BGC Purchase of Newmark Strategic for Growth

Real estate advisory firm Newmark, which operates as Newmark Knight Frank in the U.S., has agreed to be acquired by BGC Partners Inc., a major global voice and electronic broker to the wholesale financial markets. The transaction involves 425 Newmark brokers and a majority interest in more than 25 domestic offices. Neither party has revealed the financial details of the agreement.

April 29, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user morrissey

Real estate advisory firm Newmark, which operates as Newmark Knight Frank in the U.S., has agreed to be acquired by BGC Partners Inc., a major global voice and electronic broker to the wholesale financial markets. The transaction involves 425 Newmark brokers and a majority interest in more than 25 domestic offices. Neither party has revealed the financial details of the agreement.

By coming under BGC’s umbrella, Newmark will have the tools it needs to expand its presence and service lines, and to operate more efficiently. BGC will guide the real estate services firm through the growth process by relying on its own proven methods for expansion. “Hiring and acquiring key experienced brokers, continuously investing in our proprietary technology, and expanding into new markets are the drivers for BGC’s growth, and we will apply those drivers to create new capabilities and opportunities in commercial real estate brokerage,” Howard W. Lutnick, chairman and CEO of BGC, noted.

The transaction has implications beyond the businesses of BGC and Newmark. “As a sign of health for the industry, it is positive that a significant player in the financial world is making a big bet on the commercial real estate industry,” Dan Fasulo, managing director with global commercial real estate research and consulting firm Real Capital Analytics, told CPE. “It displays how the real estate world and Wall Street are starting to collide–it started before the downturn and now it’s picking up again.”

Timing is everything. “The synergy in the structure of our brokerage businesses, along with improving fundamentals and deal velocity in the commercial real estate marketplace, are excellent signals of Newmark’s growth prospects as part of BGC,” said Newmark CEO Barry M. Gosin, who served as a board member of BGC’s predecessor, eSpeed Inc. “In addition, we expect that BGC’s deep and long-standing relationships with the world’s leading financial institutions can only enhance Newmark’s reach in the marketplace.”

Investment banking firm Miller Buckfire & Co. L.L.C. advised Newmark on the transaction and Cantor Fitzgerald & Co. served as an adviser in connection with the deal. Upon completion of the acquisition, Newmark’s management team will become BGC partners. Gosin will also continue to be at the helm of Newmark’s daily business activities.