CapSource Revises Treatment of MBS

CapitalSource Inc., a real estate investment trust based in Chevy Chase, Md., has reported changes to its balance sheet of Dec. 31, 2005, involving the accounting treatment of about $2.3 billion of mortgage-backed securities and about $2.2 billion of related repurchase agreements.The REIT said the accounting treatment was based on investments simultaneously financed with repurchase agreements with the same counterparty. But the company said it has determined that approximately $323.4 million of the MBS were not acquired from and financed with the same counterparty. Therefore, it has recorded them as assets on its Dec. 31 balance sheet, and approximately $311.3 million of associated repurchase financing has been recorded as a liability, CapitalSource reported. The company said it plans eventually to record "substantially all" its MBS on its balance sheet as assets and all associated repurchase agreements as liabilities. CapitalSource also announced that it has received commitments for a $520 million unsecured credit facility, with Wachovia Bank NA as agent and Wachovia Capital Markets LLC as lead arranger for a syndicate of 11 financial institutions. The REIT can be found online at http://www.capitalsource.com.