common~~preferred shareholders of record as of the close of business on ~~December 30, 2016.~~June 20, 2017.

Subsequent to September 30, 2016, the Company closed on the acquisition of six industrial properties which comprise an aggregate of 1,528,223 rentable square feet and were acquired for an aggregate purchase price of approximately $136,875. The properties are 100.0% leased with lease terms ending between November 2022 and December 2033.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited, amounts in thousands, except share, per share and property data)

Overview

Gramercy Property Trust, or the Company or Gramercy, a Maryland real estate investment trust, or REIT, is a leading global investor and asset manager of commercial real estate. We specialize in acquiring and managing ~~single-tenant, net leased industrial, office, and specialty properties. We focus on~~high quality, income producing ~~properties~~commercial real estate leased to high quality tenants in major markets in the United States and Europe.

We earn revenues primarily through rental revenues on properties that we own in the United States and asset management revenues on properties owned by third parties in the United States and Europe. We also own unconsolidated equity investments in the United States, Europe, and Asia.

As of March 31, 2017, our wholly-owned portfolio consists of 318 properties comprising 66,732,561 rentable square feet with 98.4% occupancy. As of March 31, 2017, we have ownership interests in 48 industrial and office properties which are held in unconsolidated equity investments in the United States and Europe and two properties held through our investment in CBRE Strategic Partners Asia. As of March 31, 2017, our asset management business manages approximately $1,147,000 of commercial real estate assets, primarily on behalf of our joint venture partners, including approximately $918,000 of assets in Europe.

During the three months ended March 31, 2017, we acquired seven properties aggregating 2,257,311 square feet for a total purchase price of approximately $124,672, including the acquisition of a consolidated variable interest entity, or VIE, for $29,605 and the acquisition of a vacant property for $2,400. During the three months ended March 31, 2017, we sold seven properties aggregating 487,872 square feet for total gross proceeds of approximately $51,683.

Prior to December 17, 2015, we were known as Chambers Street Properties, or Chambers. On December 17, 2015, Chambers ~~Street Properties, or Chambers, a Maryland REIT,~~ completed a merger, or the Merger, with Gramercy Property Trust Inc.~~, or Legacy Gramercy, a Maryland corporation, pursuant to which Legacy Gramercy shareholders received 3.1898 common shares~~ While Chambers was the surviving legal entity, immediately following consummation of ~~beneficial interest of Chambers for each share of common stock of Legacy Gramercy held. Following~~ the Merger, ~~Chambers~~we changed ~~its~~our name to ~~Gramercy~~“Gramercy Property ~~Trust~~Trust” and ~~began trading on the~~our New York Stock Exchange, or NYSE, ~~using the “GPT” stock symbol. Legacy Gramercy’s executive management team manages the combined company.~~

~~In the Merger, Chambers was the legal acquirer and Legacy Gramercy was the “accounting acquirer” for financial reporting purposes. Thus, the financial information set forth herein subsequent~~trading symbol to the close of the Merger on December 17, 2015 reflects results of the combined company, and financial information prior to the close of the Merger reflects Legacy Gramercy results. For this reason, period to period comparisons may not be meaningful.

As of September 30, 2016, our wholly-owned portfolio consists of 295 properties containing an aggregate of approximately 53,306,568 rentable square feet with 98.5% occupancy. As of September 30, 2016, we have ownership interests in 46 properties with 97.6% occupancy, which are held in our unconsolidated equity investments.

As of September 30, 2016, our asset management business, which operates under the name Gramercy Asset Management, manages for third parties approximately $1,200,000 of commercial real estate assets, including approximately $871,000 of assets in Europe.

In August 2016, we partnered with TPG Real Estate, or TPG, to form Strategic Office Partners, an equity investment that will invest in single-tenant office properties in the United States. We contributed six properties to Strategic Office Partners valued at $187,500 and, in exchange, we received cash proceeds of $140,625, equivalent to TPG’s 75.0% interest in the venture, plus a 25.0% interest in Strategic Office Partners valued at $46,608. Concurrently with the initial funding of Strategic Office Partners, we received a distribution of $30,581 representing our pro rata share of loan proceeds, resulting in an initial equity investment of $16,027.

During the three months ended September 30, 2016, we acquired 16 properties aggregating 2,795,476 square feet for a total purchase price of approximately $237,432. During the nine months ended September 30, 2016, we acquired 48 properties aggregating 11,464,734 square feet for a total purchase price of approximately $862,341. Additionally, on June 30, 2016, we received 100.0% ownership of seven properties previously held in our joint venture with Duke Realty through a distribution of real estate assets by the joint venture, which had an aggregate 4,189,630 square feet and total fair value of $276,100.

During the three months ended September 30, 2016, we sold 10 properties aggregating 2,435,130 square feet for total gross proceeds of approximately $394,241. During the nine months ended September 30, 2016, we sold 20 properties aggregating 5,070,129 square feet for total gross proceeds of approximately $1,041,941. Of the properties sold during the three months ended September 30, 2016, six properties comprising an aggregate 980,825 square feet with a total value of $187,500 were contributed to Strategic Office Partners. Additionally, on June 30, 2016, we sold 74.9% of our 80.0% interest in our European joint venture with the Goodman Group to our unconsolidated equity investment in Europe, Gramercy Property Europe plc, or the Gramercy European Property Fund, for gross proceeds of $148,884 (€134,336).

“GPT.”

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, and generally will not be subject to U.S. federal income taxes to the extent we distribute our taxable income, if any, to our shareholders. We have in the past established, and may in the future establish TRSs to effect various taxable transactions. Those TRSs would incur U.S. federal, state and local taxes on the taxable income from their activities.

We were formed as a Maryland REIT in March 2004 and commenced operations in July 2004 following an initial private placement of our common shares. In May 2013, we listed our common shares on the NYSE under the symbol “CSG.” Following the Merger in December 2015, we changed our NYSE trading symbol to “GPT.” We conduct all of our operations throughOur operating partnership, GPT Operating Partnership LP, ~~our~~or the Operating ~~Partnership. We~~Partnership, is the 100.0% owner of all of its direct and indirect subsidiaries. As of March 31, 2017 third-party holders of limited partnership interests owned approximately 0.40% of the beneficial interest in us. These interests are referred to as the ~~sole general partner of our~~noncontrolling interest in the Operating Partnership. Our Operating Partnership conducts ~~our~~ commercial real estate investment business operations and third-party asset management business operations through various wholly-owned ~~entities and our realty management business through a wholly-owned TRS.~~entities.

Unless the context requires otherwise, all references to “Company,” “Gramercy,” “we,” “our,” and “us” mean Legacy Gramercy and one or more of ~~our~~its subsidiaries for the periods prior to the Merger closing and Gramercy Property Trust and one or more of ~~our~~its subsidiaries for periods following the Merger closing.

Asset and Property Management

In addition to net leased investing, we also operate a commercial real estate management business for third ~~parties. As~~parties and certain of ~~September 30, 2016, this business, which operates under the name Gramercy Asset Management, manages approximately $1,200,000 of commercial properties.~~our joint venture partners. We manage properties for companies including ~~KBS~~Strategic Office Partners, and the Gramercy European Property Fund. We managed properties for KBS Real Estate Investment Trust, Inc., or KBS, until March 31, 2017 when our management agreement with KBS expired.

We have an integrated asset management platform ~~within Gramercy Asset Management~~in order to consolidate responsibility for, and control over, leasing, lease administration, property management, operations, construction management, tenant relationship management and property accounting. To the extent that we provide asset management services for third-party property owners, we provide such services in consultation with and at the direction of such owners.

In the third quarter of 2016, concurrent with the formation of Strategic Office Partners, we entered into property management and leasing agreements with Strategic Office Partners, which provide for fees related to property management, project management and leasing services. Additionally, we will receive an asset management fee of 0.35% of aggregate purchase price as well as a 5.0% promoted interest after achieving an internal rate of return of 13.5% from our investment in Strategic Office Partners.

Results of Operations

Comparison of the three months ended ~~September 30, 2016~~March 31, 2017 to the three months ended ~~September 30, 2015~~March 31, 2016

Revenues


	2016			2015			Change			2017			2016			Change
Rental revenue	$	100,847		$	47,235		$	53,612		$	103,282		$	92,095		$	11,187
Third-party management fees	7,172			5,153			2,019			4,592			5,046			(454		)
Operating expense reimbursements	21,231			11,237			9,994			20,368			22,582			(2,214		)
Investment income	544			445			99
Other income	1,298			1,143			155			1,752			822			930
Total revenues	$	131,092		$	65,213		$	65,879		$	129,994		$	120,545		$	9,449
Equity in net loss of unconsolidated equity investments	$	(1,138	)	$	(1,096	)	$	(42	)	$	(94	)	$	(2,755	)	$	2,661

The increase of ~~$53,612~~$11,187 in rental revenue is due to the increase in our wholly-owned property portfolio of ~~295~~318 properties as of ~~September 30, 2016~~March 31, 2017 compared to ~~168~~276 properties as of ~~September 30, 2015.~~March 31, 2016.

The ~~increase~~decrease of ~~$2,019~~$454 in third-party management fees is primarily attributable to the increase of $3,016 in incentive fees earned from KBS as well as increased revenue from our European management platform during the three months ended September 30, 2016 compared to the three months ended September 30, 2015, which is partially offset by a$1,510 decrease in ~~disposition,~~asset management, property management, and accounting fees earned from our contract with KBS primarily due to property sales from the portfolio subsequent to ~~September 30, 2015.~~March 31, 2016, which is partially offset by an increase of $443 in incentive fees earned from KBS as well as an increase of $591 in revenue from our European management platform during the three months ended March 31, 2017 compared to the three months ended March 31, 2016.

The ~~increase~~decrease of ~~$9,994~~$2,214 in operating expense reimbursements is due to ~~our wholly-owned property portfolio of 295 properties~~decreases in utility-related expenses, real estate taxes, and miscellaneous operating expenses as ~~of September 30, 2016~~well as the related expense reimbursements during the three months ended March 31, 2017 compared to ~~168 properties as~~the three months ended March 31, 2016.

For the three months ended March 31, 2017, other income is primarily comprised of ~~September 30, 2015.~~investment income of $633 and property related income of $1,127. For the three months ended March 31, 2016, other income is primarily comprised of investment income of $381, property related income of $265, and realized foreign currency exchange gain of $105.

Expenses


	2016			2015			Change			2017			2016		Change
Property operating expenses	$	22,685		$	11,051		$	11,634		$	23,186		$	24,169	$	(983	)
Property management expenses	4,810			4,780			30			3,084			4,521		(1,437		)
Depreciation and amortization	62,863			25,120			37,743			62,217			58,248		3,969
General and administrative expenses	8,165			4,748			3,417			8,756			7,722		1,034
Acquisition and merger-related expenses	1,272			6,547			(5,275		)
Acquisition expenses										—			410		(410		)
Interest expense	18,409			9,227			9,182			23,056			21,953		1,103
Net impairment recognized in earnings										4,890			—		4,890
Loss on extinguishment of debt	13,777			—			13,777			208			5,757		(5,549		)
Impairment of real estate investments	1,053			—			1,053			12,771			—		12,771
Provision for taxes	331			985			(654		)	(196		)	703		(899		)
Net gains on disposals	(2,336		)	(392		)	(1,944		)
Net gain on disposals										(17,377		)	—		(17,377		)
Total expenses	$	131,029		$	62,066		$	68,963		$	120,595		$	123,483	$	(2,888	)

Property operating expenses are comprised of expenses directly attributable to our real estate portfolio. Property operating expenses include property related costs which we are responsible for during the lease term but can be passed through to the tenant as operating expense reimbursement revenue. The ~~increase~~decrease of ~~$11,634~~$983 is due to ~~our wholly-owned property portfolio of 295 properties~~decreases in utility-related expenses, real estate taxes, and miscellaneous operating expenses as ~~of September 30, 2016~~well as the related expense reimbursements during the three months ended March 31, 2017 compared to ~~168 properties as of September 30, 2015.~~the three months ended March 31, 2016.

Property management expenses are comprised of costs related to our asset and property management business. The ~~increase~~decrease of ~~$30~~$1,437 in property management expenses is primarily related to the reduction of expenses related to KBS, which is partially offset by the increase in ~~the expense~~expenses related to our European management ~~platform, offset by the reduction of expenses related to KBS.~~platform.

The increase of ~~$37,743~~$3,969 in depreciation and amortization expense is due to our wholly-owned property portfolio of ~~295~~318 properties as of ~~September 30, 2016~~March 31, 2017 compared to ~~168~~276 properties as of ~~September 30, 2015.~~March 31, 2016.

The increase of ~~$3,417~~$1,034 in general and administrative expense is primarily related to increased legal and professional fees and as well as increased compensation costs, including share-based compensation costs, related to the growth of the Company.

The decrease of ~~$5,275~~$410 in acquisition ~~and merger-related~~ expenses is attributable to the ~~acquisition~~adoption of ~~16 properties~~ASU 2017-01, Amendments to Business Combinations, in the ~~three months ended September 30, 2016 compared to~~first quarter of 2017, as a result of which our real estate acquisitions during the period were accounted for as asset acquisitions and thus the related acquisition costs were capitalized into the value of ~~16 properties and $5,195 in merger-related costs in~~ the ~~three months ended September 30, 2015.~~real estate assets acquired.

The increase of ~~$9,182~~$1,103 in interest expense is primarily due to increased borrowings on our unsecured revolving credit facility and ~~term loans,~~ our ~~Unsecured Senior Notes and the mortgages we assumed on our real estate acquisitions subsequent to December 31, 2014.~~unsecured senior notes.

During the three months ended ~~September 30,~~March 31, 2017, we recorded net impairment recognized in earnings of $4,890 on our Retained CDO Bonds due to adverse changes in expected cash flows related to the Retained CDO Bonds.

During the three months ended March 31, 2017 and 2016, we recorded loss on extinguishment of debt of ~~$13,777~~$208 and $5,757, respectively, related to the unamortized deferred financing costs, premiums and discounts that were immediately

expensed upon termination as well as early termination fees ~~and the write-off of unamortized on mortgage loan payoffs as costs~~ incurred related to ~~a mortgage defeasance~~mortgages paid off and transferred during the ~~period.~~periods.

During the three months ended ~~September 30, 2016,~~March 31, 2017, we recognized an impairment on real estate investments of ~~$1,053~~$12,771 related to ~~the~~two properties ~~sold~~that were determined to have non-recoverable declines in value during the period.

The provision for taxes was ~~$331~~$(196) and ~~$985~~$703 for the three months ended ~~September 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively. The decrease in tax expense is primarily attributable to athe decrease in ~~federal taxes related to adjustments recorded for finalized tax returns~~activity in ~~the periods.~~our TRS.

During the three months ended ~~September 30, 2016 and 2015,~~March 31, 2017, we realized net gains on disposal of ~~$(2,336) and $(392)~~$17,377 related to the disposal of ~~10 and two properties, respectively, during the periods.~~

~~Comparison of the nine months ended September 30, 2016 to the nine months ended September 30, 2015~~

~~Revenues~~

2016 2015 Change
Rental revenue $ 291,459
$ 117,990
$ 173,469
Third-party management fees 30,528
17,571
12,957
Operating expense reimbursements 65,718
29,113
36,605
Investment income 1,490
1,208
282
Other income 1,867
1,413
454
Total revenues $ 391,062
$ 167,295
$ 223,767
Equity in net loss of unconsolidated equity investments $ (4,061 ) $ (974 ) $ (3,087 )

~~The increase of $173,469 in rental revenue is due to our wholly-owned property portfolio of 295 properties as of September 30, 2016 compared to 168 properties as of September 30, 2015.~~

The increase of $12,957 in third-party management fees is primarily attributable to an increase of $15,451 in incentive fees earned from KBS as well as increased revenue from our European management platform during the nine months ended September 30, 2016. This increase is partially offset by a decrease in disposition, property management, asset management, and accounting fees earned from our contracts with KBS and other third parties primarily due to property sales from the managed portfolios subsequent to September 30, 2015 and the cessation of one of our third-party management contracts following the sale of nearly all of its properties as of December 31, 2015.

The increase of $36,605 in operating expense reimbursements is due to our wholly-owned property portfolio of 295 properties as of September 30, 2016 compared to 168 properties as of September 30, 2015.

For the nine months ended September 30, 2016 and September 30, 2015, other income is primarily comprised of and realized foreign currency exchange gain (loss), insurance refunds, and miscellaneous property related income.

The equity in net loss of unconsolidated equity investments of $(4,061) and $(974) for the nine months ended September 30, 2016 and 2015, respectively, represents our proportionate share of the loss generated by our unconsolidated equity investments.

~~Expenses~~

2016 2015 Change
Property operating expenses $ 70,364
$ 29,006
$ 41,358
Property management expenses 14,922
14,557
365
Depreciation and amortization 181,649
68,534
113,115
General and administrative expenses 23,892
14,299
9,593
Acquisition and merger-related expenses 5,994
13,508
(7,514 )
Interest expense 57,271
23,225
34,046
Gain on dissolution of previously held U.S. unconsolidated equity investment interests (7,229 ) —
(7,229 )
Loss on extinguishment of debt 20,890
—
20,890
Impairment of real estate investments 1,053
—
1,053
Provision for taxes 3,734
2,116
1,618
Net gains on disposals (2,336 ) (593 ) (1,743 )
Gain on sale of European unconsolidated equity investment interests held with a related party (5,341 ) —
(5,341 )
Total expenses $ 364,863
$ 164,652
$ 200,211

Property management expenses are comprised of costs related to our asset and property management business. The increase of $365 in property management expenses is primarily related to the increase in the expense related to our European management platform and incentive-based compensation expense related to KBS, offset by the reduction of overhead expenses related to KBS.

The increase of $113,115 in depreciation and amortization expense is due to our wholly-owned property portfolio of 295 properties as of September 30, 2016 compared to 168 properties as of September 30, 2015.

~~The increase of $9,593 in general and administrative expense is primarily related to increases in compensation costs, audit fees, rent expense and other professional fees.~~

~~The decrease of $7,514 in acquisition and merger-related expenses is attributable to $7,548 in merger-related costs incurred during the nine months ended September 30, 2015.~~

The increase of $34,046 in interest expense is primarily due to increased borrowings on our unsecured revolving credit facility and term loans, our unsecured senior notes and the mortgages we assumed on our real estate acquisitions subsequent to December 31, 2014.

~~During the nine months ended September 30, 2016, we recorded a gain of $7,229 related to the distribution of~~ seven properties ~~from our Duke JV during the period.~~

During the nine months ended September 30, 2016, we recorded loss on extinguishment of debt of $20,890 related to the unamortized premiums and discounts as well as early termination fees and defeasance costs related to the eight mortgages paid off and the one mortgage assumed by the buyer of a sold property during the period.

~~During the nine months ended September 30, 2016, we recognized an impairment on real estate investments of $1,053 related to the properties sold during the period.~~

The provision for taxes was $3,734 and $2,116 for the nine months ended September 30, 2016 and 2015, respectively. The increase is primarily attributable to an increase in federal taxes related to incentive fees recognized.

~~During the nine months ended September 30, 2016 and 2015, we realized net gains on disposal of $2,336 and $593 related to the disposal of 20 and five properties, respectively, during the periods.~~

~~During the nine months ended September 30, 2016, we recorded a gain of $5,341 related to the sale of our 74.9% interest in the Goodman Europe JV~~ during the period.

~~Same-Store and Acquisition Portfolio Analysis~~

The same-store category for the three months ended September 30, 2016 and 2015 includes properties that were owned and placed in service as of July 1, 2015 and are still owned and in service as of September 30, 2016. The same-store category for the nine months ended September 30, 2016 and 2015 includes properties that were owned and placed in service as of January 1, 2015 and are still owned and in service as of September 30, 2016. The acquisition category for the three months ended September 30, 2016 and 2015 includes properties acquired and placed in service from July 1, 2015 through September 30, 2016, from the date they were acquired and placed in service through the end of the periods presented. The acquisition category for the nine months ended September 30, 2016 and 2015 includes properties acquired and placed in service during 2015 and 2016, through September 30, 2016, from the date they were acquired and placed in service through the end of the periods presented. The development and other category for the three months ended September 30, 2016 and 2015 includes build-to-suit properties that were not placed in service as of July 1, 2015 and properties sold during the periods presented. The development and other category for the nine months ended September 30, 2016 and 2015 includes build-to-suit properties that were not placed in service as of January 1, 2015 and properties sold during the periods presented. Properties considered to be under development and included in the development and other classification for the three months ended September 30, 2016 and 2015 consist of build-to-suit properties acquired as of July 1, 2015 for which we are funding the development and which are not placed in service as of July 1, 2015, as well as build-to-suit properties acquired subsequent to July 1, 2015. Properties considered to be under development and included in the development and other classification for the nine months ended September 30, 2016 and 2015 consist of build-to-suit properties acquired as of January 1, 2015 for which we are funding the development and which are not placed in service as of January 1, 2015, as well as build-to-suit properties acquired subsequent to January 1, 2015.

The financial information presented is not an alternative to GAAP. The same-store and acquisition results of operations may be calculated differently by other REITs and should be read in conjunction with our condensed consolidated financial statements and the accompanying footnotes.

~~The tables and discussion below present the results related to our same-store and acquisition operations.~~

~~Results of the same-store and acquisition properties in our portfolio, for the three months ended September 30, 2016 and 2015 are as follows:~~

Same Store Acquisition Development and Other Asset Management and Corporate Total
2016 2015 % Change 2016 2015 2016 2015 2016 2015 2016 2015 % Change
Revenues
Rental revenue $ 46,386
$ 41,944
10.6 % $ 48,787
$ 1,311
$ 5,674
$ 3,980
$ —
$ —
$ 100,847
$ 47,235
113.5 %
Third-party management fees —
—
— % —
—
—
—
7,172
5,153
7,172
5,153
39.2 %
Operating expense reimbursements 10,405
10,675
(2.5 )% 9,517
22
1,309
540
—
—
21,231
11,237
88.9 %
Investment income —
—
— % —
—
—
—
544
445
544
445
22.2 %
Other income 7
55
(87.3 )% 402
—
—
—
889
1,088
1,298
1,143
13.6 %
Total revenues 56,798
52,674
7.8 % 58,706
1,333
6,983
4,520
8,605
6,686
131,092
65,213
101.0 %
Operating Expenses

Property operating expenses 11,117
10,774
3.2 % 11,626
(6 ) 1,841
628
(1,899 ) (345 ) 22,685
11,051
105.3 %
Property management expenses —
—
— % —
—
—
—
4,810
4,780
4,810
4,780
0.6 %
Depreciation and amortization 27,242
22,359
21.8 % 33,317
633
2,066
1,916
238
212
62,863
25,120
150.3 %
General and administrative expenses —
1
(100.0 )% 4
—
—
—
8,161
4,747
8,165
4,748
72.0 %
Acquisition and merger-related expenses (7 ) 7
(200.0 )% 1,232
1,270
—
—
47
5,270
1,272
6,547
(80.6 )%
Total operating expenses 38,352
33,141
15.7 % 46,179
1,897
3,907
2,544
11,357
14,664
99,795
52,246
91.0 %
Operating Income 18,446
19,533
(5.6 )% 12,527
(564 ) 3,076
1,976
(2,752 ) (7,978 ) 31,297
12,967
141.4 %
Other Income (Expense):

Interest expense (2,811 ) (3,335 ) (15.7 )% (1,579 ) (130 ) (9 ) —
(14,010 ) (5,762 ) (18,409 ) (9,227 ) 99.5 %
Equity in net income (loss) of unconsolidated equity investments —
—
— % —
—
—
—
(1,138 ) (1,096 ) (1,138 ) (1,096 ) 3.8 %
Gain (loss) on extinguishment of debt (14,542 ) —
100.0 % 348
—
417
—
—
—
(13,777 ) —
100.0 %
Impairment of real estate investments —
—
— % —
—
(1,053 ) —
—
—
(1,053 ) —
100.0 %
Income (loss) from continuing operations before provision for taxes 1,093
16,198
(93.3 )% 11,296
(694 ) 2,431
1,976
(17,900 ) (14,836 ) (3,080 ) 2,644
(216.5 )%
Provision for taxes —
2
100.0 % (108 ) (1 ) —
—
(223 ) (986 ) (331 ) (985 ) (66.4 )%
Income (loss) from continuing operations 1,093
16,200
(93.3 )% 11,188
(695 ) 2,431
1,976
(18,123 ) (15,822 ) (3,411 ) 1,659
(305.6 )%
Income (loss) from discontinued operations —
—
— % 80
—
174
—
93
(41 ) 347
(41 ) (946.3 )%
Income (loss) before net gains on disposals 1,093
16,200
(93.3 )% 11,268
(695 ) 2,605
1,976
(18,030 ) (15,863 ) (3,064 ) 1,618
(289.4 )%
Net gains on disposals —
—
— % —
—
2,336
392
—
—
2,336
392
495.9 %
Net income (loss) $ 1,093
$ 16,200
(93.3 )% $ 11,268
$ (695 ) $ 4,941
$ 2,368
$ (18,030 ) $ (15,863 ) $ (728 ) $ 2,010
(136.2 )%

The increase in net income of the same store properties for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 is primarily due to the loss on extinguishment of debt incurred during the three months ended September 30, 2016 related to the defeasance of a mortgage loan on 11 properties during the period. Additionally there was an increase in depreciation and amortization expense related to purchase price allocation adjustments, which was largely offset by an increase in rental revenue.

~~Results of the same-store and acquisition properties in our portfolio, for the nine months ended September 30, 2016 and 2015 are as follows:~~

Same Store Acquisition Development and Other Asset Management and Corporate Total
2016 2015 % Change 2016 2015 2016 2015 2016 2015 2016 2015 % Change
Revenues
Rental revenue $ 85,608
$ 75,991
12.7 % $ 176,003
$ 33,935
$ 29,848
$ 8,064
$ —
$ —
$ 291,459
$ 117,990
147.0 %
Third-party management fees —
—
— % —
—
—
—
30,528
17,571
30,528
17,571
73.7 %
Operating expense reimbursements 26,716
25,652
4.1 % 31,806
1,713
7,196
1,748
—
—
65,718
29,113
125.7 %
Investment income —
—
— % —
—
—
—
1,490
1,208
1,490
1,208
23.3 %
Other income 11
214
(94.9 )% 873
45
8
8
975
1,146
1,867
1,413
32.1 %
Total revenues 112,335
101,857
10.3 % 208,682
35,693
37,052
9,820
32,993
19,925
391,062
167,295
133.8 %
Operating Expenses

Property operating expenses 27,349
25,697
6.4 % 38,572
1,967
10,378
2,023
(5,935 ) (681 ) 70,364
29,006
142.6 %
Property management expenses —
—
— % —
—
—
—
14,922
14,557
14,922
14,557
2.5 %
Depreciation and amortization 52,044
41,865
24.3 % 111,919
20,925
17,009
5,092
677
652
181,649
68,534
165.0 %
General and administrative expenses —
—
— % 4
—
—
—
23,888
14,299
23,892
14,299
67.1 %
Acquisition and merger-related expenses —
—
— % 3,994
4,378
6
124
1,994
9,006
5,994
13,508
(55.6 )%
Total operating expenses 79,393
67,562
17.5 % 154,489
27,270
27,393
7,239
35,546
37,833
296,821
139,904
112.2 %
Operating Income 32,942
34,295
(3.9 )% 54,193
8,423
9,659
2,581
(2,553 ) (17,908 ) 94,241
27,391
244.1 %
Other Income (Expense):

Interest expense (5,359 ) (5,493 ) (2.4 )% (9,865 ) (3,503 ) (423 ) 1
(41,624 ) (14,230 ) (57,271 ) (23,225 ) 146.6 %
Equity in net income of unconsolidated equity investments —
—
— % —
—
—
—
(4,061 ) (974 ) (4,061 ) (974 ) 316.9 %
Gain on dissolution of previously held U.S. unconsolidated equity investment interests —
—
— % —
—
—
—
7,229
—
7,229
—
100.0 %
Loss on extinguishment of debt —
—
— % (18,290 ) —
(2,600 ) —
—
—
(20,890 ) —
100.0 %
Impairment of real estate investments —
—
— % —
—
(1,053 ) —
—
—
(1,053 ) —
100.0 %
Income (loss) from continuing operations before provision for taxes 27,583
28,802
(4.2 )% 26,038
4,920
5,583
2,582
(41,009 ) (33,112 ) 18,195
3,192
470.0 %
Provision for taxes (1 ) —
100.0 % 108
1
—
—
(3,841 ) (2,117 ) (3,734 ) (2,116 ) 76.5 %
Income (loss) from continuing operations 27,582
28,802
(4.2 )% 26,146
4,921
5,583
2,582
(44,850 ) (35,229 ) 14,461
1,076
1,244.0 %
Income (loss) from discontinued operations —
—
— % 280
—
4,488
—
277
17
5,045
17
29,576.5 %
Income (loss) before net gains on disposals 27,582
28,802
(4.2 )% 26,426
4,921
10,071
2,582
(44,573 ) (35,212 ) 19,506
1,093
1,684.6 %
Net gains on disposals —
—
— % —
—
2,336
593
—
—
2,336
593
293.9 %
Gain on sale of European unconsolidated equity investment interests held with a related party —
—
— % —
—
—
—
5,341
—
5,341
—
100.0 %
Net income (loss) $ 27,582
$ 28,802
(4.2 )% $ 26,426
$ 4,921
$ 12,407
$ 3,175
$ (39,232 ) $ (35,212 ) $ 27,183
$ 1,686
1,512.3 %

The slight decrease in net income of the same-store properties for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 is primarily due to an increase in depreciation and amortization related to purchase price allocation adjustments and the hyper-amortization of in-place lease intangible assets associated with the same leases an increase in rental revenue related to the hyper-amortization of below market lease liabilities for leases which were terminated prior to expiration, which is partially offset by an increase in rental revenue.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet cash requirements, including ongoing commitments to fund acquisitions of real estate assets, repay borrowings, pay dividends and other general business needs. In addition to cash on hand, our primary sources of funds for short-term and long-term liquidity requirements, including working capital, distributions, debt service and additional investments, consist of: (i) cash flow from operations; (ii) proceeds from our common equity and debt offerings; (iii) borrowings under our unsecured revolving credit facility and term loans; and ~~(iii)~~(iv) proceeds from ~~our common equity and debt offerings.~~sale of real estate. We believe these sources of financing will be sufficient to meet our short-term and long-term liquidity requirements.

Our cash flow from operations primarily consists of rental revenue, expense reimbursements from tenants, and third-party management fees. Our cash flow from operations is our principal source of funds that we use to pay operating expenses, debt service, general and administrative expenses, operating capital expenditures, dividends, and acquisition and merger-related expenses. Our ability to fund our short-term liquidity needs, including debt service and general operations (including employment related benefit expenses), through cash flow from operations can be evaluated through the Condensed Consolidated Statements of Cash Flows included in our Condensed Consolidated Financial Statements.

Our ability to borrow under our 2015 Revolving Credit Facility and term loan facilities is subject to our ongoing compliance with a number of customary financial covenants including our maximum secured and unsecured leverage ratios, minimum fixed charge coverage ratios, consolidated adjusted net worth values, unencumbered asset values, occupancy rates, and portfolio lease terms.

We have several unconsolidated equity investments with partners who we consider to be financially stable. Our unconsolidated equity investments are financed with non-recourse debt or equity. We believe that cash flows from the underlying real estate investments and capital commitments will be sufficient to fund the capital needs of our unconsolidated equity investments.

To maintain our qualification as a REIT under the Internal Revenue Code, we must distribute annually at least 90.0% of our taxable income. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital for operations. As of the date of this filing, we expect that our cash on hand and cash flow from operations will be sufficient to satisfy our anticipated short-term and long-term liquidity needs as well as our recourse liabilities, if any.

Cash Flows

Net cash provided by operating activities increased ~~$103,738~~$36,496 to ~~$169,739~~$58,244 for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 compared to ~~$66,001~~$21,748 for the same period in ~~2015.~~2016. Operating cash flow was generated primarily by net rental revenue from our real estate investments and management ~~fees,~~fees.

Net cash used in investing activities for the three months ended March 31, 2017 was $86,691 compared to net cash provided by investing activities of $255,510 during the same period in 2016. The decrease in cash flow related to investing activities in 2017 is primarily attributable to fewer sales of real estate, which decreased proceeds received from sales, and ~~distributions from unconsolidated equity~~the increase in capital expenditures on our owned portfolio of real estate investments.

Net cash provided by ~~investing~~financing activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 was ~~$352,417~~$17,279 as compared to net cash used ~~by investing~~in financing activities of ~~$830,876~~$338,162 during the same period in ~~2015.~~2016. The increase in cash flow ~~provided by investing activities~~ in ~~2016 is primarily attributable to proceeds received from the disposition of 20 properties during the nine months ended September 30, 2016, net of any assumed mortgages.~~

Net cash used by financing activities for the nine months ended September 30, 2016 was $593,698 as compared to net cash provided by financing activities of $602,913 during the same period in 2015. The decrease in cash flow2017 is primarily attributable to payoffs of certain mortgage loans and paydowns made on the unsecured revolving credit facility ~~and increased payment of dividends~~ in 2016 ~~which is offset by~~as well as increased draws on the unsecured credit facility and proceeds from ~~the sale~~sales of common shares in ~~2015.~~2017.

Equity Structure

Our equity structure following the reverse merger transaction reflects the equity structure of Chambers, the surviving corporation. As such, our common shares outstanding have been adjusted retroactively for all prior periods presented computed on the basis of the number of shares outstanding multiplied by the exchange ratio of 3.1898 established in the Merger Agreement. As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, our authorized capital shares consists of ~~1,000,000,000~~500,000,000 shares of beneficial interest, $0.01 par value per share, of which we are authorized to issue up to ~~990,000,000~~490,000,000 common shares of beneficial interest, $0.01 par value ~~$0.01~~ per share, ~~of our~~or common shares, and 10,000,000 preferred shares of beneficial interest, $0.01 par value ~~of $0.01,~~per share, or preferred shares. There were 236,710,763 common shares issued at the closing of the Merger, representing the number of Legacy Gramercy’s outstanding shares multiplied by the exchange ratio of 3.1898, and there were 3,500,000 shares of 7.125% Series A Cumulative Redeemable Preferred Shares issued, which were exchanged from Legacy Gramercy’s outstanding 7.125% Series B Cumulative Redeemable Preferred Stock at Merger closing. As of ~~September 30, 2016, 421,978,800~~March 31, 2017, 141,522,527 common shares and 3,500,000 preferred shares were issued and ~~outstanding, respectively.~~outstanding.

In June 2016, we instituted our 2016 Equity Incentive Plan, which was approved by our board of trustees and shareholders. The 2016 Equity Incentive Plan allows for the following awards to be made: (i) stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, (ii) stock options that do not qualify, (iii) stock appreciation rights, (iv) share awards, (v) restricted share units, and (vi) dividend equivalents and other equity awards, including LTIP Units. The aggregate number of our common shares that may be issued or transferred under the 2016 Equity Incentive Plan is 12,000,000 shares, subject to adjustment in certain circumstances. The 2016 Equity Incentive Plan became effective on June 23, 2016 and will terminate on the day immediately preceding the tenth anniversary of its effective date, unless sooner terminated by the board of trustees.

In September 2016, we issued a maximum total of 1,140,304 LTIP Units to three executives under our 2016 Equity Incentive Plan. The number of LTIPs Units actually earned by the grantees will be based on the achievement of established performance hurdles with respect to our actual and relative total shareholder returns during the period July 1, 2016 through June 30, 2019. Of the earned units, 50.0% will vest on June 30, 2019, and the remaining 50.0% will vest on June 30, 2020, based on continued employment through that date. Vested LTIP Units are convertible on a 1-for-1 basis to our common shares.

~~In July~~December 2016, our board of trustees approved ~~the establishment of an “at the market” equity issuance program, or ATM. We expect to file~~ a prospectus supplement to our currently effective registration statement with the SEC during November 2016, pursuant to which we may offer and sell common shares with an aggregate gross sales price of up to $375,000.

~~In February 2015, the board of directors of legacy Gramercy approved a 1-for-4~~1-for-3 reverse ~~stock~~share split of our common ~~stock~~shares and outstanding OP Units. The reverse ~~stock~~share split was effective after the close of trading on ~~March 20, 2015,~~December 30, 2016 and our common ~~stock~~shares began trading on a ~~reverse split-adjusted~~reverse-split-adjusted basis on the ~~New York Stock Exchange~~NYSE on ~~March 23, 2015.~~

~~Share Repurchase Program~~January 3, 2017.

In ~~February 2016, our board~~April 2017, we completed an underwritten public offering of ~~trustees approved a share repurchase program authorizing us~~10,350,000 common shares, which includes the exercise in full by the underwriters of their option to ~~repurchase up to $100,000 of our outstanding~~purchase 1,350,000 additional common shares. ~~Purchases under~~The common shares were issued at a public offering price of $27.60 per share and the ~~program will be made~~net proceeds from ~~time to time in~~ the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined at our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. For the nine months ended September 30, 2016, we did not repurchase any shares.offering were approximately $274,234.

Market Capitalization

At ~~September 30, 2016,~~March 31, 2017, our consolidated market capitalization was ~~$6,169,291~~$6,312,237 based on a common share price of ~~$9.64~~$26.30 per share, ~~and~~ the closing price of our common shares on the ~~New York Stock Exchange~~NYSE on ~~September 30, 2016.~~March 31, 2017. Market capitalization includes consolidated debt and common and preferred shares.

Dividends

To maintain our qualification as a REIT, we must pay annual dividends to our shareholders of at least 90.0% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, which would only be paid out of available cash, we must first meet both our operating requirements and scheduled debt service on our mortgages and loans payable. Dividends per share declared during 2016 and 2017 are as follows:



Quarter Ended	Common dividends ¹		Preferred dividends
March 31, 2016	$	0.330	$	0.445
June 30, 2016	$	0.330	$	0.445
September 30, 2016	$	0.330	$	0.445
December 31, 2016	$	0.375	$	0.445
March 31, 2017	$	0.375	$	0.445


1.	Common dividends declared for a quarter are accrued for during the quarter and then paid to common shareholders of record as of the end of the quarter during the month following the quarter-end.

Indebtedness

Secured Debt

Mortgage Loans

Certain ~~of our~~ real estate assets are subject to mortgage loans. During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017, we assumed ~~$45,958~~$3,680 of non-recourse mortgages in connection with 11one real estate ~~acquisitions, $12,931 associated with 2 properties distributed from the Duke JV, and entered into one non-recourse mortgage for $9,550.~~acquisition. During the year ended December 31, ~~2015,~~2016, we assumed ~~$618,169~~$244,188 of non-recourse mortgages in connection with 4227 real estate ~~acquisitions, of which $464,292 related to mortgages on 29 properties acquired in connection with the Merger.~~acquisitions.

During the three months ended ~~September 30,~~March 31, 2017, we refinanced the debt on two properties encumbered by a mortgage loan, subsequently transferred the mortgage on these two properties to the buyer of the properties, and, as a result, recorded a net loss on the early extinguishment of debt of $208. During the three months ended March 31, 2016, we paid off the debt on ~~14 properties encumbered by mortgage loans and during the nine months ended September 30, 2016, we paid off the debt on 22~~six properties encumbered by mortgage loans and transferred one ~~mortgage to the buyer of the~~property encumbered ~~property. Additionally, during the three months ended September 30, 2016 we defeased~~by a mortgage loan, ~~with an outstanding principal balance of $124,605 that encumbered 11 properties, through the purchase of treasury securities, which were immediately sold along with the associated debt. As~~and as a result, ~~during the three and nine months ended September 30, 2016,~~ we recorded a net ~~losses~~loss on the early extinguishment of debt of ~~$(13,777) and $(20,890),~~$3,827, including ~~net gains~~a gain on extinguishment of debt of ~~$0 and~~ $1,930 within discontinued ~~operations, respectively,~~operations. The gains and losses recorded for extinguishments of debt are related to unamortized deferred financing costs and mortgage premiums ~~and discounts~~(discounts) that were immediately expensed upon termination as well as early termination fees ~~and defeasance fees incurred for the extinguishments. We did not pay off any mortgage loans during the three and nine months ended September 30, 2015.~~incurred. Our mortgage loans include a series of financial and other covenants that we have to comply with in order to borrow under them. We were in compliance with the covenants under the mortgage loan facilities as of ~~September 30, 2016~~March 31, 2017.

As of March 31, 2017, we have $547,392 total outstanding principal under our mortgage loans, which encumber 59 properties, and ~~December~~have a weighted average remaining term of 3.7 years and a weighted average interest rate of 4.32%. Weighted averages are based on outstanding principal balances as of March 31, ~~2015.~~2017 and interest rate reflects the effects of interest rate swaps and amortization of financing costs and fair market value premiums or discounts. Refer to Note 6 of the accompanying financial statements for additional information on our secured debt obligations.

Unsecured Debt

2015 Credit Facility and Term Loans

~~At the close of the Merger on~~In December ~~17,~~ 2015, ~~both Legacy Gramercy and Chambers terminated the Legacy Gramercy unsecured credit facilities and~~we entered into an agreement, or the Credit Agreement, for a new $1,900,000 credit facility, or the 2015 Credit Facility, consisting of an $850,000 senior unsecured revolving credit facility, or the 2015 Revolving Credit Facility, and ~~a $1,225,000~~$1,050,000 term loan facility, or the 2015 Term Loan, with JPMorgan ~~Chase~~ Securities LLC and Merrill Lynch, Pierce, Fenner and Smith ~~Incorporated.~~Incorporated and terminated Legacy Gramercy's 2014 Credit Facility. The ~~$850,000 senior unsecured revolving credit facility, or the~~ 2015 Revolving Credit Facility consists of a $750,000 U.S. dollar revolving credit facility and a $100,000 multicurrency revolving credit facility. The 2015 Term Loan consists of a $300,000 term loan facility that matures in January 2019 with one 12-month extension, or the 3-Year Term Loan, and a $750,000 term loan facility that matures in January 2021, or the 5-Year Term Loan. The 2015 Revolving Credit Facility matures in January 2020, but may be extended for two additional six month periods upon the payment of applicable fees and satisfaction of certain customary conditions. ~~Net proceeds from~~The 2015 Term Loan consists of a $300,000 term loan facility that matures in January 2019 with one 12-month extension option, or the 3-Year Term Loan, and a $750,000 term loan facility that matures in January 2021, or the 5-Year Term Loan.

Outstanding borrowings under the 2015 Revolving Credit Facility ~~were used~~incur interest at a floating rate based upon, at our option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.875% to ~~fund acquisitions of properties and repayments of mortgage debt. Borrowings~~1.55%, depending on our credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.55%, depending on our credit ratings. We are also required to pay quarterly in arrears a 0.125% to 0.30% facility fee, depending on our credit ratings, on the total commitments under the ~~multicurrency loan denominated in euros and British pounds sterling are designated as non-derivative net investment hedges~~2015 Revolving Credit Facility. Outstanding borrowings under the 2015 Term Loan incur interest at a floating rate based upon, at our option, either (i) adjusted LIBOR plus an applicable margin ranging

from 0.90% to ~~mitigate the risk from fluctuations in foreign currency exchange rates. Refer to Note 10 of the accompanying financial statements for further information~~1.75%, depending on our ~~hedges. At~~credit ratings, or (ii) the ~~close~~alternate base rate plus an applicable margin ranging from 0.00% to 0.75%, depending on our credit ratings. The alternate base rate is the greater of (x) the ~~Merger on~~prime rate announced by JPMorgan Chase Bank, N.A., (y) 0.50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.

In December ~~17,~~ 2015, we also entered into a new $175,000 ~~seven-year~~7-year unsecured term loan with Capital One, N.A., or the 7-Year Term Loan, which matures in January 2023.

~~During~~ Outstanding borrowings under the ~~first half of 2016, we amended our 5-Year Term Loan and our~~ 7-Year Term Loan ~~in order~~incur interest at a floating rate based upon, at our option, either (i) adjusted LIBOR plus an applicable margin ranging from 1.30% to ~~remove~~2.10%, depending on our credit ratings, or (iii) the ~~0.00%~~alternate base rate ~~floor~~plus an applicable margin ranging from 0.30% to 1.10%, depending on our credit ratings. The alternate base rate is the ~~applicable~~greatest of (x) the prime rate announced by Capital One, (y) 0.50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR ~~that existed in the original loan agreements.~~ for a one-month interest period plus 1.00%.

Our unsecured borrowing facilities include a series of financial and other covenants that we have to comply with in order to borrow under the facilities. We were in compliance with the covenants under the facilities as of ~~September 30, 2016. As~~March 31, 2017. Refer to the table at the end of ~~September 30, 2016, there were~~the section for specific terms and our outstanding borrowings ~~of $163,365 outstanding~~ under the ~~2015 Revolving Credit Facility, including $93,365 (€45,000 and £33,000) on the multicurrency tranche, and borrowings of $1,225,000 outstanding under our term loans.~~facilities.

Senior Unsecured Notes

~~On December 17,~~During 2016 and 2015, we issued and sold $400,000 and $100,000 aggregate principal amount of senior unsecured notes ~~or the Senior Unsecured Notes, and on January 12, 2016 we issued and sold an additional $50,000 aggregate principal amount of the Senior Unsecured Notes~~payable, respectively, in private ~~placements. The Senior Unsecured Notes are guaranteed by us~~placements, which have maturities ranging from 2022 through 2026 and bear interest semi-annually at ~~a rate~~rates ranging from 3.89% to 4.97%. Refer to the table at the end of ~~4.97% per annum, with interest payable in arrears on June 17 and December 17~~the section for specific terms of ~~each year, commencing June 17, 2016, until~~ the ~~maturity date of December 17, 2024.~~

outstanding notes.

Exchangeable Senior Notes

On March 18, 2014, we issued $115,000 of 3.75% Exchangeable Senior Notes. The Exchangeable Senior Notes are senior unsecured obligations of ~~our~~a subsidiary of the Operating Partnership and are guaranteed by us on a senior unsecured basis. The Exchangeable Senior Notes mature on March 15, 2019, unless redeemed, repurchased or exchanged in accordance with their terms prior to such date and will be exchangeable, under certain circumstances, for cash, for common shares or for a combination of cash and common shares, at the Operating ~~Partnership’s~~Partnership's election. The Exchangeable Senior Notes will also be exchangeable prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date, at any time beginning on December 15, 2018, and also upon the occurrence of certain events. On or after March 20, 2017, in certain circumstances, the Operating Partnership may redeem all or part of the Exchangeable Senior Notes for cash at a price equal to 100.0% of the principal amount of the Exchangeable Senior Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.

As of ~~September 30, 2016,~~March 31, 2017, the Exchangeable Senior Notes have a current exchange rate of ~~41.5897~~14.0843 units of Merger consideration, where one unit of Merger consideration represents 3.1898 of our common shares, or approximately ~~132.6628~~44.9261 of our common shares for each $1.0 principal amount of the Exchangeable Senior ~~Notes.~~Notes, representing an exchange price of $22.26 per common share. The fair value of the Exchangeable Senior Notes was determined at issuance to be $106,689. The discount is being amortized to interest expense over the expected life of the Exchangeable Senior Notes. As of ~~September 30, 2016~~March 31, 2017 and December ~~31, 2015,~~2016, the Exchangeable Senior Notes were recorded as a liability at carrying value of ~~$108,186~~$109,488 and ~~$106,581,~~$108,832, respectively, net of unamortized discount and deferred financing costs of ~~$6,814~~$5,512 and ~~$8,419,~~$6,168, respectively. The fair value of the Exchangeable Senior Notes’ embedded exchange option of ~~the Exchangeable Senior Notes~~$11,726 was recorded in additional paid-in-capital within shareholders’ equity ~~of $11,726~~ as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016.

The terms of our unsecured sources of financing and their combined aggregate principal maturities as of March 31, 2017 and December 31, 2016 are as follows:



	Stated Interest Rate	Effective Interest Rate ¹	Maturity Date	Outstanding Balance
	Stated Interest Rate	Effective Interest Rate ¹	Maturity Date	March 31, 2017			December 31, 2016
2015 Revolving Credit Facility - U.S. dollar tranche	1.95%	1.95%	1/8/2020	$	55,000		$	—
2015 Revolving Credit Facility - Multicurrency tranche	1.02%	1.02%	1/8/2020	66,759			65,837
3-Year Term Loan	2.10%	2.33%	1/8/2019	300,000			300,000
5-Year Term Loan	2.10%	2.70%	1/8/2021	750,000			750,000
7-Year Term Loan	2.31%	3.34%	1/9/2023	175,000			175,000
2015 Senior Unsecured Notes	4.97%	5.07%	12/17/2024	150,000			150,000
2016 Senior Unsecured Notes	3.89%	4.00%	12/15/2022	150,000			150,000
2016 Senior Unsecured Notes	4.26%	4.38%	12/15/2025	100,000			100,000
2016 Senior Unsecured Notes	4.32%	4.43%	12/15/2026	100,000			100,000
Exchangeable Senior Notes	3.75%	6.36%	3/15/2019	115,000			115,000
Total unsecured debt				1,961,759			1,905,837
Net deferred financing costs and net debt discount				(8,988		)	(9,704		)
Total unsecured debt, net				$	1,952,771		$	1,896,133


1.	Represents the rate at which interest expense is recorded for financial reporting purposes as of March 31, 2017, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.

Derivatives and Non-Derivative Hedging Instruments

As of ~~September 30, 2016,~~March 31, 2017, our derivative instruments consist of interest rate swaps, which are cash flow hedges. Changes in the effective portion of the fair value of derivatives designated as hedging instruments are recognized in other comprehensive income (loss) until the hedged item expires or is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value and the change in value of a non-hedging derivative instrument are immediately recognized in earnings. Derivative accounting may increase or decrease reported net income and shareholders’ equity, depending on future levels of LIBOR interest rates, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.

Borrowings on the multicurrency tranche of our 2015 Revolving Credit Facility, which are designated as non-derivative net investment hedges, are recognized at par value based on the exchange rate in effect on the date of the draw. Subsequent changes in the exchange rate of our non-derivative net investment hedge are recognized as part of the cumulative foreign currency translation adjustment within other comprehensive income (loss). Refer to Note 29 and Note 910 of the accompanying financial statements for additional information on our derivatives and non-derivative hedging instruments, including the fair value measurement of these instruments, as applicable.

The following table summarizes our derivatives and hedging instruments at ~~September 30, 2016.~~March 31, 2017. The aggregate fair value of our derivatives is presented in our Condensed Consolidated Balance Sheets in derivative instruments and the aggregate carrying value of the non-derivative net investment hedges is included in the balance of our 2015 Revolving Credit Facility. The notional value is an indication of the extent of our involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks.

~~Our derivatives and hedging instruments as of September 30, 2016 are as follows:~~

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Interest Rate Swap - Waco

1 mo. USD-LIBOR-BBA

15,262 USD

4.55%

12/19/2013

12/19/2020

882

1 mo. USD-LIBOR-BBA

15,113 USD

4.55%

12/19/2013

12/19/2020

(356

)

Interest Rate Swap - Atrium I

1 mo. USD-LIBOR-BBA

19,942 USD

1.78%

8/16/2011

5/31/2018

323

1 mo. USD-LIBOR-BBA

19,474 USD

1.78%

8/16/2011

5/31/2018

(108

)

Interest Rate Swap - Easton III

1 mo. USD-LIBOR-BBA

5,955 USD

1.95%

8/16/2011

1/31/2019

151

1 mo. USD-LIBOR-BBA

5,862 USD

1.95%

8/16/2011

1/31/2019

(52

)

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.22%

12/19/2016

12/17/2018

371

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.23%

12/19/2016

12/17/2018

364

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.24%

12/19/2016

12/17/2018

345

Interest Rate Swap - 5-Year Term Loan

1 mo. USD-LIBOR-BBA

750,000 USD

1.60%

12/17/2015

12/17/2020

19,515

1 mo. USD-LIBOR-BBA

750,000 USD

1.60%

12/17/2015

12/17/2020

5,328

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

175,000 USD

1.82%

12/17/2015

1/9/2023

7,742

1 mo. USD-LIBOR-BBA

175,000 USD

1.82%

12/17/2015

1/9/2023

1,601

Net Investment Hedge in EUR-denominated investments

USD-EUR exchange rate

45,000 EUR

N/A

9/28/2015

N/A

—

USD-EUR exchange rate

45,000 EUR

N/A

9/28/2015

N/A

—

Net Investment Hedge in GBP-denominated investments

USD-GBP exchange rate

33,000 GBP

N/A

7/15/2016

N/A

—

USD-GBP exchange rate

15,000 GBP

N/A

7/15/2016

N/A

—

Total

28,613

Total hedging instruments

7,493

Through our interest rate swaps, we are hedging exposure to variability in future interest payments on our debt facilities. At ~~September 30, 2016, the~~March 31, 2017, our interest rate swap derivative instruments were reported in other assets at ~~their~~ fair value ~~as a net liability~~ of ~~$28,613.~~$8,010 and in other liabilities at fair value of $(517). Swap ~~(gain) loss~~gain (loss) of ~~$(83)~~$46 and ~~$(817) for the three and nine months ended September 30, 2016, respectively,~~$(1,830), was recognized as interest expense in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, respectively, with respect to interest rate swap hedge ineffectiveness, or to amounts excluded from ineffectiveness, which relates to the off-market financing element associated with certain derivatives. As discussed in the Unsecured Debt section above, during the first half of 2016 we amended our 5-Year Term Loan and our 7-Year Term Loan in order to remove the 0.00% rate floor on the applicable LIBOR that existed in the original loan agreements, and as a result, during the second quarter of 2016 we reversed previously recorded hedge ineffectiveness of $2,564. No gain or loss was recognized with respect to hedge ineffectiveness or to amounts excluded from ineffectiveness for the three and nine months ended September 30, 2015. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, we reclassified ~~$274~~$268 and ~~$905,~~$315, respectively, from accumulated other comprehensive income (loss) into interest expense related to a derivative terminated in 2015. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive income (loss) will be reclassified into earnings in the same periods in which the hedged interest payments affect earnings. During the next 12 months, we expect that ~~$9,113~~$3,536 will be reclassified from other comprehensive income as an increase in interest expense for our interest rate swaps as of ~~September 30, 2016.~~March 31, 2017. Additionally, we will recognize ~~$2,923~~$2,382 in interest expense on a straight-line basis over the remaining original term of terminated swaps through June 2019, representing amortization of the remaining accumulated other comprehensive income balance related to the swap, and of this amount $1,087 will be recognized in interest expense during the next 12 months.

We hedge our investments based in foreign currencies using non-derivative net investment hedges in conjunction with borrowings under the multicurrency tranche of our 2015 Revolving Credit Facility. Our non-derivative net investment hedge on our euro-denominated investments, which was entered into in September 2015, is used to hedge exposure to changes in the euro-U.S. dollar exchange rate underlying our unconsolidated net equity investments in the Gramercy European Property Fund and the Goodman Europe JV, both of which have euros as their functional currency. Our non-derivative net investment hedge on our British pound sterling-denominated investments, which was entered into in July 2016, is used to hedge exposure to changes in the British pound sterling-U.S. dollar exchange rate underlying our unconsolidated net equity investment in the Goodman UK JV and our wholly-owned property in Coventry, UK, both of which have British pounds sterling as their functional currency. At ~~September 30, 2016,~~March 31, 2017, the non-derivative net investment hedge value is reported at carrying value as a net liability of ~~$93,365,~~$66,759, which is included in the balance of the senior unsecured revolving credit facility on the Condensed Consolidated Balance Sheets. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016, we recorded a net loss of ~~$109~~$923 and ~~$175,~~$1,036, respectively, in other comprehensive income (loss) from the impact of exchange rates related to the non-derivative net investment hedges. No gain or loss was recognized with respect to non-derivative net investment hedge ineffectiveness, or to amounts excluded from ineffectiveness, in interest expense in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2016. When the non-derivative net investment is sold or substantially liquidated, the balance of the translation adjustment accumulated in other comprehensive income will be reclassified into earnings.

In June 2016, we entered into a foreign currency forward contract to mitigate our exposure to foreign currency exchange rate movements in the euro, specifically in relation to funds received in euros on the sale of 74.9% of our 80.0% interest in the Goodman Europe JV. The foreign currency forward was a derivative contract, which was not designated as a hedging instrument, through which we committed to deliver a certain amount of currency at a set price on a specific date in the future. The forward contract locked in our future currency exchange rate for the term of the contract, thus minimizing our exposure to rate fluctuations during this period. We settled the contract on July 7, 2016. During the three and nine months ended September 30, 2016, we recognized net income (loss) of $128 and $(22), respectively, in other income on the Condensed Consolidated Statements of Operations, related to the change in the value of the euro-denominated asset underlying the contract. Changes in the fair value of our foreign currency forward contract have been recognized in other income on our Condensed Consolidated Statements of Operations.

Contractual Obligations

We are obligated to fund capital expenditures related to our real estate investments, which primarily consist of expenditures to maintain assets, tenant improvement allowances and other construction or expansion obligations under tenant leases, and leasing commissions. As of ~~September 30, 2016,~~March 31, 2017, we had commitments relating to tenant improvement allowances and funding obligations under leases totaling approximately ~~$28,897~~$18,959 that are expected to be funded over the next five years. ~~In September 2016,~~During the three months ended March 31, 2017, construction was completed on our build-to-suit property in Round Rock, Texas, which we acquired ~~a parcel of land~~upon completion in Summerville, South Carolina, on which we are funding construction of a 240,800 square foot manufacturing facility with estimated total project costs of $31,201 that will be 100.0 % leased upon completion. Additionally, weMarch 2017 for $29,605. We are obligated to fund the development of aone build-to-suit industrial property ~~in Round Rock, Texas,~~as of March 31, 2017, which is ~~a consolidated VIE,~~located in Summerville, South Carolina and projected to have 240,800 rentable square feet upon ~~substantial completion of the development to acquire the property 100.0% leased through a forward purchase contract.~~completion. Our remaining future commitment for ~~these build-to-suit properties at September 30, 2016~~this property as of March 31, 2017 is approximately ~~$47,460.~~$24,382. In April 2017, we closed on the acquisition of a land parcel for $1,000, on which we have committed to construct an industrial facility for an estimated $25,805, with projected completion in October 2017.

As of ~~September 30,~~March 31, 2017 and and December 31, 2016, ~~we have funded $55,892 (€50,000)~~our cumulative contributions to the Gramercy European Property Fund ~~representing~~were $55,892 (€50,000), respectively. As of March 31, 2017, our ~~total funding~~remaining commitment to the Gramercy European Property ~~Fund. As of December 31, 2015, we had funded $25,663~~Fund is $13,315 (€23,160) to the Gramercy European Property Fund. Since inception, all equity investors, including Gramercy, have collectively committed and funded $395,213 (€352,500) in equity capital to the Gramercy European Property Fund. As of September 30, 2016, the commitments of all equity investors to the Gramercy European Property Fund have been fully funded.12,500). Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on ~~September 30, 2016,~~March 31, 2017, in the case of unfunded commitments.

We have committed to fund $100,000 to Strategic Office Partners, of which ~~$16,618 has been~~$18,677 and $16,027 was funded as of ~~September 30, 2016.~~March 31, 2017 and December 31, 2016, respectively. See Note 5 ~~“Unconsolidated Equity Investments,”~~ in the ~~Condensed Consolidated Financial Statements~~accompanying financial statements for further information on the Gramercy European Property Fund and Strategic Office Partners.

We have certain properties acquired that are subject to ground leases, which are accounted for as operating leases. The ground leases have varying ending dates, renewal options and rental rate escalations, with the latest leases extending to June 2053. Combined aggregate principal maturities and future minimum payments of our unsecured debt obligations, non-recourse mortgages, Senior Unsecured Notes, Exchangeable Senior Notes, and ground leases, in addition to associated interest payments, as of ~~September 30, 2016~~March 31, 2017 are as follows:


	2015 Revolving Credit Facility		Term Loans		Mortgage Notes Payable		Senior Unsecured Notes		Exchangeable Senior Notes		Ground Leases		Interest Payments			Total			2015 Revolving Credit Facility		Term Loans		Mortgage Notes Payable ¹		Senior Unsecured Notes		Exchangeable Senior Notes		Ground Leases		Interest Payments			Total
October 1 through December 31, 2016	$	—	$	—	$	3,558	$	—	$	—	$	432	$	14,085		$	18,075
2017	—		—		63,995		—		—		1,728		54,530			120,253
April 1 to December 31, 2017																			$	—	$	—	$	61,474	$	—	$	—	$	1,685	$	65,562		$	128,721
2018	—		—		91,291		—		—		1,731		51,469			144,491			—		—		170,819		—		—		2,263		80,435			253,517
2019	—		300,000		39,936		—		115,000		1,740		42,599			499,275			—		300,000		33,672		—		115,000		2,271		70,155			521,098
2020	163,365		—		58,907		—		—		1,732		36,715			260,719			121,759		—		60,103		—		—		2,263		65,605			249,730
2021																			—		750,000		16,364		—		—		2,231		39,682			808,277
Thereafter	—		925,000		103,514		150,000		—		48,391		58,080			1,284,985			—		175,000		204,960		500,000		—		62,186		89,275			1,031,421
Above market interest	—		—		—		—		—		—		(651		)	(651		)	—		—		—		—		—		—		(6,456		)	(6,456		)
Total	$	163,365	$	1,225,000	$	361,201	$	150,000	$	115,000	$	55,754	$	256,827		$	2,327,147		$	121,759	$	1,225,000	$	547,392	$	500,000	$	115,000	$	72,899	$	404,258		$	2,986,308


1.	Mortgage loan payments reflect accelerated repayment dates, when applicable, pursuant to related loan agreement.

We have several office locations, which are each subject to operating lease agreements. These office locations include our corporate office at ~~521 Fifth~~90 Park Avenue, New York, New York, and our seven regional offices located across the United States and Europe. Additionally, in April 2016, we entered into a lease for a new corporate office location at 90 Park Avenue, New York, New York. We will relocate to the new office upon completion of improvements to the space, which is projected to be in the fourth quarter of 2016.

Leasing Agreements

Future minimum rental revenue under non-cancelable leases, excluding reimbursements for operating expenses, as of ~~September 30, 2016~~March 31, 2017 are as follows:


	Operating Leases		Operating Leases
October 1 to December 31, 2016	$	86,390
2017	347,694
April 1 to December 31, 2017			$	289,129
2018	341,886		385,259
2019	320,834		358,794
2020	295,084		330,608
2021			305,318
Thereafter	1,762,937		1,615,136
Total minimum lease rental income	$	3,154,825	$	3,284,244

Future straight-line rent adjustments under non-cancelable leases as of ~~September 30, 2016~~March 31, 2017 are as follows:


	Straight-line Rent Adjustments			Straight-line Rent Adjustments
October 1 to December 31, 2016	$	6,112
2017	23,256
April 1 to December 31, 2017				$	20,913
2018	12,766			15,823
2019	6,671			8,145
2020	1,607			2,308
2021				(2,292		)
Thereafter	(83,456		)	(91,009		)
Total straight-line rent adjustments	$	(33,044	)	$	(46,112	)

~~Off-Balance-Sheet~~Off-Balance Sheet Arrangements

We have ~~off-balance-sheet~~off-balance sheet investments, including joint ventures and equity investments. These investments all have varying ownership structures. Substantially all of our joint venture and equity investment arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control over the operating and financial decisions of these joint venture and equity investment arrangements. Our ~~off-balance-sheet~~off-balance sheet arrangements and financial results are discussed in detail in Note 5 in the accompanying financial statements.

~~Dividends~~

Quarter Ended
Common dividends per share ⁽¹⁾
Preferred dividends per share
March 31, 2015 $ 0.063
$ 0.445
June 30, 2015 $ 0.069
$ 0.445
September 30, 2015 $ 0.069
$ 0.445
December 31, 2015 $ 0.078
$ 0.445
March 31, 2016 $ 0.110
$ 0.445
June 30, 2016 $ 0.110
$ 0.445
September 30, 2016 $ 0.110
$ 0.445


~~(1)~~	~~Common dividends declared for a quarter are accrued for during the quarter and then paid to common shareholders of record as of the end of the quarter during the month following the quarter-end.~~

Transactions with Trustee Related Entities and Related Parties

In December 2016, we sold our 5.1% interest in one property located in Lille, France held by the Goodman Europe JV to our joint venture partner, the Gramercy European Property Fund, in which we have a 14.2% ownership interest, for gross proceeds of $2,662 (€2,563).

On June 30, 2016, we ~~entered into an agreement to sell~~sold 74.9% of our outstanding 80.0% interest in the Goodman Europe JV to the Gramercy European Property Fund, in which we have a 14.2% interest as of ~~September 30, 2016. The Company has committed and funded total capital~~March 31, 2017. We have made cumulative contributions of $55,892 (€50,000) to the Gramercy European Property Fund and ~~the Company’s~~have a remaining funding commitment of $13,315 (€12,500) as of March 31, 2017. Our CEO, who is on the board of directors, also has capital commitments to the investment, as noted below. We sold 74.9% of our interest in the Goodman Europe JV to the Gramercy European Property Fund for gross proceeds of $148,884 (€134,336)., based on third-party valuations for the underlying properties. The sale of 74.9% of our interest in the Goodman Europe JV resulted in us recording a gain of $5,341 during the period, primarily related to depreciation and amortization recorded since Merger closing date. This gain amount is recorded as a gain on sale of unconsolidated equity investment interests held with a related party on our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016. Following the sale transaction, we have a continuing 5.1% interest in the Goodman Europe JV. The transaction was entered into in order to achieve efficiencies from the combination of the two European platforms.

Our CEO, Gordon F. DuGan, is on the board of directors of the Gramercy European Property Fund and has ~~invested~~committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. The two Managing Directors of Gramercy Europe Asset Management have collectively ~~invested~~committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on ~~September 30, 2016,~~March 31, 2017, in the case of unfunded commitments.

One of the properties acquired in December 2015 as part of the Merger was partially leased to Duke Realty, our partner in the Duke JV. Duke Realty acted as the managing member of the Duke JV which was dissolved in July 2016 as described in Note 5, and as such provided asset management, construction, development, leasing and property management services, for which it was entitled to receive fees as well as a promoted interest. From the date of the Merger through lease expiration in May 2016, Duke Realty leased 30,777 square feet of one of our office properties located in Minnesota which had an aggregate 322,551 rentable square feet. Duke Realty paid us ~~$333~~$176 under the lease for the ~~nine~~three months ended ~~September 30,~~March 31, 2016. See Note 5 for more information on our transactions with the Duke JV.

We acquired three properties in January 2015 in an arms-length transaction from affiliates of KTR Capital Partners, a private industrial real estate investment company, for which one of our trustees, Jeffrey Kelter, served as Chief Executive Officer and Chairman of the Board. The properties are located in Milwaukee, Wisconsin, comprise an aggregate 450,000 square feet and were acquired for an aggregate purchase price of approximately $19,750.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as a key supplemental measure of our operating performance: funds from operations attributable to common shareholders and unitholders, or FFO, core funds from operations attributable to common shareholders and unitholders, or Core FFO, and adjusted funds from operations attributable to common shareholders and unitholders, or AFFO. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. We also use FFO as one of several criteria to determine performance-based incentive compensation for members of our senior management, which may be payable in cash or equity awards. 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 as net income (loss) (determined in accordance with GAAP), excluding impairment write-downs of investments in depreciable real estate and investments in in-substance real estate investments and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to noncontrolling interests and gains/losses from discontinued operations and after adjustments for unconsolidated ~~entities.~~partnerships and joint ventures.

Core FFO and AFFO are presented excluding property acquisition costs, ~~loss on extinguishment of debt,~~ other-than-temporary impairments on retained bonds, mark-to-market on interest rate swaps, and ~~other~~ one-time charges. Our AFFO also excludes non-cash share-based compensation expense, amortization of ~~above-~~above and ~~below-market~~below market leases, amortization of deferred financing costs and non-cash interest, amortization of lease inducement costs, non-real estate depreciation and amortization,

amortization of free rent received at property acquisition and straight-line ~~rent, and these AFFO adjustments as they pertain to unconsolidated equity investments.~~rent. We believe that Core FFO and AFFO are useful supplemental measures regarding our operating ~~performances~~performance as they provide a more meaningful and consistent comparison of our operating performance.

FFO, Core FFO and AFFO do not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of our financial performance, or to cash flow from operating activities as a measure of our liquidity, nor is it entirely indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.

FFO, Core FFO and AFFO for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017 and 2016 ~~and 2015~~ are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Net income (loss) attributable to common shareholders $ (2,508 ) $ 431
$ 22,355
$ (2,947 )
Add:

Depreciation and amortization 62,863
25,120
181,649
68,534
FFO adjustments for unconsolidated equity investments 2,034
178
20,805
377
Net (income) loss attributed to noncontrolling interest 221
20
152
(43 )
Net (income) loss from discontinued operations (347 ) 41
(5,045 ) (17 )
Impairment of real estate investments 1,053
—
1,053
—
Less:
Non real estate depreciation and amortization (205 ) (214 ) (672 ) (653 )
Gain on dissolution of previously held U.S. unconsolidated equity investment interests —
—
(7,229 ) —
Gain on sale of European unconsolidated equity investment interests held with a related party —
—
(5,341 ) —
Net gain from disposals (2,336 ) (392 ) (2,336 ) (593 )
Funds from operations attributable to common shareholders and unitholders $ 60,775
$ 25,184
$ 205,391
$ 64,658
Add:

Acquisition costs 1,272
1,352
5,994
5,960
Core FFO adjustments for unconsolidated equity investments 508
1,047
7,429
1,047
Merger related costs —
5,195
—
7,548
Loss on extinguishment of debt 13,777
—
18,960
—
European Fund setup costs —
—
—
221
Net income from discontinued operations related to properties 347
—
5,140
—
Mark-to-market on interest rate swaps (83 ) —
(817 ) —
Less:
Recovery of servicing advances —
(1,071 ) —
(1,071 )
Core funds from operations attributable to common shareholders and unitholders $ 76,596
$ 31,707
$ 242,097
$ 78,363
Add:

Non-cash share-based compensation expense 1,282
1,048
3,704
2,731
Amortization of market lease assets 3,578
699
11,254
2,632
Amortization of deferred financing costs and non-cash interest (409 ) 404
(214 ) 1,270
Amortization of lease inducement costs 86
87
259
183
Non-real estate depreciation and amortization 205
214
672
653
Amortization of free rent received at property acquisition 481
1,161
1,237
2,886
Less:

AFFO adjustments for unconsolidated equity investments 1,761
(117 ) 1,352
(119 )
Straight-lined rent (6,368 ) (3,456 ) (19,084 ) (8,940 )
Amortization of market lease liabilities (8,137 ) (4,997 ) (21,586 ) (12,997 )
Adjusted funds from operations attributable to common shareholders and unitholders $ 69,075
$ 26,750
$ 219,691
$ 66,662
Funds from operations per share – basic $ 0.14
$ 0.14
$ 0.48
$ 0.38
Funds from operations per share – diluted $ 0.14
$ 0.13
$ 0.48
$ 0.37


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2016		2015		2016		2015		2017			2016
Net income (loss) attributable to common shareholders									$	7,568		$	(2,492	)
Add:
Depreciation and amortization									62,217			58,248
FFO adjustments for unconsolidated equity investments									2,253			11,306
Net income (loss) attributable to noncontrolling interest									154			(120		)
Net (income) loss from discontinued operations									24			(4,640		)
Impairment of real estate investments									12,771			—
Less:
Non-real estate depreciation and amortization									(208		)	(236		)
Net gain on disposals									(17,377		)	—
Funds from operations attributable to common shareholders and unitholders									$	67,402		$	62,066
Add:
Acquisition costs									—			410
Core FFO adjustments for unconsolidated equity investments									—			4,123
Other-than-temporary impairments on retained bonds									4,890			—
Loss on extinguishment of debt									208			3,827
Net income from discontinued operations related to properties									—			4,644
Mark-to-market on interest rate swaps									(46		)	1,830
Core funds from operations attributable to common shareholders and unitholders									$	72,454		$	76,900
Add:
Non-cash share-based compensation expense									2,054			1,150
Amortization of market lease assets									2,908			3,994
Amortization of deferred financing costs and non-cash interest									840			117
Amortization of lease inducement costs									86			86
Non-real estate depreciation and amortization									208			236
Amortization of free rent received at property acquisition									304			339
Less:
AFFO adjustments for unconsolidated equity investments									14			823
Straight-lined rent									(7,260		)	(6,761		)
Amortization of market lease liabilities									(3,541		)	(4,157		)
Adjusted funds from operations attributable to common shareholders and unitholders									$	68,067		$	72,727
Funds from operations per share – basic									$	0.48		$	0.44
Funds from operations per share – diluted									$	0.47		$	0.44
Core funds from operations per share – basic	$	0.18	$	0.17	$	0.57	$	0.46	$	0.51		$	0.55
Core funds from operations per share – diluted	$	0.18	$	0.17	$	0.57	$	0.45	$	0.51		$	0.54
Adjusted funds from operations per share – basic	$	0.16	$	0.14	$	0.52	$	0.39	$	0.48		$	0.52
Adjusted funds from operations per share – diluted	$	0.16	$	0.14	$	0.51	$	0.38	$	0.48		$	0.51
Basic weighted average common shares outstanding – EPS	420,772,508		183,945,495		423,542,467		169,781,590		140,907,399			140,060,405
Weighted average non-vested share based payment awards	3,170,302		—		—		—		—			485,290
Weighted average partnership units held by noncontrolling interest	1,017,326		1,498,785		1,199,312		1,582,067		620,586			458,101
Weighted average common shares and units outstanding	424,960,136		185,444,280		424,741,779		171,363,657		141,527,985			141,003,796
Diluted weighted average common shares and common share equivalents outstanding – EPS⁽¹⁾	420,772,508		187,683,631		427,163,126		169,781,590
Diluted weighted average common shares and common share equivalents outstanding – EPS¹									141,875,619			140,060,405
Weighted average partnership units held by noncontrolling interest	1,017,326		—		—		1,582,067		620,586			458,101
Weighted average non-vested share based payment awards	3,519,584		—		—		2,969,744
Weighted average share based payment awards									471,328			961,155
Weighted average share options	58,270		—		—		44,624		—			5,445
Phantom shares	—		—		—		514,834
Dilutive effect of Exchangeable Senior Notes	3,336,987		—		—		658,380
Diluted weighted average common shares and units outstanding	428,704,675		187,683,631		427,163,126		175,551,239		142,967,533			141,485,106


~~(1)~~1.	For the three months ended ~~September 30,~~March 31, 2016, ~~and nine months ended September 30, 2015,~~ the diluted weighted average share ~~calculations,~~calculation, which ~~represent~~represents the denominator in diluted earnings per share, ~~exclude~~excludes potentially dilutive securities because including them would have been anti-dilutive during the ~~periods.~~period.

Cautionary Note Regarding Forward-Looking Information

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. You can identify forward-looking statements by the use of forward-looking expressions such as “may,” “will,” “should,” “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” “continue,” or any negative or other variations on such expressions. Forward-looking statements include information concerning possible or assumed future results of our operations, including any forecasts, projections, plans and objectives for future operations. Although we believe that our plans, intentions and expectations as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions or expectations will be achieved. We have listed below some important risks, uncertainties and contingencies which could cause our actual results, performance or achievements to be materially different from the forward-looking statements we make in this report. These risks, uncertainties and contingencies include, but are not limited to, the following:

the success or failure of our efforts to implement our current business ~~strategy, including our ability to timely and profitably dispose of non-core assets and reinvest in target assets;~~strategy;

our ability to accomplish our office asset disposition plan subject to the REIT prohibited transaction tax limitations;

our ability to identify and complete additional property acquisitions and risks of real estate acquisitions;

availability of investment opportunities on real estate assets and real estate-related and other securities;

the performance and financial condition of tenants and corporate customers;

the adequacy of our cash reserves, working capital and other forms of liquidity;

the availability, terms and deployment of short-term and long-term capital;

demand for industrial and office space;

the actions of our competitors and our ability to respond to those actions;

the timing of cash flows from our investments;

the cost and availability of our financings, which depends in part on our asset quality, the nature of our relationships with our lenders and other capital providers, our business prospects and outlook and general market conditions;

unanticipated increases in financing and other costs, including a rise in interest rates;

economic conditions generally and in the commercial finance and real estate ~~markets~~markets;

changes in governmental regulations, tax rates and similar matters;

legislative and regulatory changes (including changes to real estate and zoning laws, laws governing the ~~banking industry specifically;~~taxation of REITs or the exemptions from registration as an investment company);

our international operations, including unfavorable foreign currency rate fluctuations, enactment or changes in laws relating to foreign ownership of property, and local economic or political conditions that could adversely affect our earnings and cash flows;

~~unanticipated increases in financing and other costs, including a rise in interest rates;~~

reduction in cash flows received from our investments;

volatility or reduction in the value or uncertain timing in the realization of our ~~Retained CDO Bonds;~~retained collateralized debt obligation bonds;

our ability to profitably dispose of non-core assets;

~~the high tenant concentration of one tenant, Bank of America, N.A.;~~

availability of, and ability to retain, qualified personnel and trustees;

changes to our management and board of trustees;

~~changes in governmental regulations, tax rates and similar matters;~~

~~legislative and regulatory changes (including changes to real estate and zoning laws, laws governing the taxation of REITs or the exemptions from registration as an investment company);~~

environmental and/or safety requirements and risks related to natural disasters;

declining real estate valuations and impairment charges;

our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and qualify for our exemption under the Investment Company Act of 1940, as amended, our Operating ~~Partnership’s~~Partnership's ability to satisfy the rules in order to qualify as a partnership for U.S. federal income tax purposes, and the ability of certain of our subsidiaries to qualify as REITs and certain of our subsidiaries to qualify as ~~TRSs~~taxable REIT subsidiaries for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

uninsured or underinsured losses relating to our properties;

our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies;

tenant bankruptcies and defaults on or non-renewal of leases by tenants;

decreased rental rates or increased vacancy rates;

the continuing threat of terrorist attacks on the national, regional and local economies;

reviewing adjustments and the discovery of new information that alters expectations about first quarter 2017 preliminary results or that impacts estimates and assumptions underlying these preliminary results; and

other factors discussed under Item 1A, ~~“Risk Factors”~~"Risk Factors" of our Annual Report on Form 10-K ~~for the year ended December 31, 2015,~~ and those factors that may be contained in any subsequent filing we make with the ~~Securities and Exchange Commission, or the~~ SEC, which are or will be incorporated by reference herein.

We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In evaluating forward-looking statements, you should consider these risks and uncertainties, together with the other risks described from time-to-time in our reports and documents which are filed with the SEC, and you should not place undue reliance on those statements.

The risks included here are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given

these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Recently Issued Accounting Pronouncements

Please refer to Note 2 in the accompanying footnotes to our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

(dollar amounts in thousands)

Market ~~Risk~~

~~Market~~ risk includes risks that arise from changes in interest rates, credit, commodity prices, equity prices ~~foreign currency exchange rates,~~ and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risks to which we will be exposed are real estate, interest rate ~~credit,~~ and ~~foreign currency exchange~~credit risks. These risks are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.

Generally, we do not use derivative instruments to hedge credit/market risks or for speculative purposes. However, from time to time, we may enter into foreign currency forward contracts to hedge our foreign currency cash flow exposures.

Real Estate Risk

Commercial property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions, local real estate conditions (such as an oversupply of retail, industrial, office or other commercial or multi-family space), changes or continued weakness in specific industry segments, construction quality, age and design, demographic factors, retroactive changes to building or similar codes, and increases in operating expenses (such as energy costs). We may seek to mitigate these risks by employing careful business selection, rigorous underwriting and credit approval processes and attentive asset management.

Interest Rate Risk

Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Our operating results will depend in large part on differences between the income from our assets and our borrowing costs. Our real estate assets generate income principally from fixed long-term leases and we are exposed to changes in interest rates primarily from floating rate borrowing arrangements. We expect that we will primarily finance our investment in commercial real estate with fixed rate, non-recourse mortgage financing, however, to the extent that we use floating rate borrowing arrangements, our net income from our real estate investments will generally decrease if LIBOR increases. We have used, and may continue to use, interest rate caps or swaps to manage our exposure to interest rate changes. We currently have a 2015 Revolving Credit Facility, several term loans and several mortgage notes payable which are based upon a floating rate which have an aggregate outstanding balance of ~~$1,429,524~~$1,387,208 at ~~September 30, 2016,~~March 31, 2017, of which ~~$966,159~~$1,265,449 is hedged effectively by interest rate swaps which we believe will mitigate the interest rate risk related to these borrowings.

The following chart shows our floating rate debt instruments, including debt that is hedged by interest rate swaps, and the related interest rates, maturity dates and balances as of ~~September 30, 2016:~~March 31, 2017:


Floating Rate Debt Instrument	Unswapped Interest Rate		Effective Interest Rate⁽¹⁾		Maturity Date	Balance at September 30, 2016			Stated Interest Rate		Effective Interest Rate ¹		Maturity Date	Balance at March 31, 2017
2015 Revolving Credit Facility - U.S. dollar tranche⁽²⁾	1.51	%	1.51	%	1/8/2020	$	70,000
2015 Revolving Credit Facility - Multicurrency tranche⁽²⁾	1.07	%	1.07	%	1/8/2020	93,365
2015 Revolving Credit Facility - U.S. dollar tranche ²									1.95	%	1.95	%	1/8/2020	$	55,000
2015 Revolving Credit Facility - Multicurrency tranche ²									1.02	%	1.02	%	1/8/2020	66,759
3-Year Term Loan⁽²⁾	1.66	%	1.66	%	1/8/2019	300,000			2.10	%	2.33	%	1/8/2019	300,000
5-Year Term Loan	1.66	%	2.70	%	1/8/2021	750,000			2.10	%	2.70	%	1/8/2021	750,000
7-Year Term Loan	2.05	%	3.34	%	1/9/2023	175,000			2.31	%	3.34	%	1/9/2023	175,000
Mortgage note payable - Waco	2.62	%	4.55	%	12/19/2020	15,262			2.93	%	4.75	%	12/19/2020	15,113
Mortgage note payable - Atrium I	2.53	%	3.78	%	5/31/2018	19,942			2.81	%	3.57	%	5/31/2018	19,474
Mortgage note payable - Easton III	2.53	%	3.95	%	1/31/2019	5,955			2.81	%	3.94	%	1/31/2019	5,862
Total Floating Rate Debt Instruments						$	1,429,524	Total Floating Rate Debt Instruments						$	1,387,208


~~(1)~~1.	Represents the rate at which interest expense is recorded for financial reporting purposes as of March 31, 2017, which reflects the effect of interest rate swaps and amortization of ~~any discounts/~~financing costs and fair market value premiums ~~excluding debt issuance costs.~~or discounts.


~~(2)~~2.	These floating rate debt instruments are not hedged by interest rate swaps.

The following chart shows a hypothetical 100 basis point increase in interest rates along the entire interest rate curve for the interest rate risk related to the 2015 Revolving Credit ~~Facility and $300,000 of the balance on the term loans:~~Facility:


Change in LIBOR	Projected Decrease in Net Income			Projected Decrease in Net Income
Base case
+100 bps	$	(1,184	)	$	(308	)
+200 bps	$	(2,368	)	$	(616	)
+300 bps	$	(3,552	)	$	(923	)

Credit Risk

Credit risk refers to the ability of each tenant in our portfolio of real estate investments to make contractual lease payments on the scheduled due dates. We seek to reduce credit risk of our real estate investments by entering into long-term leases with tenants after a careful evaluation of credit worthiness as part of our property acquisition process. If defaults occur, we employ our asset management resources to mitigate the severity of any losses and seek to relet the property. In the event of a significant rising interest rate environment and/or economic downturn, tenant delinquencies and defaults may increase and result in credit losses that would materially and adversely affect our business, financial condition and results of operations.

Foreign Currency Exchange Rate Risk

WeDuring the periods presented, we have had investments, either directly or through unconsolidated equity interest, in Europe, Asia, and Canada and we operate an asset management business and have capital commitments to an equity investment in Europe. As a result, we are subject to risk from the effects of exchange rate risk from the effects of exchange rate movements in the euro, the British pound sterling, and the Canadian dollar, which may affect future costs and cash flows. We hedge our foreign currency exposure related to our foreign investments primarily by financing our investments in the local currency denominations and through the use of net investment hedge instruments. Additionally,

we may enter into foreign currency forward contracts to manage our exposure to foreign currency exchange rate movements. We have historically been a net payer of various foreign currencies (we pay out more cash than we receive), and therefore our foreign operations benefit from a weaker U.S. dollar, and are adversely affected by a stronger U.S. dollar, relative to the foreign currency. In the future, we expect to be a net receiver of various foreign currencies as our commitments to the Gramercy European Property Fund have been ~~fully~~substantially funded.

As of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, we had outstanding borrowings of ~~$93,365~~$66,759 (€45,000 and ~~£33,000)~~£15,000) and ~~$21,724~~$65,837 (€~~20,000)~~45,000 and £15,000), respectively, under the multicurrency tranche of our 2015 Revolving Credit Facility, which we designated as a non-derivative net investment hedging instrument pursuant to ASC 815 to mitigate our risk from fluctuations in the exchange rates between the U.S. dollar and both the euro and British pound sterling. Our unhedged net investment in foreign currencies was ~~$15,007~~$13,363 and ~~$1,661~~$13,322 as of ~~September 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, respectively, based on the period ending U.S. dollar values of the hedge of ~~$93,365~~$66,759 and ~~$21,724,~~$65,837, respectively. For the three and nine months ended September 30, 2016, we recorded net losses of $1,120 and $3,687, respectively, in other comprehensive income (loss) related to our foreign currency exposure. For the three and nine months ended September 30, 2016, we recognized realized foreign currency transaction gains (losses) of $185 and $104, respectively, and no unrealized foreign currency transaction gains or losses. For the three and nine months ended September 30, 2015, we recognized net realized foreign currency transaction gains (losses) of $15 and $25, respectively, and no unrealized foreign currency transaction gains or losses. Foreign currency transaction gains and losses are included in other income on the Condensed Consolidated Statement of Operations.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time frame specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. Also, we may have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

(Dollar amounts in thousands)

Putative Shareholder Actions against Legacy Gramercy - Dismissed

Legacy Gramercy, its board of directors, Chambers and/or Merger Sub ~~are~~were named as defendants in two ~~pending~~ putative class action lawsuits brought by purported Legacy Gramercy stockholders challenging the Merger. Two suits that were separately filed in New York Supreme Court, New York County, captioned (i) Berliner v. Gramercy Property Trust, et al., Index No. 652424/2015 (filed July 9, 2015) and (ii) Gensler v. Baum, et al., Index No. 157432/2015 (filed July 22, 2015), ~~have been~~were consolidated into a single action under the caption In re Gramercy Property Trust Stockholder Litigation, Index No. 652424/2015 (the “New York Action”). In addition, four suits that were separately filed in Circuit Court for Baltimore City, Maryland, captioned (i) Jobin v. DuGan, et al., Case No. 24C15003942 (filed July 27, 2015); (ii) Vojik v. Gramercy Property Trust, et al., Case No. 24C15004412 (filed August 25, 2015); (iii) Hoffbauer et al. v. Chambers Street Properties, et al., 24C15004904 (filed September 24, 2015) (originally filed as two separate suits in the Circuit Court for Baltimore County, Maryland, captioned Plemons v. Chambers Street Properties, et al., Case No. 03C15007943 (filed July 24, 2015) and Hoffbauer et al. v. Chambers Street Properties, et al., Case No. 03C15008639 (filed August 12, 2015), and refiled as a single action in the Circuit Court for Baltimore County on September 24, 2015); and (iv) Morris v. Gramercy Property Trust, et al., Case No. 24C15004972 (filed September 28, 2015) ~~have been~~were consolidated into a single action under the caption Glenn W. Morris v. Gramercy Property Trust Inc. et al., Case No. 24C15004972 (the “Maryland Action,” and together with the New York Action, the “Actions”). The complaints ~~allege,~~alleged, among other things, that the directors of Legacy Gramercy breached their fiduciary duties to Legacy Gramercy stockholders by agreeing to sell the Company for inadequate consideration and agreeing to improper deal protection terms in the merger agreement, and that the preliminary joint proxy statement/prospectus filed with the SEC on Form S4 on September 11, 2015 was materially incomplete and misleading. The complaints also ~~allege~~alleged that Chambers, Merger Sub and/or Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The amended complaint in the Morris consolidated action also asserts derivative claims on behalf of Legacy Gramercy for breach of fiduciary duty against the directors of Legacy Gramercy. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief, an award of damages and/or costs/attorney fees.

On December 7, 2015, the parties to the Actions entered into a Memorandum of Understanding ~~(the “MOU”), which provides~~that provided for the settlement of the Actions. ~~While~~On March 1, 2017, the ~~defendants in~~court entered a Final Order and Judgment approving the ~~Actions continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of~~settlement, awarding plaintiffs’ attorney fees and expenses, and dismissing the plaintiffs or the class of stockholders of Legacy Gramercy, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the Actions, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the Actions and (iii) permit the Merger to proceed without risk of the courts in New York ~~or Maryland ordering an injunction or damages in connection~~Action with ~~the Actions, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing,~~prejudice. On March 22, 2017, pursuant to the ~~terms of the MOU, to make certain supplemental disclosures related to the Merger, which were set forth in Legacy Gramercy’s Current Report on Form 8K filed with on December 7, 2015.~~

~~Pursuant to the MOU, the parties entered into a stipulation of settlement. The~~ stipulation of settlement, ~~is subject to customary conditions, including, among other things, court approval following~~plaintiffs in the Maryland Action filed a notice ~~to Legacy Gramercy stockholders. On November 2, 2016,~~of dismissal with prejudice with the Circuit Court for Baltimore County, Maryland, which the court entered an order preliminarily approving the settlement and scheduling a hearing to consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it will resolve and release all claims by stockholders ofon April 11, 2017.

Putative Shareholder Action against Legacy Gramercy challenging the Merger, the Merger Agreement and any disclosure made in connection therewith, pursuant to terms that will be set forth in the notice sent to Legacy Gramercy stockholders prior to final approval of the settlement. In addition, in connection with the settlement, the parties contemplate that plaintiffs’ counsel will file a petition for an award of attorneys’ fees and expenses to be paid by Gramercy or its successor. There can be no assurance that the court will approve the settlement. In the event that the settlement is not approved or that the conditions are not satisfied, the settlement may be terminated.

Chambers - Dismissed

On October 1, 2015, a putative class action lawsuit was filed in the Superior Court of New Jersey, Law Division, Mercer County by a purported shareholder of Chambers. The action, captioned Elstein v. Chambers Street Properties et al., Docket No. L00225415 (the “New Jersey Action”), ~~names~~named as defendants Chambers, its board of trustees and Legacy Gramercy. The complaint ~~alleges,~~alleged, among other things, that the trustees of Chambers breached their fiduciary duties to Chambers’ shareholders by agreeing to the Merger after a flawed sales process and by approving improper deal protection terms in the merger agreement, and that Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The complaint also alleges that the preliminary joint proxy statement/prospectus was materially misleading and incomplete. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief and an award of damages.

On December 3, 2015, the parties to the New Jersey Action entered into a Stipulation of Settlement providing for the settlement of the New Jersey Action. While the defendants in the New Jersey Action continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of shareholders of Chambers, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the New Jersey Action, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the New Jersey Action and (iii) permit the Merger to proceed without risk of the Superior Court of New Jersey ordering an injunction or damages in connection with the New Jersey Action, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the Stipulation of Settlement, to make certain supplemental disclosures related to the Merger, all of which were set forth in Legacy Gramercy’s Current Report on Form 8K filed with on December 7, 2015. The Stipulation of Settlement is subject to customary conditions, including court approval following notice to the Chambers shareholders. On April 4, 2016, the court granted preliminary approval of the settlement. On

July 1, 2016, the court issued ~~a final order~~an Order and Final Judgment approving the ~~settlement.~~

~~The defendants believe the lawsuits are without merit.~~

In December 2010, we sold our 45.0% joint venture interest in the leased fee of the 2 Herald Square property in New York, New York, for approximately $25,600 plus assumed mortgage debt of approximately $86,100, or the 2 Herald Sale Transaction. Subsequent to the closing of the transaction,settlement and dismissing the New York City Department of Finance, or the NYC DOF, and New York State Department of Taxation, or the NYS DOT, issued notices of determination assessing, in the case of the NYC DOF notice, approximately $2,924 of real property transfer tax, plus interest, and, in the case of the NYS DOT notice, approximately $446 of real property transfer tax, plus interest, collectively, the Transfer Tax Assessments, against us in connection with the 2 Herald Sale Transaction.Jersey Action.

In September 2013, we filed a petition challenging the NYC DOF Transfer Tax Assessment with the New York City Tax Appeal Tribunal. In July 2014, we filed a similar petition challenging the NYS DOT Transfer Tax Assessment. Trial of our NYC DOF Transfer Tax Assessment appeal was completed in December 2014.

In April 2015, a New York City Administrative Law Judge denied our petition challenging the NYC DOF Transfer Tax Assessment and ruled that we were liable for the NYC DOF Transfer Tax Assessment. In July 2015, we appealed the adverse Administrative Law Judge decision to the New York City Tax Appeals Tribunal, or the NYC Tribunal. In July 2016, the NYC Tribunal denied our appeal. In November 2016, we appealed the adverse decision of the NYC Tribunal to the Appellate Division of the Supreme Court of New York. A decision by the Appellate Division is expected in the second quarter of 2017.

In June 2016, a New York State Administrative Law Judge ruled in our favor in connection with the NYS DOT Transfer Tax Assessment. In July 2016, NYS DOT appealed the adverse Administrative Law Judge decision to the New York State Tax Appeals Tribunal, or the NYS Tribunal. A hearing before the NYS Tribunal is expected in the first quarter of 2017.

In April 2015, to stop the accrual of additional interest while our appeal is pending, we paid the NYC DOF $4,025 in full satisfaction of the NYC DOF Transfer Tax Assessment and the NYS DOT $617 in full satisfaction of the NYS DOF Transfer Tax Assessment. There was no additional interest recorded in discontinued operations for the matter for the three and nine months ended September 30, 2016. There was $0 and $68 of additional interest recorded in discontinued operations for the matter for the three and nine months ended September 30, 2015, respectively.Other Contingencies

In connection with our property acquisitions and the Merger, we determined that there is a risk we will have to pay future amounts to tenants related to continuing operating expense reimbursement audits. WeIn 2017, we settled the majority of our operating expense reimbursement audits and paid $3,500 pursuant to the settlement in February 2017. As of March 31, 2017, we have estimated a range of loss of $0 to $360 and determined that our best estimate of total loss is ~~$8,000, including $1,000~~$360, which is related to the Merger ~~which~~and has been accrued and recorded in other liabilities as of ~~September 30,~~March 31, 2017 and December 31, 2016. ~~We have determined that there is a reasonable possibility that a loss may be incurred in excess of $8,000 and estimate this range to be $8,000 to $13,000.~~

In addition, we and/or one or more of our subsidiaries are party to various litigation matters that are considered routine litigation incidental to our business, none of which are considered material.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors as disclosed in the section entitled “Risk Factors” beginning on page 1712 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015~~2016 and filed with the SEC. Please review the Risk Factors set forth in the Form 10-K.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	INDEX TO EXHIBITS



Exhibit No.		Description
3.1		Articles of Amendment to the Declaration of Trust of Gramercy Property Trust, dated December 30, 2016, converting every three issued and outstanding common shares of beneficial interest, par value $0.01 per share, into one issued and outstanding common share of beneficial interest, par value $0.03 per share, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 4, 2017.
3.2		Articles of Amendment to the Declaration of Trust of Gramercy Property Trust, dated December 30, 2016, decreasing the par value of every common share of beneficial interest from $0.03 to $0.01 per share, incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed with the SEC on January 4, 2017.
3.3		Articles of Amendment to the Declaration of Trust of Gramercy Property Trust, dated December 30, 2016, decreasing the number of authorized common shares of beneficial interest from 990 million to 490 million, incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K, filed with the SEC on January 4, 2017.
10.1		~~Form~~Underwriting Agreement, dated April 20, 2017, by and among Gramercy Property Trust, GPT Operating Partnership LP, and Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC, as representatives of ~~LTIP Unit Award Agreement,~~the several underwriters named therein, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~October 5, 2016.~~April 26, 2017.
10.2		~~Form of LTIP Restricted Share Unit Award Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 5, 2016.~~
~~10.3~~		~~Form of LTIP Restricted Share Award Agreement, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 5, 2016.~~
~~10.4~~		~~First~~Second Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of GPT Operating Partnership LP, dated as of ~~September 29,~~December 30, 2016, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on ~~October 5, 2016.~~January 4, 2017.
10.3		Form of Equity Distribution Agreement, dated as of January 6, 2017, by and among the Company, GPT Operating Partnership LP and each sales agent, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 6, 2017.
31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1		Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
32.2		Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
101.INS		XBRL Instance Document, filed herewith.
101.SCH		XBRL Taxonomy Extension Schema, filed herewith.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase, filed herewith.
101.DEF		XBRL Taxonomy Extension Definition Linkbase, filed herewith.
101.LAB		XBRL Taxonomy Extension Label Linkbase, filed herewith.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase, filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		GRAMERCY PROPERTY TRUST

Dated: ~~November 7, 2016~~May 2, 2017		~~By:~~/s/ Jon W. Clark
		Name: Jon W. Clark
		Title: Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

9479



	2016			2015
Balance as of January 1, 2016 and January 1, 2015, respectively, of credit losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income	$	3,196		$	6,818
Additions to credit losses:
On Retained CDO Bonds for which an OTTI was not previously recognized	—			—
On Retained CDO Bonds for which an OTTI was previously recognized and a portion of an OTTI was recognized in other comprehensive income	—			—
On Retained CDO Bonds for which an OTTI was previously recognized without any portion of OTTI recognized in other comprehensive income	—			—
Reduction for credit losses:
On Retained CDO Bonds for which no OTTI was recognized in other comprehensive income at current measurement date	—			—
On Retained CDO Bonds sold during the period	—			—
On Retained CDO Bonds charged off during the period	—			—
For increases in cash flows expected to be collected that are recognized over the remaining life of the Retained CDO Bonds	(841		)	(3,622		)
Balance as of September 30, 2016 and December 31, 2015, respectively, of credit losses (gains) on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income	$	2,355		$	3,196



		Preliminary Allocations recorded
Period of Acquisition	Number of Acquisitions	Real Estate Assets		Intangible Assets		Intangible Liabilities
Nine Months Ended September 30, 2016	26	$	420,685	$	62,425	$	11,648
Year Ended December 31, 2015⁽¹⁾	1	$	7,947	$	—	$	—



Assets
Investments:
Land	$	258,451
Buildings and improvements	1,628,335
Net investments	1,886,786
Cash and cash equivalents	24,687
Restricted cash	8,990
Unconsolidated equity investments	563,888
Tenant and other receivables, net	11,166
Acquired lease assets	411,361
Deferred costs and other assets	5,002
Assets held for sale	414,187
Total assets	$	3,326,067
Liabilities
Mortgage notes payable	$	220,429
Revolving credit facilities and term loans	860,000
Below-market lease liabilities	41,130
Accounts payable, accrued expenses, and other liabilities	82,773
Liabilities related to assets held for sale	292,494
Total liabilities	$	1,496,826
Fair value of net assets acquired	$	1,829,241



At September 30, 2016	Total		Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds:
Non-investment grade, subordinate CDO bonds	$	8,439	$	—	$	—	$	8,439
Marketable securities:
Investment in CBRE Strategic Partners Asia	4,557		—		—		4,557
Real estate investments classified as held for sale at Merger closing	10,558		—		—		10,558
	$	23,554	$	—	$	—	$	23,554
Financial Liabilities:
Derivative instruments:
Interest rate swaps	$	28,613	$	—	$	—	$	28,613
	$	28,613	$	—	$	—	$	28,613



At December 31, 2015	Total		Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds:
Non-investment grade, subordinate CDO bonds	$	7,471	$	—	$	—	$	7,471
Marketable securities:
Investment in CBRE Strategic Partners Asia	5,508		—		—		5,508
Real estate investments classified as held for sale at Merger closing	393,984		—		—		393,984
	$	406,963	$	—	$	—	$	406,963
Financial Liabilities:
Derivative instruments:
Interest rate swaps	$	3,442	$	—	$	—	$	3,442
	$	3,442	$	—	$	—	$	3,442



	Retained CDO Bonds			Investment in CBRE Strategic Partners Asia			Total Financial Assets – Level III
Balance as of December 31, 2015	$	7,471		$	5,508		$	12,979
Amortization of discounts or premiums	1,427			—			1,427
Adjustments to fair value:
Unrealized gain in other comprehensive income from fair value adjustments	(459		)	—			(459		)
Total income on fair value adjustments	—			(637		)	(637		)
Purchase price allocation adjustments	—			(314		)	(314		)
Balance as of September 30, 2016	$	8,439		$	4,557		$	12,996



	Derivative Instruments
Balance as of December 31, 2015	$	3,442
Adjustments to fair value:
Termination of derivative instrument⁽¹⁾	(8		)
Ineffective portion of change in derivative instruments	(817		)
Unrealized loss on derivatives	25,996
Balance as of September 30, 2016	$	28,613



Quarter Ended	Record Date	Payment Date	Common dividend per share
March 31, 2016	March 31, 2016	April 15, 2016	$	0.110
June 30, 2016	June 30, 2016	July 15, 2016	$	0.110
September 30, 2016	September 30, 2016	October 14, 2016	$	0.110



	Same Store								Acquisition						Development and Other					Asset Management and Corporate						Total
	2016			2015			% Change		2016			2015			2016			2015		2016			2015			2016			2015			% Change
Revenues
Rental revenue	$	46,386		$	41,944		10.6	%	$	48,787		$	1,311		$	5,674		$	3,980	$	—		$	—		$	100,847		$	47,235		113.5	%
Third-party management fees	—			—			—	%	—			—			—			—		7,172			5,153			7,172			5,153			39.2	%
Operating expense reimbursements	10,405			10,675			(2.5	)%	9,517			22			1,309			540		—			—			21,231			11,237			88.9	%
Investment income	—			—			—	%	—			—			—			—		544			445			544			445			22.2	%
Other income	7			55			(87.3	)%	402			—			—			—		889			1,088			1,298			1,143			13.6	%
Total revenues	56,798			52,674			7.8	%	58,706			1,333			6,983			4,520		8,605			6,686			131,092			65,213			101.0	%
Operating Expenses
Property operating expenses	11,117			10,774			3.2	%	11,626			(6		)	1,841			628		(1,899		)	(345		)	22,685			11,051			105.3	%
Property management expenses	—			—			—	%	—			—			—			—		4,810			4,780			4,810			4,780			0.6	%
Depreciation and amortization	27,242			22,359			21.8	%	33,317			633			2,066			1,916		238			212			62,863			25,120			150.3	%
General and administrative expenses	—			1			(100.0	)%	4			—			—			—		8,161			4,747			8,165			4,748			72.0	%
Acquisition and merger-related expenses	(7		)	7			(200.0	)%	1,232			1,270			—			—		47			5,270			1,272			6,547			(80.6	)%
Total operating expenses	38,352			33,141			15.7	%	46,179			1,897			3,907			2,544		11,357			14,664			99,795			52,246			91.0	%
Operating Income	18,446			19,533			(5.6	)%	12,527			(564		)	3,076			1,976		(2,752		)	(7,978		)	31,297			12,967			141.4	%
Other Income (Expense):
Interest expense	(2,811		)	(3,335		)	(15.7	)%	(1,579		)	(130		)	(9		)	—		(14,010		)	(5,762		)	(18,409		)	(9,227		)	99.5	%
Equity in net income (loss) of unconsolidated equity investments	—			—			—	%	—			—			—			—		(1,138		)	(1,096		)	(1,138		)	(1,096		)	3.8	%
Gain (loss) on extinguishment of debt	(14,542		)	—			100.0	%	348			—			417			—		—			—			(13,777		)	—			100.0	%
Impairment of real estate investments	—			—			—	%	—			—			(1,053		)	—		—			—			(1,053		)	—			100.0	%
Income (loss) from continuing operations before provision for taxes	1,093			16,198			(93.3	)%	11,296			(694		)	2,431			1,976		(17,900		)	(14,836		)	(3,080		)	2,644			(216.5	)%
Provision for taxes	—			2			100.0	%	(108		)	(1		)	—			—		(223		)	(986		)	(331		)	(985		)	(66.4	)%
Income (loss) from continuing operations	1,093			16,200			(93.3	)%	11,188			(695		)	2,431			1,976		(18,123		)	(15,822		)	(3,411		)	1,659			(305.6	)%
Income (loss) from discontinued operations	—			—			—	%	80			—			174			—		93			(41		)	347			(41		)	(946.3	)%
Income (loss) before net gains on disposals	1,093			16,200			(93.3	)%	11,268			(695		)	2,605			1,976		(18,030		)	(15,863		)	(3,064		)	1,618			(289.4	)%
Net gains on disposals	—			—			—	%	—			—			2,336			392		—			—			2,336			392			495.9	%
Net income (loss)	$	1,093		$	16,200		(93.3	)%	$	11,268		$	(695	)	$	4,941		$	2,368	$	(18,030	)	$	(15,863	)	$	(728	)	$	2,010		(136.2	)%



Quarter Ended	Common dividends per share ⁽¹⁾		Preferred dividends per share
March 31, 2015	$	0.063	$	0.445
June 30, 2015	$	0.069	$	0.445
September 30, 2015	$	0.069	$	0.445
December 31, 2015	$	0.078	$	0.445
March 31, 2016	$	0.110	$	0.445
June 30, 2016	$	0.110	$	0.445
September 30, 2016	$	0.110	$	0.445