GFI and Melody plan RE derivatives market.GFI GFI Ground Fault InterrupterGFI Go For It GFI Government-Furnished Information GFI Growing Families International GFI Goodness of Fit Indices GFI Government Financial Institutions (Philippines) GFI Gross Farm Income Group Inc., a leading broker of derivatives and related securities, and CBRE CBRE CB Richard Ellis (real-estate firm) CBRE Chemical, Biological, Radiological and Explosive CBRE Component-Based Reliability Estimation CBRE Coldwell Banker Richard Ellis (Boston, MA) Melody, the mortgage brokerage subsidiary of CB Richard Ellis CB Richard Ellis Group, Inc. NYSE: CBG is a multinational real estate corporation currently based in Los Angeles, California, U.S.A.. On December 20, 2006, the corporation, also known as CBRE, completed acquisition of Trammell Crow Co. in a transaction valued at $2. Group, Inc., announced their collaboration to develop a market for U.S. real estate derivatives. The collaboration, referred to as CBRE Melody/ GFI, combines CBRE's leading position in commercial real estate services with GFI's expertise in brokering new derivative products. GFI and CBRE launched a similar initiative in the U.K. in 2005 and the companies are now leaders in the growing property derivatives General Definition A property derivative is a derivative (finance) whose price and value derives from the value of a real estate asset, usually represented in the form of an index. market there. Neither GFI nor CB Richard Ellis will take a principal position in any of the derivative trades arranged by CBRE Melody/GFI. CBRE Melody/GFI's brokering desk will be located in GFI's offices in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and initially staffed by Phil Barker, GFI's VP, real estate derivatives. "Real estate is the largest asset class not currently taking full advantage of derivatives," said Don Fewer, senior managing director for GFI, North America. "We believe an over-the-counter derivative market based on U.S. real estate indices will enable active risk management and trading opportunities in real estate, while reducing the transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). and lead times." "Real estate investors will have an opportunity to trade in new ways and new participants will have easy access to U.S. property for the first time," said Mike Melody, vice chairman at CBRE Melody. "The derivatives market in other asset classes has matured meaningfully within three to five years. Commercial property has the potential to develop in the same way. "CB Richard Ellis, working closely with GFI, can play an important role in this, because of the depth of our real estate market knowledge and our access to capital sources worldwide." Real estate derivatives typically take the form of a total return swap Total Return Swap Any swap in which the non-floating rate side is based on the total return of an equity or fixed income instrument with a life longer than the swap. Notes: Total return swaps are most common in equity or physical commodity markets. on commercial or residential property indices against floating interest rates plus a spread. Other products include capital appreciation swaps and structures involving options and futures. CBRE Melody/GFI will offer this service to clients of both companies, including investment banks and hedge funds, as well as develop new users such as pension funds, endowments, insurance companies and other institutional investors. |
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