Press Release brought to you by The Henley Group

Don't be Taken by Surprise - CMBS Refinance Costs


The key to a successful CMBS loan refinance is to start dialoguing with the Lender/Servicer well before the loan maturity date.  Best practices CMBS Loan Negotiation Guidelines that we’ve developed for our clients and Borrowers:  1) If you plan on defensing the loan or paying off the loan at par on the balloon maturity date, you should contact the Servicer three to six months prior to the loan maturity and synchronize the pay-off details.  This allows the Servicer ample time to deal specifically with your loan.  Servicer caseloads are expected to rise in the 4th quarter of 2015 due to the significant increase in the volume of loan maturities.  2) If you plan on retiring the loan but may need an extension beyond the maturity balloon date to secure your take-out financing, you’ll need to negotiate an “extension” and/or a “waiver of fees” with the Servicer.  Otherwise, prepare to potentially pay onerous default interest and late fees.  Ideally, a conversation requesting one or both of these accommodations takes place six to nine months prior to the loan maturity.  Now is a key time to communicate your action plan with the Servicer.  If you don’t communicate with the Servicer at this juncture, you’ll limit your ability to get the additional time and/or relief you may require.  3) If paying off the Lender at par poses an issue, discuss strategy at least 12 to 18 months prior to loan maturation and preserve your options before the window to negotiate closes.  Servicers are unlike traditional balance sheet Lenders.   Limited by their fiduciary responsibilities to a Trust and resource constraints, they often appear more rigid and seemingly irrational during negotiations.  The Borrower needs to work with informed intelligence and cooperate with the Servicer to impact a resolution.

02/27/2015 - 18:45


The Henley Group

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