Newmark earnings fell 37% in 2020

Capital markets and mortgage banking were bright spots at the end of the year

National /
Feb.February 18, 2021 12:34 PM
Newmark CEO Barry M Gosin (Newmark, Getty)

Newmark CEO Barry M Gosin (Newmark, Getty)

 

If Newmark Group goes ahead with its planned acquisition of Knotel, does that make the commercial real estate services firm a competitor to its landlord clients?

“Just the opposite,” CEO Barry Gosin said during the company’s fourth quarter earnings call Thursday morning, throwing cold water on the notion that buying the struggling short-term office company out of bankruptcy creates a conflict of interest for Newmark. “We see it as a benefit and an opportunity.”

Knotel has struggled to pay rent amid the pandemic and filed for Chapter 11 bankruptcy earlier this month. Newmark, which invested in Knotel in 2018, is providing the company with $20 million in debtor-in-possession financing and plans to acquire the firm out of bankruptcy.

That would put Newmark in the business of renting short-term space to tenants, creating a potential conflict with landlords or other flex-space firms that hire Newmark as a broker.

In fact, Knotel CEO Amol Sarva in 2018 said his company would no longer hire CBRE after the brokerage launched its own short-term office company.

Gosin said he thinks Knotel can be a service to Newmark’s landlords and clients. He added that it was too early to tell if the flex-office provider is a long-term hold for them, or an investment Newmark will look to exit once the company is stabilized.

As for Newmark’s own results, adjusted EBITDA for 2020 fell 36.6 percent year-over-year to $357.7 million. Fourth-quarter earnings fell 34.3 percent from a year earlier to $171.7 million, led by a 45 percent drop in revenues from leasing commissions.

If there was a bright spot, though, it was in the company’s capital markets and mortgage-banking activities. Revenues from capital markets grew more than 15 percent in the fourth quarter, even as the overall market saw a decline. Mortgage-banking revenues doubled in the quarter to $100 million.





    Related Articles

    arrow_forward_ios
    From left: Knotel’s Amol Sarva; Breather’s Bryan Murphy; WeWork’s Sandeep Mathrani and IWG’s Mark Dixon
    Seismic shifts in the flex-office market
    Seismic shifts in the flex-office market
    Photo illustration of Knotel CEO Amol Sarva (Sarva by Sasha Maslov; iStock)
    Knotel CEO says flex-office provider has new funding: report
    Knotel CEO says flex-office provider has new funding: report
    Knotel CEO Amol Sarva (Sasha Maslov, Knotel, iStock)
    Evictions, unpaid vendors and back rent: Lawsuits mounting against Knotel
    Evictions, unpaid vendors and back rent: Lawsuits mounting against Knotel
    Newmark CEO Barry Gosin (Getty, iStock)
    Newmark reports Q3 earnings down 25%
    Newmark reports Q3 earnings down 25%
    Amol Sarva and 110 William Street (Google Maps)
    Knotel wants out at 10 Manhattan locations
    Knotel wants out at 10 Manhattan locations
    Amol Sarva (Photography by Sasha Maslov, iStock)
    Knotel owes more than $1.6M in unpaid rent: Landlords
    Knotel owes more than $1.6M in unpaid rent: Landlords
    (Sarva by Sasha Maslov)
    Knotel seeks to raise $100M in a serious down round
    Knotel seeks to raise $100M in a serious down round
    From left: MetaProp’s Aaron Block, Domio’s Jay Roberts, Homelight’s Drew Uher, FrontDesk’s Jesse DePinto, Serendipity Labs’s John Arenas and Knotel’s Amol Sarva (Linkedin, iStock, Sarva by Sasha Maslov)
    VC or PPP? Some proptech firms got both
    VC or PPP? Some proptech firms got both
    arrow_forward_ios

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

    Loading...