DEC 27, 2013 11:29am ET

Walker & Dunlop Borrows $175M from Wells Fargo

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Walker & Dunlop Inc. is getting a $175 million secured term loan with Wells Fargo as the administrative agent, replacing an $83 million credit facility from Bank of America.

The loan agreement allows for the New York-based commercial mortgage banker to obtain up to three more term loans to an aggregate amount of $60 million.

The term loan has an interest rate of Libor plus 450 basis points. The floor is 100 bps and it amortizes at a rate of 100 bps per year. It was originated at a discount of 100 bps. Additional details about this loan are from an 8-K filing obtained via DisclosureNet.com.

The B of A facility had a balance of $75 million. The first draw of almost $78 million was used to repay that loan and to cover transaction costs. The remaining funds will be used to finance growth opportunities, repurchase common stock and general corporate purposes.

Walker & Dunlop is required to make quarterly payments of $437,500 on the outstanding loan principal starting March 31, 2014. The final principal installment is due on Dec. 20, 2020.

Walker & Dunlop entered into agreements with its warehouse lenders, B of A and PNC Bank NA which allows the commercial mortgage banker to guarantee the first term loan and the additional term loans.

In the first nine months of the year, the company originated $6.1 billion, including $1.8 billion in 3Q13. The third-quarter total was affected by lending caps imposed on Fannie Mae and Freddie Mac by their regulator, the Federal Housing Finance Agency.

Subsequently, Walker & Dunlop created a joint venture to originate and securitize commercial real estate loans.

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