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INVESTOR INFORMATION
November 2017
Forward-Looking Statements
Some of the statements contained in this presentation may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking
statements relate to expectations, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In
some cases, you can identify forward-looking statements by the use of forward-looking terminology such as ''may,'' ''will,'' ''should,'' ''expects,'' ''intends,'' ''plans,'' ''anticipates,''
''believes,'' ''estimates,'' ''predicts,'' or ''potential'' or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or
trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks,
uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking
statement. While forward-looking statements reflect our good faith projections, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly
revise any forward-looking statement to reflect changes in our projections, except as required by applicable law. Factors that could cause our results to differ materially
include, but are not limited to: (1) general economic conditions and multifamily and commercial real estate market conditions, (2) regulatory and or legislative changes to the
Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the “GSEs”), or the
U.S. Department of Housing and Urban Development, (3) our ability to retain and attract loan originators and other professionals, and (4) the future of the GSEs, including
their origination capacities, and their impact on our business. For a further discussion of these and other factors that could cause future results to differ materially from those
expressed in any forward-looking statements, see the section titled ''Risk Factors" in our most recent Annual Report on Form 10-K together with subsequent Quarterly
Reports on Form 10-Q and our other filings with the SEC, which are available publicly on our Investor Relations web page at www.walkerdunlop.com.
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), we use adjusted EBITDA, a
non-GAAP financial measure. The presentation of adjusted EBITDA is not intended to be considered in isolation of, as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA in addition to, and not as
an alternative for, net income. Adjusted EBITDA represents net income before income taxes, interest expense on our term loan facility, and amortization and depreciation,
adjusted for provision for credit losses net of write-offs, stock-based incentive compensation charges, and non-cash revenues such as gains attributable to MSRs.
Furthermore, adjusted EBITDA excludes certain costs associated with a significant acquisition in 2012, integration and restructuring costs, severance relating to the
significant acquisition in 2012 and our 2013 expense reduction efforts, early extinguishment of our term debt in 2013 and revenues from the termination fee related to the
transfer of servicing for a portion of the small loan portfolio, all of which are not part of our ongoing operations. Because not all companies use identical calculations, our
presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA is not intended to be a measure of
free cash flow for our management’s discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for
adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt agreements, which are further adjusted to reflect certain other cash
and non-cash charges that are used to determine compliance with financial covenants. We use adjusted EBITDA to evaluate the operating performance of our business, for
comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. We believe that adjusted EBITDA, when read in
conjunction with our GAAP financials, provides useful information to investors by offering:
> the ability to make more meaningful period-to-period comparisons of our on-going operating results;
> the ability to better identify trends in our underlying business and perform related trend analyses; and
> a better understanding of how management plans and measures our underlying business.
We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with
GAAP and that adjusted EBITDA should only be used to evaluate our results of operations in conjunction with net income.
For more information on adjusted EBITDA, refer to the appendix of this presentation.
F O R W A R D L O O K I N G S T A T E M E N T S A N D N O N -
G A A P F I N A N C I A L M E A S U R E S
2
T A B L E O F C O N T E N T S
4 Company Overview
11 Historical Financial Performance
19 Commercial Real Estate Market Trends
25 Transaction Platform
35 Servicing Portfolio & Mortgage Servicing Rights
39 Future Goals
43 Appendix
C O M PA N Y O V E RV I E W
4
Founded in 1937, the Walker & Dunlop went public in
2010. Walker & Dunlop provides customized
financing solutions to owners and operators of
commercial real estate properties across the United
States and is one of the largest commercial real
estate lenders in the country. The Company was the
country’s 8th largest commercial/multifamily
mortgage servicer in 2016.
5
28 OfficesNationwide
600+Professionals
Nationwide
The Company originates commercial real estate loans
for Fannie Mae, Freddie Mac, HUD, and its on-balance
sheet lending program and brokers loans to life
insurance companies, banks, CMBS originators, and
other capital providers. Walker & Dunlop also provides
investment advisory and brokerage services in the
multifamily sector through its investment sales platform,
Walker & Dunlop Investment Sales.
Headquartered in Bethesda, MD, with over 500
employees in 25+ offices across the country.
Walker & Dunlop maintains a cohesive and unique
corporate culture, as exemplified by its recognition as one
the “Top Workplaces” in the greater Washington area by
The Washington Post for the past four years.
1937
One of
the first companies
to use FHA insurance
to finance
single-family home
loans
First life
company
correspondent
appointed
First mortgage
banking
company in
~4 years
to go publicNamed
one of the
first Fannie
Mae DUS®
lenders
Arranged
the first off
balance
sheet
financing
for the U.S.
government
Completed acquisition
of certain
assets of
Column
Guaranteed LLC
Completed
acquisition of
CWCapital LLC
Acquired
Johnson Capital
Group Inc.’s
origination platform
and
servicing portfolio,
expanding the
Company’s Capital
Markets group
KEY HISTORICAL MILESTONES
Founded
IPO
W & D ’ S D I S T I N G U I S H E D 8 0 - Y E A R
H I S T O R Y
6
Entered multifamily
investment sales
business through
acquisition of Engler
Financial Group
1947
1971
1988
2009
2010
2012
2014
2015
2016
Acquired $3.6
million HUD
servicing portfolio
from a subsidiary
of Oppenheimer
Holdings Inc.
Acquired
origination
platform and
servicing portfolio
of George Elkins
Mortgage Banking
Company
(“Elkins”)
2017
Acquired
brokerage
origination
platform of
Deerwood Real
Estate Capital
(“Deerwood”)
Entered joint
venture with
Blackstone
Mortgage Trust
to originate, hold
and finance
multifamily
bridge loans
W H AT M A K E S W & D A C O M P E L L I N G
I N V E S T M E N T
7
DIVERSE AND PROFITABLE PLATFORM, PROVEN THROUGH CYCLES: Walker &
Dunlop provides a broad range of financing solutions for every type of commercial real estate
asset, including short term bridge, as well as investment sales services for multifamily properties.
Freddie Mac estimates that from 2017-2019 approximately $300 billion of multifamily financing is
expected each year. Walker & Dunlop’s national scale and reputation positions it well to capitalize
on this growing market opportunity.
MARKET LEADING POSITION: As the #2 Fannie Mae DUS® lender, the #3 Freddie Mac
Multifamily Approved Seller/Servicer, and the #4 HUD multifamily lender, Walker & Dunlop has
impressive scale and market presence in the multifamily space, which continues to create
momentum for taking additional market share and gaining access to a broader client base.
2016 Top Fannie Mae Lenders Originations(in billions)
1 Wells Fargo $11.7
2 Walker & Dunlop $6.0
3 CBRE $4.8
4 Berkadia $4.2
5 Berkeley Point $3.9
6 Capital One $2.7
7 Prudential $2.5
8 Arbor Commercial Funding $2.3
9 Greystone $2.2
10 KeyBank $2.2
2016 Top Freddie Mac Lenders Originations (in billions)
1 CBRE $10.6
2 Berkadia $9.8
3 Walker & Dunlop $5.8
4 HFF $4.6
5 Berkeley Point $2.9
6 KeyBank $2.7
7 Capital One $2.4
8 Wells Fargo $2.3
9 Northmarq $1.9
10 Greystone $1.6
10 JLL $1.6
LONG TERM GROWTH: The Company has laid out its short and long term growth strategy,
which aims to grow revenues to $1 billion by the end of 2020. This includes growth and expansion of
the current platform, as well as launching an asset management platform.
STABLE REVENUE SOURCES: Walker & Dunlop’s $63.1 billion servicing portfolio (at
December 31, 2016) provides a stable and durable source of cash flow and income, ensuring
financial flexibility.
RETURN OF CAPITAL: Over the past few years, Walker & Dunlop has returned capital to
shareholders through share repurchases, while also making strategic investments to grow its
platform and increase profitability. In February 2017, the Company’s Board of Directors authorized
the repurchase of up to $75 million of outstanding common stock over a one-year period. Walker &
Dunlop will continue to deploy capital in a disciplined manner to drive future growth and generate
returns for its shareholders.
MANAGEMENT TEAM ALIGNED: Walker & Dunlop has a strong track
record of growth and an experienced management team fully aligned to
drive shareholder value.
> Joined Company in 2003 and is third generation of Walker family leadership
> Became President in 2005, CEO in 2007 and Chairman in 2010
> Has led Company through period of significant growth including IPO and multiple acquisitions
> Serves on the Boards of Children’s National Medical Center, the Federal City Council and Sustainable Technology Fund
> Prior to joining Walker & Dunlop, Mr. Walker was President of the European and Latin American Divisions of TeleTech, a
global business process outsourcing company
> BA from St. Lawrence University and MBA from Harvard University
> Joined Company in 1980 and became member of management team in 1988
> Named Executive Vice President and Chief Operating Officer in 2004 and assumed role of President in 2015
> Oversees loan origination and investment sales operations and is a member of the Board of Directors
> Past Chairman of the Advisory Council to the Fannie Mae DUS Peer Group; Member of the National Multi Housing Council
Board of Directors
> BA from Washington & Lee University
> Joined Company in 2013
> Responsible for financial planning and reporting, accounting, investor relations, servicing, and marketing, as well as
overseeing overall strategic financial direction of the Company
> Served as Chief Financial Officer of Hampton Roads Bankshares, Inc. from 2010 to 2013
> Prior to Hampton Roads, he held numerous senior financial positions at Capital One Financial Corporation from 1999 to
2010, including Chief Financial Officer, Local Banking
> Began his career at KPMG LLP in 1984 and served as audit partner, Financial Services from 1996 to 1999
> BSBA from University of Notre Dame
W & D ’ S E X P E R I E N C E D L E A D E R S H I P
8
Willy WalkerChairman & CEO
Stephen TheobaldChief Financial Officer
Howard SmithPresident
W & D ’ S E X P E R I E N C E D L E A D E R S H I P
9
> Joined Company in 2002
> Responsible for Company’s credit risk and portfolio management departments, including day-to-day management of the
asset management and underwriting groups
> Prior to joining Walker & Dunlop, Mr. Warner held a number of leadership positions with Main America Capital and its
successors, a company that originated commercial and multifamily loans nationwide
> BA from McGill University
> Joined Company in 2010
> Responsible for legal, human resources, information technology and office services groups
> Administrative oversight of Company’s Internal Audit function; leads Risk Committee
> Prior to joining Walker & Dunlop, Mr. Lucas was General Counsel for Hilton Worldwide, Inc., a global hospitality company
> Prior to joining Hilton, he was a partner at the law firm of Arnold & Porter LLP in Washington, D.C., where he was in
private practice for 18 years
> BSBA from Georgetown University and JD from Yale Law SchoolRichard LucasEVP & General Counsel
Richard WarnerEVP & Chief Credit Officer
C O M PA N Y A WA R D S A N D R E C O G N I T I O N
10
> Fortune Top 100 Fastest Growing Companies – 2017
> Fortune Magazine and Great Place to Work® Best Workplaces for Millennials- 2017
> Fortune Magazine and Great Place to Work® Best Financial Services Workplaces List –
2017
> Washington Post Top Workplace (midsize employer) – 2014, 2015, 2016, 2017
> Fortune Magazine and Great Place to Work® Best Small & Medium Workplaces List –
2012, 2013, 2015, 2016, 2017
> Real Estate Forum Fastest Growing Companies – 2015
> Fortune Top 100 Fastest Growing Companies – 2014
> Healthiest Employer – Washington Business Journal – 2014
> Washington Business Journal Great Places to Work (large company) – 2012, 2013,
2014
> Washington Business Journal Fastest Growing Companies – 2011, 2012, 2013, 2014
> The Washingtonian's 50 Great Places to Work – 2013
> ACG® National Capital’s Corporate Growth Award for M&A Deal of the Year – 2013
H I S T O R I C A L F I N A N C I A L
P E R F O R M A N C E
The platform, brand, and client base we have built coupled with the strong
macroeconomic drivers behind commercial real estate, and more specifically,
multifamily, lead us to believe we will continue growing quarterly EPS for many
quarters to come.
- Willy Walker, August 2017
12
E X C E P T I O N A L G R O W T H S I N C E I P O
13
Total Revenues Price Per Share(as of December 31st)
Diluted EPS
30% CAGR
Total Transaction
Volume
35% CAGR
37% CAGR
21% CAGR
2014 2015 2016 2014 2015 2016
O U T PA C I N G R E C E N T C R E M A R K E T
G R O W T H
14
W&D Total RevenuesTotal CRE Market
Volume(1) W&D Diluted EPS
22% 3-YR CAGR
W&D Total
Transaction Volume
32% 3- YR CAGR
44% 3-YR CAGR
11% 3-YR CAGR
2014 2015 2016
(1) MBA Commercial/Multifamily Real Estate Finance Forecast, October 2017
2014 2015 2016
$508 $674 $1,731 $1,583
$4,348 $2,616$1,309 $1,337
$2,559 $2,385
$3,787
$5,389
$907 $2,181
$1,764 $3,124
$4,937 $5,032
$1,302
$2,910
$2,341
$4,275
$4,686$6,261
$4,026
$7,102
$8,395
$11,367
$17,758
$19,298
2011 2012 2013 2014 2015 2016
Q1 Q2 Q3 Q4
(1) Includes loans brokered to CMBS, life insurance companies and commercial banks
(2) Includes our on-balance sheet interim loans
Q U A R T E R LY A N D A N N U A L T O T A L
T R A N S A C T I O N V O L U M E
15
Total Transaction Volume by Quarter(in millions)
Mix of Transaction Volume by Year
46% 47%
33% 35%28%
36%
21% 24%
20%
32%
36% 22%
13%12%
14%
6%3%
5%
20% 17%
31%24%
23%
22%
2% 3%
1%2%
9%13%
2011 2012 2013 2014 2015 2016
Fannie Mae Freddie Mac HUD/Ginnie Mae
Brokered (1) Interim (2) Investment Sales
$152,350
$256,770
$319,039
$360,772
$468,198
$575,276
2011 2012 2013 2014 2015 2016
T O T A L R E V E N U E S & E A R N I N G S P E R
S H A R E
16
Total Revenues(in thousands)
Diluted Earnings Per Share
$1.60
$1.31 $1.21
$1.58
$2.65
$3.65
2011 2012 2013 2014 2015 2016
O P E R AT I N G M A R G I N & R O E
17
Operating Margin Return on Equity
37%
22%21%
23%
29%
32%
2011 2012 2013 2014 2015 2016
24%
14%
11%
13%
19%
21%
2011 2012 2013 2014 2015 2016
$32,163 $29,377
$56,783
$84,804
$124,279 $129,928
2011 2012 2013 2014 2015 2016
A D J U S T E D E B I T D A
18
Strong cash flow has allowed us to invest
in the business, generating higher returns
and profitability
> Returned $9 million to shareholders through
share repurchases in 2016
> Funded on-balance sheet loans
> Made several acquisitions over past 12 months,
which have lead to growth and scale in the
platform, leading to increased lending and
profitability
Debt to adjusted EBITDA ratio(2) : 1.3x as of
December 31, 2016
(1) This is a non-GAAP financial measure. For a reconciliation of the metric to GAAP, refer to the appendix of this presentation.
(2) Calculated using term debt balance of $167.2 million and 2016 adjusted EBITDA of $129.9 million
Adjusted EBITDA(1)
(in thousands)
C O M M E R C I A L R E A L E S T AT E
M A R K E T T R E N D S
20
Even with high levels of supply hitting the market, housing starts are still well below the
historic average. The combination of a healthy economy and strong renter demand has
renewed investor interest in the multifamily industry which should boost investment
sales activity and continue to drive strength in the financing markets.
- Willy Walker, August 2017
$ 3 . 1 T R I L L I O N I N C R E D E B T
O U T S T A N D I N G
21
Multifamily vs. Non-Multifamily(in billions)
By Lender(in billions)
*Includes loans supported by office, retail, industrial, hospitality, land and mixed use properties that rely on rents and leases to make their payments
Source: Mortgage Banker’s Association Commercial/Multifamily Mortgage Debt Outstanding (Q3 2017)
$1,889
$1,220
Non-multifamily*
Multifamily
$1,252
$454
$573
$454
$399
Bank & Thrift
CMBS
Agency/GSE Portfolios & MBS
Life Companies
Other
$16.9
$24.4
$33.8
$28.8 28.9
$42.4
$55.3
$14.8
$20.3
$28.8 $25.9
$28.3
$47.3
$56.8
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Capped Volume Volume Excluded from Lending Cap
F H F A S C O R E C A R D R E M A I N S
P O S I T I V E I N 2 0 1 7
> After raising the lending caps significantly throughout 2016, the FHFA scorecard left Fannie Mae’s and Freddie Mac’s multifamilylending caps at $36.5 each for 2017. The scorecard includes a quarterly review of the size of the multifamily market to ensure the GSEs are meeting the market’s liquidity needs.
> In 2017, just as in 2016, the GSEs have the ability to go beyond their lending caps, as affordable housing loans, loans on manufactured housing, qualified “Green” loans, and small loans are excluded from the lending caps.
22Source: Fannie Mae, Freddie Mac
$16.2Fannie Mae
Green Financing
2016
#1
Fannie MaeSmall Loans
2016
#5
Fannie Mae and Freddie Mac
Annual Volumes(in billions)
F A N N I E M A E F R E D D I E M A C
$110
$146
$173
$195
$250
$269
$290 $305
2.8%
5.2%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2011 2012 2013 2014 2015 2016 2017 2018
$0
$50
$100
$150
$200
$250
$300
$350
Multifamily Loan Originations W&D Multifamily Originations as % of Overall Multifamily Market
P R O J E C T E D C O N T I N U E D G R O W T H O F
M U LT I F A M I LY M A R K E T
23 (1) MBA Annual Report on Multifamily Lending & Freddie Mac Origination Forecast for years 2017-2020
Total Multifamily Loan Originations(1)
(in billions)
(F O R E C A S T)
$233.8
$298.9
$362.7
$432.4
$533.6
$488.6
2011 2012 2013 2014 2015 2016
I N V E S T M E N T S A L E S V O L U M E
24
Total Apartment Sales Volume(in billions)
Source: Real Capital Analytics
(1) Includes sales of office, industrial, retail, apartment, hotel and development properties
Total Commercial Real Estate Sales Volume(1)
(in billions)
$59.0
$87.7
$103.6
$113.9
$150.0 $158.4
2011 2012 2013 2014 2015 2016
T R A N S A C T I O N P L AT F O R M
26
The core to our success has been our scale, brand development, and capabilities in the
multifamily finance industry. We have invested considerable energy and capital in
building our loan origination platform to capture deal flow and then use the underwriting
and closing talent at W&D to deliver a best-in-class financing experience to our
customers.
- Willy Walker, August 2017
E S T A B L I S H E D P L AT F O R M
27
B U I L D I N G T H E P R E M I E R C O M M E R C I A L
R E A L E S T AT E F I R M I N T H E U . S .
28 As of January 30, 2017
New York
Bethesda
Walker & Dunlop Offices (28)
Atlanta
Chicago
Dallas
Fort Lauderdale
Irvine Nashville
New Orleans
San Francisco
Baltimore
Boston
Walker & Dunlop Correspondents (23)
MilwaukeeMadison
Seattle
Phoenix
Tampa
Denver
Orlando
Los Angeles &West Lake Village
Birmingham
Miami
Sacramento
Torrance
New Jersey
Charlotte
Raleigh/Durham
Jacksonville
A G E N C Y L O A N F I N A N C I N G P R O C E S S
29
GOAL: To facilitate efficient, timely loan origination without compromising effective risk-management controls
Loan is sourced by one of W&D’s
originators
The loan & borrower are pre-screened, W&D’s investment
committee is engaged
Loan application is completed
Loan goes through underwriting process at
W&D inclusive of property visits and
inspections
Investment committee does final review and
approves loan
Rate lock & forward sell the loan. At this point,
W&D recognizes income
Loan closes
Loan sits on warehouse prior to delivery to investor
Loan is delivered to investor. FNM / FRE recognize volume at
time of delivery
Asset management & loan servicing takes over management of
the loan
LOAN APPLICATION UNDERWRITING RATE LOCK to
CLOSING
POST-CLOSING
45-60 days
5-30 days
> W&D received one of the first Fannie Mae
DUS licenses in 1988 and has grown to be
Fannie Mae’s largest DUS partner
> Walker & Dunlop services all of the Agency
loans it originates. At the end of 2016, 91%
of the total servicing portfolio was for
Agency loans
$836
$1,685 $1,710
$3,626
$6,326
$4,234
2011 2012 2013 2014 2015 2016
$1,870
$3,230$2,763
$4,000
$5,013
$7,001
2011 2012 2013 2014 2015 2016
> W&D gained a HUD license with
acquisition of Column Guaranteed in 2009
> HUD products allow W&D to offer our
clients a more diverse array of financing
solutions, including financing for skilled
nursing facilities and construction projects
> W&D became a Freddie Mac Seller/Servicer
with the acquisition of Column Guaranteed
in 2009 and has since been one of the
fastest growing Freddie Mac lenders
> The acquisition of CW Capital in 2012
significantly expanded W&D’s Agency
lending business
A G E N C Y L E N D I N G
30
COMPOUD ANNUAL GROWTH
RATE
38%COMPOUD ANNUAL GROWTH
RATE
11%COMPOUND
ANNUAL GROWTH
RATE
30%
Fannie Mae(loan originations in millions)
Freddie Mac(loan originations in millions)
HUD(loan originations in millions)
$512
$855
$1,138
$704
$592
$880
2011 2012 2013 2014 2015 2016
$1,657
$3,112 $3,264 $3,571
$5,029
$5,971
7.0%
9.5%
11.3%
12.4%11.9%
10.8%
2011 2012 2013 2014 2015 2016
W&D Deliveries W&D Market Share
G S E M A R K E T S H A R E
31
Note: Market share is calculated using loan delivery data for Walker & Dunlop, Fannie Mae and Freddie Mac through the end of each year
Fannie Mae and Freddie Mac disclose delivery data on a monthly basis.
Fannie Mae
($ in millions)
Freddie Mac
($ in millions)
Rank 3 1 1 1 2 2 11 4 3 3 4 3
$785 $1,313
$1,997
$2,841
$5,119
$5,919 3.9%
4.6%
7.7%
10.0%10.8%
10.4%
2011 2012 2013 2014 2015 2016
C A P I T A L M A R K E T S L O A N B R O K E R A G E
32
The Capital Markets group is known for creative structured financing of all real estate asset classes. The acquisition
of Johnson Capital in 2014 doubled the size of the Capital Markets team and expanded geographic presence in the
West and Southwest. Walker & Dunlop has continued to grow its Capital Markets team through hiring and
acquisitions, including the acquisitions of Elkins in early 2016 and Deerwood in early 2017.
Over 150 Capital Sources
Securitized
LendersCommercial
Banks
Life
Insurance
Companies
Pension
Funds
Credit
Companies
Hedge
Funds
Savings
Banks39%COMPOUND
ANNUAL GROWTH RATE
Brokered Loan Originations(in millions)
$808
$1,196
$2,593$2,697
$4,122 $4,189
2011 2012 2013 2014 2015 2016
P R O P R I E T A R Y C A P I T A L L E N D I N G
33
> Walker & Dunlop’s ILP offers short-term non-recourse loans to
borrowers seeking to acquire or reposition multifamily properties
that do not currently qualify for permanent financing. Once the
property is ready for permanent financing, W&D can facilitate a
transition to Fannie Mae, Freddie Mac or HUD financing.
> The portfolio has had no delinquent loans since the program’s
inception in 2012.
> Since the inception of the ILP, W&D has refinanced 79% of the
paid-off loans into permanent loans that are now in the servicing
portfolio (as of December 31, 2016).
> In April 2017, W&D entered a joint venture with Blackstone
Mortgage Trust (BXMT) to originate, hold, and finance multifamily
bridge loans before they become eligible for permanent agency
financing.
> W&D will contribute 15% of the equity capital to the venture,
and BXMT will contribute 85%.
> With a goal of growing the portfolio to $1 billion in
outstanding loans, the partnership will allow W&D to expand
its bridge lending capacity, further tapping into the $20 billion
addressable market.
Interim Loan Program (ILP)(loan originations in millions)
$35
$192
$340
$185
$420
2012 2013 2014 2015 2016
WA L K E R & D U N L O P I N V E S T M E N T
S A L E S
34
> In April 2015, Walker & Dunlop completed the
acquisition of 75% of certain assets of Engler
Financial Group, adding multifamily investment
sales to its platform (WDIS)
> The synergies between multifamily investment
sales and multifamily financing have allowed
Walker & Dunlop to capture additional financing
business and tap into new clients since acquiring
Engler Financial Group
> Walker & Dunlop’s goal is to expand the
investment sales platform, which currently
operates in the Southeastern United States, to
new MSAs
Investment Sales Volume(in millions)
$664
$1,283
$1,818
$2,574
2013 2014 2015 2016
Engler Financial Group volume WDIS volume
S E R V I C I N G P O R T F O L I O &
M O R T G A G E S E R V I C I N G R I G H T S
36
Servicing revenue has grown dramatically and our weighted average servicing fee is
now 27 basis points. Due to 86% of our servicing fees being prepayment protected, we
currently have nearly $1 billion of forward revenues that are contractually obligated to
Walker & Dunlop. Mortgage servicing rights are the present value of the future servicing
income and are very similar to software licensing fees or subscription fees, that are
contractually obligated income and, unless a loan defaults, we will collect every dollar of
those forward revenues. Similar to a software or subscription fee business, investors in
Walker & Dunlop should pay close attention to the quarterly change in net mortgage
servicing rights as a leading indicator of future growth in servicing fees.
- Willy Walker, May 2017
$99,979
$115,469
$139,719
$163,581
2013 2014 2015 2016
Escrow Earnings & Other Interest IncomeAssumption FeesPrepayment FeesServicing Fees
$ 6 3 B I L L I O N C O M M E R C I A L S E RV I C I N G P O R T F O L I O
> As of December 31, 2016, the servicing portfolio had a weighted
average remaining life of 10 years and a weighted average
servicing fee of 26 bps
37
Total Servicing Portfolio(in thousands)
Income Received from Servicing(in thousands)
(1) Includes our on-balance sheet interim loans
(2) Includes loans brokered to CMBS originators, life insurance companies and commercial banks
> Unlike single family loans, multifamily loans are prepayment protected. As
of December 31, 2016, 87% of W&D’s servicing portfolio was protected
against prepayments.
$38,937,027
$44,031,890
$50,212,264
$63,081,154
at December 31,2013
at December 31,2014
at December 31,2015
at December 31,2016
Interim Loans (1) Brokered (2)
HUD Freddie Mac
Fannie Mae
I N H E R E N T VA L U E O F S E R V I C I N G
P O R T F O L I O
38
The fair value of our mortgage servicing rights as of December 31, 2016 was $669.4 million, compared
to our net book value of $521.9 million, indicating a substantial amount of inherent value
Book Value vs. Fair Value of MSRs(in millions)
$412.3
$521.9 $510.6
$669.4
at December 31, 2015 at December 31, 2016
Book Value Fair Value
F U T U R E G O A L S
40
Our business plan for the next four years includes three major components: continued
growth of our loan origination and investment sales platforms, dramatically scaling our
servicing portfolio and building an asset management business. If we execute on our
growth initiatives in each of these areas, we will generate over $1 billion in revenues by
the end of 2020.
- Willy Walker, February 2017
C U R R E N T G O A L S & E X P E C T AT I O N S
F O R 2 0 1 7
Financial
> Expect to grow diluted earnings per share by over
10%
> Targeting an operating margin in the range of 27%
to 33%
> Expect to deliver return on equity in the mid-to-high
teens
> Expect adjusted EBITDA to grow by over 10%
> Gain on sale margin expected to be in the range of
180 – 200 basis points over the course of the year
> Based on current size of servicing portfolio, 2017
servicing fees will be $164 million, up 16% from
2016 before taking into account any 2017
originations
Operational
> Expect strong market conditions again in 2017 with
continued growth in the multifamily market
> Anticipate growth in total transaction volumes in
2017 given the 36% increase in bankers and
brokers since the middle of 2016
• Expect brokered originations to grow at a
faster pace than other products given that
the majority of the 2016 new hires were
on the Capital Markets team
• Do not expect the difference between
Fannie Mae and Freddie Mac volumes to
be as pronounced in 2017 as it was in
2016
• Expect year-over-year growth in HUD
> Goal to hire between 15 and 25 bankers and
brokers
41
WA L K E R & D U N L O P ’ S 2 0 2 0 G O A L S
42
Sales
ProfessionalsTransaction
Volume
Servicing
PortfolioAsset
ManagementTotal
Revenues
125
200-225
$19billion
$35billion
2016Year-end
2020Year-end
$63billion
$100billion
Development
Stage$575
million
$8-$10billion
$1billion
A P P E N D I X
A D J U S T E D E B I T D A
R E C O N C I L I AT I O N T O N E T I N C O M E
For the year ended December 31,
(in thousands)2016 2015 2014 2013 2012 2011
Walker & Dunlop Net Income $113,897 $82,128 $51,422 $41,530 $33,772 $34,864
Income tax expense 71,470 52,771 32,490 25,257 21,998 21,797
Interest expense 9,851 9,918 10,311 3,743 1,649 823
Amortization and depreciation 111,427 98,173 80,138 75,955 53,925 22,514
Provision (benefit) for credit losses (612) 1,644 2,206 1,322 3,140 4,724
Net write-offs (1,757) (808) (5,242) (9,188) (6,450) (680)
Stock compensation expense 18,477 14,084 9,994 9,194 5,176 2,422
Gains attributable to mortgage servicing rights (1) (192,825) (133,631) (96,515) (91,972) (92,594) (54,301)
Severance costs (2) — — — 429 2,223 —
Deal-related expenses (3) — — — — 6,538 —
Lease modification and exit charges — — — 1,137 — —
Loss on extinguishment of debt — — — 1,214 — —
Gain on termination of servicing (4) — — — (1,838) — —
Adjusted EBITDA $129,928 $124,279 $84,804 $56,783 $29,377 $32,163
1) Represents the fair value of the expected net cash flows from servicing recognized at commitment, net of the expected guaranty obligation
2) Severance costs incurred in connection with a significant acquisition (2012) and cost reduction plan (2013)
3) Includes legal, advisory fees, other professional fees, and a transaction services agreement incurred in connection with a significant
acquisition
4) Gain attributable to the termination of the servicing rights associated with a portion of our Fannie Mae small loan portfolio
Phone 301.215.5515
7501 Wisconsin Avenue, Suite 1200E
Bethesda, Maryland 20814