GSC Capital Corp., a New York City-based REIT, is making its debut this month with a couple of back-to-back, virtually spotless deals totaling about $857.1 million.
Last week GSC came to market with a $422.1 million residential MBS deal called GSC Capital Corp. Mortgage Trust 2006-1, which it issued using a rent-a-shelf arrangement with lead manager Countrywide Securities. RBS Greenwich Capital acted as co-manager on the transaction.
Backed by apparently high-quality underlying loans, the deal was rated triple-A almost throughout its entire structure, except for an $8.9 million double-A subordinate piece, which GSC Capital Corp. will retain. Pegged off of the one-month Libor, the deal priced at par throughout the entire structure, and the super senior tranche snagged pricing at 20 basis points over the benchmark. GSC Capital Corp. sifted through more than $700 million in collateral before buying the loans to weed out potential troublemakers in the underlying portfolio, resulting in a crisp, concise deal that avoided a one-year triple-A tranche. Excluding that extra slice allowed GSC Capital to avoid excess inclusion income, which would have exposed the REIT's investors to tax liabilities, according to someone familiar with the deal.
In what might become the first of regular quarterly appearances by GSC Capital Corp., the company has plans to price about another residential MBS this week, about $435 million. That structure will reverse roles for RBS Greenwich Capital and Countrywide, putting the former in the driver's seat as lead manager and using its Harborview trust. Unlike last week's deal, this week's offering is expected to take on a REMIC style.
GSC Partners, an investment advisor which is widely known as a CDO issuer, launched the REIT in July 2005. After raising $200 million in a 144A offering last year, the REIT used the proceeds to invest in real estate-related securities, whole loan mortgages, bank loans, corporate loans and ABS.
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