Walk me through the channels by which rising interest rates transmit to real estate values.

Four channels

• CAP RATE EXPANSION - real estate is priced as a spread over risk-free yields, so higher rates raise required returns and push cap rates up, mechanically cutting values (value = NOI / cap rate)
• DEBT COST - higher mortgage rates shrink loan proceeds (DSCR binds) and create negative leverage when debt costs exceed cap rates, sidelining levered buyers and draining transaction volume
• REFINANCING STRESS - maturing loans reset to higher rates against lower values, forcing equity injections, extensions, or defaults - the slow-motion channel that plays out over years as maturities arrive
• an OFFSET - if rates rise because of inflation or strong growth, NOI may grow too (fastest in short-lease sectors like multifamily and hotels), cushioning the valuation hit. Net effect by sector depends on lease duration: long-lease bond-like assets take the full duration hit; short-lease assets partially hedge.