Market Overview

Newmark Completes $691 Million of Commercial Mortgages During 2Q2018

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Healthy Production From Pre-Maturity Refinance Fueled by Historically
Low Interest Rates Overcomes Dearth of Maturing Loans; Newmark Set to
Exceed $2 Billion Total Production in 2018 for Seventh Year

Newmark™,
the largest independent commercial mortgage banking firm in the western
U.S., completed $691 million of commercial mortgages during 2Q2018
across 61 unique transactions. Further, first half 2018 production
totals of $1.1 billion indicate production is consistent with Newmark's
expectation of exceeding $2 billion of annual production for the seventh
year in a row.

"Commercial real estate allocations have remained consistent from all
our lending sources in 2018, even in retail which, however, still
remains a case-by-case property category requiring significant
underwriting," said Michael
Heagerty
, Principal and CFO with Newmark. "While we anticipated a
production slow down from the dearth of maturing loans requiring
refinancing due to limited placements in 2009, real estate investors
continue to seek early exit structured finance options to capitalize on
rates that remain at historic lows. While primary MSA markets continue
to be favored by capital sources resulting in a highly competitive
market for top projects, lenders are also focused on identifying quality
opportunities in secondary and tertiary markets where asset underwriting
and sponsorship point to long-term performance. These trends point to a
healthy second half in 2018."

In terms of capital requirements for unique asset classes, the active
property types for the first half of 2018 included industrial,
multifamily and office; with the company's Los Angeles, San Francisco
and Seattle production offices continuing to show the highest placement
volumes during the period.

Heagerty pointed to the following trends as worthy of consideration at
the close of the First Half 2018:

  • 2Q2018 Production – Newmark is meeting its quarterly production goals
    in 2018 from forward-looking clients seeking to take advantage of
    historically low rates in early refinance transactions. This wave of
    activity is balancing out the limited number of maturing notes due to
    the lack of long term loan placements in 2009. Newmark is on track to
    exceed $2 billion for total 2018 production for the seventh year in a
    row.
  • Secondary & Tertiary Markets – Lending sources have yet to meet 2018
    allocations, and are focused on secondary and tertiary markets as well
    as the primary MSA's when underwriting meets their qualification
    criteria. Qualified placements are often receiving multiple structured
    finance options to select from, with properties in top MSA markets
    still benefiting the most.
  • Capital Sources – Life companies are the most active lending source
    for Newmark's clients. These lenders are showing an above average
    appetite and resulting execution for commercial mortgage allocations.
  • 2018 Interest Rates – Interest rates are slowly increasing in 2018,
    but spread compression is compensating to keep commercial mortgage
    finance rates at historic lows in 2018.
  • Legislative Agenda – Newmark's executive leaders continue to work
    through industry peer organizations like the Mortgage Bankers
    Association, the Commercial Real Estate Finance Council and the
    California Mortgage Bankers Association to help shape the evolutions
    of Federal HVCRE, HMDA, and Tax Reform legislation. This is a primary
    goal for the industry in 2018 with long-term impacts. Newmark is
    committed to playing an active role in the outcome.
  • Servicing – Newmark now services a portfolio of commercial mortgage
    loans for assets across the United States in excess of $12 billion.
    Loan performance is consistent with underwriting, with limited
    defaults requiring special service solutions or workouts, an indicator
    of healthy commercial real estate markets buoyed by a strong overall
    economy.

About Newmark:

Newmark, a privately held company based in San Francisco, is a full
service mortgage banking firm with an extensive lineup of correspondent
lenders utilizing Newmark's production, closing and servicing
capabilities. Established in 1991, Newmark is currently staffed by over
70 employees in regional offices throughout the western United States.
The company's national servicing platform valued in excess of $12
billion represents more than 1,300 loans located in 40 states. Newmark
is rated as a Primary Servicer by Standard & Poor's and is one of a
select few non-banking/non-insurance chartered companies with this
designation. For more information please visit www.newmarkrealtycapital.com.

NEWMARK is a trademark of Newmark Realty Capital, Inc. NEWMARK & Design
and NEWMARK REALTY CAPITAL are registered trademarks of Newmark Realty
Capital, Inc.

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