Max Sharkansky - Managing Partner, Trion Properties
Max Sharkansky - Bull markets are driven by greed. Bear markets are driven by fear, and it is peak fear right now.
In the latest episode of The Real Estate Reality Show, my guest, Max Sharkansky, principal at Trion Properties discusses why fear is making it difficult to find liquidity or to transact in the current market despite solid fundamentals (in multifamily) such as increasing rents and occupancy.
Here are some highlights from Max:
- Driving this fear is the perception that interest rates hikes have a significant impact on CRE values but while rates go up and cap rates typically follow, they do not rise on a one-to-one basis.
- Fear-driven behavior is creating stagnation in the market, affecting future growth and investment and bringing distress to some owners and sellers – opportunities for others.
- With the rate hike cycle potentially coming to an end with the first signs of easing inflation, equity is likely to re-enter the market by the end of 2023, possibly triggered by a rate cut, triggering a resurgence in investment activity and a more stable market environment.
- While obtaining equity has become more challenging, debt has improved due to Fannie Mae and Freddie Mac's Treasury-based loans allowing for attractive leverage opportunities, which could provide a much-needed boost to investors looking for reliable returns.
There are lucrative distressed opportunities in the market, such as value-add multifamily properties from sellers hit by rising interest rates, and from ground-up developments in need of exits because their permanent financing assumptions did not account for increased cost of debt.
Max shares his informed perspective on where we’re heading in the next 12-24 months, and how sponsors can “be greedy when others are fearful.”
Listen To or Watch the Full Podcast Here
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