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Real Estate Derivatives?

Real Estate Derivatives?
Financial brokerage BGC announced Friday it closed the acquisition of Newmark & Co Real Estate (better known as Newmark Knight Frank). Your browser may not support display of this image.It's a unique case of a non-real estate firm buying a real estate firm. But lots of real estate pros are asking the big question: Will it work?
Barry Gosin
The new BGC will experiment with the creation of a real estate derivatives market. BGC is a spinoff of Cantor Fitzgerald, also headed by Howard Lutnick, who plans to use the acquisition to expand relationships with financial institutions and enable Newmark brokers to help their clients hedge against changes in real estate prices, he says. Newmark CEO Barry Gosin (above) calls the acquisition a “unique moment in the commercial real estate industry as we align best-in-class technology with financial products and real estate." Despite Newmark's growth since the deal was first announced in late April, there've been reports that competitors think the merger lacks synergy and will struggle much like the attempts of Goldman Sachs and JP Morgan Chase to start real estate firms in the early 2000s. (Though if people didn't attempt bold ideas despite previous failure, we would never have the airplane or Michael Jordan.)