Lutnick’s BGC Partners plans IPO for Newmark

Barry Gosin outlines aggressive growth strategy for '17

Barry Gosin and Howard Lutnick
Barry Gosin and Howard Lutnick

Howard Lutnick’s BGC Partners, the parent company of Newmark Grubb Knight Frank, took the first step Thursday toward spinning the brokerage off into a separate company through an initial public offering.

The company issued a statement Thursday saying it had confidentially submitted a draft registration statement relating to the IPO with the Securities and Exchange Commission.

“Earlier today, we issued a press release relating to the confidential filing of our registration statement for the proposed IPO of Newmark, our real estate services business,” Lutnick said in a statement. “Since we are currently in the registration process, we are subject to the restrictions under the securities laws on communications relating to the offering.”

The press release noted that BGC may distribute the shares it will hold in the new public company to its shareholders. BGC stock rose 4.4 percent following the news.

BGC’s earnings for 2016 show that Newmark’s capital markets group generated $344.2 million in revenues last year, up 28 percent from 2015. Revenues for leasing services, however, declined 11 percent year-over-year to $144.5 million.

In New York City, Newmark came in 18th on The Real Deal’s recent ranking of top investment-sales firms for 2016, with $525 million worth of transactions, down 11 percent year-over-year. Those deals, TRD estimated, led to about $7 million in commissions.

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A representative for Newmark was not immediately available for comment, but company CEO Barry Gosin said in a statement released with the annual earnings that the brokerage expects low interest rates and steady GDP growth to provide a boost in 2017.

“As our recently hired brokers ramp up their productivity, and as we continue to execute our strategy, we expect to grow our revenues and profits faster than the overall industry going forward,” Gosin said.

It’s not clear what an IPO would mean for Newmark in New York City, but if rival brokerage Cushman & Wakefield’s plans are any indication, the company could make some big moves to make it more attractive to investors.

Industry observers have speculated Cushman is headed for a public offering ever since it was merged with Chicago-based brokerage DTZ, which is backed by private equity group TPG. The company has tightened its belt through layoffs, but also expanded with the acquisition of Massey Knakal Realty Services and poaching big-time dealmakers Doug Harmon and Adam Spies from Eastdil Secured.

Correction: A previous version of this article incorrectly stated the revenue from Newmark Grubb Knight Frank’s capital markets group in 2016.