Walker & Dunlop (NYSE: WD) is a commercial real estate finance company, and that’s not a household name for the average investor – but maybe it should be. In this fool live Video clip, recorded September 30, Fool.com contributor Matt Frankel, CFP, talks about the impressive growth and future potential of Walker & Dunlop.
Matt Frankel: Walker & Dunlop is a commercial real estate finance company. They’ve been around since the 1930s. The current CEO is the interesting real story here, his name is Willy Walker. He is the grandson of the original co-founder. It was under his leadership that real growth really began. It was a small family business until he took over. He was the one who brought the company to the stock market, it just went public in 2010. Having been founded in the 1930s, it is quite recent.
They do pretty much everything related to commercial real estate financing. They issue commercial mortgages with a specific concentration in multi-family apartment buildings. They are one of the largest commercial mortgage services in the country. They service over $ 100 billion in commercial mortgage debt, one of the highest. They have a commercial real estate sales brokerage.
If anyone wants to buy a building, Walker & Dunlop might be a place to visit. They recently started to increase their investment banking. I’ll talk about that a bit more in a second. Walker & Dunlop has truly experienced explosive growth since their IPO in 2010.
About five years ago, they set goals that seemed really ambitious. I’ve been in this business for a while. At the time, in 2015, their revenues were less than $ 0.5 billion. It is now $ 1.1 billion. It surpassed their $ 1 billion goal. They had a $ 50 billion mortgage service portfolio. Now it’s over $ 107 billion or it ended 2020 at over $ 107 billion. They wanted $ 100. They really smashed their goals and the shareholders were rewarded handsomely.
Let me show you a really quick quick visual aid. Here’s what I say every time someone tells me real estate is boring. This is the Walker & Dunlop chart since its IPO in 2010 against the S&P 500, 1140% total return against 337% for the S&P. From a boring commercial real estate finance company, that’s a pretty impressive performance record.
I think they might just get started. I’ll show you why. I know I’m running out of time here. At the end of 2020, they announced their 2025 objectives. These seem quite ambitious at the start. They want to reach $ 60 billion in origination volume, they’re at $ 35 right now. They want $ 160 billion in their service portfolio, they’re about $ 112 right now. They want to increase their real estate sales volume to $ 25 billion, four times the current level. Rather ambitious growth objectives.
In this investment banking capacity, they ended 2020 with $ 2 billion in assets under management for clients. They wanted to reach $ 10 billion by 2025. They have already reached $ 16 billion thanks to an acquisition they just made. They’ve already hit that part of their goals for 2025. It’s still a pretty small company, with a market cap of just under $ 3.6 billion, I think it could be a future large cap company. .
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