No playbook: Trimont’s Hunter on the uncharted territory in the US debt market

Still, Trimont’s chief commercial officer Mitchell Hunter believes there are reasons for optimism.

As the Federal Reserve implements its largest single rate hike in nearly 30 years, Trimont Real Estate Advisors is encountering a static environment in which the advisory company’s clients are standing pat in the middle of generational market volatility.

“There’s definitely a lot of moving parts right now in our industry. It feels as if people are sitting back waiting to see how the market reacts to the rising interest rate environment,” said Mitchell Hunter, chief commercial officer. “We certainly expect to see less volume in Q2 compared with the same period in 2021. That being said, a number of our clients remain active as they see opportunity as the market starts to show signs of dislocation.” 

The sheer amount of dry powder out there today makes this period different from past turbulent markets.

“The reality is, there’s still a lot of money to be deployed,” Mitchell said. “A significant difference when comparing the current market with the GFC, is the availability of capital – which dried up quickly in the GFC – which is not the case currently.”

Hunter is also hopeful investors will recognize that seemingly much larger interest rates are still historically low. “Pre-covid, when rates were around 2 percent or more, no one was really complaining about rates being where they were. There were a ton of deals being done in that environment,” he said.

Hunter, like most market participants, will not be surprised if rate hikes combine with other tailwinds to induce a recession. Yet, the depth and extent of the downturn is very much to be determined, and Hunter is hopeful any upcoming correction will be relatively mild.

Still, Hunter, who attended this week’s commercial real estate finance conference in New York, has a hard time even describing, let alone projecting, the market’s upcoming twists and turns.

“It’s a tough time to really gauge where this will end up in six to 12 months,” he says. “There’s no playbook.”