NEWMARK GROUP, INC. 10-K

ITEM 1. BUSINESS Throughout this document Newmark Group, Inc. is referred to as “Newmark” and, together with its subsidiaries, as the “Company,” “we,” “us,” or “our.” Our Business Newmark is a leading full-service commercial real estate services business. We offer a diverse array of integrated services and products designed to meet the full needs of both real estate investors/owners and occupiers. Our investor/owner services and products include: • capital markets, which consists of investment sales and commercial mortgage brokerage (including the placement of debt, equity and structured finance and loan sales on behalf of third parties); • agency leasing; • valuation and advisory (“V&A”); • property management; • due diligence consulting and other advisory services; • services related to government-sponsored enterprises (“GSE”) and the Federal Housing Administration (“FHA”), including multifamily lending and loan servicing, mortgage brokering and equity-raising; and • flexible workspace solutions for owners. Our occupier services and products include: • tenant representation leasing; • global corporate services ("GCS"), which includes real estate, workplace and occupancy strategy, corporate consulting services, project management, lease administration and facilities management; and • flexible workspace solutions for occupiers. We enhance these services and products through innovative real estate technology solutions and data analytics, enabling our clients to increase their efficiency and profits by optimizing their real estate portfolio. For the past decade, we have aimed to become the company with the greatest talent in the industry. We believe that we have made great progress towards achieving this goal, having assembled an incredible combination of the top strategists and advisors together with extraordinary expertise. This has led to a strong record of revenue growth for Newmark, and our becoming a top commercial real estate services platform in the United States. We have relationships with many of the world’s largest commercial property owners, real estate developers and investors, as well as Fortune 500 and Forbes Global 2000 companies. For the year ended December 31, 2022, we generated revenues of over $2.7 billion primarily from commissions on leasing and capital markets transactions, consulting and technology user fees, property and facility management fees, and mortgage origination and loan servicing fees. As discussed in greater detail in “—Industry Trends and Opportunity,” transaction and investment volumes in the commercial real estate industry declined significantly from record levels a year earlier due to the rapid rise in interest rates. We expect industry volumes to bounce back relatively quickly once interest rates have stabilized. Our near-term objectives include becoming number one in capital markets in the United States. This is partly because our investment sales and debt businesses have historically had a multiplier effect that drives outsized growth across many of our other businesses. When overall capital markets activity rebounds, we believe that our market share, revenues, and earnings can therefore outperform the industry. While the macroeconomic environment may be challenging in the short term, we remain excited about our market position and our future. We are also focused on increasing the percentage of our total revenues from our recurring and/or predictable businesses, such as V&A, mortgage servicing, GCS, and property management. Our goals also include increasing cross-selling opportunities with and between many of these businesses and our capital markets and leasing businesses. A portion of the revenues that we derive from providing property management services and from our GCS business are “pass-through” revenues that represent fully reimbursable compensation and non-compensation costs. Our growth has historically been focused on North America; however, over the last few years, we have expanded our services and product offerings internationally. During 2021, we ended our affiliation with Knight Frank LLP and accelerated our global growth plans by acquiring Space Management (DBA “Deskeo”) and Knotel, Inc. (“Knotel”), both of which are European leaders in flexible and serviced workspace. We continued our non-U.S. expansion during 2022 when we acquired BH2, a leading London-based real estate advisory firm. Furthermore, over the past two years, we announced the addition of industry-leading international professionals in GCS, leasing, real estate capital markets, and V&A. 4 As of December 31, 2022, we have nearly 6,300 employees in over 150 offices in more than 110 cities. Over 1,100 of those employees are partially or fully reimbursed by clients, mainly in our property management and GCS businesses. In addition, as of December 31, 2022, Newmark has licensed its name to 13 commercial real estate providers with more than 400 employees operating out of 27 offices in various locations where Newmark does not have its own offices. We are a leading real estate capital markets business in the United States. We have access to many of the world’s largest owners of commercial real estate, which we expect to drive growth throughout the life cycle of each real estate asset by allowing us to provide best-in-class agency leasing and property management during the ownership period. Our deep bench of talented professionals provides investment sales and arrange debt and equity financing to assist owners in maximizing the return on investment in each of their real estate assets. We are a leading GSE lender by loan origination volume and servicer with a $70.7 billion servicing portfolio as of December 31, 2022 (of which 79.5% is higher margin primary servicing, 18.1% is limited servicing, and 2.4% is special servicing). Servicing companies generally earn considerably higher fees from primary servicing (GSE and FHA loans) compared with limited and special servicing. We generate strong cash flows from our business and use those proceeds to invest by adding high profile revenue-generating professionals, including brokers and originators (together, “producers”) and other client-facing individuals. Historically, our newly hired producers tend to achieve dramatically higher productivity in their second and third years with the Company, although we generally incur related expenses immediately. As newly hired producers increase their production, our commission revenue and earnings growth accelerate, thus reflecting our operating leverage. Our long-term track record of strong revenue and earnings growth resulted from the execution of our unique combination of corporate strategies, in which we aim to: • build the leading capital markets platform in the U.S., while expanding our investment sales and debt businesses internationally, which we expect to have multiplier effects on our revenue streams across the Company, including in GSE/FHA origination and servicing, V&A, property management, and agency leasing, • add and retain the industry’s most talented professionals and encourage their innovative and entrepreneurial natures, while providing them the benefits of our partnership and equity-based compensation structure, which drives talent to our platform, encourages an ownership mindset, and promotes cross-selling and collaboration with respect to servicing our clients, • empower our professionals through technology, data analytics, and infrastructure, to make them better at what they do and to enable them to provide higher returns for our clients while enhancing the depth of their relationships with them, and • expand our global footprint by entering new geographies and new and complementary business lines, as well as by acquiring companies with attractive expected returns and hiring talented professionals. Our History Newmark was founded in 1929 with an emphasis on New York-based investor/owner and occupier services, and developed a reputation for having talented, knowledgeable, and motivated advisors/intermediaries. BGC acquired us in October 2011. From that time until we spun off from BGC in December 2018, we embarked on a rapid expansion throughout North America encompassing nearly all key business lines in the real estate services sector, which included the acquisition of Berkeley Point Financial LLC in 2017. We believe our rapid growth is a result of our management team’s strong understanding of commercial real estate as an asset class, deep relationships with users and owners and long-term vision, our strong culture of innovation and collaboration, our ability to adapt to the evolving market and to shifts in the demand for our services, and our proven track record of attracting and retaining the industry’s best talent. Beginning in 2006, our servicing of clients in the Asia-Pacific region, in Europe, the Middle East and Africa was facilitated through our relationship with Knight Frank. In the third quarter of 2021, we ended our affiliation with Knight Frank. We have accelerated our own global growth plans, including through the acquisitions of Knotel and Deskeo. Furthermore, we have announced the addition of industry-leading international professionals in our GSC, V&A, leasing, and capital markets businesses in locations including Singapore, Hong Kong and London, as we establish footholds in economic centers outside of the Americas. On February 15, 2023, we announced the hiring of the leading capital markets team in New York. On March 10, 2023, we announced the acquisition of London-based advisory firm Gerald Eve LLP ("Gerald Eve"), further expanding our operations in the U.K. with the addition of nine offices. During 2022, we acquired BH2, a leading London-based real estate advisory firm. We expect to continue to acquire and hire outside of North America as we execute on our plans to expand globally. In certain smaller U.S. and international markets in which we do not maintain Newmark-owned offices, we have agreements in place to operate on a collaborative and cross-referral basis with certain independently-owned offices in return for 5 contractual and referral fees paid to us and/or certain mutually beneficial co-branding and other business arrangements (“business partners”). These business partners may use some variation of our branding in their names and marketing materials. These agreements typically take the form of multi-year contracts, and provide for mutual referrals in their respective markets, generating additional contract and brokerage fees. While we do not derive a significant portion of our revenue from these relationships, they do enable us to seamlessly provide service to our mutual clients. These business partners give our clients access to additional brokerage professionals with local market research capabilities as well as other commercial real estate services in locations where the Company does not have a physical presence. The discussion of our financial results and other metrics reflects only the business owned by us and does not include the results for business partners using some variation of the Newmark name in their branding or marketing. We intend to continue to opportunistically expand into markets, where we believe we can profitably execute our full service and integrated business model, with a particular focus on growing our presence in key markets in Europe, the Middle East, and Asia, while continuing to opportunistically augment our presence in the Americas. In summary, we generate revenues from commissions on leasing and capital markets transactions, mortgage origination and loan servicing fees, V&A, property and facility management fees, as well as fees related to consulting and other real estate services. Our revenues are widely diversified across service lines, geographic regions and clients, with our top 10 clients accounting for approximately 7.4% of our total revenue on a consolidated basis, and our largest client accounting for less than 2.3% of our total revenue on a consolidated basis in 2022. Our Services Newmark offers a diverse array of integrated services designed to meet the full needs of both real estate investors/owners and occupiers. Our technological advantages, industry-leading talent, deep and diverse client relationships and suite of complementary services allow us to actively cross-sell our services and drive margins. Real Estate Investor/Owner Services and Products Capital Markets. We offer a broad range of capital markets services, including investment sales and mortgage brokerage (which includes debt and equity placement, fundraising and recapitalization) of individual assets, portfolios and operating companies. We match capital providers with capital users. Our capital markets professionals have deep relationships with investors and capital sources of various composition, including government sponsored agencies, insurance companies, pension funds, real estate investment trusts, private funds, private investors, developers and construction firms. On February 15, 2023, we announced the hiring of the leading capital markets team in New York. Landlord Representation. We understand the nuanced needs of corporate, institutional, family and entrepreneurial property owners, and develop customized leasing strategies to help them attract and maintain the right tenants. Armed with both on-the-ground intelligence and comprehensive data, we help landlords find opportunities and make sound decisions. From strategic planning to property and asset management, we believe that our seamless services deliver increased revenue and enhanced value for our clients. Valuation and Advisory (“V&A”). We operate a V&A business, which has grown over the past seven years from fewer than 40 professionals to over 630 as of December 31, 2022. Our V&A professionals execute projects of nearly every size and type, from single properties to large portfolios, existing and proposed facilities, and mixed-use developments across the spectrum of asset classes. Clients include banks, pension funds, equity funds, REITs, insurance companies, developers, corporations, and institutional capital sources. These institutions utilize the advisory services we provide in their loan underwriting, construction financing, portfolio analytics, feasibility determination, acquisition structures, litigation support, property tax, and financial reporting. Property Management. We provide property management services on a contractual basis to owners and investors in office (including medical and life science offices), industrial and retail properties. Property management services include building operations and maintenance, vendor and contract negotiation, project oversight and value engineering, labor relations, property inspection/quality control, property accounting and financial reporting, cash flow analysis, financial modeling, lease administration, due diligence and exit strategies. We have an opportunity to grow our property management contracts in connection with our other businesses, including higher-margin leasing or capital markets. These businesses also give us better insight into our clients’ overall real estate needs. Leading Commercial Real Estate Technology Platform and Capabilities. Investing in digital solutions has become imperative and we remain dedicated to creating customer-centric technology that optimizes our business methods while keeping our workforce and clients safe. Our multi-faceted real estate database continues to grow, as does our commitment to providing 6 innovative, value-added technological solutions across our service lines, which enables our professionals to provide clients with data-driven advice and analytics with expediency. Our solutions are designed to increase operational efficiency, realize additional income, and/or generate cost savings for our professionals and clients. Due Diligence, Consulting and Advisory Services and Other Services. We provide commercial real estate due diligence consulting and advisory services to a variety of clients, including lenders, investment banks and investors. Our core competencies include underwriting, modeling, structuring, due diligence and asset management. We also offer clients cost-effective and flexible staffing solutions through both on-site and off-site teams. We believe this business line and other non-brokerage services we offer give us additional ways to cross-sell services and add value to our clients. Government Sponsored Enterprise (“GSE”) Lending and Loan Servicing. We operate a leading commercial real estate finance company focused on the origination and sale of multifamily and other related commercial real estate loans through government-sponsored and government-funded loan programs, as well as the servicing of loans originated by it and third parties, including our affiliates. We participate in loan origination, sale, and servicing programs operated by two GSEs, Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”). We also originate, sell and service loans under Housing and Urban Development's (“HUD”) Federal Housing Administration (“FHA”) programs, and are an approved HUD Multifamily Accelerated Processing (“MAP”) and HUD LEAN lender, as well as an approved Government National Mortgage Association (“Ginnie Mae”) issuer. Origination for GSEs. We originate multifamily loans distributed through the GSE programs of Fannie Mae and Freddie Mac, as well as through HUD programs. Through HUD’s MAP and LEAN Programs, we provide construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing and healthcare facilities. We are one of 25 approved lenders that participate in the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program and one of 22 lenders approved as a Freddie Mac seller/servicer. As a low-risk intermediary, we originate loans guaranteed by government agencies or entities and pre-sell such loans prior to transaction closing. We have established a strong credit culture over decades of originating loans and remain committed to disciplined risk management from the initial underwriting stage through loan payoff. Servicing . In conjunction with our origination services, we sell the loans that we originate under GSE and FHA programs and retain the servicing of those loans. The servicing portfolio (which includes certain other non-agency loans) provides a stable, predictable recurring stream of revenue to us over the life of each loan. The typical multifamily loan that we originate and service under these programs is either fixed or variable rate and includes significant prepayment penalties. These structural features generally offer prepayment protection and provide more stable, recurring fees. Our servicing operations are rated by Fitch, S&P, and Kroll for commercial loan primary and special servicing and consist of a team of approximately 70 professionals dedicated to primary and special servicing and asset management. These professionals focus on financial performance and risk management to anticipate potential property, borrower or market issues. Portfolio management conducted by these professionals is not only a risk management tool, but also leads to deeper relationships with borrowers, resulting in continued interaction with borrowers over the term of the loan, and potential additional financing opportunities. We believe that the combination of our leading multifamily investment sales, mortgage brokerage, and agency lending businesses has provided and will have a multiplier effect that drives outsized growth across the Company. Key Lending Channels • Fannie Mae. As one of 25 lenders under the Fannie Mae DUS program, we are a multifamily approved seller/servicer for conventional, affordable and senior loans that satisfy Fannie Mae’s underwriting and other eligibility requirements. Fannie Mae has delegated to us responsibility for ensuring the loans originated under the Fannie Mae DUS program satisfy the underwriting and other eligibility requirements established from time to time by Fannie Mae. In exchange for this delegation of authority, we share up to one-third of the losses that may result from a borrower’s default. All of the Fannie Mae loans we originate are sold, prior to loan funding, in the form of a Fannie Mae-insured security to third-party investors. We service all loans we originate under the Fannie Mae DUS program. • Freddie Mac . We are one of 22 Freddie Mac multifamily approved seller/servicer for conventional, affordable and senior loans that satisfy Freddie Mac’s underwriting and other eligibility requirements. Under the program, we submit the completed loan underwriting package to Freddie Mac and obtain Freddie Mac’s commitment to purchase the loan at a specified price after closing. Freddie Mac ultimately performs its own underwriting of loans we sell to Freddie Mac. Freddie Mac may choose to hold, sell or, as it does in most cases, later securitize such 7 loans. We do not have any material risk-sharing arrangements on loans sold to Freddie Mac under the program. We also generally service loans we originate under this Freddie Mac program. • HUD/Ginnie Mae/FHA . As an approved HUD MAP and HUD LEAN lender and Ginnie Mae issuer, we provide construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing and healthcare facilities. We submit a completed loan underwriting package to FHA and obtain FHA’s firm commitment to insure the loan. The loans are typically securitized into Ginnie Mae securities that are sold, prior to loan funding, to third-party investors. Ginnie Mae is a United States government corporation in HUD. Ginnie Mae securities are backed by the full faith and credit of the United States. In the event of a default on a HUD insured loan, HUD will reimburse approximately 99% of any losses of principal and interest on the loan and Ginnie Mae will reimburse the majority of remaining losses of principal and interest. The lender typically is obligated to continue to advance principal and interest payments and tax and insurance escrow amounts on Ginnie Mae securities until the HUD mortgage insurance claim has been paid and the Ginnie Mae security is fully paid. We also generally service all loans we originate under these programs. • As described under “Real Estate Investor/Owner Services - Capital Markets,” we also offer our clients access to third party banks, insurance companies and other capital providers through our mortgage brokerage platform. Lending Transaction Process. Our value driven, credit focused approach to underwriting and credit processes provides for clearly defined roles for senior management and carefully designed checks and balances to ensure appropriate quality control. We are subject to both our own and the GSEs’ and HUD’s rigorous underwriting requirements related to property, borrower, and market due diligence to identify risks associated with each loan and to ensure credit quality, satisfactory risk assessment and appropriate risk diversification for our portfolio. We believe thorough underwriting is essential to generating and sustaining attractive risk adjusted returns for our investors. We source lending opportunities by leveraging a deep network of direct borrower and brokerage professional relationships in the real estate industry from our national origination platform. We benefit from offices located throughout the United States and our $70.7 billion servicing portfolio as of December 31, 2022 (of which 79.5% is higher margin primary servicing, 18.1% is limited servicing, and 2.4% is special servicing), providing real time information on market performance and comparable data points. Servicing companies generally earn considerably higher fees from primary servicing (GSE and FHA loans) compared with limited and special servicing. Our primary servicing book has grown at an approximately 9% CAGR since 2015. Financing . We finance our loan originations under GSE programs through collateralized financing agreements in the form of warehouse loan agreements (“WHAs”) with multiple lenders with an aggregate commitment as of December 31, 2022 of $1.6 billion, an aggregate of $400.0 million of uncommitted warehouse lines with two lenders, and an uncommitted $400 million Fannie Mae loan repurchase facility. As of December 31, 2022 and December 31, 2021, we had collateralized financing outstanding of approximately $137.4 million and $1,050.7 million, respectively. Collateral includes the underlying originated loans and related collateral, the commitment to purchase the loans, and credit enhancements from the applicable GSE or HUD. We typically complete the distribution of the loans we originate within 30 to 60 days of closing. Proceeds from the distribution are applied to reduce borrowings under the WHAs, thus restoring borrowing capacity for further loan originations under GSE programs. Intercompany Referrals. Certain of our affiliates, including subsidiaries of Cantor, have entered into arrangements in respect of intercompany referrals. Pursuant to these arrangements, the parties refer to each other for customary fees, opportunities for commercial real estate loan originations to our affiliates, opportunities for real estate investment sales, broker or leasing services to us, and opportunities for GSE/FHA loan originations to us. Real Estate Occupier Services Tenant Representation Leasing. We represent commercial tenants in virtually all aspects of the leasing process, including space acquisition and disposition (often in conjunction with our GCS business), strategic planning, site selection, financial and market analysis, economic incentives analysis, lease negotiations, lease auditing and project management. We assist clients by defining space requirements, identifying suitable alternatives, recommending appropriate occupancy solutions, negotiating lease and ownership terms with landlords and minimizing real estate costs and associated risks for clients through analyzing, structuring and negotiating business and economic incentives, as well as advising on relevant sustainability and environmental issues. Fees are typically based on a percentage of the total financial consideration of the lease commitment for executed leases and are generally earned when a lease is signed. In many cases, landlords are responsible for paying the fees. We use innovative technology and data to provide tenants with an advantage in negotiating leases, which has contributed to our market share gains. 8 Global Corporate Services (“GCS”). GCS is our consulting and outsourcing services business that focuses on reducing occupancy expenses and improving efficiency for corporate real estate occupiers, with significant, often multi-national presences. We provide beginning-to-end corporate real estate solutions for clients. GCS strives to make its clients more effective by optimizing real estate usage, managing overall corporate footprint expenses, and improving workflow and human capital efficiency through large scale data analysis and our industry-leading technology. We provide real estate strategic consulting services to our clients, including Fortune 500 and Forbes Global 2000 companies, owner-occupiers, government agencies, as well as organizations in healthcare and higher education. We also provide enterprise asset management information consulting and technology solutions which can yield cost-savings for our GCS business’s client base. Our consulting services include financial integration, asset and portfolio strategy, location strategy and optimization, workplace strategies, energy and sustainability, workflow and business process improvement, merger and acquisition integration and industrial consulting. Fees for these services are on a negotiated basis and are often part of a multi-year services agreement. Fees may be contingent on meeting certain financial or savings objectives with incentives for exceeding agreed upon targets. We believe that GCS provides us with a unique lens into commercial real estate and offers ways to win business across multiple business lines. Whether a client currently manages its real estate function in-house (insource) or has engaged an external provider (outsource), GCS aims to create value by securing accounts that are first generation outsource or by gaining outsourced market share. GCS often provides us a recurring revenue stream when it enters into multi-year contracts for ongoing services, such as project and facilities management and real estate and lease administration over the course of the contract. For the past 13 years, the International Association of Outsourcing Professionals (“IAOP”) has named Newmark to The Best of The Global Outsourcing 100®, which identifies the world’s best outsourcing providers across all industries. Our GCS platform offers the following services: • Workplace and Occupancy Strategy. Our workplace strategy and human experience team includes real estate strategists, architects, financial analysts, change managers, and subject matter experts with experience in the components of a successful workplace. We focus on the people, place and process aspects that drive performance. We work with clients to make the experience of going to work more engaging, supportive, and productive by inspiring people through meaningful placemaking. Our clients include leading corporations who are increasingly rethinking their approach to the workplace as a result of the pandemic. They are motivated by a variety of factors - including making their people happier, safer and healthier, driving organizational change and re-alignment, and being more effective with their real estate and technology investments. Our team leverages workplace strategies to tailor environments where employees want to come to work, participate and perform. • Energy and Sustainability Services. Our Energy and Sustainability Services team aims to help management services clients lower energy costs, increase net operating income and support responsible corporate stewardship, and include: calibration of outside air/demand control ventilation, energy procurement, EnergyStar management, enhanced air filtration & IAQ Upgrades, Electrical Demand Lightning, electrical load curtailment (demand response), EV charging stations, LED lighting upgrades, LEED certification, renewable energy and utility data management and benchmarking. • Technology. GCS has upgraded and improved upon various technologies offered in the real estate industry, combining our technological specialties and our creative core of development within our GCS platform. • Project Management . We provide a variety of services to tenants and owners of self-occupied spaces. These include conversion management, move management, construction management and strategic occupancy planning services. These services may be provided in connection with a tenant representation lease or on a contractual basis across a corporate client’s portfolio. Fees are generally determined on a negotiated basis and earned when the project is complete. • Real Estate and Lease Administration. We manage leases for our clients for a fee, which is generally on a per lease basis. We also perform lease audits and certain accounting functions related to the leases. Our lease administration services include critical data management, rent processing and rent payments. These services provide additional insight into a client’s real estate portfolio, which allows us to deliver significant value back to the client through the provision of additional services, such as tenant representation, project management and consulting assignments, to minimize leasing and occupancy costs. For large occupier clients, our real estate technology enables them to access and manage their complete portfolio of real estate assets. We offer clients a fully integrated user-focused technology product designed to help them efficiently manage their real estate costs and assets. 9 • Facilities Management. We manage a broad range of properties on behalf of users of commercial real estate, including headquarters, facilities and office space, for a broad cross section of companies including Fortune 500 and Forbes Global 2000 companies. We can manage the day-to-day operations and maintenance for urban and suburban commercial properties of most types, including office, industrial, data centers, healthcare, life sciences, retail, call centers, urban towers, suburban campuses, and landmark buildings. Facilities management services may also include facility audits and reviews, energy management services, janitorial services, mechanical services, bill payment, maintenance, project management, and moving management. While facility management contracts are typically three to five years in duration, they may be terminated on relatively short notice periods. Flex Workspace Provider. We offer amenity-rich and flexible work environments across a network of offices located primarily in Europe and North America and which operate under the names Knotel and Deskeo. We make smart, city-dependent choices with buildings that serve occupiers of real estate by providing a bespoke solution with world-class amenities. Industry and Market Data In this Annual Report on Form 10-K, we rely on and refer to information and statistics regarding the commercial real estate services industry. We obtained this data from independent publications or other publicly available information. Independent publications generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Although we believe these sources are reliable, we have not independently verified this information, and we cannot guarantee the accuracy and completeness of this information. Industry Trends and Opportunity We expect the following industry and macroeconomic trends to impact our market opportunity: Large and Highly Fragmented Market . We estimate that the commercial real estate services industry is a more than $400 billion global revenue market opportunity. This total addressable market (“TAM”) represents the actual and/or potential revenues that are or could be generated annually by public and private commercial real estate services firms. We believe that a significant portion of the TAM currently resides with smaller and regional companies offering services like ours. We also believe that a large percentage consists of real estate services that are performed in-house by owners and occupiers but that could be partially or entirely outsourced. The estimated TAM also includes businesses in which our public CRE services competitors operate but where Newmark currently does not, such as real estate investment management. We estimate that less than 20% of the potential revenue in the global commercial real estate services market is currently serviced by the top 10 global firms (by total revenue), leaving a large opportunity for us to reach clients through superior experience and high-quality service, relative to both our larger competitors and the significant number of fragmented smaller and regional companies. We believe that clients increasingly value full service real estate service providers with comprehensive capabilities and multi-jurisdictional reach. We believe this will provide a competitive advantage for us as we have full-service capabilities to service both real estate owners and occupiers. Institutional Investor Demand for Commercial Real Estate. Institutions investing in real estate often compare their returns on investments in real estate to those of alternative asset classes, benchmark sovereign bonds, and investment-grade corporate bonds. Even with their recent rise, benchmark interest rates have remained relatively low compared with long-term average historical rates around the world over the past several years. For example, ten-year U.S. Treasuries averaged just over 6% over the fifty years ended December 31, 2022, compared with approximately 2.1% over the past five and ten years, 2.9% in 2022, and 3.8% in the fourth quarter of 2022. From the end of the Great Recession through the second half of 2022, this generally offered investors appealing spreads between those rates and risk-adjusted total returns for commercial real estate, which attracted significant investment from the portfolios of sovereign wealth funds, insurance companies, pension and mutual funds, high net worth investors and family offices, and other institutional investors, leading to an increased percentage of direct and indirect ownership of real estate related assets over time. For example, Preqin estimated that there was approximately $436 billion of investable funds held by global real estate focused institutions in closed-end funds as of December 31, 2022, versus $235 billion in 2015 and $157 billion in 2010. These amounts exclude the significant amount of real estate assets held by other types of investors and owners, such as publicly-traded REITs, non-traded REITs, and open-ended core property funds. In the second half of 2022, investment volumes in commercial real estate declined significantly from the record levels recorded a year earlier. This was largely due to both the relatively rapid rise in both the absolute level of interest rates and the increase in overall interest rate volatility as measured by ICE BofA MOVE Index and similar indices as well as widening credit spreads. A large percentage of commercial real estate investment is financed with debt, and these recent macroeconomic 10 conditions made the financing of deals more challenging. Despite this recent slowdown in industry-wide activity, over the long term, we expect institutions to continue increasing investments in global real estate. For context, the weighted average target allocation for all global institutional investors to real estate increased from 5.6% of their overall portfolios in 2010 to 9.6% in 2015 and 10.8% in 2022, according to figures from Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates. This same source estimates that the global target allocations will increase to 11.1% in 2023, which would be nearly double the percentage in 2010, and which they say implies the potential for an additional $80 to $120 billion of capital allocations to real estate over the coming years. We expect this positive allocation trend to continue to benefit our owner-focused businesses. Significant Levels of Commercial Mortgage Debt Outstanding and Upcoming Maturities . As of the most recently available data, there is approximately $4.5 trillion in U.S. commercial and multifamily mortgage debt outstanding according to the Mortgage Bankers Association (“MBA”) and over $2.5 trillion of related maturities expected from 2023 to 2027 according to Trepp, LLC. Refinancing typically makes up a significant portion of overall industry originations. For context, the MBA states that total U.S. commercial and multifamily originations were $713 billion in 2019, $614 billion in 2020, $891 billion in 2021, and $904 billion in 2022. The MBA projects that U.S. origination volumes will decline in 2023, but they are expected to resume their long-term growth trend over the following two years. We therefore continue to see long-term opportunities for our commercial mortgage brokerage and GSE/FHA origination businesses to benefit from this trend. Steady interest rate environments typically stimulate our capital markets business, where demand is often dependent on attractive all-in borrowing rates versus expected asset yields. Demand also depends on credit accessibility and general macroeconomic trends. Favorable Multifamily Demographics Driving Growth in GSE Lending and Multifamily Sales. Increasing sales prices for single-family homes relative to wages, delayed marriages, an aging population, and immigration to the United States are among the factors increasing demand for new apartment living, as well as for single-family rental housing. We expect these factors to support continued growth for our capital markets business, which provides integrated investment sales, mortgage brokerage, GSE/FHA lending, and loan servicing capabilities. Trend Toward Outsourcing of Commercial Real Estate Services . We estimate that the outsourcing of real estate-related services has reduced both property owner and tenant costs, which has increased the profitability for those who utilize commercial real estate and spurred additional demand for property. We believe that the more than $400 billion global revenue opportunity includes a large percentage of companies and landlords that have not yet outsourced their commercial real estate functions, including many functions offered by our management services businesses. Large corporations are focused on consistency in service delivery and centralization of the real estate function and procurement to maximize cost savings and efficiencies in their real estate portfolios. This focus tends to lead them to choose full-service providers like Newmark, where customers can centralize service delivery and maximize cost savings. We expect our GCS and property management businesses to benefit from the continued growth of outsourcing. For those companies and landlords who do not outsource, we consult with them and offer technology solutions to facilitate self-management more efficiently. In addition, the recent global pandemic has increased demand among owners and occupiers of commercial real estate for ways to best manage their property portfolios and maximize both the safety and productivity of their workforce. Our GCS business has seen increased demand for services relevant to these client needs. We believe that our outsourcing, consulting, and technology offerings allow us to engage further with clients and position us for opportunities to provide additional services to fulfill their needs. Changing Nature of Office Usage. Since the onset of the global pandemic, a large percentage of our occupier clients have begun to examine the best ways to utilize office space as they seek to attract and retain talent. This has led to occupiers reducing the amount of office space they lease or will lease, particularly in the technology sector. At the same time, across most industries and regions, older office buildings in less desirable locations (often referred to as "class B” or “class C" space) have seen reduced demand and lease or sell at significant discount to “class A” space, which are newer, renovated, LEED certified, and have more amenities. Class A properties not only command historically high prices relative to class B and C office space, but often at higher absolute prices per square foot than before the pandemic. This flight to quality has negatively impacted industry capital markets and leasing activity related to class B and C space. The changing nature of office usage creates opportunities for the Company to (i) assist corporate clients with workplace strategy, site selection, and other ways to maximize the efficiency of their operations and workforce, (ii) the trend towards hybrid work includes an increasing percentage of flexible work as a percentage of corporate portfolios, which will benefit our leasing business and flexible workspace business and (iii) class B and class C building obsolescence will create opportunities to assist owners with debt and equity recapitalizations, and repositioning obsolete office inventory into multi-family, industrial, life science and other uses. While it remains to be seen how long these recent trends with respect to office utilization continue, there are indications that they have recently been moving in a positive direction. For example, security provider Kastle Systems tracks the number of employees in ten of the largest U.S. metropolitan areas that were physically in the offices. They report every work week as a percentage of the typical number physically present during the first three weeks of February 2020 (the "Kastle 11 Barometer"). The Kastle Barometer remained below 35 for most of 2021, climbed from the low 40s in early 2022 to the high 40s towards the end of 2022, and climbed above 50 for the first time since early 2020 at the end of January 2023. It remains unclear if or when office usage will return to pre-pandemic levels. To the extent occupiers continue to further increase the percentage of employees working in offices, we expect to have additional opportunities for our professionals in tenant restructuring and portfolio optimization. Our teams are also actively collaborating with clients to differentiate or repurpose underutilized spaces, including with respect to converting office space into multifamily, life science, industrial, or other uses. We also expect the need for flexibility and hybrid workforces to create significant opportunities for both our Company-owned flexible workspace business and for our Company to broker leasing transactions involving external flexible workspace platforms. Our Competitive Strengths We believe the following competitive strengths differentiate us from competitors and will help us enhance our position as a leading commercial real estate services provider: Full-Service Capabilities . We provide a fully integrated real estate services platform to meet the needs of our clients and seek to provide beginning-to-end services to each client. These services include leasing, investment sales, mortgage brokerage, property management, facility management, multifamily GSE/FHA lending, loan servicing, advisory and consulting, appraisal, property and development services, and technology solutions. Today’s clients are focused on consistency of service delivery and centralization of the real estate function and procurement, resulting in savings and efficiencies, and allowing them to focus on their core competencies. Our target clients increasingly award business to full-service commercial real estate services firms, a trend which benefits our business over many of our competitors. Additionally, our full-service capabilities afford us an advantage when competing for business from clients who are outsourcing real estate services for the first time, as well as clients seeking best in class data, industry knowledge, and technology solutions. We believe our comprehensive and collaborative approach to commercial real estate services has allowed our revenue sources to become well-diversified across services and key markets throughout North America. Going forward, we expect to replicate our growth strategies as we continue our global expansion, with an initial focus on entering or further growing in 8-10 key non-U.S. markets. Proven Ability to Attract High-Quality Talent and Grow Market Share. Over the past decade, Newmark has been able to provide full-service capabilities while maintaining a manageable scale and has gained market share and risen in relevant league table standings across many business lines. We have accomplished this in part by investing in leadership and recruiting the top performers across our diverse business lines and geographies to our platform. We believe that we will duplicate this success over time as we further expand our presence outside the U.S. Alignment to Investor Sentiment & Diverse Revenue Mix. We have added companies and talent to our platform that provide services in business lines, property types and geographies that align with the objectives of our clients and with the changing market for commercial real estate services. We have grown our revenues in property types such as multifamily, industrial and life sciences, driven by our clients’ desires to expand their investments and operations. Additionally, we have expanded our services through geographic diversification, growing service offerings in many markets in North America, and more recently, in other markets globally. Industry-Leading Technology . Our technology is designed to create customer-centric digital solutions to transform processes and effectively increase the revenue, productivity and/or efficiency of our professionals and clients. As we further improve these solutions based on our professionals’ feedback, we continue to empower them with data and technology intended to give them a competitive advantage. By digitizing and automating the way we conduct business across our service lines, we aim to increase efficiency through data-driven insights, empowering Newmark professionals to make well-informed decisions delivered with speed and precision. Below are some examples of our technology solutions: • Ngage and Nform meaningfully increase the productivity of our V&A business. Together, these comprise our proprietary value-modeling database containing expansive records of sales, comparable leases, and building operating expenses. We have dramatically reduced appraisal modeling time by automating a large percentage of the report creation process, reducing the possibility of formula errors through the use of our proprietary technology and reliable data. 12 • Spaceful is our proprietary digital tourbook platform, which allows brokerage teams to collaborate and make real-time adjustments through its drag-and-drop interface, assembling elegant tourbooks with auto-generated maps within minutes, thereby improving the tour experience and strengthening our client relationships. Spaceful is designed to eliminate the need for paper and circulating multiple physical versions by providing an in-app experience and digital downloads when sharing with a client or internally, furthering our commitment to sustainability. • Pegasus is Newmark’s 3D mapping software that assists with location strategies based on demographics and proprietary data. With features such as fly-over technology and 360-degree angles, submarket color overlays, property layers and details, heat maps, and generated animated market views with stacking plan details, Pegasus leverages the art of storytelling and transforms the visual aspect of geography into a presentation in and of itself . • Ideal is Newmark's proprietary customer relationship management (CRM) platform that allows brokers and brokerage team members to share, update, maintain, and forecast the information and data relevant to their transactions and client relationships. Through its intuitive design and reliable data, Ideal is enhancing our collaborative culture by fostering valuable insights for pursuit tracking, lead-to-sale conversions, as well as cross-selling and upselling opportunities. • Newlitic is an innovative technology solution that integrates enterprises' real estate portfolio information into a single platform. A flexible and intuitive tool for corporate real estate professionals, Newlitic offers capabilities for multiple management reporting needs, including occupancy utilization, portfolio and lease administration, transaction management, capital projects and facilities management through customizable web dashboards. Newlitic, in combination with our GCS team’s expertise in real estate management, further empowers our enterprise clients across the world, enabling leaders to advance data-driven strategies and leverage real estate information to the fullest. We believe our technology solutions encourage customers to use Newmark to execute capital markets and leasing transactions, as well as to use our other services. We believe that the customer experience through use of our data and technology is a key competitive advantage as companies look to transform how they do business. Through product innovation and engineering excellence, we expect to continue developing and investing in cutting-edge technology tailored to accommodate Newmark’s full-service platform. We are committed to empowering our professionals with customized data and digital solutions intended to improve and optimize the client experience and help drive growth. Strong and Diversified Client Relationships . We have long-standing relationships with many of the world’s largest commercial property owners, real estate developers and investors, and Fortune 500 and Forbes Global 2000 companies. We can provide beginning-to-end solutions for our clients through our management services offerings. This allows us to generate more recurring and predictable revenues. We generally have multi-year contracts to provide services, including repeatable transaction work, lease administration, project management, facilities management and consulting. In capital markets, we provide real estate investors and owners with property management and landlord representation during their ownership and assist them with maximizing their return on real estate investments through investment sales, debt and equity financing, lending and V&A services and real estate technology solutions. We believe that the many touch points we have with our clients gives us a competitive advantage in client-specific and overall industry knowledge, and that this has a multiplier effect that drives growth across the Company. Strong Financial Position to Support High Growth. We generate significant earnings and strong and consistent cash flow. We have $233.8 million of cash and cash equivalents and a $600 million revolving credit facility as of December 31, 2022. We expect to use our strong balance sheet and future cash flow generation to fuel our future growth. Employee Ownership and Equity-Based Compensation Yields Multiple Benefits. Unlike many of our peers, virtually all of our key executives and revenue-generating employees have partnership and/or equity stakes in our company. This strong emphasis on ownership promotes an entrepreneurial culture that enables us to attract and retain top producers in key markets and service lines. See “-Human Capital Management.” Strong and Experienced Management Team . Our management team possesses deep leadership experience and subject matter expertise, benefiting both us and our clients. Our executive officers comprise a diverse set of individuals with an average of more than 30 years of industry experience. Additionally, our geographic and business line leadership teams also average more than 30 years of industry experience. Together, these leadership teams represent our flat leadership structure and robust capabilities in both corporate strategy and production expertise. Opportunity to Grow Domestic and Global Footprint. In 2022, more than 7% of our revenues were from international sources, while our largest, full-service, U.S.-listed competitors generated approximately 28-45% of their revenues outside the U.S. for the most recent fiscal years reported. We believe that our successful history of acquiring over 55 businesses since 2011 and making profitable hires across our business lines and existing geographies demonstrate our ability to continue to grow substantially around the globe. 13 Industry Recognition As a result of our experienced management team’s ability to skillfully grow the Company, we have become a nationally recognized brand. Over the past several years, we have consistently won a number of U.S. industry awards and accolades, been ranked highly by third-party sources and significantly increased our rankings, which we believe reflects recognition of our performance and achievements. For example: • Ranked #2 Top Apartment Brokers, Real Capital Analytics, 2022; • Ranked #2 Top Office Brokers, Real Capital Analytics, 2022; • Ranked #2 Top Cross-Border Brokers, Real Capital Analytics, 2022; • Ranked #2 Top Brokers of Self-Storage Properties, Real Estate Alert, 2022; • Ranked #3 Top CRE Brokerage Firms and #3 Top Sales Firms, Commercial Property Executive, 2022; • Ranked #3 Top Mortgage Banking & Brokerage Firms, Commercial Property Executive, 2023; • Ranked #3 Top Brokers of Multi-Family Properties, Real Estate Alert, 2022; • Ranked #4 Top Office Brokers, Real Estate Alert, 2022; • Ranked #4 Top Overall Brokers, Real Estate Alert, 2022; • Ranked #4 Top Retail Brokers, Real Estate Alert, 2022; • Ranked #5 Fannie Mae Delegated Underwriting and Servicing (DUS) lender by volume for 2022 by the agency; including #3 DUS Producers for Structured Transactions; and • Ranked among The Global Outsourcing 100® by the International Association of Outsourcing Professionals, 2023, for the 14th consecutive year. Clients Our clients include a full range of real estate owners, occupiers, tenants, investors, lenders, small and medium sizes businesses, as well as multi-national corporations and some of the largest institutional owners of real estate in the world in numerous markets and across multiple property types, including office, retail, industrial, multifamily, student housing, hotel/lodging, data centers, healthcare, self-storage, land, condominium conversions, subdivisions and special use. Our clients vary greatly in size and complexity, and include for-profit and non-profit entities, governmental entities and public and private companies. Sales and Marketing We seek to develop our brand and highlight its expansive platform while reinforcing our position as a leading commercial real estate services firm in the United States through national brand and corporate marketing, local marketing of specific business lines and targeted brokerage professional marketing efforts. National Brand and Corporate Marketing . At a national level, we utilize media relations, industry sponsorships, social media, sales collateral and targeted advertising in trade and business publications to develop and market our brand. We believe that our emphasis on our unique capabilities enables us to demonstrate our strengths and differentiate ourselves from our competitors. Our multi-market business groups provide customized collateral, website and technology solutions designed to address specific client needs. Local Market Expertise and Targeted Brokerage Professional Efforts. On a local level, our offices (including those owned by us and those independently owned business partners) have access to tools and templates that provide our revenue-generating professionals with the market knowledge we believe is necessary to educate and advise clients, and also to bring properties to market quickly and effectively. These tools and templates include proprietary research and analyses, web-based marketing systems and ongoing communications and training about our depth and breadth of services. Our professionals use these local and national resources to participate directly in selling to, advising and servicing clients. We provide marketing services and materials to certain business partners as part of an overall agreement allowing them to use our branding. We also benefit from shared referrals and materials from local offices. Additionally, we invest in and rely on comprehensive research to support and guide the development of real estate and investment strategy for our clients. Research plays a key role in keeping colleagues attuned to important trends and changing conditions in world markets. We disseminate this information internally and externally directly to prospective clients and the marketplace through the company website, direct email, and social media. We believe that our investments in research and 14 technology are critical to establishing our brand as a thought leader and expert in real estate-related matters and provide a key sales and marketing differentiator. Globally, we believe that the combination of (i) our having assembled a group that includes some of the industry’s most talented professionals, (ii) encouraged their innovative and entrepreneurial natures, and (iii) provided them the benefits of our partnership and equity-based compensation structure together encourage an ownership mindset while promoting cross-selling and collaboration with respect to servicing our clients across our platform. Intellectual Property We hold various trademarks, trade dress and trade names and rely on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as contractual restrictions, to establish and protect our intellectual property rights. We own numerous domain names and have registered numerous trademarks and/or service marks in the United States and foreign countries. We will continue to file additional patent applications on new inventions, as appropriate, demonstrating our commitment to technology and innovation. Although we believe our intellectual property rights play a role in maintaining our competitive position in a number of the markets that we serve, we do not believe we would be materially adversely affected by the expiration or termination of our trademarks or trade names or the loss of any of our other intellectual property rights. Our trademark registrations must be renewed periodically, and, in most jurisdictions, every 10 years. Competition We compete across a variety of business disciplines within the commercial real estate industry, including commercial property and corporate facilities management, owner-occupier, property and landlord representation, property sales, valuation, capital markets (equity and debt) solutions, GSE lending and loan servicing and development services. Each business discipline is highly competitive on a local, regional, national and global level. We also compete with other large multi-national firms that have similar service competencies to ours, including CBRE Group, Inc., Jones Lang LaSalle Incorporated, Cushman & Wakefield plc, Savills plc, and Colliers International Group, Inc. In addition, more specialized firms like Marcus & Millichap Inc., Eastdil Secured LLC and Walker & Dunlop, Inc. compete with us in certain service lines or property types. Depending on the geography, property type or service, we compete with other commercial real estate service providers, including outsourcing companies that traditionally competed in limited portions of our real estate management services business and have recently expanded their offerings. These competitors include companies such as Aramark, ISS A/S and ABM Industries. From time to time, we also compete with in-house corporate real estate departments, institutional lenders, insurance companies, investment banking firms, and accounting and consulting firms in various parts of our business. Despite recent consolidation, the commercial real estate services industry remains highly fragmented and competitive. Although many of our competitors are local or regional firms that are smaller than us, some of these competitors are more entrenched than us on a local or regional basis. Seasonality Due to the strong desire of many market participants to close real estate transactions prior to the end of a calendar year, our business exhibits certain seasonality, with our revenue tending to be lowest in the first quarter and strongest in the fourth quarter. For the five years ended 2018 through 2022, we generated an average of approximately 22% of our revenues in the first quarter and 29% of our revenues in the fourth quarter. Partnership and Equity Overview We expect many of our key brokerage professionals, salespeople and other professionals to have a substantial amount of their own capital invested in our business, aligning their interests with those of our stockholders. We control the general partner of Newmark Holdings. The limited partnership interests in Newmark Holdings consist of: (i) a special voting limited partnership interest held by us; (ii) exchangeable limited partnership interests held by Cantor; (iii) founding/working partner interests held by founding/working partners; (iv) limited partnership units, which consist of a variety of units that are generally held by employees such as REUs, RPUs, PSUs, PSIs, PSEs, LPUs, APSUs, APSIs, AREUs, ARPUs and NPSUs; and (v) Preferred Units, which are working partner interests that may be awarded to holders of, or contemporaneous with, the grant of certain limited partnership units. See “Our Organizational Structure.” While Newmark Holdings limited partnership interests generally entitle our partners to participate in distributions of income from the operations of our business, upon leaving Newmark Holdings (or upon any other purchase of such limited partnership interests), any such partners will only be entitled to receive over time, and provided such partner does not violate certain partner obligations, an amount for their Newmark Holdings limited partnership interests that reflects such partner’s capital account or compensatory grant awards, excluding any goodwill or going concern value of our business unless Cantor, in 15 the case of the founding partners, and we, as the general partner of Newmark Holdings, otherwise determine. Our partners will be able to receive the right to exchange their Newmark Holdings limited partnership interests for shares of our Class A common stock (if, in the case of founding partners, Cantor so determines and, in the case of working partners and limited partnership unit holders, we, as the Newmark Holdings general partner, with Cantor’s consent, determine otherwise) and thereby realize any higher value associated with our Class A common stock. We believe that employee equity ownership creates a sense of responsibility for the health and performance of our business and a strong incentive to maximize our revenues and profitability. See “-Our Organizational Structure” and “Item 1A-Risk Factors-Risks Related to Our Relationship with Cantor and Its Respective Affiliates.” Relationship with Cantor See “– Our Organizational Structure” and “Item 1A-Risk Factors-Risks Related to Our Relationship with Cantor and Its Respective Affiliates.” Regulation The brokerage of real estate sales and leasing transactions, property and facilities management, conducting real estate valuation and securing debt for clients and other business lines require that we comply with regulations affecting the real estate industry and maintain licenses in the various jurisdictions in which we operate. Like other market participants that operate in numerous jurisdictions and in various business lines, we must comply with numerous regulatory regimes. We could be required to pay fines, return commissions, have a license suspended or revoked, or be subject to other adverse actions if we conduct regulated activities without a license or violate applicable rules and regulations. Licensing requirements could also impact our ability to engage in certain types of transactions, change how we conduct business or affect the cost of conducting business. We and our licensed associates may be subject to various obligations, and we could become subject to claims by regulators and/or participants in real estate sales or other services claiming that we did not fulfill our obligations. This could include claims with respect to alleged conflicts of interest where we act, or are perceived to be acting, for two or more clients. While management has overseen highly regulated businesses before and expects us to comply with all applicable regulations in a satisfactory manner, no assurance can be given that it will always be the case. In addition, federal, state and local laws and regulations impose various environmental zoning restrictions, use controls, and disclosure obligations that impact the management, development, use and/or sale of real estate. Such laws and regulations tend to discourage sales and leasing activities, as well as mortgage lending availability, with respect to such properties. In our role as property or facilities manager, we could incur liability under environmental laws for the investigation or remediation of hazardous or toxic substances or wastes relating to properties we currently or formerly managed. Such liability may be imposed without regard for the lawfulness of the original disposal activity, or our knowledge of, or fault for, the release or contamination. Further, liability under some of these may be joint and several, meaning that one of multiple liable parties could be responsible for all costs related to a contaminated site. Certain requirements governing the removal or encapsulation of asbestos-containing materials, as well as recently enacted local ordinances obligating property or facilities managers to inspect for and remove lead-based paint in certain buildings, could increase our costs of regulatory compliance and potentially subject us to violations or claims by regulatory agencies or others. Additionally, under certain circumstances, failure by our brokerage professionals acting as agents for a seller or lessor to disclose environmental contamination at a property could result in liability to a buyer or lessee of an affected property. We are required to meet and maintain various eligibility criteria from time to time established by the GSEs and HUD, as well as applicable state and local licensing agencies, to maintain our status as an approved lender. These criteria include minimum net worth, operational liquidity and collateral requirements, and compliance with reporting requirements. We also are required to originate our loans and perform our loan servicing functions in accordance with the applicable program requirements and guidelines from time to time established by the GSEs and HUD. For additional information, see “Item-1A-Risk Factors-Risks Related to Our Business-Regulatory/Legal- The loss of relationships with the GSEs and HUD would, and changes in such relationships could, adversely affect our ability to originate commercial real estate loans through such programs. Compliance with the minimum collateral and risk-sharing requirements of such programs, as well as applicable state and local licensing agencies, could reduce our liquidity .” Newmark is subject to various capital requirements in connection with seller/servicer agreements that Newmark has entered into with the various GSEs. Failure to maintain minimum capital requirements could result in Newmark’s inability to originate and service loans for the respective GSEs and could have a direct material adverse effect on Newmark’s consolidated financial statements. As of December 31, 2022, Newmark has met all capital requirements. As of December 31, 2022, the most 16 restrictive capital requirement was Fannie Mae’s net worth requirement. Newmark exceeded the minimum requirement by $430.1 million. Certain of Newmark’s agreements with Fannie Mae allow Newmark to originate and service loans under Fannie Mae’s DUS Program. These agreements require Newmark to maintain sufficient collateral to meet Fannie Mae’s restricted and operational liquidity requirements based on a pre-established formula. Certain of Newmark’s agreements with Freddie Mac allow Newmark to service loans under Freddie Mac’s Targeted Affordable Housing Program (“TAH”). These agreements require Newmark to pledge sufficient collateral to meet Freddie Mac’s liquidity requirement of 8% of the outstanding principal of TAH loans serviced by Newmark. As of December 31, 2022, Newmark has met all liquidity requirements. In addition, as a servicer for Fannie Mae, GNMA and FHA, Newmark is required to advance to investors any uncollected principal and interest due from borrowers. As of December 31, 2022 and 2021, outstanding borrower advances were approximately $1.3 and $0.9 million, respectively, and are included in “Other assets” in the accompanying consolidated balance sheets. In order to continue our business in our current structure, we and Newmark Holdings must not be deemed investment companies under the Investment Company Act. We intend to take all legally permissible action to ensure that such entities are not subject to such Act. For additional information, see “Item 1A-Risk Factors-Risks Related to Our Corporate and Partnership Structure- If we or Newmark Holdings were deemed an “investment company” under the Investment Company Act, the Investment Company Act’s restrictions could make it impractical for us to continue our business and structure as contemplated and could materially adversely affect our business, financial condition, results of operations and prospects .” Human Capital Management Human Capital Resources. Newmark is an organization built on strong values, employee engagement and shared ownership. At our core, we are committed to our employees by providing them with an opportunity to participate in our success. We believe that by cultivating a dynamic mix of people and ideas, we enrich the performance of our businesses, the experiences of our increasingly diverse employees, and the level of engagement in the communities in which we operate. Workforce. As of December 31, 2022, we have nearly 6,300 employees in approximately 150 offices in more than 110 cities. 99% of our employees globally are full-time, 82% are in the United States, and 18% are in the rest of the world . Over 1,100 of our employees are partially or fully reimbursed by clients, mainly in our property management and GCS businesses. In addition, as of December 31, 2022, Newmark has licensed its name to 13 commercial real estate providers with more than 400 employees operating out of 27 offices in various locations where Newmark does not have its own offices. Newmark and our business partners together operate from approximately 175 offices with over 6,700 professionals in 25 countries across four continents. We also receive support services from certain employees who also work for Cantor and its affiliates and who provide services to us pursuant to our Administrative Services Agreement with Cantor and devote some or all of their time to Newmark. Generally, employees are not subject to any collective bargaining agreements, except approximately 200 employees in the United States, all of whom are fully reimbursed and for certain of our employees based in our European offices who are covered by the national, industry-wide collective bargaining agreements relevant to the countries/sectors in which they work. Our non-U.S. headcount has grown this year due to growth in our India offshoring operations, the hiring of new international professionals across capital markets, leasing, V&A and GCS, and the BH2 acquisition. We expect our international headcount to increase as we continue to expand our global operations. We have invested significantly through acquisitions, technology spending and the hiring of new brokerage professionals, salespeople, managers and other front-office personnel. The market for these acquisitions has been competitive, and it is expected that these conditions will persist for the foreseeable future. We have attracted best-in-class professionals to our platform, known for scale, technology and expertise. Newmark is an organization built on strong values, employee engagement and ownership. At our core, we are committed to our employees by providing them with an opportunity to participate in our success. We believe that by cultivating a dynamic mix of people and ideas, we enrich our businesses’ performance, the experience of an increasingly diverse employee base, and our communities’ engagement. Human Capital Measures and Objectives. In response to shifting client demands, we seek to also manage our human capital resources as we expand service offerings and geographies in order to maximize profitability. 17 Our human capital measures and objectives include those related to employee headcount. During 2022, we saw somewhat increased voluntary turnover year-on-year for our back office and operational employees due partly to wage pressures. However, our retention rate for our managers, brokers, salespeople, and other revenue-generating personnel improved slightly compared with 2021. We continue to invest in the business by adding high profile and talented producers and other revenue generating professionals. In 2022, we increased such headcount globally through selective hiring across capital markets, leasing, V&A and GCS, and through acquisitions. Historically, newly hired revenue generating professionals in commercial real estate tend to achieve higher productivity in their second and third years with the Company, although we incur related expenses immediatel y. Newmark will continue to focus on increasing the percentage of our total revenues from our recurring and/or predictable revenue businesses, such as V&A, mortgage servicing, GCS, and property management. We also continue to focus on businesses with exposure alternative property types, such as life science, senior housing, medical office, self-storage and student housing, which, together with industrial and multifamily, contributed a significant percentage of transaction volume growth for Newmark and have aligned to investor preferences over the last few years. From a human capital perspective, we have made some key management hires in these areas in 2022 and expect them to be continued areas of growth in the future. From time to time, we engage in cost-savings initiatives, including reducing the number of employees to improve margins. We are also focused on driving margin expansion through the use of technology to improve our workforce’s productivity and rationalizing our cost structure to drive increased efficiencies and through the use of near shoring and offshoring where appropriate. As an example of the latter, our India offshoring operation now consists of over 470 employees, compared with over 300 in 2021, with plans to grow further in 2023. Flexible, Safe and Empowering Work Environment . In order to retain and hire additional workforce, we have maintained our flexible work arrangements implemented during COVID, where appropriate, and made compensation adjustments, established additional corporate opportunities and provided additional benefits, including a 401(k) match. We have taken significant measures to develop a safe work environment in our offices subject to applicable state and local regulatory requirements where appropriate. We have established a more flexible hybrid approach in many instances for non-revenue generating roles or for roles which are not office dependent. We have established vaccination requirements in accordance with applicable laws, including time-off for vaccines, coverage for COVID-19 testing and enhanced sick leave. We have implemented measures to ensure the mental health and well-being of our employees during the pandemic, including increased access to Behavioral Health and Mental Health telemedicine, expanding access to Employee Assistance Program Services and providing employees with access to preventative mental health solutions. Performance-Based and Highly Retentive Compensation Structure. Virtually all of our key executives and producers have equity or partnership stakes in the Company and its subsidiaries. Generally, they receive deferred equity, limited partnership units or restricted stock units as part of their compensation. As of December 31, 2022, our employees and independent contractors, partners, executive officers and directors owned approximately 27% of our equity on a fully diluted basis. We issue limited partnership units and other forms of equity-based compensation, such as restricted stock units, which: • Provide liquidity to our partners and employees over time; • Align the interests of our partners and employees and management with those of common stockholders; • Help motivate and retain key partners and employees; and • Encourage a collaborative culture that drives cross-selling and growth. The non-exchangeable partnership units held by our partners are subject to forfeiture (such as if the non-compete, confidentiality or non-solicit provisions of the Newmark Holdings limited partnership agreement are violated), and unvested restricted stock units are subject to service conditions that must be met in order for them to vest into shares of Newmark common stock. In addition, any partnership amounts paid following termination of service generally are paid over a number of years to ensure compliance with partner obligations. This compensation structure has proven to be highly retentive, and since 2015, we have retained 94% of our top-performing producers. We also enter into various agreements with certain employees and partners. Many of these individuals receive loans that may be either wholly or in part repaid from the distribution earnings that the individual receives on some or all of their 18 limited partnership units, or that may be forgiven over a period of time. These loans provide incentives and promote entrepreneurship and long-term engagement. Human Capital and Social Policies and Practices. We are committed to our people, our stakeholders and the community as a whole. We have a variety of programs to incentivize and support our employees, from employee ownership to comprehensive benefits and training. We are also committed to equal opportunity, diversity and other policies and practices designed to fulfill our commitment to social and human capital development. Employee Diversity, Inclusion and Equal Opportunity. We are committed to equal opportunity, diversity and other policies and practices that seek to further our development of a diverse and inclusive workplace. We consider all qualified applicants for job openings and promotions without regard to race, color, religion, gender, sexual orientation, gender identity, national origin or ancestry, age, disability, service in the armed forces, or any other characteristic that has no bearing on the ability of employees to do their jobs well. We continue to develop initiatives to support these values and include qualified, diverse candidates in the interview process for leadership roles. We are dedicated to our efforts to achieve pay equity. Our promotion and compensation processes are designed to enable us to treat employees fairly, and our compensation decisions are differentiated based on performance. Newmark participates in the Corporate Equality Index, a national benchmarking tool measuring policy, practices and benefits pertinent to lesbian, gay, bisexual, transgender and queer (LGBTQ+) employees and was named to GlobeSt.’s 2021 Women of Influence ‘Diversity Champion’ list. Talent remains at the core of who we are as a company, and we remain committed to having a culture built around inclusion, equality and developing a diverse workforce. In 2020, we launched IDEA (Inclusion, Diversity, Equality and Access), a program designed to enhance our ability to attract, develop and retain top talent with an emphasis on increasing representation of traditionally underrepresented groups at all levels of the organization. Our goal is to build an even more successful organization that more closely reflects our client base and the population at large. Our employee resource groups (“ERGs”) support the recruitment, development and retention of diverse professionals across our organization to advance our business and reputation. Our current ERGs are the Asian Pacific American Community, the Black Employee Network, the Latin American/Hispanic ERG, the Military Veterans ERG, Newmark Pride and the Network of Women. Our ERGs strive to offer a variety of opportunities and tools to help our employees make new professional contacts, find mentors and develop their careers. These events and activities also allow our employees to support one another through a valuable exchange of experiences, advice, and best practices for career success. We are helping to shape future leaders from a wide variety of backgrounds. We actively participate in various initiatives, including the following: • participation in the Mortgage Bankers Association Path to Diversity Scholarship Program; • sponsorship of the Summer Enrichment and Analyst Development Programs run by Artemis Real Estate Partners, a female-owned financial firm with a strong track record in fostering diversity; and • Platinum Level Sponsorship of the virtual internship program run by the Real Estate Board of New York (REBNY) in partnership with the City University of New York (CUNY) and Project Destined. We further participate in job fairs and job boards that are focused on reaching a diverse applicant pool. We are also an investor in a commercial real estate services firm that operates as E Smith Advisors, which is a certified minority-owned business enterprise offering a wide variety of real estate services in the U.S. Employee Engagement, Communication, Management and Leadership Training and Development . We are investing in our employees’ long-term development and engagement by delivering training and development programs and a culture where our people can thrive and maximize their potential. We require mandatory annual training in workplace respect and inclusion, anti-money laundering, anti-crime, global sanctions, ethics, cyber-security and harassment prevention among other topics. We also provide or support periodic job-specific and other developmental training and support for our employees so they can maximize their potential, as well as tuition reimbursement programs to eligible employees. We provide virtual and in-person leadership training to managers on topics, including management effectiveness, communication skills, interview skills, writing and delivering effective performance evaluations, managing diverse teams and other topics. This training is supplemented by a comprehensive library of on-line training courses that managers and employees may access. Finally, our individual business lines offer ongoing learning and development opportunities tied to deepening the understanding of the subject matter expertise of their professionals. 19 Our success depends on employees understanding how their work and engagement contribute to our strategy, culture, values and regulatory environment. We use various channels to facilitate open and direct communication, including internal calls and meetings with employees, training and policy updates, our ERGs, our IDEA program and our social and family outings and events. Succession Planning and Retention . From time to time, the Board discusses succession planning, including our consideration of succession strategy, the impact of any potential absence due to illness or leave of certain key executive officers or employees, as well as competing demands on the time of certain of our executive officers who also provide services to Cantor, BGC, and various other ventures and investments sponsored by Cantor. Our Board also discusses from time to time, as part of its succession planning, engagement and encouragement of future business leaders and the process of introducing directors to leaders in the Company’s business lines. The Board also considers hiring and retention of leaders required for the changing business landscape and to lead future business lines. Additionally, we have implemented identification and tracking of diverse candidates as part of our succession planning efforts and plan to implement development plans for all high-potential successors this year. We have taken strong steps to ensure the retention of our executive officers, including Messrs. Lutnick, Gosin, and Rispoli, our Chairman, Chief Executive Officer, and Chief Financial Officer, respectively. The retention bonus agreement entered into with Mr. Lutnick on December 28, 2021, the employment agreement entered into with Mr. Gosin on February 10, 2023, and the employment agreement entered into with Mr. Rispoli on September 29, 2022, each provide strong incentives for our key executive officers to continue providing their services to the Company. Mr. Lutnick’s investment of the first tranche of his bonus in our Class A Common Stock, and the high proportion of equity-based compensation in Messrs. Gosin and Rispoli’s respective employment agreements, further align their interests with those of our stockholders. Environmental, Social and Governance ( “ ESG ” ) / Sustainability Information. We believe that our environmental, social and governance (“ESG”) policies and practices will create sustainable long-term value for Newmark, our stockholders and other stakeholders, our clients and our employees while also helping us mitigate risks, reduce costs, protect brand value, and identify market opportunities. We are embedding social and human capital, employment, environmental, sustainability, charitable and corporate governance policies and practices into our corporate strategy, compensation, disclosure, and goals to maintain and advance long-term stockholder value. Newmark supports sustainable business practices and is focused on the steps necessary to establish a sustainability program both internally and for our clients. In 2022, we retained a nationally certified women-owned firm to assist our leadership in this endeavor. We also established an Executive ESG Council, comprised of key Company executives, to provide direction for Newmark’s ESG progress and initiatives. Our Environmental Focus, Workplace Strategies and Sustainable Business Practices . We are focused on the environment and recognize the importance of treating our natural resources with the greatest respect, so that they are available to future generations. Building operations have a significant impact on the environment, and as technology continues to place greater demands on building systems for power and cooling, energy consumption is expected to continue to rise at an unsustainable rate. As one of the nation’s largest real estate service providers, we believe it is our responsibility to improve energy efficiency and reduce energy consumption to protect the environment through continuous improvement of building practices. We understand that sustainable buildings provide a better work environment, increase building efficiency, and reduce the environmental impact of building operations. We continue to work on these initiatives. As a responsible business, we are acutely aware of climate change and other major issues affecting the environment. We also understand the impact commercial real estate can have on the health of the environment. That is why we encourage sustainable building practices, and in our GCS business and property management assignments, recommend strategies to clients to maximize energy efficiency, recycle materials and limit waste. These goals apply to Newmark’s offices as well as to the work we do for our clients, whether in selecting a location, building out space or managing an asset. Newmark’s property, facilities and energy/sustainability management teams work internally and with clients to reduce energy demand and carbon emissions. Newmark is increasingly collecting and measuring environmental data and this data is used to build client strategies around energy efficiency and renewable energy supply initiatives. In our workplaces, we are studying how to make our own contribution to state, national and global environmental initiatives and expect the same of our vendors and suppliers when doing business with us. As part of this, we are considering how to minimize our future carbon footprint when planning office renovations and intend to focus our attention in the near term on methods of reducing our greenhouse gas emissions, increasing use of renewable energy, conserving water, and reducing waste generation. Newmark is working with the landlords and property management teams that oversee the buildings we 20 occupy to collect accurate and actionable energy data. As this data becomes more available, Newmark plans to implement energy efficiency initiatives where possible that will help lower our overall carbon footprint. We are also investigating the purchase of renewable energy supply where possible in deregulated energy markets. For all newly leased space for Newmark, we generally consider green lease options and make sure the workplace is as sustainable as possible. Environmental Policy and Energy and Sustainable Service Reference Guide . We have a policy with respect to the responsible environmental management of our operations. We are creating a baseline to understand and minimize the impact that our business has on the environment and have begun to actively search for ways to reduce our footprint. We are pursuing traditional, as well as new and innovative, methods to achieve our goals. We are seeking to create a culture where environmental focus is a way of being rather than a secondary consideration. Further information on our policy can be found on our website at the following link: https://www.nmrk.com/esg under the heading “Environmental Policy.” Newmark has also developed an Energy and Sustainability Services Reference Guide which is available at https:// www.nmrk.com/storage-nmrk/uploads/documents/Newmark-Energy-and-Sustainability-Services-Guide 2021-11-16-201727.pdf which assists clients and property teams in reducing the environmental impact of property operations, maintenance and construction associated with real estate assets. For more information about these initiatives and service s provided to clients and within our own facilities as they evolve, please refer to our website at https:// www.nmrk.com/esg . To learn more about policies and practices and our continuing efforts related to human capital and ESG matters, please refer to the ESG/sustainability section of our website at nmrk.com/esg for further information. You may also find our Corporate Governance Guidelines, Code of Business Conduct and Ethics, the charters of the committees of our Board of Directors, Hedging Policy, information about our charitable initiatives and other sustainability and ESG policies and practices on our website and in the proxy statement for our annual meeting of stockholders. The information contained on, or accessed through, our website, is not part of, and not incorporated into, this Annual Report on Form 10-K. Legal Proceedings See the discussion of Legal Proceedings contained in “Note 31 - Commitments and Contingencies” to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. OUR ORGANIZATIONAL STRUCTURE Current Organizational Structure Dual Class Equity Structure of Newmark Group, Inc. We have a dual class equity structure, consisting of shares of Newmark Class A common stock and Newmark Class B common stock. Newmark Class A common stock. Each share of Newmark Class A common stock is generally entitled to one vote on matters submitted to a vote of our stockholders. As of December 31, 2022, there were 201,181,177 shares of Newmark Class A common stock issued and 150,384,605 shares outstanding. As of December 31, 2022. Cantor and CFGM held no shares of Newmark Class A common stock. Newmark Class B common stock. Each share of Newmark Class B common stock is generally entitled to the same rights as a share of Newmark Class A common stock, except that, on matters submitted to a vote of our stockholders, each share of Newmark Class B common stock is entitled to 10 votes. The Newmark Class B common stock generally votes together with the Newmark Class A common stock on all matters submitted to a vote of our stockholders. As of December 31, 2022, Cantor and CFGM held 21,285,533 shares of Newmark Class B common stock, representing all of the outstanding shares of Newmark Class B common stock and approximately 58.6% of our total voting power. Shares of Newmark Class B common stock are convertible into shares of Newmark Class A common stock at any time in the discretion of the holder on a one-for-one basis. Accordingly, if Cantor and CFGM converted all of their shares of Newmark Class B common stock into shares of Newmark Class A common stock, Cantor and CFGM would collectively hold 12.4% of the voting power in Newmark and the other stockholders of Newmark hold 87.6% of the voting power in Newmark (and the indirect economic interests in Newmark OpCo would remain unchanged). In addition, if (1) Cantor and CFGM continued to hold shares of Newmark Class B common stock and (2) Cantor exchanged all of the Newmark Holdings exchangeable limited partnership units held by Cantor for shares of Newmark Class B common stock, Cantor and CFGM would 21 hold 76.1% of the voting power in Newmark, and the stockholders of Newmark other than Cantor and CFGM would hold 23.9% of the voting power in Newmark. We expect to retain and have no plans to change our dual class structure. There are no circumstances under which the holders of Newmark Class B common stock would be required to convert their shares of Newmark Class B common stock into shares of Newmark Class A common stock. Our amended and restated certificate of incorporation, referred to herein as our certificate of incorporation, does not provide for automatic conversion of shares of Newmark Class B common stock into shares of Newmark Class A common stock upon the occurrence of any event. Partnership Structure of Newmark Holdings and Newmark OpCo. At Newmark Group, Inc., we are a holding company that holds partnership interests as described below, serves as the general partner of Newmark Holdings and, through Newmark Holdings, acts as the general partner of Newmark OpCo. As a result of our ownership of the general partnership interest in Newmark Holdings and Newmark Holdings’ general partnership interest in Newmark OpCo, we consolidate Newmark OpCo’s results for financial reporting purposes. We hold the Newmark Holdings general partnership interest and the Newmark Holdings special voting limited partnership interest, which entitle us to remove and appoint the general partner of Newmark Holdings and serve as the general partner of Newmark Holdings, which entitles us to control Newmark Holdings. Newmark Holdings, in turn, holds the Newmark OpCo general partnership interest and the Newmark OpCo special voting limited partnership interest, which entitle Newmark Holdings to remove and appoint the general partner of Newmark OpCo, and serve as the general partner of Newmark OpCo, which entitles Newmark Holdings (and thereby us) to control Newmark OpCo. In addition, as of December 31, 2022, we directly held Newmark OpCo limited partnership interests consisting of approximately 64,828,179 units representing approximately 27.3% of the outstanding Newmark OpCo limited partnership interests (not including EPUs). Cantor, founding partners, working partners and limited partnership unit holders directly hold Newmark Holdings limited partnership interests. Newmark Holdings, in turn, holds Newmark OpCo limited partnership interests and, as a result, Cantor, founding partners, working partners and limited partnership unit holders indirectly have interests in Newmark OpCo limited partnership interests. The Newmark Holdings limited partnership interests are held and designated as follows: • Newmark Holdings limited partnership interests held by Cantor and CFGM are designated as Newmark Holdings exchangeable limited partnership interests; • Newmark Holdings limited partnership interests held by the founding partners are designated as Newmark Holdings founding partner interests; • Newmark Holdings limited partnership interests held by working partners are designated as Newmark Holdings working partner interests; and • Newmark Holdings limited partnership interests held by limited partnership unit holders are designated as limited partnership units. Partnership Exchange Rights into Newmark Class A and Class B Common Stock. Each Newmark Holdings limited partnership interest held by Cantor and CFGM is generally exchangeable with us for a number of shares of Newmark Class B common stock (or, at Cantor’s option or if there are no additional authorized but unissued shares of Newmark Class B common stock, a number of shares of Newmark Class A common stock) equal to the exchange ratio. As of December 31, 2022, 3,628,183 founding/working partner interests were outstanding. These founding/working partner interests were issued in the Separation to holders of BGC Holdings founding/working partner interests, who received such founding/working partner interests in connection with BGC Partners’ acquisition of the BGC Partners business from Cantor in 2008. The Newmark Holdings limited partnership interests held by founding/working partners are not exchangeable with us unless (1) Cantor acquires Cantor units from Newmark Holdings upon termination or bankruptcy of the founding/working partners or redemption of their units by Newmark Holdings (which it has the right to do under certain circumstances), in which case such interests will be exchangeable with us for shares of Newmark Class A common stock or Newmark Class B common stock as described above, or (2) Cantor determines that such interests can be exchanged by such founding/working partners with us for Newmark Class A common stock, with each Newmark Holdings unit exchangeable for a number of shares of Newmark Class A common stock equal to the exchange ratio (which was initially one, but is subject to adjustment as set forth in the Separation and Distribution Agreement), on terms and conditions to be determined by Cantor (which exchange of certain interests Cantor expects to permit from time to time). Cantor has provided that certain founding/working partner interests are exchangeable with us for Class A common stock, with each Newmark Holdings unit exchangeable for a number of shares of Newmark Class A common stock equal to the exchange ratio (which was initially one, but is subject to adjustment as set forth in the Separation and Distribution Agreement), in accordance with the terms of the Newmark Holdings limited 22 partnership agreement. Once a Newmark Holdings founding/working partner interest becomes exchangeable, such founding/working partner interest is automatically exchanged upon a termination or bankruptcy with us for Newmark Class A common stock. We also provide exchangeability for partnership units into Newmark Class A common stock in connection with (1) our partnership redemption, compensation and restructuring programs, (2) other incentive compensation arrangements and (3) business combination transactions. As of December 31, 2022, 64,828,179 limited partnership units were outstanding (including founding/working partner interests and working partner interests, and units held by Cantor). Limited partnership units will be only exchangeable with us in accordance with the terms and conditions of the grant of such units, which terms and conditions are determined in our sole discretion, as the Newmark Holdings general partner, with the consent of the Newmark Holdings exchangeable limited partnership interest majority in interest, in accordance with the terms of the Newmark Holdings limited partnership agreement. The exchange ratio between Newmark Holdings limited partnership interests and Newmark Class A or Class B common stock was initially one. However, this exchange ratio will be adjusted in accordance with the terms of the Separation and Distribution Agreement if our dividend policy and the distribution policy of Newmark Holdings are different. As of December 31, 2022, the exchange ratio was 0.9303. With each exchange, our direct and indirect interest in Newmark OpCo will proportionately increase because, immediately following an exchange, Newmark Holdings will redeem the Newmark Holdings unit so acquired for the Newmark OpCo limited partnership interest underlying such Newmark Holdings unit. Allocation of Profits and Losses. The profit and loss of Newmark OpCo and Newmark Holdings, as the case may be, are allocated based on the total number of Newmark OpCo units (not including exchangeable preferred limited partnership units, or “EPUs”) and Newmark Holdings units, as the case may be, outstanding. Ownership Structure. The following diagram illustrates the ownership structure of Newmark as of December 31, 2022. The diagram does not reflect the various subsidiaries of Newmark, Newmark OpCo or Cantor (including certain operating subsidiaries that are organized as corporations whose equity is either wholly-owned by Newmark or whose equity is majority-owned by Newmark with the remainder owned by Newmark OpCo) or the results of any exchange of Newmark Holdings exchangeable limited partnership interests or, to the extent applicable, Newmark Holdings founding partner interests, Newmark Holdings working partner interests or Newmark Holdings limited partnership units. In addition, the diagram does not reflect the Newmark OpCo EPUs, since they are not allocated any gains or losses of Newmark OpCo for tax purposes and are not entitled to regular distributions from Newmark OpCo. 23 STRUCTURE OF NEWMARK AS OF DECEMBER 31, 2022 The diagram reflects the following activity in Newmark Class A common stock and Newmark Holdings partnership unit activity from January 1, 2022 through December 31, 2022: (a) an aggregate of 13,889,534 limited partnership units granted by Newmark Holdings; (b) 24,918,482 shares of Newmark Class A common stock repurchased by us; (c) 104,176 shares of Newmark Class A common stock forfeited; (d) 2,136,813 shares of Newmark Class A common stock issued for vested restricted stock units; (e) 251,289 shares of Newmark Class A common stock issued by us under our acquisition shelf Registration Statement on Form S-4 (Registration No. 333-231616), but not the 18,327,254 of such shares remaining available for issuance by us under such Registration Statement; and (f) 943,649 terminated limited partnership units. 24 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are also available to the public from the SEC’s website at www.sec.gov. Our website address is www.nmrk.com. Through our website, we make available, free of charge, the following documents as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC: our Annual Reports on Form 10-K; our proxy statements for our annual and special stockholder meetings; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules 13D filed on behalf of Cantor, CF Group Management, Inc., our directors and our executive officers; and amendments to those documents. Our website also contains additional information with respect to our industry and business. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this Annual Report on Form 10-K.