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Newmark And BGC Partners Announce Monetization Of About 2 Mln Nasdaq Shares

Newmark Group, Inc. (NMRK) and its parent company BGC Partners, Inc. (BGCP), a global brokerage company servicing the financial and real estate markets, announced that Newmark entered into transactions related to the monetization of the shares of Nasdaq it expects to receive in 2019 and 2020.

On June 18, 2018, Newmark's principal operating subsidiary issued approximately $175 million of exchangeable preferred limited partnership units or "EPUs" in a private transaction to The Royal Bank of Canada (RBC). Contemporaneously with the issuance of these EPUs, a newly formed special purpose vehicle, or the "SPV" entered into two variable postpaid forward transactions with RBC.

The SPV is an indirect subsidiary of Newmark whose sole asset is the Nasdaq share earn-outs for 2019 and 2020. RBC has rights to receive up to 992,247 shares of Nasdaq common stock in each of the fourth quarters of 2019 and 2020. The Forward is economically similar to at-the-money put options struck at Nasdaq's June 18, 2018 closing price of $94.21, and provides Newmark with downside protection on the shares while allowing Newmark to retain all appreciation related to the 2019 and 2020 Nasdaq share earn-outs.

Net of transaction costs, Newmark will receive approximately $153 million of net proceeds and non-dilutive equity on its balance sheet from the monetization in the second quarter of 2018. Newmark intends to use the net proceeds from the monetization to repay a portion of the $400 million Converted Term Loan2 maturing September 8, 2019.

After this repayment, approximately $247 million of the Converted Term Loan will remain outstanding. Approximately $153 million will also become available to be drawn upon under BGC's revolving credit facility. The monetization had no impact on the $93.5 million Nasdaq payment expected to be recognized in the third quarter of 2018. Newmark retains the flexibility to monetize some or all of the anticipated more than $650 million worth of remaining seven Nasdaq payments from 2021 through 2027.

As a result of the debt repayment, both BGC's consolidated and Newmark's stand-alone long-term debt will be reduced by approximately $153 million. The current interest rate on the $400 million Converted Term Loan is 4.30725 percent. The leverage ratios for BGC on a consolidated basis and for Newmark stand-alone will therefore improve.

The issuance of the EPUs to RBC are not expected to have any impact on Newmark's fully diluted share count.6 Newmark continues to expect to record income and any tax obligation related to the receipt of the Nasdaq shares in the third quarter of each year for GAAP earnings, Adjusted Earnings, and Adjusted EBITDA.

Newmark today reaffirmed the entirety of its outlook for the full year 2018.

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