NEWMARK GROUP, INC.NMRK
NEWMARK GROUP, INC. Fair Value Disclosure
Fair Value of Financial Assets and Liabilities
U.S. GAAP guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
•Level 1 measurements—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•Level 2 measurements—Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.
•Level 3 measurements—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
As required by U.S. GAAP guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth by level within the fair value hierarchy financial assets and liabilities accounted for at fair value under U.S. GAAP guidance (in thousands):
| As of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Marketable securities | $ | 93 | $ | — | $ | — | $ | 93 | |||||||||||||||
| Loans held for sale, at fair value | — | 774,905 | — | 774,905 | |||||||||||||||||||
| Rate lock commitments | — | — | 1,010 | 1,010 | |||||||||||||||||||
Forward Sales Contracts | — | — | 7,491 | 7,491 | |||||||||||||||||||
| Total | $ | 93 | $ | 774,905 | $ | 8,501 | $ | 783,499 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration | — | — | 21,935 | 21,935 | |||||||||||||||||||
| Rate lock commitments | — | — | 1,350 | 1,350 | |||||||||||||||||||
Forward Sales Contracts | — | — | 3,253 | 3,253 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 26,538 | $ | 26,538 | |||||||||||||||
| As of December 31, 2023 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Marketable securities | $ | 99 | $ | — | $ | — | $ | 99 | |||||||||||||||
| Loans held for sale, at fair value | — | 528,944 | — | 528,944 | |||||||||||||||||||
| Rate lock commitments | — | — | 9,604 | 9,604 | |||||||||||||||||||
Forward Sales Contracts | — | — | 1,259 | 1,259 | |||||||||||||||||||
| Total | $ | 99 | $ | 528,944 | $ | 10,863 | $ | 539,906 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration | $ | — | $ | — | $ | 25,740 | $ | 25,740 | |||||||||||||||
| Rate lock commitments | — | — | 1,023 | 1,023 | |||||||||||||||||||
Forwards Sales Contracts | — | — | 20,304 | 20,304 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 47,067 | $ | 47,067 | |||||||||||||||
There were no transfers among Level 1, Level 2 and Level 3 for the years ended December 31, 2024 and 2023, respectively.
Level 3 Financial Assets and Liabilities: Changes in Level 3 rate lock commitments, Forward Sales Contracts and contingent consideration measured at fair value on recurring basis were as follows (in thousands):
| As of December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Opening Balance | Additions | Settlements | Closing Balance | ||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Rate lock commitments | $ | 9,604 | $ | 1,010 | $ | — | $ | (9,604) | $ | 1,010 | $ | 1,010 | |||||||||||||||||||||||
Forward Sales Contracts | 1,259 | 7,491 | — | (1,259) | 7,491 | 7,491 | |||||||||||||||||||||||||||||
| Total | $ | 10,863 | $ | 8,501 | $ | — | $ | (10,863) | $ | 8,501 | $ | 8,501 | |||||||||||||||||||||||
| Opening Balance | Additions | Settlements | Closing Balance | ||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| Contingent consideration | $ | 25,740 | $ | (3,236) | $ | — | $ | (569) | $ | 21,935 | $ | (3,236) | |||||||||||||||||||||||
| Rate lock commitments | 1,023 | 1,350 | — | (1,023) | 1,350 | 1,350 | |||||||||||||||||||||||||||||
Forward Sales Contracts | 20,304 | 3,253 | — | (20,304) | 3,253 | 3,253 | |||||||||||||||||||||||||||||
| Total | $ | 47,067 | $ | 1,367 | $ | — | $ | (21,896) | $ | 26,538 | $ | 1,367 | |||||||||||||||||||||||
| As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
| Opening Balance | Additions | Settlements | Closing Balance | ||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Rate lock commitments | $ | 3,181 | $ | 9,604 | $ | — | $ | (3,181) | $ | 9,604 | $ | 9,604 | |||||||||||||||||||||||
Forward Sales Contracts | 11,139 | 1,259 | — | (11,139) | 1,259 | $ | 1,259 | ||||||||||||||||||||||||||||
| Total | $ | 14,320 | $ | 10,863 | $ | — | $ | (14,320) | $ | 10,863 | $ | 10,863 | |||||||||||||||||||||||
| Opening Balance | Additions | Settlements | Closing Balance | ||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| Contingent consideration | $ | 8,343 | $ | 6,192 | $ | 12,189 | $ | (984) | $ | 25,740 | $ | 6,192 | |||||||||||||||||||||||
| Rate lock commitments | 8,754 | 1,023 | — | (8,754) | 1,023 | 1,023 | |||||||||||||||||||||||||||||
Forward Sales Contracts | 624 | 20,304 | — | (624) | 20,304 | 20,304 | |||||||||||||||||||||||||||||
| Total | $ | 17,721 | $ | 27,519 | $ | 12,189 | $ | (10,362) | $ | 47,067 | $ | 27,519 | |||||||||||||||||||||||
Quantitative Information About Level 3 Fair Value Measurements
The following tables present quantitative information about the significant unobservable inputs utilized by Newmark in the fair value measurement of Level 3 assets and liabilities measured at fair value on a recurring basis:
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Level 3 assets and liabilities | Assets | Liabilities | Significant Unobservable Inputs | Range | Weighted Average | |||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities: | ||||||||||||||||||||||||||||||||
| Contingent consideration | $ | — | $ | 21,935 | Discount rate | 0.0% - 8.0% | (1) | 3.3% | ||||||||||||||||||||||||
| Probability of meeting earnout and contingencies | 99.0% - 100.0% | (1) | 99.6% | |||||||||||||||||||||||||||||
| Derivative assets and liabilities: | ||||||||||||||||||||||||||||||||
Forward Sales Contracts | $ | 7,491 | $ | 3,253 | Counterparty credit risk | N/A | N/A | |||||||||||||||||||||||||
| Rate lock commitments | $ | 1,010 | $ | 1,350 | Counterparty credit risk | N/A | N/A | |||||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||||||||
| Level 3 assets and liabilities | Assets | Liabilities | Significant Unobservable Inputs | Range | Weighted Average | |||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities: | ||||||||||||||||||||||||||||||||
| Contingent consideration | $ | — | $ | 25,740 | Discount rate | 0.0% - 8.0% | (1) | 2.6% | ||||||||||||||||||||||||
| Probability of meeting earnout and contingencies | 99.0% - 100.0% | (1) | 99.7% | |||||||||||||||||||||||||||||
| Derivative assets and liabilities: | ||||||||||||||||||||||||||||||||
Forward Sales Contracts | $ | 1,259 | $ | 20,304 | Counterparty credit risk | N/A | N/A | |||||||||||||||||||||||||
| Rate lock commitments | $ | 9,604 | $ | 1,023 | Counterparty credit risk | N/A | N/A | |||||||||||||||||||||||||
(1)Newmark’s estimate of contingent consideration as of December 31, 2024 and December 31, 2023 was based on the acquired business’ projected future financial performance, including revenues.
Valuation Processes – Level 3 Measurements
Both the rate lock commitments to borrowers and the Forward Sales Contracts to investors are derivatives and, accordingly, are marked to fair value on the accompanying consolidated statements of operations. The fair value of Newmark’s rate lock commitments to borrowers and loans held for sale and the related input levels includes, as applicable:
•The assumed gain or loss of the expected loan sale to the investor, net of employee benefits;
•The expected net future cash flows associated with servicing the loan;
•The effects of interest rate movements between the date of the rate lock and the balance sheet date; and
•The nonperformance risk of both the counterparty and Newmark.
The fair value of Newmark’s Forward Sales Contracts to investors considers effects of interest rate movements between the trade date and the balance sheet date. The market price changes are multiplied by the notional amount of the Forward Sales Contracts to measure the fair value.
The fair value of Newmark’s rate lock commitments and Forward Sales Contracts is adjusted to reflect the risk that the agreement will not be fulfilled. Newmark’s exposure to nonperformance in rate lock and Forward Sales Contracts is represented by the contractual amount of those instruments. Given the credit quality of Newmark’s counterparties, the short duration of rate lock commitments and Forward Sales Contracts, and Newmark’s historical experience with the agreements, management does not believe the risk of nonperformance by Newmark’s counterparties to be significant.
The fair value of Newmark’s contingent consideration is based on the discount rate of the Company’s calculated-average cost of capital, as well as the probability of acquirees meeting earnout targets.
Information About Uncertainty of Level 3 Fair Value Measurements
The significant unobservable inputs used in the fair value of Newmark’s contingent consideration are the discount rate and probability of meeting earnout and contingencies. Significant increases (decreases) in the discount rate would have resulted in a significantly lower (higher) fair value measurement. Significant increases (decreases) in the probability of meeting earnout and contingencies would have resulted in a significantly higher (lower) fair value measurement. As of December 31, 2024 and 2023, the present value of expected payments related to Newmark’s contingent consideration was $21.9 million and $25.7 million, respectively (see Note 28 — “Commitments and Contingencies”). As of December 31, 2024 and 2023, the undiscounted value of the payments, assuming that all contingencies are met, would be $25.3 million and $35.9 million, respectively.
Fair Value Measurements on a Non-Recurring Basis
Equity investments carried under the measurement alternative are remeasured at fair value on a non-recurring basis to reflect observable transactions which occurred during the period. Newmark applied the measurement alternative to equity securities with the fair value of $5.2 million and $4.9 million as of December 31, 2024 and 2023, respectively, which was included in “Other assets” on the accompanying consolidated balance sheets. These investments are classified within Level 2 in the fair value hierarchy, because their estimated fair value is based on valuation methods using the observable transaction price at the transaction date.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 3, 2025 | Showing above |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.