True sale confusion could put brakes on CMBS

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By David Bell
17 Aug 2017

A clash over the accounting treatment of risk retention notes has thrown the US CMBS market into flux, with uncertainty over the issue throwing into question the capital treatment and profitability of certain CMBS deals issued since the rule went into effect last year. David Bell reports.

A $625.7m deal from Ladder Capital sold in June this year — in which a horizontal risk retention piece was sold to a KKR fund — was deemed not to have met “true sale” accounting rules, according to the firm’s second-quarter results. This meant the issuer could not ...

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