53: Building the largest multifamily lender in the nation, with Willy Walker CEO of Walker & Dunlop

My pleasure, Ben.

There are. I guess you got to wind the clock back then to 2003 when I joined the firm and it was a fantastic company. It was a wonderful platform to join but it was a small company. It was just as you rightfully said it was around 50 employees and it was a very profitable firm but it was a small firm. It didn't have a wide reach and I had joined Walker and Dunlop from having run significantly larger businesses having been in the private equity world and seen how a firm like TPG did and does what TPG does, having worked at Morgan Stanley and seeing how Morgan Stanley does what it does. And I think that one of the great gifts I had was not joining the family company right out of business school or undergrad where I would have looked at what was there and said, 'Okay, let's think about how we make this bigger.' And let's just say that our footprint at the time was just the greater Washington area. Maybe we expand to Philadelphia. Maybe we expand down to Charlotte. That would have been the growth trajectory we would have been on. But because I'd gone and done a lot of other things and run much bigger businesses, I had a good sense of saying, why don't we create another Morgan Stanley? We're nowhere close to creating another Morgan Stanley. And if we were able to someday, probably long after I'm here, hallelujah. But the point being is having a vision for what you might be able to create is, I think, very important. And I was blessed to both have a lot of work experiences before joining Walker Dunlop and then also some mentors that allowed me to think big. The second thing that I would say was very important was making sure that the people on the team were aligned on that growth path and what we wanted and needed to do. There were a couple of bankers and brokers at Walker Dunlop who weren't aligned with that. They wanted to keep their client list to themselves. They wanted to do mortgage banking in the way that mortgage banking was done in the 1990s and not how it's done in 2010 or 2020. And so making sure that we had the right people on the team was not only important but challenging because it wasn't like I just showed up one day and said, 'Great, you're not on the team. You're off and I'm going to put somebody else there.' It was a small company. Everyone was important to our performance on a day-to-day and quarterly and annual basis. So you can't just walk in and say, 'You're done.' But over time, we got the right people on the team. The third thing was M&A. Walker and Dunlop had never acquired a company prior to me joining the company. And when we focused on our first acquisition, I will never forget walking into my former colleague Howard Smith's office and our chief underwriter was sitting at the table and our Howard Smith who was our president and one other person and I said we're going to acquire Column Guarantee from Credit Suisse and their first question was how do we know how well the people are trained? How do we know the credit quality of their portfolio? And there were all these questions of if it wasn't built here, we can't have faith and confidence in it. And I basically said to them, that's what diligence is for. And we went and made the acquisition of Column, the first acquisition we've made, and we've now acquired 18 companies subsequently. So 17 others, including Column, which was the 18th, or maybe it's 16 others and Column's 17. And then I would say there have been plenty of mistakes I've made and we've made collectively. I think one of the other pieces to it is that I have always had personally and as from a company standpoint a chip on our shoulders of being the person who wasn't good enough, wasn't capable enough, was the small fry that shouldn't be in the room, if you will. And so I think having that sort of thought that we actually can belong, we can be big, we can show up in a room and have people like CBRE or JLL pay attention to us. When I first joined the company, we'd walk in a room and everyone would be like, 'You'll never compete with CBRE or JLL.' So now that we actually compete with them on a day-to-day basis, it's okay, great, we've gotten there, but let's not get complacent. Let's keep driving forward. Let's be better. Let's grow. Let's keep going. And so I think that constant sort of what I would call chip on the shoulder is an important component of both me as an individual and us as a company, which has allowed us to grow as fast as we have and accomplish as much as we have.

It came from really grade school and being in a highly competitive environment in grade school into high school where I was a good athlete. I was a student leader and I was a very mediocre student and I was around a lot of hyper or exceptionally gifted students. And so I was made to feel pretty stupid. And so for my high school years and even into my college years, I consider myself to be pretty average as it relates to intelligence and capabilities. And then when I got out of college, I moved to Latin America. I started reading a tremendous amount. I got into my work and dove into it feet first and had a very young general management experience and then applied to business school. And when I got into Harvard, Ben, I was very nervous that they'd made a mistake and that somehow they saw something in me that wasn't what I actually was and that I was going to get to Harvard and not be able to keep up. And when I got back my first exam, they score on a 1, 2, and 3 scale at Harvard. 10% get ones, which are A's, 80% get twos, which are a pass, and 10% get a three, which is a fail. And that's the forced curve that they have at HBS. And when I got back my first big exam and I got a one on it, all of a sudden I was like, whoa, like I belong here. Like I can actually do this stuff. I can actually be exceptional here. I took that feeling to the max. I took every course I could. I was an honors student. I was in the student body. I was on the lacrosse team and on the hockey team and I was an editor of the student newspaper. I did everything at HBS that I possibly could to say to everyone, I'm good enough to be here. And I'm sure there were plenty of people who went to Stanford and Yale undergrad who sat around and said, 'Why is that guy so freaking insecure and we're here to get an education and do what we want to do.' And I was like, 'I'm going to prove to everyone that I'm good enough to be here.' And you know, over time and as you get successful with your career, some of that stuff burns off, but a lot of it has got these core wounds that are very hard to heal. And so as a result of it, while I'm clearly now that I'm 58 years old and have had some success, a lot more quote unquote mellow or not feeling like I've got to constantly prove myself, but at the same time being a publicly traded company, I'm constantly aware of how we stack up, how we compete with the competition, how we look from a shareholder return standpoint and all that stuff. But that's just core to me and my kind of core competitive nature.

I said previously, Ben, that there's certain people who can kind of see the future and can build a company to what they think is going to happen. Elon Musk, Steve Jobs, plenty of others who have an ability to look around corners and see what the future's going to bring. I'm not one of them. I'm not one of those guys who if I had not seen what I could turn Walker and Dunlop into and actually seen larger firms and how they go do it, I wouldn't have just sat down and said that's what we can do. So I think seeing the vision, seeing the future is very important and I was fortunate to have experiences that did that as it relates to was that misguided? No. One of the core attributes that I believe I have is just a certain sense of tenacity from having gotten kicked in the shins or kicked in the teeth a lot of times in my life. One of my great mentors, a gentleman named Jack Hennessy who ran Credit Suisse said to me when I was starting up an airline in Argentina when I just gotten out of business school and I showed him the business plan and Jack said to me, 'Get as many scars as quickly as possible.' And what Jack was saying was take risks, fail, and learn from your failures because everyone's going to do that. And I was fortunate to be in a time in my career where the bet of my time, the bet of the amount of money that I did or didn't invest in the airline wasn't something that would ruin my life. So, I could take risks. If I had done that airline startup, let's just say 10 years ago, and I'd put a lot of money into it and it was like my big career move and I had three kids and a family and all that kind of stuff. If what had happened to the airline, which it went bankrupt because all of our plane contracts and all of our fuel contracts were in dollars and the Argentine government devalued the peso in 2000 and the thing went goodbye, right? If I'd had all my chips into that, boy, that's a bad day, right? So, I was able to take risks and get experiences early in my life when they weren't going to completely derail my life or my career or whatever else. And then I think that underlying competitive nature, one of the reasons I like to hire athletes is because they've been in a competitive environment. Clearly, students also can be in a very competitive environment as far as wanting to get A's and competing with everybody to get great grades. But there is something in the sports world of going out on the field competing and you're either going to win or lose and how you deal with both your winning and losing I think is extremely helpful to people in the business world. And so that core competitive nature of me of going out and running marathons really fast or triathlons really fast or competing in college and lacrosse and things of that nature, I think creates in me somebody who just likes to succeed and win. And when we lose, I am not quick to just brush it under the mat and move forward. I like to look at it, figure out why we lost, and try and do better.

I don't know that I'd agree with that in the business world. I think that everybody in the business world understands the need to compete, the need to win. I have a little paperweight on my desk right here that says on it, 'Winning isn't normal.' And it was given to me by my friend John Fish who was the head of the chairman of the real estate round table and runs an incredible construction company called Suffolk in Boston. And you know winning isn't normal but it's required if you're going to stay in business whether you're a small business or a big business. If you're not winning you're going to go out of business. I think a lot of people hear Jeff Bezos say that one day Amazon won't exist and we see Amazon in all of our life and we're like how could Amazon ever go away? Don't forget that GE almost went away. Had Larry Culp not come in and saved GE, GE was going down. GE was the largest company in the world by a market cap standpoint in 2000. Largest. And Larry Culp did an amazing job of saving it. But quite honestly, under Jeff Immelt's leadership from when he took over from Jack Welch until Jeff Immelt left, GE almost went under. So there's no even if you're the largest market cap company on the face of the planet, there's no escaping that you've got to win. You've got to maintain clients. You've got to continue to put up the numbers. So like this I would put forth not trying to dive into politics on this too much but I look at what Mandani's administration thinks they're going to do in New York and the woman who's now the head of tenant representation saying that properties should go from being owned by individuals to being owned by the common good. We make loans, we make loans and we're one of the largest lenders in the country and one of the largest multifamily lenders in the country. We make loans to owners who take responsibility for those assets. We don't lend to conglomerates of people who all have let's hold hands and hope that this all works out. This is hard dollars and cents lending. They better pay us back and if they don't pay us back, we're going to take that asset over. There's no this isn't let's just have a good time. Yeah. That competitive spirit has to be underneath everything you do. Now to your question, Ben, have there been times when I've gone too far? 100%. Has that competitive nature, competitive spirit made me miss an opportunity, go after an opportunity that I either should have done and didn't do or did do and shouldn't have done? 100%. But at the same time, I am a big believer that if you work harder than the competition, you will win. I grew up with a mom who sat there and looked at my report cards in grade school back to where I told you I built my chip on the shoulder. And she'd look at these very mediocre grades of a bunch of B's and a C spattered in here and there. And she'd said, 'But you made the effort roll.' And we would get effort grades of ones, twos, and threes. And I would get a lot of ones for effort. She'd be like, 'But honey, you tried hard.' And that was the consolation of getting a very mediocre scorecard. But at the end of the day, there's no doubt in my mind people can out hustle the competition.

There are two things to keep in mind. When Walker Dunlop went public back in 2010, there were many more publicly traded companies back then than there are today. And the private equity markets were not nearly as large and robust back then as they are today. So that 15 years between 2010 and 2025 have transformed markets both less companies being in the public market as a number of companies not market cap then but as a number of companies the number of companies has shrunk and then the private markets have grown dramatically. So back when we went public, while there was plenty of private equity interest in Walker and Dunlop in 2009 when I went to recap the company, the private markets weren't nearly as robust and therefore didn't look as appealing to me as the public markets did. The second thing is that I think at the end of the day, you got to figure out what you're trying to accomplish. If you're trying to create capital to invest in your company, you can get that in the public markets, you can get that in the private markets. If you're trying to exit your company, you can get that in the public markets, you can get that in the private markets. So, you can go either path. I do think that there was something that was very alluring to me about having a publicly traded company. And some of the things I had no idea about and other things just seemed interesting to me. But at the end of the day, it's been a fantastic 15 years as far as being a publicly traded company. We've been very fortunate that our financial performance has been exceptional and that our shareholder returns have been exceptional. And at the same time, if you don't need to go public, don't go public. Like, you need to access the if you need to access the capital markets, go do it. We today, while we have $800 million of debt at Walker Dunlop, and being able to access the debt markets is very helpful to us. On the equity side of things, we're not a big issuer of equity capital. We're not like a REIT that uses their balance sheet to go and do a tremendous amount. So quite honestly, W&D doesn't access the capital markets the way that many large publicly traded companies do. But at the time I needed to do something from a capital structure standpoint, looked at the private markets, saw the public markets were open to us, and we went out through the public markets.

Let's go to the risk side then let's go to the opportunity side and how I frame things when we get up against the wall if you will. So on the opportunities missed, we almost sold Walker and Dunlop in the spring of 2008, just before the great financial crisis to one of the big investment banks. And that deal fell apart in May of 2008 due to the impending great financial crisis. And then in October of that year, Fannie Mae and Freddie Mac, who are our two biggest lending partners, went into conservatorship. And there were plenty of days in October of 2008 at the beginning of the great financial crisis where I said, 'Did I miss the greatest opportunity ever in selling the company in May of this year? And will we ever survive?' So in those moments, you just have to take a deep breath and deal with what the world is giving you and you have to keep moving forward. You can't sit there and say, 'This is too hard or I'm too freaked out or I should have done the deal or whatever else.' You can't look back. You can't do anything about it. So forget about what was an opportunity at the time. If you didn't execute on it, you didn't do it. Then your world is what it is in front of you today. Fast forward to January of 2009, we had the opportunity to buy a company when nobody else was buying companies and we bought Column Guarantee from Credit Suisse because Credit Suisse wanted out of the commercial real estate lending space. And so at that time we stepped into an opportunity when everyone else was running out the door. So we played offense when others were playing defense. Okay. The one thing on that deal that I did that I was able to do was I gave stock to Credit Suisse in Walker and Dunlop rather than using cash which I didn't have to buy the company. So at that time as I was thinking about the future of Fannie and Freddie and buying a company from Credit Suisse with stock of Walker Dunlop I was like I'm either going to have a business three years from now or I'm not going to have a business three years from now. So if Fannie and Freddie go away zero is still zero. If Fannie and Freddie stay in business and they take stock in Walker and Dunlop and we've now doubled the size of the company, we can grow. This thing's going to be worth a whole lot more money. So, we were able to structure a deal that was a one-way option, if you will, only because if it went to zero, right? So, I look back on those times and say that's when you step forward. Fast forward to the pandemic. The moment that the federal government granted forbearance on every loan that Fannie Mae, Freddie Mac, and HUD guarantee, every loan. My CFO called me and said, 'We got a lot of people lining up for forbearance, and guess who needs to advance payments to the bond holders? We do. We Walker and Dunlop.' And guess who doesn't have billions of dollars in capital sitting on their balance sheet to advance payments to bond holders if a whole bunch of people line up and say, 'I want forbearance on my loan.' Us. So, there was a period there from the beginning of the pandemic until we got a warehouse line put in place with Bank of America to be able to potentially fund advances to bond holders that was very much, whoa, what's tomorrow bringing? And by the way, I had we bought a company previously that had an earnout payment due to it. And I called the person who sold me their business and I said, 'Look, we don't I'm trying to hoard every dollar of capital I have in case a lot of people show up and say they want forbearance and we need to advance payments. So, I'm asking you, would you maybe can we give you a deferral of that earnout payment so we can keep the capital at Walker and Dunlop in case I got to forward it to bond holders and I'll pay you a premium to what I'd pay you today?' And that person said, 'No, I want my money today.' And I have never ever forgiven that ever. We were against the wall. That person said, 'My money is more important to me than the future of Walker and Dunlop.' We paid him and as you can imagine, he's no longer with Walker and Dunlop and not somebody that is high on my list as it relates to people who would put their own personal interest in front of the interest of the company. So those types of experiences, they test you. They make you sit there and say, 'I got to hoard every dollar of capital.' And guess what? Nobody showed up for forbearance. We didn't have to advance payments. But for a period of time there, I'm trying to hold on to every dollar I've gotten. I've got someone who we bought their company who shows up and says, 'Oh, by the way, I want to get paid out.' Those are the types of things you got to deal with. The other piece to it during the pandemic particularly was communication. When times are tough, when times are tough, the natural reaction is, I don't know what's going on. I'm going to pull back on my communication. I'm going to pull back and just say what I need to say, but I don't know where the world's going. Therefore, I can't talk with conviction, and therefore, I'm not going to talk. Big mistake. One of the great things that we did in the pandemic was to talk to everyone every single day. The Walker webcast came out of the pandemic of wanting to communicate with our clients, which today has been listened to by over 22 million people and hundreds of thousands of people every week still come to listen to the Walker webcast because we wanted to communicate. We wanted to get out to our clients to say, 'We don't know what the world's doing, but let us give you tidbits so you can make your own conclusions. You can make your own planning about what the world has in store for you.' So, we've been fortunate, Ben, to zig when others have zagged. We bought a company in the GFC when nobody else was buying companies. We overcommunicated during the pandemic and created the Walker webcast. We've done some things when up against the wall that have ended up being very valuable to us, but believe you me, there have been plenty plenty of sleepless nights during those times and there have been some really hard decisions.

That's tough because they're the most dramatic because they have such contrast, but that doesn't mean that they're the most important as it relates to the growth of the company or the culture you create. But I would say that there is no doubt that when things are great, you can't really tell people's character. When things get ugly, people's character that just to go back to it, not to dwell on it, but that earnout payment to that person who said, you know what, I want my money. And I'm sitting there pleading with him saying, the future of our company might depend on me not giving you this money and keeping it on our balance sheet. And he said, you know what? I don't care. I want my money. He had a legal right to it. We paid him. But that shows

Someone's character at that moment when the chips are down. And so I do think that it's when the contrast is there and when the tide rushes out that you actually see what people are made of. Whereas when things are going great, you don't really see it. But nonetheless, one of the great deals we ever did was the acquisition of CW Capital from Fortress back in 2012. The market had healed by that point. There was no distress in the market. Fortress wanted out. We wanted in. We struck a great deal and that ended up doubling the size of Walker and Dunlop and being one of our really great acquisitions. But that wasn't like that, that was just a great deal. I think that times of trouble tell you a lot about people's core character and also test leadership incredibly. But that doesn't necessarily mean that's the only time that sort of great things are done. Great things are done every day by being consistent in the way that you manage the business, lead the business, and the way that you react to all the different things that come to you as a business leader.

I think it's really difficult to make any generalizations there. Ben, intellect is super important. It's not by coincidence that Mark Zuckerberg and Bill Gates both dropped out of Harvard, okay? Super super intelligent people and saw things that others don't see. And so you're never going to hear me say, 'Oh, I don't think education or intelligence is important.' It's actually super super important. I think it is. But intelligence is also created in various ways. First of all, there's EQ versus IQ. So, if you're going to be an effective leader, you better have a bunch of EQ along with IQ. But, by the way, I've got a business school classmate of mine who I think has about zero EQ, who has 160 on IQ, and has an enormous business that he's built, wildly successful. You can't sit there and say it's all about EQ. And he's done pretty well overindexing on the IQ side. Then there are also plenty of people, former head of Sun Microsystems and other huge companies who sit there and say, 'I was dyslexic, a terrible student, and all I've created my incredible success on is a bunch of EQ and then also getting really intelligent on the things that I needed to know to build Microsystems and the company that was built into.'

No, I think that was Chambers.

Barksdale was Netscape, was he not?

Cisco. Cisco. Yes.

What I'm trying to get at here is look, Steve Jobs went to Reed College, not known as one of the great academic institutions of the world and ended up being one of the most insightful geniuses of all time. All I'm trying to say is you don't have to go to an Ivy League school and be a great student to have intelligence. And then second of all, intelligence comes in lots of different ways. But you're not going to get me, Ben, to say that academics and academic acuity is not important as it relates to being able to build and grow companies.

I was arrogant enough and ambitious enough to think that I was going to be successful with what I did. Okay, quote unquote being successful, maybe unfounded, maybe unwarranted, but I always had big ambitions. Okay, if you sat down and you had my parents here, they'd be like, 'Oh, no. Willie always wanted to do something big.' With that said, the personal cost and losing my... I didn't lose my family. I've got an incredibly close relationship with both my boys as well as with my ex-wife. But I lost my nuclear family because of a lot of different reasons, but part of it can be attributed to my work and my focus on work and putting work first. And that's a painful loss and not one that I would counsel anyone to take lightly as they sit there and say, 'I got to put in the hours. I got to grow the business. I got to be myopically focused on it.' The other thing to keep in mind, Ben, is that the average tenure of a publicly traded company CEO is 7 years. Right now I'm doing the Walker webcast tomorrow on this book, 'A CEO for All Seasons,' which is written by four McKinsey partners. And they talk about the four seasons of being a CEO and going into the job and then the middle part and then the end. And they're using a time frame of seven years. Seven years. I'm 23 years into W&D. I'm 18 years into being CEO and I'm 15 years into being publicly traded company CEO. Okay. So I'm well beyond my shelf life if you will as it relates to average time. But being the CEO of a publicly traded company requires a huge amount. And in this book, they talk about people who say, 'If you don't have a good relationship, careful. And if you do have a good relationship, make sure that it's put at the center of what you do and that it's part of the experience of being a CEO because the demands on your time and your efforts and your emotions are extraordinary.' That clearly has been something that has surprised me in hindsight and some real loss there and some real pain there. And at the same time, I wrote the history. I put the time in. I positioned the company where I positioned it, so I only have myself to blame for that. And then I would also put forth that being able to work with people who are friends both inside of Walker and Dunlop as well as our clients is one of the most gratifying gifts I could ever imagine. And I had no sense when I embarked on this journey that I would ever have clients who were as close friends as my closest friend clients are. I don't view them as clients. I view them as friends, as people who I will continue to be very close to for the rest of my life and with whom I've experienced more great times and also struggles and look at as deep friends as my old college friends, business school friends, and personal friends from all over my life. And so I would say as I look back on it, that was another surprise as it relates as we've grown and I've been able to engage with a lot of different people. Some of those friendships are particularly dear to me and some of the most gratifying aspects of what I've done.

Oh, there have been so many that I can't like...

I can't rank them out.

An easy one to talk about, there are two things. One, the really painful ones are when I realized that I did something bad from either the way I treated somebody, the way that I made a decision that was impactful to somebody's life that I shouldn't have. They're no longer working with us. And I said they're no good any longer and I hadn't seen the value that they could create or I reacted in a certain way to a decision that someone didn't like and they left Walker and Dunlop because they were like Willie Walker's a jerk or whatever else. Those are the ones that you know in self-reflection are the ones that hurt that you got to look at and you've got to figure out and embrace, right, and you got to figure out how you can be a better person to not commit that error again. The easier ones to talk about are the oh we didn't acquire that company and I would have loved to have acquired that company. An example on that one is there was a company called ARA, Apartment Realty Advisors, which was a great company of investment sales brokers across the country. We looked at them before they got acquired by Newmark. We had a partnership with them and they I think wanted to be acquired by Walker and Dunlop, but I incorrectly saw them as more of a franchise model where they all used the ARA brand but were 25 independent operating companies and I thought that bringing them into Walker and Dunlop and integrating those 25 independent operating companies would be super challenging and super difficult. I was wrong. They went into Newmark. They created the foundation of the investment sales platform at Newmark that exists today and we missed the opportunity to buy ARA and Newmark got the opportunity to buy them and build their investment sales platform off of that acquisition. So, as I look back on things you did right and things you did wrong, missing on the acquisition of ARA back when we did was a mistake. With that said, by going and entering the investment sales business in 2015 and having Chris Mickelson build up our investment sales platform to what it is today has been a huge success. So, you could sit there and say you missed that one, but you've actually done really well on doing it subsequently. 100%. I'm not trying to say that what Chris has built is not something that I'm super proud of and is doing exactly what the ARA acquisition by Newmark was. But at the same time, as you look back on decisions you make, if I had to replay it over, we probably would have bought ARA back in I think it was 2013 when we were looking at them.

Two things to think about there. First, I told you that before I joined Walker and Dunlop, we didn't have an M&A background. I fortunately learned M&A on Wall Street and learned M&A in the private equity world. So I had a lot of experience about buying companies and selling companies and things of that nature. Most people who are in smaller firms don't have that exposure and therefore being in the M&A world is just a whole different ball of wax. The second thing is to be in the M&A world you need capital and most smaller companies don't have capital. And so how do you put together an acquisition when you're not sitting on a huge amount of capital on your balance sheet? You've been distributing that capital to the owners of the business or you don't have access to the debt markets because you've got to go personally guarantee the loan to go buy something or whatever the case might be. So the bottom line there is it requires to have a platform with scale to be able to play in the M&A space first of all. The second is having exposure to it is important. So a lot of people don't have the build versus buy opportunity in smaller companies. Clearly when you get to scale the build versus buy is always there and at the end of the day we've built a lot of businesses at Walker and Dunlop. We're in the process of building a number of them right now. But you need to have patience and that's hard for someone like me. We had a number of businesses that two of them got to break even last year after having been losing money for 3 to 4 years prior. If we'd gone and bought companies in those segments, sectors, we'd be making money day one. Right now, you could overpay for the company. You could do a bad M&A deal. You could acquire a company and lose the management team and therefore destroy value typically. So, you got to be careful. M&A isn't a one-way road to riches. M&A transactions can go really bad. But if you're pretty good at it, and I think we're that, I give our M&A track record, Ben, I think being really honest about it, we're 17 and 1. I think we had one bad acquisition. Someone might look back and say, 'Oh, the return on that acquisition, why it wasn't quite what ProForm was.' And if I really looked at it, maybe it's 14 and 4. But we've been really good at buying great companies, integrating them into Walker and Dunlop and creating value out of them. So clearly we like to leverage off of that skill set. But the build side of things clearly some of the businesses that people have built and think about Amazon Web Services, think about that. They built it. They didn't buy it. They built it. The idea that you could build that is just like boggles my mind. Like it literally boggles my mind of how Amazon built Amazon Web Services. So there are lots of companies that are exceptional at building and building to scale really quickly. And at W&D, we've used the buy model more than we have the build, but we have plenty of builds as well. And at the end of the day, what investors are looking at to us is good capital deployment and good capital returns. So, every one of those build versus buy decisions has to be, okay, we're going to go take this amount of capital and buy it, or we're going to take this amount of capital, invest in it. But at the end of the day, that return better be the return you're expecting to get.

We've built a business that has a very large servicing portfolio that kicks off cash when our origination volumes come down. And there are some competitor firms that are just on the origination side. And so when things are great, they're cranking and when things are bad, they're crashing. And we have built this platform to have a counterweight to our origination platform of this very scaled 140 billion plus dollar servicing portfolio which kicks off a lot of cash and allows us to weather cycles. And so that's one of the key components of the business model and the way we've built this place and why I think that we have been able to withstand cycles. But with that said, we are just as susceptible to cyclical change as anybody as it relates to our overall origination volumes, as it relates to what we're doing to provide value for our clients. And the last 3 years during the great tightening have been hard. Every deal has been celebrated. Every credit issue we've dealt with has been scrutinized and looked at very hard of was that a good loan to make in the first place and how are we working with the borrower to work this thing out or not or take over the asset or whatever the case might be. As you gain the scale that we've been able to build. One of the things that's very important for me to keep in mind is that right now we're dealing with things in our business that had they happened 20 years ago when I joined Walker and Dunlop, we'd be out of business. In other words, like we couldn't afford to have a loan go bad on us back when I joined the company, literally. So, when you have a company that can't afford to have a loan go bad on you, you put a tremendous amount of rigor into your underwriting process. And we have maintained that rigorous underwriting culture throughout the growth of the company. But today a loan goes bad and it's fine. In other words, it's not something we like, but we can absorb losses. When I joined the company, if we had a large mortgage banker leave Walker and Dunlop for the competition, we lost 20% of our revenue. We lost 40% of our revenue. Today a banker leaves, we lose basis points of revenue, right? That's not to say that every banker at Walker and Dunlop today isn't equally as important to us as they were back in 2004, 2005. But with that, the sustainability, the scale that we've been able to create makes it so that we're not as susceptible to those types of market movements as we were when I first joined the firm. And so that's super important as it relates to the ability to take bets. When I joined Walker and Dunlop, we didn't have the ability to take lots of bets. Back to your M&A issue of build versus buy. When I first joined the firm, we didn't have the luxury. We didn't have the capital. We didn't have the brand. We didn't have the scale to be able to make bets like that. So, we had to build up the capital base, build up the brand, build up the platform to be able to start to make those bets. Because if you don't have all those things and one of those bets goes bad, you're dead.

I think it's important to keep in mind, Ben, that we never ever know what the future is going to bring. And there's no time with more clairvoyance than another time. Never. Lots of people can say, 'Oh, but there's more geopolitical risk today than there was at this point, or the fundamentals of the market tell me that it's either going to be good or bad more today than it did in the past.' But at the end of the day, we never ever know. So all we can do is make our best assumptions for what the market is going to give us and then either take advantage of them or move away from them depending on what the market actually does. Okay? And I think that's super important to keep in mind because there's clearly not a playbook on what the either Trump administration, the United States economy or any major players in are going to go do. Okay? There's no playbook there. You can look at things like where interest rates are and you can say does a 4.17 10-year feel about right given where inflation is, given where US debt is, etc., etc. Yeah, but that's just from a historic context. It's just what our gut reaction tells us. But every single day things are changing. I thought that oil would fall from 57 bucks a barrel on Friday to 50 bucks a barrel yesterday because of the removal of Maduro in Venezuela. I was wrong. Oil's basically stuck at the 56-57 range because we're not taking over the country. It's not going to be safe to do exploration and the amount of oil that can come out of Venezuela isn't going to materially change the amount of oil on the market today. So, if you want to talk to me about where it's going to be three years from now, go ahead and tell me what's going to happen in Venezuela. But right now, it's not going to infect overall Brent crude pricing. So, it sticks. And by the way, other than one person who bet on the Polymarkets on the 31st at night and who was using insider information to go make a $400,000 return on a $36,000 bet, nobody else knew that Maduro was going to be taken into custody on the 31st. By the way, 36 years to the day that Manuel Noriega was removed from Panama. Oddly, really to the day.

I wonder whether there was anything there where they were like, 'Let's go do that.' One other quick point on that. The person who was assistant attorney general in the Bush administration when they took Manuel Noriega out of Panama and said they could do it legally was at that time Assistant Attorney General Bill Barr who wrote the opinion that they could do it. So it's just interesting how history comes through and does its thing. It's pretty wild. Anyway, I digress on that. My only point about it is I've got no clairvoyance on the market. Things feel like they are going to continue to move forward nicely as it relates to GDP growth. It feels like tariffs and all that saber rattling seem to have died down. But I would put forth most people are thinking, most big economists are thinking that US GDP growth is going to be somewhere between 2 and 3% in 2026, which would be perfectly fine. That inflation is basically sitting in this sort of 2 to 3% range and that the 10-year Treasury is going to sit between four and four and a half percent. If all that stuff lines up and I've got a financing to do, I go do it. I don't try and mess around on it. That's just me. There are plenty of other people who sit there and say, 'No, I'm going to time it and something else going to happen and the rates are going to drop or whatever else.' I look at our client base of the people who view themselves as capital aggregators, traders, or real estate owners or developers. Okay? And I have clients in all three of those. And what I really respect is the people who understand what they are. So my real estate clients who own or develop real estate don't try and play around with rates and financial structuring. They just build great real estate. They own great real estate and they finance it at where the price is today. And from my standpoint, that's being a real estate developer or real estate owner. There are other people who are traders. They're constantly trying to buy low, sell high. They don't really care about the fundamentals of the real estate. They're just trading assets. And then there are the capital aggregators who are the big private equity firms that just know how to raise a ton of capital and then deploy the capital and they're making money off of AUM and not necessarily being real estate people. And I think the most important thing of those three buckets of people is to understand what you are and then once you understand what you are and what you're not, make sure that you're not trying to play as something that you're not. And so I have great respect for capital aggregators who say I'm a capital aggregator but not necessarily a real estate person. I have a lot of respect for people who are like I'm a trader but not a capital aggregator or not a real estate person but I trade. And then those people who are real estate people who say I'm not going to try and be a trader. I'm not going to try and be a capital aggregator. I'm just going to operate great real estate or build great real estate. And that's a very long-winded answer to your question as it relates to what's '26 feel like. It feels like there is so much debt that needs to be refinanced that fundamentals of commercial real estate are getting back into line that as a company that lends a lot of capital that sells a lot of assets that we're going to have continued growth in volumes. And as you get continued growth in volumes that means that more capital is coming to the asset class. And as we know, as more capital comes to the asset class, cap rates go down and values go up. And so I think as a general macro backdrop, that feels very good entering 2026.

Thank you, Ben. It was a joy.