October 30, 2019
By Paul Bubny
With a current enterprise value of $2 billion, Walker & Dunlop is well on its way to achieving a 100X multiple of the value it had when Willy Walker joined the family’s lending business in 2003. When it gets there, he jokingly told the Connect National Investment & Finance 2019 audience, the book chronicling the company’s journey will be titled “100X the Hard Way.”
Walker sat down with Daniel Ceniceros, founder and CEO of Connect Media, at this year’s edition of the annual conference, held recently at the Harvard Club in Midtown Manhattan. He shared insights about growing the company from a regional lender to a national, publicly traded one—and was pleased to not be asked about cap rates.
For the first 14 years of his post-college career, Walker shied away from joining the business, and instead went into several other industries. Notably, he became president of the European and Latin American divisions of TeleTech, a call-center operator.
When he did come to work for Walker & Dunlop, “I didn’t want to become the world’s greatest mortgage banker,” he recalled. “I was interested in building a business.”
And build it he did, through a mixture of organic growth and acquisitions. Currently the firm averages $1.2 million in annual revenue per employee. Among its peers in the CRE lending space, HFF came closest with per-employee revenue of $525,000.
HFF’s merger with JLL this past summer, Walker said, was “a gift from heaven.” With large-scale change at Walker & Dunlop’s two leading competitors, the firm has successfully recruited professionals who were eager to be a part of what Walker has described as an organization with “big-company capabilities and a small-company touch and feel.”
The Walker & Dunlop culture—it has won multiple awards from the Great Place to Work Institute—is in part a product of the smaller firms the company has acquired, Walker said. Employees of newly acquired companies aren’t expected to immediately conform to the new environment; as part of the onboarding process, “we tell them, ‘we want to learn from you.’”
Walker’s tenure as chairman and CEO of the 82-year company spanned one of CRE’s most precipitous downturns. He doesn’t anticipate that we’ll be seeing another anytime soon.
“Everything I’ve seen in my career tells me that a recession isn’t coming,” he told the Harvard Club audience. The length of the current cycle, and any parallels to the final years of the previous one, don’t necessarily portend a repeat of history. “Just because it happened before doesn’t mean it has to happen again,” said Walker.
In fact, he explained, from the standpoint of current economic fundamentals the closest parallel isn’t with 2006, but rather 1995: a period of strength that portended Bill Clinton’s re-election the following year.
Two classic elements of previous cycles that have caused CRE to come to grief don’t apply to 2019. The slower post-recession economic growth has meant that developers haven’t overbuilt, and lenders have remained disciplined.
On the subject of coming to grief, though, “I predicted in February that WeWork was a house of cards, and people thought I was crazy,” Walker said. Recent events have borne out that prediction; Walker called it “a classic asset/liability mismatch.”
He added that SoftBank Group, which has taken control of the co-working firm in which it had already invested billions, faces an uphill battle, not least because of the departure of CEO Adam Neumann. Like him or not, Neumann was a visionary and entrepreneurial leader, Walker said.
Walker concluded the discussion with advice to industry newcomers: 1) figure out your niche, your core strength; 2) find a real mentor, someone who will allow you to take risks and potentially fail; and 3) think forward 10 or 15 years. ”How do you plan on becoming the next Doug Harmon?”
Pictured, from left: Daniel Ceniceros and Willy Walker.
For comments, questions or concerns, please contact Paul Bubny