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Transactional Real Estate: The Role of Defeasance in Real Estate Finance

July 13, 2015 download PDF

Real estate partners Mitchell Berg and Peter Fisch published their quarterly Transactional Real Estate column in the July 8 issue of the New York Law Journal. The article, "The Role of Defeasance in Real Estate Finance," discusses defeasance, a common a feature in real estate finance (in particular in CMBS loans), which allows a borrower to effectively prepay a loan that is not by its terms prepayable. In a defeasance, the subject loan remains outstanding but Treasury securities and similar collateral are substituted for the real estate collateral, which allows the real estate collateral to be sold or refinanced. Real estate associate Shawn Fetty and John Ahearn, a consultant at Defease with Ease, assisted with the preparation of this article.

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