Good day, and welcome to the Second Quarter 2025 Walker & Dunlop, Incorporated Earnings Call. Today's conference is being recorded at this time. I would like to turn the conference over to Kelsey Duffey. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining Walker & Dunlop's Second Quarter 2025 Earnings Call. I have with me this morning our Chairman and CEO, Willy Walker; and our CFO, Greg Florkowski. This call is being webcast live on our website, and a recording will be available later today. Both our earnings press release and website provide details on accessing the archived webcast. This morning, we posted our earnings release and presentation to the Investor Relations section of our website, www.walkerdunlop.com. These slides serve as a reference point for some of what Willy and Greg will touch on during the call. Please also note that we will reference the non-GAAP financial metrics, adjusted EBITDA and adjusted core EPS during the course of this call. Please refer to the appendix of the earnings presentation for a reconciliation of these non-GAAP financial metrics. Investors are urged to carefully read the forward-looking statements language in our earnings release. Statements made on this call, which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe our current expectations, and actual results may differ materially. Walker & Dunlop is under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, and we expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC. I will now turn the call over to Willy.

Thank you, Kelsey, and good morning, everyone. In our last earnings call at the beginning of May, we mentioned that our April deal volume was very strong even with the dramatic movement in rates and market volatility post Liberation Day. As our Q2 financial results show, transaction volumes remained strong throughout the quarter and are continuing into Q3. Commercial real estate and the investing and financing activities that drive it forward is showing signs of entering its next cycle. I spoke at a conference in Chicago in May. The CEO of one of Walker & Dunlop's competitor firms spoke before me and said that the next CRA cycle would begin on July 8, 2025, as soon as the new tariff deals were negotiated. I disagreed and said it was highly unlikely all the trade deals will be negotiated by July 8. And second, even if the Trump administration was wildly successful negotiating trade deals that nobody should think trade is the last macroeconomic issue President Trump is going to try to impact. And guess what, we were both right. The volatility we have seen in the market since the advent of the second Trump administration is likely to be with us for the next 3.5 years. And at the same time, the next CRE cycle appears to be underway. This cycle is underway not due to significantly lower rates, higher asset prices nor macroeconomic tranquility. It has begun because after 3 years of dramatically lower sales and financing activity, it is time to recycle capital to investors, refinance assets and deploy capital that was raised prior to the Great Tightening. As you can see on Slide 3, there is over $640 billion of equity capital in real estate funds that has been invested for over 5 years and needs to…

Thank you, Willie, and good morning, everyone. The second quarter marked a significant inflection point for commercial real estate transaction activity and our financial performance as we saw meaningful stabilization in long-term interest rates and transaction volume rebounded. Our team took advantage, closing $14 billion in total transaction volume, up 65% year-over-year. This strong performance puts us back on track towards achieving our 2025 operational and financial goals. GAAP EPS expanded 48% this quarter to $0.99 per share, largely in line with transaction volume growth and specifically by a significant increase in originated MSR revenues. Those newly originated MSRs represent long-term contractual revenues that will boost our cash earnings over the next 5 to 10 years. As expected, growth in our adjusted metrics continues to lag GAAP earnings growth due to lower short-term interest rates year-over- year that is causing our placement fee earnings to decline compared to last year. Turning to our segment performance. Our Capital Markets segment built significant momentum in Q2. We closed 68% more debt financing volume and 51% more property sales volume than the prior year. As a result, segment revenues grew 46% year-over- year, as shown on Slide 8. Net income grew 200% to $33 million while adjusted EBITDA also improved 116% to $1.3 million. As expected, under our variable compensation model, personnel expense for the segment grew 26% over the prior year on the strength of our transaction volumes this quarter. Importantly, the momentum in our GSE volumes is promising, and we anticipate both Fannie Mae and Freddie Mac to remain active in the coming months, and that will continue to benefit our MSR and origination fee revenues the rest of the year. During Q2, we executed several larger deals and also saw an increase in shorter duration deals to take advantage of…

Thank you, Greg. As the market recovers and expands into the next cycle, it is clear that the breadth of the Walker & Dunlop platform positions us very well to win business, gain market share and continue growing. As shown on Slide 14, in our first quarter earnings call, we outlined several goals across the business that will allow us to continue meeting our clients' needs and achieve the financial targets that Greg just ran through. One important driver of our success in 2025 will be our ability to achieve at least an average of $200 million of transaction volume per banker or broker. As you can see on Slide 15, we ended 2024 with an average production per banker/broker of $172 million. And with 222 bankers and brokers on the platform today, our annualized year-to-date volume puts us at $189 million per banker/broker. On a trailing 12-month basis, our production for banker/broker is at $206 million, giving us line of sight to exceed the annual target we set last year as we take advantage of a reflating market. It is important to remember that those averages are over an expanding platform with key hires over the past 8 months to expand our New York Capital Markets team, add a very significant affordable finance team, added a hospitality investment sales business, launched the data center financing business and opened a new office in London, England. I visited our new London office in June and cannot be more excited about the growth opportunity for us in the European and Middle Eastern markets. It is our expectation that as this next cycle gains momentum, we will look to add additional banking and brokerage talent in our existing and emerging business verticals. Over the past 3 years of the Great Tightening, our scaled…

[Operator Instructions] And our first question is going to come from Jade Rahmani from KBW.

This quarter's growth rates were staggering in transaction volumes. So great job to the team. In light of that, can you share at all how the pipeline looks so far for the third quarter and put any ranges perhaps around the kind of growth rates year-on-year that might be reasonable for the second half?

As I said at the very top, the Q3 pipeline looks great. We are seeing sustained velocity, if you will, in the market. And as my comments, I hope, showed, we're seeing -- if you back up a year, Jade, you recall Q3 of 2024 when we had a surge in transaction volumes and then the yield curve inverted and long-term rates went up and transaction volumes sort of tailed off towards the end of the year. We're seeing nothing right now that would lead us to believe that the volumes we and our competitor firms saw in Q2 are going to be a quarterly phenomenon. As I tried to underscore, it clearly appears that capital needs to both be recycled back to investors as well as deployed into the market. And with rates where they sit today, clients have gone from a wait-and-see attitude to let's-get-it-done attitude. And then as it relates to any additional guidance, I think Greg walked through clearly what we're seeing as it relates to the guidance we gave at the beginning of the year, the fact that Q2 gets us back on track to achieving that guidance. And I think that's -- Greg, if you want to jump in with anything else, feel free to, but I think that's about all we should go and [indiscernible] .

Yes, you said it well. Yes. And we've also given the guidepost, Jade for what we're expecting in terms of banker/broker volume and things of that nature. So as Willy said, we're feeling good about our path to not only achieving but exceeding some of those. So that should give you some sense on a full year basis, what we're expecting.

On the Europe initiative, which I think is pretty interesting, can you comment as to what the strategy is? Is it to bring that capital into U.S. deals? Or is it to build an operation to do multifamily or perhaps other asset classes there?

So as I mentioned, Jade, I was over in London in June and extremely pleased with both the team we've put together as well as what I would call the market reception. I, back before Walker & Dunlop, opened up the European operations of a U.S. multinational sort of similar to how W&D is going about doing this. And I recall, clearly, when I would show up for meetings, people would be like, who are you and where do you come from? And we did a lot of sort of brand building as we launched those operations in Europe. I was both extremely pleased -- and to be blunt, somewhat surprised at the strength of the W&D brand meeting after meeting of we work with you in the United States, can't wait to work with you here in the U.K. and across Europe. And we have a team that's very focused on the European market. Clearly, the European market has had a, if you will, a very good run over the beginning part of 2025 as it relates to a market that people want to invest in. So we feel good about investment flows into the European market and our transaction volumes over there beginning and then growing. At the same time, the U.S. economy continues to crank along. And although the trade war and trade policies have been confusing to investors, and we have clearly seen a slowdown in foreign direct investment over the first 2 quarters of the year, we're in this for a long, long period of time. we're not thinking about a quarter, a year or even 5 years. We're in Europe to continue to expand Walker & Dunlop, expand this brand and this company around the globe. And after my previous -- almost all my work experience before joining Walker & Dunlop being in Latin America and being in Europe, after 22 years at Walker & Dunlop focusing solely on the United States to be blunt about it, it's pretty fun for me to go back to some of the markets that I was in prior to joining Walker & Dunlop.

[Operator Instructions] It appears we have no further questions in the queue at this time. I'll now turn it back over to William Walker, please -- for additional or closing remarks.

Thanks very much. I would reiterate my thanks to the team on a fantastic Q2. Thanks, everyone, for joining us this morning, and I hope everyone has a great day.

And this concludes today's call. Thank you for your participation. You may now disconnect.