On October 15, 2009, GKK Capital LP, a Delaware limited partnership to which Gramercy Capital Corp. (the "Company") is the general partner (the "Operating Partnership"), and Gramercy Investment QRS Corp., a wholly-owned indirect subsidiary of the Operating Partnership ("QRS"), entered into an Exchange Agreement, dated as of October 15, 2009 (the "Exchange Agreement"), with certain affiliates of Taberna Capital Management, LLC (collectively, "Taberna"), pursuant to which the Operating Partnership, QRS and Taberna agreed to exchange (the "Exchange") $97.5 million aggregate principal amount of junior subordinated notes of the Operating Partnership due 2035 (the "Notes") for approximately $97.5 million face amount of previously issued CDO securities held by QRS. In connection with the Exchange, the Company paid an exchange fee to Taberna calculated as a percentage of the face amount of the Notes. As a condition precedent to the Exchange Agreement, the Operating Partnership and The Bank of New York Mellon Trust Company, National Association, as trustee (the "Trustee"), entered into a Supplemental Indenture dated October 14, 2009 (the "Supplement") to the Junior Subordinated Indenture, dated as of January 30, 2009 (the "Indenture"). The Supplement provides that, except when an event of default is continuing under the Indenture, certain covenants which restrict the Operating Partnership and its subsidiaries from declaring or paying dividends or distributions and taking certain other corporate actions during the 2009 calendar year have been eliminated and are no longer applicable to the Operating Partnership.

Copies of the Exchange Agreement and Supplement are attached hereto as Exhibit 10.1 and 10.2, respectably, and are incorporated by reference herein. A copy of the press release announcing the Exchange is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01  Exhibits



(d)          Exhibits



Exhibit No.                                 Description

   10.1        Exchange Agreement, dated as of October 15, 2009, by and among GKK
               Capital LP, Gramercy Investment QRS Corp., Taberna Capital Management,
               LLC, Taberna Preferred Funding II, Ltd., Taberna Preferred Funding V,
               Ltd., Taberna Preferred Funding VII, Ltd., and Taberna Preferred
               Funding VIII, Ltd.
   10.2        Supplemental Indenture, dated as of October 14, 2009, by and between
               GKK Capital LP and The Bank of New York Mellon Trust Company, National
               Association, as Trustee.
   99.1        Press release, dated October 16, 2009.