Defeasance transparency and value

When deciding to prepay your fixed rate CMBS debt, you are generally faced with two options: yield maintenance or defeasance. The intent of each method is to protect the investment of the bondholder, but each carries intricacies and pitfalls that can have a dramatic effect on return if navigated incorrectly.

Whether you’re initiating debt, determining downstream cost implications or executing a prepayment, it’s important to know that details, like defeasance, are covered.

Chatham Financial has vast experience in defeasance and prepayment advisory and execution. As the first firm in the market to bring transparency to residual value in the defeasance process, we enable property and portfolio owners to make informed, lucrative decisions. Regardless of the loan’s size or complexity, Chatham will provide clear explanation to help clients realize cost savings, enhanced quality of work and documentation, as well as clear explanations.

How Chatham’s experience handles defeasance

Chatham’s dedicated experts in defeasance and prepayment are focused on preparing accurate and timely analysis and estimates, ensuring better coordination, communication and outcomes. This rigor and experience results in worry-free closings and best-in-class execution.

The best interest of clients: Chatham structures and facilitates purchase of collateral while coordinating and managing the process with servicers, borrowers, new lenders or buyers, successor borrower, applicable counsel, accountants, escrow agents and any other parties.

Transparency and Value: Chatham establishes the successor borrower entity, and commits to disclosure and clear sharing arrangements of any residual value therein. We accommodate client preferences and can offer the payout of this value at closing or at maturity.

More than just defeasance: With Chatham’s extensive depth in capital markets, we understand that defeasance and prepayment alternatives are just a few of the complex financial decisions our clients face when structuring real estate debt.

Clients choose Chatham for defeasance not only because we were the first to make defeasance attractive for both servicer and borrower, but because we couple this with our mastery of interest rate and FX hedging, hedge accounting, and debt placement. We help you determine the right path and connect you with the right players to complete your defeasance. We execute this service to instill trust, confidence and highest degree of quality.

How companies work with Chatham

With Chatham’s defeasance services, we work with you up front before billing you. Our fee structure is transparent, with flat service fees per defeasance executed and a clear understanding of any residual value to be returned and shared. Chatham doesn’t charge for evaluating defeasance analysis and alternatives. We only charge when you defease, because we understand the complexity and timing dynamics that real estate companies deal with every day.

Evaluate your initial debt scenarios with the Chatham Financial defeasance calculator and the Chatham Financial yield maintenance calculator.

To learn more about the Chatham Financial Defeasance and Prepayment Services, please contact us today. Contact Our Experts