Though still a drop in the bucket relative to the overall CDO market, interest in commercial real estate-backed deals has picked up to the point that mezzanine lenders are now getting into the act. RAIT Investment Trust, a mortgage REIT formed in 1998 that specializes in small mezzanine loans, plans to issue its first CDO sometime next quarter. Should that go well, it aims to issue another before the end of the year.

"The commercial real estate CDO market is growing tremendously, and issuance this year will be much higher than [the $20 billion] we saw last year," said Darrell Wheeler, global head of CMBS strategy at Citigroup Global Markets.

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