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Corporate News Blog - Berkeley Point Financial to be Acquired by Global Brokerage Firm BGC Partners

Research Desk Line-up: Interactive Brokers Group Post Earnings Coverage

LONDON, UK / ACCESSWIRE / July 20, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for BGC Partners, Inc. (NASDAQ: BGCP) ("BGC"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=BGCP. The Company announced on July 18, 2017, its plans to acquire Berkeley Point Financial LLC. BGC has agreed to pay $875 million for this transaction. The amount is subject to certain adjustments at closing. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Discover more of our free reports coverage from other companies within the Investment Brokerage - National industry. Pro-TD has currently selected Interactive Brokers Group, Inc. (NASDAQ: IBKR) for due-diligence and potential coverage as the Company announced on July 18, 2017, its financial results for Q2 2017. Tune into our site to register for a free membership, and be among the early birds that get our report on Interactive Brokers Group when we publish it.

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Commenting on the acquisition, Howard W. Lutnick, Chairman and CEO of BGC Partners, said:

"We believe that the addition of Berkeley Point will significantly increase the scale and scope of Newmark, as well as substantially improve upon its already strong financial performance. BPF's revenues increased by more than 55% year-over-year in the 12 months ended March 31, 2017. Over the same timeframe, Berkeley Point's GAAP pre-tax income grew by approximately 169%, while its pre-tax income, excluding GAAP net non-cash MSR income, increased by over 52%. BPF is also expected to generate strong double-digit revenue and earnings growth for full years 2017 and 2018."

Jeff Day, CEO of Berkeley Point added:

"Being part of Newmark will give us the ability to offer our clients a broad array of financing options. The combined business will also provide tenant and agency leasing, property, and facilities management, advisory and consulting, appraisal, project and development management, real estate technology solutions, and commercial loan servicing. This diverse suite of offerings covers the full spectrum of products applicable to tenants, landlords, and investors, which will be unmatched across the commercial real estate services industry."

Highlights of the transaction

BGC is acquiring Berkeley Point from an affiliate of Cantor Fitzgerald, L.P. Cantor's affiliate had acquired Berkeley Point in April 2014. The acquisition transaction includes Berkeley Point Financial LLC's wholly owned subsidiary Berkeley Point Capital LLC. However, the transaction does not include the transfer of finances of Berkeley Point Financial's special asset servicing business, which was unprofitable. BGC is expected to pay Cantor the consideration amount of $875 million in cash.

BGC's Board of Directors has unanimously approved the acquisition. The Board's decision is based on the recommendations of the Special Committee, consisting of all four independent directors as well as independent advisors. Once the transaction is completed Berkeley Point will be integrated with BGC's Real Estate Services segment - Newmark Knight Frank.

The transaction is expected to close in FY17 and is subject to regulatory approvals, including from Fannie Mae, Freddie Mac, and HUD, and other closing conditions. BGC plans to finance the acquisition using a mix of cash in hand, existing credit facility, bond issuance, term loan, or other debt financing.

Benefits of the acquisition

The acquisition is expected to be immediately accretive to BGC's EPS on closing.

BGC's Newmark business would significantly increase in scale and scope due to the acquisition of Berkeley Point and contribute positively to the financial performance of the Newmark's business.

Berkeley Point's multi family originated loans meet strict criteria set by the US government and complements BGC's a low-risk business model.

The acquisition will increase the profit margins of BGC given the steady revenues generated by Berkeley Point through its stable and recurring loan servicing fees. The revenues from servicing fees when added with Newmark's revenues from property management, facilities management, advisory, consulting, and agency leasing businesses will generate steady and recurring income in the near future.

Investment in Commercial real estate finance with Cantor

Parallel to the acquisition of Berkeley Point, BGC plans to invest approximately $100 million in a commercial real estate-related finance and investment business in collaboration with Cantor. The cash investment represents approximately 27% capital of this business. Cantor will have controlling interest in the new business and will provide the remaining 73% capital investment. Cantor's contributions include approximately $267 million in cash and other non-cash assets. BGC's collaboration with Cantor will be in the form of a limited partnership and will work together with Cantor's existing commercial real estate finance business.

As per the agreed terms of investment, Cantor will bear any initial losses in the partnership up to a total of approximately $37 million per year. BGC will be entitled to a cumulative annual preferred return of 5% of its account balance and a share in profits later.

About BGC Partners

BGC was formed in 2004 after its split from Cantor Fitzgerald and is headquartered both in London and New York. It is a leading global brokerage Company servicing the financial and real estate markets and grown rapidly through a series of strategic acquisitions and investments in its proprietary technology platform. The Company has invested more than $1.7 billion in technology over the past two decades. The Company offers its customers access to more than 200 financial products as well as a wide range of services to the financial community. The Company entered the commercial real estate market in 2011 with the acquisition of Newmark Knight Frank and offers a range of commercial real estate services. BGC's customers include world's largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, property owners, real estate developers, and investment firms.

About Berkeley Point

Bethesda, Maryland based Berkeley Point was formed as a result of combining three, family-owned regional Companies that were early participants in the Fannie Mae, Freddie Mac, and FHA multi family financing programs. It took on the name of Berkeley Point Capital when it was acquired by Cantor Commercial Real Estate in 2014. It has grown into a diversified commercial real estate Company and a single source to originate, distribute and service CMBS, Agency, FHA and Life Company loans. Berkeley Point has a servicing portfolio of more than $56 billion representing in over 3,100 loans in 49 states and the District of Columbia.

Last Close Stock Review

On Wednesday, July 19, 2017, the stock closed the trading session at $13.23, slightly up 0.23% from its previous closing price of $13.20. A total volume of 1.37 million shares has exchanged hands. BGC Partners' stock price soared 20.60% in the last three months, 21.60% in the past six months, and 47.16% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 29.33%. The stock is trading at a PE ratio of 35.19 and has a dividend yield of 5.44%. At Wednesday's closing price, the stock's net capitalization stands at $3.77 billion.

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