Gramercy Prices $1B CDO

Gramercy Capital Corp., New York, has announced the pricing of Gramercy Real Estate CDO 2006-1, its second $1 billion commercial real estate collateralized debt obligation.Gramercy said it will use the proceeds to retire outstanding borrowings under secured repurchase agreements and to fund debt investments. The CDO securities, to be issued by Gramercy Real Estate CDO 2006-1 LTD and Gramercy Real Estate CDO 2006-1 LLC, will consist of $903.75 million of investment-grade bonds, plus non-investment-grade bonds, preferred equity, and equity that will be retained by Gramercy. At issuance, the weighted-average interest rate of the investment-grade securities will be 36.95 basis points over the three-month London interbank offered rate, excluding transaction costs. Assets to be contributed to the CDO will consist primarily of first-mortgage loans secured by transitional and stabilized commercial properties, the company said. Also included in lesser proportions will be subordinate participation interests in first-mortgage loans, mezzanine loans, and preferred equity investments.