Buy-back benefits

Buy-back benefits

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Accounting advantages spur REITs to buy back CDOs

Mortgage REIT Gramercy Capital has bought back US$37.8m of CRE CDO bonds that it had previously issued, generating gains of US$17.6m in the process. Market participants agree that Gramercy is likely to be just one of many CRE CDO issuers taking this route, given the positive accounting implications.

"It is not surprising to hear that CRE CDO issuers are buying back their bonds - the process is a no-brainer for those companies that have ready capital," confirms Conor Downey, partner at Cadwalader, Wickersham & Taft.

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