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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 30, 2021
Walker & Dunlop, Inc.
(Exact name of registrant as specified in
its charter)
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Maryland
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001-35000
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80-0629925
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(State or other Jurisdiction of
Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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7501 Wisconsin Avenue
Suite 1200E
Bethesda, MD
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20814
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant’s telephone number, including
area code: (301) 215-5500
Not applicable
(Former name or former address if changed
since last report.)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which
registered
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Common
Stock, $0.01 Par Value Per Share
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WD
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
¨ Emerging
growth company
¨ If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry into a Material Definitive
Agreement.
On August 30, 2021, Walker
& Dunlop, Inc., a Maryland corporation (the “Company” or “our”), entered into a Purchase Agreement (the “Purchase
Agreement”) with WDAAC, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Purchaser”),
Alliant, Inc., a Florida corporation (“Alliant Inc.”), Alliant ADC, Inc., a California corporation (“Alliant ADC”),
Palm Drive Associates, LLC, a Delaware limited liability company (“Palm Drive”), Shawn Horwitz, an individual (“Horwitz”
and collectively with Alliant Inc., Alliant ADC and Palm Drive, the “Seller Parties”), and each of The Alliant Company, LLC,
a Florida limited liability company, Alliant Capital, Ltd., a Florida limited liability company, Alliant Fund Asset Holdings, LLC, a Delaware
limited liability company, Alliant Asset Management Company, LLC, a California limited liability company, Alliant Strategic Investments
II, LLC, a Delaware limited liability company, ADC Communities, LLC, a Florida limited liability company, ADC Communities II, LLC, a California
limited liability company, AFAH Finance, LLC, a Delaware limited liability company, Alliant Fund Acquisitions, LLC, a Florida limited
liability company, and Vista Ridge 1, LLC, a California limited liability company (the transactions contemplated by the Purchase Agreement,
the “Transaction”).
Pursuant to the terms of the
Purchase Agreement, Purchaser will acquire, directly and indirectly, from the Seller Parties the equity of the entities comprising the
business of Alliant Capital and its affiliates (the “Acquired Companies”), a privately owned investment management firm that
is focused on the affordable housing sector through low-income housing tax credit syndication, joint venture development, and community
preservation fund management. Subject to the receipt of all required regulatory approvals and the fulfillment of other customary closing
conditions, the parties anticipate that the Transaction will close in the fourth quarter of 2021.
Subject to the terms and
conditions of the Purchase Agreement, the total consideration to the Seller Parties for the Acquired Companies will equal $696
million, which will be comprised of the following: (i) the issuance to Horwitz of shares of common stock of the Company with an
aggregate value of approximately $90 million (based on the volume weighted average share price of the Company’s common stock),
which will be subject to restrictions, including a four-year, graded
vesting sale restriction lifted in four annual 25% increments; (ii) Purchaser’s assumption of certain securitization
debt of the Seller Parties and the Acquired Companies, currently valued at approximately $155 million; (iii) a cash payment of
approximately $351 million, subject to adjustment based on the actual balance of the assumed securitization debt of the Seller
Parties as of the closing date and for customary net working capital; and (iv) up to $100 million in cash that is contingent on the
achievement of certain post-closing financial performance objectives of the Acquired Companies during the four-year period
immediately following closing of the Transaction (the “Earnout”). The Earnout is subject to acceleration in the event
that there is either a change of control of WDAAC, LLC or the employment of certain other individuals are terminated by Purchaser
other than for cause prior to the end of the four-year anniversary of the closing of the Transaction. Additionally, the Earnout is
subject to acceleration in the event the employment of Horwitz and certain other individuals is terminated by Purchaser other than
for cause prior to the end of the two-year anniversary of the closing of the Transaction. In the event that Purchaser discontinues
or abandons a material but less than a majority of the business of the Acquired Companies, the calculation of the performance
objectives for the Earnout will be adjusted to take into account the impacted operations of the business.
The
Purchase Agreement contains customary representations and warranties from the Company and Purchaser, as well as the Seller Parties and
certain of the Acquired Companies. Each party has also agreed to customary covenants, including, in the case of the Seller Parties and
certain of the Acquired Companies, covenants relating to the conduct of the business during the interim period between the execution of
the Purchase Agreement and the closing of the Transaction and, in the case of the Seller Parties, four-year post-closing non-competition
and non-solicitation restrictive covenants. The Seller Parties have also agreed that they will not, and will cause their affiliates and
their respective representatives not to, encourage, solicit, initiate, facilitate or continue any inquiries or proposals with respect
to any other acquisition proposals.
The
consummation of the Transaction is subject to customary closing conditions, including receipt of all required regulatory approvals
and approvals of investors in the funds managed by certain Seller Parties and lenders to the Seller Parties and their affiliates
and the absence of any law or order prohibiting the closing of the Transaction. In addition, each party’s obligation to
consummate the Transaction is subject to certain other customary conditions, including the accuracy of the representations and
warranties of the other party, subject to certain materiality standards, and compliance
in all material respects by the other party with its covenants. Additional closing conditions include that the Seller Parties
obtain certain third-party consents; the Seller Parties dissolve certain entities or distribute the equity of certain entities that
are intended to be excluded from the Transaction; and Purchaser and the Seller Parties enter into an arms-length lease with respect
to certain real property.
The
Purchase Agreement provides certain termination rights for each of the Seller Parties and Purchaser. Specifically, the Purchase Agreement
can be terminated upon written consent of the Seller Parties and Purchaser; by either Purchaser or the Seller Parties if certain closing
conditions are not satisfied or if the closing of the Transaction has not occurred on or prior to three months from date of the Purchase
Agreement (which can be extended to six months by either Purchaser or Horwitz if certain third-party consent requests are outstanding);
by either Purchaser or the Seller Parties if the other party has breached any representation, warranty, covenant or agreement in the Purchase
Agreement which cannot or has not been cured within 30 days and gives rise to the failure of a closing condition; by either Purchaser
or the Seller Parties if any law or governmental authority prohibits the closing of the Transaction; or by Purchaser for any other reason,
provided that in such event Purchaser will be obligated to pay the Seller Parties a termination fee equal to $20 million.
This
Current Report on Form 8-K provides a summary of the Purchase Agreement and does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the Purchase Agreement, which will be filed as an exhibit to the Company’s Quarterly Report
on Form 10-Q for the quarterly period ending September 30, 2021.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth above
in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The shares of common stock of the Company to be issued
in connection with the Transaction will not be registered under the Securities Act of 1933, as amended (the “Securities Act”),
and will be issued in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act
and/or Regulation D promulgated thereunder as a transaction by an issuer not involving a public offering.
Item 7.01. Regulation FD Disclosure.
On August 30, 2021,
the Company issued a press release announcing the Transaction, a copy of which is attached hereto as Exhibit 99.1 and is hereby incorporated
by reference.
On August 30, 2021, the Company
announced that it intends to host a conference call for its investors on August 31, 2021 at 10:00 a.m. Eastern Time to discuss the Transaction.
The investor presentation that the Company will use on the conference call is attached hereto as Exhibit 99.2 and is hereby incorporated
by reference.
The
information in this Item 7.01, as well as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K, shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject
to the liabilities of that Section, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
The following exhibits are filed with his report:
Forward-Looking Statements
This Current Report on Form 8-K may be deemed
to contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations,
projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.
In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,”
“should,” “expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words
or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also
identify forward-looking statements by discussions of strategy, plans, or intentions.
The forward-looking statements contained in this
Current Report on Form 8-K reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties,
assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in
any forward-looking statement. Factors that could cause our results to differ materially include, but are not limited to: (1) our and
the Seller Parties’ ability to obtain the consents and approvals required to close the Transaction and satisfy other closing conditions,
(2) general economic conditions and commercial real estate market conditions, (3) significant costs related to the Transaction, including
unexpected costs or liabilities that may arise and (4) our ability to successfully integrate the Acquired Companies’ operations
into our current business, including the retention of their employees, and achieve the expected benefits from the Transaction.
For a further discussion of these and other factors
that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see the section
titled “Risk Factors” in our most recent Annual Report on Form 10-K and any updates or supplements in subsequent Quarterly
Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com.
The forward-looking statements included herein as only as of the date hereof, and the Company undertakes no obligation to revise or update
any forward-looking statements for any reason.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Walker & Dunlop, Inc.
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(Registrant)
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Date:
August 30, 2021
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By:
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/s/ Stephen P. Theobald
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Stephen P. Theobald
Executive Vice President and Chief Financial Officer
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Exhibit 99.1
Walker &
Dunlop to Acquire Alliant Capital and Affiliates
Acquisition
Establishes Affordable Housing Powerhouse with $16 Billion of Total Assets Under Management
Bethesda, Maryland – August 30, 2021 – Walker
& Dunlop, Inc. announced today that it has entered into a definitive agreement to acquire Alliant Capital, Ltd. and its affiliates,
Alliant Strategic Investments and ADC Communities (together “Alliant”), a privately held alternative investment manager focused
on the affordable housing sector through low-income housing tax credit (“LIHTC”) syndication, joint venture development,
and community preservation fund management. Alliant is the 6th largest LIHTC syndicator in the United States, and
since inception, has participated in the development of over 100,000 affordable units serving over 400,000 families.
The acquisition of Alliant brings the following strategic benefits
to Walker & Dunlop:
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·
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Market-leading affordable housing platform
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o
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Alliant’s scaled affordable housing portfolio, in combination with Walker & Dunlop’s leadership position in the affordable
debt financing space to generate significant financing and sales opportunities for Walker & Dunlop
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Tax credit syndication to expand Walker & Dunlop’s capital
solutions offering to the affordable housing industry
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Alliant’s $14 billion of affordable assets under management
to be added to Walker & Dunlop’s $2 billion of assets under management, far surpassing the company’s Drive to
’25 goal of $10 billion
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Significant asset management fees, in combination with servicing fees
already generated by Walker & Dunlop’s $112 billion servicing portfolio, to increase long-term, predictable, and stable cash
flows
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Immediate accretion to key financial metrics, including estimated increases
in 2022 total revenues of $90 to $100 million, diluted EPS of $0.45 to $0.60, and adjusted EBITDA1 of approximately
$60 million
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Walker & Dunlop Chairman and CEO Willy Walker stated,
“Alliant is one of the largest and most respected tax credit syndicators and affordable housing developers in the country. The
addition of their people, assets, and capital formation capabilities immediately makes Walker & Dunlop a market leader in affordable
housing — lending, sales, and tax credit syndication. With Fannie Mae, Freddie Mac and HUD all focused on affordable housing and
more and more Americans seeking affordable rental housing, the combination of Alliant and Walker & Dunlop is a home run. Shawn
Horwitz has built an incredible team and company, and we look forward to welcoming them to W&D.”
Mr. Walker continued, “Alliant will have an immediate impact
on Walker & Dunlop’s revenues, adjusted EBITDA, and cash flow. This acquisition dramatically accelerates the achievement of
three Drive to ’25 goals: revenue growth to $2 billion, assets under management to over $10 billion, and $60 billion
of targeted affordable housing lending. To accomplish so much in one acquisition is a true game-changer for W&D.”
Alliant Founder and CEO Shawn Horwitz commented, “Combining with
Walker & Dunlop’s scaled lending and sales platform will accelerate Alliant’s growth over the coming years. Walker
& Dunlop’s people, brand, and innovative technology will benefit our clients, partners, and investors, and allow us to provide
more affordable housing, something that is desperately needed in America.”
Financial Details
Under the terms of the purchase agreement, Walker & Dunlop will
acquire Alliant at a total enterprise value of $696 million, comprised of:
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$351 million of cash and assumption of Alliant’s securitized debt facility,
which had an outstanding balance of $155 million at July 31, 2021, is rated A2 by Moody’s and carries a 4.75% interest rate
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$90 million of WD common stock, with the number of shares to be determined
at closing
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$100 million of earn-out structured
as participating interest in future cash flows over the next four years
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Transaction Details
The transaction is expected to close during the fourth quarter of 2021.
Closing is subject to certain regulatory approvals and consents of Alliant’s investor and lender partners.
Beekman Advisors represented Alliant as financial advisor in the transaction.
Webcast
Walker & Dunlop Chairman and CEO Willy Walker and CFO Steve Theobald
and Alliant CEO Shawn Horwitz will host a webcast presentation for the investment community to discuss the transaction on August 31, 2021
at 10:00 AM Eastern Time. Listeners can access the webcast using the link below:
https://walkerdunlop.zoom.us/webinar/register/WN_G7QCiyBDStORsrPLKRgXug
or by dialing +1 408 901 0584,
Webinar ID 872 1349 9175, Password 810259.
Presentation materials will be
posted to the Investor Relations section of the company's website. A webcast replay of the event will also be available on the Investor
Relations section of the Company's website at http://investors.walkerdunlop.com/.
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(1)
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This estimate of Alliant Adjusted EBITDA is a non-GAAP financial measure the company presents to help investors better understand
our operating performance. For a reconciliation of the estimated Alliant adjusted EBITDA to net income, refer to the sections of this
press release below titled “Non-GAAP Financial Measures” and “Adjusted Financial Metric Reconciliation to GAAP.”
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About Walker & Dunlop
Walker & Dunlop (NYSE: WD) is the largest provider of capital to
the multifamily industry in the United States and the fourth largest lender on all commercial real estate including industrial, office,
retail, and hospitality. Walker & Dunlop enables real estate owners and operators to bring their visions of communities — where
Americans live, work, shop, and play — to life. The power of our people, premier brand, and industry-leading technology enables
us to meet any client need – including financing, research, property sales, valuation, and advisory services. With over 1,000 employees
across every major U.S. market, Walker & Dunlop has consistently been named one of Fortune’s Great Places to Work® and is
committed to making the commercial real estate industry more inclusive and diverse while creating meaningful social, environmental, and
economic change in our communities.
About Alliant
Alliant Capital, Ltd. (“ACL”)
is a leading investment management firm focused on providing tax credit syndication for the development and financing of affordable multifamily
rental housing throughout the United States. Founded in 1997 to assist in America’s critical need for affordable housing, today
Alliant is among the nation’s top syndicators and has an unparalleled track record of success.
Alliant Strategic Investments focuses on non-LIHTC affordable housing
preservation, workforce housing, and opportunity zone investments.
ADC Communities is the affordable housing development arm of Alliant,
which has financed 29 developments and over 5,400 units in eight states since 2014.
With a
dedicated team of experienced commercial real estate, asset management, legal and tax professionals, Alliant provides the highest
level of fully integrated real estate and investment support services. Alliant is headquartered in Woodland Hills, California
and has more than 130 employees. Shawn Horwitz and all key members of Alliant’s senior management team will join Walker &
Dunlop and continue in their leadership roles.
Forward Looking Statements
Some of the statements contained in this press
release may constitute forward-looking statements within the meaning of the federal securities laws, including statements relating to:
(1) the expected strategic benefits of the acquisition of Alliant, (2) the expected accretive effect of the acquisition of Alliant on
our financial results, (3) Alliant’s estimated contribution to our projected 2022 financial results for total revenues, diluted
earnings per share, and adjusted EBITDA, (4) creation of stable recurring cash flow, (5) our ability to leverage Alliant’s large
portfolio to increase debt financing and property sales originations, (6) the anticipated date of completion of the acquisition; and (7)
any assumptions underlying the foregoing statements.
The forward-looking statements reflect our
current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances
that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement.
While the forward-looking statements reflect our
good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation
to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data
or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially
include, but are not limited to (1) our and Alliant’s ability to obtain the consents and approvals required to close the transaction
and satisfy other closing conditions, (2) general economic conditions and multifamily commercial real estate market conditions, (3) significant
costs related to the transaction, including unexpected costs or liabilities that may arise and (4) our ability to successfully integrate
Alliant’s operations into our current business, including the retention of their employees, and achieve the expected benefits from
the transaction.
For a further discussion of these and other
factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements,
see the section titled ''Risk Factors" in our most recent Annual Report on Form 10-K, as it may be updated or supplemented by our
Quarterly Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations
web page at www.walkerdunlop.com
Non-GAAP Financial Measures
To supplement our financial statements
presented in accordance with United States generally accepted accounting principles ("GAAP"), the company uses adjusted
EBITDA, a non-GAAP financial measure. The presentation of adjusted EBITDA is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our
operating performance, readers should use adjusted EBITDA in addition to, and not as an alternative for, net income. Estimated
adjusted EBITDA for Alliant presented in this press release represents estimated Alliant net income before income taxes, interest
expense on estimated incremental debt associated with our acquisition of Alliant, including an estimated increase to our corporate
debt and Alliant’s existing debt assumed by us upon closing of the acquisition, and amortization and depreciation, adjusted
for provision (benefit) for credit losses net of write-offs, stock-based incentive compensation charges, and non-cash revenues such
as the fair value of expected net cash flows from servicing, net. Because not all companies use identical calculations, our
presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA
is not intended to be a measure of free cash flow for our management's discretionary use, as it does not reflect certain cash
requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts
calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and
non-cash charges that are used to determine compliance with financial covenants.
We use adjusted EBITDA to evaluate the operating
performance of our business, for comparison with forecasts and strategic plans and for benchmarking performance externally against competitors.
We believe that this non-GAAP measure, when read in conjunction with the company's GAAP financials, provides useful information to investors
by offering
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·
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the ability to make more meaningful period-to-period comparisons
of the company's on-going operating results;
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·
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the ability to better identify trends in the company's underlying
business and perform related trend analyses; and
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·
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a better understanding of how management plans and measures
the company's underlying business.
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We believe that adjusted EBITDA has limitations
in that it does not reflect all of the amounts associated with the company's results of operations as determined in accordance with GAAP
and that adjusted EBITDA should only be used to evaluate the company's results of operations in conjunction with net income. For more
information on adjusted EBITDA, refer to the section of this press release below titled "Adjusted Financial Metric Reconciliation
to GAAP."
ADJUSTED FINANCIAL
METRIC RECONCILIATION TO GAAP
Unaudited
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Year ended December 31,
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(in thousands)
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20221
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20222
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Estimated Alliant Net Income
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$
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15,000
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$
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20,000
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Income tax expense
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5,500
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7,500
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Interest expense on corporate debt
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22,000
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22,000
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Amortization and depreciation
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17,500
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10,500
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Provision (benefit) for credit losses
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—
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—
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Net write-offs
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—
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—
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Stock compensation expense
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—
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—
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Fair value of expected net cash flows from servicing, net
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—
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—
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Adjusted EBITDA
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$
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60,000
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$
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60,000
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(1)
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Low end of net income estimated range
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(2)
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High end of net income estimated range
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Exhibit 99.2
August 31, 2021 WALKER & DUNLOP TO ACQUIRE ALLIANT CAPITAL AND AFFILIATES 1
Forward Looking Statements Some of the statements contained in this presentation may constitute forward - looking statements within the meaning of the federa l securities laws, including statements relating to: (1) the expected strategic benefits of the acquisition of Alliant, (2) the expected accretive effect of the acquisition of Alliant on our fina nci al results, (3) Alliant’s estimated contribution to our projected 2022 financial results for total revenues, diluted earnings per share, and adjusted EBITDA, (4) creation of stable recurring cash flow, (5) our ability to leverage Alliant’s large portfolio to increase debt financing and property sales originations, (6) the anticipated date of completion of the acquisition; and (7) any assumptions underlying th e f oregoing statements. The forward - looking statements reflect our current views about future events and are subject to numerous known and unknown risks , uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward - looking statement. While the forward - looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results . Furthermore, we disclaim any obligation to publicly update or revise any forward - looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law . Factors that could cause our results to differ materially include, but are not limited to ( 1 ) our and Alliant’s ability to obtain the consents and approvals required to close the transaction and satisfy other closing conditions, ( 2 ) general economic conditions and multifamily commercial real estate market conditions, ( 3 ) significant costs related to the transaction, including unexpected costs or liabilities that may arise and ( 4 ) our ability to successfully integrate Alliant’s operations into our current business, including the retention of their employees, and achieve the expected benefits from the transaction . For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward - looking statements, see the section titled ''Risk Factors" in our most recent Annual Report on Form 10 - K, as it may be updated or supplemented by our Quarterly Reports on Form 10 - Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com Non - GAAP Financial Measures To supplement our financial statements presented in accordance with United States generally accepted accounting principles (" GAA P"), the company uses adjusted EBITDA, a non - GAAP financial measure. The presentation of adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superio r t o, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA in addition to, and not as an alternative for , net income. Estimated adjusted EBITDA for Alliant presented in this presentation represents estimated Alliant net income before income taxes, interest expense on estimated incremental debt as sociated with our acquisition of Alliant, including an estimated increase to our corporate debt and Alliant’s existing debt assumed by us upon closing of the acquisition, and amortization and depreci ati on, adjusted for provision (benefit) for credit losses net of write - offs, stock - based incentive compensation charges, and non - cash revenues such as the fair value of expected net cash flows from servicing, ne t. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBI TDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The a mou nts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other ca sh and non - cash charges that are used to determine compliance with financial covenants. We use adjusted EBITDA to evaluate the operating performance of our business, for comparison with forecasts and strategic pla ns and for benchmarking performance externally against competitors. We believe that this non - GAAP measure, when read in conjunction with the company's GAAP financials, provides useful information to investors by offering the ability to make more meaningful period - to - period comparisons of the company's on - going operating results; the ability to better identify trends in the company's underlying business and perform related trend analyses; and a better understanding of how management plans and measures the company's underlying business. We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with the company's res ults of operations as determined in accordance with GAAP and that adjusted EBITDA should only be used to evaluate the company's results of operations in conjunction with net income. For more inf ormation on adjusted EBITDA, refer to the appendix of this presentation.
Alliant is an alternative investment manager focused on multifamily affordable housing sector through low - income housing tax credit syndication, joint venture development of affordable properties, and community preservation fund management The combination of W&D and Alliant’s people, assets, and capital formation capabilities creates a market - leading affordable housing platform 3
$0 $20 $40 $60 $80 $100 $120 Zelman TapCap W&D HAS A SUCCESSFUL TRACK RECORD OF STRATEGIC ACQUISITIONS Johnson Capital Engler Financial George Elkins Mortgage Banking Deerwood Capital JCR Capital Enodo AKS Capital FourPoint Share Price iCap MSF Capital Alliant 4
WHERE WE ARE GOING GROW DEBT FINANCING VOLUME GROW PROPERTY SALES VOLUME ESTABLISH INVESTMENT BANKING CAPABILITIES ENVIRONMENTAL, SOCIAL AND GOVERNANCE $60B+ Origination Volume / $5B+ Small Balance Loans / $160B Servicing Portfolio $25B+ Sales Volume $10B+ Assets Under Management Increase Diverse Leadership / Reduce Carbon Emission / Donate 1% of Pre - Tax Profits / Grow Affordable Lending 5 GS5
TRANSACTION BENEFITS AND OPPORTUNITIES Cultural Alignment Aligned on long - term growth strategy and direction of combined platform Affordable Housing Creation of affordable housing powerhouse to progress towards 2025 affordable lending target Financing and Sales Opportunities Significant debt financing and property sales opportunities from Alliant’s portfolio to boost W&D transaction volume Assets Under Management (AUM) Combined AUM of $16 billion, with opportunity for continued growth Technology Implementation W&D’s innovative technology and processes to benefit Alliant’s operations and ability to scale over time 6
ALLIANT: CREATING EXCEPTIONAL IMPACT IN AFFORDABLE HOUSING Alliant Capital, Ltd. Low Income Housing Tax Credit (LIHTC) syndication – capital raising, investment identification, underwriting, closing, asset management, disposition, and investor relations Alliant Strategic Investments Community preservation through direct investments in affordable assets with the goal of preserving the affordable status of historically LIHTC assets ALLIANT BUSINESS LINES ADC Communities Joint - venture relationships with developers to develop and syndicate affordable properties Alliant is a vertically - integrated investment manager with a focus on the affordable housing sector 1 2 3 7
KEY PORTFOLIO STATISTICS OPERATIONAL METRICS INDUSTRY RECOGNITION 400,000 + Families Served 1,000 + Tax Credit Properties $8.4 Billion Equity Raised 100,000 + Units in Portfolio 78% Repeat Key Relationships $14 Billion Assets Under Management #6 Top Syndicator in 2021* A2 Rated Debt by Moody’s * NMHC Affordable Housing Syndicator Survey 2020 ALLIANT BUSINESS HIGHLIGHTS 8
SIZEABLE LIHTC SYNDICATION MARKET PRESENTS OPPORTUNITY FOR MARKET SHARE GROWTH Low Income Housing Tax Credit Volume in billions $17 $16 $17 $18 $18 3.4% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% $- $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2016 2017 2018 2019 2020 Alliant Market Share 1) Calculated using the syndicated portion of the market LIHTC volume Source: Cohn Reznick 2020 Housing Credit Equity Volume Survey The LIHTC market is highly fragmented with no dominant players, providing an opportunity for targeted hiring and expansion of investor relationships to grow Alliant’s market share as part of Walker & Dunlop 9 1
GOAL TO ADVANCE IN SYNDICATOR RANKINGS THROUGH CONTINUED GROWTH 2021 TOP APARTMENT SYNDICATORS BY UNITS Source: National Multifamily Housing Council Rank Company Units Syndicated 1 Boston Financial 186,785 2 Raymond James 132,268 3 PNC Real Estate 125,287 4 National Equity Fund, Inc. 115,667 5 Enterprise Community Investment 110,466 6 Alliant Capital 105,590 7 The Richman Group 104,393 8 AIG Affordable Housing Partners 87,238 9 Hunt Capital Partners 75,550 10 WNC & Associates 58,755 1 0 10
PURCHASE PRICE AND FUNDING DETAILS Estimated closing in Q4 2021 subject to certain regulatory approvals and consents of Alliant’s investor and lender partners Under the terms of the purchase agreement, Walker & Dunlop will acquire Alliant Capital and its affiliates at total enterprise value of $696 million , comprised of: Walker & Dunlop will fund the cash portion of the purchase price through a combination of corporate cash on hand and proceeds from the expected refinancing of our term debt 11 ▪ $351 million of cash and assumption of Alliant’s securitized debt facility, with balance of $155 million at July 31, 2021 ▪ $90 million of WD common stock issuance ▪ $100 million earn - out
EXPECTED FINANCIAL SYNERGIES Estimated 2022 Alliant Impact 1 Total Revenues $90 to $100 million Adjusted EBITDA 2 approximately $60 million Diluted Earnings Per Share $0.45 to $0.60 per share 1) Assumes Q4 2021 closing date 2) This is a non - GAAP financial measure. For a reconciliation of the metric to GAAP net income, refer to the appendix of this prese ntation 12
Q&A 13
Appendix 14
ESTIMATED ALLIANT ADJUSTED EBITDA RECONCILIATION TO NET INCOME For the year ended (in thousands) December 31, 2022 1 December 31, 2022 2 Estimated Alliant Net Income $15,000 $20,000 Adjustments: Income tax expense 5,500 7,500 Interest expense 22,000 22,000 Amortization and depreciation 17,500 10,500 Provision (benefit) for credit losses _ _ Net write - offs _ _ Stock compensation expense _ _ Fair value of expected net cash flows from servicing, net _ _ Adjusted EBITDA $60,000 $60,000 1) Low end of net income estimated range 2) High end of net income estimated range