WD - Earnings call transcript Q3 2023

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Operator

Good day, and welcome to the Third Quarter 2023 Walker & Dunlop, Incorporated Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kelsey Duffey, Senior Vice President of Investor Relations. Please go ahead, ma'am.

Kelsey Montz

Thank you, Melinda. everyone. morning, Good joining Call. for Dunlop's Quarter Third Thank Walker Earnings XXXX you & I Chairman morning Walker; this have me with our CFO, Florkowski. and Greg and our Willy CEO, a live This being today. on recording will our call be webcast website, is later available and release earnings provide website webcast. press the details Both accessing archived and our on release This website, www.walkerdunlop.com. earnings to Investor and morning, we posted Relations the presentation our section our of Willy reference and as These a point the for call. of during slides will Greg what touch on serve some that call, adjusted the Please will core reference metric, during note, financial non-GAAP we EBITDA EPS. a adjusted and refer presentation financial the of Please metrics. to a non-GAAP appendix of earnings these for the reconciliation

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

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

call to I will now turn the over Willy.

Willy Walker

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myself, billion of looked added by revenue we have continue loan $XXX "More the generate to portfolio management and throughout flow billion sums XXXX, consistent and company's & investing recurring to joined us in at brand under large in assets years, said servicing allow cycles. for to that past and And $XX I I the When billion servicing our people, $X Walker XX technology the of of Dunlop that." revenues generated of

environment to cash control our We and market and due worked, credit And management fully in has head. and management properties. real to rates estate its business building taking commercial cycles not cycles. negligible of benefit Part parcel from was managing strategy asset all the portfolios allowing was for on solely scaled do minimal through credit underwriting businesses conservative ensure resulting in us servicing increased sustainable credit the flows. dramatically to those asset those and control risk our however, turn risk building on and a multifamily do, that servicing macro that and We has the defaults,

'XX has As over our and investors our And the X we remain Drive in financial expectations, committed not the pursue. the plans high highly-ambitious met develop past years against that to our while and W&D strategy. strategic now, X-year benchmark bold, growth performance we of success to own we

fallen If businesses. peers, shows, quarter scale our than against peers #X and our of to you business more Slide relative year-to-date revenues financial our the our benchmark as and markets model this our have performance due significantly capital

it recurring and year. implemented W&D's is we and core only margin have by of underscores strength an and you revenues. also these can average volumes slide, on transaction EBITDA year-to-date respectively, while fall this up and adjusted recover, This earnings our only this of measures the for adjusted are X%. businesses have direct competitors so But will XX% earnings adjusted and as see EBITDA revenue As XX% cost-cutting XX% W&D's super-important, X watched the

W&D's As QX. fell this in slide revenues shows, XX%

Our bringing lower of optimistic higher dramatically and than precipitously, and down were in recovering that financing our of XXXX transaction transaction off QX. volumes QX XX% refinancing pipelines entering billion, sales were we pipeline rose were volume, XX-year total robust from treasury volumes and quarter, Yet, the and slightly $XXX as QX $X.X total deteriorated, to our in volumes resulting million. of acquisitions revenues QX the

yet built adjusted continued EBITDA $X.XX from per $XX XX% grow earnings which million to were durable and QX. throughout we technology to exposure to QX to This and X%, revenue in adjusted allow to this servicing down throughout our with $XX declined to strips Notably, with $XX million out the us EPS, in Diluted XX% brand share streams rights, us credit to cycles. EBITDA continue is share, per recurring million has company adjusted mortgage people, provide investing noncash and year QX in in core respectively. limited

XX% third market team year-over-year acquisitions sales, overall from outperforming the quarter, multifamily second up billion The property market, only closed property our sales and quarter, U.S. picked X% up which down XX% in slightly the multifamily the of grew significantly but $X.X quarter-over-quarter.

XXXX that rates. must billion, in to Mae quarters transitions given XX $XXX such other attitude in They only that powder or flow market. of I-must-move caps be over need rates of next the our a loans XX% deployed of months, of dislocated dry properties Freddie the loan of Fannie maturities, year. demand XXXX, that next of it to Mac to multifamily only the billion XX%, be and in the increased year. interest loans Multifamily deployed There are behind. well $XX annual losing into have be expectation regardless billion to the is their they lending simply volume of refinanced market needs sources. owners sold most happens of the will what or to Those billion amount refinanced $XXX or in XXXX, a totaled which wait-and-see and sold. aren't $XX hasn't But capital their deal X path for been Regardless capital through

capital real estate multifamily commercial W&D sixth provider GSE industry is the third of United the the in lender, largest largest largest States. in lender and

markets We years. $X.X declined coming finding Debt return team of for debt on our QX non-multifamily have volume and brand billion on capital and The challenged year-over-year been financing acquisitions and in hospitality being in line our retail, volume are to and as our and billion yet clients, sales financing with in QX, capitalize is over or solutions XXXX, brokerage $X focused the very industrial reflected volumes. our must and on in assets. XX%, over scale QX our volumes financing office, XX%

Walker our & Dunlop reminder, activity. of risk any financing on a non-multifamily As no takes credit

growth lending appraisals. continue our share see We market small-balance in to businesses technology-enabled of and

small-balance in to over from X% grown line Mae and top Freddie year And in not just the last XXXX, from Fannie with last with share up lending year market growth. in it's XX% XXXX. Mac, has to XX% XX% Our same

them achievements loan approval businesses. We XXXX from with we similar are our to in Mac small-balance apply and scaled, more business, QX the to in and long-term in and year-to-date. and more are is market our delivering share QX deals competition generating strategy Freddie XX% seeing XXX% growing rate X% It XXXX. the lending the property of efficiently our appraisals of take sales large appraisals technology than And to to investments appraisal XX% competition in efficiently than

servicing amount add a strength and asset our Our management tremendous of financial businesses to company.

have to focused separate X access seeing Walker Investment that equity. Partners value fundraising first Dunlop's raising the funds in the are & and institutional of other & we environment preferred trust one through deal accounts, significant Dunlop new What investors this distribution Walker network. challenging and for are We and commitments banker-broker X lending on in is flow process

capital move the increasingly valuable As of deals market, & of get is Dunlop in sources controls and and traditional capital harder Walker having strategic. and out becoming

they critical deepen are in our to our many completing technically business instances While deals long-term are and clients' are these we partnerships. challenging, today success

over now will to Greg in turn financials more Greg? I our the call talk through to details.

Greg Florkowski

and Willy, good everyone. you, morning, Thank

conditions and Willy the the year. that rapidly capital described, of and monetary tightening continuation last the market as volatile the challenging Fed since of halted stability markets this As quickly causing were Treasury began has have the summer a just XX-year conditions increased, persisted momentum

activity quarter estate second year, last generally and XX% in levels real of down quarter commercial the consistent with at line result, a QX our remained last volume As was XXXX. but compared same transaction the 'XX transaction quarter, with to

per return affected on negatively and the be continue margin volumes. operating by earnings to equity transaction share, impacts Diluted of lower

healthy due the flows continues scale cash servicing strength and to our However, our to platform. management generate of and business asset

up EPS, at to last well adjusted to As understand year, held per only a core core the compared year was down only share, better quarter while this to investors our a $XX adjusted XX% metric down performance, EBITDA X% financial million. result, same $X.XX we introduced help

includes which our our activities performance recurring A further of stable look businesses, revenues. illustrates Asset and model, business Servicing SAM, segment of Management asset the both and segment, at counterbalance or our the servicing produced management

And As Slide Willy SAM years. same grown segment has revenues just are million, the as to for several the the servicing while discussed, year and markets impacted $XXX up to shown XX% quarter not the capital segment are income net past tied over over that is up SAM management on for instability. #X, XX%. the are last long-term segment asset Revenues contracts significantly segment the by

grew segment adjusted up quarter, the are the this platform. $XXX for our and from of quarter, was million. in revenues operating the XX% to XX% and XX% scale for Importantly, The cash-driven this primarily margin segment given segment high-margin, year-ago EBITDA

to feel the impact limited activity. market-wide continues Our of capital segment markets transaction

XXXX As began QX market somewhat before descent final of transaction last activity Labor the year. volumes a reminder, steady a was Day quarter normal around

for markets XX% segment was million. on total shown XXXX down Slide transaction As #X, revenues less, capital but volume were the XX% to year-over-year, $XXX down total QX only

gain historical Servicing this was loan slight the since loans again pricing a improvement dynamics they Fannie began saw margins. we to During the fees have in remained we as the expecting on due sale tightening of interest and any rising on Mae cycle below new are rate adjusted for our a quarter, in norms quarter, rapidly compared QX to EBITDA that quarter $X.X in the capital million time segment change year. last of the environment, to positive third soon. a $XX markets million loss not

to X offensive be financial negative year, cycles market. and the market quarters of due transaction activity results are appears first pressure cash to through this under to downturn. elongated The the allows the in of settled persistent on have into though, conditions the the this while our the bottom, durability flows, of For an us the segment

several on in enhance Atlanta those in York the Southern months, California, brought to presence we markets. existing sales talent and New last our Over

retaining proactively We to turns. rethinking position are inevitably business cycle team our scale the gain when processes to market share and and ourselves

portfolio, the quarter. Given a quality at-risk on conditions, eye servicing credit and again our it close within this current terrific keeping the macroeconomic we're remains

charge-off portfolio, of That the there includes fully loan settled defaulted adjusted on $X adjusted we occurred default XXXX. occurred a moment but by a loans, at further quarter, in XX, what defaulted a in ago September because loss EBITDA this which our that and loans the are portfolio, portfolios of At this ago. no reserved the EPS quarter During and default in credit. our years earnings GAAP highlighted responsible X exceptional million the impact on reduced X nearly core last a performance had asset in about the cycle a remaining management and at-risk point Willy X,XXX reflection servicing foundation building on

issues in default X% loan are today. debt, rate cap. those the at-risk loans. the loans only loans rising maturities as floating are ] interest but an market That's rate pushing floating not are environment take causing to issues portfolio forced not rate to is multifamily as our us Only a must concerning there multifamily every in rate [ and maintain uncapped some on We not say of in weakness risk for or and today, sector,

of support of during there portfolio the those As over years. NOI in median majority maturities And only with of the origination for portfolio $X.X That's a of the environment, loans next XXXX. origination months, growth next year maturing forced our X.X% has at-risk loans. those year and only vast for at-risk rate refinancing was matures the XXXX, to of billion XX in been rising median X our of the plenty

hold average current weighted within Xx, the challenges portfolio to last reserves over coverage the consistent the short, and In our exceptionally with of credit cover fundamentals of will Finally, of well, continued comfortable year. we arise at-risk remains that the portfolio. our feel debt-to-service loss that may multifamily ratio our very up end portfolio

to on back results consolidated a year-to-date basis. our Turning

the $X.XX XX%, revenues. to down revenues while our on due only shown our share share. expenses. volume the the revenues the down core earnings operating only by Adjusted #XX, As core year per of are for swings from noncash Slide on to And total is margin is of XX% per transaction XX% can while down Diluted and first servicing $X.XX quarters earnings equity is GAAP is stability to share, of the occur and adjusted XX% asset large that reduces XX% eliminating X total X%. EPS down return volatility year-to-date, EPS is per management and

adjusted XXXX, year-over-year, Finally, in well down EBITDA revenues. held just has business stability up of demonstrating extremely the recurring model from our X%

the piece tightening a and digest struggled values. liquidity renewed volatility rapid of and to transaction new have and commercial reflect only glimpses that we cost with activity. monetary on news the stabilization to has to results faced financial leads capital Our pressure associated policy estate that real seen and year, asset of the impacts of Throughout the on of market be

the also incremental SOFR years. touch term for of million a attractively a $XX are elongated our the through balance does to loan, not within another raised on will looking blended and for basis are and we sheet cycle, we term while at Willy and is withstand mature XXX loan start And about priced year, an points cycling. cost is over At X market an cycle. as of we opportunities our in that positioning moment, transactions operations The

start out have year-to-date, expect and and least also $XX by We $XX of year million. we laid realize million savings saved almost exceeded goal of at $XX controllable our a And at our the year-on-year. to reduce to million plan the now costs

of not annualized is count first and $XX flows of with management We from to along also that action. the on in But reduced the to our remain of liquidity. quarter. of position, capital us yesterday, about of million, reflect optimistic quarter quarterly approved our and creating our and of share were at savings at strength cash range the challenging guidance third and benefit have the head call, market the end to of steps, Those transaction the servicing values to full anticipated improvement Directors asset the stabilizing entering recurring April, our per low were given our as businesses, further and, our our cash only our end stable our but cash capital ability market November half deliver this we We focused pipeline a the personnel-related our enabled asset position of our $XXX cost record Board the in as increase financial shareholders in turn, of year. stabilized support results the would financial activity flow to second building million of results and the $X.XX XXXX. On of conditions XXXX. dividend XX, those our in for last payable the We

in XX-year point However, by the changed, and increased conditions XX quickly Treasury years. mid-August, its highest to

in do again or Although do our increase guidance activity X consistent low transaction will of last rates transaction metrics meaningful rates likely to our the the end improved we fall activity stabilize end range quarters. not of are to year in results range week, before within the and expect anticipate the the fourth with fourth quarter fall a financial Consequently, a first as full-year below quarter. financial not our

year ability even and Our has and generate take make to real that confidence and in invest and great our activity, When in will a going flow our level year, of did the we today are regardless & been business importantly, or of build flows. since we one decisions public multifamily, more on performance focus associated the the make cost-cutting since company invest transaction positioned to our best and made commercial Dunlop this the me market the to size to in of has recovers, business great Walker but, investments strong this our opportunities market as all to asset for company to classes, earlier model more cash a estate of advantage quickly to the dramatically, public. quickly long-term. grow like and Walker the we durability record track going this performing continue Dunlop's move difficult business cash of given

to your I will Willy. for call time over back now you Thank the turn this morning.

Willy Walker

Greg. you, Thank

challenging competition the of at is financial end at of an performance yet, call, the W&Ds top mentioned strong. are for our the the as I industry; We exceedingly year versus

we multifamily continue and market pullback bank of commercial as position, for non-multifamily investments? debt provisions volumes to potential exceptional of year. services our do of increasing XX% going team, assumption billion technology $XXX do what And for another see, the So the advantage banks XXXX, large maturity brand and take in that year. increase next to loan how need our we to XXXX brokerage will other a forward, it also is With maturing is from coming There sources losses, refinancing market there the is increase to continued capital. address loans

the market. significant market expensive this distress and lead scenario, increase, predominantly opportunistic during loans is the This multifamily mentioned But our interest to known. business dominate be our capital HUD we Those has movements. happens loan properties, XXXX refinancings. of numbers to refinanced distress Capital the rate the on unknown thoughts. and would XXXX regardless to long-term depending provide on nonperforming of points, are The distressed to to in be increase will the loans, an would what and of If basis another market scenario in I investment are and In emerged and here what in sales is rescue maturities some just What rest XXX financing GSE short- increase expect the market, fund to forced must dramatically. that rates rates. potentially sales is to XXX

We'd into turns the the cost adjust And If we wait-and-see it sales cap expect of I've-got-to-move expectation financing and financing. levels, market is at volumes stability, current from rate their of XXXX. to our would the to increase to XXXX. with XXXX rates of rates expect market remain closer that

Finally, rates we'd sales significant expect and drop, volumes. in uptick financing if a annual

out obviously and have no we under any the services team which idea We have to 'XX, scenario will scenario. play but rate clients our in help

Over team we of is loans focused the portfolio X% next years, multifamily on every our the X maturities from total competition. piece comprise just our own risk can the maturing, so business winning in of

the on the & our our portfolio, and to Dunlop's brand activity people, that differentiate technology new refinancing XX% platform. loans third was reflecting servicing quarter, During of Walker

environment. our since could market the goals earnings and call, on to environment In our achieving focused Drive has how improved last macro ran the not the 'XX and through remain on today's while that call, we to executing achieve 'XX in the I we Drive underlying strategy. And

that we The to expansion will invest when of acquisition banking As financing fuel our Capital brokerage housing and businesses. of where sales XXXX. and goal with property Greg mentioned, our syndicator and credit market and in continue our with debt growth and our core achieve addressable of in volume affordable billion possible in adding are sales billion to of $XX capabilities growth of an additional the drivers teams talent is fantastic $XX tax by enormous Alliant XXXX debt

I is small-balance in large underlying sales after revenues years $X businesses And in goal annual asset of Enodo, business which loan technology reduce showing scaled, lines growth our And our we entered to $XX billion of per only million GeoPhy those costs in stable accelerate markets. for in businesses. X opportunities lending and distressed generating and and as property revenues as the our and 'XX well in X the Our appraisal transforming Drive opportunity great the $XXX is earnings. promise share and to of growth and management are investments business, mentioned over and it, growth presents great

the off, will we do. achieve current 'XX numbers we to pursuing and know them, we we to feel team given performance, have Drive the While until continue and our those far financial services

and the its millionth brand top Walker in challenging have some is meaning in Dunlop view our grown views just clients our ranked best we basis. imagined. to capabilities just business of to of provide for and of YouTube, in The by execution celebrated million many Webcast, are ears ways the podcasts, our saying of times It do X.X% YouTube, industry these a our this the has are consistent and the never with and we which that clients. responsibility XX clients built global with that. possible, our webcast XX for on very and extended want we on on is minds & Walker Along end the I counsel, to capital company

challenging metrics takes for investors your I & has us today takes also want I call want for markets our to company. With thank ask any the the in team or well and that joining and every financial that That Walker I each to confidence the than our competitor for firm. discipline, demonstrate, at like thank to focus, do. managed and on operator takes their of execution our showed want questions. that, for they in interest the built management of these I business And continued and As day. all a team to call for top continued I'd our better Dunlop. as all thank any this call you to the open through

Operator

And take with Rahmani first Instructions] question we from Jade [Operator KBW. our

Jade Rahmani

start and a the a It question loan and want with industry with multifamily specifically reported I off things, news some this other Mac. Freddie to with issues had some documentation that week. broker was around

cracking this GSEs that, [ you issue? overall chatter Can how outside at involving broker some please is there [indiscernible] on you on how, comment addition, as if see if are W&D this brokers a impacts this ]. you the and result, all, down In deals third-party

Willy Walker

have of have So first read. all, read what you I only

Fannie the further that Mac, So brokerage there any built longer a into a about though, out new loans. anything and either Freddie of sends The very it of both are lenders brokerage a used Mae been or all brokered It's over our sent Mac if firm. to know than last week, W&D relates into restrictions so, Mae has notes investigation implications what less or Freddie firm, take Mac flow so come force. about have on be stopping Freddie through accepting Optigo Optigo which deal Mac aftermath articles as have has been Fannie of loans that that, submit We lender. The and to number and, they putting, Freddie out and I through loans can lender that the don't brokers. no from minimal. XX% out oversight sales DUS or that years a our will, broker-based this to loan direct We XX clear, you

loans additional And XX% our originated be Walker and bankers brokers scrutiny will that & oversight subject by over so and by or to of are not at Dunlop Fannie and Freddie.

Some a of instances, JV you Jade, deal our volume as broker both of in competitor firms, and, know, through have licenses. receive flow partners not their very through do large networks agency some who

side, And that change so pre-review in the will particularly for a that, through, loans all the little Mae more make and slow and bit to brokered challenging get underwritten loans will it down on go flow I would brokered deal Fannie imagine closed.

Jade Rahmani

secure early with it's for further particularly its GSEs, market W&D Mac? the standing share gain although to an perhaps and to opportunity with be So say, this might Freddie

Willy Walker

always we're sent that, I would I Walker & a the because the where based, opportunity firm look, competitor firms have they on would of very significant deal flow York say, Jade. area, New presents significant through focused Dunlop. subject is say in

agencies if is say team lending I be that increase Community much get think loans New New York, there, New only be the opportunity longer agencies underwriting And about haven't our as thing would the subject you the having have a has can that, well Signature an volumes. being characteristics volumes. know, increase that you arms bank from a been pullback Bank market capital. York will done around York in would But opportunity brokered then Bank the should in. York New on lot if you a that market And the so And the there of the to firm, gotten there'd their that think no of from other

Jade Rahmani

more X Turning parse related multifamily to trying I your questions. broadly, to guess just remarks.

replace and well Considering the has for would of itself on to as remain debt is say rate magnitude the to up government finance First undertake to to outlook be as federal maturities, issuance interest let's the X.X%. here outlook. the XX-year maybe that

fixed the would commercial enough could think less volumes? transaction that the to real if estate be an being done, might to Fed be therefore, However, loans to and, you narrow. applied income spur is volatility opportunity have W&D's there alone respect an Do increase would lasts be, number in in number just with to with performance to is clearly, multifamily? emerge credit respect about to in one. credit be longer your this any But do anticipate comments expected, That And performance, than distress pristine. multifamily if would X you spread

Willy Walker

asked So rates, went no will, I an we and the shall clue. out. that various X Jade, say days executive relates as plays of clearly, a ago, it how as senior anecdote, see to off-site and We that I scenarios a just had for Board said same cut. sort everyone's and X, show to through and rates be of band X went up of No the up X.XX hand lot the relatively in said hands, of went up. up hand would we stay when went we we rates when go A when said rates hands almost a hands.

in whatever Board. executive into one from obviously, want poll any that play So I think and you room insight. senior nobody real But of to that it. that little our Take that's team has

so I would that thing financing. other the it's say that to The spread much is not cost the on of

the as spreads XXXX. That over investors spread XX-year know, relative you get can you or just and as blew paper in out cap to rose. going spread October, is between interest is activity interest drive rates the September market bond. a agency very tight a The that rates buying on that X-year have And paper bond buying As rates. been like says agency spread we and just throughout and rates the saw from real rates spread cap between

it's that Therefore, clear of very estate Treasury, not the estate Fed commercial off of funds it's debt. going debt fixed by Treasury. It's XX-year is not rate commercial rate. by SOFR. going So the a real off is of driven X/X real

buy the any that due hold out, over to asset, wide leverage on that spread XXX got XXX XX-year compression return potential period, as rent was cost to basis growth go buy. negative So that moved say, a and multifamily and that rates and, of buyer blew cap to to I'll the spread cap too financing for put good it rate and on I'm going my points at to a between get

and Xs, And the the [ rates low what in so the market, movement ] in froze high being Xs. that's cap XX-year that

you So value spread can transaction Cap if the would in cap deal down, That the rates up, come the market. if rates you're recalibration to until you getting volumes cap a and get get destruction of then about taken financing will, get leveling, historically can coming you cost closes that significant coming you that calculation, that volume quarter. will, rates rates move interest and so But once has back. rates back. be between of you question

what need happened are. rates cap to we rates have not quarter XXXX, destabilize rates move which to where you through any have in to is So happen, and then according

so movement stabilizing so you then X.XX% play X% cap to the Treasury, from and, rates the when transaction far market at if somewhere it negative XXXX, get on between pricing sales could that and going you're depending out and acquisitions make leverage volumes acquisitions you the rate cap that side assets get get And to you XX-year to if back slight clearly, come volumes either that commensurate were leverage for market. or how coming refinancing is a rates would that's on potentially positive move, an a

Operator

Joseph the Jefferies. Instructions] go of to line [Operator Kyle with we

Kyle Joseph

to to a sounds their a put like demand, not less lack back been that's there. agencies. desire go than capital to work they've wanted the Obviously, That lack of cap. Just to utilizing of

for of rates? of does my their towards given anticipate would the think, their refi How 'XX, I on to to activity outlook they've GSEs levels? compare the kind into math, moving improve And been easing that back X/X historical based roughly year-to-date. you cap cap

Willy Walker

So same other Kyle, old unfortunately, of go capital either Fannie to the Fannie capital. Fast-forward environment, and Freddie wanted pandemic. market, market into that and didn't up GFC, particularly Pandemic, up. the lot Fannie able HUD volumes buy, meant capital in then, we into decreasing wasn't went of moved of how who XXXX, times deploy. thing and went back XXXX, Great percentage were when to other enough rate property during it they their The to -- the you think were and But all moved Freddie previous deployed out about They they had and share compares the market, or had specifically -- of a moved exact and if stuff there have the volumes capital I'm they stepped a significantly. market but Crisis sources which happened. out Financial providers activity the particularly that everybody to caps Freddie a to and significant volumes acquisition refinance and market, the this remember all and

That You lead Walker Dunlop us due P. in & and in stepped lender X Agency may recall Dunlop that J. & United of tables, capital. market, the the multifamily to largest out Fargo, the with XXXX. States was and of ahead in the in the was Wells Walker stepping Morgan

as that Therefore, just happened are of drying down when The all XXXX that a refinancing went time cost those we down for financing a and you Jade, basis. not rates went in activity rate lagging to have, when refinancings coming difference gap on cap And rates this are in then described based in I where XXXX is of rates up on raising of are happened and environment. the a between in this market. that acquisition

raising is set their capital. that isn't source the should you capital agencies So the what just today; demand for up dominant environment, be have market rate the except in in there of much a

go to So XXXX. now

point we Freddie's all, with for billion and regulator volumes each combined, of will current are regulator as 'XX rate that be We 'XX. volume higher hopefully talking their stabilization. First That's get do, keep $XX the thinking we one. in them, our a it's the will the billion caps of what that know one don't we than look, level says, or will Fannie the year $XXX industry, and to at up regulator go but 'XX extensively, hope

they though all won't that of with had use year, capacity them the it. leave Let's they even this

matured The That steps up thing multifamily 'XX. done. number that you, must is put get of precipitously only in to Those second I forth in number $XX loans that billion deals refinancing 'XX.

potentially how those refinancing. of of agencies straight-out issue requires them just the do well other on property, a some And is a the deal type refinanced rather then how structured either wall, or the trust them and are positioned there which of sale to the much of the a are hit many loans. So foreclosure loan, first than

market. the if hasn't up waiting the that into lot comments, a it my dry and powder capital final waiting you in is, distress, cap just The where rates 'XX. for thing stability of the is issue get to then And in sitting get with this kind shown distress any sidelines lot of a of as on said move, there's is I

'XX loans try market, opportunity So starts bases capital, when you be put come is it a distress at start on in advantage to should that distressed in new of move people would and for able deploying lower to properties if the there and people arrive. to to in take the

would low underscored loans we have as in of say Greg that volume just is maturing I very thing Final as a that well very, XXXX in XXXX.

to as from means for don't The and a poor high will, loans challenge, it's of great you in I of us because We & volumes. & that and is have Walker standpoint refinancings underscored in my that Walker and Dillon. and 'XX to those what us for firms the the performance out finance lot if comments, into That's find wall is a refi So that credit competitor Dunlop. XX% of at hit because the & opportunities, for at And 'XX. loans got for from did QX, we were loans. we go opportunity Walker of Dunlop

Kyle Joseph

in a from mean, and MSRs, we're, growing job one bank you a out months capital is obviously, just servicing follow-up. Valley on of your X rumblings done guys more Silly then opportunity side. things, stepping MSR on from get commercial perspective growth on been Particularly the bigger side lot your resi away just do your mind hearing a of potentially there? to now, you or more the wanted portfolio. I phenomenal call banks that But requirements but accelerate have given we've quick it, And

Willy Walker

of portfolio volumes. growth servicing So the the in related to is all origination the growth

we're it doing only $XX quarterly Greg's originating of our transaction in of if Greg quarterly If you the total to in rolling relates in volume at-risk volumes a next to walked look basis, just these band billion levels, billion lower billion at off $X at $X.X we've through, on origination got number what we're a portfolio was which as years. X

MSRs when. XX%, those you and to question to X% volumes XX%. And part from servicing we XX% move XX% will So when is growth know in come loans exciting that's add the significant XX%, But to The XX%, to XX% and to to servicing to is portfolio from happen. continue the from us to quarterly was going the portfolio. to going for

we think confidence I to the problem. have the people able we as is to things We I the technology. the the one CEO We how that Dunlop have we into when great that, a figure get buy & Walker have demand that trying will and the design services of of lab market, go to in be and don't firm XX meet next demand. back be out at have generation brokers, that know bankers of in to comes that this brand to iPhone lot of don't to

have people. the We

services. the have We

when matter business the and team a be XXXX where And as saw and point and we are But positioned together well. those keeping starts every we a know, of the market to focused, transact, market and cap doing 'XX come after the now. heals the rates so, can in GFC, piece going exceptionally really, interest we to it's of to rates 'XX we

Operator

question comes Steve next of with the JMP from Delaney line Securities. Our

Steven Delaney

pref about the I that new Willy, that in. candid partners, with and that? little comment was not I mention The I'm mentioned maybe a most can creative then comments funds you at about your that asset partners management to thanks interesting to and right could debt. sure be, X add raise, we're follow-up you partners, who was idea I the would assume you you're you of kind morning, for your more? that. on thing related this think anything one just point for appropriate but might Could market have and clear you me those the now And thinking you're

Willy Walker

Steve. Yes,

the I are in to, can because really we can't part you quote-unquote, very think funds." what specifically be funds. to funds. But lawyers appreciate, the so fundraising The this, go script of mode, was, speaking put you on. as to have "promoting the they're exactly it much our deeper to into that was I no what relates And market is promoting the would into scrutinized by as our I I As I make can careful those outline underscore in I focused sure imagine, not heavily way

ever management to other competitor firms would are in flow Walker because not sources bid on higher sort you all fact and we market deal that find attractive with perspective. than in seen being, brokered our side, the the capital. raise asset and an from banker-broker who if relationships deal have of incredible have said, instances investor's will, being we are into is And deem so much would that other can bid volumes capital that access we the & other I them, the coming to with our we're ability what capital. against brands Dunlop of some investors, As is our very is through quicker rescue contemplate unlike many being that you flow the deals makes they The people with against have it and off off what access clients to of

the an that's & Walker so piece value And important at to proposition Dunlop.

Steven Delaney

strategy but amazing awful big And me, seeing I I in public that yet, but of reserves. To in right? the just in strategy. loan-to-own really lot to a they've there's last reporting an already sort it's decks. out, that opportunity don't few They've days. put play data seems institutionalized been in step actually their sense be of buy with and to this we're of And Xs, there and they commercial been group have Jade if And these probably a Interesting. apply believe a should are you REITs, a we X I cover for the loan-to-own ratings, multifamily-focused, everywhere. And need ratings, risk is seeing their they're lot of can characteristics But mortgage same of kind that others think while obviously, and companies, many. or on What more. XX it's not a loans

we're opportunistic just be mortgage commercial opportunity to multiples opportunity So XX we're seeing the seeing come this it those that. heck, that if commercial of has there's me strikes little just capital external REITs, tremendous to situations. for And banks what within into in the

you what So I doing. you you're are applaud focused on. can needs I your assure partners The what that. market and

Willy Walker

our and put The that opportunity say one one I would we thing thing you I on asset, thinking risk would Jade on sheet so sit or you're capital talking type that forth own the say our been making the that haven't that, bet investor use exact either deal, about. our about is this the Steve, others so to call see it, is reason that take on that know that on that go of we to and XXX% of balance we the because that let's own well The today that opportunity.

risk you way go same built that. commensurate flow Dunlop understood. and we investors not see just we the so though & opportunities at of do that co-investments to and identified. then going at off the Dunlop we're And not drive what risk ones needs, opportunity, should not & say exactly even additional look clients' It's capital, will raise Walker all-in at take massive that to with is to to our create strategy funds and other are will more expect asset and Totally with and company, increased conservative meet Walker the deal go fees. But the management XXXX we people's the

OPM earn expertise. be paid use to and going You're and your fees for your

Operator

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

James McCanless

in that So you rates origination about, guys haven't are of this my business been into does going get able if question stable, volume next to year range the that is loss talked help year? for first up rate you environment Willy, that some potentially if make HUD

Willy Walker

Jay. so, would hope I

into dive that Let bit question little deeper. a me

I significant to which that underscore, come X are and origination holding X down significantly And to. know the we volumes, Our want in to over space, have past need not due up years, factors. HUD we we are quite

knows it. team know Our We it.

of reason share that a we back. market loans. print interest is first that gain HUD the We we and HUD XXXX market very lot share, rate in market to space, have a was reason were have the The reduction share for we lost need lost the doing strong

lot in So a environment, that our low originations. and our volume loans lower with drove XXXX rates, HUD historic as were going for redoing those rate of borrowers back were that we to and we interest

In HUD both volume component large 'XX and the of construction loans. was our other 'XX,

We are country. in lender the largest HUD the construction DX

best due need very of 'XX HUD due floor to construction to sense country, and the volumes lending through a our to in in and big costs, due to DX don't team have in and the We has the a 'XX. you in the that I HUD of component to markets. many XXXX that was gone oversupply high-growth tell construction rates,

have we DXs. is what a 'XX biggest and So market on products, in that dislocated IRRs our X

get need standard We on to need is the XXX(f). exceptional market, in What focus HUD. of of So more is XXX(f) out team. an which called we have refinancings we volume refinancing to

construction backlog that XXX,XXX also the people only I've the into a starts given XXX,XXX XXX,XXX what is to XXXX will people are than down multifamily in that the to But are projected lower There is down went XXX,XXX. and this number year. dropping and number. ground about looking Jay, I in the XXXX market XXXX, continue Multifamily investors have hold around and pipeline today, in see talking heard that bring units. starts grow. starts that lot at that were a place to saying, of heard both We for

present fantastic starting will new and of 'XX supply a is 'XX lack market That delivery 'XX in and for that 'XX.

shovels capability and in market good an 'XX should a in the of in 'XX have and property great see and those underserved who and markets 'XX is into the to put deliver piece have you ground 'XX. what into So developers

focused lead So in increase down in fell we see and getting we tables numbers I and HUD up XXXX. on are would reason expect extremely those that's the But DX the us to 'XX, 'XX. volumes team our in in

James McCanless

grow function in management volumes? look in a about coming degree areas you're part those have, team going market has like high you of of just what there to reset kind in guess in 'XX in know and that you certain it Or share reason Is I a opportunities? to be past be a the what a only that not to happens start optimism new refinance and sounds of volumes the those is team a management is for better market do And we've is 'XX. of the 'XX, heard at people in able evaluate, of pretty standpoint? 'XX. 'XX take to You're from talking believe maybe think Because getting going better 'XX, looking as that terms you you to

Willy Walker

optimism thing would volumes I We started stabilize to happened. that neither clear. back, and really be rates with would want has 'XX come and

XXXX. do that we I as to saying not misinterpreted are want volumes that be going So up in think

drive to us that all of a now got going part have that of that But, We that some right in outlook for 'XX in to can of nominees that Yellen in $X and a those 'XX. that interest as go Washington have also is to absorb nice Republican and Treasuries got fantastic. Taiwan. number a people leadership war in threatening now one We've for presidential is States government the actual factors that China any refi of that very and be part planning the any United in neither the going is volumes United market the things that, than must redo issue. in States a we've of problem the the unfortunately, should we've shown on We're a XXXX of right it, We've be to in The in focus on are above we they're the quarter. Democratic on X We there like got focusing candidates November X time We've a have to change. going 'XX. look fiscal that I of an them that focused becomes now. of see know there parties, have at in issue go having next that of put Europe. war election, love The increase Washington I'd President printing type all on out every said Israel. we're in is But away. of got whomever could significant Janet fiscal see market. I'd nice more not debt And got love trillion that that year and the

stable stability, to of So that management but would commercial you through we go what environment, you're clear where, stability comments is a the a be did resolving XXXX. commercial going were have in in a in volumes you real his also has to tell it loan us I final rolling the not a in thought defaulted XXXX slow get estate estate talked is talking to thing appear. time should, rate to dynamics gone 'XX industry. want team industry really real 'XX, is in and every a we The about Greg up to that company a that

this office [ saying talking or one things in massive CNBC in about watch crashing is going and of going is you sheets. to is ] that; everyone's massive, So bank and I morning think This other a be July, the the everyone and come on there this to and sitting May issue. down back balance

there capital earnings to capital said our commercial is that slow 'XX I've-got-to-go rolling It's of into deal becomes banks. real not time. play a very I 'XX issue People whether This is where a same to issue from estate, This is going in market. It market. for banks. expectation wait-and-see lot wait-and-see The this, of a thing market have Banks market. will is for is period happen to plenty start are has problem. of have with as that been a a But a long I've-got-to-go 'XX move. for factors an

James McCanless

maybe Is continue a negatively or positive there. see of 'XX? need anything to about be minute, the thinking model your that for business good thinking part what's we ahead? as Alliant to numbers to for turning we I guess Maybe about for there

Willy Walker

be happier Alliant couldn't a company, the an team, couldn't strategically I the has done to of mean, space. Dunlop happier run housing and home the couldn't to acquisition affordable acquisition, it's first Walker be what in happier management been of with the & be with all,

many the affordability. syndication the The housing minds the housing is market, second of thing #X in credit federal credits senators being from the affordable country there that issue on budget, many, governors, amount and tax who are many, tax is the allocated across their

and issue out to so 'XX, Housing and all supply is housing affordable equation, a out come important for how 'XX. figuring HUD ability into Credits And affordable very, HAP contracts of very play Tax LIHTC, housing Low-Income that the more the 'XX

are We well-positioned extremely there.

look drivers coming market is into bottom end multifamily to given the of that, end, market. the our Dunlop we next breadth size think funds the have is the the And very thing that very the are strong at growth has several present. dynamics ability high increasingly tax Walker our the over I And not of of raising second the our at grow supply that at where because, the of come middle market, if or it & in the platform, you the credit years around is business

we advantage in And and Alliant housing is still that. dramatic take well-positioned drivers space, so of there with affordable feel growth the to extremely

Operator

line We'll return Jade Rahmani KBW. the to of with

Jade Rahmani

those greatest and affordable W&D Would raising there? Do it do its relative pursuing ask in asset balance CPACE as meaningful Or opportunity? the platform M&A be a funds, to wanted perhaps see side, is about Where it and see management on the size. you I you small the growth opportunities? housing?

Willy Walker

appropriate of to revenues the think and enormous. the our largest team sixth Jade, in those And in in market the markets & lender Dunlop though So multifamily our you space. We the with country, agency having addressable than ran on market question. of with in tiny. as that the in you annual and asset we multifamily other offsite. the strategic about offsite revenues of lender The a is strategic in total managers the And great. basis, we annual is the to us less multifamily. play management of today know, in relative which those we number that out was multifamily real tangible at an pretty I X% industry; largest came and if management commercial The Walker asset in out the exactly Board the just compete think country, total largest relates annual tangible multifamily, revenue estate it in all, even provider that opportunity it's is third very rankings, are through who capital Of the area addressable as is largest

business. come the arrow sense have and the have volumes growth that the back, about to it when the great other bow the in ready we the see like we that the and clearly transaction have that you explode But loaded, drivers asset piece brand, is, rankings, we we to So if we're team management in in team, have a our think client place relationships. is we

to And growth so of overall as is, one about relates I think for sales the great our things mean, us it team. investment you

billion added in have We investment did to our $XX investment team sales of XXXX. since they sales

billion the expand market when billion the easily to back. $XX So $XX from $XX that have field if can to team and on we billion that comes

as So good large have extremely in, of I like it growth small, appraisals. the asset like some we're then very to but tangible scale overall small-balance we, of opportunity addressable have extremely businesses existing feel today, management, market lending, markets the that in like to the areas we where drivers relates are

Operator

And that remarks. additional any I'll turn over final to for floor closing Willy our or was back Walker question the today. for

Willy Walker

everyone and their call thanks today. And thank the do on single call of Dunlop, interest our in analysts to in the to want today Appreciate everyone questions day. and your you all the fantastic on team listened for to W&D. wish I Thank & coverage Thanks Walker I you. day. all of every who for a again

Operator

thank conclude This teleconference. participation. you for We you. today's does your Thank

time. your disconnect this You at may lines

Walker & Dunlop (WD) 9 Nov 232023 Q3 Earnings call transcript