Scotiabank Peru to Acquire Citibank’s Retail and Commercial Banking Operations in Peru

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Scotiabank Perú adquiere el negocio retail y comercial de Citigroup en Perú
Photo: Raysonho . Scotiabank Peru to Acquire Citibank's Retail and Commercial Banking Operations in Peru

Scotiabank announced that its subsidiary in Peru has reached an agreement to acquire the retail and commercial banking operations of Citibank in Peru, subject to regulatory approval. The transaction is not material to Scotiabank. Scotiabank’s common equity tier one capital ratio will be impacted by less than 10 basis points.

“We’re excited about this acquisition because it will allow us to deepen existing customer relationships, serve new customers and increase our market share in credit cards and personal loans in Peru,” said Dieter Jentsch, Group Head of International Banking at Scotiabank. “This acquisition is in line with our strategy to increase our scale within the Peruvian banking sector, as well as the other Pacific Alliance economies of Mexico, Colombia and Chile.”

The agreement also includes the transfer of Citibank employees from the retail and commercial banking businesses in Peru to Scotiabank Peru.

Citibank’s Peruvian operation includes eight branches which serve more than 130,000 retail and commercial banking customers. Citibank has been operating in Peru without interruption since 1920 and will continue to operate in the country with a focus on its Corporate and Institutional Banking Business, and International Private Bank Services, capitalizing on its global presence and competitive leadership position in these segments in Peru.

“This agreement with Scotiabank is part of our recent strategic announcement to streamline the Consumer Banking footprint. We are positive that our clients and employees will benefit from Scotiabank’s large consumer footprint and plans for growth in the country,” said Julio Figueroa, Citi Country Officer in Peru. “We reaffirm our longstanding commitment to Peru and our focus on our institutional client businesses including Corporate and Investment Banking, Markets and Securities Services, Treasury and Trade Solutions and Private Banking. Peru is a strategic market for Citi, and we will continue to invest in growing the business.”

On December 11, 2014, an agreement was reached with American Airlines whereby Scotiabank will replace Citibank as American Airlines’ co-branded credit card partner in Peru and provide continuity for current Citi / AAdvantage® cardholders.

Until the transaction gets all the necessary regulatory approvals, all operations, branches, products and benefits programs will continue operating without any change. Over the coming months, Scotiabank and Citibank will work together to ensure a smooth transition for customers and employees.

Azimut Acquires 100% of AZ Global Portföy to Continue Its Growth Plans in Turkey

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Azimut se hace con el 100% de AZ Global Portföy para continuar creciendo en Turquía
Photo: Moyan Brenn. Azimut Acquires 100% of AZ Global Portföy to Continue Its Growth Plans in Turkey

Azimut, Italy’s leading independent asset manager, has signed a binding sale and purchase agreement to acquire the remaining 40% stake in AZ Global Portföy Yönetimi A.Ş., becoming its exclusive shareholder. In addition, Azimut has agreed to sell its 10% equity stake in Global Menkul Değerler A.Ş. to the majority shareholder of GMD at market price.

On November 7th 2014, AZ Global was the first independent asset management company to be approved by Capital Markets Board to operate under the new regulatory framework enforced starting on July 2014. The new license sets a strong infrastructure for the Turkish asset management industry to deploy growth opportunities both in terms of production and distribution, enabling asset managers to directly establish and market, through proprietary sales force, their own products and services.

The transactions will enable Azimut to develop its plans in Turkey by investing in an integrated financial advisory platform comprised of its first local funds factory and distribution, AZ Global (to be renamed Azimut Portfoy Yonetimi A.S.), and AZ Notus, its discretionary portfolio management partnership.

Subject to the regulatory approval by the competent authorities, Azimut, through AZ International Holdings S.A., will recognise a total consideration (including the sale of GMD shares assuming current market prices) of around € 1.3mn.

Pietro Giuliani, Chairman and CEO of Azimut Holding, comments: “We continue believing in the potential of Turkey and the prospects of the local asset management industry, supported by a team of talented professionals and strong regulatory standards. Since our first JV in 2011, Azimut has developed an integrated platform which has achieved a 21% market share among independent players also thanks to the launch of two UCITS funds managed and advised by our Turkish colleagues. We are grateful to Global for the results we have achieved together and we will continue cooperating in the future.”

Capital Strategies Partners, a third party mutual fund distribution firm, holds the distribution of AZ Fund Management products in Latin America

Oil: Boon or Slippery Slope?

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Petróleo: ¿bendición o pendiente resbaladiza?
Photo: Richard Masoner. Oil: Boon or Slippery Slope?

Are lower oil prices good or bad? Robert Spector, CFA, Institutional Portfolio Manager, Sanjay Natarajan, Institutional Equity Portfolio Manager, and Robert M. Hall, Institutional Fixed Income Portfolio Manager, from MFS, answer this question through a recent investment view.

In a year full of macro surprises, the sharp decline in the price of crude oil is the latest development to make headlines. Roughly one year ago, the consensus forecast for the end of 2014 was $100 per barrel for West Texas Intermediate and $110 for Brent crude — a miss of about 30% compared with current prices around $70. “As if on cue, many have been ready to describe how absolutely wonderful the oil price plunge can be for the global growth outlook”, highlights the report.

Winners and losers

To be sure, there are bound to be pockets of the global economy that will benefit from lower energy costs. When all the positives and negatives are balanced out, we can likely expect a net boost to global growth relative to what we would have seen with $100 oil. Then again, it was weak global growth —alongside oversupply— that was a key contributor to falling crude prices in the first place, so the argument becomes kind of circular, highlight MFS’ portfolio managers.

“We prefer to think of the oil price drop as stimulative overall, similar to a tax cut. Declines in the price of this or any other commodity help distribute growth away from regions that are producers toward those that are consumers. On balance, the net benefits to China, Europe, Japan and the United States could outweigh the hits to activity in Canada, Norway, Russia and above all the Organization of the Petroleum Exporting Countries (OPEC), where the erosion in terms of trade would impair domestic incomes, currencies, government revenues and capital spending plans”.

The drop in oil prices will put more downward pressure on already low global inflation, pushing some countries — namely, the United States and the United Kingdom — further away from their inflation targets and others — including the eurozone members — closer to mild deflation.

“Again, this acts in the same way as a tax cut to boost real consumer incomes. But when growth is weak and debt levels are high, any negative shock to nominal growth and persistently low inflation expectations could be bad for fiscal trends and rekindle concerns about debt sustain- ability — a potential risk for Europe”.

Implications for central banks

The impact of falling oil prices on inflation provides central bankers with yet more justification to keep the liquidity taps wide open. For the US Federal Reserve, which is expected to raise rates at some point next year, muted inflation pressures via lower oil prices tend to offset the effects of tightening labor markets. Should the Fed choose to postpone the anticipated rate hikes, this may be its excuse, states MFS.

The European Central Bank (ECB) will probably move toward outright sovereign bond purchases next year in its effort to fight deflation, while the Bank of Japan may maintain its easy money stance as inflation drifts away from its target. The combination of low inflation and slowing growth has already spurred the People’s Bank of China (PBOC) to take action with its first rate cut since 2012, with more likely to come if growth and inflation remain weak.

“In short, we would avoid becoming overly optimistic about the impact of falling oil prices on the global macro environment, as certain producing economies are likely to be hit pretty hard and the latest down-leg after OPEC’s decision not to cut output quotas could tip Europe into a mild deflation. Nevertheless, when the positives and negatives are netted out, and given other sources of stimulus already in place, there may be enough global growth in 2015 to support the valuations in risk assets“, concludes the report.

Henderson Points to Lower Commodity Prices as a Big Positive for Asian Corporate Earnings in 2015

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Henderson apunta al descenso de las materias primas y las reformas como claves para invertir en Asia en 2015
Photo: Andrew Gillan, Head of Asia (ex Japan) Equities at Henderson. Henderson Points to Lower Commodity Prices as a Big Positive for Asian Corporate Earnings in 2015

Andrew Gillan, Head of Asia (ex Japan) Equities at Henderson highlights in this interview risks and opportunities for 2015 in Asian markets.

What lessons have you learned from 2014?

It has been a year of divergence between individual markets within the region. This is partly politically-driven, with the change in leadership in India and Indonesia buoying those markets. But we have also seen other ASEAN (Association of Southeast Asian Nations) economies like the Philippines and Thailand perform well. Despite dollar strength, the traditional export economies of North Asia have not really benefited in terms of stock market performance despite relatively cheap valuations in China and Korea particularly. Volatility has increased through the year but Asian markets have held up relatively well following QE tapering, and the fall in commodity prices and oil should broadly benefit the region looking into next year.

Where do you see the most attractive opportunities within your asset class in 2015?

India remains one of the most positive markets but valuations also reflect that. We remain overweight as we still feel that the investments we have in financials, consumer, pharmaceutical and IT services can continue to generate significant profit growth and superior returns over the next few years.

What are the biggest risks?

Clearly the risk is that the economic reforms stall but the types of companies that we have exposure to have delivered impressive returns even in a weaker political environment. Our favoured holdings include both HDFC and affiliate HDFC Bank, Tata Motors, personal care, health care and food products group, Dabur, IT and outsourcing services group, Tech Mahindra, and pharmaceutical group, Lupin.

What is the highest position of the portfolio?

In absolute terms, China remains our highest country position at more than 20% of the portfolio and we have a mix of both new and old economy companies in addition to good consumer exposure. Despite the negative headlines and the reality of adjusting to a lower headline rate of growth – although importantly, better quality growth – valuations look attractive and company fundamentals are positive. There will be repercussions from the excessive loan growth of the last decade but I would also expect policy support to keep the economy on the right track. Favoured holdings include Baidu, which dominates the internet search market. This market continues to expand at an impressive rate, particularly from mobile communications, and the company is striking a good balance between investing for the future and profitability, as it monetises its market leadership position. In the consumer sector, we have exposure to auto companies, Brilliance (BMW’s joint venture partner) and Dongfeng Motor (partnerships include Nissan & Honda), which continue to offer good growth prospects and look attractively priced.

Are you more positive or negative now than you were 12 months ago on the economic and investment outlook? Why?

The regional index is broadly up in line with earnings growth for the year so that offers some comfort although we have seen stronger moves and consequently higher valuations in certain markets. In the short term, lower commodity prices should be positive for corporate earnings in Asia. Longer term, progress on reforms in the larger markets could provide a boost to equity markets and support the already positive macroeconomic investment case for Asia. Demographics, relative fiscal strength and a higher rate of growth ensure Asia looks favourable relative to other regions.

Deborah Fuhr Received the William F. Sharpe Indexing Lifetime Achievement Award

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ETFGI has announced that Deborah Fuhr, Managing Partner & Co-founder of ETFGI, is the 2014 William F. Sharpe Indexing Lifetime Achievement Award winner. She was honored at IMN’s 19th Annual Global Indexing & ETFs conference at the JW Marriott Camelback Resort & Spa in Scottsdale, Arizona on December 8th. This distinguished award recognizes the most accomplished innovators and practitioners in the indexing industry, and was  presented by The Journal of Index Investing.

Deborah is considered one of the leading global experts on ETFs with over 20 years industry experience in financial products, 15 of which have focused on exchanged traded funds and exposures. Currently she is the managing partner and co-founder of ETFGI, an independent research and consultancy firm established in early 2012 to provide analysis on the global ETF and ETP industry. The firm is focused on providing thought leadership, publishing independent research on industry trends, the eco-system, institutional users, products, applications, and competitors, and providing education and assistance to investors on product comparison, asset allocation implementation, as well as offering customised research and consulting.

Prior to ETFGI Deborah was the Global Head of ETF Research and Implementation Strategy at BlackRock/Barclays Global Investors from 2008 to 2011, and was a Managing Director and Head of the Investment Strategies Group at Morgan Stanley for 11 years prior to that.

Deborah commenced her career at Greenwich Associates and has lectured extensively on ETFs and other exchange traded exposures. She has served on several industry bodies and is a consultant to investors, promoters, distributors, stock exchanges, trading platforms and national- and supra-national regulatory bodies.

She was recently named as one of the Top 100 women in European Finance in 2014 by Financial News. She has an MBA from the JL Kellogg Graduate School of Management, Northwestern University, and Bachelor of Science from the University of Connecticut.

Previous William F. Sharpe Lifetime Award recipients include Harry Markowitz, William Brodsky, Joanne Hill, John C Bogle, and Robert Arnott, among others.

Gramercy Funds Management Hires Sovereign Economist

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Gramercy Funds Management contrata a una especialista en análisis de riesgo soberano
Wikimedia CommonsPhoto: Colin. Gramercy Funds Management Hires Sovereign Economist

Gramercy Funds Management has announced the appointment of Sarah Glendon to the new position of Senior Vice President, Sovereign Economist.  Glendon’s emerging markets sovereign risk expertise will enhance Gramercy’s ability to identify and interpret global market trends and movements, as well as their underlying influencing factors. Her addition brings the credit research team to 15 analysts.

“Sarah’s insight into the short- and long-term impact that global market trends have on emerging markets credit will strengthen our overall investment capabilities providing a measurable benefit to our clients,” said Robert Koenigsberger, Gramercy’s Managing Partner, Founder and Chief Investment Officer.   

“I am delighted to be joining a leading emerging markets team that recognizes the importance of understanding sovereign dynamics when investing in emerging markets sovereign and corporate credits,” said Glendon. 

Prior to joining Gramercy, Glendon was a Senior Analyst and Vice President in Moody’s Sovereign Risk Group where she served as a lead analyst on the Latin American Sovereign Team.  In this capacity, she published research related to the credit quality of numerous sovereigns and travelled regularly to the countries within her scope of geographic coverage, meeting with government officials and private sector representatives. 

“We are excited by the wealth of knowledge that Sarah brings to Gramercy and are confident that her public and private sector network within emerging markets will benefit our alternatives and long-only clients,” added David Herzberg, Partner and Head of Corporate Research.

Before Moody’s, Glendon was a Sovereign Analyst in both the Asset Management and Corporate R&D Groups at AIG.  Glendon received her Bachelor’s Degree in International Studies from Middlebury College, graduating cum laude.  She received her Master’s Degree in International Economics/Latin American Studies from Johns Hopkins University and she was awarded the G. Donald Johnston Fellowship for academic excellence in Latin American Studies.

The European Asset Management Industry Plays a Crucial and Growing Role in Financing the ‘Real Economy’

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Based on the staff costs, taxes paid and profits of the industry, it is estimated that the European asset management industry contributes an average of 0.35% per year to European GDP and has very significant potential to fill the gap left by banks in providing finance to European economy, according to Societal and Economic Impacts of the European Asset Management Industry, a report by Jens Hagendorff, Professor of Finance & Investment at the University of Edinburgh, sponsored by EY, and with contributions from EFAMA. 

The European asset management industry is large, with assets under management of over 115% of European GDP (or nearly €17 trillion). It directly employs around 95,000 individuals across Europe and is estimated to indirectly employ 530,000 full-time equivalents. The value added is particularly large in the UK, where it contributes 1% of GDP per annum, and in France, where it contributes 0.5% of GDP per annum. In absolute terms, the figures are also large – across Europe the report estimates that yearly value added of the industry is €50b.

Roy Stockell, Wealth & Asset Management Leader for EMEIA at EY, says: “What makes the size of the industry particularly noteworthy is the rate at which it is growing. Comparing OECD data for the UK in 1980 against comparable data for today shows that the industry has grown six-fold in little more than 30 years. This is largely because populations have become larger, older and wealthier and this trend shows no sign of slowing. Asset management is a European success story. Policymakers need to recognize the potential of the asset management industry to play a larger role in financing the ‘real economy’.”

Asset managers are already key to the financing of the economy

In 2012, the asset management industry held debt securities issued by euro area residents worth €4 trillion. This amounted to 23% of all debt securities outstanding at the time and corresponds to 32% of the value of euro area bank lending. The ratio increases to 43% if mortgage lending is excluded from bank lending figures.

The figures are particularly high in the UK where the debt securities managed by the industry correspond to 26% of all debt securities, but 82% of bank lending and 87% of bank lending excluding mortgages.

The report also considers equity financing. In 2012, European asset managers managed equity values at €1,374b, which corresponds to 31% of the market value of euro area listed firms and nearly 40% of the free float of European listed firms.

Jens Hagendorff, Professor of Finance & Investment at the University of Edinburgh and author of the report says: “Long-term savings and risk management are at the heart of what the industry provides, which makes it suitable to provide long-term finance to European corporations. As such, the industry provides a crucial link between investors and the needs of the real economy.

“It also should be noted that the European asset management industry does not attract a costly bailout guarantee and can therefore offer financing services in a more cost-efficient way than banks, generating a large saving for society.”

The industry acts as a steward of Europe’s corporate landscape

The report estimates that nearly €500b of the value of the European equity market is due to the role European asset managers play in improving the corporate governance of the firms they invest in.

Christian Dargnat, President of European Fund and Asset Management Association, commenting on the report, says: “We are very supportive of research initiatives such as the one carried out by this report, as they are crucial tools to communicate better on how our industry meets important needs of European societies.

“The evaluation of how we, asset managers, have a significant and positive impact on the European economy bears strong significance for the role we have to play in the financing of this economy.

“Policymakers, the media, peers and the public equally need to be made aware of the potential we can bring to this crucial goal —which ranks high in the agenda of both international and European top-level regulating bodies.”

You can access the full report here.

 

BNY Mellon Highlights Differences Between Deflation, Disinflation and Lowflation

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Despite sluggish economic growth in recent years, BNY Mellon’s 2015 Outlook is for a prolonged global and U.S. economic expansion, according to BNY Mellon Chief Economist Richard Hoey. Stronger future growth should reflect a fading of drags on growth rather than new sources of strength says Hoey in his Economic Update entitled, “Outlook 2015.”

“Following three years of global growth near 3% on the IMF measure, we expect a somewhat faster pace of global growth in 2015, given the lagged benefit of low interest rates and the effect of low energy prices,” Hoey says.  “Given the downward shift in trend growth in China, we expect the developing economies to expand at about the same pace in 2015 as in 2014.”

“With the fiscal drag fading, the cyclical pace of U.S. economic expansion is now shifting higher,” Hoey continues. “A somewhat similar pattern has emerged in the UK, although more fiscal tightening lies ahead.  It is notable that the labor markets of these two countries are among the most flexible in the developed world, which appears to have fostered a combination of strong job growth and postponed wage inflation.”

Hoey cites that due to the slow pace of global growth, there has been concern about deflation, disinflation and lowflation. (Deflation is a pattern of declining prices, disinflation is a downward shift in the pace of positive inflation and lowflation is positive inflation persisting at a pace only slightly above zero.)

“We make a distinction between ‘bad deflation‘ due to a collapse in demand, ‘capacity hangover deflation‘ due to past overexpansion of capacity and ‘good deflation‘ attributable to successful technological innovation,” Hoey says. “We believe that the oil and gas sector is an instance of ‘good deflation,’ as technological innovation has sharply reduced the cost of producing oil and gas in the U.S.  The U.S. energy service companies are global leaders of technological innovation in the energy sector.  We regard the recent weakness in energy prices as a symptom of successful technological innovation rather than as a signal of a weakening global economy.” 

Other report highlights include:

  • Japanese Expansion Sustainable but Sluggish– Stating that Japan was “caught in a stagnant equilibrium for two decades,” Hoey says that Japanese policy should stimulate a moderate cyclical expansion through low real interest rates. 
  • China Economy a Crucial Uncertainty for 2015 – Hoey states that the deceleration in Chinese economic growth is not cyclical but structural, due to the combination of a slowdown in the growth of its labor force and the need to correct past credit and property excesses.   Hoey thinks that China is beginning a transition from a double-digit trend growth rate in the past to a sustainable growth rate near 6% in the future.
  • Sustained European Expansion in 2015, 2016 and 2017 – While Hoey cites adverse demographics and relative energy prices, as well as a badly designed euro currency system contributing to a sluggish long-term outlook for Europe, Hoey is cyclically more positive about European prospects for the near term and expects moderate but sustained European expansion in 2015, 2016 and 2017.
  • U.S. Economy “Three-for-Three” Growth Acceleration – Hoey believes that the U.S. economy has just made an upward shift from a half-decade of expansion at a real GDP growth rate slightly above 2% to three years of 3% real GDP growth.  “This new “three-for-three” growth acceleration should be due largely to a fading of the persistent drag from the government sector over the last half-decade,” Hoey says.  Hoey also says that over the next three years, he expects U.S. real GDP growth to accelerate to about 3% and nominal GDP growth (real GDP growth plus inflation) to accelerate to about 5%.  He also expects this acceleration of real and nominal economic growth to contribute to a multiyear uptrend in U.S. interest rates. 

“We believe that U.S. monetary policy will be very supportive of economic expansion for the next several years,” Hoey says. “With inflation below the Fed’s target and some slack remaining in the labor market, both parts of the Fed’s dual mandate support stimulative monetary policy.” “Since we believe that the U.S. economy is not currently very inflation-prone, we would expect a monetary policy fully supportive of economic expansion in 2015 and 2016, with the need to shift to a truly restrictive policy postponed until 2017 or 2018, after the Presidential election of 2016,” Hoey concluded.

Only 5% of RIAs Feel “Advanced” at Marketing or Business Development

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La mayoría de los RIAs destinan un 2% de sus ingresos a marketing
Photo: Tomwsulcer . Only 5% of RIAs Feel "Advanced" at Marketing or Business Development

Fidelity Institutional Wealth Services, a custodian for registered investment advisor (RIA) firms, has released findings from The 2014 Fidelity RIA Benchmarking Study,which revealed many firms recognize the need to improve when it comes to marketing and business development: only 5 percent feel their firms are advanced in these areas, and seven in 10 do not have a plan in place to guide them toward better business results, a number that has gone unchanged since 2011.

The study looks at what may be holding RIAs back from advancing their marketing and business development efforts and explores the best practices of “High-Performing Firms” to help RIAs learn from their peers.

According to the study, High-Performing Firms excel in the areas of growth, productivityand profitability. And while many factors can contribute to their success, these firms stand out in several important areas of marketing and business development: firm story, targeting clients, referrals and aligning talent—strategies that may be contributing to their ability to close business in two or fewer meetings and drive more incremental growth than other firms.

“Three-fourths of firms see improving their marketing and business development as a top strategic initiative, but they are struggling to make progress,” said David Canter, executive vice president and head of practice management and consulting, Fidelity Institutional Wealth Services. “As firm leaders sit down to think through their 2015 strategic plans, they should consider looking to their peers for insights on what is working and ideas on where to focus to make the most impact.”

Among the key findings of the study, High-Performing Firms are focused on telling a consistent firm story, while half of RIA firms are still struggling to establish one. Only 56 percent of all firms agree that they have a clearly defined and differentiated firm story, and only 43 percent agree their stories are tailored to the specific needs of target clients. High-Performing Firms are 1.7X times more likely to tell a consistent firm story, with all client and prospect- facing associates describing their firm and its key differentiators in the same way. As a result, High-Performing Firms are also more likely to agree that the majority of their clients know the fundamentals of their firm story, which can help clients become advocates for the firm.

While firms are making progress when it comes to targeting the right clients, High- Performing Firms are almost twice as likely to effectively communicate their target client profiles to help generate the right referrals. Firms with a target client profile reported that 90 percent of new clients added in 2013 fit this description, compared to only 75 percent of clients on board prior to 2013. High-Performing Firms are almost twice as likely to agree that they effectively describe their target client profiles to both clients and centers of influence (COI). This may help clients and COI identify the most appropriate referrals, which may lead to a higher percentage of clients fitting target client profiles over time.

Few firms have an “advanced” referral process; High-Performing Firms are four times as likely to leverage COI referrals to the fullest. Referrals from existing clients and centers of influence are important channels of growth for RIAs, accounting for 75 percent of all new clients. However, less than one-third of firms rate their referral processes as advanced, or even fairly strong. Only 14 percent agreed that they have analyzed their client base to focus on the clients most likely to make referrals. High- Performing Firms are 4X more likely to say their COI referral processes are advanced. This includes activities such as always thanking sources for referrals and working to understand their centers of influences’ target client profiles so they can send reciprocal referrals. In addition, they are more likely to review centers of influence data, such as referral status, at least monthly and keep data up to date.

High-Performing Firms have the talent and resources in place, while one-third of RIA firms are pursuing business development officers. High-Performing Firms are approximately twice as likely to be pursuing strategic initiatives to develop talent- management plans or change firm compensation plans—signs that they may be managing talent more proactively. They are also less likely to see lack of internal sales and marketing capabilities as an issue and, possibly as a result, are less likely to be hiring business development officers (81 percent not pursuing vs. 66 percent of other firms).

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Gramercy Property Trust Closes a €350mn Venture for Single-Tenant Net Leased Assets in Europe

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Gramercy Property Trust has announced, along with several of its investment partners, the closing of a €350 million venture targeting single-tenant net leased assets and sale-leaseback opportunities across Europe, and the simultaneous acquisition of ThreadGreen Europe Limited, an existing property investment and asset management platform.

Gramercy Europe is a joint venture among the Company and investment entities managed by EJF Capital LLC, Fir Tree Partners and Senator Investment Group LP, along with certain other investors. Gramercy Europe will invest predominantly in single-tenant industrial, office and specialty retail assets in Germany, the Netherlands, the Nordic region, the United Kingdom and other targeted European countries. The total equity capital available to Gramercy Europe is €350 million, comprised of an initial commitment of €250 million of equity from Gramercy and the Founding Investors as well as an additional capital accordion of €100 million. Gramercy has a total commitment of €50 million to the venture. Simultaneously with the closing of the venture, Lindsay Sparacino of EJF, Jarret Cohen of Fir Tree and Michael Simanovsky of Senator will join the board of directors of Gramercy Europe, together with certain representatives appointed by Gramercy, including Gordon F. DuGan.

Simultaneous with the closing of Gramercy Europe, the Company is purchasing all of the assets of ThreadGreen Europe Limited who will provide the day-to-day management of the investment vehicle. With the ThreadGreen purchase, Gramercy has a fully-integrated presence in Europe, including investment personnel, asset management capability as well as all support functions in those areas. Principals of the Company and ThreadGreen worked together for a number of years at W. P. Carey & Co., where Alistair Calvert, Managing Director of ThreadGreen, along with Michael Heal, Director of ThreadGreen, ran the London office of W. P. Carey from December 2004 to June 2006. ThreadGreen currently manages approximately €210 million in single-tenant industrial and office assets located in Germany, Finland and Switzerland. Gramercy’s management along with the ThreadGreen principals have overseen investments in excess of $3 billion of single-tenant properties in Europe over a greater than 10-year period.

Gordon F. DuGan, Chief Executive Officer of Gramercy Property Trust, stated, “We are very excited about the opportunity to buy single-tenant assets with long, inflation-indexed leases throughout Europe at high current yields. We believe this new investment vehicle gives Gramercy shareholders access to European net leased assets in scale and in partnership with deep-pocketed and sophisticated partners. Gramercy will have a fully-integrated team on the ground that we have worked with in the past and a strategy that I have many years of experience with. We hope to replicate the success we have had with Gramercy Property Trust with our effort on Gramercy Europe.”

Morgan Stanley & Co. LLC served as the Company’s financial advisor in connection with the transaction.