Rate WorriesThe interest rate on the ten-year Treasury is now over 5%. This should make certain TIC transactions interesting, in particular apartment deals. Cap rates are not rising with interest rates and the spread between cap rates and mortgage rates is therefore narrowing. Apartments which have historically have had the lowest cap rates will feel the narrowing of spreads first. I have already posted about negative leverage (mortgage rates higher than the cap rate) on particular apartment transaction. The exception may now become the norm. Watch the projections. Growth rates of 4% annually or more look good on paper and erase the negative leverage quickly, but not convinced their based on reality.