Capital Lease Funding, Inc. Closes First Collateralized Debt Obligation.

NEW YORK -- Capital Lease Funding, Inc. (NYSE: LSE) today announced the closing of its first collateralized debt obligation, or CDO. The long-term financing obligation included the following highlights:

--$300 million financing, including $285 million of multi-class notes and $15 million of preferred stock issued by our wholly-owned subsidiary;

--CapLease retained $31.5 million of the transaction, representing the three most junior note classes and the preferred shares;

--84% of the notes were rated Aaa/AAA by S&P and Moody's, respectively;

--entirely fixed-rate financing, with a weighted-average effective interest rate of 4.98%;

--on-balance sheet financing, meaning the assets we financed and liabilities we incurred will remain on our balance sheet;

--the note obligations are non-recourse to us;

--the notes are secured by approximately $300 million of assets;

--we retain flexibility to reinvest principal repayments on the underlying assets into qualifying collateral during the first five years of the CDO term;

--the notes have a stated maturity in January 2040, but are expected to be retired on or before January 2015;

--we have the option to redeem the notes beginning in January 2008 with a prepayment premium to maintain investor yields; and

--if the notes are not redeemed prior January 2018, interest on the preferred shares will be redirected to repay the notes until the notes are redeemed in full.

CapLease received net proceeds in the transaction of approximately $263.1 million, approximately $206.0 million of which was used to repay borrowings under its short-term credit facility and $57.1 of which will be used to fund future investments.

"We are delighted that we have closed our first CDO on terms that provide us with both favorable fixed rate financing of our net lease assets for at least 10 years as well as significant flexibility to redeploy and releverage principal within the structure. We look forward to continuing to use CDOs to finance our net lease assets as we continue to grow," said Paul McDowell, CEO of CapLease.

The securities offered pursuant to the CDO will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Capital Lease Funding, Inc.

Capital Lease Funding, Inc. is a real estate investment trust, or REIT, focused on financing and owning commercial real estate that is net leased primarily to single tenants with investment grade or near investment grade credit ratings.