CDO 3 matures in 2017, and provides for a five-year reinvestment period during which Gramercy can utilize the proceeds of loan repayments to finance new investments. Bonds issued by the Trust have expected average lives of 8.44 to 9.02 years.

The aggregate outstanding principal balance of assets contributed by Gramercy to CDO 3 was approximately $1.1 billion, consisting of $347.9 million of commercial real estate loans and $752.1 million of AAA-rated CMBS.

"The deal was well received and we were able to sell our senior securities at spreads lower than the spreads on comparable CMBS, believed to be a first in the CRE CDO market," Hall says. "This non mark-to-market financing further bolsters our considerable corporate liquidity, lowers our borrowing costs, and match funds a large portfolio of AAA-rated CMBS selected by our Real Estate Securities Group and most of our fixed-rate loans."He continues, "we believe our ability to execute this transaction demonstrates the strength of our platform which will result in competitive advantages in the current market environment."

GKK Manager LLC, which is the external advisor to Gramercy Capital Corp, will serve as Collateral Manager for the CDO. GKK Manager LLC is a majority-owned subsidiary of SL Green Realty Corp.

Gramercy will treat the transaction as a financing and therefore consolidate on its balance sheet and statement of operations all of the assets, liabilities, income and expenses of the CDO 3 issuer. All contributed collateral will be shown as assets, and the investment grade rated securities issued to third party investors will be shown as direct liabilities.

The joint book-runners and co-lead managers were Wachovia Capital Markets LLC and Goldman Sachs & Co. Wachovia also served as structuring agent. Co-managers were Morgan Stanley & Co., Deutsche Bank Securities Inc. and Citicorp Securities Inc.