Walker & Dunlop Q1 2023 Earnings Report
Key Takeaways
Walker & Dunlop reported a 25% decrease in total revenues, totaling $238.7 million for Q1 2023, compared to the same period last year. Net income and diluted earnings per share both decreased by 63%. Adjusted EBITDA increased by 9%, and adjusted core EPS increased by 10%.
Total transaction volume was $6.7 billion, a 47% decrease from Q1 2022.
Total revenues amounted to $238.7 million, reflecting a 25% decrease from Q1 2022.
Net income was $26.7 million, with diluted earnings per share at $0.79, both down 63% from Q1 2022.
The servicing portfolio reached $124.6 billion as of March 31, 2023, marking a 7% increase from March 31, 2022.
Walker & Dunlop
Walker & Dunlop
Forward Guidance
Walker & Dunlop is well-positioned for the future due to its cost reductions, expectation of increased GSE volumes, and anticipation of brokers being hired more frequently as banks pull back from commercial real estate lending. Additionally, the company expects non-bank, private capital to enter the market with their assistance.
Positive Outlook
- Cost reductions and lower headcount by 8% position the company to operate at lower transaction volumes.
- Expectation of increased GSE volumes from Fannie Mae and Freddie Mac.
- Anticipation of brokers being hired more frequently to assist clients in finding capital solutions as banks pull back from commercial real estate lending.
- Expectation of non-bank, private capital stepping in with the help of Walker & Dunlop as bank capital exits the market.
- Largest combined Fannie Mae and Freddie Mac lender on multifamily properties in the country
Challenges Ahead
- Dramatically higher interest rates and market uncertainty pushed transaction volumes down across the commercial real estate industry.
- Multifamily property sales declined 74% in the first quarter of 2023 according to CoStar.
- HUD volumes decreased 67% in the first quarter of 2023.
- Brokered debt and property sales volume decreased in the first quarter due to decreased liquidity supplied to the commercial real estate sector by banks.
- Operating margin decreased due to the significant decline in transaction activity this quarter.