CMBS Defeasance Calculator: Estimate Your Treasury Basket Cost in 30 Seconds
Most CMBS borrowers facing the 2026 maturity wall don't know what defeasance will cost them — and the answer is counter-intuitive. When Treasury yields are BELOW your original loan rate, defeasance is EXPENSIVE. Enter your loan inputs to model the cost before engaging a defeasance consultant.
Models interest-only-to-balloon CMBS loans (the dominant structure). Uses flat-curve approximation — real defeasance prices each payment via Treasury strips. Estimate +/- 1-3% of consultant pricing.
Last updated: ·By Ed Freeman, Capital Advisor — PeerSense
Loan + Market Inputs
April 2026: 10Y ~3.85-4.35%, 5Y ~3.65-4.15%, 3Y ~3.95%
Typical $50K-$150K depending on deal size + complexity
Defeasance Cost Estimate
⚠️ Important: This is an Estimate
Real defeasance pricing uses a Treasury STRIP basket priced at each individual payment date, not a flat curve. Actual cost typically varies +/- 1-3% from this estimate depending on yield curve shape, basket optimization, and consultant negotiation. CMBS loan documents specify the exact defeasance methodology (servicer's choice of Treasuries, agency strips, or both).
Use this calculator for: directional borrower decision-making (defease now vs. wait, sell vs. refinance, prepayment penalty vs. accept the cost). Do NOT use for: final transaction pricing — engage a defeasance consultant (Chatham Financial, Commercial Defeasance LLC, ARCS) for committed pricing 60+ days before close.
Why CMBS Defeasance Cost Surprises Borrowers
The counter-intuitive truth: low Treasury yields make defeasance more expensive, not cheaper. Defeasance works by replacing your loan with a basket of U.S. Treasuries that pays the EXACT same cash flows as your remaining loan (P&I plus balloon). The Treasury basket cost is the present value of those cash flows discounted at current Treasury yields.
When Treasury yields are LOWER than your loan rate, you need MORE dollars in Treasuries to replicate the high-coupon payment stream. Borrowers who took out 2017-2019 CMBS at 4-4.5% are now facing 2026 maturities at a moment when Treasury yields are 3.85-4.35% — defeasance premiums of 2-8% of loan balance are typical.
When Treasury yields are HIGHER than your loan rate (rare), defeasance can actually cost LESS than the loan balance. This happened briefly in late 2022 when 10Y Treasury hit 4.95% on loans originated at 3-4%.
Practical implication: if you're considering selling, refinancing, or paying off a CMBS loan, model defeasance cost BEFORE making the decision. Many borrowers find that holding the loan to maturity is materially cheaper than defeasance even if the property is ready to sell.
When Defeasance Is the Right Move
Defease When
- • You have a buyer at strong pricing AND defeasance premium < gain on sale
- • Treasury yields are above or near your loan rate (cheap defeasance)
- • You want to cash out via refinance and current rates allow accretion despite premium
- • You need to free the property for redevelopment / repositioning that requires lender consent
- • Less than 18 months remain — premium tends to be modest because so few payments left
Hold to Maturity Instead When
- • Treasury yields significantly below loan rate (expensive defeasance)
- • 4+ years remaining — premium amplified by long discount period
- • Property has stable cash flow + you can wait for natural maturity
- • Refinancing economics negative even before defeasance cost
- • Buyer willing to assume the loan (if assumable per docs) — eliminates defeasance entirely
CMBS Defeasance Sources
- Trepp — CMBS Maturity + Defeasance Reports — Industry-standard CMBS data on defeasance volumes, maturity wall timing, and prepayment trends.
- Commercial Defeasance LLC — Major defeasance consultant — useful resource for understanding pricing methodology and process timeline.
- Federal Reserve — H.15 Treasury Yields — Authoritative source for Treasury yields used in defeasance basket pricing.
- Real Estate Roundtable — Commercial Real Estate Tax Guidance — Industry trade body publishing tax + structuring guidance applicable to defeasance.
External links are provided for informational and verification purposes. PeerSense is not affiliated with and does not endorse any third-party site. Information was current at the time of publication.
Need a Refinance Plan Around Your Defeasance Decision?
We structure CMBS refinances + bridge transitions for borrowers facing the 2026 maturity wall. Senior debt, mezz, preferred equity stacks. No retainer; lender pays at closing.
Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated April 2026.
Disclaimer: This calculator estimates CMBS defeasance cost using a flat-curve Treasury yield assumption. Real defeasance pricing uses Treasury STRIP baskets priced at each individual payment date — actual cost typically varies +/- 1-3% from this estimate depending on yield curve shape, basket optimization, and consultant pricing. CMBS loan documents specify the exact defeasance methodology. This calculator does not model amortizing loans, partial defeasance, prepayment lockout periods, REMIC tax compliance fees, or servicer review fees beyond the consultant fee input. This is not legal, tax, or financial advice. Engage a defeasance consultant (Chatham Financial, Commercial Defeasance LLC, ARCS) and your loan servicer for transaction-committed pricing 60+ days before close. PeerSense is a capital advisory firm, not a defeasance consultant or lender.