Frequently Asked Questions.

Since facilitating our first CMBS defeasance back in 2000, we have consistently remained the first choice in the industry among real estate owners, brokers, and attorneys. We put our unparalleled experience and deep relationships to work on every defeasance to make sure it closes on time. Our origination group will explain the defeasance process, provide an initial cost estimate, and work with the customer to answer all questions.

We assign a knowledgeable, dedicated, experienced deal manager to actively manage every transaction and push it towards the customer’s desired closing date. In fact, we made our mark coordinating large, multi-loan, portfolio defeasances across several servicers to close on the same day, but we’re just as well known for giving that same attention and level of service to the customer with a small balance loan. Smaller balance loans are just as important to us as they are to the customers that need to defease them in order to sell or refinance.

We believe in consistent communication throughout the process to manage our customer’s expectations regarding timing and cost. While in some cases our fee may be nominally higher than another’s, we also work harder than anyone else. Read what our clients say about us and make sure you Defease With Ease®. You really do get what you pay for, so in this rapidly changing lending environment, it’s more important than ever to make sure you engage the best in the business to get your transaction closed quickly and correctly while your source of funds is committed to close.

One of our experienced team members will be happy to provide you with a cost estimate at no charge, if you contact us. The most accurate estimate can be attained by having one of our originators review the applicable sections in your loan documents. We provide written estimates promptly and are happy to answer all of your questions. You may also visit our online calculator to run your own estimate. It includes helpful prompts, but you can always call us for assistance.

If you engage us to facilitate your defeasance, we will create and optimize a securities list based upon the defeasance requirements in your loan documents. The defeasance clause in most loan documents require that the securities be direct obligations of the United States that mature as close as possible to the date on which the proceeds will be needed for a payment under the note. The securities also cannot be callable or subject to early redemption. A typical defeasance transaction involves the purchase of a portfolio of anywhere from five to fifty securities, depending on the length of the remaining term of the loan. The substitute collateral for a defeasance is typically a mix of T-Bills, T-Notes, and STRIPS, unless the loan documents permit agency debt.

Any estimate of the residual value is just that – an estimate. The defeasance document constraints mentioned above limit the successor borrower’s ability to enter into any sort of arrangement whereby it shares actual residual with the original borrower after the loan is paid off, even if it turns out that the residual significantly exceeds the successor borrower’s expenses. In addition to triggering a default under the defeasance documents, there are potentially significant negative tax implications related to the borrower’s deduction of the defeasance premium, if the borrower (or its parent) were to enter into such an agreement. However, Thirty Capital Financial now has access to another alternative for borrowers commencing the defeasance process. Through a new program, a borrower who engages Thirty Capital Financial to facilitate its defeasance may be eligible to receive a payment at closing that equates to the present value of a percentage of the estimated future residual (a “PV Payment”).* A PV Payment may avoid the tax, accounting and defeasance document issues associated with a residual sharing arrangement.

*PV Payments are sponsored by an upstream parent of the successor borrower, and not by Thirty Capital Financial. Thirty Capital Financial does not receive residual or have the ability to share residual with original borrowers. The PV Payment option may be changed or discontinued at any time, without notice, in the program provider’s sole discretion. Interested borrowers should contact us for details and eligibility requirements. Thirty Capital Financial is not a tax or legal advisor, so you should discuss all tax and accounting implications with your own attorney or accountant.

Often, multiple properties serve as collateral for a single commercial real estate loan. If an owner wants to release one or more of those properties for a sale or refinance without defeasing the entire note, a partial defeasance may be an option. However, the right to obtain the release of individual properties is typically negotiated when the loan is originated and specific provisions are added outlining the requirements for the partial release A partial defeasance releases one or more properties encumbered by the loan and leaves the other properties in place as collateral for the remaining debt. In a partial defeasance, the original note will be split into a “Defeased Note” and an “Undefeased Note” with identical terms (except for amount). The amount of the “Defeased Note” will be a calculated amount based on the portion of the loan amount allocated to the properties to be released, which may include a premium on the allocated value of the released properties. For example, a typical partial defeasance clause might require the Defeased Note to be in an amount equal to 120% of the portion of the loan amount that is allocated to the released properties to protect against the lender being under-collateralized on the Undefeased Note (for example, if the best assets are the ones being released). After a partial defeasance, a securities portfolio secures the Defeased Note, the balance of the Undefeased Note is set at the undefeased balance of the Original Note (i.e. the outstanding principal balance of the original note on the defeasance closing date minus the amount of the Defeased Note), and the Undefeased Note is secured by the remaining real estate. Partial defeasance clauses vary immensely from loan to loan and can be very complicated. Please contact us if you are considering, or need help with, a partial defeasance.