PS> check the numbers I mention, I pulled them from the top of my head
First of all, I do not think they are going to loose Realty. KBS has already been open that they are willing to extend if a way is found to resolve their $270m repo with GS and Citi guaranteed by the $450m KBS mezz (KBS has around $100m in cash that can be part of the solution).
The other $90m junior mezz is partly owned by SLG (only $50m and part of the family) and the extra $40m should not be a problem if all the rest is solved (better protection with capital injection)
So the issue for GKK is how to solve the $240m mortgage part and the $270m repo. ($510m total).
With $200 in cash at corporate, $35m in Realty, around $40 coming from operations, the liquidity of the CDOs (that they would have to make room with some sale or security exchange), and some other non encumbered assets (land, CDO notes, prefs) ... why they could not reach an agreement would be beyond me. Just to pay the $240 mortgage in cash would substantially improve the mezz loans protection and actually I would ask KBS and the rest for some principal reduction in addition to the extension.
Valuation? I do not know. If they save Realty with the cash on hand this could well become a $20 per share over time cash flowing at least $100m between Realty and the CDOs (10% dividend yield), plus all the synergies of having the property administrator and the financing under the same roof, plus a conservative Realty balance sheet that could be leveraged in the future.
If the Realty negotiations fail, the cash can be used to buy CDO 2005, 2006 notes at a discount (and CMBSs too) increasing cash flow over time. so I think they could become worth around $6 per share between them if we consider the company in run-off.
Puck was negotiated and paid in Q3 ($55.7 vs $60.4 par value).
The interesting thing was that they originated with the proceeds a $28.5m loan (Church Street Plaza, 0% vacancy, Libor+4%), bought $7.3m in CMBS, and bought $6.8m (par $15m) in in A&B series of CDO 2005.
I wonder what is their endgame. Maybe an exchange of discounted CMBS/CRE CDOs/prefs for a discounted GS mezz.