Outpacing the Competition in Commercial Financing
Walker & Dunlop Boasts the Best of Both Worlds in Innovation & Technology
By Carole Vansickle Ellis
When Walker & Dunlop was founded in 1937, it was one of the first companies to use FHA insurance to make single-family home loans. Over the following decade, the company pioneered a variety of lending products for real estate investments, growing the company’s network of lending partners and expanding offerings to meet growing client demand.
By the mid-2000s, Walker & Dunlop was universally recognized as a leading commercial financing provider and poised to move into its next phase as a technology-enabled financial services firm. This move included first partnering with and then acquiring leading commercial real estate technology company GeoPhy, expanding into the appraisal space using groundbreaking data and analytics systems via the company’s appraisal service, Apprise, and establishing an influential presence in the affordable housing space at a time when the demand for this type of housing had reached unprecedented and dire levels. The results have been both rewarding and, as senior vice president and chief production officer Alison Williams describes them, “refreshing.”
“We are unique in that we are an 80-year-old company with a proven track record, but we also have a refreshingly progressive mindset and the agility of a startup,” Williams explained.
“We are the best of both worlds, and that enables us to use innovation and technology to outpace traditional banking models both in terms of financing services and also when it comes to advice and guidance on how to scale business and growth wealth.”
Meghan Czechowski, managing director and head of valuation at Apprise, agreed. “We excel at using tech-enabled processes to speed up our products and create efficiencies,” she said.
Apprise, which launched in early 2020 as a joint venture between GeoPhy, a Netherlands-based, award-winning global data science and analytics technology company, and Walker & Dunlop, uses a proprietary application to aggregate data on multifamily properties in ways that not only smooth out what Czechowski refers to as the “frictions” associated with multifamily underwriting but also remove much of the mystery from the appraisal process for clients.
“In traditional appraisal methodology, once information leaves the public property records database it becomes largely un-trackable and is no longer useful for aggregating and trending purposes,” Czechowski explained. “This creates human-error-related redundancies and can cause significant inaccuracy.”
Apprise data and supporting information is retained on the company platform where conclusions are recorded and confirmed comps are compiled over time and aggregated into the overall picture of a property asset class or submarket.
“It absolutely works for understanding expense comparables, rents, walk scores, crime rates, economic drivers, land values, tax effects and trends, demographics, and even repositioning and new development projects,” she said.
“This helps us assist clients in whatever aspect of investing they are engaged and identify potential investments very quickly.”
Czechowski noted also that Apprise operates within strict client confidentiality standards and that all assets and information held in the proprietary database are anonymized according to the Uniform Standards of Professional Appraisal Practice (USPAP) as issued by the Appraisal Standards Board of the Appraisal Foundation.
Levels of Collaboration “Off the Charts”
One thing that stands out at Walker & Dunlop amid the myriad layers of products, processes, and awards for excellence (see sidebar) is what multifamily executive vice president Donald King describes as “a level of collaboration that is off the charts.” King’s responsibilities include strategic development, growth, and product development on the company’s Freddie Mac and Fannie Mae lending platforms, and he says the job is made easier by the amount of collaboration between company verticals that is simply a part of Walker & Dunlop culture.
“We have capital markets, which is our mortgage banking operation, a HUD vertical, the multifamily side, and a lot of different originators and teams across the board,” King explained. “If you had told me that these groups would work so closely together before I came on board, I would never have believed it. In this culture, however, different people are able to see the amazing successes that come with partnering with different skill sets and it means we better serve our clients and provide better solutions.”
King cited an example of a multifamily deal that his division was working on recently in which the client expressed an urgent need to lock the interest rate before a Fed announcement later that afternoon. The committee package had not been completed yet since the deal was scheduled to be presented to the company’s loan committee and have the interest rate locked the following week.
“This was a large deal; it needed to go before our large committee that includes people like our president and our CEO,” King recalled.
The ask seemed too big to accomplish, but King and his team were willing to try.
“My CEO, my president, and my chief credit officer all agreed to take enough time out of an important board meeting to get that deal approved,” King said proudly. “We turned a commitment around to that borrower by locking their interest rate before the announcement and accomplishing in hours what should have taken days. We are a large company and enjoy all the benefits that come with our scale. That we are as nimble as we were when we had fewer than 150 employees is incredible.”
That level of collaboration and customer service extends throughout all levels and divisions of Walker & Dunlop, added Sheri Thompson, executive vice president of affordable housing and investment management/proprietary capital. She described a recent transaction in Maryland where the client was seeking to acquire 900 affordable workplace units.
“Maryland is a high-cost area and there is a huge need there for affordable housing,” Thompson said. The sponsor had initiated the move toward affordable housing, but they wanted to create the best scenario for future residents possible. Walker & Dunlop identified a strategy that would actually reduce rental rates in some of the units after closing: a new Fannie Mae product called the SIA (sponsor-initiated affordability).
“This meant that with the acquisition the sponsor entered into a land-use agreement that restricted a certain number of units to 50 percent of area median income and 80% of area median income,” Thompson explained.
“It was a great success story and fit our mission of creating and preserving affordable housing, supporting the mission of our business partner, Fannie Mae, and helping advance a minority-owned sponsor,” she concluded, adding that this project and others like it are often successful at Walker & Dunlop due to the company’s willingness and ability to “provide creative financing solutions from different parts of the business” such as bridge lending and HUD programs. “The collaboration among our teams provides opportunities for creative financing solutions and support to meet clients’ needs,” Thompson said.
Technology-Enabled, Community-Centered Service
Walker & Dunlop is certainly a behemoth in the field of commercial financing, but the company has long had a “greater goal” in its sights. That goal, generally described as “diversity and inclusion” but specifically visualized and adhered to within every division and by every executive, is “more than a moral imperative,” reads company literature; “It is critical to our success and our ability to innovate and grow.”
The firm’s five-year goals, known as the “Drive to ’25 Initiative,” include increasing the proportion of women and minorities in management positions to 35% and 25%, respectively, and increasing the proportion of women and minorities among top company earners to 15% each.
Williams, who is responsible for the small-balance multifamily lending group, and Czechowski, whose role at Apprise includes “recruiting and training the next generation of appraisal talent,” are firm believers in the practical, positive results of this company policy.
“I’m probably most proud of my involvement in the recruiting that I do for the company – even prouder than I am of great debt options and closing countless deals,” said Williams. “I built the national team for the small-balance lending group with a major focus on hiring diverse candidates and fostering an inclusive culture, and it enabled me to connect with extremely talented people right in the middle of the COVID-19 pandemic.” Williams noted that the multifaceted nature of her team is a good fit for small-balance lending because the borrowers in this space do not tend to fit any common description.
“There is no ‘typical buyer’ in small multifamily properties. They range from entrepreneurial, high-net-worth individuals interested in building a portfolio and creating generational wealth to large real estate firms with portfolios expanding from coast to coast,” Williams explained. “It is a deeply fragmented, often difficult-to-navigate marketplace.”
She credits the deliberate, thoughtful diversity in her team with their success in reaching clients with varying property portfolios and borrowing needs, making Walker & Dunlop the top multifamily lender in 2020.
“It’s important that our borrowers know Walker & Dunlop focuses on smaller multifamily loans as well as workforce housing and that the customer service we provide does not vary based on loan size or asset quality,” Williams said. She added, “Smaller multifamily owners have a lot more options than just a community or regional bank. By partnering with Walker & Dunlop, they have access to competitive, non-recourse financing – both short- and long-term – structured to meet their business goals.”
Williams said Walker & Dunlop views its role as that of an advisor to the customer. “We really listen to their needs and use our resources to help educate them on their lending options. Our culture and diverse skill set really separate us from our competition,” she concluded.
Czechowski reported similar successes in her division, where about 40% of the senior staff consist of what she described as “diverse professionals.” She explained, “From 2014 to 2018, multifamily transaction volume increased by 74% while the number of appraisers decreased by 10%, and the training to become an appraiser is not inexpensive or fast.”
Apprise recruits straight out of college in some cases and offers benefits including a “robust” training program, salaries for appraisal staff and entry-level appraisers, and a straightforward focus on targeting diversity.
“This has helped us cast a wide, attractive net to identify, interview, and hire as many candidates as possible,” Czechowski said. “Apprise is ahead of the game, and it is due in large part to our dedication to assembling a diverse, highly competent staff with similar goals and priorities to our own.”
Big Growth, Big Data & Big Insights
As Walker & Dunlop continues to grow and evolve, King says he is excited to watch the company’s clients discover just how much the firm’s new approaches to technology and data analysis can do for their portfolios. “It is already a game changer,” he said excitedly. “Sometimes we have better insight into a client’s holistic portfolio than they do, and that means we are able to be even better advisors to them on a higher portfolio-based level than we have been before.”
For Thompson, this means taking the work that Walker & Dunlop is doing to a broader community than ever before, especially since the company’s affordable housing vertical (Thompson notes she likes to call it a “horizontal” since it touches so many aspects of the firm’s services) helps meet a much-needed demand for residential housing at the present time.
“We have an overarching vision called our ‘Drive to 25,’” she explained. “Everything we are doing is driving toward the goals that are set by that strategy, and one of the primary goals is financing $60 billion in affordable housing by 2025. We are constantly looking at ways to continue to invest in the affordable housing space and develop additional key capabilities to support the creation of affordable housing in America’s communities.”
SIDEBAR
Prioritizing Diversity, Inclusion & Industry Presence
Thanks to a strong track record and 80-year history, Walker & Dunlop has been a force to be reckoned with in the commercial lending sector, and the company has been breaking new ground in the industry since the beginning. For many like Alison Williams, senior vice president and chief production officer, this means taking a thoughtful, proactive approach to the process of recruiting and hiring.
“I am probably most proud of the work I have done building out diverse teams with an inclusive culture in our small-balance lending group,” she said, noting that her team’s diversity helped maintain functionality during the COVID-19 shutdowns in 2020. “I have been very happy with our results, and the way we approach our clients is directly reflective of the teams we have created,” she said. At present, more than half of her team is comprised of what the company categorizes as “diverse talent.”
As part of Walker & Dunlop’s ambition to hire the best and most diverse talent in commercial real estate, the company enhanced its recruiting process in 2021 to focus on increasing diversity in finalist slates, developing new and better sources to pipeline candidates at all levels, and developing new partnerships with organizations focused on increasing diversity in commercial real estate including MLT, Project Destined, Project REAP, and ULI. In 2021, Walker & Dunlop recruited its most diverse intern class to date, with 41% of talent being considered diverse.
For others in the company, the Walker & Dunlop vision to “inspire every person to take their unique experiences and backgrounds and use them to spark solutions that both benefit our clients and help our communities thrive” means finding new ways to support employees. This has the positive side effect of creating networks that span multiple divisions of the company, which empowers employees to solve problems in creative ways.
“These Employee Resource Groups are not just a solution for fostering diversity and support, they are also a way of helping people connect with others like themselves and creating continuity in the organization,” Sheri Thompson, executive vice president of affordable housing and investment management/proprietary capital, said.
SIDEBAR
Walker & Dunlop Awards & Rankings
#1 Fannie Mae DUS® Lender //2012-2014, 2017, 2019, 2020
#1 Multifamily Capital Provider // 2020
#1 Fannie Mae DUS® Green Lender for Fannie Mae // 2016, 2017
#4 Optigo Multifamily Lender // 2020
#4 Overall Commercial Real Estate Capital Lender // 2020
#5 HUD Multifamily Lender // 2020
Best Small & Medium Workplaces // 2020 Fortune magazine
Top Workplace (mid-size employees) // 2021 Washington Post
Best Workplaces in Financial Services & Insurance // 2021 Fortune magazine
