Bethesda, Md.-based Walker & Dunlop entered into an agreement to buy CWCapital the company announced last week. The pending deal has implications for lending in the New York tri-state region, with Walker & Dunlop CEO Willy Walker telling The Mortgage Observer that the firm will be better positioned now to compete with larger, well-established New York lenders.
The deal is expected to close in between 90 and 120 days and is subject to all the usual approvals from stockholders, the government and regulatory agencies. The purchase price comes to $220 million—$80 million in cash and another $140 million in Walker & Dunlop stock.
Walker & Dunlop is now poised to become the second largest multifamily lender and the eighth largest commercial real estate lender in the country, the company said. CWCapital and Walker & Dunlop had a combined volume of $7.7 billion in CRE loan originations in 2011 and a combined aggregate servicing portfolio of over $33.7 billion. This should allow Walker & Dunlop to throw down the gauntlet and compete in New York as never before.
“New York is the largest multifamily market in the United States and as such if you’re going to be a significant player in the multifamily space you better have a good presence in Manhattan,” Mr. Walker told The Mortgage Observer. “What’s kind of interesting is Walker & Dunlop and CW, for being as large lenders as both of us are in the multifamily space, both have a reasonably small footprint or platform in the Manhattan area. So it would be my expectation that this combination only adds to our both brand as well as market presence in the major markets such as New York and LA.”
One large advantage will be added feet on the ground in the New York tri-state area. Mr. Walker said that CWCapital has some great origination talent focused on the Manhattan market already, which will be further developed and integrated with Walker & Dunlop’s talent once the deal goes through.
“The New York market is obviously one that has a huge amount of potential and we’ve had a good amount of originations there, but as it relates to our market standing in New York vis-à-vis some of our competition, some of the larger bank-owned multifamily lenders have a much larger market presence there. So we’ll figure out how we effectively compete and continue to win business.”
Asked about plans to staff up in the region, Mr. Walker said that the first order of business will be to ensure that the two companies are seamlessly integrated. “Then we will focus on where we need to expand,” he said.
CW Financial Services will become the largest shareholder in Walker & Dunlop when the acquisition is approved and closed. Fortress Investment Services bought CW Financial Services in 2010 for $292 million.
In personnel news, Michael Berman, CEO of CWCapital, will take on a senior role at Walker & Dunlop. Mr. Walker said that he and Mr. Berman were in the midst of “detailed discussions about what that role will be.”