The commercial real estate market has been extremely strong lately, and Walker & Dunlop (WD -1.01%) is taking full advantage of favorable conditions in the industry. With its emphasis on providing real estate services and financing for multifamily and commercial properties, Walker & Dunlop has captured a lucrative niche and developed impressive growth in the process.

Coming into Wednesday's first-quarter financial report, Walker & Dunlop investors had high hopes for the company's ability to keep its impressive past track record going. But even the most optimistic of those following the stock were surprised by the extent to which the real estate specialist managed to capture sales and earnings growth. Let's take a closer look at Walker & Dunlop to see how it did and what's ahead for the company going forward.

Logo and properties from Walker & Dunlop.

Image source: Walker & Dunlop.

Walker & Dunlop builds a strong foundation for 2017

Walker & Dunlop's first-quarter results showed just how good conditions in the industry are right now. Revenue soared by more than two-thirds to $158.5 million, and that growth rate was more than half, again faster than investors had anticipated. Net income nearly tripled to $43.2 million, and that produced earnings of $1.35 per share, blowing away the consensus forecast of just $0.73 per share among those following the stock.

Taking a closer look at the numbers, Walker & Dunlop enjoyed good performance nearly across the board. The mortgage banking unit was the standout during the quarter, as revenue more than doubled from year-ago figures. Loan origination fees climbed by more than 125%, and gains attributable to mortgage servicing rights in Walker & Dunlop's portfolio came close to doubling as well. Loan origination activity climbed by 92% in the first quarter compared to the year-ago period, led by a near 150% rise in loans originated through Fannie Mae. Growth in Freddie Mac-originated loans and brokered transactions was also impressive. Total transaction volume nearly doubled to $5.01 billion.

Walker & Dunlop's servicing segment was also a solid performer. Servicing fees were up 31% to $41.5 million, and the rise in originated loans has contributed to ongoing growth in the size of Walker & Dunlop's servicing portfolio. Currently, the company services $64.4 billion, which is up by more than a quarter from its size 12 months ago.

The only blemish on Walker & Dunlop's quarter came from what it calls net warehouse interest income, which represents net interest on loans held for sale and investment. That figure was down 2%, as the average balance of loans held for investment dropped enough to outweigh an increase in loan counts.

Credit issues continue to be a nonfactor for Walker & Dunlop. The company saw another tiny gain from favorable movements in its credit loss provisions, and it had no delinquent loans or loans in default at the end of the first quarter.

Can Walker & Dunlop keep up the pace?

CEO Willy Walker couldn't have been happier about how the company has done. "2017 is off to an extremely strong start for Walker & Dunlop," Walker said, and "our team continues to perform at a high level with a tremendous sense of teamwork." The CEO further noted that cost discipline dramatically added to performance even during a strong growth period.

Yet Walker & Dunlop also remains extremely optimistic even after having set such a high bar with its past performance. In Walker's words, "Our outlook is very strong as the economy expands, interest rates remain relatively low, and the demand for commercial real estate -- particularly rental housing -- continues forward."

Just looking at minor aspects of the company's operations show the detail to which Walker & Dunlop pays attention to its business. For instance, the servicing portfolio has seen incremental improvement, with remaining portfolio term extending by nearly a year to 10.2 years, and average servicing fees climbing by 0.02 percentage points to 0.27%. That doesn't seem like a lot, but when added to other small improvements, the result is the faster growth that Walker & Dunlop has seen lately.

Walker & Dunlop investors were appropriately pleased with the news, and the stock climbed more than 6% in pre-market trading following the announcement. With continuing strong conditions having pushed the stock to all-time record highs, Walker & Dunlop is still laser-focused on keeping itself disciplined with full attention on its business opportunities going forward.