Newmark Group, Inc.

Good day and welcome to the Newmark Group 4Q and FY 2023 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jason McGruder, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good morning. Newmark issued its fourth quarter and full year 2023 financial results press release and presentation this morning. Unless otherwise stated, the results provided on today's call compare only the three months ending December 31st, 2023 with a year earlier period. Except as otherwise specified, we will be referring to our results only on a non-GAAP basis, which includes the terms adjusted earnings and adjusted EBITDAs. Please refer to the section in today's press release for complete and or updated definition of any non-GAAP terms, reconciliation of these items to the corresponding GAAP results, and how, when, and why management uses them. Unless otherwise stated, any figures discussed today with respect to cash flow from operations refer to net cash provided by operating activities excluding loan origination and sales, cash generated by the business, is the ladder cash flow metric before the impact of loans, forgivable loans, and other receivables from employees and partners, and the impact of the 2021 equity event. For more information on these cash flow items, our GAAP and non-GAAP results, and the industry statistics mentioned today, see our website, today's press release, the supplemental Excel tables, and or the presentation. Our outlook discussed today assumes no material acquisitions or meaningful changes in this company's stock price. Our expectations are subject to change based on various macroeconomic, social, political, and other factors. None of our long-term targets or goals beyond 2024 should be considered formal guidance. I also remind you that information on this call about our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended. and Section 21E of the Securities Exchange Act of 1933 as amended. Such statements involve risks and uncertainties. Except as required by law, Newmark undertakes no obligation to update any forward-looking statement. For complete discussion of additional risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Newmark's Securities and Exchange Commission filings, including but not limited to the risk factors in our most recent Form 10-K, Form 10-Q, or form 8K filings, which are incorporated by reference. I am now happy to turn the call over to our host, Barry Gossin, Chief Executive Officer of Newmark.

Good morning, and thank you for joining us. Newmark's revenues increased by over 23% in the quarter, with double-digit gains across every revenue category. We completed the more than $50 billion signature portfolio sale, the largest real estate loan sale in U.S. history. We also closed the largest industrial occupier lease, the largest office tenant lease, and the largest office building sale in the United States. Newmark is successfully executing on its strategy of being the best in each of its service lines. In addition to completing the largest transactions in the industry, we generated 20% revenue growth from management services, servicing fees, and other. This improvement reflected a more than doubling of our high-margin asset management and servicing portfolio to $176 billion, the addition of Gerald Eve, and continued organic growth from GCS. Newmark improved its leasing revenues by 20%, while overall industry leasing activity declined by more than 10%. Our significant outperformance was driven by strong double-digit organic growth in office and industrial. We also gained meaningful market share in capital markets. Newmark was the number two broker in U.S. investment sales for the fourth quarter of 2023, and number three for the full year, which excludes the $22 billion equity portion of the signature transactions. We continue to progress towards our goal of becoming the number one capital markets advisor in the U.S. We attract the best of the best. Already in 2024, we hired the preeminent affordable housing team. some of the most prolific and experienced debt and structured finance professionals, as well as one of the most innovative and active U.S. leasing teams. We empower our extraordinary talent with world-class research, data analytics, and technology to bring their best to Newmark's clients. We refuse to let complacency impede progress in this rapidly evolving industry, and we champion the entrepreneurial spirit If you're great, you should be at Newmark. The MBA expects a record $929 billion of commercial and multifamily mortgage maturities in 2024. We estimate that about one-third are underwater and reasonably likely to be sold. One-third will need assistance with restructuring or recapitalization, and one-third will likely require an advisor to help find new lenders. As a service provider that does not own real estate, these maturities represent an enormous opportunity for us. This refinancing wave is expected to drive double-digit increases in commercial and multi-family originations this year and next. The difficulties our clients may face will continue to drive them to seek our innovative financing solutions. We expect both existing owners as well as lenders who receive properties in foreclosure to turn to Newmark for the following services. Finding new sources of capital, including equity recaps and joint ventures, selling loans, selling properties, property management, valuation and advisory, asset management and servicing, and agency leasing. With respect to leasing, vacancies remain below long-term averages in nearly all property types in the U.S. and U.K., except for office, which remains challenged outside of premium Class A properties. Quality office assets continue to command a disproportionate share of the market's activity. Class A properties accounted for 53% of all U.S. office leasing in the fourth quarter of 2023. New construction pipelines have fallen significantly from their first quarter 2020 peak, and a small but growing percentage of office buildings are being converted to other uses. In addition, owners and lenders are reaching the end of their ability to extend and pretend with respect to mortgages. The recapitalization of these properties will lead to a reset in values and stronger leasing activity. We continue to expect solid fundamentals with respect to industrial and retail leasing, which together represented over 40% of Newmark's leasing revenue in 2023, compared with just over 25% in 2019. We expect transaction volumes to accelerate in the second half of 2024, which coupled with new market investments in talent will drive our industry-leading revenue growth. With that, I'm happy to turn the call over to our CFO, Mike Rispoli.