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RAIT Closes $781M European CDO

PHILADELPHIA-Taberna Europe CDO I PLC is believed to be the first issuance of a European CDO backed primarily by debt issued by real estate companies in Europe.

By Marita Thomas | Updated on February 01, 2007

PHILADELPHIA-RAIT Financial Trust has closed Taberna Europe CDO I PLC, a EUR 600 million ($781.1 million USD) real estate collateralized debt obligation transaction. Taberna Capital Management LLC, a subsidiary of locally based RAIT, is managing the CDO.

It consists of EUR 558 million ($726.6 million USD) of investment grade notes, EUR 19 million ($24.7 million USD) of non-investment grade notes, and EUR 23 million (nearly $30 million USD) of unrated notes. At the time of the issuance, Jan. 31, the weighted-average interest rate of the investment grade securities was Euribor (Euro Interbank offered rate) plus 49 basis points. Certain of the non-investment grade notes, not quantified in a company statement, and the unrated notes were purchased by a RAIT subsidiary.

The aggregate outstanding balance of the assets acquired by the CDO on the closing date was approximately EUR 360 million ($469 million USD). Taberna expects to use the remainder of the net proceeds, EUR 240 million (approximately $312.9 million USD) to acquire similar assets by Jan. 31, 2008, which is the ramp-up completion date.

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