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bruce511today at 6:07 AM0 repliesview on HN

No there won't be clauses about rental amounts. It's not that straightforward.

It boils down to collateral for the loan.

A building has a value based on future rents. The owner borrows from the bank based on that value. The building is collateral for the loan.

The rental rate (not occupancy) determines the current building value. (Occupancy affects cash-flow, but not building value.)

Reducing rent improves cash flow, which may help paying the loan, but loan payments here are not important.

What is important is that the collateral covers the loan. Reducing the rent triggers a re-evaluation of the building value, which in turn affects the loan. There's no discretion here, it's just math.

On the other hand, as long as the owner continues to pay the installment on the loan, and as long as the building remains the same value, the banker doesn't have to do anything.

Yes, there are ways the price can be fudged a bit (bundling services, remodeling allowances and so on) but the "list price" of the rent can't come down without (automatically) triggering loan problems.

Since property companies tend to have multiple properties, cash flow is sufficient to pay the loan. So that's a lot better than triggering a revaluation.

In short commercial real estate does not behave like residential real estate.