CMBS (Conduit) Loan Defeasance Drops Rapidly

February 15, 2018

A CMBS Loan, also known as Conduit Loan, is a type of commercial real estate loan secured by a first-position mortgage on a commercial property. These loans are packaged and sold by Conduit Lenders, commercial banks, investment banks, or syndicates of banks.

The legacy CMBS market has been shrinking rapidly, which has affected defeasance activity profoundly. Last year, only 449 CMBS loans ($6.4 billion) were defeased. Compare this to 2016, where 1,059 loans ($15.9 billion) were defeased.

Why did the number of defeasances drop?

Last year, market conditions were perfect for defeasance transactions. However, there simply was not very many loans to defease. When interest rates are low, and property values high, we see higher defeasance activity. This was what happened in 2016.

Between 2013 and 2016, a spike of defeasances occurred when approximately $70.6 billion of loans were replaced by government securities.

This increase in defeasance activity occurred simultaneously with the CMBS Wall of Maturities.

What fuels the defeasance fire? Maturing Debt.

Bottom line, there are fewer maturities, so there are fewer defeasances. This is best explained when looking at the financial crisis that happened almost a decade ago. After the fall, so to speak, not as many CMBS loans were issued.

The decline of maturities = The decline of defeasances.

What is the expectation?

Steadiness. This expectation isn’t a strong one when looking at the scarce amount of loans issued in the last 10 years, following the 2008 financial crisis. Let’s break the numbers down…

2008 – $12.1 billion of loans

2009 – $3.6 billion of loans

2010 – $11 billion of loans

The Big Variable

In short, expectations of major interest rate hikes. Rate increases motivate borrowers to “lock in” current rates, as well as defease existing loans. However, for this to happen, the increases would have to be dramatic. 1% is not enough to scare a borrower into completing these transactions. Instead, it would have to be a much higher number that would cause them to defease, even if they only had a few years left on the existing loan.

Prepay or Defease?

Securitized commercial mortgages are usually structured with prepayment restrictions. This is to make sure that the lenders receive the cash flows that were expected for the life of the loan. If a borrower decides to pay off their loan before it becomes available to prepay, they could face serious penalties. These payoff cases typically happen when there is a sale of the property or a dramatic drop in interest rates.

Alternatively, the borrower could replace their mortgage collateral with government securities that copy the mortgage’s cash flow. In short, the lesser amount of time left on the loan, the lower the cost to defease. As with the opposite, the longer amount of time remaining on the loan, the more it will cost to defease. This is why most wait until the last two years of the maturity of the loan to defease.

If you have questions on defeasement or the maturity of your loan, contact RESolutions to guide you to the most appropriate steps for your situation.

RE|SOLUTIONS News 12/2017

December 13, 2017 – RE|SOLUTIONS sells Peoria apartment portfolio and hires Patrick Schenk.



RE|SOLUTIONS represents Asian buyer in purchase of Peoria multifamily assets.


Patrick Schenk has joined RE|SOLUTIONS.


Contact us to learn how you can easily monetize your real estate network by referring business to us.



Property Management,

Investment Sales & Leasing

  Send us an Email

Phone: (312) 257-3252


Address:  79 W Monroe, Suite 905, Chicago, IL  60603

SOLD: Peoria Apartments Purchased by Asian  Investor

(Peoria, IL) – RE|SOLUTIONS is pleased to announce its representation of an Asian buyer in the recent purchase of a 33 unit apartment portfolio located on Moss Avenue in Peoria, Illinois for $1.3 Million. While not exclusively leased to students, the properties’ location between the University of Illinois Medical School and Bradley University, results in a strong student occupancy.

Brian Goldman and Saar Schnitman identified the opportunity and represented the buyer in the purchase. In order to complete the transaction, we also negotiated a release of a potentially detrimental easement over the property by the owner of the land next door.


Patrick Schenk


Property Management & Leasing           

RE|SOLUTIONS is pleased to announce that Patrick Schenk has joined the company in the Property Management & Leasing group. 

Patrick graduated from DePaul University’s Driehaus College of Business this past spring after successfully completing his degree in Real Estate Finance. Patrick comes to us from The Walsh Group and will be initially working on property management and leasing.

Please note:  This is an opt-in newsletter and is only received by those who joined it or have had interactions with RE|SOLUTIONS EMR.  RE|SOLUTIONS EMR respects your privacy and will never share your email address or any other personal information with anyone.



RE|SOLUTIONS Brokers Sale of Cleveland’s Rose Building for $37.9 Million

Tuesday, September 27, 2017

Rose Building

Medical Mutual Headquarters, Cleveland, Ohio

(Chicago, IL) – Last week, as advisor to a special servicer, Torchlight Investors, on a defaulted CMBS loan, S.L. van der Zanden, Managing Principal of RE|SOLUTIONS, arranged the sale of the 381,000 square foot historic Rose Building to its current tenant, Medical Mutual of Ohio for $37.9 million. The sale is being viewed as a successful conclusion to a process that began over a year ago. That was when the lender, a group of bondholders represented by U.S. Bank, filed for foreclosure against Bentley Forbes, a California-based landlord, and a court appointed receiver was installed.

The Rose Building, which was briefly the tallest building between New York City and Chicago, has been home to Medical Mutual since 1947 and they owned the 10-story building and its six-story annex from 1984 to 2000. Seventeen years ago, Medical Mutual sold the complex, along with other buildings, to Bentley Forbes to free up cash. Due to the near-term lease expiration of the building’s sole tenant, they were unable to refinance. Thus resulting in a maturity default.

S.L. van der Zanden’s Role

S.L. van der Zanden’s initial role was to negotiate a “blend and extend” of the absolute triple net lease with Medical Mutual. To extend the term with less than four years remaining to at least 11 years.

“My assignment was to put the property on a secure financial footing conducive for a buyer to obtain long-term financing and thereby facilitate a property sale at an attractive cap rate”, he says. “We were surprised that Medical Mutual’s response to our initial proposal was an offer to purchase with a net economic value of slightly less than thirty million dollars.”

Over the course of nearly a year, and despite many stops and starts, a deal was finally struck. In June of 2017, the deal closed at the final purchase price. The sale price was about $10 million less than what BentleyForbes paid in 2000. But it’s still a notably high number for an older downtown building. This is based on the prices that other, comparable properties have been fetching. Cuyahoga County estimates that the property is worth $16.2 million.

“We were excited to work on this assignment since we specialize in improving operations and leasing of large commercial properties. We have repeatedly demonstrated that we can add significant value while guiding distressed assets through the foreclosure process,” said S.L. van der Zanden, Managing Principal and CEO of RE|SOLUTIONS.

Built-Out Office Space For Lease

April 1, 2017 – Up to 4,500 sqft of space available now in Kenosha, WI and Gurnee, IL:

built-out office space for lease - kenosha wi


RE|SOLUTIONS News 2/2017

February 15, 2017 – RE|SOLUTIONS nabs five new management assignments and promotes Saar Schnitman to Senior Director of Property Management & Leasing.

commercial property management - chicago - resolutions



RE|SOLUTIONS announces new property management assignments in:

Evergreen Park

Melrose Park

Orland Park

Benton Harbor, MI



Saar Schnitman 

Real Estate Senior Director

Property Management & Leasing

Contact us to learn how you can easily monetize your real estate network by referring business to us.

RE|SOLUTIONS is now looking to hire an assistant for our Property Management division. 

Contact Brian Goldman for more info:


Property Management & Leasing


  Send us an Email

Phone: (312) 257-3252


79 W Monroe, Suite 905

Chicago IL 60603

                                                        New Assignments: Five New Properties

“We’re seeing a big uptick in acquisitions by savvy investors from the east and west coasts that demand sophisticated, professional management”, S.L. van der Zanden, Managing Principal.  80% of our new business has come through our Referral Rewards program which compensates for deals sent our way”. 

commercial property real estate - chicago - resolutions

Announcing: Promotion

Saar Schnitman

Real Estate Senior Director

Property Management & Leasing

saar schnitman - real estate senior director

RE|SOLUTIONS is pleased to announce that Saar Schnitman has been promoted from Director to Senior Director of our Property Management and Leasing Divsions. 

In his new position, Saar will take on oversight of our recently expanded portfolio and new staff hired to manage our properties across the Central US region. 

Please note:  This is an opt-in newsletter and is only received by those who joined it or have had interactions with RE|SOLUTIONS EMR.  RE|SOLUTIONS EMR respects your privacy and will never share your email address or any other personal information with anyone.


Another Turnaround Success for RESolutions

In December of 2014, the O’Fallon Walk Shopping Center located in O’Fallon, MO was sold to a Miami-based investor for $9.155 Million – a figure which due to our efforts reflects a 66% increase in value from the best viable bid obtained during an aborted sales offering in 2012.

“We are very pleased with the value added to this asset by the RE|SOLUTIONS’ team,” says Ian Coutts asset manager for Torchlight Investors.

Built in 2005, this 157,000 square foot shopping center lost three junior box tenants during the height of the last recession – Old Navy, Linens & Things and Factory Card Outlet.  With a vacancy of 45%, the property fell into default on its mortgage and resulted in RE|SOLUTIONS being appointed by the special servicer to act as receiver and property manager.

Our analysis of the property revealed a correctable flaw caused by a third-party owned auto mechanics garage “outlot” blocking an important sightline and access to the property. With lender and court approval, we moved quickly to negotiate a purchase option with the owner of the offending land parcel.  The next step we took was to create a new marketing package to more effectively communicate the new proposed access point and view corridor to prospective tenants and purchasers.

“By thinking outside of the box and tying up the land blocking the property, we were able to create a new vision and rekindle interest in the center, and thereby attract a new high-quality grocery store and a large fashion retailer,” Mr. van der Zanden said.

Our actions created momentum that was instrumental in O’Fallon Walk’s turnaround success story.

O’Fallon Walk – Creating the Vision

commercial real estate before after OFallon Walk


Struggling Evergreen Park mall hits market after loan sale fails

(Crain’s, November 25, 2014) – The foreclosure process for one of the oldest—and emptiest—malls in the Chicago area has restarted after a deal collapsed that would have given a Florida real estate developer control of a loan on the property.

Tampa-based DeBartolo Development last year said it would buy a defaulted loan on the Plaza, a 733,986-square-foot mall near 95th Street and Western Avenue in Evergreen Park.

But the loan sale fell apart, confirmed S.L. Van der Zanden, CEO of RESolutions, a Chicago-based company that’s serving as a court-appointed receiver for the mall during the foreclosure process.

The servicer of the loan, Houston-based Situs Holdings, is now forging ahead with the foreclosure and has hired a broker to sell the property, said Van der Zanden.

The loan sale closing date “was extended numerous times and the decision by Situs at this point in time was, they’d prefer not to provide additional extensions on the contract,” he said. “So the contract expired.”

Van der Zanden said he didn’t know why the loan sale fizzled. DeBartolo representatives did not respond to messages. A Situs spokesman declined to comment.


The Plaza, which currently has just four tenants and more than 458,000 square feet of empty, enclosed mall space, is owned by a group of investors led by Kansas City, Mo.-based Provo Group, which is said to be cooperating with the foreclosure. Bruce Provo, president of his namesake firm, said his group is cooperating with Situs and has agreed to give up the property.

DeBartolo’s loan purchase was the first step the firm needed to ultimately take over the mall, demolish it and redevelop the 30-acre site with a $112 million shopping center. In a statement, the firm said it didn’t acquire the loan because it is busy working on other projects.

“After evaluating the opportunity, we decided to focus our resources in the Chicago market on the Optima towers downtown,” the company said in the statement. “We are in the process of beginning construction on a 1.4 million-square-foot regional shopping center in Kapolei, Hawaii, and didn’t want to add any additional regional centers at this time.”

In October, the Village of Evergreen Park signed a memorandum of understanding regarding a redevelopment plan with UP Development, a real estate firm based in suburban Nashville.

The village will negotiate “exclusively” with UP over the redevelopment of the Plaza site through Jan. 31, including over a financial incentive package for a 440,000-square-foot project on the site, according to a copy of the document.

Under the terms of the memo, the village says it will consider providing UP with around $10 million in funds raised through a new bonding district on the property, provide a sales-tax reimbursement to the firm and issue other incentives.

Evergreen Park Mayor James Sexton said the village wants to work with UP and won’t negotiate over incentives if a new buyer emerges to buy the property. He said UP was partnering on the project with DeBartolo, which the Tampa-based firm shot down in their statement.

“If we don’t get it going soon, and if we don’t get it going soon with the people we’ve talked to for two years, we’re out,” he said.


“It’s a remarkably urban, in-fill and probably mostly retail redevelopment site,” said Ben Wineman, principal at Mid-America Real Estate, the Oak Brook-based brokerage selling the Plaza. He expects a future owner will seek to demolish the existing mall, given its age and how it is configured.

No buyer has been picked for the mall, he said.

“It’s a wide-open playing field” right now, Wineman said.

The Plaza currently has just four tenants, according to Mid-America marketing materials: a Carson Pirie Scott department store, a Planet Fitness gym, an Applebee’s restaurant and an Enterprise car rental office.

Carson has extended its lease until 2023, and the gym has a lease for its space until 2021, according to the materials. That could complicate plans developers might have to raze the mall and build anew since those tenants would have to be accommodated in the project or bought out of their leases.

The Plaza was developed by famed Chicago developer Arthur Rubloff in the early 1950’s. Later, he converted the property into an enclosed mall, one of the first in the area.

After trip through foreclosure, Glen Town Center has new Owner

(Crain’s, May 21, 2014) – About eight months after being repossessed by its lender, the Glen Town Center retail development in Glenview sold for a fraction of what was owed on the property when it fell into foreclosure.

Dick's Sporting Goods is among the stores at Glen Town Center in Glenview.

(Crain’s, May 21, 2014) – Dick’s Sporting Goods is among the stores at Glen Town Center in Glenview.

About eight months after being repossessed by its lender, the Glen Town Center retail development in Glenview sold for a fraction of what was owed on the property when it fell into foreclosure.

A venture of Dallas-based Tabani Group Inc. paid an affiliate of U.S. Bank N.A. nearly $25 million for the 267,000-square-foot shopping center on the site of the former Glenview Naval Air Station near Lake Avenue and Patriot Boulevard, according to a person familiar with the deal. A Tabani spokeswoman confirmed the acquisition but declined to say what the company paid.

The sale represents a big loss for investors who own mortgage bonds backed by the debt on the property. U.S. Bank said Glen Town Center’s developer, an affiliate of San Diego-based OliverMcMillan LLC, owed $55.6 million when the lender filed to foreclose on a defaulted commercial mortgage-backed securities (CMBS) loan almost two years ago. The property was seized through a foreclosure sale in September.

OliverMcMillan borrowed the money on the Glen in 2006, when a robust economy and retail market prompted landlords to take out loans with the expectation that rent growth and tenancy at their properties would remain strong. Instead the market crashed, and retail property values plunged.


“This is not an uncommon story,” said Joseph McBride, an analyst at New York-based research firm Trepp LLC. For delinquent CMBS loans on retail properties originated before the crash, “when you did see a revaluation, it was as much as a 50 percent haircut on the appraised value.”

The Glen generated about $1.7 million in net cash flow before debt payments in 2013, less than the $3 million in debt payments due that year, according to a Bloomberg L.P. report about the loan. Net cash flow is up 14 percent vs. the 2010 bottom but still 50 percent less than 2006’s total of $3.3 million.

The deal is Tabani’s first acquisition in the Chicago market. The company owns 21 retail properties, including shopping centers and huge malls, in markets in Texas, Cincinnati and suburban Indianapolis, according to its website.


“We’re very excited about the acquisition,” the spokeswoman said. “The Glen Town Center is a prime shopping destination for the area.”

For Tabani, the question is whether the firm can latch on to a retail market recovery that favorsthe strongest properties in the best locations.

Despite the Glen’s Main Street-style design and its proximity to affluent consumers in the northern suburbs, the property has struggled over the years — even before the crash — in part because it’s considered difficult to get to. Tabani will carry out an “aggressive” marketing campaign for the Glen and plans to organize more events at the property to draw in additional shoppers, the spokeswoman said.

Buying the Glen at a low value gives Tabani the flexibility to offer attractive rents to retailers and still generate a decent return.


It gives the company the chance “to get creative with tenants and offer up incentives to attract groups that may not otherwise have gone there, if they were looking at similar rents along a more accessible and visible corridor like Willow or Waukegan road,” said broker Michael Marks, senior director in the Chicago office of Cushman & Wakefield Inc. who focuses on retail property sales.

The current tenant lineup at the Glen includes Dick’s Sporting Goods, a Yard House restaurant and Ulta Salon, Cosmetics & Fragrance Inc. A Von Maur department store, a movie theater and nearby apartments are owned separately.

In 2011 the occupancy rate at the property was 84 percent, but Chicago-based RE|SOLUTIONS, a receiver that managed the property starting in late 2012, during the foreclosure proceedings,signed several new tenants, boosting the rate to 90 percent as of late last year.

A spokeswoman for Minneapolis-based U.S. Bank declined to comment; the lender filed the foreclosure suit and took back the property in its role as trustee for investors in the CMBS loan. A media representative for Houston-based Situs Holdings LLC, a loan servicer that managed the CMBS debt on the property, did not return a call.

Ben Wineman, a principal at Oakbrook Terrace-based Mid-America Real Estate Corp. who handled the sale for Situs, did not respond to a call.

Smoothies, shakes, fries and fashion in Glenview

(Crain’s, November 8, 2013) – Four new stores are coming to the Glen Town Center in the northern suburbs, a bright spot for a once troubled shopping complex as it courts buyers.

The new leases, which total nearly 11,700 square feet, bring occupancy of the center’s lender-owned retail space to 90 percent, confirmed S.L. van der Zanden, managing principal and CEO of Chicago-based RE|SOLUTIONS, which manages the Glenview property.

Houston-based Situs Cos. is trying to sell the space, which encompasses nearly 267,000 square feet, after taking ownership through a foreclosure suit filed last year against the center’s developer, an affiliate of San Diego-based OliverMcMillan LLC.

“We lifted the cloud of the delinquency and the foreclosure action and let people know that there is someone here in charge,” Mr. van der Zanden said. “We were ready to do deals, and
they came forward.”

Located on the site of the former Glenview Naval Air Station, the complex also includes a Von Maur, the Regal Glen Stadium 10 cinema and apartments that are owned separately. Including the department store and movie theater, the shopping center is about 96 percent leased, according to Joe Parrott, a senior vice president with Los Angeles-based CBRE
Inc. who handles leasing.

Among the new tenants at the Glen is Houston-based Pinot’s Palette, an upscale wine-and-art franchise that is breaking into the Chicago market, where it will compete with similar concepts like Bottle & Bottega and Arts n Spirits.

Pinot’s, which is also opening a Naperville location, leased 2,500 square feet at the Glen and plans to open the studio in January, said franchisee Mari Sokolowski, who also serves as franchise development director for the company, which has 61 locations open or slated to

Mingle Juice Shop, meanwhile, signed a three-year, 1,180-square-foot lease for its first location, slated to open in March, confirmed Kimberly King, managing partner for the business. The store will target health-conscious consumers, serving fresh-squeezed juices and smoothies and a variety of grab-and-go food items, Ms. King said.

Rounding out the list of new tenants: MOOYAH Burgers Fries & Shakes, a fast-casual burger chain based in Plano, Texas, which leased about 2,000 square feet, and Curragh Traditional Irish Pub, which took 6,000 square feet. Curragh also has locations in Chicago’s Edison Park
neighborhood, Skokie and Holland, Mich.

Additionally, former business partners Stella Chun and Grace Yoon, which ran the Stella + Grace women’s clothing boutique in the center, have closed that business and opened their own stores, which total 2,274 square feet, Mr. van der Zanden said.

The value of the 267,000-square-foot retail portion of the complex plummeted during the recession, when it failed to generate enough income to cover its debt service costs, leading to the default.

Occupancy dropped as low as 84 percent in 2011, according to Mr. van der Zanden.


While the new leases are a positive sign for the center, its tenant mix and location away from main thoroughfares continue to pose a challenge, said Tony Kahan, a partner with KB Real Estate Inc., a Northfield-based retail broker and developer.

“There’s no everyday draw bringing you into the shopping center,” Mr. Kahan said. “You don’t have that Whole Foods anchor . . . that grocery anchor that is going to bring people in from outside the community and inside the community.”

Situs is a so-called special servicer that oversees the property on behalf of investors who own bonds backed by mortgages on a pool of properties, including the Glen.

The company took title to the 267,000-square-foot portion after a foreclosure auction earlier this year, according to property records. A Situs spokeswoman did not return a call.

“OliverMcMillan is glad to hear of new leases at Glen Town Center,” the company said in a statement. “We keep a keen interest in its success as owners of the theater and the Aloft
apartments and as managers of the parking.”

Situs has enlisted Oakbrook Terrace-based Mid-America Real Estate Corp. to sell the 267,000-square-foot portion of the center. The property is being marketed without an asking price. The Von Maur and movie theater are not part of the sale.

The Glen Town Center Announces New Retailers and Restaurant

Glenview, IL – (November 7, 2013) – RE|SOLUTIONS is pleased to announce many new tenants recently joining the Center. They include The Curragh Irish Pub & Restaurant, Ella Louvi and Stella315 women’s clothing and accessories boutiques, Mingle Juice Shop, a healthy juice and smoothie bar, MOOYAH Burgers, Fries & Shakes, Pinot’s Palette, a unique destination for wine and painting, and announces new locations for Glen Orthodontics, P.C. and the newly expanded Dino’s Sports Fan Shop.

“We are very proud of the positive change in momentum since taking over management last December. The quantity and quality of these new tenants speaks volumes about how the Center has turned around” said S.L. van der Zanden, Managing Principal for RE|SOLUTIONS.

“At The Glen, we’re committed to offering our patrons a wide range of incredible dining experiences, as well as top of the line retail and service options within a single, neighborhood location.”

“We welcome Ella Louvi, Stella315 and Curragh Irish Pub & Restaurant to The Glen, and are thrilled our veteran tenants, Glen Orthodontics and Dino’s Sports Fan Shop, are able to provide their unique services at more convenient, and, in the case of Dino’s, more spacious locations for their customers”, said Tom Sikoral, Senior General Manager for RE|SOLUTIONS.