The single greatest cost to defease
a loan involves purchase of the government or other eligible securities.
The cost of government securities depends on the spread between
the loan coupon and the weighted average yield on the government
securities. If the loan coupon is higher, there is usually a defeasance
premium. If the loan coupon is lower, there is usually a defeasance
discount.
| Other transactional costs
for a defeasance typically include: |
 |
Servicer Processing |
$7,500 - $30,000 |
|
Servicer Legal |
$12,500 - $25,000 |
|
Successor Borrower |
$7,000 - $12,000 |
|
Accountant |
$4,000 |
|
Securities Intermediary |
$4,000 - $12,500 |
|
Rating Agency |
$0 - $15,000 |
|
Special Servicer |
$0 - $5,000 |
|
Merrill’s Consulting Fee |
$12,500 - $20,000 |
|
|
Average Transaction Costs* |
$55,000 |
|
*These are indicative costs based on our experience. Actual transaction
costs could vary based on the complexity, size and timing of the
defeasance. For an estimate of what your defeasance transaction
costs could be, please contact
us.
|
