In commercial real estate, defeasance is a process a borrower may need to go through when selling property or refinancing a loan encumbered by CMBS debt. Defeasance is a substitution of collateral activity where a portfolio of government securities are purchased from new loan proceeds, and the cash flow from these securities are used to satisfy the remaining debt service of the existing CMBS loan. The CMBS loan is subsequently assumed by a Successor Borrower, which is an entity created to hold the securities and make the future ongoing monthly loan payments. The process can be complicated, and it is common for borrowers to engage a consultant on their behalf to help them navigate through the process since it involves structuring a portfolio of approved securities and coordinating the activities of multiple parties to meet closing schedules. The professionals at Waterstone Defeasance will make sure that all of the details are covered for you, so the defeasance will go smoothly and closes on time.
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