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CHEVY CHASE, MD-As part of its plan to elect REIT status, CapitalSource Inc. has plans to acquire an estimated $1.6 billion in agency mortgage pass-through certificates on the heels of having closed a $100-million offering of trust preferred securities. In September, the locally headquartered commercial finance company announced its intention to be taxed as a REIT beginning Jan. 1, 2006.

The billion-dollar mortgage securities group involves five pools issued by government-sponsored enterprise and mortgage lender Freddie Mac. "The successful identification, analysis, structuring and acquisition of these pools is a very good start in their effort to build a portfolio that generates targeted returns with minimal credit and interest rate risk," says CapitalSource chairman and CEO John K. Delaney of the company's newly formed residential finance team.

BlackRock Financial Management Inc. was tapped to oversee the mortgage securities' interest rate risk. CapitalSource was scheduled to make the purchase--which assists in the effort to meet REIT requirements--on Nov. 25, but the company has not yet revealed publicly whether or not the transaction has been completed. CapitalSource officials could not be reached by deadline to confirm the status of the transaction.