Walker & Dunlop, Inc (WD) Q2 2025 Earnings Call

Investor webinar replay

Replay transcript excerpt

Bill of Warrant of Walker Knapp's competitor firms spoke before me and said that the next CRA cycle would begin on July 8, 2025, as soon as the new tariff deals were negotiated. I disagreed and said it was highly unlikely all the trade deals would be negotiated by July 8. And second, even if the Trump administration was wildly successful negotiating trade deals, that nobody should think trade is the last macroeconomic issue President Trump is going to try to impact. And guess what? We were both right. The volatility we have seen in the market since the advent of the second Trump administration is likely to be with us for the next three and a half years. And at the same time, the next CRA cycle appears to be underway. This cycle is underway not due to significantly lower rates, higher asset prices, nor macroeconomic tranquility. It has begun because after three years of dramatically lower sales and financing activity, it is time to recycle capital to investors, refinance assets, and deploy capital that was raised prior to the Great Tightening. As you can see on slide three, there is over $640 billion of equity capital in real estate funds that has been invested for over five years and needs to be returned to investors. As you can also see in this chart, capital raising for new funds has plummeted since 2022. That is investors waiting for capital to be recycled prior to investing in new vehicles. And on the right side, the graph shows that there is over $400 billion of dry powder that needs to be invested or will be returned to investors. This slide represents over $1 trillion of real estate focused equity capital that either needs to be recycled or deployed. And these equity flows are what is driving transaction activity today. Beyond this significant macro driver, th...