Newmark Group, Inc. (NASDAQ:NMRK) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 10:00 am ET

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Newmark Group, Inc. (NASDAQ:NMRK) Q4 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instruction) And your first question comes from the line of David Ridley-Lane of Bank of America Merrill Lynch. Please go ahead. Your line is open.

Analyst
David Ridley-Lane

Good morning. Curious to get your thoughts on the capture rate that you're getting inside of mortgage debt brokerage from your multifamily investment sales. I know the goal was to get 35% to 40% over time. Where did you finish in 2018? What's kind of a reasonable pace of improvement for 2019?

Executive
Barry M. Gosin

Well, the last quarter we were actually 32%. For the year we were closer to 19%.

Executive
Michael Rispoli

23% for the year.

Executive
Barry M. Gosin

23%, sorry. As we continue to embed the debt originators with the investment sales multifamily brokers, the capture rate rises. I mean recently in the last quarter we had a portfolio in one of our markets that $1.5 billion of three separate properties and our capture rate was 100%. So the opportunity to be nearby the acceptance of the industry towards using the same broker to provide the debt as a service and a benefit to the client is growing. So we think that that will continue to improve.

Analyst
David Ridley-Lane

And then as a quick follow up. Could you talk about any puts and takes to 2019 margins that you would be calling out for next year?

Executive
Michael Rispoli

So when you think about our margin, we continue to lower our comp and non-comp expenses as a percentage of revenue as we move forward. And as we continue to grow our revenue, we expect those margins to stay in the 20% -- adjusted earnings margin 20% range and above. We do have the Nasdaq which will come down year-over-year in our adjusted earnings because of the -- we bought the puts and the value of those puts will come out of the earnings next year.

Analyst
David Ridley-Lane

Thank you very much.

Operator
Operator

Your next question comes from the line of Jade Rahmani of KBW. Please go ahead. Your line is open.

Analyst
Jade Rahmani

Thanks very much. Touching on the market in terms of transaction volumes, can you comment on whether you saw any volatility in December and perhaps January relative to typical seasonality or your expectations?

Executive
Barry M. Gosin

Obviously we had a good quarter, and we continue to be optimistic about sales and market share. And there's enormous amount of capital available to invest. Some things are pricey, but we're feeling pretty good about the market.

Analyst
Jade Rahmani

And in terms of bid list on transactions, have you seen any changes of note, any concentrations perhaps at the lower end of pricing or any other indicators?

Executive
Barry M. Gosin

As I've said in previous calls, there are less bidders (inaudible) depends on what the product is. If it's industrial multi, better; on core properties you may see less bidders on core investments, but they're still -- the pricing is still holding up and at the end of the music, there is somebody there to pay the proper price for the assets.

Analyst
Jade Rahmani

In terms of leasing trends, how much of the organic growth you're experiencing is driven by co-working