3 ms·
Not an expert, but could this have to do with financing? I've read of property owners keeping high rents despite it leading to empty spaces because "lower rents
by maeil 2y ago
Not an expert, but could this have to do with financing? I've read of property owners keeping high rents despite it leading to empty spaces because "lower rents -> lower property assessment value by banks -> worse financing terms". I'm sure someone here can correct me.
- JumpCrisscross 2y ago> "lower rents -> lower property assessment value by banks -> worse financing terms" It's worse. They're often in technical default of their loan terms if rents fall below a level. From the landlord's perspective, leaving units empty and waiting for a turnaround is rational: it preserves option value. For the lender, the limit provides an objective signal of hardship ex ante. Ex post facto, they're riding the same option value as the landlord, provided the payments come through.