Debt with discipline: Walker & Dunlop Investment Partners approach to the cycle’s biggest opportunity

Walker & Dunlop Investment Partners' Head of Debt Geoff Smith explains how the firm’s expertise and track record are helping it capitalize on one of the most attractive environments for real estate debt in a generation.

As investors continue to grapple with higher-for-longer interest rates and uncertain market conditions, one corner of the commercial real estate (CRE) world is gaining renewed attention: private debt.

For Geoff Smith, Head of Debt at Walker & Dunlop Investment Partners (WDIP), the case is clear: the combination of massive refinancing demand, lower asset valuations, and improved exit liquidity (via property sales or government-sponsored enterprise (GSE) refinancings) is creating ideal conditions to achieve higher risk-adjusted returns.

"We’re seeing one of the best lending environments of my nearly 30-year career," he says. "It’s comparable to the post-global financial crisis period, but with a much healthier banking system and significantly more liquidity."

Last year and this year represented two of the biggest for CRE debt maturities in modern history, with more than $1.5tn in loans coming due – many of them originated in a vastly different rate environment.

"Coming out of Covid, we were in a low-rate world," says Smith. "Now, rates are higher, asset values have reset, and borrowers are under pressure to refinance. That creates a significant supply of opportunities for lenders who are well-positioned to step in."

At WDIP, that positioning includes a deep pipeline, a national footprint, and a strong data advantage.

With approximately 1,400 employees across 44 US offices, a $135bn servicing book (as of 12/31/2024), and a dedicated investment management team, Walker & Dunlop has visibility into markets and opportunities that others may miss.

"The quality of our data and our ability to quickly assess risk across a very large volume of prospective investment opportunities allow us to be highly selective in choosing where to deploy capital," says Smith.

Diversified growth

WDIP has long focused on multifamily, which Smith describes as the firm’s ‘anchor asset class’. Roughly 75% of the company’s debt investments to date have targeted multifamily bridge loans.

This focus is not only strategic but also grounded in enduring market fundamentals. Multifamily housing continues to deliver strong risk-adjusted returns, supported by persistent demand, generally limited new supply in key areas, and demographic trends that favor renting over homeownership.

"Overall, the US is still undersupplied when it comes to housing," explains Smith. "That’s been true for more than a decade. And where there is a short term over supply, it’s generally in high-growth markets with strong fundamentals. That makes multifamily very resilient – and attractive from a lender’s perspective."

While multifamily remains the core focus, WDIP is actively expanding its presence in the industrial, self-storage, retail, hotel and medical office sectors – areas where the firm also has deep historical experience.

"Industrial is our second-largest exposure, and we see a lot of similar fundamentals as multifamily," says Smith. "Select markets have experienced some short term over supply but overall demand continues to grow, especially as e-commerce reshapes distribution models."

Retail, once considered oversupplied, has become increasingly attractive as well. "New retail development has been minimal for more than a decade and most obsolete properties are being repurposed, so vacancy has improved significantly," he says.

"We’re also seeing retail take on a hybrid role – part store, part fulfilment center – which makes it a more dynamic asset class than many people realize."

Medical office is another standout, particularly due to demographic tailwinds and the shift toward community-based care. "It’s a bit more niche," Smith admits, "but demand for localized healthcare facilities has proven to be steady and durable."

Zero losses

One of WDIP’s key strengths is its local sourcing model, powered by the broader Walker & Dunlop business. Around half of all closed investment opportunities come from within the Walker & Dunlop ecosystem – originated by GSE bankers, capital markets professionals and investment sales teams embedded in the communities where WDIP wants to deploy capital.

"Having exceptional people in local markets who understand the sponsors, the assets, and the nuances is a huge advantage," says Smith. "And on top of that, our proprietary data lets us underwrite those opportunities with speed and precision."

Perhaps most remarkable is WDIP’s track record of zero losses. Over the past eight years, the team has originated nearly $10bn in multifamily loans. It has had just ten defaults across nearly 375 positions – and no realized losses.

"In our bridge loan vehicles some 72% of our positions have been realized.  We’ve had zero losses to date – and we don’t expect that to change," says Smith.

Such a track record is a testament to the firm’s disciplined, data-backed approach and conservative risk management framework.

"We know exactly what’s happening in the markets we’re active in – cap rates, tax rates, rent growth, construction starts and more. That level of insight allows us to choose opportunities that provide relatively modest risk while we maximize returns for our investors."

Smith and his team now have their sights set on future success. "Our goal is to be the go-to provider of bridge and transitional capital across real estate," he adds. "We have the platform, the experience, and the performance history to back it up."

For more information, please get in touch with us at wdip@walkerdunlop.com

^{This presentation is for informational purposes only. Nothing herein is an offer or solicitation for the purchase or sale of any security and may not be relied upon in connection therewith. Investment advisory services offered through Walker & Dunlop Investment Partners, Inc. (WDIP). Private real estate investments involve risk of loss; past performance is not indicative of future results. WDIP investment strategies are available only to sophisticated accredited investors. Zero losses applies to WDIP originated CRE mortgage loans; WDIP has had one investment loss in its equity investment funds. Any opinions and forward-looking statements are that of the presenters are subject to change.}