Walker & Dunlop’s Q1 2025 Results: Growth Amid Growing Pains—Investors, Take Note!

Investors, buckle up! Walker & Dunlop just handed us a report card that’s full of contradictions—so let’s dig in and figure out what this means for your portfolio.

The Good: Transaction Volumes Are on Fire

Let’s start with what’s working. Walker & Dunlop’s total transaction volume hit $7.0 billion in Q1 2025, a 10% jump from last year. That’s a massive win in a market where many companies are struggling to keep up. The secret? Multifamily real estate—a sector that’s booming thanks to low unemployment, soaring demand for housing, and constrained supply.

GSE lending (think Fannie Mae and Freddie Mac) surged 24%, with Fannie Mae volumes alone jumping 67%. This isn’t luck—it’s a deliberate strategy. The company is leveraging its top-tier GSE lender status to capitalize on regulatory shifts and strong fundamentals in affordable housing. Meanwhile, multifamily property sales volumes leaped 58% YoY, outpacing the broader market’s 36% growth. That’s a testament to their sales team’s hustle and the sector’s resilience.

The Bad: Costs Are Killing the Bottom Line

Now for the ugly truth: net income cratered 77% to just $2.8 million, with EPS plummeting to $0.08. Yikes! The culprit? A perfect storm of rising expenses and write-offs. Let’s break it down:
- Personnel costs jumped due to severance for underperforming staff—a move that’ll hurt now but pay off later.
- A $4.2 million write-off from refinancing corporate debt.
- A $3.7 million provision for credit losses, as defaults in the “at-risk” servicing portfolio spiked to eight loans ($108.5 million).

Adjusted EBITDA also took a hit, dropping 12% to $65 million. The message? Growth isn’t free. The company is investing aggressively in its Capital Markets platform and talent, but it’s bleeding cash in the short term.

The Ugly: Credit Risks Are Rising

Beware the fine print. While most of Walker & Dunlop’s $135.6 billion servicing portfolio remains strong, the at-risk segment is deteriorating. Defaults in this category nearly doubled year-over-year, and unresolved GSE repurchase requests total $46.1 million. These aren’t trivial sums—especially when reserves are only $7.5 million.

The Silver Lining: Long-Term Strength

CEO Willy Walker isn’t panicking. He’s betting on a commercial real estate recovery, pointing to pent-up demand for financing and capital deployment. The company’s servicing portfolio includes $10.3 billion of Agency loans maturing within two years—a potential goldmine if they can retain those accounts.

Assets Under Management (AUM) hit $18.4 billion, up 6%, driven by low-income housing tax credit (LIHTC) funds. That’s a cash cow with strong bipartisan support in Washington—a rare bright spot in today’s political chaos.

The Bottom Line: Hold the Fort, but Keep an Eye on Risks

Here’s the deal: Walker & Dunlop is all in on multifamily, a sector that’s still thriving despite rising interest rates. Their GSE lending dominance and servicing portfolio growth are undeniable strengths. But investors need to ask: Can the company control costs and credit losses long enough to see the recovery?

The dividend of $0.67 per share is a lifeline for income investors, but it’s only sustainable if net income rebounds. The $75 million share repurchase program is a positive sign of confidence—but it’s still untested.

Final Verdict

This is a hold with a cautiously optimistic bias. If you’re in it for the long haul, Walker & Dunlop’s exposure to multifamily and GSE lending gives it staying power. But if you’re a short-term trader, the expense pressures and credit risks could sting.

The numbers that matter:
- Transaction volume growth (10% YoY) vs. net income collapse (77% drop).
- Multifamily demand metrics: 663,000 units absorbed in 2024 vs. 585,000 completions—proof of scarcity.
- Servicing portfolio’s two-year maturity cliff: $10.3 billion at risk of renewal fees, which could be a game-changer.

Final warning: Watch for regulatory shifts at HUD and the GSEs. If they tighten lending rules, this train could derail.

In the end, this isn’t a “buy now” call—it’s a wait-and-see. Keep an eye on Q2 expenses and credit metrics. If they stabilize, this stock could be a winner. But until then? Buckle up and stay vigilant.

Conclusion: Walker & Dunlop’s Q1 2025 results are a rollercoaster—volumes are soaring, but profits are in freefall. The company’s strategic bets on multifamily and GSE lending are sound, but cost discipline and credit quality must improve to justify its valuation. For now, it’s a hold, but investors who can stomach the volatility might find a gem here—if they’re willing to wait for the storm to pass.