Walker & Dunlop Launches Large Loan Bridge Program
- Aug 08, 2013
Walker & Dunlop Inc., one of the leading commercial real estate financing companies in the U.S., has launched a large loan bridge program with more than $850 million in lending power for multi-family properties.
The program will originate adjustable rate loans on multi-family properties that don’t currently qualify for permanent funding but would be candidates for loans through Fannie Mae, Freddie Mac, HUD,CMBS or a life company once it is stabilized or repositioned. It is funded with capital from a large Canadian institutional investor, a premier U.S. real estate investment manager and Walker & Dunlop, which is a 5 percent investor.
“This new program provides Walker & Dunlop with significant equity capital to dramatically scale this line of business to meet our borrowers’ needs at this time in the real estate cycle,” Willy Walker, chairman & CEO, said in a news release. “This program not only meets our clients’ needs but also creates a pipeline of high-quality assets for Walker & Dunlop to finance once the properties stabilize.”
Jeffrey Goodman, executive vice president, Proprietary Capital department at Walker & Dunlop, told Commercial Property Executive that most of the opportunities the firm is seeing are large asset and portfolio acquisitions involving a repositioning play.
“The property has been under-managed, there has been inadequate capital investment, or market dynamics speak to value appreciation through property level enhancements,” Goodman told CPE. “We are also seeing assets changing uses. For example, conversions from student housing to market rate apartments, and vice versa.
Walker & Dunlop, based in Bethesda, Md., will receive an asset management fee for servicing the loans and managing the program. It will focus on loans $30 million and higher with loan terms of up to three years on multi-family properties, including student, manufactured and seniors housing.
“The average loan size is likely to be in the $50 million range, with the upper limit at $200 million,” Goodman said. “Loans larger than $200 million will be reviewed on a case-by-case basis.”
Walker, who noted that Walker & Dunlop earned almost $200,000 in net interest income during the second quarter on the interim loans it originated using its own balance sheet and warehouse lines from banks, said the firm was “very excited to have raised this quantity of equity capital from two large, strategic institutional investors.”
“Our investors have significant resources,” added Goodman. “Accordingly, it is our expectation that successful deployment of the initial capital will result in additional capital allocations from the investors to expand the assets under management.”
Last month, Walker & Dunlop highlighted its Interim Loan Program, which it said has provided more than $73 million in creative financing solutions since it began in 2012. The Interim Loan Program offers floating-rate interim loans in the $5 million to $35 million range for experienced borrowers looking to acquire or reposition multi-family, independent living and assisted living properties that do not currently qualify for permanent financing.
Also in July, the firm announced that it had closed $257 million in financing for properties in Delaware, Maryland, New York, Pennsylvania, Virginia and Washington, D.C., including office, retail, industrial space and 2,663 multi-family units. Walker & Dunlop also said last month that it had provided $174 million in financing through Fannie Mae programs for a portfolio of seven multi-family properties with a total of 1,561 units in California.
Last June, Walker & Dunlop became the second largest multi-family lender after it acquired CWCapital L.L.C. for $220 million. The deal also made Walker & Dunlop the eighth largest commercial real estate lender in the United States.