Newmark Unveils New Name, Eyes IPO

By Gail Kalinoski

Jahn Brodwin, FTI Real Estate Solutions

Five years after acquiring the bankrupt Grubb & Ellis brokerage and adding part of its name to its own moniker to create Newmark Grubb Knight Frank, the commercial real estate advisory firm has quietly dropped Grubb and is moving forward as Newmark Knight Frank again, as its parent company, BGC Partners Inc., plans for a possible spin-off and IPO in the fall.

While there had been rumors that the name change was coming with New York Post real estate columnist Lois Weiss reporting in February 2016 that it was being considered, there was no big announcement or even a news release when it actually happened. As of June 1, Grubb was dropped from the web site and press releases issued starting on that date began using Newmark Knight Frank or NKF. A spokesman said the firm wasn’t offering any comments on the name change or the timing, just noting that “it is simply under way.”

Rob Frankel, a Los Angeles-based branding expert, said the firm might be trying to appeal to a younger client base but said it was unusual because “trust is very important” in real estate firms and he was surprised they appeared to be turning away from part of the firm’s legacy instead of capitalizing on it. Both the Newmark and Grubb & Ellis firm names were decades-old.

BGC Prepares for Real Estate Services Spin-Off

Both Frankel and Jahn Brodwin, senior managing director in the FTI Real Estate Solutions practice in New York City, said the decision to remove Grubb from the firm name was probably not connected to BGC’s plans to spin off Newmark from the parent company in an initial public offering as soon as this fall. In February, BGC, a financial brokerage firm that itself was spun off from Cantor Fitzgerald LP in 2004, announced that it had confidentially filed a draft registration form with the U.S. Securities and Exchange Commission to begin planning for an IPO for Newmark and to spin off the real estate services business into its own subsidiary.

BGC officials did not say much about the IPO plans until May 4, when BGC CEO Howard Lutnick referred to the Newmark’s 20 percent revenue growth in the first quarter of 2017 during the Q1 earnings call with analysts and said the firm was working on details of an IPO.

“We think we have a good understanding of what the market would like to see and how they would like to see it and we want to present Newmark in that light and in the right circumstances and with the right strength,” he said, according to a Seeking Alpha transcript. “Newmark is clearly in an excellent place demonstrably growing better than the industry metrics and I think we are thinking about it.”

In addition to the 20 percent revenue growth, Newmark’s Q1 capital markets revenues increased by 27 percent from Q1 2016 and leasing and other services improved by 21 percent.

Perhaps those first-quarter numbers spurred BGC’s decision to move forward because Lutnick said at the June 7 Sandler O’Neill Global Exchange and Brokerage Conference in New York that the IPO would likely happen between late September and November, according to Reuters.

Since the acquisition by BGC in 2011, Newmark, which had already been growing with numerous mergers, acquisitions and alliances, has become one of the world’s leading CRE advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NKF’s 14,100 professionals work in more than 400 offices on six continents. The firm’s full-service platform includes leasing; capital markets services; commercial mortgage brokerage services as well as corporate advisory, consulting, project and development management, and property and corporate facilities management services.

Despite the solid numbers and growth, Brodwin said, “I heard their sense is the public markets are not valuing the company properly and the only way to do that would be to take the company (Newmark) out on its own.”

He said the company shareholders or partners who own a lot of equity in the company may also feel the time is right for a liquidity event.

Newmark may not be the only commercial real estate services firm going public this year or early next year. Cushman & Wakefield has also been rumored to be considering an IPO, though Brodwin said they have not filed with the SEC yet.

“There is a sense of momentum building and you want to catch that wind at the right time and get a strong valuation,” Brodwin told Commercial Property Executive.