Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Summary of 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 (in thousands):


	As of September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	1,031	$	—	$	—	$	1,031
Loans held for sale, at fair value	—		980,859		—		980,859

Rate lock commitments	—		—		5,076		5,076

Forward sale contracts	—		—		67,525		67,525
Total	$	1,031	$	980,859	$	72,601	$	1,054,491
Liabilities:

Contingent consideration	—		—		12,253		12,253
Rate lock commitments	—		—		15,250		15,250

Total	$	—	$	—	$	27,503	$	27,503


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	524,569	$	—	$	—	$	524,569
Loans held for sale, at fair value	—		1,072,479		—		1,072,479
Debt securities	—		—		—		—
Rate lock commitments	—		—		3,957		3,957

Forward sale contracts	—		—		4,544		4,544
Total	$	524,569	$	1,072,479	$	8,501	$	1,605,549
Liabilities:
Contingent consideration	$	—	$	—	$	12,338	$	12,338
Rate lock commitments	—		—		2,836		2,836
Forwards sale contracts	—		—		2,180		2,180
Total	$	—	$	—	$	17,354	$	17,354

Schedule of Changes in Level 3 RBC Forwards, Rate Lock Commitments, Forwards and Contingent Consideration Measured at Fair Value on Recurring Basis

Changes in Level 3 Nasdaq Forwards, rate lock commitments, forward sale contracts and contingent consideration measured at fair value on recurring basis were as follows (in thousands):


	As of September 30, 2022
	Opening Balance		Total realized and unrealized gains (losses) included in Net income		Additions		Settlements		Closing Balance		Unrealized gains (losses) outstanding
Assets:
Rate lock commitments	$	3,957	$	5,076	$	—	$	(3,957)	$	5,076	$	5,076
Forward sale contracts	4,544		67,525		—		(4,544)		67,525		67,525

Total	$	8,501	$	72,601	$	—	$	(8,501)	$	72,601	$	72,601

	Opening Balance		Total realized and unrealized gains (losses) included in Net income		Additions		Settlements		Closing Balance		Unrealized gains (losses) outstanding
Liabilities:
Contingent consideration	$	12,338	$	778	$	7,322	$	(8,185)	$	12,253	$	778
Rate lock commitments	2,836		15,250		—		(2,836)		15,250		15,250
Forward sale contracts	2,180		—		—		(2,180)		—		—
Total	$	17,354	$	16,028	$	7,322	$	(13,201)	$	27,503	$	16,028


	As of December 31, 2021
	Opening Balance		Total realized and unrealized gains (losses) included in Net income		Additions		Settlements		Closing Balance		Unrealized gains (losses) outstanding
Assets:
Rate lock commitments	$	21,034	$	3,957	$	—	$	(21,034)	$	3,957	$	3,957
Forward sale contracts	7,632		4,544		—		(7,632)		4,544		4,544
Nasdaq Forwards	12,822		(12,822)		—		—		—		—
Total	$	41,488	$	(4,321)	$	—	$	(28,666)	$	8,501	$	8,501

	Opening Balance		Total realized and unrealized gains (losses) included in Net income		Additions		Settlements		Closing Balance		Unrealized gains (losses) outstanding
Liabilities:
Contingent consideration	$	31,481	$	(1,351)	$	—	$	(17,792)	$	12,338	$	12,338
Rate lock commitments	2,977		2,836		—		(2,977)		2,836		2,836
Forward sale contracts	14,971		2,180		—		(14,971)		2,180		2,180
Total	$	49,429	$	3,665	$	—	$	(35,740)	$	17,354	$	17,354

Summary of 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:


September 30, 2022
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs	Range		Weighted Average
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	$	—	$	12,253	Discount rate	4.0% - 11.8%	(1)	7.2%
					Probability of meeting earnout and contingencies	75.0%- 99.0%	(1)	91.9%

Derivative assets and liabilities:

Forward sale contracts	$	67,525	$	—	Counterparty credit risk	N/A		N/A
Rate lock commitments	$	5,076	$	15,250	Counterparty credit risk	N/A		N/A


December 31, 2021
Level 3 assets and liabilities	Assets		Liabilities		Significant Unobservable Inputs	Range		Weighted Average
Accounts payable, accrued expenses and other liabilities:
Contingent consideration	$	—	$	12,338	Discount rate	4.0% - 10.2%	(1)	8.1%
					Probability of meeting earnout and contingencies	75.0% - 99.0%	(1)	91.6%

Derivative assets and liabilities:

Forward sale contracts	$	4,544	$	2,180	Counterparty credit risk	N/A		N/A
Rate lock commitments	$	3,957	$	2,836	Counterparty credit risk	N/A		N/A

(1)Newmark’s estimate of contingent consideration as of September 30, 2022 and December 31, 2021 was based on the acquired business’ projected future financial performance, including revenues.