Gramercy Property Trust (GPT) sells 11.5M shares of common stock via private placement at $4.11 each for gross proceeds of $47.4M. The investors also received one CVR for each common share, entitling them to a one-time cash payment of up to $0.46 should the average stock price in the 10-day period ending March 25, 2014 be less than $4.11 per share (closed last night at $4.04).
The deal is expected to close on or about October 7. The investors agree not sell their stock or CVRs before to the end of the lock-up period (March 25).
Why the capital raise as the company just closed on a $100M credit facility? The simple explanation is REITs like to raise money, and raising money and effectively deploying it is part of Gramercy's business plan and the path to a $9 stock price as detailed by SA Pro's Chris DeMuth. SA Pro writer Whopper Investments can't help wondering if Gramercy is set to pay its preferred stock dividends (less than $10M) which have been in arrears for some time. Paying off the preferreds is a necessary requisite to instituting a common dividend.