In 2014, Commercial Defeasance, LLC defeased over 500 commercial real estate loans – double the number of transactions it closed in 2012. The company’s smallest transaction of the year was a $330,000 defeasance for a New York co-operative, while the largest was the defeasance of a $755,000,000 loan secured by the biggest shopping mall in America.
According to a review of the “Top Defeased Loans of 2014,” Commercial Defeasance advised on nine of the largest, including the Mall of America in Minnesota, the Loews Miami Beach Hotel in Florida, and Herald Center in New York.
“Last year, the Defease With Ease deal managers facilitated some of the industries most challenging defeasance transactions,” said Jeff Lee, Director of Originations at Commercial Defeasance. “We defeased one of the largest commercial loans of 2014, facilitated the defeasance of several bundled loans that required rating agency consent, and worked through the logistics of numerous Canadian and New York-style defeasances. While the marquis deals are fun to work on, we take real pride in the high level of customer service we consistently provide to all of our customers, no matter the size or complexity of their transaction.”
Many commercial real estate loans include provisions that restrict prepayment before the loan matures. However, commercial real estate owners can retire these loans by substituting government securities for their real estate collateral. The process, known as defeasance, has many moving parts, so most property owners engage a professional defeasance facilitator to help them complete the transaction in a timely manner. Founded in 2000, Commercial Defeasance, LLC (Defease With Ease®) is the most experienced facilitator in North America. The company expects to close its 7,000th career defeasance in 2015.
Most of the transactions Commercial Defeasance advises on never make headlines, but they are no less important to the owner whose sale or refinancing depends on a successful defeasance. For example, the average loan defeased by Commercial Defeasance in 2014 had an outstanding balance of $20,500,000, an interest rate of 5.75 percent, and a remaining term to maturity of 2.25 years.
For 2015, Commercial Defeasance expects a modest increase in defeasance volume over 2014. “Historically, defeasance activity increases when property values rise, interest rates are low and loan dollars are more accessible. That was the case in 2014, and we expect little change in 2015, even if the current chatter about the Fed raising rates slightly in 2015 comes to fruition,” said Lee.
ABOUT COMMERCIAL DEFEASANCE
Commercial Defeasance, LLC (Defease With Ease®) has led the commercial real estate defeasance market in the United States and Canada since its founding 15 years ago. Headquartered in Charlotte, North Carolina, the company also has offices in New York and Los Angeles to better serve its national customer base. To use a free online defeasance calculator and learn more about defeasance, visit defeasewithease.com. To start regular monitoring of the impact of interest rate movement on a future sale, refinancing or defeasance transaction, call 1-800-624-4779.