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Borrowers must pay legal fees, accountant fees, and successor borrower fees to commence a defeasance transaction.
More recently, defeasance continued to climb year-over-year while supplemental debt additions actually fell by 16 percent, KBRA noted.
However, for an owner who is prohibited from pre-payment or defeasance, the most attractive option is to consider subordinate mezzanine financing.
The advantages of in-substance defeasance are twofold.
Knowing that the defeasance was in good hands allowed me and my team to focus on the refinancing.
To make defeasance feasible, the property must have built up equity through the recent rally, Olasov said.
Our goal is to simplify the defeasance, so buyers and sellers are able to concentrate on their purchase and sale transactions with complete confidence that the defeasance will close on time.
The securities are typically purchased with a portion of the proceeds of a sale or refinance, so the defeasance transaction is usually coordinated with a related real estate transaction.
The company actively facilitates the 30 day defeasance process, so the borrower can be confident that the defeasance will close on time.
Adam Coleman, deal manager at Commercial Defeasance, said, "This transaction was a clear example of how the current economic turmoil can impact the timing of a defeasance transaction.
For example, 2005 brought the greatest recent change in real estate values, which led to a volume of defeasance that was four times greater than the previous year's and more than twice the total volume of defeasance in all prior years combined.
First-in-class value-sharing program marks $75 million in defeasance client returns