Newmark Group Inc.
05/08/2026 | Press release | Distributed by Public on 05/08/2026 14:03
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of Newmark's financial condition and results of operations should be read together with Newmark's accompanying unaudited condensed consolidated financial statements and related notes, as well as the "Special Note Regarding Forward-Looking Information" relating to forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, included elsewhere in this Quarterly Report on Form 10-Q.
This discussion summarizes the significant factors affecting our results of operations and financial condition during the three months ended March 31, 2026 and 2025. We operate in one reportable segment, real estate services. This discussion is provided to increase the understanding of, and should be read in conjunction with, our accompanying unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Overview
Newmark is a leading commercial real estate advisor and service provider to large institutional investors, global corporations, and other owners and occupiers. We offer a diverse array of integrated services and products designed to meet the full needs of our clients.
Business Environment
There are several factors that impact results across our three main revenue sources (Management Services, Servicing Fees and Other; Leasing and Other Commissions; and Capital Markets), including both secular and cyclical industry trends as well as macroeconomic dynamics and our investments in growth. These factors are discussed below.
Key Business Drivers. The key drivers of our business include our ability to attract and retain revenue generating headcount across our service lines, the productivity of these employees, and industry volumes in these areas. Volumes are largely a factor of economic and job growth, interest rates, and the demand for commercial real estate as an investment and for debt financing. In addition, demand for our services is influenced by secular trends with respect to outsourcing and other services we provide.
Attracting and Retaining Revenue-Generating Headcount. Over the twelve months ended March 31, 2026, we continued to solidify what we believe is our position as the platform of choice for many top professionals. In countries including the U.S., U.K., France, Germany, India, Italy, South Korea, and Singapore, we attracted some of the most prolific and experienced client-facing professionals. We believe that these additions further demonstrate the strength of our global brand, and the value of our substantial investments in data, analytics, and talent. Our revenue-generating headcount across Capital Markets, Leasing and Other Commissions, and V&A in the U.S. was flat or up modestly year-on-year on a net basis over the last several quarters. Therefore, strong gains in revenue per average producer and appraiser were the primary driver of our double-digit year-on-year U.S. commission-based revenue growth. We increased both the number of non-U.S. offices and our international revenue-generating headcount by mid-double-digit percentages year-on-year in the first quarter of 2026. As with nearly all newly hired professionals, these recent additions are expected to take at least 6 to 18 months to produce meaningful fees, although we generally record related expenses beginning in their first quarter with the Company. As more of Newmark's newer team members ramp up, we expect to further improve our productivity and earnings over time, all else equal.
Continued Trends with Respect to Management Services, Servicing Fees and Other. Many of our Management Services offerings continue to benefit from increased outsourcing by corporations and other occupiers, owners of real estate, lenders, and investment funds. We expect these outsourcing trends to persist for the foreseeable future, which should benefit our recurring revenue businesses as we continue to invest in areas including property, project, and facilities management, as well across our growing suite of managed services offerings. Between September 2025 and March 2026, our investments in recurring revenue businesses include the Company's acquisitions of the Altus appraisal platform, Catella, and RealFoundations, as well as the organic launches of our property and facilities management businesses in India and our new fund administration service line. We believe these newest offerings in Management Services, Servicing Fees and Other will help drive stable and predictable revenue and earnings growth over time.
Additionally, we operate a high margin and growing loan servicing and asset management business focused on GSE/FHA loans, as well as on bank, private credit, and commercial mortgage-backed securities clients. We expect this business to benefit as the overall amount of commercial and multifamily debt outstanding increases, we continue to gain origination market share, and we drive further cross selling between service lines. As of March 31, 2026, our overall loan servicing and asset management portfolio grew by 14.2% year-on-year to a record $222.1 billion (of which 64.8% was limited servicing and asset management, 35.2% was higher margin primary servicing, and 0.7% was special servicing). We expect our overall portfolio to continue providing a steady stream of income and cash flow over the life of the serviced loans.
These factors, combined with our ability to increase revenue synergies between our service lines, enabled us to grow Management Services, Servicing Fees and Other revenues by a double digit CAGR between 2017 and 2026, and to increase these recurring revenues by 21.2% in the first quarter ended March 31, 2026.
Trends in GDP and Job Growth. Commercial real estate leasing activity has historically been positively correlated with job creation, particularly with respect to office-based employment, and with GDP growth. Unless otherwise noted, all of the following economic statistics are from Bloomberg, including interest rate futures market data and consensus estimates based on their respective April 27, 2026 U.K. and April 27, 2026 U.S. surveys of economists.
According to a preliminary estimate by the Bureau of Economic Analysis, U.S. GDP increased 2.0% in the first quarter of 2026, after having expanded 2.1% in 2025 and 2.8% in 2024. According to the Wall Street Journal, U.S. GDP growth was once again led by increased capital expenditures on categories closely tied to artificial intelligence, which may have contributed approximately half of all GDP growth in the quarter, and resulted in overall business investment expanding by more than 10% annualized. While U.K. GDP for the quarter has not yet been released, the consensus is for it to grow by 0.6% year-on-year, after having expanded 1.4% in 2025 and 1.1% in 2024.
According to a preliminary estimate by the Bureau of Labor Statistics, the seasonally adjusted monthly average of U.S. non-farm payroll employment increased by approximately 63,000 in the first quarter of 2026. In comparison, the monthly average grew by 10,000 and 122,000 in full years 2025 and 2024. The March 2026 U.S. unemployment rate (based on U-3) was unchanged versus a year earlier at 4.3% compared with 4.1% a year earlier. Per the Office for National Statistics, the comparable U.K. unemployment rate as of February 2026 (the most recent data available) was 4.9% versus 4.3% a year earlier.
Interest Rate Environment. Commercial real estate capital markets transactions involving financing generally utilize medium- or long-term debt, and the interest rates for such debt are influenced by movements in benchmark rates with similar tenors, including U.S. Treasuries. Such benchmark rates can often be meaningfully impacted by actual or anticipated movements in key short-term rates, such as the Fed Funds Target rate. In addition, a portion of commercial and multifamily mortgages involve floating interest rates tied to short-term benchmarks. Sudden changes in short term interest rates can therefore have pronounced effects on commercial mortgage origination and investment sales volumes.
The ten-year U.S. Treasury yield increased by approximately 150 basis points quarter-on-quarter and by 111 basis points year-on-year to 4.3% as of March 31, 2026. The ten-year U.K. Gilt yield increased by approximately 439 basis points quarter-on-quarter and by 241 basis points year-on-year to 4.9% over the same timeframe. The increases are mainly due to the sharp rise in prices for oil, natural gas, and other commodities due to the Middle East conflict. For context, ten-year U.S. Treasury and ten-year U.K. Gilt yields still remain below their 50-year average through December 31, 2025 of approximately 5.8% and 7.0%, respectively.
For the month ending March 31, 2026, the most commonly cited U.S. and U.K. inflation measures were up 3.3% and 3.4%, respectively, versus a year earlier. They have both been higher than the 2% targets set by both the FOMC and MPC since June, 2021, and headline inflation in both countries increased month over month due largely to the aforementioned increase in energy prices. The surveyed economists continue to expect inflation to remain above these targets for at least the next two calendar years. Concerns about continued U.S. GDP growth, above-target inflation, and a possibly stagnant job market may present a challenge to the FOMC's dual mandate. This have reduced clarity in terms of how fast the central bank will lower short term rates. The U.K. has experienced many of these same issues, albeit with lower GDP and labor productivity growth and higher inflation. As a result, both economists and the futures markets expect short-term yields in both countries to be higher for the foreseeable future. The futures market is currently pricing in zero short term benchmark rate cuts in the U.S. through the middle of 2027, and expects a slight increase in such rates in the U.K. and Eurozone by the first quarter of next year.
Despite the possibility of flat or rising short term rates, other metrics that are inversely correlated with easier availability of credit for real estate investors remain well below their five year averages in the U.S., and at or below average in the U.K. and Eurozone. We believe this is most positive for commercial real estate capital markets transactions in the U.S., and generally positive for them in the U.K. and Eurozone. These metrics include interest rate volatility as measured by the ICE BofA MOVE Index and credit spreads as indicated by the Bloomberg U.S. Corp BBB/Baa - Treasury 10 Year Spread, as well
as similar metrics with respect to the U.K. and Eurozone. Given the stable interest rate environment and historically narrow credit spreads in the U.S., we believe current market conditions remain favorable for a continued recovery of U.S. industry capital markets volumes, and to a lesser extent in the U.K. and Continental Europe. Because of Newmark's ongoing investments in talent outside the U.S., and because our recently hired international revenue generating professionals have yet to fully ramp up, we expect to gain further global market share across our commission-based businesses over the near- and medium-term.
Industry Leasing Activity. Unless otherwise stated, all industry leasing data is from Newmark Research and/or CoStar. Office remains the majority of activity for both Newmark and the industry.
U.S. overall office leasing activity (for deals over 10,000 square feet) totaled nearly 60 million square feet in the first quarter of 2026. This represented a 7.5% improvement year-over-year and was the best performance since the fourth quarter of 2023. The continuing recovery was geographically diverse, with New York City, San Francisco, and Dallas/Fort Worth driving much of the first quarter improvement, although San Francisco continues to have one of the highest vacancy rates among major U.S. markets. Artificial intelligence and other technology companies have become a strong driver of office demand, concentrated in key hubs like San Francisco, New York City, Seattle, Los Angeles, and Austin. With respect to the U.K., London has led the recovery in demand for office space, including from artificial intelligence firms and other technology companies. Net absorption in London has been strongly positive in recent quarters, which largely offset negative absorption in the rest of the U.K. Given improving demand, the overall U.K. office vacancy rate may have peaked in the first quarter of 2026 at 9.1%. With the pipeline of new office construction expected to drop off dramatically beginning this year in Newmark's key markets, the ongoing enhancement of Class B office properties, and the conversion of obsolete space into multifamily and other uses, we expect office fundamentals to continue to improve.
We expect demand for office space to continue to be supported by the reset in values due to near-term debt maturities. We also continue to see increased need for high quality office space in an increasing number of markets, led by ongoing return-to-workplace plans. Placer.ai data for March 2026 indicates that in-person attendance in the U.S. increased to an average of 73.5% of March 2019 pre-pandemic levels versus 66.0% a year earlier. This represented a year-on-year improvement in attendance of 11.4%. According to this same source, Miami and New York were both above 90% of pre-pandemic levels, while Los Angeles and San Francisco posted the strongest year-on-year growth in attendance.
New U.S. industrial leasing activity continued its momentum in the first quarter of 2026, growing by more than 12% year-on-year, led by large modern warehouses and distribution centers. This represented the best quarter of new leasing volume since the third quarter of 2022. Tenants in many metropolitan areas are upgrading to newer facilities, and there was a notable uptick in industrial leasing related to data center development in certain markets. The national industrial vacancy rate fell 6 basis points quarter-over-quarter, the first vacancy decline since 2022, signaling that the market may be near peak vacancy. With respect to the U.K., industrial vacancy improved for the third consecutive period to 7.3% in the first quarter of 2026, while leasing volume increased by 3% sequentially and by 8% year-on-year. Leasing demand was driven by e-commerce retailers, supermarkets, food companies, automotive-related occupiers, and construction suppliers. Speculative development for the twelve months ending March 31, 2026, was the lowest in terms of square feet since the twelve months ending September 30, 2020, which should continue to support prime headline rents in the U.K.
U.S. retail leasing activity for centers and properties of at least 20,000 square feet fell to 27.5 million square feet in the first quarter of 2026, which was approximately 33% below the trailing ten-year average. Retailers continue to find it difficult to locate space in prime assets, as retail centers built from the year 2000 onward remain in high demand with a national occupancy rate above 97%. Among major markets, Dallas-Fort Worth, Phoenix, and Houston remain the most active. However, at just 5.3%, the overall U.S. retail vacancy rate remains approximately 1.2 percentage points below the long-term average as of March 31, 2026.
Against this improving market backdrop, Newmark's revenues from Leasing and Other Commissions increased by 20.2% for the quarter ended March 31, 2026.
Industry Capital Markets Activity. We believe that we once again gained share in Capital Markets in the first quarter of 2026, while overall industry volumes continued to improve. For example, based on their analysis of the most recently available data from MSCI and/or the MBA, Newmark Research estimates that U.S. notional investment sales volumes were up by approximately by 33% and 28%, respectively, year-on-year in the three and twelve months ending March 31, 2026. Activity improved by double digit percentages nationally across nearly every major property type. In comparison, Newmark's U.S. Investment Sales volumes improved by approximately 32% and 43%, respectively, year-on-year in the three and twelve months ending March 31, 2026. Preliminary MSCI data indicates that global investment sales volumes excluding the U.S. grew by at least 2% year-on-year over the twelve months ending March 31, 2026, although this source often revises such figures upwards at a later date. Due to our international investments, we grew our non-U.S. Investment Sales volumes by 65% over the same period, albeit from a lower base.
Based on their analysis of historical figures from the MBA and MSCI lending data, Newmark Research estimates that U.S. commercial and multifamily originations increased by 29% and 40%, respectively, in the three and twelve months ending March 31, 2026 versus a year earlier. In comparison, Newmark increased its U.S. Total Debt volumes by approximately 112% and 79%, respectively, over these same periods. While we continue to generate nearly all debt volumes in the U.S., we expect to increase our international mortgage brokerage and debt placement platform as we continue to invest in non-U.S. talent.
Commercial And Multifamily Mortgage Maturities and Other Drivers. We continue to benefit from the ongoing need for our clients to both refinance existing properties owned by them and to finance investments in properties they seek to own. We expect record amounts of medium-term commercial and multifamily mortgage maturities and interest rate stabilization to together lead to continued improvement in industry debt volumes, as well as increased investment sales activity. For example, the MBA expects approximately $2.1 trillion of U.S. commercial and multifamily mortgage maturities between 2026 and 2028 alone, and approximately $5.0 trillion in total.
Given Newmark's investments in talent, deep relationships with clients, and the strength of our brand, we anticipate further market share gains over time.
Financial Overview
Revenues
We generally derive revenues from the following three sources:
•Management Services, Servicing Fees and Other. We provide commercial services to tenants and landlords. In this business, we provide property and facilities management services along with project management, V&A services, and other consulting and managed services, as well as technology services, to customers who may also utilize our commercial real estate brokerage services, and flexible workspace solutions. Servicing fees are derived from the servicing of loans originated by us as well as loans originated by third parties.
•Leasing and Other Commissions. We offer a diverse range of commercial real estate brokerage and advisory services, including tenant and landlord (or agency) representation, which includes comprehensive lease negotiations, strategic planning, site selection, lease auditing, and other financial and market analysis.
•Capital Markets. This consists of investment sales and commercial mortgage origination, net. Our investment sales business specializes in the arrangement of acquisitions and dispositions of commercial properties, as well as equity placement and other related services. Our commercial mortgage origination business offers services and products to facilitate debt financing for our clients and customers. Commercial mortgage origination revenue is comprised of commissions generated from mortgage brokerage and debt placement services, as well as the origination fees and premiums derived from the origination of GSE/FHA loans with borrowers. Our commercial mortgage origination revenue also includes the revenue recognized for the fair value of expected net future cash flows from servicing recognized at commitment.
Fees for real estate lease brokerage transactions are generally earned when a lease is signed. In many cases, landlords are responsible for paying the fees. In Capital Markets, fees are earned and recognized when the sale of a property closes, and title passes from seller to buyer for investment sales and when debt or equity is funded to a vehicle for debt and equity transactions. Loan originations related fees and sales premiums, net, are recognized when a derivative asset is recorded upon the commitment to originate a loan with a borrower and sell the loan to an investor. The derivative is recorded at fair value and includes loan origination fees, sales premiums and the estimated fair value of the expected net servicing cash flows. Loan originations related fees and sales premiums, net, are recognized net of related fees and commissions to affiliates or third-party brokers. For loans we broker, revenues are recognized when the loan is closed.
Servicing fees are recognized on an accrual basis over the lives of the related mortgage loans. We typically receive monthly management fees based upon a percentage of monthly rental income generated from the property under management, or in some cases, the greater of such percentage or a minimum agreed upon fee. We are often reimbursed for our administrative and payroll costs, as well as certain out-of-pocket expenses, directly attributable to properties under management. We follow U.S. GAAP, which provides guidance when accounting for reimbursements from clients and when accounting for certain contingent events for Leasing and Other Commissions and Capital Markets transactions. See Note 3 - "Summary of Significant Accounting Policies" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a more detailed discussion.
Expenses
(i) Compensation and Employee Benefits
The majority of our operating costs consist of cash and non-cash compensation expenses, which include base salaries, producer commissions based on production, forgivable loans for term contracts, discretionary and other bonuses and all related employee benefits and taxes. Our employees consist of commissioned producers, executives and other administrative support. Our producers are largely compensated based on the revenue they generate for the firm, keeping these costs variable in nature.
As part of our compensation plans, certain employees have been granted limited partnership units in Newmark Holdings and, prior to the Newmark IPO, BGC Holdings, which generally receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders. As a result of the Corporate Conversion, there are no longer any limited partnership units in BGC Holdings outstanding. Certain Newmark employees also hold N Units that do not participate in quarterly partnership distributions and are not allocated any items of profit or loss. N Units become distribution earning limited partnership units either on a discretionary basis or ratably over a vesting term, if certain revenue thresholds are met at the end of each vesting term. As prescribed in U.S. GAAP guidance, the quarterly allocations of net income on such limited partnership units are reflected as a component of compensation expense under "Equity-based compensation and allocations of net income to limited partnership units and FPUs" in our accompanying unaudited condensed consolidated statements of operations.
Newmark has granted certain conversion rights on limited partnership units in Newmark Holdings and, prior to the Corporate Conversion, then-outstanding limited partnership units in BGC Holdings, to Newmark employees to convert the limited partnership units to a capital balance within Newmark Holdings or BGC Holdings. Generally, such units are not considered share-equivalent limited partnership units and are not in the fully diluted share count.
Certain of these limited partnership units entitle the holders to receive post-termination payments. These limited partnership units are accounted for as post-termination liability awards under U.S. GAAP guidance, which requires that we record an expense for such awards based on the change in value at each reporting period and include the expense in our accompanying unaudited condensed consolidated statements of operations as part of "Equity-based compensation and allocations of net income to limited partnership units and FPUs." The liability for limited partnership units with a post-termination payout amount is included in "Other long-term liabilities" on our accompanying unaudited condensed consolidated balance sheets.
Certain limited partnership units are granted exchangeability into Newmark Class A common stock or may be redeemed in connection with the grant of shares of Newmark Class A common stock. At the time exchangeability is granted, or the shares are issued, Newmark recognizes an expense based on the fair value of the award on that date, which is included in "Equity-based compensation and allocations of net income to limited partnership units and FPUs" in our accompanying unaudited condensed consolidated statements of operations.
Certain of our employees have been awarded Preferred Units in Newmark Holdings and, prior to the Corporate Conversion, BGC Holdings. Each quarter, the net profits of Newmark Holdings and BGC Holdings are or were allocated to such units at a rate of either 0.6875% (which is 2.75% per calendar year) or such other amount as set forth in the award documentation, which is deducted before the calculation and distribution of the quarterly partnership distribution for the remaining partnership units in Newmark Holdings. The Preferred Units are not entitled to participate in partnership distributions other than with respect to the Preferred Distribution. Preferred Units may not be made exchangeable into our Class A common stock and are only entitled to the Preferred Distribution, and accordingly they are not included in our fully diluted share count. The quarterly allocations of net income on Preferred Units are also reflected in compensation expense under "Equity-based compensation and allocations of net income to limited partnership units and FPUs" in our accompanying unaudited condensed consolidated statements of operations. After deduction of the Preferred Distribution, the remaining partnership units generally receive quarterly allocation of net income based on their weighted-average pro rata share of economic ownership of the operating subsidiaries. In addition, Preferred Units are granted in connection with the grant of certain limited partnership units, such as PSUs, that may be granted exchangeability to cover the withholding taxes owed by the unit holder upon such exchange. This is an acceptable alternative to the common practice among public companies of issuing the gross number of shares to employees, subject to cashless withholding of shares to pay applicable withholding taxes.
We have also entered into various agreements with certain of our employees and partners whereby these individuals receive loans, which may be either wholly or in part repaid from the distribution earnings that the individual receives on their limited partnership interests or from the proceeds of the sales of the employees' shares of our Class A common stock. The forgivable portion of these loans is recognized as compensation expense over the service period.
From time to time, we may also enter into agreements with employees and partners to grant bonus and salary advances or other types of loans. These advances and loans are repayable in the timeframes outlined in the underlying agreements. In addition, we also enter into deferred compensation agreements with employees providing services to us. The costs associated with such plans are generally amortized over the period in which they vest. See Note 27 - "Compensation" and Note 28 -
"Commitments and Contingencies" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
(ii) Other Operating Expenses
We have various other operating expenses. We incur leasing, equipment and maintenance expenses. We also incur selling and promotion expenses, which include entertainment, marketing and travel-related expenses. We incur communication expenses, professional and consulting fees for legal, audit and other special projects, and interest expense related to short-term operational funding needs, and notes payable and collateralized borrowings.
We pay fees to Cantor for performing certain administrative and other support, including charges for occupancy of office space, utilization of fixed assets and accounting, operations, human resources, legal services and technology infrastructure support. Management believes that these charges are a reasonable reflection of the utilization of services rendered. However, the expenses for these services are not necessarily indicative of the expenses that would have been incurred if we had not obtained these services from Cantor. In addition, these charges may not reflect the costs of services we may receive from Cantor in the future.
(iii) Other Income (loss), Net
Other income (loss), net is comprised of gains (losses) on equity method investments which represent our pro rata share of the net gains (losses) on investments over which we have significant influence but which we do not control, mark-to-market gains or losses on marketable and non-marketable investments, and settlements from litigation unrelated to our operations.
(iv) Provision for Income Taxes
We incur income tax expenses based on the location, legal structure, and jurisdictional taxing authorities of each of our subsidiaries. Certain of the Company's entities are taxed as U.S. partnerships and are primarily subject to the UBT in New York City. U.S. federal and state income tax liability or benefit related to the partnership income or loss, with the exception of the UBT, rests with the partners rather than the partnership entity. See Note 2 - "Limited Partnership Interests in Newmark Holdings and BGC Holdings" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Our accompanying unaudited condensed consolidated financial statements include U.S. federal, state and local income taxes on Newmark's allocable share of the U.S. results of operations. Outside of the U.S., we operate principally through subsidiary corporations subject to local income taxes.
Newmark is subject to the tax laws and regulations of the U.S. and various non-U.S. jurisdictions. The OECD Pillar Two Framework provides for a minimum global effective tax rate of 15%. The EU member states formally adopted the EU's Pillar Two Directive with a subset of rules that became effective January 1, 2024. Other countries are also expected to implement similar legislation. The minimum global effective tax did not have a material impact on our 2025 and 2026 tax rates.
On July 4, 2025, President Trump signed the OBBBA into law, which, among other things, introduces a broad range of changes to existing tax rules, including significant modifications to certain incentives previously introduced or expanded by the Inflation Reduction Act of 2022, as well as extensions and modifications of certain provisions of the Tax Cuts and Jobs Act of 2017. OBBBA tax provisions did not have a material impact on the Company, including with respect to its future financial condition, results of operations or liquidity.
Business Mix and Seasonality
Our pre-tax margins are affected by the mix of revenues generated. For example, servicing revenues tend to have higher pre-tax margins than Newmark as a whole, and margins from originating GSE/FHA loans, which are included in "Capital Markets" in our consolidated statement of operations, tend to be lower, as we retain rights to service loans over time, and because this item includes non-cash GAAP gains attributable to OMSRs, which represent the fair value of expected net future cash flows from servicing recognized at commitment, net. Capital Markets transactions tend to have higher pre-tax margins than leasing transactions. Pre-tax earnings margins on our property management and parts of our other OS businesses are at the lower end of margins for the Company as a whole because they include some revenues that equal their related expenses. These revenues represent fully reimbursable compensation and non-compensation costs and may be referred to as "pass through revenues."
Due to the strong desire of many market participants to close real estate transactions prior to the end of a calendar year, our business exhibits certain seasonality, with our revenue tending to be lowest in the first quarter and strongest in the fourth quarter. For the five years from 2020 through 2025, we generated an average of approximately 21% of our revenues in the first quarter and 30% of our revenues in the fourth quarter. Because approximately 30% of our expenses are fixed in a typical year, this seasonality generally leads to higher profitability in the fourth quarter and lower margins in the first quarter, all else equal.
Results of Operations
The following table sets forth our unaudited condensed consolidated statements of operations data expressed as a percentage of total revenues for the periods indicated (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Actual Results | Percentage of Total Revenues | Actual Results | Percentage of Total Revenues | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
|
Management Services, Servicing Fees and Other
|
$ | 344,031 | 40.6 | % | $ | 283,893 | 42.7 | % | ||||||||||||||||||
|
Leasing and Other Commissions
|
250,031 | 29.5 | 208,074 | 31.3 | ||||||||||||||||||||||
|
Capital Markets
|
252,457 | 29.8 | 173,527 | 26.1 | ||||||||||||||||||||||
| Total revenues | 846,519 | 100.0 | 665,494 | 100.0 | ||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Compensation and employee benefits | 515,607 | 60.9 | 399,512 | 60.0 | ||||||||||||||||||||||
|
Equity-based compensation and allocations of net income to limited partnership units and FPUs (1)
|
68,396 | 8.1 | 74,346 | 11.2 | ||||||||||||||||||||||
| Total compensation and employee benefits | 584,003 | 69.0 | 473,858 | 71.2 | ||||||||||||||||||||||
| Operating, administrative and other | 181,444 | 21.4 | 153,977 | 23.1 | ||||||||||||||||||||||
| Fees to related parties | 8,524 | 1.0 | 9,570 | 1.4 | ||||||||||||||||||||||
| Depreciation and amortization | 46,232 | 5.5 | 46,358 | 7.0 | ||||||||||||||||||||||
| Total operating expenses | 820,203 | 96.9 | 683,763 | 102.7 | ||||||||||||||||||||||
| Other income (loss), net | 644 | 0.1 | 750 | 0.1 | ||||||||||||||||||||||
|
Income (loss) from operations
|
26,960 | 3.2 | (17,519) | (2.6) | ||||||||||||||||||||||
| Interest expense, net | (6,914) | (0.8) | (8,483) | (1.3) | ||||||||||||||||||||||
|
Income (loss) before income taxes and noncontrolling interests
|
20,046 | 2.4 | (26,002) | (3.9) | ||||||||||||||||||||||
|
Provision (benefit) for income taxes
|
3,431 | 0.4 | (10,053) | (1.5) | ||||||||||||||||||||||
|
Consolidated net income (loss)
|
16,615 | 2.0 | (15,949) | (2.4) | ||||||||||||||||||||||
|
Less: Net income (loss) attributable to noncontrolling interests
|
2,196 | 0.3 | (7,183) | (1.1) | ||||||||||||||||||||||
|
Net income (loss) available to common stockholders
|
$ | 14,419 | 1.7 | % | $ | (8,766) | (1.3) | % | ||||||||||||||||||
(1)The components of Equity-based compensation and allocations of net income to limited partnership units and FPUs are as follows (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Actual Results | Percentage of Total Revenues | Actual Results | Percentage of Total Revenues | |||||||||||||||||||||||
| Issuance of common stock and exchangeability expenses | $ | 58,284 | 6.9 | % | $ | 52,279 | 7.9 | % | ||||||||||||||||||
| Limited partnership units amortization | (2,323) | (0.3) | 9,539 | 1.4 | ||||||||||||||||||||||
| RSU amortization | 9,554 | 1.1 | 12,348 | 1.9 | ||||||||||||||||||||||
|
Total equity compensation
|
65,515 | 7.7 | % | 74,166 | 11.2 | % | ||||||||||||||||||||
| Allocations of net income to limited partnership units and FPUs | 2,881 | 0.3 | 180 | - | ||||||||||||||||||||||
| Equity-based compensation and allocations of net income to limited partnership units and FPUs | $ | 68,396 | 8.0 | % | $ | 74,346 | 11.2 | % | ||||||||||||||||||
Three months ended March 31, 2026 compared to the three months ended March 31, 2025
Revenues
Management Services, Servicing Fees and Other
Management Services, Servicing Fees and Other revenues increased by $60.1 million, or 21.2%, to $344.0 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase was led by double-digit organic growth from Valuation and Advisory, our high margin servicing and asset management platform, and Newmark's expanding suite of other Management Services businesses. These results also benefited from recent acquisitions.
Leasing and Other Commissions
Leasing and Other Commission revenues increased by $42.0 million, or 20.2%, to $250.0 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, which was driven by strong activity across office, retail, and industrial.
Capital Markets
Capital Markets revenues increased by $78.9 million, or 45.5%, to $252.5 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase reflects a 51.5% improvement in investment sales fees and a 39.4% increase in commercial mortgage origination, net, both of which reflected significant client activity from multifamily, led by senior housing and, to a lesser extent, affordable housing. The increase also reflects improvements from lodging, industrial, and office.
Expenses
Compensation and Employee Benefits
Compensation and employee benefits expense increased by $116.1 million, or 29.1%, to $515.6 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase reflects higher commission-based revenues, expenses related to global growth initiatives and costs recorded by recently acquired companies.
Equity-based compensation and allocations of net income to limited partnership units and FPUs
Equity-based compensation and allocations of net income to limited partnership units and FPUs decreased by $6.0 million, or 8.0%, to $68.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Operating, Administrative and Other
Operating, administrative and other expenses increased by $27.5 million, or 17.8%, to $181.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to higher pass through costs, expenses directly tied to revenue improvements and investments in future growth.
Fees to Related Parties
Fees to related parties decreased by $1.0 million, or 10.9%, to $8.5 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Depreciation and Amortization
Depreciation and amortization for the three months ended March 31, 2026 decreased by $0.1 million, or 0.3%, to $46.2 million compared to the three months ended March 31, 2025.
Other Income (loss), Net
Other income (loss), net was $0.6 million of income for the three months ended March 31, 2026 consisting of recoveries from forfeited shares of restricted Newmark Class A common stock.
Other income (loss), net of $0.8 million in the three months ended March 31, 2025 consisting of recoveries from forfeited restricted Newmark Class A common stock.
Interest Expense, Net
Interest expense, net decreased by $1.6 million, or 18.5%, to $6.9 million during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Provision for Income Taxes
Provision for income taxes increased by $13.5 million, or 134.1%, to $3.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to the impact of change in the level and geographic mix of pre-tax earnings and 2025 tax benefit from revaluation of deferred tax assets due to a corporate ownership change. In general, our consolidated effective tax rate can vary from period to period depending on, among other factors, the level, geographic and business mix of our earnings.
Net income (loss) attributable to noncontrolling interests
Net income attributable to noncontrolling interests increased by $9.4 million, or 130.6%, to $2.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase was primarily driven by higher pre-tax income.
Financial Position, Liquidity and Capital Resources
Overview
The primary sources of liquidity for our business are the cash on our balance sheet, cash flow provided by operations, and the $600.0 million revolving Credit Facility, which was increased to $900.0 million on April 17, 2026.
Our future capital requirements will depend on many factors, including our expansion into other markets, our acquisitions of other companies and hiring of teams of producers, and our results of operations. To the extent that existing cash, cash from operations and credit facilities are insufficient to fund our future activities, we may need to raise additional funds through public equity or debt financing. As of March 31, 2026, our debt consisted of $600.0 million aggregate principal amount of 7.500% Senior Notes with a carrying amount of $597.0 million and $235.0 million outstanding under the Credit Facility with a carrying amount of $235.0 million, in each case exclusive of our warehouse facilities described under "-Warehouse Facilities Collateralized by U.S. Government Sponsored Enterprises."
Financial Position
Total assets were $5.3 billion as of March 31, 2026 and $5.0 billion as of December 31, 2025.
Total liabilities were $3.6 billion as of March 31, 2026 and $3.3 billion as of December 31, 2025.
Liquidity
As of March 31, 2026, we had cash and cash equivalents of $212.1 million. Additionally, we had $365.0 million available under our committed senior unsecured revolving Credit Facility. We expect to generate cash flows from operations to fund our business and use those funds, and our Credit Facility, to meet our short-term liquidity requirements, which we define as those arising within the next twelve months, and our long-term liquidity requirements, which we define as those beyond the next twelve months.
Debt
The carrying value of our debt, excluding our warehouse facilities, consisted of the following as of March 31, 2026 and December 31, 2025 (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
|
7.500% Senior Notes
|
$ | 597,015 | $ | 596,746 | |||||||
|
Credit Facility
|
235,000 | 75,000 | |||||||||
| Total corporate debt | $ | 832,015 | $ | 671,746 | |||||||
Credit Facility
On November 28, 2018, Newmark entered into the Credit Agreement by and among Newmark, the several financial institutions from time to time party thereto, as lenders, and Bank of America, N.A., as administrative agent.
On April 26, 2024, Newmark amended and restated the Credit Agreement, which among other things, extends the maturity date of the Credit Facility to April 26, 2027. The borrowing rates and financial covenants under the Credit Agreement are substantially consistent with the Credit Agreement prior to such amendment and restatement. As of March 31, 2026, the amount available to the Company under the Credit Facility was $600.0 million.
During the three months ended March 31, 2026, there were $175.0 million of borrowings and $15.0 million of repayments under the Credit Facility. As of March 31, 2026, there were $235.0 million of borrowings outstanding under the Credit Facility. As of March 31, 2026, borrowings under the Credit Facility carried an interest rate of 5.27%, with a weighted-average interest rate of 5.28% for the three months ended March 31, 2026. As of December 31, 2025, there were $75.0 million of borrowings under the Credit Facility.
On April 17, 2026, Newmark amended and restated the Credit Agreement, which among other things, increased its revolving Credit Facility to $900.0 million and extended the maturity date to April 17, 2030. The Company has the right to increase the Credit Facility to up to $1.1 billion, subject to certain conditions being met. The interest rate on any borrowing under the Credit Facility would have been approximately 5.27% as of market close on April 17, 2026.
7.500% Senior Notes
On January 12, 2024, Newmark closed its offering of $600.0 million aggregate principal amount of the 7.500% Senior Notes. The notes are general senior unsecured obligations of Newmark. Cantor purchased $125.0 million aggregate principal amount of 7.500% Senior Notes in the offering, and still holds such notes as of March 2, 2026. The Company received net proceeds from the offering of the 7.500% Senior Notes of approximately $594.7 million after deducting the initial purchasers'
discounts and estimated offering expenses. The notes bear interest at a rate of 7.500% per year, payable in cash on January 12 and July 12 of each year, commencing July 12, 2024. The 7.500% Senior Notes will mature on January 12, 2029.
The 7.500% Senior Notes were initially offered and sold in a private offering exempt from the registration requirements under the Securities Act. Customary registration rights were provided to purchasers of the 7.500% Senior Notes. On May 10, 2024, we filed a Registration Statement on Form S-4, which was declared effective by the SEC on June 6, 2024. On June 10, 2024, we launched an exchange offer in which holders of the 7.500% Senior Notes which were issued in the January 12, 2024 private placement could exchange such notes for new registered notes with substantially identical terms. The exchange offer expired on July 17, 2024, at which point the tendered 7.500% Senior Notes were exchanged for new registered notes with substantially identical terms.
See Note 24 - "Related Party Transactions - 7.500% Senior Notes" and "- Market-Making Registration Statement for CF&Co" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for further discussion.
Cantor Credit Agreement
On November 30, 2018, Newmark entered into an unsecured credit agreement with Cantor. The Cantor Credit Agreement provides for each party to issue loans to the other party in the lender's discretion. Pursuant to the Cantor Credit Agreement, the parties and their respective subsidiaries (with respect to Cantor, other than BGC and its subsidiaries) may borrow up to an aggregate principal amount of $250.0 million from each other from time to time at an interest rate which is the higher of Cantor or Newmark's short-term borrowing rate then in effect, plus 1.0%. As of March 31, 2026 and December 31, 2025, there were no borrowings outstanding under the Cantor Credit Agreement.
Warehouse Facilities Collateralized by U.S. Government Sponsored Enterprises
As of March 31, 2026, Newmark had $1.5 billion of committed loan funding, $1.1 billion of uncommitted loan funding available through three commercial banks, and an uncommitted $500.0 million Fannie Mae loan repurchase facility. Consistent with industry practice, these warehouse facilities are short-term, requiring annual renewal. These warehouse facilities are collateralized by an assignment of the underlying mortgage loans originated under various lending programs and third-party purchase commitments and are recourse only to our wholly owned subsidiary, Berkeley Point Capital, LLC. As of March 31, 2026 and December 31, 2025 we had $1.1 billion and $0.9 billion, respectively, outstanding under "Warehouse facilities collateralized by U.S. Government Sponsored Enterprises" on our accompanying unaudited condensed consolidated balance sheets.
Leases
Total lease liability as of March 31, 2026 was $505.1 million, of which $278.6 million of lease liability was within our flexible workspace business. In addition, Newmark had contracted future customer revenues and sub-lease income primarily related to its flexible workspace business as of March 31, 2026 amounting to approximately $168.8 million.
Debt Repurchase Authorization
On June 16, 2020, the Board and the Audit Committee authorized a debt repurchase program for the repurchase by the Company in the amount of up to $50.0 million of Company debt securities. Repurchases of Company debt securities, if any, are expected to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption.
Under the authorization, the Company may make repurchases of Company debt securities for cash from time to time in the open market or in privately negotiated transactions upon such terms and at such prices as management may determine. Additionally, the Company is authorized to make any such repurchases of Company debt securities through CF&Co (or its affiliates), in its capacity as agent or principal, or such other broker-dealers as management shall determine to utilize from time to time upon customary market terms or commissions.
As of March 31, 2026, the Company had $50.0 million remaining from its debt repurchase authorization.
Cash Flows
Cash flows from operations excluding activity from loan originations and sales, net were as follows (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by (used in) operating activities | $ | (247,598) | $ | (179,404) | ||||||||||
| Add back: | ||||||||||||||
| Net activity from loan originations and sales | 218,592 | 53,017 | ||||||||||||
|
Net cash provided by (used in) operating activities excluding activity from loan originations and sales (1)
|
$ | (29,006) | $ | (126,387) | ||||||||||
(1) Includes loans, forgivable loans and other receivables from employees and partners in the amount of $63.3 million and $122.3 million for the three months ended March 31, 2026 and 2025, respectively. Excluding these loans, net cash provided by (used in) operating activities excluding loan originations and sales would be $34.3 million and $(4.1) million for the three months ended March 31, 2026 and 2025, respectively.
Cash Flows for the Three Months Ended March 31, 2026
For the three months ended March 31, 2026, we used $247.6 million of cash from operating activities. Excluding activity from loan originations and sales, cash used in operating activities for the three months ended March 31, 2026 was $29.0 million. Cash used in operating activities included $63.3 million of loans, forgivable loans and other receivables from employees and partners primarily for the hiring of revenue generating professionals. Cash used in investing activities was $13.2 million, consisting primarily of $10.2 million of cash paid for the purchases of fixed assets and $2.4 million of payments for acquisitions, net of cash acquired. Cash used in financing activities of $246.5 million primarily related to net proceeds from warehouse facilities of $232.2 million and $160.0 million of net borrowings under the Credit Facility. This was offset by treasury stock repurchases of $136.3 million and payments to shareholders and partners for dividends and distributions (including tax distributions) of $9.4 million.
Cash Flows for the Three Months Ended March 31, 2025
For the three months ended March 31, 2025, we used $179.4 million of cash in operations. Excluding activity from loan originations and sales, cash provided by operating activities for the three months ended March 31, 2025 was $126.4 million. Cash used in operations included $122.3 million of loans, forgivable loans and other receivables from employees and partners primarily for the hiring of revenue generating professionals. Cash used in investing activities was $5.4 million, consisting of cash paid for the purchases of fixed assets. Cash provided by financing activities of $147.6 million primarily related to net borrowings of $100.0 million of corporate debt and net proceeds from warehouse facilities of $66.9 million. This was offset by payments to shareholders and partners for dividends and distributions of $18.3 million.
Commitments and Contingencies
See Note 28 - "Commitments and Contingencies" in Part I, Item 1 of this Quarterly Report on Form 10-Q for information responsive to Item 303(b)(1) of Regulation S-K regarding cash requirements from known contractual and other obligations. This includes contractual obligations relating to operating leases, warehouse facilities, debt, the commitment to fund construction loans and any associated interest.
Acquisitions
See Note 4 - "Acquisitions" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Credit Ratings
As of March 31, 2026, our public long-term credit ratings and associated outlooks are as follows:
| Rating | Outlook | |||||||||||||
| Fitch Ratings Inc. | BBB- | Stable | ||||||||||||
| JCRA | BBB+ | Stable | ||||||||||||
| Kroll Bond Rating Agency | BBB- | Positive | ||||||||||||
|
S&P Global Ratings
|
BB+ |
Stable
|
||||||||||||
Credit ratings and associated outlooks are influenced by several factors including, but not limited to, operating environment, earnings and profitability trends, the prudence of funding and liquidity management practices, balance sheet size composition and resulting leverage, cash flow coverage of interest, composition and size of the capital base, available liquidity, outstanding borrowing levels and the firm's competitive position in the industry. A credit rating and/or the associated outlook can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change. Any reduction in our credit ratings and/or the associated outlook could adversely affect the availability of debt financing on terms acceptable to us, as well as the cost and other terms upon which we are able to obtain any such financing. In addition, credit ratings and associated outlooks may be important to customers or counterparties when we compete in certain
markets and when we seek to engage in certain transactions. The interest rate on our 7.500% Senior Notes may increase by up to 2% in the event of credit ratings downgrades.
Certain Related Party Transactions
The following related party disclosure relates to the period subsequent to March 31, 2026. See Note 24 - "Related Party Transactions" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for related party transactions prior to March 31, 2026.
Cantor Rights to Purchase Cantor Units from Newmark Holdings
As of May 7, 2026, there were 137,830 Founding Partner interests in Newmark Holdings remaining which Newmark Holdings had the right to redeem or exchange and with respect to which Cantor had the right to purchase an equivalent number of Cantor Units following such redemption or exchange. See Note 24 - "Related Party Transactions Cantor Rights to Purchase Cantor Units from Newmark Holdings" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding Cantor's rights to purchase Cantor Units pursuant to the terms of the Newmark Holdings limited partnership agreement.
Regulatory Requirements
See Note 8 - "Capital and Liquidity Requirements" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for discussion relating to the impact of Newmark's capital requirements and requirements to maintain sufficient collateral to meet operational liquidity requirements.
Regulatory Environment
See "-Regulation" in Part I, Item 1, "Business," of our Annual Report on Form 10-K for the year ended December 31, 2025, for information related to our regulatory environment.
Equity
Share Repurchase Program
See Note 6 - "Stock Transactions and Unit Purchases" to our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
On February 18, 2026, Newmark's Board increased Newmark's Share Repurchase and Unit Purchase Authorization, which has no expiration date, to $400.0 million.
Fully Diluted Share Count
Our fully diluted weighted-average share counts for the three months ended March 31, 2026 and 2025 were as follows (in thousands):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
|
Common stock outstanding(1)
|
182,646 | 176,352 | |||||||||
|
Partnership units(2)
|
68,104 | - | |||||||||
| RSUs (Treasury stock method) | 4,886 | - | |||||||||
| Newmark exchange shares | 405 | - | |||||||||
|
Total(3)
|
256,041 | 176,352 | |||||||||
(1)Common stock consisted of Newmark Class A common stock and Newmark Class B common stock. For the three months ended March 31, 2026, the weighted-average number of shares of Newmark Class A common stock and Newmark Class B common stock that were included in our fully diluted EPS computation was 161.4 million shares and 21.3 million shares, respectively.
(2)Partnership units collectively include FPUs, limited partnership units, and Cantor Units. See Note 2 - "Limited Partnership Interests in Newmark Holdings and BGC Holdings" to our accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. In general, these partnership units are potentially exchangeable into shares of Newmark Class A common stock. In addition, the 20.3 million partnership units held by Cantor as of March 31, 2026 were generally exchangeable into up to 18.9 million shares of Newmark Class A common stock and/or Newmark Class B common stock at the then-current Exchange Ratio of 0.9270. These partnership units also generally receive quarterly allocations of net income, after the deduction of the Preferred Distribution, based on their weighted-average pro rata share of economic ownership of the operating subsidiaries. As a result, these partnership units are included in the fully diluted share count calculation shown above.
(3)For the three months ended March 31, 2026 and 2025, the weighted-average share count included 0.7 million and 79.0 million anti-dilutive securities, respectively, which were excluded in the computation of fully diluted earnings per share.
Our fully diluted period-end (spot) common stock, limited partnership unit, RSU and Newmark exchange share count as of each of March 31, 2026 and 2025 was as follows (in thousands):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
|
Common stock outstanding
|
177,274 | 183,210 | |||||||||
|
Partnership units
|
67,691 | 67,974 | |||||||||
| RSUs (Treasury stock method) | 4,886 | 4,755 | |||||||||
| Newmark exchange shares | 364 | 282 | |||||||||
|
Total
|
250,215 | 256,221 | |||||||||
Registration Statements
We have an effective registration statement on Form S-4 with respect to the offer and sale of up to 20.0 million shares and rights to acquire shares of our Class A common stock from time to time in connection with business combination transactions, including acquisitions of other businesses, assets, properties or securities. As of March 31, 2026, we have issued 3.2 million shares of our Class A common stock under this registration statement.
Contingent Payments Related to Acquisitions
As of March 31, 2026, our contingent cash consideration balance related to acquisitions was $11.3 million. The contingent equity instruments and cash liability is recorded at fair value in "Accounts payable, accrued expenses and other liabilities" on Newmark's accompanying unaudited condensed consolidated balance sheets.
Legal Proceedings
The Company is involved, from time to time, in legal actions associated with or incidental to its business. As of the date of this Quarterly Report, the Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on the Company's consolidated financial position or results of operations.
Critical Accounting Policies and Estimates
The preparation of our accompanying unaudited condensed consolidated financial statements in conformity with U.S. GAAP guidance requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in our accompanying unaudited condensed consolidated financial statements. These accounting estimates require the use of assumptions about matters, some which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our accompanying unaudited condensed consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows could be materially affected. We believe that of our significant accounting policies, the following policies involve a higher degree of judgment and complexity.
Revenue Recognition
We derive our revenues primarily through commissions from brokerage services, commercial mortgage origination, net, revenues from real estate Management Services, Servicing Fees and Other revenues. Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers as determined by when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation as evidenced by the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time when the customer obtains control over the promised good or service.
The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the "transaction price"). In determining the transaction price, we consider consideration promised in a contract that includes a variable amount, referred to as variable consideration, and estimate the amount of consideration due to us. Additionally, variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. In determining when to
include variable consideration in the transaction price, we consider all information (historical, current and forecast) that is available, including the range of possible outcomes, the predictive value of past experiences, the time period of when uncertainties are expected to be resolved and the amount of consideration that is susceptible to factors outside of our influence.
We also use third-party service providers in the provision of services to our customers. In instances where a third-party service provider is used, we perform an analysis to determine whether we are acting as a principal or an agent with respect to the services provided. To the extent that we are acting as a principal, the revenue and the expenses incurred are recorded on a gross basis. In instances where we are acting as an agent, the revenue and expenses are presented on a net basis within the revenue line item.
In some instances, we perform services for customers and incur out-of-pocket expenses as part of delivering those services. Our customers agree to reimburse us for those expenses, and those reimbursements are part of the contract's transaction price. Consequently, these expenses and the reimbursements of such expenses from the customer are presented on a gross basis because the services giving rise to the out-of-pocket expenses do not transfer a good or service. The reimbursements are included in the transaction price when the costs are incurred, and the reimbursements are due from the customer.
MSRs, Net
We initially recognize and measure the rights to service mortgage loans at fair value and subsequently measure them using the amortization method. We recognize rights to service mortgage loans as separate assets at the time the underlying originated mortgage loan is sold, and the value of those rights is included in the determination of the gains on loans held for sale. Purchased MSRs, including MSRs purchased from CCRE, are initially recorded at fair value, and subsequently measured using the amortization method.
We receive up to a three-basis point servicing fee and/or up to a one-basis point surveillance fee on certain Freddie Mac loans after the loan is securitized in a Freddie Mac pool. The Freddie Mac Strip is also recognized at fair value and subsequently measured using the amortization method, but is recognized as a MSR at the securitization date.
MSRs are assessed for impairment, at least on an annual basis, based upon the fair value of those rights as compared to the amortized cost. Fair values are estimated using a valuation model that calculates the present value of the future net servicing cash flows. In using this valuation method, we incorporate assumptions that management believes market participants would use in estimating future net servicing income. The fair value estimates are sensitive to significant assumptions used in the valuation model such as prepayment rates, cost of servicing, escrow earnings rates, discount rates and servicing multiples, which are affected by expectations about future market or economic conditions derived, in part, from historical data. It is reasonably possible that such estimates may change. We amortize the MSRs in proportion to, and over the period of, the projected net servicing income. For purposes of impairment evaluation and measurement, we stratify MSRs based on predominant risk characteristics of the underlying loans, primarily by investor type (Fannie Mae/Freddie Mac, FHA/Ginnie Mae, commercial mortgage-backed securities and other). To the extent that the carrying value exceeds the fair value of a specific MSR strata, a valuation allowance is established, which is adjusted in the future as the fair value of MSRs increases or decreases. Reversals of valuation allowances cannot exceed the previously recognized impairment up to the amortized cost.
Equity-Based and Other Compensation
Discretionary Bonus: A portion of our compensation and employee benefits expense comprises discretionary bonuses, which may be paid in cash, equity, partnership awards or a combination thereof. We accrue expense in a period based on revenues in that period and on the expected combination of cash, equity and partnership units. Given the assumptions used in estimating discretionary bonuses, actual results may differ.
RSUs: We account for equity-based compensation under the fair value recognition provisions of U.S. GAAP guidance. RSUs provided to certain employees are accounted for as equity awards, and in accordance with U.S. GAAP guidance, we are required to record an expense for the portion of the RSUs that is ultimately expected to vest. Further, the Company estimates forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Because significant assumptions are used in estimating employee turnover and associated forfeiture rates, actual results may differ from our estimates under different assumptions or conditions.
The fair value of RSU awards to employees is determined on the date of grant, based on the fair value of our Class A common stock. Generally, RSUs granted by us as employee compensation do not receive dividend equivalents; as such, we adjust the fair value of the RSUs for the present value of expected forgone dividends, which requires us to include an estimate of expected dividends as a valuation input. This grant-date fair value is amortized to expense ratably over the awards' vesting periods. For RSUs with graded vesting features, we have made an accounting policy election to recognize compensation cost on
a straight-line basis. The amortization is reflected as non-cash equity-based compensation expense in our accompanying unaudited condensed consolidated statements of operations.
Restricted Stock: Restricted stock provided to certain employees is accounted for as an equity award, and as per U.S. GAAP guidance, we are required to record an expense for the portion of the restricted stock that is ultimately expected to vest. We have granted restricted stock that is not subject to continued employment or service; however, transferability is subject to compliance with our and our affiliates' customary non-compete obligations. Such shares of restricted stock are generally saleable by partners in five to 10 years. Because the restricted stock is not subject to continued employment or service, the grant-date fair value of the restricted stock is expensed on the date of grant. The expense is reflected as non-cash equity-based compensation expense in our accompanying unaudited condensed consolidated statements of operations.
Limited Partnership Units: Limited partnership units in Newmark Holdings are held by Newmark employees and receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders. As discussed above, Preferred Units in Newmark Holdings are not entitled to participate in partnership distributions other than with respect to a distribution at a rate of either 0.6875% (which is 2.75% per calendar year) or such other amount as set forth in the award documentation. The quarterly allocations of net income to such limited partnership units are reflected as a component of compensation expense under "Equity-based compensation and allocations of net income to limited partnership units and FPUs" in our accompanying unaudited condensed consolidated statements of operations. Prior to the Corporate Conversion, certain Newmark employees held BGC Holdings limited partnership units with similar entitlements.
Certain of these limited partnership units entitle the holders to receive post-termination payments equal to the notional amount in four equal yearly installments after the holder's termination. These limited partnership units are accounted for as post-termination liability awards under U.S. GAAP guidance, which requires that Newmark record an expense for such awards based on the change in value at each reporting period and include the expense in our accompanying unaudited condensed consolidated statements of operations as part of "Equity-based compensation and allocations of net income to limited partnership units and FPUs." The liability for limited partnership units with a post-termination payout is included in "Other long-term liabilities" on our accompanying unaudited condensed consolidated balance sheets.
Certain limited partnership units held by Newmark employees are granted exchangeability into Newmark Class A common stock or may be redeemed in connection with the grant of shares of Newmark Class A common stock. At the time exchangeability is granted, or the shares are issued, Newmark recognizes an expense based on the fair value of the award on that date, which is included in "Equity-based compensation and allocations of net income to limited partnership units and FPUs" in our accompanying unaudited condensed consolidated statements of operations.
Employee Loans: We have entered into various agreements with certain of our employees and partners whereby these individuals receive loans that may be either wholly or in part repaid from distributions that the individuals receive on some or all of their limited partnership interests and from proceeds of the sale of the employees' shares of our Class A common stock or may be forgiven over a period of time. Cash advance distribution loans are documented in formal agreements and are repayable in timeframes outlined in the underlying agreements. We intend for these advances to be repaid in full from the future distributions on existing and future awards granted or the proceeds of the sales of the employees' shares. The allocations of net income to the awards are treated as compensation expense and the proceeds from distributions are used to repay the loan. The forgivable portion of any loan is recognized as compensation expense in our accompanying unaudited condensed consolidated statements of operations over the life of the loan. We review the loan balances each reporting period for collectability. If we determine that the collectability of a portion of the loan balances is not expected, we recognize a reserve against the loan balances. Actual collectability of loan balances may differ from our estimates. As of March 31, 2026 and December 31, 2025, the aggregate balance of employee loans, net of reserve, was $900.3 million and $862.2 million, respectively, and is included as "Loans, forgivable loans and other receivables from employees and partners, net" in our accompanying unaudited condensed consolidated balance sheets. Compensation expense for the above-mentioned employee loans was for the three months ended March 31, 2026 and 2025, was $25.2 million and $25.5 million, respectively. The compensation expense related to these loans was included as part of "Compensation and employee benefits" in our accompanying unaudited condensed consolidated statements of operations.
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. As prescribed in U.S. GAAP guidance, Intangibles - Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is periodically tested for impairment. We review goodwill for impairment on an annual basis during the fourth quarter of each fiscal year or whenever an event occurs, or circumstances change that could reduce the fair value of a reporting unit below its carrying amount.
When reviewing goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the results of the qualitative assessment indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we choose to bypass the qualitative assessment, we perform a quantitative goodwill impairment analysis as follows.
The quantitative goodwill impairment test, used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is deemed not to be impaired. To estimate the fair value of the reporting unit, we use a discounted cash flow model and data regarding market comparables. The valuation process requires significant judgment and involves the use of significant estimates and assumptions. These assumptions include cash flow projections, estimated cost of capital and the selection of peer companies and relevant multiples. Because significant assumptions and estimates are used in projecting future cash flows, choosing peer companies and selecting relevant multiples, actual results may differ from our estimates under different assumptions or conditions.
Credit Losses
The CECL methodology requires us to estimate lifetime expected credit losses by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period beyond the balance sheet date.
The expected credit loss is modeled based on our historical loss experience adjusted to reflect current conditions. A significant amount of judgment is required in the determination of the appropriate reasonable and supportable period, the methodology used to incorporate current and future macroeconomic conditions, determination of the probability of and exposure at default, all of which are ultimately used in measuring the quantitative components of our reserves. Beyond the reasonable and supportable period, we estimate expected credit losses using our historical loss rates. We also consider whether to adjust the quantitative reserves for certain external and internal qualitative factors, which consequentially may increase or decrease the reserves for credit losses and receivables. In order to estimate credit losses, assumptions about current and future economic conditions are incorporated into the model using multiple economic scenarios that are weighted to reflect the conditions at each measurement date.
During the three months ended March 31, 2026 and 2025, we expensed $4.1 million and $3.0 million, respectively, of "Operating, administrative and other" expense on the accompanying unaudited condensed consolidated statements of operations These reserves were based on macroeconomic forecasts which are critical inputs into our model and material movements in variables such as the U.S. unemployment rate and U.S. GDP growth rate which could significantly affect our estimated expected credit losses. These macroeconomic forecasts, under different conditions or using different assumptions or estimates, could result in significantly different changes in reserves for credit losses. It is difficult to estimate how potential changes in specific factors might affect the overall reserves for credit losses and current results may not reflect the potential future impact of macroeconomic forecast changes.
Income Taxes
Newmark accounts for income taxes using the asset and liability method as prescribed in U.S. GAAP guidance, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to basis differences between our accompanying unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Certain of Newmark's entities are taxed as U.S. partnerships and are primarily subject to the UBT in New York City. Therefore, the tax liability or benefit related to the partnership income or loss except for the UBT rests with the partners, rather than the partnership entity. As such, the partners' tax liability or benefit is not reflected in our accompanying unaudited condensed consolidated financial statements. The tax-related assets, liabilities, provisions or benefits included in our accompanying unaudited condensed consolidated financial statements also reflect the results of the entities that are taxed as corporations, either in the U.S. or in foreign jurisdictions.
Newmark provides for uncertain tax positions based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Because significant assumptions are used in determining whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from Newmark's estimates under different assumptions or conditions. Newmark recognizes interest and penalties related to uncertain tax positions in "Provision for income taxes" in our accompanying unaudited condensed consolidated statements of operations.
A valuation allowance is recorded against deferred tax assets if it is deemed more likely than not that those assets will not be realized. In assessing the need for a valuation allowance, Newmark considers all available evidence, including past operating results, the existence of cumulative losses in the most recent fiscal years, estimates of future taxable income and the feasibility of tax planning strategies.
The measurement of current and deferred income tax assets and liabilities is based on provisions of enacted tax laws and involves uncertainties in the application of tax regulations in the U.S. and other tax jurisdictions. Because Newmark's interpretation of complex tax law may impact the measurement of current and deferred income taxes, actual results may differ from these estimates under different assumptions regarding the application of tax law.
Derivative Financial Instruments
We have loan commitments to extend credit to third parties. The commitments to extend credit are for mortgage loans at a specific rate (rate lock commitments). These commitments generally have fixed expiration dates or other termination clauses and may require a fee. We are committed to extend credit to the counterparty as long as there is no violation of any condition established in the commitment contracts. Whenever we commit to extend credit, we simultaneously enter into a Forward Sales Contract.
Both the commitment to extend credit and the forward sale commitment qualify as derivative financial instruments. We recognize all derivatives on our accompanying unaudited condensed consolidated balance sheets as assets or liabilities measured at fair value. The change in the derivatives fair value is recognized in current period earnings.
Recent Accounting Pronouncements
See Note 1 - "Organization and Basis of Presentation" to our accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, for information regarding recent accounting pronouncements.
Capital Deployment Priorities, Dividend Policy and Repurchase and Redemption Program
On April 29, 2026, the Board declared a quarterly dividend of $0.06 per share. Prior to that, the Board had declared a quarterly dividend of $0.03 per share since 2022. In addition, Newmark Holdings has paid quarterly after-tax distributions to its partners. The Exchange Ratio is adjusted in accordance with the terms of the Separation and Distribution Agreement due to any difference between our dividend policy and the distribution policy of Newmark Holdings.
Any dividends, if and when declared by our Board, will be paid on a quarterly basis. No assurance can be made, however, that a dividend will be paid each quarter. The declaration, payment, timing, and amount of any future dividends payable by us will be at the sole discretion of our Board. With respect to any distributions which are declared, amounts paid to or on behalf of partners will at least cover their related tax payments. Whether any given post-tax amount is equivalent to the amount received by a stockholder also on an after-tax basis depends upon stockholders' and partners' domiciles and tax status.
We are a holding company, with no direct operations, and therefore we are able to pay dividends only from our available cash on hand and funds received from distributions from Newmark OpCo. Our ability to pay dividends may also be limited by regulatory considerations as well as by covenants contained in financing or other agreements. In addition, under Delaware law, dividends may be payable only out of surplus, which is our net assets minus our capital (as defined under Delaware law), or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Accordingly, any unanticipated accounting, tax, regulatory or other charges against net income may adversely affect our ability to declare and pay dividends. While we intend to declare and pay dividends quarterly, there can be no assurance that our Board will declare dividends at all or on a regular basis or that the amount of our dividends will not change.
Our Organizational Structure
Dual Class Equity Structure of Newmark Group, Inc. We have a dual class equity structure, consisting of shares of Newmark Class A common stock and Newmark Class B common stock. We expect to retain and have no plans to change our dual class structure.
Newmark Class A common stock. Each share of Newmark Class A common stock is generally entitled to one vote on matters submitted to a vote of our stockholders. As of March 31, 2026, there were 251,546,425 shares of Newmark Class A
common stock issued and 155,988,950 shares outstanding. As of March 31, 2026, Cantor and CFGM held 1,025,612 shares of Newmark Class A common stock, representing approximately 0.3% of our total voting power. See "-Partnership Exchange Rights into Newmark Class A and Class B Common Stock," below, for a discussion of developments after March 31, 2026.
Newmark Class B common stock. Each share of Newmark Class B common stock is generally entitled to the same rights as a share of Newmark Class A common stock, except that, on matters submitted to a vote of our stockholders, each share of Newmark Class B common stock is entitled to 10 votes. The Newmark Class B common stock generally votes together with the Newmark Class A common stock on all matters submitted to a vote of our stockholders. As of March 31, 2026, Cantor, CFGM, and Mr. Brandon Lutnick (through his control of Cantor and CFGM and beneficial ownership of shares held by them) held 21,285,533 shares of Newmark Class B common stock, representing all of the outstanding shares of Newmark Class B common stock and approximately 57.7% of our total voting power.
Shares of Newmark Class B common stock are convertible into shares of Newmark Class A common stock at any time in the discretion of the holder on a one-for-one basis. Accordingly, if Cantor, CFGM, and Mr. Brandon Lutnick (through his control of Cantor and CFGM and beneficial ownership of shares held by them) had converted all of their shares of Newmark Class B common stock into shares of Newmark Class A common stock as of March 31, 2026, they would have collectively held 12.6% of the voting power in Newmark and the other stockholders of Newmark would have held 87.6% of the voting power in Newmark (and the indirect economic interests in Newmark OpCo would remain unchanged). In addition, if as of March 31, 2026 (1) Cantor, CFGM and Mr. Brandon Lutnick (through his control of Cantor and CFGM and beneficial ownership of shares held by them) continued to hold shares of Newmark Class B common stock and (2) Cantor exchanged all of the 20,383,335 Newmark Holdings exchangeable limited partnership units then held by Cantor for shares of Newmark Class B common stock, Cantor, CFGM, and Mr. Brandon Lutnick would have held 72.9% of the voting power in Newmark, and the stockholders of Newmark other than Cantor, CFGM, and Mr. Brandon Lutnick would have held 27.1% of the voting power in Newmark.
Cantor has pledged 5,000,000 shares of Class B common stock held by it to Bank of America, N.A. in connection with certain partner loans. There are no circumstances under which the holders of Newmark Class B common stock would be required to convert their shares of Newmark Class B common stock into shares of Newmark Class A common stock, absent the exercise of the pledge in the event of foreclosure. Our Certificate of Incorporation does not provide for automatic conversion of shares of Newmark Class B common stock into shares of Newmark Class A common stock upon the occurrence of any event.
Partnership Structure of Newmark Holdings and Newmark OpCo. At Newmark Group, Inc., we are a holding company that holds partnership interests as described below, serves as the general partner of Newmark Holdings and, through Newmark Holdings, acts as the general partner of Newmark OpCo. As a result of our ownership of the general partnership interest in Newmark Holdings and Newmark Holdings' general partnership interest in Newmark OpCo, we consolidate Newmark OpCo's results for financial reporting purposes.
We hold the Newmark Holdings general partnership interest and the Newmark Holdings special voting limited partnership interest, which entitle us to remove and appoint the general partner of Newmark Holdings and serve as the general partner of Newmark Holdings, which entitles us to control Newmark Holdings. Newmark Holdings, in turn, holds the Newmark OpCo general partnership interest and the Newmark OpCo special voting limited partnership interest, which entitle Newmark Holdings to remove and appoint the general partner of Newmark OpCo, and serve as the general partner of Newmark OpCo, which entitles Newmark Holdings (and thereby us) to control Newmark OpCo. In addition, as of March 31, 2026, we directly held Newmark OpCo limited partnership interests consisting of approximately 180,951,935 units, representing approximately 72.6% of the outstanding Newmark OpCo limited partnership interests.
Cantor, founding partners, working partners and limited partnership unit holders directly hold Newmark Holdings limited partnership interests. Newmark Holdings, in turn, holds Newmark OpCo limited partnership interests and, as a result, Cantor, founding partners, working partners and limited partnership unit holders indirectly have interests in Newmark OpCo limited partnership interests.
The Newmark Holdings limited partnership interests are held and designated as follows:
•Newmark Holdings limited partnership interests held by Cantor and CFGM are designated as Newmark Holdings exchangeable limited partnership interests;
•Newmark Holdings limited partnership interests held by the founding partners are designated as Newmark Holdings founding partner interests;
•Newmark Holdings limited partnership interests held by working partners are designated as Newmark Holdings working partner interests; and
•Newmark Holdings limited partnership interests held by limited partnership unit holders are designated as limited partnership units.
Partnership Exchange Rights into Newmark Class A and Class B Common Stock. Each Newmark Holdings limited partnership interest held by Cantor and CFGM is generally exchangeable with us for a number of shares of Newmark Class B common stock (or, at Cantor's option or if there are no additional authorized but unissued shares of Newmark Class B common stock, a number of shares of Newmark Class A common stock) equal to the Exchange Ratio.
As of March 31, 2026, 1,543,818 founding/working partner interests were outstanding. These founding/working partner interests were issued in the Separation to holders of BGC Holdings founding/working partner interests, who received such founding/working partner interests in connection with BGC Partners' acquisition of the BGC Partners business from Cantor in 2008. The Newmark Holdings limited partnership interests held by founding/working partners are not exchangeable with us unless (1) Cantor acquires Cantor Units from Newmark Holdings upon termination or bankruptcy of the founding/working partners or redemption of their units by Newmark Holdings (which it has the right to do under certain circumstances), in which case such interests will be exchangeable with us for shares of Newmark Class A common stock or Newmark Class B common stock as described above, or (2) Cantor determines that such interests can be exchanged by such founding/working partners with us for Newmark Class A common stock, with each Newmark Holdings unit exchangeable for a number of shares of Newmark Class A common stock equal to the exchange ratio (which was initially one, but is subject to adjustment as set forth in the Separation and Distribution Agreement), on terms and conditions to be determined by Cantor (which exchange of certain interests Cantor expects to permit from time to time). Cantor has provided that certain founding/working partner interests are exchangeable with us for Class A common stock, with each Newmark Holdings unit exchangeable for a number of shares of Newmark Class A common stock equal to the exchange ratio (which was initially one, but is subject to adjustment as set forth in the Separation and Distribution Agreement), in accordance with the terms of the Newmark Holdings limited partnership agreement. Once a Newmark Holdings founding/working partner interest becomes exchangeable, such founding/working partner interest is automatically exchanged upon a termination or bankruptcy with us for Newmark Class A common stock.
We also provide exchangeability for partnership units into Newmark Class A common stock in connection with (1) our partnership redemption, compensation and restructuring programs, (2) other incentive compensation arrangements and (3) business combination transactions.
As of March 31, 2026, 68,334,462 limited partnership units were outstanding (including founding/working partner interests and working partner interests, and units held by Cantor). Limited partnership units will be only exchangeable with us in accordance with the terms and conditions of the grant of such units, which terms and conditions are determined in our sole discretion, as the Newmark Holdings general partner, with the consent of the Newmark Holdings exchangeable limited partnership interest majority in interest, in accordance with the terms of the Newmark Holdings limited partnership agreement.
The exchange ratio between Newmark Holdings limited partnership interests and Newmark Class A or Class B common stock was initially one. However, this exchange ratio will be adjusted in accordance with the terms of the Separation and Distribution Agreement if our dividend policy and the distribution policy of Newmark Holdings are different. As of March 31, 2026, the exchange ratio was 0.9270.
As of December 31, 2024, Cantor was obligated to distribute 7,221,277 shares of Class A common stock to certain current and former partners of Cantor to satisfy certain deferred stock distribution obligations provided to such partners (i) on April 1, 2008, and (ii) on February 14, 2012 in connection with Cantor's payment of previous quarterly partnership distributions. Certain Cantor partners had elected to receive their distributed shares in 2008 and 2012, respectively, and others had elected to defer receipt of their shares until a future date.
On February 18, 2025, Cantor exercised exchange rights with respect to 7,782,387 exchangeable limited partnership interests held by it, at the then-current Exchange Ratio of 0.9279, for 7,221,277 shares of Class A common stock, which Newmark issued to Cantor in reliance on the exemption from registration under the Securities Act provided by Section 4(a)(2) thereof for transactions not involving a public offering, and then immediately delivered those 7,221,277 shares of Class A Common Stock to those certain current and former Cantor partners in satisfaction of all its remaining distribution rights obligations to them. After this event, Cantor held 19,787,703 limited partnership interests, 69,469,567 limited partnership units were outstanding, and 159,223,231 shares of Class A common stock were outstanding. This issuance did not change the fully diluted number of shares outstanding.
With each exchange, our direct and indirect interest in Newmark OpCo will proportionately increase because, immediately following an exchange, Newmark Holdings will redeem the Newmark Holdings unit so acquired for the Newmark OpCo limited partnership interest underlying such Newmark Holdings unit.
On November 18, 2025, Cantor purchased from Newmark Holdings an aggregate of (i) 524,108 exchangeable limited partnership interests for aggregate consideration of $1,909,908 as a result of the redemption of 524,108 Founding Partner interests, and (ii) 71,524 exchangeable limited partnership interests for aggregate consideration of $302,750 as a result of the exchange of 71,524 Founding Partner interests.
Allocation of Profits and Losses. The profit and loss of Newmark OpCo are allocated to Newmark Holdings and Newmark Group based on the total number of Newmark OpCo units held by each of those entries outstanding.
2025 Mr. Howard Lutnick Divestiture Events
In connection with Mr. Howard Lutnick's confirmation as the U.S. Secretary of Commerce, he agreed to divest his interests in the Cantor, CFGM, and the Company, among other entities, to comply with U.S. government ethics rules. For a detailed discussion about the divestiture of Mr. Howard Lutnick's holdings in the Company, see Part I, Item 1, "Business-Our Organizational Structure" in our Annual Report on Form 10-K for the year ended December 31, 2025, and Note 24-"Related Party Transactions" to our unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Lutnick Family Voting and Transfer Agreement
On May 16, 2025, Mr. Brandon Lutnick, Mr. Kyle Lutnick, Ms. Casey J. Lutnick, and Mr. Ryan G. Lutnick, each in their capacity as trustees of certain trusts (including the Purchaser Trusts), and certain other entities entered into the Lutnick Family Voting Agreement relating to the Lutnick Family Voting Agreement Securities. On October 6, 2025, the governance, voting and transfer provisions of the Lutnick Family Voting Agreement became effective.
Pursuant to the trust documentation of the Purchaser Trusts, each of Mr. Brandon Lutnick, Mr. Kyle Lutnick, Ms. Casey Lutnick and Mr. Ryan Lutnick is an investment trustee of such trusts, and Mr. Brandon Lutnick is the Controlling Investment Trustee, which means that if there is any disagreement among the investment trustees, the decision of Mr. Brandon Lutnick will control if he is then acting as an investment trustee. Any such decisions, however, shall be subject to the terms of the Lutnick Family Voting Agreement.
The Lutnick Family Voting Agreement provides that, with respect to the election or removal of directors of the Company, (i) if there is a Controlling Investment Trustee, each of the parties shall vote (or cause the voting of) the Lutnick Family Voting Agreement Securities over which it has the direct or indirect power to vote on such director election, as directed by the Controlling Investment Trustee (which is currently Mr. Brandon Lutnick) after consultation with each of the Family Branch representatives); and (ii) if there is not a Controlling Investment Trustee, the parties shall vote (or cause the voting of) the Lutnick Family Voting Agreement Securities over which it has the direct or indirect power to vote on such director election, as directed by a Majority of the Family Branches.
The Lutnick Family Voting Agreement further provides that, with respect to the following matters for which a vote of securities of the Company is sought, each of the parties to the Lutnick Family Voting Agreement shall vote the Lutnick Family Voting Agreement Securities over which it has the direct or indirect power to vote as directed by a Majority of the Family Branches:
•Any merger or consolidation transaction or sale, lease or exchange of all, or substantially all, of the assets of the Company, or any transaction or series of related transactions pursuant to which shares of the Company are transferred such that more than 50% of the voting power of the equity securities of the Company are transferred;
•Entry by the Company or any of its subsidiaries into any transaction or series of related transactions with a member of any Family Branch (other than with respect to election or removal of directors of the Company);
•The authorization or issuance of any equity securities by the Company (other than pursuant to an incentive compensation plan); and
•The amendment, restatement, modification or supplement of any organizational document of the Company or its subsidiaries in a manner that would reasonably be expected to impair, interfere with or delay the exercise of the rights set forth with respect to these bulleted items.
The Lutnick Family Voting Agreement also prohibits the transfer of the Lutnick Family Voting Agreement Securities without the consent of a Majority of the Family Branches, subject to certain limited exceptions. As of March 31, 2026, Mr. Brandon Lutnick beneficially owned 4,391,380 shares of our Class A common stock and 21,285,533 shares of our Class B common stock, collectively representing 58.9% of the total voting power of our outstanding common stock.
Ownership Structure. The following diagram illustrates the ownership structure of Newmark as of March 31, 2026. The diagram does not reflect the various subsidiaries of Newmark, Newmark OpCo or Cantor (including certain operating subsidiaries that are organized as corporations whose equity is either wholly-owned by Newmark or whose equity is majority-owned by Newmark with the remainder owned by Newmark OpCo) or the results of any exchange of Newmark Holdings exchangeable limited partnership interests or, to the extent applicable, Newmark Holdings founding partner interests, Newmark Holdings working partner interests or Newmark Holdings limited partnership units.
STRUCTURE OF NEWMARK AS OF MARCH 31, 2026
(1) Excludes unrestricted Class A common stock owned by employees.
(2) Cantor includes Cantor Fitzgerald, L.P. and CFGM. Cantor Fitzgerald, L.P. has 11.8% of the economics and 56.8% of the voting power in Newmark Group, Inc. CFGM has 0.8% of the economics and 1.2% of the voting power in Newmark Group, Inc.
The diagram reflects the following activity in Newmark Class A common stock and Newmark Holdings partnership unit activity from January 1, 2025 through March 31, 2026: (a) an aggregate of 3,838,475 limited partnership units granted by Newmark Holdings; (b) 9,379,317 shares of Newmark Class A common stock repurchased by us; (c) 52,376 shares of Newmark Class A common stock forfeited; (d) 1,116,684 shares of Newmark Class A common stock issued for RSUs; (e) 168,524 shares of Newmark Class A common stock issued by us under our acquisition shelf Registration Statement on Form S-4 (Registration No. 333-231616), but not the 16,756,674 of such shares remaining available for issuance by us under such Registration Statement; and (f) (375,795) terminated limited partnership units.
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