The Real Deal New York

Newmark’s mortgage business takes a hit following hurricanes

BGC keeps mum on IPO during earnings call
By Rich Bockmann | October 26, 2017 12:40PM

Howard Lutnick and Barry Gosin (Credit: Getty Images)

As it prepares to go public, Newmark Group took a hit on its much-hyped multifamily-financing business during the third quarter due to hurricanes in Texas and Florida.

Berkeley Point Capital, the California-based multifamily-loan originator that Newmark parent company BGC Partners bought in July for $875 million, saw revenue gains from its mortgage business drop by 30.5 percent to $45.5 million during the third quarter from a year earlier, according to BGC’s latest financial statements.

The cause, BGC executives said on the company’s earnings call Thursday morning, was a market-wide decline in multifamily lending due to hurricanes Harvey and Irma.

“[T]his year we have a one-off anomaly which I guess is the combination of hurricanes in both Texas and Florida that effectively softened those two markets,” BGC CEO Howard Lutnick said.

Lutnick, who became a symbolic figure of the 9/11 terror attacks when his company Cantor Fitzgerald lost 658 employees in the north tower of the World Trade Center, expressed sympathy for those affected by the devastating storms.

“I don’t mean to talk about these hurricanes just in business without commenting how difficult that is,” he said. “We are very disappointed in the horrible events that happened to these two communities … but for our business it’s a time issue and nothing else.”

Lutnick announced at the beginning of the call that he would neither discuss Newmark’s initial public offering nor answer questions about it. The company on Monday filed a prospectus with the U.S. Securities and Exchange Commission indicating it proposed to raise $100 million in the offering.

Newmark’s overall revenues were up 6.8 percent year-over-year during the third quarter to $399.4 million.

Since purchasing Newmark Knight Frank in 2011, BGC has gone on to acquire other companies like Berkeley Point and the national multifamily brokerage Apartment Realty Advisors and combined them all under the Newmark Group umbrella.

Lutnick and Newmark, headed by CEO Barry Gosin, see the synergy between Berkeley’s loan-originating business and the company’s multifamily brokerage side as one of its key revenue drivers going forward.