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Walker & Dunlop, Inc. (WD - Free Report) has successfully closed a $696-million deal to acquire tax credit syndicators and affordable housing developers, Alliant Capital, Ltd. and its affiliates, Alliant Strategic Investments and ADC Communities.
Alliant is a privately-held alternative investment manager that focuses on the affordable housing sector through low-income housing tax credit ("LIHTC") syndication, community preservation fund management and joint-venture development.
Per Walker & Dunlop management, the acquisition of the sixth-largest LIHTC syndicator in the nation by the largest provider of capital to the multifamily industry will lead to the creation of an affordable housing financing platform with very few peers in that space. The company noted, “Walker & Dunlop is now a big part of the solution to build and maintain affordable and workforce housing across America."
Alliant’s founder and CEO, Shawn Horwitz, said, "Walker & Dunlop's people, brand, and innovative technology will benefit every area of Alliant's business. Bringing Walker's and Alliant's capabilities under one roof creates comprehensive solutions that will benefit our clients and investors. We are thrilled to be part of Walker & Dunlop and bring our combined scale to the market every day."
Apart from steering Walker & Dunlop deeper into the affordable housing domain, Alliant’s competencies, assets and personnel will boost WD’s goals of furthering debt financing, property brokerage and assets under management (AUM) as underlined in its Drive to ’25 strategic plan.
Deal Details
Per the purchase agreement terms announced with the acquisition in August, Walker & Dunlop was anticipated to acquire Alliant for an enterprise value of $696 million. Of this, Walker & Dunlop shelled out $351 million of cash through a combination of corporate cash on hand and proceeds from the expected term debt refinancing. It funded $90 million through common stock.
Transaction Rationale
The buyout complements Walker & Dunlop's foothold in the affordable debt-financing space by leveraging Alliant's scaled affordable housing portfolio. It also offers significant financing and sales scope.
Per the release during the buyout announcement, the acquisition was projected to be immediately accretive to key financial metrics and offer notable financial synergies. It is expected to increase 2022 revenues by $90-$100 million, earnings per share of 45-60 cents, and adjusted EBITDA of $60 million.
It will increase Walker & Dunlop's AUM to $16 million from $2 billion, facilitating the company to exceed its 2025 financial goal of $10 billion. The acquisition will also enable the company to achieve other 2025 financial targets of revenue growth to $2 billion and $60 billion of targeted affordable housing origination volume.
Significant asset-management fees generated from higher AUM balance will drive long-term, predictable and stable cash flows.
Bottom Line
Given the highly fragmented LIHTC market, the buyout will likely enable Walker & Dunlop to capitalize on Alliant’s market share and industry fundamentals.
In the past year, shares of Walker & Dunlop have jumped 58.3% against the industry’s decline of 39.5%.
Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.
In early December, United Bankshares, Inc. (UBSI - Free Report) announced the completion of its merger deal with Community Bankers Trust Corporation.
The buyout has brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and best-performing regional banking companies in the Mid-Atlantic and Southeast. The combined entity will now operate across 250 locations in opportunistic markets in the United States.
First Financial Bancorp. (FFBC - Free Report) agreed to acquire the fourth-largest independent equipment financing platform in the United States, Summit Funding Group. The deal completion, subject to customary closing conditions, is expected in the fourth quarter of this year.
The acquisition of Summit is expected to be accretive to First Financial’s earnings per share by mid-single digits in 2023 (the first-year post-integration). Thereafter, on a run-rate basis, the deal is expected to be accretive to First Financial’s earnings by low-double digits.
U.S. Bancorp’s (USB - Free Report) primary subsidiary U.S. Bank completed the deal to acquire PFM Asset Management LLC. The acquisition was carried out through U.S. Bancorp Asset Management. The deal to acquire PFM Asset Management was announced this July.
U.S. Bancorp’s several acquisitions over the past years have enabled the company to foray into untapped markets and fortify its footprint in existing geographies.
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Walker & Dunlop (WD) Buys Alliant, Boosts Housing Financing
Walker & Dunlop, Inc. (WD - Free Report) has successfully closed a $696-million deal to acquire tax credit syndicators and affordable housing developers, Alliant Capital, Ltd. and its affiliates, Alliant Strategic Investments and ADC Communities.
Alliant is a privately-held alternative investment manager that focuses on the affordable housing sector through low-income housing tax credit ("LIHTC") syndication, community preservation fund management and joint-venture development.
Per Walker & Dunlop management, the acquisition of the sixth-largest LIHTC syndicator in the nation by the largest provider of capital to the multifamily industry will lead to the creation of an affordable housing financing platform with very few peers in that space. The company noted, “Walker & Dunlop is now a big part of the solution to build and maintain affordable and workforce housing across America."
Alliant’s founder and CEO, Shawn Horwitz, said, "Walker & Dunlop's people, brand, and innovative technology will benefit every area of Alliant's business. Bringing Walker's and Alliant's capabilities under one roof creates comprehensive solutions that will benefit our clients and investors. We are thrilled to be part of Walker & Dunlop and bring our combined scale to the market every day."
Apart from steering Walker & Dunlop deeper into the affordable housing domain, Alliant’s competencies, assets and personnel will boost WD’s goals of furthering debt financing, property brokerage and assets under management (AUM) as underlined in its Drive to ’25 strategic plan.
Deal Details
Per the purchase agreement terms announced with the acquisition in August, Walker & Dunlop was anticipated to acquire Alliant for an enterprise value of $696 million. Of this, Walker & Dunlop shelled out $351 million of cash through a combination of corporate cash on hand and proceeds from the expected term debt refinancing. It funded $90 million through common stock.
Transaction Rationale
The buyout complements Walker & Dunlop's foothold in the affordable debt-financing space by leveraging Alliant's scaled affordable housing portfolio. It also offers significant financing and sales scope.
Per the release during the buyout announcement, the acquisition was projected to be immediately accretive to key financial metrics and offer notable financial synergies. It is expected to increase 2022 revenues by $90-$100 million, earnings per share of 45-60 cents, and adjusted EBITDA of $60 million.
It will increase Walker & Dunlop's AUM to $16 million from $2 billion, facilitating the company to exceed its 2025 financial goal of $10 billion. The acquisition will also enable the company to achieve other 2025 financial targets of revenue growth to $2 billion and $60 billion of targeted affordable housing origination volume.
Significant asset-management fees generated from higher AUM balance will drive long-term, predictable and stable cash flows.
Bottom Line
Given the highly fragmented LIHTC market, the buyout will likely enable Walker & Dunlop to capitalize on Alliant’s market share and industry fundamentals.
In the past year, shares of Walker & Dunlop have jumped 58.3% against the industry’s decline of 39.5%.
Currently, Walker & Dunlop carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Efforts by Other Firms
Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.
In early December, United Bankshares, Inc. (UBSI - Free Report) announced the completion of its merger deal with Community Bankers Trust Corporation.
The buyout has brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and best-performing regional banking companies in the Mid-Atlantic and Southeast. The combined entity will now operate across 250 locations in opportunistic markets in the United States.
First Financial Bancorp. (FFBC - Free Report) agreed to acquire the fourth-largest independent equipment financing platform in the United States, Summit Funding Group. The deal completion, subject to customary closing conditions, is expected in the fourth quarter of this year.
The acquisition of Summit is expected to be accretive to First Financial’s earnings per share by mid-single digits in 2023 (the first-year post-integration). Thereafter, on a run-rate basis, the deal is expected to be accretive to First Financial’s earnings by low-double digits.
U.S. Bancorp’s (USB - Free Report) primary subsidiary U.S. Bank completed the deal to acquire PFM Asset Management LLC. The acquisition was carried out through U.S. Bancorp Asset Management. The deal to acquire PFM Asset Management was announced this July.
U.S. Bancorp’s several acquisitions over the past years have enabled the company to foray into untapped markets and fortify its footprint in existing geographies.