Gordan DuGan, CEO of Gramercy Property Trust (NYSE: GPT), joined REIT.com for a CEO Spotlight video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
Gramercy has transformed from a real estate finance company to a net lease property owner. DuGan was asked how the transition has been received by the market and if there is more work to be done to complete the transformation.
“The good news is that there’s no more work to be done in the transformation, and it’s been received extremely well,” DuGan said.
He stressed that the market reaction has been positive because the timing was right for the move away from the commercial mortgage sector to “a business where we can grow and achieve scale.”
In terms of investment opportunities, DuGan explained that Gramercy is looking at the nation’s top 25 cities for industrial and office assets, typically in the range of $5 million to $25 million.
“We’re finding really good opportunities in one-off transactions,” DuGan noted. “We really think the sweet spot is industrial and office properties in major markets, but at the smaller end of the spectrum.”
Gramercy has set an acquisitions target for the year of $600 million, DuGan noted. That makes the company the fastest growing REIT in the U.S. in terms of asset size, according to DuGan.
“We’ve really reached an inflection point where we’re growing very quickly,” he said.
At the same time, Gramercy is working to expand its asset management business, DuGan commented.
“Because we’re managing assets for third parties, we think there are additional opportunities to use off-balance sheet equity… It’s a very high return on investment (ROI) business and it’s just another form of growth,” DuGan said.
DuGan observed that Gramercy’s asset management arm could double or triple the size of the company.
“We want to be able to capture as many opportunities as we can,” he said.