Newmark Group amends credit agreement with shareholder Cantor

By Marisa Wong

Los Angeles, Dec. 21 – Newmark Group, Inc. entered into a first amendment to its credit agreement dated Nov. 30, 2018 with majority stockholder Cantor Fitzgerald, LP on Dec. 20, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for each party or its subsidiaries to make loans to the other party or its subsidiaries at the lender’s discretion. The parties and their respective subsidiaries (with respect to Cantor, other than BGC Group, Inc. and its subsidiaries) may borrow up to an aggregate principal amount of $250 million from each other from time to time. The loans will bear interest at a rate that is the higher of Cantor’s or Newmark’s short-term borrowing rate then in effect, plus 100 basis points. The borrowings are payable at either the specified due date or the maturity of the credit agreement, which is the earlier of the termination of the amended credit agreement or, if notice of non-extension is given by either party six months in advance, the then-following Nov. 30. As of Dec. 20, there were no borrowings outstanding under the credit agreement.

Under the amendment, Cantor has agreed to make some loans to Newmark from time to time in an aggregate outstanding principal amount of up to $150 million. The revolving loans have substantially the same terms as other loans under the existing credit agreement, except as described below. As of Dec. 20, borrowings under the credit facility bear interest at 6.96% per annum. As of Dec. 20, the applicable interest rate for the new revolving loans would be 6.71%.

Until April 15, 2024, the revolving loans will bear interest at a rate equal to 25 bps less than the interest rate borne by the revolving loans made under Newmark’s amended and restated credit agreement dated March 10, 2022 with Bank of America, NA as administrative agent and letter-of-credit issuer that provides for a $600 million unsecured senior revolving credit facility. Borrowings under that revolver bear interest at term SOFR plus an applicable margin ranging from 100 bps to 212.5 bps depending upon the company’s credit rating. Unlike other loans made under the Cantor credit agreement, Cantor may demand repayment of the new revolving loans prior to the final maturity date upon three business days’ prior written notice.

In addition, on Dec. 20, Newmark executed a consent letter with respect to its delayed-draw term loan credit agreement dated Aug. 10 with Bank of America as administrative agent. Under the consent letter, the lenders consented to allowing the company to incur debt from time to time under the Cantor credit agreement without triggering the mandatory prepayment requirements of the delayed-draw term loan.

On Dec. 20, Newmark provided notice to Cantor to borrow $130 million of revolving loans, with the funds expected to be made available on or about Dec. 22. The company intends to use the proceeds from such borrowing, along with cash on hand, to repay the principal and interest related to all of the remaining balance under the 2022 revolver.

As of Dec. 20, Newmark’s total senior debt outstanding was $550 million, which consisted of $420 million of borrowings under a term loan under the delayed-draw term loan and $130 million of borrowings under the 2022 revolver.

As of Sept. 30, the company’s total senior debt outstanding was $605 million, consisting of $550 million aggregate principal amount of its 6 1/8% senior notes due 2023, which were paid at maturity on Nov. 15, 2023 with the proceeds of the term loan under the delayed-draw term loan agreement and draws under the 2022 revolver, and $55 million of borrowings under 2022 revolver.

Newmark Group is a New York-based commercial real estate services business.

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