Walker & Dunlop to Acquire CWCapital for $220M
By Barbra Murray, Contributing Editor
Just days before the 18-month anniversary of Walker & Dunlop Inc.’s initial public offering, the commercial real estate finance company has entered into an a definitive agreement to acquire commercial real estate finance firm CWCapital L.L.C., for $220 million. Upon completion of the transaction Walker & Dunlop will be the second largest be the second largest multifamily lender in the country.
The deal will allow Walker & Dunlop to fulfill a relatively new goal. “We have been looking at various strategic acquisitions since going public in December 2010,” Willy Walker, president, chairman & CEO of Walker & Dunlop, told Commercial Property Executive. “We raised capital in our IPO for exactly this type of opportunity and are very pleased to have completed a transaction of this size in such short order. If we are going to put up with the extra cost and regulatory burdens of being a public company, we better use being public to our advantage. This transaction shows we are.”
Walker & Dunlop will shell out $80 million in cash to purchase CWCapital and will meet the remainder of the purchase price with $140 million in company stock, leaving CW Financial Services L.L.C., CWCapital’s parent company, in the position of being the largest shareholder in Walker & Dunlop.
In addition to going to the top of the list of the nation’s largest multifamily lenders, the resulting entity will be the U.S.’s eighth largest commercial real estate lender. The numbers tell the story: Together, Walker & Dunlop and CWCapital have a servicing portfolio totaling more than $33.7 billion. CWCapital brings to the table approximately $16.8 million in commercial mortgages that are currently being serviced.
“Scale matters in our business — from an access to deal flow standpoint, from a products standpoint, and from a capabilities standpoint,” Walker said. And those capabilities, he added, include the ability to structure large transactions, warehouse large deals before sale and provide transitional funding to deals. “Walker & Dunlop and CW’s borrowers will benefit from all of those things in the combined entity, yet they will still receive the personalized attention and customer service that a company of 380 people can provide versus our competition with thousands of employees and many other business lines.”
Maintaining the climate and customer service of a small firm in the wake of an overnight growth spurt is a challenge with which Walker & Dunlop is certainly familiar. In 2009, Walker & Dunlop and Green Park Financial L.P. merged with Column Guaranteed L.L.C. and proceeded to further enhance its staff. The following year, Walker talked to CPE about clearing such a hurdle, and conceded that it’s not an easy task. “It is part of our culture to provide feedback, do comprehensive annual reviews and be on top of who is doing what inside our company,” Walker told Commercial Property Executive. “As we scale (up), that becomes increasingly challenging.”
Walker & Dunlop’s acquisition of CWCapital is on track to close within 90 to 120 days. The pieces appear to be falling into place smoothly and quickly. It’s been a fast process from the beginning; the companies managed to iron out the agreement just one month after their discussion on the matter.