Defeasance Frequently Asked Questions

Defeasance Frequently Asked Questions

When deciding to prepay your fixed rate CMBS debt, whether through yield maintenance or defeasance, most borrowers have questions. Here are a few of the more common ones, but if you have others, or just want to talk to a defeasance expert, don’t hesitate to contact us. 610.925.3120
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Bulletin: What a Borrower Should Know Before Defeasing

What a Borrower Should Know Before Defeasing

Defeasance is the process through which a borrower is released from the obligations of its debt. The borrower purchases a portfolio of government bonds to serve as replacement collateral for the debt and to generate the cash flows required to meet the future obligations of the debt.


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Real Estate Case Study: Debt Ratio

Real Estate Case Study: Debt Ratio
Our Client:
A public real estate company specializing in asset management in the hospitality sector.
Situation:
Our client had paid down a significant portion of their floating rate line of credit, leaving them with a fixed/floating rate debt ratio higher than they desired. With hotel assets essentially re-pricing daily,


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Private Equity Case Study: Currency Challenges

Private Equity Case Study: Currency Challenges
Our Client:
A large private equity firm executing an acquisition in a developed economy.
Situation:
A private equity consortium had agreed to acquire a North American company. Due to the state of debt capital markets, a substantial portion of the debt capital structure was denominated in USD with floating


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Corporate Case Study: Interest Expense & Currency Risk

Corporate Case Study: Interest Expense & Currency Risk
Our Client:
A software firm with contracts in multiple currencies, a complicated legal structure and unique debt structures.
Situation:
The company had recently increased leverage from a negligible amount to roughly 50% of its enterprise value in a recapitalization, compounding the currency risk. The company was trying


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Private Equity Case Study: Add-on Acquisition

Private Equity Case Study: Add-on Acquisition
Our Client:
A large private equity firm completing an add-on acquisition for one of its portfolio companies.
Situation:
A portfolio company acquired a public firm via a refinancing of its existing debt, contingent on a shareholder vote scheduled to take place several months in the future. The target company


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Corporate Case Study: Strategy & Accounting

Corporate Case Study: Strategy & Accounting
Our Client:
A global packaging and manufacturing company with over $7 billion in revenues and a complex capital structure.
Situation:
The company had recently issued fixed rate financing and was considering converting it to variable via a pay-variable, receive-fixed interest rate swap. Management’s objective was to achieve


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Derivatives Debacles Ancient and Modern: A Tale of Two Cities

As the old century rolls into the new, political inertia pushes both Athens and Detroit to source more debt and hedge, for better or for worse, with sophisticated derivatives.


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Real Estate Case Study: Defeasance

Real Estate Case Study: Defeasance
Our Client:
A public real estate company that owns and manages over 600 retail operating and development properties worldwide.
Situation:
Our client engaged Chatham to assist as they used proceeds from a new securitized loan to partially defease existing secured debt. The securitization was designed to include a triple-A


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