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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.

This is the ninth CDO transaction managed by RAIT and its subsidiaries. It is the financial REIT’s first European-dominated CDO, and, in a statement, the company says it believes this the first issuance of a European CDO that is backed primarily by subordinated and senior debt issued by real estate companies in Europe.

“The CDO transaction is a private transaction,” a RAIT spokesman tells GlobeSt.com and says information is limited to that contained in the company’s statement. Asked if more such transactions are anticipated, he adds, “I can’t project what we expect to do going forward at this point.”

RAIT, headed by Betsy Cohen, chairman, and Daniel Cohen, chief executive officer, was formed via a merger of RAIT Investment Trust and Taberna Realty Finance Trust on Dec. 11, 2006. The ability to close and manage CDOs was among the benefits gained by the merger, Betsy Cohen said during the Dec. 11 shareholder meeting.

Following news of the Europe CDO’s closing, share of RAS hit a new 52-week high of $37.53 per share on the NYSE. That compares with a 52-week, pre-merger low of $24.81 a share, reached on May 17, 2006.

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