Loan Defeasance Calculator — Commercial Real Estate
Defeasance Type
Prepayment Penalty
🏦 Loan Information
$
$
%
months
months
📈 Defeasance Parameters
%
%
$
$
Defeasance Cost
$0
PV of remaining payments
Prepayment Penalty
$0
If applicable
Yield Maintenance
$0
Premium over treasury
Legal & Admin Fees
$0
Defeasance costs
Total Defeasance Cost
$0
All-in cost to defease
Defeasance vs Prepayment Savings
$0
If defeasance is cheaper
📅 Remaining Payment Schedule
Payment #
Date
Payment Amount
Principal
Interest
PV Factor
PV of Payment
Enter loan details to calculate
📊 Defeasance Calculation Breakdown
📌 Loan Defeasance Explained:
• Defeasance: Substituting collateral (government securities) for the original property to release the lien
• Defeasance Cost: Present value of remaining loan payments discounted at the treasury rate + spread
• Yield Maintenance: Prepayment penalty ensuring lender gets same yield as original loan
• Make-Whole Call: Prepayment penalty equal to present value of remaining interest payments
• CMBS Loans: Most commercial mortgages use defeasance rather than prepayment
• Process: Borrower purchases government bonds, assigns them to lender, property lien released
• Costs Include: Bond purchase (PV of payments) + legal/admin fees (~$15-25k)