European real estate debt is showing strain from higher interest rates, with a slump in riskier bonds and the rare cancellation of a new junk issue.

Net Zero Properties Sarl, a firm that buys neglected apartments in Germany, recently dropped plans to borrow €500 million ($574 million) after failing to convince investors with sweetened terms.

Hybrid securities issued by landlords such as Aroundtown SA and CPI Property Group SA have fallen sharply this month, reviving fears of 2023 pain in the sector.