Walker & Dunlop president to retire

Howard W. Smith III began his 43-year run when interest rates were 17%

Walker & Dunlop's Howard Smith (Getty, Walker & Dunlop)
Walker & Dunlop's Howard Smith (Getty, Walker & Dunlop)

Walker & Dunlop, one of the nation’s biggest real estate finance brokerages, announced Tuesday that its president, Howard Smith, will retire at the start of next year.

Smith has overseen loan origination and investment sales at the publicly traded firm since becoming president in 2015.  Kris Mikkelsen, who leads multifamily investment sales at the firm, and Donald King, vice president of lending, will take up Smith’s responsibilities. They will be tasked with more personnel duties as well.

Smith began his career at Walker & Dunlop in 1980, when interest rates exceeded 17 percent. The first loan he brokered was fixed-rate debt at 14 percent, he said in a phone interview during which he reflected on the state of today’s market.

“Product type is a challenge,” said Smith. “I’m tired of talking about office. That’s all you hear. If people aren’t in the office, where are they? In their apartment. So apartments are doing well.”

“Office is under pressure. Retail is under pressure. Industrial and apartments have been outstanding. Hotels are coming back to normal. In every airport, you can’t get down the concourse and hotels are having significantly better occupancy levels. Hospitality is back.”

His retirement announcement comes as rising interest rates have dampened real estate activity. Revenue at Walker & Dunlop fell 25 percent to $239 million in the first quarter from the same period in 2022 and transaction volume was down 47 percent.

“We’re more valuable in a slower market.”
Howard Smith

In response, the firm reduced its headcount by 8 percent, but Smith’s retirement is unrelated.

With the era of cheap money gone, Smith said, brokerages have a larger role to play in deals.

“Some transactions aren’t going to work, so your book is going to shrink. But now brokers aren’t working on 20 deals a day, they’re working on one,” which makes it easier to attract talent, he said.

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“And without easy money, clients really need us. What are you going to do about maturities coming up? They have to transact, whether through a sale or raising equity — something must happen. We’re more valuable in a slower market to the borrower than when it’s go-go.”

In a statement, he thanked the Walker family for the opportunity to join the firm 43 years ago, when it was much smaller.

Acquiring other brokerages contributed largely to that growth. It purchased Aaron Appel’s AKS Capital Partners in 2020 and David Ash’s Prince Realty Advisors last year, and hired Ash to launch the firm’s investment sales arm in New York.

The company’s market capitalization is now $2.8 billion. Its New York office is at SL Green’s One Vanderbilt in Midtown East.

Despite higher interest rates, multifamily sales volume at the firm was up 2 percent last year while the overall market shrank by 17 percent, according to CEO William Walker, and the company became the largest so-called agency lender.

Being licensed as an agency lender allows a company to originate and service mortgage loans on the behalf of government-sponsored entities such as Fannie Mae and Freddie Mac.

As for his retirement plans, Smith said that “for 43 years, I’ve known who I was and what I was trying to accomplish. Come January 2024, I’ll have to figure out who I want to be for the rest of my life.”

“I’ll never own a boat,” he added. “Not that I don’t like going out on my friends’ boats.”

CORRECTION: A previous version of this story misspelled Kris Mikkelsen’s name.

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