Walker & Dunlop, Inc

Good day and welcome to the Q3 2025 Walker & Dunlop Incorporated Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Kelsey Duffy. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining Walker & Dunlop's third quarter 2025 earnings call. I have with me this morning our chairman and CEO, Willie Walker, and our CFO, Greg Florkowski. This call is being webcast live on our website, and a recording will be available later today. Both our earnings press release and website provide details on accessing the archived webcast. This morning, we posted our earnings release and presentation to the investor relations section of our website, www.walkerdunlop.com. These slides serve as a reference point for some of what Willie and Greg will touch on during the call. Please also note that we will reference the non-GAAP financial metrics, adjusted EBITDA, and adjusted core EPS during the course of this call. Please refer to the appendix of the earnings presentation for a reconciliation of these non-GAAP financial metrics. Investors are urged to carefully read the forward-looking statements language in our earnings release. Statements made on this call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe our current expectations and actual results may differ materially. Walker & Dunlop is under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, and we expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC. I will now turn the call over to Willie.

Thank you, Kelsey, and good morning, everyone. Our third quarter financial results underscore an improving commercial real estate market and Walker & Dunlop's strong brand and market position. Kind of demand for assets and a material increase in the supply of debt capital. drove increased transaction volumes across our platform, generating $15.5 billion of total transaction volume on the quarter, up 34% year over year. Strong transaction activity across all capital markets executions, sales, debt financing, equity, and structured finance, investment banking, research, and appraisals, led to third quarter revenues of $338 million and 98 cents of diluted earnings per share, up 16% and 15%, respectively, year over year. Adjusted EBITDA grew 4% to $82 million, and adjusted core EPS increased 3% to $1.22. With the 10-year sitting just above 4% and a strong forward pipeline, We expect a gradual increase in commercial real estate capital markets activity to continue forward. The 34% increase in total transaction volume to $15.5 billion was led by an extremely active quarter of lending with Freddie Mac up 137% to $3.7 billion, along with solid growth in Fannie Mae volumes up 7% to $2.1 billion. It is important to note that while the growth in GSE lending and WND's market share is fantastic, the mortgage servicing rights associated with our GSE business have decreased significantly due to the majority of our loans being five-year loans versus 10-year loans. This shift, which began in 2023, has a large impact on the capitalized mortgage servicing rights we book, as Greg will speak to momentarily. But given the growth we are seeing from both existing and new clients to W&D, this shorter duration presents a huge opportunity for asset refinancing and or sales over the next two to five years. Compounding this opportunity are the upcoming refinancings on the 10-year loans written in 2018, 19, and 20. As you can see on this slide, there is $31 billion of scheduled agency maturities in 2025, mostly comprised of 10-year loans originated in 2015. The level of agency maturity steps up to around $50 billion for both 26 and 27, and then increases dramatically to $97 billion in 2028 and $144 billion in 2029, as those later villages of both 10-year and 5-year loans mature. And as we have seen in previous cycles, where there appears to be a wall of loan maturities, assets will get sold and refinanced, pulling forward a large portion of the refinancing wall. HUD lending volumes were up 20% on the quarter to $325 million. And while the government shutdown is impacting HUD's ability to process business, the newly implemented efficiencies at HUD and increased borrower demand for HUD capital makes us bullish on the outlook for this lending business going forward. Our Q3 investment sales volume was very strong, up 30% to $4.7 billion, and outperforming overall market growth of 17%, according to RCA. While oversupplied high-growth markets such as Austin and Nashville, where our team sold $3.5 billion of assets in 2021 and 2022, are still struggling and not seeing much sales activity, Gateway cities and their suburbs have operating fundamentals attracting capital. A good example of this is the $550 million multifamily portfolio we sold in Boston in Q3 and the $350 million financing we arranged for the buyer of that portfolio, reflecting the broad geographic coverage of our team that is driving our growth in 2025. And while suburban gateway and slower growth Midwestern cities have stronger supply demand fundamentals today, the sun bet will come back due to job growth and lifestyle choice. And we have the teams in place to capture deal flow when that rebound occurs. Our investment sales platform has 26 teams across the country, including four national specialty practices, and is well positioned to take advantage of an increase in activity across geographies as the next cycle gains momentum. There is still a tremendous amount of equity capital that needs to be recycled to investors before commercial real estate private equity funds can raise fresh new capital. As slide six shows, there is over $600 billion of equity capital invested in historic funds for over five years that needs to be returned to investors, and nearly $300 billion that was raised in 2021 and 2022 that is yet to be invested. This pressure to return capital and deploy uninvested capital is an important component part of what is driving increased transaction volumes in 2025. Our broker debt financing team placed $4.5 billion in Q3, up 12% over Q3 24. Debt funds, banks, and life insurance companies are all active in the marketplace, increasing liquidity, which in turn is beginning to drive down cap rates. Our technology-enabled businesses of small-balance lending and appraisals continue to grow, with apprised revenues up 21% in the quarter and small-balance lending revenues up 69%. We continue to invest in customer-facing technology like Client Navigator, our digital experience for W&D clients. We currently have over 2,700 clients actively monitoring their loans and properties through this portal. Similarly, our clients are increasingly using WD Suite, a new web-based software that provides instantaneous market and asset-level insights. Galaxy, our proprietary loan database, continues to source new clients and loans for WND, with 16% of our transaction volume year-to-date being with new clients and 68% of our refinancing volume being new loans to Walker & Dunlop. our success continuing to broaden our client base and win loans from our competitors is a testament to the powerful combination of our talented bankers and brokers innovative technology and exceptional customer service as you can see from every client facing execution experiencing strong growth in q3 wnd's people brand and technology are well positioned in the marketplace and winning we see the secular tailwinds behind our business almost three years of pent-up demand, lower interest rates, and the need to recycle capital to investors for future investment, continuing over the next several years as the economy continues to grow and commercial real estate fundamentals improve. We are seeing very similar market dynamics in 2025 to what we saw after the great financial crisis in 2011, 12, and 13, and have built Walker & Dunlop to meet the market's needs and grow. I will now turn the call over to Greg to talk through our financial results in more detail. Greg?