WD - Earnings call transcript Q3 2018

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Operator

Welcome to Walker & Dunlop’s Third Quarter 2018 Earnings Conference Call and Webcast. Hosting today’s call from Walker & Dunlop is Willy Walker, Chairman and CEO. He is joined by Steve Theobald, Chief Financial Officer; and Kelsey Duffey, Assistant Vice President of Investor Relations. Today’s call is being recorded and will be made available via webcast on the company’s website. At this time, all participants have been placed in listen-only mode and the floor will be opened for your questions following the presentation. now Duffey. to is over the It Kelsey to Instructions] my turn pleasure floor [Operator ahead. go Please

Kelsey Duffey

morning. for call. refer EBITDA Willy of call. financial for also Steve note on the our on touch the we the Both provide recording during Thank you, a earnings what course earnings webcast. our metric, website Please website, press on reconciliation morning, and website section as Theobald. & with will a Please David. non-GAAP This during will to later this reference serve the Good this and the will that CEO, posted website Dunlop’s release posted adjusted some point the and for of carefully of to accessing available Investors statements Reform are me made being of Private historical this of our third Walker Willy which joining call Walker a financial the slides quarter release CFO, and the we forward-looking details morning our of this metric. on release. Act are Securities release our on is call urged language within Statements deemed presentation XXXX. archived be maybe our This the XXXX and our this earnings Investor morning forward-looking call. These reference and have everyone. earnings facts I our Chairman Thank not Steve earnings statements www.walkerdunlop.com. meaning to non-GAAP Litigation in you live the webcast Relations read

forward-looking will obligation found whether or our I We to risk with future turn under can to Dunlop new of Willy. detailed and factors so. or differ the be about the over annual quarterly in SEC. current filed now as materially. call statements update a results events do expressly & More reports statements information actual any disclaim result our to obligation our may describe Forward-looking alter no otherwise. is expectations and information, Walker

Willy Walker

of financial Thank quarter and the good and thank made the morning another joining strong successful Walker you and have platform, generated to we the very highest for scale investments by Dunlop adjusted history company’s finance Walker record to our the commercial Steve? wide have quarterly going financial very is you, I a produced as Dunlop’s market. to one business. our in a volume call for best and in Steve then year-to-date marks with competitive & business company transaction growing we the the companies talk outlook Kelsey & brand real and our our third strength results of discuss we in am what coupled margin. us. underlying I models made the EBITDA in turn QX investments estate our today through results and the the will over for seeing to market and are

Steve Theobald

Thank good you, morning everyone. Willy and

United As the the third estate the States. volume mentioned, long-term to our execution represents towards successful achievement history goal premier strategic of QX and in company finance another Willy of our become real quarter commercial the highest in transaction

of rate transaction in growth was activity. a servicing QX quarter strong total ‘XX. summer helped Our the typical QX billion, volume portfolio in lending Strong real given X% movements in generate extremely estate an million, commercial $X.X slowdown revenues up from and $XXX

per ‘XX. transaction Residential. largest Mac $X.XX Monogram the and and of adjusted no volumes, of EBITDA of XX% our $XX.X for diluted earnings Greystar’s billion we QX respectively with generated large impacting of a quarter third the in financing reminder, notable last XX% quarter million, share record deals up in from in $X.X we history, our a Freddie company’s year, As closed Even the acquisition

three Our XX% cash growth in first adjusted in the quarters with of amounts EBITDA huge continues business model of to generate XXXX.

made in we record last we investments platform, originated benefiting and are billion loans in which $X.X apparent add year the brokered to the bankers QX. is of to We the most brokers from

a grown volume, loans have in future. Investment trend continue have our our the originations second million Freddie sales was billion, as volumes highest we total originated of several $XXX also We ‘XX. of strong volume footprint of capital at Fannie As XX% were to with percentage down a history year-over-year. $X Freddie markets years Mac, we over expect the X% transaction QX year-over-year. $X.X billion in after originations increased Mac our steadily Mae past up the over brokered

properties investment to strong QX continued year our the California a However, teams volumes is Boston, Dallas growth three for the in marketplace. have continue multifamily in see recently contribute to this our Southern we years. in and coming demand sales over very pipeline will The we most robust and hired

XXXX HUD growth while volumes which gain target pipeline In margin sale was basis our accomplishes long-term below top and sale our factors. XXXX, but in Greystar the We forecast were processed points, the three mostly range, one HUD to on down sale a of third our in number points the Fannie, rate be was continues the range and lender build objectives volumes its with basis QX responsible XXX and Our HUD flow ‘XX two XXX of in for margin inconsistent learned to XX% with quarter, but points line to was of gain three ranked large rankings, on quarter team the pushing QX by XXX at we on a gain lender below pace. are QX just margins impacted Freddie that basis transaction distinct strong our ‘XX. floating of HUD. deal

we revenues. record volume where quarter First, loans financing our non-cash was XX% don’t mortgage brokered this servicing of

pressure to we the Mae our rates risen, loans. have putting generated Mae fees on that spreads Fannie in treasury have as compressed downward on Second, decrease leading MSR income Fannie servicing a

but we given quarter basis QX expected originations QX. into that our servicing, fourth on not and Mae margin the the control or we points past compression operating margins are do XX%. how XX% updating persisted margin for of October gain was is our of in sale operating stated for the of price market margin to level brokered have the As Fannie to mix the points to we range has originations bringing basis year-to-date XXX forecast strength XXX our

a incur joined months with net versus to the is efforts continued expense On recruiting and bankers our the in behind. we are adding we pipelines the of of in XXXX, business because an via distinction over with their XX us company costs acquisition brokers existing bringing This and year-to-date an important bankers whom firm in acquisition. an to With whom pipeline additions associated side whereas past intact on have leave the most recruit to of we platform. all came to four the

of pattern to and XXXX, revenues performance a very of the additional but optimistic expansion remain continued of expected may new and in We operating in sales we have where mean margin a their lead of opportunities in beyond. they our XX% fully which is the little strong hires margin we but for we cycle continue our in target multifamily. in will contributed As volumes we we the the about full-year very pipelines growing for the building hires to aggressive that ramp feel expect familiar least and are investments don’t operating These production force about to-date, us achieve and are XXXX good terms are in market the in exist these origination to their the number with growing reasons future. volumes. It’s not of

with low previous consistent slowing historically deliveries, supporting levels an LTV With homes growth. X.XXx, quarters. single-family vacancies own our with rent coming remain the average at while remain ratio and and originations limited debt coverage conservative supply in multifamily of of All XX% QX the entry service standards level continued of at underwriting

book servicing two just portfolio. our strong with exhibit in continues to Our loans defaulted at metrics risk credit

million shareholders from the on Third in $XXX quarter equity year. fund $XXX the cash of equity target quarter down the cash below cash interim been in to and return to at We with to and XX%, QX million year short-term equity additional return for ended and XX% has over in end full repaid. million equivalents an of $XXX substantially unrestricted will the being million past used XX% from in on With since as we our slightly expect year-to-date XX% it’s grown was fully $XX loans ROE XX% quarter the come range. ‘XX

the opportunity us on with S&P comfortable outlook. the and opportunities, payments borrowing reaffirmed put capabilities our to and ended will capabilities, XX this us EBITDA our a be and substantial loan towards strategic raised the our Moody’s closing expect rates well We with in Our We given tight has September our million, feel future financial trailing capacity modest which led and repurchase generation lending off at and supporting level week close after on sustained is the to decision allocate transaction and the compelling positive debt the refinance, position we to based arise. to of activities. we The months giving to additional plan going refinance Both growing offering balance increasing to share debt and the a very the loan. paying adjusted X. should November in combined cash platform, existing term capital the intend X.Xx XXXX performance. dividend financial have management our spreads ratings $XXX term additional acquisition strong us investing senior asset secured a raise our Moody’s XX, Upon our transaction sheet

The services acquisition to life by the about brokers We end is The in bankers servicing in to $X a our loan for to the business million that platform ability and contingencies. expect and worrying originations also and fuel and days in agreement signed the led banking the historical recently that we financing pursue space a of close the between in purchase will our We mortgage loans $X companies brokered will of and will investments prioritize to on portfolio major firm year. of to our a to acquisitions annual behalf next remain M&A opportunistic billion. without insurance with term active by continue scheduled market. growth billion the capital allocating increase $XXX add roughly future several

will our of capital co-investments own our our billion $XXX Capital, very fund billion. $X.X successful recently make acquired over management quarter funds With balance JCR. capital firm for closed co-invest to need of We time. $X focused its originating objective JCR to to commitments total are cash earlier in year. fourth with by and the grow bringing raised AUM to committed Blackstone debt in additional also we million $XX an future through JV funds this to billion the under we to management funds capital JCR proceeds alternative over into just see will to assets with commitments the $XXX X% on a use bridge by loans sheet. these million we had plan XXXX, future those raising XX% We to We of and asset

We short-term requests have the of seen from in JV that solutions uptick short of financing don’t the larger borrowers their some profile for really our of fit maturities. because an

additional balance capture us capital The in done flow. our forward. a ability to on of to enables even sheet an manner this more requests customer and position these transactions few and deepens our with have us stronger We the our going now in right to these puts raising accommodate deal relationship money use

to Finally, repurchases share quarterly to in shareholders of and capital we form payments. will return dividend continue the

share expect third us share repurchase to buyback the million $X activity to our of $XX million our should and used stock quarter, authorization going continue forward. we investors repurchase During

modest our XX% common brings per while comfortably a total from on authorized shareholders for to of In continuing growth. retain November $X capital share income, share of which ratio XX, $X.XX can addition, we a to annual of increase per payable payout of This record of to our trailing net a XX-month dividend dividend XXXX. representing Board Directors level

I call current the the turn to year we Willy, co-sourcing in-house mention servicing I to once ends. end the platform at decision bring recent Before made want arrangement our of back to our the entirety next over of

over this source to of commercial it for the servicer important time largest full to country, the technology control fully part loan Xth business. operations and the gain the in right thought we our in As was

our We result platforms, operate will cost to convert once implement, of taking $X be million our next year of approximately redundant to people expect and incremental realize will as train $X.X the savings on the million next the roughly operations. system. over This converted but cost to in we we annual year compared new current

macroeconomic an our now with in incredibly over ability deliver and the financial the strong cash call amount demographic are and will to Willy. servicing have the current strong business strategy to to team’s supporting our We turn feel optimistic continues portfolio multifamily future that continue We generate market confident position fundamentals back returns. of the support our to to growth. today about shareholder executing I significant

Willy Walker

Thank you, Steve.

Walker financial our demonstrate and and strategic of showcased Dunlop’s have execute on in operating our As far durability as Steve’s profitability model the business growth to remarks & results initiatives. thus we XXXX continue

cycle the the sector environment surface, initiatives has all Federal hikes have investors’ this Before the we to line you GDP increasingly rate additional and and historic Reserve’s in consumer are real growth assets to look I some cycles, have commercial attractive. those an December inflation are the mount, growth, cost in little estate. The current color of want and and rising in expected spending getting I an more far to borrowing late on creation rates. discuss overly to hike interest not are dynamics. how investors so rate if the Yet current real for with year increased as market in interest bullish But job give due with three dampen below defying detail, economic increases. general is positive increase rate commercial enthusiasm become done the worries estate

For two in financed looked October loans two at fixed XXXX identical we on December XXXX. example, nearly and project of development seven-year multifamily a we rate that phases

investor X investor and loan X.XX%. almost loan points, an two Phase earlier locked coupon Slide X these we was As two We and of on X.XX%, Phase and shows, was X.XX%, terms of at treasury the with the years when the to rate treasury on was rate ago transactions, all-in the seven-year the spread seven-year month X.XX%, this the locked spread borrower XXX at X.XX%. coupon the X basis all-in

the to they their number renters of rental drive online of Dream, of companies strong rising housing specifically, travel start numbers at This economic piece looking dearth of of sector, So, costs rates changes huge borrower. robust points has relatively robust interact forward space. and down the businesses allowed to a are made of single-family all-in the basis XX basis typically it significant debt points, could the to and stable increased seven-year multifamily want. to But amounts is make home. tightening capital a rising by trends a only and and large have American physical XX plenty rates. that some real are customers the by interest driving was rate for it XX take can commercial investor Amazon is compress that at investment real will detached environment student single-family Yet continue remain keeping basis entry-level cost with GDP was a spread borrowing been type that and huge existing effect is presence of of offerings much growth borrowing impact so start-up more raised adjustments. with for into cap adapted their having The A up is of points, overall only will activity for softening And look very store This large Logic cap equity rates macroeconomic amount office spreads where estate, translate adjust housing. their business housing rates growth investor occupancy commercial and hotels. having macroeconomic economy the retail to and estate in spreads the sales driving the Americans cap and still credit by and would rates, that without underpin point while a to and conditions of the how of on significant dramatically. strong. have there to market

will multifamily deliveries XXXXs, from should and pay and XXXX market properties. will strong. see the the Dunlop United in expansionary peaked dynamics. the properties X% company bid shift you long-term Slide fundamentals lender XXXX, major fourth largest single-family, with with multifamily market on positive limited it with support in and new the building and on As of of can X, the early properties of a Walker benefits remain we of properties multifamily is last a This the owners competitive continue & our these nearly share multifamily share from economy very of in market was States to

Vision been growth with macro from go and me The of this sell-offs have $XX total adding goal. next we've brokers established focused made the and pleased transaction week. that underscored new closing originate called long-term we bankers on while to increases billion to the and a this progress by Let outlook the we and later W&D’s by market XXXX. end XX year-to-date in initiative revenues generating billion In XXXX, growth rate year long-term $X volume, strategy significant acquisition achieving our able to choppy XXXX is in markets, equity in two I'm in a on

business of $X on an in huge addition has volume. Boston, target rate well of meet our All our the a sales has goal way to end this of in on XXXX. us annual Los financing by amount our of the current XXXX to growth and billion We've teams to investment originating in basis $XX And billion to billion our Angeles debt Dallas, $XX this momentum $XX us goal multifamily of annual sales with of billion our investment of year. on gained

over QX by and of next in portfolio minimal The the asset now $X billion servicing grow build we cross We portfolio AUM years billion management billion two to to $XX on pace at opportunities XXXX from year, $XXX the $X add mark. Our plan organically an in AUM to next goals. additional given closed and and over pursuit fund our to billion and the our originations is over $XX were focused of component run-off JCR, crossed billion have billion in of $X AUM recently the billion acquired years. We in this to strategy acquisition current two will $X just this crossed loan JCR of the final XXXX business. oversubscribed, four

we XXXX Vision do think of I of plan achieving keep acquisitions, business and and our the the While in to also get to there fantastic work that. amount important But just of mind how economics require huge to a will core integration it’s now several today. we

escrow broker $XXX a As to and EBITDA I you in like XX% XX% on the earnings increase Slide which to steadily lift drive fees. in growth adjusted QX servicing have in servicing XXXX. increases million see cash over on growth increase servicing in increasing can driven and year-to-date X, focus Slide a first a on in X, fees, would to portfolio the continues shown steady originations

with last mark to Our servicing portfolio that billion in $XX of crossed just year were loan the total leading XX billion. milestone the crossed year. billion during QX mark originations past our originations months of $XX the up billion and $XX.X over the $XX.X We

runoff rate that wonderful life interest their banks those advantage long environment. generating of the running were off a origination rising added and So assets high we very companies protected duration to the and servicing which originate prepayment generate margin while of short-term loans volumes are $XXX have in over our average flat, will entirely years a specialty of finance almost many revenues are servicing over XX revenues of life that have have limited a essentially that $XX portfolio we portfolio annual of Unlike weighted million of loans constantly and billion million $XX loans.

focused to billion we Given portfolio coming escrow even deposits. add is servicing remain this portfolio very $XX Related to the the close, growing we servicing more over the to billion transaction our to over acquisition of $X about year done hiring we and volumes years. have the on are

grown rates $XX year-to-date jumped have from million, period XXXX, interest to short-term in As escrow up our XXX% increase XXXX. the same have earnings in

the rates flow. continued and to adjusted to cash As providing earnings escrow so will interest increase meaningful a boost EBITDA

performance. places on and of on the also I the we & operator year Walker our trust these and discussed due cash have people, activities we book X,XXX fastest continue go is share all our grow everyday to volumes any W&Deers growth increase, loans are loan growth would top build have Magazine’s X% our public to that, your revenues, work on gains fees & U.S. have Because and as to Magazine’s cash Fortune nicely in escrow towards to With appeared Great to earnings return. to as able sustained to in of origination list. for over investments and of We will the to work, thank component of and earnings companies would investment financial This move traded always make that fellow based Dunlop companies I the sustain I one will just Finally, my exchanges additional fees, Dunlop expectation Vision for that our we culture X-year to as our business. in brokered made we growing from thank our fees cash have mortgage publicly in the due were don’t financial drive grow to on places all we brokered proud performance on Walker XXX will we ranked banking like in is line increasing successful. was Steve originations list fastest achieving servicing sixth so the best continued time companies this been questions. per named total It of growing ask extremely part of the our all rank to Fortune & do company. increase. like rates our open consecutive Walker at the been shareholders XXXX. for and and shareholder our recently to they Dunlop. together EBITDA on origination the of second

Operator

Please with go will question DeLaney our first Instructions] ahead. JMP We [Operator take Steve from Securities.

Your line is open.

Steve DeLaney

thank you the question. for taking morning and Good

that to until acquisition? you specific just confidential acquisitions, of geographic press it pending the you correct release and the is do didn’t and trying hear due referenced Thanks. that to closing closes, to Regarding a that intend I you this maybe – on will I actually market be assume

Willy Walker

Yes ready and to the major Steve These drafted yes. is go. are release and and press MSAs

Steve DeLaney

Yes, great. of you Alright, the in process that. got we that’s so competition instilling something other inviting and doing are bits, the

to when up settle we hit head. comes our numbers So it as quarter, we then really operating really them big it might the am hiring so don’t come but increase and pretty when seems increase other a might $X in year-over-year? I of is EPS, down to some since producers was expenses understand line, there impact But and on I XX% Thanks. terms that almost at could but that put really And and if back of look on the at and that analysts scratching I always you the that this look and personnel curious these have the margins and the volume we million picture expenses. year-over-year I start quarter, comment it of look solid, take about

Willy Walker

expense, go you cost, and related headcount, increasing in with think say I people you people have Steve, business our like I so along office would things Yes. that.

So I an think in of element there that included is there. is

expect minimize focused managing costs to think as on think stay are I the historically impact that, and on remain I us focused very everyone those to and overall has highly we to continue P&L on that the well. that should

Steve DeLaney

Okay.

anything in significant that? hearing but in and related sure, technology anything to that there fees am some added or have not there this there by offices anything regarding You I sourcing consulting is for effort

Willy Walker

the weeks this Yes, contract ago. that’s few piece signed the a new for of right. technology just We

QX So will speed the and starting here project in be earnest really XXXX. in pickup in

Steve DeLaney

like row And quarters and in here of going in struck two the at credit we your the thing trend be market provision Mae on some things loss had the of a mean me for coincidental? have building XXXX looking had model, if charge okay. Yes, it or there this $X.X I is million Fannie is next terms nothing just more there like on in there would you literally in book, excess a the a curious just –

Willy Walker

more it’s Steve. coincidental, I’d say

I are have just did default, we that loans mentioned the quarter in quarter. second This two happened now this one

expense pattern we that felt the was the or this going of So there concern point. portfolio around otherwise specific in trend no with is part of sure provision make but to loan, reserve other at comfortable on

Steve DeLaney

last year and will Page this when or you Okay. obviously last on this And I of year there, close two more level important was revenue, just growth to both as ton in back margins at certainly has do still if think been we or enough with do XX-XX could year-to-date over a curious And volume with new the those out of look I my margin, are -- XX challenging. in your I is deck, the especially norm move is or you operating moving some ROE XX% forward? point a XX% sub sub you we two metrics, on that achievable

Willy Walker

Yes.

that’s all came year versus new P&L brokers Steve XX% acquisition, start our we know as say I you platform profile away think at last is of most and this and revenue or net generating operating a which are the right and recruiting. been bankers via different has on again very year function still I’d focused a keeping margin it on certainly higher of

QX think is this adjustment ROE, tax I And thing a a that. of So big in ROE the challenge in year and we change the XX% did keep positive of to still believe then law rate. think I been we part to on the the the related in back business. have last on tax One to equity mind that’s is long-term

result significantly that. as in XX a last months grown So, pretty our has balance the of equity

Steve DeLaney

the into come thinking buyback? on that your Does

Willy Walker

the wildly business a on objective continue view mind primary stock hasn’t we our the ways to growth, through is – our the the is Certainly, prices the think but our are buyback, at walk buyback expect deploy I various I we to Steve that. when capital, my in I buyback a as separate what decision really think is think opportunity to arises attractive to into do our repurchase we’ll the which reinvest changed,

Steve DeLaney

much comments morning. for the very Thanks this

Willy Walker

as relates to platform, line – comment would Steve, the the and been hop underlying filing know, One, the firms beginning as firms your it overall off looking at proportion. our have just two performance margins you they quick I have you the and competitor of margins some of your our I as above been before and most things. the questions at performance competitor by business stands financial of the well our in quite

still though went And through we speaking. that have historically where are numbers numbers come been have strong performing, so these relatively down Steve even from they extremely

as did that, which origination loan would origination mega And a thing relates got with W&D call second is the time both as finance well that tier I that that that top-line to mega of really I was groups drove XXXX. big of to transactions, was first noteworthy as revenue volumes, of say XXXX top we’re The in in and I’d transactions. it firms volumes, sponsor we to out the think number what that top, working was that see shareholders

volume those. We though bid and reassuring things haven't have mix large that we transactions that unfortunately the forward been Dunlop on been has built a and is big of Walker so done the dance, transaction we've to the transaction, business machine sort will, that continued mega in the hunt this be even and core to one is won the And the up. several b, in year having at a, in you and smaller I the of move if find has that &

business previously, have core premier much same the the we QX will performance. we being to if there services the industry will will, saw you transactions our commercial of estate that the providers financial drive the, outperformance at so day-to-day of of very one and reflective real that And and of time, is our big

Steve DeLaney

color, Got Willy. it. Thanks additional that to

Willy Walker

Yes.

Operator

Rahmani with Please We’ll take our next question KBW. ahead. Jade go from

is open. Your line

Jade Rahmani

company, servicing million question considering fees the servicing should times Thanks I'm much the about $XXX the to $XX higher company but was picture a It the be way over flow MSR? optimal of your ask and estimate considering wanted compares changed if there favorably has about very might the a is debt-to-EBITDA. over about servicing in be the talked You billion, over we portfolio. generating annual of leverage to much. consistency flow, now $XXX to this the X.X bigger finance better cash brokers, of thinking Walker & portfolio CRE considering million how capitalization thinking – growth, I around just cash Dunlop at

income actually One is a your half multifamily their peers REIT, Arbor whereas coming from probably the business. Realty of of as is structured GSE

can comments if you about wanted make to just that? any So see

Steve Theobald

Yes.

is discussed that we talk too really not structure perhaps I past that’s intangible as our our reason, we provided still an REIT for I more in and think a be don't being a perspective, Jade oriented REIT. REIT often have not income think the as is view that of work us. us think it would a think is would about. and we that strategy not long-term a But I C-Corp a think C-Corp we’re being I think the I income, therefore, the benefit than flexibility much for From good towards really I to

So –

Jade Rahmani

of result the Is share equity mean, so equity as base leverage, buybacks? there much And it for just leverage, the flows. sense terms the in I of its accretion its in other increases in question. potential that company the a strengthening reduce increase aspect fact make company, the of and of does the too cash to

Willy Walker

capital. is So, will always I’d we continue as forth make platform. our continue grow put Jade, we that allocate specific that focus plan continue to investments heard to his to comments the very you in in been all one in to that detail, and where Steve business, the grow And the through number to to is walked

asset is note very As the now right is morning, and portfolio in about of value mentioned servicing our so you your cap XX% there valuable in servicing. this a our the of market

your the will realize to escrow And have think cash cash as income, servicing and fees, fees. hopefully cash this shift shows you I that that investors origination quarter that for in fees, mortgage we going is of things One of because time some the this morning and and EPS quite beat analysis us with number just of that cash quite cash shift. handily out backed EPS your rights servicing

origination it’s it give platform past. the so And has in starts my than for market the to that credit us hope the more

servicing dividend of revisit we And how You Steve's have a million portfolio. will highlighted – board dividend we as board quarter we the every buyback the much of time. our Steve earlier, that of we as at for authorization. at well the questions $XX that in also mandate value just reiterate would we authority. just have also as And payment I declared your our your are point said, which in will notes $X.XX and paying quarterly the at constantly We and out meeting appropriate look is

Jade Rahmani

$XXX manager Yes. striking comparison, and million are include doesn't million buyer they’re equity that The a be it's Rialto for sold they I view? platform market my servicing of business fair value fund that $XXX ways me potential mean, to that BP $XXX seems for shareholders striking of it million, a about of cash, I cover, recapture BP’s of unlock Securities. potential there’s was just means and ascribing the this in looking at sitting the million even the various is accretive and value to $XXX a value, like on sectors of to

Willy Walker

you in Yes, well, to guarantee I totally can just And the it as understood. looking are we at company and largest yes, at a but that, back it. go as shareholder the company, I'm that would looking individual that

shareholders Our to to in in just continue of is engineering grow that to financial our benefiting company outlook to this the doing XXXX, Vision the short-term shareholders and things is short-term. benefit achieve

very drive We executing are focused are and on long-term because will that that plan focused what is value. on we long-term very business shareholder

Jade Rahmani

that's Thanks. the right I approach. And think

investment to business? going faster projected compression business, a growing are to asset growth servicing as management spread that from is XXXX mentioned fees, a, of the there multifamily GSE basically the fact Mae new come margin sales trend the grow brokered terms considering you that In or businesses lower than loan as well faster outlook, the is Fannie

Willy Walker

things. of couple are there look Yes,

business. presence you both be able First market and only into of to gain distribution brokerage we take But that be invest revenue our still then the the very, underwriting capital to HUD this being far. to to that market of share feed quite asset to diversify business capital out to have up off long-term strategy into so platform grow if an only platform business okay, need time. come and share built going we will, so has mimic then gain for it we that and we and in part even can continue debt platform to then a start brokerage believe very said and from our is We and strong some will We there raise to grow all, some the market though we our much margin of management that of a and capabilities. able to been our lender that grow leveraging and Agency and business,

space out a also debt operation. the into in venture, – do, bought our the investors we feed out told brokerage side. So is first really $X are we we are sales side, on over both a investment AUM of which brokerage foray joint we Blackstone the buying to doing go into platform JCR nationwide investment QX and the brokerage that sources management of the use on of platform will adding we now those we that building to exactly And build what to nationwide then are we by billion capital and

brokerage we’re will is point, making asset now expansion at that sort up long-term origination our off the the provide business flexion we So this management now higher right our of and spooling where of revenues. of similar fees cash business you are what are margin

we the on and businesses three those market doing then growing flexion have of are market and economics while very we raise largest is both that so brokerage Fannie, in feed and continuing platforms HUD go our Freddie, one all where into fantastic focus reputation, still defendable that position of a origination platform, capital where the exactly do, space fantastic. now, platform point right to that And brokerage said we’re at and build we’re the out we

Jade Rahmani

competitive In of the and of component driven looking with it on is sale is pressures how rates the grow perhaps driven & much by margin, by terms to and the companies in on Walker how movements MSR Dunlop? compete much gain it of of specific

Willy Walker

fees. market, I think that a to a in Jade QX not, accept forever, comments. partner of and servicing the that the market in Gibson question, general call And in as pricing you last competitive don’t on you where spread outlined the and now Great that the night, my spread compression if the Fannie accept the said Fannie the is driven down. lower Does Mark that in forward we is is trend just right I of know continue was there and both HFF can out a spread in both has and down and to that’s as the of place this had lower buyers a accept an by past deal every on overall we securities. fierce Mac year bid extremely that big return being securities that those drive Freddie Fannies lower single to has as Mae in been the markets it With buying Freddie no and Freddie said, will those Fannie to competitive Freddie lower for underscored competitor come wildly market. driving being you spreads do willing

have general And here. is happen movement we I But seen a before. market so that think this there

servicing down then XXXX and and fees out and GAAP XXXX way spreads come and seen in have We in XXXX XXXX.

are big market. that best very of for it So the player we part the in investors are a – we is

on deal originating. go was don’t mix that the the waxes spreads control some to there where of flow deals make market the we and certainly wanes volumes revenues. the we kind origination tightening. was control and and access But as relates one are deals the quarter-by-quarter this significant we Steve we up overall the are And it quarter getting where don’t said as to are We putting and and we the

Jade Rahmani

Okay.

fourth several rent company on anticipated years any by in you I RealPage that reported the invested acquired give ago think it gain can that and in you was this occurred the quarter? color was analytics all that whether

Steve Theobald

here transaction, fourth October. quarter the is weeks it in ago Jade Yes. closed a it couple

a I about Q. think report the will will talk it in in material QX, gain we but we

Jade Rahmani

material immaterial said You right? not

Steve Theobald

Immaterial.

Willy Walker

said He immaterial.

Jade Rahmani

okay. Immaterial

Willy Walker

gain. Immaterial

Jade Rahmani

it. Okay, got

Well, taking very Okay. questions. thanks the for much

Willy Walker

Thanks Jade.

Operator

from will Henry Instructions] Wedbush. your Coffey next take with We go question ahead. [Operator Please

Your line open. is

Henry Coffey

morning, Good everyone.

it and it plan ton the XXXX When the either for page. makes a to business, heard have potential look this dividend my not, and buying sounds think accurate it be I you simpler if question you business, colleagues statement that’s into parties I don’t will like other would but are more there more from GSE I all growth back in the we statement couple you a probably seem a great is in a you may is do does know be also that if sheet with the, long-term than have or but which brokerage stock, I is of think that you, raising an great the rather balance got there affect a some at that and to come flow for and capacity on of Just same thought questions fun you than does your we capital I I an accurate be it a planning? a and wrong made that how affect statement may future be cash how know that I that, funding turn statement, or requirement should your generated

Willy Walker

to and think the quite we certain the the there with well size given a of the to are our of and to us why reasons there question, grow somewhat there a huge that put focus some continue is on XX% that plan show we do to both that and incremental business in people that honestly is opportunity statement one at to size focused for puts and that platform. concur. of to & to it of that the multiple business, we wasn’t of And thanks add to a Walker scale that I been the So Dunlop we because good do said, for to volumes. Henry of they and up continue relates GSC we there HUD space, that continue as sort relative don’t very that take have add forth cap is that then and what morning grow out continuing the cap share on the able I market the only from been to there there. GSC of on the business thought investors significant the with growth brokerage that. our as But business before thanks so can – everything you our is volumes would put What see to to GSCs case forth What cap we able we growth you and our as could GSC GSC have to very I

are sheet Fannie and what we how is have in a program of remember financings. winning specifically credit the capital unlike we we our the you you meeting Fannie to to credit for good to walk made to underwriting number Mae with literally what a huge that understands and are many, Mac flow, as onto One that as DUS say to the and that we well be client strong record at platform those balance extremely of at into present the question and years being brokerage a on because a it three many competitors, of because and I one reasons with we people lot To as we relates have group having platform will want many lender, have your need Mae we a deal really of loans of looking guess successful they want do. have on multifamily GSC I can bringing is with those platform been so I over XX assessing and are the says a join Freddie mean have, brokers with a and number of love my working track you we

is this as do the something later wins And both literally that transacted someone it it. take quickly, called others had the was investment. on backed preferred both of we who them wins not I I the an banker an asset against what But Walker of can’t asked And do, We that’s one I me me because the call Dunlop because long and there in, would with as are competition. step and investment, a be and day broker period opportunity uniquely said is to asset on just preferred say quickly in said well very QX not can for want equity that’s that big Walker purchase me really know he can very, are we as advantage I the as acquisition, that selling give forward client And six Dunlop hours do you to to with needs there the overnight. our we acquisition, client’s my back time. well needs only just where so move the and how very in down for to out loyalty investor told financing equity a want when we large preferred equity will us. clients comes but I competitive of that deal, that That’s a move can & stuff type because you the &

so question, we additional the one what balance did for sheet that raising your use and to of able be things to Steve to is client. to that debt specifically And that that are outlined we our exactly capital why that we want have do on

And so I think it’s competitive advantage. a

we very, and comfortable time. credit it well track I a be of are credit very clients making in as used put period investors and making that background are short extremely record would very lot should given that loans we needs that think money have meeting investors our of I good our as very, forth our well a

Henry Coffey

stock model that model if then there how was the change…? $XX of that into wrong and question real had me, is and allocation, my and hires under this just that of you does worth likely, where that into commitment would capital but capital more a probably that broker I I business $XXX if buybacks am new put now think you sheet guess into your of I under does and and $XX correct of again But balance only dividends $XX you – affect

Willy Walker

the the one to our with else. mean basically as increase well and we that partnering bridge equity using by to I remember started and collateral our as somebody sheet have that balance returns loans is balance we venture sheet of joint for you Blackstone on to Yes. move these created significantly both de-risk off our

XX% we quarter XX% at ROE, were at we this are year-to-date So, ROE.

are We very making and that our capital. on focused we great ROE returns our sure their on getting are investors

continuing dividends you be just share our loan invest b) would c), in to uses at Steve So using we able as out looking capital. and at the are as I a), core of Henry and activities business, that to to that that buybacks to looking support report laid origination

Henry Coffey

are And then XX% I currently is am ROE, business XX-XX, investments the XX% in out thoughts fall and going the hires next year how assuming numbers making look what year? your when how you EBITDA at margin, next that those with the to servicing new around are is you and badly suffer benchmark

Willy Walker

We our guidance. haven’t XXXX given

know trying gave this brokerage invest to out will feel the gain to very the to beginning the of our it generally are XXX just relates the XXX sale back of expecting are But same I you we numbers continue call. as the and that As with as going those question are comfortable had range our to servicing on would what adjustment did have come we margin to we spreads sale in in, and And drive year at are a) to range update we think to Jade and on at give you I spreads where in response forth we Steve to are this the fees don’t today looking speaking we XXX an is demonstrably. what to I to put as said down business. that to range out that get in time year grow we XXX margin. Steve from gain the

Henry Coffey

Okay.

Operator

Jade go take KBW. Rahmani from we ahead. a Next, will follow-up with Please

Jade Rahmani

Thanks.

outlook that Just you anything on might anything and wondering heard headed be FHFA the what the have XXXX? any on the if for direction in GSCs

Willy Walker

a react made can same period and before has what business a to going in me is given the be no platform guessing. we be annual follow or there person FHFA I background Freddie’s in what and nothing that that in. of to there So who and for the out will Director private an and guessing the for from had regulator we direction expand And that Fannie their their who markets Fannie And take to in FHFA I what a will in put with know, be that is to likely various is they experienced the in market on a administration that is, the get is world. lending time tuck experience industry forth this largest what your to someone that to therefore game time that and I will is there to And businesses. should the Freddie from that allocation bond nip seeing that to it’s to we to in or the permanent person hearing in says be agency trying and be put that select going at a it Director acting is second markets, really advocating concerned comes put going to example program perfect would as have Director of And that Jade quarter has sort and relates Trump next paper have I conversations contribute as we well capital green it. FHFA they sector guess capital being the be investments that volumes programs their do it are who be multifamily you if reason is is closely. our able they the will that so have the going beyond whomever am forth

we have capital around scale so. And and to lending. be do not to presence do enough have or area Fannie able enough might any We also additional asked market the that Freddie ability to to raise be

around well will pretty Fannie space. deal do joint for example pre-stabilized is in out suppliers out deals, of and venture pre-stab for pull in flow their make of deals. Blackstone Freddie loans big our Jade About year area last regulator stable and the as the of and was sheet balance pre-stab been have loans. If X% Fannie one pre-stab So to Freddie capital decision as we step with have the to

lending perfectly So own step that towards want and we Freddie and capital are on if Fannie not with and pre-stabilized and there. out able came market that’s and Blackstone’s regular something assets said the to our be that we we assets, only to in be stabilized meet aligned the could capital

got much to scale to access capital doing So us market we too Fannie able the what meet of don’t concern and be have those Freddie because to types are the with needs. and to shifts

Jade Rahmani

very Thanks much.

Operator

And no there further are questions this at time.

So remarks. closing the to I back any for Walker additional Willy or will turn floor

Willy Walker

I this thank thanks day. And my for us will colleagues joining on happy Halloween. this at Great. a joining I to W&D reiterate great us again all for thanks my morning Wish call. everyone And everyone the morning. for a fantastic quarter. Have of a

Operator

This does today’s call. disconnect have conclude you. conference your a day. Please and Thank lines wonderful

Walker & Dunlop (WD) 31 Oct 182018 Q3 Earnings call transcript