Walker & Dunlop acquired commercial mortgage banker iCap Realty Advisors as part of its strategic plan to increase its annual originations by at least one-third in the next two years.
Terms of the deal were not disclosed.
Atlanta-based iCap originates between $700 million and $1 billion annually of brokered volume. Its origination team and support staff, including managing directors Alfie Means and David Collie, joined Walker & Dunlop's capital markets group.
It also services $2 billion of loans made by life insurance companies.
"With the goal to grow our annual loan originations to $30 billion to $35 billion by the end of 2020, we have been very focused on expanding our capital markets presence into major markets where we are underrepresented, such as Atlanta," Walker & Dunlop Chairman and CEO Willy Walker said in a press release. "As one of the largest mortgage banking firms in Georgia, iCap will immediately benefit Walker & Dunlop through its deep client relationships and strong deal flow."
Commercial mortgage debt outstanding
Separately, Walker & Dunlop reported third-quarter net earnings of $37.7 million, up 10% from the $34.4 million earned one year prior.
The period was "the third strongest transaction volume in our history and another quarter of continued execution of our strategic growth initiatives," Walker said in a press release. "Our servicing portfolio continues to grow, crossing $80 billion in the third quarter and driving dramatic growth in servicing fees and escrow earnings, which increased a combined 24% from the third quarter of 2017."
Total revenue was $184.7 million, up 3% from 2017's third quarter.
Walker & Dunlop originated $6.8 billion during the quarter, down 11% from $7.6 billion one year prior. The drop can be attributed to a $1.8 billion reduction in Freddie Mac multifamily volume to $2.3 billion. In the third quarter of 2017, Walker & Dunlop had a $1.9 billion transaction with Freddie Mac; it didn't have any large transactions this quarter.
There was also a $66.3 million reduction in Ginnie Mae volume to $197.4 million. Fannie Mae volume increased by 22% to $1.7 billion, brokered loan volume for life insurers, commercial mortgage-backed securities, banks and other investors increased 30% to $2.4 billion and
Including investment sales activity, the company had $7.7 billion in total transaction volume for the quarter.
Walker & Dunlop originated $17 billion in the first nine months of the year, down from $18 billion for the same period in 2017.
Its servicing portfolio totaled $80.6 billion on Sept. 30, 2018, compared with $70.1 billion one year prior.
Walker & Dunlop's long-term objective is to generate $1 billion in annual revenue by the end of 2020.
"To achieve that goal, we need to take debt financing volume from $25 billion in 2017 to $30 billion to $35 billion in 2020, investment sales volume from $3 billion in 2017 to $8 billion to $10 billion in 2020, our servicing portfolio from $70 billion in 2017 to over $100 billion in 2020, and assets under management from under $500 million in 2017 to $8 billion to $10 billion in 2020," Walker said.
