Walker & Dunlop, Inc. Status update

Started 2 to 4 years. That's like judging who won the NDA Championships this past year, based on the halftime score. And it wasn't the New York Knicks, that won based on halftime scores. By the way, take another example: the Philadelphia Eagles were winning with 4.5 minutes to go. Unfortunately, they played 4.5 more minutes. That's why they play the full game. And they lost. And what you've got to do with real estate, I think, is play the whole game. Don't judge it at halftime. Don't judge it at middle of the second quarter. Wait, Keita, let me jump in there for a second.

First of all, so everyone knows, my password to access the online copy, the PDF of this quarter's lending letter, is "gobirds2," which killed me as a Washington Commander spad and not a KBW candidate spad. So I appreciate the fact that you pushed those birds all the time. But the issue here is this: many people's game on a specific asset ends in 2026 or ends in 2027. They have a refinancing coming up. They have an investor who wants to recycle capital. So while I get your analogy of, "Hey, this is an 8 to 10-year game," unfortunately, for many people, they don't have another 4.5 minutes to play as it relates to what to do with a specific asset, whether to sell right now, whether to refi right now, because the clock is running out on it.

And so to them, what do you counsel them to do now that their game is coming to an end on that specific asset?

Don't sell if you don't have to in advantage market. Therefore, talk to you and see about arranging a 2-year or some such product. A 3-year. By the way, and as you know, I'm generally a person that says, "7 to 12-year financing on these things." But I play the slope a little bit here right now. And are you with those as a result of that? Yeah, but you're dead the other way. And better to be dead 2 years from now to be dead today I'd rather have the alive today and the option value of it improves. That's what my advice is.

So you would go on shorter term, floating rate financing, to refi your property today, then go and bring it either pre-faculty or new equity if he can find it and put longer-term financing on. Even though that would obviously cost you something on your ownership of that asset.

Yeah. And by the way, that's very contrary to my normal view.

And you say that because you think rates are coming down?

I don't see them going up. They're at a 25-year high. Let's take a look at inflation where I say that. Inflation for the 30 years average inflation prior to COVID, which totally reshaped the debt, right? That's why I'm taking prior to COVID. It's 2.2% for the things people actually purchase. For the 2 years, prior to the Iranian situation beginning, a situation I mean bombings, et cetera, right, March, okay? For the 2 years prior to that, it was 2.3% for those same items. Okay? We had kind of stabilized. We then had the oil situation. The oil situation has increased inflation. You go from 60 a barrel to 100 a barrel. That's less than 118 a barrel. It's due the mathematics. And you get a higher inflation rate. But it doesn't stay inflated. Why? Let's suppose oil stays at 100, right? Let's just suppose for the next 2 years inflation, excuse me, oil stays at 100. Once the inflationary impact of oil over the next 2 years—if it stays at 100, zero. What will that do to measured inflation? Pull it down. Well. Yeah.

Right? Do you have a way to add them? Do you have a way to add them?

Except for the fact is, as you and I have discussed, of the 41,000 goods that are on the CPI print, 70% of them are impacted by the price of oil. So what you're saying is.

They're not showing there. Those 70% move up, and then once they move up, you're flat.

Then you're flat. That's all I'm saying. I'm just reminding people of mathematics. So even if oil stays up, it will become non-inflationary. Okay? And much less if some reasonable solution occurs and it falls. Now, why is that relevant? What do I think happens when it stops being inflationary? The Fed will at some point lower the rate. And when they lower the short rate, we saw what it looked like in March. Excuse me, in February. You, if you started adding your summary. In February, people thought, "Yep, it's at 4%. Short rate stays the same or falls." And that low rate was at 4. What happens if there's no inflation that the Fed says they have to tame? And I think you go back down. Much less if oil prices fall because that will really cool down inflation. The Fed will declare success, even though they had nothing to do with success because they don't control this rate of our moves. At least last time I checked. I'm not—by the way, did anyone notice? You got a big audience. Did anyone in the audience notice that immediately after the Fed increased rate by 25 bips, the Iranians immediately said, "Oh, we were repudiating any attempt to go nuclear.

We're destroying all our weapons. The Republican Guard is being disbanded. We're opening the Strait of Hormuz, and we're sending lollipops and marshmallows to all Americans' children on their birthdays." Of course not. They have no effect on those things. And yet they pretended as they did. And that has roiled the market. There's no doubt. That is—it's confused me. It's confused everybody. So it is not Rip Van Lincoln.

There's an important thing to make here. You and I have talked about the Federal Deficit for years, and outstanding debt. There is this silly narrative that for the last 40, 50, 60 years, the investor has been asleep to the fact that the deficit occurs, and that the debt outstanding grows, and suddenly, like Rip Van Lincoln, they awakened. And saw the deficit. And scrambled and said, "Oh, we've got to increase the rate we demand." That's silly. If that—it's just intellectually silly. If it were true, why is it that every country has about the same increase in the long way? Rather than being very nuanced, depending on their own fiscal situation. So that's why I want to go short. I don't want to go short. Let me clarify that. I don't—you know what it's like? I don't want to give rent concessions. I really don't. But the reason I give rent concessions is to get me from here to there. So let me— That's the same thing on the people who have to finance.