Debt and Preferred Equity Investments (Tables)

6 Months Ended

Jun. 30, 2011

Debt and Preferred Equity Investments

Summary of debt investments

Loan Type		June 30, 2011 Senior Financing		June 30, 2011 Principal Outstanding		December 31, 2010 Principal Outstanding		Initial Maturity Date
Other Loan(1)	$	15,000	$	3,500	$	3,500		September 2021
Mezzanine Loan(1)		205,000		63,711		60,407		February 2016
Mortgage/ Mezzanine Loan(1)		172,669		46,380		46,358		May 2016
Mezzanine Loan(1)		165,000		40,282		39,711		November 2016
Mezzanine Loan(1)(2)(3)(6)(7)		---		---		27,187		---
Mezzanine Loan(1) (7)(14)		---		---		15,697		---
Junior Participation(1)(4)(6)(7)		---		9,938		9,938		April 2008
Mezzanine Loan(1)(7)(8)		1,139,000		83,378		84,062		March 2017
Junior Participation(1)(6)		53,000		11,000		11,000		November 2011
Junior Participation(6)		61,250		10,875		10,875		June 2012
Junior Participation(6)		---		---		5,866		---
Junior Participation(5)(6)		---		---		47,484		---
Mortgage/ Mezzanine Loan(2)(9)		---		---		137,222		---
Junior Participation(11)		---		---		42,439		---
Junior Participation		70,800		9,200		9,200		October 2011
Mezzanine Loan(1)(12)		---		---		202,136		---
Mezzanine Loan(1)		75,000		15,000		15,000		July 2013
Mortgage(10)		---		86,339		86,339		June 2012
Mortgage(13)		---		31,500		26,000		February 2013
Mezzanine Loan		796,693		13,536		13,536		August 2011
Mezzanine Loan(1)		165,440		38,682		38,892		February 2014
Mezzanine Loan(1)		177,000		17,668		---		May 2016
Junior Participation(1)		133,000		49,000		---		June 2016
Loan loss reserve(6)		---		(18,400	)	(40,461	)	---
	$	3,228,852	$	511,589	$	892,388

(1)	This is a fixed rate loan.
(2)	The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.
(3)	This loan was sold in February 2011. We realized $6.2 million of additional income upon the sale. A portion of this income is included in loan loss and other reserves, net of recoveries.
(4)	This loan is in default. The lender has begun foreclosure proceedings. Another participant holds a $12.2 million pari-pasu interest in this loan.
(5)	Gramercy was the borrower under this loan. We sold this loan, which consisted of mortgage and mezzanine financing, for $35.8 million, in May 2011. We realized $1.2 million of additional income upon the sale, which is included in loan loss and other reserves, net of recoveries.
(6)	Loan loss reserves are specifically allocated to investments. Our reserves reflect management’s judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct or that reserves will be adequate over time to protect against potential future losses.
(7)	This loan is on non-accrual status.
(8)	Interest is added to the principal balance for this accrual only loan.
(9)	Gramercy held a pari passu interest in the mezzanine loan. This loan was repaid in March 2011.
(10)	We hold an 88% interest in the consolidated joint venture that acquired this loan. This investment is denominated in British Pounds.
(11)	This loan was repaid in January 2011. We realized $1.3 million of additional income upon the sale. This income is included in preferred equity and investment income.
(12)	In March 2011, we contributed our debt investment with a carrying value of $286.6 million to a newly formed joint venture in which we hold a 50% interest. We realized $38.7 million of additional income upon the contribution. This income is included in preferred equity and investment income. The joint venture paid us approximately $111.3 million and also assumed $30 million of related floating rate financing which matures in June 2016 and carried a weighted average interest rate for the quarter of 1.16%. In May 2011, this joint venture took control of the underlying property as part of a recapitalization transaction. See Note 6.
(13)	In June 2011, we funded an additional $5.5 million and extended the maturity date of this loan to February 2013.
(14)	In May 2011, we acquired a substantial ownership interest in the 205,000-square-foot office condominium along with control of the asset. We provided a senior mezzanine loan as part of the sale of the condominium unit in 2007. The transaction included a consensual modification of that loan. See Note 3.

Summary of preferred equity investments

Type		June 30,  2011 SeniorFinancing		June 30, 2011AmountOutstanding		December 31, 2010AmountOutstanding		InitialMandatory Redemption
Preferred equity(1)(4)(5)	$	203,956	$	47,857	$	45,912		February 2014
Preferred equity(3)(4)		979,175		46,372		46,372		August 2012
Loan loss reserve(2)		---		(23,400	)	(20,900	)	---
	$	1,183,131	$	70,829	$	71,384

(1)	This is a fixed rate investment.
(2)	Loan loss reserves are specifically allocated to investments. Our reserves reflect management’s judgment of the probability and severity of losses based on Level 3 data. We cannot be certain that our judgment will prove to be correct and that reserves will be adequate over time to protect against potential future losses.
(3)	This investment is on non-accrual status.
(4)	The difference between the pay and accrual rates is included as an addition to the principal balance outstanding.
(5)	This investment was classified as held for sale at June 30, 2009, but as held-to-maturity for all periods subsequent to June 30, 2009. The reserve previously taken against this loan is being accreted up to the face amount through the maturity date.

Rollforward of total loan loss reserves

		June 30,2011		December 31, 2010
Balance at beginning of year	$	61,361	$	93,844
Expensed		2,500		24,418
Recoveries		(4,370	)	(3,662	)
Charge-offs		(17,691	)	(53,239	)
Balance at end of period	$	41,800	$	61,361

Summary of impaired loans, including non-accrual loans

	June 30, 2011			December 31, 2010
	Unpaid Principal Balance	Recorded Investment	Allowance Allocated	Unpaid Principal Balance	Recorded Investment	Allowance Allocated
With no related allowance recorded:
Commercial real estate	$101,108	$83,378	$—	$103,678	$99,759	$—
With an allowance recorded:
Commercial real estate	80,173	78,060	41,800	160,711	158,597	61,361
Total	$181,281	$161,438	$41,800	$264,389	$258,356	$61,361

Summary of average recorded investment in impaired loans, including non-accrual loans and the related investment and preferred equity income recognized

		Three Months EndedJune 30,2011		Three Months EndedJune 30,2010		Six Months EndedJune 30,2011		Six Months EndedJune 30,2010
Average recorded investment in impaired loans	$	201,991	$	259,404	$	223,376	$	259,237
Investment and preferred equity income recognized		1,551		5,117		6,361		8,084