Multifamily lenders are increasingly partnering with, acquiring, or growing their own investment sales platforms to drive origination volume.
In the past month, Walker & Dunlop entered into a strategic alliance with broker Cushman & Wakefield, while Berkadia chose to launch its own investment sales division, tapping a Cushman vet to lead the platform. Meanwhile, CWCapital's acquisition of Rockwood Real Estate Advisors brought an investment sales platform to the lender's stable.
These strategic moves follow similar arrangements, such as the joint venture between CWCapital and Apartment Realty Advisors, and that between Wells Fargo and Hendricks & Partners.
“In the last cycle, the firms that had investment sales tied into financing did a lot of business and took deals off the street before they were out to bid,” says Willy Walker, president and CEO of Bethesda, Md.-based Walker & Dunlop. “The opportunity to partner with a firm as big and reputable as Cushman—from a capital standpoint, from a speed-to-market standpoint—was just overwhelmingly compelling.”
Walker & Dunlop’s alliance with Cushman & Wakefield will focus on providing agency debt—Fannie Mae, Freddie Mac and FHA programs—to clients of the brokerage. Cushman & Wakefield already has a debt-financing arm, Sonnenblick Goldman, which looks at life insurance company and CMBS executions.
Walker & Dunlop weighed the options of building its own versus acquiring an investment sales operation. But the company found that partnering with the brokerage powerhouse made more economic sense, and also provided a much quicker economy of scale. Unlike building a platform, or integrating an acquisition, the partnership can hit the ground running from day one.
“You would’ve thought that if you owned it, the returns would be hugely higher, but as we looked at our options, we realized that wasn’t the case,” Walker says. “So the partner route was faster and had a much better IRR.”
Berkadia Investment Client Services
Berkadia’s Investment Client Services, headquartered in Dallas, is led by Stephannie Mower, who most recently headed the Dallas Capital Markets division for Cushman & Wakefield of Texas. The platform will have a national scope, and Berkadia is looking to aggressively grow it through regional offices across the country.
The former Capmark, which was purchased by Berkshire Hathaway and Leucadia National in December 2009, hopes the move will grow its origination volume while offering its clients a greater depth of expertise.
“Often, owners want their advisors to consider both a sale and recapitalization of their assets; they want to look at all their options,” says John Cannon, executive vice president at Horsham, Pa.-based Berkadia. “Buyers want to know what kind of financing they’re able to get, and sellers want the assurance that mortgage financing is available.”
Berkadia considered striking up a joint venture or alliance, but in the end, found that building its own investment sales division made the most sense. “Some of my peers have tried to create alliances or some kind of fee-sharing arrangements with third parties, and it has not proven to be terribly successful,” Cannon says. “Clients don’t want you to say you have an alliance with another firm—they want you to solve their issues within your own walls.”
For both Berkadia and Walker & Dunlop, this is just the latest in a series of moves intended to diversify and expand lender offerings.
Earlier this year, Berkadia launched a few proprietary debt programs, including a CMBS platform and two floating-rate bridge loan executions, one short-term (a year or less) and the other longer term (two years plus a one-year extension). The company also recently hired Andrew Orloff to lead its life insurance company correspondent division.
Like Berkadia, Walker & Dunlop is also looking to grow its life insurance capabilities, and is currently mulling a few acquisition opportunities to bring more mortgage origination talent in house. The company, which went public last December, also launched a new CMBS platform in the fall.