Patrick Harden

Mortgage REIT Magic

REITs are required to distribute as dividends at least 90% of their ordinary taxable income. This is the metric that drives the dividend for most mortgage REITs. Because Gramercy Capital's sponsor is a large equity REIT, however, Gramercy follows SL Green's practice of disclosing funds from operations instead of taxable income. Generally speaking, FFO and taxable income should be roughly similar; however, this is not always the case for mortgage REITs. Gramercy's practices are not the norm for the mortgage REIT sector and I believe they should disclose taxable income as well as FFO. Given the merger with AFR, however, it may well be a moot point now.