3 Reasons Walker & Dunlop's Growth Is for Real

The multifamily lender is crushing the stock market -- and it's just getting started.

By Courtney Carlsen – Nov 22, 2021 at 8:30AM EST

Key Points

Walker & Dunlop has accomplished impressive growth with CEO Willy Walker leading the way.
The company is the top multifamily lender in the U.S. and a top lender of government-backed loans.
It has also made intelligent acquisitions to reach its ambitious goals over the next five years.

One stock that continues to impress me is Walker & Dunlop (WD +0.10%). The real estate lender posted a stellar third quarter and is en route to another solid year of growth.

Since going public in 2010, its stock has been on a tear, delivering a total return of 1,500% compared to the S&P 500 return of 367%. Walker & Dunlop has rocketed higher for a good reason, and it's not stopping anytime soon. Here are three reasons why Walker & Dunlop's growth is for real.

1. Willy Walker's leadership

While Walker & Dunlop has been around since the 1930s, it's only recently that the company has taken off. Leading the way is CEO Willy Walker, who is the grandson of one of the original co-founders. Walker took the company public in 2010 and has done a stellar job of leading it.

In 2015, the company set some pretty ambitious goals to become a top multifamily real estate lender by 2020. It established ambitious goals, accomplishing most of them.

One goal was to make $1 billion in revenue, double the amount of the company's revenue in 2015. It achieved this when it broke $1.1 billion in revenue last year. Another goal was to double its servicing portfolio from $50 billion to $100 billion. Last year it had $107 billion in this portfolio.

Walker isn't done yet. The company has set more ambitious goals for 2025. Among them are to grow origination volume to $60 billion and grow its servicing portfolio to $160 billion. The company also has plans to expand its investment banking capabilities and accumulate $10 billion in assets under management (AUM). With Willy Walker leading the charge, investors can be optimistic that the company will be laser-focused on accomplishing these goals.

A man walks between apartment buildings with his children.

Image source: Getty Images.

2. It's a top lender of government-backed loans

According to Mortgage Bankers Association (MBA), Walker & Dunlop was the top multifamily lender in the United States last year, coming out ahead of CBRE Group and Jones Lange LaSalle.

Walker & Dunlop is a top lender through government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Through these agencies, hundreds of billions of dollars in financing is extended to build out multifamily housing.

Walker & Dunlop benefits from its position as a leading lender and has an 11% share of the GSE lending market. Fannie Mae and Freddie Mac put in lending caps that make money available to create affordable housing. When they approve more financing year after year, Walker & Dunlop benefits.

In 2021, these agencies had lending caps of $70 million each. Next year, they will grow their lending casp to $78 billion each, an 11% increase. This increase in lending will benefit Walker & Dunlop, which is looking forward to a wave of maturities that presents another significant opportunity in multifamily lending in the coming years.

A miniature house sits on top of financial graphs.

Image source: Getty Images.

3. Smart acquisitions will make its 2025 goals a reality

Walker & Dunlop has also made smart, strategic acquisitions to reach its long-term goals. One move it made this year was purchasing Alliant, a market leader in the affordable housing industry. Adding Alliant gives Walker & Dunlop an even better foothold in the affordable housing space. This matters, because 50% of multifamily loans through Fannie Mae and Freddie Mac must be mission-driven to build affordable housing.

Another good move by Walker & Dunlop was its acquisition of Zelman & Associates, a top research firm focused on housing. That's because Zelman is an advisor real estate companies turn to, and one which helped advise on the IPOs of Rocket Mortgage and Invitation Homes. This move allows Walker & Dunlop to build up its investment banking capabilities, too -- one of its 2025 goals.

Not only that, but Zelman provides research and analytics for both multifamily housing and single-family housing. Walker sees an opportunity in the single-family home rental market. Zelman's expertise and relationships with single-family housing developers will be another way the lender can increase its originations and servicing portfolio. Earlier this year, Walker noted that the market for single-family rentals is estimated at $3.4 trillion, comparable to the $3.5 trillion multifamily market -- presenting another massive opportunity for the company. When you take everything into consideration, Walker & Dunlop is a company that is firing on all cylinders.