Rising Interest Rates Hit Landlords Who Can’t Afford Hedging Costs

Wall Street Journal, Jan. 17, 2023–Will Parker, Konrad Putzier (subscription)
Nearly half of all commercial property debt is floating rate, according to a 2019 report by the Mortgage Bankers Association. Lenders usually require that these borrowers hedge against an increase in borrowing costs, through a derivatives contract known as an interest-rate cap that limits a borrower’s exposure to rising interest rates.