UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549








FORM 10-K/A

Amendment No. 1








| | x | ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2012



or



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------

For the
transition period from          to         .



Commission File No. 1-32248








GRAMERCY PROPERTY TRUST INC.

(Exact name of registrant
as specified in its charter)








|Maryland                        |  | 06-1722127         
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)



|420 Lexington Avenue, New York, NY 10170            
|----------------------------------------------------
|(Address of principal executive offices) (Zip Code) 
|(212) 297-1000                                      
|(Registrant’s telephone number, including area code)










Securities registered pursuant to Section 12(b)
of the Act:



|Title of Each Class               |  | Name of Each Exchange on Which Registered
|--------------------------------- |  | -----------------------------------------
|Common Stock, $0.001 Par Value    |  | New York Stock Exchange                  
|Series A Cumulative Redeemable    |  |                                          
|Preferred Stock, $0.001 Par Value |  | New York Stock Exchange                  



Securities registered pursuant to Section 12(g)
of the Act: None








Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ̈Nox



Indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ̈Nox



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. YesxNo ̈



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNo ̈



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.



|Large accelerated filer ̈ | Accelerated filerx                            | Non-accelerated filer ̈ | Smaller reporting company ̈
|------------------------ | --------------------------------------------- | ---------------------- | --------------------------
|                         | (Do not check if a smaller reporting company)



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ̈Nox



As of March 18, 2013,
there were 60,737,604 shares of the Registrant’s common stock outstanding. The aggregate market value of common stock held
by non-affiliates of the registrant (49,069,376 shares) at June 30, 2012, was $122,673,440. The aggregate market value was calculated
by using the closing price of the common stock as of that date on the New York Stock Exchange, which was $2.50 per share.








DOCUMENTS INCORPORATED BY REFERENCE

None.











EXPLANATORY NOTE



This Amendment No. 1 on Form 10-K/A (this
“Form 10-K/A”) amends the Annual Report on Form 10-K for the year ended December 31, 2012 (the “Original Form
10-K”) of Gramercy Property Trust Inc. filed with the Securities and Exchange Commission (the “SEC”) on March
18, 2013. This Form 10-K/A is being filed to include certain information that was to be incorporated by reference from our definitive
proxy statement (pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”))
for our 2013 Annual Meeting of Stockholders (the “2013 Proxy Statement”). Because the 2013 Proxy Statement was filed
more than 120 days after our fiscal year end, we are filing this Form 10-K/A to include Part III information in our Form 10-K.
This Form 10-K/A hereby amends and restates in their entirety Items 10 through 14 of Part III of the Original Form 10-K as well
as the cover page to remove the statement that information is being incorporated by reference from the 2013 Proxy Statement.



Except as otherwise expressly noted herein
and the filing of related certifications, this Form 10-K/A does not amend any other information set forth in the Original Form
10-K, and we have not updated disclosures contained therein to reflect any events that occurred at a date subsequent to the date
of the Original Form 10-K. Accordingly, this Form 10-K/A should be read in conjunction with the Original Form 10-K and our other
filings with the SEC.



Unless the context requires otherwise,
all references to “Gramercy,” “our Company,” “we,” “our” and “us”
mean Gramercy Property Trust Inc., a Maryland corporation, and one or more of its subsidiaries, including GPT Property
Trust LP (our “Operating Partnership”).











GRAMERCY PROPERTY TRUST INC.

FORM 10-K/A



TABLE OF CONTENTS



|10-K/A PART AND ITEM NO. | Page                                                                                          
|------------------------ | ----------------------------------------------------------------------------------------------
|                         |                                                                                               
|PART III                 |                                                                                               
|                         |                                                                                               
|ITEM 10.                 | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                        
|                         |                                                                                               
|ITEM 11.                 | EXECUTIVE COMPENSATION                                                                        
|                         |                                                                                               
|ITEM 12.                 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                         |                                                                                               
|ITEM 13.                 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                     
|                         |                                                                                               
|ITEM 14.                 | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                        
|                         |                                                                                               
|PART IV                  |                                                                                               
|                         |                                                                                               
|ITEM 15.                 | EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                       



i







PART III



| | ITEM 10. | DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
| | -------- | ------------------------------------------------------



The following table and biographical descriptions
set forth certain information with respect to the nominees for election as directors at the 2013 annual meeting of common stockholders
and the nominee to be the Preferred Stock Director at the special meeting of the Preferred Stockholders, based upon information
furnished by each director. Following biographical information for the director nominees and the preferred nominee, we have provided
information regarding the specific experience, qualifications, attributes, or skills that have led us to determine that he should
serve as a director on our Board of Directors.



|Name                     |  | Age |  | Director Since
|------------------------ |  | --- |  | --------------
|Nominee Directors        |  |     |  |               
|Allan J. Baum            |  | 57  |  | 2004          
|Gordon F. DuGan          |  | 46  |  | 2012          
|Marc Holliday            |  | 46  |  | 2004          
|Gregory F. Hughes        |  | 50  |  | 2012          
|Jeffrey E. Kelter        |  | 58  |  | 2004          
|Charles S. Laven         |  | 61  |  | 2004          
|Preferred Stock Director |  |     |  |               
|William H. Lenehan (1)   |  | 36  |  | 2012          



(1)
Mr. Lenehan's term continues until the annual meeting, a special meeting held in lieu thereof or his successor is elected and
qualifies; provided, however, that his term will automatically terminate if and when all arrears in dividends on the Series A
Preferred Stock then outstanding are paid and full dividends thereon for the then current quarterly dividend period have been
paid or declared and set apart for payment.



Nominees for Election



Allan J. Baum.  Mr.
Baum has served as one of our directors since August 2004. Mr. Baum also served as the Chairman of our Special Committee, and currently
serves as a member of our Audit and Compensation Committees, and as our Lead Independent Director. Mr. Baum retired from Credit
Suisse First Boston (“CSFB”) in 2002, where he was a Managing Director and head of the structured finance unit for
commercial mortgage-backed securities. Prior to his ten years with CSFB, Mr. Baum served as a Vice President in the Real Estate
Investment Bank of Citicorp, and held positions in the tax-exempt housing finance and taxable mortgage finance areas of Merrill
Lynch. Mr. Baum also currently serves as a director of Community Development Trust, a for-profit, mission-oriented real estate
investment trust. He previously served as Vice President of the Commercial Mortgage Securities Association. In addition, from May
2004 to May 2007, Mr. Baum served as a director for National Consumer Cooperative Bank, a cooperative financial institution which
primarily provides financial services to eligible cooperative enterprises, and also served on its audit committee. Mr. Baum received
a B.A. degree in Government/Urban Studies from Dartmouth College in 1978 and an M.B.A. in Finance from Columbia University Graduate
School of Business in 1983. Mr. Baum's qualifications to serve on our Board of Directors include his executive experience at CSFB
and Citicorp, his relevant experience serving on the boards and audit committees for a real estate investment trust and a financial
institution and his extensive experience of over 20 years in commercial real estate investment banking.



2







Gordon F. DuGan.  Mr.
DuGan has been our Chief Executive Officer and served as one of our directors since July 2012. Mr. DuGan has over 20 years of senior
management experience in the real estate industry. From June 2011 to June 2012, he served as Global Head of Equity Real Estate
for Fixed Income Discount Advisory Company (“FIDAC”), a wholly-owned subsidiary of Annaly Capital Management (NYSE:
NLY), a mortgage real estate investment trust (“REIT”). FIDAC specializes in managing residential and commercial mortgage
loans and securities, managing collateralized debt obligation (“CDO”) liquidations and providing other financial services,
and serves as the external manager for Chimera Investment Corporation (NYSE: CIM) and CreXus Investment Corp. (NYSE: CXS). From
June 2010 to June 2011, Mr. DuGan served as Managing Partner of Northcliffe Asset Management (“Northcliffe”), which
managed net leased commercial real estate on behalf of private investors. From May 2004 to July 2010, he was Chief Executive Officer
of W. P. Carey & Co. LLC (NYSE: WPC) (“W. P. Carey”), a global investment firm with approximately $12.5 billion
of assets under management, and considered to be one of the leading providers of net lease financing for corporate properties.
Prior to that, Mr. DuGan served in various capacities with W.P. Carey, including President and Head of Investments. Mr. DuGan served
as a director of W.P. Carey from 2002 through July 2010. Mr. DuGan also served as a director of Corporate Property Associates 17 — Global
Incorporated from its formation in 2007 until July 2010. He served as a director of Corporate Property Associates 14 Incorporated
from February 2005 until April 2006 and then from June 2007 through July 2008, Corporate Property Associates 15 Incorporated from
2005 through June 2010 and Corporate Property Associates 16 — Global Incorporated from December 2003 to July 2008.
Mr. DuGan also served as a director of Corporate Property Associates 12 Incorporated from February 2005 to September 2006. He is
a former member of the Board of NAREIT. Mr. DuGan is a member of the Advisory Boards of India 2020 Limited, a private equity firm
investing in India, and of the Innocence Project. Mr. DuGan received his B.S. degree in Economics from the Wharton School at the
University of Pennsylvania. Mr. DuGan's qualifications to serve on our Board of Directors include his extensive leadership skills
and executive experience at FIDAC, Northcliffe and W. P. Carey, and his prior board experience.



Marc Holliday.  Mr.
Holliday has served as one of our directors since August 2004 and was our President and Chief Executive Officer from August 2004
until October 2008. Mr. Holliday served on our Special Committee and also has served on our Investment Committee from August 2004
until June 2010. Mr. Holliday became our consultant after stepping down from his positions as our President and Chief Executive
Officer from October 2008 until April 2009. Mr. Holliday is the Chief Executive Officer and a director of SL Green Realty Corp.
(NYSE: SLG) or SL Green. He served as Chief Investment Officer of SL Green from July 1998, when he joined SL Green, through 2003
and was named its President until April 2007, when Andrew Mathias, our former Chief Investment Officer, was promoted to that position,
and elected to its board of directors in 2001. Prior to joining SL Green, he was Managing Director and Head of Direct Originations
for New York-based Capital Trust (NYSE: CT), a mezzanine finance company. While at Capital Trust, Mr. Holliday was in charge of
originating direct principal investments for the firm, consisting of mezzanine debt, preferred equity and first mortgages. From
1991 to 1997, Mr. Holliday served in various management positions, including Senior Vice President at Capital Trust's predecessor
company, Victor Capital Group, a private real estate investment bank specializing in advisory services, investment management,
and debt and equity placements. Mr. Holliday received a B.S. degree in Business and Finance from Lehigh University in 1988, and
a M.S. degree in Real Estate Development from Columbia University in 1990. Mr. Holliday's qualifications to serve on our Board
of Directors include his extensive executive experience as Chief Executive Officer at SL Green, as our former President and Chief
Executive Officer, his long-time leadership skills in various management positions of various companies, as well as his deep exposure
in the real estate industry.



Gregory F. Hughes.  Mr.
Hughes previously served as our Chief Credit Officer from 2004 to 2008. From November 2010 to present, Mr. Hughes has served as
a Principal for Roscommon Capital Limited Partnership, a financial advisory and investment firm. Mr. Hughes also served as the
Chief Operating Officer of SL Green from 2007 to 2010 and its Chief Financial Officer from 2004 to 2010, responsible for finance,
capital markets, investor relations and administration. From 2002 to 2003, prior to joining SL Green, Mr. Hughes was Managing Director
and Chief Financial Officer of the private equity real estate group at JP Morgan Partners. From 1999 to 2002, Mr. Hughes was a
Partner and Chief Financial Officer of Fortress Investment Group, an investment and asset management firm, which managed a real
estate private equity fund of approximately $900 million and a NYSE listed real estate investment trust with assets in excess of
$1.3 billion. While at Fortress Investment Group, Mr. Hughes was actively involved in evaluating a broad range of real estate equity
and structured finance investments and arranged various financings to facilitate acquisitions and fund recapitalizations. Mr. Hughes
also served as Chief Financial Officer of Wellsford Residential Property Trust and Wellsford Real Properties, where he was responsible
for the firm’s financial forecasting and reporting, treasury and accounting functions, capital markets and investor relations.
While at Wellsford Residential Property Trust, Mr. Hughes was involved in numerous public and private debt and equity offerings
and during his tenure Wellsford Residential Property Trust became one of the first real estate investment trusts to obtain an investment
grade rating. From 1985 to 1992, Mr. Hughes worked at Kenneth Leventhal & Co., a public accounting firm specializing in real
estate and financial services. Mr. Hughes received a B.S. degree in Accounting from the University of Maryland and is a Certified
Public Accountant. Mr. Hughes' qualifications to serve on our Board of Directors include his extensive experience serving as an
officer for various public companies and his financial and accounting skills as a Certified Public Accountant.



3







Jeffrey E. Kelter.  Mr.
Kelter has served as one of our directors since August 2004. Mr. Kelter also serves as the Chairman of our Compensation Committee,
as well as a member of our Nominating and Corporate Governance and Investment Committees. Mr. Kelter also served on our Special
Committee. Mr. Kelter has been a senior partner of KTR Capital Partners since 2004. From 1997 to 2004, Mr. Kelter was President
and Chief Executive Officer and a trustee of Keystone Property Trust (“Keystone”), an industrial REIT. Keystone merged
during the third quarter of 2004 with and into a joint venture between ProLogis and affiliates of investment companies managed
by Eaton Vance Management. Mr. Kelter had been President and a trustee of Keystone from its formation in December 1997 and was
appointed Chief Executive Officer in December 1998. He has over 20 years of experience in all phases of commercial real estate
including development and third-party management. Prior to forming Keystone, he served as President and Chief Executive Officer
of Penn Square Properties, Inc. (“Penn Square”) in Philadelphia, Pennsylvania, a real estate company which he founded
in 1982. At Penn Square, he developed, owned, managed and leased more than 4.5 million square feet of office and warehouse projects
throughout the Pennsylvania and New Jersey markets. Mr. Kelter received a B.A. from Trinity College. Mr. Kelter's qualifications
to serve on our Board of Directors include his executive experience as President and Chief Executive Officer of Keystone and Penn
Square, and his vast experience of over 20 years in commercial real estate.



Charles S. Laven.  Mr.
Laven has been one of our directors since August 2004. In addition, Mr. Laven is the Chairman of our Nominating and Corporate Governance
Committee, as well as a member of our Audit and Compensation Committees. Mr. Laven has been the President of Forsyth Street Advisors
LLC, a New York based company specializing in real estate finance and consulting, since July 2003. From 1991 to 2003, Mr. Laven
was a partner of Hamilton, Rabinovitz, & Alschuler, Inc. (“HR&A”), a financial, policy and management consulting
firm focusing on complex housing finance, real estate, economic development and strategic planning problems. Prior to his 12 years
with HR&A, Mr. Laven served as principal of Caine Gressel Midgley Slater Incorporated and, from 1981 to 1982, served as principal
of Charles Laven and Associates. Mr. Laven also currently serves as chairman of the Urban Homesteading Assistance Board and as
a director for Citizens Housing and Planning Council. In addition, Mr. Laven served on the board of directors of Madison Harbor
Balanced Strategies, Inc., a real estate fund, from December 2003 to October 2004. Mr. Laven holds a B.S. degree in Architectural
Design from the Massachusetts Institute of Technology. From 1980 to 1981, Mr. Laven was a Loeb Fellow in Advanced Environmental
Affairs at the Harvard University School of Design. Mr. Laven is an Adjunct Professor of Real Estate at Columbia University's Graduate
School of Architecture Planning and Preservation and has been a member of the faculty of Columbia University since 1981. Mr. Laven's
qualifications to serve on our Board of Directors include his extensive leadership skills and executive experience at Forsyth Street
Advisers LLC and HR&A, his intellectual acumen as a Columbia faculty member and his prior board experience at various companies
and organizations.



Preferred Stock Director



Beginning with the fourth quarter of 2008,
our Board of Directors elected not to pay the quarterly Series A Preferred Stock dividends of $0.50781 per share. As of December
31, 2012, we had accrued Series A preferred stock dividends for over six quarters which, pursuant to the terms of our charter,
permits the holders of the Series A Preferred Stock to elect an additional director to our Board of Directors. In October 2011
we received a written communication from a holder of the Series A Preferred Stock representing more than 20% of the total number
of the Series A Preferred Stock requesting, as permitted by Article First, Section 10 of the Articles Supplementary designating
the Series A Preferred Stock, that we call a special meeting of the holders of the Series A Preferred Stock to elect a new director.
At a special meeting held on December 13, 2012, the holders of the Series A Preferred Stock elected William H. Lenehan to serve
on our Board of Directors until the 2013 annual meeting of stockholders, a special meeting held in lieu thereof or his successor
is elected and qualifies; provided, however, that the term of such director will automatically terminate if and when all arrears
in dividends on the Series A Preferred Stock then outstanding are paid and full dividends thereon for the then current quarterly
dividend period have been paid or declared and set apart for payment.



William H. Lenehan.  Mr.
Lenehan has served as the Preferred Stock Director since January 2012. He also has served as a special advisor to the board of
Evoq Properties, Inc. since June 2012. From June 2011 to December 2011, Mr. Lenehan was the Interim Chief Executive Officer of
MI Developments, Inc., a real estate operating company, and served as a member of the Board of Directors of MI Developments, Inc.
and its Strategic Review Committee. From August 2001 to February 2011, Mr. Lenehan was an investment professional at Farallon Capital
Management, L.L.C. in the real estate group, where he was involved with numerous private equity investments in the real estate
sector, including office buildings, residential land, resort communities, mixed use properties and retail properties. Mr. Lenehan
has served as a director and an audit committee member of Stratus Properties Inc. (NASDAQ: STRS), a real estate development company,
since May 2012. Mr. Lenehan has a B.A. in economics and classics from Claremont McKenna College. Mr. Lenehan's qualifications to
serve on our Board of Directors include his extensive real estate investment and management experience and public company director
experience.



4







Biographical Information Regarding Executive
Officers Who Are Not Directors



Benjamin P. Harris.  Mr.
Harris has been our President since August 2012, and served as our Chief Investment Officer from July 2012 until August 2012. Mr.
Harris served as the Head of U.S. Net Lease Investments for FIDAC from June 2011 to June 2012 and has over 10 years of experience
sourcing, underwriting and closing sale-leaseback and net lease transactions. Mr. Harris served as the Head of US Investments of
Northcliffe from October 2010 to June 2011, and as Head of US Investments of W. P. Carey from September 2005 to October 2010. Mr.
Harris joined W. P. Carey in June 1998 as an analyst in its Finance Department and moved to the United States investment department
in 1999, and was promoted to Second Vice President in March 2000. He became Vice President in 2001, Director and First Vice President
in 2002, Executive Director in 2003, Head of US Investments in September 2005 and Managing Director in March 2006. Mr. Harris graduated
with joint degrees from the University of King's College and Dalhousie University in Canada. He is a CFA charter holder and a member
of the New York Society of Securities Analysts. Mr. Harris also serves on the board of the New York Philharmonic. Mr. Harris is
38 years old.



Jon W. Clark.  Mr.
Clark has been our Chief Financial Officer and Treasurer since April 2009. He has also been our Chief Accounting Officer since
March 2009. Prior to his election as our Chief Accounting Officer, Mr. Clark served as our Vice President and Controller from June
2007 until March 2009. Mr. Clark was previously employed by the Company’s external manager (the “Manager”) from
June 2007 until April 24, 2009. Prior to joining the Manager, Mr. Clark was a Director at BlackRock Financial Management where
he managed the accounting and finance department for real estate debt products. During that time, Mr. Clark also served as Assistant
Treasurer at Anthracite Capital, Inc., which was a publicly traded mortgage REIT that specialized in subordinate commercial mortgage-backed
securities. He joined Blackrock Financial Management in 2000. Prior to joining BlackRock Financial Management, Mr. Clark was a
Vice President at Cornerstone Properties, Inc. (acquired by Equity Office Properties in 2000) where he established its internal
audit department. Mr. Clark is a Certified Public Accountant and obtained his public accountancy experience as a manager in the
national real estate practices of Arthur Andersen LLP and BDO Seidman LLP. Mr. Clark holds a B.B.A. degree in Accountancy from
Western Michigan University. Mr. Clark is 44 years old.



Michael G. Kavourias.  
Mr. Kavourias was our Executive Vice President and Chief Legal Officer from April 2009 and our Secretary effective from March 2012,
in each case, until March 31, 2013, when Mr. Kavourias’ term of employment with us ended. Mr. Kavourias was responsible for
asset management, special servicing, enforcements and remedial actions, restructuring and workouts and the negotiation, documentation
and closing of loan investments and managing our relationships with outside law of our commercial real estate finance business,
which operates under the name Gramercy Finance. Previously, Mr. Kavourias had served as our Senior Vice President and Transaction
Counsel from October 2005 until March 2008. Prior to that, Mr. Kavourias was a Special Counsel in the Real Estate Department in
Cadwalader, Wickersham & Taft LLP's New York office (“Cadwalader”), where he concentrated on commercial real estate
financing and representing major financial institutions, investment banks and commercial banks. Prior to joining Cadwalader in
2000, Mr. Kavourias was a Special Counsel in the Real Estate Structured Finance Department of Rosenman & Colin LLP. Prior to
that, Mr. Kavourias was the managing partner in a boutique real estate law firm, which he co-founded in 1994. Mr. Kavourias began
his career in 1989 as an associate at Thacher Proffitt & Wood's Real Estate Group. He attended New York University and received
his J.D. from St. John's University, where he was a Thomas More Scholar and member of the Law Review. Mr. Kavourias is a Certified
Public Accountant and practiced public accounting from 1984 to 1986 with Price Waterhouse prior to attending law school. Mr. Kavourias
has substantial experience in the origination and sale and purchase of commercial mortgage loans and mezzanine financing, as well
as a wide range of experience in the sale and acquisition of commercial and residential real estate. Mr. Kavourias is 49 years
old.



Our Board of Directors and Its Committees



Our Board of Directors currently consists
of seven members. Each of our directors serves for a term that lasts until the next annual meeting of common stockholders or special
meeting of Preferred Stockholders, as applicable, and until their successor, if any, is duly elected or appointed and qualifies.
Six of our directors are subject to annual election by holders of our common stock and one of our directors is elected by our Preferred
Stockholders. Accordingly, our common stockholders will be asked to elect six directors at our annual meeting and our Preferred
Stockholders will be asked to elect one director at our special meeting.



5







Our Board of Directors has affirmatively
determined that Messrs. Allan J. Baum, Jeffrey E. Kelter, Gregory F. Hughes and Charles S. Laven, representing a majority of its
members, are independent of our management, as such term is defined by the rules of the NYSE and the SEC. Our Board of Directors
does not affirmatively determine whether Mr. William H. Lenehan is independent under the listing standards of the NYSE, the applicable
rules promulgated by the SEC or our director independence standards. In determining director independence, our Board of Directors
considers all relevant facts and circumstances, the NYSE listing standards, as well as our director independence criteria. Under
the NYSE listing standards, no director qualifies as independent unless our Board of Directors affirmatively determines that the
director has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that
has a relationship with us. No arrangement or understanding exists between any director or executive officer and any other person
or persons pursuant to which any director or executive officer was, or is, to be selected as a director or nominee.



Our Board of Directors held nine meetings
during fiscal year 2012. During fiscal year 2012, each of the directors then serving on our Board of Directors attended at least
75% aggregate of (i) the total number of meetings of our Board of Directors while they were on our Board of Directors and (ii)
the total number of meetings of the committees of our Board of Directors on which directors served. In addition, our directors
also met several times in strategic sessions to discuss our overall strategic business plan and operating expense infrastructure.
The non-executive directors also regularly hold executive sessions in which our management does not participate. For a discussion
of the leadership structure of our Board of Directors and its role in risk oversight, see “Corporate Governance Matters”
in this report.



Audit Committee.  We
have a standing Audit Committee, consisting of Messrs. Hughes (Chairman), Baum and Laven, each of whom is “independent”
within the meaning of the rules of the NYSE and the SEC and each of whom meet the financial literacy standard required by the rules
of the NYSE. Our Board of Directors has determined that Mr. Gregory F. Hughes is an “audit committee financial expert”
as defined in rules promulgated by the SEC under the Sarbanes-Oxley Act of 2002, as amended. Our Audit Committee is responsible
for, among other things, engaging our independent registered public accounting firm, reviewing with the independent registered
public accounting firm the plans and results of their audit engagement, approving professional services to be provided by the independent
registered public accounting firm, reviewing the independence of the auditors, considering the range of audit and non-audit fees,
reviewing the adequacy of our internal controls, accounting and reporting practices and assessing the quality and integrity of
our consolidated financial statements. The function of our Audit Committee is oversight. Our management is responsible for the
preparation, presentation and integrity of our financial statements and for the effectiveness of internal control over financial
reporting. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and
internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. Our
independent registered public accounting firm is responsible for planning and carrying out a proper audit of our annual financial
statements, reviews of our quarterly financial statements prior to the filing of each Quarterly Report on Form 10-Q, annually auditing
management's assessment of the effectiveness of internal control over financial reporting and other procedures. Our Board of Directors
has adopted a written charter for our Audit Committee, a copy of which is available on our website at www.gptreit.com. Additional
information regarding the functions performed by our Audit Committee is set forth in the “Audit Committee Report” included
in this report. Our Audit Committee held five meetings during fiscal year 2012.



Compensation Committee.  We
have a standing Compensation Committee, consisting of Messrs. Kelter (Chairman), Baum and Laven, each of whom is “independent”
within the meaning of the rules of the NYSE. Our Compensation Committee is responsible for, among other things: (1) reviewing and
approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and such other executive officers
that may be designated by our Chief Executive Officer, evaluating the performance of such officers in light of such goals and objectives,
and determining and approving the compensation of such officers based on these evaluations; (2) approving the compensation of our
other executive officers; (3) recommending to our Board of Directors for approval the compensation of the non-employee directors;
(4) administering the issuance of any award under our Amended and Restated 2004 Equity Incentive Plan (our “2004 Equity Incentive
Plan”) and our 2012 Inducement Equity Incentive Plan; and (5) reviewing the Compensation Discussion and Analysis for inclusion
in the 2013 Proxy Statement. Compensation decisions for our executive officers and directors are made by our Compensation Committee.
Our Compensation Committee has retained FTI Consulting, Inc. (“FTI”) as our compensation consultant to provide it with
relevant market data concerning the marketplace, our peer group and other compensation developments. See “Executive Compensation — Compensation
Discussion and Analysis.” Our Board of Directors has adopted a written charter for our Compensation Committee, a copy of
which is available on our website at www.gptreit.com. Our Compensation Committee held three meetings during fiscal year
2012.



Nominating and Corporate Governance
Committee.  We have a standing Nominating and Corporate Governance Committee, consisting of Messrs. Laven (Chairman),
Baum and Hughes, each of whom is “independent” within the meaning of the rules of the NYSE. Our Nominating and Corporate
Governance Committee is responsible for, among other things, assisting our Board of Directors in identifying individuals qualified
to become Board members, recommending to our Board of Directors the director nominees to be elected at each annual meeting of stockholders,
recommending to our Board of Directors the directors to serve on each of our Board of Directors' committees, developing and recommending
to our Board of Directors the corporate governance principles and guidelines applicable to our company and directing our Board
of Directors in an annual review of its performance. Our Board of Directors has adopted a written charter for our Nominating and
Corporate Governance Committee, a copy of which is available on our website at www.gptreit.com.  Our Nominating
and Corporate Governance Committee held one meeting during fiscal year 2012. All of the nominees were re-elected at our 2011 annual
meeting of stockholders.



6







Investment Committee.  We
have a standing Investment Committee currently consisting of Messrs. Lenehan (Chairman) (who joined the Investment Committee effective
July 1, 2012), DuGan and Kelter. Mr. Roger M. Cozzi, our former Chief Executive Officer, served as Chairman of our Investment Committee
until June 30, 2012. All real estate investments, dispositions and financings must be approved by a credit committee consisting
of our most senior officers, including the affirmative vote of our Chief Executive Officer. Real estate investments and dispositions
at a loss (based on book value at the time of sale) having a transaction value greater than $20.0 million must also be approved
by the Investment Committee of our Board of Directors. Our full board of directors must approve all such transactions having a
value greater than $50.0 million. Additionally, the Investment Committee of our Board of Directors must approve non-recourse financings
greater than $20.0 million and our full Board of Directors must approve all recourse financings, regardless of amount, and non-recourse
financings greater than $50.0 million. Our Investment Committee held one meeting during fiscal year 2012.



Special Committee.  In
addition to the standing committees of our Board of Directors, in June 2011, our Board of Directors established a Special Committee
to direct and oversee an exploration of strategic alternatives available to us subsequent to the execution of the collateral transfer
and settlement agreement (the “Settlement Agreement”) for the Gramercy Asset Management division assets. The Special
Committee considered the feasibility of raising debt or equity capital, the possibility of a strategic combination of us, a strategic
sale of our assets, or modifying our business plan, including making additional debt repurchases or investing our available capital
outside of our CDOs. At the direction of the special committee, we engaged Wells Fargo Securities, LLC to act as our financial
advisor and to assist in the process. The members of the Special Committee consisted of Messrs. Baum, Kelter and Holliday. On June
13, 2012, we announced that our Board of Directors, following an extensive review of strategic alternatives, approved a new investment
strategy focusing on single tenant net lease investments and appointed Gordon F. DuGan as our Chief Executive Officer. Our Special
Committee held eight meetings during fiscal year 2012.



CORPORATE GOVERNANCE MATTERS



This section contains information about a
variety of our corporate governance policies and practices. In this section, you will find information about how we are complying
with the NYSE's corporate governance rules that were approved by the SEC. We are committed to operating our business under strong
and accountable corporate governance practices. Our Board of Directors reviews these guidelines and other aspects of our corporate
governance periodically. You are encouraged to visit the corporate governance section of the “Investor Relations — Corporate
Governance” page of our corporate website at www.gptreit.com to view or to obtain copies of our committee charters,
code of business conduct and ethics, corporate governance principles and director independence standards. The information found
on, or accessible through, our website is not incorporated into, and does not form a part of, this report or any other report or
document we file with or furnish to the SEC. You may also obtain, free of charge, a copy of the respective charters of our committees,
code of business conduct and ethics, corporate governance principles and director independence standards by directing your request
in writing to Gramercy Property Trust Inc., 420 Lexington Avenue, New York, New York 10170-1881, Attention: Investor Relations.
Additional information relating to the corporate governance of our company is also included in other sections of this report.



Corporate Governance Guidelines



Our Board of Directors has adopted Corporate
Governance Guidelines that address significant issues of corporate governance and set forth procedures by which our Board of Directors
carries out its responsibilities. Among the areas addressed by the Corporate Governance Guidelines are director qualification standards,
director responsibilities, director access to management and independent advisors, director compensation, director orientation
and continuing education, management succession, annual performance evaluation of our Board of Directors, management responsibilities
and meeting procedures. These guidelines meet or exceed the listing standards adopted by the NYSE, on which our common stock is
listed. Our Nominating and Corporate Governance Committee is responsible for assessing and periodically reviewing the adequacy
of the Corporate Governance Guidelines and will recommend, as appropriate, proposed changes to our Board of Directors.



7







Board of Directors Leadership Structure



Our Board of Directors recognizes that one
of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight
of management. It understands that there is no single, generally accepted approach to providing board leadership and that given
the dynamic and competitive environment in which we operate, the right board leadership structure may vary as circumstances warrant.



Our Board of Directors does not have a policy
regarding the separation of the roles of Chief Executive Officer and Chairman of our Board of Directors. Currently, we have not
appointed a Chairman. However, our Board of Director consists of a majority of independent and non-executive directors and our
Board of Directors has appointed Mr. Baum, one of our independent directors, as Lead Independent Director to coordinate the activities
of our Board of Directors and to assure effective corporate governance in managing the affairs of our Board of Directors and us.
These independent and non-executive directors, under the leadership and coordination of the Lead Independent Director, meet regularly
in executive session without the presence of management or interested directors in order to promote discussion among the independent
and non-executive directors and to assure independent oversight of management. Our Lead Independent Director (i) presides at all
meetings of the independent directors and any Board of Directors meeting when the Chief Executive Officer is not present, including
executive sessions of the independent and non-executive directors, (ii) approves and informs the Chief Executive Officer as to
the quality and timeliness of information sent to our Board of Directors and the appropriateness of meeting agenda items, (iii)
serves as the primary liaison between the independent and non-executive directors and the Chief Executive Officer, (iv) holds a
principal role in the evaluation of our Board of Directors and the evaluation of the Chief Executive Officer, (v) recommends to
our Board of Directors and its committees the hiring and retention of any consultants that report directly to our Board of Directors,
(vi) responds directly to stockholder questions or inquiries directed to the Lead Independent Director or the independent and non-executive
directors as a group, (vii) upon request and when appropriate, ensures he is available for direct communication with major stockholders,
and (viii) performs other duties as our Board of Directors may from time to time delegate. In addition, our Board committees, which
oversee critical matters such as the integrity of our financial statements, the compensation of executive management, and the development
and implementation of corporate governance policies, each consist entirely of independent directors. Therefore, our Board of Directors
believes that its majority independent composition and the strength of our independent and non-executive directors, under the leadership
and coordination of the Lead Independent Director, provide effective corporate governance at our Board of Directors level and independent
oversight of both our Board of Directors and our executive officers. The current leadership structure, when combined with the functioning
of the independent and non-executive director component of our Board of Directors and our overall corporate governance structure,
strikes an appropriate balance between strong and consistent leadership and independent oversight of our business and affairs.
As part of its annual self-assessment, our Board of Directors will consider whether the current leadership structure continues
to be optimal for us and our stockholders.



Board of Directors' Role in Risk Oversight



Our Board of Directors is responsible for
the oversight of our risk management. Our Board of Directors is involved in risk oversight through direct decision-making authority
with respect to significant matters and the oversight of management by our Board of Directors and its committees. In particular,
our Board of Directors administers its risk oversight function through (i) the review and discussion of regular periodic reports
to our Board of Directors and its committees on topics relating to the risks that we face, including, among others, market conditions,
tenant/borrower concentrations and credit worthiness, leasing activity and expirations, loan defaults and maturities, liquidity,
compliance with debt covenants, management of debt maturities, access to debt and equity capital markets, existing and potential
legal claims against us and various other legal, regulatory, accounting, and strategic matters relating to our business, (ii) the
required approval by our Board of Directors (or a committee thereof) of significant transactions and other decisions, including,
among others, acquisitions and dispositions of properties, originations and acquisitions of loans, new borrowings and the appointment
and retention of our senior management, (iii) the direct oversight of specific areas of our business by the Compensation, Audit
and Nominating and Corporate Governance Committees, and (iv) regular periodic reports from our auditors and other outside consultants
regarding various areas of potential risk, including, among others, those relating to our qualification as a REIT for tax purposes
and our internal control over financial reporting. Our Board of Directors also relies on management to bring significant matters
impacting us to its attention.



8







Our Board of Directors oversees and monitors
our risk management framework and actively reviews risks that may be material to us. As part of this oversight process, our Board
of Directors regularly receives reports from management on areas of material risk to us. Our Board of Directors receives these
reports from the appropriate sources within our company to enable it to understand our risk identification, risk management and
risk mitigation strategies. To the extent applicable, our Board of Directors and its committees coordinate their risk oversight
roles. Our Board of Directors recognizes that it is not possible to identify all of the risks that may affect us or to develop
processes and controls to eliminate or mitigate their occurrence or effects. As part of its regular oversight of us, our Board
of Directors interacts with and reviews reports from, among others, our executive officers, our chief compliance officer, our independent
registered public accounting firm, our outside corporate counsel, our compensation consultant and a variety of other financial
and other advisors, as appropriate, regarding risks faced by us and applicable risk controls. Our Board of Directors may, at any
time and in its discretion, change the manner in which they conduct risk oversight. The goal of these processes is to achieve serious
and thoughtful board-level attention to our risk management process and framework, the nature of the material risks we face and
the adequacy of our risk management process and framework designed to respond to and mitigate these risks.



Code of Business Conduct and Ethics



Our Board of Directors has adopted a Code
of Business Conduct and Ethics as required by the listing standards of the NYSE that applies to our directors and executive officers
and our employees. The Code of Business Conduct and Ethics was designed to assist our directors and executive officers and our
employees in complying with the law, in resolving moral and ethical issues that may arise and in complying with our policies and
procedures. Among the areas addressed by the Code of Business Conduct and Ethics are compliance with applicable laws, conflicts
of interest, use and protection of our company's assets, confidentiality, communications with the public, accounting matters, records
retention, fair dealing, discrimination and harassment and health and safety. A copy of the Code of Business Conduct and Ethics
is accessible, free of charge at our website, www.gptreit.com. If we grant waivers from or make amendments to the Code of
Business Conduct and Ethics that are required to be disclosed pursuant to the Exchange Act or applicable listing requirements,
we will make those disclosures on our website within four business days following the date of such waiver or amendment.



Audit Committee Financial Expert



Our Board of Directors has determined that
our Audit Committee has at least one “audit committee financial expert,” as defined in Item 407(d)(5) of SEC Regulation
S-K, such expert being Gregory F. Hughes, and that he is “independent,” as that term is used in Item 7(d)(3)(iv) of
Schedule 14A under the Exchange Act. Our Board of Directors has determined that Mr. Hughes is an “audit committee financial
expert” as defined in rules promulgated by the SEC under the Sarbanes-Oxley Act of 2002, as amended.



Communications with Our Board of Directors



We have a process by which stockholders and/or
other parties may communicate with our Board of Directors, our Lead Independent Director, our independent and non-executive directors
as a group or our individual directors (including the independent and non-executive directors). Any such communications may be
sent to our Board of Directors, our Lead Independent Director or any named individual director (including the independent and non-executive
directors), by U.S. mail or overnight delivery and should be directed to the Secretary at Gramercy Property Trust Inc., 420 Lexington
Avenue, New York, New York 10170-1881, who will forward such communications on to the intended recipient or recipients. Our Chief
Legal Officer and our General Counsel will review each communication received in accordance with this process to determine whether
the communication requires immediate action. These officers will forward all appropriate communications received, or a summary
of such communications, to the appropriate member(s) of our Board of Directors. However, we reserve the right to disregard any
communication that our Chief Legal Officer and our General Counsel determine is unduly hostile, threatening or illegal, does not
reasonably relate to us or our business, or is similarly inappropriate. These officers have the authority to disregard any inappropriate
communications or to take other appropriate actions with respect to any such inappropriate communications. Any such communications
may be made anonymously.



Whistleblowing and Whistleblower Protection Policy



Our Audit Committee has established procedures
for (1) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or
auditing matters and (2) the confidential and anonymous submission by our employees of concerns regarding questionable accounting
or auditing matters. If you wish to contact our Audit Committee to report complaints or concerns relating to our financial reporting,
you may do so in writing to the Chairman of our Audit Committee, c/o Secretary, Gramercy Property Trust Inc., 420 Lexington Avenue,
New York, New York 10170-1881. Any such communications may be made anonymously.



9







Director Attendance at Annual Meetings



We encourage members of our Board of Directors
to attend each annual meeting of stockholders. Mr. DuGan attended our annual meeting of stockholders held on December 13, 2012.



Identification of Director Candidates



Our Nominating and Corporate Governance Committee
assists our Board of Directors in identifying and reviewing director candidates to determine whether they qualify for membership
on our Board of Directors and for recommending to our Board of Directors the director nominees to be considered for election at
our annual meetings of stockholders.



Each director candidate must have (i) education
and experience that provides knowledge of business, financial, governmental or legal matters that are relevant to our business
or to our status as a publicly-owned company, (ii) a reputation for integrity, (iii) a reputation for exercising good business
judgment and (iv) sufficient available time to be able to fulfill his or her responsibilities as a member of our Board of Directors
and of any committees to which he or she may be appointed.



In making recommendations to our Board of
Directors, our Nominating and Corporate Governance Committee considers such factors as it deems appropriate. These factors may
include judgment, skill, diversity, education, experience with businesses and other organizations comparable to our company, the
interplay of the candidate's experience with the experience of other Board members, the candidate's industry knowledge and experience,
the ability of a nominee to devote sufficient time to our affairs, any actual or potential conflicts of interest and the extent
to which the candidate generally would be a desirable addition to our Board of Directors and any of its committees. Attributes
that our Nominating and Corporate Governance Committee consider include: (i) prior experience on our Board of Directors and other
relevant board level experience; (ii) real estate industry experience; (iii) transactional experience, especially within the real
estate industry; (iv) relevant experience in property operations; (v) financial expertise; (vi) legal and/or regulatory experience;
(vii) knowledge of and experience with corporate governance matters; (viii) experience with executive compensation matters; and
(ix) prior experience in risk management.



While we do not have a formal written diversity
policy, our Nominating and Corporate Governance Committee considers diversity of race, ethnicity, gender, age, cultural background,
professional experiences and expertise and education in evaluating director candidates for Board membership. We believe that considerations
of diversity are, and will continue to be, an important component relating to the composition of our Board of Directors as multiple
and varied points of view contribute to a more effective decision-making process.



When considering current directors for re-nomination
to our Board of Directors, our Nominating and Corporate Governance Committee takes into account the performance of each director.
Our Nominating and Corporate Governance committee also reviews the composition of our Board of Directors in light of the current
challenges and needs of our Board of Directors and us, and determines whether it may be appropriate to add or remove individuals
after considering, among other things, the need for audit committee expertise and issues of independence, judgment, age, skills,
background and experience.



Our Nominating and Corporate Governance Committee
may solicit and consider suggestions of our directors or management regarding possible nominees. Our Nominating and Corporate Governance
Committee may also procure the services of outside sources or third parties to assist in the identification of director candidates.



Our Nominating and Corporate Governance Committee
may consider director candidates recommended by our stockholders. Our Nominating and Corporate Governance Committee will apply
the same standards in considering candidates submitted by stockholders as it does in evaluating candidates submitted by members
of our Board of Directors. Any recommendations by stockholders should follow the procedures outlined under “Stockholder Proposals”
in the 2013 Proxy Statement and should also provide the reasons supporting a candidate's recommendation, the candidate's qualifications
and the candidate's written consent to being considered as a director nominee. No director candidates were recommended by holders
of our common stock for election at the 2013 annual meeting.



10







Executive Sessions of Independent and Non-Executive Directors



In accordance with the Corporate Governance
Guidelines, the independent and non-executive directors serving on our Board of Directors generally meet in executive session after
each regularly scheduled meeting of our Board of Directors or our Audit Committee without the presence of any directors or other
persons who are part of our management. The executive sessions regularly are chaired by our Lead Independent Director.



Disclosure Committee



We maintain a Disclosure Committee consisting
of members of our executive management and senior staff. The purpose of the Disclosure Committee is to oversee our system of disclosure
controls, assist and advise the Chief Executive Officer and Chief Financial Officer in making the required certifications in SEC
reports and evaluate our company's internal control function. The Disclosure Committee was established to bring together on a regular
basis representatives from our core business lines and employees involved in the preparation of our financial statements to discuss
any issues or matters of which the members are aware that should be considered for disclosure in our public SEC filings. The Disclosure
Committee reports to our Chief Executive Officer and, as appropriate, to our Audit Committee. The Disclosure Committee meets quarterly
and otherwise as needed.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Exchange Act requires
our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file
reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and persons who own more than 10%
of a registered class of our equity securities are required to furnish us with copies of all Section 16(a) forms that they file.
To our knowledge, based solely on review of the copies of such reports furnished to us, all Section 16(a) filing requirements applicable
to our executive officers, directors and persons who own more than 10% of a registered class of our equity securities were filed
on a timely basis in 2012, accept that William H. Lenehan did not timely file a Form 3 to report his joining the board in January
2012.



| | ITEM 11. | EXECUTIVE
COMPENSATION
| | -------- | ----------------------



Compensation Discussion and Analysis



This section discusses the principles underlying
our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and
decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to, and earned
by, our named executive officers and places in perspective the data presented in the tables and narrative that follow.



Throughout this report, the individuals
who served as our Chief Executive Officer and Chief Financial Officer during our 2012 fiscal year, as well as the other individuals
included in the "Summary Compensation Table" beginning on page 29, are referred to as the "named executive
officers," or our "executives."



Overview

Summary of Actions Taken in Response
to 2012 Say-on-Pay Vote



In response to the results of our Say-on-Pay
shareholder responses for our 2012 annual meeting, our Board has authorized our company to develop the following new practices
and policies for 2013 and beyond based upon the recommendation of our Compensation Committee and Nominating and Corporate Governance
Committee:



| | · | a shareholder outreach program to solicit reactions to our executive compensation program and corporate governance policies;                                                                                              
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | specifically identified individual and corporate annual performance metrics to be used by our Compensation Committee to measure and quantify executive performance when determining annual incentive compensation bonuses;
| | · | a policy to prohibit directors and officers from hedging, pledging and margining their shares of company stock;                                                                                                           
| | · | stock ownership guidelines for our chief executive officer to be based on a multiple of base salary;                                                                                                                      
| | · | stock ownership guidelines for our non-employee directors to be based on multiples of the annual retainer for our non-employee directors; and                                                                             
| | · | a majority voting policy in the election of directors.                                                                                                                                                                    



11







Additionally, our new Chief Executive Officer, Gordon F. DuGan,
has demonstrated his commitment to shareholders and the long-term success of the Company by:



| | · | purchasing 1,000,000 shares of the Company’s stock with his
own personal funds at the outset of his term on July 1, 2012; and
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | · | unilaterally waiving his right to receive payment of the $200,000
balance of his 2012 signing bonus.
| | - | ----------------------------------------------------------------------------------------------------



Executive Summary



2012 was a transformative year for us.
During 2012, we (i) concluded a Board of Directors strategic review process by announcing a new business strategy focused on building
value by deploying capital into income-producing net leased real estate, (ii) hired a new Chief Executive Officer, President and
Managing Director to lead our implementation of the new business strategy and (iii) following completion by the new management
team of a strategic review of our legacy assets and operations, commenced a process to exit the real estate finance business and
sell our collateralized debt obligation (“CDO”) collateral management and sub-special servicing contracts to a third-party
CDO manager and (iv) launched our asset management platform, which now provides third-party management services for approximately
$1.7 billion of commercial properties leased primarily to regulated financial institutions and affiliated users.



During 2010 and 2011, a time of acute financial
stress for us, our Compensation Committee was challenged with the task of retaining the key senior and mid-level personnel required
to maintain full-platform operations pending (i) resolution of our maturing Gramercy Realty mortgage and mezzanine debt obligations
and (ii) completion of the Board’s strategic review process. We addressed this need primarily through selectively targeted
guaranteed bonuses and time-vested equity grants to retain the key personnel required to keep both our Gramercy Realty and Gramercy
Finance divisions fully operational. We believed that such extraordinary measures were necessary, appropriate and in the long-term
best interests of our shareholders because they allowed us to (i) resolve our Gramercy Realty debt obligations from a position
of strength and (ii) pursue a strategic review process that permitted potentially interested parties to value either or both of
our Gramercy Realty and Gramercy Finance platforms.



Once our Board completed the strategic
review process in mid-2012, our executive compensation focus shifted to (i) designing and implementing a competitive and comprehensive
compensation program to attract a top-performing management team to implement our new net lease business strategy and (ii) expanding
that program to include other key persons, like our Chief Financial Officer, that will play a critical and on-going role in successful
execution of our new business strategy.



We believe that the compensation programs
we adopted during 2012 achieved these goals by creating a strong alignment of management and stockholder interests.



Seventy-five percent of the equity awards
granted to our new Chief Executive Officer and President in June 2012 are subject to the achievement of performance-based vesting
hurdles based on absolute increases in our funds from operations (“FFO”) or stock price during the five-year vesting
period in addition to continued employment. Seventy-five percent of the equity awards that we granted to our Chief Financial Officer
and certain other senior officers in March 2013 are also subject to the achievement of performance based vesting hurdles over a
five-year period. Similarly, the long term incentive plan (“LTIP”) units that we granted to our new management team
in June 2012 and to our Chief Financial Officer and certain other senior officers in March 2013 require achievement of a minimum
vesting hurdle of $5.00 per share (i.e., a 100% increase over our $2.50 per share price on June 29, 2012) and a maximum vesting
hurdle of $9.00 per share (i.e., a 260% increase over our June 29, 2012 closing price) over the five-year term of the plan. For
a more detailed description of these awards, see "Employment and Noncompetition Agreements" below.



Two actions taken by our new Chief Executive
Officer, Gordon F. DuGan, merit particular attention.



First, immediately prior to commencing
employment as our Chief Executive Officer on July 1, 2012, and as contemplated and required by his employment contract, Mr. DuGan
purchased 1,000,000 shares of our common stock for an aggregate purchase price of $2.52 million or, $2.52 per share (i.e., the
closing price of our stock on the New York Stock Exchange on the day prior to the date he agreed in writing to purchase such shares).
Mr. DuGan used his personal funds to buy the 1,000,000 shares from the company, without any reimbursement or other financial assistance
from us. As shown on the “Security Ownership of Certain Beneficial Owners and Management Table” beginning on page 42,
the purchase not only made Mr. DuGan one of our largest common stock holders, but the number of shares he purchased was equal to
the aggregate number of time-vested restricted stock (i.e., 250,000) and performance-based restricted stock units (i.e., 750,000)
that he may earn over a five-year period under his employment contract.



12







Second, the five-year contract that we
signed with Mr. DuGan in June 2012 entitled him to receive a one-time signing bonus of $400,000, with half paid in July 2012 and
the remaining $200,000 (the “Unpaid CEO Signing Bonus”) payable in three equal annual installments on June 30 of 2013,
2014 and 2015. On April 25, 2013, at a quarterly meeting of our Board of Directors, Mr. DuGan advised the Board of his desire to
unilaterally and unconditionally waive his right to receive all or any portion of his Unpaid CEO Signing Bonus. The Board accepted
Mr. DuGan’s offer, and the parties orally agreed to modify Mr. Dugan’s employment contract to remove any obligation
we have to pay the Unpaid CEO Signing Bonus to our Chief Executive Officer. Mr. DuGan indicated that his motivation for waiving
his right to be paid the balance of his signing bonus was a desire to eliminate any notion that his ongoing compensation package
included a “guaranteed” bonus component and that he preferred that he be judged and compensated for his and the company’s
performance.



Much has been accomplished by us in the
approximately ten months since we hired the new management team. During that period, we acquired or have under contract to purchase
approximately 2.2 million square feet of office space, approximately 1.5 million square feet of industrial space and one truck
terminal with 101 dock doors that collectively will generate approximately $20.0 million of annualized net operating income on
a forward looking basis. Our pipeline for additional acquisitions remains strong, and we remain focused on growing our FFO through
quality net lease investments.



In March 2013, we consummated the sale
of our CDO management platform. Exiting the real estate finance business achieved a number of important objectives for us, including:
(i) maximizing the value of the servicing business through the sale to a large servicing operation, (ii) simplifying our going-forward
business and significantly reducing the ongoing management, general and administrative expenses through elimination finance related
personnel costs and CDO servicing advance requirements, (iii) generating in excess of $50.0 million in liquidity previously invested
in the CDO business and (iv) providing for potential future proceeds through the retention of the equity in the three CDOs.



While our transformation to a company that
builds value by deploying capital into income-producing net leased real estate is still in its early stages and much remains to
be accomplished, the marketplace has responded favorably to the initial achievements of our management team. Over the past ten
months, our share price has risen approximately 88% from $2.50 per share on June 29, 2012 to $4.71 on April 26, 2013. A chart illustrating
our common stock’s total shareholder return (“TSR”) since our announced redirection as a company focused on investing
in net lease real estate is set forth below.







Notwithstanding the accomplishment of these
significant milestones since July 1, 2012 and our dramatic TSR over the past ten months, neither Mr. DuGan nor any other member
of our new management team was eligible to receive (or did receive) any guaranteed or discretionary bonus for 2012. To the contrary,
under the terms of their employment contracts, the new management team is not eligible to receive an annual incentive award until
year-end 2013.



Over the past several months our management
team has engaged in numerous formal and informal discussions with our stockholders to clarify our new business strategies and to
solicit stockholder input on the new direction of the company. Almost uniformly, the stockholders we have engaged enthusiastically
support our new business strategy and expressed a belief that there is a strong alignment of management and stockholder interests.



13







To more broadly measure and accurately
determine stockholder sentiment, our Compensation Committee has engaged its external compensation consultant, FTI Consulting, Inc.
(“FTI”), to contact our five largest stockholders in advance to our 2013 Annual Meeting to solicit stockholder input
regarding, and their level of satisfaction with, our executive compensation practices. Our Compensation Committee will use the
information obtained from this shareholder engagement when setting 2013 executive compensation guidelines, particularly with respect
to the discretionary bonus portions thereof.



Objectives of Our Compensation Program



As a self-managed, integrated commercial
real estate investment and asset management company, we operate in a highly competitive market. We seek to maintain a total compensation
package that provides fair, reasonable and competitive compensation for our executives, while allowing us the flexibility to differentiate
actual pay based on individual and organizational performance.



Our Compensation Committee, in consultation
with our Chief Executive Officer and external compensation consultant, sets our compensation philosophy, which has been structured
to achieve the following objectives:



| | · | to attract and retain talented individuals capable of performing at a high level in a market that remains highly competitive
and who have the motivation, experience and skills necessary to lead us effectively;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | to provide performance-based compensation that creates a strong alignment of management and stockholder interest to create
long-term stockholder value;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | to motivate our executives to manage our business to meet and appropriately balance our short- and long-term objectives;
| | - | ------------------------------------------------------------------------------------------------------------------------

| | · | to hold executives accountable for their level of success in attaining specific goals set for them individually;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | to maintain flexibility and discretion to allow us to recognize the unique characteristics of our operations and strategy,
and our prevailing business environment, as well as changing labor market dynamics; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | to achieve an appropriate risk-reward balance in our compensation programs that does not incentivize unnecessary or excessive
risk taking.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



Based on these objectives, we place significant
emphasis on annual and long-term performance-based incentive compensation, including base salaries, annual cash and equity incentives
and long-term equity-based incentive awards, which are designed to reward our executives based on the achievement of predetermined
company and individual goals.



Our Compensation Committee is committed
to the ongoing review and evaluation of the executive officer compensation levels and program. It is our Compensation Committee's
view that compensation decisions are complex and best made after a deliberate review of company and individual performance, as
well as industry compensation levels. Consistent with this view, our Compensation Committee annually assesses our performance within
the context of the industry's overall performance and internal performance standards and evaluates individual executive officer
performance relative to the performance expectations for their respective position and role within our company. In addition, our
Compensation Committee benchmarks from time to time the total compensation provided to our executive officers to industry-based
compensation practices. While it is our Compensation Committee's goal to provide compensation opportunities that reflect company
and individual performance and that are competitive within industry standards, a specific target market position for executive
officer pay levels has not been established.



Setting Executive Compensation



Our Compensation Committee determines compensation
for our named executive officers and is comprised of three independent directors: Jeffrey E. Kelter (Chairman), Allan J. Baum and
Charles S. Laven. Our Compensation Committee exercises independent discretion in respect of executive compensation matters and
administers our 2004 Equity Incentive Plan and our 2012 Inducement Equity Incentive Plan (including reviewing and approving equity
grants to our executives pursuant to these plans). Our Compensation Committee operates under a written charter adopted by our Board
of Directors, a copy of which is available on our website at www.gptreit.com.



14







Our Compensation Committee has retained
FTI Consulting, Inc. (“FTI”), an outside compensation consulting firm, to assist it in evaluating, formulating and
benchmarking our compensation programs. FTI provides our Compensation Committee and Chief Executive Officer with relevant market
data concerning the marketplace, our peer group and other compensation developments. FTI participates in our Compensation Committee
meetings and meets with our named executive officers and certain of our directors. Our Compensation Committee has the authority
to replace FTI or hire additional consultants at any time. It is important to understand that the compensation market data and
ranges provide only a reference point for our Compensation Committee. Depending upon our business and individual performance results,
a named executive officer's total direct compensation may be within, below or above the market range for that position. FTI also
provides additional professional services, including strategic advisory and tax planning, to us and receives market-based compensation
with respect to these services. In 2012, we paid approximately $76,000 to FTI in connection with such non-compensation based services.



Our Compensation Committee determines the
total compensation and the allocation of such compensation among base salary, annual incentive awards and long-term incentive compensation
as well as allocation of such items among cash and equity compensation for our Chief Executive Officer. With respect to the compensation
of other named executive officers, our Compensation Committee solicits recommendations from our Chief Executive Officer regarding
compensation and reviews his recommendations. We do not have a pre-established policy for the allocation between either cash and
non-cash compensation or annual and long-term incentive compensation.



Our Compensation Committee met three times
during 2012 to evaluate executive performance and to monitor market conditions in light of these goals and objectives, to solicit
input from the compensation consultant on market practices and new developments and to review our compensation practices. During
this decision making process, our Compensation Committee reviews tally sheets that detail each executive officer's compensation
history. The tally sheets help our Compensation Committee to track changes in an executive officer's total direct compensation
from year to year and to remain aware of the compensation historically paid to each executive officer. Ultimately, we rely upon
our judgment about each of our named executive officers and not on formulas or short-term changes in business performance or our
stock price. The key factors affecting our judgment are TSR, change in earnings and funds from operations, actual performance against
the financial, operational and strategic goals we set at the beginning of the year, the nature and level of responsibility of each
executive officer and the integrity and effort with which such executive officer conducts his responsibilities. Our Compensation
Committee regularly reports to our Board of Directors.



What Our Compensation Program is Designed to Reward



Our Compensation Committee has designed
our compensation program to (i) attract and retain talented individuals capable of performing at a high level in a market that
remains highly competitive and who have the motivation, experience and skills necessary to lead our company effectively, (ii) provide
performance-based compensation that creates a strong alignment of management and stockholder interest to create long-term stockholder
value, (iii) motivate our executives to manage our business to meet and appropriately balance our short- and long-term objectives,
(iv) hold executives accountable for their level of success in attaining specific goals set for them individually, (v) maintain
flexibility and discretion to allow us to recognize the unique characteristics of our operations and strategy, and our prevailing
business environment, as well as changing labor market dynamics, and (vi) achieve an appropriate risk-reward balance in our compensation
programs that does not incentivize unnecessary or excessive risk taking. We expect to perform at the highest levels of the equity
real estate investment trust (“REIT”) sectors. Our Compensation Committee rewards the achievement of our and the individual
executive's specific annual, long-term and strategic goals. Our Compensation Committee measures performance on an absolute basis
against financial and other measures and on relative basis by comparing our performance against other equity REITs generally and
against the REIT industries specifically. Comparative performance is an important metric since market conditions may affect the
ability to meet specific performance criteria.



Role of Executive Officers in Compensation Decisions



Our Chief Executive Officer annually reviews
the performance of each of the other named executive officers. He also considers the recommendations of the compensation consultant.
Based on this review and input, our Chief Executive Officer makes compensation recommendations to our Compensation Committee for
all named executive officers other than himself, including recommendations for performance targets, base salary adjustments, the
discretionary components of our short-term cash incentive compensation, and long-term equity-based incentive awards. Our Compensation
Committee considers these recommendations along with data and input provided by its other advisors. Our Compensation Committee
retains full discretion to set all compensation for the named executive officers.



15







2012 Advisory Vote to Approve Executive Compensation



At our 2012 annual meeting of stockholders,
which we held in December 2012, the advisory vote to approve executive compensation received the favorable support of our stockholders
(approximately 78.33% of votes cast). Our Compensation Committee has interpreted this vote to mean that our stockholders were generally
supportive of our executive compensation philosophy and programs, particularly as it relates to the compensation packages we granted
in June 2012 to our new management team, which are heavily weighted with performance-based incentives. Because we delayed our 2012
annual meeting to allow time for the new management team to complete its strategic review of our legacy assets and operations,
there was insufficient time or opportunity following our 2012 advisory vote for our Compensation Committee to make meaningful changes
to our compensation policies or practices for 2012.



However, our Compensation Committee values
the opinions of our common stockholders, and, in response to the results of our Say-on-Pay shareholder responses for our 2012 annual
meeting, and in furtherance of the transformation of our company, recommended, along with our Nominating and Corporate Governance
Committee, that following new practices and policies be developed and adopted for 2013 and beyond:



| | · | a shareholder outreach program to solicit reactions to our executive compensation program and corporate governance policies;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | · | a policy to prohibit directors and officers from hedging, pledging and margining their shares of company stock;
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | stock ownership guidelines for our chief executive officer to be based on a multiple of base salary;
| | - | ----------------------------------------------------------------------------------------------------

| | · | stock ownership guidelines for our non-employee directors to be based on multiples of the annual retainer for our non-employee
directors; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · | a majority voting policy in the election of directors.
| | - | ------------------------------------------------------



Our Board has accepted these recommendations
and authorized the company to develop the following practices and policies for 2013 and beyond.



Additionally, in April 2013 our Chief Executive
Officer, Gordon F. DuGan, unilaterally and unconditionally waived his right to receive payment of the $200,000 balance of his 2012
signing bonus.



Measuring 2012 Performance



As discussed more fully below, in June
2012, following completion of a strategic review process by a Special Committee of our Board of Directors, we announced a fundamental
shift in our business strategy to focus on acquiring net leased real estate. Our new investment criterion includes acquiring net
leased industrial and office properties in approximately 20 primary and secondary target markets across the United States. As of
December 31, 2012, we owned, directly or in joint venture, a portfolio of 116 office and industrial buildings totaling approximately
4.9 million square feet, net leased on a long-term basis to tenants, including Bank of America, Nestlé Waters, Philips Electronics
and others. We also have an asset and property management business which operates under the name Gramercy Asset Management (formerly
Gramercy Realty) and currently manages for third-parties approximately $1.7 billion of commercial properties leased primarily to
regulated financial institutions and affiliated users throughout the United States. Additionally, during 2012 we operated a commercial
real estate finance business under the name Gramercy Finance, which managed approximately $1.7 billion of whole loans, bridge loans,
subordinate interests in whole loans, mezzanine loans, preferred equity and commercial mortgage-backed securities, or CMBS, which
were financed through our three non-recourse CDOs. In March 2013, we exited the commercial real estate finance business by selling
the collateral management and sub-special servicing contracts for our CDOs to a third party CDO manager, resulting in the deconsolidation
of Gramercy Finance from our Consolidated Balance Sheets.



Neither Gramercy Asset Management nor Gramercy
Finance is a separate legal entity, but are divisions through which our commercial real estate finance and asset and property management
businesses are conducted.



Specifically, we achieved the following
select objectives in 2012 and in the early part of 2013:



·Our redirected business strategy is to acquire net leased industrial and office properties that generate stable, recurring cash
flows with minimal ongoing capital expenditures. During 2012, we made the following property investments:



16







Bank of America Portfolio - In August
2012, we formed a joint venture (the “Joint Venture”) with an affiliate of Garrison Investment Group. Subsequently,
in December 2012, we contributed approximately $59.1 million in cash plus the issuance of 6.0 million shares of our common stock,
valued at $15.0 million, representing a 50% equity interest in the Joint Venture’s acquisition of an office portfolio of
113 properties (the “Bank of America Portfolio”) from KBS Real Estate Investment Trust (“KBS”). The acquisition
was financed with a $200.0 million two-year, floating rate, interest-only mortgage loan with a spread to 30 day LIBOR of 4.15%,
collateralized by 67 of the Bank of America Portfolio properties. The mortgage contains three one-year extensions conditional upon
the satisfaction of certain terms. The Bank of America Portfolio totals approximately 4.2 million rentable square feet and is 84%
leased to Bank of America, N.A. (“Bank of America”) under a master lease expiring in 2023, with overall portfolio occupancy
of approximately 89%. The Joint Venture’s asset strategy for this portfolio acquisition is to sell non-core multi-tenant
assets and retain a core net-lease portfolio of high quality assets in primary and strong secondary markets, primarily leased to
Bank of America. In addition to our pro rata share of the net income from the portfolio, we receive under the joint venture agreement
an asset management fee as well as a performance based fee for portfolio management.



Indianapolis Industrial Portfolio
- In November 2012, we acquired two Class A industrial properties located in the Indianapolis, Indiana, metropolitan statistical
area (the “Indianapolis Industrial Portfolio”), totaling approximately 540 thousand square feet for a purchase price
of approximately $27.1 million. The Indianapolis Industrial Portfolio is 100% leased to three tenants for an average lease term
of approximately 10.2 years.



·We maintained approximately $105.4 million of unrestricted corporate cash at year end. We further increased our unrestricted cash
in the first quarter of 2013 with the sale of the CDO contracts and CDO notes as described below.



·In January 2013, we entered into a purchase and sale agreement to transfer the collateral management and sub-special servicing
agreements for our three CDOs to CWCapital Investments LLC for approximately $9.9 million, less certain adjustments and closing
costs. We retained our subordinate bonds, preferred shares and ordinary shares in the CDOs, which may provide us with the potential
to recoup additional proceeds over the remaining life of the CDOs based upon resolution of underlying assets within the CDOs, however,
there is no guarantee that we will realize any proceeds from our equity position, or what the timing of these proceeds may be.
The transaction closed in March 2013.



·In February 2013, we sold a portfolio of repurchased notes previously issued by two of our three CDOs, generating cash proceeds
of approximately $34.4 million. In addition, we expect to receive additional cash proceeds for past CDO servicing advances of approximately
$14.0 million when specific assets within the CDOs are liquidated. We believe that the sale of the collateral management and sub-special
servicing agreements and sale of repurchased notes of our CDOs achieves a number of important objectives, including (i) maximizing
the value of the servicing business through the sale to a large servicing operation, (ii) simplifying our going-forward business
and significantly reducing our ongoing management, general and administrative expenses through elimination of CDO related personnel
costs and servicing advance requirements, (iii) generating in excess of $50.0 million in liquidity currently invested in the CDO
business and (iv) providing for potential future proceeds through the retention of the equity in the CDOs. Immediately subsequent
to the transfer of the collateral management and sub-special serving agreements, the assets and liabilities of the corresponding
CDOs were deconsolidated from our financial statements.



In addition, the senior management team
worked closely with, and supported the activities of, our Special Committee in 2012.



We did not make any equity award grants
to our named executive officers in respect of their 2012 performance except for (i) the restricted stock and restricted stock unit
grants made to our new management team under their employment contracts in June 2012 and (ii) restricted stock and restricted stock
unit grants made to our Chief Financial Officer and certain other senior officers in March 2013. Seventy-five percent of all of
these grants are subject to the achievement of performance based vesting hurdles over a five-year period. We also granted five-year
performance-based LTIP units to our new management team in June 2012 and to our Chief Financial Officer and certain other senior
officers on March 2013. For a more detailed description of these awards, see "Employment and Noncompetition Agreements below.



Elements of Our Compensation Program and Why We Chose
Each Element



Our executive compensation program has
been structured to provide short- and long-term incentives that promote continuing improvements in our financial performance and
return to our stockholders. The elements of our executive compensation are primarily comprised of three elements: annual base salary,
annual incentive awards, which may include cash and equity bonuses, and long-term equity incentives:



17







Annual Base Salaries.  Annual
base salaries provide our named executive officers with a minimum level of compensation for services rendered during the fiscal
year. For each of our named executive officers in 2012, annual base salaries were paid in accordance with the employment agreements
between us and such named executive officers. Base salaries are reviewed annually, but are not automatically increased if we feel
that incentive awards are more appropriate means of rewarding and incentivizing performance.



Annual Incentive Awards.  Annual
incentive awards are provided in the form of cash and equity bonuses designed to focus a named executive officer on achieving key
corporate objectives (both individual and company-based), to motivate certain desired individual behaviors and to reward substantial
achievement of these objectives and individual goals. While our Compensation Committee does not set fixed hurdles or “automatic
triggers” that entitle our executive officers to formulaic bonuses, commencing in 2013, our Compensation Committee, in consultation
with our Chief Executive Officer, did adopt specifically identified individual and corporate annual performance metrics to be used
by our Compensation Committee to measure and quantify executive performance when determining annual incentive awards. For 2013,
these metrics include, but are not limited to, (i) completion of identified corporate transactions, (ii) managing identified business
units to specified levels of profitability, (iii) growing the company’s net operating income through the acquisition of net
lease properties, (iv) achieving targeted reductions in our corporate management, general and administrative expenses, (v) achieving
targeted adjusted FFO thresholds and (vi) achieving a targeted common stock equity capitalization for the company. Cash incentive
bonuses and equity incentive awards are discretionary, thereby allowing for the opportunity for greater compensation when performance
is superior and lower compensation when performance is less successful.



Long-Term Incentives.  Long-term
equity incentives have historically been provided to our named executive officers through the grant of restricted stock awards,
stock options, LTIP Units or performance awards pursuant to our 2004 Equity Incentive Plan. The grant of equity awards links a
named executive officer's compensation and net worth directly to the performance of our stock price. This encourages our named
executive officers to make decisions with an ownership mentality. The vesting provisions of these equity awards (generally two
to four years) are designed to act as a retention device and to provide a strong incentive to the executives to increase stockholder
value long after they performed the services in the year for which the equity awards were granted.



Our compensation program does not include
any significant personal benefits or perquisites for our named executive officers beyond benefits offered to our employees generally.
We do not maintain any retirement or pension plans for our named executive officers or other employees, other than our 401(k) plan
that is available to our employees generally.



Our Compensation Committee has full authority
to administer and interpret our 2004 Equity Incentive Plan and the 2012 Inducement Equity Incentive Plan, to authorize the granting
of awards, to determine the eligibility of employees, directors, executive officers, advisors, consultants and other personnel,
to determine the terms, provisions and conditions of each award, and to take any other actions and make all determinations that
it deems necessary or appropriate in connection with our 2004 Equity Incentive Plan and the 2012 Inducement Equity Incentive Plan
or the administration or interpretation thereof.



How Each Element and Our Decisions Regarding Each Element
Fit Into Our Overall Compensation Objectives and Affect Decisions Regarding Other Elements



Our compensation program seeks to reward
our named executive officers for superior performance, which is competitive with the compensation paid to named executive officers
at other public REITs and other private commercial real estate investors in the New York City commercial real estate market, while
closely aligning the interests of our named executive officers with the interests of our stockholders.



For 2012, once our Board completed its
strategic review process and announced a fundamental shift in our business strategy, our executive compensation focus shifted to
designing and implementing a competitive and comprehensive compensation program to attract a top-performing management team to
implement our new net lease business strategy. In June 2012, our Compensation Committee, in consultation with its external compensation
consultant, developed a compensation structure for our new Chief Executive Officer and President that included (i) a signing bonus,
half of which was paid in 2012, with the remainder to be paid in three equal annual installments in 2013, 2014 and 2015, (ii) market-level
base salaries, (iii) annual incentive compensation to be determined by the Compensation Committee in its sole discretion based
upon the Compensation Committee’s determination of the executive’s level of accomplishment each year of identified
individual and corporate goals and (iv) long-term incentive compensation in the form of restricted stock, restricted stock unit
and LTIP unit grants. Significant elements of our Chief Executive Officer’s and President’s five-year employment contracts
that were executed in June 2012 include the following:



18







| | · | seventy-five percent of the equity awards granted to our new Chief Executive Officer and President are subject to the achievement
of performance-based vesting hurdles based on absolute increases in our FFO or stock price during the five-year vesting period
in addition to continued employment;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the LTIP units granted to our new Chief Executive Officer and President require achievement of a minimum vesting hurdle of
$5.00 per share (i.e., a 100% increase over our $2.50 per share price on June 29, 2012) and a maximum vesting hurdle of $9.00 per
share (i.e., a 260% increase over our June 29, 2012 closing price) over the five-year term of the plan;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our Chief Executive Officer’s employment contract required him to purchase from us, and immediately prior to commencing
as our Chief Executive Officer he did purchase, 1,000,000 shares of our common stock at market pricing using his personal funds
without any reimbursement or other financial assistance from us; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | in April 2013, our Chief Executive Officer unilaterally and unconditionally waived his right to receive the $200,000 unpaid
portion of his signing bonus to eliminate any notion that his compensation package included a “guaranteed” bonus component.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Compensation Committee believes that
the compensation packages granted to our new management team are competitive and comprehensive and that they create a strong alignment
of management and stockholder interests.



Following the new management team’s
completion of its strategic review of our legacy assets and operations, and our Board’s implementation of the decision to
exit the real estate finance business, our Compensation Committee, in consultation with our Chief Executive Officer and the Compensation
Committee’s external compensation consultant, expanded the long-term incentive compensation program designed for the new
management team to include our Chief Financial Officer and other officers that will play a critical and on-going role in the successful
execution of our new business strategy. In connection therewith, in March 2013 the Compensation Committee took the following actions:



| | · | granted to our Chief Financial Officer, Jon W. Clark, and three other senior officers, restricted stock and restricted stock
units, 75% of which vest over a five-year period subject to the achievement of performance-based vesting hurdles based on absolute
increases in our FFO or stock price during the five-year vesting period in addition to continued employment; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | granted to Mr. Clark and three other senior officers LTIP units that vest over a five-year period subject to the same minimum
and maximum vesting hurdles that apply to the LTIP units granted to the new management team.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Compensation Committee believes that
granting predominantly performance-based long-term incentive compensation to our Chief Executive Officer and other senior officers
who will play a critical and on-going role in the successful execution of our new business strategy is in the best interests of
our shareholders and creates a strong alignment of management and stockholder interests.



Finally, 2012 was the year in which we
paid or vested the last of the guaranteed bonuses or time-vested equity grants that we made in 2010 and 2011 to (i) facilitate
an orderly and advantageous resolution of our maturing Gramercy Realty mortgage and mezzanine debt obligations (“Gramercy
Realty Debt”) and (ii) maintain and maximize the value of our Gramercy Finance division pending completion of its sale to
a third-party purchaser. These legacy “retention” arrangements included the following.



Roger M. Cozzi. Roger M. Cozzi became
our Chief Executive Officer on October 28, 2008 pursuant to a three year contract ending December 31, 2011. In June 2011, we extended
the term of Mr. Cozzi’s contract for a six month period ending June 30, 2012. In connection therewith, we modified the vesting
schedule for the 500,000 LTIP units we granted him at the commencement of his employment so that vesting of 250,000 units became
subject to achievement of a changed performance criteria, with the remaining 250,000 units becoming time-vested, subject to continued
employment, on June 30, 2012. Mr. Cozzi’s services as an executive officer of our company were terminated on June 30, 2012.
During the final 12 months of his contract term, Mr. Cozzi played an important role in (i) achieving a favorable resolution for
the company of the Gramercy Realty Debt, especially in negotiating the full release of claims that we received from our lenders,
(ii) supporting our Board’s strategic review process and (iii) effectuating an orderly transition with our new Chief Executive
Officer.



19







Timothy G. O’Connor. Timothy
J. O’Connor became our president on November 13, 2008 pursuant to a three year contract ending December 31, 2011. In June
2011, we extended the term of Mr. O’Connor’s contract for a six month period ending June 30, 2012. In connection therewith,
we modified the vesting schedule for the 150,000 LTIP units we granted him at the commencement of his employment so that vesting
of 75,000 units became subject to achievement of a changed performance criteria, with the remaining 75,000 units becoming time-vested,
subject to continued employment, on June 30, 2012. Mr. O’Connor’s services as an executive officer of our company ended
on July 31, 2012, although he continued under a consulting contract with us through October 31, 2012. During the final 12 months
of his contract term and three months of his consultancy term, Mr. O’Connor played an important role in (i) achieving a favorable
resolution for the company of the Gramercy Realty Debt, especially in negotiating the terms of the company’s still-in-place
asset management agreement with KBS for the transferred assets, (ii) supporting our Board’s strategic review process, (iii)
structuring our Bank of America Portfolio purchase from KBS and (iv) assisting with the initial implementation of new net lease
business strategy.



Michael G. Kavourias. In August
2011, we entered into a retention agreement with our Chief Legal Officer, Michael G. Kavourias, which we modified in June 2012.
Pursuant to the terms of that agreement, as amended, Mr. Kavourias revived (i) a time-vested restricted stock grant, (ii) a signing
bonus, (iii) a 2012 year-end guaranteed bonus and (iv) a contingent bonus if we sold, with his assistance, our CDO management business
to a third-party purchaser. Following the successful completion of our CDO management business sale in March 2013, a challenging
process in which Mr. Kavourias played a critical role, Mr. Kavourias’ services as an executive officer of our company were
terminated on March 31, 2013.



Our Compensation Committee believes that
the extraordinary measures adopted by it in 2011 and 2012 to retain and motivate the key personnel required to effectuate (i) resolution
of our maturing Gramercy Realty mortgage and mezzanine debt obligations and (ii) an orderly sale of our CDO management assets to
the third-party purchaser were necessary, appropriate and in the long-term best interests of our shareholders.



Changes to Our Compensation Program in 2012



Gordon F. DuGan. On July 1, 2012,
contemporaneously with the commencement of his five-year employment contract as our new Chief Executive Officer, we granted Gordon
F. DuGan 250,000 time-vested restricted shares of our common stock (“RSAs”), 750,000 performance-based restricted stock
units (“RSUs”) and $10 million maximum value LTIP units (“LTIP Units”) pursuant to an outperformance plan
( “2012 Outperformance Plan”). The RSAs will vest in five equal installments on June 30, 2013 and each of the next
four anniversaries of such date provided that Mr. DuGan remains employed by us. Vesting of the RSUs is subject to the achievement
of performance-based vesting hurdles based on absolute increases in our stock price or FFO during the five-year vesting period
in addition to continued employment. Full vesting of the RSUs through achievement of the stock increase thresholds requires, in
effect, a 100% increase of our per share stock price during the vesting period of our $2.50 per share price on June 29, 2012. The
specific annual stock increase hurdles are as follows: June 30, 2013 – $3.00 per share, June 30, 2014 – $3.50
per share, June 30, 2015 – $4.00 per share, June 30, 2016 – $4.50 per share and June 30, 2017 – $5.00
per share, with each hurdle reduced by any per share common stock dividends that we declare after July 1, 2012. Full vesting of
the RSUs through achievement of the FFO increase thresholds requires proportionately similar increases in our FFO levels during
the vesting period. In the event that the performance hurdles are not met on a vesting date, the RSUs scheduled to vest on that
vesting date may vest on a subsequent vesting date if the common stock price hurdle is met as of such subsequent vesting date or
the FFO hurdles have been met on a cumulative basis through such subsequent vesting date. In the event of a Change-in-Control,
the performance hurdles for the RSUs will be measured as of the date of the Change-in-Control and any RSUs with respect to which
the performance hurdles are met will remain subject to vesting based on continued employment through the original vesting dates.
Upon a Change-in-Control, the performance hurdles will be satisfied with respect to the greater of (i) a pro rata amount of the
total RSUs based on the portion of the five-year vesting period that had elapsed if the FFO hurdle is met on a cumulative basis
through the most recent quarter ended prior to the Change-in-Control or (ii) from 20% to 100% (in 20% increments) of the total
RSUs based on the common stock price upon the Change-in-Control as compared to common stock price hurdles from $3.00 per share
to $5.00 per share (in $0.50 increments).



Benjamin P. Harris. On July 1, 2012,
contemporaneously with the commencement of his five-year employment contract as our new President, we granted Benjamin P. Harris
150,000 time-vested RSAs, 450,000 performance vested RSUs and $6 million maximum value LTIP Units. Mr. Harris' equity awards will
vest on the same schedule, in the same proportion, and on the same conditions as the equity awards for Mr. DuGan as described above.



Jon W. Clark. In March 2013, we
granted Jon W. Clark, our Chief Financial Officer, 25,000 time-vested RSAs, 75,000 performance-based RSUs and $1.0 million maximum
value LTIP Units. Mr. Clark's equity awards will vest on the same schedule, in the same proportion, and on the same conditions
as the equity awards for Messrs. DuGan and Harris as described above, except that the stock increase vesting thresholds for Mr.
Clark’s RSUs are somewhat higher than the thresholds for Messrs. DuGan and Harris to reflect the higher per share value of
our stock in March 2013 as compared to July 1, 2012 and Mr. Clark’s time-vested RSAs and performance based RSUs are scheduled
to vest on December 15 th of each year as apposed to June 30 th.



20







The terms of the LTIP Units awarded to
Messrs. DuGan, Harris and Clark under the 2012 Outperformance Plan are described below under “— Equity Compensation
Plan Information — 2012 Outperformance Plan.”



Neither Mr. DuGan nor Mr. Harris was eligible
to receive (or did receive) any guaranteed or discretionary bonus for 2012. To the contrary, under the terms of their employment
contracts, these named executive officers are not eligible to receive an annual incentive award until year-end 2013. As disclosed
in the “Summary Compensation Table” beginning on page 29, Mr. Clark was paid a discretionary cash bonus of $300,000
for 2012.



Other Matters



Tax and Accounting Treatment.  Our
Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”). Section 162(m) limits the deductibility on our tax return of compensation over
$1.0 million to any of our named executive officers unless, in general, the compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been pre-approved by our stockholders. Our Compensation Committee's policy with respect to Section 162(m)
is to make every reasonable effort to ensure that compensation is deductible to the extent permitted while simultaneously providing
our executives with appropriate compensation for their performance. We paid compensation to certain of our named executive officers
during 2011, a portion of which may be nondeductible under the limitations set forth in Section 162(m). Our Compensation Committee
may make compensation payments that are not fully deductible if in its judgment such payments are necessary to achieve the objectives
of our compensation program.



We account for stock-based payments through
our 2004 Equity Incentive Plan in accordance with the requirements of FASB ASC Topic 718.



Adjustments for Certain Items.  Our
Compensation Committee has not considered whether it would attempt to recover compensation awards or payments based on our financial
performance where our financial statements are restated in a downward direction sufficient to reduce the amount of such awards
or payments that should have been made or paid under applicable criteria.



Other Policies



For 2012, we did not have any policy in
place regarding minimum ownership requirements for either our named executive officers or directors and we did not have any policy
in place regarding the ability of our named executive officers or directors to engage in hedging activities with respect to our
common stock. However, to continue the transformation of our company and in response to the results of our Say-on-Pay shareholder
responses for our 2012 annual meeting, our Board has authorized our company to develop the following new practices and policies
for 2013 and beyond based upon the recommendation of our Compensation Committee and Nominating and Corporate Governance Committee:



| | · | a shareholder outreach program to solicit reactions to our executive compensation program and corporate governance policies;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | · | specifically identified individual and corporate annual performance metrics to be used by our Compensation Committee to measure
and quantify executive performance when determining annual incentive compensation bonuses;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | a policy to prohibit directors and officers from hedging, pledging and margining their shares of company stock;
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | stock ownership guidelines for our chief executive officer to be based on a multiple of base salary;
| | - | ----------------------------------------------------------------------------------------------------

| | · | stock ownership guidelines for our non-employee directors to be based on multiples of the annual retainer for our non-employee
directors; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · | a majority voting policy in the election of directors.
| | - | ------------------------------------------------------



21







Compensation Risk Assessment



Our Compensation Committee oversaw the
performance of a risk assessment of our executive compensation programs to ascertain any potential material risks that may be created
by the compensation program. Because performance-based incentives play a large role in our executive compensation program, it is
important to ensure that these incentives do not result in our named executive officers taking actions that may conflict with our
long term interests. Our Compensation Committee considered the findings of the assessment conducted internally and concluded that
our compensation programs are designed and administered with the appropriate balance of risk and reward in relation to its overall
business strategy and do not encourage executives to take unnecessary or excessive risks. Our Compensation Committee considered
the following attributes of the program:



| | · | the balance between short- and long-term incentives;
| | - | ----------------------------------------------------

| | · | consideration of qualitative as well as quantitative performance factors in determining compensation payouts, including minimum
and maximum performance thresholds, funding that is based on actual results measured against pre-approved financial and operational
goals and metrics that are clearly defined in all plans;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the use of different types of equity compensation awards that provide a balance of incentives;
| | - | ----------------------------------------------------------------------------------------------

| | · | incentive compensation with a large stock component where value is best realized through long-term appreciation of stockholder
value; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | · | incentive compensation components that are paid or vest over an extended period.
| | - | --------------------------------------------------------------------------------



Our Compensation Committee focuses primarily
on the compensation of our named executive officers because risk-related decisions depend predominantly on their judgment. Our
Compensation Committee believes that risks arising from our policies and practices for compensation of other employees are not
reasonably likely to have a material adverse effect on us.



Compensation Committee Report



The Compensation Committee (the “Compensation
Committee”) of the Board of Directors of Gramercy Property Trust Inc. (the “Company”) has reviewed and discussed
the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and
discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in the Company's proxy statement.



| | Submitted by the Compensation Committee
| | ---------------------------------------
| |                                        
| | Jeffrey E. Kelter (Chairman)           
| | Allan J. Baum                          
| | Charles S. Laven                       
| |                                        
| | April 25, 2013                         



Summary Compensation Table



The following table* sets forth information
regarding the compensation paid to, and the compensation expense we recognized with respect to, our named executive officers during
the fiscal year ended December 31, 2012. Gordon F. DuGan was appointed as our Chief Executive Officer effective July 1, 2012 and
Benjamin P. Harris was appointed as our Chief Investment Officer effective as of July 1, 2012 through July 31, 2012, and as our
President effective as of August 1, 2012.



|                                                 |  |      |      |  | Salary |   |         | Bonus |  |   | Stock          |  |  | Option         |           |  | Non-Equity
    Incentive |   |   | All Other            |  |   |       | 
|------------------------------------------------ |  | ---- | ---- |  | ------ | - | ------- | ----- |  | - | -------------- |  |  | -------------- | --------- |  | ------------------------ | - | - | -------------------- |  | - | ----- | 
|Name And
    Principal Position                  |  | Year |      |  | ($)    |   |         | ($)   |  |   | Awards
    (1) |  |  | Awards
    (2) |           |  | Plan
    Compensation    |   |   | Compensation
    (3) |  |   | Total | 
|Gordan F. DuGan Chief
    Executive Officer      |  |      | 2012 |  |        | $ | 375,000 |       |  | $ | 200,000        |  |  | $              | 2,850,000 |  |                          | $ | — |                      |  | $ | —     | 
|                                                 |  |      | 2011 |  |        |   | —       |       |  |   | —              |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|                                                 |  |      | 2010 |  |        |   | —       |       |  |   | —              |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|Benjamin Harris President                        |  |      | 2012 |  |        | $ | 300,000 |       |  | $ | 75,000         |  |  | $              | 1,710,000 |  |                          | $ | — |                      |  | $ | —     | 
|                                                 |  |      | 2011 |  |        |   | —       |       |  |   | —              |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|                                                 |  |      | 2010 |  |        |   | —       |       |  |   | —              |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|Jon W. Clark                                     |  |      | 2012 |  |        | $ | 275,000 |       |  | $ | 300,000        |  |  | $              | —         |  |                          | $ | — |                      |  | $ | —     | 
|Chief Financial Officer                          |  |      | 2011 |  |        |   | 275,000 |       |  |   | 325,000        |  |  |                | 165,000   |  |                          |   | — |                      |  |   | —     | 
|                                                 |  |      | 2010 |  |        |   | 250,000 |       |  |   | 300,000        |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|Michael G. Kavourias                             |  |      | 2012 |  |        | $ | 385,000 |       |  | $ | 750,000        |  |  | $              | —         |  |                          | $ | — |                      |  | $ | —     | 
|Executive Vice President and Chief Legal Officer |  |      | 2011 |  |        |   | 385,000 |       |  |   | 600,000        |  |  |                | 275,000   |  |                          |   | — |                      |  |   | —     | 
|                                                 |  |      | 2010 |  |        |   | 385,000 |       |  |   | 475,000        |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 
|Roger
    M. Cozzi (4)                           |  |      | 2012 |  |        | $ | 259,615 |       |  | $ | 650,000        |  |  | $              | 110,875   |  |                          | $ | — |                      |  | $ | —     | 
|Former Chief Executive Officer                   |  |      | 2011 |  |        |   | 500,000 |       |  |   | 1,300,000      |  |  |                | 1,100,000 |  |                          |   | — |                      |  |   | —     | 
|                                                 |  |      | 2010 |  |        |   | 500,000 |       |  |   | 1,300,000      |  |  |                | 105,000   |  |                          |   | — |                      |  |   | —     | 
|Timothy
    J. O'Connor (5)                      |  |      | 2012 |  |        | $ | 343,077 |       |  | $ | 575,000        |  |  | $              | 66,241    |  |                          | $ | — |                      |  | $ | —     | 
|Consultant and                                   |  |      | 2011 |  |        |   | 400,000 |       |  |   | 575,000        |  |  |                | 319,741   |  |                          |   | — |                      |  |   | —     | 
|Former President                                 |  |      | 2010 |  |        |   | 400,000 |       |  |   | 575,000        |  |  |                | —         |  |                          |   | — |                      |  |   | —     | 





22







| | * | The
column for “Change in Pension Value and Nonqualified Deferred Compensation Earnings” has been omitted because it is
not applicable.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | (1) | Amounts
shown do not reflect compensation actually received by the named executive officers. Instead, the amounts shown are the aggregate
grant date fair value of restricted stock, restricted stock units awards and/or LTIP Units issued to the executives in 2012, 2011
and 2010, respectively, as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the grant date value of
such awards for 2012, 2011 and 2010 are set forth under Notes 2 and 12 of the Notes to Consolidated Financial Statements included
in our Annual Reports on Form 10-K for the years ended December 31, 2012, 2011 and 2010, which were filed with the SEC on March
18, 2013, March 15, 2012 and September 22, 2011, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | No
stock option awards were issued to the named executive officers in 2012, 2011 and 2010.
| | --- | ------------------------------------------------------------------------------------------



| | (3) | The
table below shows the components of this column.
| | --- | ----------------------------------------------------



|Name                 |  | Year |      |  | 401(K) MatchingContributions (a) |   |       | Term Life 
Insurance 
Premiums (b) |  |   | Severance
 Payment |  |  | CarAllowance (c) |        |  | Total “All Other
 Compensation” |  
|-------------------- |  | ---- | ---- |  | -------------------------------- | - | ----- | ---------------------------------- |  | - | ------------------ |  |  | ---------------- | ------ |  | ------------------------------- | -
|Gordon F. DuGan      |  |      | 2012 |  |                                  | $ | -     |                                    |  | $ | -                  |  |  | $                | -      |  |                                 | $
|Benjamin Harris      |  |      | 2012 |  |                                  |   | -     |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Jon W. Clark         |  |      | 2012 |  |                                  |   | 7,500 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Michael G. Kavourias |  |      | 2012 |  |                                  |   | 7,500 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Roger M. Cozzi       |  |      | 2012 |  |                                  |   | -     |                                    |  |   | 4,860              |  |  |                  | 39,363 |  |                                 |  
|Timothy J. O'Connor  |  |      | 2012 |  |                                  |   | -     |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Jon W. Clark         |  |      | 2011 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|                     |  |      |      |  |                                  |   |       |                                    |  |   |                    |  |  |                  |        |  |                                 |  
|Michael G. Kavourias |  |      | 2011 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Roger M. Cozzi       |  |      | 2011 |  |                                  |   | 7,350 |                                    |  |   | 4,860              |  |  |                  | -      |  |                                 |  
|Timothy J. O'Connor  |  |      | 2011 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|                     |  |      |      |  |                                  |   |       |                                    |  |   |                    |  |  |                  |        |  |                                 |  
|Jon W. Clark         |  |      | 2010 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Michael G. Kavourias |  |      | 2010 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  
|Roger M. Cozzi       |  |      | 2010 |  |                                  |   | 7,350 |                                    |  |   | 4,860              |  |  |                  | -      |  |                                 |  
|Timothy J. O'Connor  |  |      | 2010 |  |                                  |   | 7,350 |                                    |  |   | -                  |  |  |                  | -      |  |                                 |  



| | (a) | Represents
our company's matching contributions with respect to amounts earned by the named executive officer under our 401(k) plan. Our
401(k) matching contributions are credited in the year subsequent to which employees make their contributions. Our 401(k) match
is available to our employees generally.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Represents
reimbursement of term life insurance premiums pursuant to Mr. Cozzi's employment contract.
| | --- | -----------------------------------------------------------------------------------------------------



| | (c) | Represents
car allowance paid pursuant to Mr. Clark’s employment agreement.
| | --- | ---------------------------------------------------------------------------



| | (4) | Mr.
Cozzi's term of employment as our Chief Executive Officer ended on June 30, 2012.
| | --- | -------------------------------------------------------------------------------------



| | (5) | Mr.
O'Connor's term of employment as our President ended on July 31, 2012.
| | --- | --------------------------------------------------------------------------



23







2012 Grants of Plan-Based Awards



The following table sets forth certain information
with respect to each grant of an award made to a named executive officer in the fiscal year ended December 31, 2012.



|                     |  |            |          |  |               |  |            | Estimated Future Payouts Under Equity Incentive Plan Awards (#) |  |   |              |  |  |               |          
|-------------------- |  | ---------- | -------- |  | ------------- |  | ---------- | --------------------------------------------------------------- |  | - | ------------ |  |  | ------------- | ---------
|Name                 |  | Grant Date |          |  | Approval Date |  |            | Threshold ($/#)                                                 |  |   | Target ($/#) |  |  | Maximum ($/#) |          
|                     |  |            |          |  |               |  |            |                                                                 |  |   |              |  |  |               |          
|Gordon F. DuGan      |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  |   |              |  |  |               |          
|                     |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  |   | 150,000      |  |  |               | 750,000  
|                     |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  | $ | 2,000,000    |  |  | $             | 6,000,000
|Benjamin Harris      |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  |   |              |  |  |               |          
|                     |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  |   | 90,000       |  |  |               | 450,000  
|                     |  |            | 7/1/2012 |  |               |  | 5/23/2012  |                                                                 |  | $ | 1,200,000    |  |  | $             | 3,600,000
|Jon W. Clark         |  |            | -        |  |               |  | -          |                                                                 |  |   | -            |  |  |               | -        
|Michael G. Kavourias |  |            | -        |  |               |  | -          |                                                                 |  |   | -            |  |  |               | -        
|Roger M. Cozzi       |  |            | 1/5/2012 |  |               |  | 12/14/2011 |                                                                 |  |   |              |  |  |               |          
|Timothy J. O’Connor  |  |            | 1/5/2012 |  |               |  | 12/14/2011 |                                                                 |  |   |              |  |  |               |          










| | (1) | Represents
restricted stock units granted in connection with the hiring of such executive, which are subject to vesting based on the achievement
of performance-based vesting hurdles and continued employment over a five-year period. See “-Compensation Discussion &
Analysis-Change to Our Compensation Program in 2012” for a description of these awards. The "Maximum ($/#)" column
represents the maximum number of restricted stock units that could be earned. The "Target ($/#)" column represents the
number of restricted stock units that would be earned if we achieved the same per year stock appreciation during the five-year
vesting period as we did from the beginning of the vesting period on July 1, 2012 through year-end 2012. The "Threshold ($/#)"
column represents the number of restricted stock units that would be earned if the performance-based vesting hurdles were only
achieved during the first year of the five-year vesting period.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Represents
awards made under the 2012 Outperformance Plan. Under the 2012 Outperformance Plan, awards will be paid to each executive in LTIP
Units with a value equal to the dollar amount earned by such executive under the plan. See "- 2012 Outperformance Plan"
for a description of the terms of the 2012 Outperformance Plan.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Outstanding Equity Awards at Fiscal Year-End 2012



The following table sets forth certain
information with respect to all outstanding equity awards held by each named executive officer as of December 31, 2012.



|                     |  | Option Awards                       |        |     | Stock Awards  | 
|-------------------- |  | ----------------------------------- | ------ | --- | ------------- | 
|                     |  |                                     |        |     | Number of     | 
|                     |  | Number of
    Securities Underlying |        |     | Securities    | 
|                     |  | Unexercised                         |        |     | Underlying    | 
|                     |  | Options                             |        |     | Unexercised   | 
|                     |  | (#)                                 |        |     | (#)           | 
|Name                 |  | Exercisable                         |        |     | Unexercisable | 
|Gordon F. DuGan      |  |                                     |        |     |               | 
|Benjamin P. Harris   |  |                                     |        |     |               | 
|Jon W. Clark         |  |                                     | 5,403  | (3) |               | 
|                     |  |                                     | 5,403  | (4) |               | 
|                     |  |                                     |        |     |               | 
|Michael G. Kavourias |  |                                     | 12,966 | (5) |               | 
|                     |  |                                     | 5,403  | (6) |               | 
|                     |  |                                     | 10,806 | (7) |               | 
|                     |  |                                     | 10,806 | (4) |               | 



24







| | (1) | Pursuant to Mr. DuGan's employment agreement, we granted Mr. DuGan, 250,000 restricted shares of our common stock, 750,000
RSUs and an award under the 2012 Outperformance Plan on July 1, 2012. The restricted shares of common stock will vest in five equal
installments on June 30, 2013 and each of the first four anniversaries of such date provided that Mr. DuGan remains employed by
us through each such date. The RSUs are scheduled to vest in five equal installments on June 30, 2013 and each of the first four
anniversaries of such date; provided that the RSUs will only vest if both (i) Mr. DuGan remains employed by us through the applicable
vesting date and (ii) we achieve either a performance hurdle based on FFO during the prior year, with agreed upon adjustments,
or a common stock price hurdle.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The award granted under
the 2012 Outperformance Plan is subject to performance –based vesting hurdles based on our stock appreciation during a
four-year performance period and, if the performance-based vesting is met under the 2012 Outperformance Plan, the awards will
remain subject to vesting requirements based on continued employment, with 50% scheduled to vest on June 30, 2016 and 50%
scheduled to vest on June 30, 2017 subject to continued employment through such dates.  See "- 2012 Outperformance
Plan" for a description of the terms of the 2012 Outperformance Plan. The amounts set forth in the Equity Incentive Plan
Awards column above are based on the estimated number of RSUs and LTIP Units that will be earned if we achieve the same per
year stock appreciation during the applicable performance period under the RSUs and 2012 Outperformance Plan as we did from
the beginning of each performance period on July 1, 2012 through year-end 2012.

| | (2) | In connection with Mr. Harris’ appointment, we granted Mr. Harris 150,000 restricted shares of our common stock, 450,000
RSUs and an award under the 2012 Outperformance Plan. Mr. Harris’ equity awards will vest on the same schedule, in the same
proportion, and on the same conditions as the equity awards for Mr. DuGan, as described above.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Includes an option award granted on June 28, 2007, which vested in three equal annual installments beginning on June 28, 2008.
| | --- | ------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes an option award granted on December 31, 2007, a third of which vested immediately upon grant and the remaining portion
vested in two equal annual installments beginning on December 31, 2008.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes an option award granted on October 17, 2005, which vested in three equal annual installments beginning on October
17, 2006.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Includes an option award granted on January 2, 2007, which vested in three equal annual installments beginning on January 2,
2008.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

| | (7) | Includes an option award granted on August 1, 2007, which vested in three equal annual installments beginning on December 31,
2008.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | (8) | Based on a price of $2.94 per share/unit, which was the closing price on the New York Stock Exchange of one share of our common
stock on December 31, 2012. Assumes that the value of LTIP Units on a per unit basis is equal to the per share value of our
common stock.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Option Exercises and Stock Vested



The following table sets forth certain
information with respect to the exercise of stock options, stock appreciation rights (“SARs”), and similar instruments,
and the vesting of stock, including restricted stock, restricted stock units and similar instruments for each named executive officer
during the fiscal year ended December 31, 2012.



|                     |  | Option Awards                             |   |  | Stock Awards                      |  
|-------------------- |  | ----------------------------------------- | - |  | --------------------------------- | -
|Name                 |  | Number of Shares Acquired on Exercise (#) |   |  | Value Realized onExercise (1) ($) |  
|Gordon F. DuGan      |  |                                           | - |  |                                   | $
|Benjamin Harris      |  |                                           | - |  |                                   | $
|Jon W. Clark         |  |                                           | - |  |                                   | $
|Michael G. Kavourias |  |                                           | - |  |                                   | $
|Roger M. Cozzi       |  |                                           | - |  |                                   | $
|Timothy J. O'Connor  |  |                                           | - |  |                                   | $



| | (1) | Amounts
reflect the difference between the exercise price of the option and the market price at the time of exercise.
| | --- | ---------------------------------------------------------------------------------------------------------------------



25







| | (2) | Amounts
reflect the market value of the stock on the day the stock vested.
| | --- | --------------------------------------------------------------------------



Pension Benefits



Our named executive officers received no
benefits in fiscal year 2012 from us under defined pension or defined contribution plans. See “— Summary Compensation
Table.”



Nonqualified Deferred Compensation



We do not have a nonqualified deferred
compensation plan that provides for deferral of compensation on a basis that is not tax-qualified for our named executive officers.



Potential Payments upon Termination
or Change in Control



General



We maintain employment agreements with
Messrs. DuGan, Clark and Harris, as well as a retention agreement with Mr. Kavourias. Mr. Kavourias’ term of employment as
our Executive Vice President, Chief Legal Officer and Secretary ended on March 31, 2013. This section discusses the amount of compensation
payable to our named executive officers and current executive officers upon termination of the executive officer's employment (i)
by us with “Cause,” (ii) by the named executive officer without “Good Reason,” (iii) by us without “Cause,”
(iv) by the named executive officer with “Good Reason,” (v) in the event of death or “Disability” of the
named executive officer or (vi) in connection with a “Change-in-Control” of us (each, a “Triggering Event”)
as described below. The following discussion assumes such termination was effective as of December 31, 2012 and estimates the amounts
that would be paid out in such circumstances if the applicable agreement had then been in effect.



Employment and Retention Agreements



Each of Messrs. DuGan, Harris and Clark have
entered into employment agreements with us. Mr. Clark's employment agreement was amended on January 17, 2012, effective as of January
1, 2012. On August 31, 2011, Michael G. Kavourias entered into a retention agreement, effective as of July 28, 2011, with us, which
retention agreement was amended on June 12, 2012. Mr. Kavourias’ term of employment as our Executive Vice President, Chief
Legal Officer and Secretary ended on March 31, 2013. Illustrated below are the severance provisions associated with each Triggering
Event discussed above.



Gordon F. DuGan.  Mr. DuGan's
employment agreement has a term commencing on July 1, 2012 and ending on June 30, 2017, with an automatic renewal for a single
one-year period unless either party delivers three months' prior written notice of non-renewal under the agreement. The agreement
provides for an annual salary of no less than $750,000 and such discretionary annual bonuses as we, in our sole discretion, may
deem appropriate to reward Mr. DuGan for job performance. Mr. DuGan will also originally entitled to receive a one-time signing
bonus of $400,000, of which $200,000 was paid on July 1, 2012 and the remainder will be payable in three equal installments on
June 30, 2013, June 30, 2014 and June 30, 2015; provided that Mr. DuGan remains employed by our company on each such date. However,
in April 2013 Mr. DuGan agreed to forego the remainder of his signing bonus to determine the amount of his bonus in future years
solely based on his and the Company’s performance. Pursuant to the agreement, Mr. DuGan was also granted 250,000 of restricted
stock and 750,000 restricted stock units under the Gramercy Property Trust Inc. 2012 Inducement Equity Plan, which are subject
to vesting over five years pursuant to the terms described in the “Executive Compensation - Compensation Discussion and Analysis
- Changes to Our Compensation Program in 2012.” Under the agreement, we are also obligated to maintain a life insurance policy
for the benefit of Mr. DuGan's beneficiaries in the face amount of $5,000,000, or if not available at reasonable rates, to self-insure
Mr. DuGan up to the maximum cash severance payable under the agreement. If Mr. DuGan is terminated for any reason, under the agreement
he will be subject to the following obligations: (i) noncompetition with us for 18 months (or 12 months if his employment is terminated
due to a non-renewal of the term of employment by us, or six months if (A) his employment is terminated by us without Cause (as
defined in Mr. DuGan's employment agreement) for Good Reason (as defined in Mr. DuGan's employment agreement) by Mr. DuGan after
a Change-in-Control (as defined in Mr. DuGan's employment agreement) or (B) Mr. DuGan's employment is terminated upon or after
the expiration of the one-year renewal term); (ii) non-solicitation of our employees for two-years; and (iii) non-disparagement
of us and non-interference with our business for one year. The employment agreement also provides for the following payments and
benefits to Mr. DuGan in connection with the termination of his employment with us:



26







| | • | Termination
without Cause or with Good Reason.  If Mr. DuGan's employment is terminated by us without Cause or by Mr. DuGan
with Good Reason, Mr. DuGan will receive the following payments and benefits. Mr. DuGan will receive a cash severance payment
equal to two multiplied by the sum of (i) his average annual base salary in effect during the preceding 24 months (his “Prior
Salary”), plus (ii) the highest annual cash bonus paid to Mr. DuGan during the three fiscal years prior to the date of termination
(including any equity awarded as bonus) or, if the 2013 bonus has not yet been determined, $200,000 (his “Prior Bonus”),
which amount shall be payable in 24 equal monthly installments; provided that, if Mr. DuGan is terminated by us without Cause
by the non-renewal of the one year extension term, then Mr. DuGan shall instead receive the sum of his Prior Salary and his Prior
Bonus as opposed to two times such amount. Mr. DuGan will also receive any unpaid amount of his signing bonus and, if the termination
occurs in 2013 or a later year, we will pay to Mr. DuGan a prorated annual performance bonus based on his Prior Bonus (his “Prorated
Annual Bonus”) for the year in which Mr. DuGan's employment is terminated (and the prior year if such bonus had not yet
been determined). Mr. DuGan will also receive a monthly cash payment for 24 months equal to the monthly cash payment that we would
have paid to provide health insurance for Mr. DuGan. Mr. DuGan's unvested equity awards will be treated as follows: (i) all unvested
equity awards (other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any other
performance-based equity award) that would have otherwise vested within 24 months of Mr. DuGan's termination will vest, provided
that if such termination is in connection with or within 18 months following a Change-in-Control, then all such awards shall vest;
(ii) if Mr. DuGan is terminated prior to any Change-in-Control, then unvested RSUs in an amount equal to 40% of the initial RSU
grant will vest; and (iii) if Mr. DuGan is terminated on or after a Change-in-Control, then unvested RSUs will be treated pursuant
to clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs as of the Change-in-Control.
Mr. DuGan's receipt of these payments and benefits in connection with a termination without Cause or for Good Reason is subject
to his execution of a general release of claims with our company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Termination upon Death.  If Mr. DuGan's employment is terminated upon his death, Mr. DuGan's estate will receive
(i) any unpaid amount of his signing bonus, (ii) if the termination date occurs during 2013 or a later year, his Prorated Annual
Bonus for the year in which Mr. DuGan's employment is terminated (and the prior year if such bonus had not yet been determined).
In addition, in the event of such a termination, Mr. DuGan's unvested equity awards will be treated as follows: (i) all unvested
equity awards (other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any other
performance-based equity award) that would have otherwise vested within 12 months of the termination date will vest; (ii) if the
termination date occurs prior to any Change-in-Control, then unvested RSUs in an amount equal to 20% of the initial RSU grant
will vest; and (iii) if the termination date occurs on or after a Change-in-Control, then unvested RSUs will be treated pursuant
to clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs as of the Change-in-Control.
Notwithstanding the foregoing, Mr. DuGan's estate will only be entitled to receive such payments and benefits to the extent that
their aggregate value together with the value of any other accelerated vesting of equity awards granted by our company exceeds
the amount payable to Mr. DuGan's beneficiaries under the life insurance policy, or self-insurance, maintained by us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



| | • | Termination
upon Disability.  If Mr. DuGan's employment is terminated by us due to Mr. DuGan's disability, Mr. DuGan will receive
(i) a cash severance payment equal to the sum of his Prior Salary and his Prior Bonus, which will be payable in 24 equal monthly
installments, (ii) any unpaid amount of his signing bonus, (iii) if the termination date occurs during 2013 or a later year, his
Prorated Annual Bonus for the year in which Mr. DuGan's employment is terminated provided that the Prorated Annual Bonus shall
be less the amount of any annual bonus, or advance thereof, previously paid for the applicable period, and (iv) a monthly cash
payment for 12 months equal to the monthly cash payment that we would have paid to provide health insurance for Mr. DuGan. In
addition, in the event of such a termination, Mr. DuGan's unvested equity awards will be treated as follows: (i) all unvested
equity awards (other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any other
performance-based equity award) that would have otherwise vested within 12 months of Mr. DuGan's termination will vest; (ii) if
Mr. DuGan is terminated prior to any Change-in-Control, then unvested RSUs in an amount equal to 20% of the initial RSU grant
will vest; and (iii) if Mr. DuGan is terminated on or after a Change-in-Control, then unvested RSUs will be treated pursuant to
clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs as of the Change-in-Control.
Mr. DuGan's receipt of these payments and benefits in connection with a termination upon disability is subject to his execution
of a general release of claims with us.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



To the extent necessary to avoid the imposition
of an additional tax under Section 409A of the Code, severance pay and benefits will be delayed until six months after termination,
or death, whichever is earlier, during which time the payments will accrue interest at the rate of 5% per annum.



27







If any payments and benefits to be paid or
provided to Mr. DuGan, whether under his employment agreement or otherwise, would be subject to “golden parachute”
excise taxes under the Code, Mr. DuGan's payments and benefits under his employment agreement will be reduced to the extent necessary
to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit to Mr.
DuGan.



The following table illustrates Mr. DuGan's
potential payment and other benefits upon termination of his employment or Change-in-Control of us.



|Gordon F. DuGan                   |  | Base Salary |           |  | Bonus |   |         | Medical and Welfare Benefits |  |   | AcceleratedEquity (1) |  |  | Total |        
|--------------------------------- |  | ----------- | --------- |  | ----- | - | ------- | ---------------------------- |  | - | --------------------- |  |  | ----- | -------
|With Cause or Without Good Reason |  |             | —         |  |       |   | —       |                              |  |   | —                     |  |  |       | —      
|Without Cause or with Good Reason |  | $           | 1,500,000 |  |       | $ | 400,000 |                              |  | $ | 36,842                |  |  | $     | 294,000
|Death                             |  |             | —         |  |       | $ | 200,000 |                              |  |   | —                     |  |  | $     | 147,000
|Disability                        |  | $           | 1,500,000 |  |       | $ | 200,000 |                              |  | $ | 18,421                |  |  | $     | 147,000
|Without Cause or with Good Reason |  | $           | 1,500,000 |  |       | $ | 400,000 |                              |  | $ | 36,842                |  |  | $     | 735,000
|Following Change-in-Control       |  |             |           |  |       |   |         |                              |  |   |                       |  |  |       |        



| | (1) | Upon
a hypothetical termination on December 31, 2012,Mr. DuGan would have been entitled to (i) all unvested equity awards (other than
the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any other performance-based equity award)
that would have otherwise vested within 24 months of Mr. DuGan's termination will vest, provided that if such termination is in
connection with or within 18 months following a Change-in-Control, then all such awards shall vest; (ii) if Mr. DuGan is terminated
prior to any Change-in-Control, then unvested RSUs in an amount equal to 40% of the initial RSU grant will vest; and (iii) if
Mr. DuGan is terminated on or after a Change-in-Control, then unvested RSUs will be treated pursuant to clause (i) after giving
effect to the measurement of performance-based hurdles under the terms of the RSUs as of the Change-in-Control. Accordingly, Mr.
DuGan's accelerated equity value includes the assumed acceleration of 100,000 shares of time-based restricted stock.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Benjamin P. Harris.  Mr.
Harris’ employment agreement has a term commencing on July 1, 2012 and ending on June 30, 2017, with an automatic renewal
for a single one-year period unless either party delivers three months' prior written notice of non-renewal under the agreement.
The agreement provides for an annual salary of no less than $600,000, and such discretionary annual bonuses as we, in our sole
discretion, may deem appropriate to reward Mr. Harris for job performance. Mr. Harris will also receive a one-time signing bonus
of $150,000, of which $75,000 was paid on July 1, 2012 and the remainder will be payable in three equal installments on June 13,
2013, June 13, 2014 and June 13, 2015; provided that Mr. Harris remains employed by our company on each such date. Pursuant to
the agreement, Mr. Harris was also granted 150,000 of restricted stock and 450,000 restricted stock units under the Gramercy Property
Trust Inc. 2012 Inducement Equity Plan, which are subject to vesting over five years pursuant to the terms described under “Executive
Compensation - Compensation Discussion and Analysis - Changes to Our Compensation Program in 2012.”



If Mr. Harris’ employment is terminated
for any reason, under the agreement he will be subject to the following continuing obligations after termination: (i) noncompetition
with us for 12 months (6 months if (A) employment is terminated without Cause by us or any successor or for Good Reason by Mr.
Harris or (B) Mr. Harris’ employment is terminated upon or after the expiration of the one-year renewal term); (ii) nonsolicitation
of our employees for two-years; and (iii) non-disparagement of us and non-interference with our business for one year. The employment
agreement also provides for the following payments and benefits to Mr. Harris in connection with the termination of his employment
with us:



| | • | Termination
without Cause or with Good Reason.  If Mr. Harris’ employment is terminated by us without Cause or by Mr.
Harris with Good Reason, Mr. Harris will receive the following payments and benefits. Mr. Harris will receive a cash severance
payment equal to the sum (or, if such termination occurs in connection with or within 18 months of a Change-in-Control, 1.5 times
the sum) of (i) his average annual base salary in effect during the preceding 24 months (his “Prior
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



28







Salary”), plus (ii) the highest annual cash bonus paid
to Mr. Harris during the three fiscal years prior to the date of termination (including any equity awarded as bonus) or, if the
2013 bonus has not yet been determined, $75,000 (his “Prior Bonus”), which amount shall be payable in 12 equal monthly
installments. Mr. Harris will also receive any unpaid amount of his signing bonus and, if the termination occurs in 2013 or a later
year, we will pay to Mr. Harris his Prorated Annual Bonus for the year in which Mr. Harris’ employment is terminated (and
the prior year if such bonus had not yet been determined). Mr. Harris will also receive a monthly cash payment for 12 months equal
to the monthly cash payment that we would have paid to provide health insurance for Mr. Harris. Mr. Harris’ unvested equity
awards will be treated as follows: (i) all unvested equity awards (other than the awards of LTIP Units under the 2012 Outperformance
Plan and RSUs referenced above and any other performance-based equity award) that would have otherwise vested within 12 months
of Mr. Harris’ termination will vest, provided that if such termination is in connection with or within 18 months following
a Change-in-Control, then all such awards shall vest; (ii) if Mr. Harris is terminated prior to any Change-in-Control, then unvested
RSUs in an amount equal to 20% of the initial RSU grant will vest; and (iii) if Mr. Harris is terminated on or after a Change-in-Control,
then unvested RSUs will be treated pursuant to clause (i) after giving effect to the measurement of performance-based hurdles under
the terms of the RSUs as of the Change-in-Control. Mr. Harris’ receipt of these payments and benefits in connection with
a termination without Cause or for Good Reason is subject to his execution of a general release of claims with our company.



| | • | Termination
upon Death.  If Mr. Harris’ employment is terminated upon his death, Mr. Harris’ estate will receive
(i) any unpaid amount of his signing bonus, (ii) if the termination date occurs during 2013 or a later year, his Prorated Annual
Bonus for the year in which Mr. Harris’ employment is terminated (and the prior year if such bonus had not yet been determined).
In addition, in the event of such a termination, Mr. Harris’ unvested equity awards will be treated as follows: (i) all
unvested equity awards (other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any
other performance-based equity award) that would have otherwise vested within 12 months of the termination date will vest; (ii)
if the termination date occurs prior to any Change-in-Control, then unvested RSUs in an amount equal to 20% of the initial RSU
grant will vest; and (iii) if the termination date occurs on or after a Change-in-Control, then unvested RSUs will be treated
pursuant to clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs as of the
Change-in-Control.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
upon Disability.  If Mr. Harris’ employment is terminated by us due to Mr. Harris’ disability, Mr. Harris
will receive (i) a cash severance payment equal to the sum of his Prior Salary and his Prior Bonus, which will be payable in 12
equal monthly installments, (ii) any unpaid amount of his signing bonus, (iii) if the termination date occurs during 2013 or a
later year, his Prorated Annual Bonus for the year in which Mr. Harris’ employment is terminated provided that the Prorated
Annual Bonus shall be less the amount of any annual bonus, or advance thereof, previously paid for the applicable period, and
(iv) a monthly cash payment for 12 months equal to the monthly cash payment that we would have paid to provide health insurance
for Mr. Harris. In addition, in the event of such a termination, Mr. Harris’ unvested equity awards will be treated as follows:
(i) all unvested equity awards (other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above
and any other performance-based equity award) that would have otherwise vested within 12 months of Mr. Harris’ termination
will vest; (ii) if Mr. Harris is terminated prior to any Change-in-Control, then unvested RSUs in an amount equal to 20% of the
initial RSU grant will vest; and (iii) if Mr. Harris is terminated on or after a Change-in-Control, then unvested RSUs will be
treated pursuant to clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs
as of the Change-in-Control. Mr. Harris’ receipt of these payments and benefits in connection with a termination upon disability
is subject to his execution of a general release of claims with us.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



To the extent necessary to avoid the imposition
of an additional tax under Section 409A of the Code, severance pay and benefits will be delayed until six months after termination,
or death, whichever is earlier, during which time the payments will accrue interest at the rate of 5% per annum.



If any payments and benefits to be paid or
provided to Mr. Harris, whether under his employment agreement or otherwise, would be subject to “golden parachute”
excise taxes under the Code, Mr. Harris’ payments and benefits under his employment agreement will be reduced to the extent
necessary to avoid such excise taxes, but only if such a reduction of pay or benefits would result in a greater after-tax benefit
to Mr. Harris.



29







The
following table illustrates Mr. Harris’ potential payment and other benefits upon termination of his employment or Change-in-Control
of our company under his employment agreement.



|Benjamin P. Harris                |  | Base Salary |         |  | Bonus |   |         | Medical and Welfare Benefits |  |   | AcceleratedEquity (1) |  |  | Total |        
|--------------------------------- |  | ----------- | ------- |  | ----- | - | ------- | ---------------------------- |  | - | --------------------- |  |  | ----- | -------
|With Cause or Without Good Reason |  |             | —       |  |       |   | —       |                              |  |   | —                     |  |  |       | —      
|Without Cause or with Good Reason |  | $           | 900,000 |  |       | $ | 112,500 |                              |  | $ | 18,421                |  |  | $     | 88,200 
|Death                             |  |             | —       |  |       | $ | 75,000  |                              |  |   | —                     |  |  | $     | 88,200 
|Disability                        |  | $           | 600,000 |  |       | $ | 75,000  |                              |  | $ | 18,421                |  |  | $     | 88,200 
|Without Cause or with Good Reason |  | $           | 900,000 |  |       | $ | 112,500 |                              |  | $ | 18,421                |  |  | $     | 441,000
|Following Change-in-Control       |  |             |         |  |       |   |         |                              |  |   |                       |  |  |       |        



| | (1) | Upon
a hypothetical termination on December 31, 2012,  Mr. Harris would have been entitled to (i) all unvested equity awards
(other than the awards of LTIP Units under the 2012 Outperformance Plan and RSUs referenced above and any other performance-based
equity award) that would have otherwise vested within 12 months of Mr. Harris’ termination will vest, provided that if such
termination is in connection with or within 18 months following a Change-in-Control, then all such awards shall vest; (ii) if
Mr. Harris is terminated prior to any Change-in-Control, then unvested RSUs in an amount equal to 20% of the initial RSU grant
will vest; and (iii) if Mr. Harris is terminated on or after a Change-in-Control, then unvested RSUs will be treated pursuant
to clause (i) after giving effect to the measurement of performance-based hurdles under the terms of the RSUs as of the Change-in-Control.
Accordingly, Mr. Harris’ accelerated equity value includes the assumed acceleration of 30,000 shares of time-based restricted
stock.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Jon W. Clark.  Mr. Clark's
employment agreement, as amended, has a term commencing on April 24, 2009 and ending on April 30, 2014, which will automatically
renew for successive one-year periods unless either party serves the required notice under the agreement. The agreement provides
for an annual salary of $275,000 and such discretionary annual bonuses as we, in our sole discretion, may deem appropriate to reward
Mr. Clark for job performance. The target annual bonus for 2012 and 2013 is at least $300,000. Mr. Clark is also entitled to a
monthly car allowance of $750. If Mr. Clark is terminated for any reason prior to April 30, 2014, under the agreement he will be
subject to the following obligations: (i) noncompetition with us for six months (or three months if his employment is terminated
due to a non-renewal of the term of employment by us or for Cause (as defined in Mr. Clark's employment agreement) not related
to our business or if Mr. Clark terminates his employment after the payment of a discretionary bonus for any year in an amount
less than $200,000); (ii) non-solicitation of our employees for two-years; and (iii) non-disparagement of us and non-interference
with our business for one year. The employment agreement also provides for the following payments and benefits to Mr. Clark in
connection with the termination of his employment with us:



| | • | Termination
with Cause or without Good Reason.  If Mr. Clark's employment is terminated by us with Cause or by Mr. Clark without
Good Reason (as defined in Mr. Clark's employment agreement), Mr. Clark shall be entitled to receive earned and accrued but unpaid
base salary, but we shall have no further obligations following such termination.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
without Cause or with Good Reason.  If Mr. Clark's employment is terminated by us without Cause or by Mr. Clark
for Good Reason, Mr. Clark will receive (i) earned and accrued but unpaid base salary, (ii) annual base salary for a period of
six months following termination and (iii) a prorated annual bonus and an additional 6-month performance bonus, subject to certain
formula. Mr. Clark will continue to receive his medical and welfare benefits for six months, and all of his unvested and unexercisable
restricted stock, options or other equity-based awards that were granted as payment of a cash bonus, will fully vest or become
exercisable on the date of termination. Mr. Clark will also have 12 months of additional vesting for his outstanding restricted
stock, options or other equity-based awards and any then vested unexercised stock options will remain exercisable until the earlier
of the expiration of their term or the second January 1 following the termination date. If such termination occurs in connection
with or within 18 months after a Change-in-Control (as defined in Mr. Clark's employment agreement), then Mr. Clark will be entitled
to (i) a single lump-sum payment of an amount equal to (a) 12 months of annual base salary and (b) a prorated annual bonus and
an additional 12-month performance bonus, subject to certain formula, and (ii) the other payments and benefits described above
for a period of 12 months following termination
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
upon Death.  If Mr. Clark's employment is terminated by us upon his death, his estate will receive (i) earned and
accrued but unpaid base salary, (ii) any earned and accrued by unpaid base salary and (iii) a prorated annual bonus, subject to
certain conditions. In addition, all of Mr. Clark's unvested and unexercisable restricted stock, options or other equity-based
awards that were granted as payment of a cash bonus will fully vest or become exercisable on the date of termination and he will
be entitled to 12 months of additional vesting of his outstanding restricted stock, options or other equity-based awards and any
then vested unexercised stock options will remain exercisable until the earlier of the expiration of their term or the second
January 1 following the termination date.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30







| | • | Termination
upon Disability.  If Mr. Clark's employment is terminated by us upon his Disability (as defined in Mr. Clark's employment
agreement), Mr. Clark will receive (i) annual base salary for a period of six months following termination and (ii) a prorated
annual bonus and an additional six-month performance bonus, subject to certain conditions. Mr. Clark will continue to receive
his medical and welfare benefits for six months, and all of his unvested and unexercisable restricted stock, options or other
equity-based awards that were granted as payment of a cash bonus, will fully vest or become exercisable on the date of termination.
Mr. Clark will also have 12 months of additional vesting for his outstanding restricted stock, options or other equity-based awards
and any then vested unexercised stock options will remain exercisable until the earlier of the expiration of their term or the
second January 1 following the termination date.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table illustrates Mr. Clark's
potential payments and other benefits upon termination of employment or Change-in-Control of our company under his employment agreement.



|Jon W. Clark                      |  | Base Salary |         |  | Bonus |   |         | Medical and Welfare Benefits |  |   | AcceleratedEquity (1) |  |  | Total |  
|--------------------------------- |  | ----------- | ------- |  | ----- | - | ------- | ---------------------------- |  | - | --------------------- |  |  | ----- | -
|With Cause or Without Good Reason |  |             | —       |  |       |   | —       |                              |  |   | —                     |  |  |       | —
|Without Cause or with Good Reason |  | $           | 137,500 |  |       | $ | 150,000 |                              |  | $ | 9,685                 |  |  | $     | —
|Death                             |  |             | —       |  |       | $ | 150,000 |                              |  |   | —                     |  |  | $     | —
|Disability                        |  | $           | 137,500 |  |       | $ | 150,000 |                              |  | $ | 9,685                 |  |  | $     | —
|Without Cause or with Good Reason |  | $           | 275,000 |  |       | $ | 300,000 |                              |  | $ | 19,370                |  |  | $     | —
|Following Change-in-Control       |  |             |         |  |       |   |         |                              |  |   |                       |  |  |       |  



| | (1) | Upon
a hypothetical termination on December 31, 2012, Mr. Clark would have been entitled to 12 months of additional vesting of any
outstanding time-based restricted stock.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employment and Severance Agreements
of Former Named Executive Officers



Michael G. Kavourias.  Mr.
Kavourias' retention agreement, as amended, had a term commencing on July 28, 2011 and ended on December 31, 2012. Mr. Kavourias’
term of employment as our Executive Vice President, Chief Legal Officer and Secretary ended on March 31, 2013. The retention agreement
provided for an annual salary of $385,000 per year during the term of the agreement, a guaranteed 2012 performance bonus in an
amount determined by us in our sole discretion but in no event less than $750,000, provided Mr. Kavourias had not terminated his
employment with us and we had not terminated his employment for Cause (as defined in Mr. Kavourias’ employment agreement),
and an additional $100,000 bonus if a sale or other transfer by us of (i) all (or all but one) of the collateral management agreements
and/or special servicing agreements (or our rights thereunder) with respect to the assets owned by our indirect subsidiaries that
have issued CDO bonds that were outstanding as of June 12, 2012 or (ii) all or substantially all of their interests in (or the
underlying assets of) all (or all but one) of such entities was consummated with the assistance of Mr. Kavourias on or before December
31, 2012. Mr. Kavourias received a one-time signing bonus of $100,000, paid on December 31, 2012. Pursuant to the retention agreement,
Mr. Kavourias was subject to non-competition for the term of the agreement, and continues to be subject to non-solicitation during
his employment and for the two-year period following the termination of his employment with us, for any reason. Pursuant to the
amendment to the retention agreement, Mr. Kavourias agreed to the elimination of the severance obligations previously contained
in his retention agreement, and we agreed to accelerate the vesting of 100,000 shares of restricted stock previously granted to
Mr. Kavourias that were otherwise scheduled to vest in equal installments in July 2012 and 2013.



Roger M. Cozzi.  Mr. Cozzi's
employment agreement had a term that commenced on October 28, 2008 and ended on June 30, 2012. The agreement provided for an annual
salary of $500,000 and such discretionary annual bonuses as we, in our sole discretion, deemed appropriate to reward Mr. Cozzi
for job performance. The annual bonus for 2011 was $1.3 million, paid in a lump sum on or prior to December 31, 2011, and for the
period from January 1, 2012 through June 30, 2012 was $650,000, paid within 30-days following June 30, 2012. Under the agreement,
we were obligated to maintain a life insurance policy for the benefit of Mr. Cozzi's beneficiaries in the face amount of $5 million,
or if not available at reasonable rates, to self-insure Mr. Cozzi up to the maximum cash severance payable under the agreement.
Under the agreement, if Mr. Cozzi was terminated for any reason prior to June 30, 2012, he would be subject to the following obligations:
(i) noncompetition with us for one year (or three months if his employment was terminated due to a non-renewal of the term of employment
by us or terminated for Cause (as defined in Mr. Cozzi's employment agreement) not related to our business, or six months if Mr.
Cozzi terminated his employment after the payment of a discretionary bonus for any year in an amount less than $800,000); (ii)
non-solicitation of our employees for two-years; and (iii) non-disparagement of us and non-interference with our business for one
year. The employment agreement also provided for the following payments and benefits to Mr. Cozzi in connection with the termination
of his employment with us:



31







| | • | Termination
with Cause or without Good Reason.  If Mr. Cozzi's employment was terminated by us with “Cause” or by
Mr. Cozzi without Good Reason (as defined in Mr. Cozzi's employment agreement), Mr. Cozzi was entitled to receive earned and accrued
but unpaid base salary, but we would not have any further obligations following such termination.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
without Cause or with Good Reason.  If Mr. Cozzi's employment was terminated by us without “Cause” or
by Mr. Cozzi for Good Reason, Mr. Cozzi would receive (i) annual base salary for a period of 12 months following termination and
(ii) a prorated annual bonus and an additional 12-month performance bonus, subject to certain formula. Under the agreement, Mr.
Cozzi would continue to receive his medical and welfare benefits for 12 months, and all of his unvested and unexercisable restricted
stock, options or other equity-based awards that were granted as payment of a cash bonus would fully vest or become exercisable
on the date of termination. Under the agreement, Mr. Cozzi would also have had 12 months of additional vesting for his outstanding
restricted stock, options or other equity-based awards and any then vested unexercised stock options would have remained exercisable
until the earlier of the expiration of their term or the second January 1 following the termination date. If such termination
occurred in connection with or within 18 months after a Change-in-Control (as defined in Mr. Cozzi's employment agreement), then
Mr. Cozzi would have been entitled to (i) a single lump-sum payment of an amount equal to (a) 24 months of annual base salary
and (b) a prorated bonus annual bonus and an additional 24-month performance bonus, subject to certain formula, and (ii) the other
payments and benefits described above for a period of 24 months following termination.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
upon Death.  If Mr. Cozzi's employment was terminated by us upon his death, his estate would receive (i) annual
base salary for a period of 12 months following termination and (ii) a prorated annual bonus, subject to certain conditions. In
addition, all of Mr. Cozzi's unvested and unexercisable restricted stock, options or other equity-based awards that were granted
as payment of a cash bonus would fully vest or become exercisable on the date of termination and he would be entitled to 12 months
of additional vesting of his outstanding restricted stock, options or other equity-based awards and any then vested unexercised
stock options would remain exercisable until the earlier of the expiration of their term or the second January 1 following the
termination date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | Termination upon Disability.  If
                                                               Mr. Cozzi's employment was terminated by us upon his Disability
                                                               (as defined in Mr. Cozzi's employment agreement), Mr. Cozzi would
                                                               have received (i) annual base salary for a period of 12 months
                                                               following termination and (ii) a prorated annual bonus and an additional
                                                               12-month performance bonus, subject to certain conditions. Under
                                                               the agreement, Mr. Cozzi would have continued to receive his medical
                                                               and welfare benefits for 12 months, and all of his unvested and
                                                               unexercisable restricted stock, options or other equity-based awards
                                                               that were granted as payment of a cash bonus, would fully vest
                                                               or become exercisable on the date of termination. Under the agreement,
                                                               Mr. Cozzi would also have had 12 months of additional vesting for
                                                               his outstanding restricted stock, options or other equity-based
                                                               awards and any then vested unexercised stock options would have
                                                               remained exercisable until the earlier of the expiration of their
                                                               term or the second January 1 following the termination date.



The following table illustrates Mr. Cozzi's
potential payment and other benefits upon termination of his employment or Change-in-Control of us under his employment agreement.



|Roger M. Cozzi                    |  | Base Salary |           |  | Bonus |   |           | Medical and Welfare Benefits |  |   | AcceleratedEquity (1) |  |  | Total |  
|--------------------------------- |  | ----------- | --------- |  | ----- | - | --------- | ---------------------------- |  | - | --------------------- |  |  | ----- | -
|With Cause or Without Good Reason |  |             | —         |  |       |   | —         |                              |  |   | —                     |  |  |       | —
|Without Cause or with Good Reason |  | $           | 500,000   |  |       | $ | 1,300,000 |                              |  | $ | 17,712                |  |  | $     | —
|Death                             |  |             | —         |  |       | $ | 1,300,000 |                              |  |   | —                     |  |  | $     | —
|Disability                        |  | $           | 500,000   |  |       | $ | 1,300,000 |                              |  | $ | 17,712                |  |  | $     | —
|Without Cause or with Good Reason |  | $           | 1,000,000 |  |       | $ | 2,600,000 |                              |  | $ | 35,424                |  |  | $     | —
|Following Change-in-Control       |  |             |           |  |       |   |           |                              |  |   |                       |  |  |       |  



32







| | (1) | Upon
a hypothetical termination on December 31, 2012,had his employment agreement been on effect on December 31, 2012, Mr. Cozzi would
have been entitled to 12 months of additional vesting of any outstanding time-based restricted stock, stock option awards or LTIP
awards.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Mr. Cozzi entered into a severance agreement
with us pursuant to which he would have been entitled to receive certain benefits upon the termination of his employment with us.
The severance agreement, as amended on July 28, 2011, provided for a term that terminated on June 30, 2012. Pursuant to the severance
agreement, if Mr. Cozzi's employment with us terminated by us without Cause (as defined in Mr. Cozzi's employment agreement) or
by Mr. Cozzi with Good Reason (as defined in Mr. Cozzi's employment agreement), Mr. Cozzi would have been credited with 12 months
of additional vesting under all equity awards granted to him by us, other than the LTIP Units granted in connection with the severance
agreement. In addition, if Mr. Cozzi's employment with us was terminated due to his death or Disability (as defined in Mr. Cozzi's
employment agreement), he would have been credited with 12 months of additional vesting under all equity awards granted to him
by us, other than the LTIP Units granted in connection with the severance agreement. However, if Mr. Cozzi was terminated by us
for “Cause” or if he voluntarily terminated his employment with us without “Good Reason”, all of the equity
awards previously granted to him that have not yet vested, including restricted stock and options to purchase our common stock,
would be forfeited.



On June 12, 2012, we entered into a separation
and release agreement with Mr. Cozzi. Under the separation and release agreement, we paid Mr. Cozzi severance pay consisting of
a lump sum of $30,000, less tax-related deductions and withholdings. Additionally, we agreed to reimburse Mr. Cozzi for reasonable
legal expenses he incurs in connection with the negotiation of the separation and release agreement up to a limit of $4,000, and
for health care premiums through the earliest of (i) September 30, 2012, (ii) the date on which Mr. Cozzi receives health coverage
through other employment, or (iii) the end of Mr. Cozzi's eligibility under COBRA for continuation coverage. Pursuant to the separation
and release agreement, we agreed that Mr. Cozzi, as of the date of the termination of his employment, will no longer be bound by
the sections of his employment agreement relating to noncompetition and investment limitations. Mr. Cozzi and the company provided
each other with a mutual general release of claims.



Timothy J. O'Connor.  Mr.
O'Connor's employment agreement had a term commencing on November 13, 2008 and ended on June 30, 2012. The agreement provided for
an annual salary of $400,000 and such discretionary annual bonuses as we, in our sole discretion, deemed appropriate to reward
Mr. O'Connor for job performance. The annual bonus for 2011 was $575,000, paid in a lump sum on or prior to December 31, 2011,
and for the period from January 1, 2012 through June 30, 2012 was $287,500, paid within 30-days following June 30, 2012. Under
the agreement, if Mr. O'Connor was terminated for any reason prior to June 30, 2012, he would be subject to the following obligations:
(i) noncompetition with us for one year (or three months if his employment was terminated due to a non-renewal of the term of employment
by us or terminated for Cause (as defined in Mr. O'Connor's employment agreement) not related to our business, or six months if
Mr. O'Connor terminated his employment after the payment of a discretionary bonus for any year in an amount less than $500,000);
(ii) non-solicitation of our employees for two-years; and (iii) non-disparagement of us and non-interference with our business
for one year. The employment agreement also provided for the following payments and benefits to Mr. O'Connor in connection with
the termination of his employment with us:



| | • | Termination
with Cause or without Good Reason.  If Mr. O'Connor's employment was terminated by us with “Cause” or
by Mr. O'Connor without Good Reason (as defined in Mr. O'Connor's employment agreement), Mr. O'Connor was entitled to receive
earned and accrued but unpaid base salary, but we would not have any further obligations following such termination.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
without Cause or with Good Reason.  If Mr. O'Connor's employment was terminated by us without “Cause”
or by Mr. O'Connor for Good Reason, Mr. O'Connor would receive (i) annual base salary for a period of 12 months following termination
and (ii) a prorated annual bonus and an additional 12-month performance bonus, subject to certain formula. Mr. O'Connor would
continue to receive his medical and welfare benefits for 12 months, and all of his unvested and unexercisable restricted stock,
options or other equity-based awards that were granted as payment of a cash bonus, would fully vest or become exercisable on the
date of termination. Mr. O'Connor would also have had 12 months of additional vesting for his outstanding restricted stock, option
or other equity-based awards and any then vested unexercised stock options would have remained exercisable until the earlier of
the expiration of their term or the second January 1 following the termination date. If such termination occurred in connection
with or within 18 months after a Change-in-Control (as defined in Mr. O'Connor's employment agreement), then Mr. O'Connor would
have been entitled to (i) a single lump-sum payment of an amount equal to (a) 24 months of annual base salary and (b) a prorated
bonus annual bonus and an additional 24-month performance bonus, subject to certain formula, and (ii) the other payments and benefits
described above for a period of 24 months following termination.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33







| | • | Termination
upon Death.  If Mr. O'Connor's employment was terminated by us upon his death, his estate would have received (i)
annual base salary for a period of 12 months following termination and (ii) a prorated annual bonus, subject to certain conditions.
In addition, all of Mr. O'Connor's unvested and unexercisable restricted stock, options or other equity-based awards that were
granted as payment of a cash bonus would fully vest or become exercisable on the date of termination and he would be entitled
to 12 months of additional vesting of his outstanding restricted stock, options or other equity-based awards and any then vested
unexercised stock options would remain exercisable until the earlier of the expiration of their term or the second January 1 following
the termination date.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Termination
upon Disability.  If Mr. O'Connor's employment was terminated by us upon his Disability (as defined in Mr. O'Connor's
employment agreement), Mr. O'Connor would have received (i) annual base salary for a period of 12 months following termination
and (ii) a prorated annual bonus and an additional 12-month performance bonus, subject to certain conditions. Mr. O'Connor would
have continued to receive his medical and welfare benefits for 12 months, and all of his unvested and unexercisable restricted
stock, options or other equity-based awards that were granted as payment of a cash bonus, would fully vest or become exercisable
on the date of termination. Mr. O'Connor would also have had 12 months of additional vesting for his outstanding restricted stock,
options or other equity-based awards and any then vested unexercised stock options would have remained exercisable until the earlier
of the expiration of their term or the second January 1 following the termination date.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table illustrates Mr. O'Connor's
potential payments and other benefits upon termination of his employment or Change-in-Control of us under his employment agreement.



|Timothy J. O'Connor               |  | Base Salary |         |  | Bonus |   |           | Medical and Welfare Benefits |  |   | AcceleratedEquity (1) |  |  | Total |  
|--------------------------------- |  | ----------- | ------- |  | ----- | - | --------- | ---------------------------- |  | - | --------------------- |  |  | ----- | -
|With Cause or Without Good Reason |  |             | —       |  |       |   | —         |                              |  |   | —                     |  |  |       | —
|Without Cause or with Good Reason |  | $           | 400,000 |  |       | $ | 575,000   |                              |  | $ | 17,712                |  |  | $     | —
|Death                             |  |             | —       |  |       | $ | 575,000   |                              |  |   | —                     |  |  | $     | —
|Disability                        |  | $           | 400,000 |  |       | $ | 575,000   |                              |  | $ | 17,712                |  |  | $     | —
|Without Cause or with Good Reason |  | $           | 800,000 |  |       | $ | 1,150,000 |                              |  | $ | 35,424                |  |  | $     | —
|Following Change-in-Control       |  |             |         |  |       |   |           |                              |  |   |                       |  |  |       |  



| | (1) | Upon
a hypothetical termination on December 31, 2012, had his employment agreement been in effect on December 31, 2012, Mr. O'Connor
would have been entitled to 12 months of additional vesting of any outstanding time-based restricted stock, stock option awards
or LTIP awards.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Mr. O'Connor entered into a severance agreement
with us pursuant to which he would have been entitled to receive certain benefits upon the termination of his employment with us.
The severance agreement, as amended on July 28, 2011, provided for a term that terminated on June 30, 2012. Pursuant to the severance
agreement, if Mr. O'Connor's employment with us was terminated by us without Cause (as defined in Mr. O'Connor's employment agreement)
or by Mr. O'Connor with Good Reason (as defined in Mr. O'Connor's employment agreement), Mr. O'Connor would have been credited
with 12 months of additional vesting under all equity awards granted to him by us, other than the LTIP Units granted in connection
with the severance agreement. In addition, if Mr. O'Connor's employment with us was terminated due to his death or Disability (as
defined in Mr. O'Connor's employment agreement), he would have been credited with 12 months of additional vesting under all equity
awards granted to him by us, other than the LTIP Units granted in connection with the severance agreement. However, if Mr. O'Connor
was terminated by us for “Cause” or if he voluntarily terminated his employment with us without “Good Reason”,
all of the equity awards previously granted to him that have not yet vested, including restricted stock and options to purchase
our common stock, would be forfeited.



34







On June 12, 2012, we entered into a transition
agreement with Mr. O'Connor pursuant to which Mr. O'Connor agreed to continue to serve as our President from June 30, 2012, which
was the end of his current term of employment with us, through July 31, 2012 and thereafter to serve as a full-time Consultant
for an additional three months to assist with transitional matters. Pursuant to the transition agreement, Mr. O'Connor stepped
down as our President effective as of July 31, 2012. Pursuant to the transition agreement, the term of Mr. O'Connor's existing
employment agreement with us was extended through July 31, 2012 and Mr. O'Connor agreed to serve as a full-time Consultant for
three months thereafter. During this additional four-month period, Mr. O'Connor is entitled to receive base salary at the same
annual rate, a bonus of $287,500 payable over the four-month period and continued benefits. In the event that we terminate Mr.
O'Connor's employment as a Consultant without “Cause” during this period, we will continue to be obligated to make
all payments due under the transition agreement as if Mr. O'Connor had remained employed under the agreement. Under the transition
agreement, we also agreed that Mr. O'Connor's non-competition obligations under his existing employment agreement would not extend
beyond October 31, 2012 and the parties agreed to a mutual release of claims.



Compensation Committee Interlocks and Insider Participation



There are no Compensation
Committee interlocks and none of our employees participate on our Compensation Committee.



Director Compensation



The following table* sets forth information
regarding the compensation paid to, and the compensation expense we recognized with respect to, our non-executive directors during
the fiscal year ended December 31, 2012:



|Name                 |  | Fees Earnedor Paid inCash(1)($) |         |  | StockAwards(2)($) |   |       | OptionAwards(3)($) |  |   | All Other  Compensation ($) |  |  | Total ($) |  
|-------------------- |  | ------------------------------- | ------- |  | ----------------- | - | ----- | ------------------ |  | - | --------------------------- |  |  | --------- | -
|Allan J. Baum        |  | $                               | 343,500 |  |                   | $ | 3,750 |                    |  | $ | 5,800                       |  |  | $         | —
|Marc Holliday        |  | $                               | 208,500 |  |                   | $ | 3,750 |                    |  | $ | 5,800                       |  |  | $         | —
|Gregory F. Hughes(4) |  | $                               | —       |  |                   | $ | —     |                    |  | $ | —                           |  |  | $         | —
|Jeffrey E. Kelter    |  | $                               | 214,500 |  |                   | $ | 3,750 |                    |  | $ | 5,800                       |  |  | $         | —
|Paul J. Konigsberg   |  | $                               | 149,500 |  |                   | $ | 3,750 |                    |  | $ | 5,800                       |  |  | $         | —
|Charles S. Laven     |  | $                               | 153,500 |  |                   | $ | 3,750 |                    |  | $ | 5,800                       |  |  | $         | —
|William H. Lenehan   |  | $                               | 125,167 |  |                   | $ | —     |                    |  | $ | —                           |  |  | $         | —








| | * | The columns for “Non-Equity Incentive Plan Compensation”
and “Change in Pension Value and Nonqualified Deferred Compensation Earnings” have been omitted because they are not
applicable.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                          

| | (1) | Mr. Baum deferred $97,500 and each of Messrs. Kelter,
Konigsberg and Laven deferred $60,000 of his 2012 cash compensation pursuant to our Directors’ Deferral Program. Deferred
compensation is comprised of 50% of annual fees earned and is credited in the form of phantom stock units. Mr. Baum received 36,331
and each of Messrs. Baum, Kelter, Konigsberg and Laven received 22,601 phantom stock units, in connection with 2012 cash compensation
each elected to defer.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | (2) | Amounts shown do not reflect compensation actually received
by the named director. Instead, the amounts shown are the aggregate grant date fair value of stock awards issued to the director
as determined pursuant to Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 “Compensation
— Stock Compensation,” or FASB ASC Topic 718. The assumptions used to calculate the grant date value of such awards
for are set forth under Notes 2 and 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form
10-K for the year ended December 31, 2012. The shares of restricted stock held by each non-executive director as of December 31,
2012 were as follows: Mr. Baum — 161,060; Mr. Holliday — 131,964; Mr. Kelter — 156,341; Mr. Konigsberg —
73,587; Mr. Laven — 144,701 and Mr. Lenehan — 21,221.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | (3) | Amounts shown do not reflect compensation actually received
by the named director. Instead, the amounts shown are the aggregate grant date fair value of the option awards issued to the director
as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the grant date value of such awards are set forth
under Notes 2 and 12 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2012. The number of options held by to each non-executive director as of December 31, 2012 was as follows:
Mr. Baum — 35,806; Mr. Holliday — 35,806; Mr. Kelter — 5,000; and Mr. Laven — 35,806.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| | (4) | Mr. Hughes became a member of our Board of Directors
on December 13, 2012.
| | --- | --------------------------------------------------------------------------



35







During the fiscal year ended December 31,
2012, each non-executive director received a fee in the amount of $120,000. Each non-executive director also received $1,500 for
each meeting of our Board of Directors or a committee of our Board of Directors that he attended. The annual fees payable to our
non-executive directors are determined by our Compensation Committee. These fees are payable quarterly, half in cash and half in
stock, with each non-executive director having the option to elect to take stock in lieu of cash, up to the full amount or to elect
to defer all or part of the annual fee pursuant to our Directors’ Deferral Program, as described below. Any portion of the
annual fee that a non-executive director elects to receive or defer in stock is made under our 2004 Equity Incentive Plan.



Each non-executive director who served
as a chairman of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee received an additional
fee of $10,000, $7,500 and $5,000, respectively, which fees are payable in cash, unless such chairman elects to defer all or part
of such fees pursuant to our Directors’ Deferral Program. In addition, under our 2004 Equity Incentive Plan, each non-executive
director is entitled to an annual grant of stock options to purchase 5,000 shares of common stock, which are priced at the close
of business on the first business day in the year of grant, all of which vest on the date of grant. Each non-executive director
was also entitled to an annual grant (reviewed on an annual basis) of 1,500 shares of restricted common stock pursuant to our 2004
Equity Incentive Plan, a third of which will vest on the first business day one year from the date of grant, and each of the following
two-years, respectively, subject to the non-executive director being a member of our Board of Directors on the date such award
is expected to vest. A non-executive director may elect to defer all or part of the annual stock grant pursuant to our Directors’
Deferral Program. In addition, we reimburse all directors for reasonable out-of-pocket expenses incurred in connection with their
services on our Board of Directors. We reimbursed less than $2,000 for such expenses during 2012 in the aggregate.



On March 16, 2005, our Board of Directors
adopted the Directors’ Deferral Program for non-executive directors. Our non-executive directors may elect to defer up to
100% of their annual cash retainer fees, chairman fees, committee meeting fees and annual stock grant under the Directors’
Deferral Program. Unless otherwise elected by a participant, fees deferred under the program shall be credited in the form of phantom
shares. Distributions on vested phantom shares shall be made in cash or, if elected by the non-executive director, in shares of
common stock. Phantom shares will be settled by the transfer to the non-executive director of one share of common stock for each
phantom share, provided that our Compensation Committee at the time of the grant may provide that phantom shares may be settled
(i) in cash at the applicable phantom share value, (ii) in cash or by transfer of shares of common stock as elected by the non-executive
director or (iii) in cash or by transfer of shares of common stock as elected by us. Phantom shares will be settled on the first
day of the month following the date on which the phantom shares vest, or at the election of the non-executive director, upon the
earlier of such non-executive director’s termination of service, his death or change in control by us, as defined in the
Directors’ Deferral Program.



During the fiscal year ended December 31,
2012, the chairman of the Special Committee received a retainer of $80,000 and the other members of the Special Committee received
a retainer of $50,000 for the first six months of service. Our Board of Directors has approved the same compensation for the chairman
of the Special Committee and the other members of the Special Committee for their second six months of service. Except as noted
below, there were no other changes to the fees that each non-executive director was entitled to receive for the 2012 and 2013 fiscal
years.



Effective as of July
1, 2012, Allan J. Baum was appointed Lead Independent Director, as described on page 14 under “Corporate Governance Matters
— Board of Directors Leadership Structure.” In connection with Mr. Baum ’s appointment as Lead Independent Director,
Mr. Baum is entitled to receive an additional annual retainer, separate from and in addition to fees payable to all independent
directors, of $75,000 for 2012 and $50,000 for each year thereafter, payable 50% in the form of cash and 50% in the form of common
stock, unless Mr. Baum elects to receive 100% of the additional annual retainer in the form of stock.



36







|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------



Equity Compensation Plan Information



The following table summarizes information,
as of December 31, 2012, relating to our equity compensation plans pursuant to which shares of our common stock or other equity
securities may be granted from time to time.





|                                                               |  |                            |         |  |                      |   |       | (c)                                 | 
|-------------------------------------------------------------- |  | -------------------------- | ------- |  | -------------------- | - | ----- | ----------------------------------- | 
|                                                               |  | (a)                        |         |  | (b)                  |   |       | Number of securities
 remaining     | 
|                                                               |  | Number of securities to be |         |  | Weighted average     |   |       | available for future issuance       | 
|                                                               |  | issued upon exercise of    |         |  | exercise price of    |   |       | under equity compensation 
plans    | 
|                                                               |  | outstanding options,       |         |  | outstanding options, |   |       | (excluding securities reflected 
in | 
|Plan category                                                  |  | warrants and rights        |         |  | warrants and rights  |   |       | column (a))                         | 
|Equity compensation plans approved by security holders (1)     |  |                            | 360,251 |  |                      | $ | 16.14 |                                     | 
|Equity compensation plans not approved by security holders (2) |  |                            | -       |  |                      |   | -     |                                     | 
|Total                                                          |  |                            | 360,251 |  |                      | $ | 16.14 |                                     | 



| | (1) | Includes
information related to our Amended and Restated 2004 Equity Incentive Plan.
| | --- | ------------------------------------------------------------------------------------



| | (2) | Includes
information related to our 2012 Inducement Equity Incentive Plan.
| | --- | --------------------------------------------------------------------------



Amended and Restated 2004 Equity Incentive Plan



Our Board of Directors adopted at the July
2004 meeting of our Board of Directors, and our common stockholders ratified, a long-term, ten-year compensation program, which
was later amended and restated, for certain employees, directors, officers, advisors, consultants and other personnel, including
any of our joint venture affiliates. Of the options or stock that have not been granted at the time of our initial public offering,
our Compensation Committee shall have the right to make such awards in the form of equity incentive compensation on such terms
as our Compensation Committee may deem appropriate. Our Compensation Committee has the authority to administer and interpret our
2004 Equity Incentive Plan, to authorize the granting of awards, to determine the eligibility of certain of our employees, directors,
officers, advisors, consultants and other personnel and any of our joint venture affiliates to receive an award, to determine the
number of shares of common stock to be converted by each award, to determine the terms, provisions and conditions of each award,
to prescribe the form of instruments evidencing awards and to take any other actions and make all other determinations that it
deems necessary or appropriate. Our Compensation Committee, in its discretion, may delegate to our Chief Executive Officer all
or part of the Committee's authority and duties with respect to awards; provided, however, that we may not delegate its authority
and duties with respect to awards that have been, or will be, granted to our Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, Chief Legal Officer or President or any Executive Vice President.



Subject to adjustment upon certain corporate
transactions or events, up to a maximum of 6,250,000 shares, but not more than 10% of the common stock outstanding at the time
of the grant, may be subject to stock options, restricted stock, phantom stock and dividend equivalent rights under our 2004 Equity
Incentive Plan. The maximum number of shares of common stock that may underlie awards, other than options, to any eligible person
in any one year, shall not exceed 200,000, to the extent such awards are intended to qualify as performance-based compensation
under Section 162(m) of the Code, or 800,000, to the extent such awards are not intended to qualify as performance-based compensation
under Section 162(m) of the Code. In addition, subject to adjustment upon certain corporate transactions or events, a participant
may not receive options for more than 300,000 shares of our common stock in one year. Any common stock withheld or surrendered
by plan participants in connection with the payment of an option exercise price or in connection with tax withholding will not
count towards the share limitation and will be available for issuance under our 2004 Equity Incentive Plan. If an option or other
award granted under our 2004 Equity Incentive Plan expires or terminates, the common stock subject to any portion of the award
that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance
of additional awards. Unless our 2004 Equity Incentive Plan is previously terminated by our Board of Directors, no new award may
be granted under our 2004 Equity Incentive Plan after the tenth anniversary of the date that such plan was initially approved by
our Board of Directors. No award may be granted under our 2004 Equity Incentive Plan to any person who, assuming exercise of all
options and payment of all awards held by such person, would own or be deemed to own more than 9.8% of our outstanding common stock.
At December 31, 2012, approximately 1,123,197 shares of common stock were available for issuance under our 2004 Equity Incentive
Plan.



37







2012 Inducement Equity Incentive Plan



In connection with the equity awards to be
made to Messrs. DuGan and Harris, and Nicholas L. Pell, who joined us as a Managing Director, and in connection with our hiring
of these executives, our Board of Directors adopted the Gramercy Property Trust Inc. 2012 Inducement Equity Incentive Plan as of
June 7, 2012. Under the 2012 Inducement Equity Incentive Plan, we may grant equity awards for up to 4,500,000 shares of common
stock pursuant to the employment inducement award exemption provided by Section 303A.08 of the NYSE Listed Company Manual. The
2012 Inducement Equity Incentive Plan permits us to issue a variety of equity awards, including stock options, restricted stock,
phantom shares, dividend equivalent rights and other equity-based awards. The 2012 Inducement Equity Incentive Plan is administered
by our Compensation Committee. The 2012 Inducement Equity Incentive Plan will terminate on the ten-year anniversary of our Board
of Directors' approval of the 2012 Inducement Equity Incentive Plan, provided our Board of Directors may terminate the 2012 Inducement
Equity Incentive Plan at any time. All of the shares available under the 2012 Inducement Equity Incentive Plan were initially issued
or reserved for issuance to Messrs. DuGan, Harris and Pell in connection with the equity awards made upon the commencement of their
employment with us.



2012 Outperformance Plan



In connection with the hiring of Messrs.
DuGan and Harris, our Board of Directors approved a new outperformance plan, the 2012 Outperformance Plan. Pursuant to the 2012
Outperformance Plan, these executives, in the aggregate, may earn up to a maximum dollar amount of LTIP Units based on our common
stock price appreciation over a four-year performance period ending June 30, 2016. The amount of LTIP Units earned under the 2012
Outperformance Plan will range from 20% of the maximum amount if our common stock price equals a minimum hurdle of $5.00 per share
(less any dividends paid during the performance period) to the maximum amount if our common stock price equals or exceeds $9.00
per share (less any dividends paid during the performance period) at the end of the performance period. The executives will not
earn any LTIP Units under the 2012 Outperformance Plan to the extent that our common stock price is less than the minimum hurdle.



During the performance period, the executives
may earn up to 12%, 24% and 36% of the maximum amount under the 2012 Outperformance Plan at the end of the first, second and third
years, respectively, of the performance period if our common stock price has equaled or exceeded the stock price hurdles as of
the end of such years. If the minimum stock price hurdle is met as of the end of any such year, the actual amount earned will range
on a sliding scale from 20% of the maximum amount that may be earned as of such date (at the minimum stock price hurdle) to 100%
of the maximum amount that may be earned as of such date (at the maximum stock price hurdle). Any LTIP Units earned under the 2012
Outperformance Plan will remain subject to vesting, with 50% of any LTIP Units earned vesting on June 30, 2016 and the remaining
50% vesting on June 30, 2017 based, in each case, on continued employment through the vesting date.



Upon the occurrence of a Change-in-Control
at any time prior to the end of the performance period, the performance period will be shortened to end on the date of such Change-in-Control,
performance will be measured based on the common stock price as of the Change-in- Control and all LTIP Units that are earned will
vest as of such date. In the event of a Change-in-Control after the end of the performance period, all LTIP Units that had been
previously earned will vest as of such date. If an executive's employment is terminated by us without Cause, by the executive for
Good Reason or upon death or disability prior to the end of the performance period, then for such executive performance will be
measured as of the date of such termination and a prorated portion of the LTIP Units earned, if any, will vest based on the portion
of the full five-year vesting period that such executive remained employed, plus 12 months, as a percentage of the full five-year
vesting period. If an executive's employment is terminated upon such circumstances after the end of the performance period, all
of such executive's unvested LTIP Units that had been previously earned will vest as of the date of such executive's termination.
The terms Cause, Good Reason and Change-in-Control are specifically defined (or referenced) in the award agreement under the 2012
Outperformance Plan.



Messrs. DuGan and Harris were granted awards
under the 2012 Outperformance Plan in connection with their hiring pursuant to which they may earn up to $10 million and $6 million
of LTIP Units, respectively. Additionally, in 2013, Mr. Clark was granted an award under the 2012 outperformance plan pursuant
to which he may earn up to $1 million of LTIP Units.



38







LTIP Units are a class of limited partnership
interests in our Operating Partnership that are structured to qualify as “profits interests” for federal income tax
purposes. Accordingly, LTIP Units, initially, will not have full parity, on a per unit basis, with the Class A limited partnership
interests in our Operating Partnership with respect to liquidating distributions. If a tax book-up event occurs, which generally
includes the issuance of equity interests in us or our Operating Partnership and the occurrence of certain other events, at a time
when our Operating Partnership's assets have sufficiently appreciated, the LTIP Units will achieve full parity with the Class A
limited partnership interests. To the extent the LTIP Units have achieved parity with the Class A limited partnership interests,
the LTIP Units may be converted, subject to the satisfaction of the applicable vesting conditions, on a one-for-one basis into
Class A limited partnership interests. Until LTIP Units have been earned under the 2012 Outperformance Plan, the executives will
be entitled to receive non-liquidating distributions with respect to the LTIP Units underlying their awards under the 2012 Outperformance
Plan on a per unit basis equal to 10% of the regular dividends per share paid on our common stock, if any. If and when LTIP Units
are earned, the executives will be entitled to receive non-liquidating distributions with respect to the earned LTIP Units following
the date on which the LTIP units are earned on a per unit basis equal to the dividends per share paid on our common stock.



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT



The following table sets forth the beneficial
ownership of our common stock, as of April 29, 2013, and our Series A Preferred Stock, as of April 29, 2013, for (1) each person
known to us to be the beneficial owner of more than 5% of our outstanding common stock or Series A Preferred Stock based on the
Schedule 13D, Schedule 13G, or any amendments thereto, filed with the SEC, (2) each of our directors and nominees for director,
(3) each of our named executive officers who is not a director and (4) our directors, nominees for director and executive officers
as a group. Except as otherwise described in the notes below, the following beneficial owners have sole voting power and sole investment
power with respect to all shares of common stock or Series A Preferred Stock set forth opposite their respective names.



In accordance with SEC rules, each listed
person's beneficial ownership includes:



| | • | all
shares the investor actually owns beneficially or of record;
| | - | ----------------------------------------------------------------



| | • | all
shares over which the investor has or shares voting or dispositive control (such as in the capacity as a general partner of an
investment fund); and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | all
shares the investor has the right to acquire within 60 days (such as upon exercise of options that are currently vested or which
are scheduled to vest within 60 days) after April 29, 2013.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Unless otherwise indicated, all shares are
owned directly and the indicated person has sole voting and investment power.



|Name**                                                       |  | Amount And Nature of Beneficial Ownership of Common Stock |           |      | Percent ofTotal (1) |  |       | Amount And Nature of Beneficial Ownership of Series A Preferred Stock |  |  | PercentofClass (1) |     
|------------------------------------------------------------ |  | --------------------------------------------------------- | --------- | ---- | ------------------- |  | ----- | --------------------------------------------------------------------- |  |  | ------------------ | ----
|Gordon F. DuGan                                              |  |                                                           | 1,300,000 | (2)  |                     |  | 2.19  | %                                                                     |  |  | —                  |     
|Marc Holliday                                                |  |                                                           | 412,794   | (3)  |                     |  | 0.69  | %                                                                     |  |  | —                  |     
|Allan J. Baum                                                |  |                                                           | 218,867   | (4)  |                     |  | 0.37  | %                                                                     |  |  | —                  |     
|Jeffrey E. Kelter                                            |  |                                                           | 210,822   | (5)  |                     |  | 0.35  | %                                                                     |  |  | —                  |     
|Charles S. Laven                                             |  |                                                           | 200,683   | (6)  |                     |  | 0.34  | %                                                                     |  |  | —                  |     
|Paul J. Konigsberg                                           |  |                                                           | 73,587    | (7)  |                     |  | 0.12  | %                                                                     |  |  | —                  |     
|Gregory F. Hughes                                            |  |                                                           | 14,481    | (8)  |                     |  | 0.02  | %                                                                     |  |  | —                  |     
|William H. Lenehan                                           |  |                                                           | 75,202    | (9)  |                     |  | 0.13  | %                                                                     |  |  | —                  |     
|Benjamin P. Harris                                           |  |                                                           | 201,000   | (10) |                     |  | 0.34  | %                                                                     |  |  | —                  |     
|Jon W. Clark                                                 |  |                                                           | 98,306    | (11) |                     |  | 0.17  | %                                                                     |  |  | —                  |     
|Michael G. Kavourias                                         |  |                                                           | 155,483   | (12) |                     |  | 0.26  | %                                                                     |  |  | —                  |     
|Roger M. Cozzi                                               |  |                                                           | 901,200   | (13) |                     |  | 1.52  | %                                                                     |  |  | —                  |     
|Timothy J. O'Connor                                          |  |                                                           | 277,974   | (14) |                     |  | 0.47  | %                                                                     |  |  | —                  |     
|All Directors and Executive Officers as a Group (13 Persons) |  |                                                           | 4,140,399 |      |                     |  | 6.93  | %                                                                     |  |  | ***                |     
|KBS Acquisition Sub Owner 2 LLC                              |  |                                                           | 6,000,000 | (15) |                     |  | 10.11 | %                                                                     |  |  | ***                |     
|BlackRock Inc.                                               |  |                                                           | 3,768,262 | (16) |                     |  | 6.35  | %                                                                     |  |  | ***                |     
|Kwon Uk Choi                                                 |  |                                                           | 3,650,000 | (17) |                     |  | 6.15  | %                                                                     |  |  | ***                |     
|SL Green and SL Green Operating Partnership, L.P.            |  |                                                           | 749,086   | (18) |                     |  | 1.26  | %                                                                     |  |  | ***                |     
|He Zhengxu                                                   |  |                                                           | 2,663,067 | (19) |                     |  | 4.49  | %                                                                     |  |  | ***                |     
|Indaba Capital Fund, L.P                                     |  |                                                           | ***       |      |                     |  | ***   |                                                                       |  |  | 780,815            | (20)
|Weiss Asset Management LP                                    |  |                                                           | ***       |      |                     |  | ***   |                                                                       |  |  | 300,823            | (21)
|Thomas A. Maher                                              |  |                                                           | ***       |      |                     |  | ***   |                                                                       |  |  | 293,695            | (22)
|Rangeley Capital, LLC                                        |  |                                                           | ***       |      |                     |  | ***   |                                                                       |  |  | 200,560            | (23)



39







| | * | Less than 1% of class.
| | - | ----------------------

| | ** | Unless otherwise indicated, the business address is 420
Lexington Avenue, New York, New York 10170-1881.
| | -- | --------------------------------------------------------------------------------------------------------

| | *** | Information not publicly available.
| | --- | -----------------------------------

| | (1) | As of April 29, 2013, 59,376,249 shares of common stock and, as of April 29, 2013, 3,525,822 shares of Series A Preferred Stock
were outstanding.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Mr. DuGan was appointed as our Chief Executive Officer, effective as of July 1, 2012
| | --- | ------------------------------------------------------------------------------------

| | (3) | Includes 143,865 shares of common stock issuable upon exercise of options.
| | --- | --------------------------------------------------------------------------

| | (4) | Includes 42,500 shares of common stock issuable upon exercise of options, 2,500 shares of restricted common stock and 173,867
phantom units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Includes 42,500 shares of common stock issuable upon exercise of options, 2,500 shares of restricted common stock and 165,822
phantom units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Includes 42,500 shares of common stock issuable upon exercise of options, 2,500 shares of restricted common stock and 154,183
phantom units.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Mr. Konigsberg’s term on the Board of Directors concluded December 18, 2012.
| | --- | ----------------------------------------------------------------------------

| | (8) | Includes 5,000 shares of common stock issuable upon exercise of options and 9,481 phantom units.
| | --- | ------------------------------------------------------------------------------------------------

| | (9) | Includes 5,000 shares of common stock issuable upon exercise of options and 30,701 phantom units.
| | --- | -------------------------------------------------------------------------------------------------

| | (10) | Mr. Harris was appointed as our Chief Investment Officer effective as of July 1, 2012 through July 31, 2012, and as our President
effective as of August 1, 2012.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | Includes 10,806 shares of common stock issuable upon exercise of options.
| | ---- | -------------------------------------------------------------------------

| | (12) | Mr. Kavourias’ term of employment as our Executive Vice President ,Chief Legal Officer and Secretary ended on March 31,
2013.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------

| | (13) | Mr. Cozzi’s term of employment as our Chief Executive Officer ended June 30, 2012.
| | ---- | ----------------------------------------------------------------------------------

| | (14) | Mr. O’Connor’s term of employment as our President ended on July 31, 2012.
| | ---- | --------------------------------------------------------------------------

| | (15) | Includes 2,000,000 shares of common stock, 2,000,000 shares of Class B1 Non-voting stock, and 2,000,000 shares of Class B2
Non-Voting stock
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------

| | (16) | The address for this stockholder is 40 East 52nd Street, New York NY  10022.  Based solely on information
contained in Schedule 13G filed on January 30, 2013, this shareholder has sole voting and dispositive power over these shares of
common stock.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (17) | The address for this stockholder is Renaissance Villa 45, Ogeum-Tong, Song-Pa Gu, Seoul, Republic of Korea. Based solely on
information contained in Schedule 13D filed jointly with Jisook Jung and Anda Investment Partners on April 5, 2013. This stockholder
has sole voting and dispositive power over these shares. Based solely on information contained in the Schedule 13D, Jisook Jung
owns and has sole voting and dispositive power over 150,000 shares, representing less than 1% of the outstanding shares of common
stock, and Anda Investment Partners owns and has sole voting and dispositive power over 0 shares.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (18) | The address for this stockholder is Institution of Math, AMSS, CAS, Zhongguancun, Haidian District, Beijing 100080, People's
Republic of China. Based solely on information contained in Schedule 13G/A filed jointly by this stockholder and He & Fang
2005 Revocable Living Trust on January 10, 2012. This stockholder has shared voting and dispositive power over these shares.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (19) | Based solely on information contained in Schedule 13G/A filed jointly by SL Green and SL Green Operating Partnership, L.P.
on February 11, 2013. SL Green and SL Green Operating Partnership, L.P. have shared voting and dispositive power over these shares
of common stock
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (20) | The address for this stockholder is One Letterman Drive, Building D, Suite DM700, San Francisco, California 94129. Based solely
on information contained in Schedule 13D/A filed jointly by this stockholder, Indaba Capital Management, LLC, Indaba Partners,
LLC and Derek C. Schrier on January 17, 2012. This stockholder has shared voting and dispositive power over the shares of Series
A Preferred Stock.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40







| | (21) | Based solely on information contained in Schedule 13G/A filed jointly with BIP GP LLC, WAM GP LLC and Andrew M. Weiss, PH.D.
on February 12, 2013. This stockholder has shared voting and dispositive power over these shares. Based solely on information contained
in the Schedule 13D, BIP GP LLC owns and has shared voting and dispositive power over 207,886 shares, WAM GP owns and has shared
voting and dispositive power over 300,823 shares, Weiss Asset Management owns and has shared voting and dispositive power over
300,823 shares, and Andrew M. Weiss, PH.D. owns and has shared voting and dispositive power over 300,823 shares.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (22) | The address for this stockholder is 11 North Market Street, Asheville, North Carolina 28801. Based solely on information contained
in Schedule 13G/A filed jointly on February 6, 2013 this stockholder has sole voting and dispositive power over 91,543 shares and
joint voting and dispositive power over 202,152 shares.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (23) | The address for this stockholder is 3 Forest Street, New Canaan, Connecticut 06840. Based solely on information contained in
Schedule 13G/A filed jointly with Rangeley Capital Partners, LP, and Christopher DeMuth, Jr. on February 12, 2013. This stockholder
has shared voting and dispositive power over these shares. Based solely on information contained in the Schedule 13D, Rangeley
Capital, LLC owns and has shared voting and dispositive power over 200,560 shares, Rangeley Capital Partners, LP owns and has shared
voting and dispositive power over 195,300 shares, and Chris DeMuth, Jr. owns and has shared voting and dispositive power over 200,560
shares.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------



CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS



Policies and Procedures With Respect to Related Party Transactions



It is the policy of our Board of Directors
that all related party transactions (generally, transactions involving amounts exceeding $120,000 in which a related party (directors
and executive officers or their immediate family members, or stockholders owning 5% of more of our outstanding stock)) shall be
subject to approval or ratification in accordance with the following procedures.



Our Nominating and Corporate Governance Committee
shall review the material facts of all related party transactions that require its approval and either approve or disapprove of
the entry into the related party transaction, subject to some exceptions. If advance approval of a related party transaction is
not feasible, then the related party transaction shall be considered and, if our Nominating and Corporate Governance Committee
determines it to be appropriate, ratified at the next regularly scheduled meeting of our Nominating and Corporate Governance Committee.
In determining whether to approve or ratify a related party transaction, our Nominating and Corporate Governance Committee will
take into account, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable
than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related
party's interest in the transaction.



If a related party transaction will be ongoing,
our Nominating and Corporate Governance Committee may establish guidelines for our management to follow in its ongoing dealings
with the related party. Thereafter, our Nominating and Corporate Governance Committee, on at least an annual basis, shall review
and assess ongoing relationships with the related party to see that they are in compliance with our Nominating and Corporate Governance
Committee's guidelines and that the related party transaction remains appropriate.



All related party transactions shall be disclosed
in our applicable filings with the SEC as required under SEC rules.



SL Green Operating Partnership, L.P. and SL Green Interests
in Gramercy Investments



The Chief Executive Officer of SL Green
Realty Corp. (NYSE: SLG), or SL Green, is one of the Company’s directors.



Commencing in May 2005, the Company is
party to a lease agreement with SLG Graybar Sublease LLC, an affiliate of SL Green, for its corporate offices at 420 Lexington
Avenue, New York, New York. The lease is for approximately 7,300 square feet and carries a term of 10 years with rents of approximately
$249,000 per annum for year one rising to $315,000 per annum in year ten. In May and June 2009, the Company amended its lease with
SLG Graybar Sublease LLC to increase the leased premises by approximately 2,260 square feet. The additional premises is leased
on a co-terminus basis with the remainder of the Company’s leased premises and carries rents of approximately $103,000 per
annum during the initial year and $123,000 per annum during the final lease year. On June 25, 2012, the lease was amended to reduce
the leased premises by approximately 600 square feet and to reduce rents by approximately $29,000 per annum during the initial
year and $38,000 per annum during the final lease year. All other terms of the lease remain unchanged, except the Company now has
the right to cancel the lease with 90 days notice. For the year ended December 31, 2012, 2011 and 2010, the Company paid $361,000,
$307,000 and $339,000 under this lease, respectively.



41







Director Independence



Our Corporate Governance Guidelines provide
that a majority of the directors serving on our Board of Directors must be independent as required by the listing standards of
the NYSE and the applicable rules promulgated by the SEC. In addition, our Board of Directors has adopted director independence
standards, which are certain additional categorical standards to assist in making determinations with respect to the independence
of directors. Our Board of Directors has affirmatively determined, based upon its review of all relevant facts and circumstances
and after considering all applicable relationships, of which our Board of Directors had knowledge, between or among the directors
and our company or our management (any such relationships, if any, are described in the section entitled “Certain Relationships
and Related Transactions”), that each of the following directors and director nominees has no direct or indirect material
relationship with us and is independent under the listing standards of the NYSE, the applicable rules promulgated by the SEC and
our director independence standards: Messrs. Allan J. Baum, Jeffrey E. Kelter, Gregory F. Hughes and Charles S. Laven. Our Board
of Directors does not affirmatively determine whether Mr. William H. Lenehan is independent under the listing standards of the
NYSE, the applicable rules promulgated by the SEC or our director independence standards.



|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES
|-------- | --------------------------------------



Fee Disclosure



Audit Fees



Fees for audit services totaled approximately
$1,849,098 in 2012 and $2,334,523 in 2011, of which $145,000 and $311,325 was attributable to Sarbanes-Oxley 404 planning and testing
in 2012 and 2011, respectively. Audit fees include fees associated with our annual audit and the reviews of our quarterly reports
on Form 10-Q. In addition, audit fees include fees for services relating to other reporting requirements including those related
to our acquisition, disposition and capital-raising activities. Audit fees also include fees for accounting research.



Audit-Related Fees



Fees for audit-related services totaled approximately
$10,000 in 2012 and $65,000 in 2011. The audit-related services for 2012 principally included fees for comfort letters and consents
in connection with our acquisition and capital-raising activities.



Tax Fees



Fees for tax compliance, tax advice and tax
planning totaled approximately $207,500 in 2012 and $272,615 in 2011.



All Other Fees



We did not incur fees in 2012 and 2011 for
other services not included above.



Our Audit Committee considers whether the
provision by Ernst & Young LLP of the services that are required to be described under “All Other Fees” is compatible
with maintaining Ernst & Young LLP's independence from both management and our company.



42







Pre-Approval Policies and Procedures of Our Audit Committee



Our Audit Committee must pre-approve all
audit services and permissible non-audit services provided by our independent registered public accounting firm, except for any
de minimis non-audit services. Non-audit services are considered de minimis if: (1) the aggregate amount of all such non-audit
services constitutes less than 5% of the total amount of revenues we paid to our independent registered public accounting firm
during the fiscal year in which they are provided; (2) we did not recognize such services at the time of the engagement to be non-audit
services; and (3) such services are promptly brought to our Audit Committee's attention and approved prior to the completion of
the audit by our Audit Committee or any of its member(s) who has authority to give such approval. Our Audit Committee may delegate
to one or more of its members who is an independent director the authority to grant pre-approvals. All services provided by Ernst
& Young LLP in 2012 were pre-approved by our Audit Committee.



43







AUDIT COMMITTEE REPORT



The following is a report by the Audit
Committee of the Board of Directors of Gramercy Property Trust Inc. (the “Audit Committee”) regarding the responsibilities
and functions of the Audit Committee. This report shall not be deemed to be incorporated by reference in any previous or future
documents filed by us with the SEC) under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that
we specifically incorporate this report by reference in any such document.



The Audit Committee oversees our financial
reporting process on behalf of our Board of Directors, in accordance with the written charter of the Audit Committee. Management
has the primary responsibility for the preparation, presentation and integrity of our financial statements, accounting and financial
reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws
and regulations. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in
the Annual Report on Form 10-K for the year ended December 31, 2012 with management, including discussions regarding critical accounting
policies, other financial accounting and reporting principles and practices appropriate for us, the quality of such principles
and practices, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.



The Audit Committee reviewed and discussed
with Ernst & Young LLP, our independent registered public accounting firm, who is responsible for auditing our financial statements
and for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted
in the United States, their judgments as to the quality, not just the acceptability, of our accounting principles and such other
matters as are required to be discussed with the Audit Committee under Statement on Auditing Standards No. 61, as adopted by the
Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee received the written disclosure and the letter from
Ernst & Young LLP required by the Independence Standards Board Standard No. 1, as currently in effect, discussed with Ernst
& Young LLP, their independence from both management and our company and considered the compatibility of Ernst & Young
LLP's provision of non-audit services to our company with their independence.



The Audit Committee discussed with Ernst
& Young LLP the overall scope and plans for their audit. The Audit Committee met with Ernst & Young LLP, with and without
management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality
of our financial reporting, including off-balance sheet investments, and our compliance with Section 404 of the Sarbanes-Oxley
Act of 2002.



In reliance on the reviews and discussions
referred to above, the Audit Committee recommended to our Board of Directors (and our Board of Directors has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2012 for filing with
the SEC.



Our Board of Directors has determined that
each member of the Audit Committee is financially literate and has accounting or related financial management expertise, as such
qualifications are defined under the rules of the NYSE. It also has determined that the Audit Committee has at least one “audit
committee financial expert,” as defined in Item 407(d)(5) of SEC Regulation S-K, such expert being Mr. Gregory F. Hughes,
and that he is “independent,” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.



The Audit Committee held five meetings during
fiscal year 2012 (including non-management director sessions after certain of these meetings) attended by each director then serving
on the Audit Committee. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting
except for Mr. Konigsberg, who elected not to stand for re-election as a director at the company’s 2012 annual meeting held
on December 13, 2012. The committee members rely, without independent investigation or verification, on the information provided
to them and on the representations made by management and our independent registered public accounting firm. Accordingly, the Audit
Committee's oversight does not provide an independent basis to determine that management has maintained appropriate accounting
and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit Committee's considerations and discussions referred to above
do not assure that the audit of our financial statements has been carried out in accordance with the standards of the Public Company
Accounting Oversight Board (United States), that the financial statements are presented in accordance with accounting principles
generally accepted in the United States or that Ernst & Young LLP is in fact “independent.”



| | Submitted by the Audit Committee
| | --------------------------------
| | Gregory F. Hughes               
| | Allan J. Baum                   
| | Charles S. Laven                
| | April 25, 2013                  



44







PART IV



|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|-------- | ---------------------------------------



(a) The following documents are filed as
a part of this Report:



| | 31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------



| | 31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------



45







SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized, onMay 10, 2013.



| | Gramercy Property Trust Inc.
| | ----------------------------
| |                             
| | By:                         
| |                             
| |                             



46