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Waterstone Defeasance closes $74 Million Defeasance on Center Tower in Costa Mesa


CHARLOTTE, NC – May 2015:  Waterstone Defeasance, LLC recently closed a defeasance deal involving a CMBS loan.  The $74 million loan, originated in 2003, was secured by Center Tower, an office tower in Costa Mesa, California with a total of 1.5 million square feet.  The original loan was securitized in the MSC 2003-T11 pool, with a 5.740% coupon, and is scheduled to mature in June 2016.  Waterstone guided the owners through the defeasance process which was driven by the owner’s refinance of the loan. 

As the defeasance consultant, Waterstone managed the activities of the parties involved in the transaction in order to meet the borrower’s closing schedule.   Due to the size of the loan, rating agency consent was required. 

“What I appreciated most about working with Waterstone was the open line of communication that was always maintained.  The Waterstone team was constantly available to answer any questions and provide me with information regarding my transaction,” said Mark Heim of Center Tower Associates.

The Waterstone team representing Center Tower Associates, LLC was led by Brian Pedersen.


What is Defeasance?

Defeasance is a substitution of collateral in which a portfolio of government securities replaces the real estate as the collateral for a commercial loan.  Redemption of principal and interest from the securities pays remaining debt service, so the promissory note technically remains in place but is repaid from the proceeds of the securities purchased.  The securities are typically purchased with a portion of the proceeds of a sale or refinance, so the defeasance transaction is usually coordinated with a related real estate transaction.  Most fixed-rate conduit/CMBS loans originated since 1998 have defeasance provisions written into the loan documents. 

About Waterstone Defeasance

Waterstone Defeasance, LLC is an independent consulting firm specializing in assisting commercial real estate borrowers through the defeasance process.  Since 2005, Waterstone has assisted hundreds of owners and their advisors achieve the lowest possible defeasance costs. Headquartered in Charlotte, North Carolina, the company also has offices in New York, Dallas, and Atlanta. 


8720 Red Oak Blvd., Suite 300
Charlotte, NC 28217
Contact: Carol Tillman

Contact: Steve Hall

New York
232 Madison Ave., Suite 600
New York, NY 10016
Contact: John Felter

Contact: Mike Schoenstein

Contact: Jeff Gladstein


05/12/2015 - 21:15


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