CEO Willy Walker
BETHESDA, MD–Walker & Dunlop has announced it has agreed to acquire the independent mortgage broker company George Elkins Mortgage Banking Co. The transaction will add $1.7 billion in life insurance company servicing to Walker & Dunlop's now $57.3-billion servicing portfolio.
Established in 1922 and headquartered in Los Angeles, CA, Elkins averages $800 million a year in brokerage transactions, originating direct loans for a slew of private capital sources including life insurance companies, banks, trusts, pension funds and thrifts from its five offices in the state.
“George Elkins Mortgage will integrate nicely into Walker & Dunlop's loan origination footprint and culture, and bring with it a wonderful group of mortgage banking professionals and clients that will add value to Walker & Dunlop,” chairman and CEO Willy Walker said in a prepared statement.
For the past several years Walker & Dunlop has been taking steps and setting goals to diversify its revenue streams beyond its agency origination platform roots. One of its goals has been to increase its non-transaction based fee revenues by growing its servicing portfolio organically and through acquisition — a box that the Elkins deal clearly checks.
The Oppenheimer Portfolio
Walker & Dunlop made a similar play — albeit with different assets — in June when it acquired a $3.8-billion servicing portfolio backed by US Department of Housing and Urban Development multifamily and healthcare loans from Oppenheimer Multifamily Housing & Healthcare Finance, a subsidiary of Oppenheimer Holdings. W&D paid $45 million for the 480 loans.
At the time W&D said it expects the portfolio to add $0.06 share to annual earnings and to achieve a cash-on-cash return in excess of 15%, according to earnings reports. From a strategic perspective, the portfolio should expand its customer base — more than 50% of the portfolio is new to W&D — and opportunities to cross and upsell services.
The Elkins acquisition is not an exact comparison, of course. Besides its focus on life insurance loans, the deal will also add 14 commercial real estate originators and a robust correspondent network with potential deals and new relationships, according to Walker & Dunlop senior vice president & capital markets west chief production officer Cliff Carnes.
W&D was unable to return a call in time for publication.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
