Source: CoStar News
By: Mark Heschmeyer
Date Posted: February 10, 2017
BGC Partners Inc. (NASDAQ: BGCP) will be the first to test the IPO market this year for a major commercial real estate firm after it submitted a confidential draft registration statement to the U.S. Securities and Exchange Commission to spin off Newmark Grubb Knight Frank (NGKF) as a separate public company.
Under the plan for a proposed initial public offering, BGC would offer Class A common stock in a newly formed subsidiary that will hold BGC’s real estate services business.
The number of Class A shares to be offered and the price range for the proposed offering have not yet been determined.
In the filing, BGC said it may choose to distribute the shares that BGC will hold of the newly formed subsidiary to BGC’s stockholders in a tax-free spin-off after a certain period following the expected offering. Very little else about the proposed public offering was disclosed in its announcement.
NGKF is a full-service commercial real estate platform that comprises BGC’s real estate services segment and includes such other operations, including Newmark Cornish & Carey, ARA, Landauer Valuation & Advisory, and Excess Space Retail Services Inc. Together with its affiliates and London-based partner Knight Frank, NGKF has more than 12,800 employees across more than 370 offices and manages 250 million square feet.
In its most recent quarterly report, BGC partners reported that real estate services segment generated approximately 44% of its revenues for the three months ended September 30, 2016. Real Estate brokerage revenues were $233.7 million, up 4% year-over-year, which included growth in real estate capital markets of 17%, partially offset by decreased leasing and other services revenue of 3%.
In that filing, BGC said it believes that BGC’s assets and businesses are worth considerably more than what is reflected in its current share price.
“As we have previously stated, we are actively working on ways to unlock substantial value for our investors,” the company said then.
BGC has been growing its real estate business with notable new hires, including atop investment sales team in New England in late 2015 and landing a top-producing Los Angeles office investment sales team, eight star brokers in Southern California and a pair of elite Chicago tenant rep brokers early last year.
In making the announcement, BGC seems to have beaten rival Cushman & Wakefield to the punch in going public. Cushman & Wakefield has been rumored to be eyeing an IPO this year as well.
Link to article: Real Estate Services IPO