A New Day for Gramercy
In an effort to balance that risk, Gramercy began to diversify into safer equity sectors and the company became a quasi-lending arm for executives of SL Green
Shares that were higher than $35 in 2007 began to crash and by early 2009 the stock fell below $1. In addition, the company suspended its dividend.
No More Legacy for GramercyLast June, Gramercy brought in a new CEO, Gordon DuGan. Previously DuGan had worked at W.P. Carey
Gramercy's new strategic model -- named by DuGan as Gramercy Capital Corp. 2.0 -- was initiated to focus on modest leverage and to create recurring, durable cash flows from net leased real estate. Net leased real estate is the equity ownership of real estate that has a long-term lease with a corporation, with the tenant paying the majority of the operating costs, taxes, insurance and maintenance.
Gramercy, who at one time focused on two extremely different core business lines: High-risk commercial real estate lending and low-risk net-lease real estate, is now focused on investments in the most risk-averse triple-net sector.
While Gramercy is still a small-cap REIT with a market cap of around $275 million, the company is aiming to become a dominant player in the Triple-Net sector. By joining veteran REITs like Realty Income
Unlike the other peers, Gramercy is currently NOT paying a dividend. The company suspended both its preferred and common dividends when cash flow tightened. However, even without the sustainable dividend income, Gramercy has been an attractive play of late. Over the last year, Gramercy has returned more than 68%, with shares that have climbed from $2.71 a year ago to around $4.69.
I had an opportunity to interview Gramercy's CEO Gordon DuGan earlier this week at The Street . DuGan reflects on the new Gramercy, that includes a name change, (Gramercy Property Trust and a new ticker, GPT) effective on April 15.