Walker & Dunlop, Inc., a holding company, operates as a commercial real estate services, finance, and technology company in the United States.
The company conducts the majority of its operations through Walker & Dunlop, LLC, its operating company.
Through investments in people, brand, and technology, the company has built a diversified suite of commercial real estate services to meet the needs of its customers. The company's services include multifamily lending, property sales, appraisal, val...
Walker & Dunlop, Inc., a holding company, operates as a commercial real estate services, finance, and technology company in the United States.
The company conducts the majority of its operations through Walker & Dunlop, LLC, its operating company.
Through investments in people, brand, and technology, the company has built a diversified suite of commercial real estate services to meet the needs of its customers. The company's services include multifamily lending, property sales, appraisal, valuation, and research, commercial real estate debt brokerage and advisory services, investment management, and affordable housing lending, property sales, tax credit syndication, development, and investment. The company leverages its technological resources and investments to provide an enhanced experience for its customers, identify refinancing and other financial and investment opportunities for new and existing customers, and drive efficiencies in its internal processes. Additionally, 20% of total transaction volumes came from new customers for the year ended December 31, 2024.
The company is one of the largest service providers to multifamily operators in the country. It originates, sells, and services a range of multifamily and other commercial real estate financing products, including loans through the programs of the GSEs, and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, HUD) (collectively, the Agencies). The company retains servicing rights and asset management responsibilities on substantially all loans that it originates for the Agencies’ programs.
The company provides multifamily property sales brokerage and appraisal and valuation services, and engages in commercial real estate investment management activities, including a focus on the affordable housing sector through low-income housing tax credit (LIHTC) syndication. It engages in the development of affordable housing projects through joint ventures with real estate developers. The company provides housing market research and real estate-related investment banking and advisory services, which provide its clients and it with market insight into many areas of the housing market. The company's clients are owners and developers of multifamily properties and other commercial real estate assets across the country. The company also underwrites, services, and asset-manages shorter-term loans on transitional commercial real estate. Most of these shorter-term loans are closed through a joint venture or through separate accounts managed by its investment management subsidiary, Walker & Dunlop Investment Partners, Inc. (WDIP). The company is a leader in commercial real estate technology through the development and acquisition of technology resources that provide innovative solutions and a better experience for its customers, allow it to drive efficiencies across its internal processes, and allow it to accelerate the growth of its small-balance lending business and its appraisal platform, Apprise by Walker & Dunlop (Apprise).
Segments
The company operates through three reportable segments: Capital Markets, Servicing & Asset Management, and Corporate.
Capital Markets (CM)
CM provides a comprehensive range of commercial real estate finance products to the company’s customers, including Agency lending, debt brokerage, property sales, appraisal and valuation services, and real estate-related investment banking and advisory services, including housing market research. The company’s long-established relationships with the Agencies and institutional investors enable it to offer a broad range of loan products and services to its customers. The company provides property sales services to owners and developers of multifamily and hospitality properties and commercial real estate appraisals for various lenders and investors. Additionally, it earns subscription fees for its housing-related research. The primary services within CM are described below.
Agency Lending
Fannie Mae—The company is one of 25 approved lenders that participate in Fannie Mae’s Delegated Underwriting and Servicing (DUS) program for multifamily, manufactured housing communities, student housing, affordable housing, small balance loans, and certain seniors housing properties. Under the Fannie Mae DUS program, Fannie Mae has delegated to the company responsibility for ensuring that the loans it originates under the program satisfy the underwriting and other eligibility requirements established by Fannie Mae. In exchange for this delegation of authority, the company shares risk for a portion of the losses that may result from a borrower's default. For loans originated pursuant to the Fannie Mae DUS program, the company is generally required to share the risk of loss, with its maximum loss capped at 20% of the loan amount at origination, except for rare instances when it negotiates a cap that may be higher or lower for loans with unique attributes. Most of the Fannie Mae loans that the company originates are sold in the form of a single loan Fannie Mae-guaranteed security to third-party investors. Fannie Mae contracts the company to service and asset-manage all loans that it originates under the Fannie Mae DUS program.
The company uses several techniques to manage its Fannie Mae risk-sharing exposure. These techniques include an underwriting and approval process that is independent of the loan originator; evaluating and modifying its underwriting criteria given the underlying multifamily housing market fundamentals; limiting its geographic, borrower, and key principal exposures; and using modified risk-sharing under the Fannie Mae DUS program.
The company’s underwriting process begins with a review of suitability for its investors and a detailed review of the borrower, key principal(s), and the property. It reviews the borrower's financial statements for minimum net worth and liquidity requirements and obtains credit and criminal background checks. The company also reviews the borrower’s and key principal(s)’ operating track records, including evaluating the performance of other properties owned by the borrower and key principal(s). It also considers the borrower’s and key principal(s)’ bankruptcy and foreclosure history.
The company reviews the fundamental value and credit profile of the underlying property, including an analysis of regional economic trends, appraisals of the property, site visits, and reviews of historical and prospective financials. It engages either its Apprise appraisers or third-party vendors for appraisals and third-party vendors for engineering reports, environmental reports, flood certification reports, zoning reports, and credit reports. The company utilizes a list of approved third-party vendors for these reports. Each report is reviewed by its underwriting team for accuracy, quality, and comprehensiveness. All third-party vendors are reviewed periodically for the quality of their work and are removed from the company’s list of approved vendors if the quality or timeliness of the reports is below its standards. This is particularly true for engineering and environmental reports on which the company relies to make decisions regarding ongoing replacement reserves and environmental matters.
Freddie Mac—The company is one of 23 lenders approved as a Freddie Mac lender, where it originates and sells to Freddie Mac multifamily, manufactured housing communities, student housing, affordable housing, seniors housing loans, and small balance loans that satisfy Freddie Mac’s underwriting and other eligibility requirements. Under Freddie Mac’s programs, including Freddie Mac Optigo, the company submits its completed loan underwriting package to Freddie Mac and obtains its commitment to purchase the loan at a specified price after closing. Freddie Mac ultimately performs its own underwriting of loans that the company sells to it. The company rarely has any risk-sharing arrangements on loans it sells to Freddie Mac under its program. Freddie Mac contracts the company to service and asset-manage all loans that it originates under its program.
HUD and Ginnie Mae—As an approved HUD MAP and HUD LEAN lender and Ginnie Mae issuer, the company provides construction and permanent loans to developers and owners of multifamily housing, affordable housing, seniors housing, and healthcare facilities. It submits its completed loan underwriting package to HUD and obtains HUD's approval to originate the loan after they have performed their own underwriting analysis. The company services and asset-manages all loans originated through HUD’s various programs.
HUD-insured loans are typically placed in single loan pools which back Ginnie Mae securities. Ginnie Mae is the United States government corporation in the United States Department of Housing and Urban Development. Ginnie Mae securities are backed by the full faith and credit of the United States, and the company rarely bears any risk of loss on Ginnie Mae securities. The company is obligated to continue to advance principal and interest payments and tax and insurance escrow amounts on Ginnie Mae securities until the Ginnie Mae securities are fully paid.
Correspondent Network—In addition to the company’s originators, as of December 31, 2024, it had correspondent agreements with 22 independently owned loan originating companies across the country with which it has relationships for Agency loan originations. This network of correspondents helps the company extend its geographic reach into new and/or smaller markets on a cost-effective basis; however, it does not source a material proportion of its total originations from correspondents. In addition to identifying potential borrowers and key principals (the individual or individuals directing the activities of the borrowing entity), the company’s correspondents assist it in evaluating loans, including pre-screening the borrowers, key principals, and properties for program eligibility, coordinating due diligence, and generally providing market intelligence. In exchange for providing these services, the correspondent earns an origination fee based on a percentage of the principal amount of the financing arranged and, in some cases, a fee paid out over time based on the servicing revenues earned over the life of the loan. The company regularly reviews its correspondent network to ensure they are meeting its requirements, including ethical standards.
The company generally funds its Agency loan products through warehouse facility financing and sells them to investors in accordance with the related loan sale commitment, which it obtains concurrent with rate lock. Proceeds from the sale of the loan are used to pay off the warehouse facility borrowing. The sale of the loan is typically completed within 60 days after the loan is closed. The company earns net warehouse interest income or expense from loans held for sale while they are outstanding equal to the difference between the note rate on the loan and the cost of borrowing of the warehouse facility.
The company’s loan commitments and loans held for sale are currently not exposed to unhedged interest rate risk during the loan commitment, closing, and delivery process. The sale or placement of each loan to an investor is negotiated at the same time it establishes the coupon rate for the loan. The company also seeks to mitigate the risk of a loan not closing by collecting good faith deposits from the borrower. The deposit is only returned to the borrower after the loan is closed. Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. The company is also protected contractually from an investor’s failure to purchase the loan. It has experienced an immaterial number of failed deliveries in its history and has incurred immaterial losses on such failed deliveries.
Debt Brokerage
The company’s mortgage bankers who focus on debt brokerage are engaged by borrowers to work with banks and various other institutional lenders to find the most appropriate debt and/or equity solution for the borrowers’ needs. These financing solutions are funded directly by the lender, and the company receives an origination fee for its services. On occasion, it services the loans after they are originated by the lender.
Private Client (Small Balance) Lending
The company generally defines private clients in the multifamily sector as customers that operate less than 2,000 units. Private clients make up a substantial portion of the ownership of multifamily assets in the United States. As part of the company’s overall growth strategy, it is focused on significantly growing and investing in its private client, or small-balance, multifamily lending platform, which involves a high volume of transactions with smaller loan balances. The company has supported its small-balance lending platform with acquisitions in the past that have provided data analytics, software development, and technology products to this customer segment. These acquisitions have advanced the company’s technology development capabilities in this area, and its expectation is that the products it develops will be used in its middle market and institutional lending businesses when the products are mature and proven successful.
Property Sales
Through the company’s subsidiary Walker & Dunlop Investment Sales (WDIS), it offers property sales brokerage services to owners and developers of multifamily and hospitality properties that are seeking to sell these properties. Through these property sales brokerage services, the company seeks to maximize proceeds and certainty of closure for its clients using its knowledge of the commercial real estate and capital markets and relying on its experienced transaction professionals. The company receives a sales commission for brokering the sale of these assets on behalf of its clients, and it often is able to provide financing for the purchaser of the properties through its Agency or debt brokerage entities. The company has increased the number of property sales brokers and the geographical reach of its investment sales platform over the past several years through hiring and acquisitions and intends to continue this expansion in support of its growth strategy, geographical reach, and service offerings. The company’s geographical reach now covers many major markets in the United States, and its service offerings now include sales of land, student, senior housing, hospitality, and affordable properties.
Housing Market Research and Real Estate Investment Banking Services
The company’s subsidiary Zelman & Associates (Zelman) is a nationally recognized housing market research and investment banking firm that enhances the information it provides to its clients and increases its access to high-quality market insights in many areas of the housing market, including construction trends, demographics, housing demand, and mortgage finance. Zelman generates revenues through the sale of its housing market research data and related publications to banks, investment banks, and other financial institutions. Zelman is also a leading independent investment bank providing comprehensive M&A advisory services and capital markets solutions to its clients within the housing and commercial real estate sectors. As part of the company’s growth strategy, it has increased the number of investment bankers to broaden its reach and expertise within the residential housing, building products, affordable, multifamily, and commercial real estate sectors. Prior to the fourth quarter of 2024, the company owned a 75% controlling interest in Zelman. During the fourth quarter of 2024, it purchased the remaining 25% interest in Zelman.
Appraisal and Valuation Services
The company offers multifamily appraisal and valuation services through its subsidiary, Apprise. Apprise leverages technology and data science to dramatically improve the consistency, transparency, and speed of multifamily property appraisals in the U.S. through the company’s proprietary technology and provides appraisal services to a client list that includes many national commercial real estate lenders. Apprise also provides quarterly and annual valuation services to some of the largest institutional commercial real estate investors in the country. Prior to the acquisition of GeoPhy, a Netherlands-based company that also supports its small balance lending platform with data analytics, in 2022, the company and GeoPhy each owned a 50% interest in Apprise, and accounted for the interest as an equity-method investment. Subsequent to the GeoPhy acquisition, Apprise is a wholly-owned subsidiary of Walker & Dunlop. The growth strategy has resulted in an increase in its market share of the appraisal market over the past several years. Additionally, these valuation specialists provide support for and insight to the company’s Agency lending and property sales professionals.
Servicing & Asset Management (SAM)
SAM focuses on servicing and asset-managing the portfolio of loans the company originates and sells to the Agencies, brokers to certain life insurance companies, originates loans through its principal lending and investing activities, and manages through its tax credit equity funds focused on the affordable housing sector and other commercial real estate. The company earns servicing fees for overseeing the loans in its servicing portfolio and asset management fees for the capital invested in its funds. Additionally, it earns revenue through net interest income on the loans held for investment and the associated warehouse interest expense. The primary services within SAM are described below.
Loan Servicing
The company retains servicing rights and asset management responsibilities on substantially all of its Agency loan products that it originates and sells and generates cash revenues from the fees it receives for servicing the loans, from the placement fees on escrow deposits held on behalf of borrowers, and from other ancillary fees relating to servicing the loans. Servicing fees, which are based on servicing fee rates set at the time an investor agrees to purchase the loan and on the unpaid principal balance of the loan, are generally paid monthly for the duration of the loan. In addition to servicing substantially all of the company’s Agency loan products, it also services some of the loans it brokers for institutional investors, primarily life insurance companies. The company is an approved servicer for Fannie Mae, Freddie Mac, and HUD loans and services loans for many different life insurance companies. It is currently a rated primary servicer with Fitch Ratings. The company’s servicing function includes loan servicing and asset management activities, performing or overseeing the following activities: carrying out all cashiering functions relating to the loan, including providing monthly billing statements to the borrower and collecting and applying payments on the loan; administering reserve and escrow funds for repairs, tenant improvements, taxes, and insurance; obtaining and analyzing financial statements of the borrower and performing periodic property inspections; preparing and providing periodic reports and remittances to the GSEs, investors, master servicers, or other designated persons; administering lien filings; and performing other tasks and obligations that are delegated to it.
The company outsources some of its servicing activities to third parties.
The company’s Fannie Mae servicing arrangements generally provide for prepayment protection to it in the event of a voluntary prepayment. For loans serviced for Freddie Mac, the economic deterrent that reduces the risk of loan prepayment comes in the form of a yield maintenance formula or defeasance requirement wherein the borrower is required to replace the prepaid loan with securities that offer an equivalent return. For loans serviced outside of Fannie Mae or Freddie Mac, the company typically does not have similar prepayment protections.
For most loans the company services under the Fannie Mae DUS program, the company is required to advance the principal and interest payments and guarantee fees for four months should a borrower cease making payments under the terms of their loan, including while that loan is in forbearance. Under the Ginnie Mae program, the company is obligated to advance the principal and interest payments and guarantee fees until the HUD loan is brought current, fully paid, or assigned to HUD. The company is eligible to assign a loan to HUD once it is in default for 30 days. If the loan is not brought current, or the loan otherwise defaults, the company is not reimbursed for its advances until such time as it assigns the loan to HUD and files a claim for mortgage insurance benefits or works out a payment modification for the borrower. The company is not obligated to make advances on the loans it services under the Freddie Mac Optigo program or its bank and life insurance company servicing agreements.
Under the Ginnie Mae program, the company is obligated to advance tax and insurance escrow shortfalls and principal and interest payments on the Ginnie Mae securities until the Ginnie Mae security is fully paid.
The company has risk-sharing obligations on substantially all loans it originates under the Fannie Mae DUS program. When a Fannie Mae DUS loan is subject to full risk-sharing, the company absorbs losses on the first 5% of the unpaid principal balance of a loan at the time of loss settlement, and above 5%, it shares a percentage of the loss with Fannie Mae, with its maximum loss capped at 20% of the original unpaid principal balance of the loan (subject to doubling or tripling if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae). The company’s full risk-sharing is currently limited to loans up to $300 million, which equates to a maximum loss per loan of $60 million (such exposure would occur in the event that the underlying collateral is determined to be completely without value at the time of loss). For loans in excess of $300 million, the company receives modified risk-sharing.
The company’s servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees it would receive from Fannie Mae for loans with no risk-sharing obligations. The company receives a lower servicing fee for modified risk-sharing than for full risk-sharing. For brokered loans that it also services, the company collects ongoing servicing fees while those loans remain in its servicing portfolio. The servicing fees the company typically earns on brokered loan transactions are lower than the servicing fees it earns on Agency loans.
Investment Management and Principal Lending and Investing
Investment Management—Through the company’s investment management subsidiary, WDIP, it functions as the operator of a private commercial real estate investment adviser focused on the management of debt, preferred equity, and mezzanine equity investments in middle-market commercial real estate funds. WDIP’s current regulatory assets under management (AUM) of $2.3 billion primarily consist of eight investment vehicles: Fund III, Fund IV, Fund V, Fund VI, Fund VII, Debt Fund I, and Debt Fund II (collectively, the Funds), and separate accounts managed primarily for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments. Unfunded commitments are highest during the fundraising and investment phases. WDIP receives management fees based on both unfunded commitments and funded investments. Additionally, with respect to the Funds, WDIP receives a percentage of the return above the fund return hurdle rate specified in the fund agreements.
In the fourth quarter of 2023, WDIP launched a credit fund (Debt Fund I) focused on transitional lending with a large, institutional insurance company. Debt Fund I focuses on the same core product as the Interim Program JV. The company underwrites, services, and asset-manages all loans originated for the credit fund and has only a 5% co-investment obligation. The majority of the capital raised through Debt Fund I was deployed throughout 2024. In the fourth quarter of 2024, WDIP closed the first round of a commingled investor credit fund (Debt Fund II) focused on the same core product as Debt Fund I. Investors in Debt Fund II include life insurance companies, pension funds, high net worth individuals, and Walker & Dunlop.
Principal Lending and Investing—Through a joint venture with an affiliate of Blackstone Mortgage Trust, Inc., the company offered short-term senior secured debt financing products that provided floating-rate, interest-only loans for terms of generally up to three years to experienced borrowers seeking to acquire or reposition multifamily properties that did not qualify for permanent financing (the Interim Program JV or the joint venture). The joint venture funded its operations using a combination of equity contributions from its owners and third-party credit facilities. The company holds a 15% ownership interest in the Interim Program JV and is responsible for sourcing, underwriting, servicing, and asset-managing the loans originated by the joint venture. The Interim Program JV assumes full risk of loss while the loans it originates are outstanding, while the company assumes risk commensurate with its 15% ownership interest. The Interim Program JV had not originated new loans since 2022, resulting in a small number of loans remaining in the Interim Program JV as of December 31, 2024.
The company previously used a combination of its own capital and warehouse debt financing to offer interim loans that do not meet the criteria of the Interim Program JV (the Interim Loan Program). It originated and held these Interim Loan Program loans for investment, which were included on its balance sheet, and during the time that these loans were outstanding, it assumed the full risk of loss. The company has steadily reduced its reliance on its own capital and warehouse debt financing to fund interim loans in order to focus on raising third-party capital solutions, like Debt Fund I and Debt Fund II, to meet market demand and pursue its investment management growth strategy. Consequently, there were no loans outstanding under the Interim Loan Program as of December 31, 2024.
Affordable Housing Real Estate Services
The company provides affordable housing investment management and real estate services through its subsidiaries, collectively known as Walker & Dunlop Affordable Equity (WDAE). WDAE is one of the largest tax credit syndicators and affordable housing developers in the U.S. and provides alternative investment management services focused on the affordable housing sector through LIHTC syndication and development of affordable housing projects through joint ventures. The company’s affordable housing investment management team works with its developer clients to identify properties that will generate LIHTCs and meet its affordable investors’ needs and forms limited partnership funds (LIHTC funds) with third-party investors that invest in the limited partnership interests in these properties and earn a syndication fee for these services. WDAE serves as the general partner of these LIHTC funds, and it receives fees, such as asset management fees, and a portion of refinance and disposition proceeds as compensation for its work as the general partner of the fund.
The company invests, as the managing or non-managing member of joint ventures, with developers of affordable housing projects that are partially funded through LIHTCs. When possible, WDAE syndicates the LIHTC investment necessary to build properties through these joint venture partnerships. The joint ventures earn developer fees, and the company receives the portion of the economic benefits commensurate with its investment in the joint ventures, including cash flows from operations and sales/refinancing. Additionally, WDAE invests with third-party investors (either in a fund or joint-venture structure) with the goal of preserving affordability on multifamily properties coming out of the LIHTC 15-year compliance period or on which market forces are unlikely to keep the properties affordable.
The company advances funds to its joint venture developer partners in connection with its LIHTC operations. The funds are used to fund the joint venture partner in preparing properties for development and ultimately to be sold or syndicated into a LIHTC fund. To manage the company’s risk of loss on these advances, it evaluates the underlying property fundamentals, the expected cash flows and economics of the LIHTC syndication, and the developer’s track record. Additionally, the company continually monitors progress on development deals and takes appropriate actions as needed to mitigate its risk of loss. The company, or its predecessor, has never incurred a material loss associated with these advances.
The company also advances funds to third-party developers with whom it has long-standing relationships for durations of generally less than a year. It evaluates these advances on a deal-by-deal basis by reviewing similar factors that it does for its advances to its joint venture partners. Additionally, these advances often involve the acquisition of land or property, for which the company usually receives a security interest in the form of a mortgage or lien along with guarantees from the developer. Lastly, the company requires a letter of intent giving it the exclusive right to invest in the LIHTC investment.
Corporate
The Corporate segment consists primarily of the company’s treasury operations and other corporate-level activities. The company’s treasury operations include monitoring and managing its liquidity and funding requirements, including its corporate debt.
Competition
The company’s competitors include, but are not limited to, Wells Fargo, N.A.; CBRE Group, Inc.; Jones Lang LaSalle Incorporated; Marcus & Millichap, Inc.; Eastdil Secured; PNC Real Estate; Northmarq Capital, LLC; Newmark Realty Capital; and Berkadia Commercial Mortgage, LLC. Competitors in this fragmented but highly competitive industry include but are not limited to: Boston Financial Investment Management, L.P., Raymond James & Associates, Inc., Enterprise Community Partners, Inc., The Richman Group Affordable Housing Corporation, National Equity Fund, Inc., and PNC Real Estate.
Regulatory Requirements
The company is required to comply with certain provisions of, among other statutes and regulations, the USA PATRIOT Act, regulations promulgated by the Office of Foreign Asset Control, the Employee Retirement Income Security Act of 1974, as amended, which it refers to as ERISA, and federal and state securities laws and regulations.
To maintain the company’s status as an approved lender for Fannie Mae and Freddie Mac and as a HUD-approved mortgagee and issuer of Ginnie Mae securities, it is required to meet and maintain various eligibility criteria established by the Agencies, such as minimum net worth, operational liquidity and collateral requirements, and compliance with reporting requirements.
Under the Investment Advisers Act of 1940, WDIP is required to be registered as an investment adviser with the Securities and Exchange Commission (SEC) and follow the various rules and regulations applicable to investment advisers.
Under the Securities Exchange Act of 1934, as amended (the Exchange Act) and as a member of the Financial Industry Regulatory Authority (FINRA), Zelman is required to follow the various rules and regulations applicable to broker-dealers. These rules and regulations cover, among other things, sales practices, fee arrangements, disclosures to clients, capital adequacy, use and safekeeping of clients’ funds, and securities, Material Non-Public Information (MNPI), recordkeeping and reporting, and the qualification and conduct of officers, employees, and independent contractors.
History
Walker & Dunlop, Inc. was founded in 1937. The company was incorporated in 2010.
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