Annual Report (10-k)

Part I

ABOUT US

Gramercy Property Trust, a Maryland real estate investment trust ("REIT"), is a leading global investor and asset manager of commercial real estate. We specialize in acquiring and managing income producing commercial real estate leased to high quality tenants in major markets throughout the United States and Europe.

Our commercial real estate holdings are predominantly comprised of industrial properties comprising 68.0% of our Annualized Base Rent (“ABR”) as of December 31, 2016. We also own a number of single and multi-tenant office properties and a portfolio of specialty retail assets, which include retail bank branches, fitness centers and rental car facilities.

At December 31, 2016, our wholly-owned industrial portfolio was comprised of 56.2 million aggregate rentable square feet with a total ABR of $264.7 million and an average building age of approximately 20 years. The industrial portfolio's largest markets at year end (weighted by ABR) were Chicago, Indianapolis, Dallas, Los Angeles, Baltimore/Washington, Atlanta, Central Pennsylvania, Charleston, Memphis and Spartanburg. Our wholly-owned office portfolio was comprised of 7.1 million aggregate rentable square feet with a total ABR of $103.6 million . Lastly, our wholly-owned specialty retail portfolio was comprised of 1.6 million aggregate rentable square feet of building space with a total ABR of $20.8 million that we lease to fitness centers, a rental car operator and various retail bank branches in infill locations, predominantly leased by Bank of America, N.A.

As of December 31, 2016, our wholly-owned portfolio had 98.5% occupancy and a weighted average remaining lease term of 7.6 years (based on ABR). Our tenants at year end were 34.9% investment grade rated or were the subsidiaries of parents with investment grade ratings (based on ABR). The top 5 five tenants by ABR include Bank of America, N.A. ( 5.9% ), Healthy Way of Life II, LLC (d.b.a Life Time Fitness) ( 4.3% ), The Clorox International Company ( 2.2% ), Amazon.com, Inc. ( 2.0% ), and JPMorgan Chase Bank, N.A. ( 1.6% ).

As of December 31, 2016, we also own unconsolidated equity investments comprised of industrial and office properties with an aggregate 12.6 million rentable square feet and an average base rent per square foot of $6.17 (based on ABR).

Corporate Structure

We were formed as a Maryland REIT in March 2004. In December 2015, we completed a merger (the “Merger”) of Gramercy Property Trust Inc. ("Legacy Gramercy") into Chambers Street Properties ("Chambers"), with Chambers as the surviving entity. Following the Merger, we changed our name to “Gramercy Property Trust” and our New York Stock Exchange (“NYSE”) trading symbol to “GPT.”

Our operating partnership, GPT Operating Partnership LP (the "Operating Partnership") indirectly owns (i) all of our consolidated real estate investments, (ii) our interests in unconsolidated investments, and (iii) the entities that conduct our third-party asset management operations. We are the sole general partner of the Operating Partnership. The Operating Partnership is the 100.0% owner of all of its direct and indirect subsidiaries. As of December 31, 2016, third-party holders of limited partnership interests owned approximately 0.46% of the Operating Partnership.

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We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") and generally will not be subject to U.S. federal income taxes to the extent we timely distribute our taxable income, if any, to our shareholders. We have in the past established, and may in the future establish, taxable REIT subsidiaries ("TRSs") to effect various taxable transactions. Those TRSs would incur U.S. federal, state and local taxes on the taxable income from their activities.

Unless the context requires otherwise, all references to “Company,” “Gramercy,” “we,” “our,” and “us” mean Legacy Gramercy and one or more of its subsidiaries for periods prior to the Merger closing and Gramercy Property Trust and one or more of its subsidiaries for periods following the Merger closing.

Investment Strategy

Our strategy is to focus on stabilized, income producing industrial properties and to pursue office properties on an opportunistic basis. We believe industrial properties offer compelling risk adjusted returns in the net leased marketplace. In our experience, industrial assets have more stable tenancy and a more direct and critical relationship to the tenant’s underlying operations. Industrial assets also have lower carrying costs when vacant, lower re-leasing costs to replace tenants and lower ongoing capital requirements during the period of ownership.

Focus on Real Estate Fundamentals

We believe that real estate underwriting is an important aspect of our investment process in the net lease market, and that traditional real estate fundamentals will be the primary driver of investment performance in the current environment, in contrast to past practices where long lease terms and tenant credit quality were the primary drivers.

Target Real Estate Markets with Attractive Fundamentals - We plan to concentrate our investment activity in select target markets with the following characteristics: growing populations, high quality infrastructure, diversified local economies with multiple economic drivers, strong demographics, pro-business local governments and high quality local labor pools. We believe that these markets offer a higher probability of producing long-term rent growth and/or capital appreciation. As of December 31, 2016, approximately 87.2% of our portfolio (based on ABR) is located in our target markets.

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Buy and Own Properties with Contract Rents that are Competitive with Market Rents - We target properties with contract rents that are competitive with rents for similar properties in the market as a way to reduce the volatility of cash flows that can occur upon the expiration of a lease or the loss of a tenant.

Properties with Long Lease Terms - We generally target properties that have between five and 20 years of lease term. We believe that longer lease terms provide more stable cash flows, are less susceptible to short term changes in market conditions and require less capital expenditures to maintain tenancy. We will consider properties with shorter lease terms individually or as part of portfolio transactions where we view the in-place rents to be below market, where we believe the tenant is highly entrenched and there is a high likelihood of renewal or where compelling returns can be achieved. While this is not a primary driver, it is still an important consideration.

Properties Acquired at Above Market Yields Due to Some Market Inefficiency - We seek opportunities to acquire properties at attractive prices due to a mispricing of tenant credit or real estate risk, or a misunderstanding of the nature of the investment that may limit the competitive environment.

Target Mission Critical, Non-Traditional Net Leased Properties - We target specialized properties that we believe fall outside many traditional institutional investor parameters, but offer unique utility to a tenant or an industry and can therefore be acquired at attractive yields relative to the underlying risk. We look for properties that are difficult or costly to replicate due to a specific location, special zoning, unique physical attributes, below market rents or a significant tenant investment in the facility, all of which contribute to a higher probability of tenant renewals. Examples of specialized properties include cross-dock truck terminals, cold storage facilities, parking facilities, air-freight facilities, steel distribution facilities, properties with high parking requirements and other mission critical facilities.

Target Transactions Where We Have a Competitive Advantage

Individual Properties - We seek to acquire individual properties where the size of the transaction causes less competition from larger institutions who generally look for larger properties and portfolios. We have a robust investment and asset management team across our regional offices that can negotiate, underwrite and acquire smaller properties efficiently, which we believe gives us a competitive advantage over many local and regional investors that typically compete for these acquisitions.

Sale Leasebacks - We believe our management team is among the most experienced and well known in the sale leaseback industry, with long-standing contacts and reputations among bankers, advisors and private equity firms. We believe that we can source and effectively compete on sale leaseback transactions and believe that there will be an increasing number of such opportunities due to still extensive holdings of commercial real estate on corporate balance sheets, financial metrics which discourage such ownership and the relative attractiveness of the capital that we and others in the sale leaseback industry can offer.

Portfolios - We believe there may be opportunities to purchase portfolios of properties from existing owners who are either investor owners or corporations that occupy their properties. We believe that we will have the opportunity to purchase portfolios in exchange for cash, our common shares, units of limited partnership interest in our Operating Partnership or a combination thereof. The market for large portfolios is currently very competitive with many well-capitalized buyers actively bidding for these portfolios and we expect this market to remain competitive for the foreseeable future.

Build-to-Suits - Our management team has extensive experience in build-to-suit transactions whereby we provide construction funding for a property that we acquired or will ultimately acquire. In a build-to-suit transaction, we generally

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pre-lease all or substantially all of the property to a single tenant under a long-term lease. We believe this allows us to acquire attractive new buildings at favorable pricing because there is less competition for such investments due to other investors’ relative lack of experience with build-to-suits, the difficulties in obtaining inexpensive asset level financing and a lack of a mandate to make such investments.

Properties Acquired as Part of a Portfolio - We seek opportunities to acquire net leased property portfolios that, through individual asset sales, lease restructurings and other value-add activities, can be transformed into high quality net leased portfolios.

Actively Manage the Portfolio

Seek Opportunities to Extend Leases through Expansions or Capital Investments - We focus on net leased investment properties where, in our view, there is the potential to invest incremental capital or expand buildings to accommodate a tenant’s business, extend lease terms and increase the value of a property. We believe these opportunities can generate attractive returns due to the nature of the relationship between the landlord and tenant.

Acquire Assets with Cycle-Low Rent Levels - We target industrial and office properties with rents that we believe are competitive with market rents. These rents have typically resulted in a lease-up of vacant space or a lease renewal completed following the financial crisis. We believe that the net leased marketplace does not properly differentiate and price these properties and that these investment opportunities can generate growth in income and residual value over time.

Identify Long-term Appreciation Opportunities - We believe there are opportunities to acquire properties with longer term leases that provide current cash flow for the term of the lease and that, if correctly identified, have the potential upon lease expiration for a higher and better use that may provide capital appreciation over the long-run.

Focus on Risk Management

Underwrite and Structure Investments to Protect Downside and Preserve Cash Flows - We seek to invest in properties that have steady, predictable cash flow through: (a) long-term, well-structured leases, (b) high leasehold value for tenants, and (c) a high likelihood of renewal. We further seek to protect our investment by purchasing properties at prices at or below estimated replacement cost.

Utilize Portfolio Diversification - We seek to diversify our portfolio by property type, tenant credit, geography and tenant industry. As of December 31, 2016, our largest tenant was Bank of America, N.A., which accounted for 5.9% of our ABR as of that date. As we grow, we expect to further diversify our portfolio.

Investment Process

Sourcing and Initial Review

We utilize relationships with various real estate owners, real estate advisors and intermediaries, developers, investment and commercial banks, private equity sponsors, and other potential deal sources to identify a broad pipeline of investment opportunities. Our initial review includes an evaluation of the credit of the tenant, the criticality of the property, an evaluation of the market and submarket where the property is located, the location, age, functionality and marketability of the property, the lease structure and how contract rents relate to rents for similar buildings in the submarket, the replacement cost for a similar asset, the expected returns and pricing, and other factors that go into the overall

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evaluation of the investment opportunity. Our management team actively looks to source proprietary investment opportunities that are not being generally marketed for sale.

Underwriting and Analysis

As part of a potential property acquisition, we evaluate the creditworthiness of the tenant and the tenant’s ability to generate sufficient cash flow to make payments to us pursuant to the lease. We evaluate each potential tenant for its creditworthiness, considering factors such as the tenant’s rating by a national credit rating agency, if any, management experience, industry position and fundamentals, operating history and capital structure. We may also conduct interviews with management and owners of the tenant and/or its affiliates as a part of this process. The creditworthiness of a tenant is determined on a tenant-by-tenant and case-by-case basis. Therefore, general standards for creditworthiness cannot be applied.

Due Diligence Review

We perform a due diligence review with respect to each potential property acquisition, such as evaluating the physical condition, evaluating compliance with zoning and site requirements, as well as completing an environmental site assessment in an attempt to determine potential environmental liabilities associated with a property prior to its acquisition, although there can be no assurance that hazardous substances or wastes (as defined by present or future federal or state laws or regulations) will not be discovered on the property after we acquire it.

We review the structural soundness of the improvements on the property and typically engage a structural engineer to review all aspects of the structures in order to determine the longevity of each building on the property. This review normally also includes the components of each property, such as the roof, the electrical wiring, the heating and air-conditioning system, the plumbing, parking lot and various other aspects such as compliance with federal, state and local building codes.

We physically inspect the real estate and surrounding area as part of our process for determining the value of the real estate. We may supplement our valuation with a real estate appraisal. When appropriate, we may also engage experts to undertake some or all of the due diligence efforts described above.

Investment Policy

All real estate investments, dispositions and financings must be approved by a committee consisting of our most senior officers, including the affirmative approval of our Chief Executive Officer. Real estate investments and dispositions having a transaction value greater than $50.0 million must also be approved by the investment committee of our board of trustees. Our board of trustees must approve all such transactions having a value of $100.0 million or more. Additionally, the investment committee of the board must approve non-recourse financings greater than $50.0 million and our board of trustees must approve all recourse financings, regardless of amount, non-recourse financings of $100.0 million or more, and all related-party transactions, regardless of amount. For purposes of approval thresholds, unconsolidated equity investments are calculated using our allocated portion of the price of the asset or amount of the financing.

We generally intend to hold our properties for an extended period. However, circumstances might arise which could result in the early sale of some properties. We also may acquire a portfolio of properties with the intention of holding only a core group of properties and disposing of the remainder of the portfolio in single or multiple sales. The determination of whether a particular property should be sold or otherwise disposed of will be made after consideration of all relevant factors, including prevailing economic conditions, with a view to achieving maximum capital appreciation. The selling

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price of a property will depend on many of the same factors identified above with respect to our investment process for acquisitions.

We may use TRSs to acquire, hold, or dispose of properties, including assets that may not be deemed to be REIT-qualified assets. Taxes paid by such entity will reduce the cash available to us to fund our continuing operations and cash available for distributions to our shareholders.

Some of our investments have been made and may continue to be made through unconsolidated equity investments, which permit us to own interests in larger properties or portfolios without restricting the diversity of our portfolio. As of December 31, 2016, we have investments in six unconsolidated equity investments. Our unconsolidated equity investments consist of the following: (1) 14.2% interest in Gramercy Property Europe plc, or the Gramercy European Property Fund, which invests in industrial, office and specialty retail assets throughout Europe and owns a portfolio of 34 properties in Europe, (2) 5.1% direct interest in the Goodman Europe JV, which is comprised of eight industrial assets in Europe (which are included in the 34 property count of Gramercy European Property Fund above), as well as an indirect interest through our 14.2% interest in Gramercy European Property Fund which holds the remaining 94.9% interest in Goodman Europe JV, (3) 80.0% interest in a portfolio of two industrial properties in the Goodman UK JV, (4) 50.0% interest in an office property located in Morristown, New Jersey, which is undergoing construction for improvements, (5) 25.0% interest in the Strategic Office Partners unconsolidated equity investment which invests in single-tenant office assets in high-growth metropolitan areas in the United States and owns a portfolio of 6 properties, and (6) 25.0% interest in an office located in Somerset, New Jersey.

Use of Leverage

In addition to cash on hand and cash from operations, we anticipate using funds from various sources to finance our acquisitions and operations, including public and private debt and equity issuances, unsecured bank credit facilities and term loans, property-level mortgage debt, OP units and other sources that may become available from time to time. We believe that moderate leverage is prudent. In 2016, we maintained our investment grade credit rating of Baa3 from Moody’s Investors Services and BBB- from Standard and Poor’s Rating Service, both with a stable outlook, and received a BBB investment grade rating from Fitch Ratings, also with a stable outlook.

We expect that any property-level mortgage borrowings will be structured as non-recourse to us, with limited exceptions that would trigger recourse to us only upon the occurrence of certain fraud, misconduct, environmental, bankruptcy or similar events.

Our organizational documents do not limit the amount or percentage of indebtedness that we may incur. The amount of leverage we will deploy for particular investments will depend on an assessment of a variety of factors, which may include the availability and cost of financing the assets, the creditworthiness of our tenants, the health of the U.S. economy and commercial mortgage markets, our outlook for the level, slope and volatility of interest rates, and the overall quality of the properties that secure the indebtedness.

Significant 2016 Activities

The Merger in December 2015 significantly increased the size and scale of our portfolio - we acquired 95 wholly-owned properties, comprised of 57 industrial and 38 office properties - as well as four unconsolidated equity investments across the United States, Europe and Asia. Shortly after announcing the Merger, we released an asset sales and reinvestment strategy to sell non-strategic, multi- and single-tenant suburban office assets and reinvest the disposition proceeds into high quality industrial assets that meet our investment strategy.

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As of December 31, 2016, we have completed the majority of that plan and have disposed of over $1.5 billion in predominantly office assets, including our pro rata share of properties sold in transactions with our unconsolidated entities. The proceeds from these dispositions have been reinvested into $1.6 billion of single and multi-tenant industrial properties, including seven properties distributed to us from the Duke JV which comprise 4.2 million rentable square feet and a build-to-suit property with projected 240.8 thousand rentable square feet upon completion.

This has resulted in a significant reduction in our suburban office exposure, a significant reduction in our unconsolidated equity investments and has repositioned our portfolio back to owning primarily institutional quality income oriented industrial properties throughout the United States. As of December 31, 2016, our portfolio is 68.0% industrial (as weighted by ABR as of December 31, 2016).

In 2016, we also formed a joint venture with TPG Real Estate called Strategic Office Partners to target short and medium term leased single-tenant office assets at opportunistic returns. To seed the venture, we sold into the venture a 75.0% interest in a portfolio of six office assets with shorter lease terms having a gross value of $187.5 million, minimizing our downside exposure at lease expiration, but also retaining a 25.0% interest. We have committed $100.0 million in equity to the venture and our partner has committed $300.0 million in equity to the venture.

Gramercy Asset Management

As of December 31, 2016, our commercial real estate management business, which operates under the name Gramercy Asset Management, manages approximately $1.2 billion of commercial properties. We manage properties for certain of our joint venture partners, such as Strategic Office Partners, and the Gramercy European Property Fund, for which we provide property, asset management and advisory services to an existing portfolio of single-tenant industrial and office assets located in Western Europe. We also manage properties for a third-party, KBS Real Estate Investment Trust, Inc., ("KBS"); however, in the fourth quarter of 2016, we entered into an agreement to terminate this asset management agreement on March 31, 2017.

Gramercy’s integrated asset management platform consolidates responsibility for, and control over, leasing, lease administration, property management, operations, construction management, tenant relationship management and property accounting. Our team is strategically located across regional offices to provide market-specific knowledge and relationships as well as to facilitate constant communication with our tenants. We seek to provide the highest level of tenant satisfaction while also appropriately managing these assets with accountability. To the extent that we provide asset management services for third-party property owners, we provide such services in consultation with and at the direction of such owners.

Build-to-Suits

As of December 31, 2016, Gramercy had three industrial build-to-suits in progress in Austin, Texas, Charleston, South Carolina and Chicago, Illinois for total square footage of approximately 668,000 square feet and an estimated investment of $122.3 million. Our build-to-suit practice not only allows us to partner with strong developers to create market-leading facilities for high quality tenants, but it also allows us the ability to leverage our asset management platform and relationships with existing tenants who may be looking to expand - therefore retaining their tenancy and continuing to grow our market leading portfolio.

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Other General Business Information

Operating Segments

As of December 31, 2016, we have two reportable operating segments: Investments/Corporate and Asset Management. The reportable segments were determined based on the management approach, which looks to our internal organizational structure. These two lines of business require different support infrastructures. The Investments/Corporate segment includes all of our activities related to investment and ownership of commercial properties net leased to diverse tenants throughout the United States. The Investments/Corporate segment generates revenues from rental revenues from properties that we own, either directly or in an unconsolidated equity investment. The Asset Management segment includes substantially all of our activities related to third-party asset and property management of commercial properties located throughout the United States and Europe. Segment revenue and profit information is presented in Note 16 to our financial statements.

Employees

As of December 31, 2016, we had 96 employees. None of our employees are represented by a collective bargaining agreement.

Environmental Matters

We are exposed to various environmental risks that may result in unanticipated losses and affect our operating results and financial condition. We generally conduct environmental assessments of the properties we acquire, including land. While some of these assessments have led to further investigation and sampling, none of the environmental assessments has revealed an environmental liability that we believe would have a material adverse effect on our business, financial condition or results of operations.

Compliance With The Americans With Disabilities Act of 1990

Many of the properties underlying our investments are required to meet federal requirements related to access and use by disabled persons as a result of the Americans with Disabilities Act of 1990 (the "Americans with Disabilities Act"). In addition, a number of additional federal, state and local laws may require modifications to any properties we purchase, or may restrict further renovations of our properties, with respect to access by disabled persons. Noncompliance with these laws or regulations could result in the imposition of fines or an award of damages to private litigants.

Insurance

We carry commercial liability and all risk property insurance, including where required, flood, earthquake, wind and terrorism coverage, on substantially all of the properties that we own. For certain net leased properties, however, we may rely on our tenant’s insurance and not maintain separate coverage. We continue to monitor the state of the insurance market and the scope and costs of specialty coverage, including flood, earthquake, wind and terrorism. We cannot anticipate what coverage will be available on commercially reasonable terms in future policy years. We believe that the insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice.

Substantially all of our properties are covered by an environmental insurance policy that expires in October 2019 and several of our properties are separately covered by individual insurance policies that have 10-year terms. These policies are subject to exclusions and limitations and do not cover all of the properties owned by us, and for those

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properties covered under the policies, insurance may not fully compensate us for any environmental liability. We may not desire to renew an environmental insurance policy in place upon expiration or a replacement policy may not be available at a reasonable cost, if at all.

Corporate Governance and Other Information

Our corporate office is located in midtown Manhattan at 90 Park Avenue, 32nd Floor, New York, New York 10016. We also have regional offices located in London, United Kingdom, Horsham, Pennsylvania, Clayton, Missouri, Rosemont, IL, Dallas, Texas, Berlin, Germany and Barcelona, Spain. We can be contacted at (212) 297-1000. We maintain a website at www.gptreit.com. Our reference to our website is intended to be an inactive textual reference only. We make available free of charge through our internet site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of trustees and executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the "SEC").

We emphasize the importance of professional business conduct and ethics through our corporate governance initiatives. Our board of trustees consists of a majority of independent trustees; the Audit, Nominating and Corporate Governance, and Compensation Committees of our board of trustees are composed exclusively of independent trustees. We have adopted corporate governance guidelines, a whistleblowing and whistle blower protection policy, and a code of business conduct and ethics. We have made available on our website copies of our board committee charters, declaration of trust and by-laws and various corporate governance policies and guidelines. Information on, or accessible through, our website is not part of, and is not incorporated into, this report. You can also read and copy materials we file with the SEC at its Public Reference Room at 100 F Street, NE, Washington, DC 20549 (1-800-SEC-0330). The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding the issuers that file electronically with the SEC.

Availability of SEC Reports

We file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act with the SEC. Readers may read and copy any document that we file at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings are also available to the public from the SEC’s internet site at www.sec.gov. Copies of these reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

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ITEM 1A.    RISK FACTORS 

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 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.

Risks Related to Our Business and Investments

Our future growth will depend upon our ability to acquire and lease properties in a competitive real estate marketplace.

Our future growth will depend, in large part, upon our ability to acquire and lease properties. In order to grow we need to continue to acquire and finance investment properties and sell non-core properties. We face significant competition with respect to our acquisition and origination of assets from many other companies, including other REITs, insurance companies, private investment funds, hedge funds, specialty finance companies and other investors. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, there is significant competition on a national, regional and local level with respect to property management services and in commercial real estate services generally, and we are subject to competition from large national and multi-national firms as well as local or regional firms that offer similar services to ours. Some of our competitors may have greater financial and operational resources, larger customer bases, and more established relationships with their customers and suppliers than we do. The competitive pressures we face, if not effectively managed, may have a material adverse effect on our business, financial condition, liquidity and results of operations.

Also, as a result of this competition, we may not be able to take advantage of attractive origination and investment opportunities and therefore may not be able to identify and pursue opportunities that are consistent with our objectives. Competition may limit the number of suitable investment opportunities offered to us. It may also result in higher prices,

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lower yields and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. In addition, competition for desirable investments could delay our investment in desirable assets, which may in turn reduce our earnings per share and negatively affect our ability to declare and make distributions to our shareholders.

A concentration of our investments in a limited number of property classes may leave our profitability vulnerable to a downturn in such sectors.

At any one time, a significant portion of our property investments may be in a limited number of property classes. As a result, we are subject to risks inherent in investments in these classes and downturns in the businesses conducted at these properties could adversely impact our revenues and financial condition if tenants are unable to renew their leases or meet their payment obligations under existing leases.

We may be adversely affected by unfavorable economic changes in geographic areas where our properties are concentrated.

Adverse conditions (including business layoffs or downsizing, industry slowdowns, changing demographics and other factors) in the areas where our properties are located and/or concentrated, and local real estate conditions (such as oversupply of, or reduced demand for, office, industrial or retail properties) may have an adverse effect on the value of our properties. A material decline in the demand or the ability of tenants to pay rent for office, industrial or retail space in these geographic areas may result in a material decline in our cash available for distribution to our shareholders.

Adverse economic conditions affecting the particular industries of our tenants may adversely affect our income and our ability to pay distributions to our shareholders.

We are subject to certain industry concentrations with respect to our properties, including among others financial services, pharmaceutical and healthcare, consumer products and internet retail. Adverse economic conditions affecting a particular industry could affect the financial ability of one or more of our tenants to make payments under their leases, which could cause delays in our receipt of rental revenues or a vacancy in one or more of our properties for a period of time, and could lead to an even greater risk to the extent that the makeup of our tenants becomes even less diversified by industry as a result of adverse conditions affecting any one particular industry. Therefore, changes in economic conditions of the particular industry of one or more of our tenants could reduce our ability to pay dividends and the value of one or more of our properties at the time of sale of such properties.

If we cannot generate or obtain additional capital, our ability to make acquisitions and lease properties will be limited. We are subject to risks associated with debt and capital share issuances, and such issuances may have consequences to holders of our common and preferred shares.

Our ability to make acquisitions and lease properties will depend, in large part, upon our ability to raise additional capital or generate funds from the sale of properties. If we were to raise additional capital through the issuance of equity securities, we could dilute the interests of holders of our common shares. Our board of trustees may authorize the issuance of additional classes or series of preferred shares which may have rights that could dilute, or otherwise adversely affect, the interest of holders of our common shares.

We intend to incur additional indebtedness in the future, which may include an additional corporate credit facility. Such indebtedness could also have other important consequences to holders of the notes and holders of our common and preferred shares, including subjecting us to covenants restricting our operating flexibility, increasing our vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a portion of our

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cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements, and limiting our flexibility in planning for, or reacting to, changes in our business and our industry.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” the Dodd-Frank Wall Street Reform and Consumer Protection Act, new Securities and Exchange Commission regulations and NYSE rules, are creating uncertainty for companies such as ours. These new or changed laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, regulations, and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Increases in interest rates could increase the amount of our debt payments, adversely affect our ability to pay dividends to our shareholders and could also adversely affect the values of the properties we own.

We currently have debt outstanding and expect that we will incur additional indebtedness in the future. Interest we pay reduces cash available for distributions. Additionally, if we incur variable rate debt, increases in interest rates would increase our interest costs, which would reduce our cash flows and our ability to service indebtedness and, therefore, our ability to pay dividends to you. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

We are dependent on key personnel whose continued service is not guaranteed.

We rely on a small number of persons who comprise our existing senior management team and our board of trustees to implement our business and investment strategies. While we have entered into employment and/or retention agreements with certain members of our senior management team, they may nevertheless cease to provide services to us at any time.

The loss of services of any of our key management personnel or trustees or significant numbers of other employees, or our inability to recruit and retain qualified personnel or trustees in the future, could have an adverse effect on our business.

We are required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.

Various estimates are used in the preparation of our financial statements, including estimates related to asset and liability valuations (or potential impairments), various receivables and the dilutive effect of participating instruments including our convertible notes. Often these estimates require the use of market data values which may be difficult to assess, as well as estimates of future performance or receivables collectability which may be difficult to accurately predict. While we have identified those accounting policies that are considered critical and have procedures in place to

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facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our financial condition and results of operations.

We utilize, and intend to continue to utilize, leverage which may limit our financial flexibility in the future.

We make acquisitions and operate our business in part through the utilization of leverage pursuant to loan agreements with various financial institutions. These loan agreements contain financial covenants that restrict our operations. These financial covenants, as well as any future financial covenants we may enter into through further loan agreements, could inhibit our financial flexibility in the future and prevent distributions to shareholders.

We may incur losses as a result of ineffective risk management processes and strategies.

We seek to monitor and control our risk exposure through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational, compliance and legal reporting systems, internal controls, management review processes and other mechanisms. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the judgments that accompany their application cannot anticipate every economic and financial outcome or the specifics and timing of such outcomes. Thus, we may, in the course of our activities, incur losses due to these risks.

We are highly dependent on information systems and third parties, and systems failures could significantly disrupt our business, which may, in turn, negatively affect our operating results.

Our business is highly dependent on communications and information systems, many of which are provided by third parties. Any failure or interruption of our systems could cause delays in our collection of rents or significant increases in our expenses, which could have a material adverse effect on our operating results.

We may not be able to relet or renew leases at the properties held by us on terms favorable to us or at all.

We are subject to risks that upon expiration or earlier termination of the leases for space located at our properties the space may not be relet or, if relet, the terms of the renewal or reletting (including the costs of required renovations or concessions to tenants) may be less favorable than current lease terms. Any of these situations may result in extended periods where there is a significant decline in revenues or no revenues generated by a property. If we are unable to relet or renew leases for all or substantially all of the spaces at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected, if our reserves for these purposes prove inadequate, or if we are required to make significant renovations or concessions to tenants as part of the renewal or reletting process, we will experience a reduction in net income and may be required to reduce or eliminate distributions to our shareholders. In addition, certain of our properties are currently leased at above-market rents, so our shareholders may also suffer a loss (and a reduction in distributions) after the expiration of the lease terms if we are not able to relet such spaces on favorable terms.

We expect to lease a significant portion of our real estate to tenants who do not have investment grade credit ratings, which may result in our leasing to tenants that are more likely to default in their obligations to us than a tenant with an investment grade credit rating.

A significant portion of the leases at our properties are, or may be, with tenants that do not have investment grade credit ratings. All of our tenants may face exposure to adverse business or economic conditions which could lead to an inability to meet their obligations to us. However, non-investment grade tenants may not have the financial capacity or liquidity to adapt to these conditions or may have less diversified businesses, which may exacerbate the effects of adverse conditions on their businesses. Moreover, the fact that a substantial majority of our tenants are not investment

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grade may cause investors or lenders to view our cash flows as potentially less stable, which may increase our cost of capital, limit our financing options or adversely affect the trading price of our common shares.

Our results of operations rely on major tenants, and the insolvency, bankruptcy or receivership of these or other tenants could adversely affect our results of operations.

Our rental income depends on entering into leases with and collecting rents from tenants. General and regional economic conditions may adversely affect our major tenants and potential tenants in our markets. Our major tenants may experience a material business downturn, weakening their financial condition and potentially resulting in their failure to make timely rental payments and/or a default under their leases. In many cases, we have made substantial up front investments in the applicable leases, through tenant improvement allowances and other concessions, as well as typical transaction costs (including professional fees and commissions) that we may not be able to recover. In the event of any tenant default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment.

The bankruptcy or insolvency of a major tenant also may adversely affect the income produced by our properties. If any tenant becomes a debtor in a case under the U.S. Bankruptcy Code, we cannot evict the tenant solely because of the bankruptcy. In addition, the bankruptcy court might authorize the tenant to reject and terminate their lease with us. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims, and there are restrictions under bankruptcy laws that limit the amount of the claim we can make if a lease is rejected.

Our revenue and cash flow could be materially adversely affected if any of our significant tenants were to become bankrupt or insolvent, suffer a downturn in their business, fail to abide by the terms of their leases, fail to renew their leases at all or renew on terms less favorable to us than their current terms.

Lease defaults or terminations or landlord-tenant disputes may adversely reduce our income from our leased property portfolio.

Lease defaults or terminations by one or more of our significant tenants may reduce our revenues unless a default is cured or a suitable replacement tenant is found promptly. In addition, disputes may arise between the landlord and tenant that result in the tenant withholding rent payments, possibly for an extended period. These disputes may lead to litigation or other legal procedures to secure payment of the rent withheld or to evict the tenant. In other circumstances, a tenant may have a contractual right to abate or suspend rent payments. Even without such right, a tenant might determine to do so. Any of these situations may result in extended periods during which there is a significant decline in revenues or no revenues generated by the property. If this were to occur, it could adversely affect our results of operations.

Inflation may adversely affect our financial condition and results of operations.

Although inflation has not materially impacted our results of operations in the recent past, increased inflation could have a more pronounced negative impact on any variable rate debt we incur in the future and on our results of operations. During times when inflation is greater than increases in rent, the contracted rent increases called for under our leases may be unable to keep pace with the rate of inflation. Likewise, even though our triple-net leases generally reduce our exposure to rising property expenses resulting from inflation, substantial inflationary pressures and increased costs may have an adverse impact on our tenants, which may adversely affect the tenants’ ability to pay rent.

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Our net leases may require us to pay property-related expenses that are not the obligations of our tenants.

Under the terms of the majority of our net leases, in addition to satisfying their rent obligations, our tenants are responsible for the payment of real estate taxes, insurance and ordinary maintenance and repairs. However, pursuant to certain of our current leases and leases we may assume or enter into in the future, we may be required to pay certain expenses, such as the costs of environmental liabilities, roof and structural repairs, insurance, certain non-structural repairs and maintenance and other costs and expenses for which insurance proceeds or other means of recovery are not available. If one or more of our properties incur significant expenses under the terms of the leases, such property, our business, financial condition and results of operations will be adversely affected and the amount of cash available to meet expenses and to make distributions to our shareholders may be reduced.

We may be required to reimburse tenants for overpayments of estimated operating expenses.

Under certain of our leases, tenants pay us as additional rent their proportionate share of the costs we incur to manage, operate and maintain the buildings and properties where they rent space. These leases often limit the types and amounts of expenses we can pass through to our tenants and allow the tenants to audit and contest our determination of the operating expenses they are required to pay. Given the complexity of certain additional rent calculations, tenant audit rights under large portfolio leases can remain unresolved for several years. If as a result of a tenant audit it is determined that we have collected more additional rent than we are permitted to collect under a lease, we must refund the excess amount back to the tenant and, sometimes, also reimburse the tenant for its audit costs. Such unexpected reimbursement payments could materially adversely affect our financial condition and results of operations.

Net leases may not result in fair market lease rates over time, which could negatively impact our income and reduce the amount of funds available to make distributions to our shareholders.

The vast majority of our rental income comes from net leases, which generally provide the tenant greater discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Furthermore, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years. As a result, our income and distributions to our shareholders could be lower than they would otherwise be if we did not engage in net leases.

Actions of our joint venture partners could negatively impact our performance.

We may, from time to time and as we have done in the past, co-invest with third parties through various arrangements. With such investments, we may not be in a position to exercise sole decision-making authority regarding that property, partnership, joint venture or other entity because our partners may share certain approval rights over major decisions. Investments in partnerships, joint ventures, or other entities may involve risks not present were a third party not involved, including the possibility that our partners, co-tenants or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, our partners or co-venturers might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals. These investments may also have the potential risk of impasses on decisions such as a sale, because neither we nor the partner, co-tenant or co-venturer would have full control over the partnership or joint venture. Consequently, actions by such partner, co-tenant or co-venturer might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in specific circumstances be liable for the actions of our third-party partners, co-tenants or co-venturers.

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An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or revenue on those properties.

Under the terms and conditions of the leases currently in force on our properties, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons, air, water, land or property, on or off the premises, due to activities conducted on the properties, except for claims arising from the negligence or intentional misconduct of us or our agents. Additionally, tenants are generally required, at the tenants’ expense, to obtain and keep in full force during the term of the lease, liability and property damage insurance policies. Insurance policies for property damage are generally in amounts not less than the full replacement cost of the improvements less slab, foundations, supports and other customarily excluded improvements and insure against all perils of fire, extended coverage, vandalism, malicious mischief and special extended perils (“all risk,” as that term is used in the insurance industry). Insurance policies are generally obtained by the tenant providing general liability coverage varying between $1.0 million and $10.0 million depending on the facts and circumstances surrounding the tenant and the industry in which it operates. These policies include liability coverage for bodily injury and property damage arising out of the ownership, use, occupancy or maintenance of the properties and all of their appurtenant areas. To the extent that losses are uninsured or underinsured, we could be subject to lost capital and revenue on those properties.

We are subject to risks and uncertainties associated with operating our asset management business.

We may encounter risks and difficulties as we operate our asset management business. To achieve our goals as an asset manager, we must:

•	actively manage the assets in such portfolios in order to realize targeted performance; and

•	create incentives for our management and professional staff to develop and operate the asset management business.

If we do not successfully operate our asset management business to achieve the investment returns that we or the market anticipates, our operations may be adversely impacted.

Our investments in interest rate hedge contracts are subject to changes to market interest rates and also could expose us to contingent liabilities and certain risks and costs in the future.

Part of our investment strategy involves entering into interest rate hedging contracts. If interest rates decrease, the fair market value of any existing interest rate hedge contracts would decline. Our efforts to manage exposures under these hedge contracts may not be successful. Our use of interest rate hedge contracts to manage risk associated with interest rate volatility may expose us to additional risks, including the risk that a counterparty to a hedge contract may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of interest rate hedge contracts typically involves costs, such as transaction fees or breakage costs.

Further, the cost of using derivative or hedging instruments increases as the period covered by the instrument increases and during periods of rising and volatile interest rates. We may increase our derivative or hedging activity and thus increase our related costs during periods when interest rates are volatile or rising and hedging costs have increased.

In addition, hedging instruments involve risk since they often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities. Furthermore, the enforceability of agreements underlying derivative transactions may depend on compliance with applicable statutory

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and commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business failure of a hedging counterparty with whom we enter into a hedging transaction will most likely result in a default. Default by a party with whom we enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then current market price. Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty, and we may not be able to enter into an offsetting contract in order to cover our risk. We cannot be assured that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.

We face risks relating to information systems failures and cybersecurity breaches that could cause loss of confidential information and other business disruptions.

We maintain sensitive data, including our proprietary business information and the confidential information of our employees, tenants and business partners, in our data centers and on our networks. The systems containing this data are vulnerable to a number of risks, including energy blackouts, natural disasters, terrorism, war, telecommunication failures and cyber-attacks and intrusions, such as computer viruses, malware, attachments to e-mails, intrusion and unauthorized access. Attacks can be both individual and/or highly organized attempts by very sophisticated hacking organizations. We employ a number of security measures to prevent, detect and mitigate these threats, which include password protection, frequent password change events, firewall detection systems, frequent backups, a redundant data system for core applications and annual penetration testing; however, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. If they occur, system failures and data and security breaches could (i) disrupt the proper functioning of our networks and systems and therefore our operations and/or those of our client tenants; (ii) result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines; (iii) result in the unauthorized access to, and destruction, loss, theft, misappropriation, or release of proprietary, confidential, sensitive, or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes; (iv) require significant management attention and resources to remedy any damages that result; (v) subject us to claims for breach of contract, damages, credits, penalties, or termination of leases or other agreements and/or (vi) damage our reputation among our client tenants and investors generally.

Liability relating to environmental matters may impact the value of the properties that we may acquire or underlying our investments.

Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. If we fail to disclose environmental issues, we could also be liable to a buyer or lessee of a property.

There may be environmental problems associated with our properties which we were unaware of at the time of acquisition. The presence of hazardous substances may adversely affect our ability to sell real estate, including the affected property, or borrow using real estate as collateral. The presence of hazardous substances, if any, on our properties may cause us to incur substantial remediation costs, thus harming our financial condition. In addition, although our leases will generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant’s activities on the property, we nonetheless would be subject to strict liability by virtue of our ownership interest for environmental liabilities created by such tenants, and we cannot ensure the shareholders that any tenants we might have would satisfy their indemnification obligations under the applicable

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sales agreement or lease. To the extent we have environmental insurance to mitigate any of these risks, our coverage may be insufficient. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our shareholders.

Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results.

Under various U.S. federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances. To the extent we have environmental insurance to mitigate any of these risks, our coverage may be insufficient. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims related to any contaminated property could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to our security holders.

Risks Related to Our European Operations

Our European Operations expose us to additional risk.

We have made capital commitments to joint ventures that target net leased assets across Europe. These investments may be affected by factors particular to the laws of the jurisdiction in which the property is located. These investments expose us to risks that are different from and in addition to those commonly found in the U.S., including:

•	changing governmental rules and policies;

•	enactment of laws relating to the foreign ownership of property and laws relating to the ability of foreign entities to remove invested capital or profits earned from activities within the country to the U.S.;

•	legal systems under which our ability to enforce contractual rights and remedies may be more limited than would be the case under U.S. law;

•	difficulty in conforming obligations in other countries and the burden of complying with a wide variety of foreign laws, rules and regulations, which may be more stringent than U.S. laws, rules and regulations, including tax requirements and land use, zoning, and environmental laws, as well as changes in such laws;

•	adverse market conditions caused by changes in national or local economic or political conditions;

•	tax requirements vary by country and we may be subject to additional taxes as a result of our international investments;

•	changes in the availability, cost and terms of mortgage funds resulting from varying national economic policies;

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•	changes in real estate and other tax rates and other operating expenses in particular countries;

•	changes in land use and zoning laws;

•	more stringent environmental laws or changes in such laws; and

•	restrictions and/or significant costs in repatriating cash and cash equivalents held in foreign bank accounts.

•

In addition, the lack of publicly available information in certain jurisdictions in accordance with accounting principles generally accepted in the U.S., or GAAP, could impair our ability to analyze transactions and may cause us to forgo an investment opportunity. It may also impair our ability to receive timely and accurate financial information from tenants necessary to meet our reporting obligations to financial institutions or governmental or regulatory agencies. Also, we may engage third-party asset managers in international jurisdictions to monitor compliance with legal requirements and lending agreements with respect to properties we own or manage. Failure to comply with applicable requirements may expose us or our operating subsidiaries to additional liabilities.

Moreover, we are subject to changes in foreign exchange rates due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar. Our principal currency exposure is to the euro. We will attempt to mitigate a portion of the risk of currency fluctuation by financing our properties in the local currency denominations, although there can be no assurance that this will be effective. Because we intend to place both our debt obligation to the lender and the tenant’s rental obligation to us in the same currency, our results of foreign operations benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to foreign currencies; that is, absent other considerations, a weaker U.S. dollar will tend to increase both our revenues and our expenses, while a stronger U.S. dollar will tend to reduce both our revenues and our expenses.

Risks Related to Our Organization and Structure

Maryland takeover statutes could restrict a change of control, which could have the effect of inhibiting a change in control even if a change in control were in our shareholders' interests.

Under the Maryland General Corporation Law (the "MGCL") as applicable to REITs, certain "business combinations" between a Maryland REIT and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested shareholder is defined as:

•	any person who beneficially, directly or indirectly, owns 10% or more of the voting power of our outstanding voting shares after the date on which the Company had 100 or more beneficial owners of its shares; or

•	an affiliate or associate of the Company who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding shares.

A person is not an interested shareholder under the statute if our board of trustees approves in advance the transaction by which he otherwise would have become an interested shareholder.

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After the five-year prohibition, any business combination between the Maryland REIT and an interested shareholder generally must be recommended by our board of trustees and approved by the affirmative vote of at least:

•	80% of the votes entitled to be cast by holders of our outstanding voting shares, voting together as a single voting group; and

•	two-thirds of the votes entitled to be cast by holders of our outstanding voting shares other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder, voting together as a single voting group.

The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer, including potential acquisitions that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

Our board of trustees has adopted a resolution exempting the Company from the provisions of the MGCL relating to business combinations with interested shareholders or affiliates of interested shareholders. However, such resolution can be altered or repealed, in whole or in part, at any time by our board of trustees. If such resolution is repealed, the business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating these offers, even if our acquisition would be in our shareholders' best interests.

Certain provisions of the MGCL applicable to Maryland real estate investment trusts permit our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to adopt certain mechanisms, some of which (for example, a classified board) we do not have. These provisions may have the effect of limiting or precluding a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then current market price.

The MGCL also limits the ability of a third-party to buy a large stake in us and exercise voting power in electing trustees.

The MGCL, as applicable to REITs, provides that "control shares" of a Maryland REIT acquired in a "control share acquisition" have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiror, by officers or by employees who are trustees of the REIT. "Control shares" are voting shares that would entitle the acquirer to exercise voting power in electing trustees within specified ranges of voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval or shares issued directly by the REIT. A "control share acquisition" means the acquisition, directly or indirectly, of issued and outstanding control shares, subject to certain exceptions. The control share acquisition statute does not apply (i) to shares acquired in a merger, consolidation or share exchange if we are a party to the transaction, or (ii) to acquisitions approved or exempted by our declaration of trust or bylaws. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares. We cannot assure you that such provision will not be amended or eliminated at any time in the future. If such provision is eliminated, the control share acquisition statute could have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, even if our acquisition would be in our shareholders' best interests.

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for shareholders.

We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. Our continued qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution and

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shareholder ownership requirements on a continuing basis. Our ability to satisfy some of the asset tests depends upon the fair market values of our assets, some of which are not able to be precisely determined and for which we will not obtain independent appraisals. If we were to fail to qualify as a REIT in any taxable year, and certain statutory relief provisions were not available, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and distributions to shareholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution. Unless entitled to relief under certain Internal Revenue Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our common shares. Even if we qualify as a REIT, we may be may be subject to the corporate alternative minimum tax on our items of tax preference if our alternative minimum taxable income exceeds our taxable income.

The tax on prohibited transactions will limit our ability to engage in transactions, including how we sell our real estate properties, which may inhibit our ability to sell non-core properties pursuant to our desired asset disposition plan.

A REIT’s gain from prohibited transactions is subject to a 100.0% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business.

Whether property is held as inventory or primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances surrounding the particular transaction.  There can be no assurance as to whether or not the Internal Revenue Service might successfully assert that one or more of our dispositions is subject to the 100.0% penalty tax.  The Internal Revenue Code provide a safe-harbor pursuant to which limited sales of real property held for at least two years and meeting specified additional requirements will not be treated as prohibited transactions, but fitting within the safe harbor rules limits our operational flexibility.

We will attempt to comply with the terms of the safe-harbor provisions in the Internal Revenue Code prescribing when a property sale will not be characterized as a prohibited transaction. We cannot make any assurances, however, that we can comply with the safe-harbor provisions or that we will avoid owning property that may be characterized as property that we hold primarily for sale to customers in the ordinary course of a trade or business.

Although our use of TRSs may be able to partially mitigate the impact of meeting the requirements necessary to maintain our qualification as a REIT, our ownership of and relationship with our TRSs will be limited, and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100.0% excise tax.

A REIT may own up to 100.0% of the shares of one or more TRSs. A TRS generally may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the shares will automatically be treated as a TRS. Overall, no more than 25% (and starting in 2018 no more than 20%) of the value of a REIT’s assets may consist of shares or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100.0% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

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We own certain investments and conduct certain operations through TRSs, which pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us. We anticipate that the aggregate value of TRS securities owned by us will be less than 25% of the value of our total assets (including such TRS securities). Furthermore, we will monitor the value of our respective investments in our TRSs for the purpose of ensuring compliance with the rule that no more than 25% (or 20% starting in 2018) of the value of a REIT’s assets may consist of TRS securities (which is applied at the end of each calendar quarter). In addition, we will scrutinize all of our transactions with our TRSs for the purpose of ensuring that they are entered into on arm’s-length terms in order to avoid incurring the 100.0% excise tax described above. The value of the securities that we hold in our TRSs may not be subject to precise valuation. Accordingly, there can be no complete assurance that we will be able to comply with the 25%, limitation discussed above or avoid application of the 100.0% excise tax discussed above.

If our Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.

We believe that the Operating Partnership will be treated as a partnership for federal income tax purposes. As a partnership, each Operating Partnership will not be subject to federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of the Operating Partnership’s income. We cannot assure you, however, that the Internal Revenue Service will not challenge the status of the Operating Partnership or any other subsidiary partnership in which we own an interest as a partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the Internal Revenue Service were successful in treating the Operating Partnership or any such other subsidiary partnership as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of the Operating Partnership or any subsidiary partnerships to qualify as a partnership could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us.

Our authorized but unissued preferred shares may prevent a change in our control which could be in the shareholders’ best interests.

Our declaration of trust authorizes us to issue additional authorized but unissued common or preferred shares. Any such issuance could dilute our existing shareholders’ interests. In addition, the board of trustees, may amend our declaration of trust from time to time and without any action by our shareholders to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue, may classify or reclassify any unissued common or preferred shares into other classes or series of shares and may set the preferences, rights and other terms of the classified or reclassified shares. As a result, the board of trustees may establish a class or series of preferred shares that could delay or prevent a transaction or a change in control that might be in the best interest of our shareholders.

We may change our investment and operational policies without shareholder consent.

We may change our investment and operational policies, including our policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions, at any time without the consent of our shareholders, which could result in our making investments that are different from, and possibly riskier than, the types of investments described in this filing. A change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our ability to make distributions.

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We may in the future choose to pay dividends in our own shares, in which case you may be required to pay income taxes in excess of the cash dividends you receive.

We may in the future distribute taxable dividends that are payable in cash and common shares at the election of each shareholder. Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. shareholder may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. shareholder sells the shares it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our shares at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in shares. In addition, if a significant number of our shareholders determine to sell common shares in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common shares.

Risks Related to Ownership of Common Shares

Future sales of common shares in the public market or the issuance of other equity may adversely affect the market price of our common shares.

Sales of a substantial number of common shares or other equity-related securities in the public market could depress the market price of our common shares, and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of common shares or other equity-related securities would have on the market price of our common shares.

The price of our common shares may fluctuate significantly.

The trading price of our common shares may fluctuate significantly in response to many factors, including:

• actual or anticipated variations in our operating results, funds from operations, or FFO, cash flows, liquidity or distributions;

• changes in our earnings estimates or those of analysts;

• publication of research reports about it or the real estate industry or sector in which we operate;

• increases in market interest rates that lead purchasers of our shares to demand a higher dividend yield;

• changes in market valuations of companies similar to us;

• adverse market reaction to any securities we may issue or additional debt it incurs in the future;

• additions or departures of key management personnel;

• actions by institutional shareholders;

• speculation in the press or investment community;

• continuing high levels of volatility in the credit markets;

• the realization of any of the other risk factors included herein; and

• general market and economic conditions.

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The availability and timing of cash distributions is uncertain.

We are generally required to distribute to its shareholders at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year in order for us to qualify as a REIT under the Code, which we intend to satisfy through quarterly cash distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments.

Our board of trustees will determine the amount and timing of any distributions. In making such determinations, our trustees will consider all relevant factors, including the amount of cash available for distribution, capital expenditures, general operational requirements and applicable law. We intend over time to make regular quarterly distributions to holders of our common shares. However, we bear all expenses incurred by our operations, and the funds generated by operations, after deducting these expenses, may not be sufficient to cover desired levels of distributions to shareholders. In addition, our board of trustees, in its discretion, may retain any portion of such cash in excess of our REIT taxable income for working capital. We cannot predict the amount of distributions we may make, maintain or increase over time.

There are many factors that can affect the availability and timing of cash distributions to shareholders. Because we may receive rents and income from our properties at various times during our fiscal year, distributions paid may not reflect our income earned in that particular distribution period. The amount of cash available for distribution will be affected by many factors, including without limitation, the amount of income we will earn from investments in target assets, the amount of its operating expenses and many other variables. Actual cash available for distribution may vary substantially from our expectations.

While we intend to fund the payment of quarterly distributions to holders of common shares entirely from distributable cash flows, we may fund quarterly distributions to its shareholders from a combination of available net cash flows, equity capital and proceeds from borrowings. In the event we are unable to consistently fund future quarterly distributions to shareholders entirely from distributable cash flows, the value of our common shares may be negatively impacted.

An increase in market interest rates may have an adverse effect on the market price of our common shares and our ability to make distributions to its shareholders.

One of the factors that investors may consider in deciding whether to buy or sell common shares is our distribution rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate on common shares or seek alternative investments paying higher distributions or interest. As a result, interest rate fluctuations and capital market conditions can affect the market price of common shares. For instance, if interest rates rise without an increase in our distribution rate, the market price of common shares could decrease because potential investors may require a higher distribution yield on common shares as market rates on interest-bearing instruments such as bonds rise. In addition, to the extent we have variable rate debt, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting our cash flow and its ability to service our indebtedness and make distributions to our shareholders.

Risks Related to Our Former CDO Business

Our retained interests in our CDOs are highly speculative; as a result, there will be uncertainty as to the value of these investments.

Prior to March 2013, certain of our affiliates acted as collateral manager and sub-special servicer for our 2005, 2006 and 2007 collateralized debt obligations (“CDOs” and, collectively, the “Gramercy CDOs”). We retain interests in certain subordinate bonds, preferred shares and ordinary shares in the Gramercy CDOs. These retained interests (the “Retained CDO Bonds”) are highly speculative and subject to high fluctuations in purported value. The fair value of the Retained

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CDO Bonds, which are not publicly traded, may not be readily determinable. We value the Retained CDO Bonds quarterly. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for the Retained CDO Bonds existed. There is no guarantee that we will realize any proceeds from our Retained CDO Bonds, or what the timing of those proceeds might be, and the value of our common shares could be adversely affected if our determinations regarding the fair value of the Retained CDO Bonds were materially higher than the values that we ultimately realize upon their disposal.

SPECIAL NOTE REGARDING EXHIBITS

In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about our company or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk tone of the parties if those statements prove to be inaccurate;

•	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•	may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about our company may be found elsewhere in this Annual Report on Form 10-K and our other public filings, which are available without charge through the SEC’s website at http://www.sec.gov. See Item 1, “Business - Corporate Governance and Internet Address; Where Readers Can Find Additional Information” for further information.

ITEM 1B.	UNRESOLVED STAFF COMMENTS

As of the date of this filing, we do not have any unresolved comments with the staff of the SEC.

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ITEM 2.	PROPERTIES (Dollar amounts in thousands, except square feet and dollar per square foot amounts)

Our corporate headquarters are located in midtown Manhattan at 90 Park Avenue, 32nd Floor, New York, New York 10016. We also have seven regional offices under operating leases that are located across the United States and Europe.

Current Property Portfolio

As of December 31, 2016 , our consolidated property portfolio was comprised of industrial, office, and specialty retail properties containing an aggregate of approximately 65.0 million rentable square feet. The following table presents the geographic diversification of our consolidated properties as of December 31, 2016 :

GPT PORTFOLIO ⁽¹⁾ :

Markets			Number of Properties		Rentable SF		Occupancy Percentage		Annualized Base Rent	ABR / Leased SF	% of Total ABR by Property Type		WALT
Industrial
NORTHEAST U.S.
	Baltimore/Washington		10		2,398,556		100.0	%	$12,680	$5.29	4.8	%	6.7
	Central Pennsylvania		7		2,392,875		100.0	%	$11,975	$5.00	4.5	%	5.3
	New York/New Jersey		5		279,286		100.0	%	$3,774	$13.51	1.4	%	6.4
	Philadelphia		5		1,050,066		100.0	%	$5,563	$5.30	2.1	%	11.6
	Other		6		1,653,480		100.0	%	$9,778	$5.91	3.7	%	8.8
	Northeast U.S. Subtotal		33		7,774,263		100.0	%	$43,770	$5.63	16.5	%	7.4
SOUTHEAST U.S.
	Atlanta		11		3,458,153		100.0	%	$12,506	$3.62	4.7	%	5.6
	Charleston		8		2,597,266		100.0	%	$10,625	$4.09	4.0	%	5.2
	Charlotte		3		943,310		100.0	%	$3,055	$3.24	1.2	%	5.0
	Jacksonville		3		1,843,540		100.0	%	$7,427	$4.03	2.8	%	4.8
	Memphis		6		3,766,539		95.3	%	$9,934	$2.77	3.8	%	5.2
	Nashville		2		377,600		100.0	%	$1,080	$2.86	0.4	%	19.0
	Raleigh/Durham		1		115,500		100.0	%	$675	$5.84	0.3	%	11.7
	Savannah		2		1,107,784		100.0	%	$3,659	$3.30	1.4	%	4.4
	South Florida		7		746,371		100.0	%	$7,211	$9.66	2.7	%	11.0
	Spartanburg		18		2,389,980		97.0	%	$8,649	$3.73	3.3	%	5.1
	Tampa/Orlando		8		964,726		100.0	%	$4,851	$5.03	1.8	%	7.2
	Other		8		1,781,188		100.0	%	$7,000	$3.93	2.6	%	7.2
	Southeast U.S. Subtotal		77		20,091,957		98.8	%	$76,672	$3.86	29.0	%	6.3
MIDWEST U.S.
	Chicago		22		5,079,123		100.0	%	$27,625	$5.44	10.5	%	10.1
	Cincinnati		5		1,813,378		100.0	%	$6,164	$3.40	2.3	%	4.4
	Columbus		3		1,860,453		100.0	%	$6,041	$3.25	2.3	%	2.8
	Indianapolis		8		4,256,883		100.0	%	$18,579	$4.36	7.0	%	7.6
	Kansas City		1		1,107,000		100.0	%	$4,838	$4.37	1.8	%	3.1
	Milwaukee		3		452,752		75.6	%	$1,305	$3.81	0.5	%	1.6
	Minneapolis		4		1,414,319		76.3	%	$5,853	$5.42	2.2	%	8.3
	Other		7		2,226,596		100.0	%	$8,979	$4.03	3.4	%	6.4
	Midwest U.S. Subtotal		53		18,210,504		97.6	%	$79,384	$4.47	30.0	%	7.4

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Markets			Number of Properties		Rentable SF		Occupancy Percentage		Annualized Base Rent	ABR / Leased SF	% of Total ABR by Property Type		WALT
WESTERN U.S.
	Austin		1		120,347		100.0	%	$726	$6.03	0.3	%	11.8
	Bay Area		5		945,193		100.0	%	$7,618	$8.06	2.9	%	6.0
	Dallas		11		3,857,855		100.0	%	$18,396	$4.77	6.9	%	7.2
	Denver		3		632,562		100.0	%	$3,159	$4.99	1.2	%	4.3
	Houston		4		600,082		100.0	%	$5,000	$8.33	1.9	%	10.8
	Inland Empire		1		69,452		100.0	%	$720	$10.37	0.3	%	9.2
	Las Vegas		1		232,856		100.0	%	$1,186	$5.09	0.4	%	14.9
	Los Angeles		11		1,484,392		100.0	%	$16,710	$11.26	6.3	%	9.3
	Phoenix		1		217,422		100.0	%	$889	$4.09	0.3	%	1.8
	Seattle		3		433,199		100.0	%	$2,817	$6.50	1.1	%	5.9
	Other		6		1,279,033		100.0	%	$6,641	$5.19	2.5	%	10.9
	Western U.S. Subtotal		47		9,872,393		100.0	%	$63,862	$6.47	24.1	%	8.2
	Canada		2		297,620		100.0	%	$1,051	$3.53	0.4	%	11.6
	U.S. & Canada Industrial Total		212		56,246,737		98.8	%	$264,739	$4.77	100.0	%	7.3
Office
NORTHEAST U.S.
	Baltimore/Washington		3		161,443		100.0	%	$4,411	$27.32	4.3	%	3.8
	New York/New Jersey		5		666,356		97.9	%	$15,119	$23.17	14.6	%	4.8
	Philadelphia		2		490,406		100.0	%	$8,057	$16.43	7.8	%	9.4
	Northeast U.S. Subtotal		10		1,318,205		99.0	%	$27,587	$21.15	26.7	%	6.0
SOUTHEAST U.S.
	Charlotte		1		113,600		100.0	%	$1,253	$11.03	1.2	%	9.5
	Jacksonville (1)		10		1,242,667		91.0	%	$10,093	$8.93	9.7	%	12.8
	Nashville		1		88,958		100.0	%	$1,245	$14.00	1.2	%	12.5
	Raleigh/Durham		3		264,728		98.8	%	$5,335	$20.39	5.2	%	6.6
	Savannah		1		21,625		100.0	%	$192	$8.87	0.2	%	6.5
	South Florida		4		577,965		100.0	%	$10,028	$17.35	9.7	%	7.0
	Tampa/Orlando		2		88,068		100.0	%	$796	$9.04	0.8	%	6.3
	Other		1		13,072		100.0	%	$149	$11.40	0.1	%	3.8
	Southeast U.S. Subtotal		23		2,410,683		95.2	%	$29,091	$12.67	28.1	%	9.2
MIDWEST U.S.
	Chicago		2		199,104		99.4	%	$4,119	$20.82	4.0	%	3.3
	Columbus		2		450,587		100.0	%	$5,720	$12.69	5.5	%	2.0
	Kansas City		1		23,527		51.7	%	$108	$8.87	0.1	%	6.5
	Minneapolis		1		213,850		66.7	%	$2,427	$17.02	2.3	%	10.4
	Other		2		38,800		100.0	%	$420	$10.83	0.4	%	5.6
	Midwest U.S. Subtotal		8		925,868		90.9	%	$12,794	$15.19	12.3	%	4.1
WESTERN U.S.
	Bay Area		1		31,691		100.0	%	$281	$8.87	0.3	%	6.5
	Dallas		3		492,697		99.8	%	$8,264	$16.81	8.0	%	5.4
	Houston		3		345,810		100.0	%	$6,092	$17.62	5.9	%	6.8
	Inland Empire		3		141,674		80.6	%	$1,013	$8.87	1.0	%	6.5
	Los Angeles		5		322,957		99.3	%	$5,542	$17.28	5.4	%	3.2

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Markets			Number of Properties		Rentable SF		Occupancy Percentage		Annualized Base Rent	ABR / Leased SF	% of Total ABR by Property Type		WALT
	Phoenix		7		956,989		100.0	%	$11,544	$12.06	11.1	%	8.7
	Other		6		166,157		92.4	%	$1,359	$8.85	1.3	%	3.4
	Western U.S. Subtotal		28		2,457,975		98.2	%	$34,095	$14.12	32.9	%	6.4
	U.S. Office Total		69		7,112,731		96.4	%	$103,567	$15.10	100.0	%	6.8
Specialty Retail
NORTHEAST U.S.
	Baltimore/Washington		2		132,458		100.0	%	$2,305	$17.40	11.1	%	17.7
	Central PA		1		4,800		100.0	%	$166	$34.52	0.8	%	2.2
	New York/New Jersey		1		16,707		100.0	%	$117	$7.00	0.6	%	2.7
	Northeast U.S. Subtotal		4		153,965		100.0	%	$2,588	$16.81	12.5	%	16.0
SOUTHEAST U.S.
	Jacksonville		1		6,658		100.0	%	$59	$8.87	0.3	%	6.5
	Memphis		1		112,110		100.0	%	$1,787	$15.94	8.6	%	18.5
	South Florida		1		10,678		100.0	%	$95	$8.87	0.5	%	6.5
	Tampa/Orlando		1		16,992		88.2	%	$133	$8.87	0.6	%	6.5
	Other		1		2,048		100.0	%	$83	$40.28	0.4	%	7.0
	Southeast U.S. Subtotal		5		148,486		98.7	%	$2,157	$14.72	10.4	%	16.5
MIDWEST U.S.
	Chicago		1		22,872		100.0	%	$625	$27.32	3.0	%	4.3
	Minneapolis		1		176,704		100.0	%	$1,508	$8.53	7.3	%	18.5
	Other		5		370,953		100.0	%	$5,183	$13.97	24.9	%	18.0
	Midwest U.S. Subtotal		7		570,529		100.0	%	$7,316	$12.82	35.2	%	16.9
WESTERN U.S.
	Dallas		1		129,155		100.0	%	$1,755	$13.59	8.4	%	18.5
	Denver		1		129,182		100.0	%	$2,080	$16.10	10.0	%	18.5
	Los Angeles		14		220,742		95.5	%	$1,901	$9.02	9.2	%	6.4
	Other		5		251,595		100.0	%	$2,982	$11.85	14.3	%	15.9
	Western U.S. Subtotal		21		730,674		98.7	%	$8,718	$12.10	41.9	%	15.0
	U.S. Specialty Retail Total		37		1,603,654		99.3	%	$20,779	$13.05	100.0	%	15.9

(1)	Property counts have been adjusted to reflect number of properties instead of number of buildings. Adjustments are reflected throughout the financial statements.

Development Plans

As of December 31, 2016 , our plans for development are primarily focused on performing property improvements specified in leases as well as pursuing build-to-suit transactions where a tenant has signed a lease in advance of construction, and a developer or builder bears the risk of completion on-time and on-budget. We may renovate, improve, expand or repair existing properties where we believe the incremental investment increases the value of the property and the incremental capital can be invested at attractive risk-adjusted returns. We will, from time to time acquire adjacent land parcels to properties in our portfolio in order to accommodate expansions of existing properties.

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The following table presents the geographic diversification of our consolidated properties in development as of December 31, 2016 :

Build-to-Suits
Markets			Number of Properties		Rentable SF		Occupancy Percentage		Annualized Base Rent (1)	ABR / Leased SF	% of Total ABR		Estimated Investment	% Funded		Estimated Delivery
BUILD-TO-SUITS
	Austin (Cold Storage)		1		200,411		100.0	%	$2,166	$10.81	26.2	%	$28,287	82.0	%	Q1 2017
	Charleston (Warehouse)		1		240,800		100.0	%	$2,425	$10.07	29.3	%	$31,201	19.8	%	Q4 2017
	Chicago (Cold Storage) (2)		1		227,043		100.0	%	$3,687	$16.24	44.5	%	$62,806	11.8	%	Q4 2017
	Build-to-Suits Total		3		668,254		100.0	%	$8,278	$12.39	100.0	%	$122,294	30.1	%

(1)	Annualized Base Rent is estimated in certain instances based on final construction costs.

(2)	The Company has a forward purchase contract to acquire this build-to-suit property upon completion in 2017.

Unconsolidated Equity Investments

Gramercy European Property Fund — We formed a private real estate investment fund with several equity investment partners in December 2014, which invests predominantly in single-tenant industrial, office, and specialty retail assets throughout Europe. The equity investors have committed approximately $447,798 ( €402,500 ) in equity capital, including $69,038 ( €62,500 ) from us. As of December 31, 2016 , we have a 14.2% interest in the Gramercy European Property Fund. In connection with the Merger, we acquired an 80.0% ownership interest in the Goodman Europe JV, which is a joint venture that invests in warehouse/distribution/logistics properties in France and Germany, which were managed by the Goodman Group, or Goodman, our former joint venture partner. During the year ended December 31, 2016, the Gramercy European Property Fund acquired Goodman's 20.0% interest in the Goodman Europe JV and 74.9% of our 80.0% interest in the Goodman Europe JV. Thus, as of December 31, 2016 the Gramercy European Property Fund has a 94.9% ownership interest in the Goodman Europe JV and we have a 5.1% direct interest. There were 26 properties in the portfolio as of December 31, 2016 and eight additional properties held in the Goodman Europe JV.

Goodman UK JV — In connection with the Merger, we acquired an 80.0% ownership interest in the Goodman UK JV, which is a joint venture that invests in logistics focused warehouse/distribution/logistics properties in the United Kingdom, which are managed by Goodman, our joint venture partner. There were two properties in the portfolio as of December 31, 2016 .

Strategic Office Partners — In August 2016, we partnered with TPG Real Estate 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. We have a 25.0% interest in the investment and provide asset and property management services to the properties held in the investment. There were six properties in the portfolio as of December 31, 2016 .

Philips JV — We own a 25.0% interest in Philips JV, which is owner of a fee interest in an office 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. The property is financed by a $39,730 fixed-rate mortgage note with maturity in September 2035. The loan had an anticipated repayment date in September 2015 and, as such, distributions from the property began paying down the loan in September 2015. As of December 31, 2016, our carrying value in the Philips JV was $0 and we are not recognizing any income from the Philips JV.

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Morristown JV — In October 2015, we sold 50.0% of our interest in an office property located in Morristown, New Jersey and concurrently, entered into a joint venture agreement. In October 2015, the Morristown JV entered into a leasing and construction management agreement to complete specific improvements at the property.

CBRE Strategic Partners Asia — In connection with the Merger, we acquired a 5.07% ownership interest in a real estate investment fund in China. CBRE Strategic Partners Asia has an investment manager who is entitled to an annual management fee and acquisition fees. The fund’s term, after one exercised extension period, ended in January 2017, and commencement of the fund's liquidation was filed in early February 2017. The fund will wind up over the succeeding 24 months. There were two properties in the portfolio as of December 31, 2016 .

Duke JV — In connection with the Merger, we acquired an 80.0% ownership interest in the Duke JV, a joint venture that invested in office and industrial properties in the United States, which were managed by Duke Realty, or Duke, our joint venture partner. During the year ended December 31, 2016 , the Duke JV was dissolved and as part of the dissolution, seven properties were distributed to us from the Duke JV, which are now included in our wholly-owned property tables.

The following table presents the geographic diversification of our investments in unconsolidated properties as of December 31, 2016 :

Unconsolidated Entities (1)
Markets			Number of Properties		% Owned (2)		Rentable SF (3)		Occupancy Percentage		Annualized Base Rent (GPT Attributable)	ABR / Leased SF	% of Total ABR		WALT (4)
Europe
Gramercy European Property Fund
	United Kingdom		2		14.2	%	645,412		100.0	%	$463	$5.06	5.5	%	20.0
	France		1		14.2	%	1,073,681		100.0	%	$634	$4.16	7.6	%	8.8
	Germany		14		14.2	%	5,887,111		100.0	%	$4,707	$5.64	56.3	%	6.0
	Netherlands		14		14.2	%	2,025,397		100.0	%	$1,977	$6.88	23.6	%	12.2
	Poland		3		14.2	%	1,355,891		100.0	%	$589	$3.07	7.0	%	9.0
	Gramercy European Property Fund Subtotal		34		14.2	%	10,987,492		100.0	%	$8,370	$5.37	100.0	%	8.7
Goodman UK JV
	United Kingdom		2		80.0	%	395,041		52.8	%	$909	$5.45	100.0	%	0.2
	Goodman UK JV Subtotal		2		80.0	%	395,041		52.8	%	$909	$5.45	100.0	%	0.2
United States
	Strategic Office Partners		6		25.0	%	980,825		100.0	%	$4,480	$18.27	80.7	%	3.1
	Morristown JV		1		50.0	%	41,861		29.4	%	$134	$21.79	2.4	%	1.8
	Philips JV		1		25.0	%	199,900		100.0	%	$940	$18.81	16.9	%	5.0
	United States Subtotal		8		100.0	%	1,222,586		97.6	%	$5,554	$18.40	100.0	%	3.4

(1)	Table does not include the 2 properties held in our investment in CBRE Strategic Partners Asia.

(2)	Eight Gramercy European Property Fund assets in Germany were legacy Goodman Europe JV assets and are owned by GPT at 18.6%, while the rest of the German assets are at the same 14.2% ownership as the rest of the properties held in the Gramercy European Property Fund.

(3)	Rentable square feet is shown at 100.0% and ABR information is shown at our pro rata share.

(4)	Weighted by GPT Attributable ABR as of December 31, 2016. WALT for Goodman UK JV represents only the leased South Normanton, UK asset.

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Leased Properties

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 seven regional offices located across the United States and Europe.

Lease Expirations

Our properties are leased to tenants for terms generally ranging from five to 20 years with a weighted average remaining term of approximately 7.6 years as of December 31, 2016 . Following is a schedule of expiring leases for our consolidated properties by square feet and by annualized minimum base rent as of December 31, 2016 , assuming no exercise of lease renewal option, if any:

Wholly Owned Portfolio Lease Expirations
Expiry Year	SF Related to Expiring Leases		% of Total Occupied SF		ABR of Expiring Leases	% of Total ABR
2017	2,119,497		3.3	%	$10,812	2.8	%
2018	5,338,415		8.3	%	$22,347	5.7	%
2019	6,877,871		10.7	%	$39,989	10.3	%
2020	5,366,019		8.4	%	$28,898	7.4	%
2021	9,037,220		14.1	%	$50,694	13.0	%
2022	4,163,408		6.5	%	$23,404	6.0	%
2023	5,549,570		8.7	%	$40,231	10.3	%
2024	4,167,437		6.5	%	$22,116	5.7	%
2025	3,665,500		5.7	%	$22,448	5.8	%
2026	3,857,031		6.0	%	$19,000	4.9	%
Thereafter	13,861,417		21.8	%	$109,146	28.1	%
Total Occupied	64,003,385		100.0	%	$389,085	100.0	%
Vacant SF	959,737
Total Rentable SF	64,963,122

Tenant Diversification

As of December 31, 2016 , there were no tenants that occupied more than 4.0% of our consolidated properties based on total leased square feet or that occupied more than 5.9% of our consolidated properties based on annualized base rent.

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The following tables present our 15 largest tenants, based on total leased square feet and annualized base rent as of December 31, 2016 .

Tenant Diversification by Square Footage (Wholly Owned Portfolio)
Tenant (1)	Leased SF		% of Total Leased SF
Bank of America, N.A.	2,563,831		4.0	%
The Clorox International Company	2,495,378		3.9	%
Whirlpool Corporation	1,824,586		2.9	%
Amazon & Subsidiaries	1,652,173		2.6	%
Unilever	1,594,760		2.5	%
Life Time Fitness	1,187,258		1.9	%
Kellogg Sales Company	1,142,400		1.8	%
The Coleman Company, Inc.	1,107,000		1.7	%
TBC Retail Group, Inc.	1,100,235		1.7	%
MOM Brands Company	993,290		1.6	%
COTY, Inc.	800,797		1.3	%
Amcor Rigid Plastics	780,000		1.2	%
Domtar Paper Company	768,000		1.2	%
Kimberly-Clark Global Sales, LLC	744,080		1.2	%
ConAgra Packaged Foods	741,860		1.2	%
Remaining 200+ Tenants	44,507,737		69.3	%
Total	64,003,385		100.0	%
Tenant Diversification by ABR (Wholly Owned Portfolio)
Tenant (1)	ABR		% of Total ABR
Bank of America, N.A.	$22,940		5.9	%
Life Time Fitness	$16,575		4.3	%
The Clorox International Company	$8,649		2.2	%
Amazon & Subsidiaries	$7,719		2.0	%
JPMorgan Chase Bank, National Association	$6,254		1.6	%
Endo Pharmaceuticals Inc.	$5,977		1.5	%
Whirlpool Corporation	$5,702		1.5	%
Eisai, Inc.	$5,607		1.4	%
Nokia Solutions and Networks US LLC	$5,437		1.4	%
Unilever	$5,313		1.4	%
Adesa Texas, Inc.	$5,166		1.3	%
PPD Development	$5,090		1.3	%
FedEx Corp & Subsidiaries	$4,870		1.3	%
The Coleman Company, Inc.	$4,838		1.2	%
Deloitte LLP	$4,740		1.2	%
Remaining 200+ Tenants	$274,208		70.5	%
Total	$389,085		100.0	%

(1)	For simplification, certain tenants have been listed in the above tables as the parent entity of the named lease entities. This simplification has been made where we have multiple leases across different properties leased to the same family of companies in order to show our true exposure to the larger organization.

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Tenant Industry Diversification (Wholly Owned Portfolio)
Industry	Leased SF		% of Total Leased SF		ABR	% of Total ABR
Food & Beverage	9,514,485		14.9	%	$52,018	13.3	%
Consumer Goods	12,659,162		19.8	%	$50,036	12.9	%
Financial Services	4,211,099		6.6	%	$45,304	11.6	%
Healthcare	2,623,309		4.1	%	$26,388	6.8	%
Paper, Plastics & Glass	4,869,028		7.6	%	$22,445	5.8	%
Automotives	2,811,914		4.4	%	$21,544	5.5	%
Logistics, Transportation & Trucking	3,825,126		6.0	%	$20,960	5.4	%
Distributors	5,440,983		8.5	%	$19,036	4.9	%
Industrial Manufacturing	3,674,233		5.7	%	$18,935	4.9	%
Business Services	2,459,118		3.8	%	$18,615	4.8	%
Technology, Media & Telecom	1,689,303		2.6	%	$17,496	4.5	%
Retail	2,911,267		4.5	%	$14,740	3.8	%
Aerospace & Defense	1,596,668		2.5	%	$13,638	3.5	%
E-Commerce	2,481,637		3.9	%	$10,066	2.6	%
Oil & Gas	308,091		0.5	%	$5,757	1.5	%
Warehouse Services	197,563		0.3	%	$2,498	0.6	%
Other	2,730,399		4.3	%	$29,609	7.6	%
Total	64,003,385		100.0	%	$389,085	100.0	%

Although base rent is supported by long-term lease contracts, tenants who file bankruptcy generally have the legal right to reject any or all of their leases. In the event a tenant with a significant number of leases in our properties files bankruptcy and cancels its leases, we could experience a reduction in our revenues and an increase in our allowance for doubtful accounts receivable. We frequently monitor the financial condition of our tenants and communicate often with tenants who have been late on payments or have filed bankruptcy. We are not currently aware of any significant financial difficulties of any tenants that would cause a material reduction in our revenues.

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ITEM 3.	LEGAL PROCEEDINGS

Legacy Gramercy, its board of directors, Chambers and/or Merger Sub, a subsidiary of Chambers, were named as defendants in two pending putative class action lawsuits brought by purported Legacy Gramercy stockholders challenging the Merger. Two suits that were separately filed in New York Supreme Court, New York County, captioned (i) Berliner 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), have been consolidated into a single 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 separately filed in Circuit Court for Baltimore City, Maryland, captioned (i) Jobin v. DuGan, et al., Case No. 24C15003942 (filed July 27, 2015); (ii) Vojik 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) (originally filed as two separate suits in the Circuit Court for Baltimore County, Maryland, captioned Plemons v. Chambers Street Properties, et al., Case No. 03C15007943 (filed July 24, 2015) 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) Morris v. Gramercy Property Trust, et al., Case No. 24C15004972 (filed September 28, 2015) have been consolidated into a single action under the caption Glenn W. Morris v. Gramercy Property Trust Inc. et al., Case No. 24C15004972 (the “Maryland Action,” and together with the New York Action, the “Actions”). The complaints allege, among other things, that the directors of Legacy Gramercy breached their fiduciary duties to Legacy Gramercy stockholders by agreeing to sell 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 was materially incomplete and misleading. The complaints also allege that Chambers, Merger Sub and/or Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The amended complaint in the Morris consolidated action also asserts derivative claims on behalf of Legacy Gramercy for breach of fiduciary duty against the directors of Legacy Gramercy. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief, an award of damages and/or costs/attorney fees.

On December 7, 2015, the parties to the Actions entered into a Memorandum of Understanding (the “MOU”), which provides for the settlement of the Actions. While the defendants in the Actions continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of stockholders of Legacy Gramercy, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the Actions, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the Actions and (iii) permit the Merger to proceed without risk of the courts in New York or Maryland ordering an injunction or damages in connection with the Actions, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the MOU, to make certain supplemental disclosures related to the Merger, which were set forth in Legacy Gramercy’s Current Report on Form 8-K filed with the SEC on December 7, 2015.

Pursuant to the MOU, the parties entered into a stipulation of settlement. The stipulation of settlement is subject to customary conditions, including, among other things, court approval following notice to Legacy Gramercy stockholders. On November 2, 2016, the court entered an order preliminarily approving the settlement. On February 1, 2017 the court held a hearing to consider the fairness, reasonableness and adequacy of the settlement, and expressed an intent to grant final approval. However, the court has not yet entered a final judgment approving the settlement. If the settlement is finally approved by the court, it will resolve and release all claims by stockholders in the Actions of Legacy Gramercy challenging the Merger, the Merger Agreement and any disclosure made in connection therewith, pursuant to terms that will be set forth in the notice sent to Legacy Gramercy stockholders prior to final approval of the settlement. In addition,

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in connection with the settlement, the parties contemplate that plaintiffs’ counsel will file a petition for an award of attorneys’ fees and expenses to be paid by Gramercy or its successor. There can be no assurance that the court will approve the settlement. In the event that the settlement is not approved or that the conditions are not satisfied, the settlement may be terminated.

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”), names as defendants Chambers, its board of trustees and Legacy Gramercy. The complaint alleges, 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. The complaint also alleges that the preliminary joint proxy statement/prospectus was materially misleading and incomplete. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief and an award of damages.

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. While the defendants in the New Jersey Action continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of shareholders of Chambers, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the New Jersey Action, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the New Jersey Action and (iii) permit the Merger to proceed without risk of the Superior Court of New Jersey ordering an injunction or damages in connection with the New Jersey Action, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the Stipulation of Settlement, to make certain supplemental disclosures related to the Merger, all of which were set forth in Legacy Gramercy’s Current Report on Form 8-K filed with the SEC on December 7, 2015. On April 4, 2016, the court granted preliminary approval of the settlement. On July 1, 2016, the court issued a final order approving the settlement.

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. We initially estimated a range of loss of $8.0 million to $13.0 million and had accrued $8.0 million in other liabilities, which represented our best estimate of the total loss at the time and is accrued as of December 31, 2015. In 2017, we settled the majority of our operating expense reimbursement audits and paid $3.5 million pursuant to the settlement in February 2017. As a result of the settlement, we reduced the accrual by $3.5 million and recorded the reversal to other income during the three months ended December 31, 2016. The remaining accrual recorded as of December 31, 2016 is $360 thousand , which represents our best estimate of total loss based on estimated range of loss of $0 to $360 thousand . 

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 4.	MINE SAFETY DISCLOSURES

Not applicable.

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