Dispositions and Assets Held-for-Sale

6 Months Ended

Jun. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3. Dispositions and Assets Held-for-Sale

The Company did not classify any assets as held-for-sale as of June 30, 2013. The following operating results for Gramercy Finance and the assets previously sold for the three and six months ended June 30, 2013 and 2012, are included in discontinued operations: 

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Operating Results:
Revenues	$	75		$	39,742		$	33,582		$	83,088
Operating expenses		(224	)		(6,990	)		(3,620	)		(12,245	)
Marketing, general and administrative		(1,026	)		(2,610	)		(2,285	)		(4,184	)
Interest expense		-			(20,187	)		(14,653	)		(40,840	)
Depreciation and amortization		-			(291	)		(15	)		(580	)
Loans held for sale and CMBS OTTI		-			(16,006	)		(7,641	)		(37,074	)
Provision for loan losses		-			(5,989	)		-			(8,533	)
Expense reimbursements (1)		-			-			5,406			-
Equity in net income from joint venture		-			-			(804	)		-
Net income (loss) from operations		(1,175	)		(12,331	)		9,970			(20,368	)
Loss on sale of joint venture interests to a related party		-			-			1,317			-
Net gains from disposals		-			53			389,140			11,996
Provision for taxes		-			-			(2,515	)		-
Net income from discontinued operations	$	(1,175	)	$	(12,278	)	$	397,912		$	(8,372	)

⁽¹⁾ The Company received reimbursements for enforcement costs of $5,406 incurred on the behalf of a pari-passu lender for one loan held by the CDOs, which the Company incurred in prior years. The Company fully reserved for these costs when incurred due to the uncertainty of recovery.

Discontinued operations have not been segregated in the Condensed Consolidated Statements of Cash Flows.

Gramercy Finance Segment

On March 15, 2013, the Company disposed of Gramercy Finance and exited the commercial real estate finance business, as discussed more fully in Note 1. The Company recognized a gain of $389,140 in discontinued operations related to the disposal. The gain was calculated based upon the difference between the proceeds received of $6,291, after expenses, the fair value of the Retained CDO Bonds of $8,492, the accrual for the reimbursement of past servicing advances paid plus accrued interest of $14,529 and the net difference of the carrying value of the liabilities and the assets of Gramercy Finance of ($421,911) as of the date of disposal, March 15, 2013.

The basis of the assets and liabilities of Gramercy Finance were derecognized as follows:

- Loans and other lending investments were derecognized at the lower of cost or market value as of the date of disposal. The fair value of the loans was measured by an internally developed model which considered the price that a third-party would pay to assume the loans and other lending investments at the disposal date;

- CMBS investments were derecognized at fair value as of the date of disposal. For CMBS investments in an unrealized loss position, the Company recognized an other-than-temporary impairment equal to the entire difference between the investment’s amortized cost basis and its fair value at the date of disposal which is included in net income from discontinued operations. For CMBS investments in an unrealized gain position as of the date of disposal, the Company recorded the unrealized gains as a component of accumulated other comprehensive income (loss) in stockholders’ equity;

- Derivative instruments were derecognized at fair value as of March 15, 2013. The derivatives were not terminated, but instead were transferred with the CDOs; and,

- The non-recourse CDOs were derecognized at carrying value, which represents the full amount of outstanding liabilities issued by the CDO trusts.

For a further discussion regarding the measurement of financial instruments see Note 9, “Fair Value of Financial Instruments.”

The Company recognized other assets and other receivables retained in the disposal of Gramercy Finance and previously eliminated in consolidation as follows:

- Retained CDO Bonds were recognized at the present value of cash flows expected to be collected, which is based upon management’s assumptions and judgments regarding the resolution of the underlying assets; and,

- The accrual for reimbursement of past servicing advances is based upon actual expenses incurred by the Company plus accrued interest at the prime rate for the time from which the expenses were incurred through March 15, 2013.