NEWMARK GROUP INC

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This discussion summarizes the significant factors affecting our results of operations and financial condition during the three months ended March 31, 2024 and 2023. We operate in one reportable segment, real estate services. This discussion is provided to increase the understanding of, and should be read in conjunction with, our accompanying unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

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This discussion summarizes the significant factors affecting our results of operations and financial condition during the three and six months ended June 30, 2024 and 2023. We operate in one reportable segment, real estate services. This discussion is provided to increase the understanding of, and should be read in conjunction with, our accompanying unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

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•our leading commercial real estate technology platform and capabilities;

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•our leading commercial real estate technology platform and capabilities for owners;

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Newmark was founded in New York City in 1929, with an emphasis on local investor/owner and occupier services and products and became known for having dedicated, knowledgeable, and client-focused advisors/intermediaries. Our acquisition by Cantor Fitzgerald’s subsidiary BGC in 2011 and its subsequent investments in our business contributed to Newmark’s strong growth. This growth continued following our 2017 IPO. Between 2011 and 2023, we increased our total revenues by a CAGR of 22%. Based on reported results, we believe that this improvement was greater than any of our publicly traded commercial real estate services peers listed in the U.S. or U.K. that have reported revenues over this period (based on actual results reported by our peers as of March 14, 2024).

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Newmark was founded in New York City in 1929, with an emphasis on local investor/owner and occupier services and products and became known for having dedicated, knowledgeable, and client-focused advisors/intermediaries. Our acquisition by Cantor Fitzgerald’s subsidiary BGC in 2011 and its subsequent investments in our business contributed to Newmark’s strong growth. This growth continued following our 2017 IPO. Between 2011 and 2023, we increased our total revenues by a CAGR of 22%. Based on reported results, we believe that this improvement was greater than any of our publicly traded commercial real estate services peers listed in the U.S. or U.K. that have reported revenues over this period (based on actual results reported by our peers).

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We have relationships with many of the world’s largest commercial property owners, real estate developers and investors, as well as Fortune 500 and Forbes Global 2000 companies. For the three months ended March 31, 2024, we generated revenues of approximately $546.5 million, primarily from commissions on leasing and capital markets transactions, consulting and technology user fees, property and facility management fees, and mortgage origination and loan servicing fees.

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We have relationships with many of the world’s largest commercial property owners, real estate developers and investors, as well as Fortune 500 and Forbes Global 2000 companies. For the six months ended June 30, 2024, we generated revenues of approximately $1.2 billion, primarily from commissions on leasing and capital markets transactions, consulting and technology user fees, property and facility management fees, and mortgage origination and loan servicing fees.

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As discussed in greater detail in “—Economic Growth and Outlook in the United States and the United Kingdom” and “—Market Statistics,” origination and investment volumes in the commercial real estate industry declined year-on-year each quarter from the second half of 2022 to the fourth quarter of 2023 due to the rise in global interest rates. We gained market share in the U.S. capital markets in 2023, particularly in the third and fourth quarters, as our corresponding transaction volumes either improved or decreased at rates less than those for the industry as a whole. Our share gains continued in the first quarter of 2024. Major central banks have stopped increasing short-term target interest rates and indicated that they may begin lowering them later this year. This, coupled with the significant amount of commercial and multifamily debt maturities due over the next two years, leads us to expect industry volumes to begin rebounding, although there remains uncertainty with respect to the exact timing of such a recovery.

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As discussed in greater detail in “—Economic Growth and Outlook in the United States and the United Kingdom” and “—Market Statistics,” origination and investment volumes in the commercial real estate industry declined year-on-year each quarter from the second half of 2022 to the fourth quarter of 2023, and were generally lower in the first half of 2024, due to the rise in global interest rates. We gained market share in the U.S. capital markets in 2023, particularly in the third and fourth quarters, as our corresponding transaction volumes either improved or decreased at rates less than those for the industry as a whole. Our share gains continued in the first and second quarters of 2024. Major central banks have stopped increasing short-term target interest rates and have begun lowering them or indicated that they may begin reducing them later this year. This, coupled with the significant amount of commercial and multifamily debt maturities due over the next three years, leads us to expect industry volumes to begin rebounding, although there remains uncertainty with respect to the exact timing of such a recovery.

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We believe that during stressed or challenging times, our clients value having a trusted advisor like Newmark. We believe our partnership and collaboration with our clients during uncertain times has helped us develop long-lasting relationships and gain market share over time. Despite slower industry transactional activity levels, we continue to see strong client dialogue and engagement as owners and occupiers seek our advice with respect to executing on their strategic and real estate-focused objectives.

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We believe that during stressed or challenging times, our clients value having a trusted advisor like Newmark. We believe our partnership and collaboration with our clients during the recent uncertainty has helped us develop long-lasting relationships and gain market share over time. Despite slower industry transactional activity levels, we continue to see strong client dialogue and engagement as owners and occupiers seek our advice with respect to executing on their strategic and real estate-focused objectives.

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Institutional investors have accumulated near record amounts of undeployed real estate-focused capital, with Preqin estimating that there was approximately $400 billion of investible funds held by closed-end funds at real estate focused institutions as of April 18, 2024, of which $256 billion was held by North America focused funds and $70 billion by funds focused on Europe. This is in addition to the significant amount of real estate assets held by other types of investors and owners such as publicly traded REITs, non-traded REITs, and open-ended core property funds. According to the most recent data from MSCI, the overall size of the professionally managed global real estate investment market was $13.3 trillion in 2022, while the size of the overall investible market was $19.5 trillion. Furthermore, there was approximately $4.7 trillion in U.S. commercial and multifamily mortgage debt outstanding as of year-end 2023 per the MBA (excluding loans for acquisitions, development, and construction, as well as loans collateralized by owner-occupied commercial properties). Of this amount, approximately $2.6 trillion is expected to mature between 2024 and 2028, with approximately $2.0 trillion of this debt expected to mature between 2024 and 2026. With the sharp increase in interest rates over the past two years and generally rising capitalization rates, as well as the pullback in commercial real estate lending by banks and other traditional lenders, we believe a large and growing percentage of investors and owners will need to find alternative solutions, including via the growing share of loans we expect to be originated by alternative lenders such as private credit funds. We anticipate a significant portion of debt maturities to be resolved not only through refinancing, which should help our mortgage brokerage and GSE/FHA origination businesses, but also through the kinds of more complex and sophisticated restructurings, loan sales, and recapitalizations in which Newmark specializes. Our capital markets clients have sought, and we believe will continue to seek, our counsel with respect to addressing their related investing and financing needs.

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Furthermore, there was approximately $4.7 trillion in U.S. commercial and multifamily mortgage debt outstanding as of March 31, 2024 per the MBA (excluding loans for acquisitions, development, and construction, as well as loans collateralized by owner-occupied commercial properties). Of this amount, approximately $2.6 trillion is expected to mature between 2024 and 2028, with approximately $2.0 trillion of this debt expected to mature by 2026. With the sharp increase in interest rates over the past two years and generally rising capitalization rates, as well as the pullback in commercial real estate lending by banks and other traditional lenders, we believe a large and growing percentage of investors and owners will need to find alternative solutions, including via the growing share of loans we expect to be originated by alternative lenders such as private credit funds and insurance companies. We anticipate a significant portion of debt maturities to be resolved not only through refinancing, which should help our mortgage brokerage and GSE/FHA origination businesses, but also through the kinds of more complex and sophisticated financing solutions in which Newmark specializes, including restructurings, loan sales, equity joint ventures, and recapitalizations. Our capital markets clients have sought, and we believe will continue to seek, our counsel with respect to addressing their related investing and financing needs.

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We believe factors such as those discussed above will drive strong levels of leasing and capital markets activity over the intermediate and long-term time horizons, even as volumes remain muted in the near-term. We expect our professionals to not only provide our clients with innovative capital markets solutions, but to offer integrated services from our experts across leasing, V&A, property management, and other areas of Newmark. By using a collaborative and multidisciplinary approach, we can provide our clients with extensive industry and product expertise along regional, national, and increasingly global reach across a wide variety of property types.

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We believe factors such as those discussed above will drive strong levels of leasing and capital markets activity over the intermediate and long-term time horizons, even as volumes remain muted in the near-term. We expect our professionals to not only provide our clients with innovative capital markets solutions, but to offer integrated services from our experts across leasing, V&A, property management, and other Newmark service lines. By using a collaborative and multidisciplinary approach, we can provide our clients with extensive industry and product expertise along regional, national, and increasingly global reach across a wide variety of property types.

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We operate a leading capital markets business in the United States with a growing international presence. We have access to many of the world’s largest owners of commercial real estate, and we believe this will drive growth throughout the life cycle of each real estate asset by allowing us to provide best-in-class agency leasing and property management during the ownership period. We also supply investment sales and arrange debt and equity financing to assist owners in maximizing the return on investment in each of their real estate assets. Specifically, with respect to multifamily assets, we are a leading GSE/FHA lender by loan origination volume and loan servicing portfolio size. In addition to our traditional servicing business, we acquired the remainder of Spring11, an entity in which we had otherwise held a controlling stake since 2017, in the first quarter of 2023. Spring11’s recently launched asset management and servicing business focuses on bank, fund, and commercial mortgage-backed securities clients. As of March 31, 2024, our overall loan servicing and asset management portfolio was $174.1 billion (of which 61.9% was limited servicing and asset management, 36.6% was higher margin primary servicing, and 1.5% was special servicing).

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We operate a leading capital markets business in the United States with a growing international presence. We have access to many of the world’s largest owners of commercial real estate, and we believe this will drive growth throughout the life cycle of each real estate asset by allowing us to provide best-in-class agency leasing and property management during the ownership period. We also supply investment sales and arrange debt and equity financing to assist owners in maximizing the return on investment in each of their real estate assets. With respect to multifamily assets, we are a leading GSE/FHA lender by loan origination volume and loan servicing portfolio size. In addition to our traditional servicing business, we acquired the remainder of Spring11, an entity in which we had otherwise held a controlling stake since 2017, in the first quarter of 2023. Spring11’s recently launched asset management and servicing business focuses on bank, fund, and commercial mortgage-backed securities clients. As of June 30, 2024, our overall loan servicing and asset management portfolio was $175.4 billion (of which 62.2% was limited servicing and asset management, 36.4% was higher margin primary servicing, and 1.5% was special servicing).

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In addition, there are various trends that we expect to continue benefiting our various service lines with respect to industrial real estate. According to Newmark Research, several factors, including disruptions in global supply chains, tensions between the U.S. and China, and U.S. government spending on infrastructure and subsidies for industries associated with electrification, green energy, and strategically important technologies—notably the federal spending provided by the CHIPS and Science Act, Inflation Reduction Act, and Infrastructure and Investment and Jobs Act—could increase the size of the U.S. manufacturing base by more than 10% over the next ten years. According the Newmark Research and the U.S. Census Bureau, during first quarter of 2024, annualized manufacturing construction spending in the U.S. was more than 254% higher than the annual average for the ten years ended 2019 in nominal terms, or over 120% higher based on chain linked 2007 dollars. The impact of reshoring manufacturing would likely have far-reaching effects in terms of industrial real estate, local and national tax revenues, increases in jobs, and growth in regional and national economies. Most of the new manufacturing construction will be build-to-suit or owner-built, but demand will also exist for speculative manufacturing space.

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In addition, there are various trends that we expect to continue benefiting our various service lines with respect to industrial real estate. According to Newmark Research, several factors, including disruptions in global supply chains, tensions between the U.S. and China, and U.S. government spending on infrastructure and subsidies for industries associated with electrification, green energy, and strategically important technologies—notably the federal spending provided by the CHIPS and Science Act, Inflation Reduction Act, and Infrastructure and Investment and Jobs Act—could increase the size of the U.S. manufacturing base by more than 10% over the next ten years. According to Newmark Research, CoStar, and the U.S. Census Bureau, during the second quarter of 2024, annualized manufacturing construction spending in the U.S. was approximately 275% higher than the annual average for the ten years ended 2019 in nominal terms, or 130% higher based on chain linked 2007 dollars. The impact of reshoring manufacturing would likely have far-reaching effects in terms of industrial real estate, local and national tax revenues, increases in jobs, and growth in regional and national economies. Most of the new manufacturing construction will be build-to-suit or owner-built, but demand will also exist for speculative manufacturing space.

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Commercial real estate capital markets transactions involving financing generally utilize medium- or long-term debt, and the interest rates for such debt tend to correlate with movements in benchmark rates with similar tenors, including U.S. Treasuries. Such benchmark rates can be meaningfully impacted by movements in key short-term rates, such as the Fed Funds Target rate. Sudden increases in short term interest rates can therefore have pronounced effects on the commercial mortgage origination and investment sales volumes. In 2022, global benchmark interest rates rose at the fastest pace since at least the early 1990s, according to Fitch. U.S. and U.K. ten-year government yields continued to rise through October of 2023, fell over the remainder of that year, but gradually rose over the first quarter of 2024. This has led to challenging market conditions across commercial real estate capital markets for Newmark and the industry. Real estate capital market transactions were also lower due to the pullback in commercial and multifamily real estate lending activity as a response to recent bank failures and higher interest rates, as well as the gap between buyer and seller expectations.

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Commercial real estate capital markets transactions involving financing generally utilize medium- or long-term debt, and the interest rates for such debt tend to correlate with movements in benchmark rates with similar tenors, including U.S. Treasuries. Such benchmark rates can be meaningfully impacted by movements in key short-term rates, such as the Fed Funds Target rate. Sudden increases in short term interest rates can therefore have pronounced effects on commercial mortgage origination and investment sales volumes. In 2022, global benchmark interest rates rose at the fastest pace since at least the early 1990s, according to Fitch. U.S. and U.K. ten-year government yields continued to rise through October of 2023, fell over the remainder of that year, but gradually rose over the first half of 2024. This has led to challenging market conditions across commercial real estate capital markets for Newmark and the industry. Real estate capital market transactions were also lower due to the pullback in commercial and multifamily real estate lending activity as a response to recent bank failures and higher interest rates, as well as the gap between buyer and seller expectations.

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U.S. GDP expanded by 1.9% and 2.5%, respectively, in 2022 and 2023, according to the U.S. Department of Commerce (with all GDP figures herein inflation adjusted, unless otherwise stated). According to the April 25, 2024 estimates from the same source, U.S. GDP expanded at an annualized rate of 1.6%, in the first quarter of 2024. The most recent period’s GDP growth was driven by various factors, including increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. Economists generally expect U.S. GDP to grow at levels below pre-pandemic levels in 2024 and 2025. For example, as of April 19, 2024, the Bloomberg consensus of economists was for real U.S. GDP to expand at respective rates of 2.4%, 1.7%, and 2.0% in 2024, 2025, and 2026. For context, over the ten years ended December 31, 2019, real U.S. GDP grew at a CAGR of 2.4% per year, measured in chain linked 2017 dollars. Actual and projected growth has been and is expected be lower in the U.K., which is now our second largest market. According to the most recent data from The Office for National Statistics, U.K. GDP increased by 0.1% in 2023 and by 0.6% in the first quarter of 2024 . The April 16, 2024 Bloomberg consensus was for it to grow by 0.3%, 1.2%, and 1.4% in 2024, 2025, and 2026, respectively. In comparison, real U.K. GDP grew at an annual CAGR of 2.0% over the ten years ended December 31, 2019, measured in chain linked 2019 pounds, also per Bloomberg.

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U.S. GDP expanded by 1.9% and 2.5%, in 2022 and 2023, respectively, according to the U.S. Department of Commerce (with all GDP figures herein inflation adjusted, unless otherwise stated). According to the same source, U.S. GDP expanded at an annualized rate of 1.4% and 2.8% in the first and second quarters of 2024, respectively. The most recent period’s GDP growth was driven by various factors, including increases in consumer spending, private inventory investment, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. Economists generally expect U.S. GDP to grow in 2024 and 2025 at levels somewhat below pre-pandemic levels. For example, based on the July 19, 2024 Bloomberg consensus of economists, U.S. real GDP should expand at respective rates of 2.3%, 1.8%, and 2.0% in 2024, 2025, and 2026. For context, over the ten years ended December 31, 2019, real U.S. GDP grew at a CAGR of 2.4%, measured in chain linked 2017 dollars. Actual and projected growth has been and is expected be lower in the U.K., which is now our second largest market. According to the most recent data from The Office for National Statistics, U.K. GDP increased by 0.1% in 2023 and by 0.3% year-on-year in the first quarter of 2024. The July 15, 2024 Bloomberg consensus was for U.K. GDP to grow by 0.6% the second quarter of 2024, and by 0.8%, 1.3%, and 1.5% in full years 2024, 2025, and 2026, respectively. In comparison, real U.K. GDP grew at an annual CAGR of 2.0% over the ten years ended December 31, 2019, measured in chain linked 2019 pounds, also per Bloomberg.

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According to the U.S. Bureau of Labor Statistics data from April 5, 2024, the seasonally adjusted monthly average of non-farm payroll employment increased by 377 thousand and 251 thousand in 2022 and 2023, respectively. Their estimate as of the same date was that an average of 276 thousand jobs were created per month in the first quarter of 2024. For context, this seasonally adjusted monthly figure averaged 183 thousand over the ten years ending December 31, 2019. The March 2024 U.S. unemployment rate (based on U-3) was 3.8%, versus 3.5% a year earlier. The U.S. unemployment rate has remained below 4% for 26 straight months, the longest such stretch since the 48 months ending January 1970. The April 2024 Bloomberg consensus was for U-3 to rise modestly in 2024 and 2025, but to remain at or below 4.1%. According to recent figures from Bloomberg, the U.K. unemployment rate was 3.9% and 4.0% at the end of 2022 and 2023, respectively, rose to 4.2% in February 2024 the most recent month available, and is expected to be 4.3% at the end of 2024 and 2025.

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According to the U.S. Bureau of Labor Statistics data from August 2, 2024, the seasonally adjusted monthly average of non-farm payroll employment increased by approximately 377,000 and approximately 251,000 in 2022 and 2023, respectively. Their estimate as of the same date was that an average of approximately 267,000 jobs and approximately 168,000 jobs, respectively, were created per month in the first and second quarters of 2024. For context, this seasonally adjusted monthly figure averaged approximately 183,000 over the ten years ended December 31, 2019. The June 2024 U.S. unemployment rate (based on U-3) was 4.1% versus 3.6% a year earlier. The July 2024 U.S. unemployment rate (based on U-3) increased to 4.3% compared with 3.5% a year earlier, while the initial estimate for the number of jobs created in July was 114,000. The July figures came in above the Bloomberg consensus of 4.1% and below the Bloomberg consensus of 175,000, respectively. The most recent Bloomberg consensus also showed U-3 rising modestly in 2024 and 2025, but remaining at or below 4.2%. According to recent figures from Bloomberg, the U.K. unemployment rate was 3.9% and 3.8% at the end of 2022 and 2023, respectively, rose to 4.4% in May 2024 (the most recent month available), and is expected to be 4.4% at the end of 2024 and 4.5% at the end 2025.

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The ten-year U.S. Treasury yield increased by approximately 32 basis points quarter on quarter and by 76 basis points year-on-year to 4.2% as of March 31, 2024. On September 21, 2022 and November 2, 2022, the FOMC announced two separate increases to the upper bound of its target range for the federal funds rate of 75 basis points each, in order to curb inflation. The FOMC increased the upper bound by another 50 basis points in December of 2022, and then by 25 basis points each in February 2023, March 2023, May 2023, and July 2023. The FOMC has kept the rate unchanged since the July 2023 increase.

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The ten-year U.S. Treasury yield increased by approximately 20 basis points quarter on quarter and by 56 basis points year-on-year to 4.4% as of June 30, 2024. On September 21, 2022 and November 2, 2022, the FOMC announced two separate increases to the upper bound of its target range for the federal funds rate of 75 basis points each, in order to curb inflation. The FOMC increased the upper bound by another 50 basis points in December of 2022, and then by 25 basis points each in February 2023, March 2023, May 2023, and July 2023. The FOMC has kept the rate unchanged since the July 2023 increase.

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FOMC Chair Jerome Powell suggested in November of 2023 that the Federal Reserve was edging closer to the end of its rate-hiking campaign. He noted that the market had driven various longer-term rates high enough that it could help lower inflation without necessarily requiring further rate hikes from the FOMC. In an April 16, 2024 speech, Mr. Powell reiterated that due to continued strong economic growth and inflation above its 2% target, the Federal Reserve will proceed carefully with interest rate cuts and may move at a slower pace than the market had expected earlier in the year. After its May 1, 2024 meeting, the FOMC unanimously decided to leave the target range for the benchmark federal funds rate at 5.25% to 5.5%. It also reaffirmed the need for more evidence that price gains are cooling before cutting interest rates.

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FOMC Chair Jerome Powell reiterated in an April 16, 2024 speech that, due to continued strong economic growth and inflation above its 2% target, the Federal Reserve will proceed carefully with interest rate cuts and may move at a slower pace than the market had expected earlier in the year. After its May 1, 2024 meeting, the FOMC unanimously decided to leave the target range for the benchmark federal funds rate at 5.25% to 5.5%. It also reaffirmed the need for more evidence that price gains are cooling before cutting interest rates. In a July 15, 2024 interview, Mr. Powell said second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts. On July 31, 2024, the FOMC voted unanimously to keep the target range unchanged, although Chairman Powell said in news conference that “a reduction in our policy rate could be on the table as soon as the next meeting in September.“

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In addition, the FOMC stated that it plans to continue reducing the $7.4 trillion portfolio of securities it holds (as of April 10, 2024), including long-term agency mortgage-backed securities and U.S. Treasuries. These securities were purchased as part of the Federal Reserve’s quantitative easing program designed to hold down long-term interest rates, and the FOMC previously indicated that a maximum of $60 billion in U.S. Treasury purchases and $35 billion in mortgage-backed securities purchases (or a total of up to $95 billion) would be allowed to roll off, phased in over three months starting June 1, 2022. As quantitative easing is reversed in this manner through so-called quantitative tightening, long-term rates should rise, all else equal. After its May 1, 2024 meeting, the FOMC said that it will reduce the monthly redemption cap on Treasury securities from $60 billion to $25 billion. It will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion per month and will reinvest any principal payments in excess of this cap into Treasury securities. In its annual report issued April 17, 2024, the New York Federal Reserve Bank predicted that the central bank’s holdings will fall to $6.0 trillion by the middle of 2025. It then expects holdings to again grow to in-line with the growth of the economy as reserves reach 8.0% of nominal U.S. GDP.

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In addition, the FOMC stated that it plans to continue reducing the $7.2 trillion portfolio of securities it holds (as of July 17, 2024), including long-term agency mortgage-backed securities and U.S. Treasuries. These securities were purchased as part of the Federal Reserve’s quantitative easing program designed to hold down long-term interest rates, with the total amount of securities having increased from less than $900 billion in the second quarter of 2008 to a peak of approximately $8.9 trillion in the first quarter of 2022. The FOMC previously indicated that a monthly maximum of $60 billion in U.S. Treasury purchases and $35 billion in mortgage-backed securities purchases (or a total of up to $95 billion) would be allowed to roll off, phased in over three months starting June 1, 2022. As quantitative easing is reversed in this manner through so-called quantitative tightening, long-term rates should rise, all else equal. In its annual report issued April 17, 2024, the New York Federal Reserve Bank predicted that the central bank’s holdings will fall to $6.0 trillion by the middle of 2025. It then expects holdings to again grow to in-line with the growth of the economy as reserves reach 8.0% of nominal U.S. GDP. After its May 1, 2024 meeting, the FOMC said that it will reduce the monthly redemption cap on Treasury securities from $60 billion to $25 billion. It will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion per month and will reinvest any principal payments in excess of this cap into Treasury securities.

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Similar to what has happened in the U.S., the MPC has both raised short term U.K. rates to combat post-pandemic inflation and begun quantitative tightening. With respect to short term rates, the MPC raised the Official Bank Rate several times recently, or from 0.1% in November 2021 to 5.25% in August 2023, where it has remained as of April 17, 2024. The MPC recently stated that it “will keep interest rates high for long enough to get inflation back to the 2% target in a lasting way.” With respect to quantitative tightening, the MPC stopped buying bonds at the end of 2021, stopped reinvesting the proceeds from maturing bonds in February 2022, and began actively selling bonds in November of 2022. As a result, the amount of bonds the Bank of England holds has started to fall. From the end of 2021 through March 13, 2024, their notional value has declined from approximately £895 billion to £731 billion.

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With respect to quantitative tightening, the MPC stopped buying bonds at the end of 2021, stopped reinvesting the proceeds from maturing bonds in February 2022, and began actively selling bonds in November of 2022. As a result, the amount of bonds the Bank of England holds has started to fall. From the end of 2021 through July 17, 2024, their notional value has declined from approximately £895 billion to £693 billion.

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U.S. inflation measures have gradually declined since 2022. The consumer-price index for March 2024 rose by 3.3% year-over-year, which was lower than the 3.5% rates from three months and one year earlier, and a significant improvement versus the recent peak of 9.1% observed in June 2022. As a result, economists generally expect long-term U.S. interest rates to stabilize or decline slightly over the next few quarters, and to remain below the long-term historical averages for the foreseeable future (as discussed above). For example, the April 2024 Bloomberg consensus was for the ten-year U.S. Treasury yield to be approximately 4.4%, 4.2%, 4.0%, and 4.0%, respectively, by the ends of the second quarter of 2024 through first quarter of 2025. The same survey indicated that the yield should be 3.8% as of year-end 2025. In comparison, this rate was approximately 4.2% as of the end of the fourth quarter of 2023 and reached a five year closing high of 5.0% on October 19, 2023, also according to Bloomberg. For context, ten-year U.S. Treasury yields still remain below their 50-year average (through 2023) of just under 6.0%.

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U.S. inflation measures have gradually declined since 2022. The consumer-price index for June 2024 rose by 3.0% year-over-year, which was lower than the 3.5% year-over-year rate for the three months ended March 31, 2024, in-line with the rate one year earlier, and a significant improvement versus the recent peak of 9.1% observed in June of 2022. On a month-over-month basis, Consumer Price Index was flat in May and slightly negative in June of 2024. Other U.S. inflation measures, such as Core CPI and the Core Personal Consumption Expenditure Price Index, which exclude more volatile food and energy prices, have also come down meaningfully since their 2022 peak. As a result, economists generally expect long-term U.S. interest rates to stabilize or decline slightly over the next few quarters, and to remain below the long-term historical averages for the foreseeable future. For example, the July 19, 2024 Bloomberg consensus was for the ten-year U.S. Treasury yield to be approximately 4.2%, 4.2%, 4.1%, and 4.0%, respectively, by the ends of the third quarter of 2024 through the second quarter of 2025. The same survey indicated that the yield should be 3.9% and 3.8%, respectively, as of year-ends 2025 and 2026. In comparison, this 10-year yield was approximately 4.2% as of the end of the fourth quarter of 2023 and reached a five year closing high of 5.0% on October 19, 2023, also according to Bloomberg. For context, ten-year U.S. Treasury yields still remain below their 50-year average (through July 17, 2024) of 5.9%.

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Inflation in the U.K. has also gradually fallen, albeit from much higher recent levels. According to Bloomberg, the retail price index was 4.3% for March 2024 versus 5.2% and 13.5% three months and a year earlier, respectively. This inflation measure reached a post-pandemic high of 14.2% for October of 2023. According to the OECD, the U.K. has had a higher inflation rate compared with the G-7 average since 2016, and this trend is expected to continue in 2024 and 2025. Conversely, the U.K. had lower than average GDP growth among G-7 nations in 2023, which is also expected to continue through 2025. As a result, the Bank of England has had a more challenging time than certain other central banks with respect to balancing inflation and growth rates. U.K. benchmark long-term rates have therefore been somewhat below those of the U.S. According to Bloomberg, the yield on 10-year U.K. government bonds was approximately 3.9% at the end of March 2024, compared with 3.6% and 3.5%, respectively, three months and a year earlier. The April 2024 Bloomberg consensus was for this yield to be approximately 3.8%, 3.7%, 3.5%, and 3.5%, respectively, by the ends of the second quarter of 2024 through first quarter of

Current wording

Inflation in the U.K. has also gradually fallen, albeit from much higher recent levels. According to Bloomberg, the retail price index was 2.9% for June 2024 versus 4.3% and 10.7% three months and a year earlier, respectively. This inflation measure reached a post-pandemic high of 14.2% for October of 2023. According to the OECD, the U.K. has had a higher inflation rate compared with the G-7 average since 2016, and this trend is expected to continue in 2024 and 2025. Conversely, the U.K. had lower than average GDP growth among G-7 nations in 2023 and the first half of 2024, according to Bloomberg. As a result, the Bank of England has had a more challenging time than certain other central banks with respect to balancing inflation and growth rates. U.K. benchmark long-term rates have therefore been somewhat below those of the U.S. According to Bloomberg, the yield on 10-year U.K. government bonds was approximately 4.2% at the end of June 2024, compared with 3.9% and 4.4%, respectively, three months and a year earlier. The July 15, 2024 Bloomberg consensus was for this 10-year yield to be approximately 3.9%, 3.8%, 3.8%, and 3.7%, respectively, by the ends of the third quarter of 2024 through the second quarter of 2025. The same survey indicated that the yield should be 3.5% as of year-ends 2025 and 2026. For context, ten-year Gilts have averaged approximately 6.9% over the 50 years ended June 30, 2024.

Previous wording

While short-term yields are expected to be considerably above where they were compared with low levels seen for most of the period from the end of 2008 through early 2022, they are expected to stabilize and gradually fall from more recent levels. For context, the upper bound of the Fed Funds Target rate averaged 0.64% from December 31, 2008 through February 28, 2022, and was 5.50% as of March, 20, 2024. The April 2024 Bloomberg consensus was for this target rate to be approximately 5.5%, 5.2%, 4.9%, and 4.6%, respectively, by the ends of the second quarter of 2024 through first quarter of 2025. For additional context, the Fed Funds rate averaged approximately 4.91% and 3.11% over the 50 and 25 years ended December 31, 2022, respectively, according to Bloomberg.

Current wording

While short-term yields are expected to be considerably above where they were compared with low levels seen for most of the period from the end of 2008 through early 2022, they are expected to stabilize and gradually fall from more recent levels. For context, the upper bound of the Fed Funds Target rate averaged 0.64% from December 31, 2008 through February 28, 2022, and was 5.50% as of July, 17, 2024. This rate averaged approximately 4.9% and 3.1% over the 50 years and 25 years ended December 31, 2022, respectively, according to Bloomberg. The most recent Bloomberg consensus was for this target rate to be approximately 5.3%, 5.0%, 4.7%, and 4.0%, respectively, by the ends of the third quarter of 2024 through the second quarter of 2025. The same survey indicated that the yield should be 3.9% and 3.4%, respectively, as of year-ends 2025 and 2026. As a result of the aforementioned statements by Chairman Powell and recent economic data, the CME’s Fed Funds futures market indicated that, as of August 2, 2024, traders expect more than four rate cuts by January 2025.

Previous wording

The April 2024 Bloomberg consensus was for the Bank of England’s short-term target rate to be approximately 5.1%, 4.7%, 4.3%, and 3.9%, respectively, by the ends of the second quarter of 2024 through first quarter of 2025. As of April 17, 2024, the U.K. futures market implies that short term rates (as measured by overnight index swaps) will be approximately 5.2% after the May 9, 2024 MPC meeting, gradually falling to 4.6% by the March 20, 2025 meeting. In comparison, the Official Bank Rate was 5.25% as of this same date and averaged approximately 6.35% and 2.52% over the 50 and 25 years ended December 31, 2022, respectively, according to Bloomberg.

Current wording

The July 2024 Bloomberg consensus was for the Bank of England’s short-term target rate to be approximately 5.0%, 4.7%, 4.3%, and 4.0%, respectively, by the ends of the third quarter of 2024 through the second quarter of 2025. The same survey indicated that the yield should be 3.5% as of year-end 2025. As of August 1, 2024, the U.K. futures market implies that short term rates (as measured by overnight index swaps) will gradually fall to 4.2% by the March 20, 2025 meeting. In comparison, the Official Bank Rate was 5.00% as of August 1, 2024 and averaged approximately 6.3% over the 50 years ended this same date, according to Bloomberg.

Previous wording

While the overall office market remains challenging, we continued to see increased demand in certain markets, led by ongoing return-to-work plans, as well as new demand driven by companies investing in AI and law firms, and the expected reset in values driven by near-term debt maturities. According to the Freespace Index, the proportion of those attending in person rose to 83% of 2019 levels in the Americas in March of 2024 compared with 69% a year earlier. The Freespace Index also reports that attendance increased to 73% of 2019 levels from 71% over the same timeframe across locations they track in Europe, the Middle East, and Africa, and to 83% from 69% percent in the Asia-Pacific region. Other measures with different methodologies also show in-person attendance increasing. For example, the Kastle Barometer, which measures daily occupancy in ten large U.S. cities versus pre-pandemic levels, increased to 51% as of March 29, 2024 versus 49% a year earlier. Placer.ai data comparing January 2023 to January 2024 indicates that in-person attendance increased from 56% to 63% in the U.S. over this period. Our management services, leasing, origination, and capital markets professionals continue to actively collaborate with clients to repurpose underutilized spaces and assets, including with respect to conversion of obsolete office or retail properties.

Current wording

While the overall office market remains challenging, we continue to see increased demand in certain markets, led by ongoing return-to-work plans, as well as new demand driven by companies in technology including artificial intelligence as well as financial services. We also expect demand to be driven by the reset in values due to near-term debt maturities. According to the Freespace Index, the proportion of those attending work in person rose to 78% of 2019 levels in the Americas in June of 2024 compared with 69% a year earlier. The Freespace Index also reports that attendance increased to 73% of 2019 levels from 61% over the same timeframe across locations they track in Europe, the Middle East, and Africa, and to 83% from 67% in the Asia-Pacific region. Other measures with different methodologies also show in-person attendance increasing. For example, the Kastle Barometer, which measures daily occupancy in ten large U.S. cities versus pre-pandemic levels, increased to 52% as of June 14, 2024 versus 50% a year earlier. Placer.ai data comparing the last week of June 2023 to the end of June 2024 indicates that in-person attendance in the U.S. increased to 76% versus 69% over this period. Our management services, leasing, origination, and capital markets professionals continue to actively collaborate with clients to repurpose underutilized spaces and assets, including with respect to conversion of obsolete office or retail properties.

Previous wording

According to estimates from Green Street, prices for U.S. commercial real estate declined by approximately 7% over the twelve months ended March 31, 2024 and were down 21% from their March 2022 peak. With respect to specific property types differing the most from the mean, industrial, lodging, strip retail, and mall prices were relatively flat year-on-year, while multifamily and office prices declined by much more than average over the same period. Since industry notional volumes are based on price and transaction count, lower prices have contributed to industry-wide capital markets volumes declines. MSCI’s preliminary U.S. and European investment sales figures indicate that industry volumes declined by 16% and 26%, respectively year-on-year in the first quarter of 2024. In comparison, Newmark’s first quarter investment sales revenues and volumes were down by 1.6% and 9.8%, respectively. We have gained considerable market share over the past several years. Our investment sales volumes were up by nearly 60% over the twelve months ended March 31, 2024 versus 2015, while MSCI U.S. volumes decreased by 36% over the same timeframe. Given our continued investment in hiring talented professionals, we expect to continue gaining market share over time.

Current wording

According to estimates from Green Street, prices for U.S. commercial real estate were up slightly month-on-month, declined by approximately 5% over the twelve months ended June 30, 2024, and were down 20% from their March 2022 peak. With respect to specific property types differing the most from the mean, mall prices were up 5% year-on-year, while strip retail and apartment prices were down by less than average. Self-storage, traditional industrial, and health care property prices decreased by more than average over the same period. Since notional volumes are based on both prices and transaction count, lower prices have contributed to industry-wide capital markets volumes declines. MSCI’s preliminary U.S. and European investment sales figures indicate that industry volumes across all property types declined by approximately 2% year-on-year in the second quarter of 2024. MSCI volumes are generally revised upwards at later dates. However, even before any revisions, these recent declines are an improvement from the double-digit percentage decreases reported over the prior seven quarters. In comparison, Newmark’s second quarter investment sales revenues and volumes were up by 18.2% and 17.5%, respectively. We have gained considerable market share over the past several years. Our U.S. investment sales volumes were approximately 8.8% of overall U.S. MSCI volumes over the twelve months ended June 30, 2024 versus 3.4% in 2015.

Previous wording

We have also gained market share in our commercial mortgage origination businesses. The Company improved its first quarter 2024 revenues from Commercial mortgage origination, net, and total debt volumes by 38.7% and 91.7%, respectively, year-on-year. Newmark Research estimates that overall U.S. commercial and multifamily originations may have increased by as much as 5% over the same timeframe, based on their analysis of MBA data and preliminary MSCI lending data. Newmark’s GSE/FHA loan origination volumes, which are a subset of our total debt figures, are driven more by the GSE multifamily financing volumes than the activity level of the overall commercial mortgage market. Overall industry GSE multifamily origination volume increased by approximately 16% in the three and twelve months ended March 31, 2024 compared with a year earlier, per Fannie Mae and Freddie Mac. In comparison, Newmark’s GSE/FHA origination volumes were up by 40.2% over the same period. Certain GSE multifamily volume statistics for the industry are based on when loans are sold and/or securitized, and typically lag those reported by the MBA or by Newmark and its competitors by 30 to 45 days. We believe that we have meaningfully outperformed the industry in total debt over the last several years. According to data or estimates from MSCI, the MBA, and/or Newmark Research, U.S. debt originations have declined by 0.1% between 2015 and the twelve months ended March 31, 2024. Over the same timeframe, Newmark grew its total debt volumes by over 183%.

Current wording

We have also gained market share in our commercial mortgage origination businesses. Newmark Research estimates that overall U.S. commercial and multifamily originations may have declined by over 5% in the second quarter of 2024 versus a year earlier, with declines in lending by banks and the government entities (such as the GSEs) offsetting increases from commercial mortgage-backed securities and private credit lenders. In comparison, the Company improved its second quarter 2024 revenues from Commercial mortgage origination, net, by 9.9% year-on-year. This growth was led by 46.2% improvement in our mortgage brokerage and debt placement fees. This was partially offset by a decline in GSE/FHA origination fees, which were impacted by an approximately 27% year-on-year quarterly decline in overall U.S. GSE volumes, as well as the $947 million Freddie Mac origination Newmark completed in the second quarter of 2023. Certain GSE multifamily statistics for the industry are based on when loans are sold and/or securitized, and typically lag those reported by the MBA or by Newmark and its competitors by 30 to 45 days. Based on their analysis of MBA data and preliminary MSCI lending data, we believe that we have meaningfully outperformed the industry in total debt over the last several years. According to data or estimates from MSCI, the MBA, and/or Newmark Research, our total debt volumes were approximately 5.9% of U.S. commercial and multifamily mortgage originations over the twelve months ended June 30, 2024, compared with 1.5% in 2015.

Previous wording

Over 90% of Newmark’s 2023 investment sales volumes were generated in the U.S., (which included the Signature transactions), while approximately 88% were from the U.S. in first quarter of 2024. Most of this international volume was from the Company’s U.K. operations. Essentially all of Newmark’s total debt volumes were generated in the U.S. in both periods. Given our recent hires and acquisitions, we anticipate non-U.S. transactions to make up a greater percentage of our capital markets revenues and volumes over time.

Current wording

Over 90% of Newmark’s 2023 investment sales volumes (which included the equity portion of the Signature transactions) were generated in the U.S., while approximately 93% were from the U.S. in first half of 2024. Most of Newmark’s international volume was from the Company’s U.K. operations. Essentially all of Newmark’s total debt volumes were generated in the U.S. in both periods. Given our continued investments, we believe we can continue gaining market share over time in the U.S. and globally, and we anticipate non-U.S. transactions to make up a greater percentage of our revenues and volumes over time.

Previous wording

We continue to anticipate overall U.S. investment sales volumes to remain muted through at least the first half of 2024. However, macroeconomic conditions, recent strong U.S. economic data and higher than anticipated inflation figures have increased uncertainty with respect to the precise timing of interest rate cuts by the Federal Reserve. When benchmark interest rates stabilize, we expect activity to begin to rebound, and for our higher margin capital markets platform to drive Newmark’s strong revenue and earnings growth. We also think that the current market conditions have created an opportunity for us to solidify our position as the platform of choice for many of the real estate industry’s top professionals. During the first quarter of 2024, we hired a preeminent affordable housing team in the U.S., some of the most prolific and experienced debt and structured finance professionals in the U.S. and U.K., as well as one of the most innovative and active U.S. leasing teams. Newmark also opened a flagship office in France, continental Europe’s second largest transaction market, where we attracted some of the most talented leasing and capital markets professionals. We believe that such hires further demonstrate the strength of our brand. Our substantial investments in data, analytics, and talent uniquely position us to capitalize on ongoing macroeconomic trends and to continue outperforming the industry over time.

Current wording

We also think that the current market conditions have created an opportunity for us to solidify what we believe is our position as the platform of choice for many of the real estate industry’s top professionals. During the first half of 2024, we hired one of the top multifamily GSE/FHA originators in the U.S., who will work closely with the preeminent U.S. affordable housing investment sales team that we added earlier in the year. We also hired some of the most prolific and experienced debt and structured finance professionals in the U.S. and U.K., as well as some of the most innovative and active U.S. leasing teams. Newmark also opened a flagship office in France, continental Europe’s second largest transaction market, where we attracted some of the most talented leasing and capital markets professionals. We believe that such hires further demonstrate the strength of our global brand, and that our substantial investments in data, analytics, and talent position Newmark to capitalize on ongoing macroeconomic trends. In addition, our revenue-generating headcount and overall headcount were both relatively flat year-on-year as of the end of the second quarter of 2024. Therefore, productivity gains drove the large majority of our total revenue growth, as well as our increased fees across Capital markets, Leasing, and Valuation and Advisory. As more of our recently hired revenue-generating professionals ramp up, we expect further productivity gains over time.

Previous wording

We generally derive revenues from the following four sources:

Current wording

We generally derive revenues from the following three sources:

Previous wording

•Commercial Mortgage Origination. We offer services and products to facilitate debt financing for our clients and customers. Commercial mortgage origination revenue is comprised of commissions generated from mortgage brokerage and debt and equity placement services, as well as the origination fees and premiums derived from the origination of GSE/FHA loans with borrowers and the sale of those loans to investors. Our commercial mortgage origination revenue also includes the revenue recognized for the fair value of expected net future cash flows from servicing recognized at commitment.

Current wording

•Capital Markets. This consists of investment sales and commercial mortgage origination, net. Our investment sales business specializes in the arrangement of acquisitions and dispositions of commercial properties, as well as equity placement and other related services. Our commercial mortgage origination, net business offers services and products to facilitate debt financing for our clients and customers. Commercial mortgage origination revenue is comprised of commissions generated from mortgage brokerage and debt placement services, as well as the origination fees and premiums derived from the origination of GSE/FHA loans with borrowers. Our commercial mortgage origination revenue also includes the revenue recognized for the fair value of expected net future cash flows from servicing recognized at commitment.

Previous wording

As part of our compensation plans, certain employees have been granted limited partnership units in Newmark Holdings and, prior to the Newmark IPO, BGC Holdings, which generally receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders. As a result of the Corporate Conversion, there are no longer any limited partnership units in BGC Holdings outstanding. Certain Newmark employees also hold N Units that do not participate in quarterly partnership distributions and are not allocated any items of profit or loss. These N Units vest into distribution earnings units over a four-year period. As prescribed in U.S. GAAP guidance, the quarterly allocations of net income on such limited partnership units are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our accompanying unaudited condensed consolidated statements of operations.

Current wording

As part of our compensation plans, certain employees have been granted limited partnership units in Newmark Holdings and, prior to the Newmark IPO, BGC Holdings, which generally receive quarterly allocations of net income and are generally contingent upon services being provided by the unit holders. As a result of the Corporate Conversion, there are no longer any limited partnership units in BGC Holdings outstanding. Certain Newmark employees also hold N Units that do not participate in quarterly partnership distributions and are not allocated any items of profit or loss. These N Units vest into distribution earnings units over a three- to ten-year period. As prescribed in U.S. GAAP guidance, the quarterly allocations of net income on such limited partnership units are reflected as a component of compensation expense under “Equity-based compensation and allocations of net income to limited partnership units and FPUs” in our accompanying unaudited condensed consolidated statements of operations.

Previous wording

Our pre-tax margins are affected by the mix of revenues generated. For example, servicing revenues tend to have higher pre-tax margins than Newmark as a whole, and margins from originating GSE/FHA loans, which are included in “Commercial mortgage origination, net” in our unaudited condensed consolidated statement of operations, tend to be lower, as we retain rights to service loans over time, and because this item includes non-cash GAAP gains attributable to OMSRs, which represent the fair value of expected net future cash flows from servicing recognized at commitment, net. Investment sales and mortgage brokerage transactions tend to have higher pre-tax margins than leasing transactions. Pre-tax earnings margins on our property management and parts of our other GCS businesses are at the lower end of margins for the Company as a whole because they include some revenues that equal their related expenses. These revenues represent fully reimbursable compensation and non-compensation costs and may be referred to as “pass through revenues.”

Current wording

Our pre-tax margins are affected by the mix of revenues generated. For example, servicing revenues tend to have higher pre-tax margins than Newmark as a whole, and margins from originating GSE/FHA loans, which are included in “Capital markets” in our unaudited condensed consolidated statement of operations, tend to be lower, as we retain rights to service loans over time, and because this item includes non-cash GAAP gains attributable to OMSRs, which represent the fair value of expected net future cash flows from servicing recognized at commitment, net. Capital markets transactions tend to have higher pre-tax margins than leasing transactions. Pre-tax earnings margins on our property management and parts of our other GCS businesses are at the lower end of margins for the Company as a whole because they include some revenues that equal their related expenses. These revenues represent fully reimbursable compensation and non-compensation costs and may be referred to as “pass through revenues.”

Previous wording

Compensation and employee benefits expense decreased by $0.2 million to $328.2 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The expense was flat on higher revenue and was down by 1.1% excluding pass-through items. This was largely due to lower variable commissions and cost savings initiatives, which were partially offset by expenses related to acquisitions, and the recent hiring of industry-leading revenue-generating professionals under long term contracts.

Current wording

Compensation and employee benefits expense increased by $30.6 million to $377.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase reflects improved commission-based revenue, an increase in pass through items, and expenses related to hiring revenue-generating professionals under long term contracts. These were partially offset by the impact of Newmark’s cost saving initiatives.

Previous wording

Equity-based compensation and allocations of net income to limited partnership units and FPUs increased by $15.8 million, or 44.3%, to $51.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase is due to the timing of certain grants of exchangeability and the increase in share price of Newmark Class A common stock.

Current wording

Equity-based compensation and allocations of net income to limited partnership units and FPUs increased by $5.9 million, or 30.0%, to $25.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase is due to the timing of certain grants of exchangeability and the increase in share price of Newmark Class A common stock.

Previous wording

Operating, administrative and other expenses increased by $19.0 million, or 15.9%, to $137.9 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to an increase in pass through costs directly tied to revenue and an increase in interest expense on our GSE warehouse lines, which was offset with interest income on the GSE loans held for sale. The increase is also due to the addition of Gerald Eve.

Current wording

Operating, administrative and other expenses increased by $0.9 million, or 0.6%, to $147.7 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to an increase in pass through costs directly tied to revenue offset by lower warehouse interest expenses and the impact of Newmark’s cost saving initiatives.

Previous wording

Fees to related parties decreased by $0.3 million, or 3.2%, to $7.5 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

Fees to related parties decreased by $0.2 million, or 2.3%, to $6.7 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

The benefit for income taxes increased by $0.5 million, or 15.0%, to $3.5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was primarily driven by a higher pre-tax loss. In general, our consolidated effective tax rate can vary from period to period depending on, among other factors, the geographic and business mix of our earnings.

Current wording

The provision for income taxes increased by $2.3 million, or 34.6%, to $9.0 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was primarily driven by higher pre-tax earnings. In general, our consolidated effective tax rate can vary from period to period depending on, among other factors, the geographic and business mix of our earnings.

Previous wording

Net loss attributable to noncontrolling interests increased by $4.1 million, to $10.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was primarily driven by a higher pre-tax loss.

Current wording

Net income attributable to noncontrolling interests increased by $4.3 million, to $9.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was primarily driven by a higher pre-tax income.

Previous wording

Depreciation and amortization increased by $5.1 million, or 13.2%, to $44.0 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to increased fixed asset depreciation of $1.3 million and intangible asset amortization of $1.9 million, as well as a $2.0 million change in MSR valuation allowance.

Current wording

Depreciation and amortization for the six months ended June 30, 2024 increased by $4.0 million, or 4.9%, to $84.9 million compared to the six months ended June 30, 2023 due to increased fixed asset depreciation of $1.3 million, intangible asset amortization of $1.5 million, as well as a $1.3 million change in MSR valuation allowance.

Previous wording

Other loss, net of $3.0 million in the three months ended March 31, 2023 was primarily due to a loss from the disposition of certain assets, offset by $3.6 million of income from an equity method investment.

Current wording

Other income (loss), net of $0.9 million in the six months ended June 30, 2023 was primarily due to net realized gains on equity method investments offset by a loss from the disposition of certain assets.

Previous wording

Interest expense, net decreased by $0.4 million, or 4.9%, to $7.2 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Interest expense, net decreased by $1.7 million, or 9.9%, to $15.5 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Previous wording

Our future capital requirements will depend on many factors, including our growth, the expansion of our sales and marketing activities, our expansion into other markets, our acquisitions of other companies and hiring of teams of producers, and our results of operations. To the extent that existing cash, cash from operations and credit facilities are insufficient to fund our future activities, we may need to raise additional funds through public equity or debt financing. As of March 31, 2024, our debt consisted of $600.0 million aggregate principal amount of 7.500% Senior Notes with a carrying amount of $595.2 million and $75.0 million outstanding under the Credit Facility with a carrying amount of $75.0 million, in each case exclusive of our warehouse facilities described under “—Warehouse Facilities Collateralized by U.S. Government Sponsored Enterprises.”

Current wording

Our future capital requirements will depend on many factors, including our growth, the expansion of our sales and marketing activities, our expansion into other markets, our acquisitions of other companies and hiring of teams of producers, and our results of operations. To the extent that existing cash, cash from operations and credit facilities are insufficient to fund our future activities, we may need to raise additional funds through public equity or debt financing. As of June 30, 2024, our debt consisted of $600.0 million aggregate principal amount of 7.500% Senior Notes with a carrying amount of $595.2 million and $150.0 million outstanding under the Credit Facility with a carrying amount of $150.0 million, in each case exclusive of our warehouse facilities described under “—Warehouse Facilities Collateralized by U.S. Government Sponsored Enterprises.”