Dippinig its toe into a nascent market, Citicorp last week issued $120 million worth of securities backed by commercial real estate loans.

The issue is the first to come to market from a $2 billion shelf registration filed in August by Mortgage Capital Funding. an indirect Citicorp subsidiary. to multifamily and consecuritize mercial mortgages.

Citicorp said some of the mortgages backing the issue were acquired in the secondary market through sealed bid auctions run by the Resolution Trust Corp. and the Federal Deposit Insurance Corp.

Others were bought through negotiated transactions with a financial institution, the banking company said.

Only one of the loans in the securities pool was originated by Citicorp, a spokesman said.

The issue signals a desire by Citicorp to stake an early claim in the fledgling market for securities backed by commercial real estate loans.

The RTC, insurance companies. and a handful of retailers have securitized some real estate assets.

Although the market is not yet very liquid. there are signs of more rapid growth.

Chemical Set to Enter Field

In addition to Citicorp, Chemical Banking Corp. in August filed a shelf registration to issue up to $3 billion of securities backed by commercial mortgage loans.

Through securitization, banks can shift assets off their balance sheets.

The banks also can bring in some fee income if they develop a role as investment bankers who structure and sell the securities.

In the Citicorp deal, for instance. Citibank NA acted as the issue's underwriter.

Half the securities in last week's Citicorp issue were backed by multifamily realty loans, with the remainder comprised of loans for office buildings. shopping centers, and hotels.

The properties are located in seven states.

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