Q4 2021 Newmark Group Inc Earnings Call

Speaker 1: definitions of any non-GAAP terms, reconciliation of these items to the corresponding GAAP results, and how, when, and why management uses them. Additional information with respect to our GAAP and non-GAAP results mentioned on today's call.

non-GAAP terms reconciliation of these items to the corresponding GAAP results and how when and why management uses them additional information with respect to our GAAP and non-GAAP results.

Mentioned on today's call.

Is available on our website and in supplemental excel tables in our quarterly financial results presentation any outlook discussed on today's call assumes no material acquisitions share repurchases or meaningful changes in the company's stock price. These expectations are subject to change based on various macroeconomic social political and or other factors, including the COVID-19 .

Speaker 1: is available on our website and in supplemental Excel tables and the quarterly financial results presentation. Any outlook discussed on today's call assumes no material acquisitions, share repurchases, or meaningful changes in the company's stock price. These expectations are subject to change based on various macroeconomic, social, political, and or other factors, including the COVID-19 pandemic.

19 pandemic.

Speaker 1: While our 2025 financial and operational targets do assume acquisitions, they are also subject to change for these same reasons.

While our 2025 financial and operational targets do assume acquisitions. They are also subject to change for these same reasons, none of our targets or goals through 2025 should be considered formal guidance.

Speaker 1: None of our targets or goals through 2025 should be considered formal guidance.

Speaker 1: I also remind you that the information on this call regarding our business that are not historical facts are forward-looking statements within the meaning of Sections 27A, the Securities Act of 1933, as amended, and Section 21E, the Securities Exchange Act of 1934, as amended. Such statements involve...

I'd also remind you that the information on this call regarding our business that are not historical facts are forward looking statements within the meaning of section 27 a.

The Securities Act of 933, as amended and section 20, <unk> The Securities and Exchange Act of 1934 as amended such statements involve risks and uncertainties. These include statements about the effects of the COVID-19 pandemic on the company's business results financial position liquidity outlook, which may constitute forward looking statements.

Speaker 1: These include statements about the effects of the COVID-19 pandemic on the company's business results, financial position, liquidity outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ possibly materially from what is currently expected.

To the risks that actual the actual impact may differ possibly materially from what is currently expected.

Speaker 1: Except as required by law, we take no obligation to update any forward-looking statements. For discussion of additional risks and uncertainties which could cause ACT results to differ from those contained in forward-looking statements,

As required by law, we take no obligation to update any forward looking statements for a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained forward looking statements see our securities and exchange Commission filings, including but not limited to the risk factors set forth in our most recent Form 10-K Form 10-Q and form 8-K filings.

Speaker 1: CR Securities and Exchange Commission filings, including but not limited to the risk factors set forth in our most recent Form 10-K , Form 10-Q .

Speaker 1: form 8K filings. I'm now happy to turn the call over to our host, Barry Goff.

I'm now happy to turn the call over to our host Barry Johnston Chief.

Speaker 1: Chief Executive Officer of Newmark Group, Ing. Good morning, everyone, and thank you all for joining us. With me today are Newmark's Chief Financial Officer, Mike Rispoli, our Chief Revenue Officer, Lou Alvarado, and our Chief Strategy Officer, Jeff Day.

Chief Executive Officer of Newmark Group, Inc.

Good morning, everyone and thank you all for joining US with me today are <unk> Chief Financial Officer microscopy.

<unk> revenue officer, Lou Alvarado, our Chief strategy Officer, Jeff Day.

Speaker 2: Newmark generated record quarterly revenues for the third quarter in a row.

Newmark generated record quarterly revenues for the third quarter in a row as.

Speaker 2: as we continue to gain momentum and increase our market share.

As we continue to gain momentum and increase our market share.

Speaker 2: We also produced record fourth quarter and annual earnings.

We also produced record fourth quarter and annual earnings nearly all our growth was organic due mainly to our prior investments in multifamily commercial mortgage brokerage life science lodging industrial and management services.

Speaker 2: Nearly all our growth was organic, due mainly to our prior investments in multifamily, commercial mortgage brokerage, life science, lodging, industrial and management services.

Speaker 2: As an example of our organic growth, Newmark's 2019 annual revenue per producer was $895,000.

As an example of our organic growth New March 2019 annual revenue per producer was $895000.

Speaker 2: In 2021, this figure exceeded $1.1 million, contributing to a 700 basis point improvement in our full-year adjusted EBITDA margin.

In 2021, and this figure exceeded $1 1 million contributing to a 700 basis point improvement in our full year adjusted EBITDA margin.

Speaker 2: Newmark's revenue growth was led by capital markets, which doubled to a quarterly record of $380 million.

<unk> revenue growth was led by capital markets, which doubled to a quarterly record of $380 million.

Speaker 2: Our record capital markets and origination volumes of $58 billion were up 84%.

Our record capital markets and origination volumes of 58 billion.

We're up 84%.

Speaker 2: from leasing and other commissions were up by 91% and 5% better than the fourth quarter in 2019.

Fees from leasing and other commissions were up by 91% and 5% better than the fourth quarter in 2019.

Speaker 2: Turning to our recurring revenue businesses, management services, servicing fees, and other grew by 53% to an all-time quarterly record of $264 million.

Turning to our recurring revenue businesses.

Management services servicing fees and other grew by 53% to an all time quarterly record of $264 million.

Speaker 2: This growth was led by strong improvements from Global Corporate Services, Valuation Advisory, Servicing, and the Notel Acquisition.

This growth was led by strong improvements from global corporate services valuation and advisory servicing and the <unk> acquisition.

Speaker 2: Our valuation advisory revenues grew by 47% in the full year 2021 to $157 million.

Our valuation and advisory revenues revenues grew by 47% in the full year 2000 $21 million to $157 million.

Speaker 2: Strong growth was organic and driven by our N-Gage technology platform, which significantly increased the productivity of our appraisers.

This strong growth was organic and driven by our engage technology platform, which significantly increased the productivity of our appraisers.

Speaker 2: Newmark remains in a very strong financial position. We remain on track to achieve our 2025 financial target of $900 million of adjusted EBITDA. With that, I'm happy to turn the call over to Mike.

<unk> remains in a very strong financial position, we remain on track to achieve our 2025 financial target of $900 million of adjusted EBITDA with that I'm happy to turn the call over to Mike.

Thank you Barry and good morning.

Speaker 3: Today, Newmark reported its best ever quarterly revenues and earnings.

Nu Mark reported its best ever quarterly revenues and earnings.

Speaker 3: Revenues were $984.5 million, up 63.7%, compared with $601.4 million.

Revenues were $984 5 million up 63, 7% compared with $601 4 million.

Speaker 3: suggested EBITDA was up 108.9% to $225.4 million.

Adjusted EBITDA was up 108, 9% to $225 4 million.

Speaker 3: versus $107.9 million and adjusted EPS was up 132.1% to 65 cents.

Versus $107 $9 million and adjusted EPS was up 132, 1% to 65 cents.

Compared with 28.

Speaker 3: Our adjusted EBITDA margin improved by 495 basis points to 22.9% versus 17.9%.

Our adjusted.

The EBITA margin improved by 495 basis points to 22, 9% versus 17, 9%.

Speaker 3: Consolidated expenses increased by $283.4 million, of which $166.1 million was variable compensation related to growth in commission-based revenue.

Consolidated expenses increased by $283 4 million of which $166 1 million was variable compensation related to growth in commission based revenues.

Speaker 3: $45.3 million was due to higher pass-through expenses.

<unk> $45 3 million was due to higher pass through expenses and the remainder due to higher business activity and the impact of acquisitions.

Speaker 3: and the remainder due to higher business activity and the impact of acquisitions.

Moving to the year end balance sheet.

Speaker 3: we had $564.7 million of liquidity and no net debt.

We had $564 $7 million of liquidity and no net debt.

Speaker 3: Cash flows from operations were $410.2 million, compared with $93.8 million in 2020, and $211.2 million in 2019.

Cash flows from operations were $410 $2 million.

With $93 8 million in 2020, and $211 2 million in 2019.

Before we turn to guidance I would like to review the significant economic impact the NASDAQ asset has provided to our business.

Speaker 3: I would like to review the significant economic impact the NASDAQ asset has provided to our business.

And our 2017 IPO, we expected to receive NASDAQ shares nominally were approximately $846 million.

Speaker 3: Expected to receive NASDAQ shares nominally worth approximately $846 million, payable over 11 years.

Payable over 11 years.

With a significantly lower net present value.

Speaker 3: Now, four years later, we have received $1.5 billion based on yesterday's NASDAQ closing price, including hedging.

Now four years later, we have received $1 5 billion.

Based on yesterday, NASDAQ closing price, including hedging and monetization costs.

Speaker 3: This $1.5 billion has enabled the company to invest in growth, return significant amounts of capital to our shareholders, and maintain our strong balance sheet and liquidity position with no net debt.

This $1 5 billion has enabled the company to invest in growth returned significant amounts of capital to our shareholders and maintain our strong balance sheet and liquidity position with no net debt.

Speaker 3: the compensation committee of our board of directors in consideration of his delivering superior financial results.

The compensation committee of our board of directors in consideration of his delivering superior financial results as well as the value created for the Companys stockholders in connection with structuring hedging and monetizing the NASDAQ shares awarded a onetime bonus payable over four years to our chairman.

Speaker 3: as well as the value created for the company's stockholders in connection with structuring, hedging, and monetizing the NASDAQ shares, awarded a one-time bonus, payable over four years, to our chairman, Howard Lutz.

Howard Lutnick.

Speaker 3: The committee chose to pay cash rather than issue new shares for this bonus in part due to our active buyback program, which totaled over $150 million in the fourth quarter of 2021.

The committee chose to pay cash rather than issue new shares for this bonus in part due to our active buyback program, which totaled over $150 million in the fourth quarter of 2021.

Speaker 3: Howard intends to buy Class A common shares of Newmark in the open market with the after-tax portion of the award he received in 2021.

Howard tends to buy class a common shares of Nu Mark in the open market with the after tax portion of the award we received in 2021.

Speaker 3: The $20 million paid to Howard pursuant to this award in 2021.

The $20 million paid to Howard pursuant to this award in 2021.

Speaker 3: is included in our full-year GAAP and non-GAAP results.

<unk> is included in our full year GAAP and non-GAAP results.

Now moving onto guidance.

Speaker 3: For the full year 2022 compared with 2021, we expect revenues to grow organically between 3% and 7% compared with $2,906,400,000.

For the full year 2022, compared with 2021, we expect revenues to grow organically between 3% and 7% compared with 2 billion $906 4 million.

Speaker 3: We anticipate adjusted EBITDA to increase organically between 4% and 9% versus 597.5%.

We anticipate adjusted EBITDA to increase organically between 4% and 9% versus $597 5 million.

Speaker 3: We expect our adjusted earnings tax rate to be between 17% and 19% compared with 18.9%.

We expect our adjusted earnings tax rate to be between 17% and 19% compared with 18, 9%.

Speaker 3: We continue on our path towards our 2025 goal of $900 million of adjusted EBITDA. Turning to our stock buyback during the year.

We continue on our path towards our 2025 goal of $900 million of adjusted EBITDA.

Turning to our stock buyback during.

During the year, we repurchased $36 7 million shares and units at an average price of $13 53.

Speaker 3: and units at an average price of $13.53.

Speaker 3: Newmark has market-leading revenue, EPS, and adjusted EBITDA.

Nu Mark has market, leading revenue EPS and adjusted EBITDA growth.

Speaker 3: As of yesterday, our forward EV to EBITDA multiple was seven times, as compared to our full-service peers at 10 times. This is a fundamental reason we buy back our shares.

As of yesterday, our forward EV to EBITDA multiple was seven times.

As compared to our full service peers at 10 times.

This is a fundamental reason, we buy back our shares.

Operator, we would now like to open the call for questions.

Speaker 4: Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, please press star two. If you have joined us online, please press the red flag icon. When preparing to ask a question, please ensure that your line is unmuted locally.

Thanks, Keith if you'd like to ask a question. Please press star followed by one on your telephone keypad. If you wish to withdraw your question. Please press star two if you have joined US online. Please press the red flag icon when preparing to ask a question. Please ensure that your line is on mute locally.

Speaker 4: And our first question comes from Alexander Goldfarb from Piper Sandler. Please go ahead.

And our last question comes from Alexander Goldfarb from Piper Sandler. Please go ahead.

Speaker 5: Hey, good morning. Good morning. So, a few questions here, but the first is on the bonus payment for Howard Lutnick. Just more color around this. Why did he receive a bonus, a one-time bonus, not all of management or all of top executives, whatever? Why is it just him? And what was this bonus based on?

Hey, good morning, good morning.

So few questions here, but the first is on on the bonus payment for.

Howard Lutnick.

More color around Thats why why did he received a bonus.

A one time bonus not all of management or all of.

Top executives whatever wise as Jeff.

And what was this bonus based on.

Speaker 3: Sure. Good morning, Alex. Thanks for the question. I think to understand it, you have to understand the context related to the NASDAQ shares. And if you remember at the time of the IPO, Newmark had over a billion dollars of debt on its balance sheet.

Yes.

Sure Good morning, Alex Thanks for the question.

I think two to.

To understand that you have to understand the context related to the NASDAQ shares.

And if you remember at the time of the IPO Newmark had over $1 billion of debt on its balance sheet.

Speaker 3: And because of the tax-free spinoff, we needed to either pay that down or refinance it within a relatively short period of time.

And because of the tax free spin off we needed to either pay that down or refinance it within a relatively short period of time.

Speaker 3: It was the strong view of many people that were advising the company, and I think many market participants as well at the time.

It was the strong view of many people that were advising the company and I think many market participants as well at the time.

Speaker 3: that the approach we should take is to just take the net present value of the shares we had that were off balance sheet, which was probably in the $300 to $400 million range at the time, use it to pay down the debt and just move forward. But rather than do that, what we did is a very unique and successful transaction where we monetized four years of NASDAQ shares.

That the approach we should take.

To just take the net present value of the shares we had that were off balance sheet, which was probably in the 3% to $400 million range at the time.

Use it to pay down the debt and just move forward.

But rather than do that what.

What we did is a very unique and successful transaction, where we monetize for years of NASDAQ shares.

With no downside.

Speaker 3: and all of the upside. So no caps, no collars on the trade. We maintain all the upside on those.

And all of the upside so no caps collars on the trade we maintain all of the upside on those shares.

Speaker 3: Um, we were able to successfully do that.

We were able to successfully do that.

Speaker 3: Get it categorized as equity as opposed to debt on our balance sheet.

Get it categorized as <unk>.

Equity as opposed to debt on our balance sheet. It allowed us to lower our cost of capital on the remainder of the refinancing.

Speaker 3: It allowed us to lower our cost of capital on the remainder of the refinancing, which we successfully did in 2018.

Which we successfully did in 2018.

Speaker 3: And today, we recognized $1.5 billion instead of that discount.

And.

Today, we recognized $1 $5 billion.

Instead of that discounted present value.

Speaker 3: Howard was instrumental in those trades, he was instrumental in the structuring and because of the success of those trades and the value of NASDAQ and what it's been for the company as an asset.

<unk> was instrumental in those trades he was instrumental in the structuring.

And because of the success of those trades and the value of NASDAQ and what it's been for the company as an asset.

Speaker 3: uh... the competition committee felt it was appropriate to reward him for that as well as the performance of the company

The compensation Committee felt it was appropriate to reward them for that as well as the performance of the company.

Speaker 5: Right, but it's I mean, it sounds like this is a new bonus. It wasn't contemplated at the time that you guys made the original decision in 2017 to pursue this route, correct? This is something new, you know, done today, not it wasn't part of the original exercise, right?

Right.

I mean, it sounds like this is a new bonus it wasn't contemplated at the time that you guys made the original decision in 2017, we pursued this route correct.

Something new.

Today, not it wasn't quality original exercise right.

Speaker 3: Yeah, I think if you look at the 8K that we filed towards the end of December , the Compensation Committee, you know, in connection with their legal and their compensation advisors over a period of time, many meetings came to the conclusion that this was the best path and that's what they recommended and approved.

Yes, I think if you look at the 8-K that we filed towards the end of December .

The compensation committee in connection with their legal and their compensation advisers over.

A period of time, many meetings came to the conclusion that this was the best path and that's what they recommended and approved.

Speaker 5: Okay, I mean, just you guys have done an amazing job, truly amazing in the past few years of, you know, improving simplification and and separating from the original issues that stem from the IPO, the overhang. Yeah, this just reminds everyone of that. Obviously, it was done, but it just reminds people of some of the stuff that post IPO that you guys have really addressed well. So I'll just leave it there. The next question is just on guidance.

Okay.

They've done an amazing job truly amazed over the past few years.

Simplification and separating from the original issues that stem from the IPO with the overhead.

Yes.

Every one of that.

Obviously, it was done but it just remind people of some of the stuff that post IPO.

That you guys have really addressed well so.

I'll just leave it there. The next question is just on guidance you didn't provide a formal EPS range, but Mike if you can just walk through the Delta.

Speaker 5: You didn't provide a formal EPS range, but Mike, if you can just walk through the Delta, the EBITDA growth of four to 9%, what are the things that would make that not literally translate to EPS growth, either on the negative or on the positive?

The EBITDA growth of 4% to 9%.

What are the things that would make that not literally translate to EPS growth either on the negative on the positive so etfs growth EPS growth or denied or there are impacts between EBITDA.

Speaker 5: So EPS should grow 4-9 or there are impacts between EBITDA and adjusted EPS that could make that either higher or lower than the 4-9% range.

And adjusted EPS that could make that either higher or lower than the 4% to 9% range.

Speaker 3: Sure, I think the short answer is our EPS, because of the significant amount of stock we bought back in equity in 2021, should grow faster than.

Sure I think the short answer is our EPS because of the significant amount of stock we bought back an equity in 2021 should grow faster than our EBITDA.

Speaker 5: Okay. EPS faster than EBITDA. Great. Thank you.

Okay, EPS faster than EBITDA alright, thank you.

Thanks, Alex.

Speaker 4: Perfect. Thank you Alex for your question. Our next question comes from Jade Romani from KBW. Please go ahead, your line is open.

Perfect. Thank you Alex for your question. Our next question comes from Jade Rahmani from <unk>. Please go ahead. Your line is open.

Speaker 6: Thank you very much. Just on the EPS question, what drives the adjusted tax rate, the tax rate used for adjusted EPS?

Thank you very much.

Just on the EPS question, what drags the adjusted tax rate.

Rate used for adjusted EPS.

Yes.

Speaker 3: Well, it's the expected tax payments that we would expect under GAAP over time, so GAAP and tax over time.

Well it's.

The expected tax payments that we.

We would expect under GAAP overtime, so GAAP and tax over time.

Speaker 3: gap and non-gap over time for tax rate should be pretty similar. Obviously the earnings of the company and the deductions from the stock compensation drive that. As we've said, the reason our tax rate is going up or went up from prior years to about 19% this year is because we expect to have less tax expense over time.

GAAP and non-GAAP over time for tax rate should be pretty similar.

Obviously, the earnings of the company and the deductions from the stock compensation.

<unk> that as we've said.

The reason our tax rate is going up.

Our went up from prior years to about 19%. This year is because we expect to have less tax expense over time.

Speaker 3: And that's a function of the company structure, you know, as we continue to grow Tax and equity will become less of a percentage of total Commission earnings and earnings

And Thats a function of the company structure.

We continue to grow.

Tax equity will become less of a percentage of total.

Commission earnings and earnings of the company.

Speaker 3: And we expect that number to continue to decline over time. I think in the PowerPoint presentation, we even said that we expect between 7% and 9% equity as a percentage of commission revenue next year. Commission-based. Commission-based revenue. And commission-based was around $2 billion in 2021. So the equity comp continues to come down. We feel pretty good about the tax rate in the 17% to 19% range. And.

And.

We expect that number to continue to decline over time.

In the Powerpoint presentation, we even said that we expect between 7% to 9% equity as a percentage of Commission revenue next year Commission Base Commission based revenue a commission base was around $2 billion.

In 2021, so the equity comp continues to come down we.

We feel pretty good about the tax rate in 2017% to 19% range.

And.

Speaker 3: You know, we'll drive our EBITDA as the equity comes down, it will drive our EBITDA margin higher over time.

We will drive our EBITDA as the equity comes down it will drive our EBITDA margins higher over time.

Speaker 6: Okay. Over what period do you think, you know, your peers have a tax rate typically around 25%?

Okay over what period do you think your peers have tax rate typically around 25% over what period.

Speaker 6: would that gap narrow? Would Newmark's tax rate look more like Peer's?

With that.

GAAP narrow with new market tax rate look more like peers.

Speaker 3: We think unless there's a change in tax laws, the 17 to 19 percent, which we expect for 2022, would stay in place for the foreseeable future.

We think unless there's a change in tax laws, the 17% to 19%, which we expect for 2022 would stay in place for the foreseeable future.

Speaker 2: You know, Jade, also, you look back at the equity event. We were, with all of those deferred tax assets, we were able to.

Jay It also you look if you look back at the equity event, we were with all of those deferred tax assets, we were able to.

Speaker 2: limit our tax on the $1.1 billion gain.

Limit our tax on the $1 $1 billion gain.

Speaker 2: And, you know, it's not merely just deferred comp. The deferred tax assets have a value. They have a value in reducing our comp over the long term. It provides for some forfeitable equity in the renewing and retention of brokers. It is an attraction for brokers to come because they could build wealth by owning our stock.

<unk>.

It's not merely just deferred comp.

Deferred tax assets have a value they have a value in reducing our comp over of over the long term.

It provides for some forfeitable equity in their renewing and retention of brokers is an attraction for brokers to come because they could build wealth by owning our stock.

Speaker 2: And it's more than just a deferring of comp.

Got it.

It's more than just deferring of comp.

Okay.

Speaker 6: Thank you very much. Turning to the environment, clearly race and inflation are top of mind. Barry, at the level of folks you interact with, could you characterize whether there's been any change in sentiment? Do you expect higher rates to start impacting the business, whether it be capital markets, asset pricing, confidence in execution?

Thank you very much.

Turning to the environment, clearly race and inflation are top of mind, sorry at the level of folks you interact with could you characterize whether there's been any change in sentiment.

Do you expect.

Higher rates.

To start impacting the business, whether it be capital markets asset pricing confidence in execution.

Speaker 6: confidence in underwriting, things of that nature, or on the leasing side, you know, the ability to commit to, you know, a multi-year lease for space. Do you think that the environment we're in right now, it's too early to impact the market or you're starting to have some impact on the market?

<unk> and underwriting things of that nature or on the leasing side.

The ability to commit to a multiyear lease for space do you think that the.

Environment, we're in right now, it's too early to impact the market or youre starting to.

Some.

Impact on sentiment.

Speaker 2: I mean, the increase in leasing activity in the fourth quarter gives a...

I mean, the increase in leasing activity in the fourth core quarter Gibson, a view of more confidence around the elimination of all micron and get back to the office I think people are buying forward in terms of taking leases and companies are looking at leasing space there'll be some elements that change in terms of the <unk>.

Speaker 2: view of more confidence around the elimination of Omicron and the get back to the office I think people are buying forward in terms of taking leases and companies are looking at leasing

Speaker 2: There will be some elements that change in terms of the hybrid working and what people do, but people are committed to being in the office and

Grid, working and what people do but people are committed to being in the office and coming back to space over time.

Speaker 2: coming back to space over time. You also with respect to interest rates.

Also with respect to interest rates.

Speaker 2: You know, I've been here for a long time. Interest rates over the long term, you know, at 81, they were 18%, you know, for virtually no cost of money. And the enormity of liquidity in the market drives value. Even a few bumps in 25 basis points at two or three clips.

Been here for a long time interest rates over the long term 81, there were 18%.

Yes.

Virtually no cost of money and the enormity of our liquidity in the market drives value.

Even a few bumps in the 25 basis points at two or three clips.

Speaker 2: Would still allow you to finance Depending on the weighted average lease term of properties or the you know multi for long term at sub

Would still allow you to finance depending on at a weighted average lease term of properties or the multi for long term at sub 4% you can borrow at depending on the asset anywhere between three and three 5% long term that's about that's about as good as it gets.

Speaker 2: four percent you know you can borrow it depending on the asset anywhere between three and three and a half percent long term that's about that's about as good as it gets.

Speaker 2: And so the issue of supply chain and those things that come into question have, in some respects, a positive effect on the market. But as it costs more to build.

And so the issues of the issue of supply chain and those things that come into question.

In some respects a positive effect on the market.

As it cost more to build.

Speaker 2: build less, people build less, demand remains the same, rents go up, and values go up. So people will look to capture the value they create, even those that have bought in the last year or so will take advantage of the opportunities derived out of, you know, lessening supply.

People build less.

People build less demand remains the same rents go up and values go up so people will look to capture the value. They create even those that are bought in the last year or so we will take advantage of.

Of the opportunities derived out of.

Lessening supply.

Speaker 6: Okay, on the growth outlook, very strong revenue growth outlook, you know, above our expectations.

Okay.

On the <unk>.

Growth outlook very strong revenue growth outlook above our expectations I'm wondering if you could parse any color by business line, perhaps since capital markets. So far post COVID-19 has been growing faster than leasing do you expect that trend to reverse do you expect leasing to grow faster and then.

Speaker 6: Wondering if you could parse any color by business line, perhaps.

Speaker 6: since capital markets so far post-COVID has been growing faster than leasing. You know, do you expect that trend to reverse? Do you expect leasing to grow faster? And then on the GSE multifamily side, you know, 2021 was a down year. Their caps are up about 11% for 2022, but they still have this 50% affordable housing constraint. Do you expect GSE business to grow as well as leasing in 2022?

The GSE multifamily side 2021 was a down year their caps are up about 11% for 2022.

But they still have this 50% affordable housing constraints do you expect GSE business to grow as well as leasing in 2020.

Speaker 2: Well, we had a spectacular year in capital markets. We continue to gain market share and continue to gaining momentum. We also have white space. And as our platform continues to develop credibility and grow in the eyes of the marketplace, we continue to will continue to see more market share and more locations where we add talent. In 19, we invested heavily in buying talent.

Well, we had a spectacular year in capital markets, we continue to gain market share and continue gaining momentum. We also have white space and as our platform.

Continues to develop credibility and.

Grow.

In the eyes of the marketplace. We continue this will continue to see more market share and more locations, where we add talent and 19, we invested heavily in buying pattern.

And.

Speaker 2: And that talent is ramping up as we speak. With respect to multi, you know, multi...

And that talent is ramping up as we speak with respect to multi multi.

Speaker 2: You know, the metrics for multi continue to look good, the opportunity to...

The metrics of our multi continue to look good the opportunity too.

Speaker 2: To buy homes, people are buying homes later in life, marrying later in life. Those things still remain a good.

To.

Buy homes people are buying homes later in life marrying later in life those things still remain a good a good.

Speaker 2: opportunity for multifamily on the GSE. I think the caps, they've announced the caps, the caps seem pretty solid.

Opportunity for multifamily on the GSE.

I think they are all the caps have they've announced the caps of cap seemed pretty solid and.

Speaker 2: And I think that despite the fact that this is flat, our multifamily clearing of the market with debt funds and banks and insurance companies was through the roof. So there'll be compensating factors in every segment of the market, and we'll take advantage of them and continue to grow talent and grow market share.

I think that despite the fact that this was flat our multifamily clearing of the market with debt funds and banks and insurance companies was through the roof. So so there'll be compensating factors in every segment of the market and we will take advantage of them and continue to grow talent and grow Mark.

Sure.

Thank you very much J J.

Speaker 6: Okay, this is Jeff. Specifically that one of the things that we've shown and continue to show is that the dominance of our multifamily investment sales platform is such that we're able to lever that.

Okay. This is Jeff.

Specific to that one of the things that we've shown and continue to show us that the dominance of our multifamily investment sales platform is such that we're able to lever that.

Speaker 3: And so we do expect, obviously, to grow at least commensurate with the increase in caps, and over time, expect to exceed the growth of the overall market because of the strength of the multi-family investment sales platform. And as Barry said, we still have some white spaces to fill geographically with our loan origination team.

So we do expect obviously to grow at least commensurate with the increase in caps and over time expect to exceed the growth of the overall market because of the strength of the multifamily investment sales platform and as Barry said, we still have some white space to fill geographically with our loan origination team.

Thanks, So much appreciate it Jeff.

You bet.

Sure.

Yes.

Speaker 4: Perfect. Thank you Jade for your question. And as a reminder, if you would like to ask a question, please press star followed by one on your telephone feedback and if you have joined us online, please press the red flag icon.

Perfect. Thank you Jay for your question.

As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad and you have joined US online. Please press the red flag icon.

Speaker 4: And our next question comes from Patrick O'Shaughnessy from Raymond James. Please go ahead.

Okay.

And our next question comes from Patrick O'shaughnessy from Raymond James. Please go ahead.

Speaker 3: Hey, good morning. Newmark's board of directors is substantially smaller than those of its publicly credited.

Hey, good morning.

<unk> Board of directors is substantially smaller than those of its publicly traded peers.

Speaker 3: I think most of the members, or most of the directors, have limited real estate experience. Two of the three non-employed board members also have longstanding relationships with Newmark's chair. Why should public shareholders have confidence in the governance abilities of Newmark's board?

I think most of the.

Most of the members are most of the directors have limited real estate experience to the three non employee board members also have long standing.

Relationships with new market share why should public shareholders.

It's been the governance abilities of Newmark sport.

Speaker 2: Well, we expect we're adding another board member this year. I beg to differ on experience. Ken McIntyre is a well-known long-term career debt person, spent time at MetLife under originating loans.

What we expect we're adding another board member this year.

I beg to differ on experienced Kevin Kevin Mcintyre is a well known long term career.

That person spent time at Metlife.

Originating loans.

Speaker 2: Even Jenny Bauer has experience in real estate, Mike Snow is financial, but these are real people that have real knowledge of business and are commercial.

Even journey Bauer has experience in real estate, Mike Snow.

His financial but.

These are real people that have real knowledge of business in our commercial.

And they are independent.

Okay.

Speaker 3: And then, can you provide an update on your NoTel and Flexible Workspace, how has that progressed?

And then can you provide an update on your no tell and flexible workspace.

Post that progressing.

Speaker 2: Yeah, so, um, you know, we had an opportunity to buy Notel at what we thought is an incredibly good price. We bought them out of a 3 63 bankruptcy plan. Our invested cash is around $100 million. The business will be either certainly break even and even a positive in 22.

Yes so.

We had an opportunity to buy no telling what we thought as an incredibly good price we bought them out of a 363 bankruptcy plan.

And invested cash of around $100 million the business will be either.

Certainly breakeven and EBITDA.

EBITDA positive in 'twenty two.

Speaker 2: So we're obviously very careful. We think that the environment and the world, in terms of hybrid working, companies wanting more variability and flexibility, has indicated that this is a category that is here to stay and is going to grow and be a bigger part of the market.

So we're obviously very careful we think that the.

The environment.

And the world in terms of hybrid working companies wanting more variability and flexibility has indicated that this is a category that is here to stay and is going to grow and be a bigger.

Part of the market.

Speaker 2: And we think it's a great growth opportunity, and obviously we're, you know, we're doing it in a way that we think is going to continue to be carefully done, but resonate. We've combined both hospitality, flexible work, and activating retail and real estate as our methodology of how we look at it. We think buildings, in order to attract their employees to the building, are going to require amenities.

And we think it's a great growth opportunity and obviously, where we're doing it in a way that we think is going to continue to be carefully done, but but resonate we combined both hospitality flexible work and activating retail and real estate.

As are our methodology of how we look at it we think buildings in order to attract their employees to the building are going to require amenities more conference.

Speaker 2: more conference, more common spaces, and we think that Notell can provide that added value for the real estate market.

More common spaces, and we think that <unk> can provide that.

That added value for the real estate market.

Speaker 3: To the extent that Notel sees green news and performs well, where would we see that show up in an income statement? Is that under leasing? Would there be management services fees? Or what do we look for that?

To the extent that no tell C.

News and performs well.

We see that showing up when it comes to.

Is that under leasing would there be management services fees.

We look for that.

Speaker 7: Sure, Patrick, the fees from specifically related to the no tell spaces run through management services to the extent our producers are putting clients their clients into a flex office space that's no tell that obviously would come through the leasing line.

Sure Patrick the fees from specifically related to the <unk> spaces run through management services.

To the extent our producers are putting.

Clients their clients into a flex office space, that's no tell that obviously will come through the leasing line.

Okay.

So.

Speaker 2: Another point in the flex world, so we have developed technology that will allow us to advise corporate clients on flex work.

Another point in the flex World. So we have developed technology.

That will allow us.

Two.

Corporate clients.

On flex work.

Speaker 2: Globally so and not only no tell by the way companies are going to have some

Globally.

<unk> not only know tell by the way companies are going to have some form some part of their footprint in flexible work that will reduce the amount of.

Speaker 2: form some part of their footprint in flexible work. They'll reduce the amount of spokes that they have, they'll maintain their hub.

Spokes that they have.

<unk> their hubs and we think that flexible work environment will offer a great opportunity to give companies of that benefit.

Speaker 2: And we think that flexible work environments will offer a great opportunity to give companies that benefit. We have a technology we call.

We have a technology, we call <unk>, which allows us to advise.

Speaker 2: which allows us to advise and clients on.

Clients on where they need seats, when they need seats and if they want to move into a market and the market is not mature and it's they think theyre going to grow in a market that could open up in a flexible work environment and then two or three years later open.

Speaker 2: where they need seats, when they need seats, and if they want to move into a market and the market is not mature, and they think they're going to grow in the market, they could open up in a flexible work environment and then two or three years later open.

Speaker 2: a hub if they want.

If they want so we are both on the <unk> side and on the Flex advisory side building out a business thats going to be a part of our leasing business.

Speaker 2: On the notel side and on the flex advisory side, building out a business that's going to be a part of our leasing business.

Speaker 3: Great. And the last for me, I think a couple of years ago, 2018, you guys gave a breakdown of your revenue by property type. And I think at that time, office was 42 percent, multifamily was 27, industrial was 11. I don't have it handy, but do you have a sense for what that looked like in 2021?

Okay great.

And then last from me.

Once again you.

You guys gave a breakdown of your revenue by property type and I think at that time office was 42% multifamily at was 27% industrial was 11.

You have it handy, but do you have a sense for what that looks like in 2021.

Speaker 7: Yeah, we'll put that probably into the March investor deck that we put out. We don't have it available today, but as you can imagine, multi-family industrial is growing overall. Office is a little bit of a smaller component in 2021 than historical.

Yes, we will put that probably into the March.

Investor deck that we put out we don't have that available today, but.

As you can imagine multifamily industrial is growing overall.

Office is a little bit of a smaller component in 2021 than historical.

Speaker 7: But all the asset classes that are driving the activity in the market, we're participating in them. And we have strength in, as you know, multifamily. We have strength in industrial, retail, as well as office. So we'll be able to take advantage of that as the office market continues to recover. Okay. Thank you.

But all in all the asset classes that are driving the activity in the market.

We're participating in them and we have strengthened and as you know multifamily we have strength in industrial retail.

As well as office, so we'll be able to take advantage of that as the office market continues to recover.

Okay. Thank you.

Yes.

Yes.

Thank you Patrick for your question.

Speaker 4: And we have a follow-up question from Jade Rami from KBW. Your line is open.

And we have a follow up question from Jade Rahmani from <unk>. Your line is open.

Yes.

Speaker 6: Thank you very much. Wondering if you could give any insight into the international expansion strategy. You know, is the plan to buy into markets where you think there's an opportunity to gain a foothold, or are you trying to do more of a hub-and-spoke approach where you see a market, build an infrastructure, and use that?

Thank you very much.

I'm wondering if you can give any insight into the international expansion strategy.

Is the plan to buy into markets, where you think there is an opportunity to gain a foothold.

Or are you trying to do more of a hub and spoke approach where you see the market building infrastructure and use that.

Speaker 8: you know, as a way to build out the approach. How are you thinking about adding international?

As a way to build out the approach how are you thinking about international.

Speaker 2: We couldn't be more excited about the opportunity for the rest of the world. So that is a great opportunity for us to grow. Our historic strategy has been deadly focused on talent.

We couldnt be more excited about the opportunity for the rest of the world. So that is a great opportunity for us.

To grow.

We are our historic strategy has been deadly focused on talent.

Speaker 2: and elevating our brand to be the best in market where we can.

Elevating our brand to be the best in markets, where we can.

Speaker 2: So we see that very clearly, and there are lots of opportunities for us to both acquire companies, bolt-ons, tuck-ins, and talent. And we're already doing it. We've hired people in Hong Kong. We've opened in several other markets. And we think over the next 12 to 24 months, you will see a real growth opportunity for us.

So we see we see that very clearly.

There are lots of opportunities for us to both acquire.

Company's bolt ons tuck ins and talent and we're already doing it.

Hire people in Hong Kong, we've opened in several other markets and we think over the next 12 to 24 months you will see a real.

A real growth opportunity for us.

Speaker 8: And do you have any targets in terms of revenue mix that would derive from international sources?

And do you have any targets in terms of revenue mix that would derive from international.

Sources.

Speaker 7: Yeah, Jade, I think we said in our November investor presentation we want to get to about 10% by 2025 of our overall revenue mix. Maybe we'll do a little better than that.

Yes, Jade I think we said in our November Investor presentation, we want to get to about 10% by 2025 of our overall revenue mix.

Maybe we'll do a little better than that.

Okay.

Okay.

Perfect. Thank you Jay for your question.

Speaker 4: As there are no more questions, this concludes our question and answer session. I would like to turn the conference back over to Mr Galston for closing remarks.

As there are no more questions. This concludes our question and answer session I would like to turn the conference back over to Mr. Carlson for closing remarks.

Speaker 2: Thank you for joining us today and we look forward to updating you on our business next quarter.

Thank you for joining us today, and we look forward to updating you on our business next quarter.

Thank you.

Speaker 4: Thank you, everybody, for joining today's call. You may now disconnect your line.

Thank you everybody for joining today's call you may now disconnect your lines.

I want to make sure we're drilling.

Speaker 9: Thanks for watching!

Sure.