BETHESDA, Md., Oct. 12, 2017 /PRNewswire/ -- Walker &
Dunlop, Inc. (NYSE: WD) (the "Company"), the 8th largest
commercial mortgage servicer in the
United States as ranked by the Mortgage Bankers Association,
announced today that its commercial mortgage servicing portfolio
has grown by $10 billion in just ten
months, surpassing $70 billion.
Stephen Theobald, Walker &
Dunlop's Chief Financial Officer, commented, "What's really
exciting is that as we have dramatically grown the servicing
portfolio over the past five years, from just over $30 billion in 2012 to $70
billion in 2017, the rate of growth has accelerated and the
average servicing fee has continued to increase."
As the corresponding graph shows, Walker & Dunlop added each
incremental $10 billion of portfolio
volume in less time, while steadily expanding the weighted average
servicing fee from 23 to 26.5 basis points (as of June 30, 2017).
Walker & Dunlop's servicing portfolio is a very durable,
long-term financial asset, similar to asset management fees or
licensing fees in other industries. More than 85% of the
Company's commercial mortgage servicing rights (MSRs) recognized
are prepayment protected, meaning their value is unaffected by
changes in interest rates and the servicing revenues due to Walker
& Dunlop are contractually obligated until the loans mature –
or are paid in full if a loan is pre-paid before maturity.
"The current servicing portfolio has an average life of 10
years, which represents nearly $1
billion of contractual future revenues to Walker &
Dunlop," continued Mr. Theobald. "Growth in the portfolio
since 2012, when Walker & Dunlop generated $41 million in servicing revenues, has translated
into an annualized run rate of nearly $170
million of servicing fees in the first half of 2017.
This explosive growth in servicing revenues has propelled our
increase in adjusted EBITDA from just $29
million in 2012 to an annualized run rate of over
$200 million in the first half of
2017. At the current rates of growth in both our loan
origination and loan servicing businesses, our loan portfolio is
well on pace to reach our established goal of $100 billion by 2020."
About Walker & Dunlop
Walker & Dunlop (NYSE:
WD), headquartered in Bethesda,
Maryland, is one of the largest commercial real estate
services and finance companies in the
United States providing financing and investment
sales to owners of multifamily and commercial properties.
Walker & Dunlop, which is included in the S&P SmallCap 600
Index, has over 600 professionals in 28 offices across the nation
with an unyielding commitment to client satisfaction.
Non-GAAP Financial Measures
To supplement our
financial statements presented in accordance with United States generally accepted accounting
principles ("GAAP"), the Company uses adjusted EBITDA, a non-GAAP
financial measure. The presentation of adjusted EBITDA is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. When analyzing our operating performance,
readers should use adjusted EBITDA in addition to, and not as an
alternative for, net income. Adjusted EBITDA represents net income
before income taxes, interest expense on our term loan facility,
and amortization and depreciation, adjusted for provision for
credit losses net of write-offs, stock-based incentive compensation
charges, non-cash revenues such as gains attributable to MSRs. In
addition, adjusted EBITDA further excludes severance and
deal-related expenses from the acquisition of CW Capital, LLC in
2012. Because not all companies use identical calculations, our
presentation of adjusted EBITDA may not be comparable to similarly
titled measures of other companies. Furthermore, adjusted EBITDA is
not intended to be a measure of free cash flow for our management's
discretionary use, as it does not reflect certain cash requirements
such as tax and debt service payments. The amounts shown for
adjusted EBITDA may also differ from the amounts calculated under
similarly titled definitions in our debt instruments, which are
further adjusted to reflect certain other cash and non-cash charges
that are used to determine compliance with financial covenants.
We use adjusted EBITDA to evaluate the operating performance of
our business, for comparison with forecasts and strategic plans,
and for benchmarking performance externally against competitors. We
believe that this non-GAAP measure, when read in conjunction with
the Company's GAAP financials, provides useful information to
investors by offering:
- the ability to make more meaningful period-to-period
comparisons of the Company's on-going operating results;
- the ability to better identify trends in the Company's
underlying business and perform related trend analyses; and
- a better understanding of how management plans and measures the
Company's underlying business.
We believe that adjusted EBITDA has limitations in that it does
not reflect all of the amounts associated with the Company's
results of operations as determined in accordance with GAAP and
that adjusted EBITDA should only be used to evaluate the Company's
results of operations in conjunction with net income. For more
information on adjusted EBITDA, refer to the section of this press
release below titled "Adjusted Financial Metric Reconciliation to
GAAP."
Forward-Looking Statements
Some of the statements
contained in this press release may constitute forward-looking
statements within the meaning of the federal securities laws.
Forward-looking statements relate to expectations, projections,
plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. In
some cases, you can identify forward-looking statements by the use
of forward-looking terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes,"
"estimates," "predicts," or "potential" or the negative of these
words and phrases or similar words or phrases that are predictions
of or indicate future events or trends and which do not relate
solely to historical matters. You can also identify forward-looking
statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this press release
reflect our current views about future events and are subject to
numerous known and unknown risks, uncertainties, assumptions and
changes in circumstances that may cause actual results to differ
significantly from those expressed or contemplated in any
forward-looking statement.
While forward-looking statements reflect our good faith
projections, assumptions and expectations, they are not guarantees
of future results. Furthermore, we disclaim any obligation to
publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions or factors, new information, data
or methods, future events or other changes, except as required by
applicable law. Factors that could cause our results to differ
materially include, but are not limited to: (1) general
economic conditions and multifamily and commercial real estate
market conditions, (2) regulatory and or legislative changes
to Freddie Mac, Fannie Mae or HUD, (3) our ability to retain
and attract loan originators and other professionals, and
(4) changes in federal government fiscal and monetary
policies, including any constraints or cuts in federal funds
allocated to HUD for loan originations.
For a further discussion of these and other factors that could
cause future results to differ materially from those expressed or
contemplated in any forward-looking statements, see the section
titled ''Risk Factors" in our most recent Annual Report on Form
10-K, as it may be updated or supplemented by our Quarterly Reports
on Form 10-Q and our other filings with the SEC. Such filings
are available publicly on our Investor Relations web page
at www.walkerdunlop.com.
ADJUSTED FINANCIAL
METRIC RECONCILIATION TO GAAP
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
Reconciliation of
Walker & Dunlop Net Income to Adjusted EBITDA
|
|
|
2012
|
|
|
|
|
Walker &
Dunlop Net Income
|
$
|
33,772
|
|
Income tax
expense
|
|
21,998
|
|
Interest
expense
|
|
1,649
|
|
Amortization and
depreciation
|
|
53,925
|
|
Provision for credit
losses
|
|
3,140
|
|
Net
write-offs
|
|
(6,450)
|
|
Stock compensation
expense
|
|
5,176
|
|
Gains attributable to
mortgage servicing rights (1)
|
|
(92,594)
|
|
Severance costs
(2)
|
|
2,223
|
|
Deal-related expenses
(3)
|
|
6,538
|
|
Adjusted
EBITDA
|
$
|
29,377
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the fair
value of the expected net cash flows from servicing recognized at
commitment, net of any expected guaranty obligation.
|
(2)
|
Severance costs
incurred in connection with the acquisition of CWCapital LLC in
2012.
|
(3)
|
Includes legal,
advisory fees, other professional fees, and a transition services
agreement incurred in connection with the acquisition of CWCapital
LLC.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/walker--dunlops-servicing-portfolio-surpasses-70-billion-300536040.html
SOURCE Walker & Dunlop, Inc.