Marcus & Millichap : 2023 Annual Report

MARCUS & MILLICHAP, INC.

ANNUAL REPORT

REAL ESTATE INVESTMENT SALES | FINANCING | RESEARCH | ADVISORY SERVICES

TO OUR SHAREHOLDERS

MMI remained resilient and continued to make progress toward our long-term goals despite significant market headwinds experienced across the U.S. commercial real estate industry last year. The real estate market faced declining transaction volume resulting from the most aggressive Federal Reserve tightening policy in 40 years, culminating in interest rate increases of 525 basis points in 18 months. An already constrained lending environment was further exacerbated by the regional banking crisis. Although the broader economy performed well, interest rate volatility presented challenges for transaction closings with widening bid-ask spreads and higher borrowing costs. According to CoStar and MSCI, 2023 U.S. commercial real estate transaction volume declined by an estimated 55% compared to prior year.

In this environment, our team delivered revenue of $646 million and a net loss of $34 million, which largely reflects the impact of a 39% decline in total transactions. Our earnings were particularly pressured by expenses related to capital invested in top talent acquisition and retention, technological innovations and expanding the platform. We believe these investments will be instrumental in helping us lead in the recovery and long-term growth. We believe the company is well positioned to not only withstand the current market dislocation but to leverage the downturn to our advantage. We ended the year with $407 million in cash, cash equivalents, and marketable debt securities, available-for-sale.

In 2023, our management team adopted a range of strategic measures to mitigate the impact of the market disruption while also strengthening the MMI platform. We implemented cost control initiatives aimed at reducing the interim impact of lower revenue while continuing to make well-underwritten investments essential to long-term growth. Focusing on our people, we continued to provide broker training, retention of top producers and recruitment of experienced professionals and teams. We prioritized enhancing our ability to serve client needs by expanding marketing efforts, further integrating our auction teams into the sales process and leveraging technology. These combined efforts resulted in over 7,000 closings and

March 22, 2024

nearly $45 billion in volume, keeping MMI as the top ranked brokerage firm by transactions last year.

Our commitment to strategic capital allocation that best aligns with the long-term interests of our shareholders remains constant. In 2023, we returned $20 million to shareholders in the form of dividends and another $39 million through share repurchases. We concluded the year with $72 million of share repurchase authorization remaining under our current program which is inclusive of the additional $70 million authorization that was announced in May. Recruitment and retention of top producers remains a key priority for our core business. Concurrently, we have aggressively explored several adjacent growth opportunities to further diversify our business geographically and to expand into complementary services. Although these transactions did not close due to a valuation gap, we continue to develop our pipeline and actively evaluate strategic acquisition opportunities.

Industry Position

The company's leading position in investment sales and financing was accomplished through the tireless efforts of our 1,783-member strong salesforce, the largest in our industry. Whether it was our participation in major industry conferences, our client webcasts which drew over 40,000 investors or providing insightful research and analysis, we are proud of the client guidance and touchpoints our team delivered at a difficult time for most investors. As we have highlighted in the past, we believe that the private client segment of the market will lead the turnaround and we feel confident in our positioning when activity inevitably does pick up.

Market Environment

We believe the Federal Reserve's decision to pause interest rate hikes and turn to a more dovish stance has increased the market's confidence in a soft landing for the economy. Despite ongoing challenges in the form of wide bid-ask spreads and tighter lending standards, clarity on interest rates and price adjustments are expected to provide positive tailwind to the market in the second half of the year. Other factors such as distress in some sectors and debt maturities could also

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This letter includes forward-looking statements, including statements regarding the company's business outlook, strategies and industry position, and the market environment. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Please see our 2023 Annual Report on Form 10-K, which was filed with the SEC on February 27, 2024 for more information regarding the factors that could cause such differences. Forward-looking statements speak only as of the date of this letter. We assume no obligation to update forward- looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward- looking information, except to the extent required by applicable laws.

Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________

FORM 10-K

__________________________

(Mark One)

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________to___________

Commission File Number 001-36155

__________________________

MARCUS & MILLICHAP, INC.

(Exact name of registrant as specified in its charter)

__________________________

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-knownseasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

TABLE OF CONTENTS

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MARKET, INDUSTRY AND OTHER DATA

Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning the commercial real estate industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on (i) information gathered from various sources, (ii) certain assumptions that we have made, and (iii) our knowledge of the commercial real estate market. While we believe that the market position, market opportunity and market size information that is included in this Annual Report on Form 10-K is generally reliable, such information is inherently imprecise. Unless indicated otherwise, the industry data included herein is generally based on information available through the nine months ended September 30, 2023 since full year 2023 information may not yet have been published. We use market data from CoStar Group, Inc. and Real Capital Analytics that consists of list side information of sales transactions of multifamily, retail, office, and industrial buildings, with a value of $1 million or more.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements, including the Company's business outlook for 2024, market consensus on interest rate decreases in 2024 and for the 2024 economic forecast, our expectations of 2024 commercial real estate sales activity in the wake of reduced interest rates, the execution of our capital return program, including a semi-annual dividend and stock repurchase program, and expectations for market share growth. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

• general uncertainty in the capital markets, a worsening of economic conditions, and the rate and pace of economic recovery following an economic downturn;
• changes in our business operations;
• market trends in the commercial real estate market or the general economy, including the impact of inflation and increased interest rates;
• our ability to attract and retain qualified senior executives, managers, and investment sales and financing professionals;
• the impact of forgivable loans and related expense resulting from the recruitment and retention of agents;
• the effects of increased competition on our business;
• our ability to successfully enter new markets or increase our market share;
• our ability to successfully expand our services and businesses and to manage any such expansions;
• our ability to retain existing clients and develop new clients;
• our ability to keep pace with changes in technology;
• any business interruption or technology failure, including cybersecurity risks and ransomware attacks, and any related impact on our reputation;
• changes in interest rates, availability of capital, tax laws, employment laws, or other government regulation affecting our business;
• our ability to successfully identify, negotiate, execute, and integrate accretive acquisitions; and
• other risk factors included under "Risk Factors" in this Annual Report on Form 10-K.

In addition, in this Annual Report, the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "goal," "expect," "predict," "potential," "should," and similar expressions, as they relate to our Company, our business, and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Forward-looking statements speak only as of the date of this Annual Report on Form 10-K. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

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PART I

Unless the context requires otherwise, the words "Marcus & Millichap," "MMI," "we," the "Company," "us" and "our" refer to Marcus & Millichap, Inc., and its consolidated subsidiaries.

Item 1. Business

Company Overview

Marcus & Millichap, Inc. ("MMI") is a leading national real estate services firm specializing in commercial real estate investment sales, financing services, research, and advisory services. We are the leading national investment brokerage company in the $1 million to $10 million private client market. This is the largest and most active market and consistently comprises more than 80% of total U.S. commercial property transactions greater than $1 million in the marketplace. As of December 31, 2023, we had 1,783 investment sales and financing professionals that are primarily exclusive commission-based independent contractors who provide real estate investment brokerage and financing services to sellers and buyers of commercial real estate in over 80 offices in the United States and Canada. In 2023, we closed 7,546 sales, financing, and other transactions with total sales volume of approximately $43.6 billion.

We service clients by underwriting, marketing, selling, and financing commercial real estate properties in a manner that maximizes value for sellers, provides buyers with the largest and most diverse inventory of commercial properties, and secures the most competitive financing from lenders for borrowers. Our business model is based on several key attributes:

• for more than 50 years, we have provided investment brokerage and financing services through proprietary inventory and marketing systems, policies and a culture of information sharing, and in-depth investment brokerage training. Our sales force executes these services under the supervision of a dedicated sales management team focused on client service and growing the firm;
• market leading share and brand within the $1 million to $10 million private client market, which consistently represents more than 80% of total U.S. commercial property transactions greater than $1 million in the marketplace;
• investment sales and financing professionals providing exclusive client representation across multiple property types;
• a broad geographic platform in the United States and Canada powered by information sharing and proprietary real estate marketing technologies;
• an ability to scale with our private clients as they grow and connect private capital with larger assets through our Institutional Property Advisors ("IPA") division;
• a financing team integrated with our brokerage sales force providing independent mortgage brokerage services by accessing a wide range of lenders on behalf of our clients;
• a sales management team that supports and leads as Company executives and that does not compete with or participate in investment sales or financing professionals' commissions; and
• industry-leadingresearch and advisory services tailored to the needs of our clients and supporting our investment sales and financing professionals.

Corporate Information

We were formed as a sole proprietorship in 1971, incorporated in California on August 26, 1976 as G. M. Marcus & Company, and we were renamed as Marcus & Millichap, Inc. in August 1978, Marcus & Millichap Real Estate Investment Brokerage Company in September 1985, and Marcus & Millichap Real Estate Investment Services, Inc., ("MMREIS"), in February 2007. Prior to the completion of our initial public offering ("IPO"), MMREIS was majority-owned by Marcus & Millichap Company ("MMC") and all of MMREIS' preferred and common stock outstanding was held by MMC and its affiliates or officers and employees of MMREIS. In June 2013, in preparation for the spin-off of its real estate investment services business, MMC formed a Delaware holding company called Marcus & Millichap, Inc. Prior to the completion of our IPO in November 2013, the shareholders of MMREIS contributed the shares of MMREIS to MMI in exchange for common stock of MMI, and MMREIS became a wholly-owned subsidiary of MMI.

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