Cantor Fitzgerald Selling Affiliate to BGC Affiliate, Both Companies Headed by Dealmaker Lutnick; Firms Releasing New CRE Investment Fund
Howard W. Lutnick, chairman and CEO of BGC Partners. BGC Partners Inc. (NASDAQ: BGCP) has actually consented to acquire Berkeley Point Financial LLC, a multifamily and healthcare real estate finance company, from an affiliate of Cantor Fitzgerald LP for$ 875 million.
After the proposed acquisition is completed, Bethesda, MD-based Berkeley Point will enter into Newmark Knight Frank, BGC’s property services sector.
The relocation would immediately catapult Newmark, a New York-based worldwide brokerage company, into the top ranks of multifamily loan producers in the U.S. Fannie Mae notes Berkeley Point amongst its Leading 10 manufacturers last year and its fifth-largest budget-friendly real estate loan producer.
” We believe that the addition of Berkeley Point will substantially increase the scale and scope of Newmark, along with substantially improve upon its already strong monetary performance,” stated Howard W. Lutnick, chairman and CEO of BGC Partners.
Lutnick is likewise chairman and CEO of Cantor Fitzgerald. A special committee including all four independent directors of BGC, assisted by independent advisors, authorized the acquisition of Berkeley Point.
Along with stemming multifamily and health care loans, Berkeley Point, also services and handles business property loans. It has actually assisted in workouts for loans totaling over $10.7 billion, inning accordance with Freddie Mac data. As of year-end 2016, Berkeley Point’s servicing portfolio was comprised of 3,743 loans with an aggregate outstanding primary balance of roughly $55.7 billion.
By way of comparison, CBRE Loan Services Inc. serviced a portfolio of 5,331 loans with a balance of $116.4 billion at year-end 2016, inning accordance with Freddie Mac.
Berkeley Point’s net property or book value was $509 million as of March 31, 2017. It created incomes and pre-tax income under GAAP of $314 million and $143 million, respectively, for the trailing 12 months ended March 31, 2017, according to BGC. The latter 2 results represented year-on-year boosts of 55% and 169%, respectively.
For the year to end Dec. 31, 2017, Berkeley Point’s revenues are anticipated to increase by at least 30% compared to $294 million in 2016, and forecasts its revenues will increase by a minimum of 20% year-over-year in 2018.
” This transaction will integrate [Berkeley Point’s] leading five Fannie Mae and Freddie Mac multifamily origination business with ARA, Newmark’s leading 3 multifamily investment sales company, in addition to our fast-growing industrial home loan brokerage company,” said Barry M. Gosin, CEO of Newmark. “Our company believe that this combination will be a catalyst for considerably greater income and earnings development for Newmark. Berkeley Point will drive our margins greater, as it is more rewarding than our publicly-traded commercial real estate services peers,” Gosin added.
This earnings growth will get a boost from expense savings to be realized between Berkeley Point’s and NKF’s national sales organizations, Gosin said.
Jeff Day, CEO of Berkeley Point, stated: “Being part of Newmark will provide us the capability to provide our customers a broad array of funding choices. The combined service will also offer renter and agency leasing, home and centers management, advisory and consulting, appraisal, job and advancement management, realty innovation options, and business loan maintenance.”
BGC prepares to fund the acquisition through a mix of a bond issuance, term loans or other debt financing plans, as well as from existing financing sources and money on hand, the business stated.
Closing is expected during 2017, based on receipt of certain regulatory approvals, consisting of from Fannie Mae, Freddie Mac and HUD, and other customary closing conditions.Launching New CRE Financing Company At the exact same time the acquisition of
Berkeley Point closes, BGC said it will invest$ 100 million in cash in a new commercial genuine estate-related finance and financial investment organisation that will likewise enter into Newmark Knight Frank. Cantor Fitzgerald will control the new financial investment car and contribute approximately$ 267 million of money and non-cash properties for the remaing 73% of the financial investment’s capital. The investment, which will be structured as a limited collaboration, is anticipated to team up with Cantor Fitzgerald’s existing commercial real estate financing company, and might conduct activities in its other genuine estate-related companies. Under the terms of the investment, Cantor Fitzgerald has consented to bear initial net losses of the partnership, if any, approximately an
aggregate quantity of $37 million annually. BGC will be entitled to a cumulative annual preferred return of 5%.