Previously, Misner served as senior vice president and portfolio manager at Abacus Capital Group LLC, senior vice president of transactions at AIMCO and held senior leadership roles at Grubb & Ellis, CBRE, GreenCastle Development and Cushman & Wakefield.
Misner recently took time from his busy schedule to chat with MHN about the year we left behind and what he sees ahead.
MHN: How would you best characterize last year in terms of multifamily investment opportunities?
Misner: Until the latter stages of 2016, the year was typically consistent and linear. Multifamily rents increased, albeit at a slower pace than previous years, which we can attribute to increasing supply factors in certain markets. In tandem, we saw significantly more investor funds aggressively seeking deal opportunities than available properties. Aside from the election and December FOMC meeting, both the interest rate and lending environment remained stable.
MHN: What was unexpected about 2016?
Misner: How consistent and linear it was. The industry kept watching interest rates, anticipating an increase and potential negative impact much earlier in the year. We truly started to see rate increase once the election was over.
MHN: What do you foresee for 2017? What can we expect in the year ahead?
Misner: It will be another robust year for apartment fundamentals with price adjustments due to interest rates and governmental uncertainties. It’s likely we’ll see less industry-wide apartment sales volume as this gets sorted; however, we can still expect that a mix of relatively low borrowing costs, tremendous rental fundamentals and strong investor demand will keep the multifamily sector the healthiest of all commercial real estate sectors.
MHN: What major trends are on your radar in the next 12 months that will impact multifamily investing?
Misner: We’re keeping a close eye on debt underwriting, and how the willingness or unwillingness to aggressively underwrite new income will impact the industry. In Q4 2016, many deals were impacted by the interest rate jump and were re-traded due to declining proceeds. When deals cannot withstand an interest rate increase, it usually means that the market is priced to perfection. In the year ahead, investors will re-tool their underwriting and most will use more conservative estimates regarding debt. This could lower pricing on value-add or other investment classes relying on a levered IRR.
MHN: What was your strategy going into 2016, and looking at it now, how did it pay out?
Misner: Berkadia’s goal was diversification by increased exposure to the overall market, which worked very well. We assessed how our clients were viewing the landscape and realized that they too were looking to expand their areas of focus—everything from primary to tertiary markets, Class A to Class C assets, various sources of capital, etc. We took all factors into consideration and then married them to Berkadia’s integrated platform for each client’s specific need.
MHN: What do you feel is the most important thing that investors need to be aware of in today’s multifamily environment?
Misner: Overall, invest with knowledge and facts versus relying on market momentum. On a macro level, rates are likely to be volatile and trend higher, so it’s wise to consider making transactions now. On a micro level, investors should understand the supply pipeline of their specific market. For example, are they aware of how certain assets are being impacted when a new property is in lease-up in the immediate vicinity? We’ve seen the enormous difference that can be made by having access to as much information as possible.