Three Reasons Newmark Knight Frank’s IPO Disappointed

Newmark, a commercial real estate services firm that includes brokerage Newmark Knight Frank, went public in early December with plans to sell 30 million shares at a price tag of $19 to $22/share. However, according to the Real Deal, lukewarm reaction from investors forced a decision to decrease the offering size to 20 million shares at a cost of $14 to $15. On Dec. 15, the company officially went public at $14/share.

Analysts have attributed the poor IPO performance to three reasons:

  1. Bad Timing:  The IPO was issued in December, coinciding with the holidays. The CEO of Newmark’s parent company, BPG, wanted to honor his commitment to go with the IPO in 2017.
  2. Vague Accounting Rules:  The initial range of Newmark’s stock price has also been called high and was confusing to investors because the numbers were decided based on adjusted earnings that did not employ standard Generally Accepted Accounting (GAAP) Principles.
  3. Rising Interest Rates:  Investors are worried about the impact of rising interest rates on real estate companies and the overall real estate industry in general.