UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13, OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 28, 1999
(Date of earliest event reported)
Commission File Number 1-14373
INSIGNIA FINANCIAL GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 56-2084290
(State of Incorporation) (I.R.S. Employer Identification No.)
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Officers) (Zip Code)
(212) 984-8000
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On May 28, 1999, Insignia Financial Group, Inc. (the "Company" or
"Insignia"), announced its intention to acquire (through its DE Acquisition LLC
subsidiary) Douglas Elliman, a residential real estate brokerage firm located in
New York City. Douglas Elliman holds the number one market position for both
residential sales and rentals in New York City according to the annual ranking
of residential brokerage companies nation-wide as published by Real Trends. The
firm also holds a prominent position in several upscale suburban markets of New
York City including Greenwich, CT, Bernardsville/Basking Ridge, NJ, and Long
Island, NY.
The base purchase consideration to be paid for Douglas Elliman is $65
million in cash, substantially from borrowings under the Company's revolving
credit facility. Additional purchase consideration of up to $10 million over the
next five years is contingent on the future performance measures of Douglas
Elliman. The transaction is expected to close in late June 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits - The following are furnished as exhibits to this report:
Exhibit No.
99.1 Press Release dated May 28, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/Adam B. Gilbert
-----------------------
Adam B. Gilbert
Executive Vice President
DATE: June 3, 1999
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[GRAPHIC OMITTED]
PRESS RELEASE
For Immediate Release
Contact: Steve Iaco
(212) 984-6535
Patric Dolan
(212) 984-8073
INSIGNIA FINANCIAL GROUP
TO ACQUIRE DOUGLAS ELLIMAN
Acquisition to Give Insignia Commanding New York Market Position;
Douglas Elliman, Insignia Residential Group, Insignia/ESG
to Comprise Foremost Powerhouse in Regional Real Estate Services
Synergies with Realty One also Prominent
NEW YORK, May 28, 1999 -- Insignia Financial Group, Inc. (NYSE: IFS) today
announced that it has entered into a definitive agreement to acquire Douglas
Elliman, the leading residential real estate brokerage firm in New York City.
The acquisition bolsters Insignia's leadership position in the New York market,
adding the number one residential brokerage firm to a portfolio of Insignia
companies that also includes the area's largest manager of cooperative and
condominium housing and premier provider of commercial real estate services.
The acquisition of Douglas Elliman is expected to close in late June. The
purchase price is approximately $65 million in cash, plus an earn-out of up to
an additional $10 million over the next five years, contingent upon Douglas
Elliman's achievement of certain performance standards. Insignia believes that
the purchase price represents a multiple of five times the estimated EBITDA run
rate.
Insignia expects the Douglas Elliman transaction to be accretive to Net Income
per share by $0.10 on an annual basis, to after-tax cash flow per share by $0.24
on an annual basis, and to Net EBITDA per share by $0.33 on an annual basis. The
financial contributions for 1999 will be lower due to the inclusion of Douglas
Elliman for only part of the year and the additional expenses arising from the
change in ownership. Douglas Elliman commands the number one market position for
both residential sales and rentals in New York City. The firm also holds
leadership positions in upscale suburban markets of New York City through
offices in Greenwich, CT, Bernardsville/Basking Ridge, NJ and three on Long
Island: Manhasset, Locust Valley and Port Washington/Sands Point.
Besides residential brokerage, other Douglas Elliman operations included in the
sale are commercial retail leasing and professional office sales and leasing.
<PAGE>
New York market primacy
"With the Douglas Elliman acquisition, Insignia companies have attained a depth
and breadth of leadership in New York area real estate - the bellwether
marketplace in the country - that no other single firm can match," said Andrew
L. Farkas, Chairman and Chief Executive Officer of Insignia. "Having only
entered the New York marketplace in 1995, Insignia has developed the
quintessential New York real estate services company, with annual revenues from
regional operations of more than $270 million, a regional workforce in excess of
1,700, and more than 5,500 transactions completed on a regional basis."
"Insignia Residential Group (IRG) is clearly the number one firm in cooperative
and condominium housing management in New York. IRG provides services for 60,000
apartment units, a portfolio that is more than three times as large as its
nearest competitor. Insignia also owns the number one commercial real estate
services firm in New York through Insignia/ESG, which annually closes more major
transactions in New York than any other service-provider. Douglas Elliman -- the
largest and most prestigious residential sales and rental broker in New York -
completes the triad. Douglas Elliman is an exceptional brand-name that has been
nurtured through nearly 90 years of successful operations."
"In addition to Douglas Elliman's own exceptional pedigree, we anticipate that
the firm will benefit from the many synergies that will be realized by providing
residential brokerage services to the residents of the properties managed by
IRG, as well as the corporate and institutional decision-makers that constitute
Insignia/ESG's client base," Mr. Farkas added. "We will have repeated,
multi-level contacts with our New York area customers. Insignia will be
exceptionally and uniquely able to meet their real estate needs whether they are
commercial or residential."
On behalf of the seller, the Milstein family, Howard Milstein said: "We have
been the proud guardians of the Douglas Elliman heritage for the past 10 years.
Douglas Elliman has enjoyed fantastic growth during our ownership -- with annual
transaction volume growing from $300 million to nearly $1.8 billion - and
enhanced its decisive number one position in both residential sales and rentals.
We are most pleased that the Douglas Elliman brand will now be in the hands of a
high-quality company like Insignia. We wish Andrew Farkas and the professionals
at Douglas Elliman the best in leading Douglas Elliman into the 21st century."
Growing impact from residential operations
The acquisition of Douglas Elliman now provides Insignia with the leading market
position for residential brokerage in two markets: the New York metropolitan
area and northern Ohio. Cleveland-based Realty One, acquired by Insignia in
October 1997, is the largest residential brokerage firm in Ohio and the
eighth-largest in the U.S.
On a combined basis, Douglas Elliman and Realty One completed in excess of
25,000 transactions in 1998 with an aggregate value of nearly $5 billion - an
amount exceeded by only six other residential brokerage firms nationwide.
"We believe that our exceptional residential brands position Insignia to launch
an expansion of our residential brokerage services in the U.S. and the U.K.,
where we are already a leading provider of commercial real estate services
through our subsidiary, Richard Ellis St. Quintin," Mr. Farkas said. "We expect
to roll out the Douglas Elliman and Realty One brand names in this expansion
initiative, replicating in other major markets the stature and leadership that
both brands have attained in their home markets."
"Further, we believe that our use of the Internet will play an increasing role
in the delivery of services in all our business lines, and we are deploying our
resources toward the continued development of our Internet capabilities," Mr.
Farkas added. "We have an outstanding platform for our Internet initiative in
the technical capabilities and marketing expertise at Realty One, which is
already using the Internet to efficiently market properties and enhance the
homebuying experience for sellers and buyers."
"Finally, these companies create a platform for the development of a number of
affinity services, including mortgage finance, title insurance, renovation
services and valuation. Realty One already owns a mortgage origination company
called First Ohio Mortgage, which provided more than $411 million of financing
in 1998. We expect to expand the mortgage services into the New York market, and
to develop the other service lines in both New York and Ohio."
In total, Insignia's residential real estate operations -- including Douglas
Elliman, IRG and Realty One - are expected to account for more than $200 million
in annual revenues and more than $20 million of the Company's run-rate EBITDA.
Alan Rogers, Chief Executive Officer of Douglas Elliman, will oversee Insignia's
residential brokerage operations in New York, reporting to Ron Uretta, President
of Insignia Residential Group and Chief Operating Officer of Insignia Financial
Group.
Mr. Rogers said: "We are excited to be joining the Insignia team. There are many
synergies to be realized by marrying the market knowledge of our brokers with
the property management expertise of Insignia Residential Group. Plus, we see
added benefits from our close association with Insignia/ESG. Many of our clients
are the same corporate decision-makers that Insignia/ESG works with every day.
The opportunity to meet the full spectrum of these clients' real estate needs
within one company is truly compelling - and something no other single firm can
offer."
"We are equally looking forward to the resources that Insignia will bring to our
business. Insignia is clearly committed to helping us build our market share
through investments in technology and operating systems. In addition, Realty One
has developed sophisticated marketing and lead-generation platforms that we are
confident can be adapted to the New York marketplace."
Examples of Realty One's innovative platforms are its Realty One Marketing
System,(TM) which utilizes sophisticated technology to market homes to potential
buyers with the greatest propensity to purchase them, and 2010 Professional
System,(TM) a program designed to create more opportunities for higher earnings
and future security for sales associates. The system includes an Intranet,
retirement plan and specialized training for new and experienced sales
associates.
Douglas Elliman closed more than 4,100 transactions valued at nearly $1.8
billion during 1998. This is, by far, the highest production of any New York
City firm, according to the annual ranking of residential brokerage companies
nationwide published by Real Trends, the industry trade publication.
The firm, founded in 1911, has more than 780 brokers, supported by more than 100
corporate employees in 15 offices in the New York area. Douglas Elliman will
continue to be headquartered at 575 Madison Avenue in Manhattan.
Insignia Financial Group, Inc., based in New York, is among the leading
providers of commercial and residential real estate services in the United
States, with a growing presence in Europe. Its major operating units are:
Insignia/ESG, Inc., one of the largest providers of commercial real estate
services in the United States and the pre-eminent commercial real estate service
provider in the New York metropolitan area; Richard Ellis St. Quintin, one of
the premier real estate services firms in the United Kingdom; Realty One, the
eighth-largest residential real estate brokerage firm in the United States and
the largest in Ohio; and Insignia Residential Group, the largest manager of
cooperative and condominium housing in the New York metropolitan area.
Certain items discussed in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and, as such, may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Statements
which make reference to the expectations or beliefs of the Company or any of its
management are such forward-looking statements. These statements include the
expected roll out of Company brand names in other jurisdictions, the expected
utilization of the Internet, the expected accretiveness of this transaction to
the Company's earnings, and the expected synergies from this transaction. Such
forward-looking statements speak only as of the date of this press release. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances upon which any such statement is
based.
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