Walker & Dunlop, Inc · NYSE:WD
Walker & Dunlop — Investor Day (December 2020)
82 slides from Walker & Dunlop's investor day presentation, Dec 10, 2020
Slide 1: Investor Day 2020: Drive to <25
INVESTOR DAY 2020 DRIVE TO<25 WALKER *® DUNLOP Decei r 10, 2020 wr Ce
Slide 2: Forward-Looking Statements
Forward - Looking Statements Some of the statements contained in this presentation may constitute forward - looking statements within the meaning of the federa l securities laws. Forward - looking statements relate to expectations, projections, financial targets, plans and strategies, anticipated ev
Slide 3: Willy Walker, Chairman & CEO
Willy Walker Chairman & CEO
Slide 4: Our mission is to be the premier commercial real estate finance company
OUR MISSION IS TO BE THE PREMIER COMMERCIAL REAL ESTATE FINANCE COMPANY IN THE COUNTRY
Slide 5: W&D has outperformed its peers over the past five years
W & DH A S O U T P E R F O R M E D I T S P E E R S O V E RT H E PA S T F I V EY E A R S 13% Performance1 -7% Net Income Margin (TTM) -17% -11% -12% -13% 50% -50% 2 1) Trailing twelve months ending 9/30/20 WD (Walker & Dunlop)CBREJLLMMI (Marcus & Millichap) NMRK (Newmark)CWK (Cushman & Wakefield)ABR
Slide 6: W&D revenue growth in line with S&P firms over 10 years
W&D REVENUE GROWTH IS IN LINE WITH THESE S&P 500 FIRMS OVER 10 YEARS 29.3% SALESFORCE NETFLIX amazon 28.3% NETFLIX 27.6% AMAZON 21.7% APPLE Alphabet 21.2% ALPHABET M &.PSOO 5.3% S&P 500 MEDIAN %YEARLY REVENUE GROWTH COMPANY
Slide 7: Looking Forward: Drive to '25 Agenda
LOOKING FORWARD: DRIVE to ‘25 ✓ Introduction (Willy Walker) ✓ Financial Outlook (Steve Theobald) ✓ Financial Lookback (Steve Theobald) ✓ Drive to ‘25 Wrap Up (Willy Walker) ✓ 2020 Recap and 2025 Goals (Willy Walker) ✓ Q&A ✓ Debt Financing (Sheri Thompson) ✓ Property Sales (Kris Mikkelsen) A G E N D
Slide 8: Steve Theobald, EVP & Chief Financial Officer
Steve Theobald EVP & Chief Financial Officer
Slide 9: 2010 Employees and Offices
2010 157 Employees 8 Offices
Slide 10: 2020 Employees and Offices
2020 950+ Employees 41 Offices Pictured: Employees at the 2019 All Company Retreat
Slide 11: 10 Years of Exceptional Growth
$8,227 $205,994 2010 TTM 2020 $20,753 $221,763 2010 TTM 2020 $121,834 $951,188 2010 TTM 2020 10 YEARS OF EXCEPTIONAL GROWTH Net Income Total Revenues Adjusted EBITDA 1 Note: Dollars in thousands; trailing twelve months through 9/30/20 1) Adjusted EBITDA is a non - GAAP financial measure. For a recon
Slide 12: Vision 2020
VISION 2020 $1 BILLION IN ANNUAL REVENUES $8 B+ asset management platform $100 B+ servicing portfolio $30 B+ annual debt financing volume $8 B+ annual property sales volume
Slide 13: $30B+ Annual Debt Financing Volume
$30B+ annual debt financing volume $16,239 $16,724 $24,875 $25,334 $26,574 $31,000+ 2015 2016 2017 2018 2019 2020 Projection DEBT FINANCING VOLUME (in millions) 14% CAGR GOAL
Slide 14: $100B+ Servicing Portfolio
$50,212 $63,081 $74,310 $85,689 $93,225 $105,000+ at December 31, 2015 at December 31, 2016 at December 31, 2017 at December 31, 2018 at December 31, 2019 Projected at December 31, 2020 SERVICING PORTFOLIO (in millions) 16% CAGR $100B+ servicing portfolio GOAL
Slide 15: $8B+ Annual Property Sales Volume
$8B+ annual property sales volume PROPERTY SALES VOLUME (in millions) 31 % CAGR GOAL $1,520 $2,574 $3,031 $2,713 $5,393 $5,900 2015 2016 2017 2018 2019 2020 Projection
Slide 16: $8B+ Asset Management Platform
$8B+ asset management platform ASSETS UNDER MANAGEMENT 1 (in millions) GOAL $ - $ - $182 $1,423 $1,958 $2,000 at December 31, 2015 at December 31, 2016 at December 31, 2017 at December 31, 2018 at December 31, 2019 Projected at December 31, 2020 1) Comprised of interim loans serviced for our interim
Slide 17: $1B in Annual Revenues
$1B in annual revenues TOTAL ANNUAL REVENUE (in millions) 16% CAGR $468 $575 $712 $725 $817 $1,000 2015 2016 2017 2018 2019 2020 Projection GOAL
Slide 18: W&D vs. S&P Financials
29 W&D VS. S&P 600 FINANCIALS Net Income Total Revenues Source: S&P Capital IQ Note: Total Revenue and Net Income CAGRs calculated using TTM through the 12 months ended 6/30/2020 Trailing PE Multiple 4% 6% 10% 16% 3-Yr CAGR 5-Yr CAGR S&P 600 Financials Median Walker & Dunlop 15.8 17.3 16.5 10.1 9.0
Slide 19: Willy Walker, Chairman & CEO
Willy Walker Chairman & CEO
Slide 20: People, Brand, Technology
PEOPLE BRAND Wap TECHNOLOGY
Slide 21: Walker & Dunlop Corporate Overview | © 2018 Proprietary and
Walker & Dunlop Corporate Overview | © 2018 Proprietary and Confidential
Slide 22: Walker Webcast
“WALKER WEBCAST
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Slide 24: What Clients Are Saying
Willy - your webcasts have been “must see Zoom” for everyone in the industry over the past two plus months. They have been incredibly helpful and inspiring…your access to thought leaders has been no less than amazing and your approach is so in tune with what your clients, friends, the industry want
Slide 25: wep
wep
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Slide 27: People, Brand and Technology Driving Strong Financial Performance
$22,155 $26,895 YTD 2019 YTD 2020 $600,029 $733,998 YTD 2019 YTD 2020 PEOPLE, BRAND AND TECHNOLOGY ARE DRIVING STRONG FINANCIAL PERFORMANCE YTD Diluted Earnings Per Share $4.11 $5.11 YTD 2019 YTD 2020 Year - to - Date Key Performance Metrics (through 9/30/20) YTD Total Revenues (in millions) YTD Tot
Slide 28: Combined Fannie, Freddie and HUD Volume
$15 $21 2019 YTD 2020 1 ) Through 11/30/20 Combined Fannie, Freddie, and HUD Volume 1 (in billions) PEOPLE, BRAND AND TECHNOLOGY ARE DRIVING STRONG FINANCIAL PERFORMANCE
Slide 29: Q3'20 Refinancing and New Customers
In Q3’20 69% of refinancing volume was new loans 25% of total debt financing volume was with new customers PEOPLE BRAND TECHNOLOGY
Slide 30: Q4'20 Refinancing and New Customers
In Q4’20 1 68% of refinancing volume was new loans 31% of total debt financing volume was with new customers PEOPLE BRAND TECHNOLOGY 1) Through 12/8/20
Slide 31: Where We Are Going
WHERE WE ARE GOING GROW DEBT FINANCING VOLUME GROW PROPERTY SALES VOLUME ESTABLISH INVESTMENT BANKING CAPABILITIES ENVIRONMENTAL, SOCIAL AND GOVERNANCE $60B+ Origination Volume / $5B+ Small Balance Loans / $160B Servicing Portfolio $25B+ Sales Volume $10B+ Assets Under Management Double Diverse Lead
Slide 32: Environmental Social Governance
ENVIRONMENTAL SOCIAL GOVERNANCE
Slide 33: Grow Debt Financing
GROW DEBT FINANCING
Slide 34: Sheri Thompson, EVP, FHA Finance
Sheri Thompson Executive Vice President, FHA Finance
Slide 35: Debt Financing Growth
DEBT FINANCING GROWTH $31+ Billion projected in 2020 $60+ Billion by 2025
Slide 36: Multifamily lending remains a growing market over next five years
MULTIFAMILY LENDING REMAINS A GROWING MARKET OVER THE NEXT FIVE YEARS Source (for historical and forecast origination volumes through 2022): Mortgage Bankers Association (MBA) Annual Originations Su mmation Report and MBA CREF Forecast Source (for 2023 - 2025 forecast origination volumes): W&D propr
Slide 37: Upcoming multifamily wave of maturities drives lending opportunity
$25 $36 $30 $25 $27 $32 $52 $63 $59 $78 $94 $85 $83 $95 $114 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 CMBS Life Companies Credit Companies, Warehouse, and Other Fannie, Freddie, FHA, and Ginnie Mae UPCOMING MULTIFAMILY “WAVE OF MATURITIES” DRIVES GROWTH IN LENDING O
Slide 38: Goal to become the #1 lender in the United States
GOAL TO BECOME THE #1 LENDER IN THE UNITED STATES Top Multifamily Lenders Company Amount (millions) Number Avg. Size (millions) 1 JP Morgan Chase $ 22,739 6,638 $ 3.4 2 Wells Fargo $ 20,364 921 $ 22.1 3 CBRE $ 19,347 1,164 $ 16.6 4 Berkadia $ 17,785 898 $ 19.8 5 Walker & Dunlop $ 16,662 788 $ 21.1 6
Slide 39: Opportunity to grow debt brokerage volume
Financing Volume ( YTD 2020 1 ) Debt Brokerage Platform ( 2019 ) Non - Multifamily Market Share ( 2019 ) $7B #8 1.4% 1) Through 9/30 SIGNIFICANT OPPORTUNITY TO GROW DEBT BROKERAGE VOLUME OVER NEXT FIVE YEARS
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59 TITLE HERE
Slide 41: People, Brand, Technology
PEOPLE BRAND Wap TECHNOLOGY
Slide 42: Grow Property Sales
GROW PROPERTY SALES
Slide 43: Kris Mikkelsen, EVP, Investment Sales
Kris Mikkelsen Executive Vice President, Investment Sales
Slide 44: WDIS Footprint
Atlanta Austin Boston Chicago Columbus Dallas DC Ft. Lauderdale Jacksonville Los Angeles Miami Milwaukee Nashville Orlando Philadelphia Portland San Diego New York Tampa 1) Currently covers WDIS Seniors housing WDIS FOOTPRINT 1 Raleigh Charlotte
Slide 45: Hiring and successful integration has led to volume growth
HIRING AND SUCCESSFUL INTEGRATION HAS LED TO VOLUME GROWTH Property Sales Volume (in millions) Teams added $1,520 $2,574 $3,031 $2,713 $5,393 $5,900 2015 2016 2017 2018 2019 2020 Forecast Atlanta Washington, D.C. Jacksonville Raleigh Nashville Boston Los Angeles Dallas Atlanta Tampa San Diego Chicag
Slide 46: Property Sales Growth
PROPERTY SALES GROWTH $ 5.9 Billion projected in 2020 $25+ Billion by 2025
Slide 47: Goal to move up league table
Company 2019 Volumes (in thousands) 1 CBRE $33,300,000 2 Newmark (ARA) 23,376,000 3 JLL 22,999,000 4 Cushman & Wakefield 16,000,000 5 Marcus & Millichap 11,808,000 6 Berkadia 8,461,000 7 Eastdil 7,184,000 8 Walker & Dunlop 5,393,000 9 Northmarq 1,892,000 GOAL TO MOVE UP LEAGUE TABLE BY GROWING VOLUM
Slide 48: WDIS Expansion Opportunities
Target Markets Atlanta Austin Boston Chicago Columbus Dallas Houston DC Ft. Lauderdale Jacksonville Los Angeles Miami Milwaukee Nashville Orlando Philadelphia Portland San Diego New York Tampa Phoenix Denver Seattle San Francisco Current Markets 1) Targeting addition of market rate WDIS team 1 WDIS
Slide 49: Affordable, Student Housing and Built for Rent
Affordable We have financed over $17B of affordable housing over past three years We will expand into affordable property sales to extend the role we play in building American communities Student Housing We have a best - in - class student housing financing platform, with 182,610 beds in servicing p
Slide 50: 45% of sales were tied to debt in 2020
of sales were tied to Debt in 2020 45% 1) Based on number of transactions through 9/30/2020 1
Slide 51: Growing sales volume and maintaining strong recapture rate
$3 $5 $6 $10 $15 $25 $1 $1 $2 $3 $5 $9 $0 $5 $10 $15 $20 $25 $30 2018 2019 2020 $10 Billion $15 Billion $25 Billion Billions Sales Volume Financing Volume GROWING SALES VOLUME AND MAINTAINING STRONG RECAPTURE RATE By 2025
Slide 52: People, Brand, Technology
PEOPLE BRAND Wap TECHNOLOGY
Slide 53: Establish Investment Banking Capabilities
ESTABLISH INVESTMENT BANKING CAPABILITIES
Slide 54: CRE Investment Banking
CRE INVESTMENT BANKING Greg Florkowski Executive Vice President, Business Development
Slide 55: CRE Investment Banking Capabilities Are the DNA of the Industry
CLIENT SEGMENTATION AND CLIENT ANALYTICS APPRISE BY WALKER & DUNLOP M&A ADVISORY SERVICES . DATA ANALYTICS AND DATA SCIENCE WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH BROKER DEALER & SECURITIES CRE INVESTMENT BANKING CAPABILITIES ARE THE DNA OF THE INDUSTRY FANNIE MAE, FREDDIE MAC, HUD, DEBT BROKE
Slide 56: CRE Investment Banking Capabilities Are the DNA of the Industry
CLIENT SEGMENTATION AND CLIENT ANALYTICS APPRISE BY WALKER & DUNLOP M&A ADVISORY SERVICES . DATA ANALYTICS AND DATA SCIENCE WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH BROKER DEALER & SECURITIES CRE INVESTMENT BANKING CAPABILITIES ARE THE DNA OF THE INDUSTRY FANNIE MAE, FREDDIE MAC, HUD, DEBT BROKE
Slide 57: CRE Investment Banking Capabilities Are the DNA of the Industry
CLIENT SEGMENTATION AND CLIENT ANALYTICS APPRISE BY WALKER & DUNLOP M&A ADVISORY SERVICES . DATA ANALYTICS AND DATA SCIENCE WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH BROKER DEALER & SECURITIES CRE INVESTMENT BANKING CAPABILITIES ARE THE DNA OF THE INDUSTRY FANNIE MAE, FREDDIE MAC, HUD, DEBT BROKE
Slide 58: CRE Investment Banking Capabilities Are the DNA of the Industry
C R E D N A I N V E S T M E N TB A N K I N G C A PA B I L I T I E S A R E T H E O F T H E I N D U S T R Y BROKER DEALER & SECURITIES APPRISE BY WALKER & DUNLOP M&A ADVISORY SERVICES . WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH CLIENT SEGMENTATION AND CLIENT ANALYTICS WALKER & DUNLOP INVESTMENT SAL
Slide 59: CRE Investment Banking Capabilities Are the DNA of the Industry
C R E D N A I N V E S T M E N TB A N K I N G C A PA B I L I T I E S A R E T H E O F T H E I N D U S T R Y BROKER DEALER & SECURITIES APPRISE BY WALKER & DUNLOP WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH CLIENT SEGMENTATION AND CLIENT ANALYTICS M&A ADVISORY SERVICES . WALKER & DUNLOP INVESTMENT SAL
Slide 60: CRE Investment Banking Capabilities Are the DNA of the Industry
C R E D N A I N V E S T M E N TB A N K I N G C A PA B I L I T I E S A R E T H E O F T H E I N D U S T R Y APPRISE BY WALKER & DUNLOP WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH CLIENT SEGMENTATION AND CLIENT ANALYTICS M&A ADVISORY SERVICES . BROKER DEALER & SECURITIES WALKER & DUNLOP INVESTMENT SAL
Slide 61: CRE Investment Banking Capabilities Are the DNA of the Industry
C R E D N A I N V E S T M E N TB A N K I N G C A PA B I L I T I E S A R E T H E O F T H E I N D U S T R Y WALKER & DUNLOP INVESTMENT PARTNERS RESEARCH APPRISE BY WALKER & DUNLOP CLIENT SEGMENTATION AND CLIENT ANALYTICS M&A ADVISORY SERVICES . BROKER DEALER & SECURITIES WALKER & DUNLOP INVESTMENT SAL
Slide 62: CRE Investment Banking Capabilities Are the DNA of the Industry
C R EI N V E S T M E N TB A N K I N G C A PA B I L I T I E SA R ET H E D N AO FT H E I N D U S T R Y RESEARCH APPRISE BY WALKER & DUNLOP WALKER & DUNLOP INVESTMENT PARTNERS CLIENT SEGMENTATION AND CLIENT ANALYTICS M&A ADVISORY SERVICES . BROKER DEALER & SECURITIES WALKER & DUNLOP INVESTMENT SALES ST
Slide 63: Product Types
PRODUCT TYPES Preferred Equity JV Equity Mezzanine Debt Tax Credit Equity First Trust Debt
Slide 64: AUM Growth
AUM GROWTH $2 Billion projected in 2020 $10+ Billion by 2025
Slide 65: Platform Integration
PLATFORM INTEGRATION
Slide 66: Integration and Innovation: TJ Edwards
INTEGRATION AND INNOVATION TJ Edwards Managing Director, Proprietary Capital
Slide 67: Walker & Dunlop Corporate Overview | © 2018 Proprietary and
Walker & Dunlop Corporate Overview | © 2018 Proprietary and Confidential
Slide 68: Platform roles connected to the customer
M&A Advisory Debt Producer Investment Banker Sales Broker Appraiser Broker Dealer Loan Servicer Research Provider Connected Building Tech Provider Customer
Slide 69: Maximizing Share of a Transaction
MAXIMIZING SHARE OF A TRANSACTION APPRAISAL INVESTMENT SALES LP EQUITY EQUITY PLACEMENT AGENCY FINANCING PREFERRED EQUITY Effective collaboration allowed us to capture the lion’s share of fees from one deal
Slide 70: Galaxy: forward-looking database for opportunities
• A forward-looking database that allows our team to identify opportunities for our current customers, as well as owners and operators that we don’t service today • Enables us to ask the right questions to leverage the full bandwidth of our platform Regency Apartments • Beyond debt financing, we are
Slide 71: Steve Theobald, EVP & Chief Financial Officer
Steve Theobald EVP & Chief Financial Officer
Slide 72: Where We Are Going
WHERE WE ARE GOING GROW DEBT FINANCING VOLUME GROW PROPERTY SALES VOLUME ESTABLISH INVESTMENT BANKING CAPABILITIES ENVIRONMENTAL, SOCIAL AND GOVERNANCE $60B+ Origination Volume / $5B+ Small Balance Loans / $160B Servicing Portfolio $25B+ Sales Volume $10B+ Assets Under Management Double Diverse Lead
Slide 73: Total Revenues $1.7 to $2.0B
Total Revenues $1.7 to $2.0B BREAKDOWN OF TOTAL REVENUES $850 to $950 million from Debt Financing $150 to $200 million from Property Sales $425 to $450 million from Servicing $275 to $400 million from WDIP, Investment Banking, and Small Balance Lending
Slide 74: Operating Margin 32%-35%
Operating Margin 32% - 35% Operating margin expansion driven by growth higher margin areas of the business (Investment Banking/WDIP, Apprise, WDIS, and Small Balance Lending) By 2025, these four business lines are expected to generate $ 275 - $400M of high margin revenues Growth in servicing portfol
Slide 75: Diluted EPS $13.00 to $15.00
Diluted EPS $13.00 to $15.00 EPS target driven by strong revenue growth and operating efficiencies gained by our scale - driven business model
Slide 76: Adjusted EBITDA target
Adjusted EBITDA 1 $ 525 to $ 575M 1) Adjusted EBITDA is a non - GAAP financial measure. For a reconciliation of the metric to GAAP, refer to the appendix of this presentation In addition to strong adjusted EBITDA, achieving all financial targets would yield strong average cash generation and financi
Slide 77: People, Brand, Technology
PEOPLE BRAND Wap TECHNOLOGY
Slide 78: Willy Walker, Chairman & CEO
Willy Walker Chairman & CEO
Slide 79: Q&A
Q&A
Slide 80: Appendix
APPENDIX
Slide 81: Adjusted EBITDA Reconciliation to Net Income
ADJUSTED EBITDA RECONCILIATION TO NET INCOME For the (in thousands) Quarter Ended September 30, 2020 Quarter Ended June 30, 2020 Quarter Ended March 31, 2020 Quarter Ended December 31, 2019 Year Ended December 31, 2010 Forecast Year Ending 2025 (Low End of Range Forecast Year Ending 2025 (High End o
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