ANNUAL REPORT 2 017 344888_NEWMARK_Narr_R1.indd 1 7/23/18 5:26 PM SUCCESSFUL TRACK RECORD OF ACCRETIVE ACQUISITIONS BGC ACQUIRES NEWMARK & COMPANY REAL ESTATE, INC. NEWMARK KNIGHT FRANK 2012 GRUBB & ELLIS 18 ACQUISITIONS 2013 • Cornish & Carey Commercial 2 Acquisitions: • Apartment Realty • Frederick Ross Advisors (ARA)1 • Smith Mack 2011 2012 2013 2014 Note: Certain of these acquisitions involved only the purchase of assets. 1. Included 17 transactions, with some completed after the close of 2014. 344888_NEWMARK_Narr_R1.indd 2 7/23/18 5:26 PM 4 ACQUISITIONS 5 ACQUISITIONS BERKELEY POINT FINANCIAL • Excess Space • The CRE Group Additional Acquisitions: • Computerized Facility • Rudesill-Pera Multifamily • Regency Integration Capital Partners • Cincinnati Commercial • Continental Realty • Spring11 Real Estate • Newmark Grubb Mexico City • 6 former Integra • Steffner Commercial • Walchle Lear Realty Resources offices Real Estate d/b/a Newmark Grubb Memphis 2015 2016 2017 344888_NEWMARK_Narr_R1.indd 3 7/23/18 5:26 PM NEWMARK REVENUES ($ IN THOUSANDS) NEWMARK GROUP, INC. SELECTED CONSOLIDATED FINANCIAL DATA 1,600,000 REVENUES ($ IN THOUSANDS) 17 vs. 16 Change 2017 2016 % CAGR 1,400,000 38 Leasing and other commissions 20% 616,980 513,812 Capital markets 19% 397,736 335,607 1,200,000 Gains from mortgage banking activities/origination, net 7% 206,000 193,387 Management services, servicing fees and other 22% 375,734 307,177 1,000,000 Total revenues 18% 1,596,450 1,349,983 800,000 GAAP EARNINGS ($ IN THOUSANDS)1 600,000 Income (loss) from operations 19% 199,788 167,418 2 400,000 Net income (loss) available to common stockholders -14% 144,492 168,401 200,000 ADJUSTED EARNINGS ($ IN THOUSANDS)1 Pre-tax Adjusted Earnings3 74% 322,808 185,161 0 2011 2012 2013 2014 2015 2016 2017 Post-tax Adjusted Earnings 74% 264,099 151,540 Post-tax Adjusted Earnings margin 16.5% 11.2% % Gains from mortgage banking ADJUSTED EBITDA ($ IN THOUSANDS)1 FY 2017 REVENUES 13 activities/origination, net Adjusted EBITDA before allocation to units 72% 373,541 217,520 % % Management services, Capital markets 25 24 servicing fees and other NOTIONAL VOLUME ($ IN MILLIONS) Investment sales 24% 35,028 28,306 Mortgage brokerage 85% 10,796 5,839 Mortgage origination volume 16% 8,873 7,621 Leasing and other % 2017 commissions 39 Total debt and equity volume 31% 54,697 41,766 OTHER4 % Gains from mortgage banking Servicing portfolio ($ in billions) 58 14 activities/origination, net 6-year revenue CAGR 38% FY 2016 REVENUES Revenue per producer ($ in thousands) 806 Revenue per producer 5-year growth >70% from 474,000 % % Management services, Capital markets 25 23 servicing fees and other 1. FY 2017 GAAP Earnings and Adjusted Earnings and Adjusted EBITDA include other income related to the Nasdaq shares of $76 million. See footnote two on page 11 of this document for additional information regarding non-GAAP financial measures and reconciliations. 2. As a result of the 2017 US Tax Cuts and Jobs Act passed on December 22, 2017, Newmark’s FY 2017 GAAP net income (loss) available to Leasing and other % common stockholders included a one-time charge of approximately $65 million to reflect the re-measurement of Newmark’s deferred tax assets. commissions 38 2016 3.Excluding income related to the Nasdaq shares, pre-tax Adjusted Earnings would have increased 33% in FY 2017. 4. The average revenue per producer figures are based only on “leasing and other commissions”, “capital markets”, and “gains from mortgage banking activities/origination, net” revenues and corresponding producers. The productivity figures exclude both revenues and staff in “management services, servicing fees and other”. Headcount numbers used in this calculation are based on a period average. 3 Note: Certain numbers in the charts throughout this document may not sum due to rounding. 344888_NEWMARK_Narr_R1.indd 4 7/23/18 5:26 PM NEWMARK GROUP, INC. SELECTED CONSOLIDATED FINANCIAL DATA REVENUES ($ IN THOUSANDS) 17 vs. 16 Change 2017 2016 Leasing and other commissions 20% 616,980 513,812 Capital markets 19% 397,736 335,607 Gains from mortgage banking activities/origination, net 7% 206,000 193,387 Management services, servicing fees and other 22% 375,734 307,177 Total revenues 18% 1,596,450 1,349,983 GAAP EARNINGS ($ IN THOUSANDS)1 Income (loss) from operations 19% 199,788 167,418 Net income (loss) available to common stockholders2 -14% 144,492 168,401 ADJUSTED EARNINGS ($ IN THOUSANDS)1 Pre-tax Adjusted Earnings3 74% 322,808 185,161 2017 Post-tax Adjusted Earnings 74% 264,099 151,540 Post-tax Adjusted Earnings margin 16.5% 11.2% ADJUSTED EBITDA ($ IN THOUSANDS)1 Adjusted EBITDA before allocation to units 72% 373,541 217,520 NOTIONAL VOLUME ($ IN MILLIONS) Investment sales 24% 35,028 28,306 Mortgage brokerage 85% 10,796 5,839 Mortgage origination volume 16% 8,873 7,621 Total debt and equity volume 31% 54,697 41,766 OTHER4 % Gains from mortgage banking Servicing portfolio ($ in billions) 58 14 activities/origination, net 6-year revenue CAGR 38% Revenue per producer ($ in thousands) 806 Revenue per producer 5-year growth >70% from $474,000 Management services, servicing fees and other 1. FY 2017 GAAP Earnings and Adjusted Earnings and Adjusted EBITDA include other income related to the Nasdaq shares of $76 million. See footnote two on page 11 of this document for additional information regarding non-GAAP financial measures and reconciliations. 2. As a result of the 2017 US Tax Cuts and Jobs Act passed on December 22, 2017, Newmark’s FY 2017 GAAP net income (loss) available to common stockholders included a one-time charge of approximately $65 million to reflect the re-measurement of Newmark’s deferred tax assets. 3.Excluding income related to the Nasdaq shares, pre-tax Adjusted Earnings would have increased 33% in FY 2017. 4. The average revenue per producer figures are based only on “leasing and other commissions”, “capital markets”, and “gains from mortgage banking activities/origination, net” revenues and corresponding producers. The productivity figures exclude both revenues and staff in “management services, servicing fees and other”. Headcount numbers used in this calculation are based on a period average. Note: Certain numbers in the charts throughout this document may not sum due to rounding. 4 344888_NEWMARK_Narr_R1.indd 5 7/23/18 5:26 PM DEAR FELLOW STOCKHOLDERS 2017 was a groundbreaking year for Newmark Group, Inc. (“Newmark”). We completed our initial public offering (“IPO”), made the largest acquisition in our history, Berkeley Point,1 and generated record revenues. Newmark Group Chairman Howard W. Lutnick 5 with CEO Barry M. Gosin 344888_NEWMARK_Narr_R1.indd 6 7/23/18 5:26 PM DEAR FELLOW STOCKHOLDERS 2017 was a groundbreaking year for Newmark Group, Inc. (“Newmark”). We completed our initial public offering (“IPO”), made the largest acquisition in our history, Berkeley Point,1 and generated record revenues. Strong Growth while our Adjusted EBITDA before allocation to We generated 18% revenue growth year-on-year units and pre-tax Adjusted Earnings improved in 2017, to reach a record $1.6 billion. We also by 72% and 74%, respectively. produced strong growth in pre-tax earnings and Adjusted EBITDA2 for the year. Our strong We expect our revenues and earnings to grow overall performance included double-digit further in the coming years, as we continue top-line increases from leasing, servicing to cross-sell and increase productivity. We fees, and Global Corporate Services. Our 19% also expect to continue using technology and increase in capital markets revenues for the data to empower our producers, as well as to year was led by a 24% rise in investment sales improve our clients’ bottom lines by advising volume and an 85% increase in mortgage them on their real estate spending. brokerage volume.3 This strong growth in capital markets revenue accelerated in the Executing our Strategy via Profitable fourth quarter, as our fourth quarter revenues Hiring and Accretive Acquisitions for these businesses were up by 26% year-on- When we announced that BGC Partners, Inc. year. The improvement in capital markets was (“BGC”) would acquire Newmark in 2011, I told a result of our continuing success in integrating my partners, employees, and customers that various businesses and cross-selling services. it would enable us to evolve into the thriving commercial real estate services platform This cross-selling across our entire suite of that it is today. We have achieved our goals. services contributed to our 14% year-on-year Today, I am pleased to report that our vision increase in average revenue per front office employee for the year to $806,000.4 Our strong for Newmark has become a reality. In fact, our productivity improvement in turn explains why success has been far greater than most in the more than 80% of our overall revenue growth was industry ever imagined. From 2011 through organic in 2017. 2017, Newmark’s revenues increased almost seven-fold, or at a compound annual growth We believe that improved productivity rate (“CAGR”) of 38%. This revenue CAGR is ultimately leads to increased profitability. more than twice the comparable figures for our In 2017, our income from operations under full-service publicly traded peers.5 Our growth Generally Accepted Accounting Principles since 2011 included nearly 40 acquisitions, but (“GAAP”) increased by 19% year-on-year, over 40% of our top-line growth was organic. Newmark Group Chairman Howard W. Lutnick with CEO Barry M. Gosin 6 344888_NEWMARK_Narr_R1.indd 7 7/23/18 5:26 PM KEY HIRES IN ACQUISITIONS IN 2017 2017 During 2017, we continued to hire and acquire. We made several key hires of top talent and market leaders, with a focus on expanding in capital markets, valuation advisory, and consulting.