The Bank of Canada has not moved its policy rate since it reached 2.25%, and it held there again on September 2. The bond market has not waited. The Government of Canada 5-year yield, the benchmark most Canadian commercial mortgages price from, closed at 2.62% on October 27, 2025. By September 11, 2026 it was 3.65%, its highest close since May 2024, and it closed at 3.59% on September 18. That is roughly 100 basis points of increase in the cost of fixed-rate debt, with no help from the central bank.
For self-storage owners thinking about a sale in the next 12 months, this matters more than any rate announcement. Buyers do not borrow at the overnight rate. They borrow at the 5-year plus a spread, and that number has moved against them.
Why yields rose without the Bank of Canada
The drivers have been global. Oil prices spiked after the outbreak of war with Iran earlier this year, US Treasury yields have climbed, and markets have shifted from expecting rate cuts to pricing the possibility of hikes. At home, the Bank noted in its September decision that CPI inflation has been running around 3%, largely on gasoline, and that Q2 GDP grew 3.3%. Stronger growth and sticky headline inflation give bond investors little reason to accept lower yields. The 10-year Government of Canada bond followed the same path, closing at 3.87% on September 18 against 3.05% last October.
The Maple bond record: what institutional storage debt costs
Two US storage REITs have now funded their Canadian platforms in the domestic bond market, and their four deals give us a clean, public read on what the largest buyers pay for capital.
SmartStop opened the door in June 2025 with the first Maple bond ever issued by a self-storage company: C$500 million of 3-year notes at 3.91%, 4.5 times oversubscribed. It returned in September 2025 for C$200 million of 5-year notes at 3.888%, and again in August 2026 for C$200 million maturing in February 2031 at 4.317%, which management said substantially completed the refinancing of its 2026 maturities. All three carry a Morningstar DBRS BBB rating.
Storage REIT Maple bonds, 2025 to 2026
| Issuer | Closed | Size | Maturity (term) | Coupon | GoC benchmark* | Approx. spread* |
|---|---|---|---|---|---|---|
| SmartStop | Jun 2025 | C$500M | Jun 2028 (3-yr) | 3.910% | 2.72% (3-yr) | ~120 bps |
| SmartStop | Sep 2025 | C$200M | Sep 2030 (5-yr) | 3.888% | 2.74% (5-yr) | ~115 bps |
| SmartStop | Aug 2026 | C$200M | Feb 2031 (4.5-yr) | 4.317% | ~3.24% (interp.) | ~110 bps |
| Public Storage | Sep 2026 | C$400M | Sep 2033 (7-yr) | 4.540% | 3.61% (7-yr) | ~95 bps |
Public Storage followed on September 9, 2026 with its inaugural Canadian offering, pricing C$400 million of 7-year notes at 4.540% through PS Canada Finance ULC, guaranteed by the A-rated parent. The proceeds replenish cash used for the Public Storage Canada acquisition, which closed September 1: 68 properties and 5.3 million net rentable square feet for approximately US$1.2 billion, at what Public Storage described as a high-5% going-in yield.
The table shows two things at once. First, the credit spread investors demand from storage borrowers has not widened. If anything it has narrowed, from roughly 120 basis points on SmartStop’s first deal to roughly 95 basis points on Public Storage’s larger, higher-rated issue. Bond investors like Canadian storage credit. Second, the all-in coupon has still gone up. SmartStop’s two 5-year-range deals, eleven months apart, moved from 3.888% to 4.317%, and almost all of that increase came from the underlying Government of Canada yield, not from any change in how lenders view the sector.
That distinction is the key to reading the current market. The cost of capital is rising because the base rate is rising, not because storage has become riskier.
Two buyer pools, two costs of capital
Canadian storage transactions draw from two very different groups of buyers.
The first is institutional: SmartStop, Public Storage, StorageVault and the larger private funds. These buyers borrow unsecured or at the portfolio level. For the two Maple bond issuers, the most recent all-in cost is in the low-to-mid 4% range even after the rise. Public Storage paid a high-5% going-in yield for its Canadian portfolio, then raised 7-year money at 4.54% to replenish the cash it used. That is positive leverage from day one.
The second pool is private: local operators, family offices and first-time storage investors who finance individual facilities with conventional mortgages. Those loans typically price at roughly 150 to 300 basis points over the matching Government of Canada bond. With the 5-year near 3.6%, that puts a single-asset storage mortgage somewhere between about 5.1% and 6.6%, and a 25-year amortization at those rates produces a mortgage constant above most storage cap rates. Private buyers are now working with negative leverage on stabilized assets.
What 100 basis points does to a private buyer’s math
Consider a stabilized facility producing $1,000,000 of net operating income, a lender requiring 1.25 times debt service coverage, a 25-year amortization, and a 200 basis point spread over the 5-year.
At last October’s 5-year yield, the mortgage rate is about 4.62% and the maximum loan is roughly $11.9 million. At today’s yield, the rate is about 5.59% and the maximum loan falls to roughly $10.8 million. Nothing about the property changed, yet available debt dropped by about $1.07 million, or 9%. At a 5.50% cap rate price of $18.2 million, the loan-to-value that coverage allows falls from about 65% to about 60%.
Returns move the same way. At 60% loan-to-value, the buyer’s year-one cash-on-cash return drops from about 3.7% to about 2.7%. To restore the original return at today’s rate, that buyer would have to pay about $16.95 million, a 5.90% cap rate. In other words, a private buyer who underwrites to a fixed leveraged return will bid roughly 40 basis points higher on cap rate, or about 7% less on price, than the same buyer would have a year ago.
In practice, the gap is rarely that clean. Buyers accept lower year-one returns when they believe in rent growth or lease-up, and many private buyers bring more equity than the minimum. But the direction is not in question, and it shows up in deals as smaller loan commitments, requests for vendor take-back financing, and retrades after the lender’s appraisal.
What expected Bank of Canada hikes into 2027 could do to lending
So far the Bank of Canada has not raised rates. Markets expect that to change. The August CPI, released September 14, held at 3%, and the Bank’s October 28 decision, which comes with a new Monetary Policy Report, is now seen as close to a coin flip. National Bank and Scotiabank forecast a hike to 2.50% in October and 2.75% by year-end. BMO, CIBC, RBC and TD expect a hold through December, with RBC and Desjardins pointing to a first hike in the first quarter of 2027. Capital Economics estimates markets are pricing about 125 basis points of increases by the end of 2027, which would take the policy rate to about 3.50%, and argues the Bank will deliver less than 100.
For storage lending, the effect depends on how the debt is priced.
Floating-rate debt takes the full hit. Construction loans, lease-up bridge loans and operating lines are usually priced off prime, which sits at 4.45% at the big banks today. Every 25 basis point hike flows straight through. If the market’s path plays out, prime would be near 5.70% by the end of 2027. That falls hardest on development and lease-up projects, where interest carry is already the largest cost during the three to four years it can take a new facility to stabilize. Expect lenders to size larger interest reserves, and expect developers who are holding a project until stabilization to rethink that timeline.
Fixed-rate debt has already priced much of it in. The 2-year Government of Canada yield closed at 3.32% on September 18, about 100 basis points above the 2.25% policy rate and up from 2.36% last October. That gap is the market pricing hikes before the Bank delivers them. It is also why the 5-year has moved so far. If the Bank hikes by less than markets expect, as Capital Economics argues, fixed-rate costs could ease even while the policy rate is rising. If inflation forces more, the 5-year has room to climb further. Either way, the next move in fixed-rate storage mortgages will come from the gap between what the Bank does and what is already priced, not from the hikes themselves.
Credit terms usually tighten before rates peak. In a hiking cycle, lenders tend to protect themselves through terms as well as price: higher stress rates in debt service tests, lower loan-to-value limits, shorter amortizations and more scrutiny of lease-up assumptions. For a private buyer, that compounds the proceeds squeeze shown above. A lender that tests coverage at a stress rate 100 basis points above the note rate cuts proceeds further again.
The cheap bridge is gone. When short rates sat well below 5-year rates, a buyer could close on floating debt and fix later. Today a floating loan at prime plus a typical margin costs about the same as a 5-year fixed storage mortgage, and with hikes expected, floating costs are more likely to rise than fall. The saving has largely disappeared, and most buyers will want to lock fixed-rate terms before closing. That puts a premium on sellers who can deliver a clean, well-documented deal on a timeline a lender can meet.
What this means for sellers
Know which buyer pool your property belongs to. A stabilized, well-located facility in a major Canadian market can attract institutional buyers whose cost of capital still supports pricing at or near recent levels. A smaller or secondary-market facility will usually trade to private buyers, and those buyers have lost real purchasing power over the past year. The same NOI can produce very different outcomes depending on who is realistically at the table.
Price on cap rate and price per rentable square foot, and test it against today’s debt. A valuation built on last year’s comparable sales, without checking whether a buyer can finance the number today, sets up a failed process or a retrade.
Watch your own maturity. Owners who fixed a 5-year term in 2021, when the 5-year yield ranged between roughly 0.4% and 1.6%, face renewal at a materially higher rate. Refinancing pressure is one of the most reliable sources of new listings, and it tends to arrive in waves.
Existing fixed-rate debt may be an asset. A mortgage fixed below today’s rates that a buyer can assume becomes more valuable as rates rise into 2027. Confirm the assumption terms with your lender before going to market.
Timing is not a rate forecast. Nobody can tell you where the 5-year will close next quarter, and the pullback from the mid-September high is a reminder that yields move both ways. The better question is whether today’s pool of buyers, at today’s cost of capital, values your facility at a number that works for you.
Bottom line
The Maple bond market confirms that institutional capital still likes Canadian self storage and is paying roughly the same spread for it as it did a year ago. What has changed is the Government of Canada curve underneath every loan. For institutional buyers, that is a modest increase in cost. For private buyers financing one facility at a time, it is the difference between positive and negative leverage, and expected Bank of Canada hikes into 2027 will add pressure on floating-rate and development debt even if fixed rates stabilize. Sellers who understand which of those buyers will price their asset will set realistic expectations and run cleaner processes.
Thinking about selling?
If you own a self-storage facility anywhere in Canada and want to know what it is worth in today’s rate environment, JBW Commercial provides confidential Broker’s Opinions of Value, built on cap rate, NOI and price per rentable square foot and tested against current financing terms. Contact Patrick Wood at pat@jbwcommercial.com or 250-589-0034.
Sources
SmartStop Self Storage REIT press releases (June 16, 2025; September 24, 2025; August 18, 2026). Public Storage press releases (September 1 and September 9, 2026). Bank of Canada benchmark bond yields and prime rate (Valet series), interest rate announcement (September 2, 2026) and 2026 announcement schedule. Statistics Canada CPI, August 2026. BNN Bloomberg / Canadian Press (September 18, 2026). Capital Economics commentary (September 17, 2026). Tech Times bank forecast survey (August 31, 2026). Morningstar Canada, “Why Are Canadian Bond Yields Rising?” Cedar Commercial, commercial mortgage rate ranges, September 2026. Spreads in the table are JBW estimates against Bank of Canada closing benchmark yields near each pricing date and are not issuer-disclosed. Financing example is illustrative only and assumes semi-annual compounding.