Dynex Resecuritizes CMBS, Announces TALF Eligibility

Dynex Capital Inc., a real estate investment trust, says it has successfully resecuritized a portion of its commercial mortgage-backed securities (CMBS) portfolio.

As announced in its Nov. 23, 2009, press release, Dynex acquired the rights to call up to approximately $182.5 million in CMBS from its purchase of a joint-venture interest previously owned by a third party. The CMBS are collateralized by seasoned commercial mortgage loans originated by the Dynex from 1996 to 1998.

In December 2009, the company called $111.3 million in AAA-rated CMBS bonds with a weighted average coupon of 7.97% and resecuritized the bonds. As a result of the resecuritization transaction, the Dynex has added higher yielding investments to its portfolio at a favorable net spread to its funding costs, the company says.

"The improvement in market prices and liquidity for CMBS over the past six months has given us comfort holding these bonds in our portfolio," says Thomas B. Akin, Dynex's chairman. "However, we may elect to sell some of the retained bonds in the future depending on market conditions and use the proceeds to repay the repurchase agreement financing."

The company has also announced that it recently became eligible to borrow under the Term Asset-Backed Securities Loan Facility (TALF) and that is currently investigating opportunities to acquire additional investments in CMBS financed through TALF.

SOURCE: Dynex Capital

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