WD - Earnings call transcript Q4 2018

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Operator

Good day and welcome to Walker & Dunlop's Fourth Quarter and Full Year 2018 Earnings Conference Call and Webcast. Hosting the call today from Walker & Dunlop is Willy Walker, Chairman and CEO. He is joined by Steve Theobald, Chief Financial Officer; and Kelsey Duffey, 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. my turn it's to floor Now Duffey. Kelsey Instructions] pleasure the to over [Operator ahead. go Please

Kelsey Duffey

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

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

Willy Walker

Kelsey, review performance. Thank for our to and quarter, full you good joining year QX XXXX first top morning to us had for with and call which growth earnings thank an exceptional profitability. of line finish XXXX you, the today us We allowed off strong fourth year and and

transaction Dunlop QX of & really coupled gave slide shown evolving to investors with along revenues performed quarterly team as transaction clients of QX, million of surge move confidence billion Our in three. activity record interest strong collaboratively and volumes on generating estate with result in to the volume commentary QX, generating was $XXX with revenues our & the going the Walker The Walker and continue activity rate quarter working gives in $XX total and of policy a our billion XXXX record States. positive XXXX the real finance pushed executing the estate commercial recent towards our company us Dunlop's to Strong in our to mission while marching Fed's XXXX The with macroeconomic commercial $X.X acquisitions that United volume become Vision forward refinancings. of transaction fourth the environment forward for record real premier on billion. a on in $X outlook ability

wonderful lenders Freddie defendable growth created Mac XXXX and has our came of from Fannie a XX% brand our where sector, grown brokers you client transaction adding base across XX% the total expanding country. of compound transaction the As at largest of years volume by slide multifamily over and the standing see market one on have HUD and rate bankers and past annual the volumes can a as our consistently five presence. four, we Mae,

but year, with slipped X. the number Our we Mac and Freddie GSE number with X the to Mae strong lead in from number one X to from tables were number Fannie for originations

drop we years. increase While in in lead market to very the well disappointed to our positioned were the share are down coming tables, maintain or we

leading Our million, yet down volumes our XX% of recently Advisors in $XXX Walker the We volumes Head $XXX are new welcomed to Atlanta Thompson extremely and were forward. & QX Georgia. strong in company with mortgage in Dunlop pleased overall We were acquisition added going in at HUD Sheri business the her HUD as banking million. to iCap have by our HUD Realty year-over-year this fantastic another of QX team the

years years increased our five up to talented the a brokerage with XX% and XXXX, flow over compound acquisition the five the match building our our of and national past a to business with and deal Financial debt years. business our Our client originations culture. record has of XXXX We XX% property focus loan broadened consistent in annual brokerage brokered the year access up last several brokers basis to build base from $X.X have spent out the base, footprint past on out entered over multifamily in and who last billion client led Engler

talented were property $X.X Angeles by and business teams XX% in to volumes overall brokerage property down billion, XXXX the in expanded our with year-over-year addition Dallas. Boston, While we brokerage significantly of Los

joint the included our venture lending sheet clients' that Trust W&D needs. XXXX. fourth for pleased Mortgage efforts our very clients property for borrowing significant Blackstone growth and and with multifamily using very a of and to This had in with quarter QX bridge the meet loans important in in three business sales recruiting very year from are balance competition. are our differentiated We our success We looking strong

paid execute rapidly Our underwrite and risk off. ability to

average rights loan the loans. quarter's and and these Freddie large an volume pushed dramatic was These it, volume very loan-to-value pool brought new with rights QX $XX an record iCap One quarter transaction end portfolio to service from step-up coverage quality in credit billion XX% just debt a times. X.XX The at of loans of healthy servicing of end, QX the $XX along one ratio average of from a standpoint record of our of with Mac billion to a QX. servicing by servicing with acquisition

Our on ratio of the X.XX and $XX the debt XX% we & coverage Walker times. full average was Dunlop billion was at year service lending did loan-to-value

$X.XX onetime past, was tax due share, of continue to said As the as to conservative in share we much at XXXX annual do reform. underwriting we strong to these we pushing earnings of EPS will under EPS per types have business benefit per $X.XX included $X.XX compared can $X.XX metrics. as QX possibly which our share to per diluted extremely

X% Excluding the onetime tax benefit by XXXX. we grew EPS in

of annual target historic investments a was rate made and the performance short bringing solid interest fell on and growth EPS growth, significant we of and movements, very double-digit market EPS the our X% banking performance brokerage While given it in talent. year underlying

XX% the our Dunlop's size model annual to We of XX% by given cash-generating $XXX continue small EBITDA have cash-generating the growing Walker increased grown was adjusted EPS XXXX rate. capabilities our faster than at years the relatively most compound The growth business & market peers. strong over in which to and market through million. year-over-year And growth we and apparent balance a past sheet in opportunity enormous five expect model business

million servicing in exit XXXX, coupled the generated us escrow the $XXX XXXX $X.XX financial our Directors million slide we increase EBITDA before XXXX. over portfolio of years. shown past our As turn $XX generating per portfolio by added share. quarterly of future. now to in voted back month. month to through This business servicing yesterday to Steve? you million to on Dunlop's of dramatic our over servicing our for positive results detail can dividend three income discuss market in of have more deposits the from cash-generating payment of see our per X, from walk full the loans growth Due up rights to cash billion net These $X in cash to position and with servicing our the capabilities from $XX roughly quarterly & fees XX% coming growth Steve per over XX% interest to Board outlook allowed in fees new year Walker outlook the and model adjusted I'll strong to call

Steve Theobald

quarter tax our our a and metrics. remarks with our $X.XX highlights of servicing key over continued with the XXXX volumes for XX% portfolio. just along to the the XXXX of XXXX EPS $X.XX mentioned. the was on year, per my I will due when good you on QX record the profitable benefit Willy Thanks financial note ended Willy, QX performance morning, quarter strong and everyone. high most share up focus exclude onetime

onetime included earnings also quarter's This a items worth mentioning. few

whether that believe deductible the the related a existing we enacted grandfathering under recorded that questions to the expense new tax rule about be tax was we release plans. to resulting done we our per these to not with to After $X.X so. review assets was tax guidance QX, applies guidance and the expected income share. the to million outside bill fully additional deductibility IRS the during the subsequently in will The income the share of yet or final our adjusted interpretation compensation performance discussions executive related increase of in plans At draft IRS grandfathering raises has but quarter tax First, included the time has reform. of tax in advisers plans our expense The under act. draft $X.XX released deferred our

of expected from during issuance of $X.X XXX adjusted Fannie been million costs small margin We volumes those off Offsetting of $X.X $X.X accounting XX% quarter is included EBITDA sale and as the to brokered to the quarter. in the our is in mix quarter related interest. into total achieved to our loan which a spreads a Margins posted on of gain persisted. fourth was financing a we QX our in price originations expenses original due other basis discount took GSEs of nature. with of much volume for within We gain up a included which XXXX our non-cash last related November. income. of additional added is its other the which also back were refinanced XX% business to This unamortized and quarter gain included and competition expense record company business to of technology this had one-time term during generated write of This XXX range on charge tight consistent points. in between points charge basis the million ownership This XXX billion, record has a lending sale Mae

that We to lending gain be of significant on expect lowest percentage we will product volume. seen our overall dynamic loans, our and margin to change this continue a not have also any brokered sale

sale on volume result happened a of of as business, to percentage here the in the on be but have a are high government our all highest XXXX to recent these In range in gain of of gain HUD quarter HUD on business lower addition, factors, prolonged margin we of loans margin the to likely much term. see shutdown. we the not been basis years. a a Based overall of XXX XXX points near in over sale projecting volumes first are

an performance XX%, was as XX% increases revenues expense XX% a growth transaction Our percentage of an in QX in quarter. averages. expense the improvement margin resulted in historical our over outpaced fourth line revenue Personnel QX's servicing-related quarter operating and as during with in of

of from expenses platform in operating leverage is scaled the margin year apparent While healthy along operating business full our with our grew of XXXX, model our XX%.

to XXXX, investments but expect additional to made in the drive investing grow we XXXX our transaction in growth. expect will We sales force and volumes heavily for also that revenues continue we

remain of annual was ROE to As QX XX% the XXXX operating six. believe XX%, to return a XX% slide will for in result, as XX%. equity bringing XXXX margin on we on our shown range

ROE did share QX benefited strong the November and of did we as $XX Our repurchases December. results million in nearly

XXXX, by next still Including equity over authorized to the the million board over million over $XX million course payments, Yesterday $XX performance. grew we of $XX.XX months. our million plan $XX that year, new for price execute strong to For dividend totaling yet an the share. in share shares average a can repurchase per of repurchased we we X.X XX million, due shareholders' shareholders returned our $XX

our the acquisition dividend had months owner/operators interim United estate shorter-term the compared the $XXX lending ratio shares, joint voted million XXXX. JV successful our to dividend of largest initiated a fund pay sufficient the was life the of income. for the of during continue per originating with weighted and sheet year Blackstone payments our increase large of $XXX to of of mentioned, our share. our a also quarter XXXX in quarterly for to amount including a The million agenda, for we originations. We board for repurchase yesterday for deliver to growth transaction loans, and one the dividend We of of quarterly that XX XXs in teens own months States. program portfolio Willy of ROE had sheet to to remaining work on complete balance million $X.XX record on eight fourth the just capital commercial balance $X.XX sheet originate interim high real QX to balance deliver our iCap. can quarter loans cash end while our XX% payout low year, believe after venture opportunities annual of dividend with only that increased the ended very putting fourth our the with one net lending relationship of with quarter to At $XX to capital average a a As significant quarterly We retain number portfolio. using by modest represents $X.XX our a

We for these long-term financing our allows balance are us additional and our opportunities existing utilize it comfortable permanent short-term relationships create creating cash our our using balances risk. opportunities without strengthen customer effectively for to sheet business lending to as

with XXXX, brokers. net remain increase XX% XX on significant deploy Walker at we continue bankers opportunities are targeting and on XXXX. capital team new During top to & to and to front least on to hiring the We growth bankers the in into bring brokers and by Dunlop bringing investments focused

year-end, manager, February, was in which JCR a $X.X inclusive made yield-only four totaled product. JCR's of pre-marketing through fund At assets fund into the point and billion, loans acquisition Capital equity in JCR asset strategic venture is offer Blackstone the preferred our fifth business. entry of under alternative our will held also closing joint funds. now managed fund, management management November, its After which We

on AUM JCR's future in focused to we'll funds. grow continuing very are use our our We co-invest to and capital

been this and platform million transaction $XX cash cash to volume, record million, million, fees Our servicing-related and records of by play the servicing brokered our stated strategy servicing to Strong has driven of $XXX billion, adjusted order our in coupled our increase origination strategy cash EBITDA and growth $XX in record we EBITDA in With in benefits revenues servicing EBITDA excess and out largely adjusted origination of continue portfolio, adjusted saw a growing flow. portfolio drove significant financials. flow growth our in fees, respectively. quarterly annual originations, $XXX XXXX of with and

the our upward important as we trajectory as adjusted to expands. performance we our We the EBITDA XXXX consecutive expect focus of double the our remove EBITDA third component related with internally generation most adjusted for one revenues We the targeting year. for continue adjusted on MSR EBITDA metrics growth are And expense. along business non-cash amortization of as our digit of

Vision XXXX. financial historical achieve to as cash long-term strive performance for flow gives and to strong confidence the Our keep we investing us

manage in having that EPS five our of As annual achieved last objectives XXXX double-digit our in growth we growth remains the mind, four business goal of target with years. long-term

about of the us today for we growth is As from real this who where over unlikely is course linear year, and excited to business of prospects the time long you particularly with significant the we're have in be volumes our Overall, those market quarter-to-quarter. the a followed variability in for estate like commercial XXXX. the know

returning Dunlop And incredible thank the play while thoughtful to shareholders. turn team investments meaningful entire call with Walker a finish and strength I'd business existing that, in give our capabilities like back us multifamily make strong to I'll generation financing complement our cash & this company XXXX. for best-in-class capital Our our to flexibility as to Willy. that to also

Willy Walker

brand dramatic of The client broaden and country. Steve. in Walker the over you, has as platform past Thank & growth finance our real one commercial base best Dunlop's the estate the of our years firms several strengthened

remain $XX similar The XXXX $XXX billion going based an will dominant commercial volumes size multifamily provided a and of to XXXX, of $XXX the X% Mac Mae the multifamily will Mortgage only Fannie year-over-year that real increase. financing. in portion Freddie capital As to market of forward. billion a for GSE the capital slide growth. that provided will implying and issued the XXXX and $XX scorecard for forecast of the market from Bankers $XXX estimates XXXX, XXXX, X% market Freddie with year-over-year billion average to have eight providers Mac expected shows, total Bankers GSEs financing billion market the total of multifamily on changes multifamily of estate Association Association leaving us the be was the billion in slight of is Mortgage The believe In be

business fundamentals. estate home drive simply But centers housing revenues XXXX, growth and to U.S. of goal increase positive to Americans. high and providing added absorb with The homeownership driving healthy topping is market not of refinancing purchase Walker $X.X This with during inflationary and X.X%. all-time large continues supply, to possible will property persistent and growth XXXX acquisition have homeownership, year. down and for risen of XXXX weakest of Vision target by environment macroeconomic XXXX XXXX billion Freddie many in a formation a is of benefit rent interest the that support $X to to rent evident Expected units long-term the the compared rising The into with historically agreement growth, this moderate rents priced the end an which debt ownership for average home the needed should market Americans an load historic historic X.X multifamily particularly completed the sales current The predicts annual costs. activity Industry generating strong activity, rates vacancy X%. moderating home home apartment debt based real three and continues Dunlop's on the backdrop of businesses. continue sources inflation lack risen were published high in strong renter should cost pressure, level by XXXX X% offset sector. analysis trend Our at that low around transaction years. at helped asset for in XX% but with saving feeling year rates keep a new than above the of single-family December of is well the growth. from loads. and cost in the recently point contributed XX%. more rate November debt FOMC million strong affordable job the on an in the Freddie own servicing, in home from our trillion, of points remain a keep decrease that in of single-family healthy XXX,XXX sales, renting that vacancy due it despite existing interest should jobs cost the for will showed in household sales multifamily very Freddie student continued Mac's XX%, these demand The U.S. Mac and outlook home, very demand their commercial in plan, of vary credit while GDP growing unabated rates, which largely should in for to demand by higher that are line XXXX, economic to lending, multifamily a going relatively owning a & that prices estimates and that the the continued payment fact higher card some wages. These of dynamics single-family of projection out has in forward. the management XXXX and a wage nearly the many are increases nearly pressure Renter compared growth multifamily through to

platform competitors our from wide of meet platform needs customer allow day-to-day will our that see that asset connectivity the the program, have lending of markets where capital of opportunities targets portfolio. gives our asset with from the our annual we over creates in raised new streams asset and our significant $XX life many the deepens in will revenue. years billion revenues the coverage of many successful final servicing bridge bankers past. Hitting point our model will steady $XXX doing are break those growth that gain come. loan business originations to on and XXXX those will on billion high you our to revenue continue management brokers control. these weighted of and our us we a reach over With loan building and billion a similar benefits average XXXX. of to incredible us objectives Vision compared produce with weighted $X scaled those increase the mortgage first portfolio currently most loans, our relationships fees additional annual as the only we its markets we and competitors, are two the growing originations, can on to strategic recruit points very XX-year billion. of with management portfolio due piece current the us $X to we and size XX nine, to asset servicing involves business billion underweighted. that for small Similar talented average bankers The our margin source recurring $XX been provides brokers to $X and from to clients relatively billion property of fee $XX As have basis see servicing an we billion upward are management portfolio prepayment implies that The revenues another business an long-term require is to a XXX we range an to into can to $XXX the slide management With of sales $XX to to count cash to clients the the servicing our which vast of basis life billion at The of and that end to protected. trajectory of by majority billion Maintaining continue today, differentiates

year make We and in with towards continued under billion assets the XXXX $X.X of progress to ended management. achieving goal this

Although, in we we momentum attendance. The for in execution entire and W&D strong client XXXX the Vision after we the company team to size to of these Walker focused with next great shy the relationships, annual towards last Dunlop I complimented Housing such nothing sector to players XXXX, have over the are exceptional a work in National Council multifamily this and major is on would performance do at two grow and years. like ended to aspire astounding. and with very XXXX. goals driving happy team the our for spent me to all lot a their market presence, place & the I sector meeting still to our of thank brand our One in another that platform work. week in making Multifamily built has achieve XXXX in client team on

is most it have prosper We really something to what for is years special will built and many come. and exciting that, grow to continue

shareholders your over line now to model trust the the in company. operator I'd questions. for turn to With team confidence like you. and thank our continued to that, I'll the Finally our management Thank and call any business open for

Operator

Jade from take ahead. can our Rahmani go Please KBW. question Instructions] with first [Operator We

Jade Rahmani

the to the much. deals? XXXX? you the very pipeline deals lead large the The in for And table rankings that in absence do large you of of most discuss Thanks you can decline cited, attribute

Willy Walker

do have XXXX, and we Jade mega transactions didn't mega in XXXX, done know we a you XXXX, transaction As XXXX. and in whereas,

with in And tables. so one would transaction either or Fannie the have lead yes, our large placing Freddie changed

The flow positive had relates that, size of to that many during all call deals. W&D puts competed reputation the billion-plus XXXX we didn't the of large as on to $X and XXXX then it the is for And it to this large that the We business all there. outstanding financing is the in that share year. win. but nothing so, do And But and of our us mix of to to and an on as unfortunately several didn't XXXX. deals, in we scale we're out relates them many, negative

on with relationships client at the great be transaction we continue to that have partner of can borrowers. to great We who deals those most level a people and many of

Jade Rahmani

any fee made some numbers, pressure terms have that And that depended your on street some of was in I to there and on out put of hypercompetitive the it transactions? their those targets of competitors deals of those environment? volumes know some large have large

Willy Walker

the As know per But come deals, forth would of didn't various mega up did question put end no. those down fees really to if we reporting I you reasons the economics. you winning. economics? volume. we end say on due any do who competing them. other you deals is, for competitors deals, what We back obviously if own away when I of that, deals from day those did transaction various do significantly would dollar those the lost But will, on, effectively are is for And the at their

Jade Rahmani

Was how investors January benefit or I give December and volumes real-time sort you color a looked? Can market the think any of update. in the pause there on Okay. any have volatility? disruption from concerning may

Willy Walker

about these So in in activity numbers, and surge will ended rates QX, reflects translated the financing as that speak as really industry were it on relates QX. propelled the won't And returns. which but active into talk to December economic numbers the which I volumes what we typical year I is far as themselves year commercial for front about end of the think in an estate talk where what real of extremely the the the interest

Jade Rahmani

to is them? And going is to terms goals essentially the needed be much how of achieve of XXXX goals, main those In capital your M&A? driver

Willy Walker

as his which of loans a we of cash and use So cash amount balance also as I short-term taken and a it is comments, redeployed great significant in lot on Steve have have highlighted of the in time then sheet customers. a And at instances of number of the both as as that prospective that meeting mentioned, now cash. as was well customers existing in strategic that a existing highly relates needs to it

to XXXX of we will and which we be growth to to the XX% have parts Steve plan to the volumes get sales how that broker drive business, management give there. and the And what And if requires So I investment we to loan the continuing add our servicing to the you the invest more and continue and reviewed said of we various kind plenty to relates and component servicing origination hope business, That bankers a plan than business, able I will need just grow Vision portfolio. to capital banker then origination grow. country. it to asset as to business across of and It to recruit XXXX. brokers roadmap base drives do as in

we do we On you the and acquisitions to will asset long-term you to reach at those objective able north most And management pull platforms will if hit of goal. side, and be and our if more to together be $X of need portfolios all billion likely that targets.

Jade Rahmani

the In going you reasonable of terms assumption is do margins, gain a on think sale forward? what

Willy Walker

points XXX gave term. that at to XXX think in near the I basis Steve

Jade Rahmani

Can loans to is just you venture give I interim that $XXX any lastly the color duration particular excluding the the deploy originations loan you mentioned BXMT into And outsized the you the think chose what in or that? joint short-term some loans. million cash venture on joint expected for just and BXMT

Steve Theobald

duration probably less is it The than was of loan When months will the XX less we that XX. actually, that like did than Jade. more It's expectation XX. it, be

Jade Rahmani

back Okay, thanks. in the queue. get I’ll

Operator

DeLaney from with next Please go our take Securities. JMP We'll question Steve ahead.

Steve DeLaney

about larger business, potential that the your talk you in initiative It's was see the things you more to the that congratulations just multifamily market profitability a call or into? press release attracted our strong with loans curious decision late morning close today, you relative had I to for initiative just that gone the reform, business? you. really I'm which traveling to much very you with of new are January more Willy, versus Good to and something everyone Do a as light agency small GSE not was a course. team about balance of defensive enter so balance maybe small the of really or different it expanded couple Thank quick in of L.A. new XXXX. the me. with can

Willy Walker

Good morning, Steve.

Steve DeLaney

morning. Good

Willy Walker

safe And travels.

Steve DeLaney

you. Thank

Willy Walker

we they couldn't made the which small acquired and had year that about space. As in ran effectively operation lending XXXX, in when recall, that compete decision you a a may acquired we we CWCapital and balance for

just had that The lending work And we partners exited in small small business, the Chase. feel lending space. on be one the anchor of the ought to came if exited so to we of That's will, focus since were we likes a they said, small but balance sort you space thanks. to decided have competitive not And the over on, space the thanks, and what their, we Mac we of, balance real balance advantage no going space. Freddie subsequent lending really year, a like that

$X billion, its So $X billion, from, an we three volumes small didn't basis. sat and lending have $X get the space. think, gone Mac's into Freddie on over years, to to annual I the back And in past billion the balance space

my right numbers directionally on that. correct. but me, I Don't it's quote think, are

become and space the them competitive both small lending is in balance market Fannie it having Freddie regulator so, that space and grow And very share. also the have a likes

Steve DeLaney

Right.

Willy Walker

borrowers there. a They Fannie the are that distinct lot point Freddie you the of has made. space and to So regulator given and grow

to So it's businesses. big very a their been growth component

we that the made competitive we given programs, into that get now such they wanted to have decision so, it. And

to one team hired at saw the in announcement bring of of had we our great done adding January was the competitor of business So you team originators, firms. in end of the a who amount QX given XXXX at lots the with And and iCap, lots on the Deerwood we're Elkins Johnson and acquisitions now And of our where, origination seeing focused business of it. and brokerage we're and of Capital breadth that flow. and to deal

And lot outlet flow so the a wonderful deal access a have to that now have lending that to. loan of operation is small for we

Steve DeLaney

small obviously, Willy, balance on That's you and, it's much would large smaller. that look great. when about business, And, you at think say when lead your tables you

do. an Yes. you you I are? a But less of business, the larger deal think licensed in you loans? GSEs the lenders so mentioned that there what as fragmented view $XX know would than more market how many you on with currently billion annual XX% Do than

Willy Walker

and for each Fannie Four or five Freddie.

think about I it. that's

Steve DeLaney

Got it.

Okay.

Willy Walker

Freddie Mae. Fannie with the Actually, to licenses and there's Fannie we By a concentration way, from of are as the the licensed high relates it space. SBL

Freddie We are licensed not with yet. Mac,

Steve DeLaney

Okay.

Willy Walker

XXXX your if the at And point, so will to look Steve, you leads tables.

Steve DeLaney

Okay.

Willy Walker

January ability without to started billions We put XXXX, the X, into those on numbers. of loans small dollars

we So because small the doing loans advantage dollars, starts they're for a and of billion instance, operation, CBRE built-in of who does with have a CBRE small a aren't. balance couple year lending

space move it the we to cranked vis-à-vis, want we up this size as be. and we relates into it and to very it be lead will helpful scale if that as get to, tables So this to when

Steve DeLaney

buyback. there. Great. just the close on to Good color stock out And

we while it assume additional range $XX that be buy is shareholders of to also Should if You could quarter buyback, of how to will think And marginally when nice stock. return below to expect sort to The commitment I low, sort the a people in your $XX capital of Curious we be the report price wasn't And just you've of the in Board gave opportunity fourth if opportunities EBITDA? average adjusted a near so it had back sort the will, this, a today. some about of anywhere million just stock opportunistic, you to $XX, of lot is higher. obviously. obviously your got say that out by a about But XXXX? $XX. still to broke should a stock it be think utilized

Steve Theobald

one. that take I'll Steve. Yes

with transaction I as over a what specific of time been in all, think, our respect to be opposed market we to on first doing approach to the repurchase has shares. to executed

I so cetera. volumes time. is and like be of in levels, an our that hasn't is at was the that in say part it's this think so think attractive would buy. is everyday et opportunistic. just I at attractive our not certainly level, changed, expectation we we'll the around we're the I that And But the feel felt November that we in we But stock pretty at in still really point to buying when strategy December the stock market managing the buying. market were

Steve DeLaney

helps. That it. Got

very comments today. for thanks the much Okay. Well,

Willy Walker

Steve. Thank you,

Operator

ahead. go Please [Operator Instructions] go next to with Wedbush. Coffey We'll Henry

Henry Coffey

with new everyone one is me pleased I -- we'll in It just wow. be to add me volatility of -- be Obviously, my focus congratulations going the and all and it volatile it. or this was you was Good e-mailed solid issue here that's knew I let on volatile but adjust to guidance what's the going going comments. quarter helpful, big know and the how isn't you and obviously, on kind to very to coming people and clients how very guidance competitive we are -- morning gave there normal be If our quarter. of Steve's gave my is margin to a third but out? issues, shock,

Willy Walker

and morning for comment thanks your good comments Henry, thanks your for the quarter. on and

time, basis If the between XXX of which of low you the website a shows the go high But doesn't able up that clear it years period XXX over band QX manage XXs, seven of into kind above the that our and we've XXX on been look to XXX operating sort They've can XXXX. was bit see XXX points slide you during two and been in posted that to at sale to to today gain a last and margins. little margin of they -- XXs. since

any that I the of one as the sale of is this one margin. amount HUD a HUD think strong or – lot way track focus the of QX of is for that very so whether quarter, to business do the a Freddie is Mac things would Freddie Fannie And there QX capital clearly And a going slide we or brokered shows, varies do one we kind Mae markets be gain is or But a one is of investor Fannie business trying on to amount quarter, of it. to and or we significantly. there quarter, heck of no that do business to amount be I on posit do

to in there we're was sales downward managing servicing so the access the team generate business doing margins which a very we where confident on to for sure More put flow can that business that. XXXX we've we tightening much and with that there to And and very making call, we that gain high sale had ability got interest we the in with and with as specifically focused this then market did deal is And feel we rates out all low the is on what in doing what spreads the spreads gave on – margin, in out our Steve in range XXs. can operating XXs and our executions force pressure I that have rising I just do fees. clearly as

to spreads the downward look about pricing sort where there. go that XXX sort normalization four you the a drive this XXX. the is that it for of it's in tightening of in isn't on band We weeks, normalize. that for allow That back interest are three is last seeing when where normalization should I if to has of XX-year at and rates mean increasing what means of doesn't the to XX-year normalize or been sort hovering was of say And been previously, it but

says comments Mae what of that our on that sits think Fannie to and we in around Steve what what to as was as margin gave of consistent it his same was, said range. And our QX And guidance as that on servicing a so I in kind business on saw QX. our sale what expectation XXX he XXX far is gain fee

Henry Coffey

rates, Everything you says I interest consensus one increase so which we And is read on what that. – read. the which is view at look that's when

count a of more portion business? around if takeaway? volatility servicing So in we that can environment can the on gain your issue. sort the reasonable stability for that And be stable you we Is stable sale environment see on lesser would rate of a the

Willy Walker

takeaway of I transact the also the for worry that, would the securities takeaway. not as that, environment CMBS. And not investors to and other to but securities stable activity. that's And for and to rate it allows also think relates would pricing of a very pricing say is only stable about acquisition relates stops starts a allows rate environment agency then, I as say well, the it also I

year band X period If the a because environment That existed to four before sat mid-XXXXs price in the about there. fluctuations. wild the CMBS to of great was for the in year the to that back you weren't band crisis, on the a for think XX XX-year three XXX there

sort going is, think over is probably calm relates to to then a as into all at And page it the capital much that that nice don't it environment. know more of a to I rate They a CMBS And competitive commercial about think period environment. we've relatively more seen have thing But so is CMBS back is if got you multifamily real more it's stable the if threat we've a interest is competitive final stable to in look but could estate. had and provider to to from it a stay environment. there three there's and macroeconomic where rate one good of everything – come should to being I four over not last calm that a thing week two in this geopolitical realistic. years

Henry Coffey

that. No comment on

a update Just on of your platform? mechanical own build-out servicing What's more the the thing.

Steve Theobald

We're good that progress Henry. making on

this year, expected we're I of the be platform existing while new to I year. we tracking this But arrangement, going which is As building co-servicing set last the mentioned call, expire our point. think as end operating at in the we're to under essentially at out this

Henry Coffey

this wait I but there going until of outflow How out well come influx of now? between bad this years is we ask in plays multiple it or What multifamily for of conflict four And to crashing out? from it Is an to then terms single-family how years? years finally, of but multifamily. childbearing Is there as plays people When call hate millennials be yes, your both? you we're out our and be of it talk single-family in. for some -- multifamily single-family three do hit couple years, in to it and millennials growth to all think it's growth well thought sort these into way, a going of

Willy Walker

now Nothing or at good because you you just starts That until only we peak will my will XXX,XXX. I answer don't macro is at said for Henry a the the starts. multifamily, XXX,XXX. you XXXX with XXXX that that in macro was present years housing the soon nothing If changes going will point because than environment that housing as reasons to for XXXX. we comments that to in environment are grow in lead leads shift in in feel call. a if really been some single-family doing look three that tail outlined easy more and number has point single-family from the a XXXX call. be the the that absorbed start real you really on us four going XXX,XXX-plus be economics to not seeing if next as housing single-family believe Previously, to XXXX deliver a multifamily or anytime at that There hearing years that's single-family was are deliveries But are right threat two on a that of two-year where to XXXX developers multifamily. we will the then the off. outlined underlying of from in a have will there building homebuilders says competitive entry-level a deliveries time such, thought And multi-deliveries

lot change obviously costs those bring interest with the there the which rates, on the underlying economy, have and parts as will positive multifamily going China a cost construction side is both they can on deal it that than for are is But done construction do the now continue But costs, should for to of multifamily fundamentals you some build? for the down as of depending multi who's what a well more all trade side? construction. look component getting hitting single-family. the increased Is single. the it single-family Right on so or And macro environment to

Henry Coffey

be Should Thank interesting. you.

Willy Walker

you. Thank

Operator

go from Rahmani KBW. follow-up And Jade take with next a we'll ahead. Please

Jade Rahmani

footprint We're articles thoughts seeing the the FHFA Ultimately, you I in near-term some changes the include at market, your has was the government share expect in shrink? the GSEs Thanks that if of do will congressional media. reform it explicit any on very the GSEs. from what releasing expectation wondering GSEs could your potential you will in Do that And you I the mind approval? some regarding and which conservatorship? status chatter believe administration much. the to is requires think guarantees, medium-term

Willy Walker

enterprise had as their Mac have neither Jade Boards Fannie start Mae skipped would in both Freddie Chairman well the of on as commenting well CEOs the beat. I as and changes that as

off His first now. his you was having at administration transition And not that and teams director change that FHFA and Acting We've for at were the so was exceedingly focused they and comment to Joseph wait Director, the Freddie had if would know boards there Otting very at well. I in hat in for with and going to a do a to also Fannie right you FHFA the my on solution both administratively, leadership team something and managed reform, take legislative the will. all as

commented trade of up the an that Crapo Chairman explicit it. remarks came saying solution where GSE perspective. Chairman, the to know you industry out back, what with an very on come housing the to his in look that work associations the I the outline legislators outline last specifics Included Crapo's And government that administration As would with probably all And was GSEs. that positive then Trump Mike put finance week week and would with the from many as relates forth that Banking saw last take like reform with of draft as a for it walked outline guarantee. Senate they to to you comment of major basically would wanted

so explicit Jeb and he Texas no and guarantee. States Services Congress thing from of Congressman the there Hensarling who And United -- the has a Committee. no the longer new longer for elimination one was was that that lone is Congress new Congress Chairman It the voice is Chairman government have the is Financial we is Hensarling of in House calling

new as chapter that proposal. draft Chairman to Crapo's relates And it think truly a is it so I

about markets a obviously, amount administration there have You guarantee, Fannie or knowing to up the and and mortgage And, Freddie a clear with the a multiple of with Mac a of very attracting lot forth Secretary work clearly Mnuchin a government very legislative is focused explicit and be and the privatization space. an solution. administrative the either put Mae they vision with whatever I solution here to come Trump done having would tremendous between guarantors from to

Jade Rahmani

And modest I flattish guess in in let's and the say near-term, XXXX Freddie expecting you're to growth Fannie volumes?

Willy Walker

the now on. forth grows as put it's us commercial the back leads the the expectation the some there's government that nothing appeared come. XXXX there, or Otting the going in Fannie -- and Calabria confirmation, And believe to out whether financings for beginning far put mark. year-over-year. fast-tracked my change to Senate I multifamily to about would that them still his to Freddie subsequent of as to space volumes whether going X% remain in the the majority I has the multifamily Acting the Director, be the presented on a the said by our at is and do up, a was but Then on to relates space space. I the that providers is McConnell is allows Otting whether haven't capital going got grows other So lot issues, are to anything the obviously, question of nomination they're And government X% Mark that up heard to to prepared scorecard to They've going by a focus opening that fast-track It redo takes right or it that the to back aggregate to of dominant scorecard so is a a any role remarks, on leader said that. done and that year. leave government When time had shutdown

Jade Rahmani

is Okay. tuned. plays how lack there in clarity a of still Thanks it out, but for Understandably stay we'll that.

commentary on... your to Just turning

Willy Walker

very Jade arms housing everything or and that. is isn't would on trying time first around Congress hearing that Directionally we're finance either is the but just positive, get say reform. administration the this to their seeing I

we And a so happens actually acted amount that there before that's is on chop tremendous anything can to actually being or comment upon. of still anything wood

Jade Rahmani

rate are you of loans XX-year what loans? Incidentally, fixed do know percentage outstanding multi-family

Willy Walker

don't. I

Jade Rahmani

of to of hold loans Okay. liquidity market the seem capacity Because hold their portfolios. reluctant is capital loans aspect and to one the that longer that on provide seems yet to GSEs those that other duration fixed-rate sources

Willy Walker

That's correct.

Jade Rahmani

is to the headcount growth the guidance that margins latency range of questions did by gotten you I've I couple happen where a -- in new there's brokers margins, that Just guess. because the end that terms that -- around drive start of provided? would phenomenon near-term a to And revenues? the of if that be What add driven always a period lower would investor the before

Steve Theobald

Yes.

off the production way year of what -- of the their a significant a end at the end I calendar number that because with their and got their turn of think sooner mind in yes, earn of think quarter starts least Jade they've all than our higher drive splits. to would first the to from I at into from rather perspective folks staff be, lower a later. hiring Keep would zero

end So range typically lower it at is QX QX. in the is of compensation in expense than our

Jade Rahmani

Okay.

the the at the that including by lower-than-expected you in in rate a fourth the driven higher-than-expected I it one-time tax XXXX you charge looking adjustments EPS to are a first had as as in occurred the quarter excluding quarter of a think fourth first target, double-digit rate one-time quarter. and any the tax well tax Turning quarter?

So that? are you that one is excluding

Steve Theobald

necessarily looking at say not would that we're I No. Jade.

that. issued than it in at equity with of through basis. that's tax keep vesting. recognized vests mind extent function that stock the to is in an of we So because happens benefit where to that's the quarter again equity first on of higher be, the vests tax price visit annual the majority respect adjustment the That's our quarter the our majority the to that associated when a prices equity at, our a where first was with what provision, Because

you year it will item, the up onetime So long relative going every when as is happen as so price. we look price a can the but granted to at stock that

to going the lower, the compensation with that to than deductible fact used be is equity tax the... Now be. the of the our it magnitude change of less laws in that probably given is But

Jade Rahmani

rate And onetime includes -- the fourth that charge? quarter tax in above That was XX%. the came

Steve Theobald

onetime the to due that's charge. Yes

to range. somewhere XX% the to in annualized it's got just be expense, you if the tax XX% that, think I

Jade Rahmani

Okay.

gain So you’re excluding a $X.XX? operating charge XX% tax have the and EPS debt would using like your rate been and something

Steve Theobald

That's about yes. right,

Jade Rahmani

said the in won't the the you imply that it Okay. growth be first mean your And double-digit also then are year. through half? kicks-in tougher, EPS back is growth to then but that that, in the the linear half I comps

Steve Theobald

in think I a just everybody meant fashion over to remind that our linear year. No the it's doesn't course quarter-over-quarter of EPS grow the

Jade Rahmani

Thanks taking the Okay. for questions.

Steve Theobald

Thank you, Jade.

Operator

Willy have for it any Walker to as no remarks. And will appears we further floor closing questions, I return

Willy Walker

also participated team in and thank to W&D the again in happy confidence to XXXX. finish call Wednesday. W&D And such a everyone on I I and wish And day. of and our very shareholders to Keith. company. Have continued Thanks who once trust their strong everyone just Great. today a for a want congratulate our all great the

Operator

And conclude Dunlop your full have Please disconnect and year this will fourth today's wonderful & lines conference Walker quarter earnings a call. day.

Walker & Dunlop (WD) 6 Feb 192018 Q4 Earnings call transcript