The CRE CDO market is booming. Born in 1999 in the wake of the Russian default crisis as a more stable way to finance high yield, subordinate, CMBS securities (so-called “Cusiped” collateral), the market experienced solid but unspectacular growth until the introduction in 2004 of the managed CRE CDO. Driven by its flexible, managed structure – which permits the securitization of a wide range of non-Cusiped commercial real estate loans (CREL), such as B-notes, mezzanine debt, whole loans, credit tenant leases and even construction loans – CRE CDO issuance doubled in 2005 and nearly doubled again to $37 billion in 2006.
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