When Tenant leases and loan maturities collide: what to do

You’ve probably seen the headlines: a wave of commercial real estate loans are maturing soon. But here’s what we’re also seeing on the ground; a lot of property owners are facing expiring tenant leases in the same 6 to 18-month window as their loan maturity.

It’s a tough spot to be in. But it’s also something we’re actively helping clients strategize around. If this sounds like you, here are a few of the key questions we walk through with owners:

1. What’s your long-term plan with the property — sell or hold?

This is the first question we ask. It shapes your approach to lease renewals, rental rates, and the projected cap rate, all of which influence your refinancing options. Sometimes your answer for now and for later aren’t the same, and that’s okay. We just need clarity to guide your next steps.

2. Start early with tenant lease renewals.

If you’re waiting until a month before expiration to evaluate your options, you’re going to be forced into a decision you don’t want to make. Start the conversation early, even if you’re not sure what you want to do yet.

3. Would you accept below-market rent to get a longer-term lease?

Some owners focus so much on “market rent” in the short-term, they miss the bigger picture. If you plan to sell soon, locking in longer leases with strong tenants makes your property more attractive to buyers. It reduces perceived risk, which can bring down the cap rate and increase your value. But it might mean you offer a lower rent upfront.

4. Are you open to short-term tradeoffs?

Offering some free rent or additional TI dollars now could help secure a longer lease with a great tenant. If your long-term goal is to sell at a higher valuation, that short-term give might be worth it.

5. If you're planning to sell, do you know what you’d buy next?

If you’re in an exchange situation, now’s the time to run some replacement property scenarios. With today’s rates and market conditions, the math may not work in your favor and that may shift your strategy back to stabilizing your current asset first.

6. Remember: cap rates aren’t just math.

Cap rates are influenced by more than NOI. Tenant credit, lease length, cash flow stability, and market demand all impact how a buyer will view your property and what they’re willing to pay.

If you’re in this position or just want to get ahead of it now’s the time to start thinking strategically about lease renewals and tenant terms. Not just from a rent standpoint, but through the lens of valuation, refinancing, and buyer psychology.

I help property owners evaluate their options and position their assets for a successful sale. Let’s connect.