“We are on a cusp of a new market”.
That was the opening remark from an excited Barry Gosin, chief executive of Newmark, as the growing adviser announced its results for Q2 2023.
The firm, which in the UK owns the Gerald Eve, BH2 and Harper Dennis Hobbs businesses, reported revenues of $585.8m (£459m) in the three months ended 30 June, down by 22.4% on the same period on 2022. Half-year revenues totalled just over $1.1bn, down from $1.4bn in H1 2022.
Investment was the poorest-performing division of the business, with revenues for H1 down by 58.6% on H1 2022 to $149.6m. This was followed by commercial mortgage origination, where revenues were down by 44.7% to $107.2m. Revenues from Newmark’s management services business lines and the leasing business dipped by 3% and 3.6% respectively to $453m and $396.9m.
Despite the declining revenues, Gosin said he expected capital markets to rebound towards the end of this year, with a “robust back half of 2024”.
“I have never been more excited about our future,” said Gosin. “We are on the cusp of a new market. The complex dynamics of dramatically higher interest rates and shifting capital sources across both debt and equity require a higher level of ingenuity and talent to provide different and creative solutions in this new world.”
He added: “Given the investments we have made, we are uniquely positioned to capitalise on this changing landscape. Once markets normalise, we anticipate exceeding our best ever 2021 revenues.”
Gosin said Newmark was particularly confident around its debt business and that he expected to capitalise on the record $1.9tn of debt maturities anticipated over the next two years.
“With the sharp increase in interest rates and cap rates and the pullback in lending by banks and other traditional lenders, we believe a large and growing percentage of investors and owners will need to find alternative solutions,” said Gosin.
“We expect a significant portion of debt maturities to be resolved not only through refinancings, which will help our mortgage brokerage and origination businesses, but through more complex and sophisticated restructurings and recapitalisation.
“This process has already begun, with Newmark arranging several equity joint ventures and recaps for our clients thus far in 2023, with many other mandates in the pipeline,” he added.
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