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~~March 3031, ~~2017~~2018

¨ 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)

Commission File No. 33-219049 (GPT Operating Partnership LP)

Gramercy Property Trust

GPT Operating Partnership LP

(Exact name of registrant as specified in its charter)



Gramercy Property Trust	Maryland	56-2466617
GPT Operating Partnership LP	Delaware	56-2466618
	(State or other jurisdiction incorporation or organization)	(I.R.S. Employer of Identification No.)

90 Park Avenue, 32^nd Floor, New York, NY 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.

Gramercy Property Trust Yes x No ¨ GPT Operating Partnership LP Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Web site~~Website, 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).

Gramercy Property Trust Yes x No ¨ GPT Operating Partnership LP Yes x No ¨

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

Gramercy Property Trust



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. ¨

GPT Operating Partnership LP



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

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

Gramercy Property Trust Yes ¨ No x GPT Operating Partnership LP Yes ¨ No x

The number of shares outstanding of Gramercy Property Trust’s common shares of beneficial interest, $0.01 par value, was 160,~~670~~785,~~537~~498 as of ~~October~~April 27, ~~2017~~2018.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended ~~September~~March 3031, ~~2017~~2018 of Gramercy Property Trust and GPT Operating Partnership LP. Unless stated otherwise or the context otherwise requires, references to "Gramercy Property Trust," the "Company" or "Gramercy" mean Gramercy Property Trust and its consolidated subsidiaries; and references to "GPT Operating Partnership LP," the "Operating Partnership" or "GPTOP" mean GPT Operating Partnership LP and its consolidated subsidiaries. The terms "we," "our" and "us" mean the Company and all the entities owned or controlled by the Company, including the Operating Partnership.

The Company is a Maryland real estate investment trust, or REIT, which operates as a self-administered and self-managed entity and is the sole general partner of the Operating Partnership. As the general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership.

As of ~~September~~March 3031, ~~2017~~2018, the Company owned 9896.0875% of the outstanding general and limited partnership interest in the Operating Partnership. As of ~~September~~March 3031, ~~2017~~2018, noncontrolling investors owned approximately 13.9225% of the outstanding limited partnership interest in the Operating Partnership. We refer to these interests as the noncontrolling interests in the Operating Partnership.

The Company and the Operating Partnership are managed and operated as one entity. The financial results of the Operating Partnership are consolidated into the financial statements of the Company. The Company has no significant assets other than its investment in the Operating Partnership. Substantially all of the Company’s assets are held by, and its operations are conducted through, the Operating Partnership. Therefore, the assets and liabilities of the Company and the Operating Partnership are substantially the same.

Noncontrolling interests in the Operating Partnership, shareholders' equity of the Company and partners' capital of the Operating Partnership are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership.

We believe combining the quarterly reports on Form 10-Q of the Company and the Operating Partnership into this single report results in the following benefits:


•	Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;


•	Combined reports eliminate duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Company and the Operating Partnership; and


•	Combined reports create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the significant differences between the Company and the Operating Partnership, this report presents the following separate sections for each of the Company and the Operating Partnership:

• ~~consolidated~~Consolidated financial statements; and

• ~~the~~The following notes to the consolidated financial statements:

◦ Note 119, Shareholders' Equity (Deficit) of the Company;

◦ Note 1210, Partners' Capital of the Operating Partnership; and

◦ Note 1311, Noncontrolling Interests.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Company and the Operating Partnership, respectively, in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Company, in both their capacity as the principal executive officer and principal financial officer of the Company and the principal executive officer and principal financial officer of the general partner of the Operating Partnership, have made the requisite certifications and that the Company and the Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.

GRAMERCY PROPERTY TRUST

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	Financial Statements of Gramercy Property Trust	1
	Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016	1
	Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (unaudited)	2
	Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 (unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017 (unaudited)	3
	Condensed Consolidated Statement of Equity for the nine months ended September 30, 2017 (unaudited)	4
	Consolidated Statement of Shareholders’ Equity (Deficit) and Noncontrolling Interest for the three months ended March 31, 2018 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 (unaudited)	5
	Financial Statements of GPT Operating Partnership LP	6
	Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016	6
	Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	6
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (unaudited)	7
	Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 (unaudited)	7
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016 (unaudited)	8
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017 (unaudited)	8
	Condensed Consolidated Statement of Capital for the nine months ended September 30, 2017 (unaudited)	9
	Consolidated Statement of Partners’ Capital for the three months ended March 31, 2018 (unaudited)	9
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (unaudited)	10
	Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 (unaudited)	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
	Notes to Consolidated Financial Statements (unaudited)	11
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6345
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	8461
ITEM 4.	CONTROLS AND PROCEDURES	8764
PART II.	OTHER INFORMATION	8966
ITEM 1.	LEGAL PROCEEDINGS	8966
ITEM 1A.	RISK FACTORS	9066
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	9066
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	9066
ITEM 4.	MINE SAFETY DISCLOSURES	9066
ITEM 5.	OTHER INFORMATION	9066
ITEM 6.	INDEX TO EXHIBITS	9167
SIGNATURES		9268

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, 2017			December 31, 2016
	March 31, 2018			December 31, 2017
Assets:
Real estate investments, at cost:
Land	$	1,~~004~~009,~~236~~568		$	~~805~~1,~~264~~023,908
Building and improvements	4,~~845~~821,~~246~~301			4,~~053~~863,~~125~~916
Less: accumulated depreciation	(~~297~~368,~~448~~815		)	(~~201~~333,~~525~~151		)
Total real estate investments, net	5,~~552~~462,~~034~~054			45,~~656~~554,~~864~~673
Cash and cash equivalents	6841,~~018~~964			6730,~~529~~231
Restricted cash	1915,~~183~~041			12,~~904~~723
Investment in unconsolidated equity investments	7399,~~163~~113			~~101~~70,~~807~~214
Assets held for sale, net	~~17,292~~402			—402
Tenant and other receivables, net	7592,~~264~~525			7288,~~795~~750
Acquired lease assets, net of accumulated amortization of $201,010 and $133,710	625,771			618,680
Acquired lease assets, net of accumulated amortization of $241,939 and $220,473	563,213			598,559
Other assets	~~110~~127,~~613~~664			72100,~~948~~484
Total assets	$	6,~~541~~401,~~338~~976		$	56,~~603~~456,~~527~~036
Liabilities and Equity:
Liabilities:
Senior unsecured revolving credit facility	$	~~615~~292,~~097~~543		$	65357,~~837~~162
Exchangeable senior notes, net	—			108,832
Mortgage notes payable, net	559,473			563,521
Mortgage notes payable, net	606,898			558,642
Senior unsecured notes, net	496,887			496,785
Senior unsecured notes, net	496,684			496,464
Senior unsecured term loans, net	1,448,241			1,448,152
Senior unsecured term loans	1,225,000			1,225,000
Total long-term debt, net	2,797,144			2,865,620
Total long-term debt, net	2,943,679			2,454,775
Accounts payable and accrued expenses	60,151			59,619
Accounts payable and accrued expenses	58,083			58,380
Dividends payable	62,380			61,971
Dividends payable	61,486			53,074
Below market lease liabilities, net of accumulated amortization of $31,201 and $28,978	159,544			166,491
Below market lease liabilities, net of accumulated amortization of $27,564 and $26,416	173,577			230,183
Other liabilities	55,873			50,002
Liabilities related to assets held for sale	4,914			—
Total liabilities	$	3,135,092		$	3,203,703
Other liabilities	53,993			46,081
Total liabilities	$	3,295,732		$	2,842,493
Commitments and contingencies
Noncontrolling interest in the Operating Partnership	75137,~~139~~800			8113,~~643~~530
Equity:
Common shares, par value $0.01, 160,669,468 and 140,647,971 issued and outstanding at September 30, 2017 and December 31, 2016, respectively	1,607			1,406
Common shares, par value $0.01, 160,782,765 and 160,686,822 issued and outstanding at March 31, 2018 and December 31, 2017, respectively	1,608			1,607
Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference $87,500, and 3,500,000 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016	84,394			84,394
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, 2018 and December 31, 2017	84,394			84,394
Additional paid-in-capital	4,~~407~~411,~~953~~605			34,~~887~~409,~~793~~677
Accumulated other comprehensive income (loss)	2,118			(4,128		)
Accumulated other comprehensive income	35,667			12,776
Accumulated deficit	(1,~~325~~404,~~605~~416		)	(1,~~216~~369,~~753~~872		)
Total shareholders' equity	3,~~170~~128,~~467~~858			23,~~752~~138,~~712~~582
Noncontrolling interest in other partnerships	—			(321		)
Noncontrolling interest in other entities	226			221
Total equity	$	3,~~170~~129,~~467~~084		$	23,~~752~~138,~~391~~803
Total liabilities and equity	$	6,~~541~~401,~~338~~976		$	56,~~603~~456,~~527~~036

The accompanying notes are an integral part of these financial statements.

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,
	2017			2016			2017			2016
	2018			2017
Revenues
Rental revenue	$	~~110~~122,~~174~~245		$	~~100~~103,~~847~~282		$	~~321,717~~		$	~~291,459~~
Third-party management fees	2,057			7,172			8,287			30,528
Operating expense reimbursements	23,310			20,368
Operating expense reimbursements	21,384			21,231			61,380			65,718
Third-party management fees	2,790			4,592
Other income	1,~~240~~135			1,~~842~~752			~~4,830~~			~~3,357~~
Total revenues	~~134~~149,~~855~~480			~~131~~129,~~092~~994			~~396,214~~			~~391,062~~
Operating Expenses
Property operating expenses	24,844			22,685			71,249			70,364
Depreciation and amortization	71,516			62,217
Property management expenses	3,252			4,810			8,771			14,922
Property operating expenses	27,088			23,186
Depreciation and amortization	66,761			62,863			191,154			181,649
General and administrative expenses	9,686			8,756
General and administrative expenses	9,638			8,165			27,494			23,892
Property management expenses	2,542			3,084
Acquisition expenses	—			1,272			—			5,994
Total operating expenses	110,832			97,243
Total operating expenses	104,495			99,795			298,668			296,821
Operating income	38,648			32,751
Operating Income	30,360			31,297			97,546			94,241
Other Expenses:
Other Expenses:
Interest expense	(25,492		)	(23,056		)
Interest expense	(24,266		)	(18,409		)	(70,561		)	(57,271		)
Other-than-temporary impairment	—			(4,081		)
Other-than-temporary impairment	—			—			(4,081		)	—
Portion of impairment recognized in other comprehensive loss	—			(809		)
Portion of impairment recognized in other comprehensive loss	—			—			(809		)	—
Net impairment recognized in earnings	—			(4,890		)
Net impairment recognized in earnings	—			—			(4,890		)	—
Equity in net loss of unconsolidated equity investments	(926		)	(94		)
Equity in net income (loss) of unconsolidated equity investments	48,730			(1,138		)	48,884			(4,061		)
Loss on extinguishment of debt	—			(208		)
Gain on dissolution of previously held U.S. unconsolidated equity investment interests	—			—			—			7,229
Impairment of real estate investments	—			(12,771		)
Loss on extinguishment of debt	(6,751		)	(13,777		)	(6,691		)	(20,890		)
Income (loss) from continuing operations before provision for taxes	12,230			(8,268		)
Impairment of real estate investments	(3,064		)	(1,053		)	(21,415		)	(1,053		)
Provision for taxes	(621		)	196
Income (loss) from continuing operations before provision for taxes	45,009			(3,080		)	42,873			18,195
Income (loss) from continuing operations	11,609			(8,072		)
Provision for taxes	598			(331		)	647			(3,734		)
Loss from discontinued operations	—			(24		)
Income (loss) from continuing operations	45,607			(3,411		)	43,520			14,461
Income (loss) before net gain on disposals	11,609			(8,096		)
Income (loss) from discontinued operations before gain on extinguishment of debt	(24		)	347			(76		)	3,115
Net gain on disposals	16,255			17,377
Gain on extinguishment of debt	—			—			—			1,930
Net income	27,864			9,281
Income (loss) from discontinued operations	(24		)	347			(76		)	5,045
Net income attributable to noncontrolling interest	(802		)	(154		)
Income (loss) before net gain on disposals	45,583			(3,064		)	43,444			19,506
Net income attributable to Gramercy Property Trust	27,062			9,127
Net gain on disposals	4,879			2,336			24,258			2,336
Preferred share dividends	(1,559		)	(1,559		)
Gain on sale of European unconsolidated equity investment interests held with a related party	—			—			—			5,341
Net income available to common shareholders	$	25,503		$	7,568
Net Income (loss)	50,462			(728		)	67,702			27,183
Basic earnings per share:
Net income attributable to noncontrolling interest	(333		)	(221		)	(374		)	(152		)
Net income from continuing operations, after preferred dividends	$	0.16		$	0.05
Net income (loss) attributable to Gramercy Property Trust	50,129			(949		)	67,328			27,031
Net income from discontinued operations	—			—
Preferred share dividends	(1,559		)	(1,559		)	(4,676		)	(4,676		)
Net income available to common shareholders	$	0.16		$	0.05
Net Income (loss) available to common shareholders	$	48,570		$	(2,508	)	$	62,652		$	22,355
Diluted earnings per share:
Basic earnings per share:
Net income from continuing operations, after preferred dividends	$	0.16		$	0.05
Net income (loss) from continuing operations, after preferred dividends	$	0.32		$	(0.02	)	$	0.42		$	0.11
Net income from discontinued operations	—			—
Net income from discontinued operations	—			—			—			0.04
Net income available to common shareholders	$	0.16		$	0.05
Net income (loss) available to common shareholders	$	0.32		$	(0.02	)	$	0.42		$	0.15
Basic weighted average common shares outstanding	160,408,136			140,907,399
Diluted earnings per share:
Diluted weighted average common shares outstanding	160,416,900			141,875,619
Net income (loss) from continuing operations, after preferred dividends	$	0.32		$	(0.02	)	$	0.42		$	0.11
Net income from discontinued operations	—			—			—			0.04
Net income (loss) available to common shareholders	$	0.32		$	(0.02	)	$	0.42		$	0.15
Basic weighted average common shares outstanding	152,619,352			140,257,503			147,399,457			141,180,822
Diluted weighted average common shares outstanding	157,507,213			140,257,503			147,430,882			142,387,709

The accompanying notes are an integral part of these financial statements.

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,
	2017			2016			2017			2016
	2018			2017
Net Income (loss)	$	50,462		$	(728	)	$	67,702		$	27,183
Net income	$	27,864		$	9,281
Other comprehensive income (loss):
Unrealized loss on available for sale debt securities	(~~633~~48		)	(12,~~426~~820		)	~~(2,202~~		)	~~(459~~		)
Unrealized gain (loss) on derivative instruments	2,959			7,653			4,645			(25,996		)
Cumulative effect of accounting change	103			—
Reclassification of accumulated foreign currency translation adjustments due to disposal	(1,362		)	—			(1,362		)	(3,737		)
Unrealized gain on derivative instruments	22,050			4,378
Reclassification of unrealized gain of non-derivative net investment hedge into earnings	1,851			—			1,851			—
Reclassification of unrealized gain on terminated derivative instruments into earnings	268			268
Reclassification of unrealized gain on terminated derivative instruments into earnings	273			282			812			913
Foreign currency translation adjustments	518			691
Foreign currency translation adjustments	673			(1,120		)	2,465			(3,687		)
Other comprehensive income	$	22,891		$	2,517
Other comprehensive income (loss)	$	3,761		$	5,389		$	6,209		$	(32,966	)
Comprehensive income	$	50,755		$	11,798
Comprehensive income (loss)	$	54,223		$	4,661		$	73,911		$	(5,783	)
Net income attributable to noncontrolling interest	(802		)	(154		)
Net income attributable to noncontrolling interest	(333		)	(221		)	(374		)	(152		)
Other comprehensive (income) loss attributable to noncontrolling interest	697			(11		)
Other comprehensive (income) loss attributable to noncontrolling interest	45			(13		)	59			102
Comprehensive income attributable to Gramercy Property Trust	$	50,650		$	11,633
Comprehensive income (loss) attributable to Gramercy Property Trust	$	53,935		$	4,427		$	73,596		$	(5,833	)

The accompanying notes are an integral part of these financial statements.

Gramercy Property Trust

~~Condensed~~ Consolidated Statement of Shareholders’ Equity (Deficit) and Noncontrolling Interest

(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			Total
	Shares	Par Value
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
Balance at December 31, 2017	160,686,822	$	1,607	$	84,394	$	4,409,677		$	12,776		$	(1,369,872	)	$	3,138,582		$	221		$	3,138,803
Net Income (loss)	—	—		—		—			—			67,328			67,328			(114		)	67,214
Net income	—	—		—		—			—			27,062			27,062			—			27,062
Change in net unrealized gain on derivative instruments	—	—		—		—			4,645			—			4,645			—			4,645
Cumulative effect of accounting changes	—	—		—		—			103			560			663			—			663
Change in net unrealized loss on debt securities	—	—		—		—			(2,202		)	—			(2,202		)	—			(2,202		)
Change in net unrealized gain on derivative instruments	—	—		—		—			22,050			—			22,050			—			22,050
Reclassification of unrealized gain on terminated derivative instruments into earnings	—	—		—		—			812			—			812			—			812
Change in net unrealized loss on debt securities	—	—		—		—			(48		)	—			(48		)	—			(48		)
Offering costs	—	—		—		(14,137		)	—			—			(14,137		)	—			(14,137		)
Reclassification of unrealized gain on terminated derivative instruments into earnings	—	—		—		—			268			—			268			—			268
Issuance of shares	14,569,978	146		—		410,439			—			—			410,585			—			410,585
Offering costs	—	—		—		(39		)	—			—			(39		)	—			(39		)
Issuance of shares - redemption of Exchangeable Senior Notes for common shares	5,258,420	53		—		117,397			—			—			117,450			—			117,450
Share based compensation - fair value	88,094	1		—		2,023			—			—			2,024			—			2,024
Share based compensation - fair value	80,142	1		—		4,515			—			—			4,516			—			4,516
Dividend reinvestment program proceeds	1,811	—		—		46			—			—			46			—			46
Dividend reinvestment program proceeds	5,410	—		—		151			—			—			151			—			151
Conversion of OP Units to common shares	6,038	—		—		130			—			—			130			—			130
Conversion of OP Units to common shares	107,547	1		—		2,986			—			—			2,987			—			2,987
Reallocation of noncontrolling interest in the Operating Partnership	—	—		—		(232		)	—			—			(232		)	—			(232		)
Reallocation of noncontrolling interest in the Operating Partnership	—	—		—		(1,191		)	—			—			(1,191		)	—			(1,191		)
Foreign currency translation adjustment	—	—		—		—			518			—			518			—			518
Reclassification of accumulated foreign currency translation adjustments due to disposal	—	—		—		—			(1,362		)	—			(1,362		)	—			(1,362		)
Contributions to noncontrolling interest in other partnerships	—	—		—		—			—			—			—			5			5
Reclassification of unrealized gain of non-derivative net investment hedge into earnings	—	—		—		—			1,851			—			1,851			—			1,851
Dividends on preferred shares	—	—		—		—			—			(1,559		)	(1,559		)	—			(1,559		)
Foreign currency translation adjustment	—	—		—		—			2,502			—			2,502			(37		)	2,465
Dividends on common shares	—	—		—		—			—			(60,607		)	(60,607		)	—			(60,607		)
Contributions to noncontrolling interest in other partnerships	—	—		—		—			—			—			—			472			472
Balance at March 31, 2018	160,782,765	$	1,608	$	84,394	$	4,411,605		$	35,667		$	(1,404,416	)	$	3,128,858		$	226		$	3,129,084
Dividends on preferred shares	—	—		—		—			—			(4,676		)	(4,676		)	—			(4,676		)
Dividends on common shares	—	—		—		—			—			(171,504		)	(171,504		)	—			(171,504		)
Balance at September 30, 2017	160,669,468	$	1,607	$	84,394	$	4,407,953		$	2,118		$	(1,325,605	)	$	3,170,467		$	—		$	3,170,467

The accompanying notes are an integral part of these financial statements.

Gramercy Property Trust

~~Condensed~~ Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016
	2018			2017
Operating Activities:
Net income	$	6727,~~702~~864		$	279,~~183~~281
Adjustments to net cash provided by operating activities:
Depreciation and amortization	~~191~~71,~~154~~516			~~181~~62,~~649~~217
Amortization of acquired leases to rental revenue and expense	(4,540		)	(10,332		)
Amortization of market lease intangibles	(392		)	(547		)
Amortization of deferred costs	~~1,858~~825			~~1,177~~615
Amortization of discounts and other fees	17(632		)	(~~3,636~~409		)
Amortization of lease inducement costs	285			259
Straight-line rent adjustment	(7,025		)	(7,260		)
Straight-line rent adjustment	(22,441		)	(19,084		)
Other-than-temporary impairment on retained bonds	—			4,890
Other-than-temporary impairment on retained bonds	4,890			—
Impairment of real estate investments	—			12,771
Impairment of real estate investments	21,415			1,053
Net gain on disposals	(16,255		)	(17,377		)
Net gain on disposals	(24,258		)	(2,336		)
Distributions received from unconsolidated equity investments	—			352
Distributions received from unconsolidated equity investments	9,205			48,235
Equity in net loss of unconsolidated equity investments	926			94
Equity in net (income) loss of unconsolidated equity investments	(48,884		)	4,061
Loss on extinguishment of debt	—			208
Gain on remeasurement of previously held unconsolidated equity investment interests	—			(7,229		)
Amortization of share-based compensation	1,856			2,054
Gain from sale of unconsolidated equity investment interests held with a related party	—			(5,341		)
Loss on extinguishment of debt	6,691			18,960
Amortization of share-based compensation	6,051			3,704
Changes in operating assets and liabilities:
Restricted cash	(628		)	1,765
Payment of capitalized leasing costs	(4,526		)	(3,790		)
Payment of capitalized leasing costs	(7,491		)	(11,910		)
Tenant and other receivables	3,253			11,707
Tenant and other receivables	18,510			(19,890		)
Other assets	(1,401		)	(4,368		)
Other assets	(39,168		)	(16,660		)
Accounts payable and accrued expenses	(8,050		)	(9,755		)
Accounts payable and accrued expenses	(1,211		)	(16,945		)
Other liabilities	4,864			(2,204		)
Other liabilities	8,509			(8,446		)
Net cash provided by operating activities	72,823			58,479
Net cash provided by operating activities	187,666			166,237
Investing Activities:
Capital expenditures	(6417,~~454~~825		)	(18,~~711~~429		)
Distributions from investing activities received from unconsolidated equity investments	87,229			84,588
Proceeds from sales of real estate	108,032			33,053
Proceeds from sales of unconsolidated equity investment interests held with a related party	9,644			148,884
Contributions to unconsolidated equity investments	(5,856		)	(2,650		)
Proceeds from sale of real estate	228,135			860,783
Acquisition of real estate	(10,971		)	(99,612		)
Return of restricted cash held in escrow for 1031 exchange	—			(157,347		)
Net cash provided by (used in) investing activities	73,380			(87,638		)
Contributions to unconsolidated equity investments	(20,775		)	(33,632		)
Acquisition of real estate	(1,129,897		)	(540,596		)
Restricted cash for tenant improvements	(4,491		)	10,560
Proceeds from servicing advances receivable	—			1,390
Net cash provided by (used in) investing activities	(894,609		)	355,919
Financing Activities:
Proceeds from unsecured term loan and credit facility	~~805~~164,~~000~~922			~~306~~60,~~466~~000
Proceeds from senior unsecured notes	—			50,000
Repayment of unsecured term loans and credit facility	(230,000		)	(5,000		)
Repayment of unsecured term loans and credit facility	(261,818		)	(440,000		)
Proceeds from mortgage notes payable	—			2,582
Acquisition of treasury bonds for defeasance	—			(144,063		)
Repayment of mortgage notes payable	(3,545		)	(3,915		)
Proceeds from mortgage notes payable	2,582			9,550
Offering costs	—			(606		)
Repayment of mortgage notes payable	(61,722		)	(251,266		)
Proceeds from sale of common shares	—			20,081
Offering costs	(14,137		)	(105		)
Payment of deferred financing costs	—			(252		)
Proceeds from sale of common shares	410,736			—
Preferred share dividends paid	(1,559		)	(1,559		)
Payments for taxes related to net share settlement of equity awards	(1,855		)	—
Common share dividends paid	(60,568		)	(53,025		)
Payment of deferred financing costs	(1,719		)	(1,734		)
Distribution to noncontrolling interest in the Operating Partnership	(1,402		)	(118		)
Payment of debt extinguishment costs	—			(15,868		)
Other financing activities	(138		)	—
Preferred share dividends paid	(4,676		)	(4,676		)
Net cash provided by (used in) financing activities	(132,290		)	18,188
Common share dividends paid	(163,903		)	(101,804		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	13,913			(10,971		)
Proceeds from exercise of share options and purchases under the employee share purchase plan	—			167
Increase (decrease) in cash, cash equivalents, and restricted cash related to foreign currency translation	138			(105		)
Contributions from noncontrolling interests in other entities	472			—
Cash, cash equivalents, and restricted cash at beginning of period	42,954			80,433
Distribution to noncontrolling interest in the Operating Partnership	(286		)	(303		)
Cash, cash equivalents, and restricted cash at end of period	$	57,005		$	69,357
Change in restricted cash from financing activities	(1,192		)	(62		)
Net cash provided by (used in) financing activities	707,482			(593,698		)
Net increase (decrease) in cash and cash equivalents	539			(71,542		)
Decrease in cash and cash equivalents related to foreign currency translation	(50		)	(137		)
Cash and cash equivalents at beginning of period	67,529			128,031
Cash and cash equivalents at end of period	$	68,018		$	56,352

The accompanying notes are an integral part of these financial statements.

GPT Operating Partnership LP

~~Condensed~~ Consolidated Balance Sheets

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

	September 30, 2017			December 31, 2016
	March 31, 2018			December 31, 2017
Assets:
Real estate investments, at cost:
Land	$	1,~~004~~009,~~236~~568		$	~~805~~1,~~264~~023,908
Building and improvements	4,~~845~~821,~~246~~301			4,~~053~~863,~~125~~916
Less: accumulated depreciation	(~~297~~368,~~448~~815		)	(~~201~~333,~~525~~151		)
Total real estate investments, net	5,~~552~~462,~~034~~054			45,~~656~~554,~~864~~673
Cash and cash equivalents	6841,~~018~~964			6730,~~529~~231
Restricted cash	1915,~~183~~041			12,~~904~~723
Investment in unconsolidated equity investments	7399,~~163~~113			~~101~~70,~~807~~214
Assets held for sale, net	~~17,292~~402			—402
Tenant and other receivables, net	7592,~~264~~525			7288,~~795~~750
Acquired lease assets, net of accumulated amortization of $201,010 and $133,710	625,771			618,680
Acquired lease assets, net of accumulated amortization of $241,939 and $220,473	563,213			598,559
Other assets	~~110~~127,~~613~~664			72100,~~948~~484
Total assets	$	6,~~541~~401,~~338~~976		$	56,~~603~~456,~~527~~036
Liabilities and Partners’ Capital:
Liabilities:
Senior unsecured revolving credit facility	$	~~615~~292,~~097~~543		$	65357,~~837~~162
Exchangeable senior notes, net	—			108,832
Mortgage notes payable, net	559,473			563,521
Mortgage notes payable, net	606,898			558,642
Senior unsecured notes, net	496,887			496,785
Senior unsecured notes, net	496,684			496,464
Senior unsecured term loans, net	1,448,241			1,448,152
Senior unsecured term loans	1,225,000			1,225,000
Total long-term debt, net	2,797,144			2,865,620
Total long-term debt, net	2,943,679			2,454,775
Accounts payable and accrued expenses	60,151			59,619
Accounts payable and accrued expenses	58,083			58,380
Dividends and distributions payable	62,380			61,971
Dividends and distributions payable	61,486			53,074
Below market lease liabilities, net of accumulated amortization of $31,201 and $28,978	159,544			166,491
Below market lease liabilities, net of accumulated amortization of $27,564 and $26,416	173,577			230,183
Other liabilities	55,873			50,002
Liabilities related to assets held for sale	4,914			—
Total liabilities	$	3,135,092		$	3,203,703
Other liabilities	53,993			46,081
Total liabilities	$	3,295,732		$	2,842,493
Commitments and contingencies
Limited partner interest in the Operating Partnership (3,131,636 and 643,596 limited partner common units outstanding at September 30, 2017 and December 31, 2016, respectively)	75,139			8,643
Limited partner interest in the Operating Partnership (5,388,995 and 4,398,935 limited partner common units outstanding at March 31, 2018 and December 31, 2017, respectively)	137,800			113,530
Partners’ Capital:
Series A cumulative redeemable preferred units, liquidation preference $87,500, and 3,500,000 units issued and outstanding at September 30, 2017 and December 31, 2016	84,394			84,394
Series A cumulative redeemable preferred units, liquidation preference $87,500, and 3,500,000 units issued and outstanding at March 31, 2018 and December 31, 2017	84,394			84,394
GPT partners’ capital (1,634,559 and 1,412,916 general partner common units and 158,689,729 and 139,235,055 limited partner common units outstanding at September 30, 2017 and December 31, 2016, respectively)	3,083,955			2,672,446
GPT partners’ capital (1,658,060 and 1,650,858 general partner common units and 159,124,705 and 159,035,964 limited partner common units outstanding at March 31, 2018 and December 31, 2017, respectively)	3,008,797			3,041,412
Accumulated other comprehensive income (loss)	2,118			(4,128		)
Accumulated other comprehensive income	35,667			12,776
Total GPTOP partners' capital	3,~~170~~128,~~467~~858			23,~~752~~138,~~712~~582
Noncontrolling interest in other partnerships	—			(321		)
Noncontrolling interest in other entities	226			221
Total partners’ capital	$	3,~~170~~129,~~467~~084		$	23,~~752~~138,~~391~~803
Total liabilities and partners’ capital	$	6,~~541~~401,~~338~~976		$	56,~~603~~456,~~527~~036

The accompanying notes are an integral part of these financial statements.

GPT Operating Partnership LP

~~Condensed~~ Consolidated Statements of Operations

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Revenues
Rental revenue	$	~~110~~122,~~174~~245		$	~~100~~103,~~847~~282		$	~~321,717~~		$	~~291,459~~
Third-party management fees	2,057			7,172			8,287			30,528
Operating expense reimbursements	23,310			20,368
Operating expense reimbursements	21,384			21,231			61,380			65,718
Third-party management fees	2,790			4,592
Other income	1,~~240~~135			1,~~842~~752			~~4,830~~			~~3,357~~
Total revenues	~~134~~149,~~855~~480			~~131~~129,~~092~~994			~~396,214~~			~~391,062~~
Operating Expenses
Property operating expenses	24,844			22,685			71,249			70,364
Depreciation and amortization	71,516			62,217
Property management expenses	3,252			4,810			8,771			14,922
Property operating expenses	27,088			23,186
Depreciation and amortization	66,761			62,863			191,154			181,649
General and administrative expenses	9,686			8,756
General and administrative expenses	9,638			8,165			27,494			23,892
Property management expenses	2,542			3,084
Acquisition expenses	—			1,272			—			5,994
Total operating expenses	110,832			97,243
Total operating expenses	104,495			99,795			298,668			296,821
Operating income	38,648			32,751
Operating Income	30,360			31,297			97,546			94,241
Other Expenses:
Other Expenses:
Interest expense	(25,492		)	(23,056		)
Interest expense	(24,266		)	(18,409		)	(70,561		)	(57,271		)
Other-than-temporary impairment	—			(4,081		)
Other-than-temporary impairment	—			—			(4,081		)	—
Portion of impairment recognized in other comprehensive loss	—			(809		)
Portion of impairment recognized in other comprehensive loss	—			—			(809		)	—
Net impairment recognized in earnings	—			(4,890		)
Net impairment recognized in earnings	—			—			(4,890		)	—
Equity in net loss of unconsolidated equity investments	(926		)	(94		)
Equity in net income (loss) of unconsolidated equity investments	48,730			(1,138		)	48,884			(4,061		)
Loss on extinguishment of debt	—			(208		)
Gain on dissolution of previously held U.S. unconsolidated equity investment interests	—			—			—			7,229
Impairment of real estate investments	—			(12,771		)
Loss on extinguishment of debt	(6,751		)	(13,777		)	(6,691		)	(20,890		)
Income (loss) from continuing operations before provision for taxes	12,230			(8,268		)
Impairment of real estate investments	(3,064		)	(1,053		)	(21,415		)	(1,053		)
Provision for taxes	(621		)	196
Income (loss) from continuing operations before provision for taxes	45,009			(3,080		)	42,873			18,195
Income (loss) from continuing operations	11,609			(8,072		)
Provision for taxes	598			(331		)	647			(3,734		)
Loss from discontinued operations	—			(24		)
Income (loss) from continuing operations	45,607			(3,411		)	43,520			14,461
Income (loss) before net gain on disposals	11,609			(8,096		)
Income (loss) from discontinued operations before gain on extinguishment of debt	(24		)	347			(76		)	3,115
Net gain on disposals	16,255			17,377
Gain on extinguishment of debt	—			—			—			1,930
Net income	27,864			9,281
Income (loss) from discontinued operations	(24		)	347			(76		)	5,045
Net income attributable to noncontrolling interest in other partnerships	—			(120		)
Income (loss) before net gain on disposals	45,583			(3,064		)	43,444			19,506
Net income attributable to GPTOP	27,864			9,161
Net gain on disposals	4,879			2,336			24,258			2,336
Preferred unit distributions	(1,559		)	(1,559		)
Gain on sale of European unconsolidated equity investment interests held with a related party	—			—			—			5,341
Net income available to common unitholders	$	26,305		$	7,602
Net Income (loss)	50,462			(728		)	67,702			27,183
Basic earnings per unit:
Net (income) loss attributable to noncontrolling interest in other partnerships	97			(229		)	114			(90		)
Net income from continuing operations, after preferred unit distributions	$	0.16		$	0.05
Net income (loss) attributable to GPTOP	50,559			(957		)	67,816			27,093
Net income from discontinued operations	—			—
Preferred unit distributions	(1,559		)	(1,559		)	(4,676		)	(4,676		)
Net income available to common unitholders	$	0.16		$	0.05
Net income (loss) available to common unitholders	$	49,000		$	(2,516	)	$	63,140		$	22,417
Diluted earnings per unit:
Basic earnings per unit:
Net income from continuing operations, after preferred unit distributions	$	0.16		$	0.05
Net income (loss) from continuing operations, after preferred unit distributions	$	0.32		$	(0.02	)	$	0.42		$	0.11
Net income from discontinued operations	—			—
Net income from discontinued operations	—			—			—			0.04
Net income available to common unitholders	$	0.16		$	0.05
Net income (loss) available to common unitholders	$	0.32		$	(0.02	)	$	0.42		$	0.15
Basic weighted average common units outstanding	165,448,866			141,527,985
Diluted earnings per unit:
Diluted weighted average common units outstanding	165,457,630			142,496,205
Net income (loss) from continuing operations, after preferred unit distributions	$	0.32		$	(0.02	)	$	0.42		$	0.11
Net income from discontinued operations	—			—			—			0.04
Net income (loss) available to common unitholders	$	0.32		$	(0.02	)	$	0.42		$	0.15
Basic weighted average common units outstanding	153,971,961			140,596,612			148,248,795			141,580,593
Diluted weighted average common units outstanding	158,859,822			140,596,612			148,280,220			142,387,709

The accompanying notes are an integral part of these financial statements.

GPT Operating Partnership LP

~~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,
	2017			2016			2017			2016
	2018			2017
Net Income (loss)	$	50,462		$	(728	)	$	67,702		$	27,183
Net income	$	27,864		$	9,281
Other comprehensive income (loss):
Unrealized loss on available for sale debt securities	(~~633~~48		)	(12,~~426~~820		)	~~(2,202~~		)	~~(459~~		)
Unrealized gain (loss) on derivative instruments	2,959			7,653			4,645			(25,996		)
Cumulative effect of accounting change	103			—
Reclassification of accumulated foreign currency translation adjustments due to disposal	(1,362		)	—			(1,362		)	(3,737		)
Unrealized gain on derivative instruments	22,050			4,378
Reclassification of unrealized gain of non-derivative net investment hedge into earnings	1,851			—			1,851			—
Reclassification of unrealized gain on terminated derivative instruments into earnings	268			268
Reclassification of unrealized gain on terminated derivative instruments into earnings	273			282			812			913
Foreign currency translation adjustments	518			691
Foreign currency translation adjustments	673			(1,120		)	2,465			(3,687		)
Other comprehensive income	$	22,891		$	2,517
Other comprehensive income (loss)	$	3,761		$	5,389		$	6,209		$	(32,966	)
Comprehensive income	$	50,755		$	11,798
Comprehensive income (loss)	$	54,223		$	4,661		$	73,911		$	(5,783	)
Net income attributable to noncontrolling interest in other partnerships	—			(120		)
Net (income) loss attributable to noncontrolling interest in other partnerships	97			(229		)	114			(90		)
Comprehensive income attributable to GPTOP	$	50,755		$	11,678
Other comprehensive loss attributable to noncontrolling interest in other partnerships	12			—			37			—
Comprehensive income (loss) attributable to GPTOP	$	54,332		$	4,432		$	74,062		$	(5,873	)

The accompanying notes are an integral part of these financial statements.

GPT Operating Partnership LP

~~Condensed~~ Consolidated Statement of Partners' Capital

(Unaudited, amounts in thousands, except unit data)

	Partners' Interest				Series A Preferred Units		Accumulated Other Comprehensive Income (Loss)			Total GPTOP			Noncontrolling Interest
	Common Units	Common Unitholders														Total
Balance at December 31, 2016	140,647,971	$	2,672,446		$	84,394	$	(4,128	)	$	2,752,712		$	(321	)	$	2,752,391
Balance at December 31, 2017	160,686,822	$	3,041,412		$	84,394	$	12,776		$	3,138,582		$	221		$	3,138,803
Net Income (loss)	—	67,328			—		—			67,328			(114		)	67,214
Net income	—	27,062			—		—			27,062			—			27,062
Change in net unrealized gain on derivative instruments	—	—			—		4,645			4,645			—			4,645
Cumulative effect of accounting changes	—	560			—		103			663			—			663
Change in net unrealized loss on debt securities	—	—			—		(2,202		)	(2,202		)	—			(2,202		)
Change in net unrealized gain on derivative instruments	—	—			—		22,050			22,050			—			22,050
Reclassification of unrealized gain of terminated derivative instruments into earnings	—	—			—		812			812			—			812
Change in net unrealized loss on debt securities	—	—			—		(48		)	(48		)	—			(48		)
Offering costs	—	(14,137		)	—		—			(14,137		)	—			(14,137		)
Reclassification of unrealized gain of terminated derivative instruments into earnings	—	—			—		268			268			—			268
Issuance of common units resulting from public issuance of common shares	14,569,978	410,585			—		—			410,585			—			410,585
Offering costs	—	(39		)	—		—			(39		)	—			(39		)
Issuance of units resulting from redemption of Exchangeable Senior Notes for common shares	5,258,420	117,450			—		—			117,450			—			117,450
Share based compensation - fair value	88,094	2,024			—		—			2,024			—			2,024
Share based compensation - fair value	80,142	4,516			—		—			4,516			—			4,516
Distribution reinvestment program proceeds	1,811	46			—		—			46			—			46
Distribution reinvestment program proceeds	5,410	151			—		—			151			—			151
Conversion of OP Units to common units	6,038	130			—		—			130			—			130
Conversion of OP Units to common units	107,547	2,987			—		—			2,987			—			2,987
Reallocation of limited partner interest in the Operating Partnership	—	(232		)	—		—			(232		)	—			(232		)
Reallocation of limited partner interest in the Operating Partnership	—	(1,191		)	—		—			(1,191		)	—			(1,191		)
Foreign currency translation adjustment	—	—			—		518			518			—			518
Reclassification of accumulated foreign currency translation adjustments due to disposal	—	—			—		(1,362		)	(1,362		)	—			(1,362		)
Contributions to noncontrolling interest in other partnerships	—	—			—		—			—			5			5
Reclassification of unrealized gain of non-derivative net investment hedge into earnings	—	—			—		1,851			1,851			—			1,851
Distributions on preferred units	—	(1,559		)	—		—			(1,559		)	—			(1,559		)
Foreign currency translation adjustment	—	—			—		2,502			2,502			(37		)	2,465
Distributions on common units	—	(60,607		)	—		—			(60,607		)	—			(60,607		)
Contributions to noncontrolling interest in other partnerships	—	—			—		—			—			472			472
Balance at March 31, 2018	160,782,765	$	3,008,797		$	84,394	$	35,667		$	3,128,858		$	226		$	3,129,084
Distributions on preferred units	—	(4,676		)	—		—			(4,676		)	—			(4,676		)
Distributions on common units	—	(171,504		)	—		—			(171,504		)	—			(171,504		)
Balance at September 30, 2017	160,669,468	$	3,083,955		$	84,394	$	2,118		$	3,170,467		$	—		$	3,170,467

The accompanying notes are an integral part of these financial statements.

GPT Operating Partnership LP

~~Condensed~~ Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016
	2018			2017
Operating Activities:
Net income	$	6727,~~702~~864		$	279,~~183~~281
Adjustments to net cash provided by operating activities:
Depreciation and amortization	~~191~~71,~~154~~516			~~181~~62,~~649~~217
Amortization of acquired leases to rental revenue and expense	(4,540		)	(10,332		)
Amortization of market lease intangibles	(392		)	(547		)
Amortization of deferred costs	~~1,858~~825			~~1,177~~615
Amortization of discounts and other fees	17(632		)	(~~3,636~~409		)
Amortization of lease inducement costs	285			259
Straight-line rent adjustment	(7,025		)	(7,260		)
Straight-line rent adjustment	(22,441		)	(19,084		)
Other-than-temporary impairment on retained bonds	—			4,890
Other-than-temporary impairment on retained bonds	4,890			—
Impairment of real estate investments	—			12,771
Non-cash impairment charges	21,415			1,053
Gain on sale of properties	(16,255		)	(17,377		)
Gain on sale of properties	(24,258		)	(2,336		)
Distributions received from unconsolidated equity investments	—			352
Distributions received from unconsolidated equity investments	9,205			48,235
Equity in net loss of unconsolidated equity investments	926			94
Equity in net (income) loss of unconsolidated equity investments	(48,884		)	4,061
Loss on extinguishment of debt	—			208
Gain on remeasurement of previously held unconsolidated equity investment interests	—			(7,229		)
Amortization of share-based compensation	1,856			2,054
Gain from sale of unconsolidated equity investment interests held with a related party	—			(5,341		)
Loss on extinguishment of debt	6,691			18,960
Amortization of share-based compensation	6,051			3,704
Other non-cash adjustments	—			—
Changes in operating assets and liabilities:
Restricted cash	(628		)	1,765
Payment of capitalized leasing costs	(4,526		)	(3,790		)
Payment of capitalized leasing costs	(7,491		)	(11,910		)
Tenant and other receivables	3,253			11,707
Tenant and other receivables	18,510			(19,890		)
Other assets	(1,401		)	(4,368		)
Other assets	(39,168		)	(16,660		)
Accounts payable and accrued expenses	(8,050		)	(9,755		)
Accounts payable and accrued expenses	(1,211		)	(16,945		)
Other liabilities	4,864			(2,204		)
Other liabilities	8,509			(8,446		)
Net cash provided by operating activities	72,823			58,479
Net cash provided by operating activities	187,666			166,237
Investing Activities:
Capital expenditures	(6417,~~454~~825		)	(18,~~711~~429		)
Distributions from investing activities received from unconsolidated equity investments	87,229			84,588
Proceeds from sales of real estate	108,032			33,053
Proceeds from sales of unconsolidated equity investment interests held with a related party	9,644			148,884
Contributions to unconsolidated equity investments	(5,856		)	(2,650		)
Proceeds from sale of real estate	228,135			860,783
Acquisition of real estate	(10,971		)	(99,612		)
Return of restricted cash held in escrow for 1031 exchange	—			(157,347		)
Net cash provided by (used in) investing activities	73,380			(87,638		)
Contributions unconsolidated equity investments	(20,775		)	(33,632		)
Acquisition of real estate	(1,129,897		)	(540,596		)
Restricted cash for tenant improvements	(4,491		)	10,560
Proceeds from servicing advances receivable	—			1,390
Net cash provided by (used in) investing activities	(894,609		)	355,919
Financing Activities:
Proceeds from unsecured term loan and credit facility	~~805~~164,~~000~~922			~~306~~60,~~466~~000
Proceeds from senior unsecured notes	—			50,000
Repayment of unsecured term loans and credit facility	(230,000		)	(5,000		)
Repayment of unsecured term loans and credit facility	(261,818		)	(440,000		)
Proceeds from mortgage notes payable	—			2,582
Acquisition of treasury bonds for defeasance	—			(144,063		)
Repayment of mortgage notes payable	(3,545		)	(3,915		)
Proceeds from mortgage notes payable	2,582			9,550
Offering costs	—			(606		)
Repayment of mortgage notes payable	(61,722		)	(251,266		)
Proceeds from issuance of common units	—			20,081
Offering costs	(14,137		)	(105		)
Payment of deferred financing costs	—			(252		)
Proceeds from issuance of common units	410,736			—
Preferred unit distributions paid	(1,559		)	(1,559		)
Payments for taxes related to net share settlement of share awards	(1,855		)	—
Common unit distributions paid	(60,568		)	(53,025		)
Payment of deferred financing costs	(1,719		)	(1,734		)
Distribution to limited partnership interest in the Operating Partnership	(1,402		)	(118		)
Payment of debt extinguishment costs	—			(15,868		)
Other financing activities	(138		)	—
Preferred unit distributions paid	(4,676		)	(4,676		)
Net cash provided by (used in) financing activities	(132,290		)	18,188
Common unit distributions paid	(163,903		)	(101,804		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	13,913			(10,971		)
Proceeds from exercise of share options and purchases under the employee share purchase plan	—			167
Increase (decrease) in cash, cash equivalents, and restricted cash related to foreign currency translation	138			(105		)
Contributions from noncontrolling interests in other entities	472			—
Cash, cash equivalents, and restricted cash at beginning of period	42,954			80,433
Distribution to limited partnership interest in the Operating Partnerships	(286		)	(303		)
Cash, cash equivalents, and restricted cash at end of period	$	57,005		$	69,357
Change in restricted cash from financing activities	(1,192		)	(62		)
Net cash provided by (used in) financing activities	707,482			(593,698		)
Net increase (decrease) in cash and cash equivalents	539			(71,542		)
Decrease in cash and cash equivalents related to foreign currency translation	(50		)	(137		)
Cash and cash equivalents at beginning of period	67,529			128,031
Cash and cash equivalents at end of period	$	68,018		$	56,352

The accompanying notes are an integral part of these financial statements.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

1. Business and Organization

Gramercy Property Trust, or the Company or Gramercy, a Maryland real estate investment trust, or REIT, together with its subsidiary, GPT Operating Partnership LP, or the Operating Partnership, is a leading global investor and asset manager of commercial real estate. Gramercy specializes in acquiring and managing high quality, income producing 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. The Company also owns unconsolidated equity investments in the United States, Europe, and Asia. The Company's operations are conducted primarily through the Operating Partnership. As of ~~September~~March 3031, ~~2017~~2018, third-party holders of limited partnership interests owned approximately 13.9225% of the Operating Partnership. These interests are referred to as the noncontrolling interests in the Operating Partnership. See Note 11 for more information on the Company’s noncontrolling interests.

As of ~~September~~March 3031, ~~2017~~2018, the Company’s wholly-owned portfolio ~~consists~~consisted of ~~367~~362 properties comprising 8180,~~046~~884,~~993~~942 rentable square feet with 97.43% occupancy. As of ~~September~~March 3031, ~~2017~~2018, the Company ~~has~~had ownership interests in 1420 properties ~~which are~~ held in unconsolidated equity investments in the United States and Europe and one property held through the investment in CBRE Strategic Partners Asia. As of ~~September~~March 3031, ~~2017~~2018, the Company ~~manages~~managed approximately $1,~~622~~960,000 of commercial real estate assets, including approximately $1,~~305~~408,000 of assets in Europe~~, which includes the increase in value due to the European investment sales in July 2017, discussed below~~.

InDuring ~~July~~the ~~2017,~~three amonths ~~private~~ended ~~real~~March 31, ~~estate investment fund that targeted single-tenant industrial~~2018, ~~office~~the ~~and~~Company ~~specialty~~acquired ~~retail~~one ~~assets~~property ~~throughout~~with ~~Europe~~162,056 ~~and~~square infeet ~~which~~for ~~the~~a ~~Company~~purchase ~~owned~~price aof ~~14.2%~~approximately ~~interest~~$10,550 orand ~~the~~placed ~~Gramercy~~one ~~European~~development ~~Property~~property ~~Fund,~~into ~~sold~~service ~~100.0%~~with ~~of its assets and~~126,722 ~~concurrently,~~square ~~the Company sold its 5~~feet.1% ~~interest~~During inthe ~~another~~three ~~European~~months ~~investment~~ended inMarch 31, ~~real estate assets~~2018, or the ~~Goodman~~Company ~~Europe~~sold ~~JV.~~five ~~The~~properties ~~transactions~~and ~~resulted~~one inwarehouse ~~net~~from ~~distributions~~another toasset ~~the~~aggregating ~~Company of approximately $101~~1,~~930 (€89~~546,~~366),~~091 ~~inclusive~~square offeet afor ~~promoted~~total ~~interest~~gross ~~distribution~~proceeds of approximately $8111,~~515 (€7,448)~~012.

~~During~~Unless the ~~nine~~context ~~months~~requires ~~ended September 30~~otherwise, ~~2017,~~all ~~the~~references ~~Company~~to ~~acquired 74 properties aggregating 18~~“Company,~~361,835~~" ~~square feet for a total purchase price of approximately $1~~"Gramercy,~~321,886,~~” ~~including the acquisition of a previously consolidated variable interest entity~~“we,” or“our” ~~VIE,~~and ~~for~~“us” ~~$29,605,~~mean aGramercy ~~vacant~~Property ~~property~~Trust ~~for $2,400, two land parcels for $6,840,~~ and ~~one~~its ~~build-to-suit property upon completion for $63~~subsidiaries,~~244.~~ ~~Additionally,~~including ~~during~~ the ~~nine~~Operating ~~months~~Partnership ended September 30, 2017, the Company acquired two land parcels for an aggregate purchase price of $2,800, on which it has committed to construct industrial facilities for an estimated $49,077. During the nine months ended September 30, 2017, the Company sold 25 properties and ~~two~~its ~~offices~~consolidated ~~from another asset aggregating 2,358,928 square feet for total gross proceeds of approximately $256,828~~subsidiaries.

Prior to December 17, 2015, the Company was known as Chambers Street Properties, or Chambers. On December 17, 2015, Chambers completed a merger, or the Merger, with Gramercy Property Trust Inc., or Legacy Gramercy. While Chambers was the surviving legal entity, immediately following consummation of the Merger, the Company changed its name to “Gramercy Property Trust” and its New York Stock Exchange, or NYSE, trading symbol to “GPT.”

Unless the context requires otherwise, all references to “Company,” “Gramercy,” "we," "our" and "us" mean Legacy Gramercy and its subsidiaries, including Legacy Gramercy’s operating partnership and its subsidiaries, for the periods prior to the Merger closing and Gramercy Property Trust and its subsidiaries, including the Operating Partnership and its consolidated subsidiaries, for periods following the Merger closing.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 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 ~~2017~~2018 operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~2018. 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, 2016 and in the Operating Partnership’s audited financial statements for the year ended~~ December 31, ~~2016~~2017 ~~filed~~of ~~as an exhibit to~~ the Company’s ~~Form~~and ~~8-K~~the ~~filed~~Operating ~~on June 29, 2017~~Partnership. The ~~Condensed~~ Consolidated Balance Sheets at December 31, ~~2016~~2017 were derived from the audited Consolidated Financial Statements at that date.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Consolidated Financial Statements

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

March 31, 2018

Reclassifications

Certain prior year balances have been reclassified to conform with the current year presentation. ~~These~~During ~~reclassifications~~the ~~had~~fourth noquarter ~~effect~~of on2017, the ~~previously~~Company ~~reported~~adopted ~~net~~Accounting ~~income~~Standards Update, or ASU, No. On2016-18, ~~the~~Statement ~~Condensed~~of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash and cash equivalents to be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of ~~Operations,~~Cash Flows. As a result of the ~~Company~~adoption, ~~reclassified~~net ~~investment~~cash ~~income~~provided ofby operating activities changed by $~~544~~235, net cash used in investing activities changed by $(947), and net cash provided by financing activities changed by $1909,~~490~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016, respectively, into other income~~2017.

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. See Note 1311 for more information on the Company’s noncontrolling interests.

Real Estate Investments

Real Estate Acquisitions

InThe ~~January~~Company ~~2017,~~evaluates ~~the~~its ~~Financial~~acquisitions ~~Accounting~~of ~~Standards~~real ~~Board~~estate, orincluding ~~FASB,~~equity ~~issued~~interests ~~Accounting~~in ~~Standards~~entities ~~Update,~~that orpredominantly ~~ASU,~~hold ~~2017-01,~~real ~~Amendments~~estate assets, to ~~Business~~determine ~~Combinations,~~if ~~which~~the ~~clarifies~~acquired assets meet the ~~framework~~definition of a business and need to be accounted for ~~determining~~as ~~whether~~a business combination, or alternatively, should be accounted for as an asset acquisition. An integrated set of assets and activities ~~meets~~acquired does not meet the definition of a business. ~~The~~if ~~revised~~either ~~framework~~(i) ~~narrows~~substantially all the ~~definition~~fair value of athe ~~business,~~gross ~~which~~assets acquired is ~~expected~~concentrated toin ~~result~~either ina ~~fewer~~single ~~transactions~~identifiable ~~being~~asset ~~accounted~~or ~~for~~a asgroup ~~business~~of ~~combinations.~~similar ~~Acquisitions~~identifiable ofassets, ~~integrated~~or ~~sets~~(ii) ofthe ~~assets~~asset and activities ~~that~~acquired do not ~~meet~~contain at least an input and a substantive process that together significantly contribute to the ~~definition~~ability to create outputs. The Company expects that its acquisitions of areal ~~business~~estate ~~are~~will ~~accounted~~continue ~~for~~to asnot ~~asset~~meet the 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, 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. The Company incurs internal transaction costs, which are direct, incremental internal costs related to acquisitions, that are recorded within general and administrative expense. 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 taxes, if applicable, during the construction period.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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 first quarter of 2017. As a result, the Company evaluated its real estate acquisitions during the nine months ended September 30, 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 nine months ended September 30, 2017.

The Company 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.

To determine the fair value of assets acquired and liabilities assumed in an acquisition, 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 Company utilizes various estimates, processes and information to determine the as-if-vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, and discounted cash flow 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. The Company assesses the 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 policy section "Intangible Assets and Liabilities" for more information on the Company’s accounting for intangibles.

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.

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, 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 in 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.

Impairments and Disposals

The Company reviews the recoverability of a property’s carrying value when circumstances indicate a possible impairment of 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 to the extent that the carrying value exceeds the estimated fair value of the property 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

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~transferred~~as ~~relative~~an toimpairment loss in the ~~fair~~Consolidated ~~value~~Statements of Operations in the ~~net~~period ~~assets~~the ~~acquired~~determination is ~~recorded~~made. asThe ~~goodwill~~estimated orfair value of the asset becomes its new cost basis. For a ~~bargain~~depreciable ~~purchase~~long-lived ~~gain~~asset to be held and used, asthe ~~appropriate.~~new ~~Acquisition~~cost ~~costs~~basis ofwill ~~business~~be ~~combinations~~depreciated ~~are~~or ~~expensed~~amortized asover ~~incurred~~the remaining useful life of that asset.

~~Capital~~The ~~Improvements~~Company recognizes sales of real estate properties upon closing, at which time the Company transfers control of the assets to the purchaser. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is based on the transaction price and is recognized using the full accrual method upon closing.

~~In leasing space~~Cash, ~~the~~Cash 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 projectsEquivalents, ~~the Company capitalizes project management fees as permitted to be charged under the lease, if incremental~~ and ~~identifiable.~~Restricted 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, 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 in 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.Cash

~~Impairments~~The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company's restricted cash primarily consists of reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage note obligations, as well as proceeds from property sales held by qualified intermediaries to be used for tax-deferred, like-kind exchanges under section 1031 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code.

The ~~Company~~following ~~reviews~~table ~~the~~provides ~~recoverability of~~ a ~~property’s~~reconciliation ~~carrying value when circumstances indicate a possible impairment~~ of ~~the value of a property~~cash, ~~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~~equivalents, ~~excluding interest charges, expected to result from the property’s use~~ and ~~eventual~~restricted ~~disposition.~~cash ~~These~~reported ~~estimates~~within ~~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~~Consolidated ofBalance ~~leasing~~Sheets ~~demand,~~that ~~competition~~sums ~~and other factors. If management determines impairment exists due~~ to the ~~inability~~total ~~to recover the carrying value~~ of ~~a property, for properties to be held and used, an impairment loss is recorded to~~ the ~~extent~~same ~~that~~such ~~the~~amounts ~~carrying~~shown value exceeds the estimated fair value of the property 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~~Cash ~~in the period the determination is made~~Flows. The estimated fair value of the asset becomes its new cost basis. For a depreciable long-lived asset to be held and used, the new cost basis will be depreciated or amortized over the remaining useful life of that asset.

Cash and Cash Equivalents



	As of March 31,
	2018		2017
Cash and cash equivalents	$	41,964	$	56,256
Restricted cash	15,041		13,101
Total cash, cash equivalents, and restricted cash	$	57,005	$	69,357

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

Restricted Cash

The Company had restricted cash of $19,183 and $12,904 at September 30, 2017 and December 31, 2016, respectively, which primarily consisted of reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage note obligations.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

Variable Interest Entities

The Company had ~~two~~five ~~and three~~ consolidated VIEs ~~as of September 30, 2017~~ and ~~December 31,~~two ~~2016, respectively. The Company had three and four~~ unconsolidated VIEs as of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, ~~respectively.~~which ~~The~~were ~~following~~determined isbased aon ~~summary of~~ the ~~Company’s~~structure ~~involvement~~and ~~with~~control ~~VIEs~~provisions as of ~~September 30,~~each ~~2017:~~entity.

	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	$	6,541,338	$	3,295,732	$	6,541,338	$	3,295,732
Gramercy Europe Asset Management (European Fund Manager)	$	1,736	$	96	$	1,736	$	1,736
Unconsolidated VIEs:
Gramercy Europe Asset Management (European Fund Carry Co.)	$	284	$	—	$	1,192	$	57
Retained CDO Bonds	$	6,167	$	—	$	103,523	$	80,629

The Company’s five consolidated VIEs as of March 31, 2018 and December 31, 2017 included the Operating Partnership and four land parcels in Fort Mill, South Carolina acquired by an investment entity formed in December 2017, on which it will fund the development of four industrial facilities, or the Lakemont Development Investment. The Company has a 95.0% interest in the Lakemont Development Investment and will acquire the seller’s retained 5.0% interest when the properties are developed and leased. As of March 31, 2018 and December 31, 2017, the Company’s carrying value of the Lakemont Development Investment was $4,674 and $4,584, respectively.

The following is a summary of the Company’s involvement with VIEs as of December 31, 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
Consolidated VIEs:
Operating Partnership	$	5,603,527	$	2,842,493	$	5,603,527	$	2,842,493
Proportion Foods	$	22,836	$	3,041	$	22,836	$	23,514
Gramercy Europe Asset Management (European Fund Manager)	$	1,100	$	47	$	1,100	$	1,742
Unconsolidated VIEs:
Gramercy Europe Asset Management (European Fund Carry Co.)	$	8	$	—	$	31	$	—
Retained CDO Bonds	$	11,906	$	—	$	391,990	$	592,414

Consolidated VIEs

Operating Partnership

The Operating Partnership is a consolidated VIE because the Company is its primary beneficiary due to its majority ownership and ability to exercise control over every aspect of the Operating Partnership’s operations.

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 determined that European Fund Manager is a VIE, as the equity holders of that entity do not have controlling financial interests and do not have the

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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 concluded that it is the entity’s primary beneficiary and has consolidated the VIE. The Company receives net cash inflows from European Fund Manager in the form of management fees, and if the VIE’s cash inflows are not sufficient to cover its obligations, the Company may provide financial support for the VIE. Following the sale of the assets of the Gramercy European Property Fund in July 2017, European Fund Manager commenced liquidation and will be dissolved over the succeeding months. Related to the sale and forthcoming dissolution of European Fund Manager, the Company contributed $471 (€400) to European Fund Manager during the three and nine months ended September 30, 2017.

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 agreed to 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, at which time the Company acquired the property. Following the acquisition, the property was wholly-owned by the Company and was no longer a consolidated VIE.

Unconsolidated VIEs

~~Gramercy~~The ~~Europe~~Company’s ~~Asset~~two ~~Management~~unconsolidated ~~(European~~VIEs ~~Fund~~as ~~Carry~~of CoMarch 31, 2018 and December 31, 2017 included its retained non-investment grade subordinate bonds, preferred shares and ordinary shares of two collateralized debt obligations, or CDOs, which are collectively herein referred to as the Retained CDO Bonds.) Refer to the “Other Assets” section of this Note 2 and also to Note 7 for more information on the accounting and valuation of the Retained CDO Bonds. As of March 31, 2018 and December 31, 2017, the Company’s carrying value of the Retained CDO Bonds was $5,800 and $5,527, respectively.

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. Following the sale of the assets of the Gramercy European Property Fund in July 2017, European Fund Carry Co. commenced liquidation and will be dissolved over the succeeding months.14

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,

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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. In April 2017, one of the CDOs, in which the Company’s retained interest has no value, commenced liquidation. The Company will not receive any proceeds from the liquidation. Thus, as of September 30, 2017, one of the Retained CDO Bonds is no longer considered a VIE of the Company.

Tenant and Other Receivables

Tenant and other receivables are derived from rental revenue, tenant reimbursements, and management 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~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 were $~~691~~670 and $57638, 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 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, as appropriate.

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.

Intangible Assets and Liabilities

As discussed above in ~~the~~ policy section, “"Real Estate Acquisitions”," the Company follows the acquisition method of accounting for its asset acquisitions and 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 recorded based on the present value of 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 present value calculation utilizes a discount rate that reflects the risks associated with the leases acquired. The above-market 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. 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.

17The aggregate value of in-place leases represents the costs of leasing costs, other tenant related costs, and 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 during the expected lease-up period for each property taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the anticipated lease-up period. Management also estimates costs to execute similar leases including leasing commissions and other related expenses. The value of in-place leases is amortized to

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

depreciation and amortization expense over the remaining non-cancelable term of the respective leases. In no event does the amortization period for intangible assets exceed 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 ~~market~~in-place lease ~~intangibles~~intangible will be written off to ~~rental~~depreciation ~~revenue.~~and amortization expense.

The aggregate value of in-place leases represents the costs of leasing costs, other tenant related costs, and 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 during the expected 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 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 as a reduction of and increase to rent expense, respectively, over the remaining non-cancelable terms of the respective leases.

~~Intangible~~Refer ~~assets~~to ~~and~~Note ~~liabilities~~3 ~~consist~~for offurther information on the ~~following:~~Company’s intangible assets and liabilities.

	September 30, 2017			December 31, 2016
Intangible assets:
In-place leases, net of accumulated amortization of $178,430 and $117,717	$	571,839		$	553,924
Above-market leases, net of accumulated amortization of $22,969 and $15,719	51,421			59,647
Below-market ground rent, net of accumulated amortization of $369 and $274	5,014			5,109
Amounts related to assets held for sale, net of accumulated amortization of $758 and $0	(2,503		)	—
Total intangible assets	$	625,771		$	618,680
Intangible liabilities:
Below-market leases, net of accumulated amortization of $27,853 and $26,168	$	171,251		$	223,110
Above-market ground rent, net of accumulated amortization of $409 and $248	6,893			7,073
Amounts related to liabilities of assets held for sale, net of accumulated amortization of $698 and $0	(4,567		)	—
Total intangible liabilities	$	173,577		$	230,183

Revenue

18Adoption of ASC Topic 606, "Revenue from Contracts with Customers"

~~Gramercy~~The ~~Property~~Company ~~Trust~~adopted ASC Topic 606, which is described below in the section “Recently Issued Accounting Pronouncements,” on January 1, 2018 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and ~~GPT~~continue ~~Operating~~to ~~Partnership~~be LPreported in accordance with the historic accounting guidance in ASC Topic 605. As a result of adoption, the Company recorded an increase to its opening retained earnings balance of $663 as of January 1, 2018, which represents the cumulative impact of the new guidance and is related to the Company’s sale of real estate to Strategic Office Partners in 2016. There was no impact to revenues recorded for the three months ended March 31, 2018 as a result of adoption of the new revenue guidance.

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

The following table provides the weighted-average amortization period as of September 30, 2017 for intangible assets and liabilities and the projected amortization expense for the next five years.

	Weighted-Average Amortization Period (years)	October 1 to December 31, 2017			2018			2019			2020			2021
In-place leases	9.3	$	26,269		$	100,181		$	85,178		$	71,067		$	59,907
Total to be included in depreciation and amortization expense		$	26,269		$	100,181		$	85,178		$	71,067		$	59,907
Above-market lease assets	7.1	$	2,688		$	10,424		$	9,425		$	7,493		$	6,196
Below-market lease liabilities	17.7	(3,166		)	(12,590		)	(12,240		)	(11,763		)	(10,641		)
Total to be included in rental revenue		$	(478	)	$	(2,166	)	$	(2,815	)	$	(4,270	)	$	(4,445	)
Below-market ground rent	40.6	$	32		$	127		$	127		$	127		$	127
Above-market ground rent	32.5	(53		)	(214		)	(214		)	(214		)	(214		)
Total to be included in property operating expense		$	(21	)	$	(87	)	$	(87	)	$	(87	)	$	(87	)

The Company recorded $25,525 and $29,670 of amortization of in-place lease intangible assets as part of depreciation and amortization for the three months ended September 30, 2017 and 2016, respectively. The Company recorded $73,864 and $86,845 of amortization of in-place lease intangible assets as part of depreciation and amortization for the nine months ended September 30, 2017 and 2016, respectively. The Company recorded $(872) and $4,578 of amortization of market lease intangible assets and liabilities as an increase (decrease) to rental revenue for the three months ended September 30, 2017 and 2016, respectively. The Company recorded $4,505 and $10,388 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the nine months ended September 30, 2017 and 2016, respectively. The Company recorded $(23) and $8 of amortization of ground rent intangible assets and liabilities as part of property operating expense for the three months ended September 30, 2017 and 2016, respectively. The Company recorded $(66) and $25 of amortization of ground rent intangible assets and liabilities as part of property operating expense for the nine months ended September 30, 2017 and 2016, respectively.

Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s primary sources of revenue include rental revenue, third-party management fees, operating expense reimbursements, and other income, which are disaggregated on the Consolidated Statements of Operations and are described in detail below.

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 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.

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, the Company recognizes such amounts as both revenues and operating expenses. 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.

1916

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~are~~Management 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.Fees

The Company’s ~~recognizes~~asset ~~sales~~and ofproperty ~~real~~management ~~estate~~agreements ~~properties~~may ~~only~~contain ~~upon~~provisions ~~closing.~~for ~~Payments~~fees ~~received~~related ~~from~~to ~~purchasers~~dispositions, ~~prior~~administration of the assets including fees related to ~~closing~~accounting, ~~are~~valuation ~~recorded~~and aslegal ~~deposits.~~services, ~~Profit~~and onmanagement ~~real~~of ~~estate~~capital ~~sold~~improvements isor ~~recognized~~projects ~~using~~on the ~~full~~underlying ~~accrual~~assets. ~~method~~The ~~upon~~Company ~~closing~~recognizes ~~when~~revenue ~~the~~for ~~collectability~~fees ofpursuant to its management agreements in the ~~sale~~period ~~price~~in iswhich ~~reasonably~~they ~~assured~~are ~~and~~earned. ~~the~~Deferred ~~Company~~revenue isfrom ~~not~~management ~~obligated~~fees received prior to ~~perform~~the ~~significant~~date ~~activities~~earned ~~after~~are included in other liabilities on the ~~sale~~Consolidated Balance Sheets. ~~Profit~~For ~~may~~management befee ~~deferred~~agreements inthat ~~whole~~include ormultiple ~~part~~performance ~~until~~obligations, the ~~sale~~Company ~~meets~~allocates ~~the~~revenue ~~requirements~~to ofeach ~~profit~~performance ~~recognition~~obligation based on ~~sale~~its ofrelative ~~real~~standalone ~~estate~~selling price, which is primarily determined based on the prices charged to customers.

~~Third-Party~~Certain ~~Management~~of ~~Fees~~the Company’s asset management contracts and agreements with its unconsolidated equity investments include provisions that allow it to earn additional fees, generally described as incentive fees or promoted interests, based on the achievement of a targeted valuation or the achievement of a certain internal rate of return on the managed assets held by third parties or the equity investment. The Company’s incentive fees are accounted for as variable consideration and revenue is recognized for them based on the Company’s estimate of the expected amount to which it will be entitled in exchange for its services. The Company recognizes promoted interest in the period in which it is determined to be appropriately earned pursuant to the terms of the specific agreement. The values of incentive fees and promoted interest fees are periodically evaluated by management.

The Company’s asset and property management agreements may contain provisions for fees related to 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. Deferred revenue from management fees received prior to the date earned is included in other liabilities on the Condensed Consolidated Balance Sheets.

Certain of the Company’s asset management contracts and agreements with its unconsolidated equity investments include provisions that allow it to earn additional fees, generally described as incentive fees or promoted interests, based on the achievement of a targeted valuation or the achievement of a certain internal rate of return on the managed assets held by third parties or the equity investment. 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 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 Company recognizes promoted interest in the period in which it is determined to be appropriately earned pursuant to the terms of the specific agreement. The values of incentive management fees and promoted interest fees are periodically evaluated by management. For the three months ended September 30, 2017, the Company did not recognize any incentive fee revenue and for the nine months ended September 30, 2017, the Company recognized incentive fees of $1,449. For the three and nine months ended September 30, 2016, the Company recognized incentive fees of $2,931 and $18,121, respectively.

Other Income

Other income primarily consists of ~~miscellaneous property related~~ income, ~~lease termination fees, income~~ accretion on the Company’s Retained CDO Bonds, realized foreign currency exchange gains (losses), and interest income.

Foreign Currency

~~Gramercy~~The ~~Europe~~Company's ~~Asset~~European ~~Management~~management platform performs asset and property management services in Europe. The Company has unconsolidated equity investments in Europe and Asia and previously 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 ~~had~~ borrowings outstanding in euros and British pounds sterling under the multicurrency portion of its revolving credit facility ~~during 2017~~. Refer to Note 54 for more information on the Company’s foreign unconsolidated equity investments.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

Foreign Currency Translation

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, respectively. The Company performs the translation from 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 revenue and expense accounts using a 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. For the three and nine months ended September 30, 2017, the Company recorded net translation gains of $685 and $2,502, respectively. For the three and nine months ended September 30, 2016, the Company recorded net translation losses of $1,120 and $3,687, respectively. Translation gains and losses are reclassified to other income within earnings when the Company has substantially exited from the foreign currency denominated asset or liability.

Foreign Currency Transactions

A transaction gain or loss realized upon settlement of a foreign currency transaction will be included in earnings 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, 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. For the three and nine months ended September 30, 2017, the Company recognized net realized foreign currency transaction gains of $7 and $64, respectively, on such transactions. For the three and nine months ended September 30, 2016, the Company recognized net realized foreign currency transaction gains of $185 and $104, respectively, on such transactions.

Other Assets

The Company includes prepaid expenses, capitalized software costs, contract intangible assets, deferred costs, loan investments, goodwill, derivative assets, and Retained CDO Bonds in other assets.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Consolidated Financial Statements

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

March 31, 2018

Loan Investments

The Company may originate loans related to specific real estate development projects. In October 2017, the Company entered into an agreement to provide a mezzanine construction loan facility with a maximum commitment of $250,000 to an industrial developer as borrower. As of March 31, 2018 and December 31, 2017, the carrying value of the Company’s loan investments was $22,437 and $22,154, respectively, which represents the cost, net of accumulated amortization of loan costs. As of March 31, 2018, the loan investments had a weighted average interest rate of 10.47%. The Company evaluates its loan investments for possible credit losses each period. There were no loan reserves recorded during the three months ended March 31, 2018 and all of the Company’s loan investments were performing in accordance with the terms of the relevant investments as of March 31, 2018.

Goodwill

The Company recognized goodwill of $3,802 related to the acquisition of Gramercy Europe Limited, ~~or Gramercy Europe Asset Management,~~ which it adjusts each reporting period for the effect of foreign currency translation adjustments and tests for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The carrying value of goodwill at ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 was $3,~~244~~394 and $23,~~988~~272, respectively. The Company did not record any impairment on its goodwill during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018.

Retained CDO Bonds

The Retained CDO Bonds are non-investment grade subordinate bonds, preferred shares and ordinary shares of ~~three~~two 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 Consolidated Statements of Operations. To determine the 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 7 for further discussion regarding the fair value measurement of the Retained CDO Bonds. For the three months ended March 31, 2018 and 2017, the Company recognized OTTI on its Retained CDO Bonds of $0 and $4,890, respectively.

21A summary of the Company’s Retained CDO Bonds as of March 31, 2018 is as follows:



Number of Securities	Face Value		Amortized Cost		Gross Unrealized Gain		Other-Than-Temporary Impairment		Fair Value		Weighted Average Expected Life (years)
6	$	329,597	$	5,431	$	369	$	—	$	5,800	1.1

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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 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 months ended September 30, 2017, the Company recognized no OTTI on its Retained CDO Bonds and for the nine months ended September 30, 2017, the Company recognized OTTI of $4,890 on its Retained CDO Bonds. For the three and nine months ended September 30, 2016, the Company recognized no OTTI on its Retained CDO Bonds.

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

Number of Securities			Face Value				Amortized Cost				Gross Unrealized Gain				Other-than-temporary impairment				Fair Value				Weighted Average Expected Life (years)
6			$	324,427			$	4,670			$	1,497			$	(4,890	)		$	6,167			1.3

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

The following table summarizes the activity related to credit losses on the Retained CDO Bonds for the nine months ended September 30, 2017 and for the year ended December 31, 2016:

	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 othercomprehensive 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	523			(3,687		)
Balance as of September 30, 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)	$	(4,858	)	$	(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.

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. During the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017, there were no tenants that accounted for 10.0% or more of the Company’'s rental revenue. 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, of which 7.0% and 6.0%, respectively, pertained to amortization recorded on below-market lease liabilities. Additionally, for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018, there were three states, ~~California~~Illinois, Texas, and Florida, that each accounted for 10.0% or more of the Company’s rental revenue. Following the expiration of the KBS management contract, management fees are not a significant source of the Company’s revenue and thus concentrations of management fees from specific customers is not deemed a significant credit risk.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

Segment Reporting

ASC 280, Segment Reporting, establishes standards for the manner in which public enterprises report information about operating segments. In prior periods, the Company has viewed and presented its operations as two segments, Investments/Corporate and Asset Management. However, based upon the significant reduction in the Company’s third-party asset management operations following the expiration of the KBS management contract, as of March 31, 2017, the Company views its operations as one segment, which consists of net leasing operations. The Company has no other reportable segments.

Use of Estimates

The preparation of financial statements in conformity with 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.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 (Topic 606), 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~~In ~~guidance~~April ~~also~~2016 ~~requires enhanced disclosures related to the nature, amount, timing,~~ and ~~uncertainty~~February ~~of revenue that is recognized. In April 2016~~2017, the FASB issued ASU 2016-10, ~~which~~and ~~amends the new revenue recognition guidance on identifying performance obligations. In February 2017, the FASB issued~~ ASU 2017-05, respectively, which ~~clarifies~~further ~~the~~clarified ~~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 isunder ~~effective~~ASC ~~for~~Topic 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, 2016606. ~~Companies~~The ~~may~~Company ~~use~~adopted ~~either a full retrospective or a modified retrospective approach to adopt~~ the ~~new~~ guidance. Aon ~~substantial~~January ~~portion of the Company’s revenue consists of rental revenue from leasing arrangements~~1, ~~which~~2018 isusing ~~specifically excluded from~~ the ~~new~~modified ~~revenue~~retrospective ~~guidance~~method, ~~however the Company also generates revenue from operating expense reimbursements, management fees, incentive fees, and gains and impairments on disposals,~~ which ~~will~~did ~~be impacted by the new revenue standard. The Company does~~ not ~~believe the new revenue guidance will~~ have a material impact on its ~~recognition~~Consolidated ~~and~~Financial ~~disclosure of revenue, except as it pertains to revenue recognized for certain of its sales of unconsolidated equity investments~~Statements. ~~The~~Refer ~~Company currently expects~~ to ~~adopt~~ the ~~standard~~“Revenue” insection ~~the~~above ~~first~~for ~~quarter~~further ~~of 2018 using the modified retrospective approach~~detail.

In ~~February~~January 2016, the FASB issued ASU 2016-0201, ~~Leases,~~Recognition ~~which~~and ~~amends~~Measurement ~~the~~of ~~existing~~Financial ~~accounting~~Assets ~~standards~~and ~~for~~Financial ~~lease~~Liabilities. ~~accounting,~~The ~~including~~guidance ~~requiring~~requires ~~lessees~~entities to ~~recognize~~measure ~~most~~equity ~~leases~~investments onthat ~~their~~do ~~balance~~not ~~sheets~~result ~~and~~in ~~making~~consolidation ~~targeted~~and ~~changes~~are tonot ~~lessor~~accounted ~~accounting.~~for ~~The~~under ~~update will be effective beginning in~~ the ~~first~~equity ~~quarter~~method ofat ~~2019~~fair value and ~~early~~to ~~adoption~~record ischanges ~~permitted.~~in ~~The~~instruments ~~new~~specific ~~standard~~credit ~~requires~~risk ~~a modified retrospective transition approach~~ for ~~all~~financial ~~leases~~liabilities ~~existing~~measured ~~at,~~under ~~or entered into after,~~ the ~~date~~fair ofvalue ~~initial application, with an~~ option toin ~~use~~other ~~certain~~comprehensive ~~transition relief~~income. The ~~Company’s~~update ~~accounting~~is effective for ~~leases~~fiscal inyears ~~which~~beginning itafter isDecember ~~a lessor~~15, ~~which represents most of its leasing arrangements~~2017, ~~will~~and befor ~~largely~~interim ~~unchanged~~periods ~~under~~therein. ~~ASU~~The ~~2016-02, however the~~ Company isadopted athis ~~lessee~~standard in ~~several~~the ~~operating~~first ~~and~~quarter ~~ground~~of ~~leases~~2018 and the ~~accounting~~adoption ~~for~~did ~~these~~not ~~arrangements~~have isa ~~more~~material ~~significantly~~impact ~~impacted~~on byits ~~the~~Consolidated ~~new~~Financial ~~standard~~Statements. ~~Pursuant~~Refer to ~~the~~Note ~~new~~8 ~~guidance, lessees are required to record a right-of-use asset and a lease liability~~ for ~~all~~more ~~leases with a term of greater than 12 months regardless of their~~ information.

24In 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 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

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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~~August 2016, the FASB issued ASU 2016-0915, ~~Compensation~~Statement -of ~~Stock~~Cash ~~Compensation:~~Flows ~~Improvements~~Classification toof ~~Employee~~Certain ~~Share-Based~~Cash ~~Payment~~Receipts ~~Accounting.~~and ~~The~~Cash ~~update~~Payments, which serves to ~~simplify~~reduce the ~~accounting~~diversity ~~for~~in ~~share-based~~practice ~~payment~~in ~~award~~how ~~transactions,~~certain ~~including~~cash ~~income~~receipts ~~tax~~and ~~consequences,~~cash ~~classification~~payments ofare ~~awards~~presented ~~as either equity or liabilities,~~ and ~~classification~~classified ofin ~~awards on~~ the statement of cash flows. The ~~guidance~~update ~~in the ASU~~ is effective for fiscal years beginning after December 15, ~~2016~~2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ~~the~~this ~~new~~standard ~~guidance~~ in the first quarter of ~~2017.~~2018 ~~The~~and the adoption ~~of this guidance~~ did not have a material impact on ~~the~~its ~~Company’s Condensed~~ Consolidated Financial Statements.

In ~~January~~May 2017, the FASB issued ASU 2017-0109, ~~Amendments~~Compensation-Stock toCompensation: ~~Business~~Scope ~~Combinations,~~of ~~which~~Modification ~~amends~~Accounting. ~~the~~The ~~current~~amendment provides guidance toon ~~clarify~~determining ~~the~~which ~~definition~~changes ~~of a business in order~~ to ~~assist~~the ~~entities~~terms inand ~~evaluating~~conditions ~~whether~~of ~~transactions~~share-based ~~should~~payment beawards ~~accounted~~require ~~for~~an asentity ~~acquisitions~~to orapply ~~disposals~~modification ~~of assets or businesses~~accounting. The guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The ~~amendments~~Company ~~must~~adopted bethis ~~applied~~standard ~~prospectively~~in ~~as of~~ the ~~beginning~~first ofquarter ~~the period~~ of ~~adoption.~~2018 ~~The~~and ~~Company elected to early adopt ASU 2017-01 in~~ the ~~first~~adoption ~~quarter~~did ofnot ~~2017,~~have asa ~~described~~material inimpact ~~the~~on ~~“Real~~its ~~Estate~~Consolidated ~~Acquisitions”~~Financial ~~section above~~Statements.

In ~~January~~August 2017, the FASB issued ASU 2017-0412, ~~Intangibles-~~Derivatives ~~Goodwill~~ and ~~Other,~~Hedging: ~~which~~Targeted ~~simplifies~~Improvements ~~the~~to ~~accounting~~Accounting for ~~goodwill~~Hedging ~~impairments~~Activities. ~~Under~~The ~~the~~purpose ~~new~~of ~~guidance,~~this anupdated ~~impairment~~guidance ~~charge~~ is ~~recorded~~to ~~based~~better onalign ~~the~~a ~~excess~~company’s offinancial ~~the~~ reporting ~~unit’s~~for ~~carrying~~hedging ~~amount~~activities ~~over~~with ~~its~~the ~~fair~~economic ~~value~~objectives of those activities. The transition guidance isprovides ~~effective~~companies ~~for~~with ~~annual~~the oroption ~~interim~~of ~~goodwill~~early ~~impairment~~adopting ~~tests~~the new standard using a modified retrospective transition method in ~~fiscal~~any ~~years~~interim ~~beginning~~period after ~~December~~issuance 31of the update, ~~2019~~or ~~with~~alternatively ~~early~~requires adoption ~~permitted~~ for ~~impairment~~fiscal ~~tests~~years beginning after ~~January~~December 115, ~~2017~~2018. ~~The~~ ~~Company~~In isthe ~~currently~~first ~~evaluating~~quarter of 2018, the ~~impact~~Company ofearly adopted this ~~guidance~~standard and the adoption did not have a material impact on its ~~Condensed~~ Consolidated Financial Statements.

~~In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting~~3. ~~The~~Real ~~amendment~~Estate provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. The guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company is currently evaluating the impact of this guidance on its Condensed Consolidated Financial Statements.Investments

InInvestments August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in ~~any~~real ~~interim~~estate ~~period~~properties ~~after~~consisted ~~issuance~~ of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. While the Company continues to assess all potential impacts of the standard, it currently expects adoption to have an immaterial impact on its consolidated financial statements.following:

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



	March 31, 2018					December 31, 2017
	Square feet¹	Number of properties	Investment			Square feet¹	Number of properties	Investment
Operating properties²	80,884,942	360	$	5,811,702		82,146,063	363	$	5,857,906
Land parcels		2	7,075				2	7,075
Less accumulated depreciation			(368,815		)			(333,151		)
Total operating properties and land parcels			$	5,449,962				$	5,531,830
Development properties	1,503,300	5	12,092			1,630,022	6	22,843
Total	82,388,242	367	$	5,462,054		83,776,085	371	$	5,554,673

~~Real~~1. ~~Estate~~Represents ~~Dispositions~~rentable square feet for operating properties and ~~Impairments~~projected rentable square feet upon completion for development properties.

During the three and nine months ended September 30, 2017, the Company sold eight and 25 properties, respectively, as well as two offices that are part of another asset during the nine months ended September 30, 2017. The property sales in 2017 comprised an aggregate 2~~,358,928 square feet and generated gross proceeds of $256,828~~. ~~During~~Includes ~~the~~development ~~three and nine months ended September 30, 2017, the Company recognized a net gain on disposals of $4,879 and $24,258, respectively, related to eight and 23~~ properties ~~sold~~that ~~during~~have ~~the~~been ~~periods,~~completed ~~respectively,~~ as ~~well~~of ~~as two offices sold from another asset during~~ the ~~nine~~end ~~months ended September 30, 2017. During the three and nine months ended September 30, 2017, the Company recognized impairments~~ of ~~$3,064 and $21,415, respectively, of which $7,973 is related to four properties held as of September 30, 2017 that were determined to have non-recoverable declines in value during~~ the period~~, and the remainder is related to properties sold during the periods~~. ~~Refer to Note 9 for more information on how the Company determined the non-recurring fair value of these properties.~~

~~The Company sold 10 and~~ 20 properties during the three and nine months ended September 30, 2016, respectively. The Company recognized an impairment on real estate investments of $1,053 during the three and nine months ended September 30, 2016 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 during the nine months ended September 30, 2017, 10 of the sales were structured as like-kind exchanges within the meaning of Section 1031 of the Internal Revenue Code, or IRC. As a result of the sales, the Company deposited $176,895 of the total sale proceeds into an IRC Section 1031 exchange escrow account with a qualified intermediary. The Company then used $176,894 of these funds as consideration for 13 property acquisitions during the nine months ended September 30, 2017.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Consolidated Financial Statements

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

March 31, 2018

Acquisitions:

Real estate acquisition activity for the three months ended March 31, 2018 and 2017 was as follows:



	Three Months Ended March 31,
	2018		2017
Number of operating properties	1		7
Rentable square feet of operating properties	162,056		2,257,311
Total purchase price of all acquisitions	$	10,550	$	124,672

The total value of the properties acquired during the three months ended March 31, 2018 was comprised of $10,197 of real estate assets and $635 of intangible assets, including acquisition costs capitalized for the asset acquisitions. In addition to the operating property acquisition noted above, during the three months ended March 31, 2018 the Company also placed into service one development property which comprised 126,722 rentable square feet.

Dispositions:

Real estate disposition activity for the three months ended March 31, 2018 and 2017 was as follows:



	Three Months Ended March 31,
	2018		2017
Number of properties¹	5		7
Rentable square feet	1,546,091		487,872
Gross proceeds	$	111,012	$	51,683
Impairment of real estate investments related to asset dispositions during the period²	$	—	$	—
Net gain on disposals	$	16,255	$	17,377


1.	During the three months ended March 31, 2018, the Company sold five properties and one warehouse from another asset.


2.	Although there were no impairments recognized related to assets disposed during the three months ended March 31, 2018 and 2017, as presented in the table, the Company recognized impairments on real estate investments of $12,771 during the three months ended March 31, 2017 related to properties held as of March 31, 2017, for which the Company determined there were nonrecoverable declines in value.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Consolidated Financial Statements

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

March 31, 2018

Intangibles:

Intangible assets and liabilities consisted of the following:



	Weighted average amortization period (years)	March 31, 2018		December 31, 2017
Intangible assets:
In-place leases, net of accumulated amortization of $214,664 and $194,836	9.3	$	513,423	$	545,782
Above-market leases, net of accumulated amortization of $26,854 and $25,229	6.8	43,979		46,713
Below-market ground rent, net of accumulated amortization of $421 and $408	17.5	5,811		6,064
Total intangible assets		$	563,213	$	598,559
Intangible liabilities:
Below-market leases, net of accumulated amortization of $30,685 and $28,516	39.5	$	152,758	$	159,652
Above-market ground rent, net of accumulated amortization of $516 and $462	32.0	6,786		6,839
Total intangible liabilities		$	159,544	$	166,491

The following table provides the projected amortization expense of the intangible assets and liabilities for the next five years:



	April 1 to December 31, 2018			2019			2020			2021			2022
Depreciation and amortization expense	$	70,211		$	84,228		$	70,822		$	59,528		$	46,652
Rental revenue increase	$	(1,571	)	$	(2,520	)	$	(4,004	)	$	(4,168	)	$	(6,260	)

The Company recorded $26,159 and $24,172 of amortization of in-place lease intangible assets as part of depreciation and amortization expense for the three months ended March 31, 2018 and 2017, respectively. The Company recorded $494 and $621 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the three months ended March 31, 2018 and 2017, respectively.

Assets Held for Sale

In the normal course of business, the Company identifies non-strategic assets for sale. The Company separately classifies properties held for sale in ~~the~~its ~~Condensed~~ Consolidated Financial Statements. ~~The~~As ~~Company~~of ~~had~~March 31, ~~three~~2018 ~~properties~~ and ~~one~~December ~~land~~31, ~~parcel~~2017, ~~within~~the ~~another~~Company had one asset classified as held for sale ~~as of September 30~~, ~~2017~~which ~~with~~had ~~total~~a net asset value of $12402,~~378~~ ~~and~~all ~~no assets classified as held for sale as~~ of ~~December 31,~~which ~~2016.~~represented In the ~~normal~~value ~~course~~contained ofin ~~business,~~real ~~the~~estate ~~Company identifies non-strategic assets for sale~~investments. 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.

2522

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

The following table summarizes the assets held for sale and liabilities related to the assets held for sale as of September 30, 2017:

Assets held for sale	September 30, 2017
Real estate investments	$	14,507
Acquired lease assets, net	2,503
Other assets	282
Total assets	$	17,292
Liabilities related to assets held for sale
Below-market lease liabilities, net	4,567
Other liabilities	347
Total liabilities	$	4,914
Net assets held for sale	$	12,378

Discontinued Operations

The Company’s did not have significant discontinued operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018. ~~and~~The ~~2016~~Company’s ~~were~~discontinued ~~related~~operations tofor the ~~assets~~three ~~that~~months ~~were~~ended ~~assumed~~March in31, ~~the~~2017 ~~Merger~~were ~~and~~related ~~simultaneously~~to ~~designated~~the asassets ~~held~~assumed ~~for~~in ~~sale. The following operating results for~~ the ~~three~~Company’s ~~and~~merger ~~nine~~transaction ~~months~~in ~~ended~~2015 ~~September 30, 2017~~ and ~~2016~~simultaneously ~~are~~designated ~~included~~as inheld ~~discontinued operations~~ for ~~all~~sale. ~~periods presented:~~

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues	$	6		$	262		$	3		$	6,259
Operating expenses	—			(58		)	6			(2,294		)
General and administrative expense	(30		)	(3		)	(85		)	(41		)
Interest expense	—			148			—			(807		)
Depreciation and amortization	—			(2		)	—			(2		)
Gain on extinguishment of debt	—			—			—			1,930
Income (loss) from discontinued operations	$	(24	)	$	347		$	(76	)	$	5,045

4. Unconsolidated Equity Investments

~~Discontinued~~The ~~operations~~Company ~~have~~has ~~not~~investments ~~been~~in ~~segregated~~a invariety ~~the~~of ~~Condensed~~ventures. ~~Consolidated~~The ~~Statements~~Company ofwill ~~Cash~~co-invest ~~Flows.~~in ~~The~~entities ~~table~~that ~~below~~own ~~presents~~multiple ~~additional~~properties ~~relevant~~with ~~information~~various ~~pertaining~~investors toor ~~results~~with ofone ~~discontinued~~partner. ~~operations~~The ~~for~~Company may manage the ~~nine~~ventures ~~months~~and ~~ended~~earn ~~September 30~~fees, ~~2017~~such as asset and ~~2016~~property management fees, ~~including~~incentive ~~depreciation~~fees, ~~amortization~~and promoted interest for its services, ~~capital~~or ~~expenditures~~one of the other partners will manage the ventures for similar such fees. Depending on the structure of the venture, ~~and~~the ~~significant~~Company’s ~~operating~~voting ~~and~~interest ~~investing~~may ~~non-cash~~be ~~items:~~different than its economic interest.

	Nine Months Ended September 30,
	2017		2016
Amortization expense	$	—	$	2
Significant operating non-cash items	—		(9,647		)
Total	$	—	$	(9,645	)

The Company accounts for substantially all of its unconsolidated equity investments under the equity method of 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 and contributions and distributions. The amount of the investments on the 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 of these equity method entities is included in consolidated net income.

26As of March 31, 2018 and December 31, 2017, the Company owned properties through unconsolidated equity investments and had investment interests in these unconsolidated entities as follows:



	As of March 31, 2018								As of December 31, 2017
Investment	Ownership %		Voting Interest %		Partner	Investment in Unconsolidated Equity Investment ¹		No. of Properties	Investment in Unconsolidated Equity Investment ¹		No. of Properties
Strategic Office Partners	25.0	%	25.0	%	TPG Real Estate	$	28,792	13	$	28,243	13
E-Commerce JV	51.0	%	50.0	%	Ample Glow Investments	43,502		2	17,798		—
Goodman UK JV	80.0	%	50.0	%	Goodman Group	15,980		1	15,768		1
Gramercy European Property Fund III	19.9	%	50.0	%	Various	5,363		2	2,949		—
Other²	5.1% - 50.0%		5.1% - 50.0%		Various	5,476		3	5,456		3
Total						$	99,113	21	$	70,214	17


1.	The amounts presented include a basis difference of $2,011 and $1,943, net of accumulated amortization, for the Goodman UK JV as of March 31, 2018 and December 31, 2017, respectively. The amounts presented include a basis difference of $(3,916), net of accumulated amortization, for the E-Commerce JV as of March 31, 2018.


2.	Includes CBRE Strategic Partners Asia, the Philips JV, and the Morristown JV.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

4.The ~~Real~~following ~~Estate~~is ~~Investments~~a summary of the Company’s unconsolidated equity investments for the three months ended March 31, 2018:

Property Acquisitions



	Unconsolidated Equity Investments
Balance at January 1, 2018	$	70,214
Contributions to unconsolidated equity investments	28,731
Equity in net loss of unconsolidated equity investments, including adjustments for basis differences	(926		)
Other comprehensive income of unconsolidated equity investments	431
Cumulative effect of accounting change	663
Balance at March 31, 2018	$	99,113

During the nine months ended September 30, 2017, the Company acquired 74 properties comprising 18,361,835 square feet for an aggregate contract purchase price of approximately $1,321,886, including the acquisition of a consolidated VIE for $29,605, a vacant property for $2,400, two land parcels for $6,840, and one build-to-suit property upon completion for $63,244. Additionally, during the nine months ended September 30, 2017, the Company acquired two land parcels for an aggregate purchase price of $2,800, on which it has committed to construct an industrial facility for an estimated $25,805 with projected completion in October 2017 and an industrial facility for an estimated $23,272 with projected completion in March 2018. Total value of the properties acquired during the nine months ended September 30, 2017 was comprised of $1,226,190 of real estate assets, $125,882 of intangible assets, and $15,834 of intangible liabilities, including acquisition costs capitalized for the asset acquisitions.

Property Purchase Price Allocations

As described in Note 2, 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 nine months ended September 30, 2017 under the new framework and, accordingly, accounted for the transactions as asset acquisitions. Prior to adoption of ASU 2017-01 in 2017, the majority of the Company’s acquisitions were accounted for as business combinations. Of the acquisitions prior to 2017, there were 21 properties acquired in 2016 that were accounted for as business combinations which had preliminary purchase price allocations recorded as of December 31, 2016. The Company finalized the purchase price allocations of these 21 properties during the first quarter of 2017. The aggregate changes recorded from the preliminary purchase price allocations to the finalized purchase price allocations, are shown in the table below and are reflected in earnings for the nine months ended September 30, 2017:

Preliminary Allocations recorded						Finalized Allocations recorded
Real Estate Assets		Intangible Assets		Intangible Liabilities		Real Estate Assets		Intangible Assets		Intangible Liabilities		Decrease to Rental Revenue		Increase to Depreciation and Amortization Expense
$	513,424	$	61,178	$	11,093	$	513,087	$	60,627	$	10,205	$	27	$	16

5. Unconsolidated Equity Investments

The Company accounts for substantially all of its unconsolidated equity investments under the equity method of 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 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

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

method entities are eliminated to the extent of the Company’s ownership in each such entity. Accordingly, the Company’s share of net income of these equity method entities is included in consolidated net income.

As a result of the Merger in 2015, the Company acquired an interest in four unconsolidated entities, the Goodman Europe JV, the Goodman UK JV, the Duke JV, and CBRE Strategic Partners Asia, which are described below within this note. 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 was recorded as a basis difference, which is amortized to equity in net income from unconsolidated equity investments over the remaining weighted average useful life of the underlying assets of each entity.

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

	As of September 30, 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
Gramercy European Property Fund 2	14.2	%	14.2	%	Various	$	1,109	—	$	50,367	26
Goodman Europe JV 3	—	%	—	%	Gramercy European Property Fund	—		—	3,491		8
Strategic Office Partners	25.0	%	25.0	%	TPG Real Estate	35,760		11	15,872		6
Goodman UK JV	80.0	%	50.0	%	Goodman Group	30,884		1	25,309		2
CBRE Strategic Partners Asia	5.07	%	5.07	%	Various	2,772		1	4,145		2
Philips JV	25.0	%	25.0	%	Various	—		1	—		1
Morristown JV	50.0	%	50.0	%	21 South Street	2,638		1	2,623		1
Total						$	73,163	15	$	101,807	46

1. The amounts presented include a basis difference of $1,930, net of accumulated amortization, for the Goodman UK JV as of September 30, 2017. The amounts presented include basis differences of $2,286 and $3,941, net of accumulated amortization, for the Goodman Europe JV and Goodman UK JV, respectively, as of December 31, 2016.

2. The Gramercy European Property Fund sold 100.0% of its assets to a third party in July 2017. Pursuant to the sale agreement, as of September 30, 2017, $1,109 of the sale proceeds are being held in escrow, thus this remaining distribution held in escrow represents the total value of the Company’s investment in the entity following the transaction. The amounts presented include European Fund Carry Co., which has a carrying value of $284 and $8 for the Company’s 25.0% interest as of September 30, 2017 and December 31, 2016, respectively.

3. In the table above the Company’s 94.9% indirect interest in the 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. In July 2017, the Company sold its 5.1% direct interest in the Goodman Europe JV and the assets of the Goodman Europe JV were sold to a third party as part of the aforementioned sale of the assets of Gramercy European Property Fund.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

The following is a summary of the Company’s unconsolidated equity investments for the nine months ended September 30, 2017:

	Unconsolidated Equity Investments
Balance at January 1, 2017	$	101,807
Contributions to unconsolidated equity investments	20,775
Equity in net income of unconsolidated equity investments, including adjustments for basis differences	48,884
Other comprehensive income of unconsolidated equity investments	7,286
Distributions from unconsolidated equity investments	(96,434		)
Reclassification of unrealized gain on non-derivative net investment hedge into earnings	1,851
Sale of unconsolidated equity investment interests	(9,644		)
Reclassification of accumulated foreign currency translation adjustments due to disposal	(1,362		)
Balance at September 30, 2017	$	73,163

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 that targets single-tenant industrial, office and specialty retail assets throughout Europe. Since inception, the equity investors, including the Company, collectively funded $395,213 (€352,500) in equity capital to the Gramercy European Property Fund, of which the Company's cumulative contributions were $55,892 (€50,000).

In July 2017, the Gramercy European Property Fund sold 100.0% of its assets to a third party, including 30 properties that it 100.0% owned and eight additional properties that it had a 94.9% interest in through its investment in the Goodman Europe JV. Concurrently, the Company sold its 5.1% direct interest in the Goodman Europe JV to the same entity that acquired the Gramercy European Property Fund’s assets. The transactions resulted in net distributions to the Company of approximately $101,930 (€89,366), inclusive of a promoted interest distribution of approximately $8,515 (€7,448). As a result of the transactions, during the three months ended September 30, 2017 the Company recorded net gain on disposal of $27,613 and $6,458 related to the Gramercy European Property Fund and the Goodman Europe JV, respectively, including $(634) and $145, respectively, related to the write-off of accumulated other comprehensive income, as well as approximately $8,515 of fee income related to the promoted interest from the European Fund Carry Co. All of these amounts are recorded within equity in net income of unconsolidated equity investments on the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017. Following the transactions, the Gramercy European Property Fund had no properties, the value of the Company’s investment in the Gramercy European Property Fund was $1,109 (€939), which primarily represents the amount of funds being held in escrow pending release in the fourth quarter of 2017, and the Company had no remaining interest in the Goodman Europe JV. Subsequent to the closing of the transactions, European Fund Carry Co. and European Fund Manager commenced liquidation and will be dissolved over the succeeding months. Refer to the Management’s Discussion and Analysis for further information on the transaction.

During the three and nine months ended September 30, 2017, the Company received no distributions and distributions of $689, respectively, from the Goodman Europe JV, and no distributions from the Gramercy European Property Fund, excluding the distributions related to the sale transactions described above.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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 during the nine months ended September 30, 2017, Strategic Office Partners acquired six properties and sold 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 ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018, the Company ~~contributed~~did ~~$13,375~~not ~~and~~make ~~$20,775,~~any ~~respectively,~~contributions to ~~Strategic~~or ~~Office~~receive ~~Partners~~any ~~and as of September 30, 2017, the Company's remaining commitment is $63,198. During the three and nine months ended September 30, 2017, the Company received~~ distributions ~~of $2,710~~ from ~~the~~ Strategic Office Partners.

E-Commerce JV

In November 2017, the Company formed a joint venture with an investment partner, which will acquire, own and manage Class A distribution centers leased to leading e-commerce tenants on long-term leases across the United States, or the E-Commerce JV. The Company has joint control over the E-Commerce JV, which is shared equally with its investment partner. The Company provides asset and property management and accounting services to the E-Commerce JV, for which it earns management fees. The Company has committed capital to fund its initial acquisition of six properties, as well as the acquisition of additional properties in the future, subject to the partners' approval. The Company's pro rata funding commitment for the initial six properties is estimated at approximately $110,000, of which approximately $80,000 will be funded in OP Units issued to the seller of the property and approximately $30,000 will be funded in cash. During the three months ended March 31, 2018, the E-Commerce JV acquired two properties. During the three months ended March 31, 2018, the Company contributed $1,130 in cash and OP Units valued at approximately $25,141 to the E-Commerce JV.

Goodman UK JV

The Goodman UK JV invests in ~~one~~ industrial ~~property~~properties in the United Kingdom. During the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017, the Company received no distributions from the Goodman UK JV.

~~Duke JV~~24

The Duke JV invested in industrial and office properties located throughout the United States. In June 2016, the Company and Duke entered into a Dissolution and Liquidation Agreement, pursuant to which the Duke JV distributed seven of its properties to the Company and one of its properties to Duke on June 30, 2016, then was dissolved in July 2016 following the disposition of its remaining property and final distributions of cash to its members.

CBRE Strategic Partners Asia

CBRE Strategic Partners Asia is a real estate investment fund with investments in China. CBRE Strategic Partners Asia has an eight-year 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 commitment period has ended, however, it may call capital to fund operations, obligations and liabilities. In February 2017, the fund commenced liquidation and will wind up over the succeeding 24 months. During the three and nine months ended September 30, 2017, CBRE Strategic Partners Asia sold one of its properties and related to this sale, the Company received distributions of $812 from CBRE Strategic Partners Asia.

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 and nine months ended September 30, 2017, the Company received no distributions and recognized no revenue from the Philips JV.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~Morristown~~European JVInvestment Funds

InGramercy ~~October~~European ~~2015,~~Property ~~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, or the Morristown JV. Concurrent with the contribution, the Company sold the remaining 50.0% equity interest of the property to 21 South Street.~~III

~~The~~In ~~following~~October ~~are~~2017, the ~~balance~~Company ~~sheets~~formed ~~for~~a new European investment fund with several other equity investment partners, or the Gramercy European Property Fund III, which has total initial capital commitments of $323,359 (€262,622) from all investors, of which the Company’s ~~unconsolidated~~initial ~~equity~~capital ~~investments~~commitment atis ~~September~~$64,257 (€52,187), representing an interest of approximately 19.9%. The Company provides asset and property management and accounting services to the Gramercy European Property Fund III, for which it is entitled to management fees and a promoted interest. During the three months ended March 3031, ~~2017:~~2018, the Gramercy European Property Fund III acquired two properties. During the three months ended March 31, 2018, the Company contributed $2,460 (€1,977) to the Gramercy European Property Fund III.

	Gramercy European Property Fund 1
	Goodman Europe JV		Gramercy European Property Fund		Total		Strategic Office Partners		Goodman UK JV		CBRE Strategic Partners Asia		Other 2
Assets:
Real estate assets, net 3	$	—	$	—	$	—	$	259,949	$	18,678	$	78,202	$	48,784
Other assets	—		12,084		12,084		57,319		20,314		11,214		4,217
Total assets	$	—	$	12,084	$	12,084	$	317,268	$	38,992	$	89,416	$	53,001
Liabilities and members’ equity:
Mortgage notes payable	$	—	$	—	$	—	$	159,140	$	—	$	—	$	38,973
Other liabilities	—		5,126		5,126		13,008		194		14,677		3,407
Total liabilities	—		5,126		5,126		172,148		194		14,677		42,380
Company’s equity	—		825		825		35,760		30,884		2,772		2,922
Other members’ equity	—		6,133		6,133		109,360		7,914		71,967		7,699
Liabilities and members’ equity	$	—	$	12,084	$	12,084	$	317,268	$	38,992	$	89,416	$	53,001

Gramercy European Property Fund

1. In July 2017, the Gramercy European Property Fund sold 100.0% of its assets to a third party, ~~including~~and, concurrently, the Company sold its 945.91% direct interest in the Goodman Europe JV. ~~The~~to ~~remaining~~the ~~net~~same entity that acquired the Gramercy European Property Fund's assets. asIn ofconnection ~~September~~with 30the sale transactions, ~~2017~~the ~~primarily~~Company's ~~represent~~management acontract ~~portion~~arrangement ofwith the ~~sale~~Gramercy ~~proceeds~~European ~~being~~Property ~~held~~Fund inwas ~~escrow~~terminated; however, ~~pursuant~~the Company continues to manage the ~~sale~~assets ~~agreement~~for the new owner through June 2018.

2.The ~~Includes~~following ~~the~~are ~~Philips JV,~~ the ~~Morristown~~balance ~~JV,~~sheets ~~and~~for ~~European Fund Carry Co. The amounts that pertain to European Fund Carry Co. include assets of $1,192, liabilities of $57,~~ the Company’s ~~25.0%~~unconsolidated ~~share of~~ equity ~~totaling~~investments ~~$284~~at March 31, ~~and other members’ equity of $851.~~2018:

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



	Strategic Office Partners		E-Commerce JV		Goodman UK JV		Gramercy European Property Fund III		Other¹
Assets:
Real estate assets, net²	$	264,099	$	149,895	$	19,150	$	62,284	$	108,993
Other assets	80,897		48,894		1,751		5,428		18,421
Total assets	$	344,996	$	198,789	$	20,901	$	67,712	$	127,414
Liabilities and members' equity:
Mortgage notes payable	$	213,699	$	108,473	$	—	$	35,873	$	38,341
Other liabilities	16,698		5,018		732		4,850		19,043
Total liabilities	230,397		113,491		732		40,723		57,384
Company's equity	28,792		43,502		15,980		5,363		5,476
Other members' equity	85,807		41,796		4,189		21,626		64,554
Liabilities and members' equity	$	344,996	$	198,789	$	20,901	$	67,712	$	127,414

311. Includes CBRE Strategic Partners Asia, the Philips JV, and the Morristown JV.


2.	Includes basis adjustments recorded by the Company to adjust the unconsolidated equity investments to fair value.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

The following are the balance sheets for the Company’s unconsolidated equity investments at December 31, ~~2016~~2017:

	Gramercy European Property Fund 1
	Strategic Office Partners		E-Commerce JV		Goodman UK JV		Other1
	Goodman Europe JV		Gramercy European Property Fund 2		Total		Strategic Office Partners		Goodman UK JV		CBRE Strategic Partners Asia		Other 3
Assets:
Assets:
Real estate assets, net2	$	265,014	$	—	$	18,633	$	107,949
Real estate assets, net 4	$	285,087	$	347,069	$	632,156	$	149,484	$	25,128	$	87,852	$	49,580
Other assets	78,243		35,727		1,473		34,022
Other assets	86,273		63,523		149,796		42,323		6,650		12,247		3,020
Total assets	$	343,257	$	35,727	$	20,106	$	141,971
Total assets	$	371,360	$	410,592	$	781,952	$	191,807	$	31,778	$	100,099	$	52,600
Liabilities and members' equity:
Liabilities and members' equity:
Mortgage notes payable	$	213,205	$	—	$	—	$	38,662
Mortgage notes payable	$	174,269	$	215,980	$	390,249	$	121,894	$	—	$	—	$	39,730
Other liabilities	15,002		830		203		19,329
Other liabilities	7,778		19,940		27,718		4,347		934		14,383		3,259
Total liabilities	228,207		830		203		57,991
Total liabilities	182,047		235,920		417,967		126,241		934		14,383		42,989
Company's equity	28,243		17,798		15,768		8,405
Company's equity	12,734		41,116		53,850		15,872		25,309		4,145		2,631
Other members' equity	86,807		17,099		4,135		75,575
Other members' equity	176,579		133,556		310,135		49,694		5,535		81,571		6,980
Liabilities and members' equity	$	343,257	$	35,727	$	20,106	$	141,971
Liabilities and members' equity	$	371,360	$	410,592	$	781,952	$	191,807	$	31,778	$	100,099	$	52,600

1. AsIncludes ofCBRE ~~December~~Strategic ~~31,~~Partners ~~2016~~Asia, the ~~Company~~Philips ~~had a 5.1% direct interest in the Goodman Europe~~ JV ~~as well as an indirect interest in the remaining 94.9% interest that was held through the Company’s 14.2% interest in the Gramercy European Property Fund. In the table above~~, the ~~Company’s~~Morristown ~~equity interest in the Goodman Europe~~ JV ~~includes both its direct 5.1% interest as well as its indirect interest that was 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~~III.

2. ~~Excludes~~Includes ~~the~~basis ~~Gramercy~~adjustments ~~European~~recorded ~~Property~~by ~~Fund’s~~the ~~94.9%~~Company ~~interest~~to inadjust the ~~Goodman~~unconsolidated ~~Europe~~equity JVinvestments to fair value.

3Certain real estate assets in the Company’s unconsolidated equity investments are subject to mortgage notes. ~~Includes~~The following is a summary of the ~~Philips~~secured ~~JV,~~financing arrangements within the ~~Morristown~~Company’s ~~JV,~~unconsolidated ~~and~~equity ~~European~~investments ~~Fund~~as ~~Carry~~of ~~Co.~~March 31, 2018:

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



					Outstanding Balance²
Property	Unconsolidated Equity Investment	Economic Ownership	Interest Rate¹	Maturity Date	March 31, 2018			December 31, 2017
Strategic Office Partners Facility 1³	Strategic Office Partners	25.0%	4.70%	10/7/2019	$	169,380		$	169,380
Strategic Office Partners Facility 2⁴	Strategic Office Partners	25.0%	9.21%	10/8/2020	39,540			39,540
E-Commerce JV Facility⁴	E-Commerce JV	51.0%	3.38%	2/10/2023	109,846			—
Gramercy European Property Fund III Facility⁴	Gramercy European Property Fund III	19.9%	1.57%	3/12/2023	36,084			—
Henderson, NV	Strategic Office Partners	25.0%	4.75%	8/6/2025	8,593			8,636
Somerset, NJ	Philips JV	25.0%	6.90%	9/11/2035	38,341			38,662
Total mortgage notes payable					$	401,784		$	256,218
Net deferred financing costs and net debt discount					(5,398		)	(4,351		)
Total mortgage notes payable, net					$	396,386		$	251,867

321. Represents the current effective rate as of March 31, 2018, including the swapped interest rate for mortgage notes that have interest rate swaps. The current interest rate is not adjusted to include the amortization of fair market value premiums or discounts.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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

					Outstanding Balance 2
Property	Unconsolidated Equity Investment	Economic Ownership	Interest Rate 1	Maturity Date	September 30, 2017			December 31, 2016
Strategic Office Partners portfolio 3	Strategic Office Partners	25.0%	4.23%	10/7/2019	$	162,080		$	125,000
Durrholz, Germany	Gramercy European Property Fund	14.2%	1.52%	3/31/2020	—			12,289
Venray, Germany	Gramercy European Property Fund	14.2%	3.32%	12/2/2020	—			13,015
Lille, France	Gramercy European Property Fund	14.2%	3.13%	12/17/2020	—			27,081
Carlisle, United Kingdom	Gramercy European Property Fund	14.2%	3.32%	2/19/2021	—			10,443
Oud Beijerland, Netherlands	Gramercy European Property Fund	14.2%	2.09%	12/30/2022	—			8,077
Zaandam, Netherlands	Gramercy European Property Fund	14.2%	2.08%	12/30/2022	—			11,647
Kerkrade, Netherlands	Gramercy European Property Fund	14.2%	2.08%	12/30/2022	—			9,622
Friedrichspark, Germany	Gramercy European Property Fund	14.2%	2.08%	12/30/2022	—			8,694
Fredersdorf, Germany	Gramercy European Property Fund	14.2%	2.08%	12/30/2022	—			11,247
Breda, Netherlands	Gramercy European Property Fund	14.2%	1.90%	12/30/2022	—			9,948
Juechen, Germany	Gramercy European Property Fund	14.2%	1.89%	12/30/2022	—			18,852
Piaseczno, Poland	Gramercy European Property Fund	14.2%	1.98%	12/30/2022	—			8,141
Strykow, Poland	Gramercy European Property Fund	14.2%	1.98%	12/30/2022	—			19,167
Uden, Netherlands	Gramercy European Property Fund	14.2%	1.98%	12/30/2022	—			8,913
Rotterdam, Netherlands	Gramercy European Property Fund	14.2%	1.89%	12/30/2022	—			7,633
Frechen, Germany	Gramercy European Property Fund	14.2%	1.49%	12/30/2022	—			6,043
Meerane, Germany	Gramercy European Property Fund	14.2%	1.35%	12/30/2022	—			10,138
Amsterdam, Netherlands	Gramercy European Property Fund	14.2%	1.59%	12/30/2022	—			3,093
Tiel, Netherlands	Gramercy European Property Fund	14.2%	1.59%	12/30/2022	—			9,174
Netherlands portfolio 4	Gramercy European Property Fund	14.2%	3.02%	6/28/2023	—			13,409
Kutno, Poland	Gramercy European Property Fund	14.2%	1.91%	7/21/2023	—			5,890
European Facility 1 5	Goodman Europe JV	18.6%	0.90%	11/16/2023	—			31,551
European Facility 2 5	Goodman Europe JV	18.6%	1.75%	11/16/2023	—			106,917
Worksop, United Kingdom	Gramercy European Property Fund	14.2%	3.94%	10/20/2026	—			10,551
Somerset, NJ	Philips JV	25.0%	6.90%	9/11/2035	38,973			39,730
Total mortgage notes payable					$	201,053		$	546,265
Net deferred financing costs and net debt premium (discount)					(2,940		)	5,608
Total mortgage notes payable, net					$	198,113		$	551,873

1. Represents the current effective rate as of September 30, 2017, including the swapped interest rate for mortgage notes that have interest rate swaps. The current interest rate is not adjusted to include the amortization of fair market value premiums or discounts.


2.	Mortgage notes are presented at 100.0% of the amount held by the unconsolidated equity investment.

3. ~~There~~As ~~are~~of ~~nine~~March 31, 2018, there were ten properties under this mortgage note.

4. ~~There~~As ~~are~~of ~~five~~March 31, 2018, there were two properties under ~~this~~each of these mortgage ~~note~~notes.

5. There were eight properties under this mortgage facility. In addition, this represents the Company’s economic ownership in the Goodman Europe JV, which included both its 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that was held through the Company’s 14.2% interest in the Gramercy European Property Fund.26

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

The following are the statements of operations for the Company’s unconsolidated equity investments for the three months ended ~~September~~March 3031, ~~2017~~2018:

	Gramercy European Property Fund 1
	Strategic Office Partners			E-Commerce JV			Goodman UK JV			Gramercy European Property Fund III			Other1
	Goodman Europe JV			Gramercy European Property Fund			Total			Strategic Office Partners			Goodman UK JV			CBRE Strategic Partners Asia2			Other3
Revenues	$	11,143		$	2,165		$	—		$	482		$	1,994
Revenues	$	303		$	593		$	896		$	8,451		$	25		$	(7,766	)	$	36,224
Operating expenses	4,151			583			260			682			106
Operating expenses	33			(1,288		)	(1,255		)	2,828			82			295			170
Interest expense	3,113			669			—			97			666
Interest expense	29			152			181			2,432			—			—			690
Depreciation and amortization	4,823			862			206			209			333
Depreciation and amortization	120			237			357			3,969			204			—			333
Total expenses	12,087			2,114			466			988			1,105
Total expenses	182			(899		)	(717		)	9,229			286			295			1,193
Net income (loss) from operations	(944		)	51			(466		)	(506		)	889
Net income (loss) from operations	121			1,492			1,613			(778		)	(261		)	(8,061		)	35,031
Gain on derivatives	492			—			—			—			—
Loss on derivatives	—			(22		)	(22		)	(144		)	—			—			—
Loss on extinguishment of debt	—			(1,200		)	—						—
Loss on extinguishment of debt	—			—			—			(937		)	—			—			—
Net income (loss)	$	(452	)	$	(1,149	)	$	(466	)	$	(506	)	$	889
Net gain on disposals	—			230,392			230,392			9,923			7,871			—			—
Company's share in net income (loss)	$	26		$	(520	)	$	(373	)	$	(93	)	$	20
Provision for taxes	(38		)	(68		)	(106		)	—			30			—			—
Adjustments for REIT basis	—			18			(4		)	—			—
Net income (loss)	$	83		$	231,794		$	231,877		$	8,064		$	7,640		$	(8,061	)	$	35,031
Company's equity in net income (loss) within continuing operations	$	26		$	(502	)	$	(377	)	$	(93	)	$	20
Company's share in net income (loss)	$	4		$	32,927		$	32,931		$	2,125		$	6,112		$	(411	)	$	8,777
Adjustments for REIT basis	—			—			—			—			(2,159		)	—			—
Gain (loss) from disposal of Company's interest	6,458			(5,103		)	1,355			—			—			—			—
Company's equity in net income (loss) within continuing operations	$	6,462		$	27,824		$	34,286		$	2,125		$	3,953		$	(411	)	$	8,777

1. ~~Prior~~Includes toCBRE ~~the~~Strategic ~~sale~~Partners ofAsia, the ~~assets~~Philips ~~of the Gramercy European Property Fund and the Company’s sale of its interest in the Goodman Europe~~ JV ~~to a third party in July 2017~~, ~~the~~and ~~Company had a 5.1% direct interest in~~ the ~~Goodman~~Morristown ~~Europe~~ JV ~~as well as an indirect interest in the remaining 94~~.9% interest that was held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the three months ended September 30, 2017, the Company’s equity in net income (loss) of the entities is based on these ownership interest percentages.

2. The ~~Company~~following ~~received~~are ~~a distribution of $812 related to~~ the ~~sale~~statements of aoperations ~~property~~for ~~in September by CBRE Strategic Partners Asia, however, due to~~ the ~~3-month reporting lag, the~~ Company’s ~~financial~~unconsolidated ~~results~~equity ~~reflect~~investments ~~information~~for ~~through~~the ~~June~~three ~~30,~~months ~~2017~~ended March 31, ~~which includes the sold asset.~~2017:

3. Includes the Philips JV, the Morristown JV, and European Fund Carry Co. The amounts that pertain to European Fund Carry Co. include revenues of $35,127, expenses of $62, and the Company’s 25.0% share in net income of $8,766.



	Gramercy European Property Fund ¹
	Goodman Europe JV			Gramercy European Property Fund²		Total			Strategic Office Partners			Goodman UK JV			Other ³
Revenues	$	4,955		$	10,118	$	15,073		$	5,526		$	295		$	(1,331	)
Operating expenses	922			2,951		3,873			1,474			302			576
Interest expense	672			1,474		2,146			1,510			—			641
Depreciation and amortization	2,021			4,473		6,494			2,503			375			333
Total expenses	3,615			8,898		12,513			5,487			677			1,550
Net income (loss) from operations	1,340			1,220		2,560			39			(382		)	(2,881		)
Gain (loss) on derivatives	—			1,221		1,221			(349		)	—			—
Provision for taxes	(17		)	146		129			—			(8		)	—
Net income (loss)	$	1,323		$	2,587	$	3,910		$	(310	)	$	(390	)	$	(2,881	)
Company’s share in net income (loss)	$	67		$	446	$	513		$	(15	)	$	(312	)	$	(155	)
Adjustments for REIT basis	(36		)	—		(36		)	—			(89		)	—
Company’s equity in net income (loss) within continuing operations	$	31		$	446	$	477		$	(15	)	$	(401	)	$	(155	)

341. As of and for the three months ended 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 was held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the three months ended March 31, 2017, the Company’s equity in net income (loss) from the entities is based on these ownership interest percentages during the period.


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 CBRE Strategic Partners Asia, the Philips JV, the Morristown JV, and European Fund Carry Co.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~The~~5. ~~following~~Debt ~~are statements of operations for the Company’s unconsolidated equity investments for the nine months ended September 30, 2017:~~Obligations

	Gramercy European Property Fund 1
	Goodman Europe JV			Gramercy European Property Fund			Total			Strategic Office Partners			Goodman UK JV			CBRE Strategic Partners Asia2			Other3
Revenues	$	10,581		$	22,190		$	32,771		$	21,151		$	613		$	(9,981	)	$	38,432
Operating expenses	1,900			4,465			6,365			6,618			609			996			444
Interest expense	1,315			3,424			4,739			5,997			—			—			2,031
Depreciation and amortization	4,165			10,032			14,197			9,324			840			—			999
Total expenses	7,380			17,921			25,301			21,939			1,449			996			3,474
Net income (loss) from operations	3,201			4,269			7,470			(788		)	(836		)	(10,977		)	34,958
Gain (loss) on derivatives	—			2,248			2,248			(906		)	—			—			—
Loss on extinguishment of debt	—			—			—			(937		)	—			—			—
Net gain on disposals	—			230,392			230,392			9,923			7,871			—			—
Provision for taxes	(70		)	(346		)	(416		)	—			2			—			—
Net income (loss)	$	3,131		$	236,563		$	239,694		$	7,292		$	7,037		$	(10,977	)	$	34,958
Company’s share in net income (loss)	$	159		$	33,812		$	33,971		$	2,074		$	5,629		$	(561	)	$	8,777
Adjustments for REIT basis	(73		)	—			(73		)	—			(2,288		)	—			—
Gain (loss) from disposal of Company's interest	6,458			(5,103		)	1,355			—			—			—			—
Company’s equity in net income (loss) within continuing operations	$	6,544		$	28,709		$	35,253		$	2,074		$	3,341		$	(561	)	$	8,777

1. Prior to the sale of the assets of the Gramercy European Property Fund and the Company’s sale of its interest in the Goodman Europe JV to a third party in July 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 was held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the nine months ended September 30, 2017, the Company’s equity in net income (loss) of the entities is based on these ownership interest percentages.

2. The Company received a distribution of $812 related to the sale of a property in September by CBRE Strategic Partners Asia, however, due to the 3-month reporting lag, the Company’s financial results reflect information through June 30, 2017, which includes the sold asset.

3. Includes the Philips JV, the Morristown JV, and European Fund Carry Co. The amounts that pertain to European Fund Carry Co. include revenues of $35,127, expenses of $77, and the Company’s 25.0% share in net income of $8,763.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

The following are the statements of operations for the Company’s unconsolidated equity investments for the three months ended September 30, 2016:

	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
Revenues	$	6,195	$	7,329		$	13,524		$	1,291		$	557		$	417		$	(11,557	)	$	1,080
Operating expenses	676		1,619			2,295			280			225			191			341			129
Acquisition expenses	—		2,141			2,141			664			—			—			—			—
Interest expense	653		1,138			1,791			410			—			—			—			698
Depreciation and amortization	3,276		2,800			6,076			898			339			—			—			333
Total expenses	4,605		7,698			12,303			2,252			564			191			341			1,160
Net income (loss) from operations	1,590		(369		)	1,221			(961		)	(7		)	226			(11,898		)	(80		)
Loss on derivatives	—		(1,124		)	(1,124		)	(129		)	—			—			—			—
Net gain on disposals	—		—			—			—			—			28,170			—			—
Provision for taxes	—		(284		)	(284		)	—			—			—			—			—
Net income (loss)	$	1,590	$	(1,777	)	$	(187	)	$	(1,090	)	$	(7	)	$	28,396		$	(11,898	)	$	(80	)
Company’s share in net income (loss)	$	322	$	(252	)	$	70		$	(273	)	$	(6	)	$	20,749		$	(605	)	$	(4	)
Adjustments for REIT basis	11		—			11			—			(183		)	(20,897		)	—			—
Company’s equity in net income (loss) within continuing operations	$	333	$	(252	)	$	81		$	(273	)	$	(189	)	$	(148	)	$	(605	)	$	(4	)

1. As of and for the three months ended September 30, 2016, 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 was held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the three 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. Includes the Philips JV, the Morristown JV, and European Fund Carry Co.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

The following are the statements of operations for the Company’s unconsolidated equity investments for the nine months ended September 30, 2016:

	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
Revenues	$	18,389		$	18,270		$	36,659		$	1,291		$	5,477		$	19,812		$	(11,315	)	$	3,245
Operating expenses	2,372			3,188			5,560			280			698			5,309			1,208			342
Acquisition expenses	4,960			4,678			9,638			664			—			—			—			27
Interest expense	2,519			3,032			5,551			410			—			602			—			2,131
Depreciation and amortization	7,907			7,632			15,539			898			1,461			7,154			—			998
Total expenses	17,758			18,530			36,288			2,252			2,159			13,065			1,208			3,498
Net income (loss) from operations	631			(260		)	371			(961		)	3,318			6,747			(12,523		)	(253		)
Loss on derivatives	—			(6,428		)	(6,428		)	(129		)	—			—			—			—
Loss on extinguishment of debt	—			—			—			—			—			(7,962		)	—			—
Net gain on disposals	—			—			—			—			—			66,705			—			—
Provision for taxes	—			(876		)	(876		)	—			—			—			—			—
Net income (loss)	$	631		$	(7,564	)	$	(6,933	)	$	(1,090	)	$	3,318		$	65,490		$	(12,523	)	$	(253	)
Company’s share in net income (loss)	$	(444	)	$	(1,386	)	$	(1,830	)	$	(273	)	$	2,655		$	50,424		$	(641	)	$	—
Adjustments for REIT basis	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	)	$	—

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 had a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that was 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 percentages during the period.

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

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

6. Debt Obligations

Secured Debt

Mortgage Notes

Certain real estate assets are subject to mortgage notes. During the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, the Company ~~assumed~~did ~~$114,649~~not ofassume ~~non-recourse~~or ~~mortgages~~pay inoff ~~connection~~any ~~with~~mortgages ~~five real estate acquisitions~~notes. During the year ended December 31, ~~2016~~2017, the Company assumed $~~244~~181,~~188~~107 of non-recourse mortgages in connection with 27seven real estate acquisitions. During the three ~~and nine~~ months ended ~~September 30,~~March ~~2017~~31, ~~the Company paid off the mortgage notes on two properties. During the nine months ended September 30,~~ 2017, the Company refinanced the debt on two properties encumbered by a mortgage ~~loan for $10~~note,~~456~~ ~~and~~ subsequently transferred the mortgage on these two properties to the buyer of the properties., ~~During the three~~ and, ~~nine~~as ~~months~~a ~~ended September 30~~result, ~~2017, the Company~~ recorded a net ~~gain~~loss on the early extinguishment of ~~mortgage~~ debt of $0208. The Company’s mortgage notes include a series of financial and ~~$60~~other covenants with which the Company must comply in order to borrow under them. The Company was in compliance with the covenants under the mortgage note facilities as of March 31, ~~respectively~~2018.

During the three and nine months ended September 30, 2016, the Company paid off the mortgage notes on 14 and 22 properties, respectively, and during the nine months ended September 30, 2016, the Company transferred one property encumbered by a mortgage note. Additionally, during the three months ended September 30, 2016 the Company defeased a mortgage note 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, the Company recorded net losses on early extinguishment of debt of $13,777 and $20,890, including net gains on extinguishment of debt of $0 and $1,930 within discounted operations, respectively, related to unamortized deferred financing costs and mortgage premiums and discounts that were immediately expensed upon termination as well as early termination fees and other costs incurred related to the extinguishments. The Company’s mortgage notes include a series of financial and other covenants with which the Company must comply in order to borrow under them. The Company was in compliance with the covenants under the mortgage note facilities as of September 30, 2017. 28

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

The following is a summary of the Company’s secured financing arrangements as of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017:

Property	Interest Rate 1	Maturity Date	Outstanding Balance
			September 30, 2017		December 31, 2016
			March 31, 2018		December 31, 2017
Dallas, TX 2	3.05%	3/1/2018	$	9,372	$	9,540
Greenwood, IN	3.59%	6/15/2018	$	7,211	$	7,257
Jacksonville, FL 2	3.05%	3/1/2018	6,732		6,852
Greenfield, IN	3.63%	6/15/2018	5,828		5,865
Cincinnati, KY 2	3.29%	3/1/2018	6,512		6,628
Logistics Portfolio - Pool 32	3.96%	8/1/2018	43,302		43,302
Minneapolis, MN 2	3.05%	3/1/2018	5,896		6,001
Philadelphia, PA	4.99%	1/1/2019	11,842		11,943
Phoenix, AZ 2	3.05%	3/1/2018	4,048		4,120
Bridgeview, IL	3.90%	5/1/2019	5,792		5,838
Ames, IA	5.05%	5/1/2018	16,069		16,436
Spartanburg, SC	3.20%	6/1/2019	530		632
Columbus, OH	4.01%	5/31/2018	19,006		19,708
Charleston, SC	3.11%	8/1/2019	320		457
Greenwood, IN	3.59%	6/15/2018	7,302		7,436
Lawrence, IN	5.02%	1/1/2020	19,896		20,061
Greenfield, IN	3.63%	6/15/2018	5,902		6,010
Charlotte, NC	3.28%	1/1/2020	1,363		1,538
Logistics Portfolio - Pool 3 3	3.96%	8/1/2018	43,300		43,300
Hawthorne, CA	3.52%	8/1/2020	17,042		17,207
Philadelphia, PA	4.99%	1/1/2019	12,041		12,328
Charleston, SC	3.32%	10/1/2020	696		758
Columbus, OH	3.94%	1/31/2019	5,768		5,908
Charleston, SC	2.97%	10/1/2020	684		746
Bridgeview, IL	3.90%	5/1/2019	5,883		6,014
Charleston, SC	3.37%	10/1/2020	684		746
Spartanburg, SC	3.20%	6/1/2019	732		1,025
Charlotte, NC	3.38%	10/1/2020	594		647
Charleston, SC	3.11%	8/1/2019	591		986
Des Plaines, IL	5.54%	10/31/2020	2,365		2,385
Lawrence, IN	5.02%	1/1/2020	20,224		20,703
Waco, TX	4.75%	12/19/2020	14,815		14,890
Charlotte, NC	3.28%	1/1/2020	1,711		2,217
Deerfield, IL	3.71%	1/1/2021	10,355		10,447
Hawthorne, CA	3.52%	8/1/2020	17,327		17,638
Winston-Salem, NC	3.41%	6/1/2021	3,135		3,354
Charleston, SC	3.32%	10/1/2020	820		1,001
Winston-Salem, NC	3.42%	7/1/2021	1,043		1,114
Charleston, SC	2.97%	10/1/2020	806		984
Logistics Portfolio - Pool 12	4.27%	1/1/2022	37,856		38,107
Charleston, SC	3.37%	10/1/2020	806		984
CCC Portfolio2	4.24%	10/6/2022	22,691		22,814
Charlotte, NC	3.38%	10/1/2020	700		853
Logistics Portfolio - Pool 42	4.36%	12/5/2022	79,500		79,500
Des Plaines, IL	5.54%	10/31/2020	2,405		2,463
Romeoville, IL	3.80%	4/6/2023	24,835		24,951
Waco, TX	4.75%	12/19/2020	14,964		15,187
Romeoville, IL3	9.37%	4/6/2023	6,613		6,623
Deerfield, IL	3.71%	1/1/2021	10,538		10,804
KIK USA Portfolio2	4.31%	7/6/2023	7,077		7,154
Winston-Salem, NC	3.41%	6/1/2021	3,569		4,199
Yuma, AZ	5.27%	12/6/2023	11,804		11,858
Winston-Salem, NC	3.42%	7/1/2021	1,184		1,388
Allentown, PA	5.16%	1/6/2024	22,586		22,690
Logistics Portfolio - Pool 1 3	4.27%	1/1/2022	38,355		39,002
Spartanburg, SC	3.72%	2/1/2024	5,447		5,635
CCC Portfolio 3	4.24%	10/6/2022	22,933		23,280
Natick, MA	5.21%	3/1/2024	31,121		31,224
Logistics Portfolio - Pool 4 3	4.36%	12/5/2022	79,500		79,500
Natick, MA3	10.38%	3/1/2024	3,458		3,469
KIK USA Portfolio 3	4.31%	7/6/2023	7,230		7,450
Maple Grove, MN	3.88%	5/6/2024	16,291		16,380
Yuma, AZ	5.27%	12/6/2023	11,909		12,058
Curtis Bay, MD	4.31%	7/1/2024	13,500		13,500
Allentown, PA	5.16%	1/6/2024	22,790		23,078
Rialto, CA	3.91%	8/1/2024	54,543		54,741
Spartanburg, SC	3.72%	2/1/2024	5,821		6,360
Houston, TX	3.68%	9/1/2024	26,000		26,000
Maple Grove, MN	3.88%	5/6/2024	16,468		—
Durham, NC	4.02%	9/6/2024	3,614		3,631
Curtis Bay, MD	4.31%	7/1/2024	13,500		—
Charleston, SC	3.80%	2/1/2025	5,831		6,001
Rialto, CA	3.91%	8/1/2024	54,940		—
Hackettstown, NJ	5.49%	3/6/2026	9,420		9,455
Durham, NC	4.02%	9/6/2024	3,648		—
Hutchins, TX	5.41%	6/1/2029	21,269		21,578
Houston, TX	3.68%	9/1/2024	26,000		—
Total mortgage notes payable			$	550,953	$	554,498
Charleston, SC	3.80%	2/1/2025	6,169		6,658
Net deferred financing costs and net debt premium			8,520		9,023
Hackettstown, NJ	5.49%	3/6/2026	9,488		9,550
Total mortgage notes payable, net			$	559,473	$	563,521
Hutchins, TX	5.41%	6/1/2029	21,883		22,764
Logistics Portfolio - Pool 2 3	4.48%	1/1/2041	35,711		36,279
Buford, GA	4.67%	7/1/2017	—		15,512
Woodcliff Lake, NJ	3.04%	9/15/2017	—		35,366
KIK Canada Portfolio 3	3.57%	5/5/2019	—		7,914
Total mortgage notes payable			$	600,553	$	555,484
Net deferred financing costs and net debt premium			6,345		3,158
Total mortgage notes payable, net			$	606,898	$	558,642

1. Represents the interest rate as of ~~September~~March 3031, ~~2017~~2018 ~~or date of extinguishment if the mortgage note was extinguished during the period,~~ that was recorded for financial reporting purposes, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.

2. ~~These~~As of March 31, 2018, there were two properties under the Logistics Portfolio - Pool 3 mortgage, three properties under the Logistics Portfolio - Pool 1 mortgage, five properties under the CCC Portfolio mortgage, ~~notes~~six ~~are~~properties ~~cross~~under the Logistics Portfolio -~~collateralized~~ Pool 4 mortgage, and three properties under the KIK USA Portfolio mortgage.

3. ~~There~~Mortgage ~~are~~notes ~~two~~represent ~~properties~~mezzanine ~~under~~financing ~~the~~at ~~Logistics Portfolio - Pool 3 mortgage, three properties under~~ the ~~Logistics Portfolio - Pool 1 mortgage, five~~ properties under the CCC Portfolio mortgage, six properties under the Logistics Portfolio - Pool 4 mortgage, three properties under the KIK USA Portfolio mortgage, five properties under the Logistics Portfolio - Pool 2 mortgage, and two properties under the KIK Canada Portfolio mortgage.

3929

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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 $1,050,000 term loan facility with JPMorgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated ~~and terminated Legacy 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 periods upon the payment of applicable fees and satisfaction of certain customary conditions. The term loan facility, or 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. In December 2015, the Company also entered into a new $175,000 7-year unsecured term loan with Capital One, N.A, or the 7-Year Term Loan, which matures in January 2023. In October 2017, the Company modified the 7-Year Term Loan by increasing the loan amount to $400,000 and reducing the interest rate to the terms described below.

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~~88% 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~~13% to 0.30% facility fee, depending on ~~the~~its ~~Company's~~ credit ratings, on the total commitments under the 2015 Revolving Credit Facility. Outstanding borrowings under the 2015 Term Loan and 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 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 for the 2015 Revolving Credit Facility and the 7-Year Term Loan is the greater of (x) the prime rate announced by JPMorgan Chase Bank, N.A. or Capital One, respectively, (y) 0.50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.

InThe ~~December 2015, the~~ Company’s ~~also~~unsecured ~~entered~~borrowing ~~into~~facilities include a ~~$175,000~~series ~~seven-year~~of ~~unsecured~~financial ~~term~~and ~~loan~~other covenants with ~~Capital~~which ~~One, N.A., or~~ the ~~7-Year~~Company ~~Term~~must ~~Loan,~~comply ~~which matures~~ in ~~January~~order ~~2023.~~to ~~Outstanding~~borrow ~~borrowings~~ under the ~~7-Year~~facilities. ~~Term~~The ~~Loan~~Company ~~incur~~was ~~interest~~in atcompliance awith ~~floating~~the ~~rate~~covenants ~~based~~under ~~upon,~~the atfacilities ~~the~~as ~~Company’s~~of ~~option~~March 31, ~~either (i) adjusted LIBOR plus an applicable margin ranging from 1~~2018.~~30%~~ Refer to ~~2.10%, depending on~~ the ~~Company’s~~table ~~credit~~at ~~ratings, or (iii)~~ the ~~alternate~~end ~~base~~of ~~rate~~this ~~plus~~Note an5 ~~applicable~~for ~~margin~~specific ~~ranging~~terms ~~from~~and ~~0.30% to 1.10%, depending on~~ the Company’s ~~credit~~outstanding ~~ratings.~~borrowings ~~The~~under ~~alternate base rate is~~ the ~~greatest of (x) the prime rate announced by Capital One, (y) 0~~facilities.~~50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.~~

The 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, 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 2015 and 2016, the Company issued and sold an aggregate $500,000 principal amount of senior unsecured notes payable 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 table later in Note 65 for specific terms of the Company's Senior Unsecured Notes.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

Exchangeable Senior Notes

OnIn ~~March~~September 182017, ~~2014,~~ the Company's ~~issued~~ $115,000 of 3.75% Exchangeable Senior Notes. ~~The Exchangeable Senior Notes~~ were senior unsecured obligations of a subsidiary of the Operating Partnership and were guaranteed by the Company on a senior unsecured basis. During June 2017, the Exchangeable Senior Notes became redeemable at the option of the Company. In August 2017, the Company announced its intention to call for redemption the Exchangeable Senior Notes. As a result of the Company’s call for redemption, the holders exchanged ~~100.0% of the Exchangeable Senior Notes~~ for 5,258,420 of the Company’'s common shares ~~in September 2017~~. ~~As of September 30, 2017, there were no Exchangeable Senior Notes outstanding.~~

The fair value of the Exchangeable Senior Notes was determined at issuance to be $106,689 and the discount on the Exchangeable Senior Notes was being amortized to interest expense over their expected life. Upon exchange in September 2017, the Company remeasured the Exchangeable Senior Notes to fair value of $117,450 and then recognized a loss on extinguishment of debt of $6,751 to write them off during the three and nine months ended September 30, 2017, representing the change in fair value and the amount of the unamortized discount and deferred financing costs at the time of exchange. Additionally, during the three and nine months ended September 30, 2017, the Company recorded $42,065 to additional paid in capital in shareholders’ equity related to the extinguishment, representing the difference between the fair value of the debt and equity components of the Exchangeable Senior Notes.

As of September 30, 2017, there was no remaining value recorded for the Exchangeable Senior Notes on the Company’s Condensed Consolidated Balance Sheets. As of December 31, 2016, the Exchangeable Senior Notes were recorded as a liability at carrying value $108,832, net of unamortized discount and deferred financing costs of $6,168 and the fair value of the Exchangeable Senior Notes’ embedded exchange option of $11,726 was recorded in additional paid-in-capital.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

The terms of the Company’s unsecured debt obligations and outstanding balances as of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 are set forth in the table below:

	Stated Interest Rate		Effective Interest Rate 1		Maturity Date	Outstanding Balance
						September 30, 2017			December 31, 2016
						March 31, 2018			December 31, 2017
2015 Revolving Credit Facility - U.S. dollar tranche	2.20	%	2.20	%	1/8/2020	$	595,000		$	—
2015 Revolving Credit Facility - USD tranche	2.89	%	2.89	%	1/8/2020	$	275,000		$	345,000
2015 Revolving Credit Facility - Multicurrency tranche	1.2032	%	1.2032	%	1/8/2020	$17,543	~~20,097~~		$12,162	~~65,837~~
3-Year Term Loan	2.3591	%	2.33	%	1/8/2019	300,000			300,000
5-Year Term Loan	2.3591	%	2.70	%	1/8/2021	750,000			750,000
7-Year Term Loan	2.76	%	3.3400	%	1/9/2023	~~175~~400,000			~~175~~400,000
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 2	3.75	%	6.36	%	9/15/2017	—			115,000
Total unsecured debt						2,242,543			2,307,162
Total unsecured debt						2,340,097			1,905,837
Net deferred financing costs and net debt discount						(4,872		)	(5,063		)
Net deferred financing costs and net debt discount						(3,316		)	(9,704		)
Total unsecured debt, net						$	2,237,671		$	2,302,099
Total unsecured debt, net						$	2,336,781		$	1,896,133

1. Represents the rate at which interest expense is recorded for financial reporting purposes as of ~~September~~March 3031, ~~2017~~2018, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.

2.Combined ~~During~~aggregate ~~September~~principal ~~2017,~~maturities ~~the~~of ~~Exchangeable Senior Notes were exchanged for~~ the Company’s ~~common~~unsecured ~~shares.~~debt ~~Thus~~obligations and non-recourse mortgages, ~~they~~in ~~have~~addition noto ~~outstanding~~associated ~~balance~~interest payments, as of ~~September 30~~March 31, ~~2017.~~2018 are as follows:

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, 2017 are as follows:



	April 1 to December 31, 2018		2019		2020		2021		2022		Thereafter		Above market interest		Total
2015 Revolving Credit Facility	$	—	$	—	$	292,543	$	—	$	—	$	—	$	—	$	292,543
Term Loans	—		300,000		—		750,000		—		400,000		—		1,450,000
Mortgage Notes Payable¹	66,599		30,450		62,834		19,256		141,929		229,885		—		550,953
Senior Unsecured Notes	—		—		—		—		150,000		350,000		—		500,000
Interest Payments ²	82,144		97,025		87,135		57,199		53,364		64,772		3,648		445,287
Total	$	148,743	$	427,475	$	442,512	$	826,455	$	345,293	$	1,044,657	$	3,648	$	3,238,783

	October 1 to December 31, 2017		2018		2019		2020		2021		Thereafter		Above market interest		Total
2015 Revolving Credit Facility	$	—	$	—	$	—	$	615,097	$	—	$	—	$	—	$	615,097
Term Loans	—		—		300,000		—		750,000		175,000		—		1,225,000
Mortgage Notes Payable 1	4,073		171,988		35,003		61,803		18,153		309,533		—		600,553
Senior Unsecured Notes	—		—		—		—		—		500,000		—		500,000
Interest Payments 2	28,780		94,453		86,650		69,801		44,158		43,378		3,029		370,249
Total	$	32,853	$	266,441	$	421,653	$	746,701	$	812,311	$	1,027,911	$	3,029	$	3,310,899


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

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


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

426. Transactions with Trustee Related Entities and Related Parties

The Company’s CEO, Gordon F. DuGan, was on the board of directors of the Gramercy European Property Fund prior to its sale in July 2017 and committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. The two Managing Directors of Gramercy Europe Limited collectively committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund prior to the sale of its assets in July 2017.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

7. ~~Leasing~~Fair ~~Agreements~~Value Measurements

~~The~~ASC ~~Company’s~~820-10, ~~properties~~“Fair ~~are~~Value ~~leased~~Measurements toand ~~tenants~~Disclosures,” ~~under~~provides ~~operating~~guidance ~~leases~~on ~~with~~the ~~expiration~~fair ~~dates~~value ~~extending~~measurement ~~through~~of ~~the~~a ~~year~~financial ~~2042~~asset or liability. ~~These~~Inputs ~~leases~~used ~~generally~~to ~~contain~~develop ~~rent~~fair ~~increases~~value measurements are classified into one of three categories: Level I, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level II, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and ~~renewal~~Level ~~options.~~III, defined as unobservable inputs for which there is little or no market or pricing data, thus requiring management to use its judgment and develop its own assumptions.

~~Future~~The ~~minimum~~following ~~rental~~table ~~revenues~~presents ~~under~~the ~~non-cancelable~~carrying ~~leases~~value ~~excluding~~in ~~reimbursements~~the ~~for~~financial ~~operating~~statements ~~expenses~~and asapproximate fair value of ~~September~~assets and liabilities measured on a recurring and non-recurring basis at March 3031, ~~2017~~2018 ~~are~~and asDecember 31, ~~follows~~2017:

	October 1 to December 31, 2017		2018		2019		2020		2021		Thereafter		Total minimum lease rental income
	March 31, 2018				December 31, 2017
Operating Leases	$	112,429	$	450,096	$	424,686	$	396,516	$	362,870	$	1,973,979	$	3,720,576
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Interest rate swaps	$	41,888	$	41,888	$	19,668	$	19,668
Retained CDO Bonds	5,800		5,800		5,527		5,527
Real estate investments1	—		—		87,996		87,996
Investment in CBRE Strategic Partners Asia	2,869		2,869		2,820		2,820
Loan investments2	22,437		20,990		22,154		21,362
Financial liabilities:
Interest rate swaps	$	13	$	13	$	173	$	173
Long-term debt:
2015 Revolving Credit Facility2	292,543		292,492		357,162		357,369
3-Year Term Loan2	300,000		300,090		300,000		300,091
5-Year Term Loan2	750,000		750,653		750,000		750,678
7-Year Term Loan2	398,241		400,020		398,152		400,010
Mortgage notes payable2	559,473		565,329		563,521		573,826
Senior Unsecured Notes2	496,887		502,349		496,785		513,229

81. ~~Transactions~~Amount ~~with~~represents ~~Trustee~~seven ~~Related~~real ~~Entities~~estate investments that were impaired by the Company and ~~Related~~held ~~Parties~~as of December 31, 2017.

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 had a 14.2% ownership interest, for gross proceeds of $2,662 (€2,563). In July 2017, the Gramercy European Property Fund sold 100.0% of its assets to an unrelated third party. Refer to Note 5 for more information on the sale transaction.

On June 30, 2016, the Company sold 74.9% of its outstanding 80.0% 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 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. Following the sale transaction, the Company had a 5.1% continuing direct interest in the Goodman Europe JV, which has since been sold. The transaction was entered into in order to achieve efficiencies from the combination of the two European platforms. The Company made cumulative contributions of $55,892 (€50,000) to the Gramercy European Property Fund from inception through July 2017, when the Gramercy European Property Fund’s assets were sold. Refer to Note 5 for more information on the sale.

The Company’s CEO, Gordon F. DuGan, was on the board of directors of the Gramercy European Property Fund prior to its sale in July 2017 and 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 collectively committed and fully funded approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund prior to the sale of its assets in July 2017.

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 under the lease for the nine months ended September 30, 2016. See Note 5 for more information on the Company’s transactions with the Duke JV.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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.

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.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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

	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Interest rate swaps	$	8,243	$	8,243	$	3,769	$	3,769
Retained CDO Bonds	6,167		6,167		11,906		11,906
Investment in CBRE Strategic Partners Asia	2,772		2,772		4,145		4,145
Real estate investments 1	14,561		14,561		2,413		2,413
Financial liabilities:
Interest rate swaps	$	391	$	391	$	700	$	700
Long-term debt
2015 Revolving Credit Facility 2	615,097		612,120		65,837		65,897
3-Year Term Loan 2	300,000		299,180		300,000		300,213
5-Year Term Loan 2	750,000		744,851		750,000		750,959
7-Year Term Loan 2	175,000		176,516		175,000		172,850
Mortgage notes payable 2	606,898		618,097		558,642		567,705
Senior Unsecured Notes 2	496,684		508,547		496,464		498,650
Exchangeable Senior Notes 2	—		—		108,832		115,625

1. Amounts as of September 30, 2017 and December 31, 2016 represent four and one real estate investments, respectively, that were impaired during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, and were owned as of the end of the respective reporting periods.


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

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

~~Retained~~Loan ~~CDO Bonds~~investments: ~~Non-investment~~Loan ~~grade,~~investments ~~subordinate CDO bonds, preferred shares and ordinary shares~~ are presented in other assets on the ~~Condensed~~ Consolidated Financial Statements at amortized cost and not fair value,. ~~which~~The isfair ~~determined~~value onof aeach ~~quarterly~~investment ~~basis~~is ~~using~~estimated anby ~~internally~~a ~~developed~~ discounted cash flow model, using discount rates that best reflect current market rates for financings with similar characteristics and credit quality.

~~CBRE~~Mortgage ~~Strategic~~notes Partners Asia: 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 approachpayable, ~~the~~unsecured ~~direct~~term ~~market comparison approach~~loans, ~~the~~unsecured ~~replacement~~revolving ~~cost~~credit ~~approach~~facilities orand ~~third-party~~senior ~~appraisals~~unsecured tonotes: ~~the~~These ~~underlying~~instruments ~~assets~~are ~~held~~presented in the ~~unconsolidated~~Consolidated ~~entity~~Financial inStatements ~~determining~~at ~~the~~amortized ~~net~~cost ~~asset~~and ~~value~~not ~~attributable~~at tofair ~~the Company’s ownership interest therein. Refer to Note 5 for more information on this investment.~~

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~Derivative~~value. ~~instruments:~~ The ~~Company’s derivative instruments, which are comprised of interest rate swap agreements, are carried at~~ fair value inof ~~the~~each ~~Condensed~~instrument ~~Consolidated~~is ~~Financial~~estimated ~~Statements~~by ~~based~~a ~~upon~~discounted ~~third-party~~cash ~~valuations.~~flows ~~Derivative fair values are presented within other assets or other liabilities~~model, ~~depending~~using ondiscount ~~the~~rates ~~balance at the end of the period. Changes in fair value of derivative instruments~~ that ~~represent~~best ~~realized~~reflect ~~gains~~current ~~(losses)~~market ~~are~~rates ~~recorded~~for ~~within~~financings ~~interest~~with ~~expense~~similar oncharacteristics ~~the~~and ~~Condensed~~credit ~~Consolidated Statements of Operations~~quality. ~~Refer to Note 10 for more information on the derivative instruments.~~

~~Mortgage~~Retained ~~notes~~CDO ~~payable~~Bonds, ~~unsecured~~investment ~~term loans, unsecured revolving credit facilities and senior unsecured notes: These instruments are presented~~ in ~~the~~CBRE ~~Condensed~~Strategic ~~Consolidated~~Partners ~~Financial~~Asia, ~~Statements~~real atestate ~~amortized~~investments, ~~cost~~ and ~~not~~interest atrate ~~fair~~swaps: ~~value.~~Refer ~~The~~to ~~fair~~section ~~value~~below, “Valuation of ~~each~~Level ~~instrument~~III ~~is estimated by a discounted cash flows model~~Instruments,” ~~using~~for ~~discount~~valuation ~~rates~~methods ~~that~~and ~~best~~assumptions ~~reflect~~used ~~current market rates~~ for ~~financings~~these ~~with~~Level ~~similar~~III ~~characteristics~~assets and ~~credit~~liabilities ~~quality.~~measured ~~Mortgage~~at ~~premiums~~fair ~~and~~value ~~discounts~~in ~~are amortized to interest expense on~~ the ~~Condensed~~ Consolidated ~~Statements~~Financial ~~of Operations using the effective interest method over the terms of the related notes~~Statements. ~~Refer to Note 6 for more information on these instruments.~~

~~Exchangeable~~The ~~Senior~~following ~~Notes:~~discussion ~~The~~of ~~Exchangeable~~fair ~~Senior~~value ~~Notes~~was ~~are~~determined ~~presented~~by atthe ~~amortized~~Company ~~cost~~using onavailable ~~the~~market ~~Condensed~~information ~~Consolidated~~and ~~Financial~~appropriate ~~Statements~~valuation methodologies. ~~The~~Considerable judgment is necessary to interpret market data and develop estimated fair value. isAccordingly, ~~determined~~fair ~~based~~values ~~upon~~are anot ~~discounted~~necessarily ~~cash-flow~~indicative ~~methodology~~of ~~using~~the ~~discount~~amounts ~~rates~~the ~~that~~Company ~~best~~could ~~reflect~~realize ~~current~~on ~~market~~disposition ~~rates~~of ~~for~~the ~~instruments~~assets ~~with~~or ~~similar~~liabilities. ~~with~~The ~~characteristics~~use ~~and~~of ~~credit~~different ~~quality.~~market ~~Refer~~assumptions toand/or ~~Note~~estimation 6methodologies ~~for~~may ~~more~~have ~~information~~a material effect on ~~these~~the ~~instruments.~~estimated fair value amounts.

~~Disclosure~~Assets ~~about~~and ~~fair~~liabilities ~~value~~measured ~~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,~~on ~~such~~a ~~amounts~~recurring ~~have not been comprehensively revalued for the purpose of these financial statements since September 30, 2017~~ and ~~December 31,~~non-recurring ~~2016,~~basis ~~and~~are ~~current~~categorized ~~estimates~~as ~~of fair value may differ significantly from the amounts presented herein.~~follows:

The following discussion of fair value 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.



At March 31, 2018	Total			Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds	$	5,800		$	—	$	—	$	5,800
Investment in CBRE Strategic Partners Asia	2,869			—		—		2,869
Interest rate swaps	41,888			—		—		41,888
	$	50,557		$	—	$	—	$	50,557
Financial Liabilities:
Interest rate swaps	$	(13	)	$	—	$	—	$	(13	)
	$	(13	)	$	—	$	—	$	(13	)

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 December 31, 2017	Total			Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds	$	5,527		$	—	$	—	$	5,527
Real estate investments	87,996			—		—		87,996
Investment in CBRE Strategic Partners Asia	2,820			—		—		2,820
Interest rate swaps	19,668			—		—		19,668
	$	116,011		$	—	$	—	$	116,011
Financial Liabilities:
Interest rate swaps	$	(173	)	$	—	$	—	$	(173	)
	$	(173	)	$	—	$	—	$	(173	)

At September 30, 2017	Total			Level I		Level II		Level III
Financial Assets:
Retained CDO Bonds	$	6,167		$	—	$	—	$	6,167
Real estate investments	14,561			—		—		14,561
Investment in CBRE Strategic Partners Asia	2,772			—		—		2,772
Interest rate swaps	8,243			—		—		8,243
	$	31,743		$	—	$	—	$	31,743
Financial Liabilities:
Interest rate swaps	$	(391	)	$	—	$	—	$	(391	)
	$	(391	)	$	—	$	—	$	(391	)

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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

Retained CDO Bonds: Retained CDO Bonds are valued on a recurring basis using an internally developed discounted cash flow ~~model.~~models, ~~Management~~which 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 primarily consists of commercial mortgage backed securities~~. The ~~resolution of the underlying collateral requires further management assumptions regarding timing of workouts and recoveries, loan loss severities and other factors. The~~ models are most sensitive to the unobservable inputs such as the amount of the recoveries of the underlying securities. 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. 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 an expected future cash flows, and significant increases (decreases) in these inputs would result in a significantly lower (higher) fair value measurement. The fund’s term ended in January 2017 and commencement of the fund's liquidation was filed in early February 2017. The fund will wind up over the 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 as of the 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 using third-party valuation support, including purchase-sale contracts and other available market 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 33

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~would~~The ~~result~~valuations inare amost ~~significantly~~sensitive ~~lower~~to ~~(higher) fair value measurement. As~~ the ~~inputs are~~ unobservable, ~~the Company determined the~~ inputs ~~used~~of todiscount ~~value~~rates, ~~this~~as ~~liability~~well ~~falls~~as ~~within~~capitalization ~~Level~~rates ~~III~~an ~~for~~expected ~~fair~~future ~~value~~cash ~~reporting~~flows.

~~Derivative~~Real ~~instruments~~estate investments: ~~Interest~~Real ~~rate~~estate ~~swaps~~investments ~~are~~impaired ~~valued~~during ~~with~~a ~~the~~period ~~assistance~~are ofreported aat ~~third-party~~estimated ~~derivative~~fair ~~specialist~~value ~~using~~and areal ~~discounted~~estate ~~cash~~investments ~~flow~~impaired ~~model,~~during ~~which requires~~ a ~~combination~~period ofthat ~~observable~~are ~~market-based~~classified ~~inputs, such~~ as ~~interest~~held ~~rate~~for ~~curves,~~sale ~~and unobservable inputs which require significant judgment such~~ as of the ~~credit~~end ~~valuation~~of ~~adjustments due to~~ the ~~risk~~period ofare ~~nonperformance~~reported byat ~~both~~estimated ~~the~~fair ~~Company~~value ~~and~~less ~~its~~costs ~~counterparties~~to sell. The ~~most~~fair ~~significant~~value ~~unobservable~~of ~~input~~real inestate ~~the~~investments ~~fair~~and ~~valuation~~their ofrelated ~~derivative~~lease ~~instruments~~intangibles is ~~the~~determined ~~credit~~using third-party valuation ~~adjustment~~support, asincluding itpurchase-sale ~~requires~~contracts ~~significant~~and ~~management~~other ~~judgment~~available ~~regarding~~market ~~changes~~information. inKey ~~the~~assumptions ~~credit~~in ~~risk of~~ the ~~Company or its counterparties~~valuations, ~~however~~to which the ~~primary~~fair ~~driver~~value ofdeterminations ~~the~~are ~~fair~~most ~~value~~sensitive, ofinclude ~~the~~discount ~~interest~~and ~~rate~~capitalization ~~swaps~~rates isas ~~the~~well ~~forward~~as ~~interest~~expected ~~rate~~future ~~curve~~cash flows.

~~Total~~Interest ~~unrealized~~rate ~~gains~~swaps: ~~from~~The ~~derivatives~~Company's ~~for~~derivative ~~the~~instruments ~~three~~as ~~and~~of ~~nine~~March 31, ~~months~~2018 ~~ended~~and ~~September 30~~December 31, 2017 ~~were~~consist $2of interest rate swaps,~~959~~ ~~and~~which $4are valued with the assistance of a third-party derivative specialist using a discounted cash flow model,~~645~~ that requires a combination of observable market-based inputs, ~~respectively~~such as interest rate curves, inand ~~accumulated~~unobservable ~~other~~inputs ~~comprehensive~~which ~~income.~~require ~~Total~~significant ~~unrealized~~judgment ~~gains~~such ~~(losses)~~as ~~from~~the ~~derivatives~~credit ~~for~~valuation adjustments due to the ~~three~~risk of nonperformance by both the Company and ~~nine~~its ~~months~~counterparties. ~~ended~~The ~~September 30,~~most ~~2016~~significant ~~were~~unobservable ~~$7,653~~input ~~and~~in ~~$(25,996),~~the ~~respectively,~~fair valuation of interest rate swaps is the credit valuation adjustment as it requires significant management judgment regarding changes in ~~accumulated~~the ~~other~~credit ~~comprehensive~~risk ~~income~~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 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~~March 3031, ~~2017~~2018 are as follows:

Financial Asset (Liability)	Fair Value		Valuation Technique	Unobservable Inputs	Range
Non-investment grade, subordinate CDO bonds	$	65,~~167~~800	Discounted cash flows	Discount rate	1619.50%
Interest rate swaps 1	7,852		Hypothetical derivative method	Credit borrowing spread	135 to 205 basis points
Investment in CBRE Strategic Partners Asia	2,869		Discounted cash flows	Discount rate	20.0%
Investment in CBRE Strategic Partners Asia	2,772		Discounted cash flows	Discount rate	20.0%
Interest rate swaps1	41,875		Hypothetical derivative method	Credit borrowing spread	110 to 190 basis points

1. Fair value includes interest rate swap liabilities with an aggregate value of $(~~391~~13).

4834

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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 ~~September~~March 3031, ~~2017~~2018:

	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
Balance at January 1, 2018	$	5,527		$	2,820		$	19,495	$	27,842
Amortization of discounts or premiums	~~1,353~~321			—			—330		~~1,353~~651
Adjustments to fair value:
Ineffective portion of change in derivative instruments	—			—			138		138
Unrealized gain on derivatives	—			—			22,050		22,050
Unrealized gain on derivatives	—			—			4,645		4,645
Unrealized loss in other comprehensive income from fair value adjustment	(48		)	—			—		(48		)
Unrealized loss in other comprehensive income from fair value adjustment	(2,202		)	—			—		(2,202		)
Total gain on fair value adjustments	—			49			—		49
Other-than-temporary impairments	(4,890		)	—			—		(4,890		)
Balance at March 31, 2018	$	5,800		$	2,869		$	41,875	$	50,544
Total loss on fair value adjustments	—			(561		)	—		(561		)
Distributions from financial assets	—			(812		)	—		(812		)
Balance at September 30, 2017	$	6,167		$	2,772		$	7,852	$	16,791

Fair Value on a Non-Recurring Basis

The Company ~~measured~~measures its real estate investments impaired during ~~the~~a period, including both assets classified as held for sale and assets held for investment, on a non-recurring basis ~~as of September 30~~, ~~2017~~ and ~~December 31,~~records ~~2016. The Company recorded~~ impairment on these assets as a result of a change in intent to hold the real estate investments. Real estate investments impaired during ~~the~~a period are reported at estimated fair value and real estate investments impaired during ~~the~~a period that are classified as held for sale as of the end of the period are reported at estimated fair value less costs to sell. ~~The~~There ~~Company~~were ~~measured~~no ~~four~~ assets measured on a non-recurring basis as of ~~September~~March 3031, ~~2017,~~2018. ofThere ~~which two~~ were ~~classified~~seven asassets ~~held for investment with a total value of $10,400 and two were classified as held for sale with a value of $4,161 as of September 30, 2017. The Company~~ measured ~~one asset~~ on a non-recurring basis as of December 31, ~~2016~~2017, which ~~was~~were all classified as held for investment and recorded at $287,~~413~~996 as of December 31, ~~2016~~2017.

108. 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, forward starting swaps, caps, collars and floors. The Company expressly prohibits the use of unconventional derivative instruments and ~~using~~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.

49The Company recognizes all derivatives on the 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 designated and qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be recognized in other comprehensive income until the hedged item is recognized in earnings. Prior to the Company’s adoption of ASU 2017-12 on January 1, 2018, described in Note 2, the ineffective portion of the change in fair value of a derivative designated as a hedge was immediately recognized in earnings, however subsequent to adoption, the entire change in fair value is recognized in other comprehensive income until the hedged item is recognized in earnings. As a result of adoption, the Company recorded a decrease to its opening retained earnings balance and a corresponding increase to its opening accumulated other comprehensive income balance of $103 as of January 1, 2018, which represents the cumulative amount of hedge ineffectiveness recorded in the Consolidated Statements of Operations at the time of adoption. Derivative accounting may increase or decrease reported net income and shareholders’ equity prospectively, depending on future levels of the LIBOR 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. Refer to Note 7 for additional information on the Company's derivative instruments, including the fair value measurement of these instruments.

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 rates of the Company’s non-derivative net investment hedges are recognized as part of the cumulative foreign currency translation adjustment within other comprehensive income.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

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~~derivatives ~~in fair value will be immediately recognized in earnings. Derivative accounting may increase or decrease reported net income~~ and ~~shareholders’~~hedging ~~equity~~instruments ~~prospectively,~~as ~~depending on future levels~~ of ~~the LIBOR swap spreads and other variables affecting the fair values of derivative instruments and hedged items~~March 31, ~~but~~2018 ~~will~~are ~~have~~as no effect on cash flows, provided the contract is carried through to full term. Refer to Note 9 for additional information on the Company's derivative instruments, including the fair value measurement of these instruments.follows:

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.

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Interest Rate Swap - Waco

1 mo. USD-LIBOR-BBA

14,815 USD

4.55%

12/19/2013

12/19/2020

(13

)

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.22%

12/19/2016

12/17/2018

615

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.23%

12/19/2016

12/17/2018

612

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.24%

12/19/2016

12/17/2018

604

Interest Rate Swap - 5-Year Term Loan

1 mo. USD-LIBOR-BBA

750,000 USD

1.60%

12/17/2015

12/17/2020

17,010

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

175,000 USD

1.82%

12/17/2015

1/9/2023

5,660

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

60,000 USD

1.95%

10/13/2017

1/9/2023

1,599

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

40,000 USD

2.01%

10/13/2017

1/9/2023

953

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

39,500 USD

1.96%

10/13/2017

1/9/2023

1,016

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

31,500 USD

1.96%

10/13/2017

1/9/2023

809

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

31,500 USD

2.00%

10/13/2017

1/9/2023

765

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

22,500 USD

1.95%

10/13/2017

1/9/2023

593

Forward Starting Swap¹

3 mo. USD-LIBOR-BBA

250,000 USD

2.23%

12/20/2017

12/20/2027

11,652

Net Investment Hedge in GBP-denominated investments

USD-GBP exchange rate

9,000 GBP

N/A

7/15/2016

N/A

—

Net Investment Hedge in EUR-denominated investments

USD-EUR exchange rate

4,000 EUR

N/A

3/8/2018

N/A

—

Total hedging instruments

41,875

1. The ~~Company’s~~forward ~~derivatives~~starting ~~and~~swap ~~hedging~~has ~~instruments~~a asmandatory ofearly ~~September 30,~~termination ~~2017~~date ~~are~~of asJune ~~follows:~~20, 2018.

Benchmark Rate

Notional Value

Strike Rate

Effective Date

Expiration Date

Fair Value

Interest Rate Swap - Waco

1 mo. USD-LIBOR-BBA

14,964 USD

4.55%

12/19/2013

12/19/2020

(313

)

Interest Rate Swap - Atrium I

1 mo. USD-LIBOR-BBA

19,006 USD

1.78%

8/16/2011

5/31/2018

(48

)

Interest Rate Swap - Easton III

1 mo. USD-LIBOR-BBA

5,768 USD

1.95%

8/16/2011

1/31/2019

(31

)

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.22%

12/19/2016

12/17/2018

375

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.23%

12/19/2016

12/17/2018

370

Interest Rate Swap - 3-Year Term Loan

1 mo. USD-LIBOR-BBA

100,000 USD

1.24%

12/19/2016

12/17/2018

357

Interest Rate Swap - 5-Year Term Loan

1 mo. USD-LIBOR-BBA

750,000 USD

1.60%

12/17/2015

12/17/2020

4,352

Interest Rate Swap - 7-Year Term Loan

1 mo. USD-LIBOR-BBA

175,000 USD

1.82%

12/17/2015

1/9/2023

739

Forward Starting Swap1

3 mo. USD-LIBOR-BBA

250,000 USD

2.23%

12/20/2017

12/20/2027

2,051

Net Investment Hedge in GBP-denominated investments

USD-GBP exchange rate

15,000 GBP

N/A

7/15/2016

N/A

—

Total hedging instruments

7,852

As of March 31, 2018, the Company’s derivative instruments consisted of interest rate swaps, which are cash flow hedges used to hedge exposure to variability in future interest payments on its debt facilities. The Company's interest rate swap derivative instruments were reported in other assets at fair value of $41,888 and in other liabilities at fair value of $(13) at March 31, 2018.

1. During the three months ended September 30, 2017, the Company entered into one forward starting swap to hedge the risk of changes in the interest-related cash outflows associated with potential new long-term debt arrangements. The forward starting swap has a mandatory early termination date of March 20, 2018.36

As of September 30, 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. During the three months ended September 30, 2017, the Company entered into one forward starting swap to hedge the risk of changes in the interest-related cash outflows associated with potential new long-term debt arrangements. At September 30, 2017, the Company's interest rate swap derivative instruments were reported in other assets at fair value of $8,243 and in other liabilities at fair value of $(391). Swap gain (loss) is recognized in interest

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~expense~~The intable ~~the~~below ~~Condensed~~details ~~Consolidated~~the ~~Statements~~location ofin ~~Operations and represents interest rate swap hedge ineffectiveness, or amounts excluded from ineffectiveness, which relates to~~ the ~~off-market~~financial ~~financing~~statements ~~element associated with certain derivatives. Swap gain~~ of ~~$92 and $138 was recognized for~~ the ~~three and nine months ended September 30, 2017, respectively, and swap~~ gain ofor ~~$83~~loss ~~and $817 was~~ recognized ~~for~~on the three and nine months ended September 30, 2016, respectively. During the three and nine months ended September 30, 2017, the Company reclassified $273 and $812, respectively, from accumulated other comprehensive income into interest ~~expense~~rate ~~related~~swaps todesignated aas ~~derivative~~cash ~~terminated~~flow inhedges ~~2015.~~for ~~During~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016,~~2018 ~~the Company reclassified $274~~ and $905, respectively, from accumulated other comprehensive income 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 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 $1,883 will be reclassified from other comprehensive income as an increase in interest expense for the Company’s interest rate swaps as of September 30, 2017. Additionally, the Company will recognize $1,837 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.:

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, was used to hedge exposure to changes in the euro U.S. dollar exchange rate underlying its unconsolidated equity investments in the Gramercy European Property Fund and the Goodman Europe JV, both of which had euros as their functional currency. The Company terminated its euro-denominated non-derivative net investment hedge during the third quarter of 2017 in connection with the sale of its euro-denominated investments, which are discussed in detail in Note 5. 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. dollar exchange rate underlying its unconsolidated 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, 2017, the non-derivative net investment hedge value is reported at carrying value as a net liability of $20,097, which is included in the balance of the senior unsecured revolving credit facility on the Condensed Consolidated Balance Sheets. In connection with the sale of its euro-denominated investments and termination of the related non-derivative net investment hedge, the Company reclassified $1,851 from accumulated other comprehensive income in earnings representing the accumulated foreign currency translation adjustments recorded since inception of the hedges. During the three and nine months ended September 30, 2017, the Company recorded a net gain (loss) of $891 and $(4,228), respectively, in other comprehensive income from the impact of exchange rates related to the non-derivative net investment hedges. During the three and nine months ended September 30, 2016, the Company recorded a net loss of $109 and $175, respectively, in other comprehensive income from the impact of exchange rates related to the non-derivative net investment hedges. 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.



	Three Months Ended March 31,
	2018		2017
Accumulated other comprehensive income:
Gain recognized in accumulated other comprehensive income¹	$	22,153	$	—
Interest expense:
Gain reclassified from accumulated other comprehensive income into interest expense¹	$	268	$	268
Gain recognized in interest expense (ineffective portion)²	—		46
Total recognized in interest expense on statements of operations	$	268	$	314

111. ~~Shareholders’~~Periods ~~Equity~~prior ~~(Deficit)~~to ofJanuary 1, 2018, when the Company adopted ASU 2017-12, include only the effective portion and periods subsequent to January 1, 2018 include both the effective and ineffective portions as the two amounts are no longer separately measured and reported. The first quarter of 2018 includes $103 related to the adoption of ASU 2017-02.

As2. ofRepresents ~~September 30, 2017 and December 31, 2016,~~ the ~~Company's~~ineffective ~~authorized~~portion ~~capital~~and ~~shares~~pertains ~~consists~~only ofto ~~500,000,000~~periods ~~shares~~prior ofto ~~beneficial~~January ~~interest~~1, ~~$0.01 par value per share~~2018, ofwhen ~~which~~ the Company isadopted ~~authorized~~ASU ~~to issue up~~ 2017-12.

51During the next 12 months, the Company expects that $(7,947) will be reclassified from other comprehensive income as an increase in interest expense for the Company’s interest rate swaps as of March 31, 2018. Additionally, the Company will recognize $1,295 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.

The Company hedges exposure to changes in the exchange rates underlying 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. In March 2018, the Company entered into a non-derivative net investment hedge on its euro-denominated investment in the Gramercy European Property Fund III and in prior periods, from September 2015 until disposal of the underlying investments in July 2017, the Company had a non-derivative net investment hedge on its investments in the Gramercy European Property Fund and the Goodman Europe JV, all of which had euros as their functional currencies. 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. dollar exchange rate underlying its unconsolidated equity investment in the Goodman UK JV, which has British pounds sterling as its functional currency. The Company’s non-derivative net investment hedge values are reported at carrying value and are included in the balance of the senior unsecured revolving credit facility on the Consolidated Balance Sheets. During the three months ended March 31, 2018 and 2017, the Company recorded a net loss of $459 and $923, respectively, in other comprehensive income from the impact of exchange rates related to the non-derivative net investment hedges. 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.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~to 490,000,000 common shares of beneficial interest, $0~~9.01 ~~par~~Shareholders’ ~~value~~Equity ~~per~~(Deficit) ~~share, or common shares, and 10,000,000 preferred shares~~ of ~~beneficial~~the ~~interest, $0.01 par value per share, or preferred shares. As of September 30, 2017, 160,669,468 common shares and 3,500,000 preferred shares were issued and outstanding.~~Company

~~During~~As ~~the~~of ~~nine~~March 31, ~~months~~2018 ~~ended~~and ~~September~~December 3031, 2017, the Company’'s authorized capital shares consisted of 500,000,000 shares of beneficial interest, $0.01 par value per share, of which the Company is authorized to issue up to 490,000,000 common ~~dividends~~shares ~~are~~of asbeneficial ~~follows:~~interest, $0.01 par value per share, or common shares, and 10,000,000 preferred shares of beneficial interest, $0.01 par value per share, or preferred shares. As of March 31, 2018, 160,782,765 common shares and 3,500,000 preferred shares were issued and outstanding.

Quarter Ended	Record Date	Payment Date	Common dividend per share
March 31, 2017	3/31/2017	4/14/2017	$	0.375
June 30, 2017	6/30/2017	7/14/2017	$	0.375
September 30, 2017	9/30/2017	10/16/2017	$	0.375

In February 2018, the Company’s board of trustees authorized and the Company declared a dividend of $0.375 per common share for the first quarter of 2018, which was paid on April 16, 2018 to holders of record as of March 30, 2018.

~~During~~Employee ~~September~~Share ~~2017,~~Purchase ~~the Company issued 5,258,420 of its common shares to satisfy the exchange of 100.0% of the Exchangeable Senior Notes for 100.0% common shares.~~ Plan

In ~~April~~ June 2017, the Company’s ~~completed~~shareholders approved an ~~underwritten~~Employee ~~public~~Share ~~offering~~Purchase ~~of 10~~Plan,~~350,000~~ ~~common~~or ~~shares~~ESPP, which ~~includes~~enables the ~~exercise~~Company’s ineligible ~~full~~employees byto purchase the ~~underwriters~~common ofshares ~~their~~through ~~option~~payroll todeductions. ~~purchase~~The 1ESPP has a maximum of 250,~~350,~~000 ~~additional~~ common shares. ~~The~~available for issuance and provides for eligible employees to purchase the common shares ~~were~~during ~~issued~~defined offering periods at a ~~public~~purchase ~~offering~~ price determined at the discretion of ~~$27~~the board of trustees, which has been initially established to be equal to 90.600% ~~per~~of ~~share~~the lower of either (i) the closing price of the Company’s common shares on the first day of the offering period and (ii) the ~~net~~closing ~~proceeds~~price ~~from~~of the Company’s common shares on the last day of the offering ~~were~~period. ~~approximately~~As ~~$274~~of March 31,~~234~~ 2018, there were no shares issued under the ESPP.

In December 2016, the Company's board of trustees approved a 1-for-3 reverse share split of its common shares and outstanding OP Units. The reverse share split was effective after the close of trading on December 30, 2016 and the Company's common shares began trading on a reverse-split-adjusted basis on the NYSE on January 3, 2017.

Employee Stock Purchase Plan

In June 2017, the Company’s shareholders approved an Employee Stock Purchase Plan, or ESPP, which enables the Company’s eligible employees to purchase the common shares through payroll deductions. The ESPP has a maximum of 250,000 common shares available for issuance and provides for eligible employees to purchase the common shares during defined offer periods at a purchase price determined at the discretion of the board of trustees equal to either (1) a fixed percentage (not less than 85.0%) of the fair market value of the common shares on the exercise date or (2) the lesser of (A) a fixed percentage (not less than 85.0%) of the fair market value of the common shares on the exercise date and (B) a fixed percentage (not less than 85.0%) of the fair market value of the common shares on the first day of the offer period. As of September 30, 2017, there were no shares issued under the ESPP.

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 3,333,333 common shares related to the DRIP. During the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, 51,~~410~~811 shares were issued under the DRIP and as of ~~September~~March 3031, ~~2017~~2018 there were 3,~~327~~323,~~226~~962 shares available for issuance under the DRIP.

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

Share Repurchase Program

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. As of September 30, 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, or ATM Program, pursuant to which the Company may offer and sell common shares with an aggregate gross sales price of up to $375,000. During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018, the Company ~~sold~~did ~~3,488,525~~not ~~and~~sell ~~4,219,978~~any common shares through the ATM Program ~~for net proceeds of approximately $103,351 and $123,051, respectively~~.

Preferred Shares

Holders of the Company's 7.125% Series A Preferred Shares, or Series A Preferred Shares, are entitled to receive annual dividends of $1.78125 per share on a quarterly basis 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 ~~September~~March 3031, ~~2017~~2018, the Company had 3,500,000 of its Series A Preferred Shares outstanding with a mandatory liquidation preference of $25.00 per share.

~~Equity Incentive Plans~~38

In June 2016, the Company instituted its 2016 Equity Incentive Plan, which was approved by the Company’s board of trustees and shareholders. As of September 30, 2017, there were 2,734,009 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.

In July 2017, the Company issued a maximum total of 596,460 LTIP Units under its 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 the Company’s actual and relative total shareholder returns during the period from July 1, 2017 through June 30, 2020. Of the earned units, 50.0% will vest on June 30, 2020, and the remaining 50.0% will vest on June 30, 2021, based on continued employment through that date. Vested LTIP Units are convertible on a one-for-one basis into OP Units. The LTIP Units issued in 2017 had an aggregate fair value of $7,800 as of their date of grant, which was calculated in accordance with ASC 718, with share price volatility being one of the primary inputs in the valuation.

Through September 30, 2017, 1,037,759 restricted shares had been issued under the Company’s equity incentive plans, including the 2016 Equity Incentive Plan and the Company’s previous equity incentive plans, of which 66.6% have vested. As of September 30, 2017 and December 31, 2016, the Company had 352,378 and 318,807 weighted average restricted shares outstanding, respectively.

Compensation expense of $655 and $2,227 was recorded for the three and nine months ended September 30, 2017, respectively, related to the Company’s equity incentive plans. Compensation expense of $614 and $1,701 was recorded for the three and nine months ended September 30, 2016, respectively, related to the Company’s equity

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~incentive~~Equity ~~plans.~~Incentive Compensation expense of $4,419 will be recorded over the course of the next 29 months representing the remaining weighted average vesting period of equity awards issued under the equity incentive plans as of September 30, 2017. Plans

~~Compensation~~In ~~expense~~June ~~of $1~~2016,~~158~~ ~~and $3,284 was recorded for~~ the ~~three~~Company ~~and~~instituted ~~nine~~its ~~months~~2016 ~~ended~~Equity ~~September 30,~~Incentive ~~2017~~Plan, ~~respectively,~~which ~~for~~was approved by the Company'’s ~~Outperformance~~board ~~Plans.~~of ~~Compensation~~trustees ~~expense~~and ofshareholders. ~~$488~~As ~~and~~of $1March 31,~~464~~ ~~was~~2018, ~~recorded~~there ~~for~~were ~~the~~2,634,080 ~~three~~shares ~~and~~available ~~nine~~for ~~months~~grant ~~ended~~under ~~September 30,~~the 2016, ~~respectively,~~Equity ~~for~~Incentive ~~the~~Plan. The Company's ~~Outperformance~~accounts ~~Plans.~~for ~~Compensation~~share-based ~~expense~~compensation ofawards ~~$12,537~~using ~~will~~fair bevalue ~~recorded~~recognition ~~over~~provisions ~~the~~and ~~course~~assumes ofan ~~the~~estimated ~~next~~forfeiture 41rate ~~months,~~which ~~representing~~impacts the ~~remaining~~amount ~~weighted average vesting period~~ of ~~the~~compensation ~~awards~~cost ~~issued~~recognized ~~under~~over the ~~Outperformance~~benefit ~~Plans as of September 30, 2017~~period.

Through March 31, 2018, 1,129,130 restricted shares had been issued under the Company’s equity incentive plans, including the 2016 Equity Incentive Plan and the Company’s previous equity incentive plans, of which 67.2% have vested. As of March 31, 2018 and December 31, 2017, the Company had 316,183 and 347,676 weighted average restricted shares outstanding, respectively. Compensation expense of $541 and $817 was recorded for the three months ended March 31, 2018 and 2017, respectively, related to the Company’s equity incentive plans. Compensation expense of $4,757 will be recorded over the course of the next 26 months representing the remaining weighted average vesting period of equity awards issued under the equity incentive plans as of March 31, 2018.

Compensation expense of $1,138 and $1,056 was recorded for the three months ended March 31, 2018 and 2017, respectively, for the Company's Outperformance Plans. Compensation expense of $10,188 will be recorded over the course of the next 35 months, representing the remaining weighted average vesting period of the awards issued under the Outperformance Plans as of March 31, 2018.

Earnings per Share

The Company presents both basic and diluted earnings per share, or EPS. Basic EPS is computed by dividing net income available to common shareholders, as adjusted for unallocated earnings attributable to certain participating securities, if any, by the weighted average number of common shares outstanding during the period. 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. The two-class method is an earnings allocation methodology that determines EPS for common shares and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The Company has certain share-based payment awards that contain nonforfeitable rights to dividends, which are considered participating securities for the purposes of computing EPS pursuant to the two-class method, and therefore the Company applies the two-class method in its computation of EPS.

5439

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

Earnings per share for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 are computed as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Numerator – Income (loss):
Net income (loss) from continuing operations	$	4511,~~607~~609		$	(38,~~411~~072	)	$	~~43,520~~		$	~~14,461~~
Net income (loss) from discontinued operations	(24		)	347			(76		)	5,045
Net loss from discontinued operations	—			(24		)
Net income (loss) before net gain on disposals	4511,~~583~~609			(38,~~064~~096		)	~~43,444~~			~~19,506~~
Net gain on disposals	416,~~879~~255			217,~~336~~377			~~24,258~~			~~2,336~~
Gain on sale of European unconsolidated equity investment interests held with a related party	—			—			—			5,341
Net income	27,864			9,281
Net Income (loss)	50,462			(728		)	67,702			27,183
Less: Net income attributable to noncontrolling interest	(802		)	(154		)
Less: Net income attributable to noncontrolling interest	(333		)	(221		)	(374		)	(152		)
Less: Nonforfeitable dividends allocated to participating shareholders	(203		)	(276		)
Less: Nonforfeitable dividends allocated to participating shareholders	(191		)	(196		)	(766		)	(596		)
Less: Preferred share dividends	(1,559		)	(1,559		)
Less: Preferred share dividends	(1,559		)	(1,559		)	(4,676		)	(4,676		)
Net income available to common shares outstanding	$	25,300		$	7,292
Net income (loss) available to common shares outstanding - basic	$	48,379		$	(2,704	)	$	61,886		$	21,759
Denominator – Weighted average shares:
Plus: Interest expense on Exchangeable Senior Notes	1,462			—			—			—
Basic weighted average shares outstanding	160,408,136			140,907,399
Net income (loss) available to common shares outstanding - diluted	$	49,841		$	(2,704	)	$	61,886		$	21,759
Effect of dilutive securities:
Denominator – Weighted average shares1:
Unvested non-participating share based payment awards	—			71,848
Basic weighted average shares outstanding	152,619,352			140,257,503			147,399,457			141,180,822
Options	8,764			15,576
Effect of dilutive securities:
Exchangeable Senior Notes	—			880,796
Unvested non-participating share based payment awards	15,052			—			12,709			137,803
Diluted weighted average shares outstanding	160,416,900			141,875,619
Options	21,015			—			18,716			13,802
Outside interests in the Operating Partnership	—			—			—			399,771
Exchangeable Senior Notes	4,851,794			—			—			655,511
Diluted weighted average shares outstanding	157,507,213			140,257,503			147,430,882			142,387,709

1.The ~~Share~~Company’s options and ~~per~~other share-based ~~amounts~~payment ~~have~~awards ~~been~~used ~~adjusted~~in the computation of EPS were calculated using the treasury share method. As discussed in Note 5, 100.0% of the Company’s Exchangeable Senior Notes were exchanged for 5,258,420 of the 1-Company’s common shares in September 2017, however for-3 ~~reverse~~the ~~share~~three ~~split~~months ~~completed~~ended onMarch ~~December~~31, 302017, ~~2016~~the Company had the intent and ability to settle the debt component of the Exchangeable Senior Notes in cash and the excess conversion premium in shares, thus for that period the Company only included the effect of the excess conversion premium in the calculation of Diluted EPS.

~~The~~For ~~Company’s options and other share-based payment awards used in~~ the ~~computation~~three ofmonths ~~EPS~~ended ~~were calculated using the treasury share method. As discussed in Note 6~~March 31, ~~100.0%~~2018 ofand ~~the Company’s Exchangeable Senior Notes were exchanged for 5,258,420 of the Company’s common shares in September~~ 2017~~. Prior to the third quarter of 2017~~, the ~~Company~~net ~~had~~income ~~the~~attributable ~~intent and ability~~ to ~~settle~~ the ~~debt~~outside ~~component~~interests ~~of the Exchangeable Senior Notes~~ in ~~cash and~~ the ~~excess~~Operating ~~conversion~~Partnership ~~premium~~has inbeen ~~shares,~~excluded ~~thus~~from ~~for these periods~~ the ~~Company~~numerator ~~only~~and ~~included the effect of the excess conversion premium in the calculation of Diluted EPS. As the final exchange was completed in all shares~~5,040,730 ~~for the three~~ and ~~nine months ended September 30~~620,586, ~~2017~~respectively, ~~the~~weighted ~~Company~~average ~~used~~shares ~~the~~related ~~if-converted method~~ to ~~evaluate~~ the ~~Exchangeable~~outside ~~Senior~~interests ~~Notes~~in ~~for dilution for~~ the ~~period~~Operating ~~prior~~Partnership tohave ~~their~~been ~~conversion.~~excluded ~~The~~from ~~impact of~~ the ~~Exchangeable~~denominator ~~Senior~~for ~~Notes is dilutive during~~ the ~~three~~purpose ~~months ended September 30, 2017 and is therefore included in the calculation~~ of calculating Diluted EPS ~~for~~as ~~the~~there ~~period,~~would ~~however~~have ~~the~~been ~~impact~~no ofeffect ~~the~~had ~~Exchangeable~~such ~~Senior~~amounts ~~Notes~~been ~~is anti-dilutive during the nine months ended September 30, 2017 and is therefore excluded from the calculation of Diluted EPS for the period~~included. ~~The~~Refer ~~average~~to ~~price~~Note of11 ~~the Company’s common shares~~ for ~~the~~more ~~three~~information ~~and~~on ~~nine months ended September 30, 2016 was above~~ the ~~exchange~~outside ~~price~~interests ofin the Operating Partnership.

5540

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

Exchangeable Senior Notes as of September 30, 2016. The Company had net loss available to common shares outstanding during the three months ended September 30, 2016, therefore the potential dilutive effect of the excess conversion was excluded from the calculation of Diluted EPS for the period, however the Company had net income available to common shares outstanding during the nine months ended September 30, 2016, therefore, the potential dilutive effect of the excess conversion premium was included in the calculation of Diluted EPS for the period. For the three and nine months ended September 30, 2017, the net income (loss) attributable to the outside interests in the Operating Partnership have been excluded from the numerator and 1,352,609 and 849,338, respectively, 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~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 is comprised of the following:

	September 30, 2017			December 31, 2016
	March 31, 2018			December 31, 2017
Net unrealized gain (loss) on derivative securities	$	4,205		$	(440	)
Net unrealized gain on derivative securities	$	37,680		$	15,630
Net unrealized gain on debt instruments	~~1,497~~369			~~3,699~~417
Foreign currency translation adjustments:
Net gain on non-derivative net investment hedges 1	288			4,516
Net gain on non-derivative net investment hedges1	(162		)	297
Other foreign currency translation adjustments	(54,~~826~~757		)	(135,~~045~~734		)
Reclassification of swap gain into interest expense	12,~~954~~434			12,~~142~~166
Total accumulated other comprehensive income (loss)	$	2,118		$	(4,128	)
Cumulative effect of accounting change	103			—
Total accumulated other comprehensive income	$	35,667		$	12,776

1. The foreign currency translation adjustment associated with the Company’s non-derivative net investment hedge related to its European investments is included in other comprehensive income (loss). The balance reflects write-offs of $1,851 ~~and $652~~ on the Company’s non-derivative net investment hedge during the ~~nine months ended September 30, 2017 and the~~ year ended December 31, ~~2016, respectively~~2017.

1210. Partners’ Capital of the Operating Partnership

The Company is the sole general partner of the Operating Partnership. As of ~~September~~March 3031, ~~2017~~2018, the Company owned 160,~~324~~782,~~288~~765 of the outstanding general and limited partnership interests, or 9896.0875%, of the Operating Partnership. The number of common units in the Operating Partnership is equivalent to the number of outstanding common shares of the Company, and the entitlement of all the Operating Partnership’s common units to quarterly distributions and payments in liquidation are substantially the same as those of the Company's common shareholders. Similarly, in the case of each series of preferred units in the Operating Partnership held by the Company, there is a series of preferred shares that is equivalent in number and carries substantially the same terms as such series of the Operating Partnership’s preferred units.

Limited Partner Units

As of ~~September~~March 3031, ~~2017~~2018, limited partners other than the Company owned 35,~~131~~388,~~636~~995 common units, or 13.9225%, of the Operating Partnership.

5641

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

Earnings per Unit

The Operating Partnership's earnings per unit for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017 are computed as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Numerator – Income (loss):
Net income (loss) from continuing operations	$	4511,~~607~~609		$	(38,~~411~~072	)	$	~~43,520~~		$	~~14,461~~
Net income (loss) from discontinued operations	(24		)	347			(76		)	5,045
Net loss from discontinued operations	—			(24		)
Net income (loss) before net gain on disposals	4511,~~583~~609			(38,~~064~~096		)	~~43,444~~			~~19,506~~
Net gain on disposals	416,~~879~~255			217,~~336~~377			~~24,258~~			~~2,336~~
Gain on sale of European unconsolidated equity investment interests held with a related party	—			—			—			5,341
Net income	27,864			9,281
Net Income (loss)	50,462			(728		)	67,702			27,183
Less: Net gain attributable to noncontrolling interest in other partnerships	—			(120		)
Less: Net (gain) loss attributable to noncontrolling interest in other partnerships	97			(229		)	114			(90		)
Less: Nonforfeitable dividends allocated to participating unitholders	(203		)	(276		)
Less: Nonforfeitable dividends allocated to participating unitholders	(191		)	(196		)	(766		)	(596		)
Less: Preferred unit distributions	(1,559		)	(1,559		)
Less: Preferred unit distributions	(1,559		)	(1,559		)	(4,676		)	(4,676		)
Net income available to common units outstanding	$	26,102		$	7,326
Net income (loss) available to common units outstanding - basic	$	48,809		$	(2,712	)	$	62,374		$	21,821
Denominator – Weighted average units:
Plus: Interest expense on Exchangeable Senior Notes	1,462			—			—			—
Basic weighted average units outstanding	165,448,866			141,527,985
Net income (loss) available to common units outstanding - diluted	$	50,271		$	(2,712	)	$	62,374		$	21,821
Effect of dilutive securities:
Denominator – Weighted average units 1:
Unvested non-participating share based payment awards	—			71,848
Basic weighted average units outstanding	153,971,961			140,596,612			148,248,795			141,580,593
Options	8,764			15,576
Effect of dilutive securities:
Exchangeable Senior Notes	—			880,796
Unvested non-participating share based payment awards	15,052			—			12,709			137,803
Diluted weighted average units outstanding	165,457,630			142,496,205
Options	21,015			—			18,716			13,802
Exchangeable Senior Notes	4,851,794			—			—			655,511
Diluted weighted average units outstanding	158,859,822			140,596,612			148,280,220			142,387,709

111. ~~Unit~~Noncontrolling ~~and per unit amounts have been adjusted for the 1-for-3 reverse unit split completed on December 30, 2016.~~Interests

13. Noncontrolling Interests

Noncontrolling interests represent the outside equity interests in the 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 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 ~~September~~March 3031, ~~2017~~2018 represented an interest of approximately 13.9225% in the Operating Partnership. A portion of the Operating Partnership’s net income (loss) during each reporting period is attributed to noncontrolling interests 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 and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

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.

OP Units

InDuring ~~September~~the ~~2017~~three months ended March 31, 2018, the Company issued 2996,~~265,829~~098 OP Units inas ~~connection~~part ~~with~~of its contribution to fund its pro rata share of the E-Commerce JV’s acquisition of ~~six~~two properties. As of ~~September~~March 3031, ~~2017~~2018, 24,~~472~~729,~~121~~480 OP Units were outstanding, which can be redeemed for 24,~~472~~729,~~121~~480 of the Company's shares. During the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 and the year ended December 31, ~~2016~~2017, ~~107~~6,~~547~~038 and ~~156~~134,~~452~~607 OP Units, respectively, were converted on a one-for-one basis into common shares of the Company. At ~~September~~March 3031, ~~2017~~2018, 24,~~472~~729,~~121~~480 common shares of the Company were reserved for issuance upon redemption of OP Units. 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, 2017, the value of the OP units was $75,139.

~~LTIP Units~~42

As of September 30, 2017, noncontrolling interest owners held 659,515 earned and vested LTIP Units, which, upon conversion into OP Units, can be redeemed for 659,515 of the Company’s common shares. During the nine months ended September 30, 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 September 30, 2017, 659,515 common shares of the Company were reserved for issuance upon conversion of the earned and vested LTIP Units into OP Units and their subsequent redemption for common shares.

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

	Noncontrolling Interest
Balance at January 1, 2017	$	8,643
Issuance of noncontrolling interests in the Operating Partnership	68,898
Redemption of noncontrolling interests in the Operating Partnership	(2,987		)
Net income attribution	488
Fair value adjustments	1,191
Dividends	(1,094		)
Balance at September 30, 2017	$	75,139

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, 2017 and December 31, 2016, the value of the Company’s interest in European Fund Manager was $0 and $(321), respectively. As discussed in Note 5, following the Gramercy European Property Fund’s sale of its

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~assets~~were inreserved ~~July~~for ~~2017,~~issuance ~~European~~upon ~~Fund~~redemption ~~Manager~~of ~~commenced~~OP ~~liquidation~~Units. ~~and~~OP ~~will~~Units beare ~~dissolved~~recorded ~~over~~at the ~~succeeding~~greater ~~months.~~of ~~The~~cost basis or fair market value based on the closing share price of the Company’s ~~interest~~common inshares ~~European~~at ~~Fund~~the ~~Manager~~end isof ~~presented~~the inreporting ~~the~~period. ~~equity~~As ~~section~~of March 31, 2018, the value of ~~its~~the ~~Condensed~~OP ~~Consolidated~~units ~~Balance~~was ~~Sheets~~$137,800.

~~14.~~LTIP ~~Commitments and Contingencies~~Units

As of March 31, 2018, noncontrolling interest owners held 659,515 earned and vested LTIP Units, which, upon conversion into OP Units, can be redeemed for 659,515 of the Company’s common shares. During the three months ended March 31, 2018 and year ended December 31, 2017, there were no earned and vested LTIP Units converted into OP Units or redeemed for common shares of the Company. At March 31, 2018, 659,515 common shares of the Company were reserved for issuance upon conversion of the earned and vested LTIP Units into OP Units and their subsequent redemption for common shares.

Below is the rollforward of the activity relating to the noncontrolling interests in the Operating Partnership as of March 31, 2018:



	Noncontrolling Interest
Balance at January 1, 2018	$	113,530
Issuance of noncontrolling interests in the Operating Partnership	25,142
Redemption of noncontrolling interests in the Operating Partnership	(130		)
Net income attribution	802
Fair value adjustments	232
Dividends	(1,776		)
Balance at March 31, 2018	$	137,800

Interests in Other Entities

There are entities that the Company consolidates into its Consolidated Financial Statements based on the structure of the entities and their control provisions. As of March 31, 2018, the Company consolidated the Lakemont Development Investment and during the year ended December 31, 2017 until its dissolution in the fourth quarter of 2017, the Company consolidated European Fund Manager, which were both consolidated VIEs of the Company. The Company’s interest in these entities is presented in the equity section of its Consolidated Financial Statements. Refer to Note 2 for further discussion of these entities and consolidation considerations.

12. Commitments and Contingencies

Funding Commitments

~~During March 2017, construction was completed on the Company’s build-to-suit property in Round Rock, Texas, which the Company acquired upon completion for $29,605.~~ As of ~~September~~March 3031, ~~2017~~2018, the Company is obligated to fund the development of ~~three~~one ~~build-to-suit~~property ~~industrial~~and remaining improvements at three development properties, for which it has remaining cumulative future commitments of $4659,~~303~~104.

The AsCompany ofhas ~~September 30,~~committed ~~2017 and December 31~~$64,257 ~~2016~~(€52,187) ~~the Company made cumulative contributions~~ to the Gramercy European Property Fund ofIII. The Company contributed $552,~~892~~460 (€501,~~000~~977)~~. As~~ ~~discussed~~to ~~in Note 5, in July 2017,~~ the Gramercy European Property Fund ~~sold~~III ~~100.0%~~as of ~~its~~March 31, ~~assets to a third party~~2018. 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~~March 3031, ~~2017~~2018, in the case of unfunded commitments.

The Company has committed to fund $100,000 to Strategic Office Partners, of which $36,802 and $16,027 was funded as of September 30, 2017 and December 31, 2016, respectively. See Note 5 for further information on the Gramercy European Property Fund and Strategic Office Partners.43

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.

Legacy Gramercy, its board of directors, and Chambers were named as defendants in various putative class action lawsuits brought by purported Legacy Gramercy stockholders challenging the Merger. The lawsuits were consolidated into a New York state court action, or the New York 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 a notice of dismissal with prejudice with the Circuit Court for Baltimore County, Maryland, which the court entered on April 11, 2017.

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. 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 September 30, 2017, the Company has estimated a range of loss of $0 to $360 and

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~determined~~The ~~that~~Company has a 51.0% interest in the E-Commerce JV and has committed capital to fund its ~~best~~pro ~~estimate~~rata share of ~~total~~the ~~loss~~E-Commerce isJV’s ~~$360~~initial acquisition of six properties, ~~which~~as iswell ~~related~~as the acquisition of additional properties in the future, subject to the ~~Merger~~partners' ~~and~~approval. ~~has~~The ~~been~~Company's ~~accrued~~pro ~~and~~rata ~~recorded~~funding incommitment ~~other~~for ~~liabilities~~the asinitial ofsix ~~September 30~~properties is estimated at approximately $110,000, ~~2017~~which will be funded using a combination of OP Units and ~~December~~cash. As of March 31, ~~2016~~2018, the Company contributed approximately $30,206 to the E-Commerce JV, of which $1,130 was contributed in cash.

InThe ~~addition~~Company has committed to fund $100,000 ~~the~~to ~~Company~~Strategic ~~and/or~~Office ~~one~~Partners, orof ~~more~~which $29,477 was funded as of ~~its~~March 31, ~~subsidiaries~~2018 isand ~~party~~December to31, ~~various~~2017. ~~litigation~~See ~~matters~~Note ~~that~~4 ~~are~~for ~~considered~~further ~~routine~~information ~~litigation~~on ~~incidental~~the toGramercy ~~its~~European ~~business~~Property Fund III, ~~none~~the ofE-Commerce ~~which~~JV, ~~are~~and ~~considered~~Strategic ~~material~~Office Partners.

Legal Proceedings

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

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 90 Park Avenue, New York, New York, and the Company’s ~~seven~~various regional offices located across the United States and Europe.

Capital and Operating Ground Leases

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

	October 1 to December 31, 2017		2018		2019		2020		2021		Thereafter		Total
	April 1 to December 31, 2018		2019		2020		2021		2022		Thereafter		Total
Ground Leases - Operating	$	~~562~~1,888	$	2,~~262~~593	$	2,~~295~~596	$	2,~~295~~567	$	2,~~262~~598	$	6273,~~839~~175	$	7285,~~515~~417
Ground Leases - Capital	—1		1—		—		—		—		329		330
Total	$	~~562~~1,889	$	2,~~263~~593	$	2,~~295~~596	$	2,~~295~~567	$	2,~~262~~598	$	6373,~~168~~504	$	7285,~~845~~747

1513. 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 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. The Operating Partnership is a limited partnership and therefore is generally not liable for federal corporate income taxes as income is reported in the tax returns of its partners. The Operating Partnership may, however, be subject to certain state and local taxes. The Operating Partnership has in the past established taxable REIT subsidiaries, or TRSs, to effect various taxable transactions. Typical transactions that could cause these TRSs to be subject to federal, state and local taxes would include, but are not limited to, gains on ~~property sales and management fee income.~~

The asset management agreement with KBS expired on March 31, 2017 and, consequently, the tax expense from the Operating Partnership’s TRS for the three and nine months ended September 30, 2017 was immaterial and the activity in the TRS will be immaterial going forward. Prior to 2017, income taxes, primarily related to TRSs, were accounted for under the asset and liability method. Deferred tax assets and liabilities were recognized for the estimated future tax consequences attributable to differences between the 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 year in which those temporary differences 44

Gramercy Property Trust and GPT Operating Partnership LP

Notes to ~~Condensed~~ Consolidated Financial Statements

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

~~September~~March 3031, ~~2017~~2018

~~were~~property ~~expected~~sales toand bemanagement ~~recovered~~fee ~~or settled~~income. ATax ~~valuation~~expense ~~allowance~~from ~~was provided if~~ the ~~Company~~Operating ~~believed~~Partnership’s itTRS ~~was~~for ~~more likely than not that all or a portion of a deferred tax asset would not be realized. Any increase or decrease in a valuation allowance was included in~~ the ~~tax provision when such a change occurs. For the~~ three ~~and nine~~ months ended ~~September 30~~March 31, ~~2017~~2018 ~~the Company recorded $598~~ and ~~$647~~2017 ofwas ~~income tax expense, respectively~~immaterial.

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 ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, the Company did not incur any material interest or penalties.

1614. Supplemental Cash Flow Information

The following table represents supplemental cash flow disclosures for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017:

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016
	2018			2017
Supplemental cash flow disclosures:
Interest paid	$	6219,~~024~~320		$	5917,~~700~~447
Income taxes paid	~~663~~60			~~2,614~~71
Proceeds from 1031 exchanges from sale of real estate	~~176,924~~5			~~617~~23,~~538~~219
Use of funds from 1031 exchanges for acquisitions of real estate	(~~176,924~~5		)	(~~460~~23,~~191~~218		)
Non-cash activity:
Fair value adjustment to noncontrolling interest in the Operating Partnership	$	~~1,191~~232		$	~~2,741~~(296	)
Debt assumed in acquisition of real estate	~~114,649~~—			~~(45~~3,~~958~~680		)
Debt transferred in disposition of real estate	~~(10,456~~—		)	(~~101~~10,~~432~~456		)
Non-cash acquisition of consolidated VIE	~~24,930~~—			—24,930
Dividend reinvestment plan proceeds	~~151~~46			—81
Distribution of real estate assets from unconsolidated equity investment	—			263,015
Redemption of units of noncontrolling interest in the Operating Partnership for common shares	(130		)	(2,164		)
Treasury securities transferred in connection with defeasance of notes payable	—			(144,063		)
Contributions to unconsolidated equity investments for units of noncontrolling interests in the operating partnership	25,141			—
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	(2,987		)	(4,159		)
Real estate acquired for units of noncontrolling interest in the Operating Partnership	68,898			—
Redemption of Exchangeable Senior Notes for common shares	117,450			—

1715. Subsequent Events

In ~~October~~April ~~2017~~2018, the Company ~~modified~~declared ~~its~~a ~~7-Year~~second ~~Term~~quarter ~~Loan~~2018 bycommon ~~increasing~~dividend ~~the~~of ~~loan~~$0.375 ~~from~~per ~~$175~~share,~~000~~ topayable ~~$400~~on July 16,~~000.~~ ~~The~~2018 ~~modified~~to ~~7-Year~~shareholders ~~Term~~of ~~Loan~~record ~~has~~as ~~lower~~of ~~credit~~June 29, ~~spreads~~2018. ~~and~~In aApril ~~swapped~~2018, ~~fixed~~the ~~rate~~Company ofalso ~~approximately~~declared ~~3.0%,~~a ~~which~~second isquarter a2018 ~~decrease~~dividend ofon 34its ~~basis~~7.125% ~~points~~Series ~~from~~A Preferred Shares in the ~~original~~amount ~~agreement~~of $0.44531 ~~Proceeds~~per ~~from~~share, ~~the~~payable ~~modification~~on ~~were~~July ~~used~~2, 2018 to ~~pay~~preferred ~~down~~shareholders of record as of the ~~2015~~close ~~Revolving~~of ~~Credit~~business ~~Facility~~on June 19, 2018.

InSubsequent ~~October~~to ~~2017~~March 31, 2018, the Company ~~entered~~closed ~~into~~on athe ~~new~~disposition ~~agreement~~of ~~to provide~~ a ~~mezzanine~~parcel ~~construction~~of ~~loan~~land ~~facility~~for ~~with~~gross aproceeds ~~maximum balance~~ of ~~$250,000~~approximately ~~to an industrial developer as a borrower~~$975. ~~The~~ ~~facility~~Subsequent ~~has~~to anMarch ~~initial~~31, ~~term of five years~~2018, ~~plus two one-year extension options and will earn interest ranging from 9.0% to 12.0% depending on~~ the ~~loan-to-value. The~~ Company ~~has~~issued ~~approval~~570,863 ~~rights~~OP ~~for~~Units ~~all~~valued ~~new~~at ~~projects~~approximately ~~added~~$16,663 toin ~~the~~connection ~~facility and the facility provides the Company~~ with ~~the~~its ~~opportunity~~contribution to ~~purchase stabilized properties funded by~~ the ~~mezzanine~~E-Commerce ~~facility.~~JV Infor ~~October,~~ the ~~Company~~acquisition ~~approved~~of ~~and~~two ~~funded $15,918 towards the mezzanine construction loan facility~~properties.

In October 2017, the Company, along with several equity investment partners, also formed a European investment fund, which has total initial capital commitment of $310,262 (€262,622) from all investors, of which the Company’s initial capital commitment is $61,654 (€52,187).

Gramercy Property Trust and GPT Operating Partnership LP

Notes to Condensed Consolidated Financial Statements

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

September 30, 2017

In October 2017, the Company declared a fourth quarter 2017 common dividend of $0.375 per share, payable on January 12, 2018 to shareholders of record as of December 29, 2017. In October 2017, the Company also declared a fourth quarter 2017 dividend on its 7.125% Series A Preferred Shares in the amount of $0.44531 per share, payable on December 29, 2017 to preferred shareholders of record as of the close of business on December 19, 2017.

Subsequent to September 30, 2017, the Company closed on the acquisition of three industrial properties which comprise an aggregate 587,680 rentable square feet, which are 100.0% occupied. The properties were acquired for an aggregate purchase price of approximately $106,360 in addition to the issuance of 1,294,359 OP Units, and related to the acquisitions, the Company assumed an aggregate of $66,458 of debt on two of the properties acquired. Subsequent to September 30, 2017, the Company completed and placed into service its build-to-suit industrial property in Spartanburg, South Carolina, which comprises 432,100 square feet and is 100% leased. Subsequent to September 30, 2017, the Company closed on the disposition of two office properties which comprised an aggregate 78,767 rentable square feet for gross proceeds of approximately $10,030.


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

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

Overview

Gramercy Property Trust, or the Company or Gramercy, a Maryland real estate investment trust, or REIT, together with its subsidiary, GPT Operating Partnership LP, or the Operating Partnership, is a leading global investor and asset manager of commercial real estate. We specialize in acquiring and managing high quality, income producing 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. We also own unconsolidated equity investments in the United States, Europe, and Asia. Our operations are conducted primarily through the Operating Partnership, of which we are the sole general partner. As of ~~September~~March 3031, ~~2017~~2018, third-party holders of limited partnership interests owned approximately 13.9225% of the Operating Partnership. These interests are referred to as the noncontrolling interests in the Operating Partnership.

As of ~~September~~March 3031, ~~2017~~2018, our wholly-owned portfolio ~~consists~~consisted of ~~367~~362 properties comprising 8180,~~046~~884,~~993~~942 rentable square feet with 97.43% occupancy. As of ~~September~~March 3031, ~~2017~~2018, we ~~have~~had ownership interests in 1420 properties ~~which are~~ held in unconsolidated equity investments in the United States and Europe and one property held through the investment in CBRE Strategic Partners Asia. As of ~~September~~March 3031, ~~2017~~2018, we ~~manage~~managed approximately $1,~~622~~960,000 of commercial real estate assets, including approximately $1,~~305~~408,000 of assets in Europe~~, which includes the increase in value due to the European investment sales in July 2017, discussed below~~.

InDuring ~~July~~the ~~2017,~~three amonths ~~private~~ended ~~real~~March 31, ~~estate~~2018, ~~investment~~we ~~fund~~acquired ~~that~~one ~~targeted~~property ~~single-tenant~~with ~~industrial~~162,056 ~~office~~square ~~and~~feet ~~specialty~~for ~~retail~~a ~~assets~~purchase ~~throughout~~price ~~Europe~~of ~~and~~approximately in$10,550 ~~which~~and weplaced ~~owned~~one adevelopment ~~14.2%~~property ~~interest,~~into orservice ~~the~~with ~~Gramercy European Property Fund~~126,722 ~~sold~~square ~~100~~feet.0% ofDuring ~~its~~the ~~assets~~three ~~and~~months ended March 31, ~~concurrently~~2018, we sold ~~our~~five ~~5.1%~~properties ~~interest~~and inone ~~another~~warehouse ~~European~~from ~~investment~~another inasset ~~real~~aggregating ~~estate assets~~1, ~~or the Goodman Europe JV. The transactions resulted in net distributions to us of approximately $101~~546,~~930~~091 ~~(€89,366),~~square ~~inclusive~~feet offor atotal ~~promoted~~gross

Filing Compare · Gramercy Property Trust