WASHINGTON, DC-Walker & Dunlop went public last week, pricing its 10 million shares of common stock at $10 per share--below its expected $14 to $16 per share range. Without a doubt it was a disappointing start for Walker & Dunlop, with some analysts suggesting that it reflects the company’s exposure to a likely change in the Fannie Mae and Freddie Mac operations. Others suggested that it was merely a matter of timing more than anything else.

At the end of the year, investors are mentally and financially done with new issuances--especially of commercial real estate companies, following a year in which REITs have successfully tapped the market for billions. Indeed, the three other IPOs that priced on the same day as Walker & Dunlop also performed below their expected range. 

That all said, Walker & Dunlop’s new public status is clearly a milestone for the commercial real estate industry: the last time a major mortgage company went public was in 2007, with HFF. It will also add new competition to this space, which should benefit borrowers, although clearly not competing originators. Last year was a particularly dismal year, with the sole bright spot being CB Richard Ellis’ posting a profit at a margin of 5.6%. 

With this recent history in mind, Walker & Dunlop’s go-to-market strategy is of particular interest. CEO Willy Walker spoke with GlobeSt.com shortly after the IPO, but had to limit his comments to what the company revealed in the S-1 filed with the Securities and Exchange Commission. Its intent is straightforward--it plans to expand its product profile and strengthen its geographic footprint. Yes, the proceeds were less than expected, Walker said, but the firm will still be able to accomplish its goals. “We weren’t raising capital to buy out private equity, but rather to grow.” 

Walker & Dunlop will focus on growing its mortgage origination business with both Fannie Mae and Freddie Mac. “We see a huge volume of refinancing coming up not only with multifamily properties but in other asset classes as well,” Walker says. The firm plans to acquire origination shops across the country as well as beef up hires within its eight offices. 

Also, Walker says, the firm plans to offer interim loans to multifamily borrowers. There is a demand for this product type because GSE lending is not available to properties that need stabilization. “Our plan is to lend on such an asset for a six- to 12-month period then refinance it with Fannie or Freddie.”

Finally, Walker says, the firm plans to expand into investment sales. “Frankly we are pleased we didn’t have much exposure to it in recent years but we do think it will be good to be able to offer an investment sales group that will tie into our existing business activities.”