There is tremendous momentum and opportunity ahead for the leading commercial real estate lender, Walker and Dunlop (WD -0.66% ). In this clip from “Real Talk” on Motley Fool live, recorded on March 18Motley Fool contributors Jason Hall and Matt Frankel discuss Walker & Dunlop’s strategic growth strategy and analyze why it’s a valid long-term choice.

Jason Hall: It’s Walker & Dunlop. This is the commercial real estate company. I’m going to share a slide from their latest investor presentation that lays out all the different things they do, Matt. I’m going to read most of this. It is the largest provider of capital to the commercial real estate market. In terms of things like initiating debt, funding loans, that kind of stuff, these guys are very into that for commercial real estate. Matt, you’re gonna have to remind me here, what’s the big agency for commercial loans?

Matt Frankel: You embarrassed me here.

Hall: I do not remember. It’s like the Fannie (FNMA 0.77% ) and freddie (FMCC -0.20% ) agencies for commercial purposes. They are very connected there. However, as we have just spoken with Vacasa (VCSA -7.70% ), It’s everywhere. The opportunity to continue to consolidate this market share is huge. Great brokerage company, selling multi-family properties, appraisal services, they do a lot of research that they sell to their clients. One of the things that really interests me is something that’s a bit newer to them after an acquisition they made last year, investment management services. They have started the primary acquisition of a business that primarily deals with affordable housing investment management, but they are looking to scale it up. I hope I don’t make anyone here dizzy, but I want to find this slide.

Frankel: While you’re looking for it, the big ones are Fannie and Freddie in multifamily and then there’s HUD loans which I think is what you were thinking.

Hall: I think so. Drove to 25, wanted to talk about it. It was their growth strategy. Their goals that they had set for themselves by 2025 as to where they seek to be. This is an aggressively growing company right now in commercial real estate. One of the things that Willy Walker has done so well, I think Willy Walker is the CEO of the company. He is the grandson of one of the company’s founders. I think the company went public under Willy Walker.

Frankel: Yes, 2010.

Hall: He made it public. I think he had been in the business for less, maybe a decade when he took the company public. It’s been a great investment ever since. We talked about it yesterday. Matt, we have a question. I think we were talking about rising interest rates on the Future of FinTech show. This is a company that is well positioned to benefit from rising interest rates due to the escrow services it offers. He has a substantial amount of money in escrow accounts and every 25 basis points, i.e. a quarter of a percentage point, that interest rates go up, is worth around $9 million in income. before tax for the company. We’re going to get a lot of 25 basis point increases over the next two years. These are small levers like that, which will increase its profitability while continuing to consolidate the market. As we continue to see the commercial real estate industry rationalize all properties and opportunities. You think multifamily, which is big business for Walker & Dunlop. We’ve talked a lot about multi-family REITs. Walker & Dunlop is really well positioned for that multi-family financial side, which is such a big player. Matt, anything to add?

Frankel: I think it comes from the same presentation you had. A second. I totally lost my slide but wanted to show the market opportunity here. It’s here.

Hall: You got it?

Frankel: Yeah.

Hall: I get it.

Frankel: Jason beat me to it. This is the market opportunity. You can see that Walker & Dunlop is their service portfolio.

Hall: The small pale blue circle. The little.

Frankel: Law. They’re a mortgage manager and it’s worth mentioning that they’re commercial mortgages, which has more variable rate or variable rate loans, so you don’t have the same prepayment risks than for residential mortgages. People don’t refinance as often with commercial loans. If you scroll down to the next slide, it shows how fragmented the market is. This is the multi-family loan origination market. It is their bread and butter. Walker & Dunlop is No. 1 in this market. They hold 9% of the market.

Hall: 9%.

Frankel: They don’t just lend multifamily accommodation, they have a lot of hotel loans that I know of on the books, for example. On the next slide are non-multifamily loans, 1.6% of the market they hold.

Hall: Tiny.

Frankel: They want to build themselves into the commercial real estate finance company. Yes, the momentum is going in that direction. I think there is still plenty of room for Walker & Dunlop. They are still small cap even as the market leader right now in multifamily origination. They’ve been more than a 10-bagger since the IPO, but they’re still a small cap.

Hall: Honestly, Matt, I tend to focus on evaluation right now. I don’t think it’s a crazy price. It’s a bit above the average rating over three or five years, but I think it’s just in such a good place and it’s so small that it is, considering the opportunity, honestly, it’s probably worth overpaying a bit for if you have that long-term time horizon.