Summary of GRAMERCY CAPITAL CORP

Item 1.01. Entry into a Material Definitive Agreement.

Purchase Agreement

On August 17, 2012, BBD1 Holdings LLC (the "Buyer"), a joint venture between GKK BBD1 Owner LLC ("GKK Member"), a Delaware limited liability company and a wholly-owned subsidiary of Gramercy Capital Corp. (the "Company"), and FYF Net Lease LLC, a Delaware limited liability company and an affiliate of Garrison Investment Group ("FYF" and, collectively with the GKK Member, the "Members" and each a "Member"), entered into an Agreement for Sale of Membership Interests (the "Purchase Agreement") with KBS Acquisition Sub-Owner 2, LLC ("KBS Seller"), a Delaware limited liability company and a wholly-owned subsidiary of KBS Real Estate Investment Trust ("KBS REIT").

Pursuant to the terms of the Purchase Agreement, Buyer agreed to purchase and acquire 100% of the membership interests (the "Membership Interests") of three entities previously owned by the Company that are now owned by KBS Seller: First States Investors 5000A, LLC ("Property Owner"), GKK Independence Square Lot LLC ("Parking Lot Owner") and AFR Defeasance Pool 1, LLC ("Defeasance Collateral Owner"), each a Delaware limited liability company. Property Owner owns 115 office buildings located in 16 states throughout the United States (the "Real Property"). Parking Loan Owner owns a parking lot adjacent to and serving a Real Property located in Independence Square, Missouri. Defeasance Collateral Owner owns U.S Treasury securities acquired and pledged in connection with a prior partial defeasance of certain indebtedness formerly secured by the Real Property and certain other properties (the "Existing Mortgage Debt"). As previously disclosed by the Company, beneficial ownership of the Membership Interests, together with beneficial ownership of substantially all of the other entities comprising the Company's Gramercy Realty division, were transferred to affiliates of KBS REIT pursuant to a collateral transfer and settlement agreement (the "Settlement Agreement"), dated as of September 1, 2011, by and among GKK Stars Acquisition LLC, KBS Acquisition Sub, LLC ("KBSAS"), KBS GKK Participation Holdings I, LLC, KBS GKK Participation Holdings II, LLC, KBS Debt Holdings Mezz Holder, LLC and KBS Acquisition Holdings, LLC.

The Real Property totals approximately 5.6 million square feet of which approximately 4.5 million square feet, or approximately 81%, is leased to Bank of America, N.A. for a term ending in June 2023, and approximately 390,000 square feet, or approximately 7%, is leased to third party tenants.

The purchase price for the Membership Interests, subject to prorations and other adjustments, is $485.0 million, $470.0 million of which is payable in cash and $15.0 million of which is payable by the issuance at closing of 6.0 million shares of one or more classes of the Company's common stock ("GKK Stock"). At closing, the cash portion of the purchase price shall be reduced by (i) the unpaid principal balance of the Mezzanine Loan (as defined below) and all accrued and unpaid interest and any and all other amounts due and owing with respect to the Mezzanine Loan as of the closing date and (ii) in the event Buyer elects to assume the Existing Mortgage Debt, $12.5 million plus the undefeased principal balance of the Existing Mortgage Debt and all accrued and unpaid interest and any and all other amounts due and owing with respect to the Existing Mortgage Debt as of the closing date. Buyer shall cause the Mezzanine Lender (as defined below) to assign its interests in the Mezzanine Loan to KBS Seller at closing.

Buyer's obligations under the Purchase Agreement are subject to satisfaction or waiver of customary closing conditions. Additionally, Buyer may terminate the Purchase Agreement by written notice to KBS Seller at any time on or before October 30, 2012 if Buyer in good faith determines that, after using its commercially reasonably efforts to obtain acquisition financing, it cannot obtain such financing on terms satisfactory to Buyer ("Buyer's Financing Contingency").

Buyer has the right to either assume or defease the Existing Mortgage Debt. If Buyer elects the latter option, KBS Seller shall pay the cost of purchasing the collateral required to defease the Existing Mortgage Debt, not to exceed $15.0 million, plus 50% of all other costs, expenses and fees required to defease the Existing Mortgage Debt. KBS Seller is obligated to transfer and assign the Membership Interests to Buyer at closing free and clear of all liens and encumbrances, except for the Existing Mortgage Debt if Buyer elects to assume the same.

Closing of the transaction is scheduled to occur on November 14, 2012, subject to Buyer's right, at Buyer's election, to extend the closing date for two additional periods of 30 days each; provided that there can be no assurances that the acquisition will close on the terms described herein or at all. Within two business days following execution of the Purchase Agreement, Buyer is required to fund a $400,000 earnest money deposit with a third party escrow holder. If Buyer elects to extend the closing date for the initial 30 day period, Buyer is required to increase the earnest money deposit to an aggregate amount of $2.0 million. If Buyer elects to extend the closing date for an additional 30 day period, Buyer is required to increase the earnest money deposit to an aggregate amount of $4.0 million. The deposit and any interest accrued thereon will be credited to the purchase price at closing, refunded to Buyer if the Purchase Agreement is terminated pursuant to Buyer's Financing Contingency or otherwise not as a result of Buyer's default or paid to KBS Seller as liquidated damages if the Purchase Agreement is terminated due to Buyer's default.

Buyer's post-closing obligations under the Purchase Agreement, including without limitation, certain indemnity obligations, undertakings relating to the GKK Stock, undertakings to reconcile pre-closing Real Property income and expense, representations and warranties, further assurances and waivers, are guaranteed by the Company pursuant to a joinder by the Company to the Purchase Agreement; provided that, except for Buyer's obligation to reconcile pre-closing Real Property income and expense, which shall be unlimited, the Company's liability with respect to such guarantee, together with all amounts paid by Buyer for post-closing obligations, shall not exceed $2.5 million in the aggregate. KBS Seller's post-closing obligations under the Purchase Agreement, including without limitation, certain indemnity obligations, undertakings to pay certain taxes, undertakings to reconcile pre-closing Real Property income and expense, representations and warranties, further assurances and waivers, are guaranteed by KBS REIT pursuant to a joinder by KBS REIT to the Purchase Agreement; provided that, except for KBS Seller's obligations to pay certain taxes, reconcile pre-closing Real Property income and expense and warrant free and . . .

Item 3.02. Unregistered Sales of Equity Securities.

Pursuant to the terms of the Purchase Agreement described in Item 1.01 hereof, subject to satisfaction or waiver of the closing conditions and in absence of Buyer's termination of the Purchase Agreement pursuant to the terms thereof, at closing the Company will issue to KBS Seller 6.0 million shares of GKK Stock, which stock is valued by the parties at $15.0 million. Closing of the transaction is scheduled to occur on November 14, 2012, subject to Buyer's right, at Buyer's election, to extend the closing date, as further described in Item 1.01 hereof.

Prior to closing, the Company expects to reclassify 4.0 million authorized but unissued shares of the Company's common stock, par value $0.001 per share ("Common Stock"), as 2.0 million shares of a new class of the Company's common stock titled Class B-1 common stock, par value $0.001 per share ("Class B-1 Common Stock"), and 2.0 million shares of a new class of the Company's common stock titled Class B-2 common stock, par value $0.001 per share ("Class B-2 Common Stock"). At closing, the Company expects to issue to KBS Seller 2.0 million shares of Common Stock, 2.0 million shares of Class B-1 Common Stock and 2.0 million shares of Class B-2 Common Stock. Each share of Class B-1 Common Stock and Class B-2 Common Stock will be convertible into one share of Common Stock at the option of the holder at any time on or after the date that is nine and 12 months, respectively, after the issuance of such shares to KBS Seller. Each share of Class B-1 Common Stock and Class B-2 Common Stock that has not previously been converted and remains outstanding on the date that is 15 months after the issuance of such shares to KBS Seller shall, automatically and without any action on the part of the holder thereof, convert into one share of Common Stock on such date.

In connection with the closing pursuant to the Purchase Agreement, KBS Seller and the Company will enter into a Stockholder Agreement, in the form attached to the Purchase Agreement as Exhibit G-1, with respect to such shares of GKK Stock, pursuant to which KBS Seller will agree, among other things, to (i) at any meeting of the stockholders of the Company and in any action by written consent of the stockholders of the Company, vote or consent to all of the shares of GKK Stock held by it in accordance with the recommendation or direction of the Company's Board of Directors, (ii) a six-month lock up of all shares of GKK Stock held by it and (iii) a standstill period of 18 months.

The shares of GKK Stock issued pursuant to the Purchase Agreement will be issued without registration in reliance on the exemption in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder, to an "accredited investor" within the meaning of Rule 501(a) of Regulation D.