CASE 1: INVESTOR DEFEASES TO A HIGHER SALES PRICE
Multi-family property sold with defeasance generates additional $1.2m for seller
Situation: A multi-family investor put a mature 75-unit apartment building on the market in 2006 to unlock equity for reinvestment. The investor purchased the building in 2001 for $10m, financed with an $8m conduit loan at 8% interest.
Initial Marketing: The investor initially offered the property with assumption of the $7.6m outstanding loan balance, and five year remaining term. At the $16m asking price (cap rate of 6.5%), buyers were required to put up $8.4m cash. Due to the high equity requirement, only two buyers made offers, the highest for only $15m. The seller received feedback that the loan assumption made the deal unattractive.
Property Re-offered: The investor turned to defeasance to see if more competitive buyers could be engaged if the property were sold unencumbered. 
The re-offered property, lien removed through a defeasance, was sold for $17.2m after receiving bids from seven potential buyers.
Results: Even after the $990k defeasance costs of (including the defeasance premium and all fees), the investor netted $8.6m, $1.2m more than he would have made without the defeasance.
CASE 2: DEFEASANCE ENABLES FAVORABLE REFINANCE
Retail center recapitalized with defeasance, unlocking $6.2m of equity
Situation: An aging retail center purchased for $15.5m in 1999 with a 10 year, 7.5% conduit loan at 70% LTV needed a facelift and new roof in 2006. Although reserves could not cover the expense, a $22.5m appraisal confirmed substantial equity in the property.
Property Refinanced: The original conduit loan had three years remaining, with a principal balance of $10m. This loan was defeased concurrently with new 10 year CMBS financing secured at 6% interest and 80% LTV.
Results: After total defeasance costs of $800k , the owners were able to access $6.2m in hard-earned equity otherwise unavailable without the defeasance, and obtained substantial interest savings on the new loan as well.
