Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Walker & Dunlop Inc (WD, Financial) reported a 36% increase in total transaction volume in Q3 2024, reaching $11.6 billion, indicating strong market activity.
- The company achieved a 33% year-over-year growth in earnings per share, reaching 85 cents per share.
- WD's GSE loan volumes saw a meaningful uptick, contributing to a 23% increase in MSR revenue year-over-year.
- The company experienced significant growth in HUD lending volumes, which grew over 200% to $272 million in Q3.
- WD's servicing portfolio remains robust, ending the quarter with $134 billion, generating stable recurring revenues with strong credit fundamentals.
Negative Points
- Despite the increase in transaction volume, total revenues only grew by 9%, indicating a potential issue with revenue mix or transaction fees.
- WD's affordable equity revenues were down 37% due to a decline in tax credit syndications and asset dispositions during the quarter.
- The company recognized a $3 million provision for credit losses, indicating some challenges within its credit risk portfolio.
- Fannie Mae requested WD to repurchase two additional loans totaling $26 million, both of which are defaulted loans.
- The company faces potential risks from interest rate volatility, which could impact transaction volumes and servicing portfolio duration.
Q & A Highlights
Q: Can you provide insights on the property sales volume and how much was pulled from the pipeline versus opportunistic deals?
A: The gestation period from a broker opinion of value to listing and transaction is longer than a quarter. We have seen a significant uptick in both the pipeline and transaction volumes, and the investment sales pipeline is holding strong into Q4. – Gregory Florkowski, CFO
Q: Is there a shift between refinancing and purchase deals compared to longer-term averages?
A: The Q4 pipeline is overweighted towards refinancing activity versus acquisition activity. Despite recent rate increases, acquisitions are still moving forward, and properties are not being pulled from the market. – Gregory Florkowski, CFO
Q: What is the impact if the 10-year treasury goes to 5%?
A: We haven't specifically gamed out that scenario, but we are at the beginning of the next cycle. The gap between multifamily and single-family would increase, keeping occupancy high. We expect investment dollars to continue flowing into multifamily, driving investment sales activity. – Gregory Florkowski, CFO
Q: Do you see any issues with GSE throughput in Q4 due to increased loan requests?
A: We control our destiny more with Fannie Mae as we underwrite those loans ourselves, unlike Freddie Mac. We do not foresee processing issues impacting our ability to close loans. – Gregory Florkowski, CFO
Q: What is the outlook for the tax syndication business in 2025?
A: We expect growth in 2025. The business has been a consistent contributor to revenues and earnings. We are focused on syndication and disposition activities, and the market dynamics are favorable for growth. – Gregory Florkowski, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
