- financial institutions
- private equity
- real estate
Defeasance and Yield Maintenance are two alternatives that real estate borrowers may consider for paying off existing debt. Yield Maintenance is an actual prepayment of a loan. It is most common in agency loans and those originated by balance sheet lenders. Defeasance is the substitution of collateral and assignment of debt and is mostly seen in securitized, CMBS debt. As a real estate investor considering prepayment terms or defeasance – whether it’s to restructure a loan and exit from current debt – questions of cost versus flexibility and overall benefits versus penalty are common.
The Defeasance Team at Chatham Financial has paved the way for transparent defeasance services since 2000. With more than 1,000 defeasances totaling more than $28 billion on behalf of clients, Chatham has navigated a wide range of defeasances, from $2 million individual property loans to as large as a $1.2 billion loan for a marquee property in a large portfolio.
Every client benefits from our deep understanding and ability to efficiently execute defeasance, resulting in smooth loan closings. Our goal is to guide clients through the complexities of the defeasance process and foster understanding of yield maintenance scenarios. We present alternatives and encourage borrowers to educate themselves to the possible scenarios. We work to maximize the client’s cost savings and eliminate burden and risk. This way, you, the client, can focus on closing your deal.
Throughout the industry, Chatham is known for its expertise in handling defeasance transactions of all sizes, from the largest, most complex multi note transactions to small balance, single asset loans. Brokers, legal counsel and servicers commonly refer clients to Chatham as a trusted source for the highest quality service with low cost execution.
As your consultant, Chatham will take the time to educate you about the defeasance process and take on the significant administrative burdens that are inherent to a defeasance.