DealmakingM&A / FundingProptech

Walker and Dunlop strike its largest technology acquisition to date

Commercial real estate behemoth Walker and Dunlop (NYSE: WD) announced Monday its plans to acquire property valuation platform GeoPhy for $85 million in cash – its largest technology acquisition to date.

GeoPhy, a real estate appraisal product that taps AI to determine corporate real estate’s true market value, is currently a joint venture partner with Walker and Dunlop’s appraisal business and small balance lending platform, Apprise.

Walker & Dunlop Chairman and CEO Willy Walker called the acqusition a “game-changing investment.“

“It dramatically accelerates the growth of our technology capabilities in two areas of the market where we have the ability to disrupt the commercial real estate services industry,” said Walker.

Under the recent purchase agreement, GeoPhy CEO and co-founder, Teun van den Dries will continue to lead the GeoPhy team and assume leadership of the Apprise and SBL businesses while supporting other Walker and Dunlop avenues.

“As a combined company, we have the scale, resources, and expertise to truly differentiate Walker & Dunlop’s services in the marketplace,” van den Dries said.

Founded in 2016, Delft, Netherlands-based GeoPhy made headlines several years later when it raked in a $33 million Series B round led by London and San Francisco venture capital firm Index Ventures.

Rather than drive an appraisal based on intuition, Geophy’s platform taps a veritable fire hose of public and private data sources ranging from satellite images, sales data, transport links, green spaces, density, crime rates and a database of 150 million+ property records.

According to Walker and Dunlop, Monday’s acquisition plays a vital role in its Drive to ’25 strategy – a financial target roadmap the company made public in 2020. Within that roadmap is a $65B+ annual debt financing volume expectation along with plans of doubling its leadership diversification and reducing carbon emissions.

Fourth quarter earnings showed the commercial real estate financier reported record total revenues of $407.2 million in the fourth quarter of 2021, increasing 16% year over year. Total transaction volume in Q4 also hit a record $27.1 billion, up 91% from the fourth quarter of 2020.

Meanwhile, GSE debt financing volumes decreased by 37% year over year, likely driven by an overall decrease in GSE lending activity in the market.

With the acquisition of GeoPhy, Walker and Dunlop expect an additional $205 million of cash earn-out potential for its appraisal revenues, SBL volumes and mortgage banking gains.

The transaction is expected to close during the first quarter of 2022.

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