Resource America Inc. subsidiary Resource Real Estate is gearing up to close the first of two CDOs it plans to bring to market this year. The $345 million deal, Resource Real Estate Funding 2006-1, is backed primarily by mezzanine, B-notes, and a 20% share of commercial real estate whole loans.

The deal is co-led by Deutsche Bank Securities and Bear Stearns and matures August 2046; LaSalle Bank is the trustee. At 40.6% and 35.7% current portfolio concentrations respectively, the deal carries a higher portion of B-note and mezzanine securities than a number of recently issued CRE CDOs, including Marathon Real Estate CDO 2006-1 and N-Star REL CDO VI. The short-term nature of much of the portfolio notes is expected to result in a full turnover of the CDO portfolio during its five-year reinvestment period, according to Fitch Ratings. However, RRE can sell out of any securities that are defaulted or pose a "significant credit risk" throughout the life of the deal.

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