Via its new commercial mortgage conduit, NM Rothschild will launch the program's first CMBS before year end, a EURO250 million offering of investment grade paper in the euro market, according to sources at the bank, jointly managed by Rothschild and Merrill Lynch.

The conduit, called Real Estate Capital, is funded by a EURO250 million warehouse facility with Merrill, though the capacity of REC is expected to grow following the first CMBS refinancing. REC is the first real estate conduit in the U.K. to directly write commercial mortgages, as opposed to purchasing the mortgages from an intermediary's balance sheet. Rothschild, acting as loan placement agent instead of lender, scores favorable regulatory treatment.

The bank provides 10% single-A program credit enhancement. REC has already funded about EURO100 million in commercial mortgages.

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