Explain the property release provision and its significance in a single-borrower / multiproperty CMBS transaction

What will be an ideal response?

Because there is a single-borrower, there is concern that the borrower can benefit by removing the best properties from the mortgage pool by prepaying the balance and selling those properties. This action would result in a deterioration of the structural protection afforded the bondholders. The objective of property release provisions is to protect the investor against such an action by the borrower. Two examples of a property release provision are (i) a requirement that if any property is sold, the borrower must retire more than the initial mortgage balance in the pool (say, 125%) and (ii) a sale may not take place if the DSC ratios after a proposed sale are less than prior to the sale.