Reliable Defeasance Completes More Than 50 Transactions Valued at Nearly $1 Billion in First Six Months of Operation

LA-based firm brings welcome transparency to mortgage defeasance

transactions for borrowers in the CMBS defeasance market; Deals cover broad

span of real estate assets and borrowers

    LOS ANGELES, Sept. 5 /PRNewswire/ -- Reliable Defeasance LLC, which
 began servicing the commercial mortgage market earlier this year, has gone
 from a start-up to a major player in the industry, having completed more
 than 50 transactions valued at nearly $1 billion in the past six months.
     Reliable's fast-track growth can be attributed to the high level of
 transparency it brings to a process that had previously been opaque. As the
 company's name suggests, it assists commercial mortgage borrowers with
 defeasance -- a process that helps mortgagors leverage their holdings by
 substituting securities for the original real estate collateral.
     Defeasance transactions are complex, yet Reliable has been able to
 close deals in as little as two days, while executing the transaction in
 the most cost-efficient manner for the client. This is accomplished through
 a carefully managed bid process and coordination with rating agencies,
 accountants, custodians, attorneys, trustees, successor borrowers and other
 parties.
     Reliable has further transformed the defeasance market by developing
 innovative products that unlock value in deals that was previously
 unrealized by borrowers. One such product offers clients the ability to
 monetize some of the expected residual float and prepayment values at a
 predetermined discount rate, which can mitigate the borrower's overall
 transaction costs.
     Reliable also offers a portfolio rate-lock, which offers the same
 advantage as a loan rate-lock. By locking in a portfolio price 30 to 60
 days in advance, at minimum cost and no mark-to-market pricing, the
 borrower can predict the securities portfolio cost and the defeasance can
 proceed with no interest rate risk.
     Stewart Wolmark, principal of Reliable Defeasance, credits the firm's
 enhanced disclosure and its ability to orchestrate efficient defeasances as
 driving the early traction for Reliable. "We have become true advocates for
 the customer by providing them with timely and economical defeasances. We
 provide a new level of clarity," he said.
     Borrowers with conduit mortgages have responded well to Reliable's
 product lineup, including individual borrowers as well as large
 organizations with sizeable holdings, such as REITs. Portfolios have
 included all types of real estate, from multifamily housing and hotels to
 shopping centers and commercial office buildings. Among the properties
 represented in these portfolios is a $400 million Class A office building
 in New York, for which Reliable's superior securities pricing saved the
 client $900,000. Other notable real estate assets involved in transactions
 defeased by Reliable include a premier West Coast hotel property, a luxury
 boutique hotel in New York, and a major shopping mall in the southern
 United States.
     "Although currently there is volatility in the CMBS market, it remains
 dynamic. A relatively low interest rate environment presents an opportunity
 for commercial mortgage borrowers to leverage their existing real estate
 holdings in order to acquire additional properties or redirect capital via
 a cash-out refinancing," said Mr. Wolmark.
     "But as many commercial loans are packaged within CMBS loan pools,
 existing loans typically can't be prepaid early. Defeasance enables the
 borrower to refinance the debt and unlock equity in the property with no
 adverse effect on securitization because interest and principal payments
 are made uninterrupted," he added.
     In order to ensure full disclosure and to obtain the best value for the
 customer, Reliable does not have any special arrangements or preferred
 vendors, rather it works with all major servicers -- including Midland,
 Capmark, Wells Fargo, Wachovia Bank, Bank of America, and KeyBank. In
 addition, Reliable has collaborated with the country's top law firms,
 accounting firms and rating agencies on CMBS defeasance deals.
     Reliable is staffed with financial industry veterans whose experience
 not only ensures that clients receive the greatest value through a smooth
 and cost-efficient defeasance process, but also provide unparalleled
 insight into interest rate and swap markets transactions, shadowing and
 securities pricing. The team has a long history of working with real estate
 developers and borrowers, corporations, Wall Street firms and other
 financial institutions.
     "Reliable Defeasance also acts as a 'buy-side' trading desk for our
 clients to ensure best execution and validate market pricing on their
 securities portfolios," said Eric Ridel, Business Development Manager for
 Reliable Defeasance.
     "While the CMBS market continues to expand, it is underserved in the
 area of defeasance. We think there is significant value to be added to this
 process that mortgage borrowers are not capturing," explained Mr. Ridel.
     A good reflection of the knowledge and depth of the team at Reliable
 Defeasance is that it is one of the only firms to have successfully
 facilitated the closing of a Fannie Mae defeasance -- which like CMBS
 defeasances are complex, yet governed by even more rigid procedures.
 "Fannie Mae defeasances are largely an unknown commodity in the industry
 and we are helping to formulate a blueprint on how to get them done the
 right way. This is undoubtedly a welcome development for CMBS borrowers,"
 said Mr. Wolmark.
     For more information on Reliable Defeasance, call 310-728-1123.
 
      Contact:
      Allan Ripp 212-262-7477, arippnyc@aol.com
      John Garger 212-262-7484, jgargernyc@aol.com
 
 

SOURCE Reliable Defeasance LLC