Walker & Dunlop, Inc. Aktie

Coming in. It's an honor to have you here. we're going to start recording the Walker Webcast, and we're going to play this is a Walker Webcast next week. And so I guess I ought to do an official welcoming to Phil Washington, who runs the Denver Airport Authority after having run the Los Angeles metro system for many years. And prior to that running Denver RTD. And so Phil was in Denver that went to L.A., was extremely successful down in L.A. and then came back to Denver, and we are the great beneficiaries of Phil running a couple of things that are just really noteworthy.

First of all, it is the largest employer in the state of Colorado. It is 10% of Colorado's GDP is at DEN, 10%. By far, the largest contributor to the state of Colorado's annual GDP is the Denver Airport. It is the third largest airport in the United States of America. It is quickly growing to become #1, with 84 million passengers in 2025. Correct on that?

82.4 million.

82.4 million. I want you to correct me on my stats here, Phil. So 83 million passengers last year, very focused on 100 million and going well beyond 100 million. 100 million by 2030?

If not sooner.

If not sooner. Takes getting to 105 million annual passengers to surpass Atlanta is the busiest airport in the world?

Correct.

Right. So that's a growth trajectory that most airports, most companies would love to have in front of it.

What's the biggest challenge right now as it relates to expanding DIA from 84 million annual passengers to 100 million and then on to 125 million?

Well, first of all, thank you for having me.

It's great to have you.

Willy, it's wonderful to be here with all of you. I think our biggest challenge is making sure the facilities match the growth. We're talking about an airport at Den that was built and designed and built for 50 million annual passengers. And so having to make sure that we can accommodate this tremendous growth is probably the #1 thing and also doing it safely. Safety obviously is our #1 priority. But this growth that we're seeing, not just at Dan, I mean, Dan is the fastest-growing airport, I think, in the country, but also making sure that we are multimodal and making sure that it's not just by passengers.

Obviously, that's our #1 priority, but we want to branch out into other sectors. And hopefully, we can talk a little bit about that. But the biggest thing is the modernization and keeping up with that growth, I would say.

So a couple of things that you've done recently. First of all, to give people a sense you have a competitive advantage because of the land you have.

Yes.

So the airport itself is as large as the city of Miami to -- or the City of San Francisco or 2 reference points as it related to how much land you have. You have 6 runways 1 of which is 16,000 feet long.

The longest in North America.

The longest in North America, which allows any size jet to land and land comfortably.

Correct.

They're also wider than most landing stretch. Correct?

Yes, yes,.

So all that comes into being an advantage in what way?

Well, as you said, I mean, we can land any aircraft in the world right here. the land, 53 square miles gives us an incredible advantage in terms of development, in terms of things that we can do and what we can accommodate with regard to development as well. It also allows us to expand our cargo operation, which is, I think, one of the huge, huge potential avenues to bring more cargo into Dan. So this land thing is incredible. It really is. And there are some challenges with that as well, having all that land. I mean you would be shocked to know that we've got a lot of wild life out there. We've got...

You've got people who jump the fence.

Yes, we do. We do.

Are you -- can you talk about that at all? Or is that something because of what happened? You just tested -- I mean, I don't want to ask you a question, you can't. I mean if you say I can't talk about it, that's fine.

No, I can talk about it. I mean, I can talk about what we've said in public.

Anyone who doesn't know an individual jump defense in DIA 2 weeks ago, ran out under the runway and got hit by a Frontier flight that was taking off for Los Angeles was killed that has been deemed to be a suicide.

Correct.

So it's them that he did it on his own fruition and was there purposefully, if you will. Anything?

Well, I mean, it bears mentioning that we have about 36 miles of fence of perimeter fence. So when we talk about the land that we have, there's a lot of it unfortunate incident, we are assessing our security right now. We always do that anyway. NTSB, National Transportation Safety Board, is -- has an active investigation on it. But it was unfortunate. I'm very, very concerned. i was very concerned about the passengers on that flight and concerned about our operations and maintenance people who had to clean all of that up. And we had that runway back open the next morning at 10 a.m., after working all night to make sure that we clean that runway up. So safety, obviously, is #1. We're still working on this.

We're talking to Frontier Airlines, which is our hometown airline here in Denver. We have a very, very close relationship with all the airlines, but especially the hometown airline here, but a very unfortunate incident.

Does that engine -- can it be repaired? Does that have to be replaced?

I am actually talking with the CEO of Frontier next week. I hesitate to say it can be repair. I mean it's a tough thing. But these engines are very resilient, you know what I mean, and there's a lot of repair that goes on with the engines and the aircraft. So our hope is that it can be salvaged.

So 6 runways very wide, very long, gets you to a flight cancellation rate that is way lower than any other major airport. You're at 0.85% of flights canceled on an annual basis last year. To give people a reference point to that, Atlanta was at about 1.5% of flights were canceled in the last year. And ORD or Chicago was at 1.85%, so almost 2% of their flights were canceled last year. What does that give you as well as the airlines that fly in and out of Den as it relates to consistency, cheaper to operate? There seem to be a lot of derivative effects from having that low flight cancellation rate. And it's not like the weather here is any better than it is in Atlanta or in Chicago. So is that all based off of the length and the width of the landing strips?

I think it's some of that, and it's our people, too. who keep runways open, who maintain runways. We close the runway in the summer every year just to do runway maintenance. And so when we talk about just maintenance in general, that is a huge part of it. And you mentioned the winter. We know snow here at this airport. And it's amazing that our snow crews can actually plow a runway in about 15 to 20 minutes with the equipment that we have. And so all of that plays into it. So you've got runway maintenance, you've got our ability to increase non-aeronautical revenue that keeps cost low for airlines. There's something called cost per enplanement. We are very low or sort of middle of the row with the large airports around the country. That means a lot because we keep airline costs low in terms of how we handle our business and handle maintenance and financial management as well.

Last year, we -- from all 3 credit rating agencies, we got the highest rating in the history of Denver International Airport. And so all of those things kind of play into how we are attractive to airlines to come in and out of Denver International Airport. So all of that plays into it.

That's got to help you with your borrowing cost and your $7 billion of debt.

That's right.

We talked a little bit about the ability to grow the airport. You also talked about passengers. TSA wait times at DIA are shorter than they are at any of the other major airports buying quite some bit. Your average wait time right now is 6 to 10 minutes on your TSA lines that stacks up to 15 to 20 minutes at all the other majors and some even 20 to 25 on the TSA. How do you pull that off?

Well, a couple of things and great on the stats.

I have -- that's why I have a pause -- about aviation. I also love it. And I also happen to live at DIA. I mean I'm in and out of that airport all the time. So all this stuff is a big interest of mine.

I'd point to a couple of things. One, we invested heavily in the new security equipment. And we wanted to get it in very -- as quickly as we possibly could. And so the biometrics that we have there, the various -- the 4 stations, if you will, that we had at 3 or 4 stations that we have in one lane has taken us from about 140 passengers per hour per lane to over 200 per hour per lane, and that is a big deal.

So I point to the technology that we have brought in on the security side. And we want to do more of this. We think we can do more in terms of AI with security and different things to move folks through much, much faster. So we were very, very proud of the fact during the shutdown that we did not have these issues in Denver that you saw in Houston and some of the other places. But it's the investment that we have made in security technology that has gotten us there. And we're going to do more of that.

When you look at the East and West security checkpoints, we are going to have 12 additional lanes on Level 5 as well as we build out that entire terminal or great haul, if you will. But I point to the technology that has helped us keep those wait times low.

So people get through the security and then they go down the escalator and they get to the trams.

Yes.

And so the trams went down over your last fiscal year, 130 times that when I first read that fill, I was like, well, that's a lot. And then I read a little bit further. They went down 130x, but for an average time of 4 minutes, which gave you a redundancy rate or the network being up 99.903% of the last fiscal year. Okay. So everyone in the telecom industry used to always say five 9s that you needed your network to be 99.9999% reliable for it to actually be a network that you would be able to go and actually sell. You're at one 9, but that's still damn good.

It is, but I want 100%. And look, I -- we need redundancy at Denver International Airport for the trains. Now my operations folks tell me that all the time, "Hey, Phil, we got 99.86% uptime for the train." When that train is down, it's chaos at the airport. I mean it's...

We've got 160,000 people a day using, right?

That's right. That's right.

160,000 people a day using it.

It's incredible. -- the airport, when the train goes down, the airport is really quiet. You have been in a quiet airport, it's scary actually. So we need that redundancy. And I was talking to one of the -- Mayor Federico opinion, Secretary opinion not long ago. And I was joking with him and with others that we must atone for what I consider the original Sin of Den, SIN, the original sin was not having redundancy for that train. And we want to atone for that by having redundancy.

Redundancy in another train or redundancy in walkways?

We're looking at either or both or actually the train itself, how can we have redundancy from A to B, C. And so we have been working on that. And...

I know you're going to go from C to D because as someone who spends a lot of time in that airport, when I'm at Gate 92. I don't mind walking long distances. It's a long way. how further can you go east, west before you go north, south?

Well, a couple of things. We don't want to do a Concourse D. And the reason we don't want to do a Concourse D is that is more strain on the train. And so for us to get to 100 million, there is an expansion that we're doing on Concourse C West, Sea West. That is the last expansion that we can do on the existing Concourse infrastructure, right? We've already expanded all of the other Concourses.

In the last 5 years, we have built and opened 39 new gates. That's like another airport. That's like Kansas City. Anybody from Kansas City, yes, that's likew Kansas.

We don't like people from Kansas City. They got to go football team.

Well, they got good barbecue ribs, too. But -- so the last expansion we can do is Concourse West, which we have already started, that is 11 additional gates. That gets us to 100 million. Beyond that, we've got -- well, we actually have forecast for 120 million by 2045. What we want to do is expand the terminal itself. So think about the terminal. The south end of the terminal is where the hotel is. We want to expand to the north end. There's space there to expand that with a new, what I call a, processing facility and then have walkable concourses off that area. So you can walk to the concourses that we will build off that new facility that will have airline counters and security and all of that. So it's a walkable concourses with 25 gates each.

We have already started sort of the preconstruction utility relocation work on the facility that we have to build first to lead to 4 additional concourses, 2 on the north and 2 on the south end by the hotel.

Will you charge more for those gates? Is there any difference in cost between Gate C82 and A10?

We have use in lease agreements for the airlines. And so there's not much difference. I mean closer to the center core, they may be a little bit more expensive.

But that's typically for bigger jets, too.

Correct. And we have international gates as well on A that might cost a little bit more as well.

So someone brings in and Well, A380 is different because it's a double deckers. So let's just stick with 1 level airplanes. But someone brings in a Dreamliner versus the 737. The 737 is out on one of the far gates, the 7 -- the Dreamliner is on one of the closed gates just because of the number of passengers. But does that airline paying more for having a bigger jet come and use that gate?

There's a difference yes. There is, yes. Absolutely.

Okay. I was talking about the cost of operating and why airlines like flying out of DEM, jet fuel is another one, okay? So right now, the WTI crude is trading at $100 a barrel today, a barrel of Jet 1a is trading for $165 a barrel. So to give everyone a sense of how much more refined jet fuel is than just normal crude that shows you the price differential of a 65% premium on jet fuel. So all the airlines today are trying to come to the cheapest. I pulled up you, Atlanta and Dallas. And it didn't surprise me that Dallas was the cheapest, you're in the middle and Atlanta is significantly more expensive on a gallon of Jet A. How do you keep your cost so low and how do you get the fuel?

Well, we have pipelines. We have fueled this truck in as well.

But it's predominantly from the pipeline that goes straight to the refinery, correct?

Yes. That's right. That's right. Well, on the cost, I think the first thing is increasing non-aeronautical revenue as best we can. That's parking, that's a number of other concession revenue, things like that, where we can keep airline costs down. And I mentioned that cost per enplanement piece that CPE, please, where we are sort of in the middle of the pack, and that's actually a good thing.

What airports are really, really struggling with right now is how to increase non-aeronautical revenue. And I was at a conference not long ago and we have this form of the 100 top airports -- the CEOs from 100 top airports. And you go around room and they mentioned their challenges or whatever. And you come up with this word salad thing. Yes, what this thing. And every one of the predominant thing was growth, modernization, keeping costs down and increasing non-aeronautical revenue. And so what we have done in a big way is the parking is our biggest revenue generator.

So you got 51,000 parking spaces at DIA today.

Correct. Correct. About 51,000 or so. And we also have...

You're going to grow that? Is it going to 70,000?

At some point, we likely will grow that, but we're also looking at what public transits can do as well, namely the A-line, which happy to say I had a part in when I was running RTD. But we may have to -- as these numbers grow, we may have to look at parking, we may have to look at additional parking, but we'll look at that. We haven't decided on that just yet. We want to increase transit usage.

Will there be new parking space in the new rental car facility?

We're looking at that. We are building a new consolidated rental car facility. We are well on our way with that. We have a professional team that's helping us with that. We're going to start design and construction. We're looking at perhaps employee parking likely on the top level of that. We're looking at about 16,000 to 18,000 spaces in that consolidated rental car facility.

Quick story, though, when you look at all of that rental car space when you're driving a long [indiscernible], I was talking to one of the pioneers of building the airport and he said, "Phil, that space was temporary." And I thought, well, temporary for 31 years, which -- so one of our big priorities is to build out that space or build out that consolidated rental car facility and really EV chargers and all of that on our way to a zero emission airport.

It will be a great spot for a data center, except for the fact that City Council just passed a law that says you can't put a data center in Denver.

I know. I know. yes. It also -- and I should mention this ties to our efforts around energy resiliency and being energy independent.

So you had a blackout. You had an energy loss in March, which was at Excel substation. So when that happened, what happens? Do you have just massive generators that kick in? I know you've got solar out there, but can you run without connection to Excel?

We do have some redundancy, but we depend on Excel. We've got generators and all of that. But is not optimal. When that outage happen, and we have quite a few of them, as you mentioned, all the escalators and the elevators and all of that stopped at an airport. That's -- it was, again, very, very eerie. And so what we've done is that we want -- and we've put out a request for information to the private sector on how we can be energy independent eventually. And I stand by that.

I mean we cannot be down. We cannot afford to be no airport can afford to be down. I mean we saw the outage in Madrid last year, another in Heathrow last year as well. In Atlanta, in 2017, they were down like 10 hours. I mean can you imagine that? And so we've had these outages. And so we went out to the private sector and said, "We want alternative energy options for this airport." It's like a problem statement in college. You put out this. We put out our problem statement, our challenge statement and said, how can we eventually be energy independent. And let's put a pathway or a road map together to energy independence.

And so we put out that RFI, a request for information. We got 31 proposals from all over the world on how we can do this. We would be the first airport in the world to be energy independent. And so we're on our way to doing that, which will bring in a whole new industry to the Rocky Mountain region. That is that multi-modalism and multi-industry focus that we have a whole energy industry we could do here at Denver.

So as you think about other revenue sources, first of all, revenues in DIA now are $1.2 billion, $1.3 billion?

Yes, neighborhood, yes.

And by law, you don't return any , if you will, they're not profits that come out of DIA that go to the city of Denver. It all stays at DIA and then you continue to reinvest. So we, as a community, benefit from about $40 billion of economic activity that happens around DEN, but it's not as if the city of Denver is there and says, well, we got a windfall on us a check for $300 million last year, and so we don't have to go and do X, right?

Right, right, right.

And that doesn't change. That's by federal law federal -- that's federal off. So you take this cash flow and just pour it back into it with the thought of being the best airport in the world, potentially the largest airport in the world, but then also bringing other economic development to the city of Denver and the State of Colorado.

Yes, that's correct. And let me just put a finer point on it. We use no sales tax dollars, right? We are an enterprise. So we actually live on what we make, to your point, right, through those revenue-generating mechanisms that I mentioned. And so what we generate must stay at the airport. If it leaves the airport for any reason, that is called diversion of revenue. And that diversion of revenue is a violation of federal law, as you mentioned.

So the revenue we generate, we plow back into the airport, and we need to do that. We absolutely need to do that primarily because of the growth that we're seeing. And it's not just us. We are probably the fastest growing. But when you think about like the 20 largest airports in this country and in the world, all of them have what's called a capital improvement program. And so this capital improvement program, or CIP, when you hit that term, that CIP is in the billions of dollars.

Yours is $12 billion?

Ours is about $12 billion over a 10-year period. I spent a lot of time in Los Angeles, LAX. Theirs is something like 20-some billion.

But they don't have any space to grow.

No, they don't. They don't.

So they're going to continue to go into the existing infrastructure and just upgrade the infrastructure, but they've got no ability to say, let's move from X number of passengers to Y because they can't put another runway down.

That's exactly right. And so we have this incredible benefit, this incredible resource of land here where we can spread and we can develop and maybe we'll talk about that development piece in a minute as well.

What's a new -- what's runway 7 cost? If you just said tomorrow, I want to go build runway 7. What's the runway cost?

Between $700 million and $1 billion.

That's pretty cool. That's a lot of money.

Right, right.

And that's just trading and paving.

Yes. Yes. But I mean, this thing is very deep. It's not like paving your driveway.

No, I got it. And on that, what about putting radiant heat underneath that -- could you do that?

We could. I mean there's technology...

Are there airports that have radiant heat underneath the...

I can't think of one right now. I think there are some, but 6 runways. We are doing the pre environmental work on a seventh runway right now. There's a lot of discussion about that.

What's the environmental work cost you? I'm asking this because you know my next question is going to be about the penny Bolivar. But what's the environmental cost to go? And by the way, we're talking about farmland between here and Kansas City.

Yes. Yes. That's right. That's right.

I'm a Denver resident. I like to have clean water. I like to make sure we don't have chemicals running off and into the rivers, all that kind of stuff. But you're going to spend millions on an environmental impact study to try and build Runway 7 when it farmland.

Yes, yes. Well, I mean, I've been in this role for almost 5 years. And the environmental contracts for the seventh runway was let before I got here. So that pre-environmental was awarded about 5.5 years ago, 6 years ago.

To do a pre environmental study?

Environmental overall. So we're still in the pre environmental stage. But but that contract was let for all of the environmental for a seventh runway. And so that's being done. Now the issue is -- and what we've run into from various stakeholders is, namely the airlines is, are you fully optimizing the 6 runways you have? So therefore, do you need a seventh runway?

Now what I've said and what we've said is that once we go over 100 million, in order to sustain, we need a seventh runway because of the rate of departures and takeoffs and all of that. And so we know at some point, with forecast for 2045 of 120 million, we're going to need a seventh runway.

Talk that through for a second as it relates to -- everyone in this room has flown in and out of DIA. My understanding is that the slope that your jets come in is the exact same slope at every single 3%, which is the same at every major airport. So you can only have 2 coming in simultaneously and 2 taking off simultaneously. Is that correct? Or if you added a seventh, you could actually add a third inbound or a third take off?

I believe we could, yes. Yes. We could do that.

Is there any other for that's done that where they've got 3 jets taking off simultaneously...

I don't know of any. I don't know of any right now. But keep in mind that we're geographically, we have wind conditions and all that. So we change runways like all the time based on wind conditions and all of that. So...

But you don't have to worry about any buildings and you don't have to worry about any noise ordinance. And as a result of that, you have a massive advantage.

Well, we -- I would say we don't have to worry about noise. I mean...

Really?

We have a 1988 intergovernmental agreement with Adams County that talks a lot about noise and measure and noise and all of that. So we're always concerned about noise. It's inevitable at an airport, though. But I wouldn't say we don't worry about that. We do. We're very concerned about that in many ways.

That's surprising. So you've got, I think, 350 miles of roads out there. If you add it all together, that's from D.C. to Boston of continuous roads that you've got to maintain.

Yes.

You've also got more snowfall than another major airport. You and I have talked about this before. What do you do with all that snow?

Well, hopefully, it melts.

But you've got a melter.

Yes. We've got a melter. We've done very, very well with snow management, if you will, a melter...

Big environmental issues to it, right? So it all gets melted and then what happens to the water? Does it get recycled? Does it get...

Yes, we look to retain and capture all of the water. We look to retain and reuse the deicing fluid and all those things, that sustainability piece that we have. But we look to capture and recycle as much water as we possibly can. And I think we do a pretty good job of it.

And is there anything that doesn't meet the eye that goes on at DIA? So for instance, you've got like 1 of the things that I looked up First of all, you got a jail there. Hopefully, nobody in this room knows what the jail at DIA looks like.

Yes, we've got a morgue there, too. So...

You've got a morgue there too. How many passengers die on an airplane and end up at DIA to be taken care of, back of the envelope?

A year, I don't know, probably 10% or below I mean we -- I mean it's not as rare as you think. We have a lot of emergencies on aircraft. We have a lot of emergencies and not deaths, fortunately. But we take care -- I mean, in the concourses in the terminal, we have a lot of medical emergencies.

You have the largest service dog training facility in the state of Colorado. Why is that?

Yes. Well, the CATS program, the C9 program is really a fantastic program. Keeps people calm this whole idea of neuro diverse and all of that, and people get nervous when they fly. And so the K9 program, the CATs program really -- I mean, you would be amazed. When we bring all those dogs, those K9 in, it really calms a lot of people now, especially kids and seniors as well. And so that is one of our great programs.

People that own these lines that bring them in, I'm forever grateful to them, bring in their dogs and they got to pass a test. I don't think -- we don't have any rock wides or anything in that K9 program.

And as it relates -- I mean, all of us look at Instagram, and we see all these very sad kind of road rage that happens inside of the cabin of airplanes. Just last night happened to see one of the Southwest Airlines fight between 2 women. It just kind of came up and I don't need to see that. But that happens. How often do your either EMTs or law enforcement get called out to a plane to take care of sort of what I would call road rage would be what I call even though it's plan rage?

Yes, plane rage, air rage. It happens -- I won't say frequently, but...

I thought you happens more than I thought.

No. It happens occasionally, I will say. Where we have a disturbance on an aircraft. We have a fair number of planes that are sent to den for various reasons or -- and it might be a disturbance in the air. It might be a medical emergency and they are diverted to Dan. I think a lot of that happens when they are sent to us is because they know that our teams are very, very proficient, both our medical teams, both our fire department there. We pay for those services from downtown as well, police and fire and all of that. We pay the city for that, by the way.

But I think many of these are sort of referred to Dan because they know we have the personnel to handle pretty much any situation.

When you have police, you have paramedics, you have gate agents, you have pilots, you have passengers, you have caterers, you have fuel -- 40,000 people working in this ecosystem. They're not all your employees.

Correct.

How do you manage the access/safety component when they all have access to your facility and are all participating there. But if some, let's just say, Southwest Airlines gate agent decides that he or she doesn't want to act the way that they're supposed to act in going to the gate and being engaged with a flyer who may be or not be flying with Southwest, how do you deal with that?

Well, I think the first thing is creating a culture within the entire ecosystem, even though we don't handle everyone. We're not responsible for everyone. I think that we can really lay out a vision of safety and excellence and all of those things and create that culture ecosystem wide. And so we've done that. We meet with the airlines once or twice a month as a sort of a consortium of all the airlines. And so we talk about this culture thing. We talk about safety. We talk about all these things.

And the airlines, they handle their business as well. Airline employees, the example that you gave, all of the vendors, the concessions and all of these folks out there, I think -- I want to think that they understand what the culture is and what the vision is of the airport itself. And I think they adhere to it. That's not to say we don't have issues, we do. But I think for the most part, everyone understands that we need to run a good ship, and we have done that.

Is there a person -- so United has 90 gates at DIA, Southwest has like 40%. Is there a person at United who sort of is the station manager, everything that goes on at DIA. So you call him or her and say, "Hey, we got an issue where they call you and say, "Hey, we were on Gate A20 and something is that happening?

Absolutely. We talk to those station managers on a daily basis. You mentioned United. They have a wonderful lady who is the station manager, great professional, and we talk to her frequently. Again, probably almost every day. The same thing with all of the other airlines. And then we meet as a group, at least once a month. And I'm in that meeting. Several other folks from our team are in that meeting. So we work through these issues.

If we have an incident, we talk about the lesson learned. We talk about the after-action review that we do. So it works. I mean it's a big ecosystem and people find it hard to imagine how we control all that. But we've got good people there at the airport that help us do that.

I was looking at what your biggest city payers are. I was surprised that Phoenix is your largest city payer. And then it goes to Phoenix, Vegas, I believe, then Dallas and then L.A. But I was surprised about those. I would have -- I think about this being a regional hub and people coming in here and then going off to places like Boise that don't have a whole lot of direct access or -- but all 4 of those airports are major international airports. They've got lots of international flights coming into them. That surprised me that those were your biggest city payers. And I guess the question would be, how much are you working on getting flights from Asia to fly over San Francisco, fly over L.A. and come to Denver to then allow passengers to spread out into the United States. -- because your #1 international destination is Cancun, which is just Denver rights going to Cancun or someone from Boise who comes through here to go to Cancun. That's not necessarily someone in Tokyo, saying I'm going to New York. And I'm not going to go direct to New York, I am going to Denver and transfer across. What's the opportunity there?

Well, I think what we bill ourselves, what we've been saying over the last 5 years is that we are the gateway to the West. So it's -- in my mind, it's not just about Denver. The gateway to the West is come into Denver, catch that connecting flight to Phoenix or whatever. And so we have been sort of promoting ourselves that way internationally. We have been very, very aggressive over the last 5 to 6 years on international. We believe that with the rise of the middle class in Asia, in Africa, that travel will just -- we're already seeing the growth.

And so we have taken delegations to the continent of Africa. We are really targeting the continent of Africa. We actually went to Otis Ethiopia, Otis Ethiopia and took a delegation there and met with the government because Ethiopian Airlines owned and managed by the government of Ethiopia. And met with the Prime Minister there about a flight from Otis to Denver. There are some challenges with that. Otis is actually a higher elevation than Denver. And so we would have to take off from here with a less than full tank because of the weight that is involved with that. But I see tremendous growth on the continent of Africa, Asia as well.

Quick story, I was in Istanbul about a year ago. And we're in a setting like this, we had a delegation that went there because we got a direct flight, Turkish Airline. And the gentleman from the Chamber of Commerce came in and said, "We don't aspire necessarily to a big house like Americans do and the picket fence and all of that. We aspire to travel." So we're not so much concerned with maybe how Americans think about a house and all of that. Because what he said was we can't afford it, but we want to travel and our children want to travel. And I thought, you know what, that's pretty incredible to me. And we need to put Denver on the map, if you will, and not just have it as the flyover city. And so that is why this whole idea of economic development and us being a generator of $47 billion a year, whatever it is. It really boils down to what's happening here in Denver that people want to come to, and the West.

And so all of these things that city government is doing, the mayor is doing and all of that really ties into the potential that we have for folks to come here from all over.

You're talking about flights from Africa or from the Middle East or from -- you won't make it from the Middle East, that's too far right now. But from Asia and from Europe. What about space? Could DIA ever be a landing pad for people who go up to space and come back to space, given you got long runways, you've got runways that have very, very sturdy runways below them and you're pouring concrete down? How deep is that concrete? Is it 6 feet?

Yes, it's at least 6 weeks.

Really. Have you guys thought about space?

We have. We actually have -- listen, we've got a space for it within 5 miles of the airport, right? And we meet with the folks from Spaceport all the time. I absolutely believe that we are in the best position of any airport in this country to have space travel from. Now we've got to build the infrastructure and all that. But I think that we're so well suited. We talked about the land that we have and we talked about the space that we have to build. We talk about -- we haven't talked too much about the opportunities for development that we're doing right now. But I absolutely believe when I think about 20, 30, 40 years from now, Dan is the launching pad. It's the launching pad.

So if you think about that in the context of SpaceX and Tesla, and how Elon Musk is the S3 on -- or S1 on SpaceX came out yesterday that gives lots of insight into what the FaceXIPO is going to look like. And in it, they -- one of the things that I thought was so interesting was the fact that Elon has these 2 ecosystems between Tesla and everything that's in Tesla and SpaceX and everything that is SpaceX. And it's all co-mingled. You've got base buying the Tesla SUVs, right? You've got his -- all of these different companies are interacting with each other. So you're sitting here saying we're positioned as potentially the best airport to try and attract space activity, and yet the Denver City Council yesterday banned the development of data centers. You think Elon Musk comes to Denver?

What I will say from an infrastructure standpoint, what I feel our team's job is, is to prepare the way. I am not, of course, an elected official.

No, but I'm trying to push you on this front.

Yes. I'm an infrastructure guy. I was an infrastructure guy since I was a kid. You know what I mean. I was just like when my mother worked 14 hours a day and wondered when the next bus would come as we lived in public housing. My mom is a single mother. I was enamored with infrastructure for the good of humanity. I'm talking about -- I'm talking sidewalks, water, transit and all of that. We want to do what we can in our Fox hold, if you will, to show that we can prepare the way in terms of infrastructure for anything that we can dream of. And when I think about space, I think about what do we need to do at Denver International Airport to prepare that facility with the hope, with the hope that the politics will follow, right?

To much to ask for the politics to lead.

I think so.

Fair answer.

I think so. And I'm not just here. I'm talking about just nationally. I think that if I think about how I can prepare the way, and I think about all these things. I think about -- that we've talked about, I think about energy independence pave the way for that. Whether that is geothermal, whether that is small modular reactors that I get beat up on, but I stand by it, though. Absolutely.

How much would a small scale reactor to be able to give you enough energy cost?

Well, I mean, I think right now, I think about the need to run -- have energy and electricity, 24/7 days a week or whatever. And it's not just SMRs. It's a combination of all these things.

Could you do it on just SMRs?

I think eventually, we will be able to.

And any idea what that would cost?

I don't know. I don't know. Right now, it costs too much to do that right now, but I'm looking down the road.

Even with you having a $12 billion capital campaign right now. So it's bigger than that.

Yes, I think so. I think so. I think so. But I mean, these things are expensive now. SMRs, there's no real...

Could you pull it off on solar or the storage doesn't allow you to do?

I think solar -- I don't think we have enough solar to do that. Even though we have more solar arrays, and we have the -- probably the largest solar farm of any airport in this country. We can't do it just on solar. And so I think we're going to need a little bit more. And so I'm not just stuck on SMRs. I think we can do this across the board. I think we can do a combination of various alternative energy options to get us where we want to go, which is energy independence.

Final couple of questions. I talked earlier about the environmental impact study on Runway 7. You've got an environmental impact study going on, on the widening of Penny Boulevard. Of all the bottlenecks, you've gone and you've changed the TSA lines and brought it down to the best in the country. You've got your canceled flights down at the best in the country. You've got more growth than any other airport in the country. And yet Penyu Boulevard is still 2 lanes out and 2 lanes back. And to anyone who goes out there all the time sits there and says, "Why am I waiting longer to get in my car out there than I am to get through security into my gate.

Exactly.

Are we going to get some relief here?

Absolutely. And listen, we are talking about improving Penyu.

Well, that's just tightening it, isn't it?

Well, we cannot predetermine the outcome during the environmental period. Actually, that's against the law. So I have my ideas, but this is why we are going through that environmental process.

This is a $12 million environmental impact study.

I forget how much it is, but it is...

I believe it is $12 million.

Yes, yes.

But to figure out whether a swallow is going to have its migratory pattern change by us adding 2 more lanes to Pennar Boulevard?

Yes. It's we are looking to accelerate that environmental process as best we can, but we've got to go through it.

You want to make a -- do you want to make a bet with me that you've got a fix to your duality on the trams before Pena gets widened?

No, I'm not going to bet. I'm not going to bet. But I will tell you this, we are scheduled to get to what's called a preferred alternative by the end of this year. Now the preferred alternative says, this is what we want and plan to do. Now you got to go through this community thing and all of that, right, which we're nearing the end of. And at the end of this year, we're going to come out with that preferred alternative. Widening is one of the alternatives that we are out there shopping.

Sorry, what would be something else?

I can't remember all of the alternatives.

Beyond just widening it. Is it we're just widening it?

Well, there's a couple. There's there's the widening -- I'll come back to you with the other ones. But there's a transit element that we're doing to -- we've got 20 recommendations for what's called transit demand management, 20 recommendations that we can improve the transit side. But people don't realize that we own Pina, the airport does. And we're responsible for maintaining it. But to your point, the fact that Penya has not changed in 31 years. It's about time that we do something about -- and we are. We're at the end of that environmental period. And here's a bit I'll make with you.

Great. I'm not sure I'll take it, but you put it out there.

I bet that they will be a lot of consternation with whatever preferred alternative we come up with or people might just say, "Hey, that's great, Phil." But listen, this is something that we need to do. I mean we've had to explain to people that we cannot go from 50 million annual passengers, airport design for 50 million to 100 million and not do something about Pena.

100%.

Yes. I mean, just like we're doing with all this other stuff, right, we are doing the consolidated rental car facility. We are looking at a seventh runway. We're building the North Terminal expansion to get us to 120 million. We are expanding Concourse C to the West to get us to 100 million. We're doing all the sustainability things. alternative energy options, all of this. We've got to focus on the road that gets us to the airport. And I'm happy to say over the last 4 or 5 years, we have done that. And we're nearing the end of it towards the end of this year, where we are going to announce that preferred alternative.

So as I was getting myself ready for all this and looking at all the stats, I looked at what impact what you manage has on this state, and I said it at the top, it's got tens of thousands of employees, the largest employer in the state of Colorado. It's got 10% of the state's GDP. There's no other company or government service that has that much of a contribution to our state's GDP. It's innovating, and it's growing faster than almost anything else, and you run it. So I was sitting there saying, is Phil the most important person in the state of Colorado. And I will tell you, you're damn close to it. The governor may have more sway over an overall GDP growth and where he puts his finger on the scale to say that needs to grow or that doesn't or we're going to invest there. But barring the governor, I don't know someone else who I could have had to this conversation, who has a bigger impact on growth and the GDP of the state of Colorado.

And so thank you for all you do. Thanks for answering all of my very detailed questions. I love what you do. I love flying in and out of your airport, and I really appreciate you joining us today.

Thank you so much for having me. Thank everyone that's here or online or whatever and thank you for being just such a supporter of Denver International Airport and aviation in general.

Phil has the one drawback of knowing me as well as I know, Phil, is that he gets these texts from me at random time. I have been for 32 minutes from my value -- hasn't shown up on Carousel SP1 And he's like, it's coming really. I've got the team on. It's all good.

I remember that.

Yes. That actually, I'm not -- I hope everyone in the room who's watching this knows, I don't do that. What I did do once as I was coming back to the international terminal and literally the baggage cares. I was literally exploded in front of me. So I text it Phil said it baggage carousel on in the international terminal and the thing literally just exploded. He's like, thank you very much for audit. So I'm not quite as bad as my bags are taking me a long time the holding had blown up.

Well, what's funny about that. What you didn't know was that I was on an international flight right behind you.

Was it fixed by the time you got there?

No. No. But I had just landed and I was behind you on another flight, and I walked in and saw that. And our folks text it, our folks were working on it when I get to the international car sales, great.

So Phil, thank you so much. It's been great -- great conversation. Thank you all.

Thank you.

Good day, and welcome to the First Quarter 2026 Walker & Dunlop Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kelsey Duffey. Please go ahead.

Thank you, Lisa. Good morning, everyone. Thank you for joining Walker & Dunlop's First Quarter 2026 Earnings Call. I have with me this morning our Chairman and CEO, Willy 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 Willy 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 private -- 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'll now turn the call over to Willy.

Thank you, Kelsey, and good morning, everyone. I want to start the call by thanking Kelsey for her incredible 12 years at Walker & Dunlop. She is going to take early retirement to spend more time with her family and everyone at Walker & Dunlop and Greg and I particularly are extremely appreciative of all you have done for Walker & Dunlop over the last 12 years. So thank you, Kelsey.

We started 2026 with active commercial real estate capital markets across the industry, and Walker & Dunlop closed $13.7 billion of total transaction volume, up 94% from Q1 2025, as shown on Slide 3. That strong transaction activity, coupled with continued growth in our servicing portfolio drove total revenues of $301 million, up 27% year-over-year, and diluted earnings per share of $0.46, up 475% over Q1 of 2025. Adjusted EBITDA grew to $74 million, up 14% year-over-year.

Our Q1 2026 financial performance reflects Walker & Dunlop's teamwork, brand, and continued standing as one of the best commercial real estate capital markets firms in the industry.

Debt originations totaled $11.8 billion, more than doubling year-over-year as activity accelerated across nearly every part of our financing business. Agency lending volume was up 109% to $5.2 billion, led by $3.1 billion with Freddie Mac. Our strong quarter with Freddie included a $1.7 billion refinancing of workforce housing assets for Starwood Capital Group, a deal that demonstrates our team's ability to execute on scaled, complex transactions.

$4.7 billion of originations for the GSEs increased our market share from 11.2% at the end of 2025 to 12.3% at the end of Q1, a nice step-up. Brokered debt volumes totaled $6.5 billion, up 155% year-over-year, reflecting our fantastic team and ability to place capital across commercial real estate asset classes with a multitude of capital providers. The debt capital markets are flushed with capital and allowing owners who don't like pricing in the sales market to refinance.

As Slide 5 shows, on Zelman's quarterly research, buy, sell, build sentiment index, only 6% of multifamily owners are currently sellers with 64% buyers and 30% builders. This phenomenon is tempering investment sales volume, which was solid, but only up 4% on the quarter to $1.9 billion. We expect investment sales volumes to increase over the course of the year due to increased capital flows as well as values. One important indicator of our growth and productivity is transaction volume per banker broker.

As you can see on Slide 6, on a trailing 12-month basis through Q1 '26, our average production per banker broker was $282 million, up from $248 million at the end of 2025. This increase reflects the pickup in industry activity as well as the large portfolio transaction I mentioned previously. As we continue to use technology and focus on increasing our team's productivity, we expect that this metric will continue to improve to hit our goal of $300 million of transaction volume per banker broker by the end of 2026.

Loan repurchases and indemnification agreements with the GSEs have required a tremendous amount of time and effort from our servicing and asset management teams over the past 2 quarters. During the first quarter, our total GSE loan repurchase exposure was lowered from $222 million to $192 million, which is welcome progress. Both Fannie Mae and Freddie Mac will be performing their annual reviews of Walker & Dunlop, and we are hopeful that those reviews in conjunction with the conclusion of any loan-specific investigations will be resolved later this year and allow us to move past these repurchase issues.

We have strengthened our underwriting processes, enhanced our teamwork and protocols, and reinforced our culture of accountability to make us an even better lender going forward.

I will now turn the call over to Greg to talk through our financial performance and financial outlook in more details. Greg?

Thank you, Willy, and good morning. We delivered a strong start to 2026 with a meaningful year-over-year improvement across all key financial metrics, driven by a significant rebound in transaction activity.

Total transaction volume grew 94% to $13.7 billion, reflecting improving market conditions and continued strength across our platform. This translated into diluted earnings per share of $0.46, up 475% from the prior year period, alongside a 14% increase in adjusted EBITDA, and a 20% increase in adjusted core EPS.

Our Capital Markets business is benefiting from improving market-wide activity that is fueling the expansion of our servicing and asset management business, which continues to generate consistent and durable cash flows.

Before I discuss our segment results, I'll briefly update you on our loan repurchase exposure. During the quarter, we repurchased one additional loan for approximately $5 million and also negotiated an indemnification agreement for a $34 million portfolio of loans without the requirement to repurchase the portfolio. As a result, our total repurchase exposure declined to $192 million at quarter end.

We recorded approximately $10 million in expenses related to these assets in the quarter, split almost equally between credit reserves and operating costs. We have begun executing on our disposition plan and expect to have 2 assets under contract in the second quarter with a goal of reducing our repurchase exposure to between $100 million and $125 million by the end of the year. Overall, we are making steady progress reducing this exposure and expect the portfolio to become less of a factor in our results in the coming quarters.

Turning to our segments, on Slide 7. Our Capital Markets segment delivered a strong start to the year and was the primary driver of our financial performance this quarter. Transaction volumes increased 94% and were led by growth in Freddie Mac, HUD, and broker transactions, driving segment revenues up 58% to $162 million.

Earnings growth for the segment was also strong with net income of $28 million, up $26 million from the prior year and adjusted EBITDA of $3.9 million, up from a loss of $13.3 million last year. As expected, personnel expense increased with transaction activity. However, the majority of that increase was driven by variable compensation and directly tied to production growth. Importantly, personnel expense declined to 68% of segment revenue from 84% of revenue last year, demonstrating the operating leverage and economies of scale of the platform as volumes recover. As financing and acquisition activity continue to improve, we expect the Capital Markets segment to be a key driver of growth in 2026.

As shown on Slide 8, our Servicing and Asset Management, or SAM segment, continues to generate stable earnings and cash flow. The servicing portfolio grew to $146 billion and generated $85 million of servicing fees, up 4% year-over-year, contributing to total segment revenues of $138 million, up 5%. Despite the $10 million of incremental provision and repurchase-related expenses this quarter, net income for the segment increased 12% and adjusted EBITDA rose 3% to $112 million.

The performance of this segment will be driven by 2 primary factors. First, as we execute our plan to sell repurchased loans, we expect to reduce the operating drag caused by this portfolio and further improve earnings and cash flow. Second, continued growth in our capital markets business will drive expansion of the servicing portfolio, increasing the long-term profitability of the segment. Taken together, this positions SAM to deliver consistent performance today with a clear path to incremental earnings growth over time.

Turning to credit on Slide 9, which highlights key metrics for our Fannie Mae At-Risk portfolio. There are over 3,200 loans in the $69 billion At-Risk portfolio and just 14 are in default at the end of the first quarter, unchanged from the end of 2025 and representing only 24 basis points of the portfolio.

We will be collecting and analyzing full year 2025 results for every property in the portfolio through the end of this month. Based on the financial data collected to date, which is nearly 80% of the portfolio, the weighted average debt service coverage ratio remains strong at over 2x and only 1% of loans collected to date are below 1x.

Credit fundamentals also remain sound with an average underwritten LTV of 61% for the entire portfolio and just 4% of loans above 75% LTV. We continue to actively monitor the portfolio and remain confident in the strength and stability of the underlying credit performance at this point in the cycle.

Our business continues to generate strong, steady cash flow, and we ended the quarter with $193 million of cash on the balance sheet. During the quarter, we deployed $13 million of capital to repurchase 283,000 shares of stock at a weighted average price of $47.13, leaving us with $62 million of remaining capacity under our 2026 authorization. We see a healthy pipeline of strategic opportunities and we'll balance investing in the growth of the business with returning capital through opportunistic repurchases.

Our dividend remains a key component of our shareholder returns. And yesterday, our Board approved a quarterly dividend of $0.68 per share, consistent with last quarter and payable to shareholders of record as of May 21.

Turning to our annual guidance, on Slide 10. We established our outlook assuming a gradual stabilization in interest rates and a corresponding increase in capital markets activity over the course of the year. While geopolitical dynamics have introduced some uncertainty around inflation and the near-term path of interest rates, we have seen limited disruption to transaction activity and the broader environment for commercial real estate remains constructive.

We are entering the second quarter with a healthy pipeline, consistent with this time last year. Given our strong start to the year and visibility into our near-term pipeline, we remain confident in our ability to achieve our guidance and deliver on our expectations. We're encouraged by the strong start to the year and the momentum we're seeing across both sides of the business. Capital markets activity continues to improve, and our servicing portfolio remains a strong source of stable, growing cash flow. We're entering the second quarter with a healthy pipeline and good visibility into an active transactions market, and we remain confident in our ability to deliver on our full year 2026 guidance.

Thank you for your time this morning. I'll now turn the call back over to Willy.

Thank you, Greg. As Greg just outlined, our business is delivering solid financial results as Walker & Dunlop's people, brand, and technology continue to differentiate us across the industry. I want to discuss today's market through the lens of signal versus noise and, importantly, what that means for Walker & Dunlop as we look ahead.

If you start on Slide 11, the market came into the year with a very constructive set of expectations, lower energy prices, deregulation, tax reform, and a pickup in M&A activity. That backdrop, if realized, would have supported a strong commercial real estate transaction market.

But as Slide 12 depicts, the markets have been volatile due to policy shifts, tariffs, and the Iran conflict. Unlike during many past conflicts, investors did not seek safety in treasury bonds. And as a result, equity markets fell as bond yields increased. Yet even with this volatility in the equity and debt markets, overall transaction volume in commercial real estate is normalizing.

Multifamily sales volume today is only modestly below pre-COVID levels, as you can see on Slide 13.

And as you can see on Slide 14, due to more capital being called than returned over the past decade, the black line on this chart shows the 5-year rolling average at negative $240 billion. Investors are seeking capital return, which is forcing owners to sell. We expect this phenomena will push transaction volume up, which drives both sales and financing activity at Walker & Dunlop.

As shown on Slide 15, commercial real estate lending volumes are projected to increase meaningfully over the next several years as the next investment cycle begins to take hold. We have confidence in this forward look for 2 primary reasons. First, industry volumes over the past 3 years have been significantly under trend, meaning there is a lot of pent-up financing and sales demand.

Second, look at the 2019 and 2020 financing volumes on this chart, $602 billion and $614 billion, respectively. That volume of lending was predominantly 10-year loans set to mature in 2029 and 2030. If you then look at 2024 and 2025, a ton of that lending was done with 5-year terms. For Walker & Dunlop, 54% of our 2025 GSE lending was 5-year term.

As a result, 2029 and 2030 are setting up to be enormous financing years. At the same time, the near-term opportunity for Walker & Dunlop remain very attractive as our clients are choosing shorter-term loans to buy optionality to sell or refinance assets more quickly. This will likely accelerate the financing and sales cycle and increase transaction volumes over the next 1 to 3 years. Multifamily fundamentals are very strong as you look at affordability versus single-family and the forward supply curve.

As Slide 16 shows, if you purchased a single-family home in 2019 when the median home in America cost $275,000, you paid $1,400 shown by the black line in principal and interest versus $1,600 to rent the average apartment in America. If you could afford the down payment, owning was cheaper than renting.

But as you can see from the bar chart, the average home price skyrocketed, driving the black line through the blue line, representing homeownership becoming wildly more expensive than renting. That is a structural advantage to multifamily over single-family today, and it will remain so until either home prices fall, interest rates fall, or multifamily rents rise significantly. Many Americans are also opting for single-family rental as an attractive alternative to owning.

From a monthly payment perspective, it is currently 20% more expensive to live in an owned single-family home than a single-family rental, making SFR an extremely important piece of the solution to the affordable housing crisis in the United States. Our team is very focused on growing SFR financing volumes. And while we are in support of the ROAD to Housing Act, we have been working with other industry leaders to remove the 7-year provision sale that would severely diminish institutional investment in DFR and SFR assets.

On the forward supply curve, as you can see, multifamily starts peaked in 2023, deliveries peaked in 2025, and we are headed towards significantly less supply over the coming years. This dynamic will drive improved fundamentals, increased transaction volumes, and deal flow for Walker & Dunlop.

We have a deep foundation and brand recognition in the multifamily market, a sector with significant tailwinds that I just described. But we've also diversified our capabilities to meet the expanding needs of our client base. The 155% increase in debt brokerage volume in Q1 is due to these investments and the strength of our team. And while W&D is known for multifamily, nearly 45% of our Q1 debt brokerage volume was on non-multifamily assets.

Similarly, while we have tremendous partnerships and scale with the GSEs, in 2025, we worked with over 250 capital providers [ nearly $22 billion ] of non-agency debt financing. We will continue to invest in capital markets bankers, brokers, appraisers, researchers, and technology in both the U.S. and Europe over the coming months and years to become the very best real estate capital markets firm in the world.

This is the mission of our newly announced 5-year strategic growth plan, the journey to '30. From a financial perspective, the plan involves significantly growing total transaction volumes to generate $2 billion of revenues by 2030. As we embark on this journey, we will continue to add the very best talent across geographies and across asset classes, expand our client base, invest in technology, and meet our clients' needs every day while growing our top and bottom line for our shareholders.

We have a strong Q2 pipeline of deal flow and confidence in achieving our 2026 guidance. We are focused on delivering growth in 2026 and making progress towards our ambitious journey to 30 goals, knowing that we have made the investments in people, brand, and technology to do so.

Thank you for your time this morning. I will now ask the operator to open the line for any questions.

[Operator Instructions] We'll take our first question from Jade Rahmani with KBW.

It looks like a very strong quarter. I was wondering if you could give some color on the mix shift between 10-year and 5-year deals, if you're seeing continued mix toward the 5-year and when you expect that potentially to inflect the other way or maybe it already has begun to do so?

Jade, good morning, and thanks for joining us. We and I personally watch that number quite closely. I will say this, we were actually, I think, seeing kind of a trend back towards more 10-year money. And then we had the rates go up by about 50 basis points and the steepening of the yield curve.

And I will say, since that movement, while as Greg and I both said, aggregate volumes have actually held in nicely, many borrowers have moved from longer term to shorter term just because of the pricing differential between 5-year paper and 10-year paper. It's my hope that when and if rates settle down, we get the reversion back to longer-term duration. But for right now, given that 50 basis point increase in the long bond, many people just from an overall proceeds and rate standpoint have opted for shorter maturity.

Secondly, can you just talk about the drivers of the strength in transaction volumes that you're seeing right now? How much of it is refinancing volume versus new acquisitions? And what would you say is driving the strength as WD posted leading industry growth?

So as we mentioned, Jade, investment sales activity Q1 to Q1 was pretty much flat, only up about 4%, whereas you saw debt volumes go up by over 100% in both GSE as well as non-GSE volumes. So it's very heavily on refinancing right now versus acquisitions.

While the -- I will say that at the same time, the investment sales pipeline is very strong. We have a very significant pipeline there as it relates to properties that we've done broker opinions of value on and have a lot of sellers waiting to go to market. But I think that what we have seen, particularly in the last sort of 6 to 8 weeks since the Iran conflict began, is that the sales market has somewhat gone sideways, whereas people still need to transact because they've got a debt maturity coming up.

And so as you can imagine, we're giving them pricing on a sale versus a refinancing. And what we have seen is many people sit there and say, I don't like what the price is I'm seeing in the market today. I'm going to go a short-term refinancing to sort of bridge through to a future sale. And therefore, they're going and putting the financing on.

And as I said in my prepared remarks, what that is going to do is give us, if you will, increased volume in the shorter term, people aren't taking the asset, putting 10-year financing on it. We won't see that for another 9 years. It's going shorter term, which would say that they're trying to buy optionality to either put it back in the market to sell it or they're going to be required to refinance it sometime in the next 4 to 5 years if they've gone with a 5-year instrument.

So we view that as a huge opportunity for us as well as our competitor firms as it relates to sort of increased cycle time in the industry.

[Operator Instructions] We'll take our next question from Chris Muller, Citizens Capital Markets.

Congrats to Kelsey. She's been great to work with over the years. So nice to see the repurchase loan exposure going down a little bit in the quarter. And if I'm reading correctly, it looks like you guys have reached indemnification agreements on all 3 portfolios now. So I guess, first off, is that correct? Am I reading that correctly?

And then I guess on the broader situation, should we assume that no news is good news in regards to Freddie doing their own investigation? I think you guys said on your 4Q call that you expected them to be wrapped up with that in 90 days. So just any updates there would be very helpful.

Chris, great to hear your voice on the call. Good to have you. So yes, you are reading that correctly. The $134 million of loans that we were working through on our last call, we've now reached either a repurchase and indemnification or just an indemnification agreement on. So that's behind us.

And then with respect to the review with Freddie, as Willy said in his remarks, we're working with them closely on that. We're sending them what they need from us in order to complete that review. And as much as we hope it will be done in the near term, maybe in the next couple of quarters, we don't control that timing, but we certainly think it will be wrapped up here in the near future.

And then I guess it's nice to see the pickup in HUD originations in the quarter. And it looks like that was the highest origination volume since 4Q '21 for that business. Is there anything driving that strength from a government policy standpoint? And should we expect that business to continue above 2025 levels?

So Chris, first of all, good catch because we didn't mention that and you just went and did your own homework on that. The HUD pipeline is strong. And I think it is reflective of Secretary Turner and the team at HUD and what they've done to increase processing times and streamline that business and making that business more competitive.

So I think you're spot on it that that's a very attractive sort of financing option today for many of our customers. And we have a very solid HUD pipeline for 2026. So feeling quite good about that. And as you well know, those loans carry with them very long maturities and very healthy mortgage servicing rights.

And so as we see an uptick in volumes there on HUD, while not a large part of our business from a volume standpoint, those MSRs are long-term and therefore quite significant from a financial standpoint.

And we'll move to our next question from Kyle Joseph with Stephens.

Congrats on a strong start to the year. And, yes, Kelsey, we'll miss you. Just wanted to touch base. First on, Greg, you kind of overlaid your plan for improving the profitability of the SAM segment. Can you kind of walk us through a few more details there and more specifically kind of how you're envisioning the time line for that?

Sure. Great to have you back, Kyle. It's an early morning for you. I appreciate you joining. So look, I think, first, what we've talked about now for the last couple of quarters is just our focus on reducing the portfolio of repurchased loans. That has been a $3 million to $5 million quarterly operating drag for us. And we have a couple of deals in the market right now, hoping to get those either sold or right around the end of Q2 or shortly thereafter.

And we're still evaluating the remaining part of the portfolio and think that by the end of the year, we should get the overall portfolio reduced by about half to $100 million to $125 million, which would be really nice progress.

And then, look, most importantly, we've got a capital markets business that is delivering top end market share right now, and that just feeds the servicing portfolio. The portfolio is going to continue to grow. We don't have a lot of near-term maturity risk or maturity pressure over the next 2 years. And as long as our team is delivering on the capital markets side, that's going to feed that portfolio and feed the growth of our servicing revenues and related fees.

So I think that that has a real clear near-term growth path. And that segment overall is just going to continue to generate the cash we need to grow this business.

It appears there are no further questions at this time. I'd like to turn the conference back to Willy Walker for any additional or closing remarks.

I want to thank everyone for joining us today. One final thanks to Kelsey for all she's done at W&D. Enjoy the time with the kids. And thanks, everyone, for joining us. I hope you have a great day.

And this concludes today's call. Thank you for your participation. You may now disconnect.

I love going and speaking at universities across the country. And it's a real honor for me when I go to universities that I could have never gotten into. And in some instances, that's a debatable point. But at MIT, that's a very clear point that I could have never gotten into MIT. So it's a real honor for me to be here today and talking to all of you.

The other thing that I would say, my friend, Sharmil Modi, just walked in and Sharmil went to Harvard College up the road, but was -- he was his Class A speaker at Harvard. And if any of you get a moment, you ought to go take a look at Sharmil's Class A speech because it's a real -- it's a great one.

With all that said, it's really fun to be at MIT today and having gone to business school just up the river. It's always fun to come back to Cambridge and see the Charles River with all the activity going on in the crew shells. And I ran the marathon a number of times when I was here, and that was just last week, and I had 3 of my business school classmates who ran with me way back in the dark ages, who all went and actually ran last Monday, which was really great for the 3 of them.

So let me dive into the presentation. I want to get the signal versus noise. As Denise said, I typically like questions during presentations. But I guess from an AV standpoint, it's better for us to wait until the end when we have the mic that's going to go around. So just if you got something that comes up in the middle of it, just hold the question and we can back up to the slide if you need to. But it's just easier from an AV production standpoint for us to do all the questions at the end when we've got the mic going around the room.

So titled Signal versus Noise, what are we -- it seems like there's a lot of noise in the markets today, not just in the commercial real estate markets, but just sort of broadly. And so the idea was to just kind of dive into a little bit of the data that might be able to pull out Signal versus Noise and what we're seeing in the market. So let me dive in here. So what was expected in Trump 2?

What was expected in Trump 2 is lower energy prices, immigration reform, lower taxes, increased M&A and deregulation. Those are the things that sort of everyone said, this is what the second Trump administration is going to bring to the world that we live in. And on pretty much all of those, the Trump administration has been very effective at actually putting in policies that have sort of delivered on all of that.

You can see here M&A back and being bolder than almost ever, hasn't quite hit the peak of 2021 that you can see in the middle there, but #2 over the past decade as it relates to actual M&A activity. The other thing on that black line is that's the number of transactions. So as you can see, the transaction is actually getting bigger, right? As that goes down and the aggregate amount goes up, it's just bigger companies, more M&A activity, which was something that we'd expected to see. And 2026 from both an M&A standpoint as well as from an IPO standpoint is looking like it's going to be a wildly active year in the capital markets.

One of the big questions that I have is, as companies like SpaceX and some of the AI companies go public, sort of where does that capital come from? If SpaceX goes public for $1.5 trillion valuation or a $2 trillion valuation, that's capital that has to come from somewhere. Are people selling other holdings and migrating into it? Are they getting out of a private credit position to go buy into those IPOs? Where does that capital come from? And what does that mean for the broader markets as you get trillions of dollars of IPOs coming out in 2026.

Tax cuts. The big beautiful bill gave tax cuts across the board to every level, every quintile of taxpayers has more in their pockets. I think one of the big things that people were projecting for right now, if you look -- if you rewind the clock when the big beautiful bill got passed last summer, many people were saying there's going to be a tax refund that goes to a great number of Americans, and they're going to get an average check of $2,200 in May of 2026, and that's going to stimulate a lot of economic activity. And then the Iran conflict happened and sort of everything has kind of gone to the side. But in a normal course of business, you would have been getting these refund checks off of the big beautiful bill that would have put $2,200 on average into people's pockets, which is sort of like the stimulus bill that went through during the pandemic, which would have driven a lot of retail spending. We'll see whether all that plays out given the backdrop of the macro situation today.

Border encounters, you can see here, the Trump administration clearly has been extremely, if you will, effective in implementing the border security that they had campaigned on and said that they were going to get to. I will show later on something that shows the implications of this as it relates to the demand side of the equation on rental housing, not an insignificant issue.

And then crude prices. One of the interesting things on this is you can see back here when Trump came into office, crude prices were at $80 a barrel. They got down over here on the far right in January, down into $56, $57 a barrel. The back of the envelope number on what that means to inflation is that for every $10 change in the price of a barrel of oil, you pick up about 20 basis points in the CPI. So as you went from $80 a barrel down to $60 a barrel, you're picking up $20 or you're picking up almost 40 to 50 basis points in the CPI because oil flows through everything.

And so in that, you could have seen from going up here down to there that the probably new Fed Chair, Kevin Warsh, would come into his new role with a backdrop of inflation sort of being under control. And then all of a sudden around hits and we see where oil prices have gone. And so now you go to the other end of that. So from $60 to $100, do the math, you're adding almost 1 percentage point to the CPI print if oil prices stay up at that level.

And on consumer sentiment, this is the one side to it all. You kind of look at the -- where the stock market has gone, and I got a chart in a second on that. But this is the one that I think probably confounds people in the Council of Economic Advisors as well as the President himself, which is that they look at the stock market doing great. They look at all the innovation that's happening in our country. They look at our country versus other countries and they say, "Man, we are doing a great job." And then they look at this chart and they say, "Oh, but the consumer isn't sort of behind us. The consumer isn't feeling good. The consumer isn't right now feeling any better off than they were when Trump came into office back here. And you can see it's actually fallen kind of off a cliff.

And so clearly, forget about the politics of all that in the midterm elections. This is one of those data points that I'm sure they look at all the other charts of what they set out to do and have delivered on, they look at this and they say, "What are we missing here?"

As I said, where are we on the equity markets? This slide is a pretty interesting one. If you look at inauguration day where you had the 10-year is the black line and the blue line is the S&P 500. And those 2 were inverted in the first year of the administration, they drove the cost of debt down, and they drove the equity markets up. And most people would look at that and say, "Hey, we're doing a great job." Then all of a sudden, obviously, they converge together at the beginning of the Iran conflict. And then you can see the recovery that's happened.

The question I would have right now is, if you will, how real is that recovery? Like do these 2 charts continue to move away from each other and S&P continues to go up and the cost of debt continues to go down? Or do they turn around and get back to the 2 convergence points you see on this in July of last year and then in March of this year?

K-shaped economy. You hear a lot about this. This slide back to January of '23 really shows you what has happened as it relates to consumer spending on the upper portion of the economy and the lower portion of the economy. So since '23 and the great tightening where the cost of debt went up, credit card payments go up, the cost of flying on an airplane goes up, everything else, you can see here that the top 1/3 of the economy earning over $250,000 annually, that's actually smaller than 1/3 are the ones driving the spending. And then the rest, which is earning less than $75,000 annually has sort of fallen off precipitously.

A lot of people have talked about the sort of the fatigue or that the U.S. consumer is going to kind of give up. So far, that hasn't played out. You look at consumer credit card default rates, while they have gone up significantly since the post-pandemic era where they got to historic lows, they're no different than they have been on a historic average as it relates to both DQs -- delinquencies as well as default rates. And so the consumer has actually held in better than many people had thought, but the K economy here really does show you that the majority of consumer spending is happening in the top part of the economy, not in the lower parts of it.

How is the K economy played into multifamily? This is kind of an interesting slide for two reasons. One, you can clearly see here on the 76 basis point difference between Class A and Class C multifamily, that there is a huge difference of the newer product, more amenitized, has a big pricing advantage. But then look at vintage for a moment because I think vintage is really interesting. You sort of ask yourself, how is it that assets that are newer or from 2020 until today are trading at a higher cap rate or as you all know, a lower value than a 2010 or 2000 vintage. And the issue on that one is the fact that core capital has basically pulled out of the commercial real estate market over the past couple of years, and it's been that value-add capital that has actually been active in the market for the past couple of years. Hence, those investors of value-add capital are driving down cap rates and the pullback in core capital is what has made Class A newly delivered actually trade at a higher cap rate or a lower value. But as you can see here, I spoke to AvalonBay's development group last week, and AvalonBay is going right at that higher-end product. And what they're building and what they own is directly targeted at the upper part of the K economy. And as a result of that, they're seeing rent growth and they're in the right markets with the right clients.

This is an interesting -- this is on multifamily investment sales volumes. So a couple of things jump out to me on this slide. First of all, look how consistent the market was from 2015 to 2020. Like you sit there and you're like, oh, there'll be 1 year that's good and 1 year that's bad and whatever. I mean it's literally like right on top of each other for an entire 5-year period up to the pandemic. And then obviously, we have a big dip down and then we have this big spike back up. The thing to keep in mind here is we're talking about kind of a recovery of the markets right now, and you'll hear myself and other CEOs of services firms talk about the markets are recovering. The market is pretty much recovered.

If you look at the average volume for the last year, it's back to pre-pandemic levels. The thing about it is that a lot of us look at this and say, investors in Walker & Dunlop look back and they say, well, why don't you back at these volumes? Who knows whether we ever get back to those types of volumes. But from a normalized market standpoint, you can see the hiking period, the trough, and now we're in that recovery period. But as it relates to overall volumes, we're pretty much -- as far as multifamily investment sales, we're sort of back to pre-pandemic levels.

This is an interesting slide, which doesn't take all of you with your MIT soon-to-be degrees to understand this. Hindsight is obviously always 2020 vision. But go back and look at the spread, okay? So this is cap rates versus the 10-year. Light blue is the cap rates. The dark line is the 10-year treasury, okay? And then the bottom one is WME Track institutional sales. So this is multifamily institutional sales and the volume of multifamily institutional sales, okay?

Obviously, you've got the pandemic that comes in right here in this moment. And so you have no activity during the pandemic, everyone's gone home, nothing is happening. But look at the spread between cap rates and interest rates. It does not take an MIT degree to realize that this is a really good time to be buying commercial real estate and buying multifamily.

The spread between what you're paying in interest rates and where you are from a cap rate standpoint. And then, of course, everyone sees this and they go, great, now it's time to buy. And look at what happens to volume. Everyone gets the memo here and they get to a point here. The problem with that is you really didn't want to be a buyer right here. And by saying what I just said, I'm insulting every single Walker & Dunlop client, okay?

So I know this is going out on our webcast and to everyone who's going to be watching in on this, I'm not trying to be -- I'm not trying -- but hindsight's 2020 vision and almost -- not all the deals that happened here are "in trouble," but this is sort of a vintage of deals here where cap rates and interest rates have compressed, where that's not a great vintage. If you bought there, you're probably not getting into your promote. And I just put this out here because as you go into your careers. And you see a chart like this, you just sort of say, let's make sure we're looking at the data when we can see a spread like that and say, let's take advantage of it. And then you see this collapsing of the two and you sort of say, "Maybe now is not the time for me to be buying."

What's amazing to me is the amount of institutional capital that sees all of this and they say, we need it on the party, like got to go, let's go buy." -- and they made a buy here or here that they now look back on and say, maybe we shouldn't have jumped into the party at that point. So this slide is on debt volumes. The thing I love to look at is that we pull this from the Mortgage Bankers Association. So this isn't our data. But I will also tell you, I've been in this industry for almost a quarter century. And I have yet to be presented with by either my team or the Mortgage Bankers Association, a slide that goes down here. It's always up and to the right. Somehow or another, the future always looks nice. And it obviously doesn't always go that way because back in right here where they were projecting it to continue to go to the right, we fell off quite dramatically.

The one thing to keep in mind on this chart is that this is all based off of maturity volume -- maturity schedules. So it sits there and says, okay, you did a huge amount of debt in 2020 and 2021, right, $1.5 billion between those 2 years -- $1.5 trillion, excuse me, not $1.5 billion, $1.5 trillion. And you sit there and you say, okay, most of it was 10-year paper, project out 10 years and you go 2029 and 2030, you got to redo all that paper. A lot will be redone in between. But you know from a maturity standpoint, these 2 years are going to be significant years given the amount of volume that went on in these 2 years. The thing to keep in mind that is very different is the following. In 2020, just on our agency volume at Walker & Dunlop, we did $20 billion of lending with Fannie Mae and Freddie Mac.

And in 2020 at W&D, we did not do a single 5-year loan, not one, 0. Out of $20 billion in 2020, we did not do a single 5-year loan. It was all 10-year paper, some 7-year paper and some longer than that. But the great majority of it was 10-year. So all that $20 billion that we did in 2020 is set to refi in 2030. Now go to 2025. Last year, of our $16.8 billion of lending with the agencies, 63% was 5-year paper. 63% was 5-year paper. So what you're getting here is you've got all of these maturities in 2020 and 2021 as well as all the maturities in 2024 and 2025 that are all going to pile up right here because the market has shifted.

Now why did the market shift? A lot of people look at where cap rates are right now, and I'll show you a slide in a second as it relates to buyer sentiment, seller sentiment and builder sentiment. But they look at cap rates right now and they say, I don't want to sell at this elevated cap rate. And so because they don't want to sell at this elevated cap rate, they say, let's just kind of refi the asset, but I don't want to put 10-year financing on it because if I decide to sell it in year 3, I've got a lot of yield maintenance that's left in the mortgage that I have on the property. So I want to go shorter. Let's go 5.

And so first of all, it's prepayment flexibility why they've gone 5 and the other thing is just the steepness of the yield curve. 5-year borrowing has been significantly cheaper than 10-year borrowing. And a lot of the deals that need to get redone in '25 and '26 were bought back, maybe they were bought in '21 or '22 with a 3- or 5-year instrument on them. And that cost of financing has made it that the performance of the asset is such that they need every dollar they can possibly get. And so as a result, they're going shorter at a cheaper cost of capital than going longer at a higher cost of capital. And so that has made a very interesting dynamic in the market; a, that everyone is borrowing short; and b, you're going to get this big pile up in 2030 and potentially 2031, depending on what volumes are in '26 of 5-year and 10-year paper that all needs to get redone at the same time.

One of the things we're talking to a lot of our customers about is you may not want to have a refi coming up in this window, and you might want to try and push out if you possibly can and not have it come up for refinancing at the exact same time.

So here's the buy-build sentiment slide. For one second, take a look here. Remember where we were in '21 and '22 when I was talking about that volume spike, okay? This should remind you of one thing. Markets are made by buyers and sellers, but if nobody wants to sell, you really don't have a market, okay? Everyone back here was a seller. All the dark blue is the sales. Everyone was a seller. It's like, I love that cap rate. Let's go. Let's sell it, okay? And you could see the buyer sentiment is the light blue, which was -- a lot of people you say, are you a seller or a buyer? It was like, no, I'm more of a seller today than I'm a buyer, but obviously, there are plenty of buyers to buy.

And as you can see, the build sentiment moved from Q3 '21 and pretty much went straight down until right here in what is that Q3 of '24. So everyone was -- I'm a buyer or a seller, but I'm not a builder. And now all of a sudden, you can see the build sentiment coming back out, okay? The interesting thing, look at how much is in light blue. So there are all these buyers out there. They're like, I want to buy, I want to buy, I want to buy, but there are no sellers. At the end of Q4 of last year, only 4% of survey respondents were actually sellers. And I have also -- we bought 18 companies at Walker & Dunlop, and I've always said that companies are sold, they're not bought.

If we want to go buy a company and wildly overpay for it, we can go buy a company. But if you want to actually go make a good deal, you're going to find a willing seller who wants to sell their company to Walker & Dunlop and become part of Walker & Dunlop. That's how good M&A is done.

And so similarly, in the property markets, you can see here, right now, we are in a buyer's -- it's not a buyer's market because there are too many buyers who want to buy. It's actually a seller's market, but sellers right now don't want to sell.

One of the reasons why we are getting -- let me go back real quick here. One of the reasons you've got this amount of volume in the sales market is because of this slide. So this is capital flows. So capital called, capital distributed and 5-year rolling net distributions cumulative. And as you can see on the 5 years, net distributions cumulative, we are way, way negative. So what ended up happening is that LPs who have invested in commercial real estate private equity funds have sat there and they've said, look, you called all this capital back here, the light blue is all capital calls and you haven't redistributed any of that capital back to me.

So you want to go raise private equity Fund VI, private equity Fund VII, you need to return capital to me before I'm going to give you another dollar for your next fund. And so that is what's driving. If you look at this buyer-seller sentiment, nobody really wants to sell, yet you go back here and you say, but the sales market is actually reasonably active. That's because investors want their money back. And it's that sort of forced transaction volume that's going on in the market today that is really driving volume. It's not because they're saying, I love that cap rate and want to sell into the market. It's because they need to return capital to their LPs. And until they do that, they're not going to get capital for their next fund.

You can see here, this slide is pretty interesting as it relates to private credit versus commercial real estate. So you can see the light blue is non-traded REITs. The dark blue is non-traded business development corporations. Most of that is private credit funds. And you can see here that it was all commercial real estate in 2020. In 2021, BDCs or private credit started to come out, but it was still predominantly commercial real estate and then boom. From '22, it was all commercial real estate, that falls off a cliff and then BDCs or private credit start to grow. The real question now is what happens with the redemption queues in private credit? And does that end up flowing back into commercial real estate private equity. That's right now, I would say to you that commercial real estate, private equity will benefit from the rotation out of private credit funds.

And this just shows you here the redemption queues that are there and what I was just talking about. You can see that the redemption queues on the non-traded REITs have come down significantly, and you can see the redemption queues on the non-traded BDCs going up quite significantly.

This slide, you've all seen it, heard it. An effective or a functioning market is when you've got average starts and your average completions relatively close to each other. That's one of the reasons, quite honestly, why you're back here with very consistent sales volume is because you've got supplies and deliveries -- construction starts and deliveries all kind of paired up. But obviously, the pandemic kind of turned everything on its head. You get back to that quarter where everyone is like, wow, I got to get into this market.

I'm going to go make an investment. And boom, we got lots of shovels going in the ground and starts start to spike and you're still with a delivery number that's normalized and then all of a sudden deliveries, all these construction starts turn into deliveries. And what everyone sees in this slide, obviously, is that because you had starts come down significantly, you're seeing deliveries come down with the starts. So that is going to create what should be an undersupplied market.

But what we've seen is that you're looking at this slide, and this is your multifamily demand slide, okay? And -- what everyone was looking at was, okay, starts have gone down, deliveries will go down. And if you were looking at that back in here, you're like demand, which is this coin bar, demand is just going to keep on going up. So demand keeps going up, supply and starts go down, and it's a great market and we can start to push rents, except as you can see on this for the last 3 quarters, demand has fallen off and demand has fallen off significantly. And one of the big questions there is why has demand fallen off when the price of multifamily housing is so much cheaper than single-family housing. So that's not the market losing in the competitive battle with single-family. Let me just show you really quickly on single-family versus multifamily. So -- and I'll come back to that other slide.

So this darker line is what the cost of homeownership is on principal and interest on a mortgage payment. The bar charts are the median price of a single-family home in America, okay? And the blue is the average cost of renting in America, okay? So you go back to 2019, 2020, and you were much better off, much better off buying a single-family house right here for an average price back then of $280,000. Much better off buying your $280,000 home, putting a mortgage on it and your principal and interest. We're down here at less than $1,200 a month. And the average rent in the United States back then was $1,400 a month. You were $200 in the black on a monthly basis for having your single-family home and paying your P&I on your mortgage, then you were renting.

And then all of a sudden, as you can see, because of the pandemic, the cost of single-family homes started to skyrocket. And that's this bar chart going all the way up where you move from the average median price being at $270,000 all the way up to what was at $430,000 over that period of time. Well, to buy that $430,000 home and pay principal and interest on your mortgage, as you can see on this line, it's skyrocketed. And you went upside down on your cost of homeownership versus the cost of renting.

And look, the cost of renting went up significantly from '21 to '23, but then it basically plateaued since then. But the important thing about this is to think about it from a structural standpoint that right now, it is significantly cheaper to rent than it is to own a home. And until mortgage rates come down and this bar chart continues to fall down, and no one is wishing that we lose value in single-family homes in America. But until the values continue to come down and the cost of borrowing continues to come down, it's still going to remain much, much cheaper to rent than to own a home.

So if that's the case, multifamily is holding up really well against single-family. People aren't like saying, "Oh, it's cheaper for me to own a single-family home than to rent. So then what is it that's making that chart as it relates to demand come down? And the only thing that you can come back to really is immigration and the fact that the border has been closed, that there isn't a huge amount of illegals coming in and that legal immigration numbers have not gone up. And so I think this slide is a very important one to keep in mind as it relates to household formation, demand drivers for multifamily as well as single-family. And until the government does something as it relates to increasing the amount of legal immigration in the United States, that demand side of the equation is going to be questionable.

Let's dive into a couple of specific markets, and then I'm going to open it up for Q&A in a sec. So before we started, I was asked about sort of what markets are hot and what markets are not and the oversupplied markets.

So if you look at this slide and you look at these MSAs -- this is the top 10 markets right now. And you sort of said, I see here all of the Sunbelt, job growth, companies relocating from California to Texas. You would sit there and say, okay, that would mean that San Francisco isn't a place that I want to be. It happens to be at the very, very top of the list. San Jose is a place I don't want to be -- happens to be #2 on the list. Look at the cities here that are doing really, really well right now.

And oh, by the way, look at the trailing 5-year population growth, negative 4.5%, negative 1.2%, negative 0.9%. Who's the winner on this list? We've got a whopping 2.8% growth in Cincinnati, Ohio over the last 5 years. Not exactly boom from a population growth standpoint, okay? But none of these markets had any real new supply into them over that 5-year period, so they don't really need the new population to come in to get the type of rent growth that they've been able to get. So these right now are the darling markets that while 2% rent growth doesn't sound that great in comparison to this list, it looks really good.

So now look at all these markets. These are all your oversupplied markets. These are all the markets that all those shovels back in that previous one of starts into the deliveries. This is where they all went, okay? And as you can see here, I mean, look at the population growth in all of these. So at this one, our winner here was 2.8%. Look at these population growth numbers, almost all of them in double digits. It's where the jobs are, it's where the people are moving, except for the fact that they've all been wildly oversupplied. And so you might sit there and say, well, I like the long-term growth of Austin, Texas. No doubt, I think you've got to like the long-term growth opportunities for Austin, Texas, except for the fact that in real estate, when you have oversupply to the degree that Austin, Texas has had, you're going to have negative 7.7% trailing 12 rent, it's not rent growth, it's negative rent over the last year. Denver, Colorado, # 2, negative 7.4%.

Two really, really hard markets to be an owner in today. Do they both have Austin more than Denver? Do they both have really, really good fundamentals to them? Without a doubt. Has Austin turned into a really affordable market almost overnight, 100%, single-family and multifamily.

Austin, if you were -- if I was starting Walker & Dunlop today and I had to pick a city to move to, Austin has so many things going for it, including it's super affordable today. Super affordable. So if you say, start today and go forward, Austin is a great market, except for the fact that you're probably going to have to feed that asset if you went and bought one for a period of time because we're still trying to absorb all the oversupply that was in that market.

So one of the big things that Peter Linneman, who comes on the webcast on a quarterly basis and I constantly debate is Peter is very much prone towards Cleveland, Ohio and Cincinnati, Ohio, sort of kind of boring Midwestern markets and anyone who I just offended by calling Cincinnati and Cleveland a boring market, excuse me. But it's kind of steady Eddie. You're never going to get this big surge in supply. And as a result of it, if you buy well, put low leverage on it, it's going to turn into a really good investment for you.

These markets are the ones that -- there's a lot of, what I call, grass and glass there. People are like, man, I can go into Austin and I can buy it and I'm going to sell it at like a 3.2% cap rate at some point. And by the way, I got a lot of clients who were investors in Austin, either built or bought back in 2013 and sold in 2018 or '19 at a 3.2% cap rate and made just enormous returns on multiples on their money. So a lot of these markets, you can make a lot of money. But right now, as it relates to do you want to be an owner in them. I was just in Phoenix 2 weeks ago.

Phoenix is still way oversupplied. The one other thing about Phoenix, the building of the new Taiwan semiconductor plant there, fascinating to see the amount of work and the kind of ecosystem that's going on in Phoenix right now around that investment. And it's obviously not just that they're going to build a chip manufacturer there. It's all the ancillary services that need to be built out there. I met with a gentleman who is working with Taiwan Semiconductor as it relates to all the other kind of services that they need, the plants and how the plants feed products into the actual chip manufacturer, but then the multifamily and the retail and the office and everything that needs to be around that huge investment of tens of billions of dollars. It's really quite something and will be a great growth driver for the Phoenix market over the next couple of years.

So in summary, before we go to Q&A, a couple of things on noise. You hear a lot about $200 a barrel. We're not going to $200 oil on a barrel. Trump won't let it happen, period. The President will stop the conflict before we even get close to that. So there's a lot of fearmongering about that, that isn't going to happen.

Runaway inflation? One of the big things to keep in mind is that one of the main reasons that the inflation print has stayed as high as it is, is because of owner's equivalent rent and because of multifamily rent growth that for whatever reason the CPI continues to get a false read off of. But owner equivalent rent is 25% of the CPI and nobody's ever paid owner equivalent rent ever. You don't -- I own 3 homes, and I don't pay rent to anyone. I pay a mortgage, but that owner equivalent rent of what would you rent your house to someone else for today, no one's ever paid it. It's a completely made-up number.

So if you call me today and say, what would you rent your house in Denver, Colorado for, I'll come up with some number. And I'm going to kind of triangulate off of some number I heard down the street. They'll tell me, last month, you said it was x, this month, is it up or is it down? And I'll give you my gut reaction of I should charge more, I should charge less. That's the way they go about determining owner's equivalent rent and it's 25%, 23% of the CPI. Makes no sense.

So in the CPI number that has stayed elevated is an elevated owner equivalent rent number that shouldn't be there. I'd be interested to see whether Kevin Warsh when he comes into the Fed thinks about doing something to adjust it. It's one of the reasons why so many economists don't focus on the CPI, but focus on the PCE because the PCE has a lower weighting on housing than the CPI. But the bottom line on all this stuff is I told you about oil and the impact of oil. Oil stays high for a very long period of time, it will have an impact on the CPI, but I don't think we're going to have runaway inflation as many people are fearmongering.

Higher interest rates. I don't predict interest rates, okay? But what I would say is the following. You have a new Fed Chair who is coming in, and there's no doubt that he has heard the President clearly that he wants to get the cost of borrowing down. The second thing on all that stuff is you are either going to have Kevin Warsh being successful at lowering rates or you'll have a sell-off in the equity markets that should have people move to safety in treasuries. The interesting thing since Iran is that you actually didn't see that happen.

Typically, when there's an international conflict like Iran, people flee into -- they jump into safety and you would have seen yields on the 10-year go down. That didn't happen this time, which is a little concerning. And at the same time, if you do get a significant sell-off in the equity markets, there's no doubt that you're going to get the 10-year going down.

Debts of the blue states and blue cities, I just showed you numbers on why they're not dead and probably aren't going away. There's lots of talk about all this great migration to the lower tax, high-growth states. But from a real estate standpoint, those states are still struggling. And then transaction volumes remain muted. I showed you, there might be a narrative out there that says transaction volumes are muted, but at least in multifamily on the sales side, it's sort of back to the normal.

On the Signal, CRE capital flows will drive transaction volumes up and cap rates down, okay? I showed you that rotation of capital from LPs. That is going to continue. That doesn't stop. The capital hasn't gone back to them. They'll continue to ask for their capital and fund managers who want to raise their next fund are going to have to recycle that capital. That recycling of capital means that they're putting it into assets as they sell them and refinance them. More capital flows mean cap rates come down.

You then go from a, "I don't want to sell market to I'm ready to sell market," and transaction volumes come. That's the way it will happen.

Multifamily significantly more affordable than single-family. That's there. That's structural right now. That doesn't change quickly. Prices of single-family have to come down materially and the cost of borrowing has to come down materially for that to change. So for quite some time, multi continues to win over single.

Sunbelt will continue to attract jobs and families. No doubt about that. You saw the job growth numbers that I put up there. They are the long-term winners right now, unless Blue states can figure out how they can get their tax policies in place to retain and attract new investment.

Population growth problem without increased legal immigration. That is a really important one. And by the way, the administration can work on that. They can say we only brought in 700,000 legal immigrants last year. Let's bring that up to 1 million. Let's bring that up to 1.2 million and start processing more legal immigrants to the United States. And then the final rates will come down due to cuts or the sell-off in the equities. Pretty -- again, I don't try and predict where rates are going to go. I get asked about it all the time. I'm smart enough to leave that to economists and not myself. But you just think from a signal standpoint, there'll be plenty of noise in there. But from a long-term outlook standpoint, we should be in pretty good shape where rates should come down either from a sell-off in equities or that Kevin Warsh is effective as the Fed chair in bringing down the short end of the curve and the long end should follow at some point.

That is it for my prepared remarks. I am up for any and all questions. So let's dive in.

Michael Camus, MIT, MS. Thanks again for coming out today. You're a native Washingtonian. You've long been a proponent of the city, and it's created a real estate market. You recently had Meyer Baer on the webcast, and she's communicated her and her team are all in on D.C. to bring business and investment back to D.C. But there's obviously been some hesitancy from investors in reentering the D.C. real estate market. And I'm curious if you're still bullish on D.C. And what do you think needs to happen to make those investors more comfortable to reenter?

So a couple of things on that. The big story of 2025 that has not been covered widely, but that Peter Linneman has underscored not only in our last conversation, but in the Linneman letter, is that the federal government shed almost 250,000 jobs last year. Almost 10% of the federal workforce was shed in 2025. And Peter's comment is that like the Trump administration hasn't jumped up and down and said, look, we actually did what we said we were going to do as far as thinning things out.

Elon Musk came into town to do his go stuff and left town and everyone sort of said that was an effort that we're not going to follow up on. But that shedding of federal workers is a very, very significant economic driver for the greater D.C. area. If you think about it, theoretically, those people will then go find jobs in the private sector, which if you're a libertarian as my friend, Peter Linneman is, you're like, that's great. They're going to go into productive jobs rather than just redistribution jobs. Those are Peter's words, not mine. But that does put pressure on the D.C. employment market.

The other thing that when Doge came in, one of the big concerns I had was all of the consulting firms that sort of, if you will, feed off of the federal government apparatus from a defense contracting standpoint, from a process engineering standpoint, the likes of Booz Hamilton -- Booz Allen and other big consulting firms. They were very much sort of under target for redo or elimination of their contracts from what I have seen. That sort of came and went pretty quickly with Doge. So that they are still doing as much business. And then the other piece to it is you got to remember, we're going to print a, what, $2 trillion deficit in 2026, $2 trillion. So the bottom line is the federal government is still spending money hand over fist.

So it's sort of a tale of two cities, if you will, in the sense that you actually had 250,000 job cuts out of the federal workforce, which is big downward pressure, yet you have a federal budget that's running a $2 trillion deficit and is spending money on everything over and over and over.

So the question there is what does all that mean for the D.C. area? D.C. is struggling, and they have a new mayoral race coming up and Mural is stepping down from her role and we'll see who the new mayor is. Northern Virginia is doing extremely well and suburban Maryland is also struggling in a very big way. And Governor Wes Moore of Maryland has a big challenge in front of him as it relates to getting that state in a position where it can attract jobs and attract companies.

Well, that was an amazing presentation. I am thinking about the recent regulation on private equity ownership of single-family homes, and I'm curious what your thoughts on how that affects the rent versus own that.

So the legislation that went from the Senate to the House has in it a provision on build for rent that requires anyone who builds a build-for-rent community to sell the community in 7 years. That's really bad legislation. In a bill that is designed to try and increase the amount of supply of housing in America, they put in there a paragraph that does exactly the opposite. And the build-for-rent market has been frozen since that -- since the Senate passed that legislation.

And by the way, they passed it 91-8, one person didn't vote, 91-8. They haven't passed anything in the Senate, 91-8 in a long time. When you have Senator Tim Scott from South Carolina and Senator Elizabeth Warren from Massachusetts, both fighting for the same legislation, you know something sort of gone wrong, to be honest with you. I mean, honestly, they should be on different sides of most issues, and this one they both jumped in on. And unfortunately, that paragraph on BFR is going to set the build-for-rent industry back a lot.

Senator Warren is very specific in saying it only applies to those who own over 350 homes, okay? And that is only 70 basis points of homeowners in the United States, okay? So she's pretty careful with her numbers here.

She's like it's only impacting 70 basis points of single-family homeowners, except those 70 basis points are the only people who have the capital to build new homes. Everyone else is just a single-family homeowner. It's those companies that actually build-for-rent that create the build-for-rent supply that then feeds into the single-family rental market.

So this 7-year provision is a real problem. I got something last night that there's actually some real progress going on and a number of Congress men and women have signed on to basically say this provision needs to be changed. And I actually also heard that the speaker of the House understands the problem and has asked the Chairman of the House Financial Services Committee, French Hill, to focus in on this and potentially change it in the House legislation.

So we will get that law passed as it relates to the other provisions in it. And the President and his executive orders to try and create more supply and bring down the cost of housing in America. But that one provision on BFR have to sell after 7 years, hopefully gets pulled out in the actual legislation. But for right now, there is not a big institutional investor that will put $1 into a BFR community right now given the potential regulatory risk around it.

Thank you for coming here. And so I just want to ask about rates and inflation. A couple of things you didn't really spend a lot of time talking about was the national debt, the demographic trends and trade, all of which, in my view, are highly inflationary and changed dramatically over the last 5 years. Wondering if you could sort of -- and that's a very large question, but if you could sort of comment on those within the context of your -- what you had said before.

So sure. And I'll give a big disclaimer before I say anything on it. I am not an economist. I'm not a trained economist. But I will tell you from having done now almost 6 years of quarterly Walker webcast with Peter Linneman, who is one of the truly great economists of our time. I do feel like I've gotten a PhD in reading the Linneman letter on a quarterly basis and being able to go to Peter with lots of questions.

And so I will say everything I'm about to say is 100% from Peter Linneman, okay? So this is not my thinking. This is all out of Linneman.

Linneman has spoken extensively about the fact that he doesn't think that the national debt is a big issue. And I don't want to dive into Peter's reasoning, although one thing that I would say is just he goes to our overall national net worth, what this country is worth, how much GDP we are developing and growing. And he basically says, if you're adding $3 trillion to $5 trillion a year of net wealth to the United States, you can easily afford to be printing $2 trillion of deficits on an annual basis.

So as long as you keep that GDP growth going and we're creating $3 trillion to $5 trillion of additional net wealth in the United States every year, you can run $2 trillion deficit and it's not going to catch up with you. The one thing that you know very well on that one is that's as long as we remain the reserve currency. And if we lose that position, we're in real trouble.

The issue with it is go back and think about this. China is now squawking about that they want to create the reserve currency. And there obviously was some thought that Bitcoin and other crypto currencies were going to be a better store of value than the U.S. dollar as the reserve currency. The euro had every opportunity to become a real competitor to the U.S. dollar, except for the fact that they never got the U.K. into it and they never got Switzerland into it, 2 of the larger economies from a financial services standpoint. And because of that, it's never really had the chance to be a real competitor to the dollar as it relates to a reserve currency.

And then think about how long the euro has been out there and how long they've been trying to make a run of making the euro be any kind of competitor to the dollar. We're talking about things that take decades, quarter centuries, half centuries to get developed. And so yes, right now, there's a lot of talk about the debt is too high, lots of our allies are -- there was a big narrative last year that actually is another one on Noise versus Signal.

There was a lot of talk last year about all of our allies dumping their treasury holdings because they wanted to kind of give the finger to the United States. It didn't happen. You look at treasury holdings of foreign countries, they're going to go for yield and safety. They can sit there and listen to politicians and say, we don't like this, we don't like that. They're going out -- they have a fiduciary responsibility to get for their investors what they need to. They weren't dumping treasuries.

So I would just say, as long as we remain the reserve currency of the world, unfortunately, we continue to -- we can continue to be propagate spenders and not treating tax dollars the way that they ought to be. The one other thing that I would throw out there is this kind of blue state, red state and tax policies has a huge impact on sort of decades worth of growth and where companies are going. I happen to live in the state of Colorado. Colorado is 4.4% income tax, which is actually quite low relative to other states that have income taxes.

There's a ballot initiative in Colorado right now to try and overturn the taxpayers' bill of rights that holds that at 4.4%. And I've been talking extensively with legislators about how damaging that would be to Colorado. And if they were to take it from 4.4% to they've been talking about 8% to 9% if they were able to overturn it.

And one of the things I've been advocating is, why don't you all think about going to zero? And every time I say that, they're like, what do you mean? Like we can't go to 0. We've got a $1 billion deficit this year. And I said, well, the bottom line here is think about the type of growth you would get of companies moving from California to Colorado if you dropped it from 4.4% to 0. And what that would do to your overall fiscal position. The thing that Colorado has that many other states like New York or California don't have is that because California and New York get about 50%, if not more, of their income from income taxes, they can't do away with it. They can't go to 0.

Colorado only gets 20% of its income from its income tax. So there are lots of ways to make up for that $9 billion of income tax that they bring in, property taxes, fees, other things that you could put there.

The bottom line that I'm trying to put out there is that until state governments and local governments understand that they are constantly competing for residents, Zoom in the pandemic changed everything. You used to not -- like I moved from Washington, D.C. where Walker & Dunlop is based to Denver, Colorado in 2019, pre-pandemic, okay? It was a huge decision. It was like we got 250 people in headquarters. I'm going to be leaving going out to Denver, Colorado. I'm going to be back here every 2 weeks. And that was my plan to constantly commute back to the D.C. area because that's where my team was, my senior executive team was, our headquarters work. And even though we have 45 offices across the country, it was like, I got to get back to headquarters.

Boom. Pandemic happens. My senior management team goes all over the country. We learn how to do Zoom calls. And it literally today does not matter where I am and where my executive team is. Every company in the country has that dynamic today, everyone. So you don't have to be somewhere. Jamie Dimon talks about the fact that from when he joined JPMorgan Chase to today, they've gone from 45,000 jobs in New York to 35,000 jobs. And in the process, they've gone from 5,000 jobs in Texas to 30,000 jobs in Texas.

It's like Maram Dani can tap on the camera and be like, "Haha, we're going after you Ken Griffin and just watch all that money move away." And so one of the things that I'm trying to get in Colorado and to focus on is don't go raise the income tax, raise property taxes because the property in Vail and the property in Aspen isn't going anywhere. You can't move it.

That billionaire who owns their $50 million home in Aspen, they may not like the fact that their property taxes go up a little bit, but they're not going to Jackson Hole. So I think governments need to shift on what they're taxing and how they're taxing it to try and keep the revenues in the state because if they're just going that we're going to chase some billionaire out of California, they're going to move to Florida or Texas tomorrow, and it's at almost no switching cost. So that's a big issue, I think, from overall growth in the coming decades and what, quite honestly, blue states and blue cities need to do to retain and attract jobs and people.

Thanks, Willy, for a really informative discussion there. I'm Tanner Miks. I'm an incoming student class of 27. My question, it's a little bit more of a niche market, but the senior housing that I brought up before we started today.

Demographic shifting wise, we're seeing probably a doubling of that market over the next 10, 15, 20 years. And the market itself is already undersupplied estimate somewhere in the neighborhood of 500,000 units.

My question to you is from your vantage point, how should sophisticated capital be positioning itself today in order to meet that demand? And what type of challenges are there still to be overcome when it comes to meeting the scale that we need to meet, maybe capital structure and then also like operationally, how can we improve our efficiency to make it affordable and beneficial to investors?

So I'll ask you a question. What do you think the percentage -- you keep the microphone for a second because I can ask you this question. What's your handicap us having another pandemic within the next 10 years?

Very unlikely.

And another pandemic in the next 20 years?

Still unlikely, I would say.

And when you say unlikely, 5% chance, 50% chance, 49%, less than 50%?

As far as pandemics go, if you take a 200-year vintage on it, it happened twice-ish, so maybe 1%.

Okay. The reason I ask that is that if I ask you the same question about the great financial crisis right after the great financial crisis, I think you would handicap the chance of a great financial crisis similarly to what you just did on the pandemic, okay?

So great financial crisis is over, generally speaking, in 2010, okay? And I was certain that the CMBS market, commercial mortgage-backed securities market would go back to sort of the silly math that created the great financial crisis, that liquidity come back, a lot of the bankers have moved from one bank to the next bank and they would get back to the same lending habits that they had.

And until today, 16 years later, CMBS hasn't gotten back to the same practices that caused the great financial crisis. Those memories last for a long period of time, okay? Even though the chance that we were going to have another great financial crisis due to overleverage on CMBS and you can either go CMBS or the mortgage -- single-family mortgage market as the drivers of the great financial crisi's.

I would say to you that the reason I'm trying to bring this up is because the pandemic, I think, materially changed people's views of seniors housing. The amount of death that happened inside of seniors housing communities was something that scared people of my age who had parents who might be in seniors housing to their bones, okay?

And so there has been a big move for people to say sort of anything but. And yet at the same time, the demographics behind it are unbelievable. You just sit there and look at the numbers, you're like this asset class is going to be full and it's going to crank for years and years. So I would say to you, you look at the math and you say, yes, you should go build there, and it's going to be a great asset class to own in and it's going to be full. But I go back to the GFC and CMBS and the long memories that stayed in place after that.

And I sit there and say, it might take longer than you think to get people to go back into that type of living. And -- there are some great companies that are making a lot of money right now. And my friend, Deb Cafaro, runs one of the largest publicly traded seniors housing REITs out there, and they've got a great business. But that asset class had huge losses in 2021 and 2022, huge. And those memories are still there from a lending standpoint.

Fannie Mae and Freddie Mac, the only real losses they had in '21 and '22 were in their seniors housing portfolios. And so people underwrite more conservatively. And they look at that risk with a little bit, am I going wrong there? Or am I staying short? And I think that will impact seniors housing for the next couple of years.

Yes. I think we have time for 1 or 2 more.

My name is Ryan Oman. I'm MIT MSRED. You spoke about private credit. I understand the SaaS spook because of the AI and vibe coding age. Why do you think investors are spooked by real estate private credit? And why also -- one thing you mentioned in the presentation, you said that fleeing from private credit might go into private equity. What...

Commercial real estate private equity. Yielding private. So one of the big issues there is yield. So one of the reasons why the private credit market is attracted so much out of the retail distribution network is because there are a lot of retirees who want that coupon that comes off of their investment in private credit. As they get concerned about private credit. They're like, maybe I'm going to pull that back and reallocate it somewhere else. They can't go to just a normal private equity vehicle because private equity vehicles don't have a current return, whereas commercial real estate private vehicles, particularly credit vehicles, have a current return.

And so it's something that an RIA can sit there and say, okay, we're going to pull you out of that private credit fund, we're going to put you into that real estate fund. So that's the reason I believe that it competes quite well in any reallocation of dollars because people need yield. And the one other piece to it is there's $7 trillion of capital right now, $7 trillion sitting in money market funds, okay?

If Warsh comes in and starts to cut the short end of the curve, people will rotate out of money market funds. By the way, they will not go from $7 trillion to 0. Back when the Fed funds rate was at 0 in 2012 and 2013, there was still $3 trillion of money that sat in money market funds. So don't think it goes to 0. There's a certain amount of capital that will always sit in those money market funds.

But you could see $7 trillion go to $5 trillion and where is $2 trillion of capital go? By the way, we used to talk about billions being real money. Now it's trillions, okay? So where is $2 trillion go? That's real money, okay? And so if you take $2 trillion out of money market funds because the short end of the curve gets lower and you get any kind of rotation out of the private credit funds, I think net-net, that's probably beneficial for commercial real estate because it's a yielding hard asset.

The final piece I'd say on that is, look, who knows where AI goes? Who knows whether these SaaS companies get just obliterated by AI or whether they actually live for another day, that's way above my pay grade. But in commercial real estate, you have yielding assets. They're hard assets. And so in a world that has a lot of shifting and moving parts to it, people got to live somewhere. So multifamily hangs in there pretty tough, okay? People don't actually need a place to work. People -- bricks and mortar, retail, okay? What percentage of U.S. retail sales today goes online versus through bricks and mortar? I'm going to ask you directly. What percentage is online versus through bricks and mortar?

Not familiar with that retail -- held up pretty well.

Yes. But let's swag it. What percentage is online, what percentage is through bricks and mortar?

[indiscernible]

You're going to say 40% online and 60% through bricks and mortar. Other way around, 60% online and 40% bricks and mortar. 16% online, 84% bricks and mortar, 84% bricks and mortar, 16%. It got to a high of 20% during the pandemic and has come back down to 16%.

So your impression is 100% where most people are. Everything is Amazon and everything is UPS and FedEx. That's what you think. So retail is actually still a very important part to the retail channel is bricks and mortar. So retail is a good place.

Hospitality, if AI puts all of us on the beach, we can all make huge amounts of money on our investment in OpenAI, and we can just put our feet up on the table and go do something else. High-end hospitality does really well in that scenario, okay. The hotel I'm staying in here in Boston for work probably doesn't do that well, okay? But high-end hospitality, let me go to the beach, that's going to do really, really well, okay?

And then data centers, the one thing on data centers, I asked Linneman this a year and 4 months ago in our conversation in Philadelphia. I said, so if you had to pick one asset class that you would invest in, and obviously, location is important and all that stuff, but just one asset class that you invest in right now, what would it be? And Peter looks at me and he goes, well, if I wanted to stay rich, it would be multifamily.

So I said to him, "Okay, well, then if multifamily is the one that you would stay rich in, what would you get rich in?" And he goes, office. I was like, interesting. He goes, yes, there's some really great office deals. If you've heard that from Peter and you invested in San Francisco office, you've made a huge amount of money, huge amount of money, okay?

And so I said, okay, you said, stay rich and get rich, how about get poor? And he goes data centers, okay?

Now Jeff Lau was just on CNBC yesterday morning, and he was talking about this $36 billion data center that related his building for Oracle, who's going to lease it out to OpenAI. There are a couple of things to keep in mind there.

First of all, the JPMorgan headquarters that they built in Manhattan, that they talk about it costing $3 billion, it's more like it cost them $5 billion. But that's like the most expensive office building ever built in the United States of America, okay? $3 billion to $5 billion.

Jeff, was talking about a $34 billion investment in a data center. This is orders of magnitude bigger than anything we've ever seen, okay? One of the other interesting things that he said yesterday was that they went through the 144A market to raise capital for it rather than going to the bank market. Super interesting.

Basically, this market has gotten so damn big that banks don't have the ability to even syndicate out the loans on there. They've had to go to the securitized markets and 144A registration to go raise the capital on it.

And then the final thing that I have thought for quite some time is if data centers are fundamental to the future of companies like Amazon and Microsoft, why are they doing it all off balance sheet?

Just a question. If it's fundamental to their business in 10 years and 20 years, why are they putting it off balance sheet rather than actually owning it? And so there's no doubt we're going to have oversupply in data centers. There's just no doubt Look at that slide that I had as it relates to everyone is like, let's go buy multifamily.

Well, we got to put a shovel in the ground and go build it. We're going to get oversupplied. The question is what's the -- what are the repercussions of the oversupply? And how does that then filter out into the valuations of the hyperscalers, the valuations of the Oracles of this world and the valuations of companies like related that are actually building the data centers. And it does seem a little bit like everyone is getting really careful on how they're structuring these things because there's kind of a sense that at some point, everyone grabs and you want to have the proper structure that makes it. So when everyone grabs, you're not left out in the cold.

All right. Willy,thank you again for being here. I'm [indiscernible], MIT Real estate Student. You touched a little bit on immigration, and I had a question about how that relates to the construction labor supply market. immigrant workers are like 1/3 of it, and it goes up to anywhere to like 2/3 for certain trades like drywallers and more skewed also towards single-family home construction. So I guess to what degree is that -- are new starts impacted by current immigration policy and constrained supply of workers that can do new construction?

I'm going to surprise you, zero, zero. It's unbelievable. I have asked that question at almost every single meeting I've had with either a merchant builder on the multifamily side or a single-family homebuilder, and I know lots of the CEOs, the big single-family builders. It is not only not impacted as it relates to the supply of labor, but the cost of the labor has actually come down. So you're seeing deflationary forces from a labor input on construction, which is complete counter narrative to what you would think it would be. And so it has not impacted access to or the cost of construction labor One Iota.

And that's an anecdotal comment in the sense that I haven't looked at some actual study that says we've gone and studied everyone in the industry. That's for me meeting with the very big merchant builders, the very big single-family development companies and just saying, "How is it going?" And to a person, they also hasn't impacted us a bit. So it's a very interesting back to Noise and Signal. The noise is that you're not going to get people showing up in the job site, you're not going to be able to get labor. Cost of labor is going to go up, hasn't impacted at One Iota.

So thank you all for taking the time. It's been a real pleasure. Thank you.

Good morning, everyone. Thank you for joining us at our 2026 Investor Day for Walker & Dunlop. Before we begin, I'm just going to note that today's presentation includes references to non-GAAP financial measures. A reconciliation of these can be found in the appendix to our presentation that's available on our website, www.walkerdunlop.com.

Also, we will make certain forward-looking statements during this presentation. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to material differ -- materially differ. More detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC.

And I'm going to kick it off with a short video.

[Presentation]

Good morning, everyone. Thank you to those of you who are joining us here in New York, and welcome to everyone who's watching this on the live stream. It is wonderful to have all of you here.

There are many familiar faces in the room, people who have been investors in Walker & Dunlop for a very long period of time, a number of people, including my friend, Mike, who is -- who I met with on our IPO roadshow, Mike, back in 2010. And some analysts like Jade, who've covered Walker & Dunlop for a very long period of time and many others who've had a long track record of understanding what this company is, what it's made up of and where we're going.

I'm really excited today because many people here from me on a very consistent basis, and they'll also hear from Greg on our earnings call and in investor meetings. But today, we have our full management team here to talk through the component parts of the Journey to 30 and where this company is going to go over the next 5 years.

So I want to dive in a little bit on the Journey to 30. As you can see below, to be the very best commercial real estate capital markets company in the world. When we went public back in 2010, the concept that I would even be able to say that with seriousness today was nothing more than a fantasy in a dream. We were a small cap agency lender with big ambitions and at the same time, not a tremendous amount of capabilities to achieving something like that.

Today, we have the people. We have the market positioning we have the brand and we have clients to be able to achieve just that. But as you think back to where we were in 2010, one [ I ] will show in my presentation and throughout the day, is, a, the people of Walker & Dunlop and what makes this team so special. The other thing you will note is you could actually see me in this picture. This is the last time you'll be able to see me sitting up front because all it does is get bigger and bigger, and I become sort of where is Waldo varied inside of a big crowd of people.

But it shows the growth and the dynamic of Walker & Dunlop as we've grown, as we have gain market share, as we have built out our capabilities, both across the United States as well as now in Europe. If you think about that 2010 picture and what we did when we went public, we set out a 5-year highly ambitious strategic plan at that time to gain scale.

And as you can see in this slide from that period of time from 2010 to 2015 as it relates to transaction volumes, total revenues and the total [ rig ] portfolio, we gain scale. We did a major acquisition of CW Capital in 2012, which moved us way up in the league tables of Fannie Mae and Freddie Mac, as well as with HUD. But during that period of time of gaining that scale, we were still pretty much viewed as an agency lender. And one of the things that happened during that period of time is that was the recovery from the great financial crisis.

During that period of time, our services firms, real estate services firms such as CBRE, JLL, HFF, who back then was a publicly traded company as an independent, had this great run in the capital markets because after the GFC and everything had taken a 3- to 4-year pause as credit work through the system, we all of a sudden saw commercial real estate start to have a bid again. We started to see transaction volumes [ taking ] during that period of time, all of our competitor firms did exceptionally well as it relates to revenue growth, earnings growth.

And we did very well during that period of time. But because the GSEs were in conservatorship and people didn't know about where they were going, because we were focused just on agency and many investors sat there and said, how much more share can Walker & Dunlop get, there was -- we continue to trade at a relatively low multiple as our peer companies just sort of zoomed and I look back to then and I sort of see a lot of parallels to where we are today.

I look back to then after the 3 years of the GFC and then coming out of it and the increase in transaction volumes and the capital that came to the commercial real estate sector. And I think very much after the great tightening, and where we have been for the last 3 years that we are right now at the beginning of a new cycle for Walker & Dunlop and a new cycle for the commercial real estate industry.

Once we've built that scale, you can see how much the team had grown between 2010 and 2015, we set ourselves out on establishing the Vision 2020, which was to basically double everything. And in this period of time, we decided to diversify the company. We got into the investment sales space. We really started to invest in the deck brokerage space. And we started to do a lot of things to try and build off of that moat that we have built around our agency lending business. And that motes around our agency lending business also was fantastic because it was in multifamily, which is obviously the largest commercial real estate asset class.

And so to be able to use that competitive positioning and start to move out from there was, A, very exciting, B, gave us real market presence and, C, made achievement of these goals at least at that time, I mean, when I put out there to our team in 2015 that we would take a $48 billion servicing portfolio and turn it into a $100 billion servicing portfolio. Many people in the room sort of said, how do we get that done? But as you can see, over that period of time, we did just that. And we took transaction volumes up on a CAGR of 18% during that period of time.

We took total revenues up by a similar CAGR and we took the servicing portfolio from $50 billion to $107 billion over that period of time. One of the things that's important to keep in mind as it relates to the 10 to 15 and 15 to 20 5-year bold, highly ambitious business plans was that on both of them, we basically landed it right on the line. And it kind of shocked me to the degree of putting these bold, highly ambitious plans out there.

The team didn't build a servicing portfolio of $120 million or $130 billion, it also didn't build a servicing portfolio [ to ] it came in right at where we wanted to go. And most of the metrics, what it said to me was, you put bold, highly ambitious plans out there. You put a great team to them and people will work tirelessly to achieve those goals. Then we come up with the Drive '25. And in 2020, in the midst of the pandemic, as our agency volumes were flying as interest rates were very low, we had bold, highly ambitious plans for the next 5 years.

We didn't know what was going to happen during the pandemic as it relates to not being able to visit properties to do property inspections and some of the things that we've been dealing with today as it relates to changes in underwriting policies and procedures of just not being able to actually go visit an actual property. We also didn't know that we were going to get through the pandemic through the big run off and then also have a fall off in volumes of over 50% as it relates to transaction volumes.

And we also, to be blunt about it, from going public in 2010, had a great 10-year ride with no down cycle. Commercial real estate and particularly multifamily, it had a decade of sort of unprecedented growth, unprecedented value creation. And so we built a bold, highly ambitious plan that didn't take into account what we have seen for the last 3 years.

And as investors know, we did not achieve the [ do ] not -- but we did grow. You can see transaction volumes continue to grow even with that huge step down in volumes. You can see that total revenues grew slightly over that period of time by 3%. Servicing portfolio growing from $107 billion to $144 billion. One of the things that I just mentioned was the step down in transaction volumes from 2021 to 2023, as interest rates, the light blue went up dramatically. You can see where we look -- where we sit in 2025 as it relates to overall transaction volumes, that's a very healthy market.

So I think it's important we talk about the step down to [ 42 ]8, but the [ $6.34 ] last year was a very active and very healthy market on sort of any look back as it relates to 2015 to 2020 when [ the ] extraordinary growth in the company. One of the things that our business model allows us to do, is generate a huge amount of EBITDA even as those volumes came down. That's due to the strength of the servicing portfolio and the consistent revenue streams that come off the servicing portfolio.

And as you can see here, adjusted EBITDA has been in that range and held up extremely strong. The light blue on the top there is an adjustment of had we not taken the Q4 charges in Q4 for the loan buybacks and the write-downs adjusted EBITDA would have been at [ $318 ] million on the year. One of the reasons why EPS has been hit so much is our mortgage servicing rights. So you saw in that previous slide how much volumes came down. This slide is a very important one because it shows you our GSE origination volumes in the light blue bars where we went from over $20 billion in 2020 [ down ] to a low of around $12.5 billion. You can see us building back off of that.

But the dark blue line in there is our mortgage servicing [ revenues ]. And as you can see on the right-hand side of the y-axis, you can see where mortgage servicing rights went from $350 million in 2020 on that high volume of business down to about $180 million in 2025 on what is a pretty good volume of business. Why is that? It is due to servicing fee compression, and it is due to term contraction. It's due to -- in 2020, Walker & Dunlop did not originate a single 5-year loan. All of our agency origination in 2020 was either 10-year paper or 7-year paper. 3-year paper, no 5-year paper.

In 2025, 63% of our agency originations were 5-year paper. Why? A couple of reasons. The first is the spread between the 10-year treasury and the 5-year treasury. A lot of borrowers who had done financing in 2017, 2020, have a coupon rate on their actual property today that is significantly lower than the refinancing rate. And so as they looked at the refinancing rate and the step up in cost of capital, they sat there and said, "I want the cheapest rate I can possibly get." They go for 5 years.

The issue that they have to now understand is the delta between borrowing 5 years, 10 years in the coupon rate, not in the spread on treasuries is actually much tighter because 10-year spreads are [ than ] 5-year spreads right now. And as a result of that, even though there's about a 50 basis point difference between a 5-year treasury and a 10-year treasury, last I checked, there was only 11 basis points entered borrowing Fannie Mae, Freddie Mac, fixed rate for 10 years versus 5 years.

And so we see a lot of borrowers now realizing that you can go longer without paying a significant amount more for that capital. The other reason many are going shorter is that they have wanted to sell a property in 2023, 2024, 2025, and the cap rate environment, the value wasn't there. So they -- we're sitting there looking at it and saying, "I don't really want to sell it at this cap rate. Let's refinance the property, but what we want to do is sell it in 2 or 3 years, let's not put a 10-year loan on that has a lot of prepayment penalties on it if we pay it off or sell it. Let's just put a shorter duration loan. We see those two things changing right now.

Borrowers hopefully going longer and we're selling longer duration, and the other is many of those people who just wanted that sort of bridge loan to be able to sell are now saying, "Hey, maybe I load up and hold on to it for a little bit longer. The final piece is servicing fees. Servicing fees are very rate dependent and volatility dependent. As rates bang around, it's very difficult to price in.

We've had consistent rates for pretty much the back half of 2025 into the beginning of 2026. And when we have stability in rates, we can price servicing fees in. The other thing is in a rising interest rate environment, borrowers are extremely focused on every single [ basis ] that made fees and as fees get impressed as we get in a more normalized environment, spreads can widen on both GPs as well as SPs. So those are things to watch over the next year or two.

One thing that Greg will reiterate in his numbers as it relates to 2026, we are expecting mortgage servicing right margins to stay consistent between '25 and '26, even though we, as a team, are very focused on it to see if we can get some lift there. During that period of time, we have continued to invest in our capital markets growth. And my colleagues who run our Capital Markets business will talk in a moment about how we're going to market, what our client segmentation looks like and things of that nature.

But one of the things to keep in mind is from 2020 to 2025, even though we didn't hit the drive to '25 goals, we continue to invest in people and capabilities. So you can see AKS there, that's our New York infusional Capital Markets team. It has been an incredible add to Walker & Dunlop. You can see FourPoint, which got us into the student housing investment sales business. You can see Avalon, where we been doing land sales for the past 3 to 4 years. Alliant Capital, which is the cornerstone of our affordable business today, and Sherry will talk about that in a moment. And then we continued to hire and retain talent.

One of the things on the [ section ] of talent is average origination volume per banker broker. And as you can see here, go back to 2020 when we hit our all-time high as it relates to agency origination of $209 million per banker or broker, picking up at $313 million in 2021 and then kind of coming crashing down during '23 when volumes were down, we maintained the team and as a result of lower volumes and maintaining the team, you're going to get a much lower average origination volume per banker broker. You can see that moving back up, and the goal for 2026 is $300 million per banker broker.

How do you do that? It's not easy. But what we're doing is we are using a number of our research services, a ton of technology as it relates to finding our clients as well as just, quite honestly, blocking and tackling from a management standpoint. And Chris and Don and Ali and Cheryl will talk to you about how we're actually doing that and how we've segmented our origination sales force into an institutional group into a middle market group and into a private client group to properly identify our client base, feed them research, feed them opportunities and then do more business with them.

Along those lines, we made a big investment in 2021 in GeoPhy which was a machine learning company long before AI became all in anything everyone could talk about. And we have had GeoPhy inside of Walker & Dunlop has done a fantastic job of really getting us on the front foot as it relates to machine learning and artificial intelligence. And Megan will talk about what we are doing today as a company to use technology to make our bankers and brokers more insightful and more capable to their clients.

We bought Zelman. Ivy is going to talk to you in a second about where the state of the housing market is could not be more pleased to have both Ivy and her team at Walker & Dunlop, the research they are writing and the insights they are providing to our team and to our clients differentiates us every single day. And so while the research business on a stand-alone basis has been a really good business for us, and Ivy and our team have continued to grow that as a stand-alone company.

It's really research and insights that they're providing to our bankers and brokers that make them more relevant to their clients, which allow us to grow the broader platform. And then finally apprised, it's our valuation business. We've built that from scratch and the appraisals give us the ability and all the data that comes from that to feed into Zelman using GeoPhy technology, again, to make our bankers and brokers more insightful and more capable of their clients.

What's all that play into as it relates to our leadership position in multifamily. I harbored back to 2010 and I remember distinctly going to visit with Mike up in Boston and sit there. And at that time, we were the eighth largest Fannie Mae DUS lender. And everyone was like, well, how do you compete with all these big behemoths who are much, much bigger than you have bigger brands than you have a more potent sales force. Well, the goal was to become the largest Fannie Mae DUS lender in the country, and we have been that for the last 7 years.

Last 7 years, we've been the #1 Fannie Mae DUS lender in the country. The idea was to be the #1 Freddie Mac Optigo lender. We were #3 last year. and we are nipping at the heels of Berkadia who has now stepped in as the #1 Freddie Mac Optigo lender in the country. And JLL had an extremely good year and jumped into the #2 slot. And you can see, as it relates to us on overall GSE, we're #2 behind Berkadia by a couple of hundred million dollars very, very tight race for us to be the largest agency lender in the country. This business, and Don will talk about this, has a huge moat around it. You need a license. There are only 25 of them.

So first of all, you got to have a license to be in here. Second of all, there have been competitor after competitor that have stepped into this space. who when I'll be sitting there talking to Jade Ramani about the competitive dynamic, I'll never forget a number of years ago, Jade, one of our competitor firms to be nameless and this was putting a big emphasis in trying to move up the league tables with Fannie Mae and Freddie Mac, and Jade said to me, look at they've got investment sales. They've got the team, they've got the capital. I mean, are you fearful of them? And I said, "Jade, we've had a lot of people step into this space and compete with us. I'm not in any way trying to sound arrogant, but it's hard to build scale. It is hard to get the bankers and brokers onto your platform. And once they're on your platform, the clients trust them, they trust us. It's more of a -- really more of an asset management, money management business than it is a trading business."

And so big firms like Goldman Sachs, like Ares, like Guggenheim Partners who come into the agency space and have exited the agency space because I think they view it as a trading business, and it is not a trading business. It is a wealth management business. It's once you have the confidence of the client, they stick with you for a very long period of time. And so these league tables and the leaders at the league tables are very, very difficult to displace.

We have been extremely fortunate to move these league tables. And one of the things that is so important for us is keeping our team together and then continuing to feed them with the research and the insights and the technology to continue to make them extremely not only capable but to differentiate them in the eyes of the client.

So here's a graph that shows -- and this is -- there's no -- this is just us sitting around trying to plot us versus our competitor firms and who we compete with on a day-to-day basis. And the strategy for the next 5 years is to move up the Y-axis and not out the x-axis. So one of the things that many investors have seen is that CBRE who is an incredible firm and is in the upper really, really strong service, really, really strong capital markets.

It's very clear from what CBRE is saying in their earnings call that they want to move out the X-axis more into owner occupier services and less up the Y-axis into capital markets. We hear it from the people. You see it from their investment of capital. And to summarize it, to some degree, my read on it is they'd rather work for Amazon and Google than for related in Blackstone. Doesn't mean that they're not a big competitor against related and Blackstone today, but where they're putting capital and attention, they're moving out on the axis and not up the Y-axis.

We see that as a huge opportunity for Walker & Dunlop to continue to move up the Y-axis. It's where we compete, it's where we have the client base and where we have the people to be able to continue to differentiate ourselves. You can see the three firms to our upper right are really the three terms that we go head-to-head with every single day. Other firms on here are big competitors of ours. I've already mentioned Berkadia right there. Eastdil Secured up into the left, fantastic capital markets business. none of the underlying servicing revenues that Walker & Dunlop has to be able to weather the types of sort of downturns that we've had for the last 3 years.

But the strategy over the next 3 years -- 5 years, excuse me, and that my colleagues will talk to is moving up the Y axis, and not necessarily out the X axis. What's that look like? It looks like growing our origination volume up to $80 billion a year. It looks at taking our property sales volume up to $35 billion a year. It's taking our revenues from about $1.2 billion to $1.4 billion, up over $2 billion.

And you can see on EPS, adjusted EBITDA and adjusted core EPS some pretty both exciting as well as bold goals as it relates to growth in all three of those metrics. How do we do it? We do it -- by putting our clients at the center of everything that we do. And I have run this company for long enough and thought about all sorts of things about how our team is super important. Our technology is super important. Our processes are super important.

All of them are incredibly important. But unless we are focused on what our clients need, all those things don't matter. We've got to keep the client at the center of everything we do. You can see around that, my colleagues in the Capital Markets group will talk about all the light blue of the various services that we're bringing to our clients on a day-to-day basis.

Steve Theobald, who's going to come in a moment and talk about our operations as COO of the company. We'll talk about all the other services that play into supporting those go-to-market teams of valuation investment management, research and servicing and then again, we'll talk about WD Suite, the technology that wraps everything we do at Walker & Dunlop, make our bankers and brokers more insightful and more capable to our clients.

So let's look at our client base for a moment. This is segmenting client base into the big guys on the upper left, if you will, in both the global alternative asset managers as well as the traditional asset managers then more of the sector-specific middle market players and then over on the right one, the regional players, more on the private client side.

Obviously, there are people in the middle who are sector-specific who have the size and sale of some of the big, big, big private equity firms. And there are also people at the regional level or the local level who have the size and scale of some of the sector-specific middle market players. But generally speaking, these are the companies that we go to market to try and cover and as the capital markets leadership, we'll talk to you in a moment, one of the things that is very important right now is a real focus on each one of these client segments and figuring out what it is they need for us. what kind of research do they need from us, what kind of insight do they need from us to be able to continue to grow our wallet share with each one of them back to growing our average origination per banker broker from $260 million up to $300 million in 2026.

The thing we are very focused on is the continued consolidation of capital into the big alternative asset managers. You can just look at this slide. It's just Carlyle Blackstone Areas in KKR from 2019 to 2025, going from $23 billion to $555 billion of AUM in real estate alone. So this back slide A lot of those sector-specific investors, many of them right now are sitting there saying, they're typically using $1 billion fund, maybe $1.5 billion fund. That used to be a major player in this space. Today, with the upper left, players raising $8 billion, $12 billion, $20 billion in a fund. The middle group is trying to figure out, can I continue to operate and compete as a middle market player.

And when I say middle market player, it shocks me -- you would call middle market. And I've talked to the CEOs of pretty much each one of those. Some of them are not in any way considered middle market, but many of them are sitting there saying, is this a strategy viable going forward. And one of the things we're seeing is a number of those either becoming part of one of the larger alternative asset managers or getting institutional capital from the lower left to redo their GP structure to be able to have more capital to be able to grow and aggregate assets.

So this is a very significant trend and how in those major alternative asset managers is very, very important. What do they need from us? How do we dwell into them? And how do we add connectivity with them. All of this only gets done because of that team. That's the team in Las Vegas just back in December when we had our all company meeting. We invest every single year to bring our team together. Because at the end of the day, it is that team, it's the personal relationships that we have amongst one another that really does differentiate this company.

It is an incredible honor for me in this company's 88th year to run the company that my grandfather started that my father ran throughout his entire career and that I have the honor to run today.

I hear a lot of question marks as it relates time now, 58 years old. And how long will they around for whether you like it or don't like around for a long time. I have an Instagram account that is titled, Live2120 and that means that if I am going to try and live [indiscernible], I haven't even turned the corner on a golf course and gotten to the temp hole because I'm only 58 years old. But I've heard from investors, hey, it's a good and the bad.

Willie has had a great track record. He's got a very significant brand in the industry. How long is the around for? If he were to leave who knows I just love to and most importantly, I love the team with which I work. And I also don't play a lot of golf and don't plan a lot of golf.

And so as a result of that, this 5-year plan, another 10-year plan, I'm all about it and I'm extremely excited about where this company sits today and what we have in front of us for the next commercial real estate cycle as well as for our next 5-year highly ambitious business plan.

So as I said to start, what I'm really excited about today is for you to hear from my colleagues. This is an exceptional team of executives. I think one of the things that I am super proud of is, over time, we've had a lot of people come to Walker & Dunlop, and most of them have stayed at Walker & Dunlop. But we also had people come and retire. Howard Smith, our long-time President, retired 2 years ago. And this company has continued to move forward. I miss Howard every day. I love Howard. He was an incredible person to have as a partner and as President of this company, but this company has a management team today that is as good as it's ever been.

David Levy was our Chief Credit Officer. David Levy is an exceptional Chief Credit Officer. David Levy, also retired 2 years ago. We have managed the retirement of Howard and the retirement of David with a number of executives who we hear from today, who have stepped up, taken on leadership roles, expanded leadership roles and are driving this company forward. And so I'm very, very excited for all of you to hear from this team of exceptional professionals.

I'm now going to turn it over to Ivy Zelman, who I said previously, it's just that -- it's a true joy to have Ivy with us at Walker & Dunlop. Her insights as an individual and her team's insights really differentiate our bankers and brokers every single day. I got a text 2 weeks ago from a huge client of ours. Who just wrote me out of the blue and said, "God, I just love Ivy's research. He said it makes my life so much easier and allows my team to find assets and find markets so much quicker than we ever have."

That's the differentiator that's going to get that client coming back to us for the next refinancing for the next acquisition. And so with that, let me turn it over to Ivy Zelman. Ivy.

Good morning, everybody. Nice to be here. It's my first WD Investor Day. So excited to be here. I want to provide you an overview of what's happening in our housing market. And hopefully, we'll have some brighter days ahead.

Let's start with the -- I think on the policy update, we took that out. I think we have the wrong slides Kelcy. But I'll wing it, don't worry about it. I hope they are the ones that have the right section for multifamily. Can we change them out? Do you want me to send you the deck I have? Should take -- go out of this?

Okay. So what I want to talk about is what everybody is talking about is how stretched affordability is. So when you're seeing this graph, what I want you to think about is what a nonsupervisory employee would think about, which is the monthly payment as a percent of their gross income that monthly payment would also include property taxes, homeowners insurance and mortgage insurance. And you can see depicted in the gray or brown bar that it improved slightly in from the stretch levels that we were in '24.

But still, from a historical perspective, it's very elevated. In fact, it's as high as it instance the early '80s when mortgage rates were in the high teens. But we do expect improvement really dependent upon predominantly wage growth exceeding overall home prices as well as mortgage rates coming down, although only slightly. What the lack of affordability has done is kept housing really in the doldrums.

And what you're looking at is the total number of existing home closings as a percent of households. And we like to look at it that way because you can actually see that we're running at about 3.4% of households are turning over. And you can see that, that is actually pretty consistent with prior trust in previous recessions. So we're really at recessionary levels. But in my 30 years of analyzing the industry, it's the first time that we've ever had recessionary transactions, but yet home prices have still been increasing nationally.

Now home prices have decelerated, and we do expect that to continue. But we're looking -- price is really the lever. We need people to capitulate to get off their aspirational asking price, lower their home values or lower their asking prices happening. Predominantly in the Sunbelt and we'll get to that a little bit later. But we do expect that, that will result in modest improvement in existing home transactions. What we're seeing is spreads, mortgage rates have been coming down they've been helped by spread compression.

So the 30-year mortgage rate is actually priced off the 10-year yield. So when you think about the spread, the 10-year to the 30-year fixed mortgage rate that as high as over 300 basis points. And now it's down to $192 that's helped reduce mortgage rates and mortgage rates are covering right about 6% today. We actually ticked slightly lower. We were like 5.9% something, [ 99 ]. But we are seeing that the mortgage rates have moved kind of slightly again because the 10-year yield is now was 412. So we watch the tenure very closely.

And what really mortgage rates have had the challenge is a stuck factor. So when we go back during COVID, and there was free money and mortgage rates -- or close to it a lot of people wanted space, they wanted more distance, and that resulted in the boom we had in housing, but actually, it locked a lot of people in. So 2 years ago, over 90% of homeowners were locked in below the 5% level.

Now we're at [ 72 ] or a set that a stay roughly where they are today, by the end of [ 29% ]. So people are like, why would I move? I don't want to give up that rate. So that's keeping the overall demand depressed but people do have to move. I mean my colleague just had a second child a year ago, leaving a townhouse in Chicago, moving out to the burbs. Life moves on. We call it the 3 Ds. Death, Divorce Default, but the last discretion is the one we've been missing and people are starting to recognize that their lives have to move on. So we're more optimistic that we'll see a slow improvement, but I'd say it's slow brine. We're not looking for any gangbuster change in the market.

Here, we look at inventory. Similarly, we want to look at existing inventory and new inventory divided by households. Just to give you a spectrum, you can look at it historically that we, although have ticked higher, we're still at very depressed levels. which has enabled home prices naturally to continue to move higher, although we have tail of two geographies. We have Sunbelt that is generally under pressure, that got overbuilt by both the single-family developers and the multifamily developers.

And we're now dealing with getting all that inventory either sold or leased up, but we're also seeing in the existing market that the inventories are low enough that, for example, the Midwest and the Northeast are still seeing appreciation because demand is so much stronger than supply.

I just want to show you one graph to do pick that. If we look at the left on this correlation, if you look at pre-COVID, inventories in Hartford, Connecticut are down 80% and compared to where they were in '19. And then you can see that home prices are still up almost 8%, if I'm reading that chart right. comparatively, if you look at Austin, Texas, inventories are up, call it, 50% since 2019. And you can see that home prices are actually down. So that's the divergence that we have in the market. Again, it's really simple.

We need to absorb all the inventory that we have in the market, and that's happening as housing starts have slowed, we're seeing some very strong lease-ups, although modestly lower in the multifamily market, I'll get to that later. But we are looking for existing home closings to increase in '26, roughly 5% and then stronger in 2027 slightly but, again pretty -- when you look at it back to that housing turnover trial I showed you earlier.

Moving into the new home market -- sorry, existing home prices, '26, we're looking at flat and then a slight improvement in '27. Looking at the new home market. The new home market, we do proprietary surveys, really across the whole Ecostone, starting with mortgage as well as real estate brokers, homebuilders multifamily operators, shore building products, everything that goes into the ecosystem. And for our February homebuilding survey we just published due to easy comparisons, February year-over-year was up roughly 10%. I'd say that this is not anything to get too excited about, but it's really based almost entirely on community count growth.

So I'd say the organic orders are about flat. When we look at what's happening, though, is that the absorptions are actually pretty healthy. If you think about retail same-store sales, think about homebuilders, how many homes can they sell per community. And roughly something in that 4% range is pretty healthy, but it's really coming with incentives, substantial incentives. So the incentives right now are running at very, very high levels.

And this is a proprietary survey 0 to 100, 0, no incentive is 100, the most incentives you can have and across our housing market, we can see that incentives are still up predominantly mortgage rate buydowns. So builders are buying mortgage rates down to as low as 399% more in the range of $499.

Looking at the material costs, they've been the good guy and material costs have remained very benign, and that's really because builders are suffering. So they're pushing back to their vendors, and that's been a good guy. These are the wrong slide, Kelcy, but that's okay. Home prices, we are seeing down net of incentives. So when you look at that negative 5%, that negative 5% that I just showed you was inclusive of incentives.

Let's move to we're on the single-family side -- probably in the midst of changing. Here's our housing start forecast. Let me go back a moment, sorry. So when you go back to the single family, we're going to get into my next section is single-family rental. The single-family rental market has been also, I'd say, challenged with inventories, both from build for rent, as well as existing single-family rental products have been more prevalent again in the Sunbelt where we're seeing leases that are under pressure.

Okay. So I'll just keep talking and then I'll show you the chart when we get there. So when you think about the single-family rental market, it accounts for total shelter around 11%. The multifamily market accounts for 23% and you'll just tell me because I'm not getting there. But the 23% of multifamily, 22%, 11% single-family rental that has been gaining share, and we expect that, that will continue to gain share as a result of the very stretched affordability. The challenge in single-family rental, I think, has been more really due to the oversupply of the new construction built for-rent market, and that is putting pressure on lease rates. But we are seeing that -- so really, the single-family rental market has been gaining traction as consumers are really inclined to have more flexibility.

Maybe the sentiment towards homeownership has been depressed and people are realizing maybe I don't need to be homeowner because it's not a great asset class. I might not get a good return. Maybe I'd rather invest in crypto or in just equities. But young people today are disenchanted with, I think, ownership. And we think, therefore, that we're going to see share gains, both in multifamily and single-family rental.

Right now, single-family rental monthly payments are about 30% lower than if you were to buy a home today. So it's a very favorable comparison. And when you look at the single-family rental market, rent levels are coming well below trend lines. We have a new move-in rent growth that is here we go. We're finally here. So as I showed you, this is what I just was depicting about -- we're about 30% plus better off on a single-family rental than we are in a owned home.

When you look at the affordability, though, when we look at the rent for single-family home compared to income it's elevated. You could see by the income line, the blue line, but it's definitely been coming down, again, more favorable than ownership. Rent rates are under pressure, and we expect that to continue, but there's still positive new move-in or negative, and we have renewals that are increasing.

But recognizing that, that's been the early signs from the public REITs that have just been either on webcast, various competitor conferences have indicated they've seen some green shoots. Demand is definitely there. They're still dealing with more concessions, and that's going to continue.

So sort out all that, let's get into the multifamily now. In multifamily, I'd say the good news, the blue line depicted at the top there, the 3.8% growth that you see in households that are renters, while it has decelerated it's growing faster than the owner level of households that's growing at about 3%. So that's sort of going in line with what I was suggesting that we think that the rental market take share from the new home market or the existing market as well. We've seen continued pressure on rents. The lines that you see there, new move-in rent has been negative, and renewal growth has been actually fairly I think surprisingly strong -- a total considering the challenges in the market. And we do expect that rent growth will continue to be pressured this year. The challenges, just looking at the rent growth is doing better. You could see that Class A is outperforming both B and C. And C is really like someone asking, I think it was a colleague in the room, where would you be putting your money today is workforce housing the way to go.

And I think that we would all agree in our key economy that, that Class C tenant is the most stretched and the most difficult scenario would be to try to push rents on them. And we're seeing most of the deportation and risks associated with the immigration policy for the Class C product. Now this chart tries to quartile where we are in supply. Supply is the big challenge today, absorbing that slide. So you can see in the top quartile, the 4.5 years we have, that's based on absorptions over the last, call it, from 2012 to 2019. So we tried to look at pre-COVID. What absorption look like.

I'm back at the quartiles, I want to show you that. Okay. So when you look at the 42% that's in the top quartile, the supply, both the top quartile and the upper quartile, those -- that's the Sunbelt. So that's the majority of where the supply needs to be absorbed. Comparatively down at the bottom where you see actual rent growth is the 1.4 years, is that sort of a supply balance.

I think that it depends on the absorption that you're using. If you use the last 5 years of absorptions, we'd have less supply. So I don't think the last 5 years are likely be indicative of what's a true trend line. So I'm more comfortable using pre-COVID absorptions. But again, you can use your own sensitivities. But the challenge in the market, not a problem with demand. The problem is with all the supply that we need to absorb.

Here, you could just see from a rent-to-income ratio, we have been seeing improvement in rent to income for multifamily. So we are seeing declines and the blue line is nonsupervisory versus all employees. Get more favorable. The actual numbers make -- it's much more compelling, $833 difference in the monthly rent versus buying a home. So I think of the monthly payment. So very compelling to be a renter today, which is a homeowner.

The blue dot you see depicted is the amount of lease-ups that happened in '25, significant amount of lease-ups as compared to prior periods, but you can see the impact it had on rent growth. So the brown bar is a picking rent growth. So that lease-up activity, we think, will continue in '26. The hope is that, that will be front half weighted with less lease pressure in the second half. We're more dubious and things that will go into '27 with still challenging lease growth.

But what I want you to see here is a lot on this chart, but focusing on the blue -- light blue line because that's absorptions. Absorptions are our demand. So absorptions are being impacted because unemployment has been under pressure, we have to be thinking about what's going to happen with the backdrop of the -- that's where the question mark will lie. If we have absorption. And by the way, based on our multifamily contacts, we're seeing some green shoots in multifamily as well right now.

And I think the public reaches around -- and everyone were indicating they're seeing some signs of strong demand, but still concessions still significant supply and especially again in the Sunbelt. Here's our rent growth forecast. And you could see here that rent growth in '26, we're looking for improvement, but not yet back to trend line and then continued improvement in '27.

And here, we have our forecast for starts, completions and backlog. As you can see, the start growth is kind of getting back to really more a trend line. We could debate if that start -- I think to some of my colleagues in the room, Chris Mike, seems like nobody is starting anything. So it doesn't make -- it doesn't pencil, but we are seeing starts and we can debate that, but that is really the big question mark, and backlogs coming down is a very favorable thing.

Just looking at the transaction market, and Chris, I'm sure we'll talk more about this. It's been challenging, but you can see depicted there that 17% growth that we saw really through last year has been favorable, and cap rates have been pretty stable at 5.51, making it more attractive for sellers. I think here, you could see that both the indices from our survey or NAND and supply indices are both moving in the right direction. So more are listening and more are buying. And that's helpful to the transaction market for WD to capitalize on.

Here we just show you the acquisition market. Financing has actually been moved steadily higher both for development, equity as well as debt. And I think that will help the trend of continued expansion in transactions. That's it. I had one more, I think. No. I think I'm done. I'm over. There was one or two more slides that I just wanted to say that the transaction market is, in fact, seeing more activity. And what we're hearing from our multifamily developer operators and those in the market is that there is an appetite.

And it's not uncertainty from the economy backdrop is weighing on people, but I'd say there's more optimism recently when our colleagues were out of multifamily, ULI just feels like people want to transact and that's something that we watch and sentiment is very important. So sorry for all the confusion on the slides, and I hope you found that helpful.

Thank you, Ivy. Insightful as always, and you clearly know your stuff. Slides or no slides. So thank you very much. Good morning, everyone. Thank you for being here with us today. I'm Steve Theobald, I'm the Chief Operating Officer at Walker & Dunlop.

I've been with the company for 13 years. And some of you may remember the first 9.5, I was the CFO. So I've been in the COO role for about 3.5 years now. I have responsibility for our valuation business, research and investment banking on management and servicing businesses and then also asset management, GSE underwriting, technology and marketing. So my job with my colleagues is to make sure that we're bringing the weight of the W&D platform to all of our client interactions and that we're doing that in a manner that's consistent and has exceptional execution.

Willy debuted this slide already, but I had to kind of linger on this a little bit. As he stated, we put our clients at the center of everything. My colleagues are going to talk about the light blue pie pieces around the center. One thing I would observe is in the 13 years I've been here, we've added many of these capabilities. So when I started in 2013, we were not in investment sales. We did not have investment bank capabilities we really weren't doing anything on the equity side, and we didn't have tax credit equity.

So most of those were missing from our service offerings back in 2013. We also were not in investment management or research or valuation. So think about all the things, the pieces here that we've added in the last 13 years as a company, all with our clients in mind, all focused on capital markets. And the way to think about this, with your institutional middle market, private client, you come to us for your capital markets needs which is represented mostly by the light blue pieces.

Around that are the businesses, many of which I lead that are supporting and complementary to those capital markets services. So whether it's investment management, which provides us another cattle source for transactions with our clients, research, which Ivy leads and Will already mentioned, an anecdote where we have clients are benefiting directly from that servicing where our business comes to, and that is the -- at the end of the day, if you do a 10-year loan, you have a 10-year relationship with that client.

And that is super valuable in terms of how we approach that and how we think about that. And then on the valuation side, we're in commercial real estate, everything revolves around what's it worth. What's the value. And so we have that as an offering that complements our overall capital markets business. And then wrapped around all of that is technology. So WD Suite is the digital experience that we've created that enables us to interact with our clients through technology, and Megan is going to talk a lot more about that in her presentation.

But that wraps all of the services that we provide to our clients today. Why is this important? As Willie said, we're moving up the y-axis. We're not moving out the x-axis from a services standpoint. Everything revolves around capital markets. Servicing, as you know, provides the cash flow and the fuel for growth of the company always has, and it's only gotten stronger and we'll continue to do so. So as an investor, why do you care? Why is this important?

So first of all, it allows us to take greater wallet share with our clients. We have -- our clients love us. They love doing business with us. They are very loyal. The more services that we can provide to them. the better off we are, the more revenue we can generate as a company.

We get recurring revenue. I mentioned servicing, right? We do a loan, we do a Fannie loan, Freddie loan, HUD loan, it goes into our servicing portfolio. We generate revenue off of that. We generate a sticky relationship. We generate investment management opportunities through our structure, which then also provides long-term recurring revenues. We sell research, which is also a long-term revenue stream for the company. So diversifying revenue stream away from purely transaction-oriented to long-term sustainable streams of revenue for the company. Improved risk and control.

So all the data we're gathering, all the information in our servicing portfolio, all of the market intelligence that we're gathering on a daily basis and bring to bear in terms of managing credit. And one thing I do want to pause here and talk about is on the credit side, Jim Schroeder, who's going to talk about debt operations and servicing later. We got the GSE credit function about 2 years ago.

As a CPA as the former CFO of the company, I bring a very process and control oriented approach to how I manage things. Jim brings the operational background of servicing and we're bringing that expertise and experience to our GSE underwriting practices. As the largest GSE lender in the country, we were not immune to fraud that occurred post pandemic. We're working through those issues. We have an excellent track record from a credit standpoint, which you'll see later as well. If you take the frog that happened away our credit is still exceptional. However, we've still done a lot to bolster the processes and the underwriting approach that we've taken to credit, and we think we've gotten ourselves to a good spot at this point in time.

And then finally, scale. We have parts of our business that are at scale, other parts that are getting to scale. At in-scale add margin. We have businesses that we've been investing in that are supporting our overall capital markets business as those scale margin will improve. And so from an investment perspective, all these things are driving towards increased profitability and margin.

So how does that work on a day-to-day basis? Think about the life cycle of a deal. So the -- on the early engagement front, our research is arming both our clients and our bankers and brokers with the data to support an investment in this market, a divestment in that market. We're providing that information to allow us to enable our business better.

On the valuation side, as I said, what's the property worth. So -- is it improving market deteriorating market, all those things come into the early engagement side. WD Suite, which I mentioned earlier, one of the interesting elements of that is a tenant credit tenant credit profile, where we have the aggregate credit score of the tenants in that particular property. So you can see the trends over time. You can see how that credit profile compares to the entire neighborhood, which is super insightful and valuable to folks who are looking to invest in a particular market or in any particular asset.

So that's one of the proprietary pieces of data that we are actually providing our clients are today. So all that goes into the advice on where to invest, how to invest. Then in sitting with our clients, do they buy, sell, hold, recapitalize, do they build we're arming our bankers and brokers with the advice to provide to their clients. And then from that comes the actual execution.

So the deal management, whether you want an agency loan whether you want to tap into our proprietary capital sources through our investment management arm, whether you want to broker it off to CMBS or a bank, we have the full spectrum of capabilities there to execute on. We underwrite those loans that go into our servicing portfolio, and that creates the virtuous loop of transaction into servicing cash flow, cash flow invested back into the business.

And then all of this is supported by our technology organization. So bringing the data together, bringing the workflows, client intelligence and all of that comes together to help us execute better. So I think it's always helpful to provide some examples like when we talk about this, what do we really mean? So I'll give you a couple of quick anecdotes that show what we're talking about in terms of bringing all these services together.

So a quick one here. We sold two assets in Georgia. We also did the Freddie Mac financing for the buyer of those two assets and our appraisal team did the appraisals for those two loans. So that was one transaction, three separate fees, all from being able to provide all of those capabilities.

Next one, I think this is an interesting one. There's a lot of noise going on and change potentially coming to the SFR space. We have the sole adviser role with resi built to sell their homebuilding unit. And the buyer of that was Invitation Homes, who is in the single-family rental space. and wanted to be more vertical, which in hindsight may be a good move for them. So very strategic transition in terms of matching the buyer with the seller and getting great execution for client.

This was also sourced by a combination of Chris [ Nicholson ] and our capital markets, institutional advisory practice and our investment banking group here in New York. So again, a joint effort in terms of getting best execution for our clients. So I wanted to pause for a second. I think it was Mark Twain said, history doesn't repeat, but it often rhymes.

When I joined the company in 2013, it was right after the FHFA put the caps on the agency multifamily business. So we went through a period 2013, most of you around them will remember, '13, '14, a little bit into '15 of very challenging transaction markets. We took some actions to reduce our cost structure back then. And then things turned and we reeled off, I don't know, 5 or 6 straight years of $1 of EPS growth every single year like clockwork.

So we've got some very anxious goals here. And as I pointed out in the first slide, our capabilities as a company are so much better today than they were back in 2013 when I joined that I have a significant amount of optimism here in terms of our ability to actually achieve these goals over the next 5 years and we have the team to do that.

As Willie mentioned, we've had some changes over the course of my time here at the company, but we have a leadership group that is incredibly strong, incredibly team-oriented and incredibly focused on achieving these goals. And I feel wildly optimistic about our chances of achieving this. So with that, I'm going to turn it over to my colleagues in Capital Markets.

Good morning, everybody. Willie referenced his age earlier. Willie, maybe you should start just referencing your whoop age versus your actual age. If anybody has a whoop, they get that one. So my name is Chris Mikkelsen.

I came to W&D in April of 2015. It was part of W&D's entrance into the multifamily investment sales business. It's been a massive effort, and it's taken the help of a lot of people, but we've taken that business from a regional boutique to a national powerhouse. And we'll talk more about the momentum there in a minute.

But before we go there, I want to pause and I want to sort of reemphasize something that Steve just mentioned. And it's probably something that Willie candidly can't do on his own. You all would probably discount it given the position that he's in. But Walker & Dunlop's position in the marketplace, our brand, our relevance with our clients, the capabilities of our platform, the technological infrastructure, it has all been utterly transformed in the 11 years that I've been with W&D.

And from a personal standpoint, I think it's important for me to communicate that to you all. I spent a tremendous amount of time in the market in front of clients and also on the recruiting trail. And on the client side, we have significant depth and diversity. The largest -- from the largest global asset managers to the individual local owner operator.

In 2025, we transacted with over 400 buyers and sellers. We represented over 800 borrowers, and we sourced capital from 275 distinct capital sources. That reach is tremendous. I think about how my recruiting conversations, I spent a ton of time on the recruiting trail. I think about how my recruiting conversations have changed over time from spending years with candidates, convincing them about what we were building, building trust and the relationships to earn their trust, so they would be willing to come over to today where in the case of our most recent recruiting ad, an investment sales professional in Seattle, we literally get a telephone call in the fourth quarter, and he says, I've been watching everything that you all have done all across the country, and I want to come to Walker & Dunlop.

I want to lead the charge for you in the Pacific Northwest. That is really a transformation that has taken over 11 years, but is here today. So we have a lot to cover about where we're going from a capital markets platform. But I want to anchor the conversation right here. First, this business has transformed itself over the past decade. Second, we are equipped with a full set of capabilities to engage with our clients like we never have before. Third, we have a tremendous amount of momentum.

We're going to talk about that and quantify that. And with these capabilities, with our momentum and with our focus on industry-leading talent, we're going to run down these very audacious goals that we've set forth in our Journey to 30. So we've seen this slide a couple of times. Steve covered some of the multiple touch points we have within the individual client. But this is -- when I think about the capabilities that we have today, this is a slide that I think about. debt, equity finance, investment sales, research, investment banking, valuation services, we can provide proprietary capital.

We have the ability to engage with the client and provide solutions irrespective of their need. It enables our bankers and brokers to move from merely an intermediary to a true advisory role, and that is a differentiator within the market. All of these services and products are supported by our scaled servicing and asset management business. So the result of all this is a very powerful platform dynamic. The more we serve our clients across multiple needs, the more transaction flow moves through the platform.

That flow increases, our advisers benefit from better insight into client behavior, their preferences, market execution, making them more effective, our advisers more effective with every transaction and every deal. Over time, the combination of client breadth, life cycle engagement and better insight creates a durable competitive advantage. It's the investment that we made in GeoPhy and Megan will talk through that a little bit more that allows the knowledge to really compound across our firm. And what does it result in? It results in a Net Promoter Score of 82.

The capabilities and quality of the execution is really resonating with our clients. This number is obviously well in excess of the industry average. So we talk about the role of capital markets, what we're really talking about is increasing the relevance of WD with our clients. We're using all these channels we discussed on the earlier slide to capture more of their business.

The increased transaction activity, particularly on the banking, equity and sales front leads to more debt capture, which leads to more servicing income. That's the revenue, that's the recurring revenue that stabilizes the platform and adds additional capabilities for us to reinvest in the business. In my first few years at Walker & Dunlop, it was all about trying to sell as many assets as we could and staple the financing to those assets to feed the servicing business. That over the last couple of years and really since the acquisition of GFI has changed a little bit.

Megan and her team, they're building a technological infrastructure that's really fueled by W&D Suite, where the density of that transaction data and the ease to access that information will make our salespeople and is making our salespeople wildly more effective in front of clients and across the market. Remember, every deal creates underwriting data, market intelligence, client preferences, market comps, all that feeds our production team, it feeds our credit intelligence, future pricing decisions, recapture timing as we think about the retention book.

So we go back to this slide that both Willie and Steve have mentioned. As Willie said, it's not really -- it's not a scientific slide, but it does lay out the competitive landscape in regards to their focus across cap markets and commercial real estate services. As we think about our plan to move further up the Y-axis, from the capital markets perspective, I think it's really simple. We believe that the most talented professionals within the real estate capital markets want to be a part of a firm that's focused on the real estate capital markets.

We're seeing that in the market real time. I mentioned earlier the time that I spent on the recruiting trail. We see talent migrating out of these global real estate services organizations Back to capital to firms where capital markets is really the core function. If you've seen the capital markets function of the global real estate services organizations, I think it's very fair to say somewhat deemphasizing that part of their business over the last couple of years, it's been to the benefit of folks like W&D who remain focused almost singularly on the real estate capital markets. So when you think about who we're competing with, you look at the names below the x-axis and whether it's Colliers, Northmark, Marcus & Millichap, we don't really see them very much. We see them maybe in a specific market here or there, but it's not consistent.

We're competing most consistently with the names on the top right-hand side of the list, and we'll look at the momentum we have relative to them in the multifamily space in a minute, and Ali will speak to the growth opportunities that we have as our capabilities move beyond multifamily. So one of our great strengths as a firm is the diversity of our client base. Willie walked through this slide a little bit earlier. I'm going to unpack it in a little bit more detail.

First, you have the global alternative asset managers and traditional asset manager set. These are clients that are conducting business across all asset classes. They're doing it across credit and equity, and many of them are doing it globally. 10 years ago, when I came to W&D, this group, particularly the group on the top left, the alt managers were operating almost exclusively with opportunistic vehicles.

And steadily over time, they've raised capital across the risk spectrum, arming themselves in some of these instances are aligning themselves with captive insurance capital to provide longer duration core and core plus capital, and they've also really focused on the private wealth channels to continue to aggregate capital. These names will continue to control more capital. Willie walked through some of the slides of their progress over the course of the last few years.

We've known that, and we've been organizing our coverage accordingly for the last 10 years. When I think back to when I came to W&D and the challenges that I had as a salesperson knocking on the door of the Blackstones or the Starwoods of the world and recognizing the hill that we would need to climb to be able to earn their business. We're now included in these conversations. We're competing for and winning these mandates. We're steadily increasing our relevance with these groups by doing more things in more places.

And as evidenced by our early capital markets engagements that you've seen in our London office and across EMEA, where we're transacting with some of the names on this list, Growth in that segment will be another very -- growth in this segment will be a very important component part of our Journey to 30. Willie talked about our sector-specific investors, and he covered it, but this is largely a multifamily conversation.

Many of these groups have grown into vertically integrated fund managers. They've got asset and property management arms, but for all intents and purposes, they're singularly focused on the housing space. So the way that we've organized our capital markets platform with professionals that are also singularly focused in housing is enabling us to continue to be more relevant and gain more share with this client base. The third group, these are our sort of regional owner, developer and managers. This is a group that most of these clients are playing across all the asset classes. They're doing it at a local or regional level.

This is why we have offices in 50 markets across the country with boots on the ground in market expertise in every single one of those offices. Ali is going to walk through a few case studies of how we are extending debt and equity solutions across product types to help these clients grow. It's a fragmented market where our scale and organization will benefit us, particularly as we add additional subject matter expertise across sectors. So the takeaway from this slide is very simple, and it's one word, it's momentum.

Outside, if you look at the top four names on this list, this is multifamily investment sales year-over-year. All top -- all the top four grew significantly from '24 to '25, but Walker & Dunlop at a 42% increase led the industry. Outside of the top 4, every other significant player took a step back. I'm hugely encouraged by this slide for a number of reasons. Walker & Dunlop wasn't on this list 11 years ago for beginners. That's when we came over to build this business. But we moved past Marcus & Millichap, Berkadia, Eastdil, Cushman & Wakefield, all household names in this space in '25.

We've retained many of our key team members and already added in 2026, one of the few markets where we previously had no presence. I mentioned the Pac Northwest. I think about one of my early Sun Valley summer conferences, we had the author of -- good to great, Jim Collins come and speak, and he talked about team building and he talked about the importance of the big seats on the bus. When I look across our landscape in the capital markets platform that we've built, the head of our hospitality practice, the head of our Digital Infrastructure practice, the head of the team that we have covering the large alternative asset managers, the head of our EMEA debt capital markets platform.

They're all in a similar peer group. They all are very established in the market. They all have a tremendous amount of runway in front of them. There are five real ingredients to a highly performing team: trust, communication, commitment, accountability and a focus on results. But the first and most important is trust. And that's something that is unique at W&D.

Our producers have trust in one another and trust in the leadership to go to market as a team, not as a collection of individuals. We can do that very easily, much more easily, I should say, given our size. We talk a lot about our big company capabilities, but our small company touch and feel. That's an important feature, and it's another thing that makes our capital markets platform distinct.

So with all that as a backdrop, here's where we're going. And Willie showed the slide, but it's $115 billion of total transaction volume. That's across sales, equity, debt on our conventional and affordable platforms, $1.1 billion in revenue, which is more than the total revenue that was generated across the business in '25. This is a bold and audacious goal and on its surface is someone who is going to be accountable for executing the plan. It was pretty daunting at first. It was Don and Ali and I as we sat down and we thought about this goal, we started breaking it down into component parts and understand -- as we really start to think about -- understand our current market position, the opportunities for growth, it started to feel more and more in reach.

It was still bold, but as Willie and Steve have said in their opening remarks, we have a history of setting bold plans and running them down. So we really have three component parts within the capital markets of our Journey to 30. And sort of the how as to how we're going to bridge this gap and how we're going to grow to our transaction revenue goals. So the way that I think about the three legs of the stool, first and foremost, is the size of the market.

We're coming off several years of subdued activity within the transaction markets and capital markets activity in general. Ivy showed and Willie showed some of those slides earlier. You can find various forecasts about where that's headed over the course of the next few years, and we'll cover some of those later this morning. But the takeaway here is our existing position in the market puts us in a position to just naturally benefit from increased capital markets activity. So the market is going to get bigger.

But second and probably more importantly, is market share. And market share, when I think about market share and sort of the core foundation multifamily part of our business. We'll continue to build the momentum that we have that we showed on the earlier slide.

We still have plenty of room to grow. And as we steadily increase and aggregate market share across debt, equity and property sales as the sales and financing markets reaccelerate, you can make very reasonable assumptions about the amount of revenue generation that comes with every single point of market share. And if you make conservative assumptions about the sales of the size of the sales and finance markets in multifamily, you can back into a number pretty quickly that 1 point of market share generates somewhere around $40 million of revenue.

So there's sort of two ways to look at it. If we're trying to pick a number, you're trying to add $200 million of revenue to the business and just in multifamily over the course of the next 5 years, that's a pretty daunting goal to sit down with your sales teams and say, "Hey, let's go find all of this extra revenue. But if you sit down with sales teams and say, "Hey, we need everybody to go out. And every year, we need to find one more point of market share. It sort of reframes the work that we have ahead of us.

And in my mind, with the platform that we've built and the momentum we have, the talent that we have, we can go get that. So it's increasing market share in our core multifamily business. And the third leg of the stool is diversification. We're investing in subject matter expertise to expand product coverage as well as opening new geographies. Ali is going to cover some specific examples on how that's playing out in real time.

We'll continue to do more things with more people in more places. Diversification in emerging businesses will mature over time and ultimately become sort of that third component part of achieving our 2030 transaction and revenue goals. So I hope that sets a little bit of a stage for where we are today and where we're trying to go in capital markets.

Don is going to come up and talk a little bit more specifically about the multifamily business.

I'm Don King, Co-Head of our Capital Markets division. Today, you've heard from both Willie and Chris, two exceptional sales leaders who focus most of their days externally meeting with our clients. I have a different role. I'm focused mostly internally, making sure that this complex business is operating smoothly and is continuing to scale.

Today, I'm going to talk about multifamily, the core of the Walker & Dunlop Capital Markets platform and in our view, our most defensible franchise. I'm often asked a simple question. What happens to the GSEs?

I have operated GSE lending platforms both before and after conservatorship under both Republican and Democratic administrations. Throughout decades of policy debate, one thing has remained clear. The GSEs continue to serve as the primary liquidity engine for multifamily finance. While Walker & Dunlop has diversified meaningfully, multifamily remains the core of our capital markets platform and our most defensible business. It generates our strongest margins. It produces recurring revenue, and it is protected by structural advantages that are difficult to replicate.

This is not simply our largest segment. It is our moat. Our multifamily moat is structural, not cyclical. When we talk about defensibility in multifamily, we're referring to our position inside the GSE and HUD ecosystem. That advantage rests on 4 structural pillars. First, regulatory barriers to entry. Fannie Mae, Freddie Mac and HUD operate delegated regulated systems.

Approvals are earned over decades, delegated underwriting authority is limited and the servicing and compliance infrastructure required to participate are significant. This is not an open brokerage market. It is a regulated capital channel. Second, structural cost of capital advantage. The GSEs and HUD consistently provide the lowest cost, longest duration capital in multifamily. In periods of volatility, their relative advantage widens. When banks pull back, liquidity migrates towards certainty and scale, and we are one of the largest participants in that ecosystem.

Third, scaled market leadership. We are #1 in Fannie for 7 consecutive years, #3 in Freddie Mac, #2 in GSE overall and #2 construction lender with HUD. Scale drives influence, information flow and execution certainty. Every transaction expands our data advantage, underwriting history, sponsor performance, asset level insight, which improves pricing precision, speeds execution and ultimately increases our win rates. This is a self-reinforcing system.

And finally, the recurring revenue flywheel. Origination feeds servicing, servicing generates stable recurring income, servicing drives recapture. Multifamily borrowers refinance repeatedly. Affordable housing requires ongoing capital formation. Bridge to perm creates multiyear relationships. This is not episodic revenue. It is durable recurring economics laid on to a needs-based asset class. While our leadership in the GSEs ecosystem is a core advantage, our multifamily platform extends far beyond those channels.

In 2025, we originated $11 billion of non-agency multifamily loans with 138 unique lending partners, including banks, insurance companies, debt funds and CMBS lenders. Those relationships give our clients access to the full spectrum of capital solutions, and they allow us to remain active across cycles of capital as capital availability shifts. Our 2025 total multifamily market share was 10.6%.

In 2022, it was 7.6% in a much larger market. So while the market shrank, our share grew. That's the momentum Chris discussed earlier. The breadth of that capital network is another structural advantage for our platform. The market backdrop supports growth. The MBA projects total CRE originations of $805 billion in 2025, and that number moves up to $840 billion in 2030 based on our forecast. Multifamily historically represents about half of that, roughly $400 billion in 2026.

That makes multifamily the largest and most liquid asset class in commercial real estate finance. The fundamentals are clear. The U.S. remains structurally undersupplied in housing. And as you just heard from Ivy, the cost of homeownership is prohibitive for many Americans. Rental demand is durable. Affordability remains a national priority. If we simply maintain our roughly 10% overall market share, our volumes expand about $40 billion in 2026.

Our plan is not to maintain market share, but to grow it. Every 100 basis point increase in market share adds another $4 billion of volume. On the GSE side alone, projected capacity is approximately $176 billion. Maintaining our 2025 GSE market share of 11.2% implies roughly $20 billion of volume. Our plan is to grow GSE market share as well. Every 100 basis points in GSE market share adds another $1.7 billion. The markets will grow, and we will inherently grow with it. But we plan to grow market share, and I will talk to our path to gaining market share momentarily.

We do not need heroic assumptions. Market growth plus disciplined execution drives meaningful expansion. While maintaining market share drives growth, we are not standing still. We have been incredibly successful hiring the very best bankers and brokers to our platform to build up the brand in the market that we have today. We plan to increase our bankers and brokers by about 20% over the next 5 years, expanding in key growth markets.

We are increasing investment sales volume and improving tie rates between debt and sales, bringing the full weight of the platform to our clients. We are investing in technology to increase producer productivity, automating underwriting workflows and accelerating quote generation, allowing our bankers to originate more volume per producer. And we are seeing large portfolios transactions begin to reemerge, transactions that favor scaled platforms. This is disciplined expansion built on structural advantage, not expansion in search of one.

Multifamily remains the foundation of our capital markets platform, combining structural advantage, recurring revenue and durable housing demand. But growth in this sector is not just about volume. It's about meeting housing needs across the spectrum, including affordable and workforce housing, where capital formation is critical. The affordable segment is strategically important to the country and to our growth.

With that, I'll turn it over to Sheri to discuss our positioning in affordable.

Good morning. I'm Sheri Thompson. I'm the Head of Affordable Housing at Walker & Dunlop. I spent my career in agency lending, having positions as a Chief Credit Officer, a Chief Operating Officer and Head of Originations. This is actually my second time at Walker & Dunlop.

As Willie talked about people coming and going, I'm actually full circled. I started my career very early as an underwriter for Willie [ Dad ]. And I returned a little over 7 years ago to run our HUD platform. At that time, I also helped to architect our affordable strategy. And what we've built is products and services to meet today's market. So I now lead and manage our affordable and our HUD teams.

For us, affordable housing is a niche business. It's really an integrated platform of affordable experts that sits within our capital markets team and delivers both capital and advisory services. It was intentionally built to execute across the entire capital stack in the affordable space. 7 years ago, when I came back, we had agency debt, but that really wasn't enough. We didn't have other products and services.

And as Willie talked about putting our clients in the center, we listened to their needs and saw the market moving. They were looking for partners who could solve their entire capital stack. So we purchased Alliant Capital, which is now called Walker & Dunlop Affordable Equity, which was really to jump-start our comprehensive platform. And we did that strategically because LIHTC equity drives permanent executions.

And from there, we've built out our property sales and our bridge lending capabilities. As you've heard a few other people talk about, affordable housing is really complex by nature, which is an important driver of why we're actually in this business. There's layered capital structures with regulatory constraints, with compliance time lines and public policy mandates.

And execution requires expertise in every part of the business. We have professionals and have built a platform that delivers that to the market. So you heard Don and Ivy talk about the housing shortage in the United States, which is real and serious. Affordable housing demand is not cyclical. It's structural.

And as Don said, it's a national priority, and the government is highly focused on solutions. So right now, what we're seeing in the market is the government coming up with solutions such as expanding the GSE affordable housing goals, increasing GSE LIHTC equity allocations and greater emphasis at HUD on affordable housing solutions. In addition, we're seeing institutional investors' interest rise in this area.

And as Chris talked about, when he talked about client segmentation, we have penetration into those clients, and we're ready to serve them in their affordable needs. We already are in some cases. Don talked about the moat that we have in multifamily. And affordable housing is really a unique part of that moat. The complexity, capital needs and scale make it a distinct ecosystem and one where we get opportunities to engage with our clients on all parts of their business. That drives new and recurring revenues.

The regulatory intensity and capital complexity are really meaningful barriers to entry here. So we've built a coordinated system, one where transaction revenue activates multiple parts of the platform and really protects our moat. It's how we scale and how we plan to double our volumes in this space over the next 5 years, contributing meaningfully to our capital markets growth.

So this slide really highlights the sequence of an affordable transaction and our focus on our clients' needs throughout the life cycle of a deal. There are really very few platforms that have actually all six of these components. Most people didn't have the time, the money or the energy to really create the moat that we have here. And each phase that we have in this creates incremental engagement opportunities where a single asset can drive revenues across multiple products over time.

The result of that is a greater wallet share, stronger retention and expanded recurring revenues. So how are we going to scale? We've really got three ways in the affordable housing that we're focused our priorities on, expanding our bridge lending, expanding our property sales and scaling our equity and dispositions. Bridge lending fills a critical gap in the market, and it provides speed and certainty of executions for our clients.

And it allows those clients to execute through complex affordable subsidy timing and regulatory approval. It really creates sticky clients and drives downstream permanent debt and property sales opportunities. So in January of this year, we launched an affordable bridge product with our partners at [ Pretium ] to meet that need in the market and expect to drive meaningful permanent debt and sales opportunities in the future.

In addition, we're currently working on a seniors housing bridge product to similarly support our HUD producers and our property sales teams to drive seniors permanent volume, sales and revenue. And Don outlined that sales drives financing. Our affordable property sales also strengthens debt capture rates, portfolio visibility, early recapture insights and broader advisory engagements.

And as we expand that capacity, we're going to increase our visibility into our clients' portfolios, which gives us a lot more integrated execution opportunities because when debt, sales and equity are aligned, we get higher win rates and greater market share. LIHTC Equity delivers revenue across both our capital markets and our SAM segments.

It's why it's so valuable to us. Because every time we make an equity investment, we get transactional revenues upfront in syndication fees and permanent debt. And then during the life cycle of that investment, we get recurring revenues in the way of asset management fees, fund reimbursables and servicing revenues on the permanent debt that we placed in the beginning. With over 107 funds and over $6.7 billion in equity currently deployed, that's a lot of meaningful revenue that comes in annually.

And then as those deals mature, we get subsequent revenue or another bite at the apple because we get to look at refinancing, [ resyndications ] or sales. We have over 600 assets in the WAE portfolio currently, many of which are approaching the end of their life cycle where we can actually trade them. That will drive more property sales and more refinances in the coming years. So the point really here is the LIHTC business provides built-in deal flow. And as we scale it from about $450 million to over $1 billion annually, we'll go after every deal at every stage of the life cycle, growing both our capital markets and our SAM revenues. So the affordable housing has incredible tailwinds right now.

Now is the right time. We've got the right team, and we spent the past few years building it to be ready for this moment. There's a national focus on affordable housing. The components parts we've built has made our platform exceedingly well equipped to manage today's complexities. And with both capital markets and SAM revenues, we're not only a growth engine, but we're a stability engine. So this is actually my favorite slide, maybe a little bit because it's my last one, but mostly because the platform, what it's showing is that we also deliver measurable social impact in this platform.

Our 2030 objective translates into over 3 million families that will gain access to safe, quality, affordable housing, which is impact that's tied to our scale.

Thank you. I'm going to turn it over to Ali to talk about our broader debt brokerage platform.

Good morning. My name is Alison Williams, and I run our debt brokerage business within our capital markets leadership team. I joined Walker & Dunlop in 2014 as a debt originator, where I focused on both multifamily and non-multifamily debt originations in our Capital Markets group. I transitioned to leadership in 2021, where I continue to use my sales expertise, underwriting and disciplined execution to help drive our teams towards ambitious goals year after year. As you heard Don and Sherry discuss, we will scale our multifamily and affordable debt and sales platform, which remains our most durable engine and generates significant recurring revenue. But today, I'm going to talk about the other half of the opportunity, which is non-multifamily.

Let's start with the size of the market. As you can see in the slide, the MBA is forecasting that the 2026 total debt originations is going to be $805 billion. 50% of that is multifamily. The other half, $400 billion is non-multifamily. Today, our market share is only 2%, which shows that we have a massive opportunity to scale and grow within non-multifamily sector.

Our goal is to increase our market share by 2030 to 6%, which, based on the forecast, will create an additional $12 billion of volume. Let's talk about where we've been and where we are today. So if you look at the slide, you can see in 2020, our non-multifamily sales was $3.7 billion, and we grew that 68% to $6.2 billion in 2025. The growth we saw in non-multifamily from '24 to '25 was 29%. And the interesting thing about this is that we grew over the 5-year period by actually with actually reducing our debt brokerage team by 24%. Why this is important is it shows that we were able to basically retain and recruit new talent.

We had some, obviously, those individuals retire and leave the platform, but we were able to increase our volume per banker and broker, which is a staple and a priority for our firm. I'm going to talk now about the three priorities for growth. First, we will deepen our client coverage in private client, middle market and large asset managers by expanding our reach and expertise in growth markets. Second, we will scale our EMEA platform to increase our relevance with global and large asset managers who are expanding their footprint globally. And third, we will expand into sector-specific asset classes where we see the highest growth potential, such as hospitality, data centers and industrial and logistics.

Let's double-click on each of these initiatives. First, we plan to deepen our client coverage in core markets by continuing to recruit and retain top talent in both debt and sales with sector expertise. We will use our regional footprint, which Chris mentioned, is about 50 offices across the U.S. to provide sector and market expertise. We will grow our institutional practice to focus on larger and more complex transactions, and we will increase our use of technology to make our bankers and brokers more insightful and increase win rates, excuse me, and productivity.

As I spoke about earlier, we saw a 68% growth from 2020 to 2025. Much of that growth came from a strategic initiative to increase our relevance with large asset managers. Two great examples of this include the recent $407 million office financing, as well as the largest office to multifamily conversion loan ever done in U.S. history for $867 million. Both of those assets are located here in Manhattan.

The opportunity here is pretty simple. Hire and retain great talent, deepen client relationships and grow market share. The second key initiative is scaling our EMEA platform. The European commercial real estate market is over $550 billion in annual transactions. We entered Europe in 2025 with a clear objective to scale our relevance and market share with large global asset managers that currently transact with us in the U.S. We will continue to add top talent in both debt and property sales with sector expertise to increase our connectivity with the largest clients that have both capital needs and capital to deploy both internationally and here in the U.S.

We have already seen success in Europe with several notable transactions, including the recent EUR 118 million office building we just closed in Belgium. This is one of many transactions illustrating that our expansion into Europe has allowed us to increase our reach and frequency of transactions with existing clients. Third, diversification. Our third priority is diversifying into sector-specific asset classes where we see strong demand and the ability to tie debt in sales.

Our immediate areas of focus include hospitality, data centers, industrial and logistics. The hospitality market is around $70 billion in total annual transactions. Hospitality is a highly transactional market, making it a strong fit for our integrated debt and sales platform. Since adding a dedicated hospitality practice to our platform in late 2024, we have seen more than $2.5 billion in financing opportunities, including the recent win here shown for the National Edition Hotel.

Previously, our clients who invested heavily in both multifamily and hospitality would look to us to refinance their multifamily deals, but they would go to a competitor to refinance their hospitality transaction. Now that we have sector expertise, we are seeing more opportunities from our existing clients. A great example of this is the recent $225 million restructuring and extension for the Santa Monica proper.

For years, we've closed multifamily transactions for Ralberurry, but this was the first hospitality assignment for this repeat client. We are also expanding into digital infrastructure, including data centers, one of the fastest-growing segments of the market. In 2025, there was more than $60 billion of debt, equity and sales transactions, and it's forecasted to almost double by 2030. Transaction activity in these sectors is heavily weighted towards debt and structured finance, which aligns well with our platform.

Our sector specialists work hand-in-hand with our existing capital markets teams, showcasing the weight of the broader platform. Across all of these sectors, we are expanding selectively where we already have client adjacency, capital relationships and cross-sell opportunities. This is not a stand-alone build-out. This is a platform expansion. Alongside these growth initiatives, we will continue to invest heavily in technology and WD Suite platform, which Megan will speak to shortly.

AI and data will absolutely change parts of our industry. But many of our core businesses, including GSE and HUD lending as well as the complex capital and equity restructuring and our institutional advisory practice remain deeply relationship and expertise driven. Technology will not replace those relationships. Instead, it will enhance our platform by delivering better data and insights, greater transparency, faster execution and improved productivity.

Our goal is to create a seamless and end-to-end client experience while enabling our teams to work more efficiently. And by investing early, we can increase productivity without risking disruption risk. Stepping back, I want to discuss all the points that we've talked about today, which really points to the same conclusion. We've seen a significant opportunity to grow our capital markets platform. We will do that by adding 110 bankers and brokers across multifamily and non-multifamily debt and property sales in key markets.

We will remain true to our core by investing in the best-in-class talent with sector expertise. We will increase our market share in both GSE and brokered executions within our core multifamily and affordable businesses. And we will expand into non-multifamily sectors across the U.S. and Europe, deepening our client relationships and expanding our reach and market share. And we will invest in technology to improve productivity and win rates, providing better insights and data to our teams and to our clients.

Together, these initiatives position us to achieve our journey to 30 targets, $115 billion in annual commercial real estate transactions and $1.1 billion in revenues. We spent a long time talking about growth today, but growth does not end when a deal closes. In many ways, that's where the long-term value begins. Our servicing platform connects origination, recurring revenue, credit discipline and long-term client relationships.

With that, I'll turn it over to Jim, who will discuss servicing and credit.

Good morning. My name is Jim Schroeder. I run debt operations at Walker & Dunlop. I joined W&D back in 2012 with the CW acquisition, spent my entire career in this space, managed large CRE debt portfolios through good times and bad through the SNL crisis, GFC, COVID and now the post-COVID tightening cycle bring a deep background in operations, trading, servicing and asset management to my current role overseeing the debt operations platform.

And today, I have a specific focus on credit, credit operations, compliance and leveraging technology in all of these areas. The servicing portfolio is a vital component of Walker & Dunlop's business model and our ability to achieve our Journey to 30 goals. I'm going to spend some time this morning talking about the portfolio's cash generation and margins, strategic value to our business, strong credit fundamentals and how we're using data and technology and servicing.

Our $144 billion portfolio kicks off a ton of cash, as you can see from the servicing-related revenues that have grown steadily over the last 5 years. Roughly 70% of the servicing revenue comes from servicing fees with the remaining 30% coming from escrow income and prepayment penalty income. The cash generated from the portfolio dampens cyclicality in our transaction business and allows us to make all the investments that you've heard about today.

Scaling the servicing platform and growing the portfolio increases our recurring revenue, improves visibility into future refinancing opportunities and enhances the data advantage that powers our capital markets platform. Servicing platform has a highly attractive and stable margin profile with continued opportunities for scalability. Even though the margins in this business are already extremely high, AI and technology are going to make us more efficient over the next 5 years. We will continue to improve the way we service loans and the way we capture data as we scale the platform.

As we move toward a $200 billion portfolio, our goal is to automate lower-level repetitive tasks and focus our team on high-impact, high-value tasks to meet the demands of the scaled portfolio of that size and to continue providing best-in-class service to our clients. Our cost per loan will decline as we scale and as we further embed technology into our business. Our retained servicing model is a massive advantage and an opportunity for us. Most non-agency lenders like REITs, debt funds and CMBS shops don't operate this way. We retain 100% of the loans we originate for Fannie Mae, Freddie Mac and HUD.

In a market where pricing isn't a significant differentiator, exceptional execution during underwriting, closing and servicing matters, and it makes a difference for our borrowers. Our customer satisfaction and Net Promoter Scores show that we are delivering for our clients and meeting or exceeding their expectations. We're in front of borrowers and engaging with them monthly for the life of their loan. We have real-time insights into the operations of the properties, leading to additional transaction opportunities well before maturity.

This gives us incredibly valuable data and insights that flow into other areas of our business that you've heard about this morning. And you'll hear from Megan shortly about how all of that data is being digested and utilized as part of our technology strategy. We continue to grow our servicing portfolio largely because our capital markets team is skilled at winning deals from our competitors.

In 2025, 72% of the GSE refinancings that we originated were refinanced out of other lenders' portfolios. We've consistently increased this over the past 4 years, growing it from 62% to 72%. This gives us a fantastic opportunity to differentiate W&D from our competitors with the exceptional execution and service that we provide. This turns new clients into repeat clients. 52% of our portfolio will mature over the next 5 years. Every maturity will result in a recapitalization, a refinance or a sale.

Our recapture rate out of the portfolio was 34% in 2025. A significant number of the deals that we lost were sales by competitor firms, which makes it more difficult to retain the servicing on the debt. Our capital markets team, as you've heard today, is very focused on capturing those in the future as they bring the full weight of the platform to our clients. Our current recapture rate of 34% will generate $23 billion of transaction volume over the next 5 years.

If we grow that rate to 50%, that translates into an additional $11 billion. At 70%, an additional $13 billion on top of that gets us to $47 billion of transaction activity just from maturities in our existing book. So how will we move from 34% to 50% to a 70% recapture rate?

Three ways. Focusing on transparency of data and arming our capital markets team with the property and client insights that help them win the business. Secondly, staying in front of our customers on every transaction, leveraging the weight of the platform to meet the clients' needs, whatever that need may be. And third, ensuring that we have a scaled national investment sales team to capture all of the sales transactions.

Steve mentioned this earlier, the industry experienced an unprecedented wave of fraud post-COVID that surfaced in our portfolio and others over the past 18 to 24 months. Like others in our space, we were impacted by these schemes and have had to deal with loan repurchases and the losses associated with them. Outside of these isolated incidents, our credit performance has been exceptional, and we expect that, that will continue.

As you can see on the slide here, over the past 10 years, our net write-offs as a percentage of our at-risk portfolio has never been above 1 basis point. GSE underwriting requirements and our internal protocols have both been strengthened with a focus on the specific gaps that fraud schemes between 2021 and 2024 attempted to exploit. We've also expanded our internal oversight capabilities. We doubled the size of our debt operations compliance team to provide continuous testing and review of underwriting and closing processes.

At the same time, we established a dedicated operations group, led by a senior credit professional to manage the operational infrastructure that supports our underwriting and closing teams. This allows our teams to focus entirely on credit analysis and execution for our clients while operational controls and process integrity are managed centrally. Technology plays an increasingly important role in strengthening these controls.

Our operations teams now benefit from the investments that we've made in our data infrastructure. It allows the team to analyze underwriting and servicing data at scale across the portfolio. We're also leveraging proprietary AI tools to parse and structure financial statements, making it easier for our teams to evaluate borrower information consistently and to identify anomalies.

In addition, we use generative AI tools through ChatGPT Enterprise and have developed custom GPTs that support specific debt operations workflows. WD Suite servicing provides a secure and structured digital channel for borrower documentation and data. Instead of receiving information through fragmented e-mail chains, documents and data now enter our system in a consistent format, creating a scalable and ongoing monitoring or a scalable foundation for ongoing monitoring and fraud detection.

Through WD Suite, we've created a digital experience that allows our clients to interact with us more efficiently, access loan information and manage servicing requests in one place. For our internal teams, it improves operational efficiency, strengthens compliance, reduces manual processes across the servicing life cycle. Just as importantly, it creates a direct digital channel between us and our clients. More and more borrowers are choosing to interact with us through WD Suite, where we can provide tools and services they simply would not have if their loans sat in another lender's portfolio. The broader vision for WD Suite and how it will reshape how we operate across the firm is what Megan is going to walk you through next.

Good morning, everyone. My name is Megan Strachan. I'm Chief Information Officer with Walker & Dunlop. And I joined the firm via the acquisition of GeoPhy that was Europe's leading AI scale-up at the time back in 2022. And I've spent much of my career building data and software products.

And long before generative AI became a top headline, I was building predictive machine learning solutions for commercial real estate. And so that is the experience I'm now applying to Walker & Dunlop's Capital Markets platform. So today, I'm excited to share with you all in a bit more depth what our technology vision is for 2030.

But first, I want to speak a bit about how we think about technology at Walker & Dunlop. So we don't treat technology as a sort of stand-alone shiny object that's separate from our core strategy. It's very much both how we operate the business more effectively every single day, but it's also our quiet long-term strategic advantage, especially as AI raises the bar for insight, compliance and client experience.

Now many of us may have experienced this, but in many companies, technology can oversell and sometimes doesn't always do what it promises and becomes far too visible sort of maze of point solutions, if you will. And each of those add their own friction. We very much view our job as technologists within Walker & Dunlop as not there to create yet more tools. We are there to create time for our employees, for our clients, time for strategy, not searching for value, not verification.

And we very much view that time as a competitive advantage. So if that time is the advantage and that friction is the enemy, how do we move from friction to flow? Well, the answer to that, and you've heard a little bit about this so far today, is WD Suite. And our vision for 2030 is really quite simple, one interconnected platform for any deal type, any client and every employee. WD Suite is very much our unified capital markets operating system. It brings together both client workflows and employee workflows into one intuitive experience. This helps us to better identify opportunities, deepen client relationships, win more predictably and execute more efficiently across all deal workflows.

Now before we dive deep into that life cycle and that technology, I think it's important to explain why Walker & Dunlop, in particular, is uniquely positioned in our peer set to go and successfully execute on this technology vision. Walker & Dunlop did not outsource its technology strategy and technology team. It was very intentional in how we built a mature technology organization inside of the firm. These professionals in technology understand when to build, when to buy and how to bring that all together seamlessly into one platform like WD Suite.

Our product and engineering teams work side by side with our producers, our underwriters and servicing professionals every single day. They deeply understand the business. They understand their workflows and they understand Walker & Dunlop's clients. And that capability was only built because of the acquisitions that the business has made to date. So let's dive into WD Suite at a bit more of a granular level, starting at the beginning of this life cycle with WD Suite Research.

So we launched this in 2025, and it is quickly becoming the digital front door to the business. We have seen over 3,000 users signing up for the technology, hundreds of clients engaging actively every single month, real clients telling us that they've improved their deal workflows by leveraging the data and insights within this platform. WD Suite Research is giving our clients clarity, and it's also influencing deals. We've seen over $165 million in successful deals that have been influenced by this technology.

It's giving our clients clarity about opportunities, hyperlocal intelligence, automated valuation and as Steve mentioned, tenant credit level insights. But this is not just a data tool. This is very much a growth engine as we look to 2030, a digital client acquisition channel. This is -- there's an early signal of this that we've seen in just its first year of launch, which is if we look at the 2,800-plus client firms that have signed up for the technology so far, they are -- about 90% of those are new to Walker & Dunlop. So that tells us we're starting to expand that top of funnel through this digital channel.

Moving into WD Suite financing. This is where those opportunities become real deals. Now historically, that work has been spread across inboxes and spreadsheets, but WD Suite financing is going to bring that into one connected workflow. In Q1 of this year, so shortly, we're about to launch this experience for the first time to our production teams.

And there's a simple reason we're starting with the production teams, and that is because we view data quality as really being won or lost at the top of that funnel. So if you're collecting data from borrowers or other sources from multiple channels, multiple times over and over, you're only going to see inconsistencies flow downstream. So that solves for that. WD Suite financing will also be expanded shortly after into our underwriting and closing teams and additionally outside of the debt financing workflows.

Now obviously, this will drive efficiencies for us, but it's also going to strengthen our risk posture. So as Jim already described in detail, we have made investments to strengthen our business protocols around how we detect fraud. But we know that Evolve can evolve over time. And so we need to be building that into our operating system from the outset. And that's what WD Suite really strengthens. It allows us to capture that information in a structured way and flow that downstream. This allows us to then layer AI on top of that and spot unusual anomalies or risks much earlier and much more easily.

WD Suite servicing, we launched this back in 2023. So this has already been improving and differentiating our client experience and is already starting to drive some real efficiency gains for our servicing teams. Adoption of this technology has been very strong. We have over 6,000 users that rely on this platform today, and it is reducing friction for them. It is strengthening compliance for us, and it's also allowing us to eliminate many of our legacy paper-based and e-mail-driven processes. It's not just an efficiency play, though. What you need to understand here is that this embeds us deeper into our clients' capital life cycles, closer to where those financing decisions are beginning.

And as we further layer AI into this experience, we're going to shift from not just effectively and efficiently responding to our borrowers' needs and asks, but actually proactively predicting those and anticipating them. So this is just going to help us deepen that client relationship, as Jim mentioned. So one platform does not mean one generic client experience. WD Suite has the flexibility to allow us to meet our clients where they are. But to understand how that interface with our client might evolve in the future, we need to talk about AI. We all know AI is dominating the headlines, and many markets are really pricing that in as though it's going to immediately collapse the economics of knowledge work. And commercial real estate has not been immune to that narrative either, but we view it as far more nuanced. AI and commercial real estate, we believe, will really unfold over 2 curves that will unfold at a different rate.

So the first curve is really about speeding up the model we know. So how can we drive efficiencies via AI and automation. And today, we're seeing that, right? So we're adopting AI within Walker & Dunlop. It's starting to meaningfully change how we run our existing workflows. But if we just focus on efficiency alone, that is shortsighted because there is a second curve to this. The second curve is about preparing for the model that's coming. So not AI replacing brokers, but AI reshaping the value chain, reshaping where those capital decisions begin.

Today, our biggest threat is a competitor beating us to a client, but tomorrow, that risk may look quite different. As our clients increasingly adopt AI systems and AI agents to potentially compare, search, evaluate financing options, capital decisions, we need to ensure that we are showing up in front of that system, in front of that agent in that comparison set. But I do think it's important to temper a lot of what we're seeing in the media, I think, misses the distinction between AI capability and how that diffuses into an established industry. AI is advancing extremely quickly. But when it comes to commercial real estate, there's some characteristics to consider. We have an industry where it's a market buy that's really defined by its heterogeneity. It has a low tolerance for error and ultimately strict requirements, sorry, around accountability. Those characteristics will slow the rate at which AI will change our industry. And we very much view that as a time horizon that is short enough to matter but long enough to prepare. And that is why our strategy for technology is not just about bolting on AI solutions to our existing workflows, but it's much more about deploying this operating system where we can really reimagine those workflows with AI from the start.

And that brings us to the intelligent core for data and AI compound, which really sits behind and powers this WD Suite experience that you see. We know that historically, in commercial real estate, every deal is essentially starting from scratch. Information and data lives and dies in documents, e-mails and individuals memory. WD Suite changes that because as deals flow through this platform, we are structuring that data, making it accessible, making it reusable. And in addition to that, we're creating this data flywheel, whereby every single interaction with the system improves our data. And ultimately, the firms that are able to capture this data flywheel and benefit from that, learn faster and adapt their business faster than their peers are the ones that will win. And that is our long-term strategic advantage with WD Suite.

Thank you, everyone. I will now hand over to Greg.

So those of you that know the agenda, I'm assuming you're excited to see me for 1 of 2 reasons. One, you're like me and you love numbers and capital. So congratulations. Your wait is over or you're hungry, and you're not over yet. You got about 30 more minutes.

So I've met many of you, but for those of you that don't know me yet, Greg Florkowski, I'm the CFO of Walker & Dunlop. I joined the company back during the IPO in 2010. At that time, we were 150 people, about $10 billion of transaction volume. And I became the Head of Business Development in 2018 and then from there, the CFO in 2022, right at the start of the great tightening. So my timing was impeccable.

Over the last 15 years, though, I've had the privilege of being a part of every one of our growth strategies that you've heard about from Willie through this group today. I led a direct role in helping shape the drive to '25. Unfortunately, we did not meet those financial targets. The great tightening disrupted transaction activity a bit more than we expected. Yet over the last 5 years, as you've heard throughout today, we meaningfully diversified and grew the business and strengthened the platform. We grew through organic hiring, but we also used M&A as an accelerant. And we structured that M&A responsibly with discipline. We used performance-based earn-outs that protected shareholder capital.

And today, those obligations are behind us. And those acquisitions, as you heard throughout our prepared remarks this morning, are an integrated part of the platform. Most importantly, though, the platform that we built is intact. In many cases, it's scaled and where it's not, it's positioned to grow. So before I turn to that future, I do want to take you through and level set on where we stand today as I think that, that's an important part and sets the foundation for the future.

So as this graph shows, the lead up to the great tightening demonstrated cyclical growth and the power of this platform during that cycle. We delivered peak transaction volumes in 2021, and the great tightening really demonstrated the durability of our business model. From 2021 to 2023, our transaction volumes, which are the bars, fell about 60% from peak to trough. Yet the total revenues, which are the line actually grew or held steady and only fell about 19% during that same period. So that's the power of pairing a capital markets platform with the contractual durable revenue of our servicing and asset management or SAM platform. Here, you can see the shift in the mix of revenue from peak to trough. At its peak, our capital markets platform was driving over 70% of our revenues.

Today, it's around 50%. As commercial real estate volumes continue to recover from here and we execute on the journey to a 30 growth plan that you heard outline throughout the morning, we expect that our capital markets revenues will become a larger portion of our overall revenue. But because our SAM platform is significantly more scaled, we do not expect that 70-30 split in the future. So how did the cycle translate into earnings and cash? As you can see here, as transaction volumes fell and remained down, our GAAP earnings were under pressure for a few reasons. First, there was reduced noncash MSR revenue that Willie spoke about due to duration and S fee compression. There was higher noncash amortization and depreciation, elevated interest due to higher short-term rates and elevated loan purchase -- repurchase costs over the previous 2 years really drove '24 and '25. But our cash generation remained very strong.

The pressure on GAAP earnings doesn't translate to EBITDA proportionately as it's largely driven by MSRs, interest and amortization and depreciation I just mentioned. So our servicing portfolio continues to grow and it stands at $144 billion today. As I've said, though, those revenues from that servicing portfolio are contractual and durable. And that cash generation allowed us to return nearly $0.5 billion to shareholders over the last 5 years and while simultaneously investing in the business for its long-term growth.

So the step down in EPS during the downturn was significant, and it reflected -- let me just finish here. So it reflected that slowdown in total transaction activity. But what didn't happen was you saw that profitability hold up and that cash generation remain durable. That's the stability that positions us really to grow from where we are today. So despite that market disruption, we have been investing in the platform. consistently. The investments we made between 2020 and 2025 in capital markets businesses, affordable housing, research, investment banking, technology, they're all now embedded in the platform, and they form the foundation of the journey to 30.

Although we didn't achieve the ambitious growth targets of the Drive to '25, I'm proud of how we navigated that cycle. We managed through a downturn in our core businesses. We took decisive action when we needed to, all while positioning ourselves for sustained growth here as the market begins recovery. Let's talk about the future and the journey to 30. So my remarks today should accomplish a few things. First, connect you to what you've heard this morning to our financial model; second, reset our scorecard for the next 5 years; and finally, establish a clear capital allocation framework that will drive shareholder return over the next 5 years.

So here's what you heard. I think it's pretty simple, summarized 3 hours in a few lines here. Research and valuation drive insight. Insights drive transactions. Our transactions feed our servicing portfolio. The servicing feeds -- deepens client relationships, further feeds insights and transactions and WD Suite connects it all. That's the power of the platform. You'll hear a lot about that over the next 5 years. So these are the targets. You've seen these a few times, so I won't stay too long or linger too long on this slide, but these goals reflect the current market conditions and profitability drivers of the business. They also reflect our commitment to organic top line growth and shareholder return. So let me step you through the top line. We'll achieve growth across the capital markets platform in a few ways. let me hold on one second. First, the capital markets platform. We'll see expansion in the market, right? Just generally, you heard Chris and Don and Ali and Sherry just talk about the market normalization. The market should expand 30% to 40% in terms of total debt and investment sales transaction activity from today through 2030. That will add about $200 million to $250 million of revenue, just that natural growth in the market.

We'll also continue to expand our multifamily market share. As you heard, we expect to grow that about 300 to 400 basis points over the next 5 years, and that should add an additional $150 million to $200 million of revenue. And finally, we're going to diversify the non-multifamily expertise at Walker & Dunlop through a combination of non-multifamily execution in the U.S. and our European expansion, and that will add another $100 million to $200 million of revenue. That growth in transaction activity will feed into our servicing portfolio. And given the maturity profile that you saw, we have a pretty clear path to growing the portfolio an additional 30% to 40%, which will drive further durable revenues over the next 5 years. And finally, we will expand our strategic products.

Many of those are poised to grow. They'll deliver fuel for insights and transactions into the overall capital markets platform. And that combination of servicing and strategic product growth should drive an additional $150 million to $200 million of top line revenue growth, as you can see here. But we're not just focused on the top line. We have to deliver sustainable profitability. And as you can see, our margins have been down, particularly with the elevated repurchase costs the last couple of years. So our margins will expand in a few key areas.

First, we expect repurchases to normalize closer to historical norms, and our margins will clearly benefit from that. Second, as our capital markets platform grows, we'll see margin expansion from productivity gains and greater scale. Third, our emerging businesses and strategic products are subscale today. And as these businesses mature, margins will benefit, as you heard Steve talk about. And finally, our corporate G&A does not need to grow linearly with revenue, and that creates further opportunity for margin expansion. And by 2030, our expectation is that our margins will return to between 15% and 20%. So a couple of weeks ago, we shared our guidance for 2026. I think that's a good foundation to build these long-term bottom line goals off of. So our 2026 guidance was $3.50 to $4 of diluted EPS. adjusted EBITDA of between $300 million and $325 million and adjusted core EPS of $4.50 to $5. As we mentioned on our earnings call, though, 2 weeks ago, we'll achieve that guidance, and you also heard a lot about that here today through growth in the market, share gains from our leading capital markets platform and the continued strength of our servicing portfolio and asset management revenues. And by 2030, we expect to double EPS at the low end to $8 to $10 per share. We expect to grow adjusted EBITDA to between $400 million and $500 million and grow adjusted core EPS to $8 to $10 per share.

As you've heard throughout this morning, our outlook assumes the following: normalization of global capital flows to fuel transaction volumes, continuity in the GSEs as the dominant provider of capital to the multifamily sector and our ability to continue to recruit to grow the platform. Those are the key variables that underpin the model and the journey of 30 targets. But there's a few upside levers as well. So we expect MSRs to normalize over the next few years. Our outlook is based on the current environment. So if duration and fees -- I got ahead of myself. So if duration and fees do indeed increase, we'll see an uptick in our noncash MSR revenue, and that would benefit our GAAP EPS performance.

Our outlook is also based on the business as it's executed today. So the technology pickup that you just heard or technology gains that you heard Megan just talk about -- if we can capture those, you'll see growth as well. AI is rapidly reshaping transaction flows, underwriting and client engagement. We are well positioned, and we believe we're very well positioned to capture productivity gains from that transformation, but we still expect people to close transactions.

So any productivity gains we can pick up will only improve the numbers I just walked through. And finally, accretive M&A. We have used M&A consistently over the last 15 years to deliver on our growth goals. But as we have in the past, we're likely to do that through tuck-in M&A, not large-scale M&A. So to the extent there is large-scale M&A, that would only be an accelerant, but not a necessity to our journey to 30 -- so let's talk about capital allocation.

Over the next 5 years, we're expecting to generate close to $2 billion of total EBITDA. And I think that, that helps square cash flow and cash capital allocation. There's nondiscretionary needs for our business, taxes, debt service, that will take about $400 million to $500 million of that capital. But then there's a handful of really key growth areas or key areas where we expect to use our capital. The first is shareholder return. I mentioned over the last 5 years, we paid nearly $0.5 billion. We expect to pay another $0.5 billion over the next 5 years in dividends to our shareholders. That's a core component of our shareholder return. We also think there's strong organic growth drivers. We'll invest $500 million to $600 million in expanding our capital markets platform through recruiting and tuck-in M&A and retaining our very talented salespeople. We'll also grow our strategic product presence through co-investments in capital vehicles that feed that capital markets business.

And we'll expand the WD Suite product offering as we think that drives top of funnel. And finally, I mentioned it just a moment ago, but as a growth accelerator, larger scale M&A. We'll target strong ROIs at accretive multiples, and that will only accelerate our growth drivers. We do not need additional incremental debt, though, to drive this plan. So in summary, the journey to 30 is a disciplined growth plan. It's funded by cash generation, built on durable revenue and designed to deliver strong shareholder return. We believe this combination of durability and growth positions Walker & Dunlop to create meaningful long-term value for our shareholders.

So with that, I'll turn it back over to Willie and get you all a little closer to lunch.

Great. As I said at the top, I was very much looking forward to all of you hearing from our exceptional senior leadership team. We have the opportunity from time to time to do diligence on companies that we're looking to acquire. I watch all of our competitor firms as it relates to who's taking what jobs, who's recruiting, whom from what other firms. And I have to say that to look at the depth, the experience and mostly the dedication of our senior leadership team, it is a huge honor for me to be able to lead this team -- as I listen to all of them talk about how they came to Walker & Dunlop, when they came to Walker & Dunlop.

You might have picked up a theme there that most of the team other than Megan joined Walker & Dunlop in the early teens. And Sherry even round tripped from being an analyst and underwriter for my father way back in the day and then coming back to Walker & Dunlop in a senior leadership role. It's a real privilege to have this team to work with every single day, and they are as good as they get. The journey to 30, as I said at the top, to be the very best commercial real estate capital markets company in the world. There are a couple of things that have changed there.

One of them is the broad offering as it relates to capital markets. The other is in the world. We were very much focused on the United States for the first 20 years that I was at this company. We've, if you will, broadened our horizons. And I think that's going to give us great growth opportunities over the coming years and over coming decades as we continue to expand the Walker & Dunlop brand around the globe. We talked a little bit about our competitive positioning. I would reiterate, there's not a brand on that slide that isn't a fierce competitor of ours every single day.

Chris talked about some bigger competitors, some where we show up, we know who we're kind of going up against. But the insight that Chris gave as it relates to him being out on the front lines every single day, seeing our teams go head-to-head with firms like that. I'd go back to 2010. If you told me we'd be positioned like that with the market presence and scale and brand that we have today, it was nothing but a dream back then.

Today, it's reality. It's our responsibility to grow from here, to continue to take market share, to continue to compete with those firms every day and also be ready to compete with someone who's not on that chart today. You can see a couple of names in here like Evercore and Lazard and Blue Owl. Those 5 firms wouldn't have been on that chart 5 years ago. They are all doing certain things to compete with us in certain ways. Some of them are partners, some of them are competitors. The other piece to it is in that upper left-hand quadrant as it relates to client segmentation. One day, Blackstone is a client.

The next day, they are a partner and the next day, they're a competitor. We have the responsibility to figure out every single day how we are partnering with firms, how we are competing with firms and how we are winning with firms to continue to grow this platform and staying out in front of our clients, one of the things I spend an inordinate amount of time doing is staying in front of our clients. There are probably 1 or 2 other CEOs in our industry who spend as much time with clients as I do. Many of the people from an operational standpoint would say, wish you were sitting at the desk, wish I was getting you a little bit quicker on the response to something as it relates to a major business decision. But the flip side to that is market intelligence and working with our bankers and brokers across the country to bring the full weight of this platform. And it is that client input that allows us to adapt what we're doing every single day, not only from me, but from the rest of the senior leadership team that you heard from today as well as from everybody who's out on the front lines for Walker & Dunlop every single day.

If we're not listening to that and adapting this company to those inputs, we're missing something. And we've been very lucky up until now, and it's reflected by our market leadership to have listened and adapted this firm and grown this firm in line with what our clients want from us. I've talked a lot about our people. This is a people business. And there is plenty, plenty, plenty out there today as it relates to AI and what AI is going to do in the future. All I can say is that, first of all, there is nobody who knows what AI is going to do. The best we can do is be on the front foot, be watching what it does, adapt to it and use it to the best of our abilities. I have talked a number of times about the fact that in 2000, if you were sitting around and someone was looking at Amazon, and they looked at Amazon at that time as sort of a start-up company that went public in 1996 and was flying up to the right, you'd say that's going to be a $5 trillion market cap company in 2025.

Well, you'd go long on Amazon. You also likely would short bricks-and-mortar retail real estate. You'd say it's all going to go online, and I'm going to short bricks-and-mortar retail real estate. Well, 84% of U.S. retail still flows through bricks-and-mortar, 84%. Only 16% of U.S. retail goes online. All the growth has been in online. It's 16% market share of total retail sales in the United States. But if you'd sat there and said, I'm going to jump on to that $5 trillion growth engine on Amazon, well done, but you would have missed a huge opportunity to continue to invest in bricks-and-mortar retail a quarter century later. And oh, by the way, Walmart's market cap just went over $1 trillion. So Walmart, who everyone knows was a, if you will, late adopter to the online world, is doing very, very well today in both its bricks and mortar as well as its online. We have to be watching that to figure out what we're putting into AI and what we're doing the old-fashioned way of staying close to our clients. It's all going to be dependent upon those people. You're getting sick of this slide. I'm going to jump right through it because we've focused on it potentially a little bit too much.

But I would reiterate that it is that client focus. I sat in the back listening to my colleagues. As you can imagine, I've listened to their presentations a couple of times now, so I didn't have to listen quite as intently as all of you were to all of their comments. But I was sitting there texting with clients on that client segmentation slide, circling their logo and sending it out to them saying, walking off Investor Day, we've got you front and center. That's how we make a difference. That's how when the Head of Starwood writes me back immediately and says, we got to move from the upper left to the bottom left, going from an alternative asset manager to one of the big scaled asset managers. That's how somebody who is right in the middle who I circled came back to me and said, thank you for having us square in the middle of your slide. Those types of little things build the relationships that have built this company, and they build the loyalty that we have been honored to be able to build with incredible owner-operators, investors over this company's great 88-year history.

And I would close on this team. There are plenty of other people on Walker & Dunlop's, not only senior leadership team, but throughout the organization who make this company work every single day. But one of the main reasons why we put this Investor Day on is not only to outline the strategy and show you the growth targets and have you understand exactly where we're headed and what the true north is going to be over the next 5 years, but for you to hear from this exceptional team of professionals.

And as I said previously, for me, to work with a group like this every single day is truly an honor. I will now open it up to any Q&A. I would ask the people in the room when you ask a question, just state your name and the company that you are with. We have online chat for questions as well that Kelsey will read out any of those that are coming from people who are watching the webcast live. And I will address any questions that come in. And if I need to ask one of my colleagues to go in more specifics on it, I will turn it over to them, and they will grab the microphone and participate back.

So let me open it up to any questions or comments from people local or out. Jade?

You mentioned client segmentation being a big emphasis for this year for the capital markets team. I was wondering if you could give any color on institutional, regional private client, the way you guys broke it out, what the ratios might be and where you see the biggest opportunity in the next maybe couple of years?

So I'll jump in. And Chris, if you want to dive in after me, feel free to do so. I think the -- the most important thing is that as we have grown this platform, we've added -- we've done 18 acquisitions at Walker & Dunlop. Acquiring 18 companies is not an easy thing. I think if you look back on them as it relates to the returns and success or failure, I think we're about 17 in 1, maybe 16 and 2, but we have an extremely successful track record of not only buying great companies and getting the returns out of them, but keeping the teams at Walker & Dunlop. As you acquire that many companies, how they fit into Walker & Dunlop, how the client base is segmented, what the go-to-market strategy is and how you manage all that, I can draw you on a chart how to do it, but quite honestly, how you implement it and how you actually do it every single day is quite challenging.

So if you look at our sales force database, the structure that's behind that has not been as regimented as structured as you would think. And so one of the things that we are now engaging upon is we have an institutional team based here in New York that is really focused, Jade, on those upper left-hand and lower left-hand clients. They have incredible relationships.

Yesterday, I was meeting with a very significant sovereign wealth fund, and we were talking about that team's capabilities. And one of the things that was kind of interesting was the sovereign wealth fund was saying, we kind of view you as an agency lender, and we didn't know that you do all this broad capital markets work. And Chris jumped in and talked about the 240 capital sources that we worked with in 2025, just in 2025. And their eyes opened up and they said, "Wow, we didn't know you were doing that much." and we talked about some very, very large SASB transactions that we financed and that big office to multi-conversion loan that we did, the largest ever done in the United States last year. And so that gives us great bonafidas to continue to sell into that big institutional group. That middle segment of the focused multifamily scaled private equity firms, that's been bread and butter for Walker & Dunlop.

You saw on that slide, Greystar. You saw on that slide, Bell Partners, you saw on that slide, Capital Square and others. That has been the largest, fastest-growing cohort of owners and operators of multifamily, and we have covered them both from the debt side as well as from the investment sales side and done an extremely good job of creating great relationships there. That cohort is going to continue to grow, and we need to maintain our focus on them. And then as Allison talked about, the right-hand side of those local owner operators. That's the reason you have 50 offices. You can't cover that client base from New York. You've got to have an office in Tampa, Florida. You've got to have an office in Austin, Texas to be able to cover those local owner operators. And they come to our bankers and brokers for that access to institutional capital as well as local capital to be able to finance a deal, to be able to sell a deal, to be able to get an appraisal on a deal, et cetera. And so it's that segmentation from institutional into middle market into private client that is so important as it relates to not only how we are managing the teams, how we're coordinated.

But then the other piece to it, Jade, that I think is exceedingly important is that we have had a national outlook. We have built this platform of sort of saying, let's go at the market across the country. And what we're trying to do now is, yes, institutional, you can go across the country. The middle segment, you can pretty much go across the country. But on the far right-hand side, you need to be local. You need to have local leadership, you need to have local focus. You need to have integrated teams at the local level. And that is what we're really doing now as it relates to the go-to-market strategy going forward you got anything else you want to add?

Yes. I would just say that we're organizing our sales force around the clients that we cover. And when I think back to the playbook about trying to build our investment sales business, people said, how do you do it? How are you going to do it? And it was real simple. Look, we're going to move into new geographies, and we're going to segment the market in geographies where we currently have a presence. And that's the playbook that we're running here. The reality of the left-hand names on that slide is what motivates them to make decisions and what drives sort of deal flow with them looks a lot different than what's on the right-hand side. Willie mentioned it, the group that's in the middle, those are the people that have been consumers of agency capital since the beginning of the firm.

Those are the people that we built the multifamily investment sales business around. So that organization is simply getting our predominantly GSE-focused producers and our multifamily investment sales professionals, all in one group coordinating one another to bring the weight of the platform to that client more consistently. So the way that, that shows up is our tie ratios, right? How are they working together? If you think about how suppressed the transaction market has been over the last couple of years, we've got to go to every single client with debt execution in tow, a recapitalization execution in tow and a sales execution in tow.

And we go run this sort of 90- to 120-day exercise, not knowing what the ultimate execution is going to be until we go get feedback from the market, right? And so you look at the amount of transaction activity that's gone to market and not cleared over the course of the last 2 to 3 years, roughly 50% of the multifamily investment sales offerings since 2023 have gone to the market and not cleared. That's dead revenue or that's a dead deal cost for a lot of folks. But if we can do that with those groups arm in arm with one another, if it breaks away from a sales transaction to a recap conversation to a refinancing conversation, we've got sort of the full suite of services in toast. So that's why we organized a little bit differently around that sector-specific group.

I had a question about name...

Sorry, Donostino, -- no Street Capital.

Question about the guidance. And it might just be -- it's probably a very straightforward answer around MSR amortization and depreciation. But the EPS guide -- growth guide is significantly higher than the EBITDA growth guide. So if you could help me bridge that gap? And then the second kind of adjacent question is, I appreciate the dedication to capital return. I mean, given what you think you can do and given the valuation, is it on the table to shift some of the dollars going into dividend into buyback? Or is that just -- is the dividend just sacrosan?

So I'll take the dividend question, and then I'll turn it to Greg as it relates to EBITDA. Why don't you grab the mic there, Greg, so that you can -- you're on. Okay. Great. You got to get out of the dark then come this way. So there is nothing sacrosanct about the capital strategy. I will say, as Greg underscored, the dividend has been something that we have not only established but grown every single year since we established it. We think that is a reflection of the cash-generating capabilities of the firm. And I would love to think that we can both execute on our Board-authorized buyback strategy as well as continue to grow the dividend over the coming years. And so I wouldn't see any major shift to those 2 things. Do you want to go with EBITDA versus EPS?

Yes. It is fairly straightforward, right? I think as you gain -- as we gain more multifamily market share and gain a larger proportion of the GSE's book of business, that would drive more of those noncash MSRs, and that will close the gap that exists today between our MSR revenue and our amortization and depreciation. And our modeling shows that we can only close it, but sort of get back to a positive margin there on noncash, and that's going to drive greater EPS growth than it will EBITDA growth. And then the cash, obviously, the EBITDA growth will also drive EPS growth, which is why you see disproportion -- I call it, disproportionate growth rates for the 2 metrics.

Stating the obvious that we should just expect the EPS to grow faster than the cash flow for a while, and then there should be a catch-up as you're generating the cash off of the kind of front-loaded EPS from...

Exactly as you'll start to see that sort of improvement in overall quality of earnings. That's why you also see the adjusted core EPS and GAAP EPS. metrics convert.

What do you prefer investors to focus on free cash flow, EBITDA, EPS? What do you think the best measure of the progress you're making?

So I'd say I -- for me, cash is king. Cash is the most important thing that drives the capital, that drives our ability to invest and return capital and drive long-term returns. So I think that, that's critical. That said, we've always looked at GAAP EPS because that noncash MSR revenue is fuel for the servicing portfolio, which drives the cash flow. So we want to see those metrics clearly both heading in the same direction. But I spend a lot of my time focusing on cash and capital. And I think that that's critical because that's what drives long-term returns and our ability to invest.

But we can pretty easily calculate a cash EPS number? Or is that something you publish?

We do not publish a cash EPS number, but we published adjusted core EPS, which is, I think, a fairly close approximation for cash.

.

Which the one other thing I would underscore there is that, that 5-year goal is so that the adjusted core as well as GAAP are both in that $8 to $10 range. So you will see both the noncash EPS number as well as the cash EPS number get to the same place. So to Greg's point, if you can get to $8 to $10 of adjusted core EPS, you're doing really, really good.

Tony Polone, JPMorgan. Willie, if you look out the next 5 years across all of commercial real estate services, whether you're in the business or not, where do you see the most risk to fee compression? And where do you think the greatest opportunity for margin expansion is?

It's a really good question and one that I talked about yesterday with actually someone who sits on one of the advisory boards of the Federal Reserve, and they're going to a meeting at the end of this week and wanted some input as it relates to how are our fees and how are our fees -- we talked about everything from inflationary pressures to rates and everything else. But one of the questions that I -- my response to her was, when you're in this tightening cycle, and volumes have come down. There are 2 things that hit us.

One, because there's less volume, the competitive landscape is actually more fierce, if you will, than it's not. Everybody is fighting for that more scarce deal. And so everyone is trying to cut fees, everyone is trying to win the deal, and it's a tight competitive environment. As you get to a more normalized environment, that competitive landscape smooths out a little bit. And so from a fee on a deal-by-deal basis, you actually get some margin or some fee expansion as the market normalizes. The other thing is that when you're in that great tightening, as I said previously, S fees and G fees compress, so do origination fees because every borrower who's asking us for capital or trying to sell a transaction is sitting there saying, I'm sort of selling this at a cap rate I don't love. putting on debt that's costing me too much. And so there's a lot of compression on those fees. So as you get into a more normalized cycle, we get expansion, okay? And so I would say to you that it's actually somewhat counterintuitive as it relates to what we've gone through the last 3 years and what you would think about setting up for in the next 3 or 4 years.

The second thing is that there are deals that we can now go after that previously we couldn't go after. A big portfolio of properties that had geographic distribution across the country. As Chris was building out the platform, we didn't have teams in a lot of markets where someone would look at us and say, well, CD has a team in every one of those markets. Walker & Dunlop only has half of them covered. Today, we have them all covered. So we get into those types of deals. Larger portfolio transactions, which are coming back, and we said it on our last earnings call, those by nature, have tighter fees, both from an origination standpoint as well as typically from a servicing standpoint. But look, we'll take $1 billion transactions anytime they come to us. So we'll do that. The final piece to it is how does technology play into it?

How does the ability to use technology to say, "Hey, it's influencing the way we're looking at the deal, the way Walker & Dunlop is adding value, we're going to ask you for some type of discount. I don't know how that plays in, to be honest with you. On our agency lending, there are minimum fees. And so that is on that core piece of our business, there are minimum fees. There are minimums you can't drop below. And so that's very healthy and helpful to us and our competitor firms that when you actually win the transaction, the client can't window you down on the fee once you've actually gotten it. And so that's one of the nice parts about the agency lending business that's quite distinct from the broader capital markets.

Tobey Milligan from Convversion Capital. So I think one thing that stood out to me in your guidance for '26 is the business is doing well, the capital markets are recovering. But the midpoint of the EBITDA guide was below the adjusted number that you guys put out for '25. And so are there any onetime items in that, that investors should be aware of that actually mean that the number of '26, if you kind of adjust those out, would better represent the recovery in the business? And then second question is, how can investors get comfortable that the credit bogeyman isn't as meaningful as maybe the market is pricing it to be?

Yes. I'll address the first one, and then I'll let Greg address -- excuse me, I'll address the second one and then let Greg address the first one. Look, as it relates to the credit bogeyman, and I appreciate the way that you sort of couch that. I would hope by listening to Jim talk about his team, the way they've approached all of this, that you have a very good sense of the experience and the people, process and systems that we have in place that have allowed us to have that impeccable track record. We are -- as I said on our last earnings call, from the moment that Freddie Mac called us and asked us to start the investigation, we hired the very most qualified outside counsel. We gave them full access to everything inside of Walker & Dunlop. We acted with complete transparency.

We took responsibility for what happened, and we have been working on both showing what happened indemnifying Freddie Mac for what happened and then moving forward. How can I assure you, I can't. We've got a $144 billion servicing portfolio. We have looked exceedingly hard in that portfolio to make sure that nothing that we found is in a broader format, and we haven't found anything. But it's an incredibly scaled portfolio. And I would say to you that one of the things that's super important to keep in mind is that as we found what we found in our investigation, Freddie Mac at no time said, hold it. We don't have trust and confidence in Walker & Dunlop. We want to cease originating loans with you. We want to take a pause here until we understand that everything is good. Freddie Mac has maintained its confidence in Walker & Dunlop.

Fannie Mae has maintained their confidence in Walker & Dunlop, and we've maintained confidence in our own people, process and systems. As Chairman, CEO and the largest individual shareholder in this company, I go to bed at night saying, we're originating new loans. I want to make damn sure that those are good loans for us to be originating. And I have great confidence in our team that we have the people, process and systems in place to make sure that we're not adding any additional problems to the problems we've already identified. You want to talk about the guide?

Thanks for calling me back into the light. I appreciate that.

You can come up.

I'm just saying must. I think the guide -- we may have even talked a little bit about this after earnings, but One of the things that we shifted here going into 2026 was our approach to loans that we repurchased.

Previously, we were taking a longer term, let's try to recover asset value over time. I think as we sat back and started really diving into the journey of 30, focusing on our 2026 budget and planning out this year, it was, hey, these assets are not long-term value creators for Walker & Dunlop. They're creating drag on our operations. We need to look to exit them. So as we do that, and we try to really roll out of them in 2026 and into 2027, as we exit them, there's charge-offs that come with that. We've reserved those losses in either '24 or '25. Those are part of our GAAP EPS, but they're added back in our reported adjusted EBITDA. So as we cycle out of those, depending on how quickly we can do it, those charge-offs will be part of the adjusted EBITDA or deduction from EBITDA in the future. So that's I don't think every investor sort of or people that have talked to me over the last 2 weeks have identified that as sort of a unique circumstance.

So if you wanted to pull those out and your model doesn't exclude them, there would be some delta there based on how quickly we can cycle out of those existing repurchases and sort of take those charge-offs, but that also implies longer-term health because we're going to eliminate the drag on operating earnings as a result.

Do you mind quantifying that?

I cannot because it depends on how quickly we can exit it.

Chris Muller, Citizens Capital Markets. So I guess there's 25 GSE licenses out there. I think 3 of them are currently up for sale right now. So are there any read-throughs to the broader market with that, especially with potential IPOs on the horizon? And then does that create opportunity for you guys to either approach talent from any of those platforms or grow market share?

So a couple of things on that. First of all, as you can imagine, we look at a lot. So we've looked at a number of those platforms. Second of all, in a number of instances without calling out names, we have not seen that there's a big opportunity as it relates to poaching talent distinct originator base, distinct client base and just not heading W&D in the direction it wants to.

But nonetheless, there are opportunities there. As you can imagine, when some of those companies go out onto the market, we have a decision to make about signing an NDA, which would then limit us from potentially hiring talent away or actually going into the diligence process with them. And we always take -- have a real good analysis of sign the NDA and they're off out of bound or don't sign the NDA and now we know that they're in play and we can go after origination talent. The one other thing that I would put out, a banker yesterday I was meeting with in New York, talked about one of those firms that's out for sale. And he said, I'm not trying to poke you, but XYZ company, which is a far smaller firm than Walker & Dunlop is right now looking to trade at a valuation of about $1.2 billion -- and he said, "God, in comparison to where you guys are, the platform you have and the size and scale that W&D has, your relative value is not that much greater than them today. And I said, thanks for the poke in the ribs. But I feel really good about the platform we have and the growth opportunities for us, particularly if the market is giving value to one of these other firms that's going to be sold at that level. Yes, Anthony.

You talked about over the next 5 years, gaining scale on your overhead. But how do you pick your points when it comes to spending on tech, especially as you go up against some of the larger diversified platforms that can maybe spread that spending around perhaps? Like how do you think about that budget and whether you have enough allocated there to compete effectively on the tech side?

So I think as Megan accurately described, we've always had a technology for service attitude, not technology for technology attitude. I think we are actually really lucky that we don't have the size and scale of a -- I'll just pick a fidelity or a Schwab where they have the decision of do we let someone else build it or do we build it ourselves? And they're sort of in that size and scale that they could create their own environment or they just wait for someone else to come along.

We don't have that scale. So it's not even an option for us to think about building it ourselves. So we're going to draft off of what the big technology providers can create to us. Our OpenAI secured environment, which we were sort of in the sandbox in throughout '25, and we're now launching out of for everyone in the corporation to use, has been a fantastic AI environment for us to use to test. We obviously have to be extremely careful as does JPMorgan as it relates to the data, where the data is going, making sure that all of our client data stays within our environment. The other thing to keep in mind is given the size and scale of our operations with the agencies and HUD, clearly, the FHFA director came out a couple of weeks ago saying we want Fannie and Freddie to lean in on AI. And I take the director for his word, and he clearly wants Fannie and Freddie to lean in on it. But we have to be conscious of the fact that neither Fannie or Freddie nor many aspects of commercial real estate are on the bleeding edge as it relates to technological innovation.

And so we do -- we are in a rapidly evolving market. And at the same time, we clearly are not in a market that has had technology come in and radically change it every single day. Again, that's not to try and say we can sit back and put our feet up and just wait for things to happen. We're on the front lines. But I would say that given our scaled operations with Fannie, Freddie and HUD, who at the end of the day, are the federal government as well as the broader commercial real estate industry being, I would say, a slow adopter, generally speaking, anything we can do to be ahead of the curve will be net beneficial to us.

And I right now don't see anything that any of our competitor firms are doing. And that's one of the advantages of having -- being out on the front lines as much as I am that all of a sudden, I turn around one day and say, well, XYZ is doing this, we're way behind the curve. Haven't seen it yet. Lots of our competitor firms talk about it a lot. The real proof is in when we go to meet with a client who says, "Oh, you missed this. They're doing this and you guys haven't done that yet. So far, that's not -- we're not seeing that. Kelsey, do we have anything from the chat? Great.

Okay. First one. What is assumed for the GSE multifamily lending caps and your market share with the GSEs in your outlook?

So that's a great question. One of the -- we did not expect the caps to go up as much as they went this year. And as a result of that, we had business planning in place prior to the 20-plus percent increase, and we kept our 2026 expectations as it relates to our GSE growth in line, if you will, and not with the step-up in the numbers. There's 2 reasons for that. One, we wanted to establish a goal that we can run through. But two, Fannie and Freddie will be constrained in getting to the upper limits of their 2026 cap due to a requirement that 14% of their annual production be done on very low-income units. If they don't get to that 14% threshold on very low-income units, they can't get to the $88 billion top line.

So it's very important. We're working on a great portfolio of workforce and affordable housing units right now that will be gold to either Fannie or Freddie when we actually get the deal done. There will be incredibly tight pricing on that portfolio because Fannie and Freddie both want these very low-income units to go in so that they can continue to move on their conventional business, up on their overall annual origination volumes. So that is extremely beneficial to us and to them whenever we decide where that portfolio is going to go. But that's one of the constraints on it. So it's great to look at the top line number, but if they and we and our competitor firms can't get them those VLI units, they're not going to be able to get to the upper end on their aggregate lending caps.

So that's one of the reasons that we kept our 2026 expectations where they were. As far as market share, one of the things that we've heard for a long time is you can't go higher than 1. It's been great to be Fannie's largest partner for the last 7 years. We are very focused on being it for the 8 years in a row. And as far as Freddie, we had great growth, over 40% growth year-on-year in our Freddie volumes and moving up to #3. We are working really, really hard to get to #2 and #1 with Freddie and take on that #1 GSE lender mantle in 2026. And by the way, as Kelsey is going through these on the webcast, if anyone here has another question, feel free to jump in. Go ahead, Kelsey.

The plan implies both strong revenue growth and strong margin expansion. Where do you see a majority of the operating leverage coming from?

Well, one of the things you have to think back on -- and Greg highlighted it, and I talked about it, is that when you talk about our margins, the capitalized mortgage servicing rights have a huge impact on our operating margin and on our net margin. And so when you get volumes coming back with servicing fees either stabilized or growing and you get longer term, that immediately plays into your revenue number. That immediately plays into your margin. And so one of the other things to think about is the financial income when Jim was up here talking about the servicing portfolio, he talked about servicing revenue, but then he also talked about escrow balances.

He also talked about prepayment fees. What he didn't talk about was warehouse interest income. We've been in a negative spread environment for the last 3 years. A loan goes on to our line, and we're upside down. We're losing money while that loan is on the line. Our line right now is actually making us money because of where the yield curve is and because of the steepness of the yield curve. So when you're in that down environment, everything is sort of a headwind. We're now moving the other way. You're getting positive warehouse interest income. You're getting prepayment penalties. You're getting servicing fees stabilizing and hopefully expanding. And all those things move into our revenue number without adding new people, without adding new expenses to what we do. And all of that then flows down into the margins. And so that's what we're looking at as the setup for this next, if you will, pro cycle rather than being in a down cycle for the last 3 years, we're on a pro cycle for the next couple of years with any luck.

What are the key downside risks to the 2030 framework?

Well, you've got to -- first of all, one of the things that -- I mean, there's no doubt we are in an interest rate-sensitive industry. And as a result of that, where rates go will have a big impact. And it's -- I will say it's nice to have a President in the United States who is very, very rate focused. President Trump has said numerous times that he wants to get the short end of the curve down. Plenty of analysts would tell us that the cutting on the short end won't necessarily impact the long end of the curve. But getting interest rates down, making it so that capital flows continue to flow to commercial real estate. I went to the CREFC conference in January in Miami, and it's all the capital providers to commercial real estate. And you would have thought it was, I don't know, 2005 in the resi industry in the sense of just sort of euphoria, lots of capital.

Everyone wants to put debt out to a deal. Everyone wants to put equity out to a deal, lots of activity, a record attendance, everyone was happy. And then 2 weeks later, I went to the National Multifamily Housing Council in Las Vegas where all the operators were, 180 degrees different. 180 degrees different. Every operator their head in their hands going, man, operating fundamentals aren't that great. What's going on? And you sat there and you looked at those 2 things. You said, well, how can there be so much capital out there that wants to find a home, yet the operating fundamentals right now have a lot of operators very concerned. And one of the things you have to keep in mind is that cap rates are dependent upon capital flows.

So as that capital of debt capital and equity capital keeps going into the industry, trying to find a home, that is going to bring down cap rates, push prices up. It's going to allow someone who's dealing with a free financing to find a loan to refinance them out. That's someone who needs to recycle capital to an investor to be able to sell an asset because there is a willing buyer out there. All of those things are fundamental to getting capital flows into the industry, which then allow for some of the problem assets and problems that our owner operators have today to be healed by capital. And so the one other piece to it that I think is very important, and Ivy talked about this, if you look at the supply of multifamily in the country, in 2024 and 2025, we peaked on supply and then the supply curve started to bend.

And if you saw where demand was going leading up to that, you said, wow, demand for multifamily is just growing and it's escalating going to the upper right. And in Q4 of '25, we saw that demand curve dip with supply. And that had a lot of owner operators very, very concerned. And the first quarter so far, for January and February, that demand curve continued to stay down. And it's just been in the last couple of weeks, we've started to see more tours, more leasing and an uptick in activity. It's a very early indicator.

And If it does turn on us, we'll obviously see the data, but we are all over that right now because that's going to have a big impact on overall operating fundamentals. And as Chris would tell you, you get any turnaround in that demand curve, you start to get assets getting filled up, you start to get any kind of rent growth off of it and the transaction market is going to accelerate very, very fast.

You're done with your online questions? That's it. Anybody else in the room have any other questions for us? I would then wrap in saying the following. First of all, to Kelsey and to [indiscernible] for all the work that went into getting this scheduled, put together, coordinated, thank you so much. Carol, your marketing team did a fantastic job of pulling the space together and getting all of this put together. Matt Cabral, who worked on all of these slides with Taj, thank you very much to my colleagues who all spent time and effort in pulling this together after just doing earnings and into this. I know it's been an incredible amount of work. And so thank you. And then to everyone who joined us here today in this room, thank you.

We'll have lunch just outside right after this, and please stay and have lunch, and I and the management team will stick around. And to everyone who joined us on the live webcast, thank you very much for tuning in today. I know a lot of our colleagues at Walker & Dunlop have been watching this, and I tweeted something out to all of you earlier. saying how proud I am of this exceptional leadership team for both the materials they presented and also their leadership of this company every single day. And so thank you all for tuning in, and thanks for all you do every day at Walker & Dunlop. That's the end of our 2026 Investor Day, and thank you all for coming.

Good day, and welcome to the Q4 2025 Walker & Dunlop, Inc. Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kelsey Duffey. Please go ahead.

Thank you, Cynthia. Good morning, everyone. Thank you for joining Walker & Dunlop's Fourth Quarter and Full Year 2025 Earnings Call. I have with me this morning our Chairman and CEO, Willy 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 Willy 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'll now turn the call over to Willy.

Thank you, Kelsey, and good morning, everyone, and thank you for joining us. Walker & Dunlop's fourth quarter and full year results demonstrate continued success in our real estate capital markets business with significant and sustained growth in transaction volumes. Our people and brand are winning, demonstrated by transaction volumes, market share and year-end league tables. At the same time, our Q4 and annual results were impacted by loan buybacks and valuation marks on our real estate owned portfolio.

Notwithstanding the charges, W&D's core business and market presence is extremely strong. We have an incredible team and brand that is meeting our clients' needs and winning. W&D's capital markets transaction volumes grew throughout the year from $7 billion in Q1 to $18 billion in Q4. That 161% growth in transaction volumes was due to a recovering market and the strength of W&D's team and brand. And we start 2026 with an extremely strong pipeline of both flow business as well as some very large portfolio financings.

W&D is very well positioned to benefit from increased deal flow across the commercial real estate industry as the down cycle of the great tightening wanes and the up cycle of an expansionary macro economy sets in. Walker & Dunlop's multifamily property sales volumes grew from $1.8 billion in Q1 2025 to $4.5 billion in Q4, up 146%. Our team increased their share of institutional multifamily sales from 8.7% in 2024 to 10.2% in 2025, ending the year as the fourth largest multifamily broker according to Real Estate Alert.

The breadth of W&D's service offering allowed us to finance 42% of our 2025 multifamily property sales for the buyer. This collaboration between our sales and financing teams was an important part of how we ended 2025 as the largest Fannie Mae DUS lender for the seventh consecutive year and moved up with Freddie Mac to be the third largest Optigo lender by growing volumes 58% in 2025.

We finished the year #1 with Fannie Mae, #3 with Freddie Mac and is the second largest GSE loan originator in the nation with 11.2% market share and $17.8 billion of total lending volume. W&D's people, brand and technology are winning in one of the most competitive markets in commercial real estate.

As we mentioned in our Q3 earnings call, we were asked by Freddie Mac to investigate a portfolio of loans totaling $100 million where the borrower committed fraud by submitting false documents to Walker & Dunlop and Freddie Mac. We retained excellent outside counsel to conduct the investigation and several conclusions were reached. First, not a single employee at Walker & Dunlop had knowledge of or participated in the borrowers' fraudulent flip transactions. However, while investigating the loans, it was determined that a Walker & Dunlop banking team had not adhered to our loan origination policies and procedures. This team is no longer at Walker & Dunlop.

Due to the investigation findings, Walker & Dunlop at our own initiative and expense did further loan diligence on the approximately 266 loans originated by that team. Through that review, we found 1 additional portfolio of loans totaling $34 million, where it appeared the borrower misrepresented financial information. We presented the results of our investigation to Freddie Mac in January of 2026 and offered to indemnify them for losses arising out of the aggregate $134 million of loans, which led to the $29 million of loan loss expense we booked in the fourth quarter. Freddie Mac is performing an additional review of our work on that portfolio, and we expect them to finalize their diligence over the next 90 days.

We have built Walker & Dunlop over the past 89 years as not only one of the best companies in our industry, but one with impeccable credit standards and ethics. Our track record speaks for itself. But what we found through this investigation did not hold to our high standards. Yet let me also be very clear about how we responded to these issues.

We acted swiftly, hired skilled outside counsel, acted with full transparency, took accountability for what transpired and improved our people, processes and systems as a result. While we can never say we will not have further loan losses or fraudulent borrowers, these improvements make us an even better company going forward.

As Greg will discuss in a moment, we completed our annual business strategy review and made 2 important decisions that also impacted our Q4 and full year financial results. First, we shifted our strategy for 2024 loan repurchases from long-term hold to near-term exit and marked down the carrying value of several assets in the fourth quarter. Last year was spent stabilizing the properties behind those loans, and we are now focused on selling them and recovering the capital we invested in the buybacks.

Second, we took an impairment charge on affordable assets we hold in the Walker & Dunlop affordable equity platform. We evaluated the cost of operating these assets and their long-term returns and decided to sell the assets. The impairment charges we took this quarter reduced the carrying value of these assets to fair value.

While loan buybacks and additional provision expenses are never welcome, we are taking several charges this quarter to set W&D up for growth and success in 2026 and beyond. Excluding impairment and repurchase-related charges, Q4 generated $1.04 in diluted earnings per share, reflecting the increasing strength of our Capital Markets business. We also ended the year with $299 million of cash on our balance sheet, plenty to absorb these loan repurchases and continue investing in the growth of our company.

I'm going to turn the call over to Greg now to discuss our financials in more detail, and I'll return to talk about what we are seeing to begin 2026 and our go-forward strategy, which is both focused and exciting. Greg?

Thank you, Willy. As you outlined, we took action to address repurchases in the affordable assets. And given the consistent strength of our core business over the last 3 quarters, those actions position the company for stronger performance going forward.

I'll begin by walking through the financial impact of those decisions and then discuss the performance and outlook for our core business.

In total, we recognized $66 million of impairments and credit losses this quarter related to loan repurchases and our strategic decision to exit the affordable assets. And we added 2 new line items to our income statement titled Indemnified & Repurchased Loan Expenses and Asset Impairments & Other Expenses to capture these charges.

I'll start with the indemnified and repurchased loan expenses. Since 2024, we have either indemnified or repurchased $222 million of loans from the GSEs, including all the loans from the investigation. In the fourth quarter, we recognized charges totaling $38 million related to these assets, including $29 million of charges related to the loans subject to the investigation.

We are now evaluating the most efficient path to disposition and expect to execute over the next few quarters. Although there was underlying borrower fraud, many of the loans remain current, and we do not expect significant carry costs as we prepare to sell them. The remaining $9 million of charges -- $9 million of charges this quarter relate to our shift in strategy for previously repurchased loans. Since taking control of those assets in 2024, they have cost between $2 million and $3 million per quarter to operate.

While we believe we could recover a portion of the lost value over time, doing so would take several years and the ongoing cost of operating them dilutes near-term earnings and understates the performance of our core platforms. As a result, we will sell them in the coming quarters, in some cases, at prices below our carrying values, which made the impairment charges this quarter necessary. Going forward, we will report future credit reserve adjustments and operating costs for these assets through the indemnified and repurchased loan expenses line item.

To put these repurchases in context, we have $115 billion of loans outstanding with the GSEs as of December 31, 2025. So, the UPB of our repurchases represents just 19 basis points of that portfolio. And our cumulative losses totaled $51 million or 4 basis points. Nearly 90% of our repurchases to date were with 4 borrowers and were originated by the team that is no longer with Walker & Dunlop.

The actions of a few had an outsized impact over the last 2 years. This is not meant to suggest we will not have future repurchases, but these figures demonstrate the overall quality of the remaining portfolio and that the recent losses are not reflective of our broader book. If we do have future repurchases, we are confident in our ability to absorb future losses and manage the capital needs, just as we have over the last 2 years.

The second charge we recognized this quarter relates to the impairment of affordable assets held since the acquisition of Alliant. This part of the Alliant business was focused on raising capital from institutional investors to acquire and operate affordable assets. The hold periods are long term, and since the business is not at scale, operating these assets has cost approximately $2 million per quarter. These assets do not align with our long-term strategy. So, we made the decision to sell them and recorded impairment charges of $26 million in the fourth quarter.

These charges are reported within the asset impairments and other expenses line item. As assets are sold, we will report any net gains or losses through this line item. The operating costs for personnel, interest and depreciation are recognized in those respective line items, and those financial impacts should be reduced to 0 by the end of 2026.

As we position the company to execute the Journey to '30, the long-term growth strategy Willy will begin outlining in a moment, we believe that focusing on our core businesses is the most effective use of our capital and internal resources. Selling the repurchased and affordable assets is expected to return $25 million to $35 million of capital to the balance sheet over the coming quarters and eliminate the approximately $4 million to $5 million of quarterly operating costs I mentioned previously. The capital will be redeployed into our core businesses where we believe it can generate stronger long-term growth and shareholder returns.

If you'll turn to Slide 6, you will see a crosswalk from each of our reported core metrics to what they would have been absent the impairment and repurchase-related charges recognized in the fourth quarter.

For the quarter, we reported a diluted loss per share of $0.41, adjusted EBITDA of $39 million and adjusted core EPS of $0.28. All of the charges were reflected in diluted loss per share, while only the credit loss portion of those charges is added back to adjusted EBITDA and adjusted core EPS, consistent with how we define and report those metrics.

If the remaining impacts of these charges were added back to our reported results for illustrative purposes, diluted earnings per share would have been $1.04, adjusted EBITDA would have been $85 million and adjusted core EPS would have been $1.31, demonstrating the underlying earnings power of our core platform.

Loan repurchases and credit events are an inherent part of our business model, and we will manage them conservatively and transparently. While individual quarters may reflect that volatility, the underlying strength of our Capital Markets and Servicing & Asset Management platforms remains intact, and we are optimistic about the outlook for both businesses.

Turning now to segment results. Our Capital Markets business continues to build momentum amidst the commercial real estate recovery. We delivered $18 billion of total transaction volumes, up 36% over the year ago quarter, generating $191 million of revenue, up 5% year-over-year. Revenues did not grow in line with volumes for 2 reasons. First, the volume growth year-on-year was driven primarily by debt brokerage and property sales activity, which earn lower fee margins and revenues than our agency originations. And second, MSR margins on new GSE originations remained tight and lower than Q4 last year.

We expect MSR margins to remain near 2025 levels again in 2026. Nonetheless, the Capital Markets business had another strong quarter of net income, delivering $26 million. The outperformance in the fourth quarter triggered performance incentives for some of our salespeople, and those accruals caused EBITDA to fall just below breakeven. That's a timing impact as overall for the full year, the Capital Markets segment delivered $90 million of net income, up 35% from $67 million in 2024 and more than double the $41 million reported for 2023.

Adjusted EBITDA for the segment also improved to a loss of $17 million, up 40% from a $28 million loss in 2024 and about 1/3 of the $46 million loss reported in 2023. The momentum building in the transaction markets over the last 4 quarters has continued into early 2026. We are starting the year with a very strong pipeline, and we are bullish on our team and its ability to deliver another year of sequential growth that will drive our performance in 2026.

The Servicing & Asset Management, or SAM segment had another solid quarter absent the aforementioned loan repurchase and asset impairment charges. Our servicing portfolio grew to $144 billion at the end of 2025, fueled by our success with the GSEs this year and grew 6% compared to the end of 2024. With a very strong Capital Markets team delivering top end market share, we expect continued growth in the portfolio in 2026. Revenues from the SAM segment were $143 million, down 9% from the year ago quarter.

We sold an affordable asset last Q4 that generated $29 million of revenue. So, the decline was expected and not due to any particular headwind facing the segment. As mentioned, repurchase and impairment charges impacted our SAM segment and were $66 million this quarter, which drove the $9 million net loss for the segment compared to $37 million of net income in Q4 last year.

Adjusted EBITDA was also negatively affected by the charges, coming in at $80 million this quarter compared to $124 million last year. Our outlook for the SAM segment is positive for 2026. We expect growth in the servicing portfolio, which will drive earnings and cash flow, and we also see opportunities for growth in syndication revenues and investment management fees. As we sell the affordable and repurchased assets, we will eliminate those operating costs from our ongoing results, improving the long-term financial performance for this segment.

Turning to credit on Slide 10, which provides key credit metrics that are specific to our at-risk portfolio. The at-risk portfolio with Fannie Mae now stands at $69 billion at December 31, 2025. We have 14 defaulted loans at December 31, 2025, totaling $159 million, just 23 basis points of the at-risk portfolio. As the macroeconomic environment continues to recover, our at-risk portfolio continues to demonstrate strong underlying credit performance with low defaults and low loss severity upon default.

As this slide shows, the cash flows of the portfolio remain strong with a weighted average debt service coverage ratio over 2x and only 3% of our loans performing below a 1x debt service coverage ratio. The underwritten LTV of the portfolio is also sound at just 61%, with only 4% of loans underwritten at an LTV above 75%.

With strong cash flows and a healthy amount of equity in front of our senior debt, our at-risk portfolio is extremely well positioned in the current environment. We ended the quarter with $299 million of cash on our balance sheet, reflecting the cash generation from our Servicing & Asset Management business and the strength of the transaction markets. Although we reported impairment charges this quarter, we will recover capital as we sell the assets, reduce operating costs and further improve our cash generation.

Our business remains foundationally strong. And when coupled with the continued momentum building in our Capital Markets business, our strong cash position provides us with flexibility to support organic growth, invest strategically across the platform and continue returning capital to shareholders. Since initiating our dividend in 2018, we have returned more than $0.5 billion to shareholders over the last 7 years. Our dividend is an important driver of our shareholder returns. And as such, our Board of Directors increased the quarterly dividend for the seventh consecutive year to $0.68 per share, a 1.5% increase over 2025.

Before discussing our guidance for 2026, it is important to put our 2025 performance in context. 2025 reported results were meaningfully impacted by a very slow start to transaction activity in the first quarter when we generated $0.08 of diluted earnings per share and again in the fourth quarter as a result of the loan repurchase and impairment losses.

As we look ahead to 2026, a significant reduction in those charges, combined with a first quarter pipeline that is over twice the level of the year ago first quarter creates a clear step -- a clear opportunity to step up our earnings. We expect the market to grow again in 2026 at a similar rate to 2025, and for our Capital Markets platform to continue gaining share, we also anticipate the interest rate environment to stabilize with only minor reductions to short-term rates, which will support increased transaction volumes and slow the declines in escrow-related earnings.

Importantly, our core business has demonstrated a solid and consistent run rate over the last 3 quarters, and we expect that performance to continue into 2026. As a result, as shown on Slide 11, our full year 2026 guidance is for diluted earnings per share of $3.50 to $4.00, adjusted EBITDA of $300 million to $325 million and adjusted core earnings per share of $4.50 to $5.00.

We enter 2026 with momentum. Our outlook is supported by a strong balance sheet, improving transaction markets and the durability of our recurring revenue streams. We feel extremely good about our positioning, capital flexibility and ability to generate long-term value for shareholders.

Thank you for your time this morning. I will now turn the call back over to Willy.

Thank you, Greg. I know it's been an extremely busy and challenging year-end close, and I'm very appreciative of all the time and effort you and your team have invested in making sure our results are transparent and exact.

As I said earlier, we begin 2026 with a very healthy pipeline and an improving macroeconomic environment. Given W&D's significant volume growth in 2025, we have confidence that 2026 will generate both top and bottom line results for our investors.

During my tenure as CEO of Walker & Dunlop, we have been fortunate to develop and execute on several bold, highly ambitious 5-year business plans. We did not achieve The Drive to '25 due in large part to interest rate spikes and challenging market conditions from 2022 to 2025. So, we begin 2026 with the Journey to '30, another bold plan that has everyone at Walker & Dunlop excited about where we are going and how we get there.

As you can see on Slide 12, Walker & Dunlop competes with some of the world's largest and most successful real estate finance and services firms. We have plotted on this graph where we believe Walker & Dunlop and its competitive set sit with regard to real estate capital markets capabilities on the Y-axis and real estate services capabilities on the X-axis. The Journey to '30 will drive W&D up the Y-axis deeper into commercial real estate capital markets. We will add talent, diversify our service offerings and invest in businesses to become the very best commercial real estate capital markets company in the world.

How do we get there? Let's first focus on our top line and where we see strength in 2026. Our Q1 2026 pipeline currently sits at $15 billion, over 2x our Q1 2025 production total and includes several large portfolio transactions. There are several things happening in Q1 2026 that are quite distinct from last year.

First, we are seeing owners refinance or transact on portfolios of scale. Second, in 2025, Fannie Mae and Freddie Mac were in the process of transitioning to a new administration and had a slow start to the year. This year, they are both out of the gates quickly with a combined lending cap that was increased by over 20% to $176 billion, which will make them the dominant provider of capital to the multifamily market in 2026.

Finally, there is an abundance of capital looking to be lent and invested into commercial real estate from commercial banks, life insurance companies and debt funds. Our Q1 pipeline includes a number of large transactions by our institutional advisory practice led by Aaron Appel. This team completed the largest single building office to multifamily conversion loan ever done ever in Q4 of last year, an $867 million financing for 111 Wall Street and also just funded the largest land acquisition loan for $464 million ever done in Miami.

This team has the people, brand and capital to continue growing W&D's debt brokerage business across all commercial real estate asset classes in 2026 and beyond. The Journey to '30 includes continued growth in brokered loan originations and agency lending, adding talented bankers and brokers in the United States and Europe, expanding our client base and adding investment sales capabilities across commercial real estate asset classes to broaden our service offering to existing and new clients.

I mentioned earlier the growth and market presence of our multifamily investment sales team. They had a phenomenal 2025. And as you can see on Slide 13, by originating $13.3 billion in property sales, they moved up in the league tables to #4, jumping over competitor firms, Eastdil Secured, Berkadia, Marcus & Millichap and Cushman & Wakefield. This type of growth and market presence is exciting and will drive top line growth in both investment sales and financing.

We are currently working on financing a large credit facility for one of our largest clients. When they called me to award us that financing, the first thing they said was, "We love your debt team, but we are awarding you this financing due to the incredible work done for us by your multifamily investment sales teams in Houston, Miami and Boston."

We constantly talk at Walker & Dunlop about the power of the platform, the breadth of our offerings and making sure we are selling our entire suite of services. And as this client call demonstrates, it is generating deal flow and value to W&D. It is this collaboration across our Capital Markets team that we are focused on increasing globally as we expand our Capital Markets team and product offerings over the next 5 years.

W&D's market insights, data analytics and research differentiate us with clients every day. Zelman, our housing research business, continues to expand its reach and client base while providing W&D bankers and brokers with extremely valuable market insights. Apprise, our appraisal company, performed almost 4,000 appraisals in 2025, up 20% from the previous year. All Zelman Research and Apprise valuations get pulled together by Walker & Dunlop's Market Intelligence team to make our bankers and brokers more informed and insightful to their customers.

As AI makes data analysis and compilation faster and more insightful, we feel extremely well positioned to use our data and insights to add value to our clients and win more business. Our average financing transaction in 2025 was $29 million, and our average sales transaction in 2025 was $46 million. These are large complex transactions that require human interaction and trust. Our data, insights and people give our clients just that.

Finally, with regard to our market insights and research, The Walker Webcast continues to be the #1 commercial real estate webcast by a wide margin, being watched by an average 267,000 viewers each week so far in 2026. What started as simply a way to communicate directly with our customers at the advent of the pandemic has turned into an exceedingly valuable marketing channel. It is unique to W&D, and we will continue to invest in the Walker Webcast to inform our clients and drive our brand.

I just talked about our top line growth and how 2026 is setting up to be a fantastic year for W&D. Now let me focus on margins. The following graph shows W&D's GSE loan origination volumes for the past 5 years. As this graph shows, while volumes came down dramatically as interest rates rose, we maintained or grew market share throughout that period.

Now look at what happened to our capitalized mortgage servicing rights during that period of time. As you can see, MSRs fell dramatically more than loan origination volumes for 2 reasons. Borrowers shifted from borrowing for 10 years to borrowing for 5 years, and the average servicing fee fell dramatically due to higher interest rates and spread compression.

And while Greg just said that our expectation is that MSR margins will remain flat between 2025 and 2026, we are beginning to see an opportunity to sell longer duration loans as spreads between 5- and 10-year paper tighten, and increase servicing fees as rates and spreads stabilize. Longer duration loans and increased servicing fees will have a dramatic impact on our noncash revenues and earnings when they materialize, and we are focused on achieving both over the coming quarters and years.

We are also focused on increasing the average transaction volume per banker/broker from $248 million at the end of 2025 to $300 million at the end of 2026. We achieved this several ways. First, we simply cover our existing and prospective clients better using technology, research and bringing the weight of the Walker & Dunlop platform to every client engagement. That sounds obvious, but it is not easy.

Second, I mentioned previously that 42% of the multifamily properties we sold in 2025 had Walker & Dunlop finance the acquisition for the buyer. We can do better than that in 2026. Third, we are segmenting our sales team by customer size to better cover existing and prospective clients. We now have teams focused on institutional, middle market and private client customers and supplying them with research, technology and go-to-market support to meet the distinct needs of these 3 market segments. Penetrating each of these client segments better will drive increased sales productivity, economies of scale and margin.

To enhance our service offering to W&D clients, we launched WDSuite in 2025, which allows our clients to manage every aspect of their relationship with Walker & Dunlop from making loan payments to accessing loan documents to running loan analytics, to valuing properties, to researching investment opportunities, to not only get information and do analytics on their loans, but also provide them with direct access to our financing, appraisal, research and investment sales teams.

WDSuite integrates the full weight of our commercial real estate services platform into one digital experience. And while our data and technology remove a ton of the friction around finding, acquiring and financing an asset, we firmly believe that the people of Walker & Dunlop are what provide our clients with the ability to invest and transact, and we will continue investing in our people, technology and brand going forward.

Our $144 billion servicing portfolio is a powerful cash-generating machine and the second largest GSE servicing portfolio in the nation, generating fantastic returns today and significant embedded refinancing opportunity ahead. Importantly, over 50% of our agency portfolio matures over the next 5 years. In 2025, we recaptured 34% or $3.4 billion of the $10 billion of loans that either matured or paid off early.

Holding that recapture rate steady at 34% will generate $23 billion of loan origination volume over the next 5 years. By increasing that recapture rate to 50% through enhanced engagement with WDSuite, delivering more of the platform to each client and expanding the capital markets solutions tailored to each customer segment will drive an incremental $10 billion of financing activity on top of the $23 billion.

The strategy is straightforward: stay closer to our clients, better understand their evolving needs and engage earlier in the decision process. If a client elects to refinance, we should win that deal as it sits in our portfolio today. If they choose to sell, we need to be ahead of that decision, valuing the asset and demonstrating our sales capabilities. And if they select to sell the property, we are well positioned to provide financing for the new buyer.

By integrating technology with the breadth of our capital markets platform, we should increase portfolio recapture, expand client relationships and grow revenues over the coming years as our portfolio matures.

Greg spoke previously about our 2026 guidance and what we are focused on achieving this year. In 2 weeks, we will hold an Investor Day in New York to walk through The Journey to '30 in more detail. We will show investors where we plan to invest and how we plan to grow earnings per share from $3.50 to $4.00 a share in 2026 to $9 per share in 2030. We have the people, brand and technology to continue growing and generate these earnings.

When I look at how the commercial real estate capital markets and W&D have rebounded following past downturns, I get really excited. I get excited about the team we have built at W&D. I get excited about the brand we have built. I get excited about the technology we have created. And most importantly, I get overjoyed about the amazing clients who have put their trust and confidence in the people and platform of Walker & Dunlop.

We are entering the next cycle at W&D, and I am exceedingly excited about what it has in store for our clients, our team and our investors. It is an honor to lead this great company, and I'm thankful for the trust and confidence our shareholders have placed in the W&D team.

Thank you for joining us this morning. I'd like to ask the operator to open the call for any questions. Thank you.

[Operator Instructions] We will take our first question from Jade Rahmani with KBW.

To start off with just on credit, it sounds to me like you took an approach to be proactive and comprehensive with respect to the Freddie Mac potential fraudulent loans. And while there are no guarantees, the body language suggests that you feel pretty good about the overall portfolio. Could you just comment on the credit trends you're seeing and provide any additional color?

Jade, thanks for joining us. We obviously gave as much specificity and color to the credit portfolio in both Greg's remarks and my remarks as we could. I would reiterate what you just said is that we feel extremely good about the credit portfolio, the scale it has. And while as we both said, the buybacks and loan losses associated with those this quarter were disappointing, we have acted very proactively on this with full transparency.

And while we can never guarantee that we won't have further loan losses or fraudulent borrowers who we lend to, we feel like we are extremely well positioned and a better company today, having gone through all this than we were before.

Secondly, just looking at the adjusted EBITDA outlook for 2026 of $300 million to $350 million and comparing it to the $316 million, excluding charges, could you just quantify the amount of nonrecurring operating cost headwinds in 2026 relative to that ex-charges number so that we can ascertain how much of an overhang that component is?

Sure, Kate. I'll take that one. So, look, our guidance this year certainly does include continued carry costs for those repurchased assets and affordable assets. We're not going to exit them immediately. So, we will continue to incur those costs for -- that I mentioned on the call, about $4 million to $5 million a quarter, at least in the near term because we're not expecting that immediate resolution. So, there is going to be a gradual reduction over the course of the year, but it will be heavier in the first half and obviously lighter in the second half and should fully realize most of those quarterly costs by late this year.

We will take our next question from Steven Delaney with Citizens Capital Markets.

Willy, I heard loud and clear, I think, when you were going through the impairments and the losses. It sounded like you were intentionally trying to communicate to us that you and Greg feel that you look deep into all the corners and closets and that you feel that you're presenting to us as of year-end of 2025 as clean of a balance sheet in terms of write-downs and fair value marks, litigation, whatever. Is it accurate for me to view that, that you have accomplished that as you sit there today and you look at -- look in the rearview mirror and the problems you have that we can look at those as being in the rearview mirror?

Sure, Steve, and thank you for joining us this morning. So, the challenge is that sort of you don't know what you don't know, and we have an extremely scaled portfolio that we feel extremely good about how we underwrote those loans and the performance of those loans.

As I mentioned in my comments, the proactive work that we did on the portfolio of loans that we look into at our own initiative and presented to Freddie Mac that we would indemnify them on one other portfolio. Freddie Mac is doing their own analysis of that one portfolio of loans. And as I said, we believe that we'll hear back from Freddie Mac in the next 90 days as it relates to whether they concur with us that there's nothing else in that portfolio of loans.

So, we scrub that portfolio of loans as deeply as we possibly could, and we feel very good about what we presented to Freddie Mac and our findings on it. And at the same time, you can never sort of say we're done because of the size and scale of what we do. We're a lender. We take credit risk every single day. And while these incidences as it relates to borrower fraud are both, we believe, isolated and also -- isolated from both an origination team as well as a time standpoint. And we have significantly enhanced, we and other actors in the market, our competitor firms as well as the agencies have all stepped up our underwriting processes, procedures and protocols.

I would just say that we are diligent. We're on it every single day, and we feel extremely good about both the loans that we are originating every day as well as our historic portfolio.

That's great. And I mean, I think what we all want to get a handle on is what is the upside going forward. But obviously, you have to make sure you're starting with that rock-solid foundation, and it sounds like that was certainly what you intended to do.

I'm looking at the, I guess, Page 5 in your deck. So, you held on with Fannie Mae as #1 in 2025, down at #3 in Freddie. I guess, looking forward in 2026 and beyond, is this kind of -- should this be kind of static? How far are you ahead of Wells Fargo with Fannie? And do you have the possibility to move up from #3 at Freddie to a higher level there?

So, as you saw, we had over 50% growth in loan origination volumes in 2025 with Freddie Mac from 2024. We grew our originations with Fannie Mae as well in 2025. We take our position in the league tables very seriously as do our competitive firms. And it is an honor and a privilege for everyone at Walker & Dunlop to be able to sell our exceptional track record and growth and market position with both Fannie Mae and Freddie Mac to our client base.

I do believe that there is the opportunity for us to continue to gain market share. And I think one of the reasons that we walked you through in such a detail the strength of our financing platform and our sales platform, combined with our research platform and our appraisal platform that all add a tremendous amount of value to our client engagement and our ability to win future financing work as well as sales work.

The growth in our investment sales group in 2025, as I said, was spectacular. Jumping over the 4 competitor firms that I mentioned in my prepared remarks is, quite honestly, when we started and entered that business in 2015, if you told me that we would leapfrog over those 4 firms in 2025, I would have said that will be quite an accomplishment because those are fantastic firms with fantastic people.

But it is the combination of investment sales and debt financing and research and appraisals, along with a fantastic underwriting team and servicing portfolio that allow us to be positioned in the market where we are today. And we plan to continue to work extremely hard to both maintain our #1 positioning with Fannie Mae and continue to grow with Freddie Mac.

It's an expanding market. As I said, we all know that the regulator Director Pulte increased the 2025 lending caps for Fannie Mae and Freddie Mac by over 20%, and that presents us as well as our competition with a huge opportunity in 2026 and beyond to continue to grow both market share with the GSEs and overall multifamily financing.

We will take our next question from Matthew Hurwit with Jefferies.

So, can you walk us through the key market assumptions embedded in the 2026 guidance, specifically volume growth, margins and capital markets activity. What needs to get right to land at the midpoint of the guidance?

Greg, do you want to jump in there?

Sure. Yes. Look, I think this is your first [ official ] on that. So, welcome to the call. Thanks for joining us. Look, I think as I've said in my remarks, we're expecting the market to be up similarly outside of particularly -- I'll put the GSEs off to the side, but the market in general to be up similarly in '26 compared to '25. We also have the GSEs caps, multifamily caps were expanding close to 20% for 2026. It looks like at least in January, Fannie is already off to a very strong start from a delivery perspective and Freddie is kind of on top of where they were a year ago, but they're certainly pricing deals and starting the year off very competitively. And you heard our pipeline expectations for the first quarter, just our pipeline outlook.

So, I think the expectation for us is that we're going to continue to hold the market leadership position that Willy and Steve were just talking about on Slide 5, and if not continue to advance forward where we can and certainly continue to capture market share wherever possible, whether that's through investment sales opportunities or more GSE originations with both Fannie and Freddie or non-multifamily transactions.

We've got a lot of different bankers and brokers across the platform going to market every single day to do just that. So, look, our expectation is to beat or exceed our performance in '25 and '26 with the continued growth in the market. And I think if we can do that, we'll put ourselves around that midpoint, just like you asked.

Great. Okay. And then, with the dividend increase, how should we think about the dividend sustainability and payout policy within the 2026 framework?

Yes. Look, I think, again, same thing mentioned, almost $300 million of cash at the end of the year. The Board certainly looked at not only the capital position at the end of the year, but our outlook throughout 2026. Our recommendation and their decision was grounded in a strong foundation and fundamental ability to continue to generate cash. I think the EBITDA expectations and EBITDA outlook for 2026 are a good reflection of that.

And importantly, we are beyond some of the earn-out periods that we had for a couple of our transactions in 2021. So those will fall away from a capital use perspective, and we feel very good about our ability to not only sustain but grow the dividend in the years ahead. So, I think very positive throughout this year.

We will take a follow-up question from Jade Rahmani with KBW.

I wanted to ask you about AI, which has taken the market by storm this year, but maybe not in the way many anticipated. The so-called AI scare trade has played out in the commercial real estate services sector. And yesterday, FHFA Director Pulte posted that he wants Fannie, Freddie and their providers to lean into AI. So the question is, what potential impact, positive and negative, you think AI presents to W&D's business?

So, Jade, we put in a number of places in our prepared remarks where we see technology and our people coming together to provide our clients with more insight and streamline loan origination, property sales and valuation work. I think that one of the reasons we put the competitive new graph up with where Walker & Dunlop believes it sits as it relates to our competitive set on commercial real estate capital markets on the Y-axis and commercial real estate services on the X-axis is to underscore that we're moving towards more engagement with our clients on very large transactions where the people and the technology and the processes and the capital of Walker & Dunlop differentiate.

There are plenty of commercial real estate services out the X-axis that we believe technology can have a big impact on and potentially, in some instances, do what some of those firms today do in a much, much more streamlined and potentially just a technology interface. And so, our strategy going up the Y-axis, going deeper into real estate capital markets, given the size of our average transaction and the type of customers that we work with, we believe that, that is an extremely good space for us to be in as it relates to the additional use of AI and how AI can both enable us as well as make us more relevant to our customers.

I guess the final piece to it is just that we acquired GeoPhy back in 2021 when AI was not anything that you would have asked on this earnings call, and quite honestly, back when AI was called machine learning. And we have had GeoPhy inside of Walker & Dunlop for the past 4 years using their technology to streamline our processes to be able to digest information and do analytics on that information. And we feel extremely good that we are -- I wouldn't say ahead of the curve because this is moving so fast that I think it's exceedingly hard for anyone other than the largest and most capable technology firms to truly be ahead of the curve. But we feel very well positioned in our industry that we are using the technology and its implications and applications to make Walker & Dunlop a better firm every day.

And are there practical ways in which you think the GSEs will use AI or will -- or W&D will use AI and how it interacts with them?

So, first of all, I take what Director Pulte said yesterday with the full seriousness of everything that comes out of FHFA. And if his intention is to get Fannie and Freddie focused on it, they are very much going to get focused on it, thought the question comes into play, at what level of their involvement in the secondary market? And the other question that I would have would be, how much of that's going to be on the single-family side, where the size of the loans is much smaller, where the underwriting is algorithmic and where -- the single-family business of Fannie and Freddie today is really an algorithm business.

You have conforming loans. They come from originators across the country. And as long as that loan fits their underwriting box, if you will, that loan is taken by Fannie and Freddie and securitized and pooled and insured. The multifamily business is a wildly different business. The multifamily business is a client relationship business. It is dealing with some of the largest both real estate developers, owners and private equity firms on the face of the planet.

Every asset is underwritten uniquely. The loan size and sales size of those assets, as I said in my prepared remarks, is dramatically larger. And so, I would look at AI and the application of AI and think that the first place that, that would be really focused on inside the agencies would be in their single-family business. That is not to say that there is an opportunity for its use in the multifamily business.

But given the deal size, given the bespoke nature of every single loan, it is a different business, and it is able to use technology as it has ever since we started working with Fannie and Freddie. Every year, there's new technological innovation, new technological applications. But I would think that the original or first place that they focus inside of the agencies is on the single-family business.

There are no further questions at this time. I will turn the conference back to Mr. Walker for any additional or closing remarks.

I'd like to thank Greg and Kelsey and their teams for all the work that they have done to close out 2025 and get us focused on 2026. I'd like to thank the W&D team for all you do every day to make this firm so great. And I want to thank everyone who joined us on the call this morning for your time and your focus on Walker & Dunlop. I hope everyone has a great day, and thanks for joining us.

This concludes today's call. Thank you for your participation. You may now disconnect.

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

Thank you, and 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, Willy 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 Willy 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 Willy.

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. Pent-up 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 $0.98 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 W&D'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 5-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 2 to 5 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 vintages 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% in 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 in 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 Sunbelt 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 4 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 6 shows, there is over $600 billion of equity capital invested in historic funds for over 5 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 brokered 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 appraise 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 WDSuite, 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 W&D 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, W&D's people, brand and technology are well positioned in the marketplace and winning.

We see the secular tailwinds behind our business, almost 3 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.

Thank you, Willy, and good morning, everyone. As Willy just outlined, the continued momentum of the commercial real estate transaction markets drove growth across every one of our product offerings in Q3 '25. Both of our operating segments, Capital Markets and Servicing and Asset Management grew revenues this quarter, reflecting the strength of our overall business model as the market continues to improve. Diving into our segments, our capital markets team continued to build momentum, delivering volume growth across every product offering this quarter when compared to the year ago quarter.

As a result, loan origination fees grew 32%, property sales broker fees grew 37% and MSR revenues increased 12% year-over-year. Over the past 2 years, we highlighted 2 trends in our GSE lending volumes. The first is a shift away from 10-year loan products towards shorter duration 5-year products. As this graph shows, back in 2020, 82% of W&D's GSE lending was 10-year or longer paper and 0% was 5-year. Fast forward to today, and those numbers have essentially inverted. Year-to-date in 2025, 23% of loans are 10-year or longer, while 60% are 5-year.

The second trend we have seen over the past 2 years is tighter servicing fees due to the higher interest rate environment. Both of these trends continued this quarter, which led to lower valuations for our noncash MSRs. So even though the 64% growth in GSE lending volumes this quarter was fantastic, it only drove a 12% increase in our noncash MSR revenues compared to the year ago quarter. These clients are part of our ecosystem and their loans are now in our servicing portfolio, and we will be in the pole position to address those loans for our clients as they prepare to transact over the next 5 years.

As shown on Slide 9, total Capital Markets segment revenues grew 26% year-over-year. Net income grew 28% to $28 million, and adjusted EBITDA improved 83% to a loss of less than $1 million. This segment's performance this quarter is a reflection of the team on the field and what they are capable of delivering as market conditions continue improving. We expect to see more quarters like this as momentum in the markets continue building. Our Servicing and Asset Management, or SAM segment grew third quarter total revenues by 4% year-over-year, as shown on Slide 10. Our $139 billion servicing portfolio continues to generate steady cash servicing fees that grew 4% this quarter.

Our placement fees and other interest income also grew this quarter by 5%, even though short-term interest rates declined year-over-year. We experienced an uptick in loan payoffs this quarter, many of which we refinanced for our clients, temporarily increasing the balance of our escrow accounts and offsetting the year-over-year decline in interest rates. This is a nice surprise in Q3, but not something we expect to persist in future quarters. Overall, SAM segment net income declined 1%, but adjusted EBITDA grew 2% to $119 million.

Turning to credit. Our at-risk servicing portfolio continues to perform exceptionally well with only 10 defaulted loans totaling just 21 basis points. We recognized a $1 million provision for loan losses this quarter compared to $2.9 million in the year ago quarter. The provision this quarter was driven by updated loss estimates on 2 previously defaulted loans as well as standard loss provisions for the growth in our overall at-risk portfolio. We continue to see strengthening operating fundamentals across the portfolio as rates come down, excess supply in certain high-growth markets get absorbed and national occupancy increases.

While our portfolio performance is exceptional, and we feel extremely good about the credit quality of our book, we continue to investigate in collaboration with the GSEs, specific incidences of borrower fraud that took place largely as a result of changes in industry practices in the aftermath of the pandemic. We are currently in negotiations with Freddie Mac on the indemnification of 2 such loan portfolios totaling $100 million. While Freddie Mac and Walker & Dunlop jointly underwrote these loans, we have a long-standing partnership with Freddie Mac that requires us to repurchase loans or indemnify them if certain borrower documentation is determined to be fraudulent.

Our current expectation is to use approximately $20 million of Walker & Dunlop capital to collateralize our indemnification of Freddie Mac for these loans, and we expect to take the credit losses associated with this portfolio in the fourth quarter. While loan buybacks and the associated losses are never welcome, we do not have other fraud investigations underway with either GSE and feel confident that the policies, procedures and new technology we have in place today protect us from the type of borrower fraud that transpired during and in the immediate aftermath of the pandemic from occurring again.

As Willy just outlined, we have significant momentum heading into the fourth quarter and the strength of our pipeline and the macroeconomic environment has our core business on the path toward achieving our annual guidance for EPS, adjusted core EPS and adjusted EBITDA, absent any losses related to loan buybacks. We ended the quarter with $275 million of cash on our balance sheet, reflecting the continued recurring revenues from our SAM segment, combined with a rebound in capital markets activity.

Our capital deployment strategy remains focused on organic growth opportunities through recruiting and retention, reinvestment in strategic areas of the business and continued support of our quarterly dividend. To that end, yesterday, our Board of Directors approved a quarterly dividend of $0.67 per share payable to shareholders of record as of November 21. As I said previously, we feel very good about our business model, credit outlook, market positioning and growth opportunities for 2026 and beyond. Thank you for your time this morning. I will now turn the call back over to Willy.

Thank you, Greg. As Greg just described, our business is very strong as we finish off 2025 and start looking ahead to the coming year. Our bankers and brokers are winning, driving strong transaction volume and revenue growth. And while our clients borrowing for shorter duration is putting downward pressure on noncash mortgage servicing rights, we are being set up for an extremely strong run of both cash origination fees and new mortgage servicing rights as the shorter duration loans of 2023, '24 and '25 come up for refinancing over the next 2 to 5 years.

Our market share with the GSEs continues to grow. And as Fannie and Freddie get ready for potential public offerings, we expect to see their multifamily lending volumes increase. Similarly, we see HUD becoming a more efficient and competitive source of capital. We remain at the top of the league tables with Fannie, Freddie and HUD, and we see a tremendous amount of opportunity ahead as the Trump administration focuses on lowering the cost of housing in America. We saw the opportunity and necessity to be a scaled player in multifamily investment sales back in 2015. And after a decade of growth, our sales volumes have increased 40% in 2025, handily beating the industry average of 17%.

We can still grow this group further in the United States, Europe as well as into new asset classes such as hospitality, retail and industrial. Investment sales is the tip of the spear with regard to real estate capital markets activity, and we will continue to invest in great talent for many years to come. We are focused on the continued expansion of our debt brokerage business. We split this business into 2 units earlier this year, one led by Aaron Appel, focusing on institutional clients and the other run by Alison Williams, focusing on middle market and regional borrowers. Both of these groups have a massive total addressable market of almost $3 trillion of refinancing volume based on our contractual maturities over the next 5 years.

We will both add bankers and brokers as well as expand our investment sales business to make W&D as competitive in banking, the retail, hospitality and industrial sectors as we are in multifamily. Given the strong total transaction volume we closed in Q3 and the strength of our Q4 pipeline, it is clear that our bankers and brokers are meeting their clients' broad needs today. Year-to-date, our annualized average transaction volume per banker broker is $220 million, ahead of our 2025 goal of $200 million per banker broker and tracking towards our 2021 peak of $311 million.

We see data becoming increasingly important to us and our clients. As I mentioned earlier, our Galaxy database continues to identify new clients and loans to W&D. Our client portal developed completely in-house provides our borrowers with data on their loans and portfolio of assets that we believe is unique and differentiating in the marketplace. And while there are multitudes of point solutions for technology and data in the marketplace today, we see the combination of our people, technology and data as the way to differentiate us today and going forward. Aggregating data from our Zelman research, brokers' opinions of value, appraisals, loan underwriting and servicing portfolio to identify trends and investment opportunities for our clients is where we will continue to invest.

W&D is the 10th largest commercial loan servicer in the United States. We have invested heavily in people and technology and believe we have one of the best servicing platforms in the world. But we know there are economies of scale we can gain by expanding our servicing business by either buying mortgage servicing rights or increasing our loan origination capabilities significantly. Our fund management business continues to grow, but we need to raise more capital. In 2025, our team will invest just under $1 billion of capital in debt and equity investments, and over half of that deal flow was sourced by Walker & Dunlop bankers and brokers.

We see great value in both our fund management professionals' ability to structure and deploy capital as well as our large distribution network of 225 bankers and brokers across the country who have placed $28 billion of capital year-to-date. We are extremely focused on growing our fund management business by raising additional capital vehicles to meet our clients' varying capital needs. We see the continued institutionalization of the commercial real estate industry as capital raising and technology become more differentiators. W&D has best-in-class point solutions in lending, property brokerage, research and appraisals with a very real opportunity to combine these service offerings into a scaled suite to the institutional investor community.

Our capital markets group is increasingly selling more than one service to our clients, debt financing along with investment sales or fund valuation services along with research. The opportunities for growth in our industry with W&D's people, brand and technology are enormous. And the challenge and opportunity over the coming years will be to integrate our service offerings to meet the needs of our customers, particularly institutional investors, where we see capital and assets aggregating. Finally, our brand could not be stronger. The Walker Webcast is about to surpass 20 million views on YouTube and Spotify, placing it as the preeminent voice to the commercial real estate industry by a wide margin.

Zelman research continues to expand its coverage universe and maintains its reputation as one of the most insightful housing research companies in the United States. And our bankers and brokers exceed their clients' expectations consistently, which in the services business is the best branding and marketing possible. W&D's net promoter score year-to-date is 86, a number well above the financial services industry average and a reflection of the exceptional people, technology and client focus of Walker & Dunlop.

These are exciting times for our company. We see an enormous opportunity ahead to expand our capabilities, bring technology to our business that makes our clients and us more insightful and more efficient and continue growing to drive exceptional shareholders' returns. I'd like to thank our entire team for a terrific Q3, and I would ask the operator to open the line for questions. Thank you.

[Operator Instructions] We'll go first to Jade Rahmani with KBW.

Just to start off with on the 2 new loan repurchase requests. So far this quarter, we have seen some of the agency multifamily lenders, particularly Greystone take charges, JLL and Arbor also have taken charges. W&D's credit has been pristine through this cycle. So this is a modest surprise, although I don't think it's huge. But just can you give any context as to how widespread the issue might be? I think the last repurchase requests you received were in 2024.

Yes, Jade, thanks for joining us. As Greg underscored, this is isolated to the portfolios that have been identified by us and by Freddie, so we do not have any other investigations underway with either GSE. And so we feel good about that. And at the same time, as Greg said, we never like it when this happens, but feel very good that we have the people, the processes and the systems in place to make sure that this doesn't happen again.

And in terms of credit trends within the portfolio beyond these select instances of apparent fraud, how has credit been performing? I know in the past, you've talked about 2x debt service coverage ratio in the Fannie portfolio, but are you seeing any credit deterioration at this point?

No. Actually, if you look at the provision for loss sharing in Q3 of last year at $2.9 million and it lowering to $1 million this quarter and Greg's comment as it relates to the overall performance fundamentals of the portfolio, it's exceptionally good. I would underscore the fact that our at-risk portfolio right now as it relates to defaulted loans is sitting at less than 20 basis points. If you look out into CMBS portfolios, the multifamily default rate in CMBS portfolios just eclipsed 7%.

And so I think it's a testament to us and to the underwriting policies and procedures that the agencies have had in place for decades that has maintained such a pristine credit track record. And we feel extremely good about the underlying credit fundamentals of our portfolio, particularly with the amount of debt capital that has come back to the market as well as where interest rates and cap rates appear to be trending.

Just to add to what Willy said just real quick. I mean there's still really strong national occupancy and just fundamental tailwinds behind multifamily as a sector. So that just contributes to the strength of the portfolio. So it's not just our assets, but it just broadly, there's really strong tailwinds behind the sector that just continue to strengthen overall credit. So I think the repurchases are isolated relative to the broader credit of our book.

Just turning to volumes. Fannie Mae volumes seemed a little light and the strength was clearly in the Freddie business. Was there anything that weighed on Fannie volumes in the quarter? And do you expect to pick up in the fourth quarter?

As you know, Jade, from having covered us for quite some time, Fannie and Freddie sort of wax and wane as it relates to market participation and market volumes. And when one sort of steps in, the other one goes down a little bit. The nice thing for us is that we are #1 with Fannie Mae and our indication right now, there are no league tables that have come out year-to-date, but our indication is that we're right at the very top of the league tables with Freddie Mac as well. And so as a very large scaled agency lender, as one or the other is more competitive, we're going to benefit from getting more deal flow done with the agency that is doing more transaction volume at that time.

And so we feel extremely good about where both agencies are today as it relates to annual volumes. As you know, neither Fannie nor Freddie hit their caps in 2024 or 2023. And it is very clear that both Fannie and Freddie are headed towards hitting their caps in 2025. The regulator has not given the cap number for 2026 yet, but there is a lot of talk about an increase in the cap. How much of an increase is to be determined, but we see that it's great that both agencies are headed towards hitting their 2025 caps and that my sense from having spoken with officials at FHFA that we'll probably see a cap increase in 2026.

We'll take our next question from Steve Delaney with Citizens Capital Markets.

Willy, my question was going to be would you see the possibility of a refi wave coming later this year as the Fed cuts and maybe the bond market rallies a little bit? It sounds like you're in one. And if you could comment on that -- those vintage, the post-COVID vintage loans, the nature of those transactions, do you think that those borrowers had a shorter mindset? In other words, was it more opportunistic money and that's why you're seeing some exiting of properties as opposed to simply doing a rate and term refinance? Just your thoughts on if the nature of the recent originations is really what's causing the prepayments that you're seeing now.

Sure, Steve, thanks for joining us. I think you have to underscore the recycling of capital as one of the major drivers of the market we're in today. Many, many of the large participants in the broader commercial real estate markets and more specifically the multifamily markets are fund businesses that have finite lives and have a tremendous amount of capital that needs to be recycled back to investors before they are going to be able to go and raise that next fund. And with essentially very limited to -- you can't say no deal activity in 2023 and 2024, but very muted deal activity in '23 and '24, we sort of arrived in '25 with a lot of people sitting there saying, I've got to start recycling capital back to my investors if I have a chance of going and raising my next fund.

And so a lot of the sales activity and financing activity that we've seen in 2025 has not been because cap rates have been, if you will, exceptionally low or exceptionally exciting for someone to sell into. It's been that need to recycle capital that has driven the transaction markets. And what that's also done is it's closed off the bid ask. A lot of sellers have sat there and said, I don't really like the price that I'm selling at. And yet at the same time, they have to recycle that capital. So they have, to some degree, capitulated on the pricing of the market and allowed the buyer to step in and buy the asset at a price that they find to be attractive. And so throughout the year, we've seen that bid-ask shrink. The beginning of the year was much wider and it's gotten tighter and tighter.

Interest rates have obviously played into that, making it so that both on the buy side, you're buying the asset at a relatively cheaper price. And we've also seen cap rates come down modestly. I think that what we're now looking at is with that transaction volume going on, you now have buyers and sellers back in the market. That bid-ask has come down, which just drives that transaction activity. And it's getting a lot of people off the sidelines, if you will. And so you know this, Steve, we're in a cyclical business. We have been in a down cycle for the last 3 years since the great tightening began. And we're now starting that next cycle, and it's not just happening at Walker & Dunlop.

If you look at the commentary of all of our competitor firms on their Q3 capital markets activity, there is pretty widespread commentary that transaction volumes are picking up. I would also say that everyone has been very tempered in their commentary to say this is a slow build back to where we were at the end of the last cycle. I don't think anybody is saying there's some massive amount of activity that's going to happen in the upcoming quarter because I think everyone is quite honestly a little scared to get over their skis and say, hey, this is going to be game on. But we clearly, from looking at our transaction volumes from Q1 to Q2, Q2 to Q3 and what we're looking in our forward pipeline for Q4, are seeing a resurgence of activity in the real estate capital markets.

Interesting. And it sounds like the loan product has definitely shifted to more demand for a 5-year term than a 10-year term, if I heard you correctly. What are you quoting a 5-year Fannie or Freddie multifamily loan at just the range of what you're quoting the coupon at today for 5 years? And how would that compare to the weighted average coupon in your servicing book?

Steve, well, I can tell you this, first of all, there are a couple of factors that play into that. One of the things that I think is an important data point is that the spread between a 5-year treasury and a 10-year treasury, last I looked at it, it was about 50 basis points. But if you actually do a 10-year loan versus a 5-year loan, it's actually only 15 basis points more expensive to the borrower. And so one of the big things that's going on in the market is, I believe, borrowers look at that 50 basis point spread between the 10-year treasury and the 5-year treasury and they say, well, I want to go short. But given where spreads are on 5-year agency paper versus 10-year agency paper, you're only 15 basis points more expensive going long than you are going relatively shorter.

The other piece to your specific question is whether the client is doing a rate buydown or whether the client is just taking the existing rate and spread on top of it. But if you're taking the existing rate and the spread on top, we're doing a lot of financing in the high 4s right now. Last one I looked at yesterday was a 4.83% coupon on a 5-year deal. But that 4% to 5% number is also something that a lot of clients are sort of getting attracted to where they sit there and look at, hey, I can do a 5-year deal at a 4.78% coupon. And if I do a 10-year deal, that's going to push it up closer to 5%, I want to go with the lower one. The other piece to it, Steve, is the prepayment flexibility that a 5-year loan gives you versus a 10-year loan.

What we're seeing a lot of borrowers do is sit there and say, I don't want to sell the asset today, but I probably want to sell the asset in the next 3 to 5 years. Therefore, let's go with a 5-year loan that gives us prepayment flexibility and a lower prepayment penalty in year 3 or opens up at 4.5, then go and lock in a 10-year instrument that is rate lock, that is prepayment protected for 9.5 years. And so one of the things that that says to me is that if they're buying that optionality today and only going with a shorter structure, that sales activity or refinancing activity that's going to come up in 2, 3 and 4 years is going to be quite robust because they're buying that optionality to do something with the asset in the next 3, 4, 5 years.

So that's the reason why the shorter durations. We don't like the downward pressure it's put on our mortgage servicing rights, but we also are sitting there saying, wow, there's going to be a great opportunity in the next 3, 4 and 5 years as this 5-year paper from '23, '24 and '25 needs to either be sold or refinanced.

A lot of transaction activity potential, it sounds like. Willy, new clients, that's been a focus of W&D, just trying to broaden out your brand and more touch points with the institutional multifamily community. When you look at your third quarter transactions, do you have any data as to on those transactions, can you estimate how many of those were with new clients to WD or repeat borrowers?

Yes. I cited that in my script, Steve, and I don't have the exact data point in front of me, but I think it's 14% were new clients to Walker & Dunlop and 60-some-odd percent were new loans to Walker & Dunlop. So the new loans are pieces of business with an existing Walker & Dunlop client, just a loan that one of our competitor firms had done that we refinanced or financed the acquisition for our client. So over 60% is new product to Walker & Dunlop. And then totally new clients, I think was it 14%?

16%.

16%, yes. 16% were new clients to Walker & Dunlop. And so look, as you know, Steve, we operate in an exceedingly competitive market. We have great competitor firms that have wide distribution networks and in some cases, seemingly a banker and broker on every corner. And so the opportunity for W&D is to go and attract new clients and bring new loans and new sales opportunities to our platform. And as our Q3 numbers show, we did just that. And I would also say, as our growth numbers show, we are outstripping a number of our competitor firms as it relates to growth in our capital markets executions, from aggregate volume numbers.

Just one final thing for me, Willy, big picture. The S&P is up 16% or so year-to-date 2025. You're putting up good numbers, but W&D share is down about 18% year-to-date '25. What do you think people are missing? I mean this is a strong report. Rates are headed down, not up, that generally is a good thing for real estate-related firms. I know you're probably frustrated by it, but I don't see the negative bear case for W&D shares. I think my notes reflect that. So I'm not saying anything that's not out there on the street. But it just seems to be a disconnect between the way your shares are trading and where the market is and where the rate outlook is.

So Steve, a couple of things. One, and clearly, as the largest individual shareholder in Walker & Dunlop, I take your comments very seriously. Two, as having been fortunate enough to be CEO of this company for all 15 years of its public life, I've been around this too long to let it frustrate me and really just focusing on what we need to do to execute as a company. Third thing I would say is, look, Q1 of 2025, given where rates went at the end of 2024, was a very slow start to the year. As I hope investors can see, we have been building momentum in Q2 into Q3. And Greg's and my commentary talk about a forward look on Q4 that looks quite good.

And I think that '26 is going to present to us and all of our competitor firms a very big opportunity to continue to grow in the capital markets area. The fourth thing I'd say, Steve, is that, look, some of our big competitor firms have steady Eddie real estate services businesses that are not as cyclical as the capital markets businesses are and have provided them with significant ballast in their financial performance for '23 and '24 and into 2025. But those businesses are not nearly as high growth as the real estate capital markets are.

And so if you look at some of our larger scale competitor firms, they've done very well as capital markets transaction volumes have been way down in '23 and '24 and started to come back in '25. We are a real estate capital markets pure play for all practical purposes. And we better get the benefit of the growth that we are seeing coming to us in '26 and '27 as the capital markets reflate. And that's on us to go and perform and put up the numbers. And so I appreciate you pointing out where we stand, and I also appreciate the positive outlook you have on W&D and our forward performance. But we also know it's up to us to go address the market and put up the numbers going forward to make it so that our investors are benefiting from that growth and from that performance.

At this time, there are no further questions. I will now turn the call back to Willy for any additional or closing remarks.

I just want to thank everyone for joining us this morning. Thank the W&D for a fantastic Q3. And I wish everyone a very nice day and end of the week. Thank you very much, operator.

Thank you. This does conclude today's conference. We thank you for your participation.

Good day, and welcome to the Second Quarter 2025 Walker & Dunlop, Incorporated Earnings Call. Today's conference is being recorded at this time. I would like to turn the conference over to Kelsey Duffey. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining Walker & Dunlop's Second Quarter 2025 Earnings Call. I have with me this morning our Chairman and CEO, Willy 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 Willy 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 Willy.

Thank you, Kelsey, and good morning, everyone. In our last earnings call at the beginning of May, we mentioned that our April deal volume was very strong even with the dramatic movement in rates and market volatility post Liberation Day. As our Q2 financial results show, transaction volumes remained strong throughout the quarter and are continuing into Q3. Commercial real estate and the investing and financing activities that drive it forward is showing signs of entering its next cycle.

I spoke at a conference in Chicago in May. The CEO of one of Walker & Dunlop'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 will 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 3.5 years. And at the same time, the next CRE 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 3 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 3, there is over $640 billion of equity capital in real estate funds that has been invested for over 5 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, the multifamily sector is extremely well positioned over the next several years. We do not have enough housing in America, and the delta between the cost of renting and homeownership continues to widen, making multifamily the only option for many Americans.

As this slide shows, if we go back to March of 2020, the cost of paying principal and interest on a mortgage on the median-priced home in America was $200 to $300 cheaper than renting the median-priced apartment unit. Fast forward 5 years and the median home price in America has gone from $285,000 to $410,000 and the monthly cost of principal and interest on a mortgage to own that home is now $500 to $600 more expensive than the cost to rent the median-priced apartment per month.

Single-family housing is thoroughly unaffordable to someone making anything close to the median income in America today, and this reality is why the multifamily industry has seen record absorption of 227,000 units in the second quarter of 2025 and 794,000 units over the past year. Supporting that point, Q2 household growth was driven entirely by 2.7% growth in renter households, while owner households remained flat. Apartment construction has collapsed. And as apartment deliveries begin to tail off in 2025 into 2026, owners of multifamily properties will begin to increase rents. The industry is currently at 96% occupancy. So with full properties and rising rents, values will go up, increasing investment sales and financing activity. As one of the largest providers of capital and investment sales to the multifamily industry, W&D is extremely well positioned to meet our clients' capital markets needs as this investment cycle accelerates.

W&D's Q2 total transaction volume of $14 billion is up 65% from Q2 2024 and over twice our volume in the first quarter of this year. This significant increase in deal flow drove 18% revenue growth and diluted earnings per share of $0.99, up 48% year-over-year. Two things of note with regard to volumes, revenue and earnings. First, transaction volumes do not directly correlate to revenue growth. For example, we did an almost $1 billion financing for one of our long-standing clients in Q2, once again showing that W&D is one of the go-to lenders for large structured GSE financings. But a $1 billion financing does not carry with it the same origination fees nor mortgage banking gains as 10 $100 million loans.

Second, while revenues were up 18%, GAAP earnings were up 48%. This is due to gaining economies of scale on our platform as well as booking significant noncash mortgage servicing rights. Those noncash servicing rights, which are the present value of future servicing income, are the lifeblood of Walker & Dunlop over the next 5, 7 and 10 years. We love booking significant noncash MSRs, but we will benefit from their cash flows going forward. As we transition to higher transaction volumes and GAAP earnings, we should see adjusted EBITDA and adjusted core EPS come down as they did in Q2.

Adjusted EBITDA declined 5% in the quarter, while adjusted core EPS declined 7%, largely due to the 100 basis point decrease in short-term rate which significantly pressures escrow earnings in the quarter. As the market recovers and hopefully, rates continue to come down, we will gladly swap out increased origination volumes and MSR revenues in exchange for lower escrow earnings.

$14 billion of total transaction volume included growth across almost all transaction channels, including $4.9 billion of lending volume with the GSEs, our highest GSE volume in 11 quarters. As shown on Slide 6, our year-to-date GSE market share has increased to 11.4%, up from 10.3% at the end of last year. Both Fannie Mae and Freddie Mac are extremely active in the market today and with the prospect of a future privatization being considered by the Trump administration, we expect both GSEs to be focused on hitting their multifamily caps in 2025 and beyond.

Property sales volume grew to $2.3 billion in Q2, up 51% year-over-year. Our team awarded a higher volume of deals in the month of June than they did in all of Q1 2025. Those transactions will be closed in the second half of the year and reflect a strong pipeline moving into the third quarter. Our brokered debt volume grew to $6.3 billion in Q2, up 64% year-over-year. This is fantastic growth and shows the increased deal volume across all commercial real estate asset classes, not just multifamily. We work with a wide range of capital providers in our debt brokerage business, and this pickup in loan originations is reflective of a huge amount of liquidity across the capital markets.

We continue to focus on expanding our affordable housing platform, which includes affordable property sales, loan originations and low-income housing tax credit syndications. Our HUD lending volumes grew 55% to $288 million in Q2, and W&D Affordable Equity completed its largest ever $240 million multi-investor fund syndication at the beginning of the quarter. Our technology-enabled businesses of small balance lending and appraisals continue to grow nicely with appraisal revenues up 61% in the quarter and small balance lending revenue up 99%.

Galaxy, our proprietary loan database, continues to source new clients and loans with 17% of our transaction volume year-to-date being with new clients to Walker & Dunlop and 58% of our refinancing volume being new loans to Walker & Dunlop. These numbers speak to the use of technology and expansion of our brand to win new loans and clients from the competition. And Client Navigator, our servicing and loan analytics platform using our data and machine learning now has over 5,600 active users that allows our borrowers to seamlessly analyze their loans. These are very exciting data points as we enter the next market cycle with the W&D team, brand, technology and market presence.

I will now turn the call over to Greg to talk through our second quarter and year-to-date results in more detail. Greg?

Thank you, Willie, and good morning, everyone. The second quarter marked a significant inflection point for commercial real estate transaction activity and our financial performance as we saw meaningful stabilization in long-term interest rates and transaction volume rebounded. Our team took advantage, closing $14 billion in total transaction volume, up 65% year-over-year. This strong performance puts us back on track towards achieving our 2025 operational and financial goals. GAAP EPS expanded 48% this quarter to $0.99 per share, largely in line with transaction volume growth and specifically by a significant increase in originated MSR revenues.

Those newly originated MSRs represent long-term contractual revenues that will boost our cash earnings over the next 5 to 10 years. As expected, growth in our adjusted metrics continues to lag GAAP earnings growth due to lower short-term interest rates year-over-year that is causing our placement fee earnings to decline compared to last year.

Turning to our segment performance. Our Capital Markets segment built significant momentum in Q2. We closed 68% more debt financing volume and 51% more property sales volume than the prior year. As a result, segment revenues grew 46% year-over-year, as shown on Slide 8. Net income grew 200% to $33 million while adjusted EBITDA also improved 116% to $1.3 million. As expected, under our variable compensation model, personnel expense for the segment grew 26% over the prior year on the strength of our transaction volumes this quarter. Importantly, the momentum in our GSE volumes is promising, and we anticipate both Fannie Mae and Freddie Mac to remain active in the coming months, and that will continue to benefit our MSR and origination fee revenues the rest of the year. During Q2, we executed several larger deals and also saw an increase in shorter duration deals to take advantage of the shape of the yield curve.

Those 2 trends are tightening our origination fee and MSR margins, and we expect both margins to remain in line with Q2 over the next couple of quarters. Our investment banking platform, Zelman, also had another strong quarter with 9% year-over-year growth in revenues, driven by robust demand for its investment banking, research and advisory services. We are very pleased to see the investments we made leading up to and during the great tightening benefit our financial results in the Capital Markets segment this quarter, and we expect the segment to perform well in a growing market over the coming quarters.

Our Servicing & Asset Management, or SAM segment continues to deliver stable and largely cash-driven recurring revenues and earnings. The servicing portfolio now stands at $137 billion, as shown on Slide 9, and generated servicing fees of $84 million, up 4% year-over-year. However, total SAM revenues declined 5% from Q2 '24, primarily due to a 12% decrease in placement fees tied to the lower Fed funds rate. As a reminder, placement fees fluctuate directly with short-term rates. Depending upon future Fed action, revenues for this line item may increase or decrease in future quarters.

Investment management fees were also down 49% this quarter. While most of our investment management revenues are stable and recurring, a portion of the revenue is tied to asset performance and/or asset dispositions, particularly for our affordable platform. Consistent with recent years, we continue to see fewer affordable asset dispositions in response to lower asset values driven by the great tightening. As a reminder, we estimate realization-related revenues each quarter with a final true-up recorded at the end of the year based on actual results.

Based on last year's full year results, we reduced our quarterly estimates for this year which explains the majority of the decline in investment management fees in this Q2 versus last year's Q2. Based on the realizations to date and our second half pipeline, we continue to expect these revenues to remain in line with 2024 on a full year basis.

That said, we continue to see strong investor demand for new funds in the affordable sector. And as Willy just mentioned, we closed the largest fund in that business' history this quarter, offsetting a portion of the decline in asset management fee revenue.

Turning to credit. There were no new defaults this quarter, but we did recognize a $1.8 million provision for loan losses related to updated valuations for previously defaulted loans and year-over-year growth in the at-risk portfolio driven by the strength of our Fannie Mae loan origination volumes this quarter. Our key credit metrics are shown on Slide 11 and demonstrate the credit quality and strong performance of our portfolio. Out of the nearly 3,200 loans in our $65 billion at-risk portfolio, only 8 are in default as of the end of the quarter, totaling just 17 basis points.

Based on the 2024 financials that have now been collected for all loans in the at-risk portfolio, the weighted average debt service coverage ratio remains over 2x, a testament to the strength of the property level cash flows. We closely monitor the credit risk in our portfolio and continue to feel good about our clients' positioning.

We ended the quarter with $234 million of cash on our balance sheet, reflecting the strength of our cash generation and the rebound in capital markets activity. Our capital deployment strategy remains focused on organic growth opportunities through recruiting and retention, reinvestment in strategic areas of the business and continued support of our quarterly dividend.

Yesterday, our Board of Directors approved a quarterly dividend of $0.67 per share payable to shareholders of record as of August 21. We have grown the dividend steadily for 7 years, even in volatile markets, reflecting the strength and stability of our business model in up and down markets.

In February, we provided annual guidance shown on Slide 12 that anticipated GAAP EPS expanding at a faster rate than adjusted EBITDA and adjusted core EPS due largely to the reduction in placement fees resulting from the decline in short-term interest rates. We expected the decline in cash revenues to be offset by an increase in transaction activity that would drive growth in noncash MSR revenues. That scenario is playing out through the first 6 months as 41% growth in transaction volumes so far this year has lifted our year-to-date diluted earnings per share to $1.07, up 5% over 2024.

Placement fees have fallen 14% and year-to-date adjusted EBITDA totaled $142 million, down 9% from 2024 while adjusted core EPS declined 16% to $2 per share. Year-to-date return on equity improved slightly to 4.2%, while operating margin expanded to 9% compared to 8% in 2024. We remain committed to the full year guidance we laid out in February, recognizing the path to achieving our targets requires focused execution and continued strength in transaction volumes.

As we look ahead, we expect the momentum of the second quarter to carry into the back half of the year, supported by a healthy third quarter pipeline, significant liquidity across commercial real estate lending markets, strong demand for commercial real estate assets and positive underlying market fundamentals.

Our second quarter performance reflects the pickup in market activity that we have been anticipating. Pent-up demand, abundant liquidity and the conviction to deploy capital are now driving a steady flow of transactions across our platform. Throughout the last few years, we remain committed to investing in our people, brand and technology, and we believe those investments have positioned Walker & Dunlop to outperform as the market normalizes.

Thank you for your time this morning. I'll now turn the call back over to Willie.

Thank you, Greg. As the market recovers and expands into the next cycle, it is clear that the breadth of the Walker & Dunlop platform positions us very well to win business, gain market share and continue growing.

As shown on Slide 14, in our first quarter earnings call, we outlined several goals across the business that will allow us to continue meeting our clients' needs and achieve the financial targets that Greg just ran through. One important driver of our success in 2025 will be our ability to achieve at least an average of $200 million of transaction volume per banker or broker.

As you can see on Slide 15, we ended 2024 with an average production per banker/broker of $172 million. And with 222 bankers and brokers on the platform today, our annualized year-to-date volume puts us at $189 million per banker/broker. On a trailing 12-month basis, our production for banker/broker is at $206 million, giving us line of sight to exceed the annual target we set last year as we take advantage of a reflating market.

It is important to remember that those averages are over an expanding platform with key hires over the past 8 months to expand our New York Capital Markets team, add a very significant affordable finance team, added a hospitality investment sales business, launched the data center financing business and opened a new office in London, England. I visited our new London office in June and cannot be more excited about the growth opportunity for us in the European and Middle Eastern markets. It is our expectation that as this next cycle gains momentum, we will look to add additional banking and brokerage talent in our existing and emerging business verticals.

Over the past 3 years of the Great Tightening, our scaled servicing and asset management businesses generated strong recurring cash flows that allowed us to maintain adjusted EBITDA despite a dramatic decline in transaction activity. We never lost money during the quarter and our peak to trough earnings were less severe than any of our major competitors. And as our origination volumes increase during this next cycle, our servicing portfolio will begin growing much faster.

Remember that between 2015 and 2020, the last expansionary cycle before the pandemic and Great Tightening, we saw our servicing portfolio double in size from $50 billion to $107 billion. As we see loan origination volumes increase, we also need to continue growing our investment management business. We set a 2025 goal to raise $600 million of tax credit equity, up from $400 million last year. And in the first half of the year, the team has raised $270 million.

We are also focused on growing WDIP, our real estate investment management platform, with a goal to increase capital deployment in 2025 to over $1 billion. Through the second quarter, the team has deployed $330 million of capital, and we expect transaction activity to pick up throughout the remainder of the year.

In 2020, we laid out an ambitious 5-year growth plan called the Drive to '25. We acquired Zelman to expand our research and investment banking capabilities. We acquired GeoPhy to bring machine learning and artificial intelligence into our business. And we acquired Alliant to dramatically expand our affordable lending, tax credit syndication and asset management businesses.

When the Great Tightening began and transaction volumes and earnings fell, we hunkered down and cut costs across the business. These new businesses performed well despite minimal investment over the past 3 years. And now as the market recovers, we have a very clear vision for how they can continue to grow and add value across the W&D platform. We need to use Zelman's research capabilities and insights to make our banking and investment sales businesses even better.

We need to integrate our investment banking operation which is still primarily focused on the single-family industry into our broader commercial real estate businesses and client relationships. We need to take the technology we acquired with GeoPhy and have been using primarily in our small balance lending, appraisal and servicing businesses and broaden it across our larger business verticals. And we need to take our broader client relationships across the multifamily industry and use them to scale our affordable lending, affordable investment sales and affordable tax credit syndication businesses.

It is time to continue to execute on the vision we had when we acquired each of these businesses in 2021 and 2022. And as we do, we will make W&D a more competitive, insightful and powerful company. I cannot focus on the future of W&D and the opportunities that lie ahead as we enter the next investment cycle without mentioning our team and amazing people that are the heart and soul of Walker & Dunlop. I have met with investors of all shapes and sizes over W&D's 15-year history as a public company and rarely do investors ask about the team, the culture and the relationships that make W&D so unique.

But the culture and brand of W&D are what make this company so special, unique and powerful. I spoke earlier about revenue per banker/broker. The only way we achieve those numbers is if there is collaboration, teamwork to client engagement across our enterprise. I just spoke about the vision of integrating our 2021 and 2022 acquisitions into our broader business. That only happens with teamwork, collaboration and an understanding of where we all are heading. I have been honored to lead this incredible company with its incredible people for over 2 decades, and I have never tired of saying thank you to our team for all they do every day for our customers and shareholders.

When times get tough, the tough get going, and that's exactly what W&D has done for the past 3 years. What is less appreciated, but equally as important is that as times get good, the ability to scale and grow is only as big as the team's ability to work together, trust one another and ensure that the people, processes and technologies we have developed scale.

The W&D team is ready, ready for the next cycle, ready to work together and ready to benefit from the investment of time and resources that position us where we sit today. Thank you for your time this morning. I will now ask the operator to open the line for questions.

[Operator Instructions] And our first question is going to come from Jade Rahmani from KBW.

This quarter's growth rates were staggering in transaction volumes. So great job to the team. In light of that, can you share at all how the pipeline looks so far for the third quarter and put any ranges perhaps around the kind of growth rates year-on-year that might be reasonable for the second half?

As I said at the very top, the Q3 pipeline looks great. We are seeing sustained velocity, if you will, in the market. And as my comments, I hope, showed, we're seeing -- if you back up a year, Jade, you recall Q3 of 2024 when we had a surge in transaction volumes and then the yield curve inverted and long-term rates went up and transaction volumes sort of tailed off towards the end of the year.

We're seeing nothing right now that would lead us to believe that the volumes we and our competitor firms saw in Q2 are going to be a quarterly phenomenon. As I tried to underscore, it clearly appears that capital needs to both be recycled back to investors as well as deployed into the market. And with rates where they sit today, clients have gone from a wait-and-see attitude to let's-get-it-done attitude.

And then as it relates to any additional guidance, I think Greg walked through clearly what we're seeing as it relates to the guidance we gave at the beginning of the year, the fact that Q2 gets us back on track to achieving that guidance. And I think that's -- Greg, if you want to jump in with anything else, feel free to, but I think that's about all we should go and [indiscernible] .

Yes, you said it well. Yes. And we've also given the guidepost, Jade for what we're expecting in terms of banker/broker volume and things of that nature. So as Willy said, we're feeling good about our path to not only achieving but exceeding some of those. So that should give you some sense on a full year basis, what we're expecting.

On the Europe initiative, which I think is pretty interesting, can you comment as to what the strategy is? Is it to bring that capital into U.S. deals? Or is it to build an operation to do multifamily or perhaps other asset classes there?

So as I mentioned, Jade, I was over in London in June and extremely pleased with both the team we've put together as well as what I would call the market reception. I, back before Walker & Dunlop, opened up the European operations of a U.S. multinational sort of similar to how W&D is going about doing this. And I recall, clearly, when I would show up for meetings, people would be like, who are you and where do you come from? And we did a lot of sort of brand building as we launched those operations in Europe.

I was both extremely pleased -- and to be blunt, somewhat surprised at the strength of the W&D brand meeting after meeting of we work with you in the United States, can't wait to work with you here in the U.K. and across Europe. And we have a team that's very focused on the European market. Clearly, the European market has had a, if you will, a very good run over the beginning part of 2025 as it relates to a market that people want to invest in. So we feel good about investment flows into the European market and our transaction volumes over there beginning and then growing.

At the same time, the U.S. economy continues to crank along. And although the trade war and trade policies have been confusing to investors, and we have clearly seen a slowdown in foreign direct investment over the first 2 quarters of the year, we're in this for a long, long period of time. we're not thinking about a quarter, a year or even 5 years. We're in Europe to continue to expand Walker & Dunlop, expand this brand and this company around the globe.

And after my previous -- almost all my work experience before joining Walker & Dunlop being in Latin America and being in Europe, after 22 years at Walker & Dunlop focusing solely on the United States to be blunt about it, it's pretty fun for me to go back to some of the markets that I was in prior to joining Walker & Dunlop.

[Operator Instructions] It appears we have no further questions in the queue at this time. I'll now turn it back over to William Walker, please -- for additional or closing remarks.

Thanks very much. I would reiterate my thanks to the team on a fantastic Q2. Thanks, everyone, for joining us this morning, and I hope everyone has a great day.

And this concludes today's call. Thank you for your participation. You may now disconnect.