But! It might not be better if you are leveraged based on last known rental rate.
Something is broken in the real estate lending market because landlords do prefer lack of occupancy to lowered rents. I don’t know the industry well enough to know why but it’s definitely a pattern.
Surely it's because when you've borrowed a lot against a highly-valued property you don't want its perceived value to be reduced (by having low rents) in case that triggers the lender to recall the loans. But I too don't know enough about the commercial real estate "industry".
One explanation that I have heard that sort of makes sense is that by refusing to lower asking rents they prevent existing tenets from seeking rent reductions.
So the calculation is probably some combination of projected increase in occupancy, projected rent reductions of existing tenants, tax implications, and potential loan recalls.
My guess is most landlords are just trying to hold on till the end of the pandemic and hope that rents and valuations snap back quickly.
Something is broken in the real estate lending market because landlords do prefer lack of occupancy to lowered rents. I don’t know the industry well enough to know why but it’s definitely a pattern.