Lutnick proposes new property derivatives system at Newmark

New York /
May.May 25, 2011 01:33 PM

As Cantor Fitzgerald CEO Howard Lutnick prepares to finalize the purchase of brokerage Newmark Knight Frank, he is also seeking out ways in which he can use his knowledge of bond trading to gain advantage in the real estate game. According to the Wall Street Journal, Lutnick is considering the possibilities for developing a market in property derivatives pegged to rents as a means for landlords and tenants to hedge against surprise market volatility.

“You can hedge orange juice and you can hedge corn,” Lutnick said, “but real estate you can’t. I think property derivatives will become a common part of tenants’ and landords’ transactions in commercial real estate.”


The Real Deal
reported last month that BGC Partners, owner of Cantor, had agreed to purchase the firm for an undisclosed price.

Some are not convinced that Lutnick’s system would work. The pricing in the office market, they say, is more amorphous than other markets and it may be harder to attach derivatives. “I think it will certainly be a tough sell,” said Gary Rosenberg, a New York-based real estate attorney.

Lutnick points out that BCG Partners has pioneered advances in information technology and that expertise may enable Newmark to pinpoint metrics such as market rents for the purposes of settling derivatives contracts.

“I think it will be an eye-opener to our clients,” he predicted. [WSJ]


Related Articles

arrow_forward_ios
(iStock)
These were Manhattan’s best office submarkets in Q4
These were Manhattan’s best office submarkets in Q4
Newmark CEO Barry M Gosin (Newmark, Getty)
Newmark earnings fell 37% in 2020
Newmark earnings fell 37% in 2020
Cantor Fitzgerald CEO Howard Lutnick and View CEO Rao Mulpuri (Getty; iStock; View)
Howard Lutnick’s SPAC is taking smart-glass company public
Howard Lutnick’s SPAC is taking smart-glass company public
Newmark CEO Barry Gosin (Getty, iStock)
Newmark reports Q3 earnings down 25%
Newmark reports Q3 earnings down 25%
Paul Vanderslice (Linkedin)
CMBS vet Paul Vanderslice exits CCRE
CMBS vet Paul Vanderslice exits CCRE
Director of Research & Analytics for CBRE Tri-State Nicole LaRusso, Vice Chairman & Director at Savills David Goldstein, and President of Newmark Knight Frank's Tri-State region David Falk
“For years we all laughed at them”: office brokers warm to virtual tours
“For years we all laughed at them”: office brokers warm to virtual tours
Director of Research & Analytics for CBRE Tri-State Nicole LaRusso, Vice Chairman & Director at Savills David Goldstein, and President of Newmark Knight Frank's Tri-State region David Falk
How to open up our offices on tonight’s TRD Talk
How to open up our offices on tonight’s TRD Talk
TSCG and SCG Retail's David Firestein, Meridien Retail Leasing's James Famularo and Newmark Knight Frank's Jeffrey Roseman
How to restart retail on today’s TRD Talk
How to restart retail on today’s TRD Talk
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...