Cases & Deals

DDR and subsidiaries close on first ever offering of CMBS under the Federal Reserve's TALF Program

Client(s) Developers Diversified Realty Corporation

Jones Day assisted Developers Diversified Realty Corporation and certain of its subsidiaries (DDR) with closing on the first ever offering of newly-issued commercial mortgage backed securities (CMBS) under the Federal Reserve's TALF Program on November 25, 2009. The transaction also marks the first successful primary issuance of CMBS in the U.S. in approximately 18 months. The CMBS issuance, DDR I Depositor LLC Trust 2009 Commercial Mortgage Pass-Through Certificates, Series 2009-DDR1, is backed by a $400 million portfolio mortgage loan made by Goldman Sachs Commercial Mortgage Capital, L.P.

Jones Day advised DDR as borrower's counsel in connection with both the $400 million portfolio mortgage loan and as counsel to the sponsor and the depositor in connection with the subsequent TALF securitization. The mortgage loan is secured by a portfolio of 28 properties across 19 states and was underwritten to be "TALF Eligible." The placement and TALF agents were Goldman Sachs & Co. and Citigroup Global Markets Inc.

In addition to the work typically expected in a large portfolio CMBS matter (such as negotiating loan documents, providing nonconsolidation, corporate enforceability, and other opinions and entity formations and restructuring), Jones Day attorneys also provided guidance concerning DDR's credit facility compliance, investment requirements under the TALF securitization, offering documents, and other matters arising under securities laws in connection with the securitization. In addition, Jones Day provided guidance in response to policy changes and additional underwriting requirements from both the Federal Reserve and rating agencies. Of note, the involvement of the Federal Reserve introduced an additional layer of loan underwriting and servicing requirements to address real and perceived risks that have occurred in the marketplace, including recent developments from the GGP bankruptcy case.