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Due to the complexity of the transaction, most borrowers engage a defeasance consultant to manage
the process on their behalf. Although the process itself is relatively standard,
not all consultants are created equal. It is important that you engage someone who is
knowledgeable and experienced, has strong relationships
with the other participants in the process, and takes the time to understand your defeasance
objectives and align their interest with yours.
TriMont has a long and proven history of providing high quality service
to real estate lenders, borrowers, and investors with integrity and consistency. We understand
the importance of relationships and reputation
and our professionals understand that honest, effective, and fair dealings are the only way to
sustain such relationships consistently.
Our defeasance track record is proven and diverse and we provide the
borrowers with maximum flexibility in the process. Through our strong relationships with industry
participants, we are able to offer ways to eliminate speculation in the
securities purchase
as well as alternatives for buying down up front transaction costs and
mitigating tax exposures through full or partial monetization of negotiated residual sharing.
TriMont will coordinate all pieces of the defeasance process and navigate you
through with persistence, effectiveness and integrity. TriMont will be upfront about our
fees and fair in our negotiations and will strive to create the most efficient portfolio of
securities for your substitute collateral. Our clients have repeatedly acknowledged the value
in having a trusted and committed partner to advise them throughout the process and provide
solutions to any defeasance challenge.
- The borrower responsibilities
are minimal
- Notify the loan servicer of borrower’s intent to defease the loan
- Sign an engagement letter with TriMont
- Sign various legal documents on the closing date
- Collect the net proceeds from the sale or refinance
- The services that TriMont will typically provide
prior to closing
- Contact loan servicer to obtain loan amortization schedule and pertinent documents
- Work with servicer’s counsel to ensure completion of all legal documentation for the defeasance
- If necessary, provide information and documents to rating agencies and/or special servicer to obtain their approval for the defeasance
- Obtain quotes and select dealer to provide the securities to be purchased as new collateral
- Work with successor borrower’s counsel to set up new entity to own the securities
- Engage independent director for successor borrower entity
- Engage accounting firm to review pool of securities for sufficiency to make all future debt service payments
- Set up securities account with custodian to hold securities and make debt service payments
- The responsibilities that TriMont will have for the remaining
term of the loan following defeasance
- Financial reporting to loan servicer and/or trustee
- Maintenance of successor borrower entity including filing tax returns, annual filings with the State
of Delaware and any other administrative filings necessary
- Annual payment of services to independent director
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| Copyright 2006 Trimont Real Estate Advisors |
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