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 SeptemberJune 30, 20172018
or 
¨ 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, 32nd 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. ¨

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. 
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)

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

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

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 160,670,537160,795,797 as of October 27, 2017.July 26, 2018.

EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended SeptemberJune 30, 20172018 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 SeptemberJune 30, 20172018, the Company owned 98.08%96.42% of the outstanding general and limited partnership interest in the Operating Partnership. As of SeptemberJune 30, 2017,2018, noncontrolling investors owned approximately 1.92%3.58% 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:
consolidatedConsolidated financial statements; and
theThe following notes to the consolidated financial statements:
◦Note 11,9, Shareholders' Equity (Deficit) of the Company;
◦Note 12,10, Partners' Capital of the Operating Partnership; and
◦Note 13,11, 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 SeptemberJune 30, 20172018 (unaudited) and December 31, 20162017
1
  
Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
2
  
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
3
  
Condensed Consolidated Statement of Shareholders’ Equity (Deficit) and Noncontrolling Interest for the ninesix months ended SeptemberJune 30, 20172018 (unaudited)
4
  
Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
5
  Financial Statements of GPT Operating Partnership LP
6
  
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20172018 (unaudited) and December 31, 20162017
6
  
Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
7
  
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
8
  
Condensed Consolidated Statement of Partners’ Capital for the ninesix months ended SeptemberJune 30, 20172018 (unaudited)
9
  
Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172018 and 20162017 (unaudited)
10
  
Notes to Condensed Consolidated Financial Statements (unaudited)
11
ITEM 2. 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
6351
ITEM 3. 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
8470
ITEM 4. 
CONTROLS AND PROCEDURES
8773
PART II. 
OTHER INFORMATION
8975
ITEM 1. 
LEGAL PROCEEDINGS
8975
ITEM 1A. 
RISK FACTORS
9075
ITEM 2. 
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
9077
ITEM 3. 
DEFAULTS UPON SENIOR SECURITIES
9077
ITEM 4. 
MINE SAFETY DISCLOSURES
9077
ITEM 5. 
OTHER INFORMATION
9077
ITEM 6. 
INDEX TO EXHIBITS
9178
SIGNATURES
9279
 

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, 2016June 30, 2018 December 31, 2017
Assets: 
  
 
  
Real estate investments, at cost: 
  
 
  
Land$1,004,236
 $805,264
$1,008,704
 $1,023,908
Building and improvements4,845,246
 4,053,125
4,849,168
 4,863,916
Less: accumulated depreciation(297,448) (201,525)(410,020) (333,151)
Total real estate investments, net5,552,034
 4,656,864
5,447,852
 5,554,673
Cash and cash equivalents68,018
 67,529
59,741
 30,231
Restricted cash19,183
 12,904
12,026
 12,723
Investment in unconsolidated equity investments73,163
 101,807
147,282
 70,214
Assets held for sale, net17,292
 —
—
 402
Tenant and other receivables, net75,264
 72,795
94,260
 88,750
Acquired lease assets, net of accumulated amortization of $201,010 and $133,710625,771
 618,680
Acquired lease assets, net of accumulated amortization of $265,990 and $220,473537,824
 598,559
Other assets110,613
 72,948
134,763
 100,484
Total assets$6,541,338
 $5,603,527
$6,433,748
 $6,456,036
Liabilities and Equity:      
Liabilities:      
Senior unsecured revolving credit facility$615,097
 $65,837
$441,773
 $357,162
Exchangeable senior notes, net—
 108,832
Mortgage notes payable, net606,898
 558,642
499,215
 563,521
Senior unsecured notes, net496,684
 496,464
496,990
 496,785
Senior unsecured term loans1,225,000
 1,225,000
Senior unsecured term loans, net1,448,330
 1,448,152
Total long-term debt, net2,943,679
 2,454,775
2,886,308
 2,865,620
Accounts payable and accrued expenses58,083
 58,380
45,774
 59,619
Dividends payable61,486
 53,074
62,601
 61,971
Below market lease liabilities, net of accumulated amortization of $27,564 and $26,416173,577
 230,183
Liabilities related to assets held for sale4,914
 —
Below market lease liabilities, net of accumulated amortization of $33,302 and $28,978148,661
 166,491
Other liabilities53,993
 46,081
54,462
 50,002
Total liabilities$3,295,732
 $2,842,493
$3,197,806
 $3,203,703
Commitments and contingencies
 

 
Noncontrolling interest in the Operating Partnership75,139
 8,643
156,293
 113,530
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, respectively1,607
 1,406
Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference $87,500, and 3,500,000 shares authorized, issued and outstanding at September 30, 2017 and December 31, 201684,394
 84,394
Common shares, par value $0.01, 160,792,820 and 160,686,822 issued and outstanding at June 30, 2018 and December 31, 2017, respectively1,608
 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 June 30, 2018 and December 31, 201784,394
 84,394
Additional paid-in-capital4,407,953
 3,887,793
4,406,445
 4,409,677
Accumulated other comprehensive income (loss)2,118
 (4,128)
Accumulated other comprehensive income29,125
 12,776
Accumulated deficit(1,325,605) (1,216,753)(1,442,153) (1,369,872)
Total shareholders' equity3,170,467
 2,752,712
3,079,419
 3,138,582
Noncontrolling interest in other partnerships—
 (321)
Noncontrolling interest in other entities230
 221
Total equity$3,170,467
 $2,752,391
$3,079,649
 $3,138,803
Total liabilities and equity$6,541,338
 $5,603,527
$6,433,748
 $6,456,036
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 June 30, Six Months Ended June 30,
2017 2016 2017 20162018 2017 2018 2017
Revenues 
  
     
  
    
Rental revenue$110,174
 $100,847
 $321,717
 $291,459
$119,177
 $108,261
 $241,422
 $211,543
Operating expense reimbursements22,346
 19,628
 45,656
 39,996
Third-party management fees2,057
 7,172
 8,287
 30,528
2,374
 1,638
 5,164
 6,230
Operating expense reimbursements21,384
 21,231
 61,380
 65,718
Other income1,240
 1,842
 4,830
 3,357
1,698
 1,838
 2,833
 3,590
Total revenues134,855
 131,092
 396,214
 391,062
145,595
 131,365
 295,075
 261,359
Operating Expenses 
  
  
  
Operating expenses 
  
  
  
Depreciation and amortization68,479
 62,176
 139,995
 124,393
Property operating expenses24,844
 22,685
 71,249
 70,364
26,018
 23,219
 53,106
 46,405
General and administrative expenses8,862
 9,100
 18,548
 17,856
Property management expenses3,252
 4,810
 8,771
 14,922
2,616
 2,435
 5,158
 5,519
Depreciation and amortization66,761
 62,863
 191,154
 181,649
General and administrative expenses9,638
 8,165
 27,494
 23,892
Acquisition expenses—
 1,272
 —
 5,994
Merger-related expenses1,945
 —
 1,945
 —
Total operating expenses104,495
 99,795
 298,668
 296,821
107,920
 96,930
 218,752
 194,173
Operating Income30,360
 31,297
 97,546
 94,241
Other Expenses:       
Operating income37,675
 34,435
 76,323
 67,186
Other expenses:       
Interest expense(24,266) (18,409) (70,561) (57,271)(25,597) (23,239) (51,089) (46,295)
Other-than-temporary impairment—
 —
 (4,081) —
—
 —
 —
 (4,081)
Portion of impairment recognized in other comprehensive loss—
 —
 (809) —
—
 —
 —
 (809)
Net impairment recognized in earnings—
 —
 (4,890) —
—
 —
 —
 (4,890)
Gain on derivative instruments14,970
 —
 14,970
 —
Equity in net income (loss) of unconsolidated equity investments48,730
 (1,138) 48,884
 (4,061)(1,838) 248
 (2,764) 154
Gain on dissolution of previously held U.S. unconsolidated equity investment interests—
 —
 —
 7,229
Loss on extinguishment of debt(6,751) (13,777) (6,691) (20,890)
Impairment of real estate investments(3,064) (1,053) (21,415) (1,053)
Gain on extinguishment of debt83
 268
 83
 60
Impairment losses(4,601) (5,580) (4,601) (18,351)
Income (loss) from continuing operations before provision for taxes45,009
 (3,080) 42,873
 18,195
20,692
 6,132
 32,922
 (2,136)
Provision for taxes598
 (331) 647
 (3,734)
Benefit (provision) for taxes62
 (147) (559) 49
Income (loss) from continuing operations45,607
 (3,411) 43,520
 14,461
20,754
 5,985
 32,363
 (2,087)
Income (loss) from discontinued operations before gain on extinguishment of debt(24) 347
 (76) 3,115
Gain on extinguishment of debt—
 —
 —
 1,930
Income (loss) from discontinued operations(24) 347
 (76) 5,045
Loss from discontinued operations—
 (28) —
 (52)
Income (loss) before net gain on disposals45,583
 (3,064) 43,444
 19,506
20,754
 5,957
 32,363
 (2,139)
Net gain on disposals4,879
 2,336
 24,258
 2,336
4,523
 2,002
 20,778
 19,379
Gain on sale of European unconsolidated equity investment interests held with a related party—
 —
 —
 5,341
Net Income (loss)50,462
 (728) 67,702
 27,183
Net income attributable to noncontrolling interest(333) (221) (374) (152)
Net income (loss) attributable to Gramercy Property Trust50,129
 (949) 67,328
 27,031
Net income25,277
 7,959
 53,141
 17,240
Net (income) loss attributable to noncontrolling interest(845) 113
 (1,647) (41)
Net income attributable to Gramercy Property Trust24,432
 8,072
 51,494
 17,199
Preferred share dividends(1,559) (1,559) (4,676) (4,676)(1,558) (1,558) (3,117) (3,117)
Net Income (loss) available to common shareholders$48,570
 $(2,508) $62,652
 $22,355
Net income available to common shareholders$22,874
 $6,514
 $48,377
 $14,082
Basic earnings per share: 
  
     
  
    
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
Net income from continuing operations, after preferred dividends$0.14
 $0.04
 $0.30
 $0.09
Loss from discontinued operations—
 —
 —
 —
Net income available to common shareholders$0.14
 $0.04
 $0.30
 $0.09
Diluted earnings per share: 
  
     
  
    
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
Net income from continuing operations, after preferred dividends$0.14
 $0.04
 $0.30
 $0.09
Loss from discontinued operations—
 —
 —
 —
Net income available to common shareholders$0.14
 $0.04
 $0.30
 $0.09
Basic weighted average common shares outstanding152,619,352
 140,257,503
 147,399,457
 141,180,822
160,420,278
 148,542,916
 160,414,240
 144,746,251
Diluted weighted average common shares outstanding157,507,213
 140,257,503
 147,430,882
 142,387,709
160,433,351
 149,914,443
 160,425,291
 145,965,936
 
Gramercy Property Trust
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, amounts in thousands)


 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net Income (loss)$50,462
 $(728) $67,702
 $27,183
Other comprehensive income (loss):       
Unrealized loss on available for sale debt securities(633) (1,426) (2,202) (459)
Unrealized gain (loss) on derivative instruments2,959
 7,653
 4,645
 (25,996)
 Reclassification of accumulated foreign currency translation adjustments due to disposal(1,362) —
 (1,362) (3,737)
Reclassification of unrealized gain of non-derivative net investment hedge into earnings1,851
 —
 1,851
 —
Reclassification of unrealized gain on terminated derivative instruments into earnings273
 282
 812
 913
Foreign currency translation adjustments673
 (1,120) 2,465
 (3,687)
Other comprehensive income (loss)$3,761
 $5,389
 $6,209
 $(32,966)
Comprehensive income (loss)$54,223
 $4,661
 $73,911
 $(5,783)
Net income attributable to noncontrolling interest(333) (221) (374) (152)
Other comprehensive (income) loss attributable to noncontrolling interest45
 (13) 59
 102
Comprehensive income (loss) attributable to Gramercy Property Trust$53,935
 $4,427
 $73,596
 $(5,833)
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Net income$25,277
 $7,959
 $53,141
 $17,240
Other comprehensive income (loss):       
Unrealized gain (loss) on available for sale debt securities667
 1,251
 619
 (1,569)
Cumulative effect of accounting change—
 —
 103
 —
Unrealized gain (loss) on derivative instruments4,990
 (2,692) 27,040
 1,686
Reclassification of unrealized gain (loss) on terminated derivative instruments into earnings(11,017) 271
 (10,749) 539
Foreign currency translation adjustments(1,182) 1,101
 (664) 1,792
Other comprehensive income (loss)$(6,542) $(69) $16,349
 $2,448
Comprehensive income$18,735
 $7,890
 $69,490
 $19,688
Net (income) loss attributable to noncontrolling interest(845) 113
 (1,647) (41)
Other comprehensive (income) loss attributable to noncontrolling interest(233) 25
 464
 14
Comprehensive income attributable to Gramercy Property Trust$17,657
 $8,028
 $68,307
 $19,661
 


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 TotalCommon Shares Preferred Shares Additional Paid-In-Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Gramercy Property Trust Noncontrolling Interest Total
Shares Par Value Shares Par Value 
Balance at December 31, 2016140,647,971
 $1,406
 $84,394
 $3,887,793
 $(4,128) $(1,216,753) $2,752,712
 $(321) $2,752,391
Net Income (loss)—
 —
 —
 —
 —
 67,328
 67,328
 (114) 67,214
Balance at December 31, 2017160,686,822
 $1,607
 $84,394
 $4,409,677
 $12,776
 $(1,369,872) $3,138,582
 $221
 $3,138,803
Net income—
 —
 —
 —
 —
 51,494
 51,494
 —
 51,494
Cumulative effect of accounting changes—
 —
 —
 —
 103
 560
 663
 —
 663
Change in net unrealized gain on derivative instruments—
 —
 —
 —
 4,645
 —
 4,645
 —
 4,645
—
 —
 —
 —
 27,040
 —
 27,040
 —
 27,040
Change in net unrealized loss on debt securities—
 —
 —
 —
 (2,202) —
 (2,202) —
 (2,202)
Change in net unrealized gain on debt securities—
 —
 —
 —
 619
 —
 619
 —
 619
Reclassification of unrealized gain on terminated derivative instruments into earnings—
 —
 —
 —
 812
 —
 812
 —
 812
—
 —
 —
 —
 (10,749) —
 (10,749) —
 (10,749)
Offering costs—
 —
 —
 (14,137) —
 —
 (14,137) —
 (14,137)—
 —
 —
 (40) —
 —
 (40) —
 (40)
Issuance of shares14,569,978
 146
 —
 410,439
 —
 —
 410,585
 —
 410,585
Issuance of shares - redemption of Exchangeable Senior Notes for common shares5,258,420
 53
 —
 117,397
 —
 —
 117,450
 —
 117,450
Share based compensation - fair value80,142
 1
 —
 4,515
 —
 —
 4,516
 —
 4,516
Issuance of shares - share purchase plan1,374
 —
 —
 —
 —
 —
 —
 —
 —
Share-based compensation - fair value95,223
 1
 —
 4,045
 —
 —
 4,046
 —
 4,046
Dividend reinvestment program proceeds5,410
 —
 —
 151
 —
 —
 151
 —
 151
3,363
 —
 —
 81
 —
 —
 81
 —
 81
Conversion of OP Units to common shares107,547
 1
 —
 2,986
 —
 —
 2,987
 —
 2,987
6,038
 —
 —
 130
 —
 —
 130
 —
 130
Reallocation of noncontrolling interest in the Operating Partnership—
 —
 —
 (1,191) —
 —
 (1,191) —
 (1,191)—
 —
 —
 (7,448) —
 —
 (7,448) —
 (7,448)
Reclassification of accumulated foreign currency translation adjustments due to disposal—
 —
 —
 —
 (1,362) —
 (1,362) —
 (1,362)
Reclassification of unrealized gain of non-derivative net investment hedge into earnings—
 —
 —
 —
 1,851
 —
 1,851
 —
 1,851
Foreign currency translation adjustment—
 —
 —
 —
 2,502
 —
 2,502
 (37) 2,465
—
 —
 —
 —
 (664) —
 (664) —
 (664)
Contributions to noncontrolling interest in other partnerships—
 —
 —
 —
 —
 —
 —
 472
 472
—
 —
 —
 —
 —
 —
 —
 9
 9
Dividends on preferred shares—
 —
 —
 —
 —
 (4,676) (4,676) —
 (4,676)—
 —
 —
 —
 —
 (3,117) (3,117) —
 (3,117)
Dividends on common shares—
 —
 —
 —
 —
 (171,504) (171,504) —
 (171,504)—
 —
 —
 —
 —
 (121,218) (121,218) —
 (121,218)
Balance at September 30, 2017160,669,468
 $1,607
 $84,394
 $4,407,953
 $2,118
 $(1,325,605) $3,170,467
 $—
 $3,170,467
Balance at June 30, 2018160,792,820
 $1,608
 $84,394
 $4,406,445
 $29,125
 $(1,442,153) $3,079,419
 $230
 $3,079,649

Gramercy Property Trust
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)

Nine Months Ended September 30,Six Months Ended June 30,
2017 20162018 2017
Operating Activities: 
  
 
  
Net income$67,702
 $27,183
$53,141
 $17,240
Adjustments to net cash provided by operating activities:      
Depreciation and amortization191,154
 181,649
139,995
 124,393
Amortization of acquired leases to rental revenue and expense(4,540) (10,332)
Amortization of market lease intangibles(1,705) (5,227)
Amortization of deferred costs1,858
 1,177
1,652
 1,274
Amortization of discounts and other fees17
 (3,636)(1,219) 33
Amortization of lease inducement costs285
 259
Straight-line rent adjustment(22,441) (19,084)(12,828) (14,718)
Other-than-temporary impairment on retained bonds4,890
 —
—
 4,890
Impairment of real estate investments21,415
 1,053
Impairment losses4,601
 18,351
Gain on derivative instruments(14,970) —
Net gain on disposals(24,258) (2,336)(20,778) (19,379)
Distributions received from unconsolidated equity investments9,205
 48,235
555
 689
Equity in net (income) loss of unconsolidated equity investments(48,884) 4,061
2,764
 (154)
Gain on remeasurement of previously held unconsolidated equity investment interests—
 (7,229)
Gain from sale of unconsolidated equity investment interests held with a related party—
 (5,341)
Loss on extinguishment of debt6,691
 18,960
Gain on extinguishment of debt(83) (60)
Amortization of share-based compensation6,051
 3,704
3,804
 4,058
Changes in operating assets and liabilities:      
Restricted cash(628) 1,765
Payment of capitalized leasing costs(7,491) (11,910)(11,453) (6,008)
Tenant and other receivables18,510
 (19,890)7,347
 20,031
Other assets(39,168) (16,660)(488) (3,125)
Accounts payable and accrued expenses(1,211) (16,945)(6,464) (14,331)
Other liabilities8,509
 (8,446)4,412
 (1,895)
Net cash provided by operating activities187,666
 166,237
148,283
 126,062
Investing Activities:      
Capital expenditures(64,454) (18,711)(64,518) (46,119)
Distributions from investing activities received from unconsolidated equity investments87,229
 84,588
Proceeds from sales of unconsolidated equity investment interests held with a related party9,644
 148,884
Proceeds from sale of real estate228,135
 860,783
Return of restricted cash held in escrow for 1031 exchange—
 (157,347)
Proceeds from sales of real estate127,081
 207,553
Contributions to unconsolidated equity investments(20,775) (33,632)(46,065) (7,400)
Acquisition of real estate(1,129,897) (540,596)(34,722) (284,689)
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
Funding of loan investments(14,756) —
Proceeds received from loan investments4,271
 —
Net cash used in investing activities(28,709) (130,655)
Financing Activities:      
Proceeds from unsecured term loan and credit facility805,000
 306,466
330,179
 155,000
Proceeds from senior unsecured notes—
 50,000
Repayment of unsecured term loans and credit facility(261,818) (440,000)(245,000) (155,000)
Acquisition of treasury bonds for defeasance—
 (144,063)
Proceeds from mortgage notes payable2,582
 9,550
—
 2,582
Repayment of mortgage notes payable(61,722) (251,266)(63,263) (58,014)
Offering costs(14,137) (105)—
 (12,346)
Proceeds from sale of common shares410,736
 —
—
 305,763
Payments for taxes related to net share settlement of equity awards(1,855) —
Payment of deferred financing costs(1,719) (1,734)—
 (213)
Payment of debt extinguishment costs—
 (15,868)
Proceeds from settlement of forward starting swap14,970
 —
Preferred share dividends paid(4,676) (4,676)(3,117) (3,117)
Common share dividends paid(163,903) (101,804)(121,175) (106,377)
Proceeds from exercise of share options and purchases under the employee share purchase plan—
 167
Contributions from noncontrolling interests in other entities472
 —
Distribution to noncontrolling interest in the Operating Partnership(286) (303)(3,176) (205)
Change in restricted cash from financing activities(1,192) (62)
Other financing activities(78) —
Net cash provided by (used in) financing activities707,482
 (593,698)(90,660) 128,073
Net increase (decrease) in cash and cash equivalents539
 (71,542)
Decrease in cash and cash equivalents related to foreign currency translation(50) (137)
Cash and cash equivalents at beginning of period67,529
 128,031
Cash and cash equivalents at end of period$68,018
 $56,352
Net increase in cash, cash equivalents, and restricted cash28,914
 123,480
Decrease in cash, cash equivalents, and restricted cash related to foreign currency translation(101) (78)
Cash, cash equivalents, and restricted cash at beginning of period42,954
 80,433
Cash, cash equivalents, and restricted cash at end of period$71,767
 $203,835
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, 2016June 30, 2018 December 31, 2017
Assets: 
  
 
  
Real estate investments, at cost: 
  
 
  
Land$1,004,236
 $805,264
$1,008,704
 $1,023,908
Building and improvements4,845,246
 4,053,125
4,849,168
 4,863,916
Less: accumulated depreciation(297,448) (201,525)(410,020) (333,151)
Total real estate investments, net5,552,034
 4,656,864
5,447,852
 5,554,673
Cash and cash equivalents68,018
 67,529
59,741
 30,231
Restricted cash19,183
 12,904
12,026
 12,723
Investment in unconsolidated equity investments73,163
 101,807
147,282
 70,214
Assets held for sale, net17,292
 —
—
 402
Tenant and other receivables, net75,264
 72,795
94,260
 88,750
Acquired lease assets, net of accumulated amortization of $201,010 and $133,710625,771
 618,680
Acquired lease assets, net of accumulated amortization of $265,990 and $220,473537,824
 598,559
Other assets110,613
 72,948
134,763
 100,484
Total assets$6,541,338
 $5,603,527
$6,433,748
 $6,456,036
Liabilities and Partners’ Capital:      
Liabilities:      
Senior unsecured revolving credit facility$615,097
 $65,837
$441,773
 $357,162
Exchangeable senior notes, net—
 108,832
Mortgage notes payable, net606,898
 558,642
499,215
 563,521
Senior unsecured notes, net496,684
 496,464
496,990
 496,785
Senior unsecured term loans1,225,000
 1,225,000
Senior unsecured term loans, net1,448,330
 1,448,152
Total long-term debt, net2,943,679
 2,454,775
2,886,308
 2,865,620
Accounts payable and accrued expenses58,083
 58,380
45,774
 59,619
Dividends and distributions payable61,486
 53,074
62,601
 61,971
Below market lease liabilities, net of accumulated amortization of $27,564 and $26,416173,577
 230,183
Liabilities related to assets held for sale4,914
 —
Below market lease liabilities, net of accumulated amortization of $33,302 and $28,978148,661
 166,491
Other liabilities53,993
 46,081
54,462
 50,002
Total liabilities$3,295,732
 $2,842,493
$3,197,806
 $3,203,703
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 (5,959,858 and 4,398,935 limited partner common units outstanding at June 30, 2018 and December 31, 2017, respectively)156,293
 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, 201684,394
 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
Accumulated other comprehensive income (loss)2,118
 (4,128)
Series A cumulative redeemable preferred units, liquidation preference $87,500, and 3,500,000 units issued and outstanding at June 30, 2018 and December 31, 201784,394
 84,394
GPT partners’ capital (1,663,870 and 1,650,858 general partner common units and 159,128,950 and 159,035,964 limited partner common units outstanding at June 30, 2018 and December 31, 2017, respectively)2,965,900
 3,041,412
Accumulated other comprehensive income29,125
 12,776
Total GPTOP partners' capital3,170,467
 2,752,712
3,079,419
 3,138,582
Noncontrolling interest in other partnerships—
 (321)
Noncontrolling interest in other entities230
 221
Total partners’ capital$3,170,467
 $2,752,391
$3,079,649
 $3,138,803
Total liabilities and partners’ capital$6,541,338
 $5,603,527
$6,433,748
 $6,456,036

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 June 30, Six Months Ended June 30,
2017 2016 2017 20162018 2017 2018 2017
Revenues 
  
     
  
    
Rental revenue$110,174
 $100,847
 $321,717
 $291,459
$119,177
 $108,261
 $241,422
 $211,543
Operating expense reimbursements22,346
 19,628
 45,656
 39,996
Third-party management fees2,057
 7,172
 8,287
 30,528
2,374
 1,638
 5,164
 6,230
Operating expense reimbursements21,384
 21,231
 61,380
 65,718
Other income1,240
 1,842
 4,830
 3,357
1,698
 1,838
 2,833
 3,590
Total revenues134,855
 131,092
 396,214
 391,062
145,595
 131,365
 295,075
 261,359
Operating Expenses       
Operating expenses       
Depreciation and amortization68,479
 62,176
 139,995
 124,393
Property operating expenses24,844
 22,685
 71,249
 70,364
26,018
 23,219
 53,106
 46,405
General and administrative expenses8,862
 9,100
 18,548
 17,856
Property management expenses3,252
 4,810
 8,771
 14,922
2,616
 2,435
 5,158
 5,519
Depreciation and amortization66,761
 62,863
 191,154
 181,649
General and administrative expenses9,638
 8,165
 27,494
 23,892
Acquisition expenses—
 1,272
 —
 5,994
Acquisition costs and merger-related expenses1,945
 —
 1,945
 —
Total operating expenses104,495
 99,795
 298,668
 296,821
107,920
 96,930
 218,752
 194,173
Operating Income30,360
 31,297
 97,546
 94,241
Other Expenses:       
Operating income37,675
 34,435
 76,323
 67,186
Other expenses:       
Interest expense(24,266) (18,409) (70,561) (57,271)(25,597) (23,239) (51,089) (46,295)
Other-than-temporary impairment—
 —
 (4,081) —
—
 —
 —
 (4,081)
Portion of impairment recognized in other comprehensive loss—
 —
 (809) —
—
 —
 —
 (809)
Net impairment recognized in earnings—
 —
 (4,890) —
—
 —
 —
 (4,890)
Gain on derivative instruments14,970
 —
 14,970
 —
Equity in net income (loss) of unconsolidated equity investments48,730
 (1,138) 48,884
 (4,061)(1,838) 248
 (2,764) 154
Gain on dissolution of previously held U.S. unconsolidated equity investment interests—
 —
 —
 7,229
Loss on extinguishment of debt(6,751) (13,777) (6,691) (20,890)
Impairment of real estate investments(3,064) (1,053) (21,415) (1,053)
Gain on extinguishment of debt83
 268
 83
 60
Impairment losses(4,601) (5,580) (4,601) (18,351)
Income (loss) from continuing operations before provision for taxes45,009
 (3,080) 42,873
 18,195
20,692
 6,132
 32,922
 (2,136)
Provision for taxes598
 (331) 647
 (3,734)
Benefit (provision) for taxes62
 (147) (559) 49
Income (loss) from continuing operations45,607
 (3,411) 43,520
 14,461
20,754
 5,985
 32,363
 (2,087)
Income (loss) from discontinued operations before gain on extinguishment of debt(24) 347
 (76) 3,115
Gain on extinguishment of debt—
 —
 —
 1,930
Income (loss) from discontinued operations(24) 347
 (76) 5,045
Loss from discontinued operations—
 (28) —
 (52)
Income (loss) before net gain on disposals45,583
 (3,064) 43,444
 19,506
20,754
 5,957
 32,363
 (2,139)
Net gain on disposals4,879
 2,336
 24,258
 2,336
4,523
 2,002
 20,778
 19,379
Gain on sale of European unconsolidated equity investment interests held with a related party—
 —
 —
 5,341
Net Income (loss)50,462
 (728) 67,702
 27,183
Net (income) loss attributable to noncontrolling interest in other partnerships97
 (229) 114
 (90)
Net income (loss) attributable to GPTOP50,559
 (957) 67,816
 27,093
Net income25,277
 7,959
 53,141
 17,240
Net loss attributable to noncontrolling interest in other partnerships—
 137
 —
 17
Net income attributable to GPTOP25,277
 8,096
 53,141
 17,257
Preferred unit distributions(1,559) (1,559) (4,676) (4,676)(1,558) (1,558) (3,117) (3,117)
Net income (loss) available to common unitholders$49,000
 $(2,516) $63,140
 $22,417
Net income available to common unitholders$23,719
 $6,538
 $50,024
 $14,140
Basic earnings per unit: 
  
  
  
 
  
  
  
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
Net income from continuing operations, after preferred unit distributions$0.14
 $0.04
 $0.30
 $0.09
Loss from discontinued operations—
 —
 —
 —
Net income available to common unitholders$0.14
 $0.04
 $0.30
 $0.09
Diluted earnings per unit:     
  
     
  
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
Net income from continuing operations, after preferred unit distributions$0.14
 $0.04
 $0.30
 $0.09
Loss from discontinued operations—
 —
 —
 —
Net income available to common unitholders$0.14
 $0.04
 $0.30
 $0.09
Basic weighted average common units outstanding153,971,961
 140,596,612
 148,248,795
 141,580,593
166,355,043
 149,103,359
 165,904,457
 145,336,798
Diluted weighted average common units outstanding158,859,822
 140,596,612
 148,280,220
 142,387,709
166,368,116
 150,474,886
 165,915,508
 146,556,483
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,
 2017 2016 2017 2016
Net Income (loss)$50,462
 $(728) $67,702
 $27,183
Other comprehensive income (loss):     
  
Unrealized loss on available for sale debt securities(633) (1,426) (2,202) (459)
Unrealized gain (loss) on derivative instruments2,959
 7,653
 4,645
 (25,996)
Reclassification of accumulated foreign currency translation adjustments due to disposal(1,362) —
 (1,362) (3,737)
Reclassification of unrealized gain of non-derivative net investment hedge into earnings1,851
 —
 1,851
 —
Reclassification of unrealized gain on terminated derivative instruments into earnings273
 282
 812
 913
Foreign currency translation adjustments673
 (1,120) 2,465
 (3,687)
Other comprehensive income (loss)$3,761
 $5,389
 $6,209
 $(32,966)
Comprehensive income (loss)$54,223
 $4,661
 $73,911
 $(5,783)
Net (income) loss attributable to noncontrolling interest in other partnerships97
 (229) 114
 (90)
Other comprehensive loss attributable to noncontrolling interest in other partnerships12
 —
 37
 —
Comprehensive income (loss) attributable to GPTOP$54,332
 $4,432
 $74,062
 $(5,873)
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Net income$25,277
 $7,959
 $53,141
 $17,240
Other comprehensive income (loss):     
  
Unrealized gain (loss) on available for sale debt securities667
 1,251
 619
 (1,569)
Cumulative effect of accounting change—
 —
 103
 —
Unrealized gain (loss) on derivative instruments4,990
 (2,692) 27,040
 1,686
Reclassification of unrealized gain (loss) on terminated derivative instruments into earnings(11,017) 271
 (10,749) 539
Foreign currency translation adjustments(1,182) 1,101
 (664) 1,792
Other comprehensive income (loss)$(6,542) $(69) $16,349
 $2,448
Comprehensive income$18,735
 $7,890
 $69,490
 $19,688
Net loss attributable to noncontrolling interest in other partnerships—
 137
 —
 17
Other comprehensive loss attributable to noncontrolling interest in other partnerships—
 25
 —
 25
Comprehensive income attributable to GPTOP$18,735
 $8,052
 $69,490
 $19,730

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  Partners' Interest Series A Preferred Units Accumulated Other Comprehensive Income (Loss) GPTOP Noncontrolling Interest  
Common Units Common Unitholders TotalCommon Units Common Unitholders Total
Balance at December 31, 2016140,647,971
 $2,672,446
 $84,394
 $(4,128) $2,752,712
 $(321) $2,752,391
Net Income (loss)—
 67,328
 —
 —
 67,328
 (114) 67,214
Balance at December 31, 2017160,686,822
 $3,041,412
 $84,394
 $12,776
 $3,138,582
 $221
 $3,138,803
Net income—
 51,494
 —
 —
 51,494
 —
 51,494
Cumulative effect of accounting changes—
 560
 —
 103
 663
 —
 663
Change in net unrealized gain on derivative instruments—
 —
 —
 4,645
 4,645
 —
 4,645
—
 —
 —
 27,040
 27,040
 —
 27,040
Change in net unrealized loss on debt securities—
 —
 —
 (2,202) (2,202) —
 (2,202)
Change in net unrealized gain on debt securities—
 —
 —
 619
 619
 —
 619
Reclassification of unrealized gain of terminated derivative instruments into earnings—
 —
 —
 812
 812
 —
 812
—
 —
 —
 (10,749) (10,749) —
 (10,749)
Offering costs—
 (14,137) —
 —
 (14,137) —
 (14,137)—
 (40) —
 —
 (40) —
 (40)
Issuance of common units resulting from public issuance of common shares14,569,978
 410,585
 —
 —
 410,585
 —
 410,585
Issuance of units resulting from redemption of Exchangeable Senior Notes for common shares5,258,420
 117,450
 —
 —
 117,450
 —
 117,450
Share based compensation - fair value80,142
 4,516
 —
 —
 4,516
 —
 4,516
Issuance of common units resulting from issuance of shares under the share purchase plan1,374
 —
 —
 —
 —
 —
 —
Share-based compensation - fair value95,223
 4,046
 —
 —
 4,046
 —
 4,046
Distribution reinvestment program proceeds5,410
 151
 —
 —
 151
 —
 151
3,363
 81
 —
 —
 81
 —
 81
Conversion of OP Units to common units107,547
 2,987
 —
 —
 2,987
 —
 2,987
6,038
 130
 —
 —
 130
 —
 130
Reallocation of limited partner interest in the Operating Partnership—
 (1,191) —
 —
 (1,191) —
 (1,191)—
 (7,448) —
 —
 (7,448) —
 (7,448)
Reclassification of accumulated foreign currency translation adjustments due to disposal—
 —
 —
 (1,362) (1,362) —
 (1,362)
Reclassification of unrealized gain of non-derivative net investment hedge into earnings—
 —
 —
 1,851
 1,851
 —
 1,851
Foreign currency translation adjustment—
 —
 —
 2,502
 2,502
 (37) 2,465
—
 —
 —
 (664) (664) —
 (664)
Contributions to noncontrolling interest in other partnerships—
 —
 —
 —
 —
 472
 472
—
 —
 —
 —
 —
 9
 9
Distributions on preferred units—
 (4,676) —
 —
 (4,676) —
 (4,676)—
 (3,117) —
 —
 (3,117) —
 (3,117)
Distributions on common units—
 (171,504) —
 —
 (171,504) —
 (171,504)—
 (121,218) —
 —
 (121,218) —
 (121,218)
Balance at September 30, 2017160,669,468
 $3,083,955
 $84,394
 $2,118
 $3,170,467
 $—
 $3,170,467
Balance at June 30, 2018160,792,820
 $2,965,900
 $84,394
 $29,125
 $3,079,419
 $230
 $3,079,649
GPT Operating Partnership LP
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)


Nine Months Ended September 30,Six Months Ended June 30,
2017 20162018 2017
Operating Activities: 
  
 
  
Net income$67,702
 $27,183
$53,141
 $17,240
Adjustments to net cash provided by operating activities:      
Depreciation and amortization191,154
 181,649
139,995
 124,393
Amortization of acquired leases to rental revenue and expense(4,540) (10,332)
Amortization of market lease intangibles(1,705) (5,227)
Amortization of deferred costs1,858
 1,177
1,652
 1,274
Amortization of discounts and other fees17
 (3,636)(1,219) 33
Amortization of lease inducement costs285
 259
Straight-line rent adjustment(22,441) (19,084)(12,828) (14,718)
Other-than-temporary impairment on retained bonds4,890
 —
—
 4,890
Non-cash impairment charges21,415
 1,053
Gain on sale of properties(24,258) (2,336)
Impairment of real estate investments4,601
 18,351
Gain on derivative instruments(14,970) —
Net gain on disposals(20,778) (19,379)
Distributions received from unconsolidated equity investments9,205
 48,235
555
 689
Equity in net (income) loss of unconsolidated equity investments(48,884) 4,061
2,764
 (154)
Gain on remeasurement of previously held unconsolidated equity investment interests—
 (7,229)
Gain from sale of unconsolidated equity investment interests held with a related party—
 (5,341)
Loss on extinguishment of debt6,691
 18,960
Gain on extinguishment of debt(83) (60)
Amortization of share-based compensation6,051
 3,704
3,804
 4,058
Other non-cash adjustments—
 —
Changes in operating assets and liabilities:      
Restricted cash(628) 1,765
Payment of capitalized leasing costs(7,491) (11,910)(11,453) (6,008)
Tenant and other receivables18,510
 (19,890)7,347
 20,031
Other assets(39,168) (16,660)(488) (3,125)
Accounts payable and accrued expenses(1,211) (16,945)(6,464) (14,331)
Other liabilities8,509
 (8,446)4,412
 (1,895)
Net cash provided by operating activities187,666
 166,237
148,283
 126,062
Investing Activities:      
Capital expenditures(64,454) (18,711)(64,518) (46,119)
Distributions from investing activities received from unconsolidated equity investments87,229
 84,588
Proceeds from sales of unconsolidated equity investment interests held with a related party9,644
 148,884
Proceeds from sale of real estate228,135
 860,783
Return of restricted cash held in escrow for 1031 exchange—
 (157,347)
Contributions unconsolidated equity investments(20,775) (33,632)
Proceeds from sales of real estate127,081
 207,553
Contributions to unconsolidated equity investments(46,065) (7,400)
Acquisition of real estate(1,129,897) (540,596)(34,722) (284,689)
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
Funding of loan investments(14,756) —
Proceeds received from loan investments4,271
 —
Net cash used in investing activities(28,709) (130,655)
Financing Activities:      
Proceeds from unsecured term loan and credit facility805,000
 306,466
330,179
 155,000
Proceeds from senior unsecured notes—
 50,000
Repayment of unsecured term loans and credit facility(261,818) (440,000)(245,000) (155,000)
Acquisition of treasury bonds for defeasance—
 (144,063)
Proceeds from mortgage notes payable2,582
 9,550
—
 2,582
Repayment of mortgage notes payable(61,722) (251,266)(63,263) (58,014)
Offering costs(14,137) (105)—
 (12,346)
Proceeds from issuance of common units410,736
 —
—
 305,763
Payments for taxes related to net share settlement of share awards(1,855) —
Payment of deferred financing costs(1,719) (1,734)—
 (213)
Payment of debt extinguishment costs—
 (15,868)
Proceeds from settlement of forward starting swap14,970
 —
Preferred unit distributions paid(4,676) (4,676)(3,117) (3,117)
Common unit distributions paid(163,903) (101,804)(121,175) (106,377)
Proceeds from exercise of share options and purchases under the employee share purchase plan—
 167
Contributions from noncontrolling interests in other entities472
 —
Distribution to limited partnership interest in the Operating Partnerships(286) (303)
Change in restricted cash from financing activities(1,192) (62)
Distribution to limited partnership interest in the Operating Partnership(3,176) (205)
Other financing activities(78) —
Net cash provided by (used in) financing activities707,482
 (593,698)(90,660) 128,073
Net increase (decrease) in cash and cash equivalents539
 (71,542)
Decrease in cash and cash equivalents related to foreign currency translation(50) (137)
Cash and cash equivalents at beginning of period67,529
 128,031
Cash and cash equivalents at end of period$68,018
 $56,352
Net increase in cash, cash, and restricted cash equivalents28,914
 123,480
Decrease in cash, cash equivalents, and restricted cash related to foreign currency translation(101) (78)
Cash, cash equivalents, and restricted cash at beginning of period42,954
 80,433
Cash, cash equivalents, and restricted cash at end of period$71,767
 $203,835
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)
SeptemberJune 30, 20172018


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 SeptemberJune 30, 2017,2018, third-party holders of limited partnership interests owned approximately 1.92%3.58% 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 SeptemberJune 30, 2017,2018, the Company’s wholly-owned portfolio consistsconsisted of 367355 properties comprising 81,046,99381,134,150 rentable square feet with 97.4%96.7% occupancy. As of SeptemberJune 30, 2017,2018, the Company hashad ownership interests in 1433 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 SeptemberJune 30, 2017,2018, the Company managesmanaged approximately $1,622,000$2,364,000 of commercial real estate assets, including approximately $1,305,000$1,617,000 of assets in Europe, which includes the increase in value due to the European investment sales in July 2017, discussed below.
In July 2017, a private real estate investment fund that targeted single-tenant industrial, office and specialty retail assets throughout Europe and in which the Company owned a 14.2% interest, or the Gramercy European Property Fund, sold 100.0% of its assets and, concurrently, the Company sold its 5.1% interest in another European investment in real estate assets, or the Goodman Europe JV. 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).Europe.
During the ninesix months ended SeptemberJune 30, 2017,2018, the Company acquired 74three properties aggregating 18,361,835550,522 square feet for a total purchase price of approximately $1,321,886, including$32,690 and placed one development property into service with 126,722 square feet. During the acquisition of a previously consolidated variable interest entity, or 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 ninesix months ended SeptemberJune 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, 2017,2018, the Company sold 2514 properties and two offices fromone land parcel that was part of another asset aggregating 2,358,9281,890,057 square feet for total gross proceeds of approximately $256,828.
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.”$130,983.
Unless the context requires otherwise, all references to “Company," "Gramercy,” “Gramercy,“we,” "we," "our"“our” and "us"“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 followingsubsidiaries.
Pending Mergers
On May 6, 2018, the Company and the Operating Partnership entered into an Agreement and Plan of Merger, or the Merger closing.Agreement, with BRE Glacier Parent L.P., or Parent, BRE Glacier L.P., or Merger Sub I, and BRE Glacier Acquisition L.P., or Merger Sub II, all of which are affiliates of Blackstone Real Estate Partners VIII L.P., an affiliate of The Blackstone Group L.P. Pursuant to the Merger Agreement, Merger Sub II will merge with and into the Operating Partnership, or the Partnership Merger, and the Company will merge with and into Merger Sub I, or the Company Merger, and, together with the Partnership Merger, the Mergers. Following the Mergers, Merger Sub I and the Operating Partnership will continue as the surviving entities and the separate existence of the Company and Merger Sub II will cease. The Merger Agreement, the Mergers, and the other transactions contemplated thereby were unanimously approved by the Company’s board of trustees. Pursuant to the Merger Agreement, the closing of the Mergers will take place on the third business day after satisfaction of waiver of the conditions to the Merger (other than those conditions that by their nature are to be satisfied or waived at the closing, but subject to the satisfaction or waiver of such conditions) or at such other date as mutually agreed to by the parties to the Merger Agreement; however, Parent may on one or more occasions elect to delay the closing to a date that is on or prior to October 10, 2018.
Gramercy Property Trust and GPT Operating Partnership LP
Notes to Condensed Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit data)
June 30, 2018

Pursuant to the terms and conditions in the Merger Agreement, each of the Company’s common shares, other than shares owned by Parent, Merger Sub I or any subsidiary of Parent, the Company or Merger Sub I and any award of restricted Company common shares, that is issued and outstanding immediately prior to the effective time of the Company Merger will automatically be converted into the right to receive an amount in cash equal to $27.50, plus, if the Mergers are consummated after October 15, 2018, a per diem amount of approximately $0.004 for each day from and after such date until, but not including, the closing date, or the Merger Consideration, without interest. Pursuant to the terms and conditions in the Merger Agreement, each of the Company’s 7.125% Series A Preferred Shares, or the Series A Preferred Shares, issued and outstanding immediately prior to the effective time of the Company Merger will be redeemed as of the closing date of the Company Merger through the payment of an amount, without interest, equal to $25.00 plus accrued and unpaid dividends, if any, until, but not including, the closing date. 
At the effective time of the Partnership Merger, each outstanding Class A Unit of the Operating Partnership, or OP Unit, other than OP Units held by the Company or any of the Company’s subsidiaries or Parent, Merger Sub II, or any of their respective subsidiaries, that is issued and outstanding immediately prior to the effective time of the Partnership Merger will automatically be converted into, and will be cancelled in exchange for, the right to receive an amount in cash equal to the Merger Consideration, without interest, or in lieu of receiving the Merger Consideration, each qualifying holder of an OP Unit may elect to receive one newly created Series B Cumulative Preferred Unit in the surviving partnership for each OP Unit of such holder. Additionally, each unvested unit of limited partnership interest in the Operating Partnership granted by the Company pursuant to its share-based compensation plans, or LTIP Unit, will vest pursuant to its terms on the day prior to the effective time of the Partnership Merger and each vested LTIP Unit (including those that vest on the day prior to the effective time of the Partnership Merger) will be converted into an OP Unit immediately prior to the effective time of the Partnership Merger and treated as an OP Unit as previously described.
In addition, each award of restricted common shares and each restricted share unit, or RSU, award that is outstanding immediately prior to the effective time of the Company Merger will be cancelled in exchange for a cash payment in an amount equal to (i) the number of Company common shares subject to the restricted share or RSU award at that time multiplied by (ii) the Merger Consideration, less any applicable withholding taxes. Each option to purchase Company common shares will be cancelled in exchange for a cash payment in an amount equal to (i) the number of Company common shares subject to the option immediately prior to the effective time of the Company Merger multiplied by (ii) the excess (if any) of the Merger Consideration over the per share exercise price applicable to the option, less any applicable withholding taxes.
The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants by the Company to, in all material respects, use commercially reasonable efforts to carry on its business in the ordinary course of business consistent with past practice, subject to certain exceptions, during the period between the execution of the Merger Agreement and the consummation of the Mergers. The obligations of the parties to consummate the Mergers are not subject to any financing condition or the receipt of any financing by Parent, Merger Sub I, or Merger Sub II.
The consummation of the Mergers is subject to certain customary closing conditions, including, among others, approval of the Company Merger and the other transactions contemplated by the Merger Agreement by the affirmative vote of the holders of Company common shares entitled to cast not less than a majority of all of the votes entitled to be cast on the matter, or the Company Requisite Vote. The Company will convene a shareholders’ meeting for purposes
Gramercy Property Trust and GPT Operating Partnership LP
Notes to Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit and property data)
SeptemberJune 30, 20172018

of obtaining the Company Requisite Vote on August 9, 2018, as described in its definitive proxy statement filed on June 27, 2018.
Upon a termination of the Merger Agreement, under certain circumstances, the Company will be required to pay a termination fee to Parent of $138,000. Upon termination of the Merger Agreement in certain other circumstances, Parent will be required to pay the Company a termination fee up to $414,000.
This description of certain terms of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is included as an exhibit to our definitive proxy statement on Schedule 14A which was filed on June 27, 2018.
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 20172018 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, 20162017 of the Company and in the Operating Partnership’s audited financial statements for the year ended December 31, 2016 filed as an exhibit to the Company’s Form 8-K filed on June 29, 2017.Partnership. The Condensed Consolidated Balance Sheets at December 31, 20162017 were derived from the audited Consolidated Financial Statements at that date.
Reclassifications
Certain prior year balances have been reclassified to conform with the current year presentation. These reclassifications had no effectDuring the fourth quarter of 2017, the Company adopted Accounting Standards Update, or ASU, No. 2016-18, Statement 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 previously reported net income. On the Condensed Consolidated Statements of Operations,Cash Flows. As a result of the Company reclassified investment income of $544adoption, net cash provided by operating activities changed by $19, net cash used in investing activities changed by $26,523, and $1,490net cash provided by financing activities changed by $880, for the three and ninesix months ended SeptemberJune 30, 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 wherefor which the Company is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have
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)
June 30, 2018

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
In January 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-01, Amendments to Business Combinations, which clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset
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

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.
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.
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 expenseexpensed 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
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)
SeptemberJune 30, 20172018

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. 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,
Impairments 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.
ImpairmentsDisposals
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 the estimated cost of disposal. These assessments are recorded as an impairment loss in the Condensed Consolidated Statements of Operations in the period the determination is made. The estimated fair value of the asset becomes its new cost basis. 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.
The 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.
Cash, and Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Restricted Cash
The Company hadCompany's restricted cash of $19,183 and $12,904 at September 30, 2017 and December 31, 2016, respectively, which primarily consistedconsists of reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage note obligations.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.
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)
SeptemberJune 30, 20172018

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sums to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.
 As of June 30,
 2018 2017
Cash and cash equivalents$59,741
 $163,509
Restricted cash12,026
 40,326
Total cash, cash equivalents, and restricted cash$71,767
 $203,835
Variable Interest Entities
The Company had five consolidated VIEs and two unconsolidated VIEs as of June 30, 2018 and threeDecember 31, 2017, which were determined based on the structure and control provisions of each entity.
The Company’s five consolidated VIEs as of SeptemberJune 30, 20172018 and December 31, 2016, respectively.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 had threehas a 95.0% interest in the Lakemont Development Investment and fourwill acquire the seller’s retained 5.0% interest when the properties are developed and leased. As of June 30, 2018 and December 31, 2017, the Company’s carrying value of the Lakemont Development Investment was $4,765 and $4,584, respectively.
The Company’s two unconsolidated VIEs as of SeptemberJune 30, 20172018 and December 31, 2016, respectively. The following is a summary of the Company’s involvement with VIEs as of September 30, 2017:
 Company carrying value-assets Company carrying value-liabilities Face value of assets held by the VIEs Face value of liabilities issued by the VIEs
Consolidated VIEs:       
Operating Partnership$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 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 is2017 included 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 Europe Asset Management (European Fund Carry Co.)
In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Carry Co., entitled to receive certain preferential distributions, if any, made from time-to-time by the Gramercy European Property Fund. The Company determined that European Fund Carry Co. is a VIE, as the equity holders of that entity do not have controlling financial interests and do not have the obligation to absorb losses in excess of capital committed. Decisions that most significantly affect the economic performance of European Fund Carry Co. are decided by a majority vote of that VIE’s shareholders. As such, the Company does not have a controlling financial interest in the VIE and accounts for it as an equity investment. 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.
Investment in Retained CDO Bonds
The Company has retained non-investment grade subordinate bonds, preferred shares and ordinary shares of threetwo collateralized debt obligations, or CDOs, togetherwhich are collectively herein referred to as the Retained CDO Bonds. The Company does not controlRefer to the activities that most significantly impact the Retained CDO Bonds’ economic performance“Other Assets” section of this Note 2 and is not obligatedalso 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 assetsNote 7 for more information 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 Trustaccounting 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

however, there is no guarantee that the Company will realize any proceeds from the Retained CDO Bonds or what the timingvaluation of the proceeds may be. The Company’s maximum exposure to loss is limited to its interest in the Retained CDO Bonds. In AprilAs of June 30, 2018 and December 31, 2017, one of the CDOs, in which the Company’s retained interest has nocarrying 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.was $6,792 and $5,527, respectively.
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 allowancesallowance for doubtful accounts, which as of SeptemberJune 30, 20172018 and December 31, 2016 were $6912017 was $692 and $57,$638, 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
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)
June 30, 2018

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"Real Estate Acquisitions”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- marketbelow-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
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

prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the market lease intangibles will be written off to rental revenue.
The aggregate value of in-place leases represents the costs of leasing costs, other tenant related costs, and 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.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 depreciation and amortization expense over the remaining non-cancelable term of the respective leases, but never over a term that exceedsleases. 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 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.
IntangibleRefer to Note 3 for further information on the Company’s intangible assets and liabilities consistliabilities.
Revenue
Adoption of the following:
 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 $15,71951,421
 59,647
Below-market ground rent, net of accumulated amortization of $369 and $2745,014
 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 $2486,893
 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
ASC Topic 606, "Revenue from Contracts with Customers"
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)
SeptemberJune 30, 20172018

The following table providesCompany adopted ASC Topic 606, which is described below in the weighted-average amortization periodsection “Recently Issued Accounting Pronouncements,” on January 1, 2018 using the modified retrospective method applied to those contracts which were not completed as of September 30, 2017January 1, 2018. Results for intangible assetsreporting periods beginning after January 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and liabilities andcontinue to be reported in accordance with the projected amortization expense forhistoric accounting guidance in ASC Topic 605. As a result of adoption, the next five years.
 Weighted-Average Amortization Period (years) October 1 to December 31, 2017 2018 2019 2020 2021
In-place leases9.3 $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 assets7.1 $2,688
 $10,424
 $9,425
 $7,493
 $6,196
Below-market lease liabilities17.7 (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 rent40.6 $32
 $127
 $127
 $127
 $127
Above-market ground rent32.5 (53) (214) (214) (214) (214)
Total to be included in property operating expense
 $(21) $(87) $(87) $(87) $(87)
The Company recorded $25,525an increase to its opening retained earnings balance of $663 as of January 1, 2018, which represents the cumulative impact of the new guidance and $29,670is related to the Company’s sale of amortization of in-place lease intangible assets as part of depreciation and amortizationreal estate to Strategic Office Partners in 2016. There was no impact to revenues recorded for the three and six months ended SeptemberJune 30, 2017 and 2016, respectively. The Company recorded $73,864 and $86,8452018 as a result of amortizationadoption 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 rentalnew 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.guidance.
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, operating expense reimbursements, third-party management fees, 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
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

are recognized as both revenues and operating expenses for the Company.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.
The Company recognizes sales of real estate properties only upon closing. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sale price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate.
Third-Party Management Fees
The Company’s asset and property management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. The Company recognizes revenue for fees pursuant to its management agreements in the period in which they are earned. Deferred revenue from management fees received prior to the date earned isare included in other liabilities on the Condensed Consolidated Balance Sheets. For management fee agreements that include multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is primarily determined based on the prices charged to customers.
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 recognizesCompany’s incentive fees on its asset management contracts based upon the amount that would be due pursuantare accounted for as variable consideration
Gramercy Property Trust and GPT Operating Partnership LP
Notes to the contract, if the contract were terminated at the reporting date. If the incentive fee is a fixed amount, only a proportionateConsolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share ofand per unit data)
June 30, 2018

and revenue is recognized atfor them based on the reporting date, withCompany’s estimate of the remaining fees recognized on a straight-line basis over the measurement period.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 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 Europe Asset ManagementThe Company's European 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.2017. The Company also has had borrowings outstanding in euros and British pounds sterling under the multicurrency portion of its revolving credit facility during 2017.facility. 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.
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 June 30, 2018 and December 31, 2017, the carrying value of the Company’s loan investments was $33,169 and $22,154, respectively, which represents the cost, net of accumulated amortization of loan costs. As of June 30, 2018, the loan investments had a weighted average interest rate of 11.36%. The Company evaluates its loan investments for possible credit losses each period. There were no loan reserves recorded during the three and six months ended June 30, 2018 and all of the Company’s loan investments were performing in accordance with the terms of the relevant investments as of June 30, 2018.
Goodwill
The Company recognized goodwill of $3,802 related to the acquisition of Gramercy Europe Limited or Gramercy Europe Asset Management,in December 2014, 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. TheBased on the prevailing operating results and projected outlook for Gramercy Europe Limited as of June 30, 2018, the Company determined the fair value of Gramercy Europe Limited was less than its carrying value and thus recorded an impairment loss of goodwill at September 30, 2017 and December 31, 2016 was $3,244 and $2,988, respectively. The Company did not record any impairment$3,293 on its goodwill during the three and ninesix months ended SeptemberJune 30, 2017.2018. The fair value of Gramercy Europe Limited was determined using the income approach, wherein projections of discounted cash flows were based on factors such as forecasts of future real estate investments, operating results, management fees, and discount, promote hurdle and capitalization rates. The carrying value of goodwill at June 30, 2018 and December 31, 2017 was $0 and $3,272, respectively.
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)
June 30, 2018

Retained CDO Bonds
The Retained CDO Bonds are non-investment grade subordinate bonds, preferred shares and ordinary shares of threetwo 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
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

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 97 for further discussion regarding the fair value measurement of the Retained CDO Bonds. For the three and six months ended SeptemberJune 30, 2018, the Company did not recognize any OTTI on its Retained CDO Bonds. For the three months ended June 30, 2017, the Company recognized nodid not recognize any OTTI on its Retained CDO Bonds and for the ninesix months ended SeptemberJune 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 SeptemberJune 30, 20172018 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) $3,196
Additions to credit losses:   
On Retained CDO Bonds for which an OTTI was not previously recognized—
 —
On Retained CDO Bonds for which an OTTI was previously recognized and a portion of an OTTI was recognized in other comprehensive income (loss)(4,890) —
On Retained CDO Bonds for which an OTTI was previously recognized without any portion of OTTI recognized in other comprehensive income (loss)—
 —
Reduction for credit losses:—
 —
On Retained CDO Bonds for which no OTTI was recognized in other
comprehensive income at current measurement date		—
 —
On Retained CDO Bonds sold during the period—
 —
On Retained CDO Bonds charged off during the period—
 —
For increases in cash flows expected to be collected that are recognized over the remaining life of the Retained CDO Bonds523
 (3,687)
Balance as of September 30, 2017 and December 31, 2016, respectively, of credit of losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income (loss)$(4,858) $(491)
Number of Securities Face Value Amortized Cost Gross Unrealized Gain Other-Than-Temporary Impairment Fair Value Weighted Average Expected Life (years)
6
 $332,360
 $5,756
 $1,036
 $—
 $6,792
 0.8
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 ninesix months ended SeptemberJune 30, 2017,2018, there were no tenants that accounted for 10.0% or more of the Company’sCompany's rental revenue. One tenant, Bank of America, N.A., accounted for 13.7% and 13.3% of the Company’s rental revenue forAdditionally, during the three and ninesix months ended SeptemberJune 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 30, 2017,2018, there were threetwo states, California,Illinois and 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, dollar amounts in thousands, except share, unit, per share and per unit and property data)
SeptemberJune 30, 20172018

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 guidance also requires enhanced disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized. In April 2016 the FASB issued ASU 2016-10, which amends the new revenue recognition guidance on identifying performance obligations. Inand February 2017, the FASB issued ASU 2016-10 and ASU 2017-05, respectively, which clarifiesfurther clarified the scope of gains and losses from the derecognition of nonfinancial assets and provides guidance for the partial sales of nonfinancial assets in context of the new revenue standard. The new revenue recognition guidance is effective forunder ASC Topic 606. The Company adopted the first interim period within annual reporting periods beginning after December 15, 2017, with early adoption permitted forguidance on January 1, 2018 using the first interim period within annual reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the new guidance. A substantial portion of the Company’s revenue consists of rental revenue from leasing arrangements,method, which is specifically excluded from the new revenue guidance, however the Company also generates revenue from operating expense reimbursements, management fees, incentive fees, and gains and impairments on disposals, which will be impacted by the new revenue standard. The Company doesdid not believe the new revenue guidance will have a material impact on its recognitionConsolidated Financial Statements. Refer to the “Revenue” section above for further detail.
In January 2016, the FASB issued ASU 2016-01, Recognition and disclosureMeasurement of revenue, except as it pertainsFinancial Assets and Financial Liabilities. The guidance requires entities to revenue recognizedmeasure equity investments that do not result in consolidation and are not accounted for certain of its sales of unconsolidatedunder the equity investments.method at fair value and to record changes in instruments specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods therein. The Company currently expects to adopt theadopted this standard in the first quarter of 2018 usingand the modified retrospective approach.adoption did not have a material impact on its Consolidated Financial Statements. Refer to Note 8 for more information.
In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The update will be effective beginning in the first quarter of 2019 and early adoption is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company’s accounting for leases in which it is a lessor, which represents most of its leasing arrangements, will be largely unchanged under ASU 2016-02,2016-02; 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 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
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

classification. The Company is continuing to evaluate the impact of adopting the new leases standard on its Condensed Consolidated Financial Statements.
In MarchAugust 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update2016-15, Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments, which serves to simplifyreduce the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities,diversity in practice in how certain cash receipts and classification of awards oncash payments are presented and classified in the statement of cash flows. The guidance in the ASUupdate 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 new guidancethis standard in the first quarter of 2017. The2018 and the adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-01, Amendments to Business Combinations, which amends the current guidance to clarify the definition of a business in order to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The amendments must be applied prospectively as of the beginning of the period of adoption. The Company elected to early adopt ASU 2017-01 in the first quarter of 2017, as described in the “Real Estate Acquisitions” section above.
In January 2017, the FASB issued ASU 2017-04, Intangibles- Goodwill and Other, which simplifies the accounting for goodwill impairments. Under the new guidance, an impairment charge is recorded based on the excess of the reporting unit’s carrying amount over its fair value. The guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 31, 2019 with early adoption permitted for impairment tests after January 1, 2017. The Company is currently evaluating the impact of this guidance on its Condensed Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting. The amendment provides guidance on determining which changes to the terms and conditions of share-basedshare-
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)
June 30, 2018

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 evaluatingadopted this standard in the impactfirst quarter of this guidance2018 and the adoption did not have a material impact on its Condensed Consolidated Financial Statements.
In 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 interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. WhileIn the first quarter of 2018, the Company continues to assess all potential impacts ofearly adopted this standard and the standard, it currently expects adoption todid not have an immateriala material impact on its consolidated financial statements.Consolidated Financial Statements.
3. Dispositions, Assets Held for Sale, and Discontinued OperationsReal Estate Investments
Investments in real estate properties consisted of the following:
 June 30, 2018 December 31, 2017
 
Square feet1
 Number of properties Investment 
Square feet1
 Number of properties Investment
Operating properties2
81,134,150
 353
 $5,828,172
 82,146,063
 363
 $5,857,906
Land parcels
 2
 7,075
 
 2
 7,075
Less accumulated depreciation    (410,020)     (333,151)
Total operating properties and land parcels    $5,425,227
     $5,531,830
Development properties1,653,300
 6
 22,625
 1,630,022
 6
 22,843
Total82,787,450
 361
 $5,447,852
 83,776,085
 371
 $5,554,673
1.Represents rentable square feet for operating properties and projected rentable square feet upon completion for development properties.
2.Includes development properties that have been completed as of the end of the period.
Acquisitions:
Real Estate Dispositions and Impairments
Duringestate acquisition activity for the three and ninesix months ended SeptemberJune 30, 2018 and 2017 was as follows:
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Number of operating properties2
 10
 3
 17
Number of land parcels—
 2
 —
 2
Rentable square feet of operating properties388,466
 2,493,043
 550,522
 4,750,354
Total purchase price of all acquisitions$22,140
 $177,740
 $32,690
 $302,412
The total value of the properties acquired during the three months ended June 30, 2018 was composed of $21,691 of real estate assets and $2,060 of intangible assets, including acquisition costs capitalized for the asset acquisitions. The total value of the properties acquired during the six months ended June 30, 2018 was composed of $31,888 of real estate assets and $2,695 of intangible assets, including acquisition costs capitalized for the asset acquisitions. In addition to the operating property acquisitions noted above, during the six months ended June 30, 2018 the Company sold eightalso placed into service one development property which comprised 126,722 rentable square feet.
Gramercy Property Trust and 25 properties, respectively, as well as two offices that are part of another asset during the nine months ended SeptemberGPT Operating Partnership LP
Notes to Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit data)
June 30, 2017. The property sales in 2017 comprised an aggregate 2,358,928 square feet and generated gross proceeds of $256,828. During2018

Dispositions:
Real estate disposition activity for the three and ninesix months ended SeptemberJune 30, 2018 and 2017 the Company recognized a net gain on disposals of $4,879 and $24,258, respectively, related to eight and 23 properties sold during the periods, respectively,was as follows:
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Number of properties1,2
9
 10
 14
 17
Rentable square feet343,966
 1,739,881
 1,890,057
 2,227,753
Gross proceeds$19,971
 $183,302
 $130,983
 $234,985
Impairment of real estate investments related to asset dispositions during the period3
$—
 $528
 $—
 $13,299
Net gain on disposals$4,523
 $2,002
 $20,778
 $19,379
1.During the three and six months ended June 30, 2018, the Company sold nine and 14 properties, respectively, and also sold a land parcel that was part of another asset.
2.During the three and six months ended June 30, 2017, the Company sold 10 and 17 properties, respectively, as well as two offices that were part of another asset.
3.Although there were no impairments recognized related to assets disposed during the three and six months ended June 30, 2018, as presented in the table, the Company recognized impairments of $1,308 during these periods related to two offices sold from another asset during the nine 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 June 30, 2018 that were determined to have non-recoverable declines in value. In addition to the impairments recognized related to assets disposed during the three and six months ended June 30, 2017, as presented in the table, the Company recognized impairments of $5,052 during these periods related to three properties held as of June 30, 2017 that were determined to have non-recoverable declines in value.
Intangibles:
Intangible assets and liabilities as of SeptemberJune 30, 2018 and December 31, 2017 that were determinedconsisted of the following:
 Weighted average amortization period (years) June 30, 2018 December 31, 2017
Intangible assets:   
  
In-place leases, net of accumulated amortization of $236,602 and $194,8369.4 $490,350
 $545,782
Above-market leases, net of accumulated amortization of $28,930 and $25,2297.2 41,700
 46,713
Below-market ground rent, net of accumulated amortization of $458 and $40817.3 5,774
 6,064
Total intangible assets  $537,824
 $598,559
Intangible liabilities:     
Below-market leases, net of accumulated amortization of $32,733 and $28,51639.4 $141,929
 $159,652
Above-market ground rent, net of accumulated amortization of $569 and $46231.8 6,732
 6,839
Total intangible liabilities  $148,661
 $166,491
Gramercy Property Trust and GPT Operating Partnership LP
Notes to have non-recoverable declinesConsolidated Financial Statements
(Unaudited, dollar amounts in value duringthousands, except per share and per unit data)
June 30, 2018

The following table provides the period,projected amortization expense of the intangible assets and liabilities for 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.next five years:
 July 1 to December 31, 2018 2019 2020 2021 2022
Depreciation and amortization expense$44,977
 $81,899
 $70,915
 $60,426
 $47,619
Rental revenue increase$(3,271) $(2,854) $(3,559) $(3,450) $(5,467)
The Company sold 10recorded $22,983 and 20 properties during$24,167 of amortization of in-place lease intangible assets as part of depreciation and amortization expense for the three and nine months ended SeptemberJune 30, 2016,2018 and 2017, respectively. The Company recognizedrecorded $49,142 and $48,339 of amortization of in-place lease intangible assets as part of depreciation and amortization expense for the six months ended June 30, 2018 and 2017, respectively. The Company recorded $1,433 and $4,756 of amortization of market lease intangible assets and liabilities as an impairment on real estate investments of $1,053 duringincrease to rental revenue for the three and nine months ended SeptemberJune 30, 2016 related to the properties sold during the period.2018 and 2017, respectively. The Company recognized $2,336 in gains on disposals duringrecorded $1,927 and $5,377 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the three and ninesix months ended SeptemberJune 30, 2016. Of the properties sold during the nine months ended September 30,2018 and 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.respectively.
Assets Held for Sale
The Company separately classifies properties held for sale in the Condensed Consolidated Financial Statements. The Company had three properties and one land parcel within another asset classified as held for sale as of September 30, 2017 with total net asset value of $12,378 and no assets classified as held for sale as of December 31, 2016. In the normal course of business, the Company identifies non-strategic assets for sale. The Company separately classifies properties held for sale in its Consolidated Financial Statements. The Company had no assets classified as held for sale as of June 30, 2018 and one asset classified as held for sale as of December 31, 2017, which had a net asset value of $402. The net asset value of the asset held for sale represents the value contained in real estate 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.
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 assets held for sale and liabilities related to the assets held for sale as of September 30, 2017:
Assets held for saleSeptember 30, 2017
Real estate investments$14,507
Acquired lease assets, net2,503
Other assets282
Total assets$17,292
Liabilities related to assets held for sale 
Below-market lease liabilities, net4,567
Other liabilities347
Total liabilities$4,914
Net assets held for sale$12,378
Discontinued Operations
The Company did not have discontinued operations for the three and six months ended June 30, 2018. The Company’s discontinued operations for the three and ninesix months ended SeptemberJune 30, 2017 and 2016 were related to the assets that were assumed in the MergerCompany’s merger transaction in 2015 and simultaneously designated as held for sale. The following operating results for the three and nine months ended September 30, 2017 and 2016 are included in discontinued operations for all 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) $5,045
Discontinued operations have not been segregated in the Condensed Consolidated Statements of Cash Flows. The table below presents additional relevant information pertaining to results of discontinued operations for the nine months ended September 30, 2017 and 2016, including depreciation, amortization, capital expenditures, and significant operating and investing non-cash items:
 Nine Months Ended September 30,
 2017 2016
Amortization expense$—
 $2
Significant operating non-cash items—
 (9,647)
Total$—
 $(9,645)
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

4. Real Estate Investments
Property Acquisitions
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

5.4. Unconsolidated Equity Investments
The Company has investments in a variety of ventures. The Company will co-invest in entities that own multiple properties with various investors or with one partner. The Company may manage the ventures and earn fees, such as asset and property management fees, incentive fees, and promoted interest for its services, or one of the other partners will manage the ventures for similar such fees. Depending on the structure of the venture, the Company’s voting interest may be different than its economic interest.
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
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)
June 30, 2018

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 its 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 SeptemberJune 30, 20172018 and December 31, 2016,2017, 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
  As of June 30, 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 $31,512
 14
 $28,243
 13
E-Commerce JV 51.0% 50.0% Ample Glow Investments 70,475
 4
 17,798
 —
Gramercy European Property Fund III 19.9% 50.0% Various 27,045
 13
 2,949
 —
Goodman UK JV 80.0% 50.0% Goodman Group 13,480
 1
 15,768
 1
Other2
 5.1% - 50.0% 5.1% - 50.0% Various 4,770
 2
 5,456
 3
Total       $147,282
 34
 $70,214
 17
1.The amounts presented include a basis difference of $1,930,$431 and $1,943, net of accumulated amortization, for the Goodman UK JV as of SeptemberJune 30, 2017.2018 and December 31, 2017, respectively. The amounts presented include a basis differencesdifference of $2,286 and $3,941,$(8,100), net of accumulated amortization, for the Goodman EuropeE-Commerce JV and Goodman UK JV, respectively, as of December 31, 2016.June 30, 2018.
2.
The Gramercy European Property Fund sold 100.0%As of its assets to a third party in July 2017. Pursuant toJune 30, 2018, includes CBRE Strategic Partners Asia and the sale agreement, asMorristown JV. 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.
2017, includes CBRE Strategic Partners Asia, the Philips JV, and the Morristown JV.
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 ninesix months ended SeptemberJune 30, 2017:2018:
 Unconsolidated Equity Investments
Balance at January 1, 2017$101,807
Contributions to unconsolidated equity investments20,775
Equity in net income of unconsolidated equity investments, including adjustments for basis differences48,884
Other comprehensive income of unconsolidated equity investments7,286
Distributions from unconsolidated equity investments(96,434)
Reclassification of unrealized gain on non-derivative net investment hedge into earnings1,851
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.
 Unconsolidated Equity Investments
Balance at January 1, 2018$70,214
Contributions to unconsolidated equity investments81,356
Equity in net loss of unconsolidated equity investments, including adjustments for basis differences(2,764)
Other comprehensive loss of unconsolidated equity investments(1,632)
Distributions from unconsolidated equity investments(555)
Cumulative effect of accounting change663
Balance at June 30, 2018$147,282
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)
SeptemberJune 30, 20172018

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 ninesix months ended SeptemberJune 30, 2017,2018, the Company contributed $13,375 and $20,775, respectively,$2,950 to Strategic Office Partners and asPartners. As of SeptemberJune 30, 2017,2018, the Company's remaining commitment is $63,198.Company contributed an aggregate of $32,427 to Strategic Office Partners. During the three and ninesix months ended SeptemberJune 30, 2018, the Company did not receive any distributions from Strategic Office Partners.
In July 2018, the Company sold its 25.0% interest in Strategic Office Partners to TPG, and following the sale the Company’s has no outstanding commitment to Strategic Office Partners. Refer to Note 15 for more information on the transaction.
E-Commerce JV
In November 2017, the Company received distributionsformed 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 the E-Commerce JV’s initial acquisition of $2,710six 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 and six months ended June 30, 2018, the E-Commerce JV acquired two and four properties, respectively. During the three and six months ended June 30, 2018, the Company contributed $14,435 and $15,565, respectively, in cash and also contributed OP Units valued at approximately $12,416 and $37,557, respectively, to the E-Commerce JV.
European Investment Funds
Gramercy European Property Fund III
In October 2017, the Company formed 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 $310,643 (€262,622) from all investors, of which the Strategic Office Partners.Company’s initial capital commitment is $61,730 (€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 and six months ended June 30, 2018, the Gramercy European Property Fund III acquired eleven and thirteen properties, respectively. During the three and six months ended June 30, 2018, the Company contributed $22,710 (€18,987) and $25,170 (€20,964), respectively, to the Gramercy European Property Fund III. As of June 30, 2018, the Company contributed an aggregate of $28,186 (€23,478) to the Gramercy European Property Fund III.
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)
June 30, 2018

Gramercy European Property Fund
In July 2017, the Gramercy European Property Fund sold 100.0% of its assets to a third party, and, 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. In connection with the sale transactions, the Company's management contract arrangement with the Gramercy European Property Fund was terminated; however, the Company continued to manage the assets for the new owner through July 4, 2018.
Goodman UK JV
The Goodman UK JV invests inowns one industrial property in the United Kingdom. During the three and ninesix months ended SeptemberJune 30, 2018 and 2017, the Company received no distributions from the Goodman UK JV.
Duke JV
The Duke JV invested in industrial and office properties located throughout the United States. In June 2016, the Company and Duke entered into a 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, amounts in thousands, except share, unit, per share, per unit, and property data)
September 30, 2017

Morristown JV
In October 2015, the Company contributed 50.0% of its interest in an office property located in Morristown, New Jersey to a joint venture the Company formed with 21 South Street, a subsidiary of Hampshire Partners Fund VIII LP, or the Morristown JV. Concurrent with the contribution, the Company sold the remaining 50.0% equity interest of the property to 21 South Street.
The following are the balance sheets for the Company’s unconsolidated equity investments at SeptemberJune 30, 2017:2018:
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
Strategic Office Partners E-Commerce JV Gramercy European Property Fund III Goodman UK JV 
Other1
Assets:                      
Real estate assets, net 3
$—
 $—
 $—
 $259,949
 $18,678
 $78,202
 $48,784
Real estate assets, net2
$277,863
 $302,636
 $314,022
 $16,122
 $60,361
Other assets—
 12,084
 12,084
 57,319
 20,314
 11,214
 4,217
88,048
 62,200
 68,677
 921
 15,628
Total assets$—
 $12,084
 $12,084
 $317,268
 $38,992
 $89,416
 $53,001
$365,911
 $364,836
 $382,699
 $17,043
 $75,989
Liabilities and members’ equity:             
Liabilities and members' equity:         
Mortgage notes payable$—
 $—
 $—
 $159,140
 $—
 $—
 $38,973
$226,427
 $216,863
 $238,339
 $—
 $—
Other liabilities—
 5,126
 5,126
 13,008
 194
 14,677
 3,407
14,009
 9,786
 8,253
 —
 15,793
Total liabilities—
 5,126
 5,126
 172,148
 194
 14,677
 42,380
240,436
 226,649
 246,592
 —
 15,793
Company’s equity—
 825
 825
 35,760
 30,884
 2,772
 2,922
Other members’ equity—
 6,133
 6,133
 109,360
 7,914
 71,967
 7,699
Liabilities and members’ equity$—
 $12,084
 $12,084
 $317,268
 $38,992
 $89,416
 $53,001
Company's equity31,512
 70,475
 27,045
 13,480
 4,770
Other members' equity93,963
 67,712
 109,062
 3,563
 55,426
Liabilities and members' equity$365,911
 $364,836
 $382,699
 $17,043
 $75,989
1.In July 2017,Includes CBRE Strategic Partners Asia and the Gramercy European Property Fund sold 100.0% of its assets, including its 94.9% interest in the Goodman EuropeMorristown JV. The remaining net assets as of September 30, 2017 primarily represent a portion of the sale proceeds being held in escrow, pursuant to the sale agreement.
2.Includes the Philips JV, the Morristown JV, and 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% share of equity totaling $284, and other members’ equity of $851.
3.Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger.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)
SeptemberJune 30, 20172018

The following are the balance sheets for the Company’s unconsolidated equity investments at December 31, 2016:2017:
Gramercy European Property Fund 1
        
Goodman Europe JV 
Gramercy European Property Fund 2
 Total Strategic Office Partners Goodman UK JV CBRE Strategic Partners Asia 
Other 3
Strategic Office Partners E-Commerce JV Goodman UK JV 
Other1
Assets:                    
Real estate assets, net 4
$285,087
 $347,069
 $632,156
 $149,484
 $25,128
 $87,852
 $49,580
Real estate assets, net2
$265,014
 $—
 $18,633
 $107,949
Other assets86,273
 63,523
 149,796
 42,323
 6,650
 12,247
 3,020
78,243
 35,727
 1,473
 34,022
Total assets$371,360
 $410,592
 $781,952
 $191,807
 $31,778
 $100,099
 $52,600
$343,257
 $35,727
 $20,106
 $141,971
Liabilities and members' equity:                    
Mortgage notes payable$174,269
 $215,980
 $390,249
 $121,894
 $—
 $—
 $39,730
$213,205
 $—
 $—
 $38,662
Other liabilities7,778
 19,940
 27,718
 4,347
 934
 14,383
 3,259
15,002
 830
 203
 19,329
Total liabilities182,047
 235,920
 417,967
 126,241
 934
 14,383
 42,989
228,207
 830
 203
 57,991
Company's equity12,734
 41,116
 53,850
 15,872
 25,309
 4,145
 2,631
28,243
 17,798
 15,768
 8,405
Other members' equity176,579
 133,556
 310,135
 49,694
 5,535
 81,571
 6,980
86,807
 17,099
 4,135
 75,575
Liabilities and members' equity$371,360
 $410,592
 $781,952
 $191,807
 $31,778
 $100,099
 $52,600
$343,257
 $35,727
 $20,106
 $141,971
1.
As of December 31, 2016,Includes CBRE Strategic Partners Asia, the Company had a 5.1%direct interest inPhilips JV, the Goodman EuropeMorristown 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 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 inand 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 the Gramercy European Property Fund’s 94.9% interest in the Goodman Europe JV.
3.Includes the Philips JV, the Morristown JV, and European Fund Carry Co.
4.Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger.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)
SeptemberJune 30, 20172018

Certain real estate assets in the Company’s unconsolidated equity investments are subject to mortgage notes. The following is a summary of the securedoutstanding financing arrangements withinof the Company’s unconsolidated equity investments as of SeptemberJune 30, 2017:2018:
         
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
         
Outstanding Balance2
Property
Unconsolidated Equity Investment
Economic Ownership
Interest Rate1

Maturity Date
June 30, 2018 December 31, 2017
Gramercy European Property Fund III Bridge Facility3

Gramercy European Property Fund III
19.9%
1.50%
9/26/2019
$49,715

$—
Strategic Office Partners Facility 14

Strategic Office Partners
25.0%
5.02%
10/7/2019
169,380

169,380
Strategic Office Partners Facility 24
 Strategic Office Partners 25.0% 6.03% 10/8/2020 52,020
 39,540
E-Commerce JV Facility4
 E-Commerce JV 51.0% 3.38% 2/10/2023 220,000
 —
Gramercy European Property Fund III Facility 14
 Gramercy European Property Fund III 19.9% 1.54% 3/12/2023 45,685
 —
Solingen, Germany Gramercy European Property Fund III 19.9% 1.66% 3/31/2023 9,785
 —
Gramercy European Property Fund III Facility 24
 Gramercy European Property Fund III 19.9% 1.18% 6/22/2023 126,538
 —
Offenau, Germany Gramercy European Property Fund III 19.9% 1.89% 6/30/2023 9,125
 —
Henderson, NV Strategic Office Partners 25.0% 4.75% 8/6/2025 8,551
 8,636
Total mortgage notes payable      
$690,799
 $217,556
Net deferred financing costs and net debt discount       (9,170) (4,351)
Total mortgage notes payable, net       $681,629
 $213,205
1.Represents the current effective rate as of SeptemberJune 30, 2017,2018, 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.
2.Mortgage notes are presented at 100.0% of the amount held by the unconsolidated equity investment.
3.There are nine properties under this mortgage note.Represents the loan facility that is used to generate bridge financing for acquisitions and working capital needs of the Gramercy European Property Fund III.
4.There are fiveAs of June 30, 2018, there were ten properties under this mortgage note.
5.There were eightthe Strategic Office Partners Facility 1, three properties under this mortgage facility. In addition, this represents the Company’s economic ownership inStrategic Office Partners Facility 2, four properties under the Goodman EuropeE-Commerce 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 inFacility, four properties under the Gramercy European Property Fund.Fund III Facility 1, and seven properties under the Gramercy European Property Fund III Facility 2.


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)
SeptemberJune 30, 20172018

The following are the statements of operations for the Company’s unconsolidated equity investments for the three months ended SeptemberJune 30, 2017:2018:
Gramercy European Property Fund 1
        
Goodman Europe JV Gramercy European Property Fund Total Strategic Office Partners Goodman UK JV 
CBRE Strategic Partners Asia2
 
Other3
Strategic Office Partners E-Commerce JV Gramercy European Property Fund III Goodman UK JV 
Other1
Revenues$303
 $593
 $896
 $8,451
 $25
 $(7,766) $36,224
$11,765
 $6,771
 $1,730
 $180
 $(5,632)
Operating expenses33
 (1,288) (1,255) 2,828
 82
 295
 170
4,328
 1,703
 376
 105
 272
Interest expense29
 152
 181
 2,432
 —
 —
 690
3,390
 2,003
 450
 —
 —
Depreciation and amortization120
 237
 357
 3,969
 204
 —
 333
5,148
 2,855
 761
 210
 20
Total expenses182
 (899) (717) 9,229
 286
 295
 1,193
12,866
 6,561
 1,587
 315
 292
Net income (loss) from operations121
 1,492
 1,613
 (778) (261) (8,061) 35,031
(1,101) 210
 143
 (135) (5,924)
Loss on derivatives—
 (22) (22) (144) —
 —
 —
Gain (loss) on derivatives177
 —
 (781) —
 —
Loss on extinguishment of debt—
 —
 —
 (937) —
 —
 —
—
 —
 (461) —
 —
Net gain on disposals—
 230,392
 230,392
 9,923
 7,871
 —
 —
Provision for taxes(38) (68) (106) —
 30
 —
 —
—
 —
 (36) —
 —
Net income (loss)$83
 $231,794
 $231,877
 $8,064
 $7,640
 $(8,061) $35,031
$(924) $210
 $(1,135) $(135) $(5,924)
Company's share in net income (loss)$4
 $32,927
 $32,931
 $2,125
 $6,112
 $(411) $8,777
$(92) $260
 $(184) $(108) $(312)
Adjustments for REIT basis—
 —
 —
 —
 (2,159) —
 —
Gain (loss) from disposal of Company's interest6,458
 (5,103) 1,355
 —
 —
 —
 —
Adjustments for REIT basis2
—
 63
 —
 (1,465) —
Company's equity in net income (loss) within continuing operations$6,462
 $27,824
 $34,286
 $2,125
 $3,953
 $(411) $8,777
$(92) $323
 $(184) $(1,573) $(312)
1.Prior to the sale of the assets of the Gramercy European Property FundIncludes CBRE Strategic Partners Asia and the Morristown JV.
2.Goodman UK JV amount includes write-down of $1,462 recorded on the Company’s saleoutside basis during the three months ended June 30, 2018 related to its accumulated foreign currency translation adjustments recorded on the investment.
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)
June 30, 2018

The following are statements of operations for the Company’s unconsolidated equity investments for the six months ended June 30, 2018:
 Strategic Office Partners E-Commerce JV Gramercy European Property Fund III Goodman UK JV 
Other1
Revenues$22,908
 $8,936
 $2,212
 $180
 $(3,638)
Operating expenses8,479
 2,286
 1,058
 365
 378
Interest expense6,503
 2,672
 547
 —
 666
Depreciation and amortization9,971
 3,717
 970
 416
 353
Total expenses24,953
 8,675
 2,575
 781
 1,397
Net income (loss) from operations(2,045) 261
 (363) (601) (5,035)
Gain (loss) on derivatives669
 —
 (781) —
 —
Loss on extinguishment of debt—
 (1,200) (461) —
 —
Provision for taxes—
 —
 (36) —
 —
Net loss$(1,376) $(939) $(1,641) $(601) $(5,035)
Company’s share in net loss$(66) $(260) $(277) $(481) $(292)
Adjustments for REIT basis2
—
 81
 —
 (1,469) —
Company’s equity in net loss within continuing operations$(66) $(179) $(277) $(1,950) $(292)
1.Includes CBRE Strategic Partners Asia and the Morristown JV.
2.Goodman UK JV amount includes write-down of $1,462 recorded on the Company’s outside basis during the six months ended June 30, 2018 related to its interest inaccumulated foreign currency translation adjustments recorded on the Goodman Europe JV to a third party in Julyinvestment.

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)
June 30, 2018

The following are the statements of operations for the Company’s unconsolidated equity investments for the three months ended June 30, 2017:
 
Gramercy European Property Fund 1
      
 Goodman Europe JV 
Gramercy European Property Fund2
 Total Strategic Office Partners Goodman UK JV 
Other 3
Revenues$5,323
 $11,479
 $16,802
 $7,174
 $293
 $1,324
Operating expenses945
 2,802
 3,747
 2,316
 225
 399
Interest expense614
 1,798
 2,412
 2,055
 —
 700
Depreciation and amortization2,024
 5,322
 7,346
 2,852
 261
 333
Total expenses3,583
 9,922
 13,505
 7,223
 486
 1,432
Net income (loss) from operations1,740
 1,557
 3,297
 (49) (193) (108)
Gain (loss) on derivatives—
 1,049
 1,049
 (413) —
 —
Provision for taxes(15) (424) (439) —
 (20) —
Net income (loss)$1,725
 $2,182
 $3,907
 $(462) $(213) $(108)
Company’s share in net income (loss)$88
 $439
 $527
 $(36) $(171) $5
Adjustments for REIT basis2
(37) —
 (37) —
 (40) —
Company’s equity in net income (loss) within continuing operations$51
 $439
 $490
 $(36) $(211) $5
1.As of and for the three months ended June 30, 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 SeptemberJune 30, 2017, the Company’s equity in net income (loss) offrom the entities is based on these ownership interest percentages.percentages during the period.
2.The Company received a distributionExcludes the results of $812 related to the sale of a propertyGramercy European Property Fund’s 94.9% interest in September by CBRE Strategic Partners Asia, however, due to the 3-month reporting lag,Goodman Europe JV, as the Company’s financial results reflect information through June 30, 2017, which includes the sold asset.Goodman Europe JV is separately presented.
3.Includes CBRE Strategic Partners Asia, 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 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)
SeptemberJune 30, 20172018

The following are the statements of operations for the Company’s unconsolidated equity investments for the ninesix months ended SeptemberJune 30, 2017:
Gramercy European Property Fund 1
        
Gramercy European Property Fund 1
      
Goodman Europe JV Gramercy European Property Fund Total Strategic Office Partners Goodman UK JV 
CBRE Strategic Partners Asia2
 
Other3
Goodman Europe JV 
Gramercy European Property Fund2
 Total Strategic Office Partners Goodman UK JV 
Other3
Revenues$10,581
 $22,190
 $32,771
 $21,151
 $613
 $(9,981) $38,432
$10,278
 $21,597
 $31,875
 $12,700
 $588
 $(7)
Operating expenses1,900
 4,465
 6,365
 6,618
 609
 996
 444
1,867
 5,753
 7,620
 3,790
 527
 975
Interest expense1,315
 3,424
 4,739
 5,997
 —
 —
 2,031
1,286
 3,272
 4,558
 3,565
 —
 1,341
Depreciation and amortization4,165
 10,032
 14,197
 9,324
 840
 —
 999
4,045
 9,795
 13,840
 5,355
 636
 666
Total expenses7,380
 17,921
 25,301
 21,939
 1,449
 996
 3,474
7,198
 18,820
 26,018
 12,710
 1,163
 2,982
Net income (loss) from operations3,201
 4,269
 7,470
 (788) (836) (10,977) 34,958
3,080
 2,777
 5,857
 (10) (575) (2,989)
Gain (loss) on derivatives—
 2,248
 2,248
 (906) —
 —
 —
—
 2,270
 2,270
 (762) —
 —
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
 —
 —
(32) (278) (310) —
 (28) —
Net income (loss)$3,131
 $236,563
 $239,694
 $7,292
 $7,037
 $(10,977) $34,958
$3,048
 $4,769
 $7,817
 $(772) $(603) $(2,989)
Company’s share in net income (loss)$159
 $33,812
 $33,971
 $2,074
 $5,629
 $(561) $8,777
$155
 $885
 $1,040
 $(51) $(483) $(150)
Adjustments for REIT basis(73) —
 (73) —
 (2,288) —
 —
Gain (loss) from disposal of Company's interest6,458
 (5,103) 1,355
 —
 —
 —
 —
Adjustments for REIT basis2
(73) —
 (73) —
 (129) —
Company’s equity in net income (loss) within continuing operations$6,544
 $28,709
 $35,253
 $2,074
 $3,341
 $(561) $8,777
$82
 $885
 $967
 $(51) $(612) $(150)
1.Prior toAs of and for 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 Julysix months ended June 30, 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 ninesix 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 expenses676
 1,619
 2,295
 280
 225
 191
 341
 129
Acquisition expenses—
 2,141
 2,141
 664
 —
 —
 —
 —
Interest expense653
 1,138
 1,791
 410
 —
 —
 —
 698
Depreciation and amortization3,276
 2,800
 6,076
 898
 339
 —
 —
 333
Total expenses4,605
 7,698
 12,303
 2,252
 564
 191
 341
 1,160
Net income (loss) from operations1,590
 (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 basis11
 —
 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.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, 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 expenses2,372
 3,188
 5,560
 280
 698
 5,309
 1,208
 342
Acquisition expenses4,960
 4,678
 9,638
 664
 —
 —
 —
 27
Interest expense2,519
 3,032
 5,551
 410
 —
 602
 —
 2,131
Depreciation and amortization7,907
 7,632
 15,539
 898
 1,461
 7,154
 —
 998
Total expenses17,758
 18,530
 36,288
 2,252
 2,159
 13,065
 1,208
 3,498
Net income (loss) from operations631
 (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 basis455
 —
 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

6.5. Debt Obligations
Secured Debt
Mortgage Notes
Certain real estate assets are subject to mortgage notes. During the ninesix months ended SeptemberJune 30, 2018, the Company did not assume any mortgages notes. During the year ended December 31, 2017, the Company assumed $114,649$181,107 of non-recourse mortgages in connection with five real estate acquisitions. During the year ended December 31, 2016, the Company assumed $244,188 of non-recourse mortgages in connection with 27seven real estate acquisitions. During the three and ninesix months ended SeptemberJune 30, 2018, the Company paid off the mortgage notes on four properties and recorded a net gain on extinguishment of debt of $83 related to the payoffs. During the three and six months ended June 30, 2017, the Company paid off the mortgage notes on two properties. During the ninesix months ended SeptemberJune 30, 2017, the Company refinanced the debt on two properties encumbered by a mortgage loan for $10,456 and subsequently transferred the mortgage on these two properties to the buyer of the properties. During the three and ninesix months ended SeptemberJune 30, 2017, the Company recorded a net gain on the early extinguishment of mortgage debt of $0$268 and $60, respectively.
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 SeptemberJune 30, 2017.2018.
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)
SeptemberJune 30, 20172018

The following is a summary of the Company’s secured financing arrangements as of SeptemberJune 30, 20172018 and December 31, 2016:2017:
Property 
Interest Rate 1
 Maturity Date Outstanding Balance 
Interest Rate 1
 Maturity Date Outstanding Balance
 September 30, 2017 December 31, 2016  June 30, 2018 December 31, 2017
Dallas, TX 2
 3.05% 3/1/2018 $9,372
 $9,540
Jacksonville, FL 2
 3.05% 3/1/2018 6,732
 6,852
Cincinnati, KY 2
 3.29% 3/1/2018 6,512
 6,628
Minneapolis, MN 2
 3.05% 3/1/2018 5,896
 6,001
Phoenix, AZ 2
 3.05% 3/1/2018 4,048
 4,120
Ames, IA 5.05% 5/1/2018 16,069
 16,436
Columbus, OH 4.01% 5/31/2018 19,006
 19,708
Greenwood, IN 3.59% 6/15/2018 7,302
 7,436
Greenfield, IN 3.63% 6/15/2018 5,902
 6,010
Logistics Portfolio - Pool 3 3
 3.96% 8/1/2018 43,300
 43,300
Philadelphia, PA 4.99% 1/1/2019 12,041
 12,328
 4.99% 1/1/2019 $11,743
 $11,943
Columbus, OH 3.94% 1/31/2019 5,768
 5,908
Bridgeview, IL 3.90% 5/1/2019 5,883
 6,014
 3.90% 5/1/2019 5,745
 5,838
Spartanburg, SC 3.20% 6/1/2019 732
 1,025
 3.20% 6/1/2019 427
 632
Charleston, SC 3.11% 8/1/2019 591
 986
 3.11% 8/1/2019 181
 457
Lawrence, IN 5.02% 1/1/2020 20,224
 20,703
 5.02% 1/1/2020 19,730
 20,061
Charlotte, NC 3.28% 1/1/2020 1,711
 2,217
 3.28% 1/1/2020 1,185
 1,538
Hawthorne, CA 3.52% 8/1/2020 17,327
 17,638
 3.52% 8/1/2020 16,960
 17,207
Charleston, SC 3.32% 10/1/2020 820
 1,001
 3.32% 10/1/2020 633
 758
Charleston, SC 2.97% 10/1/2020 806
 984
 2.97% 10/1/2020 622
 746
Charleston, SC 3.37% 10/1/2020 806
 984
 3.37% 10/1/2020 622
 746
Charlotte, NC 3.38% 10/1/2020 700
 853
 3.38% 10/1/2020 540
 647
Des Plaines, IL 5.54% 10/31/2020 2,405
 2,463
 5.54% 10/31/2020 2,344
 2,385
Waco, TX 4.75% 12/19/2020 14,964
 15,187
 4.75% 12/19/2020 14,741
 14,890
Deerfield, IL 3.71% 1/1/2021 10,538
 10,804
 3.71% 1/1/2021 10,263
 10,447
Winston-Salem, NC 3.41% 6/1/2021 3,569
 4,199
 3.41% 6/1/2021 2,913
 3,354
Winston-Salem, NC 3.42% 7/1/2021 1,184
 1,388
 3.42% 7/1/2021 971
 1,114
Logistics Portfolio - Pool 1 3
 4.27% 1/1/2022 38,355
 39,002
CCC Portfolio 3
 4.24% 10/6/2022 22,933
 23,280
Logistics Portfolio - Pool 4 3
 4.36% 12/5/2022 79,500
 79,500
KIK USA Portfolio 3
 4.31% 7/6/2023 7,230
 7,450
Logistics Portfolio - Pool 12
 4.27% 1/1/2022 37,603
 38,107
CCC Portfolio2
 4.24% 10/6/2022 22,572
 22,814
Logistics Portfolio - Pool 42
 4.36% 12/5/2022 79,500
 79,500
Romeoville, IL 3.80% 4/6/2023 24,724
 24,951
Romeoville, IL3
 9.37% 4/6/2023 6,605
 6,623
KIK USA Portfolio2
 4.31% 7/6/2023 7,001
 7,154
Yuma, AZ 5.27% 12/6/2023 11,909
 12,058
 5.27% 12/6/2023 11,752
 11,858
Allentown, PA 5.16% 1/6/2024 22,790
 23,078
 5.16% 1/6/2024 22,487
 22,690
Spartanburg, SC 3.72% 2/1/2024 5,821
 6,360
 3.72% 2/1/2024 5,256
 5,635
Natick, MA 5.21% 3/1/2024 31,027
 31,224
Natick, MA3
 10.38% 3/1/2024 3,447
 3,469
Maple Grove, MN 3.88% 5/6/2024 16,468
 —
 3.88% 5/6/2024 16,201
 16,380
Curtis Bay, MD 4.31% 7/1/2024 13,500
 —
 4.31% 7/1/2024 13,500
 13,500
Rialto, CA 3.91% 8/1/2024 54,940
 —
 3.91% 8/1/2024 54,344
 54,741
Houston, TX 3.68% 9/1/2024 26,000
 26,000
Durham, NC 4.02% 9/6/2024 3,648
 —
 4.02% 9/6/2024 3,597
 3,631
Houston, TX 3.68% 9/1/2024 26,000
 —
Charleston, SC 3.80% 2/1/2025 6,169
 6,658
 3.80% 2/1/2025 5,658
 6,001
Hackettstown, NJ 5.49% 3/6/2026 9,488
 9,550
 5.49% 3/6/2026 9,387
 9,455
Hutchins, TX 5.41% 6/1/2029 21,883
 22,764
 5.41% 6/1/2029 20,955
 21,578
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
Greenwood, IN 3.59% 6/15/2018 —
 7,257
Greenfield, IN 3.63% 6/15/2018 —
 5,865
Logistics Portfolio - Pool 3 3.96% 8/1/2018 —
 43,302
Total mortgage notes payableTotal mortgage notes payable $600,553
 $555,484
Total mortgage notes payable $491,236
 $554,498
Net deferred financing costs and net debt premiumNet deferred financing costs and net debt premium 6,345
 3,158
Net deferred financing costs and net debt premium 7,979
 9,023
Total mortgage notes payable, netTotal mortgage notes payable, net $606,898
 $558,642
Total mortgage notes payable, net $499,215
 $563,521
1.Represents the interest rate as of SeptemberJune 30, 2017 or date of extinguishment if the mortgage note was extinguished during the period,2018 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 five mortgage notes are cross-collateralized.
3.There are two properties under the Logistics Portfolio - Pool 3 mortgage,As of June 30, 2018, there were 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, and three properties under the KIK USA Portfolio mortgage, five properties undermortgage.
3.Mortgage notes represent mezzanine financing at the Logistics Portfolio - Pool 2 mortgage, and two properties under the KIK Canada Portfolio mortgage.properties.
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)
SeptemberJune 30, 20172018

Unsecured Debt
2015 Credit Facility and Term Loans
In December 2015, the Company entered into an agreement, or the Credit Agreement, for a new $1,900,000 credit facility, or the 2015 Credit Facility, consisting of an $850,000 senior unsecured revolving credit facility, or the 2015 Revolving Credit Facility, and a $1,050,000 term loan facility with JPMorgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated and terminated Legacy Gramercy's 2014 Credit Facility.Incorporated. 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 monthsix-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 $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’sCompany's option, either (i) adjusted London Interbank Offered Rate, or LIBOR plus an applicable margin ranging from 0.875%0.88% to 1.55%, depending on the Company’sCompany's credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.55%, depending on the Company’sCompany's credit ratings. The Company is also required to pay quarterly in arrears a 0.125%0.13% to 0.30% facility fee, depending on the Company'sits 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’sCompany's option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.90% to 1.75%, depending on the Company’sCompany's credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.75%, depending on the Company’sCompany'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., (y) 0.50% above the Federal Funds Effective Rate and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.
In December 2015, the Company also entered into a $175,000 seven-year unsecured term loan with or Capital One, N.A., or the 7-Year Term Loan, which matures in January 2023. Outstanding borrowings under the 7-Year Term Loan incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 1.30% to 2.10%, depending on the Company’s credit ratings, or (iii) the alternate base rate plus an applicable margin ranging from 0.30% to 1.10%, depending on the Company’s credit ratings. The alternate base rate is the greatest of (x) the prime rate announced by Capital One,respectively, (y) 0.50% 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 thatwith which the Company has tomust comply with in order to borrow under the facilities. The Company was in compliance with the covenants under the facilities as of SeptemberJune 30, 2017.2018. Refer to the table at the end of this Note 65 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.
Exchangeable Senior Notes
In September 2017, the Company's $115,000 of 3.75% Exchangeable Senior Notes were exchanged for 5,258,420 of the Company's common shares.
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)
SeptemberJune 30, 2017

Exchangeable Senior Notes
On March 18, 2014, the Company 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, amounts in thousands, except share, unit, per share, per unit, and property data)
September 30, 20172018

The terms of the Company’s unsecured debt obligations and outstanding balances as of SeptemberJune 30, 20172018 and December 31, 20162017 are set forth in the table below:
Stated Interest Rate 
Effective Interest Rate 1
 Maturity Date Outstanding BalanceStated Interest Rate 
Effective Interest Rate 1
 Maturity Date Outstanding Balance
 September 30, 2017 December 31, 2016 June 30, 2018 December 31, 2017
2015 Revolving Credit Facility - U.S. dollar tranche2.20% 2.20% 1/8/2020 $595,000
 $—
2015 Revolving Credit Facility - USD tranche3.08% 3.08% 1/8/2020 $405,000
 $345,000
2015 Revolving Credit Facility - Multicurrency tranche1.20% 1.20% 1/8/2020 $20,097
 $65,837
1.11% 1.11% 1/8/2020 36,773
 12,162
3-Year Term Loan2.35% 2.33% 1/8/2019 300,000
 300,000
3.23% 2.33% 1/8/2019 300,000
 300,000
5-Year Term Loan2.35% 2.70% 1/8/2021 750,000
 750,000
3.23% 2.70% 1/8/2021 750,000
 750,000
7-Year Term Loan2.76% 3.34% 1/9/2023 175,000
 175,000
3.08% 3.00% 1/9/2023 400,000
 400,000
2015 Senior Unsecured Notes4.97% 5.07% 12/17/2024 150,000
 150,000
4.97% 5.07% 12/17/2024 150,000
 150,000
2016 Senior Unsecured Notes3.89% 4.00% 12/15/2022 150,000
 150,000
3.89% 4.00% 12/15/2022 150,000
 150,000
2016 Senior Unsecured Notes4.26% 4.38% 12/15/2025 100,000
 100,000
4.26% 4.38% 12/15/2025 100,000
 100,000
2016 Senior Unsecured Notes4.32% 4.43% 12/15/2026 100,000
 100,000
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 debtTotal unsecured debt 2,340,097
 1,905,837
Total unsecured debt 2,391,773
 2,307,162
Net deferred financing costs and net debt discountNet deferred financing costs and net debt discount (3,316) (9,704)Net deferred financing costs and net debt discount (4,680) (5,063)
Total unsecured debt, netTotal unsecured debt, net $2,336,781
 $1,896,133
Total unsecured debt, net $2,387,093
 $2,302,099
1.Represents the rate at which interest expense is recorded for financial reporting purposes as of SeptemberJune 30, 2017,2018, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.
2.During September 2017, the Exchangeable Senior Notes were exchanged for the Company’s common shares. Thus, they have no outstanding balance as of September 30, 2017.
Combined aggregate principal maturities of the Company’s unsecured debt obligations and non-recourse mortgages, and Exchangeable Senior Notes, in addition to associated interest payments, as of SeptemberJune 30, 20172018 are as follows:
October 1 to December 31, 2017 2018 2019 2020 2021 Thereafter Above market interest TotalJuly 1 to December 31, 2018 2019 2020 2021 2022 Thereafter Above market interest Total
2015 Revolving Credit Facility$—
 $—
 $—
 $615,097
 $—
 $—
 $—
 $615,097
$—
 $—
 $441,773
 $—
 $—
 $—
 $—
 $441,773
Term Loans—
 —
 300,000
 —
 750,000
 175,000
 —
 1,225,000
—
 300,000
 —
 750,000
 —
 400,000
 —
 1,450,000
Mortgage Notes Payable 1
4,073
 171,988
 35,003
 61,803
 18,153
 309,533
 —
 600,553
6,880
 30,450
 62,834
 19,256
 141,929
 229,887
 —
 491,236
Senior Unsecured Notes—
 —
 —
 —
 —
 500,000
 —
 500,000
—
 —
 —
 —
 150,000
 350,000
 —
 500,000
Interest Payments 2
28,780
 94,453
 86,650
 69,801
 44,158
 43,378
 3,029
 370,249
54,009
 104,625
 89,976
 58,015
 53,868
 64,822
 3,299
 428,614
Total$32,853
 $266,441
 $421,653
 $746,701
 $812,311
 $1,027,911
 $3,029
 $3,310,899
$60,889
 $435,075
 $594,583
 $827,271
 $345,797
 $1,044,709
 $3,299
 $3,311,623
1.Mortgage note payments reflect accelerated repayment dates, when applicable, pursuant to related the loanrelated agreement.
2.Interest payments do not reflect the effect of interest rate swaps.

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

7. Leasing Agreements
The Company’s properties are leased to tenants under operating leases with expiration dates extending through the year 2042. These leases generally contain rent increases and renewal options.
Future minimum rental revenues under non-cancelable leases excluding reimbursements for operating expenses as of September 30, 2017 are as follows:
 October 1 to December 31, 2017 2018 2019 2020 2021 Thereafter Total minimum lease rental income
Operating Leases$112,429
 $450,096
 $424,686
 $396,516
 $362,870
 $1,973,979
 $3,720,576
8.6. Transactions with Trustee Related Entities and Related Parties
In December 2016, the Company sold its 5.1% interest in one property located in Lille, France held by the Goodman Europe JV to the Gramercy European Property Fund, in which the Company 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 ManagementLimited 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, dollar amounts in thousands, except share, unit, per share and per unit and property data)
SeptemberJune 30, 20172018

9.7. 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 realizeprovides guidance 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 measurement of a financial instruments and other assets and liabilities. Theasset or liability. Inputs used to develop fair value measurements are classified into one of three broad levels defined are as follows:
categories: Level I, - This level is comprised of financial instruments and other assets and liabilities that havedefined as observable inputs such as quoted prices that are available in liquidactive markets for identical assets or liabilities.
liabilities; Level II, - This level is comprised of financial instrumentsdefined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and other assets and liabilitiesLevel III, defined as unobservable inputs 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 levelthere is comprised of financial instruments and other assets and liabilities that have little or no market or pricing data, thus requiring management 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 managementuse its judgment and develop its own 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 nonrecurringnon-recurring basis at SeptemberJune 30, 20172018 and December 31, 2016:2017:
 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 Bonds6,167
 6,167
 11,906
 11,906
Investment in CBRE Strategic Partners Asia2,772
 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
 June 30, 2018 December 31, 2017
 Carrying Value Fair Value Carrying Value Fair Value
Financial assets: 
  
  
  
Interest rate swaps$35,212
 $35,212
 $19,668
 $19,668
Retained CDO Bonds6,792
 6,792
 5,527
��5,527
Real estate investments1
2,592
 2,592
 87,996
 87,996
Investment in CBRE Strategic Partners Asia2,062
 2,062
 2,820
 2,820
Loan investments2
33,169
 28,872
 22,154
 21,362
Financial liabilities:       
Interest rate swaps$—
 $—
 $173
 $173
Long-term debt:       
2015 Revolving Credit Facility2
441,773
 441,823
 357,162
 357,369
3-Year Term Loan2
300,000
 300,066
 300,000
 300,091
5-Year Term Loan2
750,000
 750,573
 750,000
 750,678
7-Year Term Loan2
398,330
 400,006
 398,152
 400,010
Mortgage notes payable2
499,215
 502,870
 563,521
 573,826
Senior Unsecured Notes2
496,990
 494,455
 496,785
 513,229
1.
Amounts as of September 30, 2017represent two and December 31, 2016 represent four and oneseven real estate investments, respectively, that were impaired duringby the nine months ended SeptemberCompany and held as of June 30, 20172018 and the year ended December 31, 2016, respectively, and were owned as of the end of the respective reporting periods.2017.
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.maturities.
Retained CDO Bonds:Loan investments: Non-investment grade, subordinate CDO bonds, preferred shares and ordinary sharesLoan investments are presented in other assets on the Condensed Consolidated Financial Statements at amortized cost and not fair value. The fair value whichof each investment is determined onestimated by a quarterly basis using an internally developed discounted cash flow model.
CBRE Strategic Partners Asia:The investment manager of CBRE Strategic Partners Asia applies valuation techniquesmodel, using discount rates that best reflect current market rates for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. Refer to Note 5 for more information on this investment.
Real estate investments: Real estate investments impaired during a period are reported at estimated fair valuefinancings with similar characteristics 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.
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

Derivative instruments: The Company’s derivative instruments, which are comprised of interest rate swap agreements, are carried at fair value in the Condensed Consolidated Financial Statements based upon third-party valuations. Derivative fair values are presented within other assets or other liabilities, depending on the balance at the end of the period. Changes in fair value of derivative instruments that represent realized gains (losses) are recorded within interest expense on the Condensed Consolidated Statements of Operations. Refer to Note 10 for more information on the derivative instruments.credit quality.
Mortgage notes payable, unsecured term loans, unsecured revolving credit facilities and senior unsecured notes: These instruments are presented in the Condensed Consolidated Financial Statements at amortized cost and not at fair
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)
June 30, 2018

value. The fair value of each instrument is estimated by a discounted cash flows model, using discount rates that best reflect current market rates for financings with similar characteristics and credit quality. Mortgage premiums
Retained CDO Bonds, investment in CBRE Strategic Partners Asia, real estate investments, and discounts are amortized to interest expense on the Condensed Consolidated Statements of Operations using the effective interest method over the terms of the related notes.rate swaps: Refer to Note 6section below, “Valuation of Level III Instruments,” for more information onvaluation methods and assumptions used for these instruments.
Exchangeable Senior Notes: The Exchangeable Senior Notes are presentedLevel III assets and liabilities measured at amortized cost onfair value in the Condensed Consolidated Financial Statements. The fair value is determined based upon a discounted cash-flow methodology using discount rates that best reflect current market rates for instruments with similar with characteristics and credit quality. Refer to Note 6 for more information on these instruments.
Disclosure about fair value measurements is based on pertinent information available to the Company at the reporting date. Although the Company is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for the purpose of these financial statements since September 30, 2017 and December 31, 2016, and current estimates of fair value may differ significantly from the amounts presented herein.
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 The use of different market assumptions and/or liability falls withinestimation methodologies may have a material effect on the hierarchy requires significant judgment and the Company evaluates its hierarchy disclosures each quarter.estimated fair value amounts.
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.as follows:
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 June 30, 2018 Total Level I Level II Level III
Financial Assets:  
  
  
  
Retained CDO Bonds $6,792
 $—
 $—
 $6,792
Real estate investments 2,592
 —
 —
 2,592
Investment in CBRE Strategic Partners Asia 2,062
 —
 —
 2,062
Interest rate swaps 35,212
 —
 —
 35,212
  $46,658
 $—
 $—
 $46,658
At December 31, 2016 Total Level I Level II Level III
At December 31, 2017 Total Level I Level II Level III
Financial Assets:  
  
  
  
  
  
  
  
Retained CDO Bonds $11,906
 $—
 $—
 $11,906
 $5,527
 $—
 $—
 $5,527
Real estate investments 2,413
 —
 —
 2,413
 87,996
 —
 —
 87,996
Investment in CBRE Strategic Partners Asia 4,145
 —
 —
 4,145
 2,820
 —
 —
 2,820
Interest rate swaps 3,769
 —
 —
 3,769
 19,668
 —
 —
 19,668
 $22,233
 $—
 $—
 $22,233
 $116,011
 $—
 $—
 $116,011
Financial Liabilities:  
  
  
  
  
  
  
  
Interest rate swaps $(700) $—
 $—
 $(700) $(173) $—
 $��
 $(173)
 $(700) $—
 $—
 $(700) $(173) $—
 $—
 $(173)
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. Management estimates the timing and amount of cash flows expected to be collected and applies a discount rate equal to the yield that the Company would expect to pay for similar securities with similar risks at the valuation date. Future expected cash flows generated by managementmodels, which 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.judgment. 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’sCompany'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,flows.
Gramercy Property Trust and significant increases (decreases)GPT Operating Partnership LP
Notes to Consolidated Financial Statements
(Unaudited, dollar amounts in these inputs would result in a significantly lower (higher) fair value measurement. The fund’s term ended in January 2017thousands, except per share and commencement of the fund's liquidation was filed in early February 2017. The fund will wind up over the succeeding 24 months.per unit data)
June 30, 2018

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
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

would result in a significantly lower (higher) fair value measurement. As the inputs are unobservable, the Company determined the inputs used to value this liability falls within Level III for fair value reporting.
Derivative instruments:Interest rate swaps: The Company's derivative instruments as of June 30, 2018 and December 31, 2017 consist of interest rate swaps, which are valued with the assistance of a third-party derivative specialist using a discounted cash flow model, whichthat requires a combination of observable market-based inputs, such as interest rate curves, and unobservable inputs which require significant judgment such as the credit valuation adjustments due to the risk of nonperformance by both the Company and its counterparties. The most significant unobservable input in the fair valuation of derivative instrumentsinterest rate swaps is the credit valuation adjustment as it requires significant management judgment regarding changes in the credit risk of the Company or its counterparties, however the primary driver of the fair value of the interest rate swaps is the forward interest rate curve.
Total unrealized gains from derivatives for the three and nine months ended September 30, 2017 were $2,959 and $4,645, respectively, in accumulated other comprehensive income. Total unrealized gains (losses) from derivatives for the three and nine months ended September 30, 2016 were $7,653 and $(25,996), respectively, in accumulated other comprehensive income.
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 SeptemberJune 30, 20172018 are as follows:
Financial Asset (Liability) Fair Value Valuation Technique Unobservable Inputs Range
Non-investment grade, subordinate CDO bonds $6,167
 Discounted cash flows Discount rate 16.5%
Interest rate swaps 1
 7,852
 Hypothetical derivative method Credit borrowing spread 135 to 205 basis points
Investment in CBRE Strategic Partners Asia 2,772
 Discounted cash flows Discount rate 20.0%
1.Fair value includes interest rate swap liabilities with an aggregate value of $(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

Financial Asset (Liability) Fair Value Valuation Technique Unobservable Inputs Range
Non-investment grade, subordinate CDO bonds $6,792
 Discounted cash flows Discount rate 19.0%
Investment in CBRE Strategic Partners Asia 2,062
 Discounted cash flows Discount rate 20.0%
Interest rate swaps 35,212
 Hypothetical derivative method Credit borrowing spread 110 to 175 basis points
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 SeptemberJune 30, 2017:2018:
Retained CDO Bonds Investment in CBRE Strategic Partners Asia Interest Rate Swaps Total Financial Assets (Liabilities) - Level IIIRetained 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 premiums1,353
 —
 —
 1,353
646
 —
 (35) 611
Adjustments to fair value:   
   

   
   

Ineffective portion of change in derivative instruments—
 —
 138
 138
Termination of derivative instrument—
 —
 (11,288) (11,288)
Unrealized gain on derivatives—
 —
 4,645
 4,645
—
 —
 27,040
 27,040
Unrealized loss in other comprehensive income from fair value adjustment(2,202) —
 —
 (2,202)619
 —
 —
 619
Other-than-temporary impairments(4,890) —
 —
 (4,890)
Total loss on fair value adjustments—
 (561) —
 (561)—
 (251) —
 (251)
Distributions from financial assets—
 (812) —
 (812)—
 (507) —
 (507)
Balance at September 30, 2017$6,167
 $2,772
 $7,852
 $16,791
Balance at June 30, 2018$6,792
 $2,062
 $35,212
 $44,066
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)
June 30, 2018

Fair Value on a Non-Recurring Basis
The Company measuredmeasures its real estate investments impaired during thea 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, 2016. The Company recordedrecords impairment on these assets as a result of a change in intent to hold the real estate investments. Real estate investments impaired during the period are reported at estimated fair value and real estate investments impaired during the 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 CompanyThere were two assets measured four assets on a non-recurring basis as of SeptemberJune 30, 2017, of2018, which two were both classified as held for investment with a total value of $10,400 and two were classified as held for sale with a value of $4,161recorded at $2,592 as of SeptemberJune 30, 2017. The Company2018. There were seven assets measured one asset on a non-recurring basis as of December 31, 2016,2017, which waswere all classified as held for investment and recorded at $2,413$87,996 as of December 31, 2016.2017.
10.8. 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 usingthe 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.
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 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 designated and qualifies as 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. ThePrior to the Company’s adoption of ASU 2017-12 on January 1, 2018, described in Note 2, the ineffective portion of a derivative’sthe change in fair value will beof 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 97 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 raterates of the Company’s non-derivative net investment hedgehedges 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 Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit data)
June 30, 2018

The Company’s derivatives and hedging instruments as of SeptemberJune 30, 20172018 are as follows:
 Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value
Interest Rate Swap - Waco 1 mo. USD-LIBOR-BBA 14,964 USD 4.55% 12/19/2013 12/19/2020 $(313) 1 mo. USD-LIBOR-BBA 14,741 USD 4.55% 12/19/2013 12/19/2020 $64
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
 1 mo. USD-LIBOR-BBA 100,000 USD 1.22% 12/19/2016 12/17/2018 472
Interest Rate Swap - 3-Year Term Loan 1 mo. USD-LIBOR-BBA 100,000 USD 1.23% 12/19/2016 12/17/2018 370
 1 mo. USD-LIBOR-BBA 100,000 USD 1.23% 12/19/2016 12/17/2018 470
Interest Rate Swap - 3-Year Term Loan 1 mo. USD-LIBOR-BBA 100,000 USD 1.24% 12/19/2016 12/17/2018 357
 1 mo. USD-LIBOR-BBA 100,000 USD 1.24% 12/19/2016 12/17/2018 465
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
 1 mo. USD-LIBOR-BBA 750,000 USD 1.60% 12/17/2015 12/17/2020 19,539
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 175,000 USD 1.82% 12/17/2015 1/9/2023 739
 1 mo. USD-LIBOR-BBA 175,000 USD 1.82% 12/17/2015 1/9/2023 6,853
Forward Starting Swap1
 3 mo. USD-LIBOR-BBA 250,000 USD 2.23% 12/20/2017 12/20/2027 2,051
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 60,000 USD 1.95% 10/13/2017 1/9/2023 2,025
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 40,000 USD 2.01% 10/13/2017 1/9/2023 1,243
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 39,500 USD 1.96% 10/13/2017 1/9/2023 1,298
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 31,500 USD 1.96% 10/13/2017 1/9/2023 1,038
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 31,500 USD 2.00% 10/13/2017 1/9/2023 991
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 22,500 USD 1.95% 10/13/2017 1/9/2023 754
Net Investment Hedge in GBP-denominated investments USD-GBP exchange rate 15,000 GBP N/A 7/15/2016 N/A —
 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 21,300 EUR N/A 3/8/2018 N/A —
Total hedging instrumentsTotal hedging instruments $7,852
Total hedging instruments $35,212
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.
As of SeptemberJune 30, 2017,2018, the Company’s derivative instruments consistconsisted of interest rate swaps, which are cash flow hedges. Through its interest rate swaps, the Company is hedginghedges used to hedge 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, theThe Company's interest rate swap derivative instruments were reported in other assets at fair value of $8,243 and in other liabilities$35,212 at fair value of $(391). Swap gain (loss) is recognized in interestJune 30, 2018.
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)
SeptemberJune 30, 20172018

expenseThe table below details the location in the Condensed Consolidated Statementsfinancial statements of Operations and representsthe gain or loss recognized on the interest rate swap hedge ineffectiveness, or amounts excluded from ineffectiveness, which relates to the off-market financing element associated with certain derivatives. Swap gain of $92 and $138 was recognizedswaps designated as cash flow hedges for the three and ninesix months ended SeptemberJune 30, 2017, respectively,2018 and swap gain of $83 and $817 was recognized for 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 related to a derivative terminated in 2015. During the three and nine months ended September 30, 2016, 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. 2017:
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Accumulated other comprehensive income:       
Gain recognized in accumulated other comprehensive income1
$4,990
 $—
 $27,143
 $—
Interest expense:       
Loss reclassified from accumulated other comprehensive income into interest expense1
$271
 $271
 $539
 $539
Gain recognized in interest expense (ineffective portion)2
—
 —
 —
 46
Total recognized in interest expense on statements of operations$271
 $271
 $539
 $585
Gain on derivative instruments:       
Gain reclassified from other comprehensive income into gain on derivative instruments3
$14,970
 $—
 $14,970
 $—
1.Periods prior to January 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 six months ended June 30, 2018 includes $103 related to the adoption of ASU 2017-02.
2.Represents the ineffective portion and pertains only to periods prior to January 1, 2018, when the Company adopted ASU 2017-12.
3.Amounts represent gain recognized during the three and six months ended June 30, 2018 related to the Company’s termination of its forward starting swap in June 2018.
During the next 12 months, the Company expects that $1,883$(9,553) will be reclassified from other comprehensive income as an increase in interest expense for the Company’s interest rate swaps as of SeptemberJune 30, 2017.2018. Additionally, the Company will recognize $1,837$1,024 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.swap.
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. The Company’sIn March 2018, the Company entered into a non-derivative net investment hedge on its euro-denominated investments, which was entered intoinvestment in the Gramercy European Property Fund III and in prior periods, from September 2015 was used tountil disposal of the underlying investments in July 2017, the Company had a non-derivative net investment hedge exposure to changes in the euro U.S. dollar exchange rate underlyingon its unconsolidated equity investments in the Gramercy European Property Fund and the Goodman Europe JV, bothall 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.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, and its wholly-owned property in Coventry, UK until its disposition in December 2016, both of which havehas British pounds sterling as theirits functional currency. At September 30, 2017, theThe Company’s non-derivative net investment hedge value isvalues are reported at carrying value as a net liability of $20,097, which isand are 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 ninesix months ended SeptemberJune 30, 2017,2018, the Company recorded a net gain (loss) of $891$1,027 and $(4,228),$568, respectively, in other comprehensive income from the impact of exchange rates related to the non-derivative net investment hedges. During the three and ninesix months ended SeptemberJune 30, 2016,2017, the Company recorded a net loss of $109$4,196 and $175,$5,119, respectively, in other comprehensive income from the impact of exchange rates related to the non-derivativenon-
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)
June 30, 2018

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.
11.9. Shareholders’ Equity (Deficit) of the Company
As of SeptemberJune 30, 20172018 and December 31, 2016,2017, the Company's authorized capital shares consistsconsisted of 500,000,000 shares of beneficial interest, $0.01 par value per share, of which the Company is authorized to issue up
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

to 490,000,000 common shares of beneficial 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 SeptemberJune 30, 2017, 160,669,4682018, 160,792,820 common shares and 3,500,000 preferred shares were issued and outstanding.
During the ninesix months ended SeptemberJune 30, 2017,2018, the Company’s common dividends arewere as follows:
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
During September 2017, 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.
In April 2017, the Company completed an underwritten public offering of 10,350,000 common shares, which includes the exercise in full by the underwriters of their option to purchase 1,350,000 additional common shares. The common shares were issued at a public offering price of $27.60 per share and the net proceeds from the offering were approximately $274,234.
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.
Quarter Ended Record Date Payment Date Common dividend per share
March 31, 2018 3/30/2018 4/16/2018 $0.375
June 30, 2018 6/29/2018 7/16/2018 $0.375
Employee StockShare Purchase Plan
In June 2017, the Company’s shareholders approved an Employee StockShare Purchase Plan, or ESPP, which enables the Company’s eligible employees to purchase the common shares through payroll deductions.deductions, subject to the restrictions in the Merger Agreement. 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 offeroffering periods at a purchase price determined at the discretion of the board of trustees, which was initially established to be equal to either (1) a fixed percentage (not less than 85.0%)90.0% of the fair market valuelower of either (i) the closing price 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 theCompany’s common shares on the first day of the offeroffering period and (ii) the closing price of the Company’s common shares on the last day of the offering period. As of SeptemberJune 30, 2017,2018, there were no1,374 shares issued under the ESPP. As of June 30, 2018, the ESPP has been suspended, subject to the terms of the Merger Agreement.
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.Company, subject to the restrictions in the Merger Agreement. In August 2016, the Company registered 3,333,333 common shares related to the DRIP. During the ninesix months ended SeptemberJune 30, 2017, 5,4102018, 3,363 shares were issued under the DRIP and as of SeptemberJune 30, 20172018 there were 3,327,2263,322,410 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.$375,000, subject to the restrictions in the Merger Agreement. During the three and ninesix months ended SeptemberJune 30, 2017,2018, the Company sold 3,488,525 and 4,219,978did not sell any common shares through the ATM Program for net proceeds of approximately $103,351Program.
Gramercy Property Trust and $123,051, respectively.GPT Operating Partnership LP
Notes to Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit data)
June 30, 2018

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 SeptemberJune 30, 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
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 SeptemberJune 30, 2017,2018, there were 2,734,0092,625,800 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 throughThrough 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, 1,037,7592018, 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 66.6%67.2% have vested. As of SeptemberJune 30, 20172018 and December 31, 2016,2017, the Company had 352,378341,089 and 318,807347,676 weighted average restricted shares outstanding, respectively.
Compensation expense of $655$617 and $2,227$1,158 was recorded for the three and ninesix months ended SeptemberJune 30, 2018, respectively, related to the Company’s equity incentive plans. Compensation expense of $755 and $1,572 was recorded for the three and six months ended June 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, amounts in thousands, except share, unit, per share, per unit, and property data)
September 30, 2017

incentive plans. Compensation expense of $4,419$4,141 will be recorded over the course of the next 2923 months representing the remaining weighted average vesting period of equity awards issued under the equity incentive plans as of SeptemberJune 30, 2017.2018.
Compensation expense of $1,158$1,151 and $3,284$2,289 was recorded for the three and ninesix months ended SeptemberJune 30, 2018, respectively, for the Company's Outperformance Plans. Compensation expense of $1,070 and $2,126 was recorded for the three and six months ended June 30, 2017, respectively, for the Company's Outperformance Plans. Compensation expense of $488 and $1,464 was recorded for the three and nine months ended September 30, 2016, respectively, for the Company's Outperformance Plans. Compensation expense of $12,537$9,037 will be recorded over the course of the next 4132 months, representing the remaining weighted average vesting period of the awards issued under the Outperformance Plans as of SeptemberJune 30, 2017.2018.
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.
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)
SeptemberJune 30, 20172018

Earnings per share for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 are computed as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 20162018 2017 2018 2017
Numerator – Income (loss): 
  
     
  
    
Net income (loss) from continuing operations$45,607
 $(3,411) $43,520
 $14,461
$20,754
 $5,985
 $32,363
 $(2,087)
Net income (loss) from discontinued operations(24) 347
 (76) 5,045
Net loss from discontinued operations—
 (28) —
 (52)
Net income (loss) before net gain on disposals45,583
 (3,064) 43,444
 19,506
20,754
 5,957
 32,363
 (2,139)
Net gain on disposals4,879
 2,336
 24,258
 2,336
4,523
 2,002
 20,778
 19,379
Gain on sale of European unconsolidated equity investment interests held with a related party—
 —
 —
 5,341
Net Income (loss)50,462
 (728) 67,702
 27,183
Less: Net income attributable to noncontrolling interest(333) (221) (374) (152)
Net income25,277
 7,959
 53,141
 17,240
Less: Net (income) loss attributable to noncontrolling interest(845) 113
 (1,647) (41)
Less: Nonforfeitable dividends allocated to participating shareholders(191) (196) (766) (596)(206) (337) (409) (635)
Less: Preferred share dividends(1,559) (1,559) (4,676) (4,676)(1,558) (1,558) (3,117) (3,117)
Net income (loss) available to common shares outstanding - basic$48,379
 $(2,704) $61,886
 $21,759
Plus: Interest expense on Exchangeable Senior Notes1,462
 —
 —
 —
Net income (loss) available to common shares outstanding - diluted$49,841
 $(2,704) $61,886
 $21,759
Denominator – Weighted average shares1:
       
Net income available to common shares outstanding$22,668
 $6,177
 $47,968
 $13,447
Denominator – Weighted average shares:       
Basic weighted average shares outstanding152,619,352
 140,257,503
 147,399,457
 141,180,822
160,420,278
 148,542,916
 160,414,240
 144,746,251
Effect of dilutive securities:              
Unvested non-participating share based payment awards15,052
 —
 12,709
 137,803
Unvested non-participating share-based payment awards—
 86,452
 —
 79,552
Options21,015
 —
 18,716
 13,802
13,073
 19,196
 11,051
 14,471
Outside interests in the Operating Partnership—
 —
 —
 399,771
Exchangeable Senior Notes4,851,794
 —
 —
 655,511
—
 1,265,879
 —
 1,125,662
Diluted weighted average shares outstanding157,507,213
 140,257,503
 147,430,882
 142,387,709
160,433,351
 149,914,443
 160,425,291
 145,965,936
1.Share and per share amounts have been adjusted for the 1-for-3 reverse share split completed on December 30, 2016.
The Company’s options and other share-based payment awards used in the computation of EPS were calculated using the treasury share method. As discussed in Note 6,5, 100.0% of the Company’s Exchangeable Senior Notes were exchanged for 5,258,420 of the Company’s common shares in September 2017. Prior to2017, however for the third quarter ofthree and six months ended June 30, 2017, 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 these periodsthat period the Company only included the effect of the excess conversion premium in the calculation of Diluted EPS. As the final exchange was completed in all shares, for the three and nine months ended September 30, 2017, the Company used the if-converted method to evaluate the Exchangeable Senior Notes for dilution for the period prior to their conversion. The impact of the Exchangeable Senior Notes is dilutive during the three months ended September 30, 2017 and is therefore included in the calculation of Diluted EPS for the period, however the impact of the Exchangeable Senior Notes is anti-dilutive during the nine months ended September 30, 2017 and is therefore excluded from the calculation of Diluted EPS for the period. The average price of the Company’s common shares for the three and nine months ended September 30, 2016 was above the exchange price of 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

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 ninesix months ended SeptemberJune 30, 2018, the net income (loss) attributable to the outside interests in the Operating Partnership has been excluded from the numerator and 5,934,765 and 5,490,217, respectively, weighted average shares related to the outside interests in the Operating Partnership have been excluded from the denominator for the purpose of calculating Diluted EPS as there would have been no effect had such amounts been included. For the three and six months ended June 30, 2017, the net income (loss) attributable to the outside interests in the Operating Partnership havehas been excluded from the numerator and 1,352,609560,443 and 849,338,590,547, respectively, weighted average shares related to the outside interests in the Operating Partnership hashave 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 1311 for more information on the outside interests in the Operating Partnership.
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)
June 30, 2018

Accumulated other comprehensive income (loss)Other Comprehensive Income
Accumulated other comprehensive income (loss) as of SeptemberJune 30, 20172018 and December 31, 20162017 is comprisedcomposed of the following:
 September 30, 2017 December 31, 2016
Net unrealized gain (loss) on derivative securities$4,205
 $(440)
Net unrealized gain on debt instruments1,497
 3,699
Foreign currency translation adjustments:   
Net gain on non-derivative net investment hedges 1
288
 4,516
Other foreign currency translation adjustments(5,826) (13,045)
Reclassification of swap gain into interest expense1,954
 1,142
Total accumulated other comprehensive income (loss)$2,118
 $(4,128)
 June 30, 2018 December 31, 2017
Net unrealized gain on derivative securities$42,670
 $15,630
Net unrealized gain on debt instruments1,036
 417
Foreign currency translation adjustments:   
Net gain on non-derivative net investment hedges1
865
 297
Other foreign currency translation adjustments(6,966) (5,734)
Reclassification of swap gain (loss) into interest expense(8,583) 2,166
Cumulative effect of accounting change103
 —
Total accumulated other comprehensive income$29,125
 $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).income. 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.
12.10. Partners’ Capital of the Operating Partnership
The Company is the sole general partner of the Operating Partnership. As of SeptemberJune 30, 2017,2018, the Company owned 160,324,288160,792,820 of the outstanding general and limited partnership interests, or 98.08%96.42%, 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 SeptemberJune 30, 2017,2018, limited partners other than the Company owned 3,131,6365,959,858 common units, or 1.92%3.58%, of the Operating Partnership.
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

Earnings per Unit
The Operating Partnership's earnings per unit for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 are computed as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 20162018 2017 2018 2017
Numerator – Income (loss):              
Net income (loss) from continuing operations$45,607
 $(3,411) $43,520
 $14,461
$20,754
 $5,985
 $32,363
 $(2,087)
Net income (loss) from discontinued operations(24) 347
 (76) 5,045
Net loss from discontinued operations—
 (28) —
 (52)
Net income (loss) before net gain on disposals45,583
 (3,064) 43,444
 19,506
20,754
 5,957
 32,363
 (2,139)
Net gain on disposals4,879
 2,336
 24,258
 2,336
4,523
 2,002
 20,778
 19,379
Gain on sale of European unconsolidated equity investment interests held with a related party—
 —
 —
 5,341
Net Income (loss)50,462
 (728) 67,702
 27,183
Less: Net (gain) loss attributable to noncontrolling interest in other partnerships97
 (229) 114
 (90)
Net income25,277
 7,959
 53,141
 17,240
Less: Net loss attributable to noncontrolling interest in other partnerships—
 137
 —
 17
Less: Nonforfeitable dividends allocated to participating unitholders(191) (196) (766) (596)(206) (337) (409) (635)
Less: Preferred unit distributions(1,559) (1,559) (4,676) (4,676)(1,558) (1,558) (3,117) (3,117)
Net income (loss) available to common units outstanding - basic$48,809
 $(2,712) $62,374
 $21,821
Plus: Interest expense on Exchangeable Senior Notes1,462
 —
 —
 —
Net income (loss) available to common units outstanding - diluted$50,271
 $(2,712) $62,374
 $21,821
Denominator – Weighted average units 1:
       
Net income available to common units outstanding$23,513
 $6,201
 $49,615
 $13,505
Denominator – Weighted average units:       
Basic weighted average units outstanding153,971,961
 140,596,612
 148,248,795
 141,580,593
166,355,043
 149,103,359
 165,904,457
 145,336,798
Effect of dilutive securities:              
Unvested non-participating share based payment awards15,052
 —
 12,709
 137,803
Unvested non-participating share-based payment awards—
 86,452
 —
 79,552
Options21,015
 —
 18,716
 13,802
13,073
 19,196
 11,051
 14,471
Exchangeable Senior Notes4,851,794
 —
 —
 655,511
—
 1,265,879
 —
 1,125,662
Diluted weighted average units outstanding158,859,822
 140,596,612
 148,280,220
 142,387,709
166,368,116
 150,474,886
 165,915,508
 146,556,483
1.Unit and per unit amounts have been adjusted for the 1-for-3 reverse unit split completed on December 30, 2016.
13.11. 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 interestsEquity 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 SeptemberJune 30, 20172018 represented an interest of approximately 1.92%3.58% 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
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
In September 2017,During the six months ended June 30, 2018, the Company issued 2,265,8291,566,961 OP Units in connection withas part of its contribution to fund its pro rata share of the E-Commerce JV’s acquisition of sixfour properties. As of SeptemberJune 30, 2017, 2,472,1212018, 5,300,343 OP Units were outstanding, which can be redeemed for 2,472,1215,300,343 of the Company's shares. During the ninesix months ended SeptemberJune 30, 20172018 and the year ended December 31, 2016, 107,5472017, 6,038 and 156,452134,607 OP Units, respectively, were converted on a one-for-oneone-for-
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)
June 30, 2018

one basis into common shares of the Company. At SeptemberJune 30, 2017, 2,472,1212018, 5,300,343 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 SeptemberJune 30, 2017,2018, the value of the OP unitsUnits was $75,139.$156,293.
LTIP Units
As of SeptemberJune 30, 2017,2018, 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 ninesix months ended SeptemberJune 30, 20172018 and year ended December 31, 2016,2017, there were no earned and vested LTIP Units converted into OP Units or redeemed for common shares of the Company. At SeptemberJune 30, 2017,2018, 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 SeptemberJune 30, 2017:2018:
Noncontrolling InterestNoncontrolling Interest
Balance at January 1, 2017$8,643
Balance at January 1, 2018$113,530
Issuance of noncontrolling interests in the Operating Partnership68,898
37,558
Redemption of noncontrolling interests in the Operating Partnership(2,987)(130)
Net income attribution488
1,647
Fair value adjustments1,191
7,448
Dividends(1,094)(3,760)
Balance at September 30, 2017$75,139
Balance at June 30, 2018$156,293
 
Interests in Other Operating PartnershipsEntities
In connection withThere are entities that the Company’sCompany consolidates into its Consolidated Financial Statements based on the structure of the entities and their control provisions. As of June 30, 2018, the Company consolidated the Lakemont Development Investment and during the year ended December 2014 investment31, 2017 until its dissolution in the Gramercy European Property Fund,fourth quarter of 2017, the Company acquired a 50.0% equity interest inconsolidated European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. European Fund Manager is awere both consolidated VIEVIEs of the Company andCompany. The Company’s interest in these entities is consolidated intopresented in the equity section of its Condensed Consolidated Financial Statements. Refer to Note 2 for further discussion of the VIEthese entities 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, amounts in thousands, except share, unit, per share, per unit, and property data)
September 30, 2017

assets in July 2017, European Fund Manager commenced liquidation and will be dissolved over the succeeding months. The Company’s interest in European Fund Manager is presented in the equity section of its Condensed Consolidated Balance Sheets.
14.12. 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 SeptemberJune 30, 2017,2018, the Company is obligated to fund the development of three build-to-suit industrialtwo properties and remaining improvements at two development properties, for which it has remaining cumulative future commitments of $46,303.$40,265.
As of September 30, 2017 and December 31, 2016, theThe Company made cumulative contributionshas committed $61,730 (€52,187) to the Gramercy European Property Fund of $55,892III. The Company contributed $28,186 (€50,000). As discussed in Note 5, in July 2017,23,478) to the Gramercy European Property Fund sold 100.0%III as of its assets to a third party.June 30, 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 SeptemberJune 30, 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.
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)
SeptemberJune 30, 20172018

determined thatThe Company has a 51.0% interest in the E-Commerce JV and has committed capital to fund its best estimatepro rata share of total loss is $360, which is relatedthe E-Commerce JV’s initial acquisition of six properties, as well as the acquisition of additional properties in the future, subject to the Mergerpartners' approval. The Company's pro rata funding commitment for the initial six properties is estimated at approximately $110,000, which will be funded using a combination of OP Units and has been accrued and recordedcash. As of June 30, 2018, the Company contributed approximately $61,304 to the E-Commerce JV, of which $15,565 was contributed in other liabilitiescash.
The Company committed to fund $100,000 to Strategic Office Partners, of which $32,427 was funded as of SeptemberJune 30, 20172018. In July 2018, the Company sold its 25.0% interest in Strategic Office Partners to TPG, and December 31, 2016.following the sale the Company has no outstanding commitment to Strategic Office Partners. Refer to Note 15 for more information on the transaction. See Note 4 for further information on the Gramercy European Property Fund III, the E-Commerce JV, and Strategic Office Partners.
Legal Proceedings
Gramercy and its board of trustees are named as defendants in three pending lawsuits brought by purported Gramercy shareholders challenging the proposed transaction between the Company and affiliates of Blackstone: Anderson v. Gramercy Property Trust et al., No. 1:18-cv-05335-PCK, a purported class action, was filed in the United States District Court for the Southern District of New York on June 13, 2018, Franchi v. Gramercy Property Trust et al., No. 1:18-cv-01842-ELH, a purported class action, was filed in the United States District Court for the District of Maryland on June 20, 2018, and Madry v. Gramercy Property Trust et al., No. 1:18-cv-01851-TDC, an individual action, was filed in the United States District Court for the District of Maryland on June 21, 2018. The complaints allege, among other things, that the individual defendants caused the Company to file a materially incomplete and misleading preliminary proxy statement relating to the proposed transaction in violation of Sections 14(a) and 20(a) of the Exchange Act. The Anderson and Madry complaints seek a variety of equitable and injunctive relief, including enjoining defendants from consummating the proposed merger transaction unless and until the Company provides supplemental disclosures, unspecified damages and, in the case of the Anderson complaint, rescission of the Merger Agreement or any of the terms thereof, or rescissory damages. The Franchi complaint seeks, among other relief, to enjoin defendants from proceeding with, consummating or closing the proposed merger transaction, rescission of the merger transaction or rescissory damages, and dissemination of a supplemental proxy statement. All three complaints also seek an award of attorneys’ and expert fees and expenses. The Company believes the lawsuits are without merit. The Company is unable to predict the outcome of these matters.
In addition, the Company and/or one or more of its subsidiaries is party to various litigation matters that are considered routine litigation incidental to its 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 sevenvarious 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
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)
June 30, 2018

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 TotalJuly 1 to December 31, 2018 2019 2020 2021 2022 Thereafter Total
Ground Leases - Operating$562
 $2,262
 $2,295
 $2,295
 $2,262
 $62,839
 $72,515
$1,266
 $2,593
 $2,596
 $2,567
 $2,598
 $73,175
 $84,795
Ground Leases - Capital—
 1
 —
 —
 —
 329
 330
—
 —
 —
 —
 —
 329
 329
Total
$562
 $2,263
 $2,295
 $2,295
 $2,262
 $63,168
 $72,845
$1,266
 $2,593
 $2,596
 $2,567
 $2,598
 $73,504
 $85,124
15.13. 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 Tax expense from the Operating Partnership’s TRS for the three and ninesix months ended SeptemberJune 30, 2018 and 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
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

were expected to be recovered or settled. A valuation allowance was provided if the Company believed it was 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, 2017 the Company recorded $598 and $647 of 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 SeptemberJune 30, 20172018 and December 31, 2016,2017, the Company did not incur any material interest or penalties.
Gramercy Property Trust and GPT Operating Partnership LP
16.Notes to Consolidated Financial Statements
(Unaudited, dollar amounts in thousands, except per share and per unit data)
June 30, 2018

14. Supplemental Cash Flow Information
The following table represents supplemental cash flow disclosures for the ninesix months ended SeptemberJune 30, 20172018 and 2016:2017:
Nine Months Ended September 30,Six Months Ended June 30,
2017 20162018 2017
Supplemental cash flow disclosures:      
Interest paid$62,024
 $59,700
$50,194
 $44,441
Income taxes paid663
 2,614
218
 296
Proceeds from 1031 exchanges from sale of real estate176,924
 617,538
5
 170,210
Use of funds from 1031 exchanges for acquisitions of real estate(176,924) (460,191)(5) (140,987)
Non-cash activity:      
Fair value adjustment to noncontrolling interest in the Operating Partnership$1,191
 $2,741
$7,448
 $576
Debt assumed in acquisition of real estate114,649
 (45,958)—
 3,680
Debt transferred in disposition of real estate(10,456) (101,432)—
 (10,456)
Non-cash acquisition of consolidated VIE24,930
 —
—
 24,930
Dividend reinvestment plan proceeds151
 —
81
 103
Distribution of real estate assets from unconsolidated equity investment—
 263,015
Treasury securities transferred in connection with defeasance of notes payable—
 (144,063)
Transfer of defeased note payable—
 124,605
Contribution of real estate assets as investment in unconsolidated equity investments—
 (182,168)
Redemption of units of noncontrolling interest in the Operating Partnership for common shares(2,987) (4,159)(130) (2,697)
Real estate acquired for units of noncontrolling interest in the Operating Partnership68,898
 —
Redemption of Exchangeable Senior Notes for common shares117,450
 —
Contributions to unconsolidated equity investments for units of noncontrolling interests in the operating partnership37,558
 —
 
17.15. Subsequent Events
In October 2017,Subsequent to June 30, 2018, the Company modifiedsold its 7-Year Term Loan by increasing25.0% interest in Strategic Office Partners to its investment partner, TPG, for gross proceeds of $45,382 in a transaction that valued the loan from $175,000 to $400,000. The modified 7-Year Term Loan has lower credit spreads and a swapped fixed rate of approximately 3.0%, which is a decrease of 34 basis points from the original agreement. Proceeds from the modification were used to pay down the 2015 Revolving Credit Facility.
In October 2017, the Company entered into a new agreement to provide a mezzanine construction loan facility with a maximum balance of $250,000 to an industrial developer as a borrower. The facility has an initial term of five years, 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 approval rights for all new projects added to the facility and the facility provides the Company with the opportunity to purchase stabilized properties funded by the mezzanine facility. In October, the Company approved and funded $15,918 towards the mezzanine construction loan facility.
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 compriseportfolio at an aggregate 587,680 rentable square feet, which are 100.0% occupied. The properties were acquired for an aggregate purchase pricevalue of approximately $106,360 in addition$388,000. Also subsequent 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 SeptemberJune 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, 2017,2018, 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.


$36,650.

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 SeptemberJune 30, 2017,2018, third-party holders of limited partnership interests owned approximately 1.92%3.58% of the Operating Partnership. These interests are referred to as the noncontrolling interests in the Operating Partnership.
As of SeptemberJune 30, 2017,2018, our wholly-owned portfolio consistsconsisted of 367355 properties comprising 81,046,99381,134,150 rentable square feet with 97.4%96.7% occupancy. As of SeptemberJune 30, 2017,2018, we havehad ownership interests in 1433 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 SeptemberJune 30, 2017,2018, we managemanaged approximately $1,622,000$2,364,000 of commercial real estate assets, including approximately $1,305,000$1,617,000 of assets in Europe, which includes the increase in value due to the European investment sales in July 2017, discussed below.
In July 2017, a private real estate investment fund that targeted single-tenant industrial, office and specialty retail assets throughout Europe and in which we owned a 14.2% interest, or the Gramercy European Property Fund, sold 100.0% of its assets and, concurrently, we sold our 5.1% interest in another European investment in real estate assets, or the Goodman Europe JV. The transactions resulted in net distributions to us of approximately $101,930 (€89,366), inclusive of a promoted interest distribution of approximately $8,515 (€7,448).Europe.
During the ninesix months ended SeptemberJune 30, 2017,2018, we acquired 74three properties aggregating 18,361,835550,522 square feet for a total purchase price of approximately $1,321,886, including$32,690 and placed one development property into service with 126,722 square feet. During the acquisition of a previously consolidated variable interest entity, or VIE, for $29,605, a vacant property for $2,400, two land parcels for $6,840,six months ended June 30, 2018, we sold 14 properties and one build-to-suit property upon completion for $63,244. Additionally, during the nine months ended September 30, 2017, we acquired two land parcels for an aggregate purchase priceparcel that was part of $2,800, on which we have committed to construct industrial facilities for an estimated $49,077. During the nine months ended September 30, 2017, we sold 25 properties and two offices from another asset aggregating 2,358,9281,890,057 square feet for total gross proceeds of approximately $256,828.
Prior to December 17, 2015, we were 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, we changed our name to “Gramercy Property Trust” and our New York Stock Exchange, or NYSE, trading symbol to “GPT.”
Gramercy Property Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, and generally will not be subject to U.S. federal income taxes to the extent we distribute our taxable income, if any, to our shareholders. 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. We have

in the past established, and may in the future establish taxable REIT subsidiaries, or TRSs, to effect various taxable transactions. Those TRSs are subject to federal, state and local taxes on the taxable income from their activities.$130,983.
Unless the context requires otherwise, all references to “Company,” “Gramercy," "Gramercy,” “we,” “our,”“our” and “us” mean Legacy Gramercy and its subsidiaries, including Legacy Gramercy’s operating partnership and its consolidated 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 followingsubsidiaries.
Pending Mergers
On May 6, 2018, we entered into an Agreement and Plan of Merger, or the Merger closing.Agreement, with BRE Glacier Parent L.P., or Parent, BRE Glacier L.P., or Merger Sub I, and BRE Glacier Acquisition L.P., or Merger Sub II, all of which are affiliates of Blackstone Real Estate Partners VIII L.P., an affiliate of The Blackstone Group L.P. Pursuant to the Merger Agreement, Merger Sub II will merge with and into the Operating Partnership, or the Partnership Merger, and we will merge with and into Merger Sub I, or the Company Merger, and, together with the Partnership Merger, the Mergers. Following the Mergers, Merger Sub I and the Operating Partnership will continue as the surviving entities and the separate existence of the Company and Merger Sub II will cease. Pursuant to the Merger Agreement, the closing of the Mergers will take place on the third business day after satisfaction of waiver of the conditions to the Merger (other than those conditions that by their nature are to be satisfied or waived at the closing, but subject to the satisfaction or waiver of such conditions) or at such other date as mutually agreed to by the parties to the Merger Agreement; however, Parent may on one or more occasions elect to delay the closing to a date that is on or prior to October 10, 2018. On June 27, 2018, we filed a definitive proxy statement with the Securities and Exchange Commission, or SEC, in connection with the Mergers. See our definitive proxy statement on Schedule 14A, the risk factors contained below under the heading

“Part II - Other Information - Item 1A. Risk Factors” and Note 1 in the accompanying Consolidated Financial Statements for further discussion of the Merger Agreement and the Mergers.
The Mergers are expected to close during the second half of 2018, although closing is subject to various conditions, including the approval of the Company Merger by our common shareholders, and therefore we cannot provide any assurance that the Mergers will close in a timely manner or at all. Our ability to execute on our business plan could be adversely impacted by operating restrictions included in the Merger Agreement, including restrictions on acquiring new assets and raising additional capital. We have incurred and will incur a variety of merger-related costs, which, while not recurring in nature, will not be recoverable if the Mergers are not consummated.

Results of Operations
Comparison of the three months ended SeptemberJune 30, 20172018 to the three months ended SeptemberJune 30, 20162017
Revenues
2017 2016 Change2018 2017 Change
Rental revenue$110,174
 $100,847
 $9,327
$119,177
 $108,261
 $10,916
Operating expense reimbursements22,346
 19,628
 2,718
Third-party management fees2,057
 7,172
 (5,115)2,374
 1,638
 736
Operating expense reimbursements21,384
 21,231
 153
Other income1,240
 1,842
 (602)1,698
 1,838
 (140)
Total revenues$134,855
 $131,092
 $3,763
$145,595
 $131,365
 $14,230
Equity in net income (loss) of unconsolidated equity investments$48,730
 $(1,138) $49,868
$(1,838) $248
 $(2,086)
 
The increase of $9,327$10,916 in rental revenue and $2,718 in operating expense reimbursements is due to the increase in our wholly-owned property portfolio of 367355 properties as of SeptemberJune 30, 20172018 compared to 295320 properties as of SeptemberJune 30, 2016.2017.
The decreaseincrease of $5,115$736 in third-party management fees is primarily attributable to a decrease of $5,937 in asset management, property management, and accounting fees earned from our contract with KBS primarily due to property sales from the portfolio subsequent to September 30, 2016 and the expiration of the contract on March 31, 2017, which is partially offset by an increase of $387$520 in revenue from our European management platform during the three months ended SeptemberJune 30, 20172018 compared to the three months ended SeptemberJune 30, 2016.
The increase of $153 in operating expense reimbursements is due to the reduction in our office portfolio from 73 office properties as of September 30, 2016 to 56 office properties as of September 30, 2017.
For the three months ended September 30, 2017, other income is primarily comprised of property related income of $710 and investment income of $455. For the three months ended September 30, 2016, other income is primarily comprised of property related income of $879, investment income of $544, and lease termination fees of $195.
The equity in net income (loss) of unconsolidated equity investments of $48,730$(1,838) and $(1,138)$248 for the three months ended SeptemberJune 30, 20172018 and 2016,2017, respectively, represents our proportionate share of the income (loss) generated by our equity investments. The increase in net income (loss) of unconsolidated equity investments is primarily driven by gains of $34,071 related to the disposal of our direct interest in the Goodman Europe JV and the Gramercy European Property Fund’s sale of its assets, as well as $8,515 in promote fee income from European Fund Carry Co.

Expenses
2017 2016 Change2018 2017 Change
Depreciation and amortization$68,479
 $62,176
 $6,303
Property operating expenses$24,844
 $22,685
 $2,159
26,018
 23,219
 2,799
General and administrative expenses8,862
 9,100
 (238)
Property management expenses3,252
 4,810
 (1,558)2,616
 2,435
 181
Depreciation and amortization66,761
 62,863
 3,898
General and administrative expenses9,638
 8,165
 1,473
Acquisition expenses—
 1,272
 (1,272)
Merger-related expenses1,945
 —
 1,945
Interest expense24,266
 18,409
 5,857
25,597
 23,239
 2,358
Loss on extinguishment of debt6,751
 13,777
 (7,026)
Impairment of real estate investments3,064
 1,053
 2,011
Provision for taxes(598) 331
 (929)
Gain on derivative instruments(14,970) —
 (14,970)
Gain on extinguishment of debt(83) (268) 185
Impairment losses4,601
 5,580
 (979)
(Benefit) provision for taxes(62) 147
 (209)
Net gain on disposals(4,879) (2,336) (2,543)(4,523) (2,002) (2,521)
Total expenses$133,099
 $131,029
 $2,070
$118,480
 $123,626
 $(5,146)
The increase of $6,303 in depreciation and amortization expense and $2,799 in property operating expenses is due to our wholly-owned property portfolio of 355 properties as of June 30, 2018 compared to 320 properties as of June 30, 2017. Property operating expenses are comprisedcomposed of expenses directly attributable to our real estate portfolio. Property operating expenses include property related costs which we are responsible for during the lease term but can be passed through to the tenant as operating expense reimbursement revenue. The increase of $2,159 is due to increases in real estate taxes and other miscellaneous operating expenses during the three months ended September 30, 2017 compared to the three months ended September 30, 2016.
Property management expenses are comprised of costs related to our asset and property management business. The decrease of $1,558 in property management expenses is primarily related to the reduction of expenses related to KBS arrangement which ended as of March 31, 2017. The decrease is partially offset by the increase in expenses related to our European management platform.
The increase of $3,898$1,945 in depreciation and amortization expensemerger-related expenses is due to our wholly-owned property portfolio of 367 properties as of September 30, 2017 comparedlegal and professional costs incurred related to 295 properties as of September 30, 2016.the pending Mergers.
The increase of $1,473 in general and administrative expense is primarily related to increased professional fees and as well as increased compensation costs, including share-based compensation costs, related to the growth of the Company.
The decrease of $1,272 in acquisition expenses during the three months ended September 30, 2017 is attributable to the adoption of ASU 2017-01, Amendments to Business Combinations, in the first quarter of 2017, as a result of which our real estate acquisitions during the period were accounted for as asset acquisitions and thus the related acquisition costs were capitalized into the value of the real estate assets acquired.
The increase of $5,857$2,358 in interest expense is primarily due to our unsecured senior notes which were issued in December 2016, increased borrowings on our 2015 Revolving Credit Facility and the mortgages we assumed onupsize of our real estate acquisitions.7-Year Term Loan.
During the three months ended SeptemberJune 30, 2017 and 2016,2018, we recorded lossrecognized a gain on extinguishmentderivative instruments of debt of $6,751 and $13,777, respectively,$14,970 related to the unamortized deferred financing costs, premiums and discounts that were immediately expensed upon termination as well as early termination fees incurred related to the Exchangeable Senior Notes and mortgages paid off and transferred during the periods.

of our forward starting swap.
During the three months ended SeptemberJune 30, 2018, we recognized impairment losses of $4,601, of which $1,308 is related to two properties held as of June 30, 2018 that were determined to have non-recoverable declines in value during the period and $3,293 is related to the goodwill associated with our European management platform. During the three months ended June 30, 2017, we recognized an impairment on real estate investments of $3,064$5,580 related to twothree properties held as of SeptemberJune 30, 2017 that were determined to have non-recoverable declines in value during the period and during the three months ended September 30, 2016 we recognized an impairment on real estate investments of $1,053 related to one property sold during the period.
The provision for taxes was $(598) and $331 for the three months ended September 30, 2017 and 2016, respectively. The decrease in tax expense is primarily attributable to the decrease in activity in our TRS and the KBS arrangement, which ended in the first quarter of 2017.
During the three months ended SeptemberJune 30, 20172018 and 2016,2017, we realized a net gain on disposals of $4,879$4,523 and $2,336,$2,002, respectively, related to the disposals of properties during the periods.



Comparison of the ninesix months ended SeptemberJune 30, 20172018 to the ninesix months ended SeptemberJune 30, 20162017
Revenues
2017 2016 Change2018 2017 Change
Rental revenue$321,717
 $291,459
 $30,258
$241,422
 $211,543
 $29,879
Operating expense reimbursements45,656
 39,996
 5,660
Third-party management fees8,287
 30,528
 (22,241)5,164
 6,230
 (1,066)
Operating expense reimbursements61,380
 65,718
 (4,338)
Other income4,830
 3,357
 1,473
2,833
 3,590
 (757)
Total revenues$396,214
 $391,062
 $5,152
$295,075
 $261,359
 $33,716
Equity in net income (loss) of unconsolidated equity investments$48,884
 $(4,061) $52,945
$(2,764) $154
 $(2,918)
The increase of $30,258$29,879 in rental revenue and $5,660 in operating expense reimbursements is due to our wholly-owned property portfolio of 367355 properties as of SeptemberJune 30, 20172018 compared to 295320 properties as of SeptemberJune 30, 2016.2017.
The decrease of $22,241$1,066 in third-party management fees is primarily attributable to a decrease of $24,547$3,086 in asset management, property management, incentive fees and accounting fees earned from our contract with KBS, primarily due to property sales from the portfolio subsequent to September 30, 2016 and the expiration of the contractwhich expired on March 31, 2017, which2017. This is partially offset by increasesan increase of $1,337 and $919$1,600 in revenue from our European management platform and our management fees from Strategic Office Partners, respectively, during the ninesix months ended SeptemberJune 30, 20172018 compared to the ninesix months ended September 30, 2016.
The decrease of $4,338 in operating expense reimbursements is due to the reduction in our office portfolio from 73 office properties as of September 30, 2016 to 56 office properties as of SeptemberJune 30, 2017.
For the ninesix months ended SeptemberJune 30, 2018, other income is primarily composed of investment income of $1,934 and property related income of $935. For the six months ended June 30, 2017, other income is primarily comprisedcomposed of investment income of $899, property related income of $2,297, investment income of $1,354,$1,588, and lease termination fees of $952. For the nine months ended September 30, 2016, other income is primarily comprised of investment income of $1,490 and property related income of $1,452.$953.
The equity in net income (loss) of unconsolidated equity investments of $48,884$(2,764) and $(4,061)$154 for the ninesix months ended SeptemberJune 30, 20172018 and 2016,2017, respectively, represents our proportionate share of the lossincome (loss) generated by our unconsolidated equity investments. The increase in net income (loss) of unconsolidated equity investments is primarily driven by gains of $34,071 related to the disposal of our direct interest in the Goodman Europe JV and the Gramercy European Property Fund’s sale of its assets, as well as $8,515 in promote fee income from European Fund Carry Co. 



Expenses
2017 2016 Change2018 2017 Change
Depreciation and amortization$139,995
 $124,393
 $15,602
Property operating expenses$71,249
 $70,364
 $885
53,106
 46,405
 6,701
General and administrative expenses18,548
 17,856
 692
Property management expenses8,771
 14,922
 (6,151)5,158
 5,519
 (361)
Depreciation and amortization191,154
 181,649
 9,505
General and administrative expenses27,494
 23,892
 3,602
Acquisition expenses—
 5,994
 (5,994)
Merger-related expenses1,945
 —
 1,945
Interest expense70,561
 57,271
 13,290
51,089
 46,295
 4,794
Net impairment recognized in earnings4,890
 —
 4,890
—
 4,890
 (4,890)
Gain on dissolution of previously held U.S. unconsolidated equity investment interests—
 (7,229) 7,229
Loss on extinguishment of debt6,691
 20,890
 (14,199)
Impairment of real estate investments21,415
 1,053
 20,362
Provision for taxes(647) 3,734
 (4,381)
Gain on derivative instruments(14,970) —
 (14,970)
Gain on extinguishment of debt(83) (60) (23)
Impairment losses4,601
 18,351
 (13,750)
(Benefit) provision for taxes559
 (49) 608
Net gain on disposals(24,258) (2,336) (21,922)(20,778) (19,379) (1,399)
Gain on sale of European unconsolidated equity investment interests held with a related party—
 (5,341) 5,341
Total expenses$377,320
 $364,863
 $12,457
$239,170
 $244,221
 $(5,051)
The increase of $15,602 in depreciation and amortization expense and $6,701 in property operating expenses is due to our wholly-owned property portfolio of 355 properties as of June 30, 2018 compared to 320 properties as of June 30, 2017. Property operating expenses are comprisedcomposed of expenses directly attributable to our real estate portfolio. Property operating expenses include property related costs which we are responsible for during the lease term but can be passed through to the tenant as operating expense reimbursement revenue. The increase of $885 is due to increases in real estate tax and other miscellaneous operating expenses during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.
Property management expenses are comprised of costs related to our asset and property management business. The decrease of $6,151 in property management expenses is primarily related to the reduction of expenses related to our KBS arrangement which ended in the first quarter of 2017. The decrease is partially offset by the increase in expenses related to our European management platform.
The increase of $9,505 in depreciation and amortization expense is due to our wholly-owned property portfolio of 367 properties as of September 30, 2017 compared to 295 properties as of September 30, 2016.
The increase of $3,602$692 in general and administrative expense is primarily related to increased professional fees and as well as increased compensation costs, including share-based compensation costs, related to the growth of the Company.
The decrease of $5,994 in acquisition expenses during the nine months ended September 30, 2017 is attributable to the adoption of ASU 2017-01, Amendments to Business Combinations,increase in the first quarter of 2017, as a result of which our real estate acquisitionstransaction costs during the period were accounted for as asset acquisitions and thus the related acquisition costs were capitalized into the value of the real estate assets acquired.six months ended June 30, 2018.
The increase of $13,290$1,945 in merger-related expenses is due to legal and professional costs incurred related to the pending Mergers.
The increase of $4,794 in interest expense is primarily due to increased borrowings on our unsecured senior notes which were issued in December 2016, increased borrowings on our 2015 Revolving Credit Facility and the mortgages we assumed onupsize of our real estate acquisitions.7-Year Term Loan.
During the ninesix months ended SeptemberJune 30, 2017, we recorded net impairment recognized in earnings of $4,890 on our Retained CDO Bonds due to adverse changes in expected cash flows related to the Retained CDO Bonds.

During the six months ended June 30, 2018, we recognized a gain on derivative instruments of $14,970 related to the termination of our forward starting swap.
During the ninesix months ended SeptemberJune 30, 2016,2018, we recorded a gainrecognized impairment losses of $7,229$4,601, of which $1,308 is related to two properties held as of June 30, 2018 that were determined to have non-recoverable declines in value during the period and $3,293 is related to the distribution of seven properties fromgoodwill associated with our Duke JV during the period.
European management platform. During the ninesix months ended September 30, 2017 and 2016, we recorded loss on extinguishment of debt of $6,691 and $20,890, respectively, related to the unamortized deferred financing costs, premiums and discounts that were immediately expensed upon termination as well as early termination fees incurred related to the Exchangeable Senior Notes and mortgages paid off and transferred during the periods.
During the nine months ended SeptemberJune 30, 2017, we recognized an impairment on real estate investments of $21,415$18,351 related to threetwo properties sold during the period as well as fourthree properties held as of SeptemberJune 30, 2017 that were determined to have non-recoverable declines in value during the period. During the nine months ended September 30, 2016 we recognized an impairment on real estate investments of $1,053 related to one property sold during the period.
The provision for taxes was $(647)$559 and $3,734$(49) for the ninesix months ended SeptemberJune 30, 20172018 and 2016,2017, respectively. The decreaseincrease in our tax expenseprovision is primarily attributable to the decreaseincrease in activity inestimated taxes related to our TRS and the KBS arrangement which ended in the first quarter of 2017.European management platform.

During the ninesix months ended SeptemberJune 30, 20172018 and 2016,2017, we realized a net gain on disposals of $24,258$20,778 and $2,336,$19,379, respectively, related to the disposals of properties during the periods.
During the nine months ended September 30, 2016, we recorded a gain of $5,341 related to the sale of our 74.9% interest in the Goodman Europe JV during the period.
Liquidity and Capital Resources
The Merger Agreement contains provisions which restrict or prohibit certain capital expenditures as well as certain capital transactions typically used to fund our short and long-term liquidity requirements. Until the Mergers close, or the Merger Agreement is terminated, our liquidity requirements will primarily be funded by our cash flow from operations and certain other capital activities allowed under the Merger Agreement. In particular, we are subject to various restrictions under the Merger Agreement on raising additional capital, issuing additional equity or debt, repurchasing equity or debt, and entering into certain acquisition, disposition and leasing transactions, among other restrictions, subject to the restrictions under the Merger Agreement.
Liquidity is a measurement of our ability to meet cash requirements, including ongoing commitments to fund acquisitions of real estate assets, repay borrowings, pay dividends and other general business needs. In addition to cash on hand, our primary sources of funds for short-term and long-term liquidity requirements, including working capital, distributions, debt service and additional investments, consist of: (i) cash flow from operations; (ii) borrowings under our unsecured revolving credit facility and term loans;(ii) proceeds from our common equity and debt offerings;(iii) proceeds from sales of real estate; and (iv) cash flowproceeds from operations.our common equity and debt offerings. We believe these sources of financing will be sufficient to meet our short-term and long-term liquidity requirements.requirements, subject to restrictions under the Merger Agreement.
Our cash flow from operations primarily consists of rental revenue, expense reimbursements from tenants, and third-party management fees. Our cash flow from operations is our principal source of funds that we use to pay operating expenses, debt service, general and administrative expenses, operating capital expenditures, dividends, and acquisition-related expenses. Our ability to fund our short-term liquidity needs, including debt service and general operations (including employment related benefit expenses), through cash flow from operations can be evaluated through the Condensed Consolidated Statements of Cash Flows included in our Condensedthe accompanying Consolidated Financial Statements.
Our ability to borrow under our 2015 Revolving Credit Facility and term loan facilities is subject to our ongoing compliance with a number of customary financial covenants including our maximum secured and unsecured leverage ratios, minimum fixed charge coverage ratios, consolidated adjusted net worth values, unencumbered asset values, occupancy rates, and portfolio lease terms.
We have several unconsolidated equity investments with partners who we consider to be financially stable. Our unconsolidated equity investments are financed with non-recourse debt or equity. We believe that cash flows from the

underlying real estate investments and capital commitments will be sufficient to fund the capital needs of our unconsolidated equity investments.
To maintain our qualification as a REIT under the Internal Revenue Code, we must distribute annually at least 90.0% of our taxable income. This distribution requirement limits our ability to retain earnings and thereby replenish or increase capital for operations. As of
See the date of this filing,discussion above and in Note 1 in the accompanying Consolidated Financial Statements for more information regarding restrictions under the Merger Agreement to which we expect that our cash on hand and cash flow from operations will be sufficient to satisfy our anticipated short-term and long-term liquidity needs as well as our recourse liabilities, if any.are subject.
Cash Flows
Net cash provided by operating activities increased $21,429$22,221 to $187,666$148,283 for the ninesix months ended SeptemberJune 30, 20172018 compared to $166,237$126,062 for the same period in 2016.2017. Operating cash flow was generated primarily by net rental revenue from our real estate investments.
Net cash used in investing activities for the ninesix months ended SeptemberJune 30, 20172018 was $894,609$28,709 compared to net cash provided byused in investing activities of $355,919$130,655 during the same period in 2016.2017. The increase in cash flow related to investing activities in 20172018 is primarily attributable to an increasea decrease in acquisition of real estate decreasedand increased proceeds from sales of real estate, and increased capital expenditures on our owned portfolio of real estate investments.estate.
Net cash used in financing activities for the six months ended June 30, 2018 was $90,660 as compared to net cash provided by financing activities for the nine months ended September 30, 2017 was $707,482 as compared to net cash used in financing activities of $593,698$128,073 during the same period in 2016.2017. The increasedecrease in cash flow in 20172018 is primarily attributable to proceeds fromnet paydowns on our unsecured term loans and credit facility payoffs of certain mortgage notes and paydowns made on the unsecured revolving credit facilityincreased dividend payments in 20162018, as well as proceeds from sales of our common shares in 2017.
Equity Structure
As of SeptemberJune 30, 20172018 and December 31, 2016,2017, our authorized capital shares consists of 500,000,000 shares of beneficial interest, $0.01 par value per share, of which we are authorized to issue up to 490,000,000 common shares of beneficial 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 SeptemberJune 30, 2017, 160,669,4682018, 160,792,820 common shares and 3,500,000 preferred shares were issued and outstanding.
During September 2017, we issued 5,258,420 of our common shares to satisfy the exchange of 100.0% of the Exchangeable Senior Notes for 100.0% common shares.
In April 2017, we completed an underwritten public offering of 10,350,000 common shares, which includes the exercise in full by the underwriters of their option to purchase 1,350,000 additional common shares. The common shares were issued at a public offering price of $27.60 per share and the net proceeds from the offering were approximately $274,234.
In December 2016, our board of trustees approved a 1-for-3 reverse share split of our common shares and outstanding OP Units. The reverse share split was effective after the close of trading on December 30, 2016 and our common shares began trading on a reverse-split-adjusted basis on the NYSE on January 3, 2017.


Market Capitalization
At SeptemberJune 30, 2017,2018, our consolidated market capitalization was $7,891,430$7,366,668 based on a common share price of $30.25$27.32 per share, the closing price of our common shares on the NYSE on SeptemberJune 30, 2017.2018. Market capitalization includes consolidated debt and common and preferred shares.

Dividends 
To maintain our qualification as a REIT, we must pay annual dividends to our shareholders of at least 90.0% of our REIT taxable income, determined before taking into consideration the dividends paid deduction and net capital gains. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, which would only be paid out of available cash, we must first meet both our operating requirements and scheduled debt service on our mortgages and other loans payable. Under the Merger Agreement entered into on May 6, 2018, we were permitted to pay one additional common share dividend of $0.375 per share on July 16, 2018, but will not be permitted to pay common share dividends for any quarter thereafter, subject to certain exceptions.
Dividends per share declared during 20162017 and 20172018 are as follows:
Quarter Ended 
Common dividends 1
 Preferred dividends 
Common dividends 1
 Preferred dividends
March 31, 2016 $0.330
 $0.445
June 30, 2016 $0.330
 $0.445
September 30, 2016 $0.330
 $0.445
December 31, 2016 $0.375
 $0.445
March 31, 2017 $0.375
 $0.445
 $0.375
 $0.445
June 30, 2017 $0.375
 $0.445
 $0.375
 $0.445
September 30, 2017 $0.375
 $0.445
 $0.375
 $0.445
December 31, 2017 $0.375
 $0.445
March 31, 2018 $0.375
 $0.445
June 30, 2018 $0.375
 $0.445
1.Common dividends declared for a quarter are accrued for during the quarter and then paid to common shareholders of record as of the end of the quarter during the month following the quarter-end.
Indebtedness
Secured Debt
Mortgage Notes
Certain real estate assets are subject to mortgage notes. During the ninesix months ended SeptemberJune 30, 2018, we did not assume any mortgages notes. During the year ended December 31, 2017, we assumed $114,649$181,107 of non-recourse mortgages in connection with five real estate acquisitions. During the year ended December 31, 2016, we assumed $244,188 of non-recourse mortgages in connection with 27seven real estate acquisitions. During the three and ninesix months ended SeptemberJune 30, 2018, we paid off the mortgage notes on four properties and recorded a net gain on extinguishment of debt of $83 related to the payoffs. During the three and six months ended June 30, 2017, we paid off the mortgage notes on two properties. During the ninesix months ended SeptemberJune 30, 2017, we refinanced the debt on two properties encumbered by a mortgage loan for $10,456 and subsequently transferred the mortgage on these two properties to the buyer of the properties. During the three and ninesix months ended SeptemberJune 30, 2017, we recorded a net gain on the early extinguishment of mortgage debt of $0$268 and $60, respectively.
During the three and nine months ended September 30, 2016, we paid off the mortgage notes on 14 and 22 properties, respectively, and during the nine months ended September 30, 2016, we transferred one property encumbered by a mortgage note. Additionally, during the three months ended September 30, 2016 we 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, we 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. Our mortgage notes include a series of financial and other covenants with which we must comply in order to borrow under them. We were in compliance with the covenants under the mortgage note facilities as of SeptemberJune 30, 2017.2018.
As of SeptemberJune 30, 2017,2018, we have $600,553had $491,236 total outstanding principal under our mortgage notes, which encumber 6146 properties, and have a weighted average remaining term of 5.54.8 years and a weighted average interest rate of 4.24%4.48%. Weighted averages are based on outstanding principal balances as of SeptemberJune 30, 20172018 and the interest rate reflects the effects of interest rate swaps and amortization of financing costs and fair market value premiums or discounts. Refer to Note 6 of5 in the accompanying financial statementsConsolidated Financial Statements for additional information on our secured debt obligations.
Unsecured Debt
2015 Credit Facility and Term Loans
In December 2015, we entered into an agreement, or the Credit Agreement, for a new $1,900,000 credit facility, or the 2015 Credit Facility, consisting of an $850,000 senior unsecured revolving credit facility, or the 2015 Revolving Credit Facility, and a $1,050,000 term loan facility or the 2015 Term Loan, with JPMorgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated and terminated Legacy Gramercy's 2014 Credit Facility.Incorporated. 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 monthsix-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, we also entered into a $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, we 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 our option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.875%0.88% to 1.55%, depending on our credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.55%, depending on our credit ratings. We are also required to pay quarterly in arrears a 0.125%0.13% to 0.30% facility fee, depending on ourthe credit ratings, on the total commitments under the 2015 Revolving Credit Facility. Outstanding borrowings under the 2015 Term Loan and 7-Year Term Loan incur interest at a floating rate based upon, at our option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.90% to 1.75%, depending on our credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.75%, depending on our credit ratings. The alternate base rate for the 2015 Revolving Credit Facility and 7-Year Term Loan is the greater of (x) the prime rate announced by JPMorgan Chase Bank, N.A., (y) 0.50% above the Federal Funds Effective Rate, and (z) the adjusted LIBOR for a one-month interest period plus 1.00%.
In December 2015, we also entered into a $175,000 7-year unsecured term loan with or Capital One, N.A., or the 7-Year Term Loan, which matures in January 2023. Outstanding borrowings under the 7-Year Term Loan incur interest at a floating rate based upon, at our option, either (i) adjusted LIBOR plus an applicable margin ranging from 1.30% to

2.10%, depending on our credit ratings, or (iii) the alternate base rate plus an applicable margin ranging from 0.30% to 1.10%, depending on our credit ratings. The alternate base rate is the greatest of (x) the prime rate announced by 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%.
Our unsecured borrowing facilities include a series of financial and other covenants thatwith which we have tomust comply with in order to borrow under the facilities.them. We were in compliance with the covenants under the facilities as of SeptemberJune 30, 2017.2018. Refer to the table at the end of Note 5 in the sectionaccompanying Consolidated Financial Statements for specific terms and our outstanding borrowings under the facilities.
Senior Unsecured Notes
During 20162015 and 2015,2016, we 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 semi-annuallysemiannually at rates ranging from 3.89% to 4.97%. Refer to the table at the end of the section for specific terms of the outstanding notes.
Exchangeable Senior Notes
On March 18, 2014, we issuedIn September 2017, our $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 us on a senior unsecured basis. During June 2017, the Exchangeable Senior Notes became redeemable at our option. In August 2017, we announced our intention to call for redemption the Exchangeable Senior Notes. As a result of our call for redemption, the holders exchanged 100.0% of the Exchangeable Senior Notes for 5,258,420 of our 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, we 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, we 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 our 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.

shares.

The terms of our unsecured sources of financing and their combined aggregate principal maturities as of SeptemberJune 30, 20172018 and December 31, 20162017 are as follows:
Stated Interest Rate 
Effective Interest Rate 1
 Maturity Date Outstanding BalanceStated Interest Rate 
Effective Interest Rate 1
 Maturity Date Outstanding Balance
 September 30, 2017 December 31, 2016 June 30, 2018 December 31, 2017
2015 Revolving Credit Facility - U.S. dollar tranche2.20% 2.20% 1/8/2020 $595,000
 $—
2015 Revolving Credit Facility - USD tranche3.08% 3.08% 1/8/2020 $405,000
 $345,000
2015 Revolving Credit Facility - Multicurrency tranche1.20% 1.20% 1/8/2020 20,097
 65,837
1.11% 1.11% 1/8/2020 36,773
 12,162
3-Year Term Loan2.35% 2.33% 1/8/2019 300,000
 300,000
3.23% 2.33% 1/8/2019 300,000
 300,000
5-Year Term Loan2.35% 2.70% 1/8/2021 750,000
 750,000
3.23% 2.70% 1/8/2021 750,000
 750,000
7-Year Term Loan2.76% 3.34% 1/9/2023 175,000
 175,000
3.08% 3.00% 1/9/2023 400,000
 400,000
2015 Senior Unsecured Notes4.97% 5.07% 12/17/2024 150,000
 150,000
4.97% 5.07% 12/17/2024 150,000
 150,000
2016 Senior Unsecured Notes3.89% 4.00% 12/15/2022 150,000
 150,000
3.89% 4.00% 12/15/2022 150,000
 150,000
2016 Senior Unsecured Notes4.26% 4.38% 12/15/2025 100,000
 100,000
4.26% 4.38% 12/15/2025 100,000
 100,000
2016 Senior Unsecured Notes4.32% 4.43% 12/15/2026 100,000
 100,000
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 debtTotal unsecured debt 2,340,097
 1,905,837
Total unsecured debt 2,391,773
 2,307,162
Net deferred financing costs and net debt discountNet deferred financing costs and net debt discount (3,316) (9,704)Net deferred financing costs and net debt discount (4,680) (5,063)
Total unsecured debt, netTotal unsecured debt, net $2,336,781
 $1,896,133
Total unsecured debt, net $2,387,093
 $2,302,099
1.Represents the rate at which interest expense is recorded for financial reporting purposes as of SeptemberJune 30, 2017,2018, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.
2.During September 30, 2017, the Exchangeable Senior Notes were exchanged for our common shares. Thus, they have no outstanding balance as of September 30, 2017.

Derivatives and Non-Derivative Hedging Instruments
As of SeptemberJune 30, 2017,2018, our derivative instruments consist of interest rate swaps, which are cash flow hedges.hedges and are reported at fair value in other assets or other liabilities depending on the ending balance. Changes in the effective portion of the fair value of derivatives designated as hedging instruments are recognized in other comprehensive income until the hedged item expires or is recognized in earnings. ThePrior to our adoption of ASU 2017-12 on January 1, 2018, described in Note 2 in the accompanying Consolidated Financial Statements, the ineffective portion of a hedging derivative’sthe change in fair value and the change in value of a non-hedging derivative instrument aredesignated 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, we recorded a decrease to our opening retained earnings balance and a corresponding increase to our 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, depending on future levels of LIBOR interest rates, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term.
Borrowings on the multicurrency tranche of our 2015 Revolving Credit Facility, which are designated as non-derivative net investment hedges, are recognized at par value based on the exchange rate in effect on the date of the draw. Subsequent changes in the exchange rate of our non-derivative net investment hedge are recognized as part of the cumulative foreign currency translation adjustment within other comprehensive income. Refer to Note 97 and Note 10 of8 in the accompanying financial statementsConsolidated Financial Statements for additional information on our derivatives and non-derivative hedging instruments, including the fair value measurement of these instruments, as applicable.

The following table summarizes our derivatives and hedging instruments at SeptemberJune 30, 2017.2018. The aggregate fair value of our derivatives is presented in our Condensed Consolidated Balance Sheets in derivative instruments and the aggregate carrying value of the non-derivative net investment hedges is included in the balance of our 2015 Revolving Credit Facility. The notional value is an indication of the extent of our involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks.
 Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value Benchmark Rate Notional Value Strike Rate Effective Date Expiration Date Fair Value
Interest Rate Swap - Waco 1 mo. USD-LIBOR-BBA 14,964 USD 4.55% 12/19/2013 12/19/2020 $(313) 1 mo. USD-LIBOR-BBA 14,741 USD 4.55% 12/19/2013 12/19/2020 $64
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
 1 mo. USD-LIBOR-BBA 100,000 USD 1.22% 12/19/2016 12/17/2018 472
Interest Rate Swap - 3-Year Term Loan 1 mo. USD-LIBOR-BBA 100,000 USD 1.23% 12/19/2016 12/17/2018 370
 1 mo. USD-LIBOR-BBA 100,000 USD 1.23% 12/19/2016 12/17/2018 470
Interest Rate Swap - 3-Year Term Loan 1 mo. USD-LIBOR-BBA 100,000 USD 1.24% 12/19/2016 12/17/2018 357
 1 mo. USD-LIBOR-BBA 100,000 USD 1.24% 12/19/2016 12/17/2018 465
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
 1 mo. USD-LIBOR-BBA 750,000 USD 1.60% 12/17/2015 12/17/2020 19,539
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 175,000 USD 1.82% 12/17/2015 1/9/2023 739
 1 mo. USD-LIBOR-BBA 175,000 USD 1.82% 12/17/2015 1/9/2023 6,853
Forward Starting Swap1
 3 mo. USD-LIBOR-BBA 250,000 USD 2.23% 12/20/2017 12/20/2027 2,051
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 60,000 USD 1.95% 10/13/2017 1/9/2023 2,025
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 40,000 USD 2.01% 10/13/2017 1/9/2023 1,243
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 39,500 USD 1.96% 10/13/2017 1/9/2023 1,298
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 31,500 USD 1.96% 10/13/2017 1/9/2023 1,038
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 31,500 USD 2.00% 10/13/2017 1/9/2023 991
Interest Rate Swap - 7-Year Term Loan 1 mo. USD-LIBOR-BBA 22,500 USD 1.95% 10/13/2017 1/9/2023 754
Net Investment Hedge in GBP-denominated investments USD-GBP exchange rate 15,000 GBP N/A 7/15/2016 N/A —
 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 21,300 EUR N/A 3/8/2018 N/A —
Total hedging instrumentsTotal hedging instruments $7,852
Total hedging instruments $35,212

The table below details the location in the financial statements of the gain or loss recognized on the interest rate swaps designated as cash flow hedges for the three and six months ended June 30, 2018 and 2017:
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Accumulated other comprehensive income:       
Gain recognized in accumulated other comprehensive income1
$4,990
 $—
 $27,143
 $—
Interest expense:       
Loss reclassified from accumulated other comprehensive income into interest expense1
$271
 $271
 $539
 $539
Gain recognized in interest expense (ineffective portion)2
—
 —
 —
 46
Total recognized in interest expense on statements of operations$271
 $271
 $539
 $585
Gain on derivative instruments:       
Gain reclassified from other comprehensive income into gain on derivative instruments3
$14,970
 $—
 $14,970
 $—
1.DuringPeriods prior to January 1, 2018, when we 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 six months ended June 30, 2018 includes $103 related to the adoption of ASU 2017-02.
2.Represents the ineffective portion and pertains only to periods prior to January 1, 2018, when we adopted ASU 2017-12.
3.Amounts represent gain recognized during the three and six months ended SeptemberJune 30, 2017, we entered into one2018 related to the termination of our 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,June 2018.

Through our interest rate swaps, we are hedging exposureRefer to variabilityNote 8 in future interest paymentsthe accompanying Consolidated Financial Statements for additional information on our debt facilities. During the three months ended September 30, 2017, we 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, our 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 expense in the Condensed Consolidated Statements of Operations and represents interest rate swap hedge ineffectiveness, or amounts excluded from ineffectiveness, which relates to the off-market financing 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 of $83 and $817, was recognized for the three and nine months ended September 30, 2016, respectively. During the three and nine months ended September 30, 2017, we reclassified $273 and $812, respectively, from accumulated other comprehensive income into interest expense related to a derivative terminated in 2015. During the three and nine months ended September 30, 2016, we 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, we expect that $1,883 will be reclassified from other comprehensive income as an increase in interest expense for our interest rate swaps as of September 30, 2017. Additionally, we 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.
We hedge our investments based in foreign currencies using non-derivative net investment hedges in conjunction with borrowings under the multicurrency tranche of our 2015 Revolving Credit Facility. Our non-derivative net investment hedge on our euro-denominated investments, which was entered into in September 2015, was used to hedge exposure to changes in the euro-U.S. dollar exchange rate underlying our unconsolidated net equity investments in the Gramercy European Property Fund and the Goodman Europe JV, both of which had euros as their functional currency. We terminated our euro-denominated non-derivative net investment hedge during the third quarter of 2017 in connection with the sale of these euro-denominated investments, which are discussed in detail in Note 5 of the accompanying financial statements. Our non-derivative net investment hedge on our British pound sterling-denominated investments, which was entered into in July 2016, is used to hedge exposure to changes in the British pound sterling-U.S. dollar exchange rate underlying our unconsolidated net equity investment in the Goodman UK JV and our wholly-owned property in Coventry, UK, both of which have British pounds sterling as their functional currency. At September 30, 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 our euro-denominated investments and termination of the related non-derivative net investment hedge, we reclassified $1,851 from accumulated other comprehensive income into earnings, representing the accumulated foreign currency translation adjustments recorded since inception of the hedge. During the three and nine months ended September 30, 2017, we 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, we 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.hedging instruments.

Contractual Obligations
We are obligated to fund capital expenditures related to our real estate investments, which primarily consist of expenditures to maintain assets, tenant improvement allowances and other construction or expansion obligations under tenant leases, and leasing commissions. As of SeptemberJune 30, 2017,2018, we had commitments relating to tenant improvement allowances and funding obligations under leases totaling approximately $13,383$10,243 that are expected to be funded over the next five years. During March 2017, construction was completed on our build-to-suit property in Round Rock, Texas, which we acquired upon completion for $29,605. As of SeptemberJune 30, 2017,2018, we are obligated to fund the development of three build-to-suit industrialtwo properties and remaining improvements at two development properties, for which we have remaining cumulative future commitments of $46,303.$40,265.
Our cumulative contributionsWe have committed $61,730 (€52,187) to the Gramercy European Property Fund were $55,892III. We contributed $28,186 (€50,000) as of July 4, 2017, when23,478) to the Gramercy European Property Fund sold 100.0% of its assets to a third party, andIII as of December 31, 2016. Refer to Note 5 in the accompanying financial statements for more information on the sale transaction.June 30, 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 SeptemberJune 30, 2017,2018, in the case of unfunded commitments.
We have a 51.0% interest in the E-Commerce JV and have committed capital to fund our pro rata share of the E-Commerce JV’s initial acquisition of six properties, as well as the acquisition of additional properties in the future, subject to the partners' approval. Our pro rata funding commitment for the initial six properties is estimated at approximately $110,000, which will be funded using a combination of OP Units and cash. As of June 30, 2018, we contributed approximately $61,304 to the E-Commerce JV, of which $15,565 was contributed in cash.
We committed to fund $100,000 to Strategic Office Partners, of which $36,802 and $16,027$32,427 was funded as of SeptemberJune 30, 20172018. In July 2018, we sold our 25.0% interest in Strategic Office Partners to our investment partner, TPG Real Estate, and December 31, 2016, respectively. Seefollowing the sale we have no outstanding commitment to Strategic Office Partners. Refer to Note 515 in the accompanying financial statementsConsolidated Financial Statements for more information on the transaction. See Note 4 in the accompanying Consolidated Financial Statements for further information on the Gramercy European Property Fund III, the E-Commerce JV, and Strategic Office Partners.
We have certain properties acquired that are subject to ground leases, which are accounted for as operating leases. The ground leases have varying ending dates, renewal options and rental rate escalations, with the latest leases extending to June 2053. Combined aggregate principal maturities and future minimum payments of our unsecured debt obligations, non-recourse mortgages, Senior Unsecured Notes, Exchangeable Senior Notes, and ground leases, in addition to associated interest payments as of SeptemberJune 30, 20172018 are as follows:
 October 1 to December 31, 2017 2018 2019 2020 2021 Thereafter Above market interest Total July 1 to December 31, 2018 2019 2020 2021 2022 Thereafter Above market interest Total
2015 Revolving Credit Facility $—
 $—
 $—
 $615,097
 $—
 $—
 $—
 $615,097
 $—
 $—
 $441,773
 $—
 $—
 $—
 $—
 $441,773
Term Loans —
 —
 300,000
 —
 750,000
 175,000
 —
 1,225,000
 —
 300,000
 —
 750,000
 —
 400,000
 —
 1,450,000
Mortgage Notes Payable 1
 4,073
 171,988
 35,003
 61,803
 18,153
 309,533
 —
 600,553
 6,880
 30,450
 62,834
 19,256
 141,929
 229,887
 —
 491,236
Senior Unsecured Notes —
 —
 —
 —
 —
 500,000
 —
 500,000
 —
 —
 —
 —
 150,000
 350,000
 —
 500,000
Ground Leases 562
 2,263
 2,295
 2,295
 2,262
 63,168
 —
 72,845
 1,266
 2,593
 2,596
 2,567
 2,598
 73,504
 —
 85,124
Interest Payments 2
 28,780
 94,453
 86,650
 69,801
 44,158
 43,378
 3,029
 370,249
 54,009
 104,625
 89,976
 58,015
 53,868
 64,822
 3,299
 428,614
Total $33,415
 $268,704
 $423,948
 $748,996
 $814,573
 $1,091,079
 $3,029
 $3,383,744
 $62,155
 $437,668
 $597,179
 $829,838
 $348,395
 $1,118,213
 $3,299
 $3,396,747
1.Mortgage note payments reflect accelerated repayment dates, when applicable, pursuant to the related loan agreement.
2.Interest payments do not reflect the effect of interest rate swaps.

We have several office locations, which are each subject to operating lease agreements. These office locations include our corporate office at 90 Park Avenue, New York, New York, and our sevenvarious regional offices located across the United States and Europe.

Leasing Agreements
Future minimum rental revenue under non-cancelable leases, excluding reimbursements for operating expenses, as of SeptemberJune 30, 20172018 are as follows:
 October 1 to December 31, 2017 2018 2019 2020 2021 Thereafter Total minimum lease rental income
Operating Leases$112,429
 $450,096
 $424,686
 $396,516
 $362,870
 $1,973,979
 $3,720,576
 July 1 to December 31, 2018 2019 2020 2021 2022 Thereafter Total
Future Rents$228,714
 $451,176
 $433,706
 $401,860
 $351,738
 $1,826,972
 $3,694,166
Future straight-line rent adjustments under non-cancelable leases as of SeptemberJune 30, 20172018 are as follows:
 October 1 to December 31, 2017 2018 2019 2020 2021 Thereafter Total straight-line rent adjustments
Straight-line Rent Adjustments$6,743
 $20,583
 $12,037
 $4,067
 $(7) $(102,692) $(59,269)
 July 1 to December 31, 2018 2019 2020 2021 2022 Thereafter Total
Straight-line Rent Adjustments$10,622
 $14,724
 $5,445
 $(513) $(3,543) $(104,989) $(78,254)
Off-Balance Sheet Arrangements
We have off-balance sheet investments, including joint ventures and equity investments. These investments all have varying ownership structures. Substantially all of our joint venture and equity investment arrangements are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control over the operating and financial decisions of these joint venture and equity investment arrangements. Our off-balance sheet arrangements and financial results are discussed in detail in Note 54 in the accompanying financial statements.
Unconsolidated Equity Investment Transactions
In July 2017, the Gramercy European Property Fund sold 100.0% of its assets to a third party, including 30 wholly owned properties and eight additional properties that is had a 94.9% interest in through its investment in the Goodman Europe JV. Concurrently, we sold our 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 us of approximately $101,930 (€89,366), inclusive of a promoted interest distribution of approximately $8,515 (€7,448). Pursuant to the sale agreement for the assets of the Gramercy European Property Fund, a portion of these net proceeds are being held in escrow pending release in the fourth quarter of 2017, at which time the funds will be distributed to the Gramercy European Property Fund and we will receive our pro-rata final distribution of approximately $1,109 (€939).
As a result of the sale transactions, during the three months ended September 30, 2017 we recorded net gains on disposals 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. The amounts written off from accumulated other comprehensive income into earnings include $(1,851) related to our euro-denominated non-derivative net investment hedge, as the euro borrowings under our 2015 Revolving Credit Facility were repaid and the hedge instrument was terminated in connection with the sale transactions during the three months ended September 30, 2017. The aggregate of the net gains and income from the sale transactions of approximately $27,613 are recorded within equity in net income (loss) of unconsolidated equity investments on our Condensed

Consolidated Statements of Operations for the three and nine months ended September 30, 2017. As of September 30, 2017, following the transactions, the Gramercy European Property Fund had no properties, the value of our investment in the Gramercy European Property Fund was $1,109, which primarily represents the amount of funds being held in escrow pending release in the fourth quarter of 2017, and we 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.
In connection with the sale transactions, our management contract arrangement with the Gramercy European Property Fund was terminated, however we will continue to manage the assets that were held by both the Gramercy European Property Fund and the Goodman Europe JV for the new owner pursuant to a new asset management contract entered into upon closing of the July transactions. Under the new management contract, we will provide asset management services for the properties for one year following the sale in exchange for a quarterly fee of 0.45% of gross asset value and reimbursement of expenses.Financial Statements.
Transactions with Trustee Related Entities and Related Parties
In December 2016, we sold our 5.1% interest in one property located in Lille, France held by the Goodman Europe JV to our joint venture partner, the Gramercy European Property Fund, in which we had a 14.2% ownership interest, for gross proceeds of $2,662 (€2,563). In July 2017, the Gramercy Europe Property Fund sold 100.0% of its assets to an unrelated third party. Refer to Note 5 in the accompanying financial statements for more information on the sale transaction.
On June 30, 2016, we sold 74.9% of our 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 sale of 74.9% of our interest in the Goodman Europe JV resulted in us recording a gain of $5,341 during the period, primarily related to depreciation and amortization recorded since Merger closing date. Following the sale transaction, we 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. We 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 in the accompanying financial statements for more information on the sale transaction.
Our 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 ManagementLimited 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. 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 SeptemberJune 30, 2017,2018, in the case of unfunded commitments.
One of the properties acquired in December 2015 as part of the Merger was partially leased to Duke Realty, our partner in the Duke JV. Duke Realty acted as the managing member of the Duke JV, which was dissolved in July 2016 as described in Note 5, and as such provided asset management, construction, development, leasing and property management services, for which it was entitled to receive fees as well as a promoted interest. From the date of the Merger through lease expiration in May 2016, Duke Realty leased 30,777 square feet of one of our office properties located in Minnesota which had an aggregate 322,551 rentable square feet. Duke Realty paid us $333 under the lease

for the nine months ended September 30, 2016, respectively. See Note 5 for more information on our transactions with the Duke JV.
Non-GAAP Financial Measures 
We use the following non-GAAP financial measures that we believe are useful to investors as a key supplemental measure of our operating performance: funds from operations attributable to common shareholders and unitholders, or FFO, core funds from operations attributable to common shareholders and unitholders, or Core FFO, and adjusted funds from operations attributable to common shareholders and unitholders, or AFFO, and Earnings Before Interest, Taxes, Depreciation and Amortization for real estate, or EBITDAre.AFFO. We present FFO because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs. We also use FFO as one of several criteria

to determine performance-based incentive compensation for members of our senior management, which may be payable in cash or equity awards. The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-downs of investments in depreciable real estate and investments in in-substance real estate investments and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to noncontrolling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures.
Core FFO and AFFO are Company definedCompany-defined measures. Core FFO is presented excluding transaction costs, acquisition costs,merger-related expenses, gain (loss) on extinguishment of debt, other-than-temporary impairments on retained bonds, mark-to-market on interest rate swaps, and one-time charges. Our AFFO also excludes non-cash stock-basedshare-based compensation expense, amortization of above and below market leases,lease intangibles, amortization of deferred financing costs and non-cash interest, amortization of lease inducement costs, non-real estate depreciation and amortization, amortization of free rent received at property acquisition, straight-line rent, and other adjustments including non-real estate depreciation and amortization and straight-line rent.rent related to corporate office leases. Core FFO and AFFO include applicable adjustments for unconsolidated partnerships and joint ventures. We believe that Core FFO and AFFO are useful supplemental measures regarding our operating performances as they provide a meaningful and consistent comparison of our operating performance and allow investors to more easily compare the Company'sour operating results.
EBITDAre is a non-GAAP financial measure. We present EBITDAre because we believe that EBITDAre, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of our ability to incur and service debt. We compute EBITDAre in accordance with standards established by NAREIT. The White Paper on EBITDAre approved by the Board of Governors of NAREIT in September 2017 defines EBITDAre as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), plus interest expense, plus income tax expense, plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus (minus) losses and gains on extinguishment of debt, plus impairment write-downs of depreciated property and investments in unconsolidated equity investments, plus adjustments to reflect the entity's share of EBITDAre of unconsolidated equity investments.
FFO, Core FFO, AFFO, and EBITDAreAFFO do not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternativealternatives to net income (determined in accordance with GAAP), as an indicationindications of our financial performance, or to cash flow from operating activities as a measuremeasures of our liquidity, nor is itare they entirely indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our calculationscalculation of FFO and EBITDAre may be different from the calculationscalculation used by other companies and, therefore, comparability may be limited.

FFO, Core FFO, and AFFO for the three and ninesix months ended SeptemberJune 30, 20172018 and 20162017 are as follows:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss) attributable to common shareholders$48,570
 $(2,508) $62,652
 $22,355
Add: 
      
Depreciation and amortization66,761
 62,863
 191,154
 181,649
FFO adjustments for unconsolidated equity investments1
(39,393) 2,034
 (34,803) 20,805
Net income attributable to noncontrolling interest333
 221
 374
 152
Net (income) loss from discontinued operations24
 (347) 76
 (5,045)
Impairment of real estate investments3,064
 1,053
 21,415
 1,053
Less:       
Non-real estate depreciation and amortization(202) (205) (610) (672)
Gain on dissolution of previously held U.S. unconsolidated equity investment interests—
 —
 —
 (7,229)
Gain on sale of European unconsolidated equity investment interests held with a related party—
 —
 —
 (5,341)
Net gain on disposals(4,879) (2,336) (24,258) (2,336)
Funds from operations attributable to common shareholders and unitholders - basic$74,278
 $60,775
 $216,000
 $205,391
Add: 
  
    
Acquisition costs—
 1,272
 —
 5,994
Core FFO adjustments for unconsolidated equity investments234
 508
 234
 7,429
Other-than-temporary impairments on retained bonds—
 —
 4,890
 —
Transaction costs2,354
 —
 2,543
 —
Loss on extinguishment of debt6,751
 13,777
 6,691
 18,960
Net income from discontinued operations related to properties—
 347
 —
 5,140
Mark-to-market on interest rate swaps(93) (83) (139) (817)
Core funds from operations attributable to common shareholders and unitholders - basic$83,524
 $76,596
 $230,219
 $242,097
Add: 
  
    
Non-cash share-based compensation expense1,993
 1,282
 6,051
 3,704
Amortization of market lease assets3,863
 3,578
 9,568
 11,254
Amortization of deferred financing costs and non-cash interest 2
1,116
 (409) 3,323
 (214)
Amortization of lease inducement costs112
 86
 285
 259
Non-real estate depreciation and amortization202
 205
 610
 672
Amortization of free rent received at property acquisition401
 481
 941
 1,237
Less: 
  
    
AFFO adjustments for unconsolidated equity investments269
 1,761
 262
 1,352
Straight-line rent(7,723) (6,368) (22,441) (19,084)
Amortization of market lease liabilities(3,003) (8,137) (14,108) (21,586)
Adjusted funds from operations attributable to common shareholders and unitholders - basic$80,754
 $69,075
 $214,710
 $219,691
Add:       
Cash interest expense on Exchangeable Senior Notes2
898
 —
 3,055
 —
Non-cash interest expense on Exchangeable Senior Notes2
564
 —
 1,886
 —
Funds from operations attributable to common shareholders and unitholders - diluted 2
$75,740
 $60,775
 $220,941
 $205,391
Core funds from operations attributable to common shareholders and unitholders - diluted 2
$84,986
 $76,596
 $235,160
 $242,097
Adjusted funds from operations attributable to common shareholders and unitholders - diluted 2
$81,652
 $69,075
 $217,765
 $219,691
        
Funds from operations per share – basic$0.48
 $0.43
 $1.46
 $1.45
Funds from operations per share – diluted$0.48
 $0.43
 $1.44
 $1.44
Core funds from operations per share – basic$0.54
 $0.54
 $1.55
 $1.71
Core funds from operations per share – diluted$0.53
 $0.54
 $1.53
 $1.70
Adjusted funds from operations per share – basic$0.52
 $0.49
 $1.45
 $1.55
Adjusted funds from operations per share – diluted$0.51
 $0.48
 $1.41
 $1.54
Basic weighted average common shares outstanding – EPS152,619,352
 140,257,503
 147,399,457
 141,180,822
Weighted average non-vested share based payment awards—
 1,056,767
 —
 —
Weighted average partnership units held by noncontrolling interest1,352,609
 339,109
 849,338
 399,771
Weighted average common shares and units outstanding153,971,961
 141,653,379
 148,248,795
 141,580,593
Diluted weighted average common shares and common share equivalents outstanding – EPS157,507,213
 140,257,503
 147,430,882
 142,387,709
Weighted average partnership units held by noncontrolling interest1,352,609
 339,109
 849,338
 —
Weighted average share-based payment awards405,629
 1,173,194
 511,460
 —
Weighted average share options—
 19,423
 —
 —
Dilutive effect of Exchangeable Senior Notes—
 1,112,329
 5,121,388
 —
Diluted weighted average common shares and units outstanding159,265,451
 142,901,558
 153,913,068
 142,387,709
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Net income attributable to common shareholders$22,874
 $6,514
 $48,377
 $14,082
Depreciation and amortization68,479
 62,176
 139,995
 124,393
FFO adjustments for unconsolidated equity investments4,470
 2,337
 6,391
 4,590
Net income (loss) attributable to noncontrolling interest845
 (113) 1,647
 41
Net loss from discontinued operations—
 28
 —
 52
Impairment loss on real estate investments1,308
 5,580
 1,308
 18,351
Other adjustments1
(221) (200) (421) (408)
Net gain on disposals(4,523) (2,002) (20,778) (19,379)
Funds from operations attributable to common shareholders and unitholders$93,232
 $74,320
 $176,519
 $141,722
Core FFO adjustments for unconsolidated equity investments93
 —
 767
 —
Other-than-temporary impairments on retained bonds—
 —
 —
 4,890
Transaction costs614
 189
 1,658
 189
Merger-related expenses1,945
 —
 1,945
 —
Gain on extinguishment of debt(83) (268) (83) (60)
Gain on derivative instruments(14,970) —
 (14,970) —
Impairment loss - other3,293
 —
 3,293
 —
Mark-to-market on interest rate swaps—
 —
 —
 (46)
Core funds from operations attributable to common shareholders and unitholders$84,124
 $74,241
 $169,129
 $146,695
Non-cash share-based compensation expense1,948
 2,004
 3,804
 4,058
Amortization of deferred financing costs and non-cash interest565
 1,367
 1,079
 2,207
Other adjustments2
177
 200
 331
 408
Amortization of free rent received at property acquisition127
 236
 556
 540
AFFO adjustments for unconsolidated equity investments(45) (21) (88) (7)
Straight-line rent(5,803) (7,458) (12,828) (14,718)
Amortization of market lease intangibles3
(1,313) (4,680) (1,705) (5,227)
Adjusted funds from operations attributable to common shareholders and unitholders$79,780
 $65,889
 $160,278
 $133,956
Funds from operations per share – basic$0.56
 $0.50
 $1.06
 $0.98
Funds from operations per share – diluted$0.56
 $0.49
 $1.06
 $0.96
Core funds from operations per share – basic$0.51
 $0.50
 $1.02
 $1.01
Core funds from operations per share – diluted$0.50
 $0.49
 $1.02
 $1.00
Adjusted funds from operations per share – basic$0.48
 $0.44
 $0.97
 $0.92
Adjusted funds from operations per share – diluted$0.48
 $0.44
 $0.96
 $0.91
Basic weighted average common shares outstanding – EPS160,420,278
 148,542,916
 160,414,240
 144,746,251
Weighted average partnership units held by noncontrolling interest5,934,765
 560,443
 5,490,217
 590,547
Weighted average common shares and units outstanding166,355,043
 149,103,359
 165,904,457
 145,336,798
Diluted weighted average common shares and common share equivalents outstanding – EPS160,433,351
 149,914,443
 160,425,291
 145,965,936
Weighted average partnership units held by noncontrolling interest5,934,765
 560,443
 5,490,217
 590,547
Weighted average share-based payment awards403,821
 597,543
 396,794
 594,460
Diluted weighted average common shares and units outstanding166,771,937
 151,072,429
 166,312,302
 147,150,943
1.For the threeIncludes non-real estate depreciation and nine months ended September 30, 2017, the amount includes ($1,335) that represents the Company’s net gain on disposal of its interests in unconsolidated equity investments.amortization.
2.
ForIncludes non-real estate depreciation, amortization, and straight-line rent related to corporate office leases. Corporate office related straight-line rent has been reclassified into this line for the three and ninesix months ended SeptemberJune 30, 2017, the FFO2018.
3.Includes amortization of lease inducement costs and Core FFO diluted per share calculations add back Exchangeable Senior Notes cash and non-cash interest expense, and the AFFO diluted per share calculation adds back only Exchangeable Senior Notes cash interest expense of $898 and $3,055, respectively, as non-cash interest expense is already added back to basic AFFO.market lease intangibles.

EBITDAre for the three and nine months ended September 30, 2017 and 2016 is as follows:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$50,462
 $(728) $67,702
 $27,183
Add:       
Interest expense24,266
 18,409
 70,561
 57,271
        
Provision for taxes(598) 331
 (647) 3,734
Depreciation and amortization66,761
 62,863
 191,154
 181,649
Amortization of lease inducement costs112
 86
 285
 259
Impairment of real estate investments3,064
 1,053
 21,415
 1,053
EBITDAre adjustments for unconsolidated equity investments
(38,300) 2,527
 (31,525) 28,219
Loss on extinguishment of debt6,751
 13,777
 6,691
 18,960
Less:       
Amortization of market lease assets and liabilities860
 (4,559) (4,540) (10,332)
Net gain on disposals(4,879) (2,336) (24,258) (2,336)
EBITDAre attributable to common shareholders and unitholders
$108,499
 $91,423
 $296,838
 $305,660

Cautionary Note Regarding Forward-Looking Information
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. You can identify forward-looking statements by the use of forward-looking expressions such as “may,” “will,” “should,” “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” “continue,” or any negative or other variations on such expressions. Forward-looking statements include information concerning possible or assumed future results of our operations, including any forecasts, projections, plans and objectives for future operations. Although we believe that our plans, intentions and expectations as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions or expectations will be achieved. We have listed below some important risks, uncertainties and contingencies which could cause our actual results, performance or achievements to be materially different from the forward-looking statements we make in this report. These risks, uncertainties and contingencies include, but are not limited to, the following:
risks associated with our ability to obtain the shareholder approval required to consummate the Merger and the timing of the closing of the Mergers, including the risks that a condition to closing would not be satisfied within the expected timeframe or at all or that the closing of the Mergers will not occur;
unanticipated difficulties or expenditures relating to the Mergers;
the occurrence of any change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement;
the outcome of any legal proceedings that have been, or may be, instituted against the parties and others related to the Merger Agreement;
unanticipated difficulties or expenditures relating to the transaction, the response of business partners and competitors to the announcement of the Merger Agreement and/or potential difficulties in employee retention as a result of the announcement and pendency of the Merger Agreement;
our exclusive remedy against the counterparties to the Merger Agreement with respect to any breach of the Merger Agreement being to seek payment by Parent of a termination fee in the amount of $414 million (which amount is guaranteed by Blackstone Real Estate Partners VIII L.P.), which may not be adequate to cover our damages;
our restricted ability to pay dividends to the holders of our common shares pursuant to the Merger Agreement;
the success or failure of our efforts to implement our current business strategy; 
our ability to accomplish our office asset disposition plan subject to the REIT prohibited transaction tax limitations;
our ability to identify and complete additional property acquisitions and risks of real estate acquisitions; 
availability of investment opportunities on real estate assets and real estate-related and other securities;
the performance and financial condition of tenants and corporate customers; 
the adequacy of our cash reserves, working capital and other forms of liquidity; 
the availability, terms and deployment of short-term and long-term capital; 
demand for industrial and office space; 
the actions of our competitors and our ability to respond to those actions;
the timing of cash flows from our investments;
the cost and availability of our financings, which depends in part on our asset quality, the nature of our relationships with our lenders and other capital providers, our business prospects and outlook and general market conditions;
unanticipated increases in financing and other costs, including a rise in interest rates; 

economic conditions generally and in the commercial finance and real estate markets;
changes in governmental regulations, tax rates and similar matters;
legislative and regulatory changes (including changes to real estate and zoning laws, laws governing the taxation of REITs or the exemptions from registration as an investment company); 
our international operations, including unfavorable foreign currency rate fluctuations, enactment or changes in laws relating to foreign ownership of property, and local economic or political conditions that could adversely affect our earnings and cash flows;
reduction in cash flows received from our investments;
volatility or reduction in the value or uncertain timing in the realization of our retained collateralized debt obligation bonds;
our ability to profitably dispose of non-core assets;
availability of, and ability to retain, qualified personnel and trustees;
changes to our management and board of trustees;

environmental and/or safety requirements and risks related to natural disasters;
declining real estate valuations and impairment charges;
our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and qualify for our exemption under the Investment Company Act of 1940, as amended, our Operating Partnership's ability to satisfy the rules in order to qualify as a partnership for U.S. federal income tax purposes, and the ability of certain of our subsidiaries to qualify as REITs and certain of our subsidiaries to qualify as taxable REIT subsidiaries for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;
uninsured or underinsured losses relating to our properties;
our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies;
tenant bankruptcies and defaults on or non-renewal of leases by tenants;
decreased rental rates or increased vacancy rates;
the continuing threat of terrorist attacks on the national, regional and local economies; and
other factors discussed under Item 1A, "Risk Factors" of our Annual Report on Form 10-K and those factors that may be contained in any subsequent filing we make with the SEC, which are or will be incorporated by reference herein.
We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In evaluating forward-looking statements, you should consider these risks and uncertainties, together with the other risks described from time-to-time in our reports and documents which are filed with the SEC, and you should not place undue reliance on those statements.
The risks included here are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Recently Issued Accounting Pronouncements
Please refer to Note 2 in the accompanying footnotes to our Condensed Consolidated Financial Statements.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
(Unaudited, dollar amounts in thousands)
Market risk includes risks that arise from changes in interest rates, credit, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risks to which we will be exposed are real estate, interest rate and credit risks. These risks are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.
Real Estate Risk
Commercial property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions, local real estate conditions (such as an oversupply of retail, industrial, office or other commercial or multi-family space), changes or continued weakness in specific industry segments, construction quality, age and design, demographic factors, retroactive changes to building or similar codes, and increases in operating expenses (such as energy costs). We may seek to mitigate these risks by employing careful business selection, rigorous underwriting and credit approval processes and attentive asset management.
Interest Rate Risk
Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Our operating results will depend in large part on differences between the income from our assets and our borrowing costs. Our real estate assets generate income principally from fixed long-term leases and we are exposed to changes in interest rates primarily from floating rate borrowing arrangements. We expect that we will primarily finance our investmentinvestments in commercial real estate with fixed rate, non-recourse mortgage financing,senior unsecured debt, however, to the extent that we use floating rate borrowing arrangements, our net income from our real estate investments will generally decrease if LIBOR increases. We have used, and may continue to use, interest rate caps or swaps and forward starting swaps to manage our exposure to interest rate changes. We may also employ forward starting derivative instruments to hedge qualifying anticipated transactions. We currently have a 2015 Revolving Credit Facility, several term loans and severalone mortgage notes payablenote which are based upon a floating rate which have an aggregate outstanding balance of $1,879,835$1,906,514 at SeptemberJune 30, 2017,2018, of which $1,264,739$1,464,741 is hedged effectively by interest rate swaps which we believe will mitigate the interest rate risk related to these borrowings.

The following chart shows our floating rate debt instruments, including debt that is hedged by interest rate swaps, and the related interest rates, maturity dates and balances as of SeptemberJune 30, 2017:2018:
Floating Rate Debt Instrument Stated Interest Rate 
Effective Interest Rate 1
 Maturity Date Balance at September 30, 2017 Stated Interest Rate 
Effective Interest Rate 1
 Maturity Date Balance at June 30, 2018
2015 Revolving Credit Facility - U.S. dollar tranche 2
 2.20% 2.20% 1/8/2020 $595,000
2015 Revolving Credit Facility2
 3.08% 3.08% 1/8/2020 $405,000
2015 Revolving Credit Facility - Multicurrency tranche 2
 1.20% 1.20% 1/8/2020 20,097
 1.11% 1.11% 1/8/2020 36,773
3-Year Term Loan 2.35% 2.33% 1/8/2019 300,000
 3.23% 2.33% 1/8/2019 300,000
5-Year Term Loan 2.35% 2.70% 1/8/2021 750,000
 3.23% 2.70% 1/8/2021 750,000
7-Year Term Loan 2.76% 3.34% 1/9/2023 175,000
 3.08% 3.00% 1/9/2023 400,000
Mortgage note payable - Waco 3.33% 4.75% 12/19/2020 14,964
 4.10% 4.75% 12/19/2020 14,741
Mortgage note payable - Atrium I 3.23% 4.01% 5/31/2018 19,006
Mortgage note payable - Easton III 3.23% 3.94% 1/31/2019 5,768
Total Floating Rate Debt InstrumentsTotal Floating Rate Debt Instruments $1,879,835
Total Floating Rate Debt Instruments $1,906,514
1.Represents the rate at which interest expense is recorded for financial reporting purposes as of SeptemberJune 30, 2017,2018, which reflects the effect of interest rate swaps and amortization of financing costs and fair market value premiums or discounts.
2.These floating rate debt instruments are not hedged by interest rate swaps.
The following chart shows a hypothetical 100 basis point increase in interest rates along the entire interest rate curve for the interest rate risk related to the 2015 Revolving Credit Facility:
Change in LIBOR Projected Decrease in Net Income Projected Decrease in Net Income
Base case    
+100 bps $(1,572) $(1,129)
+200 bps $(3,144) $(2,258)
+300 bps $(4,716) $(3,387)
Credit Risk
Credit risk refers to the ability of each tenant in our portfolio of real estate investments to make contractual lease payments on the scheduled due dates. We seek to reduce credit risk of our real estate investments by entering into long-term leases with tenants after a careful evaluation of credit worthiness as part of our property acquisition process. If defaults occur, we employ our asset management resources to mitigate the severity of any losses and seek to relet the property. In the event of a significant rising interest rate environment and/or economic downturn, tenant delinquencies and defaults may increase and result in credit losses that would materially and adversely affect our business, financial condition and results of operations.
Foreign Currency Exchange Rate Risk
During the periods presented, we have had investments, either directly or through unconsolidated equity interests, in Europe Asia, and CanadaAsia, and we perform asset management services and have had capital commitments to an equity investment in Europe. As a result, we are subject to risk from the effects of exchange rate risk from the effects of exchange rate movements in the euro and the British pound sterling, and the Canadian dollar, which may affect future costs and cash flows. We hedge our foreign currency exposure related to our foreign investments primarily by financing our investments in the local currency denominations and through the use of net investment hedge instruments. Additionally,

we may enter into foreign currency forward contracts to manage our exposure to foreign currency exchange rate movements. We have historically beenare currently a net payer of various foreign currencies (we pay out more cash than we receive), due to our commitments to the Gramercy European Property Fund III, and therefore our foreign operations benefit from a weaker U.S. dollar, and are adversely affected by a stronger U.S.

dollar, relative to the foreign currency. In 2017, we have beenwere a net receiver of various foreign currencies as our commitments to the Gramercy European Property Fund were fully funded and, in July 2017, the assets in the Gramercy European Property Fund as well as our interest in the Goodman Europe JV were sold to a third party.
As of SeptemberJune 30, 20172018 and December 31, 2016,2017, we had outstanding borrowings of $20,097$36,773 (€21,300 and £9,000) and $12,162 (€0 and £15,000) and $65,837 (€45,000 and £15,000)£9,000), respectively, under the multicurrency tranche of our 2015 Revolving Credit Facility, which we designated as a non-derivative net investment hedging instrument pursuant to ASC 815 to mitigate our risk from fluctuations in the exchange rates between the U.S. dollar and both the euro, prior to the aforementioned sale of our euro-denominated investments, and British pound sterling. Our unhedged net investment in foreign currencies was $11,612$3,752 and $13,322$6,555 as of SeptemberJune 30, 20172018 and December 31, 2016,2017, respectively, based on the period ending U.S. dollar values of the hedge of $20,097$36,773 and $65,837,$12,162, respectively.

ITEM 4.CONTROLS AND PROCEDURES
Gramercy Property Trust
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time frame specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. Also, we may have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.
As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
GPT Operating Partnership LP
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time frame specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer of the Company in its role as the sole general partner of the Operating Partnership, as appropriate, to allow for timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports. Also, we may have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.
As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including ourthe Chief Executive Officer and ourthe Chief Financial Officer of the Company, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive

the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART IIOTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
(Dollar amounts in thousands)
Putative Shareholder Actions against Legacy Gramercy - Dismissed
Legacy Gramercy,and its board of directors, Chambers and/or Merger Sub weretrustees are named as defendants in two putative class actionthree pending lawsuits brought by purported Legacy Gramercy stockholdersshareholders challenging the Merger. Two suits that were separately filed in New York Supreme Court, New York County, captioned (i) Berlinerproposed transaction between the Company and affiliates of Blackstone: Anderson v. Gramercy Property Trust et al., Index No. 652424/2015 (filed July 9, 2015) and (ii) Gensler v. Baum, et al., Index No. 157432/2015 (filed July 22, 2015), were consolidated into1:18-cv-05335-PCK, a singlepurported class action, under the caption In re Gramercy Property Trust Stockholder Litigation, Index No. 652424/2015 (the “New York Action”). In addition, four suits that were separatelywas filed in Circuitthe United States District Court for Baltimore City, Maryland, captioned (i) Jobin v. DuGan, et al., Case No. 24C15003942 (filed July 27, 2015); (ii) Vojikthe Southern District of New York on June 13, 2018, Franchi v. Gramercy Property Trust et al., Case No. 24C15004412 (filed August 25, 2015); (iii) Hoffbauer et al. v. Chambers Street Properties, et al., 24C15004904 (filed September 24, 2015) (originally1:18-cv-01842-ELH, a purported class action, was filed as two separate suits in the CircuitUnited States District Court for Baltimore County,the District of Maryland captioned Plemons v. Chambers Street Properties, et al., Case No. 03C15007943 (filed July 24, 2015)on June 20, 2018, and Hoffbauer et al. v. Chambers Street Properties, et al., Case No. 03C15008639 (filed August 12, 2015), and refiled as a single action in the Circuit Court for Baltimore County on September 24, 2015); and (iv) MorrisMadry v. Gramercy Property Trust et al., Case No. 24C15004972 (filed September 28, 2015) were consolidated into a single1:18-cv-01851-TDC, an individual action, underwas filed in the caption Glenn W. Morris v. Gramercy Property Trust Inc. et al., Case No. 24C15004972 (the “Maryland Action,” and together withUnited States District Court for the New York Action, the “Actions”).District of Maryland on June 21, 2018. The complaints alleged,allege, among other things, that the directors of Legacy Gramercy breached their fiduciary duties to Legacy Gramercy stockholders by agreeing to sellindividual defendants caused the Company for inadequate consideration and agreeing to improper deal protection terms in the merger agreement, and that the preliminary joint proxy statement/prospectus filed with the SEC on Form S4 on September 11, 2015 wasfile a materially incomplete and misleading.misleading preliminary proxy statement relating to the proposed transaction in violation of Sections 14(a) and 20(a) of the Exchange Act. The Anderson and Madry complaints seek a variety of equitable and injunctive relief, including enjoining defendants from consummating the proposed merger transaction unless and until the Company provides supplemental disclosures, unspecified damages and, in the case of the Anderson complaint, rescission of the Merger Agreement or any of the terms thereof, or rescissory damages. The Franchi complaint seeks, among other relief, to enjoin defendants from proceeding with, consummating or closing the proposed merger transaction, rescission of the merger transaction or rescissory damages, and dissemination of a supplemental proxy statement. All three complaints also alleged that Chambers, Merger Sub and/or Legacy Gramercy aidedseek an award of attorneys’ and abetted these purported breaches of fiduciary duty.
On December 7, 2015, the parties to the Actions entered into a Memorandum of Understanding that provided for the settlement of the Actions. On March 1, 2017, the court entered a Final Order and Judgment approving the settlement, awarding plaintiffs’ attorneyexpert fees and expenses, and dismissingexpenses. We believe the New York Action with prejudice. On March 22, 2017, pursuantlawsuits are without merit. We are unable to predict the stipulationoutcome 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.
Putative Shareholder Action against Legacy Chambers - Dismissed
On October 1, 2015, a putative class action lawsuit was filed in the Superior Court of New Jersey, Law Division, Mercer County by a purported shareholder of Chambers. The action, captioned Elstein v. Chambers Street Properties et al., Docket No. L00225415 (the “New Jersey Action”), named as defendants Chambers, its board of trustees and Legacy Gramercy. The complaint alleged, among other things, that the trustees of Chambers breached their fiduciary duties to Chambers’ shareholders by agreeing to the Merger after a flawed sales process and by approving improper deal protection terms in the merger agreement, and that Legacy Gramercy aided and abetted these purported breaches of fiduciary duty.
On December 3, 2015, the parties to the New Jersey Action entered into a Stipulation of Settlement providing for the settlement of the New Jersey Action. On April 4, 2016, the court granted preliminary approval of the settlement. On

July 1, 2016, the court issued an Order and Final Judgment approving the settlement and dismissing the New Jersey Action.
Other Contingencies
In connection with our property acquisitions and the Merger, we determined that there is a risk we will have to pay future amounts to tenants related to continuing operating expense reimbursement audits. In 2017, we settled the majority of our operating expense reimbursement audits and paid $3,500 pursuant to the settlement in February 2017. As of September 30, 2017, we have estimated a range of loss of $0 to $360 and determined that our best estimate of total loss is $360, which is related to the Merger and has been accrued and recorded in other liabilities as of September 30, 2017 and December 31, 2016.matters.
In addition, we and/or one or more of our subsidiaries are party to various litigation matters that are considered routine litigation incidental to our or their business, none of which are considered material.

ITEM 1A.RISK FACTORS 
ITEM 1A.    RISK FACTORS 
There have been no material changes to the risk factors as disclosed in the section entitled “Risk Factors” beginning on page 12 of ourOur Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 includes detailed discussions of our risk factors in the section entitled “Part I, Item 1A. Risk Factors.” Set forth below are certain changes from the risk factors previously disclosed in our Annual Report on Form 10-K, which we are including in this quarterly report on Form 10-Q as a result of our entering into the Merger Agreement on May 6, 2018, as further described above. You should carefully consider the risk factors discussed in our Annual Report on Form 10-K, as well as the other information in this report, which could materially harm our business, financial condition, results of operations, growth prospects or the value of our securities.
Risks Related to the Mergers
There may be unexpected delays in the completion of the Mergers, or the Mergers may not be completed at all.
The Mergers are currently expected to close during the second half of 2018, assuming that all of the conditions in the Merger Agreement are satisfied or waived. The Merger Agreement provides that either we or Parent may terminate the Merger Agreement if the Mergers have not occurred by November 6, 2018. Certain events may delay the completion of the Mergers or result in a termination of the Merger Agreement. Some of these events are outside the control of either party. In particular, the Company Merger and filedthe other transactions contemplated by the Merger Agreement must be approved by the affirmative vote of the holders of common shares as of the record date for the special meeting entitled to cast not less than a majority of all the votes entitled to be cast on the matter. If the required vote is not obtained at a special meeting (including any adjournment or postponement thereof) at which the Company Merger has been voted

upon, either we or Parent may terminate the Merger Agreement. We may incur significant additional costs in connection with any delay in completing the Mergers or termination of the Merger Agreement, in addition to significant transaction costs, including legal, financial advisory, accounting, and other costs we have already incurred. We can neither assure you that the conditions to the completion of the Mergers will be satisfied or waived or that any adverse change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement will not occur, nor provide any assurances as to whether or when the Mergers will be completed.
In addition, under the terms of the Merger Agreement, we may not declare or pay any future dividends (other than the regular quarterly dividend of $0.375 per common share for the quarter ended June 30, 2018, which was declared on April 30, 2018 and paid on July 16, 2018 to shareholders of record at the close of business on June 29, 2018) to the holders of our common shares during the term of the Merger Agreement without the prior written consent of Parent, subject to certain exceptions. Depending on when the Mergers are consummated, these restrictions may prevent holders of our common shares from receiving dividends that they might otherwise have received.
Failure to complete the Mergers in a timely manner or at all could negatively affect our share price and future business and financial results.
There is no assurance that the Mergers will occur or that the conditions to the Mergers will be satisfied in a timely manner or at all. Also, there is no assurance that an event, change, or other circumstance that could give rise to the termination of the Merger Agreement will not occur. Delays in completing the Mergers or the failure to complete the Mergers at all could negatively affect our future business and financial results, and, in that event, the market price of our common shares may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Mergers will be completed. If the Mergers are not completed for any reason, we will be subject to several risks, including the diversion of management focus and resources from operational matters and other strategic opportunities while working to implement the Mergers, any of which could materially adversely affect our business, financial condition, results of operations and the value of our securities.
The pendency of the Mergers could adversely affect our business and operations.
In connection with the SEC. Please reviewpending Mergers, some of our current or prospective tenants, lenders, joint venture partners or vendors may delay or defer decisions, which could negatively impact our revenues, earnings, cash flows and expenses, regardless of whether the Risk Factors set forthMergers are completed. In addition, under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Mergers. These restrictions may prevent us from pursuing certain strategic transactions, undertaking certain capital projects, undertaking certain financing transactions and otherwise pursuing other actions that are not in the Form 10-K.ordinary course of business, even if such actions could prove beneficial and may cause us to forego certain opportunities we might otherwise pursue absent the Merger Agreement. Additionally, the pendency of the Mergers may make it more difficult for us to effectively recruit, retain and incentivize key personnel and may cause distractions from our strategy and day-to-day operations for our current employees and management.
An adverse judgment in a lawsuit challenging the Mergers may prevent the Mergers from becoming effective or from becoming effective within the expected timeframe.
We and the members of our board of trustees have been named as defendants in two purported class action lawsuits, and a third individual action, related to the Mergers, and seeking, among other things, to enjoin us from consummating the Mergers. Our shareholders may file additional lawsuits challenging the Mergers or the other transactions contemplated by the Merger Agreement, which may name us and/or our board of trustees as defendants. We cannot assure you as to the outcome of such lawsuits, including the amount of costs associated with defending these claims or any other

liabilities that may be incurred in connection with the litigation of these claims. If plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Mergers on the agreed-upon terms, such an injunction may delay the completion of the Mergers in the expected timeframe, or may prevent the Mergers from being completed altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs and divert management’s attention and resources, which could adversely affect the operation of our business.
Counterparties to certain of our agreements may have consent rights in connection with the Mergers.
We are party to certain agreements that give the counterparties to such agreements certain rights, including consent rights, in connection with “change in control” transactions or otherwise. Under certain of these agreements, the Mergers may constitute a “change in control” or otherwise give rise to consent rights and, therefore, the counterparties may assert their rights in connection with the Mergers, including in the case of indebtedness, acceleration of amounts due. Any such counterparty may request modifications of its agreements as a condition to granting a waiver or consent under those agreements, and there can be no assurance that such counterparties will not exercise their rights under the agreements, including termination rights where available. In addition, the failure to obtain consent under one agreement may be a default under other agreements and, thereby, trigger rights of the counterparties to such other agreements, including termination rights where available.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
None.

ITEM 6.INDEX TO EXHIBITS  
Exhibit No. Description
10.12.1 
AmendedAgreement and Restated Term Loan Agreement,Plan of Merger, dated as of October 13, 2017,May 6, 2018, by and among Gramercy Property Trust, BRE Glacier Parent L.P., BRE Glacier L.P., BRE Glacier Acquisition L.P. and GPT Operating Partnership LP, GPT Property Trust LP, Gramercy Property Trust, the lenders party thereto, and Capital One, National Association, as administrative agent, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 18, 2017.May 7, 2018.
10.210.1 
Joinder and First Amendment to the Amended and Restated Term LoanEmployment and Noncompetition Agreement dated as of October 16, 2017, amongbetween Gordon DuGan, Gramercy Property Trust and GPT Operating Partnership LP, GPT Property Trust LP, Gramercy Property Trust, the lenders party thereto, and Capital One, National Association,effective as administrative agent,of May 6, 2018, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 18, 2017.May 7, 2018.
10.2
Amendment to Employment and Noncompetition Agreement by and between Benjamin Harris and Gramercy Property Trust, effective as of May 6, 2018, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on May 7, 2018
10.3 
Amendment to Employment and Noncompetition Agreement dated June 12, 2012, by and between Nicholas Pell and Gramercy Capital Corp. and Nicholas L. Pell,Property Trust, effective as of May 6, 2018, incorporated by reference to the Company’s Current Report on Form 8-K, filed herewith.with the SEC on May 7, 2018.
31.1 
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2 
Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.3 
Certification by the Chief Executive Officer of the Company, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.4 
Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1 
Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filedfurnished herewith.
32.2 
Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filedfurnished herewith.
32.3 
Certification by the Chief Executive Officer of the Company, the sole general partner of the Operating Partnership pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filedfurnished herewith.
32.4 
Certification by the Chief Financial Officer of the Company, the sole general partner of the Operating Partnership pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filedfurnished herewith.
101.INS XBRL Instance Document, filed herewith.
101.SCH XBRL Taxonomy Extension Schema, filed herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase, filed herewith.
101.DEF XBRL Taxonomy Extension Definition Linkbase, filed herewith.
101.LAB XBRL Taxonomy Extension Label Linkbase, filed herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase, filed herewith.

SIGNATURES 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  GRAMERCY PROPERTY TRUST
   
Dated: November 1, 2017July 31, 2018 /s/ Jon W. Clark 
  Name: Jon W. Clark
  Title: Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

SIGNATURES 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  GPT Operating Partnership LP
   
Dated: November 1, 2017July 31, 2018 /s/ Jon W. Clark 
  Name: Jon W. Clark
  Title: Chief Financial Officer, Gramercy Property Trust, the sole general partner of the Operating Partnership (duly authorized officer and principal financial and accounting officer)


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