Exhibit 10.1

Execution Version

SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (“Agreement”) is made as of the 13th day of November, 2008, between Timothy O’Connor (“Executive”) and Gramercy Capital Corp., a Maryland corporation (“Gramercy”), to be effective as of November 13, 2008 (the “Effective Date”).  This Agreement is being entered into in connection with the Employment and Noncompetition Agreement, dated as of the date hereof, by and between GKK Manager LLC (the “Manager”) and Executive (as amended or superseded from time to time, the “Employment Agreement”).

1.                                        Term .  The term of this Agreement shall commence on the Effective Date and shall continue through, and terminate on, December 31, 2011 (the “Original Term”) unless earlier terminated as provided in Section 6 below.  The Original Term shall automatically be extended for successive one (1) year periods (each a “Renewal Term”), unless either party gives the other party at least three (3) months written notice of desire to negotiate terms and/or non-renewal prior to the expiration of the then current term; provided that a notice of desire to negotiate terms and/or non-renewal given by Executive or Gramercy under the Employment Agreement shall be deemed to constitute a notice of desire to negotiate terms and/or non-renewal under this Agreement. The period of Executive’s employment hereunder consisting of the Original Term and all Renewal Terms, if any, is herein referred to as the “Term.”

2.                                        Employment .  As of the Effective Date, Gramercy has appointed Executive to serve as its President and the Manager has entered into the Employment Agreement with Executive whereby, among other things, the Manager has agreed to employ Executive to serve as the President of Gramercy. In consideration of Executive’s service as an officer of Gramercy, Gramercy shall compensate Executive as provided in this Agreement.

3.                                        Equity Awards .  As determined by the Board of Directors of Gramercy (the “Board”) or the Compensation Committee of the Board (the “Compensation Committee”) and as provided in this Agreement, Executive shall be eligible to participate in Gramercy’s then current equity incentive plan (the “Plan”) during the Term.  On the Effective Date, Executive will be granted 130,000 shares of restricted common stock of Gramercy (“Common Stock”) and 150,000 LTIP Units in GKK Capital LP, a Delaware limited partnership, in accordance with and subject to definitive documentation which is consistent with the terms summarized on Exhibit A hereto and which is otherwise consistent with Gramercy’s general practices for documentation.

4.                                        Indemnification and Liability Insurance .  Gramercy agrees to indemnify Executive to the full extent permitted by applicable law, as the same exists and may hereafter be amended, from and against any and all losses, damages, claims, liabilities and expenses asserted against, or incurred or suffered by, Executive (including the costs and expenses of legal counsel retained by Gramercy to defend Executive and judgments, fines and amounts paid in settlement actually and reasonably incurred by or imposed on such indemnified party) with respect to any action, suit or proceeding, whether civil, criminal administrative or investigative (a “Proceeding”) in which Executive is made a party or threatened to be made a party or is otherwise involved, either with regard to his entering into this Agreement with Gramercy or in his capacity as an officer or director, or former officer or director, of Gramercy or any affiliate thereof for which he may serve in such capacity.  Gramercy also agrees to secure promptly and maintain officers and directors liability insurance providing coverage for Executive, with such terms and limits as are deemed appropriate by Gramercy, to the extent that coverage can be obtained on reasonable efforts at a comparable rate; provided that Executive shall be covered in such a manner as to provide Executive the same rights and benefits as are accorded to the most favorably insured of Gramercy’s officers.  The provisions of this Section 4 shall remain in effect after this Agreement is terminated irrespective of the reasons for termination.