Walker Private Lending: New option keeping multifamily investors in the market

Rising interest rate hikes, inflation, and market uncertainty can seemingly tempt borrowers to sit on the sidelines until conditions improve. Turbulent markets also limit financing options, as many lenders and capital sources become cautious and pull back on financing.

But the business of real estate investing never stops. New acquisition opportunities arise as distressed owners are forced to sell, cap rates settle to more conservative levels, and the market shifts in the buyer’s favor. All things considered, now is the time to seek new investment opportunities. In fact, Warren Buffet once offered the timeless advice that it is wise for investors to be, “…fearful when others are greedy, and greedy when others are fearful.”

Despite this, the availability of capital — or lack thereof — has historically limited investor ability to take advantage of this phase of the market cycle. Reliable financing options that endure through both up markets and down cycles are few and far between.

That’s just one reason why Walker & Dunlop and Kayne Anderson Real Estate have joined forces to launch Walker Private Lending — a non-recourse loan program promising dependability and certainty of execution in any phase of the market lifecycle. With a focus on full-term interest-only lending, Walker Private Lending helps investors achieve more loan proceeds and increase cash flow for loans starting at $2 million.

The new partnership with Kayne Anderson expands Walker & Dunlop’s direct lending capabilities and is designed to complement its existing Fannie Mae and Freddie Mac offerings.

Are Walker Private Lending’s interest-only loans right for you?

For multifamily investors, it’s all about having more options. We’re going to cover:

• Nuances of Walker Private Lending’s interest-only program
• A breakdown of its benefits
• Insights from our dedicated team of experts
• A recently closed transaction case study

Walker Private Lending’s interest-only SBL loans at a glance

For multifamily investors, it’s all about having more options. Walker Private Lending’s interest-only loans are ideal for investors looking to maximize cash flow on stabilized multifamily properties of 5+ units.

Breakdown of benefits

Certainty of execution: Whether you are refinancing an existing loan or looking to finance an acquisition, certainty of execution is key. As the originator, underwriter, closer, and servicer of all Walker Private Lending loans, Walker & Dunlop is your partner from quote to close and beyond — promising not only certainty of closing, but also certainty of the terms you can expect at closing.

Higher proceeds: When compared to a conventional loan constrained by an amortizing debt service coverage requirement, our proprietary program’s interest-only loans put more emphasis on debt yields and support a loan amount 5%–8% higher on average — meaning more proceeds at closing.

Higher cash flow: Excluding principal from your monthly loan payment means a lower monthly payment amount and higher net cash flow. Those monthly savings can instead be used to reinvest capital into your property in a meaningful way, such as funding improvements or offset unforeseen expenses.

Flexible prepayment: Walker Private Lending loans offer a variety of flexible prepayment options including fixed percentage, declining prepayment structures. Prepayment flexibility gives investors the advantage of knowing what their prepayment premium will be at any given time should they wish to sell or refinance before the end of their loan term and often results in a lower prepayment premium relative to yield-focused structures, which fluctuate with the market.

Walker Private Lending case study: MQ Apartments refinancing

The utility of interest-only loans in the current market isn’t just theoretical. Our team has already been resolving borrower challenges from coast-to-coast with the new product.

The opportunity

Managing Director Jared Sobel recalled how the sponsor first contacted him in 2020 — a year with its own set of formidable challenges. “The goal was to finance the acquisition of a 92-unit multifamily asset in Fuquay-Varina, North Carolina, a vibrant community whose population had more than doubled over the past 10 years,” Sobel said.

“After the COVID-19 pandemic hit, lenders tightened their debt service coverage ratio requirements, and the borrower was unable to secure conventional financing,” Sobel said. Ultimately, after shopping around for capital, the sponsor was able to secure financing from the seller.

Fast forward to 2022. The sponsor needed to refinance their existing loan with the goal of $9.8 million in refinancing. But Sobel and the sponsor now faced a new obstacle: rising Treasury rates. “Traditional financing with amortizing debt coverage constraints led to insufficient proceeds by over a million dollars, we needed another solution,” Sobel said.

Solution

Fortunately, Sobel had a new product to present to the client through Walker Private Lending. It was an interest-only, fixed-rate loan with the advantages of a non-recourse product and flexible prepayment.

“The client was intrigued, and I was very excited about the product as well, as I don’t believe there’s anything quite like it on the market,”

Jared Sobel

Managing Director, Small Balance Group//New York, NY

We believed in the property, and this further supported our efforts to get aggressive on the credit.”

Results

With Walker Private Lending, refinancing for this asset resulted in an expedited closing — under 45 days — and funding proceeds over its original goal of $9.8 million. The sponsor will now benefit from a five years fixed-rate, interest-only loan providing the sponsor with extra cash flow for operations, improvements, and enhancements.

“It was great to see this deal come full circle,” Sobel said.

“The business is evolving more than ever today,” he said about the current lending environment. While he’s still a big advocate for agency financing — especially with Walker & Dunlop, a top ranked Fannie and Freddie lender in the nation — he also recognizes the value of expanding one’s options and having a plan B ready when necessary.

“This product is intended to complement agency financing, not compete with it. Agency lenders must have other capital to stand out in this highly competitive space.” Walker Private Lending fills that role.

Take the next step

Walker Private Lending offers multifamily investors a new financing option — one they can depend on regardless of the market cycle.

For a helpful comparison of financing options in the current market, including Walker Private Lending, check out our Financing Guide.

If you are interested in exploring real-time quotes tailored to your property, request a Quote or reach out directly. We’re here to help you evaluate your options.