Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Hierarchy of Financial Assets and Liabilities under U.S. GAAP Guidance

The following table sets forth by level within the fair value hierarchy financial assets and liabilities accounted for at fair value under U.S. GAAP guidance at March 31, 2018 and December 31, 2017 (in thousands):

	As of March 31, 2018
	Level 1		Level 2		Level 3			Total
Assets:
Marketable securities	$	8,622	$	—	$	—		$	8,622
Loans held for sale		—		965,639		—			965,639
Rate lock commitments		—		—		8,750			8,750
Forwards		—		—		9,687			9,687
Total assets	$	8,622	$	965,639	$	18,437	#	$	992,698
Liabilities:
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	—	$	—	$	23,087		$	23,087
Rate lock commitments		—		—		8,980			8,980
Forwards		—		—		2,421			2,421
Total Liabilities	$	—	$	—	$	34,488		$	34,488

	As of December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	57,623	$	—	$	—	$	57,623
Loans held for sale		—		362,635		—		362,635
Rate lock commitments		—		—		2,923		2,923
Forwards		—		—		3,753		3,753
Total assets	$	57,623	$	362,635	$	6,676	$	426,934
Liabilities:
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	—	$	—	$	23,711	$	23,711
Rate lock commitments		—		—		2,390		2,390
Forwards		—		—		657		657
Total Liabilities	$	—	$	—	$	26,758	$	26,758

Roll forward of Derivative Instruments and Contingent Consideration Require Valuation Based upon Significant Unobservable Inputs

A roll forward of derivative instruments and contingent consideration (level 3) that require valuation based upon significant unobservable inputs is presented below (in thousands):

	As of March 31, 2018
	Opening Balance		Total realized and unrealized (gains) losses included in Net income⁽¹⁾		Issuances		Settlements			Closing Balance		Unrealized (gains) losses outstanding as of March 31, 2018
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	23,711	$	134	$	—	$	(758	)	$	23,087	$	134
Rate lock commitments and forwards, net		3,629		7,036		—		(3,629	)		7,036		7,036
	$	27,340	$	7,170	$	—	$	(4,387	)	$	30,123	$	7,170

	As of March 31, 2017
	Opening Balance		Total realized and unrealized (gains) losses included in Net income⁽¹⁾		Issuances		Settlements			Closing Balance		Unrealized (gains) losses outstanding as of March 31, 2017
Accounts payable, accrued expenses and other liabilities—contingent consideration	$	38,713	$	438	$	—	$	(10,153	)	$	28,998	$	438
Rate lock commitments and forwards, net		10,254		2,462		—		(10,254	)		2,462		2,462
	$	48,967	$	2,900	$	—	$	(20,407	)	$	31,460	$	2,900

(1)	Realized losses are reported in “Other income, net” in Newmark’s unaudited condensed consolidated statements of operations.

Quantitative Information about Level 3 Fair Value Measurements

The following tables present quantitative information about the significant unobservable inputs utilized by Newmark in the fair value measurement of Level 3 assets and liabilities measured at fair value on a recurring basis:

March 31, 2018
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	$	—	$	23,087	Discount rate—6.6% weighted average rate^(a)
Derivative assets and liabilities:					Financial forecast information
Forward sale contracts	$	9,687	$	2,421	Counterparty credit risk
Rate lock commitments	$	8,750	$	8,980	Counterparty credit risk

December 31, 2017
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	$	—	$	23,711	Discount rate—6.43% weighted average rate^(a)
Derivative assets and liabilities:					Financial forecast information
Forward sale contracts	$	3,753	$	657	Counterparty credit risk
Rate lock commitments	$	2,923	$	2,390	Counterparty credit risk

(a)	Newmark’s estimate of contingent consideration as of March 31, 2018 and December 31, 2017 was based on the acquired business’ projected future financial performance, including revenues.