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BGC Partners, Inc. (NASDAQ: BGCP) ("BGC Partners", "BGC", or the "Company"), a leading global brokerage company servicing the financial and real estate markets, has agreed to acquire Berkeley Point Financial LLC. Berkeley Point is a leading commercial real estate finance company focused on the origination and sale of multifamily and other commercial real estate loans through government-sponsored and government-funded loan programs, as well as the servicing of commercial real estate loans, including those it originates. Berkeley Point was acquired by an affiliate of Cantor Fitzgerald, L.P. on April 10, 2014.

The Board of Directors of BGC, upon the unanimous recommendation of a Special Committee consisting of all four independent directors (the "Special Committee") assisted by independent advisors, has unanimously approved the acquisition of Berkeley Point and the related transactions. The total consideration payable by BGC for the acquisition of Berkeley Point is USD 875m, subject to certain adjustments at closing. After the proposed acquisition is completed, Berkeley Point and the investment in the new real estate business described below will become part of Newmark Knight Frank ("Newmark" or "NKF"), BGC's Real Estate Services segment. The acquisition of BPF is expected to be immediately accretive to BGC's earnings per share upon closing.

Howard W. Lutnick, Chairman and Chief Executive Officer 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 percent 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 percent, while its pre-tax income, excluding GAAP net non-cash MSR income, increased by over 52 percent. BPF is also expected to generate strong double-digit revenue and earnings growth for full years 2017 and 2018.

"Berkeley Point is a low-risk intermediary in commercial real estate finance for the multifamily market. It originates and services multifamily loans as part of programs run by U.S. government-sponsored enterprises such as Fannie Mae and Freddie Mac, as well as by the U.S. Department of Housing and Urban Development. This means that unlike traditional lenders, Berkeley Point originates loans that meet strict criteria set by the U.S. government. These loans are guaranteed by GSEs, and are pre-sold. Berkeley Point is entirely consistent with our low-risk business model."

Barry M. Gosin, Chief Executive Officer of Newmark, added: "This transaction will combine BPF's top five Fannie Mae and Freddie Mac multifamily origination business with ARA, Newmark's top three multifamily investment sales business, along with our fast-growing commercial mortgage brokerage business. We believe that this combination will be a catalyst for dramatically higher revenue and earnings growth for Newmark.

"Berkeley Point will drive our margins higher, as it is more profitable than our publicly-traded commercial real estate services peers. In addition, Berkeley Point generated approximately 30 percent of its revenues from stable and recurring loan servicing fees, which come from mortgage servicing rights with an average duration of almost eight years. These servicing fees, alongside Newmark's existing property management, facilities management, advisory, consulting, and agency leasing businesses, mean that a significant amount of our revenues and earnings will be recurring and predictable."

Jeff Day, Chief Executive Officer of Berkeley Point, stated: "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".

Berkeley Point's net asset or book value was USD 509m as of March 31, 2017. BPF generated revenues and pre-tax income under GAAP of USD 314m and USD 143m, respectively, for the trailing 12 months ended March 31, 2017. The latter two results represented year-on-year increases of 55 percent and 169 percent, respectively.

BPF's GAAP pre-tax income includes non-cash GAAP gains attributable to originated MSRs and non-cash GAAP amortization of MSRs. Excluding the net impact of these non-cash items, Berkeley Point's pre-tax earnings would have increased by 52 percent to USD 64m for the same trailing 12 month period. Following the completion of the proposed transaction, BGC's calculation of pre-tax distributable earnings and adjusted EBITDA will exclude the net impact of these same non-cash GAAP items. Investors should note that the cash received with respect to these MSRs, net of associated expenses, is expected to increase pre-tax distributable earnings and adjusted EBITDA recorded by the Real Estate Services segment in future periods.

The total consideration payable by BGC to Cantor for the acquisition of Berkeley Point is USD 875m, expected to be in cash, subject to upward or downward adjustment to the extent that the net assets of Berkeley Point as of the closing are greater than or less than approximately USD 509m. The proposed transaction does not include a transfer of the economics of BPF's special asset servicing business, which was not profitable.

BGC expects to fund the acquisition through a combination of a bond issuance, term loan, or other debt financing arrangements, as well as from existing financing sources and cash on hand. BGC intends to remain investment-grade following the close of the transaction. The acquisition of Berkeley Point is expected to close during 2017, subject to receipt of certain regulatory approvals, including from Fannie Mae, Freddie Mac and HUD, and other customary closing conditions.

Contemporaneously with the proposed acquisition of Berkeley Point, BGC will invest USD 100m in cash for approximately 27 percent of the capital in a commercial real estate-related finance and investment business, along with Cantor (the "Investment"). Cantor will control the Investment and will contribute approximately USD 267m of cash and non-cash assets for approximately 73 percent of the Investment's capital. The Investment will be structured as a limited partnership, is expected to collaborate with Cantor's significant existing commercial real estate finance business, and may conduct activities in any real estate-related business.

Under the terms of the Investment, Cantor has agreed to bear initial net losses of the partnership, if any, up to an aggregate amount of approximately USD 37m per year. BGC will be entitled to a cumulative annual preferred return of five percent of its capital account balance and a profit participation thereafter.

The Board of Directors of BGC has unanimously approved the BPF acquisition and the Investment, upon the recommendation of the Special Committee, which was assisted by independent advisors. Sandler O'Neill & Partners, L.P. served as financial advisor to the Special Committee, and Debevoise & Plimpton LLP served as legal advisor to the Special Committee.

Cantor Fitzgerald & Co. served as Cantor's financial advisor, and Wachtell, Lipton, Rosen & Katz served as Cantor's legal advisor