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Newmark Completes $712.7 Million of Commercial Mortgages During 3Q2018

October 16, 2018

Multifamily Leads Production Volumes Followed by Retail Despite New Economy Challenges; Newmark Set to Exceed $2 Billion Total Production in 2018 for Seventh Year Running

SAN FRANCISCO – Newmark™, the largest independent commercial mortgage banking firm in the western U.S., completed $712.7 million of commercial mortgages during 3Q2018 across 81 unique transactions. As 2018 production totals for the first three quarters now exceed $1.8 Billion, volumes are consistent with Newmark’s expectation of production exceeding $2 billion for a seventh year.

In terms of capital requirements for unique asset classes, the active property types in 3Q2018 included multifamily, retail and office; with the company’s Los Angeles, San Francisco and Seattle production offices continuing to show the highest placement volumes during the period.

“The health of the commercial real estate markets remains excellent across all asset classes, and not surprisingly production volumes are led by multifamily transactions,” said Michael Heagerty, principal and CFO with Newmark. ”We remain in a historically low interest rate environment at the close of 2018, and Newmark’s clients remain active in addressing long and near term structured financing needs. Retail is an asset class that Newmark producers have successfully targeted by identifying desired fundamentals and underwriting qualified assets relative to long-term performance. This has allowed clients to secure best-option financing in this challenged asset class adjusting to new economy realities. Self storage financing, essentially a boutique industrial asset class, is also receiving healthy allocations from Newmark’s correspondent lenders. Production in this asset class is approaching financing volumes of $400 million during the past 24 months.”

Newmark has also focused its leadership team on addressing a list of legislative agendas critical to the long-term health of the commercial real estate markets. This agenda is focused on Federal and State agendas with a direct impact on ownership or financing; including tax reform and rent control.

“The MBA, CMBA, and CREF-C have collectively targeted several issues for action in 2018, and our principals are active within our peer organizations to ensure an outcome fostering the long-term health of the commercial real estate markets, truly a bipartisan issue,” said Heagerty. “In California, Newmark has joined a bi-partisan community of public officials, candidates, organizations and business leaders opposed to Proposition 10, and recommend our peers in commercial real estate visit the California Mortgage Bankers Association analysis at the link below as they consider their own position.”

California Mortgage Bankers Association California Proposition 10 Position Overview

Additionally, Heagerty pointed to the following trends as worthy of consideration moving into 4Q2018:

3Q2018 Production – Newmark continues meeting quarterly production goals in 2018 from forward-looking clients seeking to take advantage of historically low rates. Newmark is on track to exceed $2 billion for total 2018 production for the seventh year in a row.

Industrial – While 3Q2018 production volumes reflected a healthy interest from correspondent lenders for multifamily, office and retail assets, industrial remains the favored asset class for allocations moving into the fourth quarter and 2019.

Primary, Secondary and Tertiary Markets – Lenders continue to seek asset allocations in the primary MSA markets of the Western States, with a continued willingness to review well positioned assets of any commercial property class in secondary and tertiary markets across the United States.

Capital Sources – Life companies remain the most active lending source for Newmark’s clients. These lenders are showing an above average appetite for commercial mortgage allocations.

2018 Interest Rates – Interest rates are slowly increasing in 2018, but spread compression is compensating to keep commercial mortgage finance rates at historic lows in 2018.

Legislative Agenda – Newmark’s executive leaders continue to work through industry peer organizations like the Mortgage Bankers Association, the Commercial Real Estate Finance Council and the California Mortgage Bankers Association to ensure that commercial real estate finance, investment and ownership priorities remain at the forefront of legislative and ballot agendas in 2018. Resolution of a number of Federal and individual state policy agendas that will benefit the health of the entire commercial real estate industry remains a primary goal for the industry. Newmark is committed to playing an active role in the outcome.

Servicing – Newmark continues to service a portfolio of commercial mortgage loans for assets across the United States valued in excess of $12 billion. Loan performance is consistent with underwriting, with limited defaults requiring special service solutions or workouts, an indicator of healthy commercial real estate markets buoyed by a strong overall economy.

 

About Newmark:

Newmark, a privately held company based in San Francisco, is a full service mortgage banking firm with an extensive lineup of correspondent lenders utilizing Newmark’s production, closing and servicing capabilities. Established in 1991, Newmark is currently staffed by over 70 employees in regional offices throughout the western United States. The company’s national servicing platform valued in excess of $12 billion represents more than 1,300 loans located in 40 states. Newmark is rated as a Primary Servicer by Standard & Poor’s and is one of a select few non-banking/non-insurance chartered companies with this designation. For more information please visit www.newmarkrealtycapital.com.

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