Waterstone Capital Advisors is an independent defeasance consultant group offering the following services to commercial real estate borrowers with conduit loans:

As an independent consultant to the borrower, Waterstone Capital Advisors represents our client’s best interest in an effort to structure the most optimal defeasance transaction. Waterstone Capital Advisors will coordinate with the various parties such as the servicer, servicer’s counsel, verification accountant, securities broker/dealer, securities custodian, rating agencies, title company, and successor borrower in order to ensure the defeasance is completed within your closing schedule.

Waterstone Capital Advisors uses its extensive experience to identify and structure an optimized portfolio of defeasance securities to satisfy the remaining principal and interest payments of the loan.

The securities portfolio is then placed in a competitive auction environment where major broker/dealers bid on the portfolio. Although Waterstone Capital Advisors is not a broker/dealer, we work closely with the executing broker/dealers, the verification accountant, and the custodian to make sure the securities are sufficient to pay off the remaining loan payments and are delivered to the custodian in a timely manner.

Conduit loan documents with defeasance language typically require the formation of an entity to assume the liability for the loan when the defeasance occurs; this entity is termed the successor borrower.

A successor borrower is a special purpose, bankruptcy-remote entity, formed primarily for purposes of insulating the loan from any trailing liabilities of the original borrower that relate to the operation and ownership of the real property.

The successor borrower is typically unrelated and unaffiliated with the original borrower. Waterstone Capital Advisors will create and maintain a successor borrower entity to assume the loan from the original borrower.