The seemingly endless supply of interest in real estate investments struck an opportunistic chord with the creative forces in the structured-finance market, resulting in a brand new CDO that taps REITs. Small and mid-sized REITs, which generally have trouble accessing the capital markets due to cost concerns, were able to raise funding through a new structure in the CDO market.

The recently issued Taberna Preferred Funding I is a $790 million CDO that caused a stir among institutional investors, some of whom are not even typical CDO investors. Merrill Lynch was the sole lead manger on the CDO.

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