Interest rates rise since January - and impact on CRE - Canada (and elsewhere)
I dont know rates in USA and elsewhere, but in Canada CRE interest rates have gone up substantially in pas 6 months.  

What are people seeing happening to CRE transactions now with 5year mortgage rates around the 5% mark vs under 3% in January?  Are deals collapsing? Are they being repriced?  Sellers canceling sales?
Lenders reducing mortgage amount?

Buying at a 5% cap or lower and financing at 5% doesn’t make sense.  So something’s got to change.

5 year bonds are about 3.2% today and spread is 180-210 bps over depending on lender and deal metrics so 5% and more.
Yield curve is flat so shorter mortgage terms are not much cheaper.
For owner Wanting to refinance to pull equity is becoming difficult with higher rates.

Multi unit Apartments are about 1% cheaper with CMHC insured financing.

Are we going into a big freeze in sale market as everyone’s been used to cheap money since 2010?  Forced sales?

Comments and thoughts?
[{"id": "ibqaob5", "text": "interest only periods, rate locks, and equity heavy buyers still helping to make deals happen\n\n&amp;#x200B;\n\nalso demand for an inflation hedge from some investors who are willing to have zero yield so long as they preserve capital\n\n&amp;#x200B;\n\nsource: small ball CRE and multifamily world, smooth brain broker", "replies": [{"id": "ibqq4t4", "text": "This is it right here. Also 1031 people (which can of course be the equity heavy buyers you mention).", "replies": [], "depth": 2}], "depth": 1}, {"id": "ibqoozh", "text": "Having an assumable CMHC mortgage is a huge bonus right now.", "replies": [], "depth": 1}, {"id": "ibqu09d", "text": "We are seeing bigger equity positions and more players coming to market who are not subject to conventional financing. As long as rents can grow faster than yields cap rates can stay low but terminal rates and IRRs should increase if you are doing a cash flow.", "replies": [], "depth": 1}, {"id": "ibqx4hs", "text": "We saw things slowing down a couple months ago. Some big CMBS deals were seeking bank financing quotes because it didn\u2019t work for them anymore in the CMBS world. \n\nWe have slowed way down but we did so much business in the 1st part of our year that it was more than all of last year. Clients are still wanting to do deals but it\u2019s getting harder to pencil when you figure construction costs are up, rates are up, and land prices are up. However rental rates continue to remain strong in several markets so it\u2019s hard to tell what is going to give first.\n\nBtw work for a big 5 CA bank in the US doing upper middle market deals with mostly institutional sponsor/equity.", "replies": [{"id": "ibsyiak", "text": "Yep I second this. New issue pipeline has been pretty light past couple months compared to last year or even just early Q1. The high quality stuff is getting done (industrial, multi, trophies, etc) near guidance.\n\nHowever, saw several CMBS new issue sasbs get pulled due to initial talk levels leaking way wide of what sponsor had in mind (200bps+ wide). Just saw another potential new issue SASB loan get paid off with cash on hand instead of taking the wider level the market wanted (~300dm at AAAs). Very frustrating for dealers and banks.\n\nSeeing lots of forced selling by insurance and money managers as well. Slightly seasoned collateral is trading at a discount at wider levels in secondary, so it\u2019s great for our desk", "replies": [], "depth": 2}, {"id": "ibt8gvv", "text": "I think it depends on the land cost of the deal. If the developer has already bought the land a while ago and is just now getting entitlements then the rent growth for apartments far offsets the higher interest rate and development costs.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ibs7r47", "text": "I work at one of the largest credit unions in the western US and we offer 4.5-5% depending on the deal.", "replies": [{"id": "ic1bamb", "text": "Cheaper than in Canada currently for 5 year Money.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ibtlnug", "text": "Office/Industrial Broker bro here so take the heresy below with a dose of salt. \n\n1) Not seeing a freeze. Seeing more cautious underwriting from the pros. \n\n2) Institutional Grade MF deals are pulling out or getting re-traded towards 4% in my market. Lots of deals are still happening. 1031 exchanges are driving smaller deals.\n\n3) Industrial deals are similarly going to 4 - 4.5%. Low in my market was a WalMart distribution deal 6 months ago at 3.1%. Buddy of mine that works in acquisitions/dispositions\n\n4) Office - LOL. But seriously - lots of activity here in Multitenant stuff as well as conversion items. Do not know how some of the multitenant stuff is getting penciled. Large single tenant buildings are getting convereted to industrial or MF or sitting wishing for an arsonist. \n\n5) Retail - Things are moving similar to 1 and 2. \n\n6) Homebuilders - Having a very difficult time getting deals to make money and have their buyers be able to afford what is being built. \n\nOverall the big developers are being very cautious right now due to rising construction costs and rising cap rates. Tough to make things pencil right now. \n\nMy groups looking to buy and occupy are certainly more concerned about the interest rates and the added costs.", "replies": [], "depth": 1}, {"id": "ibzlr9o", "text": "Downturn will come.\n\nI have friends doing projects that can't pull out their equity any more with a cmhc rate at 5%. They under wrote these deals 1-2 years ago for a 3% cmhc take out rate. He will have $2M stuck in the building which puts him at a stop.\n\nI closed on a 2.7M$ building in november with a 2% rate and got 2.2M in cmhc financing, today same numbers we would only get $1.65M. I wouldn't pay 2.7M for that building today, it would be repriced at 2.35M. Good thing my rate is locked in for 5 years so I don't care.\n\nAnd its not stopping. Central banks want to raise rates more this year.\n\nReal estate winter has arrived and its only October / November.", "replies": [{"id": "ic1bgv1", "text": "I\u2019m hearing similar stories as well.  Lenders having uncomfortable conversations with their clients about adding equity to their construction projects.", "replies": [{"id": "ic5zqst", "text": "Lenders are freaking out.\n\nMy mortgage broker friend forwards me the deal sheet from first national that he gets every day.\n\nThey keep jacking the rates a few basis points for multi res cmhc every few days... its almost as if they themselves are freaking out about lending out money now and raise rates in anticipation.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]