CreXus Investment Corporation
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CreXus Investment Corporation (NYSE:CXS) is a real estate investment trust that buys, manages and finances commercial mortgage debt.
They were the first of a series of new companies launched in the second half of 2009 to take advantage of government programs designed to clean up the toxic assets on the books of banks, which had caused the subprime mortgage crisis. It had its Initial Public Offering (IPO) September 16, 2009. This also set the trend for these companies not meeting their initial goals. They planned to sell 33.3 million shares for about $15, but were able to sell only 13 million shares.
CreXus Investment is externally managed by Fixed Income Discount Advisory Company (FIDAC), a wholly-owned subsidiary of Annaly Capital Management, Inc. This means that this company was formed and sponsored by Annaly Capital Management to make a profit in the commercial mortgage business, without risking the company's own balance sheet. They have no employees except their officers.
CreXus Investment Could Go Into All Types of Commercial Real Estate Financing
CreXus could work with many different kinds of commercial real estate-related assets: commercial mortgage loans and other commercial real estate debt, CMBS, and other commercial real estate-related assets; fixed and floating rate first mortgage loans secured by commercial properties; subordinated commercial mortgage and mezzanine loans, CMBS rated AAA through BBB as well as CMBS that are below investment grade or non-rated; debt and equity tranches of commercial real estate collateralized debt obligations, or CRE CDOs, loans to real estate companies including real estate investment trusts (REITs) and real estate operating companies (REOCs), commercial real estate securities and commercial properties, and Agency mortgage-backed securities.
They could use non-recourse leverage, including that under the Term Asset Backed Securities Loan Facility, other non-recourse financing sources, or leverage through securitizations of commercial real estate loans, and recourse leverage to finance the acquisition of Agency RMBS.
They have entered into, and anticipate continuing to do so, Mortgage Origination and Servicing Agreements (MOSAs) to originate, underwrite, conduct due diligence, close, and service commercial real estate loans.
Kevin Riodan is President and Chief Executive Officer.
The success of CreXus Investment Corporation will depend on their ability to judge the quality of their loans and managing them against the overall economic interest rate environment.
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