Bisnow Exclusive: Details On Walker & Dunlop's New $3.8B HUD Portfolio

CRE lender Walker & Dunlop closed a deal this week on a $3.8B HUD portfolio, making it the largest HUD servicer in the nation.

Walker & Dunlop acquired the commercial mortgage servicing portfolio for about $45M from an Oppenheimer Holdings subsidiary, which liquidated its assets and is now defunct, the company tells us.

“Oppenheimer, the public company, was the owner of the subsidiary that had the HUD business and has made the decision to exit the business,” Walker & Dunlop CFO Stephen Theobald (pictured) tells Bisnow. “It’s pretty rare to even see a portfolio for sale. In the three-plus years that I’ve been here we’ve seen maybe five for sale, all HUD portfolios…Generally it’s larger servicers who are for whatever reason selling off a smaller piece of their servicing portfolio—whether it is to generate some cash or establish the valuation for the whole portfolio. It’s rare for a company to just get out of the business entirely, which is what the Oppenheimer subsidiary has done.”

The HUD servicing portfolio is made up of 480 loans—361 of which have an unpaid principal balance of $2.7B and are secured by multifamily properties. Borrowers are disbursed throughout 43 states, the District of Columbia and the US Virgin Islands.

“It’s a large portfolio that nearly doubles the size of our existing portfolio,” Stephen tells us. “The financial returns on the portfolio, which we think are going to be very strong, were very attractive to us. HUD portfolios stick around for a long period of time, and these are generally 35-year-old loans. The portfolio itself is relatively young, with a 44-month-old average.”

Walker & Dunlop financed the deal with cash on hand, Stephen tells Bisnow, and the exec projects it will bring in $6.5M in annual servicing revenue. The company’s overall HUD servicing portfolio, including its former clients, is projected to exceed $9.3B at the end of Q2 ’16, making it the largest servicer of HUD Multifamily and Healthcare loans in the US.

The company has roughly 500 employees in 26 offices across the nation. Stephen said although they're well-staffed, they are putting out feelers for a few additional team members.

“You don’t double a portfolio without having to add a little more resources,” he tells us. “We’re actually in the market now to bring on a couple of folks to the HUD team.”