Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Q2 2023 Walker & Dunlop, Inc. Earnings Call. Today’s call is being recorded. [Operator Instructions]

At this time I will like to turn the conference over to Kelsey Duffey. ahead. go Please

Kelsey Duffey

Good & Ruth. Thank for you Thank second morning, quarter Walker Dunlop's XXXX joining you, everyone. earnings call.

me our I Willy with this Chairman our have and Walker; and CFO, Florkowski. Greg morning CEO,

being is be and webcast. will website today. a later details on call our accessing website webcast This available press earnings and our Both provide recording on release archived live the

a These relations our point as This and investor call. the our release of posted some touch Willy reference the earnings Greg section morning, slides website, what www.walkerdunlop.com. we to presentation of will serve during for and on

Please earnings core that will EPS presentation of these for financial the metrics. call. non-GAAP adjusted course also the to note this a of reconciliation reference adjusted to financial during Please non-GAAP and the we of EBITDA, refer metrics, appendix

Investors facts, read are language are Private XXXX. Act of earnings release. forward-looking call, be made the Litigation in Reform of may not within deemed our statements which urged on statements meaning this carefully Statements historical Securities the to the forward-looking

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

I will now turn to call the over Willy.

Willy Walker

everyone. Thank And you, Kelsey. good morning

and transaction across the estate believe is coming points in of and of has started the great behind real added volumes recover the March reduced industry. pricing XXX by adjust basis volumes rate the funds majority to tightening to to and XXXX commercial expect quarters. We tightening Federal transaction in Reserve us the Fed The dramatically

revenues long-term and & provided servicing XXXX, credit In the management half the financial the strength and and track us investing record consistent lower lending in Walker of transaction growth dramatically exemplary in success. countercyclical business asset to Dunlop’s continue for of volumes first midst with businesses, the

QX, total from were to management down volume in XX% servicing to the streams businesses. revenue and XXXX. billion XX% $X.X down $XXX of asset transaction second million. durable Yet our of quarter Thanks revenues only was

down Adjusted million, our nont strength was XX% year-over-year EBITDA showing the $XX related again to transaction of revenues.

tightening which down per per per $.XX XX% volumes expectation hope was by XXXX share. earnings was to the Diluted adjusted EPS mortgage half that rights Fed we share, core is continue is to servicing back It to the non-cash build $X.XX due impacted first our cycle of XX% And down of was lower point the here. and transaction to and low share. from

from X on Driven Slide $X.X Looking the quarter. Fannie volume billion XX% XX% quarter. basis, up HUD is Mae, at up volume growth is sequential by W&D’s a $X.X QX was as performance first up Freddie on up XXXX, and on total XX% volume of billion Mac agency volumes the in in transaction shown with XX%; lending

billion $XXX the half $XX.X the their of to as of leaving capacity GSE XXXX lend XX% has recovers. deployed billion lending annual Through or the only of capacity, first plenty market

placing team continue is other transaction, We and our lenders opportunities portfolios loan refinancing new finding sale maturity database refinancing Galaxy investment sales focus in our our to portfolio, on and using on every marketing. financing every

rate the as on putting QX waited sellers clarity and assets market. rate acquisitions multifamily The market cap before for stabilization stalled in

but trajectory indication, in pipeline is an XX% were current any slowly. QX XX% sales QX Our If this year-over-year QX. low and multifamily property from point volumes in here, from activity the was multifamily we're sales and upward sales cycle down our for down

on QX. The crisis We of second to in of up lending services a flows full quarter the was last the U.S. Republic will banking First SVB, XX% from for of sector a debt dropping commercial year, $X.X yet real increase with averted billion going Signature debt expectation QX QX, demand XX% failure from of volume have system the CRE had brokerage and down commercial and estate pulling meltdown dramatically. appear that forward. to real brokerage from banks estate back capital is our banking

of Private only is private and continues brokers is & but capital. market with management the provides valuable coming capital and Investment meet our our capital that clients’ to the CRE raise financing bank needs. into to business, and their not funds Partners deploy returns Dunlop capital Walker replace growth proprietary to bankers asset to

reduction our business invest to bankers our still April are brokers The We vast even our force. with after in in continue and majority of us.

scale. generated of Our credit We to income capabilities single and Alliant’s and Director raised the we real make tax by the predominantly flow businesses. on We hiring our loans investment a businesses commercial low management these from family and XXXth small asset based focused during non-trans to banking our continues Managing new servicing fund cash broaden appraisals from estate QX investments thanks market. a technology-enabled can

Greg some longer turn our Greg. outlook. term and on over then financial thoughts results to I come our to now call will the discuss back with

Greg Florkowski

Willy. you, And Thank morning good everyone.

call. Market conditions quarter, quarter generally trends were the described we in with our this consistent earnings first

sequential to same of different results the slowed real we both commercial periods compared half our market the the of financial and when XXXX, has across Although monetary this all today quarter QX second has than reflect slowly during as tightening overall first and market XXXX business pace quarter growth estate lines saw of almost extremely for an adapted. the

business and grow revenues adjusted $XX million, to strong remained strength at from significantly, continued our EBITDA down and the a transaction testament to and model. durability asset of total QX was our servicing recurring volume segment management but

costs steps We year. continue to million G&A SG&A decisions. into cost our the reduce and at benefit down of reflect QX containment focus operational the annual on XX% the are least in to drive compared to improvements by to quarter Coming took same cost year, we full last those results efficiency. controllable $XX

by million employees creating $XX XXX our April in also annualized headcount over We related personnel of savings. reduced

the quarter the reduction costs, to quarters. fourth a and reminder, the but separation impact we the in action third headcount to results on benefits our As had the expect full financial little of due see this

Turning transaction for operating of year QX segment second different our Markets XXXX. performance, very market than segment the Capital to a last reflects of quarter

ago, As had its our shown in a on Slide seven second our year quarter team volume by company's best history.

were compared improvement products $XXX across this near year-over-year. transaction saw XX% decline revenues in most XX% quarter, sale record to that Although volumes segment million only margins the as for slight quarter we on total gain down to

QX, from transaction just in volumes breakeven increased $XX.X in an QX. QX comparison on and to Slide a transaction saw the which segment drove in A QX, comparison loss more total sequential adjusted the for X, shown of is The QX net important as increase and for $XX.X XX%. the XX% in revenues activity pickup from to million a above to segment improvement XX% million in income EBITDA in increase

to segment on our performance as conditions. do, Our and the challenging continue will brokers of expertise these navigate clients And market steadily for will draw financial bankers this improve. to they the

produce management servicing for SAM, revenue management business, and recurring of activities asset and our stable, asset servicing segment both stream. which includes The

revenues due expected and fees week bottom in were SAM Fed’s to on basis benefit line. earnings. The XX% point increase escrow servicing will our $XXX and was up growth shown XX Slide As year-over-year X, to million last

term also our just our loan rates, of also cost the the balance three over grow manage in earning increases times term debt with short-term assets we in tandem short-term interest with of that Although rates.

equity revenues Alliant note to were Alliant in a ever. benefit our syndications see for slight from capital rates. best So the $XX $XXX total incremental we quarter putting this million, Of recent its a pace close of $XXX will bringing new raising as on year and of ago XX% year-to-date ahead QX, we year million million

As points well shared continues servicing several portfolio. for our quarters, defaulted of seven the in we the have with loans perform at-risk basis only portfolio to last

majority loans. Slide flowing As XX%, our shown of December to was the across was of the XX, underwritten XX, ratio equity coverage cash on loan debt XXXX, a value weighted reflecting cushion the average substantial times was and portfolio service X.XX as

resolved later loss to the property, This charging off balance the our while finally million quarter, loan of the loan interim in defaulted defaulted back history loan reserve. the we program. The million $X returning $X sheet, XXXX sold years four only we in our and

on sale the improved of earnings, adjusted are the Although impact $X and the GAAP health EBITDA both adjusted sheet core EPS no million off. and our quarter had balance by charge this reduced

the from on results capital back earnings half earnings half to Slide XX, of year, Turning share the But markets SAM of XX% are transaction down large $X.XX stability slowdown per of portion Diluted shown year-to-date. of XXXX. as total down a was our offset the segment from volumes consolidated our our XX% the the in activity. for first first

adjusted EBITDA core $XXX While just XX% $X.XX XX% down share. to and EPS down was is to year-to-date adjusted million; per

was XX% to Finally, in in XX% of same X% year-to-date compared XXXX. margin the equity while on XX% XXXX, return versus was operating period

financial half the Fed results but its restricted The likely that for rates remain material winning market by interest term. appears inflation, in and clear market shift increased it's impacting longer interest to ago year large will remain near be reflect that banks Fed as the a a elevated began first conditions the in battle supplied rates. Our aggressively liquidity to is over

to we're activity, forecasting for pace XXXX. continue optimistic in XX, the shown our reflecting market of interest last adjusting. After the transaction call, as quarters updated QX and magnitude our pushed our four difficulty a be of year and environment that would On pickup the Slide from slow consecutive that continue sequential will and financial performance the changes rate recovery potential we're by QX, declining the will clients this an range and uncertainty we to to activity saw due macro and we provided encouraged XXXX on guidance into

third it However, transaction quarters. very and forecast still to the fourth for is activity difficult

fourth is today, what and annual recover the earnings. our on the outcome our quarter guidance lower the generate third the most Based as fourth we end quarter months, than and we the likely over be range coming asset stronger markets quarter of expect stronger businesses see to management the

the operating are the under fees, time and focused during pressure due most strong to earnings EBITDA adjusted this tighter transaction in declining volumes cycle. our on we servicing metrics Although and remain delivering

sustainable our free for service shareholders. businesses to and create us core our our Our our cash long-term from ability allows businesses in value in generate debt, invest people to

cash cash of quarter at $XXX our balance This to portion the the strong our our QX repayment second up a cash, loan portfolio. of business increased of with interim due million of end ending the of $XX $XXX quarter, million capabilities from and generating million the

Board our in and long-term to of at company the Directors on and the a liquidity best of to quarterly per continue as for time, August dividend. payable And a our operating will yesterday remain $X.XX to the are our share we challenging record same to shareholders of committed building focus environment We we approved dividend quarterly position of XXth.

we into an things. quarters of extremely about Two been has number year, feel a good very challenging what

First, produce build cash current the our business model continues capital market strong steady us flows that to despite margin allow up maintain headwinds. a profitability position and to high

we capital multifamily of Second, and to sources businesses. support transaction large are to access focused have our countercyclical on

underwriting to opportunities the well multifamily need holding very And to up us growth a perspective the environment, historical entrepreneurial to today. position our with current feeling as in our market. has a we us spirit returns about our fundamentals the to to combined advantage good puts financial but are we credit navigate take managed flexibility retain our continue when from long-term of risk strategy. talent portfolio growth Fourth, we costs Third, and pursue at capitalize finally, our

Thank time this you morning. your for

over the I'll Willy. now to turn back call

Willy Walker

Greg. you, Thank

XX and the having real and flows. to the today year XX estate a or basis make Transaction flow investors on sensitive in second break potential points rates half are will depending ebb deal. the with extremely Commercial volumes to of capital rate

is the following. outlook Our

believe the it's of rate is the the its majority done has done. more work, even majority one, Fed of whether increases, or three tightening two, We their

will issuances of real next of the estate determining commercial quarters. estate treasury the timing the new financing and the Second, cost deals, size the with to for capital most impact rates department's real of to commercial several cost bond long-term

remain Fannie objective multi-family And and as servicing capital particularly of our Mac are Third, fixed to Mae capital to partner fourth, should the at-risk to deploy portfolio clear as provide with of of multi-family Freddie them that industry loans healthy. is much our in credit XX% plenty to possible. our where have rate and very

dive number a deeper those me of little points. Let on a

stabilize. treasury XXX Fed only is While It's a X% the moved has rate allow months, XXX once in owners which basis average in our Reserve to basis just the the to treasury has financing Federal adjusted cap happen at past pricing research of cap X.XX% somewhat can Zelman, over only added the points an normal XX-year funds A with the to work rates, reasonable points. XXXX XX-year in team interest rates QX costs XXXX. to determine XX multi-family compared adjustment rate will with. to X.X% QX and According

adjusted and and costs transaction cap costs transaction pick-up. cap rates When as rates Reserve's and and financing were volumes rates and financing X.XX% and between X.XX%, will pick-up. rates cap dynamic saw volumes we market will involvement in the between should stabilize diminishes This the Federal continue

Greg’s remain underscore, very strong. quality comments and As credit previous multifamily and my fundamentals fund

fixed loans with includes portfolio at-risk Our loans only very are multi-family rate interest rates. XX% of attractive those and

XXXX. of the for in We have million XXXX $X.X $XXX and only maturing another loans billion at-risk of rest

XX at-risk borrowers the to our portfolio. that to credit of only X.X% our quality of the mature a is in and gift So next months; loans our

first While performance model our our what in it would business be, XXXX half to the to financial we like is design. isn't of performing

not Our maintain billion produce investing but businesses teams businesses our high in brokerage billion banking high and us that technology. and to servicing only growth continue $XXX our portfolio margin infrastructure, stable and asset management revenues allow and $XX

re-financings it technology, As relates data to analytics proprietary technology competition. we our successfully from have our win to focus and on the used

Dunlop. to the During of QX, we were XX% Walker re-financings new originated loans &

Let my portfolio. that and me point tie double to on it our click servicing back commentary on

outlook competition. our loan XX% from which our re-financing means very year exceptional perspective. upon to inflation deteriorate. in next running XX with we are in re-financing win and to months, re-financings started the activity basis We brokers Fed over the raising volume total the deal our has are which XX rates credit using A a month, our and up rampant of which is not uncertain very relying per QX, points to positive from own and technology portfolio, by ago was pipeline little bankers the

volume is outlook to still is the starting begun recover. inflation have markedly to bottomed clearly have appears different, transaction concern, and while Today markets is a and to stabilize

our we for deliver day-to-day clients, executing invest to Our on every focus of and piece returns. in people, can, continuing long-term to exceptional winning possibly and our is brand business shareholder technology

going to Howard two Kris be I'm team of but our Howard's Don to new senior and have Markets duties leadership management primary Group. and X, will from step today. & take we roles Dunlop. been Mikkelsen longtime July, Kris a In and owned the building industry not was forward. that co-heads my XX leading business, and assume helping on retiring partner Don and XXXX their with of to this after King exceptional President in across one leaders our provide announced will be and missed, years excited Capital members business small we in has he instrumental great Howard's grow Howard family are Walker office company as other into see greatly for January in announcement Smith unexpected, responsibility our scaled W&D Howard with to the enterprise

in to Drive remain targets it. investors to established revenue our of would pathway COVID earnings the business remain that to is for a total $X called share Drive the know pandemic highly those 'XX in knowing our XXXX. is Drive are the focused five-year What plan great important economy $XX XXXX, 'XXs, pretty and static, 'XX The have and assumptions. to We financial were major we good tightening, per to achieving business on not in the after and that and two and ambitious billion

of and yet ambitious necessary to not targets estimates 'XX segment. to scene debt that to and volume management property done growth market $XX team to what volume XXXX, closed million the by The asset financing due Bankers volumes, return servicing of markets estate of volume in XXXX, our net Dunlop. sales unlikely, will the Given reaching has In the XXXX. is $XXX the Association to our financing Mortgage Drive generated transaction commercial tightening income financing great transaction & billion capital real and Walker in the

generate continue in Dunlop, the management to XXXX. have to and of on technology track and to segment in grow After deliver volumes, $XXX the brand up servicing our segment and confidence outperform. Capital XXXX from earnings at short-term increasing of million we still markets results $XXX asset XXXX will we management in our our in people, million brokers of XXXX, that team levels, can every and acquisition & servicing our in bankers XXXX Alliant to rapid return Walker Market And back asset segment. our and is annualized and rise That is net income as if transaction interest the similar rates, interest dramatically,

we a the investing segments, SAM would initiatives growth continue and XXXX more targets And bring billion and segment, volumes transaction return current and our achieving Drive to appraisal with pathway over lending our raise capital share brokers net capital to asset and adding us our small through $XX in EPS. of market So of have scale 'XX our coupled in $X $XX per we from a and management bankers to corporate income platform, balance of our of businesses to as revenues per earnings financial share. to

no impact average and credit servicing quality, will capital While spreads and our rates, fees there are flows, business. guarantees

the the made achieve and to this team are team, have business successful. Knowing setting We has what to so long-term achieve company 'XX focus is loose amazing Drive our model and them to our goals what goals.

great the perform model opportunity and recovers both grow and W&D, real exceptional dramatically to an that to market as at business good team times the tightening. bad from a ahead very diverse We the have allows in us

call. you on Thank today's for us joining

any call ask now Ruth the open questions. for to I'll

Operator

to go first Thank you. Securities. DeLaney JMP Steven We'll with [Operator Instructions]

Steven DeLaney

in to like new management half. half more proactive market first second the nice really Good to that see we more, hear morning reality the taken everyone. Willy respond estate has that benefit And from And sounds the to commercial real that response applaud you'll it this have. in

I So to want start. the that get at out

most June caps. to as billion slow, say not Willy, in would combined up, in have been $XX terms of second about the their billion we that Freddie the in mention of but basis collectively multifamily a normally expect Fannie there's through the like catch how let's you is guess not obvious far highlighted I looks or on slow thing below It how half. and $XX

how by there leadership an do closer GSCs close, as get that? the to to can effort their to at mean, try full acceleration Thanks. to and part like their cut you I that, order caps? of expect them an to see loan rates in try benchmark relative So And to to year pricing accomplish we

Willy Walker

market. for and Steve, I to couple joining the agencies a the things overall thanks that mind think to important keep and are morning. in it Sure, There us relates as are this

The fell just XXXX is for XXXX. of that demand a our first XXXX right, QX and acquisition, of wasn't the QX in quarter-on-quarter thing investment through down half highlighted given sales lot floor there the XX%, as between we financing, being first simply volumes

a and deals so on to for Fannie has been and not profitability non-affordable if said very borrowers market on get want been been or pricing have there will And two of non-affordable things, With point financing. are where a has you affordability. rate that Profitability huge focused to it to where on amount that capital. move challenging their Freddie need,

of they very also So the we in realize that rate part capital is affordable the in market. the that their of not hopeful to market only point but and needed are have market, section them the underscored that

& as affordable The targets flow I and is supplying is well to Freddie. would deal say on it relates to our Fannie second thing Walker above affordable Dunlop

transactions that of their half year back market that if year-on-year, if portfolio up and that deals. in we will is benefit from on by year to XXXX. in obviously a And large portfolios And meet you and financing fed some having them look say in XXXX to that allow QX competitively us frees our no so big on I deals the our think, expect them there so a that would and standpoint I dollar price I at did of that year and would QX therefore regulatory been have impact affordable QX the transaction to into XXXX then last from we start volumes. far targets to last final them this you thing see more of And – a multi-billion had rate

Steve, quite of cap has as to when an expected. we as you that come Walker been down we for on Sellers onto that you types I out, stability very the the was. unwilling to in the have back some they know rates to market. pronounced market. one that into market, portfolios thinking put transactions. in see see strip providers isn't hire And as consistently as it will few And would & market the been agency that want GoTo And dollar expect teams step that the come the portfolios they volumes of deals multi-billion Those team the weren't Dunlop going finance get quarter-on-quarter

Steven DeLaney

and background guess a who time, capital the their certainty. not your I of from point bit borrowers obviously helpful about for be lend, it's waiting the to the That's frozen availability rate demand I at to little seem but get

will. going amount rent of expenses that maintenance, about economic non-payers you're and And going is to operating and are we're things, getting that people basis, that lot up multifamily while significantly. a that but security, thing, and of a the reported, do talking kinds this mentioned One if of rents a property to as cleanup a lenders type, lot are many hearing everybody how of you was a – to surprised this revenue week up multifamily drag just case-by-case final with that has I from loves bridge the on those lot

municipality be COVID. that? you. kind goes just in loan obviously is this worked and is or Thank issue by than In an And your a needs that something to broader borrowers, your your of is on? to of conversations municipality it officers it Some multi-family with that the back market

Willy Walker

think Sure, are are that question that things important couple I a Steve. There underscore. to in

on sheet lending. The first we very risk balance is taken limited that have any

loss out, of CLO As that's for the exposure XX% at And don't we we've at-risk portfolio call, pointed rate interim the great But XXXX; & underscored had our Dunlop. our only is Walker ever in Greg we have the loan any resolved portfolio. fixed in as loan loans. we one majority,

from So we to a standpoint credit W&D, good. feel extremely

rate second flows that a at look who are of have rate a have has low-cap debt, that played if gone as you've much. gone while cap and off a it Dunlop bought point your operating much. that floating out if cash you come where because right? operating of you underscored the assets those up gone The is and also cost the of buyer fixed up, up. debt you multifamily, not got fundamentals at rates up, but values We & down a have it a your a of property there and cost to not played strong, problems on due lot have put remained costs and is That's gone bought Walker space has and little financing rate So bit, went scary very has

risk benefiting our to profile debt a not That's in. competitor floating debt floating played rate that now giving right have and have Some they having from flows we cash of the lending of from them. that benefited our firms, that they're rate is

by they senators Bill number Administration's a was FHFA Biden democratic And The two third thing things. to was days to out is economic and that rights of letter renter try seeing were ago to the of underscoring signatories three of to after to what the pointed add for written is that your letter them I request I and There a letter would the a a I vacancy. reached go, Tenant protection. missing senators out about number underscore point that are who

stay first affordable thing, market they have that sure is tirelessly pandemic and make the and of and economic across to with safe landlords pandemic could post housing. the vacancy in that still worked that country through the amount renters in The the

there bent While us The have there of tenants that their like. with to as backwards majority clearly and owner as are support who through treated outliers, have post not pandemic. are tenants clearly of operators work been any well would we vast the pandemic over

And must not the an who an shorting that it's an so who to we of owner the the as operator. gotten operating the raise legislators from that and issue as industry the well tenant standpoint regulator you stick underscore has as both think

piece second and Steve, that that right not them and they maintenance. focused and track their sure point, are affordable make renters now Dunlop makes asset. on & very, is incredibly assets to at lenders assets. the so Walker The some as a affordable we that assets it where up out, quality they have other to are asset it who that we the record an to standard well-maintained on that that reasons at in have it relates are are strong safe, agencies are there that so very of to investing and making keep a But situations lend maintained borrowers for And the safe, you pointed just have

sure tenants to that the on them have in top of loan live properties an And those make agency and step sit that we and as those of types maintained properties to documents so have in are them. need financing according industry that to that on

Steven DeLaney

all inside Thanks know to great Thanks for comments the your about proposed this and Willy. morning. Baseball, legislation. good That's

Willy Walker

Sure.

Operator

[Operator Instructions] Jay We'll to Wedbush. go with McCanless next

Jay McCanless

morning everyone. questions. good for Thank taking Hey, my you

on caps hit that's year, but the just transactions past still The the would I Willy, had probably out you opined table? based first you that see know their you the in I had the GSEs this think on one there, do

Willy Walker

go. saw now – think to Jay. activity in I describe borrowers as Steve's don't tried question prepared as band got X.XX, Xs say X.XX taking to of saying, that, and May okay looping sort to sort XX back my between that I'll so, points I'd I'm I of in into I we of and in XX April comments. moving basis late rates of significant could that up negative into yours. Of a to and high uptick cap being precisely leverage, sort cost when to the We financing May

up picked there right and when that around volumes QX our so And call. was did we

saw out starting if of rate, going they could cost end the then to the rates market this lot in pressure a So never keep and the and raise debt department federal to of ceiling more the we stepping move uptick treasury that's I year issuance their we've issuances And between treasury seen again. at trillion upward on hit for now pointed of government in program negotiations a said, as started an put out my rate they capital caps. sensitive. hey, the The $X and rates, of their comments,

So you say, movement XX that's my people pause. coupon in band it's negative to what, get points the basis tenure know I'm on outside pushing leverage; to of and overall you going XX out rates of

it focusing them portfolios numbers sales materially. financing their large and than could transacted standpoint to numbers we as needing for the be And made very profitability see rather Steve, both So that of we, that Fannie would Jay. I at possible. of the point current or are Freddie the deploy I But deployment, to to If and the on upon change and Fannie Freddie capacity, caps. as are said at numbers the as get be of and affordability we annual to working go no capital capital closely portfolios XX% I as with their much large some from challenging back a to that will

Jay McCanless

Thank you, Willy.

seen there the if seems your are a store sounded headlines, question what are you talk guys rent but potentially it kind Maybe The SOFR doing good misconstruing and efforts this, reset like we've I'm of from for are pretty companies and apologies getting rent. second on where the now from public it about still same like family single had, I growth.

where on about the with? talk you're maybe then So that of from now? that W&D also kind And seeing is what you've operators worked

Willy Walker

on So team the quite the they that [indiscernible] on capital. challenging a very and they've SOFR, It's of space, we a focused bit non-BFR. have lend deploying agencies that's in been SOFR don't

lend will on So are single build-for-rent. who on the family about, family I and built-for-rent, that know won't rental rental. those don't for the talking agencies Jay versus They lend acronyms single

that gets why finding for And to Jay don't have our they to anymore with that shock we increased not you has four debt so because be if it's capital are where the challenging as developers of the the worked one to an we would brokerage sector debt of capital. you brokerage looked been capabilities through lending going reasons demand for displaced, and banking times and turn It banker there's sources. know says QX believe capital list

real commercial real lending they loan know? them, Jay, in don't they're make that various wouldn't They're to, the you need that up, the household like They're small think of capital many to commercial banks not showing that estate of a names. estate are because because How markets fundamentals you seemingly would on. deploy they

as And so recovers. market the positive for we our business debt believe feels that and brokerage that's very

own majority that a market. The other are thing is of Americans do that very continue low expense, well. I would should who have their mortgage very What are fixed supply to that as putting say an not into and very class is on interest home the is rate home, asset the seeing they because we a SOFR well doing

existing for the time. market stay sales home is some in there So, will and gutter the quite

will of coming are market But they have home new is That because point a two the want new move, at supply rental. thoroughly for and home their now cheap the because everyone lose to cost that which don’t of only down cost buy renters, are financing, right financing depressed the homes very job, they’ve that is on price home larger they stay has most and single newly to is in unaffordable an the means renters means mortgage existing market have The they a building people to most X.X% that to unaffordable a those into new needs or coming family, X.X% People got And that what the in very, options overall America. new have mortgage. onto family have move a the payment renting a got built will you. construction. in apartment sales

well great as new dynamics of the most is product really benefit market stays achievable a as depressed And having renters as existing to multi-family single-family is that home by and the the that price next lose at fixed basically don’t point rate space, both the several growth that delivering single-family people want because see so we as not that over X.X% rental market years mortgage.

Jay McCanless

guess, some know new does, your you loans, of the borrowers, I talking this and Where wouldn’t that remarks I that you new are what small we it. quarter Got thought investors. banks list loans roughly on was… new were part of the about names that is the that said XX% in prepared

Willy Walker

No.

Jay McCanless

interesting Pretty it. other encouraging side stat, and of

Okay.

Willy Walker

it’s are these Jay. – so Walker loans new are & – to but they Dunlop Yes,

that I Sunshine in did before. would you source bank tell We disrespect have be never more with will. showed capital heard but a new Bank, Bank. Sunshine no Bank you it’s So, a new have it’s the to capital Sunshine list, capital loan QX providers I I a it called if source. of not If you, even of probably to

the that And so, that we’re loans about XX% were in talking in to Dunlop. new XX% what QX & Walker is that of financed loans number we

the that So, our source refinancing we originated billion do portfolio, fact and CBRE, refinanced a the Fargo, our other loan were servicing but some loan previously we’re that on view, and we capital where was portfolio. provider came rely borrower, existing the in volume from was Wells loan by need for a $XXX the about to talking that went is that not distinct refinancing in we

loan, able into Walker be & because from and Dunlop and the we to competition isn’t meet portfolios because our this are out in stealing visibility go financing invested them have We with and going a clients’ we’ve Galaxy say, the relates brokers but add asset. portfolios. that to and bankers huge somewhat has that refinancing and x-ray it our of our value a as into borrowers’ would client And on work having to an love of to been to we

Jay McCanless

given That’s great may about that, out terms offense, opportunities potential have about some rates structure how to back are higher on WD like if you hear, last looks. in interest fact people for their everyone capital there there, Willy. talked the you question, getting M&A just of for My think side gotten off

Willy Walker

work was looking tightening. helped transaction made I three a acquisitions have one did of crisis acquisition crisis. weren’t great but publicly did honestly pandemic, nobody, first through & quite financial of large always the in So great I well an we us, during no of have post-pandemic the materially the zig mean a a quite Walker J financial Coming at sagged. great when Dunlop have and midst others did and the when yet, bit we to all, so traded tried would we out company say, the we that We of

very zig I good So feel when zag. others our capabilities our M&A and of to ability

fallen would say I knives seen that that you standpoint any haven’t have will. yet, from lender if the I

Some be of floating lot to rate took a so well of very those, seemed performing on far. it risk

there really to someone’s there we dramatically. that hasn’t taking advantage risk having profile at it anything of would so look been changed And relates as

that we does the I more that think was underwriting the to most than heading cycle were are crisis. and great go into people’s where when fact financial the in conservative we

scale size of and needle. scale, But going are then move to size to be wanting looking. things just on to now and And the would our have constantly we’re significant given anything things first actually in and all, we the side pretty of services do

quarter. we performing thing down our team our EBITDA while able And continue don’t to invest financial over business million provides through businesses in the design. the that down numbers, is and the QX us flow the are in model of like cash volumes in $XX the It growth. in went we and performance, two don’t XX% with continue Greg volumes investing to as to place, keep deal like in our overall a transaction with be second is is fantastic

market our it screaming go here would just us has opportunity and on that problems we’re as we’ve in else’s risk taking not going it got to the have this back time, of do today say, opportunity some on everything taking seeing what And and and recovers to so than someone advantage inflate problems. and someone for the take at rather when of else’s to bringing be to started significant own a

companies constantly & history looking. But Walker said, with Dunlop’s in we’ve that acquired XX we’re look, and

Jay McCanless

questions. Okay, Willy. my very Always that’s Thanks great for helpful. taking

Willy Walker

Thanks Jade.

Operator

with Rahmani next go Jade to We’ll Instructions] KBW. [Operator

Jade Rahmani

taking Thank the you for very much questions.

Just the seems last to that and was are uptick volumes think a set $X multi-family GSE more quarter. your pretty on is GSE improve. There around Fannie you volumes, do the are strong can sequentially. peers the half year, billion it think second And interested outlook from you for I averaged and usually an XQ Freddie that levels for W&D’s sequentially inflows and up you Freddie? Fannie exceed in of picking

make can you on comment if wondering just So, that. any

Willy Walker

so, hope certainly I Jade.

Fannie both continue & We Walker and brokers base with to and relationships Dunlop the have have at client bankers we market fantastic to grow the share. Freddie, and

in market first Our the XXXX. Freddie share half with grew of

large QX XXXX. the through Our market market goes half we and XXXX, share in our Fannie that of of half, the in Mae with Fannie first the down did back first was to transaction share with popped which

our deliveries we the QX, inflows see as to quite I and it pipeline. out closing Mae solid that after relates think, deliver positioning And agency we materially. July to will to to in continue had Freddie Given Fannie the increase Mac lead very our tables

we projecting April, Jade, there late to Greg early to both now, to underscore tried in I while given, so had cap go. of the bit comment adjusted, going where all say, and right adjusted in said, And borrowers window I came May sudden little volumes in, costs back the made difficulty XX borrowers a a financing, a don’t year externalities rates go. and and the And then runs

wildly at forward, clients So, for every sensitive it’s move a to time we’ve are. they same opportunity rate the the market. And time, seen

because tempered sync the optimism time, then we’ve be gives for and our same sort enthusiasm back also in moment in of it market to a watched and right only at be requires So, the us away. us it

Jade Rahmani

margins haven’t sale able last pickup. to versus margins for up Thanks had gain standalone did sequentially that. but been nice quarter, I margins a nicely. The the agency check on pick

as stabilized outlook? a that this some MSR at there kind imputed feeling and on of savings lower isn’t through to they’ve are gain provide about with feel point much gain. the How you pressure sale borrowers margin You

Willy Walker

at to their passed other with looked the and their affordability. burden are number good G-fees year-on-year SB’s I stayed down us agencies of with focused of Fannie QX partners, precipitously. partners while on Jade, partner and and them down They of to precipitously market. they’re in their to us all talked it. static the want to very S-fees on profitability G-fees Mae’s They have and deal financial this we’ve so, partners Yes a are results year-on-year pricing in that come mentioned And pricing. our times, have the flat, being about but have sensitivity I’ve

that they’ve – there America, a there a about think hopeful California And homeless a that people was non-sheltered population XXX,XXX we’re So, obligation is population. Jade, clearly in XX% deploy that at University It the of of caps. you shows Francisco America San people if of XX% today. them there’s of got a U.S. done their lot for hit no it, by homeless the in But is to just that XXX,XXX realize U.S. sentiment and has was they of have very very capital to they population, homeless there study the Benioff the U.S. Center the homeless XX% published.

become this home is in in states housing to a and also got Wrong got California California at XX% the says The and in homeless large an that of homeless move wrong. people a homeless. other and the they it’s before because great and net Center are people living it’s affordability. or homeless weather. reason in there’s safety California becoming apartment that narrative looked social went who it were And Benioff

And And to in in is Fannie America an and in have Small an today. the obligation is market HUD do what A rate to we to provide and capital adequate deals, crisis market affordability Freddie, crisis A have we to what affordability in make Big that the market it sure so affordable and deals to we capital today. to there in have is make do America the deals that that not affordable have

the main The through why under of of at people. annual XX% So the their the create first HUD think, one for of financing insurance half supply into Freddie authorized Fannie caps is a market. remains more many to cap new getting year, is reasons fact I that fact reason housing annual, the big and are why not significantly the that affordable its DX HUD we’re is unaffordable

example letter look now U.S. came at deployment. the be out as a to Senate just incredibly One it and on FHFA zoned County the capital as bill in of multi-family. homelessness new, makes needs Los that’s Angeles Angeles build is tenant XX%. it impossible relates clear Los the That about so housing, sit going And focus right of rights, talking single-family, County, that and XX% the affordable, affordability we to in property there to almost that real administrator to of

under is rate spectrum, XX% zoning, by has the of you that for go dropped lack which because over built. Texas product Houston, If and homelessness for their of the the be lack And the of the reason nimbyism last decade. to allows new

and the renter. Texas; place a renter. to capital, it’s and is a down. market be that’s housing developer in We gets that to it lean and to inverse. between be be think in Fannie this the time cost America, the provide capital spectrum so need is terrible a great at their a an complete the to owner, a brings and place or across on a to and about Los renting it’s HUD place developer California a crisis going to make Freddie, California; this Los Angeles, terrible of if affordability the Houston, place owner, is Angeles, Houston, an to to Texas be Texas So, difference Houston, be great a you

Jade Rahmani

that. for Thanks

write-down for apprise its PropTech One prior a about two ask of feeling businesses. outlook how about large the GeoPhy wanted just those valuation and in of you’re investments to peers took your

Willy Walker

acquisition you as Jade, earn it. had GeoPhy significant a to out recall, very may So the

as with the us as do relates acquisition And paid lending has and up That acquisition the It have given, GeoPhy value then call the out down if then so balance we will we total end or small small I you backend. it nature on write-down surprise great digested no for for variable into to on and business the in you balance the to need any to that that on will, to well come the of large expect that leads prize. volumes paying should very appraisal earn-out actually it tightening. be a business the the market in this a value lending do that transaction anyone as GeoPhy as a the have not else

not them make both great while them both than that scaled in have larger technology those of they going get more once And far our help scale both opportunities as the two larger are to technology fantastic we businesses and day proven. every growth businesses seen our single grow are liked would we to have both, efficient and use the to up in we the gets where and of with have to us well we as technology applying we teams see technology businesses, them

as very investments in the feel made emerging our we’ve GeoPhy about well So businesses. good as

Jade Rahmani

very much. Thanks

Willy Walker

you. Thank

Operator

are questions this at no other There time.

Willy Walker

fantastic talk Thank a And Great. for day. next you everyone joining to today. us we’ll Thanks. Have you again quarter.

Operator

call. Thank your you does for This conclude today’s conference participation.

may now disconnect. You

Walker & Dunlop (WD) 3 Aug 232023 Q2 Earnings call transcript