Why Walker & Dunlop (WD) is buying GeoPhy for $85 million in cash

  • Walker & Dunlop, Inc. (NYSE: WD) recently announced that it has reached an agreement to purchase GeoPhy for $85 million in cash. These are the details.

Walker & Dunlop, Inc. recently announced that it has entered into a definitive agreement to purchase GeoPhy, a leading commercial real estate technology company. GeoPhy’s data analytics and development capabilities will significantly accelerate the growth of Walker & Dunlop’s lending, brokerage and emerging businesses, including Apprise, its technology-enabled appraisal business and low-balance lending platform (SBL). GeoPhy CEO and co-founder Teun van den Dries will continue to lead the GeoPhy team and assume leadership of the Apprise and SBL businesses while supporting continued innovation within Walker & Dunlop.

transaction details

Under the terms of the purchase agreement, Walker & Dunlop will purchase GeoPhy for $85 million in cash to be paid at closing with an additional earnout potential of $205 million structured to directly align with targets. of Walker & Dunlop’s Drive to ’25 surrounding growth in valuation revenue, SBL volumes and mortgage banking earnings, as detailed below:

Low Balance Loans

Mortgage Bank Gains (MBG) 2021: $29 million

The objective of the MBGs is to reach the low end of the price supplements: 61 million dollars

The objective of the MBG is to reach a maximum price supplement: 175 million dollars

2021 origination volume: $515 million

Origination volume target to reach the low end of earn-outs: $1.75 billion

Origination volume target to reach a maximum earn-out: $5 billion

Maximum earn-out potential: $155 million

The earn-out opportunity is structured in four phases. Part of the earn-out payment can be earned if the specified objective in a phase is achieved.

Full earn-out potential requires achievement of all volume phases and MBG milestones by 2025. Earn-out is measured and paid annually.

Inform

2021 revenue: $9 million

Revenue target to reach the low end of earn-outs: $30 million

Revenue target to reach the maximum earnout: $75 million

Maximum earn-out potential: $50 million

KEY QUOTES:

“This acquisition is a game-changing investment for Walker & Dunlop, as it significantly accelerates the growth of our technology capabilities in two market areas where we have the ability to disrupt the commercial real estate services industry. As our current JV partner in Apprise, we know the GeoPhy team and their capabilities well. Actionable technology – which makes our bankers and brokers more insightful and capable – is what has set Walker & Dunlop apart, and the acquisition of GeoPhy immediately enhances our capabilities.

“GeoPhy is the largest technology investment we have made and is accelerating the realization of our Drive to ’25 strategy to use technology to grow our existing lending and brokerage businesses at scale, as well as transform the real estate services landscape. by developing technology companies that will be faster, better and cheaper than the competition. We are thrilled to bring Teun, his visionary leadership and fantastic team to W&D.

— Willy Walker, President and CEO of Walker & Dunlop

“GeoPhy has earned a reputation for its unparalleled capabilities in data science and predictive modeling, which provide our commercial real estate clients with unparalleled efficiency and insights. We are delighted to bring our industry experience and knowledge to Walker & Dunlop to propel the growth of their lending, brokerage and emerging businesses. As a combined company, we have the scale, resources and expertise to truly differentiate Walker & Dunlop’s services in the marketplace. We know W&D, we know the value of their brand and their platform, and we expect this acquisition to be a fantastic success.

— Teun van den Dries, CEO and co-founder of GeoPhy

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.