CMBS Conduit Loan with Mezzanine Debt & Defeasance Exit

The Deal

You are the capital markets associate advising the sponsor of the Riverwalk Retail Portfolio, a stabilized three-center grocery-anchored shopping portfolio financed in 2022 with a CMBS first mortgage and a mezzanine loan secured by a pledge of the borrower's equity. The sponsor has a signed contract to sell the portfolio this September for $46,500,000 - years before either loan's 2032 maturity. Because the CMBS loan can only be prepaid through defeasance, you need to size the defeasance cost, understand how the mezzanine lender's rights affect the closing, and tell the sponsor what net proceeds to expect - and whether paying the defeasance premium now is actually the right call.