Financial Reports - Annual Reports and Proxy - 2023 Annual Review :: Walker & Dunlop

Dear Fellow Shareholders,

William M. Walker, Chairman and CEO

After two years of challenging macroeconomic conditions for the commercial real estate industry due to dramatic rate increases in 2022 and 2023, 2024 showed signs of an improving market as investors began transacting more steadily and actively throughout the year, signaling the start of a new commercial real estate cycle. Walker & Dunlop’s transaction volumes and financial results improved sequentially each quarter over the course of 2024, culminating in the strongest quarter of transaction activity in over two years in the fourth quarter. For the year, we generated total transaction volume of $40 billion, up 21% over 2023, and 7% growth in total revenues to $1.1 billion. 2024 diluted earnings per share was $3.19, up slightly from 2023. The strong finish to the year from our Capital Markets business, combined with the consistent revenues from our Servicing and Asset Management business, brought annual adjusted EBITDA1 to $329 million, a record for Walker & Dunlop, and up 9% over 2023. Finally, adjusted core EPS2 totaled $4.97 per share, up 6% year over year. Given the macroeconomic challenges that persisted in 2024 and the typically competitive landscape, our strong financial results are a testament to the talent, teamwork, and tenacity of the Walker & Dunlop team. 

We ended the year as the largest Fannie Mae DUS® lender for the sixth consecutive year, the fourth largest Freddie Mac Optigo® lender, and the second largest HUD lender – all strong market positions that reinforce our reputation as one of the very best multifamily lenders in the United States and will benefit us greatly as transaction volumes continue to recover. In 2024, our average production per banker/broker was $172 million, up $35 million per banker/broker from 2023, yet still less than the $184 million average prior to the pandemic in 2019. Coming out of the pandemic, when transaction activity was at its peak in 2021, our average total transaction volume per banker/broker was $311 million. Given the strength of our brand, expanded service offering, and investments in people and technology we have made over the past several years, our productivity should continue marching upward from $172 million as the macro fundamentals underpinning the commercial real estate sector continue to improve and transaction volumes grow. Walker & Dunlop operates in an enormous industry with an extremely large total addressable market, and it is our expectation that we will grow transaction volume, revenues, and earnings in 2025 and beyond.

As we enter 2025, we are confident that the Walker & Dunlop platform is extremely well positioned to meet the market needs today and over the next several years due to continued investments in our people, brand, and technology. We recently announced the expansion of our Capital Markets team in three significant ways: 1) adding a hospitality-focused investment sales team to increase connectivity between our sales and financing teams beyond the multifamily sector, 2) hiring an exceptional affordable housing debt financing team with deep affordable housing client relationships and expertise as we continue to build out our affordable platform that now includes financing, sales, structured equity and tax credit equity syndication, and 3) expanding into Europe through the addition of a London-based Capital Markets brokerage team, presenting a huge opportunity for connectivity to new geographies, global investors, and global transactions. These investments reflect our continued evolution as a firm, broadening our capabilities and meeting the needs of our clients within a market that is also constantly evolving. 

Walker & Dunlop started as a local firm, and we are now embarking internationally. We began as a pure brokerage firm, taking no principal risk on loans, and now take risk on debt and manage capital that takes risk on equity and properties. We began selling one product – debt – to our customers, and now sell debt, equity, hard assets, research, investment banking, investment management, and valuation advisory services. Throughout the evolution of our scale and product offerings, our primary focus was generating alpha for our investors, partners, and clients – and we will continue to do just that. 

We are now in the last year of our five-year growth plan, the Drive to ‘25, which includes growing our debt and property sales presence and volumes, scaling our servicing and asset management businesses, and establishing several new complementary businesses, including small balance lending, valuation advisory, and investment banking. Over the last several years, we grew the number of bankers and brokers in our Capital Markets platform and successfully broadened the reach and recognition of our brand. We also acquired or built the new, strategic businesses central to our diversification strategy in the Drive to ‘25. While market conditions the last two years slowed the rate of growth for all our businesses, we remain focused on the underlying strategy of the Drive to ’25, as we know it is the right long-term strategic direction for our business. Walker & Dunlop has the durable business model and team in place to continue scaling our existing platform and adding new, innovative technology-focused businesses to complement our growth and meet our clients’ needs.

As we continue to invest in our people, brand, and technology in a recovering transaction market, we see an exciting path ahead for us in 2025 and over the next several years. Market uncertainties remain, such as stubborn inflation, the long-term path of interest rates, and a change in the presidential administration, but the underlying fundamentals of the commercial real estate sector are undeniably strong. With almost $1 trillion of commercial real estate debt maturing in 2025, abundant dry powder from both investors and lenders in place for deployment, and a renewed desire to transact, Walker & Dunlop is poised to continue meeting our clients’ needs and deliver strong shareholder returns for many years to come. 

I would like to personally thank you for your investment in Walker & Dunlop and continued confidence in our business model and long-term vision.

Sincerely,

Willy Walker signature

William M. Walker
Chairman & CEO

Footnotes:

(1)Adjusted EBITDA is not calculated in accordance with GAAP. For a reconciliation of adjusted EBITDA to GAAP net income, refer to page 41 of this Annual Report on Form 10-K for the year ended December 31, 2024.

(2)Adjusted core EPS is not calculated in accordance with GAAP. For a reconciliation of Adjusted core EPS to Diluted EPS, refer to the section at the back of this Annual Report titled “Adjusted Core EPS Reconciliation.”

This Annual Report includes forward-looking statements within the meaning of federal securities law. Please see page 3 of our 2024 Form 10-K filed with the Securities and Exchange Commission for additional information regarding forward-looking statements.