cashflow, page-24

Celica,

there lies the problem. They have been relying on the assets being revalued up and then borrowing further against these values.

However, higher interest rates actually reduce (discount) the value of these infrastructure assets as this is the widely accepted method of valuing infrastructure.

So, you are spending $100k, interest is $50k, Rent is $30K and value is now $90k.

So it works both ways. Environment of low interest rates will cause a strong benefit, but in rising rates, there are issues unless there is plenty of spare equity.