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Newmark Realty Capital Completes $2.47 Billion of Commercial Mortgages During 2018; Ends Year with 4Q2018 Production Totals of $669.1 Million across 73 Transactions

February 6, 2019

Firm Surpasses $2 Billion in Total Production Seventh Year Running Through 270 Transactions; Health of Market Punctuated by $12 Billion Servicing Portfolio Performing at Near 100 Percent

SAN FRANCISCO – Newmark Realty Capital, Inc. (NRC), the largest independent commercial mortgage banking firm in the western U.S., completed $2.47 billion of commercial mortgages during 2018 across 270 transactions. This is the seventh year the firm has exceeded $2 billion in annual production, a trend pointing to both healthy commercial real estate markets and operational performance. At year end, NRC’s 4Q2018 production totaled $669.1 million through 73 transactions.

“Newmark Realty Capital met and exceeded our projections for 2018 and for many reasons it was a banner year,” said Michael Heagerty, Principal and CFO with Newmark Realty Capital. “We further solidified our internal operating best practices, organically grew our market share and workforce, joined our peers in successfully shaping federal and state legislative dialogue and continued growing a premier servicing portfolio through diligent oversight, active management and accurate underwriting.”

In terms of capital allocations by asset class, the top funded property types in 2018 included (ranked in descending order) office, multifamily and retail assets; with the company’s Los Angeles, San Francisco and Seattle production offices finishing the year with NRC’s highest placement volumes.

“Notably, retail assets received above-expected allocations during a tumultuous cycle of changing fundamentals in this sector, demonstrating the ability of our producers to precisely underwrite and then identify relevant funding options for this challenged asset class,” said Tim Storey, Principal with Newmark Realty Capital in Phoenix. “Our teams also met correspondent allocations and served client needs through a significant volume of transactions for multifamily and industrial assets. However, it was office that surprised us all as the firm’s top asset class by sheer total of funding secured.”

NRC is a producer-owned platform entering its third decade of operations, led by founders and a team of partners active in day-to-day production. Guided by a vested committee of experienced principal leaders, the firm’s focus on best practices, workforce development and platform efficiencies will remain key mandates for NRC moving into 2019. This culture of constant improvement guides a commitment to organic growth including recruiting key talent and a development of operational efficiencies for mortgage production and administration of a growing $12 billion servicing portfolio.

“As a company founded, owned and managed by direct producers, we are extremely selective when adding professionals to our production teams,” said Peter Welsh, Principal with Newmark Realty Capital’s Los Angeles office. “That being said, our executive committee focuses on lateral recruitment and key leadership additions that reflect our core best practices and performance drive. It was with great personal enthusiasm on my part that we welcomed to our ranks Paige Serden, a longtime peer and colleague who joined us at yearend 2018. She is one of the nation’s premier talents in commercial mortgage finance and real estate banking, and now a key member of our LA production team.”

In total during 2018, NRC added nine experienced executive professionals to its production teams in San Francisco, Southern California and Seattle, including a roster of senior production talent with more than $8.5 billion in career production stats between them. NRC will continue to develop staff and selectively add producers in 2019 where additions will improve NRC production capabilities for the benefit of its borrower and lender clients.

Additionally, NRC’s Heagerty pointed to the following trends identified collectively by NRC’s principal leadership as worthy of consideration moving into 1Q2019:

  • 2019 Production – NRC remains optimistic for commercial mortgage production in 2019 barring significant or sustained interruptions to the domestic economy. With that in mind, NRC will anticipate exceeding $2 billion in production in 2019, and current allocations available from NRC’s more than 80 lenders closing loans in 2018 points to meeting this projection.
  • 2019 Interest Rates – Most lender economists anticipate a moderate uptick in rates during the year and NRC is in general concurrence. However, with interest rates and, alternatively, spreads still at historic lows due partially to low delinquencies, the firm’s producers remain confident in current market fundamentals.
  • Structure – NRC production teams have access to the full spectrum of lending structures from their correspondent relationships, including: life lender construction-to-permanent and low interest long-term loans, traditional bank products and CMBS structures. NRC expects strong interest entering 2019 from its clients seeking creative, tailored and highest return structures to meet unique investment and asset performance goals with multiple options for consideration.
  • Capital Sources – NRC expects its life lender correspondents to remain a primary driver of the firm’s production in 2019. Allocations to commercial real estate lending remain higher than average from these institutions and NRC is a trusted partner in placement and servicing.
  • Retail – Arguably the most challenged asset class next to hospitality has become a specialized asset class for NRC’s production teams. NRC producers have identified a range of capital options for assets in this class, and expect 2019 to be an active year for this property type.
  • Multifamily – NRC continues to be a leader in creative solutions for multifamily assets in all phases of the ownership cycle; from development or acquisition to renovation or refinance. As one of the healthiest asset classes in the CRE sector, NRC producers know that allocations to this sector generate multiple finance options for short term and long term hold strategies alike.
  • Industrial – The driver of the current economy, industrial assets remain targeted for significant allocations by the full spectrum of lenders in 2019. NRC will be aggressively working with its current and future clients focused on this asset class to maximize the potential options offered by structure combined with what remain historically low rates.
  • Servicing – NRC services 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 only minor defaults to date requiring special service solutions or workouts. NRC remains confident in the stability and performance of this growing portfolio for 2019.

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