Structuring CRE-CLOs: Tax, Eligible Assets, Closing Timeline, Investment and Servicing Concerns

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Tuesday, April 12, 2022

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Course Materials

This CLE course will examine the structuring and administration of commercial real estate collateralized loan obligations (CRE-CLOs). The panel will discuss entity structures used to avoid entity-level tax treatment, types of loan collateral, the reinvestment timeline, loan servicing parameters, and loan origination features for a CLO portfolio.


CRE-CLOs allow REITs and other mortgage loan funds to finance their loan portfolios with match term funding via the capital markets as an alternative to bank provided repurchase facilities or lines of credit. Unlike REMICs, CRE-CLOs may hold reinvest principal proceeds, which makes it an attractive vehicle for financing short-term bridge loans.

CRE-CLOs are typically structured as either a qualified REIT subsidiary (QRS) or a foreign corporation. When operating as a foreign corporation, the sponsor must be able to demonstrate that it is not originating loans as an agent for the CRE-CLO in order to avoid entity-level taxation. This may include "seasoning" of loans before transferring them to the CLO and other deal specific guidelines.

CRE-CLOs have a limited reinvestment period (typically two years) in which the CLO can reinvest any funds received from repayment or refinancing of portfolio loans into new debt instruments. After that, the CLO manager must revert to receiving and distributing funds to investors as the portfolio amortizes down for the remainder of the life of the CLO.

Loan structuring requirements are similar to those required for REMIC securitization. SPE covenants, recourse carveouts, reserves, cash management, and independent directors may be required as a prerequisite to a loan's inclusion in the securitized pool. Originators should adopt closing and documentation requirements that enable a smooth transition to the CRE-CLO.

Listen as our authoritative panel discusses the various nuances of CRE-CLOs, including tax structuring, CLO administration, and loan origination concerns.



  1. Purpose and characteristics of CRE-CLOs contrasted with REMICs
  2. Avoiding entity-level tax
    1. QRS
    2. Foreign corporation (Cayman Islands?)
    3. Separation of sponsor/originator from CRE-CLO: sponsor must not be an agent
  3. Management of the CRE-CLO portfolio
    1. Reinvestment period
    2. Actions management may take after that
  4. Loan structuring features
    1. Eligible loans
    2. SPE borrower
    3. Cash management/reserves
    4. Recourse carveouts


The panel will review these and other vital issues:

  • What are the key differences between a CRE-CLO and a REMIC?
  • How should the CRE-CLO be structured to avoid entity-level taxation?
  • What kinds of reinvestment are permitted during the reinvestment period, and what actions are permitted after the reinvestment period has expired?
  • What types of loans are eligible, and what are the structuring features of loans that typically go into CRE-CLOs?


Pawling, Matthew
Matthew P. Pawling

Special Counsel
Cadwalader Wickersham & Taft

Mr. Pawling is a special counsel in the Capital Markets Group. His practice is concentrated in the area of structured...  |  Read More

Rotblat, Y. Jeffrey
Y. Jeffrey Rotblat

Cadwalader Wickersham & Taft

Mr. Rotblat practices primarily in commercial real estate securities representing major Wall Street investment banks...  |  Read More

Silverstein, Gary
Gary T. Silverstein

Cadwalader Wichersham & Taft

Mr. Silverstein represents issuers, underwriters, insurers and other parties in connection with the tax aspects of...  |  Read More

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