Defeasances

Helping borrowers navigate CMBS defeasances

Our clients include owners of student housing, self-storage, shopping centers, and mobile home parks that opted to defease their CMBS loans in order to refinance or pre-pay before maturity. Most borrowers (and many attorneys!) don't have experience with defeasances and don't appreciate the complexities, the parties, and the timelines.

We've worked on hundreds of defeasances.

In a defeasance, new money is used to purchase a specially-curated set of securities designed to exactly recreate the ongoing payment structure of an existing loan. The parties involved in most defeasances include the borrower, existing lender, new lender, a specially created entity called the successor borrower, a securities intermediary bank, and a loan servicer. Additionally, a defeasance consultant typically coordinates the purchase of the securities, a process that requires deep knowledge of the pricing and availability of specialized security markets.

Defeasance are inherently complex, and you want attorneys who know how to handle them.