What is the difference between a borrower closing a loan deal with a company like Walker & Dunlop and Berkadia? Why would they choose one over the other? What would W&D have to offer over Berkadia in this scenario?
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What’s the difference between a company hiring JP Morgan or Goldman Sachs to sell itself? What’s the difference between using C&W or JLL to sell your building?
Nothing. Well, theoretically you go with the one who has better capabilities in whatever area you’re looking for advisory on, relationships, etc. But honestly they’re all the same.
Debt capital is basically a commodity, so the differentiation in shops is originator relationships, customer service and certainty of execution
for typical "bank loans" there's probably little differentiation between banks.
in private credit things get more interesting because different lenders will demand different things. One might offer to lend at cheaper rate but have very strict covenants. If management want to avoid this and have more freedom in their capital structure choices, they might opt for a slightly more expensive loan with less covenants.
One word: relationships
Since you specifically touched on Berkadia & Walker & Dunlop and I work in agency space, I will tell you, the top 10 agency lenders (you can google top 10 freddie/fannie lenders 2021, 2020, 2019, etc). all do a shit ton of volume so they have their pulse on the market and clearly know what they are doing. You cannot go wrong with any of them. That being said, there are different product types- conventional, MHC, student housing, senior housing etc. Even if you are a top producer, you most likely are an expert in some product types and not all. A client might also have a relationship with a producer at a particular shop going back decades. If all else is the same, why switch things up as long as the producer is responsive and still treats every deal as the 1st deal. There is also not really any difference in pricing (spread or fees) between the agency shops. Lastly, I will add this- there is something called Performance Differentiation in agency lending. It means while for example Fannie tells us for acquisitions you can only offer 12 months of I/O for tier 2 (1.25/80% LTV) deals, you can increase the I/O (upto full term ) as long as certain Performance Differentiation conditions (exit tests, market, etc) are met. This is how most Fannie deals are done. It is my understanding that different shops get different PD conditions and the top shops based on their volume get rewarded for it. Agency lenders correct me if I am wrong. But that being said, again going back to my comment about the top 10 agency lenders, all of them will most likely have similar PD programs.
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